The Organization of the Innovation Industry: Entrepreneurs, Venture Capitalists, and Oligopolists

Pehr-Johan Norbäck and Lars Persson

No 626, Working Paper Series from Research Institute of Industrial Economics

Abstract: The starting point of this paper is that the exit of venture-backed firms often takes place through sales to large incumbent firms. We show that in such an environment, venture-backed firms have a stronger incentive to develop basic innovations into commercialized innovations than incumbent firms, due to strategic product market effects. In turn, this will increase the price for basic innovations, thereby triggering more basic innovations by entrepreneurs. Consequently, the presence of a venture capital market implies that more basic innovations are created and that these become better developed.

Keywords: Acquisitions; Entrepreneurship; Innovation; Venture Capital (search for similar items in EconPapers)
JEL-codes: G24 L10 L20 M13 O30 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2004-09-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Journal Article: The Organization of the Innovation Industry: Entrepreneurs, Venture Capitalists, and Oligopolists (2009)
Working Paper: The Organization of the Innovation Industry: Entrepreneurs, Venture Capitalists and Oligopolists (2009)
Working Paper: The Organization of the Innovation Industry: Entrepreneurs, Venture Capitalists and Oligopolists (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0626

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