Why Entrepreneurs Choose Risky R&D Projects - but still not risky enough
Erika Färnstrand Damsgaard,
Per Hjertstrand,
Pehr-Johan Norbäck,
Lars Persson and
Helder Vasconcelos
No 6138, CESifo Working Paper Series from CESifo
Abstract:
This paper examines how entrepreneurs and incumbents differ in R&D strategies. We show that entrepreneurs have incentives to choose projects with higher risk and a higher potential in order to reduce expected commercialization costs. However, entrepreneurs may still select too safe projects from a social point of view, since they do not internalize the business stealing effect. Commercialization support induces entrepreneurship but may lead to mediocre entrepreneurship by inducing entrepreneurs to choose less risky projects, whereas R&D support encourages entrepreneurship without affecting the type of entrepreneurship. We develop a regression framework to test empirical predictions of the model. Within our regression framework we derive and attach statistical decision hypotheses corresponding to each prediction. Using a unique data set of Swedish patents and innovators, we find strong empirical support for these predictions.
Keywords: entrepreneurship; R&D; entry deterrence (search for similar items in EconPapers)
JEL-codes: K23 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)
Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp6138.pdf (application/pdf)
Related works:
Journal Article: Why Entrepreneurs Choose Risky R&D Projects – But Still Not Risky Enough (2017)
Working Paper: Why Entrepreneurs Choose Risky R&D Projects - But Still Not Risky Enough (2012)
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:ces:ceswps:_6138
Access Statistics for this paper
More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().