Financial Systems, Corporate Investment in Innovation, and Venture Capital

Bartzokas, Anthony; Mani, Sunil

doi:10.4337/9781845420642

Cited by 13 publications

(5 citation statements)

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“…Research evidence has revealed that innovation positively impacts SMEs ' performance (Rosenbusch, Brinckmann & Bausch, 2011). However, relying on resource-based theory, successful innovation requires organizational resources and capabilities (Goedhuys, Janz & Mohnen, 2014), especially financial resources (Nylund et al, 2019;O 'brien, 2003;Bartzokas & Mani, 2004). Accordingly, entrepreneurs try different formal and informal sources of financing to cover their innovation expenses.…”

Section: Introductionmentioning

confidence: 99%

Formal sources of finance boost innovation: Do immigrants benefit as much as natives?

Ashourizadeh¹,

Saeedikiya²,

Aeeni³

et al. 2022

EBER

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The article investigates the relative benefit of formality/informality of finance sources for innovation and compares this benefit amongst immigrant and native entrepreneurs. The authors investigate whether formal finance (here, bank loan) benefit innovation more than informal sources (personal savings and friend/family loan). Then, they explore whether an entrepreneur's status strengthens or weakens the benefit finance sources for innovation. Research Design & Methods:This study applies a quantitative approach to conduct the research. The data of 15,850 entrepreneurs surveyed by Global Entrepreneurship Monitor in 2015 were analysed using the hierarchical linear modelling (HLM) technique. Findings: Results indicated that formal finance benefits innovation more than informal sources, and this advantage is the same for both immigrant and native entrepreneurs. Implications & Recommendations: Despite the prevalence of some stereotypes regarding the simplistic and repetitive nature of immigrants ' businesses, the study recommends that financial institutions and policymakers plan to enhance entrepreneurs ' access to formal financial resources irrespective of their migrant status. Policymakers also can plan to increase the immigrant entrepreneurs ' access to the formal sources of finance by tailored educations to boost innovation. Contribution & Value Added:The results highlight that immigrant entrepreneurs benefit from formal finance towards innovation similarly to their native counterparts. Such a clarification informs the studies on the liability of foreignness and innovation finance that immigration status cannot be a barrier to innovation as portrayed and conceptualized by some studies. Article type:research article

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Section: Introductionmentioning

confidence: 99%

Formal sources of finance boost innovation: Do immigrants benefit as much as natives?

Ashourizadeh¹,

Saeedikiya²,

Aeeni³

et al. 2022

EBER

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“…Sun et al (2019) pointed out that venture capital supports innovation both in developed and developing markets. Bartzokas and Mani (2004) pointed out that venture capital supports innovation by providing various services such as financial planning, hiring the right human resources, obtaining suitable sources of debt financing, establishing network with foreign firms and obtaining public listing. Therefore, greater availability of venture capital promotes innovation activities.…”

Section: H2: Terrorism Has Insignificant Impact On Innovation In Devementioning

confidence: 99%

Terrorism, innovation and venture capital

Uddin

Alam

Yazdifar

et al. 2021

JES

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PurposeThis paper aims to examine the relationship between terrorism and innovation and the moderating role of venture capital.Design/methodology/approachThe paper has used panel data from 140 countries covering the period of 2007–2016 and has analysed the data by using generalised method of moments instrumental variables (GMM-IV) estimation method to control for unobserved endogeneity among the variables.FindingsThe authors find that terrorism has negative impact on innovation. Interesting results emerge when we separated the developed countries from others. The results show that the impact of terrorism on innovation is lower in developed countries. This is due to the fact that strong institutional settings in developed countries make the investors confident by providing support and incentives. Better institutional settings in developed countries also help to reduce uncertainty, which maximise innovation and minimise terrorism risk. The authors also find that venture capital positively moderates the terrorism and innovation relationship. This implies that by providing sufficient fund for technological development, venture capital may help to reduce terrorism risk.Practical implicationsThese results may guide the policy makers to find a business solution instead of lengthy political solution to mitigate terrorism risk in emerging countries. Overall, this paper will provide the basis for improving the counter-terrorism approaches from an innovation perspective.Originality/valueThe paper has used terrorism and venture capital data from 140 countries and finds interesting results that may help the policy makers to reduce the effect and intensity of terrorism in emerging countries.

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“…Government-sponsored VCs have been popular for a long time, such as the small business investment company (SBIC) plan in the United States, the Yozma plan in Israel, and the innovation investment fund (IIF) plan in Australia. Taking Israel's Yozma plan as an example, the evaluation system of Yozma includes the IPO/M&A ratio, number of exits, whether reputable investors invested in the VC company or not, total capital under management (critical mass effects), and demonstration effects [29]. In addition, the total sales [12], the number of employees [13], the growth potential [14], and the number of IPO exits [15] have been included in the evaluation system of risky projects.…”

Section: Related Literaturementioning

confidence: 99%

Exit Decision of Venture Capital Based on Linear Contract in Continuous Time: IPO or M&A

Ding

2020

Complexity

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Based on the assumption that the long-term value of a venture capital satisfies the algebraic Brownian motion, we develop a continuous-time exit model of venture capital under different exit modes, namely, initial public offering (IPO) and mergers and acquisitions (M&A). The employee incentive problem is analyzed jointly with the exit decision of the firm in terms of the exit timing and the exit mode. Further, the problem of capital exit is considered from two perspectives, namely, optimal venture capital and social welfare maximization, and the differences between these exit decisions are compared. Our model predicts that the timing of an IPO, the purpose of which is to maximize the utility of the capitalists, lags behind the exit timing, whose purpose is to maximize social welfare. Using a numerical analysis, this paper also proves that increasing the production efficiency, lowering the interest rates, and improving risk management can make the exit decision of venture capitalists converge with that of maximizing social welfare.

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Financial Systems, Corporate Investment in Innovation, and Venture Capital

Cited by 13 publications

References 0 publications

Formal sources of finance boost innovation: Do immigrants benefit as much as natives?

Formal sources of finance boost innovation: Do immigrants benefit as much as natives?

Terrorism, innovation and venture capital

Exit Decision of Venture Capital Based on Linear Contract in Continuous Time: IPO or M&A

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