EconPapers    
Economics at your fingertips  
 

Organization of innovation and capital markets

Cuneyt Orman ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper develops a theory of the firm scope where not only research but also ordinary production employees can generate inventions. Separating research from production (“specialization”) solves the two-tier agency problem of inducing simultaneously research effort and managerial truthful-reporting but is costly when capital markets are imperfect. Improvements in capital markets, therefore, promote specialization, allowing a greater number of specialized firms to be established and also enabling them to undertake innovative projects with larger potential outcomes. Moreover, this capital market improvement effect is stronger for innovative activities that are less capital-intensive and that have weaker synergies with existing production activities. The model can help us understand the explosion of small company innovation in the U.S. since late 1970s and the contribution of venture capital to this change.

Keywords: Innovation; Organizational form; Agency problems; Technological synergies; Financial imperfections. (search for similar items in EconPapers)
JEL-codes: D2 D82 D86 G24 O32 (search for similar items in EconPapers)
Date: 2015-07, Revised 2015-02
New Economics Papers: this item is included in nep-cfn, nep-cse, nep-cta, nep-ent, nep-ino, nep-knm and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/65441/1/MPRA_paper_65441.pdf original version (application/pdf)

Related works:
Journal Article: Organization of innovation and capital markets (2015) Downloads
Working Paper: Organization of Innovation and Capital Markets (2010) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:65441

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().

 
Page updated 2024-02-18
Handle: RePEc:pra:mprapa:65441