Drivers of Firm-Government Engagement for Technology Ventures


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Abstract: Prior scholarship predominantly examines the returns generated by firm-government engagement. Implicit in these studies lies an inherent and understudied assumption – the a priori strategic choice made by the firm to engage with the government. Here, we unpack the drivers of this strategic choice. We construct a representative sample of the population of high-tech U.S. ventures founded between 2015 to 2017 and trace their activity over their first three years of operation. We rely on government records to identify two forms of firm-government engagement: (i) expressed interest by the firm to establish an initial relationship with the government; and (ii) subsequent engagement via financial transactions between the firm and government. We examine a range of factors spanning features of institutional intermediaries, capital infrastructure, market spillovers, political context, firm imprinting, and early-stage growth. We identify salient trends that guide such a strategic choice, while also observing divergent trends shaped by the level of commitment between the two entities.

Keywords: Strategy, Firm-Government Engagement, Entrepreneurship, Technology Ventures, Procurement, Public Policy