Entrepreneurial risk, investment, and innovation

Andrea Caggese

Journal of Financial Economics, 2012, vol. 106, issue 2, 287-307

Abstract: I estimate the effect of uncertainty on risky innovation using a panel of 11,417 manufacturing firms. I find that an increase in uncertainty has a large negative effect on the risky innovation of entrepreneurial firms, while it does not have any significant impact on other firms. This negative effect is stronger for the less diversified entrepreneurial firms in the sample. The estimation results are consistent with the innovation dynamics generated in a model in which entrepreneurs are risk averse and cannot diversify the risk of their business.

Keywords: Precautionary saving; Entrepreneurial risk; Uncertainty; Innovation (search for similar items in EconPapers)
JEL-codes: D21 D92 G11 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (33)

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Related works:
Working Paper: Entrepreneurial Risk, Investment and Innovation (2006)
Working Paper: Entrepreneurial risk, investment and innovation (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:106:y:2012:i:2:p:287-307

DOI: 10.1016/j.jfineco.2012.05.009

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