The role of innovative entrepreneurship within Colombian business cycle scenarios: A system dynamics approach

Abstract

Since the advent of public and private initiatives in Colombia, there has been interest in exploring the possible future pathways of the Colombian business cycle. Based on a foresight analysis, it has been identified on the one hand that it is necessary to achieve greater productivity and competitiveness and on the other hand, collective intentionality toward progress must be encouraged. Using these analyses, new Colombian scenarios are discussed, taking into account intentionality towards entrepreneurship and innovation. Following the entrepreneurship research, it is suggested that innovative entrepreneurial activity is linked to long-term economic growth. Thus, the purpose of this paper is to identify the role of innovative entrepreneurship in Colombian business cycle scenarios using system dynamics (SD) modelling. Here, we approach futures studies, testing dynamic hypotheses concerning development based on societal and socioeconomic integration, in which innovative entrepreneurship is highly relevant. The model, supported by circular flow analysis and Schumpeterian theory, shows how this type of entrepreneurship contributes to sustainable economic growth during the simulation period (2003-2032). To achieve a 6.77% average growth rate (the higher scenario), policies regarding knowledge transfer from specialized foreign individuals, incumbent firms and universities, as well as incentives for entrepreneurial societies and collectivism, are discussed.

Technological change, rent and income inequalities: A Schumpeterian approach

“…According to Schumpeter, in fact, the introduction of technological innovations is an intrinsic characteristic of the working of economic systems and cannot be separated from economic growth: technological change and economic growth are intertwined. This interdependence has been further clarified by recent advances of the economics of innovation that have brought attention to the contribution of Schumpeter (1934) on the role of entrepreneurship in the introduction of radical innovations (Acs et al, 2013;Aparicio et al, 2016aAparicio et al, , 2016b, rather in contrast to the Schumpeterian focus (Schumpeter, 1942) on the innovative potential of large corporations. The importance of entrepreneurship consists in the fact that the positive rate of technological change is more powerful in reducing income inequality when it is the product of newcomers rather than incumbents (Bruton et al, 2013).…”

“…Fast rates of technological change are associated with the creation of new firms by new entrepreneurs that are able to challenge the incumbents by means of the introduction of radical innovations. Innovations are in turn associated with upward mobility (Aghion et al, 2015b;Aparicio et al, 2016aAparicio et al, , 2016bSanchisLlopis et al, 2015). C) The entry of innovators engenders an increase in market rivalry and a reduction in barriers to entry.…”

Social progress orientation and innovative entrepreneurship: an international analysis

“…Empirical evidence supporting the idea that individualism favors entrepreneurial activity and innovation has been found by some researchers (McGrath et al 1992a;Morris et al 1993;Mueller and Thomas 2001;Rooks et al 2016;Shane 1993). However, challenging this assumption, other authors suggest that a lesser degree of individualism, as well as different sorts of collectivisms (patriotism and nationalism) are positively related to innovation and entrepreneurial activity (Aparicio et al 2016b;Baum et al 1993;Hunt and Levie 2002;Taylor and Wilson 2012;Tiessen 1997). In fact, Pinillos and Reyes (2011) found evidence that the level of economic development moderated the influence of individualism on entrepreneurial activity.…”

“…This specific recognition is due to the fact that the phenomenon of innovative entrepreneurship has a positive impact on the generation of economic development and social progress at the country level Acs et al 2008b;Amorós and Bosma 2014;Aparicio et al 2016b;Carlsson et al 2013;Reynolds et al 2005;van Stel et al 2005;Wennekers and Thurik 1999;Wennekers et al 2005) and at a regional level Bosma 2009;Dejardin 2011;Feldman 2014;Fritsch 2011). Traditionally, the definition of social progress has been based on economic terms (GDP-oriented).…”

“…Thus, higher secular-rational values mean that societies tend to accept easily issues such as abortion, divorce and euthanasia, among others. However, in terms of development and social progress, the survival vs. selfexpression dimension, related to trust, tolerance, subjective well-being, political activism, and self-expression, emerges in postindustrial societies with high levels of security (Aparicio et al 2016b). Societies that emphasize survival values show relatively low levels of subjective well-being, report relatively poor health, are low on interpersonal trust, are relatively intolerant of out-groups, are low on support for gender equality, emphasize materialist values, have relatively high levels of faith in science and technology, are relatively low on environmental activism, and are relatively favorable to authoritarian government.…”