Entrepreneurial Spillovers from Corporate RD

new NBER paper supports your view that potential high impact entrepreneurial efforts come out of the "Google's" of the world. increases in corporate R&D leads to "R&D-induced spawning" note these spillovers do not harm the parent firm, but they are not beneficial

"...We show that corporate investment in research and development (R&D) increases the rate at which employees depart to launch new firms. This effect is not obvious, as R&D might increase the firm’s growth options or make it a more interesting place to work, leading to greater employee retention. Evidence that many successful entrepreneurs are former employees of high-tech, large firms motivates our research (Bhide 2000,Klepper 2001). Especially relevant is Gompers, Lerner & Scharfstein (2005), who observe that around 40 percent of venture capital-backed executive teams previously worked at a public company, often those with entrepreneurial cultures..... There is a robust relationship between firm R&D investment and entrepreneurial spawning. A one standard deviation increase in R&D is associated with a 18.7 percent increase in entrepreneurial spawning, relative to sample mean of 1.3 percent.The model includes firm, state-year, and industry-year fixed effects, as well as a rich array of time-varying firm characteristics, including total investment and establishment-level payroll and employment. Further, the results are robust to including four-digit SIC code fixed effects, suggesting that narrow industries do not explain the result. Finally, they are robust to several measures of entrepreneurial spawning.... This paper shows that corporate R&D investment leads to entrepreneurial spawning, in which employees depart to launch their own firms. We do this both in tightly controlled fixed effects regressions and in an instrumental variables approach, where we instrument for R&D using federal and state R&D tax credits. We find that for the parent firm, the spawning effect of R&D yields no obvious contractual benefits, nor is it observably costly. Our evidence is consistent with corporate R&D being a new channel for knowledge spillovers, as well as a new source of high-tech startups. Our results have two policy implications. First, the spawning effect of R&D implies greater corporate underinvestment in R&D relative to the social optimum than previously thought. Second, the presence of knowledge spillovers are one motivation for offering firms tax credits that lower their cost of R&D investment. The spawning effect of R&D is much larger in the instrumental variables model than in the fixed effects regression. This suggests, albeit in a partial equilibrium sense, that R&D tax credits are effective in that they lead to greater R&D-induced entrepreneurial spawning, which is likely a form of knowledge spillover.Our finding also speaks to the theory of the firm. Zingales (2000) writes that “Entrepreneurship is the process by which new firms are created. But new firms are created to exploit growth options existing firms cannot or do not want to exploit. Thus, a theory able to explain what growth options existing firms are willing and able to exploit will also identify the opportunities for entrepreneurial activity.” We offer a concrete mechanism tying entrepreneurship to the growth options that an incumbent does not to exploit.....In sum, it appears likely that R&D-induced spawning is a direct form of knowledge spillover. We document that a remarkable 88 percent of spawns are located in the same state as the parent...."

Tania Babina and Sabrina T. Howell, "Entrepreneurial Spillovers from Corporate R&D," National Bureau of Economic Research, December 2018, https://www.nber.org/papers/w25360