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Governments around the world are increasingly shifting economic development expenditures to the support of early-stage businesses. In the United States, state governments have also expanded their development agencies' mandates from primarily serving as tourism-support operations to now working as engines of small business development. This Article challenges the conventional wisdom driving the creation of state venture capital programs and argues that the structure of state venture capital is deeply flawed. Rather than remedy inequities between states and within states--for instance, in the urban/rural divide that is a feature of most states' political economies--state venture capital is more likely to perpetuate and even exacerbate inequality. Furthermore, it introduces the potential for waste and corruption that jeopardize governmental legitimacy. From a legal perspective, state venture capital makes use of existing private financing and its accompanying legal infrastructure to channel financing and fill funding gaps, particularly for marginalized entrepreneurs. However, by co-opting private entity forms, it often impairs the administrative mechanisms designed to safeguard public funds. State venture capital also faces daunting market headwinds that make it difficult for venture financing to thrive outside of Silicon Valley and a few other venture capital hubs. Despite these challenges, state venture capital can be structured to give it better odds of success. This Article proposes reforms that can help governments create economic environments in which entrepreneurship is more likely to thrive, governance mechanisms that can foster accountability, and investment selection and contract design features that make it more likely that state venture capital programs will succeed. [ABSTRACT FROM AUTHOR]

Why might start-ups not change even when doing so may enhance firm performance? It seems reasonable to point to founder presence as a potential culprit given founders' cognitive myopia and/or commitment to the status quo. However, founder presence may instead be a facilitator of change in response to environmental uncertainty because founders can uniquely coordinate resources needed for organizational change. We empirically address these two opposing views on the impact of founder presence (versus loss) on organizational change by using a comprehensive administrative data set of start-ups in the United States. Correlational analysis shows that start-ups generally become less likely to change following founder turnover. Given the potentially endogenous nature of founder turnover, we exploit premature deaths as a natural experiment that suddenly removes some founders from their start-ups while leaving others intact. We find that start-ups are less likely to change after losing a founder, especially if the founder loss happens during an economic recession. At the same time, the effect is attenuated when losing a founder with more experience in the same industry, suggesting that founder presence can also contribute to reinforcing the status quo under some conditions. Broadly, these results not only show that founders tend to facilitate change in their organizations but also identify when founders are merely subject to organizations' bureaucratic forces that they themselves may have imprinted originally. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2023.1668. [ABSTRACT FROM AUTHOR]

We investigate underlying sources of the US entrepreneurial ecosystem's advantage compared to other innovative economies by assessing the benefits that Israeli startups derive from migrating to the United States. Addressing positive sorting into migration, we show that migrants raise larger funding amounts and are more likely to have a U.S. trademark and be acquired than nonmigrants. Migrants also achieve a higher acquisition value. However, their patent output is not larger. We conclude that the United States entrepreneurial ecosystem's advantage vis-à-vis other innovative economies arises from several sources producing sizeable gains for startups. These sources are investor availability as well as large consumer and acquisitions markets. [ABSTRACT FROM AUTHOR]

The field of entrepreneurship is growing rapidly and expanding into new areas. This article presents a new compilation of administrative panel data on the universe of business start-ups in the United States, which will be useful for future research in entrepreneurship. To create the US start-up panel data set, the authors link the universe of non-employer firms to the universe of employer firms in the Longitudinal Business Database (LBD). Start-up cohorts of more than five million new businesses per year, which create roughly three million jobs, can be tracked over time. To illustrate the potential of the new start-up panel data set for future research, the authors provide descriptive statistics for a few examples of research topics using a representative start-up cohort. [ABSTRACT FROM AUTHOR]

Prior research acknowledged the importance of founders in affecting firm strategy and performance, but large empirical analyses of profiles of entrepreneurial founders are scant, in part because of the difficulty in collecting founder data. This study represents the first effort to study entrepreneurial founders across half a century. Using a hand‐collected unique and comprehensive dataset, this research sheds light on the demographic, educational, and career characteristics of founders for the venture capital (VC)‐backed initial public offering (IPO) companies during 1960–2015. The research has useful implications for researchers and practitioners. By understanding who the founders are and where they come from, this article scratches the surface of founder characteristics and firm performance from which further work could build on and provides useful information for founders who are likely to seek VC‐funding and IPO to build realistic expectations, VC firms who are interested in investing in potentially rewarding and promising new ventures to select good targets, and governments that struggle to promote entrepreneurial efforts and enhance economic development, in general, to come up with appropriate policies. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this paper is to add to the small but growing body of research examining the influence of founder gender on new venture access to venture development programs. Design/methodology/approach: Hypotheses were tested utilizing a sample of 482 nascent technology ventures which applied for admittance into a venture development organization headquartered in the southern region of the United States from March 2004 through February 2016. Findings: Findings suggest that female-founded applicant ventures experience a higher likelihood of acceptance into venture development programs than male-founded applicant ventures. Results further suggest that social attention to gender equality reduces this effect for female-founded applicant ventures. Findings extend the understanding of the gendered nature of high-technology venturing and venture development organizations. Research limitations/implications: The findings of this study may not generalize to new ventures operating in other contexts (e.g., non-U.S., low-tech, and other venture development programs). Additionally, this study's design and data limitations do not allow for the establishment of causality or address founder motivations to apply for acceptance into venture development programs. Originality/value: This study adds to empirical findings regarding the influence of founder gender on new venture acceptance into venture development programs by developing and testing competing hypotheses. This study also extends extant research by examining the moderating effect of social attention to gender equality on the hypothesized relationships between founder gender and acceptance into venture development programs. [ABSTRACT FROM AUTHOR]

Dazed and confused by the wild hype surrounding "gazelles" and "unicorns," entrepreneurship researchers have focused on the "black swans" of the entrepreneurial world, even though IPOs and venture capital financing of firms are extremely rare events. Despite the rarity of IPOs and obtaining venture capital, entrepreneurship conferences and journals have been filled with papers on various aspects of the process of "going public" and "VC networks." Fortunately, in the middle of the Silicon Valley mania, other scholars have been paying attention to the more mundane aspects of business start-ups—the ordinary business starts, numbering in the hundreds of thousands for businesses with employees. The purpose of this article is to address what we believe to be scholars' misplaced attention on the extreme and their neglect of the mundane in the study of entrepreneurship. Correcting the misperception that has been introduced through selection biases favoring growing and profitable firms will give scholars and policymakers a more accurate and policy-relevant picture of entrepreneurship in the 21st century. [ABSTRACT FROM AUTHOR]

Regions with spatial concentrations of businesses create conditions that spawn new firms, but also undercut new venture survival. Localized competition puts pressure on new firms to exit. Adding to this pressure to exit is regional path dependence, which limits the ability of firms to respond strategically to hostile local conditions. We investigate the extent to which the pressure to exit created by localized competition is moderated by three "path breaking" factors—new knowledge, industry diversity, and industry switching. We test and find broad support for our hypotheses using data from 355 metropolitan statistical areas in the United States spanning 2002 to 2010. [ABSTRACT FROM AUTHOR]

We examine how institutional factors may affect microlevel career decisions by individuals to create new firms by impacting their ability to exercise entrepreneurial preferences, their accumulation of human capital, and the opportunity costs associated with new venture formation. We focus on an important institutional factor—immigration-related work constraints—given that technologically intensive firms in the United States not only draw upon immigrants as knowledge workers but also because such firms are disproportionately founded by immigrants. We examine the implications of these constraints using the National Science Foundation's Scientists and Engineers Statistical Data System, which tracks the careers of science and engineering graduates from U.S. universities. Relative to natives, we theorize and show that immigration-related work constraints in the United States suppress entrepreneurship as an early career choice of immigrants by restricting labor market options to paid employment jobs in organizational contexts tightly matched with the immigrant's educational training (job-education match). Work experience in paid employment job-education match is associated with the accumulation of specialized human capital and increased opportunity costs associated with new venture formation. Consistent with immigration-related work constraints inhibiting individuals with entrepreneurial preferences from engaging in entrepreneurship, we show that when the immigration-related work constraints are released, immigrants in job-education match are more likely than comparable natives to found incorporated employer firms. Incorporated employer firms can both leverage specialized human capital and provide the expected returns needed to justify the increased opportunity costs associated with entrepreneurial entry. We discuss our study's contributions to theory and practice. [ABSTRACT FROM AUTHOR]

The Jumpstart Our Business Startups (JOBS) Act was signed into law on April 5, 2012. A key objective of the JOBS Act was to allow new ventures in the United States to go public and raise growth capital more easily and cost-effectively than before. The aim of this paper is to discuss the implications of the JOBS Act for initial public offerings (IPOs). We argue that the JOBS Act gives rise to important spillover effects that may create ambiguous consequences for firms' IPOs. The central question is whether the JOBS Act's mandate of facilitating fund raising can come to fruition and, if so, which features of it may lead to shifts in capital markets in entrepreneurship. Our paper begins to address these questions and aims to serve as a catalyst for future academic work in this area. [ABSTRACT FROM AUTHOR]

The prevailing geographic model for high-technology industrial organization has been the "nerdistan," a sprawling, car-oriented suburb organized around office parks. This seems to contradict a basic insight of urban theory, which associates dense urban centers with higher levels of innovation, entrepreneurship, and creativity. This article examines the geography of recent venture capital finance startups across U.S. metros and within a subset of them by neighborhood. It concludes that the model is changing. The suburban model might have been a historical aberration, and innovation, creativity, and entrepreneurship are realigning in the same urban centers that traditionally fostered them. [ABSTRACT FROM AUTHOR]

The article focuses on the federal statute known as Section 230, which protects online companies from being held accountable for content created by users. It mentions that to foster innovation in the marketplace of ideas, reduce obstacles for startups, and hinder more significant government authority over the internet, it is essential to retain its extensive safeguards.

The study investigates the determinants of first-time diversification activities undertaken by about 3,000 startups in the United States. Drawing on the resource-based view, we examine the impact of resource endowment on the timing of diversification. We further examine the effect of the timing of diversification on the likelihood of firm survival and then test for persistence. The analysis offers three main insights. First, resources play a crucial role in early diversification. Second, early diversification reduces the hazard of exit from the market. Third, the positive impact of early diversification on survival attenuates after five to six years. Our study contributes to the literature on the resource-based view and firm survival. The findings have important implications for entrepreneurs, policymakers, and entrepreneurship scholars. [ABSTRACT FROM AUTHOR]

Equity‐based crowdfunding platforms enable investors to come together to invest in startups and help lay‐investors to follow the lead of investors with good startup evaluation skills. Crowdfunding platforms often gather users' inputs to evaluate investors and startups, but such inputs are quite noisy and often rely on past performance. Many investors with good evaluation skills do not have substantial past investment experience but still can lead investment rounds. This helps provide investment opportunities to lay‐investors who otherwise do not get to join investors with proven records. Without identifying such investors with potential, platforms lose the opportunity to put together investors to fund worthy startups and lose business. We develop a Bayesian model to address this problem and improve funding operations of equity‐based crowdfunding platforms. Specifically, the model helps platforms to better assess investors' evaluation skills, identify lead investors for lay‐investors to follow, and increase funding opportunities on the platforms. To test the effectiveness of the proposed model, we gathered data from 319 actual investors listed on one of the largest crowdfunding platforms in the United States, picked startups randomly for investors to evaluate, and had investors evaluate startups in two ways—our approach and the conventional approach. We also discuss an extension of this Bayesian model that penalizes investors in case investors perform well by randomness. Furthermore, we used a Bayesian framework to help platforms better predict startup valuations accounting for investors' evaluation skills. [ABSTRACT FROM AUTHOR]

A key finding in the literature on industry evolution and strategy is that knowledge "inherited" from the founder's previous employer can be an important source of a new firm's capabilities. We analyze the conditions under which knowledge that is useful for carrying out a key value chain activity is inherited, and explore the mechanism through which such an inheritance shapes an entrant's strategies and, in the process, influences its performance. Evidence from the early U.S. auto industry indicates that employee spinoffs generated from incumbents that had integrated a key value chain activity were also more likely to integrate that activity than other entrants, which, we suggest, reflects the application of knowledge inheritance relative to that activity. Moreover, we find that the integration of this key activity, stimulated by knowledge inheritance, contributed to the establishment of defensible strategic positioning, thereby enhancing the survival duration of inheriting spinoffs. We thus link together the phenomena of knowledge inheritance, vertical integration, and strategic positioning to explain entrant performance. Previously, these three phenomena have tended to be treated disparately in the literature, rather than in combination. [ABSTRACT FROM AUTHOR]

Drawing on institutional theory, we examine how the institutional logics—taken-for granted norms, structures, and practices—of different types of funding partners influence young firms and their search for innovations. We test our hypotheses in a longitudinal study of a complete population of ventures in the minimally invasive surgical device industry in the U.S., supplemented by interviews with industry informants. We find that types of funding partners vary significantly from one another: they all provide resources, but their institutional logics differ. Venture capitalists (VCs) pick young firms with significant patented technologies and help firms launch products, and high-status VCs strengthen both the patenting and product innovations of young firms. Corporate venture capitalists and government agencies also select patent-intensive firms but are less effective than VCs in helping ventures during the relationship because, though these partners often have impressive technical and commercial resources for innovation, their institutional logics constrain how effectively young firms can access their resources. Relative to other types of funding partners, VCs have a closer advisor relationship with the venture; greater power, influence, and access to resources; better-paced and more-motivating milestones; and better understanding of the commercialization process. Our results extend the institutional logics literature to interorganizational relationships and suggest that the choice among types of funding partners may have unanticipated effects on firms’ innovation beyond the financial resources gained through the relationship. [ABSTRACT FROM AUTHOR]

In their endeavor to establish new products and services, entrepreneurs can face strong resistance from market incumbents whose resources and market position they threaten. This paper looks at the battles between entrepreneurs and market incumbents in a regulated market where various institutional actors (e.g., regulators, courts) have the power to protect the incumbents by hindering the entrepreneurs. Our comparison of one failed and one successful attempt to introduce pay TV in the U.S. reveals how entrepreneurs can first enter a regulated market without facing resistance, and then introduce a new frame to legitimize their product or service despite growing resistance from incumbents. Our framework highlights framing as a strategy and framing contests as a mechanism through which entrepreneurs and incumbents can battle to enable or disable institutional change. As part of this process,we also uncover how entrepreneurs evolve from self-serving actors with no field-level intentions to powerful groups that create a ripple effect in their environment by moving their target of influence from private to institutional actors. Our work constitutes a step toward a more "realistic" tale of institutional change. [ABSTRACT FROM AUTHOR]

Although Blacks in the United States suffered disproportionately high unemployment, housing and wealth losses during the Great Recession, little is known about the recession's impact on Black entrepreneurship. This study uses data from the Panel Study of Income Dynamics (PSID) to estimate the difference in probability of starting a business before and after the recession for Black and White households. While the likelihood of starting a business declined for Whites after the Great Recession there were no statistically significant changes in the rate of firm startups among Blacks. Evidence supports the prosperity pull hypothesis for White but not Black entrepreneurs. [ABSTRACT FROM AUTHOR]

This paper shows that housing wealth helps alleviate credit constraints for potential entrepreneurs by enabling home owners to extract equity from their property and invest it in their business. Using a large U.S. individual-level survey dataset for the 1996-2006 period, we find that a 10% increase in home equity raises the share of individuals who transition into self-employment each year from 1% to 1.07%. Our results persist when we use proxies for aggregate housing demand shocks and for the topological elasticity of housing supply to generate variation in home equity that is orthogonal to entrepreneurial choice. [ABSTRACT FROM AUTHOR]

The automobile industry's high costs of entry, economies of scale, and network effects from distribution, fueling, and service lead many to conclude that new entrants have no chance. Tesla Motors has overcome many barriers to pioneer electric cars. Starting with partnerships and a minimum viable product, Tesla is working to innovate and scale up. Tesla now produces a top-selling luxury car and has a market capitalization twice that of Fiat Chrysler and half that of General Motors or Ford. Tesla has shown that a startup can enter and disrupt the status quo in one of the most established industries. [ABSTRACT FROM AUTHOR]

Social entrepreneurs navigate a complex landscape of legal structures in which they need to select among for-profit, nonprofit, and mixed-entity structures. This study of 48 hybrid organizations identifies why social entrepreneurs chose one legal structure over another and explains what motivates half of them to change their legal structure as they build their enterprise. It highlights the critical desire for flexibility among social entrepreneurs, discusses the implications that changes to legal structure may have for companies and hybrids in partnerships, and explores how companies can leverage hybrid structures to go beyond their current scope of CSR initiatives. [ABSTRACT FROM AUTHOR]

Using a large, longitudinal panel of US start-ups collected between 2004 and 2011, this article shows the extent to which intellectual property (IP) types, for example trademarks, patents, copyrights and outward licensing, enhance multidimensional performance. An ordered probit analysis corrected for sample selection bias, estimates performance to derive the following conclusions. First, trademarks and out-licensing IP types increase a firm's chances of being a high performer, confirming the importance of certain forms of IP protection for start-ups. Second, patenting significantly reduces the chances of being a high performer, suggesting patenting has limited performance benefits for start-ups. Third, few performance synergies exist in the joint use of IP types, suggesting that strong complementarities among IP types are limited. While out-licensing patents and out-licensing copyrights increase performance, out-licensing patents and out-licensing trademarks diminish it. Furthermore, registering more trademarks and out-licensing more trademarks also diminishes performance, suggesting start-up firms should keep trademarks in-house. [ABSTRACT FROM AUTHOR]

This study focusses on the high growth of Latino-owned businesses (LOBs) in the United States during the last two decades and the constraints these businesses face during their start-up and development stages. During this period, the number of LOBs increased faster than businesses owned by other racial and ethnic groups. The study also addresses the following aspects of Latino business ownership: 1) the main reasons U.S. Latinos decide to become business owners; 2) their reluctance to seek loans from formal financial markets; 3) internal and external factors that limit Latino business owner participation in financial markets, 4) and the internal and external factors that banks and other financial institutions face when working with Latino businesspeople. We found important gaps in access to credit between LOBs and two comparison groups: i) Equally-Latino & non-Latino firms and ii) White-owned businesses. [ABSTRACT FROM AUTHOR]

This article analyzes how institutional differences affect university entrepreneurship. We focus on ownership of faculty inventions, and compare two institutional regimes, the United States and Sweden. In the United States, the Bayh–Dole Act gives universities the right to own inventions from publicly funded research, whereas in Sweden, the professor privilege gives the university faculty this right. We develop a theoretical model and examine the effects of institutional differences on modes of commercialization, entrepreneurship or licenses to established firms, as well as on probabilities of successful commercialization. We find that the US system is less conducive to entrepreneurship than the Swedish system if established firms have some advantage over faculty startups, and that, on average, the probability of successful commercialization is somewhat higher in the United States. We also use the model to perform four policy experiments, as suggested by recent policy debates in both countries. [ABSTRACT FROM PUBLISHER]

We show that every time a local economy generates a new job by attracting a new business in the traded sector, a significant number of additional jobs are created in the non-traded sector. This multiplier effect is particularly large for jobs with high levels of human capital and for high-technology industries. These findings are important for local development policies, as they suggest that to increase local employment levels, municipalities should target high-technology employers with high levels of human capital. [ABSTRACT FROM PUBLISHER]

We analyse the rate of formation, the characteristics, and the performance of different types of new firms in Sweden over a decade. Comparisons with Denmark, Brazil, and the United States suggest that the environment for new firm formation in Sweden is not markedly different than elsewhere. In line with previous studies, spin-offs of incumbents perform better than other types of new firms, particularly if their parent firm continues to operate. A novel finding is that the larger the size of their parent, the greater is the rate of employment growth of spin-offs. This contrasts sharply with findings for firms with a single owner. [ABSTRACT FROM PUBLISHER]

As spikes and resurgences of COVID-19 cases continue to increase in different geographical regions across the United States, more and more companies are left with numerous questions about reopening or restarting their operations. The current pandemic in the United States poses unique challenges unlike any other for businesses and employers as they begin to reopen. Businesses and employers are forced to ensure that they are not only in compliance with federal guidances but also with state and local guidances. In addition to the complex and ever evolving guidances, we are still learning about and adapting best practices during these reopening phases. Therefore, it is crucial for businesses to stay up-to-date not only with the released guidances but also with the latest understanding and information about SARS-CoV-2. As part of reopening, it is crucial for businesses to have comprehensive reopening plans prior to restart of operation. These plans must be clear, concise, and flexible enough to include updated guidances and information. In this publication, we describe reopening frameworks, considerations, and strategies that can be used as a starting point for businesses to further optimize and tailor to their unique operations. [ABSTRACT FROM AUTHOR]

The phenomenon known as crowdfunding has become an attractive alternative for businesses looking for investors without having to go through more well-established routes or without necessarily having to lure and impress professional investors. However, this new form of raising capital creates a series of issues and problems unique to crowdfunding, which has led to a struggle amongst governments to effectively regulate this new entrepreneurial opportunity. The crowdfunding conundrum government regulators are facing causes them to have to reconcile two contradictory missions: facilitating the acquisition of capital by businesses and protecting investors (and the market) from fraud and manipulation. This Article analyzes this conundrum from a United States ("U.S.") and Spanish perspective. I first describe the crowdfunding conundrum in general terms by explaining how crowdfunding (both consumer and accredited investor) works in practice and explore the major problems and issues that startup companies, investors, the market, and the state face in crowdfunding, which need to be resolved in a regulatory system. I will then describe and evaluate the current American and Spanish and proposed European regulatory solutions to the crowdfunding conundrum. I then conclude by evaluating whether and how well the United States' and Spain's regulations, as well as the European Union's ("EU") proposed regulations, have attempted to resolve the conundrum by balancing the risks and problems facing crowdfunding transactions. [ABSTRACT FROM AUTHOR]

The article focuses on role of patents in facilitating the exchange of information during the investment-seeking process includes not only encouraging disclosure of information. It mentions startups in some technology areas continue to spend their limited resources on patents and determining organizational structure, and facilitating disclosure by mitigating the risks of expropriation by the partner. It also mentions patent protection can encourage reciprocal exchanges of information.

Research Summary : Does embeddedness in global social networks elevate or diminish individuals' propensity to found new ventures? I analyze entrepreneurial entry among a large, cross‐country sample of skilled return migrants, all of whom had worked abroad in the United States before returning to 98 different home countries. My findings reveal that maintaining stronger cross‐border social ties—that is, relationships to former colleagues abroad—leads returnees to be more likely to found new ventures in their homelands. However, the positive effects of cross‐border social ties diminish with greater institutional distance between the returnee's home country and the United States. The findings have implications for research at the intersection of social networks, international migration, and entrepreneurship. Managerial Summary When it comes to founding a venture, social networks are often critical in helping prospective entrepreneurs identify new market opportunities and resources. Which types of networks are most beneficial in helping people become entrepreneurs, however, still remains a question. This paper asks whether having social connections to individuals across countries makes one more likely to become an entrepreneur, and if so why? Studying skilled return migrants, I find that returnees who maintain stronger social ties to those they met while working abroad are more likely to start companies, but only if there is sufficient similarity between the market environments of the returnee's home country and the country where the returnee worked abroad. [ABSTRACT FROM AUTHOR]

Even as economic incentives are increasingly used by policy makers to spur state and local economic development, their use is controversial among the public and academics. The authors examine whether state and local incentives lead to higher rates of business start-ups in metropolitan counties. Existing research indicates that start-ups are important for supporting (net) job creation, long-term growth, innovation, and development. The authors find that incentives have a statistically significant, negative relationship with start-up rates in total and for some industries including export-based and others that often receive incentives. The findings support critics who contend that incentives crowd out other economic activity, potentially reducing long-term growth. The authors also find that greater intersectoral job flows are positively linked to total start-ups, consistent with claims of those who advocate for policies that enhance labor market flexibility through reducing barriers to job mobility. [ABSTRACT FROM AUTHOR]

Little is known about the process of tracking the activity and days-to-productivity of new research faculty in pediatric academic medical centers in the United States. The purpose of this study was to design a quantitative technique for measuring the startup journey and academic productivity of new research faculty at an established research academic medical center. Three measures, (1) engagement, (2) efficiency, and (3) publication, were used to identify the total number of days that it takes for a new research faculty member to move from the discovery phase (value-consumed) into the engagement phase (value-created) after accepting a new position. General findings were that the typical research faculty member hired from 2014 to 2018 at Children's Mercy was male, submitted his first research project within the first three months of employment and averaged one new research submission per year. He would collaborate on a publication as a co-author within the first six months of employment, his first primary author publication would be published near his first employment anniversary, and he would average 2.9 publications per year in the first few years. The current study hopes to fill a gap in existing literature regarding the best practices for tracking, reporting and comparing the startup journey and academic productivity of new research faculty in pediatric academic medical centers. [ABSTRACT FROM AUTHOR]

We assess the impact of initial seeds on the long-run growth of biotechnology startups, including the response of the capital market, in the U.S. and Japan. For this purpose, we collected a comprehensive dataset of the matched sample of listed firms from their foundations to the post-IPO period. We find that the quality of initial seeds predicts significantly both the level and the growth rate of the patent stock as well as those of the asset size of the U.S. startups, even controlling for their alliances and acquisitions, while it predicts only the level of the patent stock for the Japanese startups. Furthermore, the asset growth and the patent stock growth in turn account for the market value performances of the U.S. firms much more significantly than those of the Japanese firms. On the other hand, there are only small differences with respect to the time to IPO and the asset growth through the IPO. These results suggest that higher quality of initial seeds significantly enhanced long-run growth of biotechnology startups in the U.S. but not in Japan, and that the differences in fertility of the initial seeds and in efficiency of the capital market could significantly explain the difference. [ABSTRACT FROM AUTHOR]

This study examines the role of cooperative relations among incumbents in the formation of new firms. We argue that cooperative interfirm relations that bridge geographically remote and diverse sources of knowledge-cross-cutting ties-contribute to new firm formation. Employing data on state-level entries into the U.S. biotech industry from 1994 to 1998, we find support for the following hypotheses: the formation of new firms in a focal region of an industry is positively related to the number of cross-cutting ties; the number of cross-cutting ties negatively moderates the effects of organizational density on the formation of new firms. [ABSTRACT FROM AUTHOR]

This article discusses the expansion of literature on university entrepreneurship in the United States and Europe. The author suggests that it is time to evaluate the current knowledge to provide direction for future research and guideposts for policy makers. The author presents a comprehensive literature analysis of research on university entrepreneurship. The analysis includes information concerning entrepreneurial research university, productivity of technology transfer offices, firm creation, and environmental context including networks of innovation.

New business models combined with a lack objective operating data results in significant information asymmetry and uncertainty in the valuation of new firms in emerging markets. Information asymmetry increases the risks of both adverse selection and moral hazard. When traditional differentiators of firm quality are lacking, such as in emerging economic sectors, markets may turn to secondary information sources to filter and sort firms. We investigate the roles played by observable corporate governance characteristics as indirect indicators of new firms potential qualitative differences. Markets may sort firms based on such characteristics because they are perceived to be correlated with desired but unobservable characteristics and actions and they lower the risks of both adverse selection and moral hazard. Our study of publicly traded U.S. Internet firms found that firm market valuation was strongly associated with corporate governance characteristics (e.g., executive and director stock-based incentives, institutional and blockholder stock ownership, board structure, and venture capital participation). In addition, firm age moderated how markets used sonic quality proxies to determine firm valuation during the post-IPO period. [ABSTRACT FROM AUTHOR]

Newly chartered banks provide an additional credit source for small businesses, but the staying power of new banks can be weak. A multi-state exit model is estimated for U.S. commercial banks chartered between 1980 and 1985 and for a benchmark sample of small established banks. The determinants of failure are similar for both samples, but new bank failure is more sensitive to adverse environmental conditions. The timing of new bank exit-by-failure follows a life-cycle pattern, but the timing of new bank exit-by-acquisition does not. There is mixed evidence on the efficacy of regulations aimed at reducing new bank fragility. [ABSTRACT FROM AUTHOR]