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Project

Essays on technology development in entrepreneurial ventures.

The first part of the PhD project focusses on the dichotomy between large and small firms in the process of technological progress and innovation. Prior research discusses how small and large firms play different but complementary roles in the innovation process (Baumol 2004, Balasubramanian and Lee 2008). Small firms are seen as a vehicle of entrepreneurship  and radical innovation. Large incumbent firms are portrayed as opting for incremental innovations as a result of the oligopolistic competition with other large incumbents in high-tech industries. Oligopolistic forces drive them towards less risky and path-dependent innovations. Interests in existing products and markets (including their scale) bias their assessment of new ideas, especially when they bear the capacity to disrupt their current business (Henderson 1990). The implementation of routinized innovation management processes further results in streams of incremental improvements to existing products (and processes) originating from incumbents. The creation of more radical and experimental ideas encompassing more uncertainty and risks, is more likely to originate from small entrepreneurial ventures. Notice however that current empirical evidence in this respect is limited (anecdotal/case based evidence, or evidence based on (limited) samples of firms).

This first part was initiated by the ambition to create a more exhaustive picture, by relating all technological activity undertaken by firms to firm size on the level of the EU (EU-28). We have been successful in achieving a large scale mapping of patents to business register firms based on name harmonization techniques described in Callaert et al. (2011). The exercise illustrates the prevalence of small and medium sized firms (SMEs) in corporate patenting in Europe (Vervenne et al. 2014). In a follow up paper, we relate the distribution of R&D and patenting between large and small firms to changes in labor productivity at the macro level (Vervenne and Van Looy  2016). Findings suggest that small firms contribute to an increase in labor productivity in a distinctive manner; for young small firms however this finding appears conditional on the maturity of the innovation system in which they are embedded. The latter finding provides empirical support for the knowledge spillover theory of entrepreneurship (Acs et al., 2013), with a young small firm sector that is capable of outperforming large incumbents in terms of innovative impact but quite likely only to the extent they can operate in the vicinity of such large local R&D investors.

In the second part of the PhD project we take the perspective of the large firm. Prior research has proven that scientific progress is an important driver of economic growth (Jaffe, 1989; Adams, 1990). Scientific discoveries create technological opportunities that can be exploited by firms to satisfy existing or latent market demands (Scherer, 1965; Klevorick et al., 1995). Its catalyzing role in shaping technological progress takes various forms. It expands the pool of theory, data, technique and problem-solving capability that can be employed in industrial R&D (Leten et al., 2016). In a more direct way, science can propose solutions to older practical problems. By serving as a map that helps researchers to avoid dead end streets in research, it can contribute to the efficiency of search processes (Leten et al., 2016; Klevorick et al., 1995; Fleming & Sorenson, 2004). Evidence has been obtained in earlier studies (Deng et al., 1999; Simeth & Cincera, 2015) that the extent to which patent portfolios of listed, incumbent firms cite science can be reliably associated with their stock returns. Based on large-scale access to detailed meta-information regarding that cited science we provide an attempt to contribute to this line of research. More specifically we explore the economic implications of timing in scientific knowledge sourcing. Preliminary findings suggest that it pays off for large firms to be fast in the absolute sense and slow in the relative sense. Stated otherwise, markets value the use of science that is recent in terms of time that has elapsed between scientific breakthrough and technological application but at the same time apply a discount to science that is new when it comes to being associated with technological applications. Current research explores the dynamics potentially underlying these seemingly contradictory findings.

Datum:1 okt 2012 →  1 okt 2016
Trefwoorden:small business, innovation, science-industry linkage
Project type:PhD project