Entrepreneurs face higher commercialization costs than incumbents. We show that this
implies that entrepreneurs will choose more risky projects than incumbents, aiming to reduce
their high expected marginal commercialization cost. However, entrepreneurs may select too
safe projects from a social point of view, since they do not internalize the business steal-
ing e¤ect. We also show that commercialization support induces entrepreneurship but may
lead to mediocre entrepreneurship by inducing entrepreneurs to choose less risky projects,
whereas R&D support encourages entrepreneurship without a¤ecting the type of entrepre-
neurship. Using Swedish patent citation data, we ?nd empirical support for predictions of
the model.