Entrepreneurial risk, investment, and innovation

Article Type: Abstracts From: Strategic Direction, Volume 29, Issue 2

Caggese A. Journal of Financial Economics, November 2012, Vol. 106 Issue: 2, Start Page: 287, No of pages: 21

Estimates the effect of uncertainty on risky innovation using a panel of 11,417 manufacturing firms. Finds that an increase in uncertainty has a large negative effect on the risky innovation of entrepreneurial firms, while it does not have any significant impact on other firms. This negative effect is stronger for the less diversified entrepreneurial firms in the sample. Finds that the estimation results are consistent with the innovation dynamics generated in a model in which entrepreneurs are risk averse and cannot diversify the risk of their business. Article type: Research paper ISSN: 0304-405X Reference: 41AX133

Keywords: Entrepreneurial risk, Innovation, Precautionary saving, Uncertainty