Falck, Oliver; Heblich, Stephan; Kipar, Stefan (2011): Incumbent innovation and domestic entry. In: Small Business Economics, Vol. 36, No. 3: pp. 271-279 |
Abstract
This paper analyzes the escape-entry incentive for innovation by incumbent firms. The threat posed by the possibility of leading-edge firms entering the market influences incumbent innovation. To overcome problems of endogeneity, we apply an instrumental variable approach to analyze a rich firm-level dataset (1987-2000) for Germany. We find evidence that domestic entry has a negative effect on incumbent product innovation, which is a strong indication of new entrants’ comparative advantage in commercializing new ideas. In contrast, domestic entry has a positive effect on incumbent process innovations, an effect also known as the escape-entry effect.
Item Type: | Journal article |
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Faculties: | Economics Economics > Chairs > CESifo-Professorship for Empirical Innovation Economics |
Subjects: | 300 Social sciences > 330 Economics |
Language: | English |
ID Code: | 20566 |
Deposited On: | 15. Apr 2014 09:00 |
Last Modified: | 04. Nov 2020 13:01 |