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Organizing venture capital: the rise and demise of American Research & Development Corporation, 1946--1973


  • David H. Hsu
  • Martin Kenney


While venture capital (VC) has become an important element of the twentiethcentury US innovation system, few studies have systematically examined the origins and evolution of this financial institution. We take a step in this direction by analyzing the evolution of the early and influential VC firm, American Research & Development Corporation (ARD), in the period that it was independent from 1946 to 1973. We place the creation and subsequent evolution of ARD within its historical context and show how it was an innovation by Boston-area civic elites. Using new historical data, we examine the evolution of ARD's practices over time. We argue that ARD's funding model constrained its functioning as a venture capital firm and contributed to its demise. ARD was a pioneering organization whose business model ultimately failed as a newer organizational model, the limited partnership, was created and had a better fit with the business environment. Nevertheless, ARD has had a lasting imprint on the practice of modern venture capital. Copyright 2005, Oxford University Press.

Suggested Citation

  • David H. Hsu & Martin Kenney, 2005. "Organizing venture capital: the rise and demise of American Research & Development Corporation, 1946--1973," Industrial and Corporate Change, Oxford University Press, vol. 14(4), pages 579-616, August.
  • Handle: RePEc:oup:indcch:v:14:y:2005:i:4:p:579-616

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    1. “Organizing Venture Capital: The Rise and Demise of American Research and Development Corporation, 1946-1973,” D. Hsu & M. Kenney (2005)
      by afinetheorem in A Fine Theorem on 2014-09-30 23:43:52


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    Cited by:

    1. Michael Peneder & Andreas Resch, 2015. "Schumpeter and venture finance: radical theorist, broke investor, and enigmatic teacher," Industrial and Corporate Change, Oxford University Press, vol. 24(6), pages 1315-1352.
    2. Hsu, David H. & Roberts, Edward B. & Eesley, Charles E., 2007. "Entrepreneurs from technology-based universities: Evidence from MIT," Research Policy, Elsevier, vol. 36(5), pages 768-788, June.
    3. Chen, Kun & Kenney, Martin, 2007. "Universities/Research Institutes and Regional Innovation Systems: The Cases of Beijing and Shenzhen," World Development, Elsevier, vol. 35(6), pages 1056-1074, June.
    4. Rin, Marco Da & Hellmann, Thomas & Puri, Manju, 2013. "A Survey of Venture Capital Research," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, volume 2, chapter 0, pages 573-648, Elsevier.
    5. Yan Alperovych & Xavier Mouchette, 2020. "Industry Concentration and Venture Capital Flows around the World," Post-Print hal-02567433, HAL.
    6. Kenney, Martin, 2013. "Commercialization or Engagement: Which Is of More Significance to the U.S. Economy ?," ETLA Working Papers 13, The Research Institute of the Finnish Economy.
    7. Dimo Dimov & Pablo Martin de Holan & Hana Milanov, 2012. "Learning patterns in venture capital investing in new industries," Industrial and Corporate Change, Oxford University Press, vol. 21(6), pages 1389-1426, December.
    8. Da Rin, Marco, 2016. "Financing Growth through Venture Capital in Asia and the Pacific," Other publications TiSEM 9fb91a28-6b54-41ce-a01d-9, Tilburg University, School of Economics and Management.
    9. Murray, Gordon, 2020. "Ten Meditations on (Public) Venture Capital – Revisited," MPRA Paper 104389, University Library of Munich, Germany.
    10. Alice Civera & Davide Donina & Michele Meoli & Silvio Vismara, 2020. "Fostering the creation of academic spinoffs: does the international mobility of the academic leader matter?," International Entrepreneurship and Management Journal, Springer, vol. 16(2), pages 439-465, June.
    11. Grimaldi, Rosa & Kenney, Martin & Siegel, Donald S. & Wright, Mike, 2011. "30 years after Bayh-Dole: Reassessing academic entrepreneurship," Research Policy, Elsevier, vol. 40(8), pages 1045-1057, October.
    12. William Lazonick, 2008. "Entrepreneurial Ventures and the Developmental State: Lessons from the Advanced Economies," WIDER Working Paper Series DP2008-01, World Institute for Development Economic Research (UNU-WIDER).
    13. Bruce Kogut & Pietro Urso & Gordon Walker, 2007. "Emergent Properties of a New Financial Market: American Venture Capital Syndication, 1960-2005," Management Science, INFORMS, vol. 53(7), pages 1181-1198, July.

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