Investigating the relationship of high-tech entrepreneurship and innovation efficacy: The moderating role of absorptive capacity

Abstract

While high-tech entrepreneurs have been recognized as the important driving force for national innovation, more empirical evidence is needed. Especially, despite the notion of innovation efficacy has been well understood as an excellent approach to measuring national innovation performance, there is only a limited understanding of this concept. The purpose of this study is to analyze the impact of high-tech entrepreneurial activities on innovation efficacy based on the Knowledge Spillover Theory of Entrepreneurship. For the analysis, this study uses a panel data regression analysis with global data of 90 countries from 2011 to 2015. The results indicate that the ratio of high-tech entrepreneurial activities has an inverted-U-shaped relationship with innovation efficacy. We also find that the level of absorptive capacity positively moderates this relationship. This study shows that the reckless increase of high-tech startups can harm the national economy. Therefore, the government should precisely understand the non-linear relationship between high-tech startups and the nation's innovation capability, and strategically utilize R&D policies to maximize national innovation efficacy. Through a greater understanding on the relationship of the nation's entrepreneurial resources and capabilities, and specific innovation performance, this study contributes to broadening the view of innovation research in KSTE.