Entrepreneurship, Teamwork and the Commercialization of Ideas

The paper estimates the value added of teaming up with others for the commercialization of ideas. Estimating the effect of teaming up in the probability of commercialization and in the returns of commercializing ideas is subtle. It is subtle because teaming up in a project is endogenous to the quality of the project. For instance, partners are more likely to team up with better projects in order to compensate their opportunity cost of providing technical skills, social capital and financial resources. Similarly, entrepreneurs with quality projects are more likely to be financially constrained, and consequently they seek partners to provide financial help to commercialize their ideas. In our context, an implication of the endogeneity problem is that the fact that projects with teams have higher probability and larger profits is not only reflecting the value added of partners, but also captures that entrepreneurs with better projects are more likely to seek partners and that partners prefer to team up with better projects. To separately identify the quality of the project from the value added by partners, we propose a structural model of teamwork. We consider that entrepreneurs can create, develop and commercialize their ideas, but sometimes they might find it optimal to team up with partners in the commercialization process. We estimate the parameters of the model using a survey of individual inventors based on the list of independent inventors, self-identified through their use of the services of the Canadian Innovation Centre (CIC). The survey contains information at the project level on the characteristics of entrepreneurs, the R&D expenditures, sales, whether there was a team or not, the type of team that was formed, etc.(This abstract was borrowed from another version of this item.)