Following or breaking regional development paths: on the role and capability of the innovative entrepreneur

Abstract

Structural change, economic diversification and new path development feature prominently in scientific and policy debates. Against the backdrop of increasing specialization in the economy, this paper reinterprets Schumpeterian innovative entrepreneurship as a fundamental process that creates new connections between distinct fields of specialization, thereby induces path-breaking innovations and structural change. It is argued that the transformation capability of innovative entrepreneurs rests essentially on their position(s) and networks within evolving innovation systems. By focusing on micro-level processes and transformation capability, the paper complements the large body of work on structural barriers. Unintended consequences, supporting institutional arrangements and policy implications are discussed.