Private Equity and the Innovation Strategies of Entrepreneurial Firms: Empirical Evidence from the Small Business Innovation Research Program

25 Pages Posted: 18 Aug 2012 Last revised: 27 Oct 2014

See all articles by Albert Link

Albert Link

University of North Carolina (UNC) at Greensboro - Department of Economics

Christopher J. Ruhm

University of Virginia - Frank Batten School of Leadership and Public Policy; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Donald S. Siegel

Arizona State University

Multiple version iconThere are 2 versions of this paper

Date Written: August 2012

Abstract

There is great interest in evaluating the impact of private equity investments on innovation and economic growth. However, there is no direct empirical evidence on the effects of such transactions on the innovation strategies of entrepreneurial firms. We fill this gap by examining a rich project-level data set consisting of entrepreneurial firms receiving Small Business Innovation Research (SBIR) program research awards. We find that SBIR firms attracting private equity investments are significantly more likely to license and sell their technology rights and engage in collaborative research and development agreements. Our results suggest that private equity investments accelerate the development and commercialization of research-based technologies, thus contributing to economic growth. We conclude that both public investments and private investments are key to innovation performance.

Suggested Citation

Link, Albert N. and Ruhm, Christopher J. and Siegel, Donald S., Private Equity and the Innovation Strategies of Entrepreneurial Firms: Empirical Evidence from the Small Business Innovation Research Program (August 2012). NBER Working Paper No. w18297, Available at SSRN: https://ssrn.com/abstract=2131609

Albert N. Link (Contact Author)

University of North Carolina (UNC) at Greensboro - Department of Economics ( email )

Greensboro, NC 27402-6165
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Christopher J. Ruhm

University of Virginia - Frank Batten School of Leadership and Public Policy ( email )

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IZA Institute of Labor Economics ( email )

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Donald S. Siegel

Arizona State University ( email )

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United States
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