Start-ups and Spin-offs: Collective Entrepreneurship Between Invention and Innovation

Abstract

The function of entrepreneurs is to reform or revolutionize the pattern of production by exploiting an invention, or more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of materials or a new outlet for products, by reorganizing an industry, and so on…. To undertake such new things is difficult and constitutes a distinct economic function, first because they lie outside of the routine tasks which everybody understands and secondly, because the environment resists in many ways that vary, according to social conditions, from simple refusal either to finance or buy a new thing, to physical attack on the man who tries to produce it. Joseph A. Schumpeter (1942: 132) INTRODUCTION The most successful new technology ventures generate tremendous returns for their investors (see Scherer and Harhoff 2000). Interest in capturing a share of such potentially large returns has stimulated rapid growth in recent years in both the number and diversity of institutions specialized in supporting the commercial development and marketing of new technologies. These include venture capital firms, corporate venture funds, incubators of various types, niche law firms, university and government offices of technology transfer, and networks of individual private equity, or “angel,” investors. The funds available for the support of technology entrepreneurship have grown accordingly. Indeed, at present, by some measures, the supply of such funds seems to exceed the demand.