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Stanford study: IPOs slow down innovation at tech companies - Quartz

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An eye-popping new study by Shai Bernstein, an assistant professor of finance at Stanford Graduate School of Business, finds that innovationslowed down by about 40% at tech companies after they went public. In a meticulous analysis of patent data from nearly 2,000 companies, Bernstein found that newly public companies became noticeably more incremental and less ambitious with their in-house research than comparable firms that stayed private.

And that’s not all. Top inventors were much more likely to leave if their companies went public, and the ones who stayed behind showed a steep decline in “innovation quality.” Indeed, the newly public tech companies became much more dependent on buying technology from outside—usually by making corporate acquisitions.

Sometimes you need formal studies to confirm the seemingly obvious...

Why is it obvious that public companies are less innovative?

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