Cite As:
Antonelli Cristiano, Teubal Morris. KNOWLEDGE-INTENSIVE PROPERTY RIGHTS (STE-WP-39) Haifa Israel: Samuel Neaman Institute, 2007.
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Venture capitalism is a major institutional innovation based on identifying economies of scope in transactions of technological knowledge, bundled with managerial competence, reputation, screening procedures and equity. It has paved the way to the emergence of new surrogate markets for knowledge, i.e. financial markets specialized in trading knowledge-intensive property rights. This development has important benefits in terms of risk management and hence profitability of investments in high-tech start-ups. The  dynamic efficiency effects of the new institution also derives from the fact that the public at large, through its investments in knowledge-based income streams, contributes to the creation of new economically useful knowledge and capabilities.


The paper presents a three phase Innovation and Technology Policy Cycle framework based on Israel’s policy experience, which since the creation of the OCS in 1969 (beginning of Phase 1) has promoted business sector R&D through grants, and which successfully targeted a domestic Venture Capital industry and market (“Yozma” program) between 1993-2000  (Phase 3). The success of this program, which also resulted from emergence of a very successful startup-intensive high tech cluster, contrasts with the relatively weak impact of several VC policy attempts (up to 2000) in Europe and elsewhere. The analysis suggests that despite a successful Phase 1 (1969-1984, in Israel), existence of favorable events and processes prior to VC policy attempts may be required for subsequent VC policy success. In Israel, such Phase 2 (1985-1992) events and processes included: a critical mass of high tech startup companies, business experiments with new forms of financial intermediation oriented to high tech startup companies, the liberalization of capital and foreign exchange markets and linking with selected global product and capital markets, policy learning and identification of a new strategic priority (“creation of a domestic venture capital industry”); and design features of the VC targeted program that confront with the specific system failures identified in the cluster. We conclude 1) that the concept of innovation policy cycle is a useful tool both for policymakers and for academics; 2) that countries must seriously consider, among other options, direct subsidization of innovation/R&D at the firm level as a precursor policy to the implementation of venture capital policies; 3) that the intermediate policy phase (phase 2), which is usually ignored by both policymakers and academics might be a very critical phase; and 4) that a systems-evolutionary perspective could be critical for successful Venture Capital policy and for successful innovation and technology policy in general.

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