Does Easy Start-Up Formation Hamper Incumbents' R&D Investment? A Theoretical and Empirical Analysis

21 Pages Posted: 6 Apr 2013  

Luca Colombo

Catholic University of the Sacred Heart of Milan - Institute of Economy and Finance

Herbert Dawid

Bielefeld University - Department of Business Administration and Economics; Center for Mathematical Economics

Mariacristina Piva

Universita Cattolica del Sacro Cuore, Piacenza

Marco Vivarelli

Universita Cattolica del Sacro Cuore, Milano; IZA Institute of Labor Economics

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Abstract

This paper investigates, both theoretically and empirically, the implications that complementary assets needed for the formation of start-ups – proxied by the ease of access to financial resources – have on the innovative efforts of incumbent firms. In particular, we develop a theoretical model, highlighting a strategic incentive effect by which the innovative efforts of incumbent firms are decreasing in the availability of the complementary assets needed for the creation of a start- up. The empirical relevance of this effect is investigated by using firm level data drawn from the third Italian Community Innovation Survey covering the period 1998-2000. The results of our empirical analysis support our theory-based insights.

Keywords: R&D, innovation, start-up, complementary assets

JEL Classification: O31, L26

Suggested Citation

Colombo, Luca and Dawid, Herbert and Piva, Mariacristina and Vivarelli, Marco, Does Easy Start-Up Formation Hamper Incumbents' R&D Investment? A Theoretical and Empirical Analysis. IZA Discussion Paper No. 7302. Available at SSRN: https://ssrn.com/abstract=2245972

Luca Colombo (Contact Author)

Catholic University of the Sacred Heart of Milan - Institute of Economy and Finance ( email )

Largo Gemelli 1
20123 Milano
Italy

Herbert Dawid

Bielefeld University - Department of Business Administration and Economics ( email )

P.O. Box 100131
D-33501 Bielefeld, NRW 33501
Germany
+49-521-1064843 (Phone)
+49-521-1062994 (Fax)

Center for Mathematical Economics ( email )

Postfach 10 01 31
Bielefeld, D-33501
Germany

Mariacristina Piva

Universita Cattolica del Sacro Cuore, Piacenza ( email )

Via Emilia Parmense, 84
Piacenza
Italy

Marco Vivarelli

Universita Cattolica del Sacro Cuore, Milano ( email )

Largo Gemelli 1
Milano, 20123
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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