A Triple Helix of University–Industry–Government
Edited by Riccardo Viale and Henry Etzkowitz
Chapter 3: Venture Capitalism as a Mechanism for Knowledge Governance
3. Venture capitalism as a mechanism for knowledge governance1 Cristiano Antonelli and Morris Teubal INTRODUCTION 1. New dedicated capital markets specialized in the public transactions of the stocks of ‘science-based companies’ emerged in the USA during the 1970s. These new financial markets enable the anticipation of returns stemming from the economic applications of technological knowledge, bundled with managerial competence, but non-embodied in either capital or intermediary goods. As such the financial markets have, for the first time in history, promoted the creation and growth of a specialized segment of ‘inventor’ companies and favored public transactions in technological knowledge as an activity per se. These new financial markets are becoming a key component of an innovation-driven novel institutional system termed ‘venture capitalism’. This is key for a new model of ‘knowledge-based’ growth relevant not only for information and communication technologies but also for biotechnologies and new radical technologies at large (Perez, 2003). As such, venture capitalism can be considered a major institutional innovation that enables higher levels of knowledge governance. The basic ‘innovation’ here is not technological but rather institutional, as it consists in a new hybrid organization based upon the bundling of knowledge, finance and competence into new science-based startup firms and in the trade of their knowledge-intensive property rights in dedicated institutional financial markets (Hodgson, 1998; Menard, 2000, 2004; Menard and Shirley, 2005). In order to grasp the process that has led to its introduction we shall rely upon the complexity approach to the economics of innovation. The application...
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