Tania Babina, PhD, Assistant Professor of Business, Finance, Columbia Business School

Entrepreneurial Spillovers from Corporate R&D

Using U.S. Census data, we show that corporate research and development (R&D) investment increases employee departures to entrepreneurship. We identify a causal effect with changes in federal and state tax incentives. High-tech parents drive the effect, and R&D-induced startups are much more likely to be venture capital-backed than the average employee-founded startup. This is the first evidence of employee startups as a type of R&D spillover. New ideas seem to be the primary channel, though new skills likely also play a role. R&D investment appears to lead to new growth options that are located outside the firm boundary.

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