Knowledge diffusion in nascent industries: Asymmetries between startups and established firms in spurring inventions by other firms

Abstract

Research Summary: Research on industry evolution highlights the role of knowledge-building activities of startups and established firms in shaping knowledge evolution in a nascent industry. Yet, research thus far has overlooked the possibility that differences between startups and established firms might also shape the diffusion of the knowledge that they build. This study abductively explores this conjecture in the context of solar energy by examining the extent to which the photovoltaic cell inventions that firms create spur subsequent inventions by other firms. In contrast with existing literature highlighting differences across firms in the types of inventions they create, this study reveals asymmetries between startups and established firms in the diffusion of the knowledge underlying their inventions, even when they create inventions with similar attributes. Managerial Summary: This study examines differences between startups and established firms in shaping knowledge diffusion in a nascent industry. Using data from photovoltaic cell patents, it shows that startups' inventions spur more subsequent inventions by other firms, even when compared to established firms' inventions with similar attributes. Findings indicate that such asymmetry is not driven by knowledge transfer mechanisms but rather by factors associated with knowledge spillovers. Specifically, findings reveal that university citations of a startup's patents draw other firms' attention to those patents, and that startups are less able to preempt rivals through cumulative inventions and less able to rely on litigiousness to deter rivals from building on their patents. These findings underscore the asymmetric influence startups have in shaping the knowledge underlying a nascent industry.