Summary: Indian Economics | Kathal

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• 1 Nooteboom: innovation and di\ffusion in SE

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• LE face a paradox

  to obtain similar advantages as SE they must loosen control, but to obtain the advantages of size (economies of scale, scope & learning) they must maintain control.

• There is a statistic and a qualitative definition of SE & LE

  • Statistic: Micro (less then 10), Small (10-50), medium (50-250) and large (250-500)
  • Qualitative: SE is a small independent business unit, this includes small independent division in LE

• Diversity can lead to a dilemma in developing policies in SE

  • One hand: want rich diversity of policy, tailored to diverse needs of SE
  • Other hand: in view of limited capacity for collecting external information, it makes environment to complex for effective entrepreneurship

• Tacitness can be a problem, but also has a positive side

  • protect knowledge from leakage (spillover) to competition
  • knowledge is more difficult to transfer and to copy

• in process of innovation, strength of SE lies in

  • greater motivation
  • better survey of entire project
  • tacit knowledge in unkown skills
  • more informal communication
  • less bureaucracy
  • greater proximity to market and own product
  • closer interaction with customer

  More likely to be better at small scale applications of fundamental technologies

• In process of innovation, strenght of LE lies in

  • deeper level of specialization (people and equipment)
  • science-based knowledge
  • economies of scale and scope
  • experience
  • larger financial resources
  • spread of risk

  More likely to generate fundamentally new, and science based technologies

• SE is more productive in innovation then LE, when industry is

  • relatively low capital intensity
  • low concentration
  • high level of innovation

  Summing up, in general, SE has lesser participation in R&D, but a greater intensity and productivity when they participate.

• People resort to independency for 3 reasons

  • push factors: entrepreneur is not satisfied with his current position
  • Pull factors: attractiveness of being self-employed (will to power, richness, creativeness, freedom)
  • Coincidence: being at right place at right time

• Diversity is the most important characteristic of SE. There are conditions that allow diversity, and sources that produce diversity. These are

  • Environment, in which business is operating. Ex. standards and rules
  • Resources available, often problems for SE in gaining access to funding.

• Relation between characteristics and performance

  • characteristics do not determine performance directly
  • goes in interaction with contingency factors and strategies
  • different conditions allow different actors, and yield different outcomes
  • set of characteristics may be beneficial in one, but fatal in other situation