The Financing of R&D and Innovation

  title={The Financing of R\&D and Innovation},
  author={Bronwyn H Hall and Josh Lerner},
  journal={Entrepreneurship \& Finance eJournal},
Evidence on the "funding gap" for investment innovation is surveyed. The focus is on financial market reasons for underinvestment that exist even when externality-induced underinvestment is absent. We conclude that while small and new innovative firms experience high costs of capital that are only partly mitigated by the presence of venture capital, the evidence for high costs of R&D capital for large firms is mixed. Nevertheless, large established firms do appear to prefer internal funds for… 
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