Patenting and Entrepreneurial Spawning: An Innovation Strategy Approach

This paper analyzes how different innovation-strategies of incumbent firms affect the quality of their entrepreneurial spawns. Using a novel data set that combines employer-employee micro data from Sweden with firm level patent application data files for the period 1997-2008, three types of incumbent firms are distinguished: firms that are engaged in innovation activities persistently, occasionally and not at all. The analysis shows only weak indication that the chance of survival for a new firm can be linked back to the innovation strategy of the parent firm. In contrast, there is strong evidence that employee start-ups from persistent innovators are more productive during their first five years on the market than other spin-offs, everything else equal.