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Venture Capitalists and Cooperative Start-up Commercialization Strategy

  • David H. Hsu

    ()

    (Management Department, The Wharton School, University of Pennsylvania, 2000 Steinberg Hall-Dietrich Hall, Philadelphia, Pennsylvania 19104)

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    This paper examines the possible impact of venture capital (VC) backing on the commercialization direction of technology-based start-ups by asking: To what extent (if at all) do VC-funded start-ups engage in cooperative commercialization strategies (strategic alliances or technology licensing, or both) relative to a comparable set of start-ups, and with what consequences? To address these questions, I assemble a novel data set that matches firms receiving a federal research and development subsidy through the U.S. Small Business Innovative Research program to VC-funded firms by observable characteristics in five technology-intensive industries. These data allow decoupling of cooperative activity resulting from start-up development via the passage of calendar time from that due to association with VCs. An analysis of the 696 start-ups in the sample (split by an external funding source) suggests substantial boosts in both cooperative activity associated with VC-backed firms and in the likelihood of an initial public offering.

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    File URL: http://dx.doi.org/10.1287/mnsc.1050.0480
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    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 52 (2006)
    Issue (Month): 2 (February)
    Pages: 204-219

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    Handle: RePEc:inm:ormnsc:v:52:y:2006:i:2:p:204-219
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