Bundling Technologies and Life
Chapter 6: Financing biomaterials innovation: selling science in venture capital markets
One of the most comprehensive changes in the world economy over the last four decades is the increased emphasis on financial markets and financial actors. The so-called ‘financialization’ of the economy (Krippner, 2005, 2011; Tomaskovic-Devey and Lin, 2011; Dore, 2008; Epstein, 2005; Lapavitsas, 2012) has emerged on the basis of macroeconomic and political changes and on the basis of the increased domain of jurisdiction of economists in the field of finance theory. Today, corporations are managed by and large on the basis of their ability to satisfy the demand for shareholder value creation, that is, to optimize the value produced to the benefit of the owners of the firm. One of the principal arguments in favour of shareholder value corporate governance policy and its underlying theoretical framework, agency theory, is that capital invested wisely can be released and transferred to other, more competitive, industries and corporations (Jensen, 1993). Such alleged efficiency of operative capital is, however, not necessarily supported by empirical evidence. While Lazonick and Tulum (2011) and Pisano (2006), for example, stress the substantial inflow of capital into the US biotechnology industry during the last few decades, despite poor performance in terms of profitability and output of new therapies, such increases in venture capital have not been observed in other parts of the world.
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