Experimentation, Learning, and Appropriability in Early-Stage Ventures
85 Pages Posted: 10 Dec 2018
Date Written: November 10, 2018
This study examines the tension between learning and appropriability in the experimentation pro- cess of early-stage ventures. I argue that, when formal intellectual property is weak, the learning benefit of experimentation may be offset by its imitation risk. I test this argument on a hand- collected dataset of 1200 US-based software ventures, exploiting the software release life cycle to measure experimentation and the US Supreme Court ruling Alice Corp v CLS Bank International as a negative shock to patent protection. Following the ruling, the affected ventures experiment less but enter the market earlier. This pattern is moderated by the strength of learning incentive and competition. The evidence confirms that the learning-appropriability tension plays a central role in entrepreneurship and suggests boundary conditions for the use of experimentation in early-stage ventures. This study contributes to the emerging debate on entrepreneurial strategy, combining insights from the literature on organizational learning and appropriability.
Keywords: Experimentation, Learning, Appropriability, Entrepreneurship, Software
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