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Entrepreneurs Seeking Gains: Profit Motives and Risk Aversion in Inventors’ Commercialization Decisions
Author(s) -
Simons Kenneth L.,
Åstebro Thomas
Publication year - 2010
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/j.1530-9134.2010.00272.x
Subject(s) - commercialization , sunk costs , entrepreneurship , profit (economics) , risk aversion (psychology) , for profit , business , economics , marketing , microeconomics , industrial organization , finance , expected utility hypothesis , financial economics
Direct evidence has been lacking on entrepreneurs’ response to individual‐specific opportunities, and recent work suggests that entrepreneurship may be a non‐profit‐seeking activity and that entrepreneurs evaluate risk oddly. We model heterogeneous inventors and inventions, outside opportunities, sunk and nonsunk costs, and risk, to guide data analysis. We use assessment data from a center paid to assess the inventions’ economic potential. Inventors’ choices whether to commercialize their inventions and later whether to remain in production were consistent with profit‐seeking motives and risk aversion.