Catering Innovation: Entrepreneurship and the Acquisition Market

54 Pages Posted: 30 Sep 2018

See all articles by Xinxin Wang

Xinxin Wang

UCLA Anderson School of Management

Date Written: July 2018

Abstract

Start-up entrepreneurs depend on M&A markets to exit VC investments. I test a novel catering theory of innovation: Does the market structure of potential acquirers impact entrepreneurial decision-making? Using CrunchBase and LinkedIn data, I find that a standard deviation increase in acquirer market concentration decreases the propensity to become an entrepreneur by 4%, suggesting that fragmented markets are appealing entry markets. Likewise, a standard deviation increase in acquirer concentration increases the catering of entrepreneurs by 9%, as measured by technological overlap with potential acquirers. Catering comes at the cost of breakthrough innovation (16% decrease), the key determinant of economic growth.

Keywords: Innovation, Entrepreneurship, Competition, Mergers and Acquisitions, Industrial Organization, Venture Capital

JEL Classification: L10, L26, O32

Suggested Citation

Wang, Xinxin, Catering Innovation: Entrepreneurship and the Acquisition Market (July 2018). Kenan Institute of Private Enterprise Research Paper No. 18-27, Available at SSRN: https://ssrn.com/abstract=3247274 or http://dx.doi.org/10.2139/ssrn.3247274

Xinxin Wang (Contact Author)

UCLA Anderson School of Management ( email )

Los Angeles, CA 90095-1481
United States

HOME PAGE: http://https://sites.google.com/view/xinxinwang

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
135
Abstract Views
877
rank
239,892
PlumX Metrics