Risk capital constraints to innovation in services

Freel, Mark and Robson, Paul and Jack, Sarah (2014) Risk capital constraints to innovation in services. Journal of Business and Industrial Marketing, 29 (6). pp. 476-486. ISSN 0885-8624

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Purpose - We note a general and longstanding neglect of services in studies of innovation and a common focus of innovation studies on the availability of, and demand for, risk capital. Given these observations, the current paper is concerned with understanding the factors associated with perceptions of venture capital as a barrier to innovation in an important subset of knowledge-intensive service firms – technology-based business services. Design/methodology/approach - In exploring these issues, we draw on survey data collected from 264 technology-based service firms located in Scotland and Northern England. The data is subjected to bivariate and multivariate statistical techniques to help explore the extent of demand side risk-capital concerns. Findings - We find that smaller, faster growing and R&D intensive firms perceive of greater equity barriers. Moreover, firms who are relatively happy about the managerial competencies available to them, but who identify deficiencies in marketing skills and the availability of external debt finance (which may say something broadly about their financial neediness), are shown to be ‘needy’. Originality/value - Studies of venture capital demand are relatively rare. Studies involving innovative service firms are rarer still. Given the prominent role of service firms in advanced economies and the changing perspective of the role of services in innovation, studies of financial constraints to innovation in services are timely. Innovation policy in advanced economies continues to be premised on patterns identified in manufacturing industries. This paper contributes to a broader perspective that views [technology-based] business services as dynamic innovation actors.

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Journal Article
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Journal of Business and Industrial Marketing
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23 Sep 2013 15:09
Last Modified:
15 Sep 2023 00:11