Introduction

Globalisation is widely equated with institutional convergence (Kluth and Andersen, 1996, 1997). Finance is quoted as the first and foremost example of how key economic institutions are conforming to common modes of operation and design across the OECD. This chapter will advance the opposite perspective. Taking various national schemes aimed at promoting the allocation of capital to innovative SMEs as the point of departure, we intend to demonstrate that financial institutions are indeed subject to national trajectories of development even when attempting to cater for new market and/or policy demands.

Europe's lack of ability to create new jobs during the economic upturns of the mid1980s and 1990s has largely been attributed to an inflexible industry structure featuring paramount shortage of new market entrants particularly in the high-technology segment. European financial institutions have been pointed out as a key source of industry structure rigidity. In response a venture capital system, modelled along American lines, has been suggested as the optimal way to ensure capital and managerial skills for European high-technology entrepreneurs and SMEs. Consequently a number of European-level initiatives has been launched, such as ‘Euroventures’ in the 1980s and ‘EASDAQ’ in the 1990s, to bring about a functioning venture capital market.

While the venture capital approach has been dominant in political and academic debate, national approaches to eliminate the lack of capital and managerial skills for high-technology entrepreneurs and SMEs have been extremely diverse and display a stronger allegiance to existing institutional set-ups than to the original model operating in the US.