The effect of founders' credentials on allocation of risk in cooperative agreements

Rama Devarakonda, Jeffrey Reuer

Research output: Chapter in Book/Report/Conference proceedingConference contributionScientificpeer-review


We unpack founders’ attributes and show their contingent effects in the context of the market for ideas and technologies. Specifically, we extend ideas clarified in the economics of information about the risk of adverse selection and its remedies, and propose three distinct and costly- to-imitate credentials of startups’ founders – scientific stars, former employees of prominent firms, and successful founders – which can be influential in promoting cooperative commercialization agreements for early stage startups. We also argue that the impact of these credentials of founders will be contingent on presence or absence of signals that broadly transmit information about the underlying nature and quality of early stage startups’ ideas. In particular, we argue that the positive effects of founders’ credentials will be less pronounced for startups that obtain a technological credential, such as a patent publication, which publicly conveys credible information about the early stage technological activity of startups. Empirical analyses of early stage cooperative commercialization agreements of startups in the biopharmaceutical industry furnish evidence for our theory of founders’ credentials.
Original languageEnglish
Title of host publicationAcademy of Management Proceedings
Publication statusPublished - 2015
Externally publishedYes
Event75th Annual Meeting of the Academy of Management (AOM 2015) - Vancouver, Canada
Duration: 7 Aug 201511 Aug 2015


Conference75th Annual Meeting of the Academy of Management (AOM 2015)
Abbreviated titleAOM 2015


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