2012 Conference: Faculty Paper Abstracts

Patent Utilization by Incumbent Firms and Employee Entrepreneurship of the Patent Inventors
Alfonso Gambardella (Bocconi), Martin Ganco (Minnesota), Florence Honore (Minnesota)

Existing literature shows that knowledge acquired by employees within incumbent firms is an important driver of entrepreneurship. We ask the question of when does the knowledge protected by patents affects employee’s entrepreneurial decision. Using a dataset based on the European Patent Survey, we find that the likelihood of entrepreneurship increases with the perceived value of inventor’s patents, and, decreases with the compensation she received for the patents. We further find that the relationship between the patent value and the entrepreneurship decision weakens when the patent is licensed out or when the patent is in a core technological domain of the firm. We show how entrepreneurship decisions depend on the unique characteristics of the patented knowledge with implications for the diffusion and exploitation of underutilized knowledge.

Taste for Science, Taste for Commercialization, and Hybrid Scientists
Henry Sauermann (Georgia Tech)

Scientists who are willing to bridge “science” and “commerce” play important roles in academia, industrial R&D, as well as scientific entrepreneurship. However, our understanding of these individuals remains limited. Drawing on prior work that has emphasized scientists “taste for science,” we develop a two-dimensional framework that also characterizes scientists with respect to their “taste for commercialization.” In this framework, scientists may have a strong taste for either science or commercialization (“traditional scientists” and “commercial types”), but can also have a strong interest in both (“hybrid scientists”) or neither (“other types”). Using data on over 4,000 junior scientists in a wide range of fields, we derive empirical measures of taste for science and taste for commercialization. Exploratory analyses show significant heterogeneity in scientist types across fields and organizations, consistent with both selection and socialization effects. Further analyses show that “hybrid scientists” ¬ those with a strong taste for both science and commercialization - exhibit a unique profile with respect to the nature of their research, patenting and publishing output, as well as career goals and entrepreneurial intentions. We discuss implications for future research as well as for policy makers, administrators, and managers seeking to foster hybrid and boundary spanning activities in various sectors of the economy.

Compensation Structure and the Creation of Exploratory Knowledge in Technology Firms
Victor Cui (Winnipeg), Waverly W. Ding (Maryland), and Yoshio Yanadori (British Columbia)

Given the importance of exploration-oriented innovation, scholars have sought to understand organizational factors that give rise to exploration-oriented innovations. We propose theory and empirical evidence that relates firms’ (i) use of long-term incentives, and (ii) horizontal pay dispersion in R&D divisions to their exploratory innovation performance. We combine a unique unbalanced, 5-year panel dataset of 94 high technology firms in the U.S. with the patent database. Empirical results suggest that firms with high level of horizontal pay dispersion have less exploratory patent innovations. Surprisingly, firms that give pay R&D employees a higher proportion of long-term incentives in total compensation have lower level of exploratory innovation. This implies that long-term incentive plans such as stock options might have weaknesses in their designs or have been misused in practice. We discuss possible factors that might moderate the negative impact of long-term incentives on exploratory innovation.

Innovation Ecosystems and the Pace of Substitution: Re-examining Technology S-curves
Ron Adner (Dartmouth) and Rahul Kapoor (Wharton)

Why do some new technologies emerge and immediately supplant incumbent technologies while others take years or decades to takeoff? We explore this question through a framework that weighs the emergence challenges that need to be overcome by a new technology against the extension opportunities that are available to the old technology. We consider both the focal competing technologies as well as the external technology ecosystems in which they are developed and used. We apply this framework to analyze ten episodes of technology competition that have occurred in the semiconductor lithography equipment industry from 1972 to 2009. The framework provides a robust explanation for the observed differences in the pace of substitution. We consider the implication of these findings for both firm strategy and R&D policy.

Height Taken But Worth Unknown: Valuation as an Institutional Process
R. Daniel Wadhwani (Harvard) and Mukti Khaire (Harvard)

Abstract: Synthesizing research from organizational studies, sociology, history, and anthropology, we develop a framework for understanding valuation as an institutional process in markets. We posit that three institutional elements ¬ categories, criteria, and standards ¬ are integral to the interpretive process of value construction that is in turn shaped by recursive interactions among actors, texts, and the social, cultural, and historical contexts that constitute markets. We also examine the conditions under which such institutions are subject to change by entrepreneurs. The paper contributes to institutional and organizational literature by theorizing how institutions shape perceptions of value and providing a framework for understanding variations in the organization of value in different markets.

Social Influence and Competition Among Critics
David Waguespack (Maryland) and Daniel Olson (Maryland)

Abstract not available.

Place and Space: The Evolving Impact of Geography and Technological Advances on Organizational Founding
Heather A. Haveman (UC-Berkeley) and Christopher I. Rider (Emory)

Two aspects of geography strongly influence organizations: place, the features of locations, and space, the distances between locations. Most previous research neglects the question of how the influences of place and space change as transportation and communication technologies develop and spatial barriers to interaction diminish. We propose that such technological advances simultaneously attenuate the relevance of space by expanding the geographic scope of interaction and accentuate the relevance of place by rendering geographic distinctions more salient. Our arguments are supported by analyses of the development of the first modern communication system, the US post office, and foundings of one type of organization that depended on it for distribution, magazine-publishing ventures. As the postal system developed, the geographic scope of competition among magazines expanded: more-distant magazines exerted stronger negative effects and more-proximate magazines exerted weaker positive effects on magazine founding rates. Additionally, new magazines were increasingly differentiated by their position in space and by their identity claims to place: magazines founded in the industry's core increasingly made universalistic (e.g., national) claims to place, while those founded in its periphery increasingly made localistic (e.g., state or municipal) claims to place. These findings reveal how technological advances influence the spatial distribution of entrepreneurial activity and also encourage competitors to differentiate product offerings based on place of production.

Misery Loves Microfinance – Sometimes: A Cross-National Investigation of Patriarchal Logics and the Emergence of Microfinance Organizations
Tyler Wry (Wharton) and Eric Tanfei Zhao (Alberta)

Why do countries differ so much in the extent to which their microfinance market has developed? Economists have proffered explanations based on the heterogeneous material conditions among nations but this is, at best, a partial explanation: there is considerable unexplained variance in founding rates among ostensibly similar nations. To help account for this, and provide a more culturally informed view, we advocate for the consideration of societal level logics which shape organizational foundings at the national level. In particular, we argue that societal patriarchy will constrain the emergence of microfinance organizations which are designed to empower women. Moreover, we suggest that logics such as patriarchy are cross-sectoral and manifest in multiple sites of social relations. As such, our approach foregrounds a nuanced and relational approach to institutional logics and identifies conditions under which shared cognitive frameworks across sectors may be complementary and reinforcing. We find strong support for our arguments in a time-series study of over 1000 microfinance organization foundings across 168 nations between 1990 and 2006.