Facing patent infringement lawsuits can be a crisis for entrepreneurial new ventures when they threaten the ventures’ limited products and resources. Thus, it is essential to understand what drives entrepreneurs’ responses to such litigation and how that litigation affects entrepreneurs’ subsequent decision-making, particularly as to whether to patent innovations in the future. We develop the concept of entrepreneurial human capital risk calculus to theorize how entrepreneurial teams’ human capital determines how they perceive and respond to the various risks involved in patent infringement litigation and subsequent patent decisions. Drawing on the literature on human capital and threat-response, we theorize and test how entrepreneurs’ specific human capital affects how they balance the risks and costs of pursuing litigation vs. settlement. We then consider how patent litigation experience combined with entrepreneurial-specific human capital affects entrepreneurs’ patenting decisions. We contribute to the entrepreneurship literature on crisis, such as patent litigation, human capital, and entrepreneurial team decision-making.
