Impatient Capital in High-Tech Industries

This research project analyzes the role of investment in the operation and performance of three broad high-technology sectors: communication technology, biopharmaceutical drugs and medical technologies, and wind power, solar power, electric vehicles, and the smart grid.

The theory of innovative enterprise posits that an understanding of the operation and performance of financial markets related to high-tech industries must be grounded in the analysis of the ways in which businesses and governments organize investment in the innovation process. The US government plays important roles in funding research, much of it publicly available, and in providing subsidies to specific companies in the sectors analyzed in this project. Given this government funding, one key question addressed by this project is whether business investment in these sectors entails the “financial commitment” or “patient capital” required to generate innovative products at prices that buyers are willing and able to pay. The other key question is the relation between those economic actors (taxpayers, workers, financiers) who take the risks of investing in these high-tech industries and those who reap the rewards when these industries generate returns. This research provides fundamental insights into science and technology policy, financial regulation, and corporate governance reforms with a view to promoting investments in industrial innovation. The research also considers how the success of industrial innovation can contribute to more equitable and more stable economic growth, or what we call “sustainable prosperity.”