Understanding the financing of innovation and commercialization

First, the reluctance of innovative firms to reveal their ideas to financial markets, because of the non-rival nature of such information, reduces the quality of the signal the firm can deliver about a potential innovation (Bhattacharya and Ritter 1983). [...] The current paper seeks to enhance understanding of the ability of firms to raise capital in pursuit of product development and commercialization, specifically in the functional food and nutraceutical sector in Canada. [...] This survey provides relatively detailed information on the nature of firms engaged in the functional food and 2 Some of these costs and benefits include examples such as the tax advantage of borrowing, the trade-off between profitability of external financing versus the firm’s aversion to external financiers influence on firm governance, and the agency costs attributable to information asymmetry. [...] Indeed, we have a rather imprecise understanding of the direction and magnitude of the impact a particular characteristic has on a firm’s propensity to raise capital, both generally and in the specific context of the functional food and nutraceutical sector. [...] The second to last element in (1) represents to cost of capital, where r is the rental rate and k is the level of capital, while the last element shows the value of other inputs (i.e.