Will Recession Have an Effect on Innovation?

Two economists argue on the Vox EU that recession will not really have that big of an impact on innovation. Many venture capitalists have most likely lost their ability to cash out on the investments they have made and placed in the stock market. However, such a thing does not really mean that the amount of innovative control these investors have will bankroll out and dry up. This was according to Masayuki Hirukawa, from the Northern Illinois University and also from Masako Ueda from the University of Wisconsin-Madison. The two economists pointed out that recent research shows that the venture capital will not really end up leading to more patents (which could also be a very imperfect measure of the total amount of innovation) and also that such an investment will not really affect the entire growth of factor productivity.

What Studies Suggest and Its impact on Innovation

When put together, these studies will also suggest that the amount of innovation will be seen as something that can stimulate the investments of venture capitalists compared to it moving the other way around. Both authors conclude that while the recession is here, it might also mean that it will take a much longer time for such innovations to actually be commercialized. However, innovative activity will be most likely present to persist as well.  Scientific curiosity as well as enthusiasm will be the reason behind this.

Stoking the Fire of Scientific Curiosity and Enthusiasm

While the authors themselves failed to mention it, most will be able to presume that the subsidies provided by the economic stimulus bill that is reserved for the area of science and technology are also intended to further stoke and ignite that sense of scientific curiosity as well as enthusiasm in case there is a decline in terms of venturing into the capital financing. This was also done in case there is a reduction in terms of the incentives reserved for the area of research and development. The aim now is o provide hope for more commercialization of this challenge to innovation, as said by InsideCRM. I

InsideCRM had recently put together an entire list of the biggest names in business innovations that had been birthed through some economic slumps in the history of the nation. Such a list also includes some household names like FedEx, Burger King, Wikipedia, Microsoft and GE. However, looking at it in a technical light some of these companies have been founded just right outside the official dates of recession that were set by the NBER or the National Bureau of Economic Research. The aim in this effort, as it seems, is to learn from these companies and see if there are any principles worth applying.