Resent Research

A recent study found that the use of industrial robots (UIR) can reduce a country’s overall ecological footprint while simultaneously promoting economic growth. This is through timesaving, green employment, and energy upgrading effects that increase as the level of economic development and human capital within the country increases. The researchers also observed that the effect of UIR in reducing the ecological footprint is more evident in countries that are members of the Organisation for Economic Co-operation and Development (OECD) – which includes some of the world’s most carbon-intensive nations. Therefore, UIR can simultaneously be used to further economic growth while increasing environmental protection and reducing contributions that accelerate climate change.

From 2005 to 2008, the clean technology industry experienced a venture capital boom where the share of total VC investments in clean energy technologies tripled before falling dramatically. Many studies have concluded that the boom and bust in cleantech as an equity investment focus was because clean energy does not fit the venture capital “model.” A recent study from the National Bureau of Economic Research explores other possible reasons for the failure of venture capital to remain interested in clean energy.

The NBER researchers propose that a lack of demand for clean technologies impacted investors’ decisions, especially when coupled with the failure of the cap and trade bill in Congress in 2009. Additionally, they suggest clean energy firms may be unable to earn oversized profits rapidly – a priority for VC investors – due to difficulties differentiating products and increasing market power. A third concern or explanation the researchers explored is the role of governments and public sector investments in funding clean energy startups.

A recent study found that merit aid awards increased four-year bachelor’s degree completion rates for students – especially among students that were unlikely to pursue the four-year program in the absence of financial aid. A team of researchers from the National Bureau of Economic Research assessed the marginal effects that merit aid from the Susan Thompson Buffett Foundation (STBF) has on students attending public colleges in Nebraska. The research also showed that the projected lifetime earnings of the students outweighed the costs of funding merit aid for low-income, people of color, urban, and first-generation college students in Nebraska.

A team of researchers recently assessed the relationship between angel investing and venture capital (VC) for startups. Although they found some variation in the performance of companies based on their share of angel and VC financing, there was no clear indication that angel investing provides any unique value for a startup.

The research addressed three questions. First, the research analyzed if there are notable differences in the added value to startups when they utilize angel versus VC financing. Second, the research assessed if angel financing and VC financing are substitutes or complements to each other. The last question that the research sought to answer was if the order of angel and VC financing across deal rounds for a startup, referred to as the financing sequence, is related to the probability of a successful exit for the startup.

Adding to the debate about whether smaller or larger businesses play an outsized role in the nation’s economy, a new Census Bureau report finds that the concentration of both older and larger firms has continued to increase in the U.S. economy over the last several decades, giving these firms an overall greater impact on employment and job growth than younger and smaller firms. Specifically, the report indicates that decreases in the national share of startup firms over the last several decades lead to an increased concentration of older firms, which in turn has had a greater impact on national employment and job creation than an increase in larger firms over the same period.

Faculty of the nation’s higher education institutions have long used research publications and citations as a measure of success. A new working paper posted by the National Bureau of Economic Researchers (NBER) suggests a select group of research publications may do more than gain the authors tenure and celebrity in their chosen field: these works are correlated with reductions in local disease-related mortality. In an era of marked increases in anti-intellectualism among legislatures, is this finding an additional argument to add to TBED policymakers’ arsenal for increasing state and regional investments targeting R&D?

Does Research Save Lives? The Local Spillovers of Biomedical Research on Mortality, written by Rebecca McKibbin (University of Sidney) and Bruce A. Weinberg (Ohio State University), reports the findings of the authors’ study using the PubMed database, the geographic location of the publishing biomedical researchers, and the timing and intensity of local mortality rates by disease. They conclude each “additional research publication on average reduces local mortality from a disease by 0.35 percent.” 

A recent research study suggests that diverse identity representation of website spokespeople increases the likelihood of attracting a higher proportion of prospective entrepreneurs.

Rosanna Garcia and Daniel Baack, researchers at Worcester Polytechnic Institute and the University of Denver respectively, explore whether the demographic of spokespeople featured on websites had an impact on the entrepreneurial intention of individuals of various identities. Their article, Entrepreneurial Intent Is Not Black or White: An Intersectional Perspective, sampled 562 students across five American universities to gain insight into this issue. The goal of the study was to isolate and cross-examine individual and compounded impacts of race and gender in both the website spokesperson and student respondent in order to identify ways to encourage more diverse entrepreneurial involvement in university settings.

Forthcoming research suggests venture development organizations, that is, those publicly-supported nonprofits that combine risk financing with expert technical assistance to grow local innovation-based startups, should give careful consideration to the exit histories of the venture capitalists they partner with to move the VDO’s portfolio firms through seed and series A investment rounds. Who those VCs know and have worked with to achieve successful exits previously through acquisitions or IPOs, in many cases, may be more important than the VC firms’ zip codes or assets under management.

The path to a successful exit for each high-growth startup will vary; for example, exiting from the startup phase may take many forms, including staying an independent private company, becoming a publicly traded business through an IPO, or being acquired by a larger firm. The last two paths in that list are the most common for equity-financed innovation startups, with acquisitions being the much more prevalent of the two. 

High-risk/high-reward research can yield breakthroughs, produce new technologies, and allow the surrounding region to remain economically relevant. However, the scientific community remains concerned that research and development-focused policies, both in the U.S. and elsewhere, continue to be conservative with their goals by only encouraging incremental growth that can yield tangible results in shorter amounts of time. These concerns, and potential policy solutions, are explored in a recently published research paper by the Organization for Economic Cooperation and Development (OECD). Effective Policies to Foster High Risk/High Reward Research, authored by an international group selected by the Global Science Forum, examines the current policy environment, notes the roadblocks to supporting high-risk/high-reward research, and investigates what can be done to provide long term support for high-risk/high-reward projects.

Building on top of the notion that diversity of industry is central to a region’s entrepreneurial success, recent research has noted that the personalities of people living throughout a region also play an important role in local knowledge spillover and the economic diversity of the area. The report, Entrepreneurship in Cities by Sam Tavassoli, Martin Obschonka, and David B. Audretsch, examines the relationship between a city’s entrepreneurial success and its ability to provide a favorable and connected environment for its residents through urban density and local psychological openness.

“The Achilles Heel of Reputable VCs,” a recent paper by Nuri Ersahin et al., finds that the most successful venture capital (VC) funds make fewer and smaller investments in states after investment tax credits go into effect. These VCs also co-invest with fewer firms, are less likely to invest in “serial” entrepreneurs and experience fewer positive exits after the introduction of the tax credit.

The paper specifically speaks to the investment activity of VC firms that have previously garnered the top one-third of initial public offering (IPO) shares, which the authors call “reputable VCs.” The authors examine this group because they recognize that many investment tax credit studies have found marginal overall effects on investment activity and are attempting to build on this research. The contribution of this paper is showing that, within static topline numbers, the credits are trading activity from successful VCs for activity from new or previously-unsuccessful investors.

Having interdisciplinary teams of scientists and relationships with “star” entrepreneurs are factors that can influence the chances for academic discoveries to reach the commercialization stage. While proximity to capital has traditionally been viewed as the core stimulus for academic commercialization, a recently released working paper by the National Bureau of Economic Research reexamines the variables that play a role in the commercialization of academic sciences, and provides new insight into the importance of team composition throughout the commercialization process.

In their approach, authors Matt Marx and David H. Hsu control for “latent commercializability” and technology differences to provide a more level field for analyzing the roles of variables such as munificent financial environments and team composition. By studying over 20,000 ‘twin’ discoveries, pairs of academic research that resulted in similar findings, the authors were able to explore what variables led to successful commercialization while balancing out the influence of the latent commercializability of the research.