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Private Equity and the Innovation Strategies of Entrepreneurial Firms: Empirical Evidence from the Small Business Innovation Research Program

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  • Albert N. Link
  • Christopher J. Ruhm
  • Donald S. Siegel

Abstract

There is great interest in evaluating the impact of private equity investments on innovation and economic growth. However, there is no direct empirical evidence on the effects of such transactions on the innovation strategies of entrepreneurial firms. We fill this gap by examining a rich project-level data set consisting of entrepreneurial firms receiving Small Business Innovation Research (SBIR) program research awards. We find that SBIR firms attracting private equity investments are significantly more likely to license and sell their technology rights and engage in collaborative research and development agreements. Our results suggest that private equity investments accelerate the development and commercialization of research-based technologies, thus contributing to economic growth. We conclude that both public investments and private investments are key to innovation performance.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18297.

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Date of creation: Aug 2012
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Publication status: published as Peter Klein & Donald Siegel & Nick Wilson & Mike Wright & Albert N. Link & Christopher J. Ruhm & Donald S. Siegel, 2014. "Private Equity and the Innovation Strategies of Entrepreneurial Firms: Empirical Evidence from the Small Business Innovation Research Program," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 35(2), pages 103-113, 03.
Handle: RePEc:nbr:nberwo:18297

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References

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  1. Frank R. Lichtenberg & Donald Siegel, 1991. "The Effects of Leveraged Buyouts on Productivity and Related Aspects of Firm Behavior," NBER Working Papers 3022, National Bureau of Economic Research, Inc.
  2. Steven J. Davis & John C. Haltiwanger & Ron S. Jarmin & Josh Lerner & Javier Miranda, 2011. "Private Equity and Employment," NBER Working Papers 17399, National Bureau of Economic Research, Inc.
  3. Richard Harris & Donald S. Siegel & Mike Wright, 2003. "Assessing the Impact of Management Buyouts on Economic Efficiency: Plant-Level Evidence from the United Kingdom," Rensselaer Working Papers in Economics, Rensselaer Polytechnic Institute, Department of Economics 0304, Rensselaer Polytechnic Institute, Department of Economics.
  4. Dora Gicheva & Albert Link, 2013. "Leveraging entrepreneurship through private investments: does gender matter?," Small Business Economics, Springer, Springer, vol. 40(2), pages 199-210, February.
  5. Wright, Mike & Thompson, Steve & Robbie, Ken, 1992. "Venture capital and management-led, leveraged buy-outs: A European perspective," Journal of Business Venturing, Elsevier, vol. 7(1), pages 47-71, January.
  6. Steven J. Davis & John C. Haltiwanger & Kyle Handley & Ron S. Jarmin & Josh Lerner & Javier Miranda, 2013. "Private Equity, Jobs, and Productivity," NBER Working Papers 19458, National Bureau of Economic Research, Inc.
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Cited by:
  1. Leyden, Dennis & Link, Albert, 2014. "Toward a Theory of the Entrepreneurial Process," Working Papers 14-4, University of North Carolina at Greensboro, Department of Economics.
  2. Bozeman, Barry & Link, Albert N., 2014. "Toward an Assessment of Impacts from U.S. Technology and Innovation Policies," Working Papers 14-5, University of North Carolina at Greensboro, Department of Economics.

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