Job Market Paper - Revision history

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2013-11-01T22:33:38Z

References

imported>Ed at 22:32, 1 November 2013

2013-11-01T22:32:30Z

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2013-11-01T22:28:58Z

References

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2013-11-01T22:28:44Z

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2013-11-01T22:28:30Z

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2013-11-01T22:28:05Z

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2013-11-01T22:27:47Z

References

imported>Ed at 22:27, 1 November 2013

2013-11-01T22:27:27Z

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2013-11-01T22:26:25Z

Abstracts

imported>Ed at 23:01, 18 October 2013

2013-10-18T23:01:30Z

@@ Line 22: / Line 22: @@
 *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 model is included in the appendix of ''How Start-up Firms Innovate''.
+Note: Until ''Venture Capitalists as Vendors of Complementary Components'' is released, its model is included in the ''Model Appendix to 'How Start-up Firms Innovate'''.
 ==Abstracts==

@@ Line 1: / Line 1: @@
-[[Media:Egan_(2013)_-_How_Startups_Innovate_(Job_Market_Paper).pdf|Download a copy of my job market paper (pdf)]]
+[[Media:Egan_(2013)_-_How_Startups_Innovate_(Job_Market_Paper).pdf|Download a copy of my job market paper (pdf)]] and the [[Media:Egan (2013) - Model Appendix to Job Market Paper.pdf|separate model appendix]]
 Visitors to this page might also be interested in my [[Job Market Applications|job market applications]] page, [[Profile|profile]] page, research [[Papers|papers]] page, [[Research Statement|research statement]] page (which contains summaries of some of my research papers), [[Projects|projects]] page (which details work that is not yet ready for submission to peer-reviewed journals), and [[Teaching Statement|teaching statement]] page.
@@ Line 16: / Line 16: @@
 Job Market paper:
 *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)]]
 Companion paper:

@@ Line 15: / Line 15: @@
 Job Market paper:
-*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), ''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)]]
 Companion paper:

@@ Line 15: / Line 15: @@
 Job Market paper:
-*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), ''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)]]
 Companion paper:

@@ Line 15: / Line 15: @@
 Job Market paper:
-*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), ''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)]]
 Companion paper:

← Older revision		Revision as of 22:26, 1 November 2013
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	''How Start-up Firms Innovate'':		''How Start-up Firms Innovate'':

−	A start-up firm makes two important strategic innovation choices during its early life. It must decide upon a 'technology strategy' -- ~~how~~ to ~~allocate~~ its research and development efforts -- and a 'commercialization strategy' -- ~~how~~ to secure the investment it will need to commercialize its inventions. Many start-up firms follow a predictable pattern. They either specialize in developing a technology that can be used by incumbents and are later acquired, or they develop a rival stand-alone product and raise commercialization investment through an initial public offering (IPO). In this paper, I advance a 'system vs. components' theory of innovation, which supposes that technological products are based on systems of ~~patented~~ complementary components. ~~The~~ pattern of ~~specialization~~-and-~~acquisition~~ and ~~generalization~~-and-~~IPO~~ then occurs naturally as entrepreneurs maximize their expected profits given both the available technological opportunity and the state of technology in their industry.	+	A successful start-up firm makes two important strategic innovation choices during its early life. It must decide upon a 'technology strategy' -- whether to specialize or generalize in the allocation of its research and development efforts -- and a 'commercialization strategy' -- whether to cooperate or compete with incumbents to secure the investment it will need to commercialize its inventions. In this paper, I advance a `system vs. components' theory of innovation, which supposes that 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 available technological opportunity and the state of technology in their industry. I derive measures of technology strategy for patent-holding start-up firms, and use the choice to sell the firm in an acquisition or to raise investment through an initial public offering (IPO) as prototypical examples of cooperate versus compete commercialization strategies. I then show that measures of technology strategy Granger-cause commercialization strategies in cross sectional analyses. I also address the endogeneity issue that arises because forward-looking start-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 shock to the relative costs of an IPO. I provide evidence that successful start-up firms altered their technology strategies to favor component specialization following the introduction of SOX.