Financing Innovation

Posted: 11 Dec 2015

See all articles by William Kerr

William Kerr

Harvard University - Entrepreneurial Management Unit

Ramana Nanda

Harvard University - Entrepreneurial Management Unit

Multiple version iconThere are 3 versions of this paper

Date Written: December 2015

Abstract

We review the recent literature on the financing of innovation, inclusive of large companies and new start-ups. This research strand has been very active over the past five years, generating important new findings, questioning some long-held beliefs, and creating its own puzzles. Our review outlines the growing body of work that documents a role for debt financing related to innovation. We highlight the new literature on learning and experimentation across multistage innovation projects and how this impacts optimal financing design. We further highlight the strong interaction between financing choices for innovation and changing external conditions, especially reduced experimentation costs.

Suggested Citation

Kerr, William R. and Nanda, Ramana, Financing Innovation (December 2015). Annual Review of Financial Economics, Vol. 7, pp. 445-462, 2015. Available at SSRN: https://ssrn.com/abstract=2702340 or http://dx.doi.org/10.1146/annurev-financial-111914-041825

William R. Kerr (Contact Author)

Harvard University - Entrepreneurial Management Unit ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Ramana Nanda

Harvard University - Entrepreneurial Management Unit ( email )

Boston, MA 02163
United States

HOME PAGE: http://www.people.hbs.edu/rnanda

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