THE ROLE OF COMMERCIALIZATION COMPETENCE IN ENDOGENOUS ECONOMIC GROWTH

Erol Taymaz

Gerard Ballot
ERMES, Universite Paris II

Gunnar Eliasson
KTH and Ratio Institute

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     Last modified: February 28, 2006

Abstract
While innovation supply is creative, unpredictable and not necessarily related to future economic usefulness, resource provision is experience based and much more narrow, implying a positive economic risk of losing innovative winners. We demonstrate through simulation experiments that industrial growth is explained by the identification and financial support of winners. Competence bloc theory is used to model the innovation supply and commercialization processes. We demonstrate that lack of commercialization competence (competence embodied in venture capitalists’ ability to identify, select and finance new innovations) breaks the conventionally assumed linearity between innovation supply and economic growth.