Financial Institutions for Innovation and Development (FIID)
The FIID project studies the types of financial institutions – in terms of their governance, organization, and operation – that support innovation at the level of the business enterprise, and the implications for stable and equitable growth at the level of the economy as a whole. We define innovation as the processes that generate higher quality, lower cost products at prevailing factor prices. Innovation creates the possibility for growth in per capita incomes, but that growth may be unstable over time and inequitably distributed across the population.  A prime challenge for legislators and policy-makers concerned with economic development is to structure financial institutions so that they support innovation in ways that contribute to stable and equitable growth. 
Included in the project are three nations, the United States, Japan, and China, with a focus on innovation in information and communication technologies (ICT), biotechnology (especially biopharmaceuticals), and clean technology (which cuts across many industrial classifications). The project is analyzing the governance, organization and operation of financial institutions that are central to funding industrial innovation in key high-tech sectors of the economy. Our analytical framework accords a potentially central role to business interests in the restructuring of financial institutions.
In some times and places, the objectives of these business interests may be to generate the higher quality, lower cost products that can be the foundation for equitable and stable economic growth. But business interests may use financial institutions in ways that generate instability and inequity. A case in point is the speculative promotion of startups in the “dot.com” boom of the late 1990s, with the US venture capital industry and Wall Street banks playing active and important roles. So too is the way in which, in the name of selling “innovative” derivative products, US banking interests shaped the governance, organization, and operation of US mortgage institutions, culminating in the financial meltdown of 2008.

In this project, we construe the relevant financial institutions to include not only securities markets, the banking system, prevailing tax regimes and foreign direct investment but also government spending on the knowledge base and physical infrastructure that can serve as inputs into the innovation process at the business level as well as government subsidies to businesses that promote the development and utilization of innovative products.
Project Director
William Lazonick, University of Massachusetts
Faculty Researchers 
Dan Breznitz, Georgia Institute of Technology
Henrik Glimstedt, Stockholm School of Economics
Kenji Kushida, Stanford University
Dic Lo, University of London
William Milberg, The New School
Mari Sako, University of Oxford
Kay Shimuzu, Columbia University
Fenglin Zhang, Dongbei University of Finance and Economics
Yu Zhou, Vassar College
John Zysman, University of California Berkeley
Research Associates
Mark Huberty
Nina Kelsey
Dan Breznitz and Michael Murphree, "Standardized Confusion? The Political Logic of China's Technology Standards Policy" FIID Working Paper, August 2010
Dan Breznitz and Michael Murphree, "Run of the Red Queen: How China Innovates"  
China Economic Quarterly, September 2010
Kenji E. Kushida, Jonathan Murray and John Zysman, "Diffusing the Fog: Cloud Computing and Implications for Public Policy" BRIE Working Paper 197, March 11, 2011
Kenji E. Kushida, "Leading Without Followers: How Politics and Market Dynamics Trapped Innovations in Japan's Domestic 'Galapos' ICT Sector" BRIE Working Paper 199, March 13, 2011
William Lazonick, "The New Economy Business Model and the Crisis of US Capitalism” 
Capitalism and Society, 4, 2, 2009
William Lazonick, "The Explosion of Executive Pay and the Erosion of American Prosperity
Entreprises et Histoire, 57, 2010
Wililiam Lazonick, "The Fragility of the US Economy: The Financialized Corporation and the Disappearing Middle Class"
theAIRnet Working Paper, January 2011
William Lazonick and Öner Tulum, "US Biopharmaceutical Finance and the Sustainability of the Biotech Business Model"
theAIRnet working paper, January 2011
William Milberg, "Global Value Chains: Governance and Policy Implications
Post-­Hearing Statement to the U.S. International Trade Commission Pursuant to Investigation No.332-­325,

The Economic Effects of Significant Import Restraints: Seventh Update, December 20th, 2010
John Zysman and Dan Breznitz, "The State in A Double Bind: Staying Wealthy in a Changing Global Economy"
BRIE Working Paper 188, April 25, 2010
John Zysman and Mark Hurberty, "Governments, Markets, and Green Growth: Energy systems transformation for sustainable prosperity" September 30, 2010