Firm Size, Ownership, and Innovation

Project summary

Project B04 studies innovation by small and medium sized firms (SMEs) using novel data sets that allow exploring the causal effects of different types of innovation constraints. The project contrasts neoclassical and behavioral explanations of SME innovation activities to investigate their contribution to outcomes in different competitive market environments. Theoretical predictions about (possibly non-standard) preferences and expectations of decision makers in owner-managed as opposed to non-owner-managed firms are developed and then tested using data, elicited in experiments and surveys, on preferences and beliefs held by owner- and employee-managers.