The Entrepreneur's Idea and Outside Finance: Theory and Evidence about Entrepreneurial Roles
33 Pages Posted: 11 Mar 2015
Date Written: March 9, 2015
We study the problem faced by the entrepreneur seeking outside support to turn an entrepreneurial idea into a successful innovation — specifically a successful technological innovation resulting from research and development. The paper develops and tests the hypothesis that as an entrepreneur’s innovative idea becomes more complicated, the entrepreneur will find it more difficult to obtain outside finance and then outside support more generally for the commercialization of the idea. Consequently, the entrepreneur will be more likely to take on additional roles beyond providing the essential idea. The evidence supports the hypothesis that, other things being the same, an entrepreneur with a more complicated idea will have greater difficulty obtaining outside finance and will be more likely to take on the additional roles of development, production, marketing and distribution that are necessary for successful innovation.
Keywords: entrepreneur, outside finance, entrepreneurial roles, Small Business Innovation Research (SBIR) program
JEL Classification: O31; L26; O38; L24; O30; O32
Suggested Citation: Suggested Citation