This paper analyzes innovation races in a moral hazard setting. I develop a model where two competing entrepreneurs …

I model an innovation game in which firms can choose to be leaders or followers. Internal finance leads to a stalemate … in which each firm wants to free-ride on the others' experimentation costs. Therefore, no innovation occurs. When instead … firms compete in the capital markets to finance innovation (e.g., in the case of venture capital or IPOs) there is an …

rates and radicalness. This research introduces and develops the new staged competition innovation theory which builds on … the well-understood diffusion of innovation theory and the Technology-Organisation-Environment framework to explain how … innovation activity. The new theory comprises three principles that demonstrate how a well-designed staged competition provides …