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Suggested Citation:"4 What Research Merits Consideration?." National Research Council. 2009. Investor Exits, Innovation, and Entrepreneurial Firm Growth: Questions for Research: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/12811.
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4
What Research Merits Consideration?

Notwithstanding these challenges, many workshop participants suggested topics that merited further exploration and proposed varied lines of inquiry:

  • A survey of entrepreneurs and investors could help quantify and rank factors—securities regulation, legal liability, etc.—raising the transaction and opportunity costs of undertaking an IPO and sustaining a small new public company.

  • An international comparison of IPO markets would shed light on issues of competitiveness in high technology sectors, including the extent to which disruptive new entrants are being grown abroad.

  • A cross-sectoral comparison of how technological progress and market conditions interact to influence exit strategies, firm formation, and growth more generally.

  • More research is needed on what types of innovation are associated with different firm organizational structures and investment sources. In particular, examining different patterns of acquisition could improve understanding of how parent companies sustain or stifle certain kinds of innovative activity. Likewise, studies of differences in firms’ post-exit performance could shed light on the process of creative destruction and its impact on growth.

  • The workshop did not give sufficient attention to the question of whether acquisitions were occurring earlier than previously in the life of entrepreneurial companies and, if so, what are the possible consequences of “premature” sell-outs?

  • Surveys and perhaps other methods could illuminate how investors’ expectations regarding their eventual exit affect the focus and development of entrepreneurial firms in different sectors.

Finally, it was suggested that any serious effort to investigate the questions raised in the workshop involve a wider range of scholars including historians of markets and entrepreneurship, technology specialists, and students of social networks that influence firm origins, development, and strategies.

Suggested Citation:"4 What Research Merits Consideration?." National Research Council. 2009. Investor Exits, Innovation, and Entrepreneurial Firm Growth: Questions for Research: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/12811.
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Suggested Citation:"4 What Research Merits Consideration?." National Research Council. 2009. Investor Exits, Innovation, and Entrepreneurial Firm Growth: Questions for Research: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/12811.
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Page 17
Suggested Citation:"4 What Research Merits Consideration?." National Research Council. 2009. Investor Exits, Innovation, and Entrepreneurial Firm Growth: Questions for Research: Summary of a Workshop. Washington, DC: The National Academies Press. doi: 10.17226/12811.
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Investor Exits, Innovation, and Entrepreneurial Firm Growth: Questions for Research: Summary of a Workshop Get This Book
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The bursting of the dot-com bubble in 2001 coincided with an abrupt and lasting change in the development of entrepreneurial venture-backed firms in the United States. Previously, entrepreneurs and investors commonly took viable young firms public through initial public offerings. Since 2001, however, venture investors have more frequently exited by selling their companies to established corporations, usually for lower returns. There are concerns among some entrepreneurs, investors, and academics that this change has reduced the potential of young, entrepreneurial firms to contribute to innovation, job creation, international competitiveness, and economic growth. There are also claims that public policies, including securities regulation, have contributed to this result and should be modified or compensated for.

In 2007 investors, entrepreneurs, and academic experts in economics, corporate finance, and law came together to consider the merits and feasibility of additional research addressing the change in investor exit strategies, its causes and consequences. During the 2007 workshop, summarized in this volume, participants identified several factors complicating systematic inquiry and suggested a number of research avenues that could be productive.

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