The Role of Patents for Bridging the Science to Market Gap

This paper examines an ex-post rationale for the patenting of scientific discoveries. In this model, scientist do not know which firms can make use of their discoveries, and firms do not know which scientific discoveries might be useful to them. To bridge this gap, either or both sides need to engage in costly search activities. Patents determine the appropriability of scientific discoveries, which affects the scientists. and firms. willingness to engage in search. Patents decrease dissemination when the search intensity of firms is sufficiently elastic, relative to that of scientists. The model also examines the role of universities. Patents facilitate the delegation of search activities to the universities%u2019 technology transfer offices, which enables efficient specialization. Rather than distracting scientists from doing research, patenting may be a complement to doing research.

Entrepreneurship and the Process of Obtaining Resource Commitments

Most theories of the firm ignore the entrepreneurial process of how the various resources of the firm are combined in the first place. This paper examines the process of how an entrepreneur obtains commitments from multiple resource providers to create a new venture. Resource providers may be reluctant to commit to an unproven concept, and the commitment of one gives external validation for the others. The entrepreneur has to decide in what order to approach potential providers, and what to bargain for. The optimal sequence of commitments depends on the entrepreneur's own credibility. Additional problems arise when no resource provider wants to be the first to commit. In this case the entrepreneur may shuttle between resource providers for a long time and the venture may never get started. The paper also shows how, as a result of the entrepreneurial process, the resources in a firm may differ from their first-best combination.

Banks as Catalysts for Industrialization

We provide a new theory of the role of banks as catalysts for industrialization. In their influential analysis of 19th century continental European industrialization, Gerschenkron and Schumpeter accorded banks a central role, arguing that they promoted the creation of new industries. We formalize this role of banks by introducing financial intermediaries into a 'big push' model. We show that banks may act as `catalysts' for industrialization provided that they are sufficiently large to mobilize a critical mass of firms, and that they possess sufficient market power to make profits from coordination. The theory provides simple conditions that help to explain why banks seem to play a creative role in some but not in other emerging markets. The model also shows that universal banking helps to reduce the cost of coordination. Finally, we show that one disadvantage of catalytic banks is that they may favor concentration in the industrial sector.http://deepblue.lib.umich.edu/bitstream/2027.42/39827/3/wp443.pd

The Genesis of Venture Capital - Lessons from the German Experience

Why does venture capital work in some countries but not in others? This clinical study of the first German venture capital firm examines the difficulties of creating a venture capital market in a bank-based financial system. The analysis identifies the problem of creating appropriate governance structures to protect investor returns. It exposes the difficulties of established banks - not to mention government - to devise venture investment strategies. It identifies the availability of high quality entrepreneurs as a critical complement. And it provides a reinterpretation of the hypothesis of Black and Gilson (1997), arguing that the existence of an active stock market is a necessary, but by no means sufficient condition for the development of venture capital.

On the fundamental role of venture capital

The venture capital industry experienced its biggest decline ever in 2001. The National Venture Capital Association reports that, in the fourth quarter of 2001, investments by venture capital firms were at approximately a third of the level the year before and the amount of money raised by these firms had dropped 80 percent. Many people question whether this trend signals the eventual demise of venture capital. ; However, according to the authors of this article, it is important to put these numbers in perspective. In terms of total dollars invested, 2001 ranks as the venture capital industry's third-best year, and the developments of 2001 are simply an anomaly in an otherwise exceptional growth curve. The article examines the significance of this difference between short- and long-term performance. ; Using the findings from the Stanford Project on Emerging Companies, an interdisciplinary research project that analyzed 170 technology start-up firms, the authors discuss the effects of venture capital on both the market position of the start-up and on internal operational issues. Their research supports the conclusion that venture capitalists provide value-added services that enhance the value of their portfolio companies. The article concludes with some thoughts on the evolution of the venture capital industry in the nineties.Venture capital ; Productivity ; Technology ; Economic development

The government's role in Japanese and Korean credit markets : a new institutional economics perspective

The authors discuss the effectiveness of credit policies in the early stages of economic development in Japan and Korea. They examine the importance of institutional arrangements for managing credit policies in the two countries. They emphasize participatory government intervention, wherein credit policies could be viewed as part of an internal allocation mechanism: government, banks, and large industrial firms may be said to have formed what the authors call a"government led internal organization"(GLIO). They examine the theoretical foundations for this view and discuss the implications for the efficiency of credit allocations. They argue that in early economic development such a participatory approach may have helped overcome pervasive market imperfections. But there were also significant dangers: problems of entrenched interests and institutional inertia. In both countries, the relative importance of GLIO gradually diminished as competitive capital markets and large conglomerates ("privately led internal government organizations") expanded with economic growth.Financial Crisis Management&Restructuring,Banks&Banking Reform,Environmental Economics&Policies,Economic Theory&Research,Financial Intermediation

Banks as Catalysts for Industrialization

We provide a new theory of the role of banks as catalysts for industrialization. In their influential analysis of 19th century continental European industrialization, Gerschenkron and Schumpeter accorded banks a central role, arguing that they promoted the creation of new industries. We formalize this role of banks by introducing financial intermediaries into a 'big push' model. We show that banks may act as `catalysts' for industrialization provided that they are sufficiently large to mobilize a critical mass of firms, and that they possess sufficient market power to make profits from coordination. The theory provides simple conditions that help to explain why banks seem to play a creative role in some but not in other emerging markets. The model also shows that universal banking helps to reduce the cost of coordination. Finally, we show that one disadvantage of catalytic banks is that they may favor concentration in the industrial sector.Coordination Failures, Financial Institutions, Financial History, Banks, Banking and Finance

When Do Employees Become Entrepreneurs?

This paper examines an economic theory of when employees become entrepreneurs. It jointly addresses the two fundamental questions of when employees generate innovations, and whether these innovations are developed as internal ventures or outside the firm. The model shows that if generating innovations distracts employees from their assigned tasks, firms may discourage innovation. Firms may reject profitable opportunities that fall outside of their core activities. If employees own the intellectual property (IP), they may leave to do a start-up. The allocation of IP rights also affects the generation of innovation. The external entrepreneurial environment is a complement to firm-internal innovation. If the external environment is particularly good, firms may embrace employee innovation and take advantage of it through spin-offs

Some Thoughts on the Theory of Corporate Venture Investing

In this note I develop some further thoughts that build on my paper entitled a "A Theory of Corporate Venturing." In this paper I develop a formal economic model of why corporations may face difficulties when making venture capital investments. In thinking broadly about the reasons why corporations may have difficulties when investing in entrepreneurial companies, I see three main sets of issues. The first set of reasons revolves around issues of intellectual property rights. The second set relates to strategic conflicts of interest. The third set concerns issues of organizational design and conflict within the corporation. The theory paper deals directly with the second set of issues, the conflicts of interest that result from the strategic objectives of the corporation. In this note I therefore want to focus on the first and third area of problems. Many would argue that entrepreneurs don't want corporate investors because they do not want their intellectual property stolen. I would actually argue that, while intellectual property is important, these problems should not be overstated

Global minimum determination of the Born-Oppenheimer surface within density functional theory

We present a novel method, which we call dual minima hopping method (DMHM), that allows us to find the global minimum of the potential energy surface (PES) within density functional theory for systems where a fast but less accurate calculation of the PES is possible. This method can rapidly find the ground state configuration of clusters and other complex systems with present day computer power by performing a systematic search. We apply the new method to silicon clusters. Even though these systems have already been extensively studied by other methods, we find new configurations that are lower in energy than the previously found.Comment: 4 pages, 3 figures, minor changes, more structures are presented no