Financial Contracting for Innovation: Property Rights in Action

63 Pages Posted: 15 Jun 2019

See all articles by Tristan Fitzgerald

Tristan Fitzgerald

Texas A&M University - Department of Finance

Date Written: December 1, 2018

Abstract

In property rights theory, financial contracting structures can align property rights to promote entrepreneurial firm innovation. I first provide novel estimates that strategic alliances have 6% to 11% higher overall innovative success rates compared to corporate VC and independent VC, respectively. Then, using a matched quasi-experiment in clinical trials to decompose selection (endogenous matching) and treatment effects, I find that strategic alliances promote 5% higher overall innovative success rates than both CVC and IVC (33% change in relative terms). I map the underpinnings of alliance success to the mechanisms of knowledge sharing and willingness to support costly experimentation.

Keywords: Innovation, research and development, strategic alliances, venture capital

JEL Classification: G34, O32, G23, G24, O31

Suggested Citation

Fitzgerald, Tristan, Financial Contracting for Innovation: Property Rights in Action (December 1, 2018). Available at SSRN: https://ssrn.com/abstract=3395614 or http://dx.doi.org/10.2139/ssrn.3395614

Tristan Fitzgerald (Contact Author)

Texas A&M University - Department of Finance ( email )

430 Wehner
College Station, TX 77843-4218
United States

HOME PAGE: http://https://sites.google.com/site/tristanjfitzgerald/

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