We explore the conditions under which firms are likely to pursue equity investment in new ventures as a way to source innovative ideas. We find that firms invest more in new ventures - commonly referred to as "corporate venture capital" - in industries with high technological ferment, weak intellectual property protection, and where complementary distribution capability is important. Furthermore, we find that the greater a firm's cash flow and history of innovation, the more likely it is to invest. Our results suggest that in Schumpeterian environments, incumbents may supplement their innovative efforts by tapping into the knowledge generated by new ventures.

In this paper, we focus on the potential innovative benefits to corporate venture capital (CVC), i.e. equity investments in entrepreneurial ventures by incumbent firms. We propose that corporate venture capital programs may be instrumental in harvesting innovations from entrepreneurial ventures and thus an important part of a firm's overall innovation strategy. We hypothesize that these programs are especially effective in weak intellectual property (IP) regimes and when the firm has sufficient absorptive capacity. We analyze a large panel of public firms over a 20-year period and find that increases in corporate venture capital investments are associated with subsequent increases in firm patenting.

In the early 1980's, Antoine W. van Agtmael of the International Finance Corporation of the World Bank coined the term "emerging market" to describe nations with low-to-middle per capita incomes and that are instituting economic development and reform programs that allow them to "emerge" into the arena of global economic competitiveness. Since that time, the phrase has gained popularity and has been used to describe nations and even regions within and across nations. Scholarly and practical interest in understanding the factors that lead to rapid growth in these markets has proliferated, and investment activity has increased accordingly. One key element of nearly all usage is the notion of rapid economic transition and burgeoning investment opportunity in formerly overlooked areas.

In many design environments, the technology around which a product is designed may evolve over the course of the product development cycle. In reaction, designers may modify the product's design to avail of new technology, resulting in cost overruns and delays. This effect can be mitigated if a firm proactively considers the revenue projections for alternate technology choices, the cost of these choices, and the anticipated path of technology evolution, in choosing the optimal product positioning policy. We develop an analytical model that navigates this tradeoff.

We explore the relationship between the probability of a transition from paid work to self-employment and three explanatory variables: paid income, predicted income, and income for ability. We use panel data for heads of households from the PSID SRC sample for eight pairs of years. Our results show that the relationship between paid income and self-employment is not linear. We then break up paid income into two components: a) predicted income based on human capital, demographic, and locational variables, and b) income for ability. Again, we find nonlinear relationship between self-employment and either predicted income or income for ability. We then test for curvilinear relationships between these three variables (i.e., paid income, predicted income, and income for ability) and the transition to self-employment. We find that individuals with low incomes are more likely to take up self-employment. Further, income for ability is a stronger predictor of the transition to self-employment than predicted income. We show that the relationship between ability and self-employment is U shaped: very low ability and very high ability individuals are more likely to take up self-employment than medium ability individuals. We use prospect theory to explain this result.

Both history of science and creativity research have shown that reformulating the questions we ask can lead to breakthroughs more often than trying harder to search for more rigorous answers. In such a spirit of creative play, I suggest we throw away our obsession with dividing the world into entrepreneurs and nonentrepreneurs and focus instead on categories within entrepreneurs. In particular, (a) those who want to become entrepreneurs but do not suggest compelling research questions about barriers to entrepreneurship; while, (b) those who do become entrepreneurs need to develop expertise, impelling our research to focus on the rubric of design.

Current theories of the firm provide no explanation for entrepreneurial success except in terms of firm success. Even when the focus is on the entrepreneur, s/he is entirely cast as a bundle of traits/behaviors or heuristics/biases that serves to explain firm performance. In this article, I suggest putting the entrepreneur center stage, adopting an instrumental view of the firm. Drawing upon the work of Simon in symbolic cognition and Lakoff in semantic cognition, I explore how we can go beyond explanations based on economic forces and evolutionary adaptation to entrepreneurial effectuation; I end with specific research questions pertaining to firm design.

The U.S. health care system is in bad shape. Medical services are restricted or rationed, many patients receive poor care, and high rates of preventable medical error persist. There are wide and inexplicable differences in costs and quality among providers and across geographic areas. In well-functioning, competitive markets, such outcomes would be inconceivable. In health care, these results are intolerable. Competition in health care needs to change, say the authors. It currently operates at the wrong level. Payers, health plans, providers, physicians, and others in the system wrangle over the wrong things, in the wrong locations, and at the wrong times. System participants divide value instead of creating it. (And in some instances, they destroy it.) They shift costs onto one another, restrict access to care, stifle innovation, and hoard information--all without truly benefiting patients. This form of zero-sum competition must be replaced by competition at the level of preventing, diagnosing, and treating individual conditions and diseases. Among the authors' well-researched recommendations for reform: Standardized information about individual diseases and treatments should be collected and disseminated widely so patients can make informed choices about their care. Payers, providers, and health plans should establish transparent billing and pricing mechanisms to reduce cost shifting, confusion, pricing discrimination, and other inefficiencies in the system. And health care providers should be experts in certain conditions and treatments rather than try to be all things to all people. U.S. employers can also play a big role in reform by changing how they manage their health benefits.

In this article, we propose an entrepreneurial theory of the firm that is based on dispersed knowledge. We argue that the dispersion of knowledge over people and places and over time leads to uncertainty. This uncertainty, combined with heterogeneous expectations and the nexus of an individual and opportunity, explains the emergence of new firms. We then suggest that the theory of the firm proposed by us answers questions that have been overlooked by alternative theories. The specific question we discuss in this article is when and why an entrepreneurial opportunity will be taken to market through an existing firm, and when and why a new firm will be chosen as a vehicle for taking a new idea to market, i.e., whether the residual will be concentrated in an existing or in a new firm.

In this article, we propose an entrepreneurial theory of the firm that is based on dispersed knowledge. We argue that the dispersion of knowledge over people and places and over time leads to uncertainty. This uncertainty, combined with heterogeneous expectations and the nexus of an individual and opportunity, explains the emergence of new firms. We then suggest that the theory of the firm proposed by us answers questions that have been overlooked by alternative theories. The specific question we discuss in this article is when and why an entrepreneurial opportunity will be taken to market through an existing firm, and when and why a new firm will be chosen as a vehicle for taking a new idea to market, i.e., whether the residual will be concentrated in an existing or in a new firm.

What does it take for a region to foster technological entrepreneurship? Recently, there has been significant interest in this topic. Most writers on this topic emphasize the tangible infrastructure such as sound legal systems, transparent capital markets, advanced telecommunications and transportation systems, etc. Sound legal systems, capital markets, and other structural features are necessary prerequisites for technopreneurship; however, what I am calling the intangibles of entrepreneurship are the sufficient conditions that allow, specifically, for Schumpeterian entrepreneurship to thrive in a locality. Often, governments attempt to promote technopreneurship by injecting risk capital. They distribute these funds through small business development centers, and several regions and countries have even attempted "public" venture capital funds. However, my hypothesis is that if only risk capital is injected, it flows straight to low-quality entrepreneurship. Focusing on only risk capital, the investing government assumes that the risk capital itself will create all other prerequisites for growth. This is a major supposition. If risk capital is expected to produce extraordinary wealth, it must be accompanied by seven other intangibles, including, access to novel ideas, role models, informal forums, region-specific opportunities, safety nets, access to large markets, and executive leadership.