Document Type

Working Paper

Publication Date

11-11-2016

SSRN Discipline

Industrial Organization & Regulation eJournals; Public Economics eJournals; Management Research Network; Innovation Research & Policy Network; Economics Research Network; Legal Scholarship Network; European Economics eJournals; Law School Research Papers - Legal Studies; Law & Society eJournals; Law & Society: Private Law eJournals; Accounting Research Network; Political Science Network; Employment, Labor, Compensation & Pension Law eJournals; PSN Subject Matter eJournals; ARN Subject Matter eJournals; LSN Subject Matter eJournals; ERPN Subject Matter eJournals; ERN Subject Matter eJournals; Financial Economics Network; MRN Business School Research Papers; IRPN Subject Matter eJournals; Innovation Areas eJournals; Entrepreneurship Research Paper Series; Organizations & Markets eJournals; Public Choice & Political Economy eJournals; Entrepreneurship Research & Policy Network; Corporate Governance Network; Auditing, Litigation & Tax eJournals; Political Economy - Development eJournals

Abstract

The standard narrative of entrepreneurship is of selfemployed creative individuals working out of their garage or independently owned startup companies Intrapreneurship "” where employees are responsible for being alert to new opportunities inside firms "” is another model for developing innovations Relatively little is known however about the latter process through which large complex firms engage in groundbreaking corporate entrepreneurship This Article's focus is on this type of innovation agents It provides a thorough account of the positive and negative spillovers of intrapreneurial firms while making the following key points First intrapreneurial companies utilize their economies of scale scope and age to deliver innovations to the masses They transform ideas labor and raw materials into tangible assets that can be traded in the market Second in doing so they offer individual entrepreneurs opportunities to capitalize their knowledge Sustaining entrepreneurs' prospects for supracompetitive profits is the main engine that motivates the latter to invest in discoveries in the first place Lastly intrapreneurial firms also serve as greenhouse for entrepreneurship through the migration of their own talented labor in the market While these spillovers have tremendous societal benefits they can also introduce harms First the race for the next breakthrough might result in anticompetitive behavior by rivals who conspire with employeesintrapreneurs to leave their firms and take with them confidential information Second intrapreneurs often aspire to undertake their own independent journey In so doing they leave secure positions and high salaries while carrying valuable knowledge and expertise This in return often prompts intrapreneurial firms to act opportunistically and lockin or lockout intrapreneurs in restrictive and wasteful arrangements As a solution this Article proposes ways law can balance the positive and negative spillovers of intrapreneurship and ways the tax system can help achieve such result

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