Money for nothing: how firms have financed R&D-projects since the Industrial Revolution
Economic History Working Papers from London School of Economics and Political Science, Department of Economic History
We investigate the long-run historical pattern of R&D-outlays by reviewing aggregate growth rates and historical cases of particular R&D projects, following the historical-institutional approach of Alfred Chandler (1962), Douglass North (1981) and Oliver Williamson (1985). We find that even the earliest R&D-projects used non-insignificant cash outlays and that until the 1970s aggregate R&D outlays grew far faster than GDP, despite five well-known challenges that implied that R&D could only be financed with cash, for which no perfect market existed: the presence of sunk costs, real uncertainty, long time lags, adverse selection, and moral hazard. We then review a wide variety of organisational forms and institutional instruments that firms historically have used to overcome these financing obstacles, and without which the enormous growth of R&D outlays since the nineteenth century would not have been possible.
Keywords: R&D-project financing–-history; R&D-financing institutions; sunk costs; historical R&D-project cost case studies Britain; United States (search for similar items in EconPapers)
JEL-codes: N20 N80 O21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cse, nep-his, nep-ino and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9) Track citations by RSS feed
Downloads: (external link)
http://eprints.lse.ac.uk/54518/ Open access version. (application/pdf)
Journal Article: Money for nothing: How firms have financed R&D-projects since the Industrial Revolution (2013)
Working Paper: Money for nothing: how firms have financed R&D-projects since the industrial revolution (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ehl:wpaper:54518
Access Statistics for this paper
More papers in Economic History Working Papers from London School of Economics and Political Science, Department of Economic History LSE, Dept. of Economic History Houghton Street London, WC2A 2AE, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager on behalf of EH Dept. ().