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The Financing of Innovative Activities in the Data Processing Industry

In: Finance and Technological Change

Author

Listed:
  • Enrico Santarelli

    (University of Bologna)

Abstract

As shown in Chapter 6, the initially rapid growth of the DP industry was mainly due to a continuous process of development and diffusion of new products, through a ‘D’-oriented R&D activity in most cases set in motion by new firms and reinforced by previously existing ones. In this chapter the relationship between sources of financing and technological activities in the DP industry is outlined in order to provide empirical evidence for the theoretical analysis conducted in Chapter 4. Thus Section 7.2 presents an international comparison of the size and features of the venture capital industry, which, besides its significant function in the early development of the microcomputer industry, has always represented a major source of finance for the whole of the DP industry in the USA. Section 7.3 examines the impact of venture capital on the development of the DP industry in the USA by presenting two case studies concerned, respectively, with successful and unsuccessful venture-capital-funded start-ups. Section 7.4 presents a formal test of the hypothesis introduced in Chapter 4, namely that equity financing is among the preferred sources of financing for large established DP companies investing heavily in R&D. Section 7.5 investigates the wave of takeovers and cooperation agreements that interested the industry during the 1980s and which, in some cases, enabled companies to overcome liquidity problems and to share risk in the undertaking of innovative projects.

Suggested Citation

  • Enrico Santarelli, 1995. "The Financing of Innovative Activities in the Data Processing Industry," Palgrave Macmillan Books, in: Finance and Technological Change, chapter 7, pages 115-138, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-37503-1_7
    DOI: 10.1057/9780230375031_7
    as

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