Complementary Assets, Start-Ups and Incentives to Innovate

Colombo L, Dawid H (2016)
International Journal of Industrial Organization 44: 177-190.

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Journal Article | Published | English
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We examine to what extent market conditions facilitating start-up formation affect firms' R&D investment and profits. We consider a model in which R&D efforts of an incumbent firm generate partly tacit technological know-how embodied in a key R&D employee, who might use it to form a start-up. The availability of complementary assets influences whether new firms are created and determine expected profits for start-up's founders. A large availability of complementary assets has the direct effect that the generation of start-ups is fostered. However, as a strategic effect, the incentives of incumbents to invest in R&D may be reduced because of the increased danger of knowledge loss occurring through start-up formation. We fully characterize the effects of an increase in the availability of complementary assets, showing that counter-intuitively there are cases in which it induces an increase in incumbents' R&D investment.
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Colombo L, Dawid H. Complementary Assets, Start-Ups and Incentives to Innovate. International Journal of Industrial Organization. 2016;44:177-190.
Colombo, L., & Dawid, H. (2016). Complementary Assets, Start-Ups and Incentives to Innovate. International Journal of Industrial Organization, 44, 177-190.
Colombo, L., and Dawid, H. (2016). Complementary Assets, Start-Ups and Incentives to Innovate. International Journal of Industrial Organization 44, 177-190.
Colombo, L., & Dawid, H., 2016. Complementary Assets, Start-Ups and Incentives to Innovate. International Journal of Industrial Organization, 44, p 177-190.
L. Colombo and H. Dawid, “Complementary Assets, Start-Ups and Incentives to Innovate”, International Journal of Industrial Organization, vol. 44, 2016, pp. 177-190.
Colombo, L., Dawid, H.: Complementary Assets, Start-Ups and Incentives to Innovate. International Journal of Industrial Organization. 44, 177-190 (2016).
Colombo, Luca, and Dawid, Herbert. “Complementary Assets, Start-Ups and Incentives to Innovate”. International Journal of Industrial Organization 44 (2016): 177-190.
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