Bakker, Gerben (2013) Money for nothing: how firms have financed R&D-projects since the Industrial Revolution. Economic History working paper series , 182/2013. Department of Economic History, The London School of Economics and Political Science, London, UK.
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We investigate the long-run historical pattern of R&D-outlays by reviewing aggregate growth rates and historical cases of particular R&D projects, following the historical-institutional approach of Alfred Chandler (1962), Douglass North (1981) and Oliver Williamson (1985). We find that even the earliest R&D-projects used non-insignificant cash outlays and that until the 1970s aggregate R&D outlays grew far faster than GDP, despite five well-known challenges that implied that R&D could only be financed with cash, for which no perfect market existed: the presence of sunk costs, real uncertainty, long time lags, adverse selection, and moral hazard. We then review a wide variety of organisational forms and institutional instruments that firms historically have used to overcome these financing obstacles, and without which the enormous growth of R&D outlays since the nineteenth century would not have been possible.
|Item Type:||Monograph (Working Paper)|
|Additional Information:||© 2013 The Author|
|Library of Congress subject classification:||H Social Sciences > HG Finance|
|Journal of Economic Literature Classification System:||N - Economic History > N2 - Financial Markets and Institutions > N20 - General, International, or Comparative
N - Economic History > N8 - Micro-Business History > N80 - General, International, or Comparative
O - Economic Development, Technological Change, and Growth > O2 - Development Planning and Policy > O21 - Planning Models; Planning Policy
|Sets:||Departments > Accounting
Departments > Economic History
Collections > Economists Online
|Date Deposited:||21 Nov 2013 14:28|
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