Innovation and new business formation: the role of innovative large firms

Pu Liu and Yingying Shao ()
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Pu Liu: University of Arkansas
Yingying Shao: Towson University

Small Business Economics, 2022, vol. 59, issue 2, No 15, 720 pages

Abstract: Abstract The present study uses patent data for US public firms from 1986 through 2018 to investigate the impact of large corporate sector innovation activities on new business creation at the county level. Consistent with the knowledge spillover theory of entrepreneurship, the results show that large firms’ inventive activities exhibit a positive relationship with new business formation in the local manufacturing sector, and the positive effect is significant to small startup firms. Further tests reveal that when inventing firms are financially constrained, the positive effect of their innovations on local new business formation becomes more pronounced. This study suggests that financial constraints of large corporates have positive externalities to the real economy, highlighting the importance of financial capital resources to the regional entrepreneurship process.

Keywords: Innovation; New business formation; Financial constraints (search for similar items in EconPapers)
JEL-codes: G31 L26 O3 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s11187-022-00603-y

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