ABSTRACT
Knowledge is generally considered to be the essential ingredient for innovative activity. However, knowledge is not equivalent to innovation. The purpose of this chapter is to explain the role of entrepreneurship in facilitating the spillover of knowledge from an organization where that knowledge is created to a new organization where it is used for innovative activity. The body of the chapter is organized in three primary sections. The first section discusses the knowledge production and the emergence of the knowledge production function, which was primarily cited in the academic literature between 1983 and 1997. Additionally, this section highlights the model’s strengths and weaknesses in regards to various levels of analysis, as well as the three stages of the innovation process and its variable measurement constraints. The second section then discusses knowledge spillover theory, the distinctions between information and knowledge, and highlights how the impacts of knowledge spillover can be estimated within the framework of the knowledge production function. The third section discusses the theoretical links between entrepreneurial activity and knowledge spillover, and how these links assist in explaining the heterogeneity that is observed among different levels of analysis.
