When do serial entrepreneurs found innovative ventures? Evidence from patent data

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When do serial entrepreneurs found innovative ventures? Evidence from patent data Amrita Lahiri

&

Anu Wadhwa

Accepted: 24 July 2020 # Springer Science+Business Media, LLC, part of Springer Nature 2020

Abstract Experienced entrepreneurs are typically considered to be wellsprings of both wealth creation and innovation. However, given that prior research has provided evidence of an inverse relationship between economic performance and innovation performance, innovation performance of experienced entrepreneurs requires greater scrutiny. In this study, we examine the question: under what conditions do serial entrepreneurs produce impactful innovations in their subsequent ventures? Using data on 334 VC-funded companies, our study suggests that the familiarity garnered by founders through their prior industry experience may limit the venture’s propensity to produce impactful innovation. Our findings contribute to the literature on serial entrepreneurship and innovation.

Keywords Serial entrepreneurship . Impactful innovation . Founder experience . Spillovers

JEL classifications L26 . O31 . O00 . O32

A. Lahiri (*) Carson College of Business, Washington State University, Pullman, WA 99163, USA e-mail: [email protected] A. Wadhwa Imperial College Business School, Imperial College, South Kensington, London, UK e-mail: [email protected]

1 Introduction Experienced entrepreneurs are often considered to be the drivers of enterprise and change in industries (McGrath and MacMillan 2000). However, it is unclear when prior entrepreneurial experience influences the propensity of individuals to create innovative new ventures.1 Even though prior entrepreneurial experience can increase the ability of entrepreneurs to pursue a broader choice set of lucrative opportunities (Gruber et al. 2008; Ucbasaran et al. 2008b, 2009) and create more successful ventures (Delmar and Shane 2006; Lafontaine and Shaw 2016), it may also make them more inclined towards exploiting their existing knowledge as opposed to exploring new ideas (March 1991) and to favor the conventional over more innovative approaches to solving problems (Baron and Ensley 2006; Audia and Goncalo 2007). As noted by Autio et al. (2014: p.1098), “The real question, then, … [is] not whether entrepreneurs innovate, but rather, when and where they do so.” We examine this question in the context of serial entrepreneurs (Westhead et al. 2005b, c; Parker 2014). Serial entrepreneurs—those individuals who have wholly or partly owned a business in the past and who then go on to found another new venture (Hyytinen and Ilmakunnas 2007)—are often lionized in the media and described as “economic artists…bringing together economic resources rather than putting paint on canvas” 1 We conceptualize innovation as “a new idea, which may be a recombination of old ideas, a scheme that challenges the present order, a formula, or a unique approach” (Van de Ven 1986: 591).

A. Lahiri, A. Wadhwa

(Chaplin 2001). Their rich experience and deep knowledge of entrepreneurship enable them to re