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The Effect of Going Public on Innovative Productivity and Exploratory Search

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  • Geraldine A. Wu

    (Stern School of Business, New York University, New York, New York 10012)

Abstract

This paper investigates whether and how going public affects firm innovation. I propose that initial public offerings (IPOs) fundamentally reshape core organizational structures and processes, and I consider implications for firms' overall innovative productivity and their exploratory search strategies. Using longitudinal data on U.S. medical device firms funded by venture capital and inverse probability of treatment weights to account for self-selection into IPOs and the presence of time-dependent confounders, I find that a firm's overall innovative productivity increases after the firm goes public. Going public also decreases the proportion of innovation search that explores new and recently developed knowledge and increases the proportion of exploratory search building on scientific knowledge. Estimates represent population average treatment effects.

Suggested Citation

  • Geraldine A. Wu, 2012. "The Effect of Going Public on Innovative Productivity and Exploratory Search," Organization Science, INFORMS, vol. 23(4), pages 928-950, August.
    • Handle: RePEc:inm:ororsc:v:23:y:2012:i:4:p:928-950
    DOI: 10.1287/orsc.1110.0676
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    5. George A Shinkle & Jo-Ann Suchard, 2019. "Innovation in newly public firms: The influence of government grants, venture capital, and private equity," Australian Journal of Management, Australian School of Business, vol. 44(2), pages 248-281, May.
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    8. Devarakonda, Ramakrishna & Liu, Aqi, 2023. "A legitimacy-based view of the impact of government venture capital on startup innovation: Evidence from a transition economy," Other publications TiSEM 3afc4804-f469-4dd7-bb34-8, Tilburg University, School of Economics and Management.
    9. Guoliang Frank Jiang & Jeffrey J. Reuer & Colette Southam & Paul W. Beamish, 2022. "The impact of initial public offerings on SMEs’ foreign investment decisions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(5), pages 879-901, July.
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