ABSTRACT

This chapter provides a critical evaluation of the literature on finance, investment and innovation and suggests insights for a new comparative research method for evaluating the comparative performance of financial systems in supporting innovation. A first relevant empirical fact in firm financing choices is that, in different financial systems, a significant share of firm R&D is financed by governments or by foreigners. The chapter provides descriptive statistics and a survey of contributions constituting the basis of the research. Four sub-branches of analysis have been pinpointed: micro-theoretical, micro-empirical, macro-theoretical and macro-empirical. The chapter examines models which may provide a framework for the comparative micro foundation by describing the interaction between financial and innovative units in a technological area with a coordination failure model. Descriptive statistics on firm internal and external financing in several countries with different industrial and financial structures is quite puzzling for several reasons.