Author Abstract
The treatment of foreign investors has been a contentious topic in US entrepreneurship policy in recent years. This paper examines foreign corporate investments in Silicon Valley from a theoretical and empirical perspective. We model a setting where such funding may allow US entrepreneurs to pursue technologies that they could not otherwise, but may also lead to spillovers to the overseas firm providing the financing and the nation where it is based. We show that despite the benefits from such inbound investments for US firms, it may be optimal for the U.S. government to raise their costs to deter investments. Using as comprehensive as possible a sample of investments by non-US corporate investors in US. start-ups between 1976 and 2015, we find evidence consistent with the presence of knowledge spillovers to foreign investors.
Paper Information
- Full Working Paper Text
- Working Paper Publication Date: September 2020
- HBS Working Paper Number: HBS Working Paper 21-043
- Faculty Unit(s): Entrepreneurial Management
