Vinay Subramanian

Suting Hong, David Hsu, Vinay Subramanian (Working), The Evolution of U.S. Entrepreneurial and Innovation Ecosystems in Artificial Intelligence: Geographic ‘Pull’ Factors.

Abstract: What geographic pull factors shape where individuals engage in startup activity? The related literatures discuss how agglomeration forces shape the geographic locus of innovation, characterize the business environment influencing individual mobility, and suggest that local spinoffs can lead to industry clustering. To improve our understanding of why some individuals move geographies (bypassing their home social capital) to start new ventures, we evaluate three candidates: venture capital access, specialized human capital access, and co-location to access knowledge spillovers. Using startups in the artificial intelligence (AI) industry, we examine the relative empirical importance of these factors in the 2001-2018 timeframe. We find that our measures of knowledge spillover capital and human capital best explain geographic pull factors for entrepreneurship, especially after a major technological advance.

Vinay Subramanian and David Hsu (Working), Acquisitions as a Venture Scaling Strategy: Adolescent Firms and Innovation Outcomes.

Abstract: When adolescent ventures choose their scaling strategy for longer-run innovation outcomes, is organic- or acquisition-led-growth preferable? The multifaceted reasons managers may choose an acquisitive path, only some of which are observed and measured, makes this question difficult to address. We study U.S. firms undergoing an initial public offering (IPO) between 1975 and 2016 and track the extent to which they conduct acquisitions, pre- and post-IPO. We use firms’ patenting activity as proxies for innovation. We address endogenous selection of acquisition strategies by employing difference-in-differences and instrumental variable methods and estimate a 6 - 10% boost in innovation for acquisition relative to organic scaling. These results contrast with naïve analyses, which suggests a negative or null effect of acquisitions on innovation.