Title: Policies for financing entrepreneurship through venture capital: learning from the successes of Israel and Taiwan

Authors: Robyn Klingler-Vidra; Martin Kenney; Dan Breznitz

Addresses: Department of International Development, King's College London, London, UK ' Department of Human Ecology, Community and Regional Development Unit, University of California, Davis, USA ' Munk School of Global Affairs, Innovation Policy Lab, University of Toronto, Ontario, Canada

Abstract: The success of Silicon Valley as a hub for rapid-innovation growth has motivated policy-makers around the world to initiate policies trying to mimic it. These policy initiatives raise the question of whether globalisation should encourage innovation policy-makers to aim for institutional convergence and close imitation, or for institutional hybridisation and local experimentation. This paper explores this question by focusing on venture capital creation policy. Using two national cases, Israel and Taiwan, we show that policy effectiveness is not the result of simple imitation. Instead, policy performance is determined by degree of fit with local financial conditions and the position of the local ICT industry within global production networks. We then consider the implications of our study for understanding the development of national VC industries and the industries they fund. The primary message being that there is no singular model for venture capital market development. Instead, policy-makers need to understand the local context with its assets and liabilities. Of particular importance are local financing conditions, firm capabilities, and the existing position of local firms within the global production networks of the ICT industry.

Keywords: innovation policy; entrepreneurship; venture capital; public policy; Silicon Valley; Israel; Taiwan; information and communications technology; ICT; information technology; entrepreneurial financing; local contexts; entrepreneurial funding; access to funding.

DOI: 10.1504/IJIRD.2016.079462

International Journal of Innovation and Regional Development, 2016 Vol.7 No.3, pp.203 - 221

Available online: 20 Sep 2016 *

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