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The Circulation of Ideas in Firms and Markets

Thomas Hellman and Enrico Perotti ()
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Thomas Hellman: University of British Columbia

Authors registered in the RePEc Author Service: Thomas Hellmann ()

No 2010.47, Working Papers from Fondazione Eni Enrico Mattei

Abstract: Novel early stage ideas face uncertainty on the expertise needed to elaborate them, which creates a need to circulate them widely to find a match. Yet as information is not excludable, shared ideas may be stolen, reducing incentives to innovate. Still, in idea-rich environments inventors may share them without contractual protection. Idea density is enhanced by firms ensuring rewards to inventors, while their legal boundaries limit idea leakage. As firms limit idea circulation, the innovative environment involves a symbiotic interaction: firms incubate ideas and allow employees to leave if they cannot find an internal fit; markets allow for wide circulation of ideas until matched and completed; under certain circumstances ideas may be even developed in both firms and markets.

Keywords: Ideas; Innovation; Entrepreneurship; Firm Organization; Start-Ups (search for similar items in EconPapers)
JEL-codes: D83 L22 M13 O31 (search for similar items in EconPapers)
Date: 2010-05
New Economics Papers: this item is included in nep-bec, nep-cta, nep-ent, nep-hpe, nep-ino and nep-sbm
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Related works:
Journal Article: The Circulation of Ideas in Firms and Markets (2011) Downloads
Working Paper: The Circulation of Ideas in Firms and Markets (2011) Downloads
Working Paper: The Circulation of Ideas in Firms and Markets (2010) Downloads
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