Financing Innovation in the United States, 1870 to Present

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Although technological change is vital for economic growth, the interaction of finance and technological innovation is rarely studied. This pioneering volume examines the ways in which innovation is funded in the United
States. In case studies and theoretical discussions, leading economists and economic historians analyze how inventors and technologically creative entrepreneurs have raised funds for their projects at different stages of U.S. economic development,
beginning with the post-Civil War period of the Second Industrial Revolution. Their discussions point to intriguing insights about how the nature of the technology may influence its financing and, conversely, how the availability of funds influences technological advances.These studies show that over the long history of American technological advancement, inventors and innovators have shown considerable flexibility in finding ways to finance their work. They have moved to cities to find groups of local investors; they have worked for large firms that could tap the securities market for funds; they have looked to the federal government for research and development funding; and they have been financed by the venture capital industry. The studies make it clear that methods of funding innovation--whether it is in the auto industry or information technology--have important implications for both the direction of technological change and the competitive dynamism of the economy.

The MIT Press

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What People Are Saying

From the Publisher

"A marvelous exploration of the central strength of capitalism: its unique ability to foster successful innovation over the long term. Read this book if you want to understand how Americans have financed innovation and promoted growth over the past two centuries of sustained economic expansion."--Louis Galambos,
Professor of Economic and Business History, Johns Hopkins University

The MIT Press

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Product Details

  • ISBN-13: 9780262513326
  • Publisher: MIT Press
  • Publication date: 8/21/2009
  • Edition description: Reprint
  • Pages: 520
  • Product dimensions: 6.00 (w) x 8.80 (h) x 1.30 (d)

Meet the Author

Ashish Arora is Associate Professor in the Heinz School of Public Policy and Management at Carnegie Mellon University.

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Table of Contents

Foreword   William Janeway     ix
Acknowledgments     xiii
Introduction: The Organization and Finance of Innovation in American History   Naomi R. Lamoreaux   Kenneth L. Sokoloff     1
Financing Invention during the Second Industrial Revolution: Cleveland, Ohio, 1870-1920   Naomi R. Lamoreaux   Margaret Levenstein   Kenneth L. Sokoloff     39
The Organizing and Financing of Innovative Companies in the Evolution of the U.S. Automobile Industry   Steven Klepper     85
Why Did Finance Capitalism and the Second Industrial Revolution Arise in the 1890s?   Larry Neal   Lance E. Davis     129
Funding New Industries: A Historical Perspective on the Financing Role of the U.S. Stock Market in the Twentieth Century   Mary A. O'Sullivan     163
Stock Market Swings and the Value of Innovation, 1908-1929   Tom Nicholas     217
Financing Fiber: Corning's Invasion of the Telecommunications Market   Margaret B. W. Graham     247
The Federal Role in Financing Major Innovations: Information Technology during the Postwar Period   Kira R. Fabrizio   David C. Mowery     283
Learning the Hard Way: IBM and the Sources of Innovation in Early Computing   Steven W. Usselman     317
TradingKnowledge: An Exploration of Patent Protection and Other Determinants of Market Transactions in Technology and R&D   Ashish Arora   Marco Ceccagnoli   Wesley M. Cohen     365
The Governance of New Firms: A Functional Perspective   Josh Lerner     405
Real Effects of Knowledge Capital on Going Public and Market Valuation   Michael R. Darby   Lynne G. Zucker     433
Afterword   Naomi R. Lamoreaux   Kenneth L. Sokoloff     469
List of Contributors     475
Index     477
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