Entrepreneurial risk, investment and innovation

Andrea Caggese

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: In this paper I develop a general equilibrium model with risk averse entrepreneurial firms and with public firms. The model predicts that an increase in uncertainty reduces the propensity of entrepreneurial firms to innovate, while it does not affect the propensity of public firms to innovate. Furthermore, it predicts that the negative effect of uncertainty on innovation is stronger for the less diversified entrepreneurial firms, and is stronger in the absence of financing frictions in the economy. In the second part of the paper I test these predictions on a dataset of small and medium Italian manufacturing firms.

Keywords: Entrepreneurs; Entrepreneurship; Innovation; Idiosyncratic Risk; Uncertainty; Incomplete Markets (search for similar items in EconPapers)
JEL-codes: D80 M13 O31 (search for similar items in EconPapers)
Date: 2006-12
New Economics Papers: this item is included in nep-bec, nep-dge, nep-ent, nep-ino and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://econ-papers.upf.edu/papers/1011.pdf Whole Paper (application/pdf)

Related works:
Journal Article: Entrepreneurial risk, investment, and innovation (2012)
Working Paper: Entrepreneurial Risk, Investment and Innovation (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1011

Access Statistics for this paper

More papers in Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra
Bibliographic data for series maintained by ( this e-mail address is bad, please contact ).