Incumbent Innovation and Entry by Spinoff
AbstractThis paper takes a different perspective toward the escape entry incentive of incumbent firms to innovate. New entrants spawned from incumbents are not necessarily a threat; they can complement incumbents' production by commercializing knowledge incumbents are not willing or able to exploit. Accordingly, incumbent innovation determines exploitable knowledge externalities for spinoffs while, at the same time, spinoffs are expected to influence incumbent innovation. To overcome this problem of endogeneity, we apply an IV approach to analyze a rich industry-level dataset (1987â€“2000) for Germany. We find evidence that entry by spinoffs does, indeed, have a positive impact on incumbent innovation.
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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2008-083.
Date of creation: 04 Nov 2008
Date of revision:
Innovation; Entry; Spinoff;
Find related papers by JEL classification:
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-11 (All new papers)
- NEP-COM-2008-11-11 (Industrial Competition)
- NEP-ENT-2008-11-11 (Entrepreneurship)
- NEP-INO-2008-11-11 (Innovation)
- NEP-IPR-2008-11-11 (Intellectual Property Rights)
- NEP-KNM-2008-11-11 (Knowledge Management & Knowledge Economy)
- NEP-MIC-2008-11-11 (Microeconomics)
- NEP-TID-2008-11-11 (Technology & Industrial Dynamics)
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