Government supports for innovation: when is promoting entrepreneurial entry suboptimal?

Download

index.pdf

Date

2018

Author

Uysal, Yetkin

Metadata

Show full item record

Item Usage Stats

206
views

84
downloads

Governments evidently provide financial support for R&D expenditures of start-ups, and subsidies for commercialization costs of entrepreneurs with the aim of promoting innovation and increasing welfare. In order to investigate these implications of entrepreneurship and government supports for an oligopolistic market with homogeneous goods, I construct a model where a start-up can commercialize its innovation either by market entry or by sale to an incumbent firm. The innovation is first considered a non-drastic process innovation, and then, in an extension, it is supposed to reduce fixed production cost. The results reveal that an optimal policy scheme for government supports is not just beneficial but also required in most cases to achieve higher innovation levels yielding more welfare. Governments’ bias towards favoring entrepreneurial entry over commercialization by sale is found to be counter-productive both for a non-drastic process innovation if the start-up is not innovative enough and for a fixed cost innovation if an entry-deterring incumbent acquisition is expected. In addition, for a non-drastic process innovation, increasing level of market competition diminishes the R&D expenditure and the resulting innovation level, if the start-up is, again, not an able innovator. For a fixed cost innovation, it inclines the start-up to choose riskier projects, that is, projects to arrive the product market less frequently, when market entry is possible for the start-up. Under such circumstances, facilitating incumbent acquisition instead of promoting entrepreneurial entry seems to be a preferable option for governments.

Subject Keywords

Entrepreneurship., Business incubators., New business enterprises., Government-sponsored enterprises.

URI

http://etd.lib.metu.edu.tr/upload/12622721/index.pdf
https://hdl.handle.net/11511/27649

Collections

Graduate School of Social Sciences, Thesis

Suggestions

OpenMETU
Core

Sources and determinants of intra-industry heterogeneity in the innovation process Yurtseven, Alp Eren; Pamukcu, Mehmet Teoman; Department of Science and Technology Policy Studies (2015) This thesis aims to explore the sources of intra – industry heterogeneity of innovation modes and the effects of such heterogeneity on the innovation process. A taxonomy of innovative firms was constructed and different modes of innovation were explored for this purpose, then micro and macro level determinants of intra – industry heterogeneity were analyzed. The linkage between firm’s innovative characteristics and its resource position, knowledge base and relationships with other organizations was establis...
Financial capital flows and economic growth: the Turkish case Kömürcüoğlu, Muammer; Akbostancı Özkazanç, Elif; Department of Economics (2010) This study analyzes the effect of capital outflows on economic growth though the channels described in sudden stop literature. Using the autoregressive distributed lag (ARDL) bounds testing approach; it is found that there is a cointegration between capital inflows, real exchange rate and real GDP. The results show that there is a significant positive long-run relation between capital inflows and growth. It is also found that capital inflows affect real output in the short run. The results show that real ex...
A Sociological study of corporate social responsibility: a Marxist perspective Karaca Akbaş, Eren; Topal, Çağatay; Department of Sociology (2012) The main concern of this thesis is to problematize the so-called mutually beneficial relationship between free market mechanism and common good through the debates around Corporate Social Responsibility (CSR). Despite the social problems deepened by the free market, capitalist discourse attempts to justify itself by adopting some ethical concerns. However, it should be recognized that these attempts including CSR constitute market-based ethics. Trying to move beyond the existing critical literature on CSR, ...
The relationship between corporate entrepreneurship and innovation and the moderating effect of transformational leadership Soyal, Barış; Wasti Pamuksuz, Syeda Nazlı; Department of Science and Technology Policy Studies (2020) Innovation has one of the most important activities for ensuring competitiveness and development which results in sustainable economic growth.Innovation is encouraged by corporate entrepreneurship which challenges bureaucracy and promotesentrepreneurial behaviorswithin an organization. Corporate entrepreneurial environmentis the stimulator ofinnovation within large companiesthrough development of new opportunities, renewing processes, implementationof new methods,andexploitat...
Empowering knowledge driven Turkish start-ups: a practical rule-based decision support system integrated with business model canvas Nabavi, Seyed Hesamoddin; Gönül, M. Sinan; Oran, Adil; Department of Business Administration (2015) Entrepreneurship is the core engine of economy and value creation (Baumol, 1968) where the Turkish entrepreneurship has recently become a center of interest, both for policy makers and academicians. Empowering entrepreneurs, above all the knowledge driven entrepreneurs who transform knowledge into value (Stam et al., 2007), by strategic decision making tools, especially those tools utilized to formulate business models would help the ventures to develop faster and with minimum step backs possible. Tools suc...

Citation Formats

Y. Uysal, “Government supports for innovation: when is promoting entrepreneurial entry suboptimal?,” M.S. - Master of Science, Middle East Technical University, 2018.