'Job hopping' by engineers and scientists is widely heralded as an important channel for knowledge spillovers within industries. Far less is known, however, about the actions firms take to reduce the ...outward flow of knowledge through markets for skilled labor. This study investigates the efficacy of a lever that has received little research attention: corporate reputations for toughness in patent enforcement. Drawing on unique data on enforcement activity, intra-industry inventor mobility, and patent citations in the U.S. semiconductor industry, we find that a firm's litigiousness significantly reduces spillovers otherwise anticipated from departures of employee inventors, particularly when the hiring organizations are entrepreneurial ventures. Surprisingly, the deterrent effects of patent enforcement are similar in magnitude for firms located in California, a state characterized by open norms for knowledge trading, and firms headquartered in other U.S. states. The study sheds new light on the strategic actions firms use to prevent rivals from capturing value from their investments in human capital and research and development.
•In contrast to prior work, the study shows that the NK model correctly captures the relationship between the N, K and average performance.•Specifically, I find an empirical pattern that is ...consistent with the key prediction of the NK model – the “complexity catastrophe”.•Single-industry context may allow for more precise measurement of technological complexity.
The process of innovation is frequently modeled as a bounded, iterative, trial-and-error search over a complex landscape using an NK model. An important question, however, is whether such theoretical approximation is consistent with empirical data. Prior work tested specific insights of the NK model while yielding mixed evidence. I examine how the full set of predictions generated by the NK model map onto observed empirical patterns while relying on commonly used patent-based measures of complexity. While the fit between the predictions and data is not perfect, I find that the ability of the NK model to capture innovative processes is better than previously thought. While doing so, I draw attention to potential boundary conditions for both the applicability of the model and usefulness of the measures. The study sheds new light on an important discussion within the field of innovation and technology management and helps to bridge the gap between the NK model and its empirical implementation.
Employee entrepreneurship and employee moves to rival firms (employee mobility) have both been recognized as critical drivers of the transfer of knowledge. Drawing on a unique database of ...intra-industry inventor entrepreneurship and mobility events in the U.S. semiconductor industry, I examine the effect of the complexity of inventors' prior patenting activities on their decisions to join a rival firm or found a start-up. The findings show that even though complexity inhibits knowledge diffusion to rival firms through employee mobility, complex knowledge may be underexploited within existing organizations and may still flow to startups through employee entrepreneurship. This study sheds new light on how technology shapes patterns of employee entrepreneurship and mobility, with implications for knowledge flows and competitive dynamics.
We investigate the relationship between firms' entry characteristics and their subsequent performance as contingent on environmental turbulence and stage of industry life cycle by simulating industry ...as an NKC landscape. Diversifying entrants differ from entrepreneurial start-ups in terms of the complexity of their routines. We posit that diversifying entrants outperform entrepreneurial start-ups when turbulence is high. Further, learning—possible in later industry stages—disproportionately favors entrepreneurial start-ups.
Much has been learned, and even more needs to be learned, about designing organizations and institutions. Since the 1960s this research has evolved from contingency to configuration, to ...complementarity, to complexity and creative theories of organizing. This chapter reviews these evolving theories (better called perspectives) and urges scholars to return to the frontier of organization studies by addressing an important new agenda in designing organizations with promising new research methods.
Although prior research in traditional equity financing shows that male founders are preferred, emerging evidence in low-stakes crowdfunding (e.g., rewards-based crowdfunding) indicates that female ...entrepreneurs may have an advantage, particularly with female investors. We seek to examine whether investors in high-stakes equity crowdfunding, which includes elements from both traditional equity financing and low-stakes crowdfunding, respond differently to male and female founders. Specifically, we examine whether founder gender preferences, if they exist, vary based on the gender and the experience of the investor. Through a randomized field experiment, we find that inexperienced female investors are significantly more interested (138%) in ventures with female founders than those with male founders; however, we do not observe founder gender preferences among experienced female investors. For male investors, we do not observe differences in interest based on founder gender or investor experience. Thus, we confirm that the gender gaps observed in traditional equity financing are ameliorated in the equity crowdfunding context. Furthermore, we identify a boundary condition to the preference for female founders reported in earlier work involving low-stakes crowdfunding. In high-stakes crowdfunding, investor experience serves as a contingency that reduces female investors’ preference for female founders, potentially because of the weakening effects of activism homophily and the lower reliance on heuristics as investor experience increases.
This paper was accepted by Sridhar Tayur, entrepreneurship and innovation.
We examine whether equity crowdfunding democratizes access to funding for nontraditional user entrepreneurs. User entrepreneurs start by creating a product to serve their own unmet needs with no ...expectations of monetary profit, then later decide to commercialize the product through entrepreneurship. In contrast, traditional (producer) entrepreneurs take a more profit-driven path to entrepreneurship and start by identifying an opportunity that has commercial potential. Through a randomized field experiment, we randomly reveal to some investors that a firm producing a product used by musicians is founded by a musician and conceal this founder-related information from other investors. Revealing the information suggests that the firm is a user innovator firm and concealing it suggests that the firm is a traditional producer firm. We find that investors are significantly more interested in the traditional producer firm. Through an additional field experiment, we identify that the bias against user entrepreneurs is statistical (based on a response to limited information) rather than taste based (based on an idiosyncratic dislike). Our findings suggest that user entrepreneurs can mitigate investor bias by displaying signals of quality such as those regarding firm growth and broad product appeal.
Research summary
One of the established findings in the spinout literature is that founders with prior industry experience assemble larger entrepreneurial teams and create better‐performing startups. ...We examine the role of prior industry experience in the startups' next stage—its hiring of new employees. We tackle two empirical challenges—the mutual aspect of hiring and the effect of unobserved variables on employees' earnings using a two‐sided matching model. Our results reveal that even firms founded by entrepreneurs without industry experience can attract new employees with such experience if the founders start with a large entrepreneurial team. Further, startups provide new hires with an earnings premium for their industry experience. Our approach illustrates the benefits of matching models over traditional regressions.
Managerial summary
Growing startups face the question of who to hire and how much to compensate the new hires. Simultaneously, prospective new hires ask which startup to join and how much their salary will be. We explore these questions using a novel method that tackles the mutual selection process. In the context of five technological manufacturing industries, we find that having industry experience within founding teams may not be necessary to attract new hires with high quality if the startup can signal its own quality through other means such as having a larger founding team. Our results indicate that startups prefer employees with industry experience for which startups offer a wage premium. Thus, employees seeking startup employment benefit from gaining industry experience prior to joining a startup.
A video is available at https://youtu.be/w00YzYi5VqA.
We advance a theoretical framework of how entrepreneurial ideas of employees are commercialized as a function of their uncertainty, firm-specificity, and appropriability. We argue that as uncertainty ...increases, the choice of commercialization mode will increasingly be driven by differences in subjective judgments of the idea's value, with firms having an advantage in assessing the true value of their employee's ideas relative to market because of their firm-specific nature. Building on this insight, we develop a formal model of commercialization choice that maps idea characteristics to commercialization outcomes-spinouts, internal commercialization, market mobility, or abandonment-while also predicting how these relationships will be moderated by the cost of startups, the value of the idea, and the institutional context, as well as how value will be created and appropriated within each mode. In particular, the model distinguishes between four different types of employee spinouts, including the previously neglected case where the employer sees value in an idea and wants to commercialize it, but the employee still prefers to start their own firm. We thus offer a more nuanced view of employee entrepreneurship, based on differences in subjective judgment under uncertainty, the firm-specific nature of employee knowledge, and appropriability regimes.
Managers and academics are increasingly viewing innovating firms as being interdependent on other firms in the business ecosystem. But how might the structure of interdependencies shape the ...innovativeness of firms in an ecosystem? To answer this question, we develop a search-based theory that considers a multiplicity of upstream and downstream firms simultaneously innovating in an ecosystem, contributing to and searching for novel combinations of components. We conceptualize two types of structural interdependencies between firms in an ecosystem based on the structure of technological interactions between components and the structure of input–output flows between stages of production. Using a simulation model, we show that downstream firms can benefit from mixing and matching components produced upstream, whereas upstream firms can benefit from optimizing their search more narrowly around their focal components. Importantly, these benefits that accrue to upstream and downstream firms are significantly impacted by the structure of technological and flow interdependencies in the ecosystem.
PDF
