Boulevard of broken dreams: Why public efforts to boost entrepreneurship and venture capital have failed--and what to do about it

Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed--and What to Do About It

Volumn , Issue , 2009, Pages

  Lerner, Josh ^a  

^a HARVARD BUSINESS SCHOOL   (United States)

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EID: 84884048777     PISSN: None     EISSN: None     Source Type: Book    
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References (160)

1. See Tor Klette, Jarle Moen, and Zvi Griliches, "Do Subsidies to Commercial R&D Reduce Market Failures? Microeconomic Evaluation Studies/' Research Policy 29 (2000): 471-95, for an overview of the current state of empirical research in this area.
2. "AIG Gets $150 Billion Government Bailout; Posts Huge Loss/' Reuters News Service, November 10, 2008, and Nelson D. Schwartz, "UBS Given an Infusion of Capital," New York Times, October 16, 2008.
3. The Global Entrepreneurship Monitor's tabulations are available at "The Global Entrepreneurship Monitor," http://www.gemconsortium.org/ (accessed July 11, 2008). It should be noted that the results of these and similar comparisons, which rely on surveys with different sampling methodologies and survey responses in different languages across countries, must be viewed with some caution.
4. These figures are computed using the Central Intelligence Agency, 2008 World Factbook (Langley, VA: CIA, 2008); Council of Economic Advisors, Executive Office of the President, 2008 Economic Report of the President (Washington, D.C.: Government Printing Office, 2008); and the World Bank's World Development Indicators database.
5. Vanetta Skeete, Claudette Williams-Myers, Olusegun Afis Ismail, and Sandra Glasgow, Global Entrepreneurship Monitor: 2006 Jamaica Report (Kingston: University of Technology, 2007).
6. Sandra Glasgow, Claudette Williams-Myers, Vanetta Skeete, and Olusegun Afis Ismail, Global Entrepreneurship Monitor: 2005 Jamaica Report (Kingston: University of Technology, 2006).
7. International Finance Corporation, "Doing Business: Jamaica," http://www.doingbusiness.org/ExploreEconomies/?economyid=97 (accessed August 8, 2008).
8. International Finance Corporation, "Doing Business: Singapore/' http://www.doingbusiness.org/ExploreEconomies/Feconomyid=167 (accessed August 8, 2008).
9. International Finance Corporation, "Doing Business: United States/' http://www.doingbusiness.org/ExploreEconomies/Feconomyid=197 (accessed August 8, 2008).
10. Henry, "The Jamaican Economy/' 12.
11. See William R. Kerr, "Ethnic Scientific Communities and International Technology Diffusion," Review of Economics and Statistics 90 (2008): 518-37.
12. This figure was compiled from the web site and publications of SDC Venture Economics.
13. This account is drawn from Henny Sender, "China Tries Venture Capitalism-the Government Emulates Western Counterparts-Its Own Way-Having Missed the Industrial Revolution, They Can't Afford to Miss This One, Says Singaporean Partner," Asian Wall Street Journal, January 3, 2001; and Feng Zeng, "Venture Capital Investments in China," Ph.D. diss., Pardee Rand Graduate School, 2004.
14. Felda Hardymon, Ann Leamon, and Josh Lerner, "Chengwei Ventures and the hdt* Investment," Harvard Business School Case (2002): no. 9-802-089.
15. T J. Rodgers, Why Silicon Valley Should Not Normalize Relations with Washington D.C. (Washington, D.C.: Cato Institute, 2000), 2-9.
16. Sturgeon, "Silicon Valley," 16.
17. Leslie and Kargon, "Selling Silicon Valley," 419.
18. Sturgeon, "Silicon Valley," 30-34.
19. Saxenien, Regional Advantage, 21.
20. For one discussion of the limitations of public efforts to boost entrepreneurial firms in the 1920s, see Joseph L. Nicholson, "The Fallacy of Easy Money for Small Business," Harvard Business Review 17:1 (Autumn 1938): 31-34.
21. This history of American Research and Development is largely drawn from Spencer Ante, Creative Capital: Georges Doriot and the Birth of Venture Capital (Boston: Harvard Business School Press, 2008); and Patrick R. Liles, Sustaining the Venture Capital Firm (Cambridge, Mass.: Management Analysis Center, 1978).
22. Liles, Venture Capital Firm, 32.
23. Gene Bylinsky, "General Doriot's Dream Factory," Fortune 76:2 (August 1967): 103-36.
24. This history of the SBIC program is drawn from C. M. Noone and S. M. Rubel, SBJCs: Pioneers in Organized Venture Capital (Chicago: Capital Publishing, 1970); Jonathan J. Bean, Big Government and Affirmative Action: The Scandalous History of the Small Business Administration (Lexington: University Press of Kentucky, 2001); and Liles, Venture Capital Firm.
25. Bean, Big Government, 56.
26. See the discussion, for instance, in Vyvyan Tenorio, "SBA's Dilemma: Troubled VCs," Daily Deal, September 9, 2002; and Bean, Big Government.
27. Timothy Bates, "The Minority Enterprise Small Business Investment Company Program: Institutionalizing a Nonviable Minority Business Assistance Infrastructure," Urban Affairs Review 32 (1997): 683-703.
28. Morris Abramowitz, "Resource and Output Trends in the United States since 1870/' American Economic Review 46 (1956): 5-23.
29. Robert M. Solow, "Technical Change and the Aggregate Production Function/' Review of Economics and Statistics 39 (1957): 312-20.
30. The interested reader can turn to surveys by Pierre Azoulay and Josh Lerner, "Technological Innovation and Organizations/' in Handbook of Organizational Economics, ed. Robert Gibbons and John Roberts (Princeton: Princeton University Press, forthcoming); and Wesley M. Cohen and Richard C. Levin, "Empirical Studies of Innovation and Market Structure/' in Handbook of Industrial Organization, vol. 2, ed. Richard Schmalensee and Robert D. Willig (New York: North-Holland, 1989), chap. 18.
31. Wesley M. Cohen, Richard C. Levin, and David C. Mowery, "Firm Size and R&D Intensity: A Re-examination," Journal of Industrial Economics 35 (1987): 543-63.
32. Zoltan J. Acs and David B. Audretsch, "Innovation in Large and Small Firms: An Empirical Analysis," American Economic Review 78 (1988): 678-90.
33. John Jewkes, David Sawers, and Richard Stillerman, The Sources of Invention (New York: St. Martin's Press, 1958).
34. See, for instance, Debra J. Aron and Edward P. Lazear, "The Introduction of New Products," American Economic Review Papers and Proceedings 80 (1990): 421-26.
35. Thomas J. Prusa and James A. Schmitz Jr., "Can Companies Maintain Their Initial Innovation Thrust? A Study of the PC Software Industry," Review of Economics and Statistics 76 (1994): 523-40.
36. Zain, "Mobile Telephony to Reach 400,000 People in Remote African Villages/' http://www.zain.com/muse/obj/lang.default/portal,view/content/Media%20centre/Press%20releases/AfricaMillenniumVillages (accessed October 8, 2008).
37. William A. Wells, "Venture Capital Decision Making." Ph.D. diss., Carnegie-Mellon University, 1974.
38. David Amis and Howard Stevenson, Winning Angels (New York: Pearson Education Limited, 2001), 114.
39. T T Tyebjee and A. V. Bruno, "A Model of Venture Capitalist Investment Activity," Management Science 30 (1984): 1051-66.
40. Paul Gompers and Josh Lerner, The Venture Capital Cycle (Cambridge: MIT Press, 1999).
41. Wells, "Venture Capital Decision Making," 47; and George W. Fenn, Nellie Liang, and Stephen Prowse, The Economics of the Private Equity Market (Washington, D.C.: Federal Reserve Board, 1996).
42. Bessemer Venture Partners, "Anti-Portfolio," http://www.bvp.com/Portfolio/AntiPortfolio.aspx (accessed July 12, 2008).
43. Michael Gorman and William A. Sahlman, "What Do Venture Capitalists Do?" journal of Business Venturing 4 (1989): 231-48.
44. Hardymon and Leamon, "Gobi Partners/' 9.
45. Thomas Hellmann and Manju Puri, "The Interaction between Product Market and Financing Strategy: The Role of Venture Capital," Review of Financial Studies 13 (2000): 959-84.
46. Samuel S. Kortum and Josh Lerner, "Assessing the Contribution of Venture Capital to Innovation," Rand journal of Economics 31 (2000): 674-92.
47. For a study of spawning in medical devices, see Aaron K. Chat-terji, "Spawned with a Silver Spoon? Entrepreneurial Performance and Innovation in the Medical Device Industry," Strategic Management journal (forthcoming); for a discussion of Recruit, see Josh Lerner, Lee Branstetter, and Takeshi Nakabayashi, "New Business In-vestment Company: October 1997/' Harvard Business School Case (1999): no. 9-299-025.
48. For a discussion of the benefits that deal-sharing can bring, see Josh Lerner, "The Syndication of Venture Capital Investments/' Financial Management 23 (1994): 16-27.
49. These calculations are the author's. The database on which these calculations are based is described in Josh Lerner, Antoinette Schoar, and Wan Wongsunwai, "Smart Institutions, Foolish Choices: The Limited Partner Performance Puzzle/' journal of Finance 62 (2007): 731-64.
50. Liles, Venture Capital Firm, 83.
51. U.S. Small Business Administration, The Small Business Economy (Washington, D.C.: Government Printing Office, 2007).
52. For an overview of the literature on herding by institutions, see Andrea Devenow and Ivo Welch' "Rational Herding in Financial Economics," European Economic Review 40 (1996): 603-15.
53. For a discussion of this argument, see David De Meza, "Over-lending," Economic journal 112 (2002): F17-F31.
54. See, for instance, Adam B. Jaffe, Economic Analysis of Research Spillovers-Implications for the Advanced Technology Program (Wash-ington, D.C.: Advanced Technology Program, National Institute of Standards and Technology, U.S. Department of Commerce, 1996).
55. Zvi Griliches, "The Search for R&D Spillovers," Scandinavian journal of Economics 94 (1992): S29-S47.
56. See, for instance, Jewkes, Sawers, and Stillerman, The Sources of Invention, and Edwin Mansfield, John Rapoport, Anthony Romeo, Samuel Wagner, and George Beardsley, "Social and Private Rates of Return from Industrial Innovations," Quarterly journal of Economics 91 (1977): 221-40.
57. Douglass North, Growth and Structural Change (New York: Norton, 1981).
58. For the classic paper in this literature, see Rafael La Porta, Flor-encio Lopez-de-Silanes, Andrei Shleifer, and Robert W. Vishny, "Law and Finance," journal of Political Economy 106 (1998): 1113-55.
59. Rafael La Porta, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert W. Vishny, "The Quality of Government," journal of Law, Economics and Organization 15 (2000): 222-79.
60. This account is based in part on Eli Noam, "Telecommunications in Transition," in Changing the Rules: Technological Change, International Competition, and Regulation in Telecommunications, ed. Robert W. Crandall and Kenneth Flamm (Washington, D.C.: Brookings Institution Press, 1989); and Victoria Shannon, "Bull S.A., the Computer Company, Aims to Emerge from Dependence on France," New York Times, August 25, 2003.
61. For more about the Taiwanese incentive programs, see Kenneth L. Kraemer, Jason Dedrick, Chin-Yeong Hwang, Tze-Chen Tu, and Chee-Sing Yap, "Entrepreneurship, Flexibility, and Policy Coordination: Taiwan's Computer Industry," Information Society 12 (1996): 215-49; and Fu-Lai T. Yu, Ho-Don Yan, and Shen-Yu Chen, "Adaptive Entrepreneurship and Taiwan's Economic Dynamics," Laissez-Faire (Universidad Francisco Marroquin) 24-25 (2006): 57-74.
62. See, for instance, OECD, OECD Territorial Reviews: France, 46.
63. Leoning, "Housing Grants Misused."
64. Claire Lelarge, David Sraer, and David Thesmar, "Entrepre-neurship and Credit Constraints: Evidence from a French Loan Guarantee Program/' in International Differences in Entrepreneurship, ed. Josh Lerner and Antoinette Schoar (Chicago: University of Chicago Press, forthcoming).
65. Megan Woolhouse, "$1 Billion Life-Sciences Bill Passes Senate," Boston Globe, June 13, 2008.
66. See the data in BHI Policy Study, Police Details in Massachusetts: Protection or Perk? (Boston: Beacon Hill Institute for Public Policy Research, Suffolk University, 2004).
67. See William J. Baumol, "Entrepreneurship: Productive, Unproductive, and Destructive," journal of Political Economy 98 (1990): 893-921; and Kevin M. Murphy, Andrei Shleifer, and Robert W. Vishny, "The Allocation of Talent: Implications for Growth," Quarterly journal of Economics 106 (1991): 503-30.
68. These evaluations are Xulia Gonzalez, Jordi Jaumandreu, and Consuelo Pazo, "Barriers to Innovation and Subsidy Effectiveness," RAND journal of Economics 36 (2005): 930-50; and Saul Lach, "Do R&D Subsidies Stimulate or Displace Private R&D? Evidence from Israel," journal of Industrial Economics 50 (2002): 369-90.
69. "Incubators Doing Their Bit," press release, Ministry for Communications, Information Technology and the Arts, June 2, 2004.
70. This tabulation is drawn from a large number of government web sites, as well as Francis C. C. Koh and Winston T H. Koh, "Venture Capital and Economic Growth in Singapore," Singapore Management University working paper (2002) no. 21-2002; and conversations with Yinglan Tan.
71. See, for instance, Yukata Imai and Masaaki Kawagoe, "Business Start-Ups in Japan: Problems and Policies/' Oxford Review of Eco-nomicPolicy 16:2 (2000): 114-23.
72. Gilson's account is drawn from Ralf Becker and Thomas Hell-mann, "The Genesis of Venture Capital -Lessons from the German Experience/' in Venture Capital, Entrepreneurship, and Public Policy, ed. Vesa Kanniainen and Christian Keuschnigg (Cambridge: MIT Press, 2004), 33-67.
73. This discussion is drawn from Josh Lerner and Antoinette Schoar, "Does Legal Enforcement Affect Financial Transactions? The Contractual Channel in Private Equity/' Quarterly journal of Economics 120 (2005): 223-46.
74. "Innovation's Golden Goose/' Economist 365:8303 (December 12, 2002): 3.
75. See, for instance, David C. Mowery, Richard R. Nelson, Bhaven N. Sampat, and Arvids A. Ziedonis, Ivory Tower and Industrial Innovation: University-Industry Technology Transfer before and after the Bayh-Dole Act (Stanford: Stanford University Press, 2004).
76. See Josh Lerner, "Venture Capital and the Commercialization of Academic Technology: Symbiosis and Paradox," in Industrializing Knowledge: University-Industry Linkages in Japan and the United States, ed. Lewis M. Branscomb (Cambridge: MIT Press, 1999), 385-409.
77. Josh Lerner, "ARCH Venture Partners: November 1993," Harvard Business School Case (1995): no. 9-295-105.
78. See Gompers, Lerner, and Scharfstein, "Entrepreneurial Spawning."
79. James M. Poterba, "Venture Capital and Capital Gains Taxa-tion," in Tax Policy and the Economy, ed. Lawrence H. Summers, 3 (1989): 47-67.
80. Paul A. Gompers and Josh Lerner, "What Drives Venture Capital Fund-Raising?" Brookings Papers on Economic Activity: Microeconomics (1998): 149-92.
81. See, for instance, John Armour and Douglas Cumming, "The Legal Road to Replicating Silicon Valley," working paper, Economic and Social Research Council, Centre for Business Research, 2001.
82. Organisation for Economic Cooperation and Development," Venture Capital Policy Review: United Kingdom, STI Working Paper 2003/1 (Paris: OECD, 2003).
83. See the international evidence, for instance, in Leslie A. Jeng and Philippe C. Wells, "The Determinants of Venture Capital Funding: Evidence across Countries." Journal of Corporate Finance 6 (2000): 241-89, which highlights the extent to which labor market rigidities can deter venture capital investment.
84. These estimates are from Thomas Astebro and Irwin Bernhardt, "The Social Rate of Return to Canada's Inventor's Assistance Program," Engineering Economist 44 (1999): 348-61.
85. Dean S. Karlan and Martin Valdivia, "Teaching Entrepreneur-ship: Impact of Business Training on Microfinance Clients and Institutions," discussion paper, Economic Growth Center, Yale University (2006): no. 941. For an overview of other works, see J. Bennet and M. M. Banerjee, "Light at the End of the Tunnel: Using Qualitative Research to Evaluate Micro-Entrepreneurial Training Programs," working paper, Center for Women and Enterprise, 1999.
86. New Zealand Venture Investment Fund, Progress and Achievement Report: 2003/04 (Auckland: NZVIF, 2004).
87. Josh Lerner, David Moore, and Stuart Shepherd, A Study of New Zealand's Venture Capital Market and Implications for Public Policy: A Report to the Ministry of Research Science and Technology (Auckland: LECG, 2005).
88. This point was originally made by Bernard S. Black and Ronald J. Gilson, "Venture Capital and the Structure of Capital Markets: Banks versus Stock Markets/' journal of Financial Economics 47 (1998): 243-77.
89. These facts are from the Bombay Stock Exchange web page, http://www.bseindia.com/(accessed September 14, 2008).
90. These facts are drawn from Felda Hardymon and Ann Leamon, "Motilal Oswal Financial Services -an IPO in India," Harvard Business School Case (2007): no. 9-807-095; and Lily Fang and Roger Leeds, "Warburg Pincus and Bharti Tele-Ventures," in The Globalization of Alternative Investments: Working Papers, ed. Anuradha Gurung and Josh Lerner (Geneva: World Economic Forum, 2008), 151-63.
91. Jeng and Wells, "Determinants of Venture Capital Funding."
92. The information in this paragraph is drawn from Graham Bannock and Partners, European Second-Tier Markets for NTBFs (London: Graham Bannock and Partners, 1994).
93. This history of the EASDAQ market is drawn from Josh Lerner, "European Association of Securities Dealers: November 1994," Harvard Business School Case (1995): no. 9-295-116.
94. Reena Aggarwal and James J. Angel, "The Rise and Fall of the Amex Emerging Company Marketplace," journal of Financial Economics 52:2 (1999): 257-89.
95. This fact is taken from Ramana Nanda and Tarun Khanna, "Di-asporas and Domestic Entrepreneurs: Evidence from the Indian Software Industry," working paper, Harvard University, 2007.
96. AnnaLee Saxenian, Local and Global Networks of Immigrant Professionals in Silicon Valley (San Francisco: Public Policy Institute of California, 2002).
97. Nanda and Khanna, "Diasporas and Domestic Entrepreneurs."
98. "Plans for Asia's Silicon Valley," Australian, November 27, 2001.
99. B. Ramasamy, A. Chakrabarty, and M. Cheah, "Malaysia's Leap into the Future: An Evaluation of the Multimedia Super Corridor," Technovation 24 (November 2004): 871-83.
100. Roziana Hamsawi, "Adviser-Need to Create an Innovative Work Culture/' Business Times, September 28, 1999.
101. Carol Murugiah, "All States to Establish 'Bio-Valley' Hubs by 2006," New Straits Times, September 28, 2003.
102. "Net Value: Reviving MTDC," Edge Malaysia, July 20, 2004.
103. Scott Wallsten, "The Role of Government in Regional Technology Development: The Effects of Public Venture Capital and Science Parks," Stanford Institute for Economic Policy Research Discussion Paper (2001): no. 00-39.
104. Michael I. Luger and Harvey A. Gildstein, Technology in the Garden: Research Parks and Regional Economic Development (Chapel Hill: University of North Carolina Press, 1991), 71.
105. This paragraph is based on Peter K. Eisinger, "The State of State Venture Capitalism/' Economic Development Quarterly 5 (1991): 64-76; and Peter K. Eisinger, "State Venture Capitalism, State Politics, and the World of High-Risk Investment/' Economic Development Quarterly 7 (1993): 131-39.
106. The discussion of the European Seed Capital Fund Program is drawn from Gordon Murray, "The European Union's Support for New Technology-Based Firms: An Assessment of the First Three Years of the European Seed Capital Fund Program/' European Planning Studies 2 (1994): 435-61.
107. This account is based on, among other sources, Katrina Onstad, "Nothing Ventured, Tax Break Gained," Canadian Business 70:11 (1997): 47-52; Canadian Auto Workers, Labour-Sponsored Funds: Examining the Evidence (Toronto: CAW Research Department, 1999).
108. The statistics in this paragraph are from Douglas Cummings and Jeffrey Macintosh. "Crowding Out Private Equity: Canadian Evidence," journal of Business Venturing 21 (2006): 569-609.
109. "Government Sponsored Venture Capital in Canada: Effects on Value Creation, Competition and Innovation," working paper, University of British Columbia, 2008.
110. SDC Thomson, "VentureXpert," http://vx.thomsonib.com/NA-SApp/VxComponent/VXMain.jsp (accessed July 5, 2008).
111. Wim Borgdorff, "Public Money Is Harming the VC Industry/' Financial Times, February 16, 2004.
112. See, for instance, the history of the Victorian Economic Development Corporation in Australia in Christopher C. Golis, Enterprise and Venture Capital: A Business Builders and Investor's Handbook (London: Allen and Unwin, 2002).
113. Amar Bhide, The Origin and Evolution of New Businesses (New York: Oxford University Press, 2000).
114. Paul A. Gompers and Josh Lerner, Capital Formation and Investment in Venture Markets: A Report to the NBER and the Advanced Technology Program, Report GCR-99-784 (Washington, D.C.: Advanced Technology Program, National Institutes of Standards and Technology, U.S. Department of Commerce, 1999).
115. American Small Business League, "Obama May Support Venture Capitalists' Move to Dominate Government Small Business Programs," http://www.asbl.com/showmedia.php?id=1272 (accessed May 1, 2009).
116. Statement of Mark G. Heesen, President, National Venture Capital Association, House Committee on Small Business, "Legislation to Reauthorize."
117. This figure is based on the data in Josh Lerner, "The Government as Venture Capitalist: The Long-Run Effects of the SBIR Program," Journal of Business 72 (1999): 285-318.
118. See Maryann P. Feldman and Johanna L. Francis, "Fortune Favors the Prepared Region: The Case of Entrepreneurship and the Capitol Region Biotechnology Cluster/' European Planning Studies 11 (2003): 765-88.
119. See, for instance, the saga of Cleveland's biotechnology initiative as related in Michael Fogarty and Amit Sinha, "Why Older Industrial Regions Can't Generalize from Route 128 and Silicon Valley: University-Industry Relationships and Regional Innovation Systems," in Branscomb, Industrializing Knowledge, 473-509.
120. Lynne G. Zucker, Michael R. Darby, and Marilyn B. Brewer, "Intellectual Human Capital and the Birth of U.S. Biotechnology Enterprises," American Economic Review 88 (1998): 290-306.
121. For a discussion, see, for instance, Kenneth L. Kraemer, "Entrepreneurship, Flexibility, and Policy Coordination: Taiwan's Computer Industry," Information Society 12 (1996): 215-49; and Carol Yeh-Yun Lin, "Success Factors of Small- and Medium-Sized Enterprises in Taiwan," journal of Small Business Management 36:4 (1998): 43-56.
122. For a detailed history and analysis of the program, see Lerner, Moore, and Shepherd, New Zealand's Venture Capital Market.
123. Michael Selz, "Post Mortem: Leadership, Too Late -Pseudo Programs Spent a Lot of Its Venture Capital before Seasoned Management Arrived," Wall Street journal, November 27, 2000.
124. Brick, "Business; Venture (Widely) Forth."
125. This account is based on "Iowa Suit Tests LPs' Authority to Abolish Fund/' Private Equity Analyst 4 (1994): 1, 9.
126. See the discussion in David L. Barkley, Deborah M. Markey, and Julia Sass Rubin, "Certified Capital Companies (CAPCOs): Strengths and Shortcomings of the Latest Wave in State-Assisted Venture Capital Programs/' Economic Development Quarterly 15 (2001): 350-66.
127. Lerner, Schoar, and Wongsunwai, "Smart Institutions, Foolish Choices." The results discussed here are from the National Bureau of Economic Research working paper, which used a larger sample than the published paper.
128. This discussion is drawn from Paul A. Gompers and Josh Lerner, The Money of Invention (Boston: Harvard Business School Press, 2001).
129. Vanessa Maybeck and William Bains, "Small Company Mergers-Good for Whom?" Nature Biotechnology 24 (2006): 1343-48.
130. See the discussion, for instance, in Miguel Helft, "A Kink in Venture Capital's Gold Chain," New York Times, October 7, 2006.
131. For a review of the institutional challenges associated with state-sponsored Chinese venture funds and the failure to undertake evaluations, see Dai Zhi-min and Yu Jin-jin, "On the Institutional Defect and Its Correction of Venture Capital in China/' journal of Zhejiang University (SCIENCE) 2:4 (2001): 462-66.
132. "Israeli Government to Sell Off Venture Capital Fund/' Reuters, October 9, 1996.
133. See, for instance, Charles W. Wessner, ed., The Small Business Innovation Research Program: An Assessment of the Department of Defense Fast Tract Initiative (Washington, D.C.: Board on Science, Technology, and Economic Policy, Policy Division, National Research Council, 2000).
134. This problem was first identified by Linda R. Cohen and Roger G. Noll, eds., The Technology Pork Barrel (Washington, D.C.: Brookings Institution, 1991); and Scott J. Wallsten, "The Effects of Government-Industry R&D Programs on Private R&D: The Case of the Small Business Innovation Research Program," RAND Journal of Economics 31 (2000): 82-100.
135. Gompers and Lerner, Capital Formation and Investment.
136. Morten T. Hansen, Nitin Nohria, and Jeffrey A. Berger, The State of the Incubator Marketspace, Harvard Business Review Report (Boston: Harvard Business School Publishing, 2000): no. 4797.
137. See the discussion in Adam B. Jaffe, "Building Program Evaluation into the Design of Public Research Support Programs," Oxford Review of Economic Policy 18 (2002): 22-34, 33.
138. This account is drawn from, among other sources, Daniel Roth, "Catch Us If You Can," Fortune 149:3 (February 9, 2004): 65-74; and Adam Lashinsky, "Venture Capital Is Not for Girlie Men," Fortune 152:8 (October 17, 2005): 38.
139. Jerusalem Institute of Management, Export-Led Growth Strategy for Israel (Jerusalem: Jerusalem Institute of Management and the Telesis Group, 1987).
140. Yigdal Erlich, "The Yozma Group -Policy and Success Factors/' http://www.insme.org/documenti/Yozma_presentation.pdf (accessed July 5, 2008).
141. This discussion of the Japanese case is based on Lerner, Brans-tetter, and Nakabayashi, "New Business Investment Company/' and the sources cited therein.
142. Fernandez and Eschweiler, Sovereign Wealth Funds.
143. See, for instance, Stephen Jen, How Big Could Sovereign Wealth Funds Be by 2015? (New York: Morgan Stanley Research -Global, 2007).
144. This account is based on, among other sources, Private Equity Intelligence, Sovereign Wealth Fund Review.
145. This account, among other sources, is drawn from Kyle Pope, "Uneasy Boom: Norway's Oil Bonanza Stirs Fears of a Future When Wells Run Dry-as Output Climbs, Many Say Money Is Being Wasted and a Slump Lies Ahead -a Town's Varying Fortunes," Wall Street Journal, October 3, 1995; and Svein Gjedrem, "The Management of Petroleum Wealth," lecture at the Polytechnic Association, November 8,2005.
146. Quoted in David S. Landes, The Wealth and Poverty Of Nations: Why Some Are So Rich and Some So Poor (New York: Norton, 1998), 172.
147. American Economic Review Papers and Proceedings 82:2 (May 1997): 178-83.
148. For an overview of these issues, see Jeffrey D. Sachs and Andrew M. Warner, "The Curse of Natural Resources," European Economic Review 45 (May 2001): 827-38.
149. Lawrence Summers, "Funds That Shake Capitalist Logic," Financial Times, July 29, 2007.
150. William Miracky, Davis Dyer, Drosten Fisher, Tony Goldner, Loic Lagarde, and Vicente Piedrahita, Assessing the Risks: The Behaviors of Sovereign Wealth Funds in the Global Economy (Boston: Monitor Group, 2008).
151. "Bogus Backlash: Attacks by a Leading German Politician on Investors Have Been Hysterical and Misguided," Economist 375:8425 (May 7, 2005): 12-13.
152. These results are reported in Steven Davis, John Haltiwanger, Ron Jarmin, Josh Lerner, and Javier Miranda,, "Private Equity and Employment," unpublished working paper, University of Chicago, University of Maryland, U.S. Bureau of the Census, and Harvard University, 2008; and Josh Lerner, Morten Sorenson, and Per Stromberg, "Private Equity and Long-Run Investment: The Case of Innovation," working paper, Harvard University, Columbia University, and Swedish Institute for Financial Research, 2008.
153. Josh Lerner, Antoinette Schoar, and Jialan Wang, "The Secrets of the Academy: The Drivers of University Endowment Success," journal of Economic Perspectives 22:3 (2008): 207-22.
154. Paul Gompers and Josh Lerner, "Money Chasing Deals? The Impact of Fund Inflows on Private Equity Valuation," journal of Financial Economics 55:2 (2000): 281-25.
155. This account is drawn from "Manifold Effects of Hard Times," Time, December 9, 1974, 40-41; and Christopher Shea, "U. of Rochester to Cut Programs, Faculty, and Enrollment," Chronicle of Higher Education 42:16 (1995); A33; and personal conversations.
156. This account is based on Kevin Book, Felda Hardymon, Ann Leamon, and Josh Lerner, "In-Q-Tel," Harvard Business School Case (2005): no. 9-804-146; Business Executives for National Security, Accelerating the Acquisition and Implementation of New Technologies for Intelligence: The Report of the Independent Panel on the Central Intelligence Agency In-Q-Tel Venture (Washington, D.C.: BNES, 2001); and assorted press accounts.
157. Booketal., "In-Q-Tel," 11.
158. These quotes are drawn from one of several pieces on In-Q-Tel done by the paper: Christopher Byron, "Penny Stock Spies," New York Post, April 25, 2005.
159. This account draws on, among other sources, Annika Sunden, "The Swedish NDC Pension Reform," Annals of Public and Cooperative Economics 69 (1998): 571-83; and Karen M. Anderson, "Pension Politics in Three Small States: Denmark, Sweden and the Netherlands," Canadian journal of Sociology 29:2 (2004): 289-312.
160. Government of Singapore Investment Corporation, "Structure," http://www.gic.com.sg/aboutus_structure.htm (accessed July 24, 2008).