The Development and Exploitation of Financial Innovation
Lead Research Organisation:
University of Sussex
Department Name: Sch of Business Management & Economics
Abstract
Abstracts are not currently available in GtR for all funded research. This is normally because the abstract was not required at the time of proposal submission, but may be because it included sensitive information such as personal details.
Publications
Binder M
(2012)
Life satisfaction and self-employment: a matching approach
in Small Business Economics
Coad A
(2014)
Business experience and start-up size: Buying more lottery tickets next time around?
in Small Business Economics
Coad A
(2013)
Death is not a success: Reflections on business exit
in International Small Business Journal: Researching Entrepreneurship
Coad A
(2012)
Diversification patterns and survival as firms mature
in Small Business Economics
Coad A
(2016)
Why should banks provide entrepreneurship training seminars?
in International Small Business Journal: Researching Entrepreneurship
Coad A
(2016)
Innovation and firm growth: Does firm age play a role?
in Research Policy
Coad A
(2014)
Two's Company: Composition, Structure and Performance of Entrepreneurial Pairs
in European Management Review
Coad A
(2016)
Predicting new venture survival and growth: Does the fog lift?
in Small Business Economics
Coad A
(2013)
Like milk or wine: Does firm performance improve with age?
in Structural Change and Economic Dynamics
Cowling M
(2013)
Public intervention in UK small firm credit markets: Value-for-money or waste of scarce resources?
in Technovation
| Description | The project produced findings in three key areas: A) in relation to the design of hybrid VC funds that are supported by government money, the results suggest that regionally focused funds perform extremely poorly and should be avoided. The top performing funds were larger, nationally or internationally focused, provided significant managerial support, and were co-funded in ways that balanced risks and rewards. The indirect impact of these public policy schemes, in terms of future taxation take rather than financial returns to the government as an investor, were significant suggesting they represent good value for money for the taxpayer. B) In relation to innovation in financial technology and its exploiting the research highlighted the important role of business model innovation and the neglect of managerial attention to how the firm will capture value. The provision of financing has an important role in structuring which business models will be viable and in the UK these tend to be more asset-focused, directed towards acquisition, capable of leaving a significant runway of funding when firms enter into negotiations, and significantly compressed over time in how long the firms' life-cycle exists for. The provision of managerial support is an key feature of equity provision and government policy has overlooked its importance. The UK system is more effective at developing technology for large firms than it is at producing global firms, such as google, because of gaps in the existing financing system that constrain firms growth. This has led to human capital constraints and created a thin market in the provision of funding for innovative firms. We find little evidence of market failures in the provision of equity to the majority of firms in non-recessionary data. The weak performance of many funded firms suggests policy would be improved if it focused on quality rather than quantity, and aimed to increase the size of funds and investments. C) In relation to financial regulation the project supported previous research that suggests increases in banking equity are effective and are only more costly than current debt levels because of the higher risks involved. Since the point of capital provisions is to shift risk this increased cost is a reason for the policy rather than against it. The project also supported previous calls for increased competition in the UK banking sector, which may improve debt provision to SMEs, which is extremely difficult during the financial crisis (2008-2012 data). However, we also found a decrease in demand for debt, which is again consistent with previous studies and suggests supply side measures may be less effective than many policy makers hope. Our overall findings suggest that there are significant problems with the provision of data on SMEs with the result that poor performing firms are under-represented in datasets. As a result, the actual performance of SMEs is often significantly lower than is commonly thought. |
| Exploitation Route | The project generated a practitioner book edited by Michael O'Neill and Michael M. Hopkins: Michael O'Neill and Michael M. Hopkins (Editor) (2012), A Biotech Manager's Handbook: A Practical Guide (Woodhead Publishing Series in Biomedicine) |
| Sectors | Creative Economy,Digital/Communication/Information Technologies (including Software),Government, Democracy and Justice,Pharmaceuticals and Medical Biotechnology |
| Description | A large amount of work from this project has suggested the traditional very positive way of thinking about entrepreneurship is misplaced. We have attempted to widely disseminate these findings through social media and publications, and they have been repeatedly picked up by the broader community. In particular, they are regularly mentioned in the Financial Times etc. While it is impossible to quantify this is leading to a change in how policy makers think about entrepreneurship policy. |
| First Year Of Impact | 2014 |
| Impact Types | Cultural,Societal,Economic,Policy & public services |
| Description | Support for BIS in design of funding schemes for UK SMEs |
| Geographic Reach | National |
| Policy Influence Type | Contribution to a national consultation/review |
| Impact | We are advising, drawing on our work on innovative forms of finance, and evaluations we have conducted, BIS on the design of support schemes to help improve the funding of innovative firms in the UK. |
| Description | SME financing after GFC. ESRC Research Seminar, Bournemouth University, 22 January, 2015 |
| Form Of Engagement Activity | Participation in an activity, workshop or similar |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Industry/Business |
| Results and Impact | Evidence on how capital markets changed in respect of SME financing after the GFC |
| Year(s) Of Engagement Activity | 2015 |
| Description | Briefing for Minister |
| Form Of Engagement Activity | Participation in an activity, workshop or similar |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Policymakers/politicians |
| Results and Impact | I briefed David Willets, the Science Minister at the time on the outputs of our research. We discussed the outputs of the research and its implications for innovation and industrial policy for the UK. |
| Year(s) Of Engagement Activity | 2012 |
| Description | Business Angel Financing. ESRC Research Seminar, Freiberg, Germany, 21 January, 2016 |
| Form Of Engagement Activity | Participation in an activity, workshop or similar |
| Part Of Official Scheme? | No |
| Geographic Reach | International |
| Primary Audience | Other audiences |
| Results and Impact | Presented evidence on the role of business angels in funding entrepreneurial ventures |
| Year(s) Of Engagement Activity | 2016 |
| Description | Discussion of local growth strategies with Greater Brighton City Region |
| Form Of Engagement Activity | A talk or presentation |
| Part Of Official Scheme? | No |
| Geographic Reach | Local |
| Primary Audience | Policymakers/politicians |
| Results and Impact | Research we have undertaken fed into the growth strategy of the local Greater Brighton City Region, and their development of a Smart Specialisation Strategy |
| Year(s) Of Engagement Activity | 2016 |
| Description | Loan Guarantee Financing. British Business Bank, London, 12th October, 2015 |
| Form Of Engagement Activity | A talk or presentation |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Policymakers/politicians |
| Results and Impact | Presented evidence on how loan guarantee schemes can be best utilised to support growing SMEs that are capital constrained |
| Year(s) Of Engagement Activity | 2015 |
| Description | Presentation and discussion about research on access to finance and its impact on the economy |
| Form Of Engagement Activity | A talk or presentation |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Policymakers/politicians |
| Results and Impact | Based on work that I have conducted with Marc Cowling, we presented a small seminar with questions and answers on the current state of the art in relation to access to finance and how it can be improved in the UK. We developed a simple model and explained how financing needs differed across firms lifecycles and across different types of firms, this was then related to the variety of different financing instruments to provide a holistic picture of the UK |
| Year(s) Of Engagement Activity | 2016 |
| Description | Presentation on Loan Guarantee Financing. to British Business Bank, London, 12th October, 2015 by Marc Cowling |
| Form Of Engagement Activity | A formal working group, expert panel or dialogue |
| Part Of Official Scheme? | No |
| Geographic Reach | National |
| Primary Audience | Policymakers/politicians |
| Results and Impact | Presentation to BBB. INformed policy makers of recent research. Impact hard to unpick |
| Year(s) Of Engagement Activity | 2015 |
| Description | Presentation on Public Financing Initiatives to OECD Expert Group on Industrial Policy, Paris. September 3rd, 2013. by Marc Cowling |
| Form Of Engagement Activity | A formal working group, expert panel or dialogue |
| Part Of Official Scheme? | No |
| Geographic Reach | International |
| Primary Audience | Policymakers/politicians |
| Results and Impact | A presentation of recent research on Public Financing Initiatives delivered to the OECD Expert Group on Industrial Policy, in Paris on September 3rd, 2013 by Prof. Marc Cowling, drawing on the work of the project. |
| Year(s) Of Engagement Activity | 2013 |
| Description | Public Financing Initiatives. OECD Expert Group on Industrial Policy, Paris. September 3rd, 2013. |
| Form Of Engagement Activity | A formal working group, expert panel or dialogue |
| Part Of Official Scheme? | No |
| Geographic Reach | International |
| Primary Audience | Policymakers/politicians |
| Results and Impact | OECD Expert panel on financing entrepreneurial firms |
| Year(s) Of Engagement Activity | 2013 |
| Description | SME Policy Developments. Institute for Public Accountants Australia. Melbourne, October 21st, 2014. |
| Form Of Engagement Activity | Participation in an activity, workshop or similar |
| Part Of Official Scheme? | No |
| Geographic Reach | International |
| Primary Audience | Policymakers/politicians |
| Results and Impact | Outlined policy development in relation to how best to support SME growth and development |
| Year(s) Of Engagement Activity | 2014 |