alliance governance and technological performance some evidence from biotechnology alliances pursuing alliance opportunities are fraught with difficulties due to information asymmetry between the potential partners as well as technological and or market uncertainties in this article i empirically test how social ties between alliance partners alliance governance and individual firm characteristics impact alliance performance since alliances are by definition relationships between two or more independent firms defining and measuring alliance performance is difficult as the partner firms may have different objectives in entering the alliance therefore analyzing alliance performance at different stages of the alliance process using intermediate indicators of success can provide help to better understand the determinants of alliance performance as well as how these determinants may change over time

on sharks trolls and their patent prey unrealistic damage awards and firms strategies of being infringed abstract patent trolls or sharks are patent holding individuals or often small firms who trap r d intensive manufacturers in patent infringement situations in order to receive damage awards for the illegitimate use of their technology while of great concern to management their existence and impact for both corporate decision makers and policy makers remains to be fully analyzed from an academic standpoint in this paper we show why patent sharks can operate profitably why they are of growing concern how manufacturers can forearm themselves against them and which issues policy makers need to address to do so we map international indemnification rules with strategic rationales of small patent holding firms and large manufacturers within a theoretical model our central finding is that the courts unrealistic consideration of the trade offs faced by inadvertent infringers is a central condition for sharks to operate profitably

entrepreneurs perceived chances for success abstract entrepreneurs involved in planning or starting firms must engage in a continuing process of appraising prospects for success these assessments presumably bear upon the preparations they make as well as at some later point whether they decide to make major changes or even to discontinue the business in this study data from 2994 entrepreneurs who had recently become business owners were analyzed to determine their perceived changes of success although previous evidence on business survival led to the hypothesis that the entrepreneurs would only be cautiously optimistic this was not the case they perceived their prospects as very favorable with 81 seeing odds of 7 out of 10 or better and a remarkable 33 seeing odds of success of 10 out of 10 in considering the prospects for other businesses like their own they perceived odds which were significantly lower but still moderately favorable based upon previous research on factors associated with new business success it was hypothesized that those who were more likely to succeed based upon their personal backgrounds and the nature of their new firms would be more optimistic however this was not the case those who were poorly prepared were just as optimistic as those who were well prepared at this point shortly after having become business owners the assessment by entrepreneurs of their own likelihood of success was dramatically detached from past macro statistics from perceived prospects for peer businesses and from characteristics typically associated with higher performing new firms the psychological literature on post decisional bolstering suggests that decision makers in many settings tend to bolster or exaggerate the attractiveness of an option after it has been chosen this coupled with the tendency of entrepreneurs to believe that they can control their own destinies implies that the extreme optimism observed here is probably a typical occurrence for entrepreneurs the findings suggest that it is probably natural to experience feelings of entrepreneurial euphoria when first becoming a business owner with the available evidence it is difficult to judge whether this leads to inadequate preparations or an inability to diagnose problems and make adjustments after the business is started this extreme optimism probably does contribute to the heavy personal commitments observed here in which the median entrepreneur devoted more than 60 hours per week to the business the entrepreneur would seem well advised to form relationships with outsiders such as board members and professional advisors who can be objective and detached in diagnosing problems and assessing objectively the prospects for the business in its current form

entrepreneurial success and failure confidence and fallible judgment excess entry or the high failure rate of market entry decisions is often attributed to overconfidence exhibited by entrepreneurs assuming that these decisions depend on assessments of business opportunities we model boundedly rational entrepreneurs and show analytically that whereas excess entry is an inevitable consequence of imperfect judgment it does not necessarily imply overconfidence indeed judgmental fallibility can lead to excess entry even when all potential entrepreneurs are underconfident we further demonstrate that as a group individuals who decide to start a new business exhibit more confidence than those who do not and that successful entrants are less confident than failures our results therefore question general claims that overconfidence leads to excess entry we conclude by emphasizing the need to understand the role of judgmental fallibility in producing economic outcomes and implications for both venture capitalists and the training of entrepreneurs

do institutions matter for regional development rodriguez pose a do institutions matter for regional development regional studies this paper discusses whether institutions matter for regional development and how to integrate them in regional development strategies it is found that while institutions are crucial for economic development generating an institution based regional development strategy is likely to be undermined by the lack of definition of what are efficient institutions problems related to the measurement of institutions to their space and time variability to the difficulties in establishing the right mix of formal and informal institutions and to the endogeneity between institutions and economic development make one size fits all approaches to operationalizing institutions difficult the paper posits that in order to overcome these problems it is crucial to distinguish between the institutional environment and institutional arrangements that is to target not the institutions which shape the unique character of any territ

how do competitive pressures affect incentives to innovate when there is a market for inventions competition and intellectual property ip protections are complements in stimulating innovation when ip is appropriable a market for inventions forms and competitive pressures increase incentives to innovate competition among producers the demand side of the market for inventions and competition among inventors the supply side of the market for inventions create incentives to innovate when ip is not fully appropriable markets for inventions are limited and competitive pressures can decrease incentives to innovate firms vertically integrate r d and production and share technology to appropriate the returns to ip this implies that antitrust policy and ip protections are complements

getting there exploring the role of expectations and preproduction delays in processes of organizational founding because of preproduction delays environmental conditions at founding cannot explain organization building decisions taken earlier as a consequence environmental conditions at founding cannot explain organizational founding future levels of resource availability may be estimated but not directly observed by potential entrepreneurs at the time at which they decide to enter preproduction in this paper we take these considerations as our starting point to build a dynamic feedback model of organization founding according to the model organizational founding is driven by expectations that entrepreneurs form about future levels of resources and only indirectly by current levels of population density we explore the behavior of the model under a variety of experimental conditions we show that the qualitative behavior of the model is consistent with studies that have linked the duration of preproduction stage with fluctuations in density during population maturity our simulation analyses sustains three main conclusions first historical trajectories of organizational populations that are consistent with empirical observations may be produced by mechanisms that are not directly dependent on density second alternative hypotheses about how expectations are formed produce qualitatively different historical trajectories of density third fluctuations in numbers of organizations are linked to specific aspects of individual organization building decisions

competition and the efficiency of markets for technology the sale of r d projects through licensing facilitates the division of labor between research and development activities this vertical specialization can improve the overall eciency of the innovative process however these gains depend on the timing of the sale the buyer of an r d project should assume development at the stage at which he has an eciency advantage we show that in an environment where the seller is overcondent about the value of the project she may delay the sale to the more ecient rm in order to provide veriable information about its quality though this delay implies higher total development costs for the project we obtain a condition for the equilibrium timing of licensing and examine how factors such as the intensity of competition between potential buyers inuence it we show that a wide array of dierent explanations based on dierences in information beliefs or risk proles lead to the same qualitative results we present empirical evidence from pharmaceutical licensing contracts that is consistent with our theoretical predictions

failure is an option institutional change entrepreneurial risk and new firm growth does an institutional change that lowers failure barriers improve new firm growth we take advantage of a quasi natural experiment in japan that drastically reduced the stringency of bankruptcy regulations to examine this question using longitudinal data over a 10 year period we find that bankruptcy reform increases the rates of bankruptcy and founding and more importantly the likelihood of high growth ventures by disproportionately encouraging elite individuals i e those with superior human and social capital to start firms in turn these firms are more likely than others to achieve high growth broadly put we contribute to research at the nexus of institutional theory and entrepreneurship by emphasizing the connectedness of barriers to failure venture growth and elite entrepreneurs we also highlight how institutional change that eases bankruptcy change can foster a regenerative cycle of failure founding and growth by attracting more capable entrepreneurs overall we conclude that lowerin

the endogeneity between language and earnings international analyses this study is concerned with the determinants of dominant language fluency its effects on earnings and its endogeneity with earnings among immigrants dominant language fluency is hypothesized to

university entrepreneurship and professor privilege 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 copyright 2013 the author 2013 published by oxford university press on behalf of associazione icc oxford university press

and a vision appeared unto them of a great profit evidence of self deception among the self employed evidence is presented that the self employed expect better financial outcomes than do employees but experience worse realisations this is consistent with theories that entrepreneurship is driven by unrealistic optimism

timid choices and bold forecasts decision makers have a strong tendency to consider problems as unique they isolate the current choice from future opportunities and neglect the statistics of the past in evaluating current plans

the changing form of overconfidence and its effect on growth expectations at the early stages of startups in this article we attempt to explain the failure of many studies to show a link between entrepreneurs beliefs in their entrepreneurial skills and the actual or expected growth of their venture by using frese and gielnik s action characteristics model of entrepreneurship as an analytical framework and analyzing global entrepreneurship monitor adult population survey data we show that entrepreneurs perceived entrepreneurial skills are consistently inflated over the different phases of the startup albeit in different ways depending on the typical form of overconfidence the link between skill beliefs and growth expectations may be mediated by expectations about competitive advantages moreover the huge drop in growth expectations is not associated with a drop in perceived skills instead other entrepreneurial expectations also become more realistic and their effect strengthens with experience

appropriability and commercialization evidence from mit inventions the effects of appropriability on invention have been well studied but there has been little analysis of the effect of appropriability on the commercialization of existing inventions exploiting a database of 805 attempts by private firms to commercialize inventions licensed from the massachusetts institute of technology mit between 1980 and 1996 we explore the influence of several appropriability mechanisms on the commercialization and termination of projects to develop products based on university inventions our central hypothesis is that the relationship between a licensee s decision to either terminate or commercialize the invention is driven by the current market value of the invention as well as the option value of delaying its commercialization we use a competing risks framework that allows for nonparametric heterogeneity and correlated risks we find that better appropriability in the sense of more effective patent strength and secrecy has a strong negative effect on the hazard of license termination the effectiveness of learning has a strong positive effect on the hazard of technology commercialization while lead time has a negative effect

entrepreneurial optimism and the market for new issues this article analyzes the impact of entrepreneurial optimism on the market for new issues we find that the existence of optimists generates a new reason for entrepreneurs to own equity in their firms we show that optimism is a natural explanation for why some new issues are underpriced and others overpriced we also show that the impact of optimism on entrepreneurs equity holdings depends on the number of optimists absolute risk aversion and cash flow variance optimism makes entrepreneurs worse off in contrast optimism can make outside investors better off when entrepreneurs signal firm value by retaining shares and underpricing

choosing the wrong pond social comparisons in negotiations that reflect a self serving bias we explore the role that choice of comparison groups plays in explaining impasse in teacher contract negotiations we hypothesize that the negotiators select comparable districts in a biased fashion such that teachers salaries in districts that unions view as comparable are higher than teachers salaries in districts that school boards view as comparable we also predict that strike activity is positively related to the difference in the salary levels of the unions and boards lists of comparables we test these predictions using a unique combination of subjective survey and field data on teacher contract negotiations in pennsylvania both hypotheses are supported by the data

perceiving and managing business risks differences between entrepreneurs and bankers abstract we compared entrepreneurs with bankers in their perception and management of a variety of risks problems included financial risk risk to human life and health and risk of a natural disaster cluster analysis and content analysis of think aloud protocols revealed surprising details entrepreneurs accept risk as given and focus on controlling the outcomes at any given level of risk they also frame their problem spaces with personal values and assume greater personal responsibility for the outcomes bankers focus on target outcomes attempting to control risk within structured problem spaces and avoiding situations where they risk higher levels of personal responsibility

entrepreneurial universities and overt opportunism entrepreneurial universities are a catalyst for regional economic development and growth yet the entrepreneurial university may not always capture the full gains made by the broader economy due to opportunistic behavior by its faculty scientists we expand agency theory to address conditions when opportunistic behavior persists in the face of substantial information symmetry and where principals appear to tolerate opportunism despite the authority to sanction their agents using a sample of 105 us research universities and 73 603 scientists we demonstrate that some scientists privately leak discoveries invented while working for their universities counter to prior prediction we find that universities acting as principals often do not retaliate even when having knowledge of such opportunistic behavior and the capability to punish non complying agents to extend theory we examined contexts that exacerbate and alleviate such overt opportunism high value discoveries and sizable entrepreneurial activity are associated with greater opportunistic behavior whereas efforts to empower those who have close professional ties with scientists their departments and technology commercialization offices are related to reduced opportunism to complement our empirical analyses we provide a stylized mathematical model that shows how agency theory can improve its predictive power once it formally recognizes certain conditions under which agents wield substantial bargaining power over their principals who in turn seem to tolerate agents overt opportunistic behavior

the return to independent invention evidence of unrealistic optimism risk seeking or skewness loving examining a sample of 1 091 inventions i investigate the magnitude and distribution of the pre tax internal rate of return irr to inventive activity the average irr on a portfolio investment in these inventions is 11 4 this is higher than the risk free rate but lower than the long run return on high risk securities and the long run return on early stage venture capital funds the portfolio irr is significantly higher for some ex ante identifiable classes of inventions the distribution of return is skew only between 7 9 reach the market of the 75 inventions that did six realised returns above 1400 60 obtained negative returns and the median was negative

overoptimism and the performance of entrepreneurial firms recent theoretical and empirical research on cognitive bias in decision making suggests that overoptimism critically influences entrepreneurs decisions to establish and sustain new ventures we investigate whether such cognitive bias influences entrepreneurial venture performance using data on commercialization efforts for university inventions in contrast to prior studies our results suggest that entrepreneurial overoptimism does not appear to be the determining factor in the decision to found a firm we do find that entrepreneurs continue unsuccessful development efforts for longer periods of time than do established firms which is consistent with entrepreneurial overoptimism in the development of technologies with uncertain market prospects this latter finding is also consistent with rationality based models of decision making behavior however we find that the economic returns associated with many of the technologies in our sample are realized after the start up has been acquired by an established firm suggesting that start ups may serve as a transitional organizational form in the market for technology commercialization

selling university technology patterns from mit many research universities engage in efforts to license inventions developed by university affiliated inventors however no systematic explanation of the conditions under which university inventions will be licensed or commercialized has been provided drawing on transaction cost economics i provide a conceptual framework to explain which university inventions are most likely to be licensed commercialized and generate royalties and who will undertake that commercialization i test this framework on data on the 1 397 patents assigned to the massachusetts institute of technology during the 1980 1996 period the results showthat 1 university inventions are more likely to be licensed when patents are effective 2 when patents are effective university technology is generally licensed to noninventors 3 when patents are effective licensing back to inventors increases the likelihood of license termination and reduces the likelihood of invention commercialization and 4 the effectiveness of patents increases royalties earned for inventions licensed to noninventors the implications of these findings for innovation management and strategy entrepreneurship and university technology commercialization are discussed

managerial biases and debt contract design the case of syndicated loans we examine whether managerial overconfidence impacts the use of performance pricing provisions in loan contracts performance sensitive debt psd managers with biased views may issue psd because

overconfidence and excess entry an experimental approach psychological studies show that most people are overconfident about their own relative abilities and unreasonably optimistic about their futures e g shelly e taylor and j d brown 1988 neil d weinstein 1980 when assessing their position in a distribution of peers on almost any positive trait like driving ability ola svenson 1981 income prospects or longevity a vast majority of people say they are above the average although of course only half can be if the trait is symmetrically distributed this paper explores whether optimistic biases could plausibly and predictably influence economic behavior in one particular setting entry into competitive games or markets many empirical studies show that most new businesses fail within a few years for example using plant level data from the u s census of manufacturers spanning 1963 1982 timothy dunne et al 1988 estimated that 61 5 percent of all entrants exited within five years and 79 6 percent exited within 10 years most of these exits are failures see also dunne et al 1989a 1989b d shapiro and r s khemani 1987

reinvestment decisions by entrepreneurs rational decision making or escalation of commitment abstract among the most important decisions made by entrepreneurs are those relating to whether to expand maintain or contract their businesses we would expect these major commitments to be based upon expectations about future performance these expectations in turn would be heavily influenced by performance to date thus we might presume that businesses that have been receiving favorable feedback from the marketplace would be more likely to expand and those receiving negative feedback would be more likely to contract ongoing research in decision making suggests that psychological processes may play a role in influencing these decisions under certain conditions entrepreneurs may be influenced by a phenomenon termed escalation of commitment this may lead entrepreneurs to decide to expand the asset bases of their firms regardless of feedback from the marketplace the literature on escalation of commitment suggests that under certain conditions decision makers who make an initial decision become overly committed to the original choice and then subsequently make decisions biased by psychological commitment previous research most of which has been conducted in laboratory settings suggests that escalation bias is more likely to occur 1 if entrepreneurs have started their firms rather than purchased them 2 if entrepreneurs have partners 3 if entrepreneurs expect to use their skills in the new business and 4 if entrepreneurs are overconfident that is expected to do substantially better than others in the same kinds of business it is also expected that these escalation predictors will have a relatively greater influence when feedback is negative than when it is positive the negative feedback seems to invoke a self justification process it is also hypothesized that the influence of these predictors will be less in the third year of a business than in the second year finally it is expected that these psychological influences will help to provide systematic explanation of reinvestment decisions over and beyond what one could predict based upon financial feedback the hypotheses were tested using data from a longitudinal study involving 1112 firms it was found that entrepreneurs who had started their firms and those who had expressed substantial over confidence were significantly more likely to make the decision to expand the hypotheses that those who had partners and those who expected to apply their skills would be more likely to expand were not supported furthermore and consistent with previous research these psychological escalation predictors seemed to exert a greater influence when feedback from the marketplace was negative as expected there was a declining influence in the third year as compared with the second consistent with the prior literature and the hypotheses these psychological predictors did show a small but systematic influence upon reinvestment decisions decisions to expand or contract a business are not necessarily good or bad however it is important that entrepreneurs be aware of the factors influencing their decisions entrepreneurs should recognize that the escalation bias tendency is likely to occur seeking independent opinions from advisors who do not feel as much personal responsibility for the original decision to start may lead to more objective evaluation of alternatives advisors should also realize that the inclination to escalate exists and is natural they may thereby be able to guard against the tendency to be swept along by the entrepreneur s enthusiasm and propensity to escalate entrepreneurs and their advisors as well as researchers should recognize that important entrepreneurial decisions are often influenced by psychological as well as economic factors this awareness should enable entrepreneurs to make more rational decisions

contracting for tacit knowledge the provision of technical services in technology licensing contracts abstract recent research on the economic payoff from new technology has emphasized the importance of tacit knowledge or know how this paper shows that arm s length contract can overcome the problems in contracting for know how by bundling complementary inputs with know how in a technology package and leveraging the superior enforceability of contracts over the latter in the empirical part of this paper the relationship between bundling and transfer of know how is analyzed using indian data the results imply that tied sales of inputs may increase the efficiency of contracts involving the transfer of know how a striking result in the context of the current north south debates on intellectual property rights is the packaging of patents with know how

ceo hubris and firm risk taking in china the moderating role of managerial discretion this study linked ceo hubris to firm risk taking and examined the moderating role of managerial discretion in this relationship drawing on upper echelons theory and behavioral decision theory we

encouraging university entrepreneurship the effect of the bayh dole act on university patenting in the united states abstract universities are seen as a source of technology development that is useful to entrepreneurial activity as a result policy makers often consider mechanisms to stimulate technology commercialization at research universities as a way to encourage entrepreneurial activity in a region however the transfer of technology from universities to the private sector requires the exploitation of markets for knowledge which are fraught with difficulty arrow k 1962 economic welfare and the allocation of resources for inventions in nelson r ed the rate and direction of inventive activity princeton nj princeton univ press this article examines the effect of one u s public policy initiative the bayh dole act in the united states on one aspect of technology commercialization university patenting specifically the article explores the university share of patents from 1969 through 1996 across 117 lines of business and shows that the effectiveness of licensing in a line of business is significantly correlated with university share of patents in the post bayh dole period but not in the pre bayh dole period these results suggest that the bayh dole act provided incentives for universities to increase patenting in those fields in which licensing is an effective mechanism for acquiring new technical knowledge the paper discusses the implications of this shift in patenting for research and public policy

entrepreneurs optimism and new venture performance a social cognitive perspective previous research indicates that entrepreneurs are generally high in dispositional optimism the tendency to expect positive outcomes even when such expectations are not rationally justified findings of the current study demonstrate a negative relationship between entrepreneurs optimism and the performance revenue and employment growth of their new ventures past experience creating ventures and industry dynamism moderated these effects strengthening the negative relationship between entrepreneurs optimism and venture performance these findings illustrate the benefits of applying a social cognitive perspective toward efforts to understand key aspects of the new venture creation and development process

using what you know patented knowledge in incumbent firms and employee entrepreneurship prior studies have shown that the acquisition of relevant knowledge by employees in existing firms is associated with the creation of new firms through employee entrepreneurship some researchers propose that the transition to entrepreneurship may be explained by established firms undervaluing knowledge created by employees whereas other scholars maintain that firm strategies may lead to the underutilization of knowledge we ask the question of which of these drivers is more pronounced as an explanation of employee entrepreneurship and what technological factors matter in this relationship analyzing a unique data set we find that the likelihood of employee entrepreneurship increases with the inventor s assessment of the value of a patent for an invention developed while at the incumbent firm but dramatically decreases when the invention protected by the patent is commercialized by the firm licensed to third parties interdependent with other firms inventions protected by patents or technologically broad we also find that conditional on high valuation by the inventor a matching high valuation by the firm further increases the likelihood of transitioning to entrepreneurship in combination we show that a situation when both the inventor and the firm consider the invention valuable but the firm ends up not commercializing the invention is more predictive of employee entrepreneurship than simple differences in assessing the value of the invention the study refines our understanding of the drivers of entrepreneurship by underscoring the strategic explanation of employee entrepreneurship

the self perpetuation of biased beliefs to overcome strong prior beliefs strong evidence to the contrary is needed if a person is predisposed to choosing a certain action the advice from an advisor who sets a low threshold for recommending the alternative action is not of much use the preference for like minded advisors who supply coarse information implies that the advice a person receives is likely to reinforce his existing priors this effect can lead to polarisation of opinion and the emergence of self serving beliefs the learning process is prolonged and the induced short run bias can become perpetual if information is costly