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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 and private investments have a positive effect on innovation performance. Copyright © 2013 John Wiley & Sons, Ltd.

Suggested Citation

  • 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, March.
    • Handle: RePEc:wly:mgtdec:v:35:y:2014:i:2:p:103-113
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    Cited by:

    1. Deng, Yumiao & Ding, Yongling & Li, Chen & Ma, Sichao, 2025. "Shareholding by industry peers, firm size, and innovation quality," Finance Research Letters, Elsevier, vol. 80(C).
    2. Chen Zhao & Feng Feng, 2023. "Do parent organizations influence R&D decisions of academic spin‐offs?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 43-57, January.
    3. Thomas V. Edwards & Noushi Rahman, 2025. "Does technological knowledge transfer from CVC investor firms to venture firms? An examination of CVC investments, venture firm technological learning, and IPO," The Journal of Technology Transfer, Springer, vol. 50(3), pages 938-961, June.
    4. Dennis Leyden & Albert Link, 2015. "Toward a theory of the entrepreneurial process," Small Business Economics, Springer, vol. 44(3), pages 475-484, March.
    5. Kesen Zhang & Gefang Deborah, 2025. "Digitalization, internationalization and green innovation in China: an analysis based on threshold and mediation effects," The Journal of Technology Transfer, Springer, vol. 50(3), pages 962-994, June.
    6. Rajeev Goel & Devrim Göktepe-Hultén & Rati Ram, 2015. "Academics’ entrepreneurship propensities and gender differences," The Journal of Technology Transfer, Springer, vol. 40(1), pages 161-177, February.
    7. Barry Bozeman & Albert N. Link, 2015. "Toward an assessment of impacts from US technology and innovation policies," Science and Public Policy, Oxford University Press, vol. 42(3), pages 369-376.
    8. Silvia Magri, 2014. "Does issuing equity help R&D activity? Evidence from unlisted Italian high-tech manufacturing firms," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 23(8), pages 825-854, November.
    9. Leyden, Dennis P. & Link, Albert N. & Siegel, Donald S., 2014. "A theoretical analysis of the role of social networks in entrepreneurship," Research Policy, Elsevier, vol. 43(7), pages 1157-1163.
    10. Silvia Magri, 2014. "Does issuing equities help R&D activity? Evidence from unlisted Italian high-tech manufacturing firms," Temi di discussione (Economic working papers) 978, Bank of Italy, Economic Research and International Relations Area.
    11. Zhu Huijuan, 2021. "The impact of the Growth of High-tech companies on Investment income: a study in China," International Journal of Science and Business, IJSAB International, vol. 5(12), pages 23-35.
    12. Amess, Kevin & Stiebale, Joel & Wright, Mike, 2016. "The impact of private equity on firms׳ patenting activity," European Economic Review, Elsevier, vol. 86(C), pages 147-160.
    13. Scott, John T. & Scott, Troy J., 2016. "The entrepreneur's idea and outside finance: Theory and evidence about entrepreneurial roles," European Economic Review, Elsevier, vol. 86(C), pages 118-130.

    More about this item

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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