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Chapter 38: From the Corporation to Venture Capitalism: New Surrogate Markets for Knowledge and Innovation Led Economic Growth
38 From the corporation to venture capitalism: new surrogate markets for knowledge and innovation-led economic growth Cristiano Antonelli and Morris Teubal 38.1 INTRODUCTION The corporation has been able for a large part of the twentieth century to fulfil the pivotal role of intermediary between finance and innovation. Yet the discontinuities brought about by the ICT revolution have progressively undermined its efficiency. The span of competence of incumbents was unable to match the new radical technologies: a case of lock-in competence could be observed. Venture capitalism seems more and more likely to emerge as the third major institutional set-up able to manage the complex interplay between finance and innovation when radical changes take place (Lamoreaux and Sokoloff, 2007). The information and communication technological revolution has led to a new set of private (venture capital) and public (epitomized by NASDAQ) capital markets for ‘technology companies’ including high-tech start-ups (SUs), which, by supporting such companies and enabling the anticipation of returns, have for the first time in history, promoted the creation in advanced economies of a specialized segment of ‘inventor’ companies.1 These markets, which emerged in the USA during the 1970s, specialize in knowledge-intensive assets or knowledge-intensive property rights (KIPRs). For this reason they have been termed ‘surrogate knowledge markets’. Their emergence parallels the demise of the Chandlerian corporation and can be considered as a major institutional innovation (Antonelli and Teubal, 2010). 38.2 FROM THE CORPORATION TO VENTURE CAPITALISM The relationship between finance and innovation is crucial. Radical uncertainty and hence major knowledge...
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