Animal Spirits and Entrepreneurial Innovation: Theory and Evidence
AbstractThis paper proposes and empirically tests a theory of entrepreneurial innovation to explain its high degree of concentration in space and time. In the model, a successful entrepreneurial project is the result of a search and matching process between entrepreneurs looking for funds and capitalists looking for new ideas to finance. The resulting strategic complementarity between them gives rise to a multiplier effect. Moreover, if complementarity is sufficiently strong, multiple equilibria arise, which can be ranked in terms of entrepreneurial activity. Using data from the European and the US business angels markets for the period 1996-2010, we show that (ii) a complementarity exists between business angels and the entrepreneurial projects submitted to them, and that (ii) the result of multiple equilibria is empirically plausible.
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Bibliographic InfoPaper provided by Dipartimento di Economia e Finanza, LUISS Guido Carli in its series Working Papers CASMEF with number 1210.
Date of creation: 2012
Date of revision:
Entrepreneurship; financing of innovation; search and matching; strategic complementarities; venture capital; business angels.;
Other versions of this item:
- Angela Cipollone & Paolo E. Giordani, 2012. "Animal Spirits in Entrepreneurial Innovation: Theory and Evidence," Working Papers CELEG 1201, Dipartimento di Economia e Finanza, LUISS Guido Carli.
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
- O38 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Government Policy
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-09 (All new papers)
- NEP-ENT-2012-09-09 (Entrepreneurship)
- NEP-INO-2012-09-09 (Innovation)
- NEP-SOC-2012-09-09 (Social Norms & Social Capital)
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