Bridging Innovation and Finance: Evolving Ecosystems for Entrepreneurial Success

Abstract

Investment in innovation significantly diverges from typical business expenditures due to the inherent characteristics of Research and Development (R&D), which include high upfront costs, specialized human resources, and considerable uncertainty about the economic returns. Unlike physical assets, the intangible outcomes of R&D have limited collateral value, restricting their suitability for conventional debt financing. This complexity is further exacerbated by informational asymmetry and the risks associated with moral hazard, which inflate external funding costs relative to internal funding options.

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DOI

10.47191/jefms/v8-i5-66

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