The Eurozone's high tech industry paradox

Abstract

This study addresses the relative underdevelopment of high tech industries in the Eurozone compared to high tech industries in the US. Based on a review of previous studies this study identifies a paradox, in which limited acquisition of early stage venture capital hinders the growth of New Technology Based Firms (NTBFs) in the Eurozone, and in which underdevelopment of NTBFs results in the lagging development of high tech industries in the Eurozone. Further exploration of this paradox shows that it comprises an industry as well a firm level dimension, namely the market dynamics of HHTIs in the Eurozone and the willingness by NTBFs to accept early stage venture capital in the Eurozone. The study of these two dimensions leads to a discussion of technology-push versus demand-pull. The results show that ‘well developed’ industries in terms of relatively high R&D intensities go along with relatively more demand-pull in early stages of the development process of NTBFs. In addition this study relates a smaller willingness by NTBFs to accept early stage venture capital to the presence of relatively less tech technology-push at later stage in development process of NTBFs. A possible solution for escaping this paradox in the Eurozone should simultaneously address both elements, because as this study shows ‘technology-push’ cannot exist without ‘demand-pull’.