Public-sector entrepreneurship and the creation of a sustainable innovative economy

Economic growth requires innovation that can only occur through entrepreneurial action. Attempts to stimulate such action through central direction and explicit planning such as embodied in a National Systems of Innovation approach are inherently limiting because of an inability to anticipate future actions and consequences. A more fruitful approach is the one embodied in a National Systems of Entrepreneurship (NSE) approach, one that recognizes the uncertainty of the entrepreneurial process and focuses instead on the promulgation of policies through public-sector entrepreneurship to create a more nurturing environment within which entrepreneurial action can spontaneously arise in both the private and the public sectors. This paper develops an NSE-based theoretical model of the entrepreneurial environment that integrates into a functional whole the various subsets of that environment that others have studied and explores the role that NSE-guided public policy can play in improving the entrepreneurial environment for both private-sector and public-sector entrepreneurs. In the private sector, such public policies would focus on enhancing the creative environment, the exchange environment, the incentive and feedback structures, and the access to resources. It is also possible to enhance the entrepreneurial environment in the public sector, though the competing demands of democratic norms make that enhancement more difficult.