FINANCE, INNOVATION AND THE VALUE OF THE FIRM

The traditional business corporation, emerged in the early 20th century, is facing dramatic changes, concerning the internal organisation, the crucial assets and the productive structure. In this paper, we will consider the firm as a “system”, where knowledge becomes the crucial factor for a more realistic description of the internal workings of the black box, including the complexity of technology and the productive structure. From this framework, that permits to better assess the productive and organizational capabilities of the firm, with internal and external indicators, we try to make suggestions for a new financial approach, integrating some relevant variables in a model of incomplete contracts. We will present a path-dependent model applying this framework to debt financing, with the target of a more efficient project selection by a financial intermediary and the value creation for the economic system in which the firm is embedded