This paper advances the microeconomic foundations of endogenous growth theory by developing a Knowledge Spillover Theory of Entrepreneurship. The theory posits that knowledge created endogenously results in knowledge spillovers, which allow entrepreneurs to identify and exploit opportunities. The authors argue that entrepreneurial activity involves both arbitrage of opportunities and exploitation of new opportunities created but not appropriated by incumbent firms. The model suggests that an increase in the stock of knowledge has a positive effect on entrepreneurial activity, while more efficient exploitation of knowledge by incumbents reduces the effect of new knowledge on entrepreneurship. Additionally, entrepreneurial activities are likely to decrease under greater regulation, administrative burden, and market intervention. The paper uses data from 19 OECD countries over the period 1981-2002 to test these hypotheses, finding strong support for the role of knowledge spillovers in entrepreneurial activity. The findings highlight the importance of intra-temporal knowledge spillovers in driving economic growth and the need for a more nuanced understanding of the role of entrepreneurship in the economy.This paper advances the microeconomic foundations of endogenous growth theory by developing a Knowledge Spillover Theory of Entrepreneurship. The theory posits that knowledge created endogenously results in knowledge spillovers, which allow entrepreneurs to identify and exploit opportunities. The authors argue that entrepreneurial activity involves both arbitrage of opportunities and exploitation of new opportunities created but not appropriated by incumbent firms. The model suggests that an increase in the stock of knowledge has a positive effect on entrepreneurial activity, while more efficient exploitation of knowledge by incumbents reduces the effect of new knowledge on entrepreneurship. Additionally, entrepreneurial activities are likely to decrease under greater regulation, administrative burden, and market intervention. The paper uses data from 19 OECD countries over the period 1981-2002 to test these hypotheses, finding strong support for the role of knowledge spillovers in entrepreneurial activity. The findings highlight the importance of intra-temporal knowledge spillovers in driving economic growth and the need for a more nuanced understanding of the role of entrepreneurship in the economy.