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I. INTRODUCTION During the second half of the 1980s, foreign direct investment (FDI) became a major force in the global economy, reaching an unprecedented annual growth rate of approximately 25%. [...]

Is the Bayh-Dole intellectual property regime associated with more and better academic entrepreneurship than the Professor’s Privilege regime? The authors examine data on US PhDs in the natural sciences, engineering, and medical fields who became entrepreneurs in 1993–2006 and compare this to similar data from Sweden. They find that, in both countries, those with an academic background have lower rates of entry into entrepreneurship than do those with a non-academic background. The relative rate of academics starting entrepreneurial firms is slightly lower in the United States than in Sweden. Moreover, the mean economic gains from becoming an entrepreneur are negative, both for PhDs originating in academia and for non-academic settings in both countries. Analysis indicates that selection into entrepreneurship occurs from the lower part of the ability distribution among academics. The results suggest that policies supporting entrepreneurial decisions by younger, tenure-track academics may be more effective than are general incentives to increase academic entrepreneurship.

Abstract: Sunk Costs, Firm Size, and Internationalization. — One strand of the industrial organization literature argues that outlays on sunk costs are endogenous in market expansion, implying an adaptive adjustment by firms to preserve their market share. A different view is taken in the literature on firms’ internationalization. Here it is argued that sunk costs in firm-specific assets, such as R&D and marketing, are necessary in order to grow and gain market shares. The empirical analysis supports the internationalization hypothesis. In addition, we also provide evidence that even though larger firms incur higher sunk costs, they do so at a diminishing rate.