Changes

EganVisitors to this page might also be interested in my [[Job Market Applications|job market applications]] page, [[Profile|profile]] page, research [[Papers|papers]] page, Edward J. [[Research Statement|research statement]] page (2012which contains summaries of some of my research papers), "Technology and Commercialization Strategy: The Role of Patent Citations, Property Rights and Product[[Projects|projects]] page (which details work that is not yet ready for submission to peer-Market Competition"reviewed journals), Preliminary and Incomplete Draft[[Teaching Statement|teaching statement]] page.

==File(s)Overview==

*[[MediaMy job market research consists of two papers:Egan_(2012)_''How Start-_Technology_and_Commercialization_Strategy_(October_Version)up Firms Innovate'', which is a strategy and business economics paper, and a companion paper ''Venture Capitalists as Vendors of Complementary Components'', which is a business economics and corporate finance paper.pdf‎|Download Comparative statics on the PDF]] *[[:Image:Egan_(2012)_model in ''Venture Capitalists as Vendors of Complementary Components'' provide the basis for the empirical tests carried out in ''How Start-_Technology_and_Commercialization_Strategy_(October_Version)up Firms Innovate''.pdf‎|Repository record]]

*This is currently ''Venture Capitalists as Vendors of Complementary Components'' presents a preliminary and incomplete drafttwo-stage, complete information, economic model of start-up innovation. *The main empirical results will persist across versions*model places a structure on the nature of technological innovation by assuming that high-technology products are made up of systems of complementary components. It then uses this structure to understand the technological differences between successful venture-capital-backed start-up firms that achieve either an initial public offering (IPO) or an acquisition. The model suggests that venture-capital-backed start-up firms that get acquired by incumbents are purchased because they specialized in creating a high-quality component that has a complementarity with the incumbent's other components. This complementarity reduces the cost of production for the incumbent and is welfare improving for consumers. The next version model also suggests that firms that will have secure IPOs should follow a general technology strategy and internalize the complementarities between components by creating an entire rival system of components. IPOs enhance welfare by increasing competition in product markets. Whether a formal model firstventure-capital-backed start-up firm should elect to pursue an acquisitions or an IPO depends on the available technological opportunity and the relative state of technologies in their innovative ecosystem. Therefore, acquisitions and IPOs are alternative profit-maximizing strategies, and have an instrumentboth enhance consumer welfare.

==AbstractReferences==

This Job Market paper explores the relationship between the technology of a start:*Egan, Edward J. (2013), ''How Start-up Firms Innovate: Technology Strategy, Commercialization Strategy, and their Relationship'', Job Market Paper [[Media:Egan_(2013)_-_How_Startups_Innovate_(Job_Market_Paper).pdf|(pdf)]] [[:Image:Egan_(2013)_-_How_Startups_Innovate_(Job_Market_Paper).pdf|(record)]]*Egan, Edward J. (2013), ''Model Appendix to 'How Start-up Firms Innovate: Technology Strategy, Commercialization Strategy, and their Relationship''' [[Media:Egan (2013) - Model Appendix to Job Market Paper.pdf|(pdf)]] [[:Image:Egan (2013) - Model Appendix to Job Market Paper.pdf|(record)]]  Companion paper:*Egan, Edward J. (2013), ''Venture Capitalists as Vendors of Complementary Components'', Job Market Companion Paper Note: Until ''Venture Capitalists as Vendors of Complementary Components'' is released, its choice model is included in the ''Model Appendix to remain an independent competitor through an initial public offering or cooperate with an incumbent through an acquisition'How Start-up Firms Innovate'''. I use  ==Abstracts== ''How Start-up Firms Innovate'': A successful start-up firm makes two new measures of patent citations important strategic innovation choices during its early life. It must decide upon a 'technology strategy' -- whether citations are made to valid specialize or expired patents and whether citations are between firms generalize in the same productallocation of its research and development efforts --market or not and a 'commercialization strategy' -- whether to show that patent citations map complementary and/cooperate or substitution-based relationships between property-rightscompete with incumbents to secure the investment it will need to commercialize its inventions. In this paper, I test advance a number of theories `system vs. components' theory of patent citations and innovation from the literature by interpreting the consequences , which supposes that they would have for these measures technological products are based on systems of complementary components. A pattern of specialize-and-cooperate and generalize-and-compete then occurs naturally as entrepreneurs maximize their expected profits given both the choice to IPO or be acquired available technological opportunity and the value state of a technology in their industry. I derive measures of technology strategy for patent-holding start-up firms, and use the choice to sell the firm; my results are not consistent with any in an acquisition or to raise investment through an initial public offering (IPO) as prototypical examples of themcooperate versus compete commercialization strategies. I then articulate a theory show that measures of `systems versus component innovation', technology strategy Granger-cause commercialization strategies in which cross sectional analyses. I argue also address the endogeneity issue that arises because forward-looking start-ups face up firms chose their technology strategy in anticipation of their commercialization strategy by using the introduction of the 2002 Sarbanes-Oxley Act (SOX) as a choice shock to either the relative costs of an IPO. I provide complete systems evidence that successful start-up firms altered their technology strategies to favor component specialization following the introduction of SOX.  ''Venture Capitalists as Vendors of Complementary Components'': Venture capitalists obtain most of their earnings by selling or specialize 'exiting' their ownership positions in producing highsuccessful start-quality componentsup firms through either initial public offerings (IPOs) or third party acquisitions. The paper seeks to explain the choice between IPOs and acquisitions as exit vehicles. I posit that component substitution explains why citationsThis paper provides a model where acquisitions of venture-capital-backed start-received to up firms occur because of complementarities between a start-ups are negatively correlated with value, up firm's innovations and argue that the greater specificity technology of systems as compared with components to product-markets gives rise to potential acquirers. The complementarities reduce the very strong explanatory power cost of production for an acquiring incumbent and improve welfare for consumers. Initial public offerings, on the decomposition other hand, occur when a start-up firm creates an entire system of citations components and internalizes the complementarities between them. Entry into the product market after an IPO also increases consumer welfare. Venture capitalists can therefore be viewed as vendors of complementary components to either incumbents or public investors, who use complementarities inthe component-sector based structure of technological innovation to both maximize profits and out-of-sector citationsenhance consumer welfare. ==Paper Development== The [[Job Market Paper Development]] section is restricted to authorized readers only.