Working Paper: NBER ID: w16943
Authors: Thomas F. Hellmann; Enrico C. Perotti
Abstract: Novel early stage ideas face uncertainty on the expertise needed to elaborate them, which creates a need to circulate them widely to find a match. Yet as information is not excludable, shared ideas may be stolen, reducing incentives to innovate. Still, in idea-rich environments inventors may share them without contractual protection. Idea density is enhanced by firms ensuring rewards to inventors, while their legal boundaries limit idea leakage. As firms limit idea circulation, the innovative environment involves a symbiotic interaction: firms incubate ideas and allow employees leave if they cannot find an internal fit; markets allow for wide ideas circulation of ideas until matched and completed; under certain circumstances ideas may be even developed in both firms and markets.
Keywords: Innovation; Idea Circulation; Nondisclosure Agreements; Intellectual Property; Market Dynamics
JEL Codes: D83; L22; L26; M13; O31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| firm environments (L20) | idea generation and circulation (O36) |
| idea circulation (O36) | risk of idea theft (O36) |
| presence of firms (R30) | likelihood of collaboration (O36) |
| agents matched with complementors (L14) | successful innovation outcomes (O36) |
| lack of requisite expertise (D82) | potential for theft (K42) |
| NDAs (Y40) | protection of ideas (O34) |
| high idea density (D46) | discouragement of idea sharing (O36) |
| local reputation for fair dealing (L14) | encouragement of idea sharing (O36) |