More knowledge, more entrepreneurs? An investigation of the science and cluster policy mix in Germany

Abstract The relationship between knowledge and entrepreneurship has been extensively studied, with the knowledge spillover theory of entrepreneurship (KSTE) providing a key theoretical framework. However, the assumption that increasing knowledge stocks and flows inevitably leads to higher levels of entrepreneurship remains contested. This study examines how the mix of science and cluster policies in Germany influences entrepreneurial activity by shaping knowledge spillovers. While science policies aim to advance research and knowledge creation, cluster policies primarily enhance knowledge flows by fostering collaboration among firms, universities, and research institutions. Following the rationale of KSTE, we test whether regions exposed to both types of policy exhibit higher levels of innovation and innovative entrepreneurship than control groups, that is, regions treated only by one or by neither policy. Contrary to KSTE predictions, our findings reveal that knowledge spillovers do not automatically result in increased innovative entrepreneurship but instead primarily fuel intrapreneurship. We thus argue that simply increasing knowledge production is insufficient to drive innovation and innovative entrepreneurship; rather, the way in which knowledge is transferred and absorbed plays a crucial role.