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Startup Innovation during the Past Economic Crisis

Author

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  • Nabil Abou Lebdi

    () (CREA, Université du Luxembourg)

  • Katrin Hussinger

    () (CREA, Université du Luxembourg)

Abstract

By the notion of creative destruction, a crisis can stimulate entrepreneurship and innovation through reallocation of unproductive assets to new ventures that exploit emerging opportunities. However, a crisis can also hamper innovation by exacerbated credit market imperfections that affect new innovative ventures disproportionately. This study investigates the innovation behavior of German startups founded during the past economic crisis in 2009. Empirical results show that crisis startup foundations in high-tech sectors are less likely to introduce innovations to the market than ventures started in the pre-crisis period. Yet, the degree of novelty of these product or service innovations is significantly higher as compared to products and services introduced by start-ups founded in pre-crisis years. Moreover, we do not find evidence for necessity entrepreneurship in German low-tech industries.

Suggested Citation

  • Nabil Abou Lebdi & Katrin Hussinger, 2016. "Startup Innovation during the Past Economic Crisis," CREA Discussion Paper Series 16-27, Center for Research in Economic Analysis, University of Luxembourg.
  • Handle: RePEc:luc:wpaper:16-27
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    Keywords

    creative destruction; economic crisis; entrepreneurship; innovation; startups;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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