The purpose of this paper is to examine the role of entrepreneurship in the process of enhancing economic innovation in the Yangtze River Delta of China.
A system of simultaneous‐dynamic panel equations is developed that incorporates the relationships between entrepreneurship, human capital (HC) and research and development (R&D) expenditures. Then, the generalized methods of moment approach designed by Arellano and Bond is applied to estimate this system and investigate whether there is a possibility to promote innovation through the channel of entrepreneurship in the Delta.
The empirical results reveal a significant relationship between entrepreneurship and HC, but insignificant relationship between R&D expenditures and entrepreneurship in the Delta.
The Delta has a potential to transform its growth strategy due to its HC endowment as an antecedent of innovation, but entrepreneurs and local governments should seek more opportunities to exploit and strengthen their R&D base in the Delta.
In order to find an effective remedy for the current downturn in the Delta, this paper studies the role of entrepreneurship and assesses the potential that the Delta has in carrying out an innovation‐based growth strategy.
