Integrating Technical Knowledge and Entrepreneurial Skills in Production : A Deconfounding Approach

We propose a model integrating technical, knowledge, and entrepreneurial skills, accounting for potentially unique resources and competitive advantages. This model is operationalized using data from the World Bank (1998–2018). We pay particular attention to deconfounding, which removes potentially spurious correlations and specification bias, thereby allowing for a causal interpretation. Our approach includes global and local production of technical knowledge and entrepreneurial skills, as well as the internal appropriation of globally available knowledge and entrepreneurial expertise within firms. The model is contextualized by modelling its parameters as functions of several underlying fundamental social constructs. Our primary findings reveal that both local and global knowledge enhance productivity and efficiency in production, new knowledge generation, and entrepreneurship. Furthermore, our results underscore the substantial influence of social context on these formative processes.