R&D, Innovation, Start-up, Complementary Assets

O31, L26

This paper investigates, both theoretically and empirically, the implications that complementary assets needed for the formation of start-ups —proxied by the ease of access to financial resources— have on the innovative efforts of incumbent firms. In particular, we develop a theoretical model, highlighting a strategic incentive effect by which the innovative efforts of incumbent firms are decreasing in the availability of the complementary assets needed for the creation of a startup. The empirical relevance of this effect is investigated by using firm level data drawn from the third Italian Community Innovation Survey covering the period 1998-2000. The results of our empirical analysis support our theory-based insights.