Financial Market and Technological Innovation

This paper addresses the relationship between technological innovation and finance. The financial market must be regarded as one of the fundamental prerequisites of innovation, inasmuch as it is here that decisions are made on capital allocation to enterprises. However, less has been written on the interdependencies between the patterns of corporate finance and governance on the one hand and company innovation strategies on the other. The paper takes up these open questions. It analyses the transformation process of the German innovation system due to the dynamics of the financial market in the last decades. In conclusion, some general insight into the relationship between finance and innovation beyond the German context will be provided. The paper is based on an extensive literature research in the fields of economic sociology and innovation studies and the analysis of the public debate on the prospects of the current economic development.