engleski

Venture Capital and the Flexibility of Production Networks in Transition Economies

A comparison between the industrial structures of developed and transition economies reveals a smaller role of SMEs in the production networks, and lower levels of innovation in the latter. This contributes to a lower level of flexibility in transition economies&#8217 ; production networks, which in turn is associated with lower levels of corporate competitiveness, innovation, and productivity growth, and in the lower ability of the economy to absorb technological and market shocks. Among the institutions and organisations that increase production network flexibility in developed economies, we focus on venture capital firms (VCs). In developed economies, these facilitate the selection and development of innovative start-ups, and dissemination of information on new products and technologies. Eventually, this leads to the absorption of start-up firms into corporations or their production networks, which is particularly important in high-technology industries. By contrast, venture capital investments in transition economies have so far been focused on non-technology-intensive production, and inward technology transfer, rather than on domestic innovators. Again, unlike developed economy patterns, domestic corporations in transition economies have very little interaction with VCs or high-technology start-ups. By comparing the role venture capital plays in developed and transition economies we (i) illustrate one avenue through which innovations are selected and developed into products and services that have a demand ; (ii) link the absence of this channel to the current shortcomings of production networks in transition economies and (iii) suggest some policy measures that may alleviate these problems.

venture capital; production networks; transition economies; systems of innovation; small and medium size enterprises; academic spin-outs; technology transfer

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