"Innovative entrepreneurs are the prime movers of the economy. The innovative entrepreneur helps to overcome two types of institutional frictions. First, existing firms may not innovate efficiently due to incumbent inertia resulting from adjustment costs, diversification costs, the replacement effect, and imperfect adjustment of expectations. The innovative entrepreneur compensates for incumbent inertia by embodying innovations in new firms that compete with incumbents. Second, markets for inventions may not operate efficiently due to transaction costs, imperfect intellectual property protections, costs of transferring tacit knowledge, and imperfect information about discoveries. The innovative entrepreneur addresses inefficiencies in markets for inventions through own-use of discoveries and adoption of innovative ideas. The Innovative Entrepreneur presents an economic framework that addresses the motivation of the innovative entrepreneur, the innovative advantage of entrepreneurs versus incumbent firms, the effects of competitive pressures on incentives to innovate, the consequences of creative destruction, and the contributions of the innovative entrepreneur to the wealth of nations"-- Provided by publisher.

"Much like the popular myth that a bumblebee's flight is aerodynamically impossible, experts often suggest that innovative entrepreneurship is economically impossible. Entrepreneurs must be irrationally optimistic because there are few economic returns to innovative entry. Entrepreneurs cannot innovate effectively because incumbent firms have better complementary assets. Entrepreneurs cannot possibly innovate because only incumbent firms have the necessary size and market power to support innovation. And yet, they fly! Innovative entrepreneurs add value to the economy through individual initiative, creativity, and flexibility. Innovative entrepreneurs help to overcome two types of institutional frictions. First, existing firms may not innovate efficiently due to incumbent inertia resulting from various organizational rigidities. The innovative entrepreneur compensates for incumbent inertia by embodying innovations in new firms. Second markets for inventions may not operate efficiently due to transaction costs (search, bargaining, contracting, monitoring), imperfect IP protections, costs of transferring tacit knowledge, and imperfect information about discoveries. The innovative entrepreneur addresses frictions in markets for inventions through own-use of discoveries and adoption of innovative ideas. This chapter presents a dynamic economic framework that will be applied to study the innovative entrepreneur. The entrepreneurial process has three stages: invention, entrepreneurship, and competitive entry"-- Provided by publisher.

Includes bibliographical references and index.

Machine generated contents note: 1. Introduction; 2. Entrepreneurial motivation: maximizing life-cycle utility; 3. Innovative advantage: entrepreneurial initiative and incumbent inertia; 4. Competitive pressures and entrepreneurial incentives to innovate; 5. Creative destruction: transaction costs and intellectual property rights; 6. Creative destruction: making new combinations; 7. Creative destruction: tacit knowledge; 8. Creative destruction: asymmetric information; 9. The wealth of nations: international trade and investment; 10. Conclusion.