Mobilizing Venture Capital During the Second Industrial Revolution: Cleveland, Ohio, 1870 - 1920

64 Pages Posted: 23 Jan 2013  

Naomi R. Lamoreaux

Yale University; National Bureau of Economic Research (NBER)

Margaret C. Levenstein

University of Michigan at Ann Arbor - Survey Research Center; The Stephen M. Ross School of Business at the University of Michigan, Business Economics and Public Policy

Kenneth L. Sokoloff

University of California, Los Angeles (UCLA) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: January 23, 2013

Abstract

During the Second Industrial Revolution of the late nineteenth and early twentieth centuries, Midwestern cities were important centers of innovation. Cleveland, the focus of this study, led in the development of a number of key industries, including electric light and power, steel, petroleum, chemicals, and automobiles, and was a hotbed of high-tech startups, much like Silicon Valley today. In an era when production and invention were increasingly capital-intensive, technologically creative individuals and firms required greater access to funds than ever before. This paper explores how Cleveland's leading inventors and technologically innovative firms obtained financing. We find that formal financial institutions, such as banks and securities markets, were of only limited significance. Instead our research highlights the vital role played by a small number of successful local enterprises that both exemplified the wealth-creation possibilities of the new technologies and served as hubs of overlapping networks of inventors and financiers. We conclude by suggesting that such nodal firms have spawned important clusters of innovative enterprises in other places and times as well.

Comments on this paper can be found at:
http://ssrn.com/abstract=2206018

Suggested Citation

Lamoreaux, Naomi R. and Levenstein, Margaret C. and Sokoloff, Kenneth L., Mobilizing Venture Capital During the Second Industrial Revolution: Cleveland, Ohio, 1870 - 1920 (January 23, 2013). Capitalism and Society, Vol. 1, Issue 3, Article 5, 2006. Available at SSRN: https://ssrn.com/abstract=2205966

Naomi R. Lamoreaux (Contact Author)

Yale University ( email )

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HOME PAGE: http://www.econ.yale.edu/faculty1/lamoreaux.htm

National Bureau of Economic Research (NBER)

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Margaret C. Levenstein

University of Michigan at Ann Arbor - Survey Research Center ( email )

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Ann Arbor, MI 48109
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734-647-1186 (Fax)

HOME PAGE: http://www-personal.umich.edu/~maggiel

The Stephen M. Ross School of Business at the University of Michigan, Business Economics and Public Policy

Ann Arbor, MI 48109
United States
734-764-8336 (Phone)

Kenneth L. Sokoloff

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of California, Los Angeles (UCLA) - Department of Economics ( email )

Box 951477
Los Angeles, CA 90095-1477
United States
310-825-4249,310-825-1011 (Phone)
310-825-9528 (Fax)

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