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Title:Incumbent innovation and entry by spinoff PDF Logo
Authors:Falck, Oliver
Heblich, Stephan
Issue Date:2008
Series/Report no.:Jena economic research papers 2008,083
Abstract:This paper takes a different perspective toward the escape entry incentive of incumbent firms to innovate. New entrants spawned from incumbents are not necessarily a threat; they can complement incumbents’ production by commercializing knowledge incumbents are not willing or able to exploit. Accordingly, incumbent innovation determines exploitable knowledge externalities for spinoffs while, at the same time, spinoffs are expected to influence incumbent innovation. To overcome this problem of endogeneity, we apply an IV approach to analyze a rich industry-level dataset (19872000) for Germany. We find evidence that entry by spinoffs does, indeed, have a positive impact on incumbent innovation.
Subjects:Innovation
entry
spinoff
JEL:O3
L16
M13
Document Type:Working Paper
Appears in Collections:Jena Economic Research Papers, MPI für Ökonomik

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