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Tacit knowledge with innovative entrepreneurship

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  • Spulber, Daniel F.
Abstract
Tacit knowledge affects the trade-off between entrepreneurship and technology transfer. I present a formal model in which an inventor and the existing firm engage in a strategic innovation game by choosing whether to compete or to cooperate through technology transfer. The model highlights how the problem of tacit knowledge affects the inventor's R&D investment and the existing firm's investment in absorptive capacity. The inventor's tacit knowledge implies that benefits from own-use through entrepreneurship can exceed the benefits from technology transfer. In equilibrium, higher-quality inventions result in entrepreneurship and lower-quality inventions result in technology transfer. R&D investment and absorption investment are strategic substitutes in the innovation game with the option of entrepreneurship. The possibility of entrepreneurship increases R&D investment and reduces absorption investment. The equilibrium probability of entrepreneurship is decreasing in the costs of R&D, increasing in the costs of absorption, and decreasing in the set-up costs of new firms.

Suggested Citation

  • Spulber, Daniel F., 2012. "Tacit knowledge with innovative entrepreneurship," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 641-653.
    • Handle: RePEc:eee:indorg:v:30:y:2012:i:6:p:641-653
    DOI: 10.1016/j.ijindorg.2012.07.004
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    Cited by:

    1. Kenneth A. Younge & Matt Marx, 2016. "The Value of Employee Retention: Evidence From a Natural Experiment," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(3), pages 652-677, September.
    2. Emanuela Carbonara & Hien Thu Tran & Enrico Santarelli, 2020. "Determinants of novice, portfolio, and serial entrepreneurship: an occupational choice approach," Small Business Economics, Springer, vol. 55(1), pages 123-151, June.
    3. Dietmar Harhoff & Elisabeth Mueller & John Van Reenen, 2014. "What are the Channels for Technology Sourcing? Panel Data Evidence from German Companies," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(1), pages 204-224, March.
    4. Jan Zabojnik, 2016. "Firm Reputation And Employee Startups," Working Paper 1362, Economics Department, Queen's University.
    5. Luca Stanca & Herbert Dawid & Mariacristina Piva & Marco Vivarelli, 2015. "Are R&D investments by incumbents decreasing in the availability of complementary assets for start-ups?," LEM Papers Series 2015/12, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    6. Emily Bacon & Michael D. Williams & Gareth H. Davies, 2023. "On the Combinatory Nature of Knowledge Transfer Conditions: A Mixed Method Assessment," Information Systems Frontiers, Springer, vol. 25(3), pages 1039-1061, June.
    7. Colombo, Luca & Dawid, Herbert, 2016. "Complementary assets, start-ups and incentives to innovate," International Journal of Industrial Organization, Elsevier, vol. 44(C), pages 177-190.
    8. Cunningham, Thomas, 2013. "Biases and Implicit Knowledge," MPRA Paper 50292, University Library of Munich, Germany.
    9. L. Colombo & H. Dawid & M. Piva & M. Vivarelli, 2017. "Does easy start-up formation hamper incumbents’ R&D investment?," Small Business Economics, Springer, vol. 49(3), pages 513-531, October.
    10. Poblete, Joaquín & Spulber, Daniel, 2017. "Managing innovation: Optimal incentive contracts for delegated R&D with double moral hazard," European Economic Review, Elsevier, vol. 95(C), pages 38-61.
    11. Deepak Hegde, 2014. "Tacit Knowledge and the Structure of License Contracts: Evidence from the Biomedical Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(3), pages 568-600, September.
    12. Kevin A. Bryan & Erik Hovenkamp, 2020. "Antitrust Limits on Startup Acquisitions," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 56(4), pages 615-636, June.
    13. Egle Vaznyte & Petra Andries & Sarah Demeulemeester, 2021. "“Don’t leave me this way!” Drivers of parental hostility and employee spin-offs’ performance," Small Business Economics, Springer, vol. 57(1), pages 265-293, June.
    14. Nelson Duarte & Krzysztof Szczepaniak & Vítor Santos & Cristóvao Sousa & Carla Sofia Gonçalves Pereira, 2017. "Model transferu wiedzy z uczelni wyższych do biznesu," Collegium of Economic Analysis Annals, Warsaw School of Economics, Collegium of Economic Analysis, issue 44, pages 211-236.
    15. Colombo, Luca & Dawid, Herbert & Piva, Mariacristina & Vivarelli, Marco, 2013. "Does Easy Start-Up Formation Hamper Incumbents' R&D Investment? A Theoretical and Empirical Analysis," IZA Discussion Papers 7302, Institute of Labor Economics (IZA).
    16. Elena Nikolaevna Zakharova & Anzaur Aslanbekovich Kerashev & Aleksandr Aleksandrovich Mokrushin & Ruslan Aslancherievich Tkhagapso & Marine Zaurovna Abesalashvili, 2015. "Government Control over Innovative Ventures in the West European Countries," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 97-109.
    17. Colombo, Luca & Dawid, Herbert, 2016. "Complementary assets, start-ups and incentives to innovate," International Journal of Industrial Organization, Elsevier, vol. 44(C), pages 177-190.

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    More about this item

    Keywords

    Tacit knowledge; R&D; Invention; Innovation; Entrepreneur;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O - Economic Development, Innovation, Technological Change, and Growth

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