Innovative efficiency as a lever to overcome financial constraints in R&D contests

Markus Merz

Economics of Innovation and New Technology, 2021, vol. 30, issue 3, 284-294

Abstract: Often the winner of an R&D contest seems unexpected or surprising, e.g. small firms win a disproportionate number of R&D contests despite having limited funds and on average lower market power. Here, different contest situations are modeled by considering variations in the innovative efficiency, patent valuation and financial resources of firms. It is found that small firms can be the Nash winner through highly efficient innovation despite financial constraints and low patent valuation. The results are helpful in understanding and predicting the probability of a firm's successful innovation.

Date: 2021
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DOI: 10.1080/10438599.2019.1695946

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