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  5. Contemporary Issues in Entrepreneurship Policy
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Contemporary Issues in Entrepreneurship Policy

Paper Session

Sunday, Jan. 3, 2021 12:15 PM - 2:15 PM (EST)

Hosted By: American Economic Association
  • Chair: Ufuk Akcigit, University of Chicago

Fencing Off Silicon Valley: Cross-Border Venture Capital and Technology Spillovers

Ufuk Akcigit
,
University of Chicago
Sina T. Ates
,
Federal Reserve Board
Josh Lerner
,
Harvard University
Richard R. Townsend
,
University of California-San Diego
Yulia Zhestkova
,
University of Chicago

Abstract

The treatment of foreign investors has been a contentious topic in U.S. entrepreneurship policy in recent years. This paper examines foreign corporate investment in Silicon Valley from a theoretical and empirical perspective. We depict a setting where such funding may allow a U.S. entrepreneur to pursue technologies that they could not otherwise, but may also lead to spillovers to the overseas firm providing the financing and the nation where it is based. Using as comprehensive as possible a sample of investments by non-U.S. corporate investors in U.S. start-ups between 1976 and 2015, we find evidence supportive of the model.

Opening Up Military Innovation: An Evaluation of Reforms to the United States Air Force SBIR Program

Sabrina T. Howell
,
New York University
Jason Rathje
,
United States Air Force
John Van Reenen
,
Massachusetts Institute of Technology
Jun Wong
,
New York University

Abstract

The U.S. military was historically an important investor in transformational technologies. This virtuous cycle is facing challenges from a consolidated and less innovative defense industrial base. We examine reforms to the U.S. Air Force SBIR program, which are central to an effort to bring new firms with frontier technologies into the defense contracting pipeline. In doing so, we offer the first causal evaluation of a defense R&D program. We find that the “open topic” reforms, which welcomed a broad set of ideas rather than specific technologies, attracted new types of firms and generated strong positive effects on VC investment and Air Force contracts.

Give Me Your Tired, Your Poor, Your High-Skilled Labor: H-1B Lottery Outcomes and Entrepreneurial Success

Stephen G. Dimmock
,
National University of Singapore
Jiekun Huang
,
University of Illinois
Scott J. Weisbenner
,
University of Illinois

Abstract

We study how access to high-skill labor affects the outcomes of start-up firms. We obtain exogenous variation in firms’ ability to access skilled labor by using win rates in H-1B visa lotteries. Relative to other firms that also applied for H-1B visas, firms with higher lottery win rates are more likely to receive additional venture capital funding and to have a successful exit via an IPO or acquisition. H-1B visa lottery winners also subsequently receive more patents and patent citations. Overall, our results show that access to high-skill labor is a critical determinant of success for start-up firms.

How Are Small Businesses Adjusting to COVID-19? Early Evidence from a Survey

Alexander W. Bartik
,
University of Illinois-Urbana-Champaign
Marianne Bertrand
,
University of Chicago
Zoe Cullen
,
Harvard University
Edward Glaeser
,
Harvard University
Michael Luca
,
Harvard University
Christopher Stanton
,
Harvard Business School

Abstract

In addition to its impact on public health, COVID-19 has had a major impact on the economy. To shed light on how COVID-19 is affecting small businesses – and on the likely impact of the recent stimulus bill, we conducted a survey of more than 5,800 small businesses. Several main themes emerge from the results. First, mass layoffs and closures have already occurred. In our sample, 43 percent of businesses are temporarily closed, and businesses have – on average – reduced their employee counts by 40 percent relative to January. Second, consistent with previous literature, we find that many small businesses are financially fragile. For example, the median business has more than $10,000 in monthly expenses and less than one month of cash on hand. Third, businesses have widely varying beliefs about the likely duration of COVID related disruptions. Fourth, the majority of businesses planned to seek funding through the CARES act. However, many anticipated problems with accessing the aid, such as bureaucratic hassles and difficulties establishing eligibility.
Discussant(s)
Lee Branstetter
,
Carnegie Mellon University
Jacquelyn Pless
,
Massachusetts Institute of Technology
Sari Pekkala Kerr
,
Wellesley College
David Robinson
,
Duke University
JEL Classifications
  • L2 - Firm Objectives, Organization, and Behavior
  • H2 - Taxation, Subsidies, and Revenue