This paper presents a knowledge spillover theory of entrepreneurship, which extends endogenous growth theory by emphasizing the role of knowledge spillovers in generating entrepreneurial opportunities. The theory posits that knowledge created endogenously leads to spillovers that allow entrepreneurs to identify and exploit opportunities. Unlike traditional theories that treat opportunities as exogenous, this theory views them as endogenous, created through investments in new knowledge. The paper argues that entrepreneurial activity involves both arbitrage of opportunities and the exploitation of new opportunities created but not appropriated by incumbent firms. The theory shifts the unit of analysis from exogenously assumed firms to individual agents with new knowledge endowments. Agents with new economic knowledge endogenously pursue the exploitation of such knowledge, implying that the existing stock of knowledge yields spillovers. This suggests a strong relationship between knowledge spillovers and entrepreneurial activity. The theory provides an explanation for the role of the individual and the firm in an economy, linking microeconomic observations on routines, machine designs, and the like with macroeconomic discussions of technology. The paper develops a model where new product innovations can come from either incumbent firms or startups. Incumbent firms rely on incremental innovation from the flow of knowledge, while startups with access to entrepreneurial talent and intra-temporal spillovers from the stock of knowledge are more likely to engage in radical innovation. The model predicts that an increase in the stock of knowledge has a positive effect on the level of entrepreneurship, the more efficiently incumbents exploit knowledge flows, the smaller the effect of new knowledge on entrepreneurship, and entrepreneurial activities decrease under greater regulation, administrative burden, and market intervention by government. The paper also examines the empirical relationship between entrepreneurship and knowledge spillovers. It finds that entrepreneurial activity is strongly influenced by knowledge created but not exploited by incumbent firms. The results support the theory that knowledge spillovers play a crucial role in generating entrepreneurial opportunities. The paper concludes that entrepreneurship contributes to economic growth by acting as a conduit through which knowledge created by incumbent firms spills over to agents who endogenously create new firms. The findings highlight the importance of knowledge spillovers in the process of economic growth and the role of entrepreneurship in transmitting these spillovers.This paper presents a knowledge spillover theory of entrepreneurship, which extends endogenous growth theory by emphasizing the role of knowledge spillovers in generating entrepreneurial opportunities. The theory posits that knowledge created endogenously leads to spillovers that allow entrepreneurs to identify and exploit opportunities. Unlike traditional theories that treat opportunities as exogenous, this theory views them as endogenous, created through investments in new knowledge. The paper argues that entrepreneurial activity involves both arbitrage of opportunities and the exploitation of new opportunities created but not appropriated by incumbent firms. The theory shifts the unit of analysis from exogenously assumed firms to individual agents with new knowledge endowments. Agents with new economic knowledge endogenously pursue the exploitation of such knowledge, implying that the existing stock of knowledge yields spillovers. This suggests a strong relationship between knowledge spillovers and entrepreneurial activity. The theory provides an explanation for the role of the individual and the firm in an economy, linking microeconomic observations on routines, machine designs, and the like with macroeconomic discussions of technology. The paper develops a model where new product innovations can come from either incumbent firms or startups. Incumbent firms rely on incremental innovation from the flow of knowledge, while startups with access to entrepreneurial talent and intra-temporal spillovers from the stock of knowledge are more likely to engage in radical innovation. The model predicts that an increase in the stock of knowledge has a positive effect on the level of entrepreneurship, the more efficiently incumbents exploit knowledge flows, the smaller the effect of new knowledge on entrepreneurship, and entrepreneurial activities decrease under greater regulation, administrative burden, and market intervention by government. The paper also examines the empirical relationship between entrepreneurship and knowledge spillovers. It finds that entrepreneurial activity is strongly influenced by knowledge created but not exploited by incumbent firms. The results support the theory that knowledge spillovers play a crucial role in generating entrepreneurial opportunities. The paper concludes that entrepreneurship contributes to economic growth by acting as a conduit through which knowledge created by incumbent firms spills over to agents who endogenously create new firms. The findings highlight the importance of knowledge spillovers in the process of economic growth and the role of entrepreneurship in transmitting these spillovers.