The Fate of Science-Based Startups

32 Pages Posted: 3 Nov 2020 Last revised: 17 Dec 2021

See all articles by Thomas B. Astebro

Thomas B. Astebro

HEC Paris - Economics and Decision Sciences

Serguey Braguinsky

University of Maryland - Department of Management & Organization; National Bureau of Economic Research (NBER); Osaka University - Institute of Social and Economic Research

Yuheng Ding

University of Maryland - Robert H. Smith School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: August 31, 2020

Abstract

Declining rates of new business formation in the U.S. have been documented in macroeconomic literature but we still know relatively little about its causes and how it might affect innovation. We use individual-level work data to examine trends in new firm formation by U.S. PhD recipients in science and engineering and its causes. Since 1997, the fraction of startup founders with PhDs in science and engineering among all business owners with the same PhDs has declined by 38 percent, and the share of PhDs in science and engineering who work for startups has declined by 30 percent. These trends are joined by a long-term earnings decline for startup founders, especially less experienced ones, and increasing number of R&D and administrative tasks performed by founders, indicating less attractiveness for doctorate recipients to found startups. We use abductive reasoning to examine a plausible explanation for these trends being driven at least in part by an increasing complexity of conducting innovation. Established firms have been able to handle this better than startups through greater division of labor, thereby attracting PhDs in greater numbers. Since economy-wide innovation largely depends on science- and technology-based startups, the development is of great concern.

Keywords: Business Dynamism, High-Tech Entrepreneurship, Startup Rates, Doctorate Degree Recipients, Burden of Knowledge

JEL Classification: J24, O3

Suggested Citation

Astebro, Thomas B. and Braguinsky, Serguey and Ding, Yuheng, The Fate of Science-Based Startups (August 31, 2020). ISER DP No. 1099, 2020, HEC Paris Research Paper No. ECO/SCD-2020-1397, Available at SSRN: https://ssrn.com/abstract=3684945 or http://dx.doi.org/10.2139/ssrn.3684945

Thomas B. Astebro

HEC Paris - Economics and Decision Sciences ( email )

Jouy-en-Josas Cedex, 78351
France

HOME PAGE: http://www.hec.edu/Faculty-Research/Faculty-Directory/ASTEBRO-Thomas

Serguey Braguinsky (Contact Author)

University of Maryland - Department of Management & Organization ( email )

United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Osaka University - Institute of Social and Economic Research ( email )

6-1, Mihogaoka
Ibaraki, Osaka 567-0047
Japan

Yuheng Ding

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
81
Abstract Views
928
Rank
486,162
PlumX Metrics