Innovation Financing in Colombia: An explicative proposal
| Autor | Jaime Humberto Sierra-González - David Andrés Londoño Bedoya - Juan Manuel García-Ospina |
| Cargo | Pontificia Universidad Javeriana, Colombia - Pontificia Universidad Javeriana, Colombia - Pontificia Universidad Javeriana, Colombia |
| Páginas | 58-78 |
Artículos
Innovation nancing in Colombia: An explicative proposal*
Financiación de la innovación en Colombia: una propuesta explicativa
Financiamiento da inovação na Colômbia: uma proposta explicativa
Jaime Humberto Sierra-González a
Pontificia Universidad Javeriana, Colombia
jhsierra@javeriana.edu.co
David Andrés Londoño-Bedoya
Pontificia Universidad Javeriana, Colombia
Juan Manuel García-Ospina
Pontificia Universidad Javeriana, Colombia
DOI: https://doi.org/10.11144/Javeriana.cao34.ifce
Received: 14 September 2020
Accepted: 09 July 2021
Published: 15 October 2021
Abstract:
Data on innovation nancing in Colombia present a paradox: Manufacturing companies prefer to nance their innovation
projects with their own capital, with bank loans in second place, and cheaper public funding last. Extant nancial theories
cannot explain such a paradox (reversed pecking order), making a different approach necessary. Hence, a new perspective is
presented on the basis of Sierra’s (2014, 2020) proposal. A xed effects panel estimation is carried out that includes three new
variables: A Knowledge Incorporation and Consolidation System, interaction among companies and funders, a particular type of
investor (Dedicated). e results support the alternative explanation. Additionally, research possibilities, designs and
applications of public and organisational policy aimed to overcome some of the problems mentioned are proposed.
JEL Codes: D81, D92, G32, O16, O31.
Keywords: Alternative funding, investment strategy, project uncertainty, risk funding, strategic decision-making, paradox.
Resumen:
Los datos sobre la financiación de la innovación en Colombia presentan una paradoja: las compañías manufactureras pre
eren financiar sus proyectos de innovación con su propio capital, usando préstamos bancarios como segunda opción o, en
última instancia, fondos públicos de bajo costo. Las teorías existentes no pueden explicar esta paradoja (inversión del orden
jerárquico), y hacen necesario un abordaje diferente. Por tanto, se presenta una nueva perspectiva a partir de la propuesta de
Sierra (2014, 2020). Se realiza una estimación de panel de efectos fijos que incluye tres nuevas variables: un Sistema de
Incorporación y Consolidación de Conocimiento, la interacción entre compañías e inversionistas, y un tipo particular de
inversionista (Dedicado). Los resultados apoyan la explicación alternativa. Adicionalmente, se proponen algunas
posibilidades de investigación, además de diseños y aplicaciones de políticas públicas y organizacionales orientadas a solucionar
algunos de los problemas mencionados.
Códigos JEL: D81, D92, G32, O16, O31.
Palabras clave: Financiamiento alternativo, estrategia de inversión, proyección de incertidumbre, nanciación de
riesgo, estrategia de toma de decisiones, paradoja.
Resumo:
Os dados sobre financiamiento da inovação em Colômbia apresentam um paradoxo: as companhias manufatureiras preferem
financiar seus projetos de inovação com o seu próprio capital, usando empréstimos bancários como segunda opção ou,
finalmente, fundos públicos de baixo custo. As teorias existentes não conseguem explicar este paradoxo (inversão da ordem
hierárquica), fazendo uma abordagem diferente. Por tanto, uma nova perspectiva é apresentada a partir da proposta de Sierra
(2014, 2020). Um painel de estimação de efeitos xos foi realizado com a inclusão de três novas variáveis: um Sistema de
Incorporação de Conhecimento e Consolidação, a interação entre companhias e investidores, e um tipo particular de investidor
(Dedicado). Os resultados suportam a explicação alternativa. Aliás, propõem-se algumas possibilidades de pesquisa, além de
desenhos e aplicações de políticas públicas e organizacionais orientadas a solucionar alguns dos problemas mencionados.
Códigos JEL: D81, D92, G32, O16, O31.
Author notes:a Corresponding author. E-mail address: jhsierra@javeriana.edu.co
Cuadernos de Administración, 2021, vol. 34, ISSN: 0120-3592 / 1900-7205
Palavras-chave: Financiamento alternativo, estratégia de investimento, projeção de incerteza, nanciamento de risco, estratégia
da tomada de decisões, paradoxo.
Introduction and problem approach
Colombia is the most recent member State of OECD and it barely invests 0.25% of GDP in science,
technology and innovation (STI). While public spending on STI activities re cently reached 30% of total
funding, private actors contribute the remaining 70%; rms contribute 53% of the total spending, and higher
education entities, non-governmental organisations, research centres and government entities contribute the
remaining 47% jointly. Likewise, Minciencias1 –the Ministry of Science, which is the hub of the national
innovation system– is the main nancier of seed capital in the country; at a reg ional level, the departmental
(Colombian states) governments contribute to such nancing through oil and mining royalty funds allocated
to STI activities. However, there are few companies that bet on innovation as a central component of their
competitive strategy and , in addition, there are even fewer that operate in technology-intensive sectors. In
fact, despite being the newest OECD member, Colombia is the new tail-light according to OECD standards
in this subject (OCyT, 2018).
Moreover, only a few rst and second tier nancial institutions are interested in nancing STI projects
in Colombia. To complete this picture, venture capital in many cases faces serious restrictions as in almost
all Latin American countries (Jiménez, 2008); also, potential applicants seem not to know or recognise this
alternative2 to nance their projects. Additionally, the stock/equity market is underdeveloped and inefficient.
is snapshot shows Colombia as a country relatively close to the stereotypical Tylecote and Visintin’s (2008)
Family/State pattern in terms of its corporate governance and nancial system characterisation, particularly
in reference to coordination and control; however, it do es not t the category perfectly since transactional
bank debt is the main funding source, but VC is essentially absent (Table 1).
Interestingly, according to previous research on this subject, most Colombian rms prefer to nance their
innovation projects with internal liquidity (undistributed prots) in the rst place. Only when these funds
are non-existent or insufficient, they go to commercial banks for funding3 (loans) or, very marginally, they
get nancing from suppliers or clients (deferred or advanced payments) (Sierra, Malaver, & Vargas, 2009;
Barona, Rivera, & Aguilera, 2015). Yet, external nancing seems to be more relevant in the case of small and
medium-sized rms (SMEs) (García, Barona, & Madrid, 2013), possibly due to their low degree of liquidity.
TABLE 1
Major stereotypical systems of corporate governance and nance
Source: Sierra (2019) based on Tylecote & Visintin (2008)
When external funds become desirable, companies prefer to g o to local commercial banks rather than to
available public nancers (Table 2) or to international banks. On the other hand, funding through private
bond placement is rare (Sierra et al., 2009; Barona et al., 2015). us, innovative Colombian companies,
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