Working Paper: NBER ID: w18297
Authors: Albert N. Link; Christopher J. Ruhm; Donald S. Siegel
Abstract: There is great interest in evaluating the impact of private equity investments on innovation and economic growth. However, there is no direct empirical evidence on the effects of such transactions on the innovation strategies of entrepreneurial firms. We fill this gap by examining a rich project-level data set consisting of entrepreneurial firms receiving Small Business Innovation Research (SBIR) program research awards. We find that SBIR firms attracting private equity investments are significantly more likely to license and sell their technology rights and engage in collaborative research and development agreements. Our results suggest that private equity investments accelerate the development and commercialization of research-based technologies, thus contributing to economic growth. We conclude that both public investments and private investments are key to innovation performance.
Keywords: Private Equity; Innovation Strategies; Entrepreneurial Firms; Small Business Innovation Research Program
JEL Codes: G24; G34; L26; O31; O33; O38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Private Equity Investments (G24) | Adoption of Innovation Strategies (O36) |
| Private Equity Investments (G24) | Number of Innovation Strategies Pursued (O36) |
| Foreign Investments (F21) | Licensing Strategy (D45) |
| U.S. Venture Capital (G24) | R&D Strategy (O32) |