Can innovation enhance entrepreneurial activities of a region? : an analysis utilizing the Entrepreneurial Remedy Model (EREM).

In contrast to the Entrepreneurial Recycling Model (EREC), the Entrepreneurial Remedy Model (EREM) demands an active role of innovation to create an environment where small and medium size companies (SMEs) are developed. The EREM may provide a conceptual platform which may explain why developed regions have succeeded in maintaining a healthy entrepreneurial environment, while the less developed have failed to do that. Further, the Open Innovation concept is brought into the discussion connecting innovation to entrepreneurial environment conditions. A question which remains to be solves has to do to with the impact of innovation on the extent of entrepreneurial activities at a regional level. In this paper we will analyze and discuss this issue and provide understanding of the impact of innovation using the EREM. As such, the EREM offers an analytical tool to examine how the macroeconomic conditions impact the creation of new firms within a region or a country.