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Financing Innovation
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The role of financing to support company strategies to introduce
new products and processes in the economy has long been recognised
as key. More than a hundred years ago, Joseph Schum peter pointed
out the crucial function of banks in stimulating economic growth and
innovation, as well as identifying and financing new investments in
production. He also emphasised the differences between countries
due to the organisation of their banking and credit systems. Especially
for small firms and other organisations that could not benefit from
previous profits, credit was singled out as a starting point to introduce
an innovation. In the third chapter of his 1911 book, The Theory of
Economic Development, Schum peter pointed out that credit works
as a command for the economic system to accommodate the entrepreneurs’
goals, and so development could fl ow. Later on, with the
‘capitalism of trusts’, innovation was fundamentally connected to
large-scale firms and their initiatives. The power of these firms to
accumulate reserves and to directly access capital markets changed
their need for credit. Nevertheless, in his work Business Cycles (1939),
he once again qualified the relation between credit and innovation, as
he pointed out that such a relationship is essential for the capitalist
machine to work properly.
1st Edition
978-0-415-71039-8
NONE
Financing Innovation
Management
English
International Development Research Centre
2014
Indianapolis
1-312
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