Tacit knowledge with innovative entrepreneurship

Daniel F. Spulber*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

20 Scopus citations

Abstract

Tacit knowledge affects the trade-off between entrepreneurship and technology transfer. I present a formal model in which an inventor and the existing firm engage in a strategic innovation game by choosing whether to compete or to cooperate through technology transfer. The model highlights how the problem of tacit knowledge affects the inventor's R&D investment and the existing firm's investment in absorptive capacity. The inventor's tacit knowledge implies that benefits from own-use through entrepreneurship can exceed the benefits from technology transfer. In equilibrium, higher-quality inventions result in entrepreneurship and lower-quality inventions result in technology transfer. R&D investment and absorption investment are strategic substitutes in the innovation game with the option of entrepreneurship. The possibility of entrepreneurship increases R&D investment and reduces absorption investment. The equilibrium probability of entrepreneurship is decreasing in the costs of R&D, increasing in the costs of absorption, and decreasing in the set-up costs of new firms.

Original languageEnglish (US)
Pages (from-to)641-653
Number of pages13
JournalInternational Journal of Industrial Organization
Volume30
Issue number6
DOIs
StatePublished - Nov 2012

Keywords

  • Entrepreneur
  • Innovation
  • Invention
  • R&D
  • Tacit knowledge

ASJC Scopus subject areas

  • Industrial relations
  • Aerospace Engineering
  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)
  • Strategy and Management
  • Industrial and Manufacturing Engineering

Fingerprint Dive into the research topics of 'Tacit knowledge with innovative entrepreneurship'. Together they form a unique fingerprint.

Cite this