What we do know and what we need to know about knowledge in the growth process

Purpose – There is evidence for major positive effects of knowledge transfer and innovation diffusion on economic growth. Much research has addressed schooling, training, and other aspects of human capital accumulation, but less emphasis has been placed on the interaction between firms and other organizations as a key driver of the development of new knowledge and its economic use. There is an extensive body of literature that discusses various aspects of knowledge transfer and innovation diffusion between firms, and this literature may serve as a microfoundation for understanding the role of knowledge in the growth process. However, we need to understand the role of the entrepreneur as a missing link between knowledge and innovation. The purpose of this paper is to outline some foundations of endogenous (externally driven) growth models, and uses the knowledge spillover theory of entrepreneurship to propose a new model of latent and emergent entrepreneurship. Design/methodology/approach – The paper uses the method of conceptual analysis to structure the literature and its assumptions. The authors review in broad terms what we know in the space of knowledge and growth, and what we still need to know. The authors curate informed views on the topic of knowledge and the way that entrepreneurs contribute to innovation diffusion. Findings – The paper develops a new perspective on knowledge. Starting from the role of knowledge as a core element in the microfoundations of endogenous growth models, it uses the knowledge spillover theory of entrepreneurship to propose a new model of latent and emergent entrepreneurship. Practical implications – The paper uses knowledge spillover theory to lay out a more complete and more realistic process through which knowledge gets converted into realized innovations, and as such, it makes the intervention points through which people management can facilitate organizational effectiveness through innovation more transparent. Originality/value – The paper provides guidance for future researchers on knowledge and innovation diffusion. It encourages innovation in our thinking about the role of knowledge, and allows scholars to combine perspectives more flexibly both across levels of analysis (macro and micro), and across disciplines (economy and management).