Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: This paper analyzes how different R&D strategies of incumbent firms affect the quantity and quality of their entrepreneurial spawning. By examining entrepreneurial ventures of ex-employees of firms with different R&D strategies three things emerge: First, firms with persistent R&D investments with a general superiority in sales, exports, productivity, profitability and wages are less likely to generate entrepreneurs than firm with temporary or no R&D investments. Second, start-ups from knowledge intensive business service (KIBS) firms with persistent R&D investments have a significantly increased probability of survival. No corresponding association between the R&D strategies of incumbents and survival of entrepreneurial spawns is found for incumbents in manufacturing sectors. Third, spin-outs from KIBS-firms are more likely to survive if they start in the same firm, indicating the importance of inherited related knowledge. The findings suggest that R&D intensive firms spur fewer entrepreneurs, but their entrepreneurial spawns tend to be of higher quality.

Keywords: entrepreneurship; self-employment; R&D strategy; innovation; new firms; spin-off; spin-out

JEL-codes: J24; L26; M13; O31; O32

40 pages, April 14, 2010

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