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| Author: | Falck, O. Heblich, S. Kipar, S. |
| Title: | Incumbent innovation and domestic entry |
| Journal: | Small business economics
2011 : MAR, VOL. 36:3, p. 271-279 |
| Index terms: | innovation markets economics Germany market entry |
| Language: | eng |
| Abstract: | This article analyzes the escape-entry incentive for innovation by incumbent firms. The threat posed by the chance of leading-edge firms entering the market impacts incumbent innovation. To dodge problems of endogeneity, an instrumental variable approach is used to analyze a rich firm-level dataset (1987-2000) for Germany. We find evidence of domestic entry having a negative effect on incumbent product innovation, strongly implying new entrants' comparative advantage in commercializing new ideas. However, domestic entry has a positive effect on incumbent process innovations, an influence also known as the escape-entry effect. |
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