Handbook on the Economics and Theory of the Firm
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Handbook on the Economics and Theory of the Firm

Edited by Michael Dietrich and Jackie Krafft

This unique Handbook explores both the economics of the firm and the theory of the firm, two areas which are traditionally treated separately in the literature. On the one hand, the former refers to the structure, organization and boundaries of the firm, while the latter is devoted to the analysis of behaviours and strategies in particular market contexts. The novel concept underpinning this authoritative volume is that these two areas closely interact, and that a framework must be articulated in order to illustrate how linkages can be created.
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Chapter 38: From the Corporation to Venture Capitalism: New Surrogate Markets for Knowledge and Innovation Led Economic Growth

Cristiano Antonelli and Morris Teubal


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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