2023/2024
Finance of Innovation
Type:
Mago-Lego
Delivered by:
Department of Educational Programmes
When:
4 module
Open to:
students of all HSE University campuses
Language:
English
ECTS credits:
3
Contact hours:
32
Course Syllabus
Abstract
This course provides a background on how organizations make innovation project management decisions including financing and investing. A general introduction to finance issues in innovation projects is provided, followed by a discussion of specifics of innovation project management for companies and the meaning of expected return and cost of capital. This illustrates management of the financial structure and leverage for strategic development, shows how man-agers, shareholders and investors resolve possible conflicts of interests based on corporate governance best practices. Also capital budgeting issues in innovation project management are considered. This helps students to understand the principal factors determining companies’ incentives for whether to invest or not in a project in the long-term. Approaches towards assessing in-novation projects with regard to the financial investment are discussed and sources of finance for innovation projects introduced.
Learning Objectives
- The course spans 1 academic module. Students are assessed with a written exam. The teaching is based on selected writings and experiences of the instructor. In addition views from different perspectives on the meaning of finance of innovation provide in-depth learning opportunities for all students
- Lectures are designed to deliver theoretical frameworks and international experiences. The course is accompanied by a seminar where students present projects on innovative financing. Lectures and seminars introduce and develop new approaches to understand and further develop different facets of innovation thinking and to provide participants with ready to use state of the art knowledge as well as academic training.
Expected Learning Outcomes
- Know how to analyse the industry trends, forecast industry trends, estimate projected relative market share. Adoption curves
- Know how to estimate the cost of capital and NPV of a project
- Knowledge of Stages of innovations. Uncertainties in financial assessment at different stages. Knowledge of the most promising innovative products and markets for investors
- Knowledge of the investment process, active and passive investors. Know how to assess the investment in innovation. Equity financing and debt financing
- Knowledge of the role of innovations in the modern economy. Knowledge of creating value through technology innovation
- Understanding how to model revenue and cost structure
- Understanding of comparables analysis and other approaches of valuation of innovative projects
- Understanding of venture capital and government support of innovation
Course Contents
- Topic 1. Requirements on innovation from financial point of view
- Topic 2. Financial issues of strategic and competitive analysis for innovative project
- Topic 3. Issues of investment in innovation
- Topic 4. Venture capital and Public support
- Topic 5. Market forecasting for innovative project
- Topic 6. Building a financial model for innovative project
- Topic 7. Estimation of return on investment in innovation projects
- Topic 8. Financial valuation of innovation projects
Assessment Elements
- HomeworkHomework includes preparation of oral presentations at seminars and written essay before final exam.
- Written exam
Bibliography
Recommended Core Bibliography
- Akhavein, J., Frame, W. S., & White, L. J. (2001). The diffusion of financial innovations: an examination of the adoption of small business credit scoring by large banking organizations. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.7D05AF00
- BROWN, J. R., FAZZARI, S. M., & PETERSEN, B. C. (2009). Financing Innovation and Growth: Cash Flow, External Equity, and the 1990s R&D Boom. Journal of Finance (Wiley-Blackwell), 64(1), 151–185. https://doi.org/10.1111/j.1540-6261.2008.01431.x
- Cumming, D. (2007). Government policy towards entrepreneurial finance: Innovation investment funds. Journal of Business Venturing, (2), 193. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.a.eee.jbvent.v22y2007i2p193.235
- de la Torre, A., Gozzi, J. C., & Schmukler, S. L. (2007). Innovative experiences in access to finance : market friendly roles for the visible hand ? Policy Research Working Paper Series. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.p.wbk.wbrwps.4326
- Julian Atanassov, Vikram N, Amit Seru, Gautam Ahuja, Nike Bharucha, John Dinardo, … Er Koch. (2007). Finance and Innovation: The Case of Publicly Traded Firms. SSRN working paper. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.5346B5BA
Recommended Additional Bibliography
- Amer Alzaidi, & Shahzad Qamar. (2018). Factors affecting the adoption of internet banking: a systematic literature review. International Journal of Business Information Systems, (1), 95. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.a.ids.ijbisy.v28y2018i1p95.124