The KSTE + I approach and the advent of AI technologies: evidence from the European regions

Abstract In this paper, we integrate insights from the Knowledge Spillover Theory of Entrepreneurship and Innovation (KSTE + I) with Schumpeter’s concept of the entrepreneur as a “factor of disequilibrium”. Specifically, we examine whether there is a correlation between the level of Artificial Intelligence (AI) knowledge available in a region and the number of newly established innovative ventures, defined as startups that file patents in any technological field within the same year of their foundation. Empirically, we test for 287 Nuts-2 European regions whether the local AI stock of knowledge exerts an enabling role in fostering innovative entry within AI-related local industries (AI technologies as focused enablers) and within non-AI-related local industries (AI technologies as generalised enablers). Results from fixed-effect regressions using Poisson and Negative Binomial models - while controlling for a range of concurrent drivers of entrepreneurship - indicate that the local stock of AI knowledge fosters the proliferation of innovative startups within AI-related local industries. This finding supports both the KSTE + I framework and the enabling role of AI technologies; however, it does not support the notion of AI technologies as generalised enablers.