The Finance and Technological Innovation Cluster is a loose cluster of academics in RMIT’s Department of Finance with shared interests in understanding the deep connections between finance and technology. These issues include how emerging technologies can address long-standing challenges facing decision-makers in finance (such as risk management, information processing, and valuation), how technology is reshaping the interaction between users and suppliers of capital, and how financial markets themselves influence the direction and pace of technological progress.
My own interest and expertise lie primarily in the latter area. At the Finance and Technological Innovation Cluster, we have access to high-powered computing resources and advanced data-analytics capabilities, including frontier natural language processing tools. Using these methods, we are in the process of quantifying technological progress over long historical periods using patent data, with particular attention to transformative, frontier-pushing forms of innovation. This agenda focuses on documenting how different waves of technological change have unfolded and, crucially, on understanding the role that financial markets and institutional design play in shaping breakthrough discovery. Within this space, I am actively engaged in several projects examining how institutional structures, incentives, and capital-market forces support, or impede, technological progress.
These projects include a recent working paper that tackles a fundamental question for modern innovation systems: can the organisational structures that make large firms efficient also make them less capable of producing breakthrough technologies? As innovation has become increasingly dominated by a small number of large, complex firms, their ability to generate radical discoveries has become central to economic progress. Our research shows that the very features that enable these organisations to function—cohesive cultures, strong alignment, and mechanisms that reduce internal frictions—also significantly suppress frontier-pushing innovation. This creates a structural tension: the organisational designs required to manage scale and complexity may be incompatible with the exploratory environment needed for transformative discovery. Our paper (available here) quantifies this tension and introduces new measures of innovation developed through our computational approach.
Together with collaborators, I am also examining how the ESG industry affects the emergence of breakthrough discoveries in the green and renewable-energy space, as well as the role the venture-capital sector plays in supporting young firms pursuing radical technological advances. Working papers will be made available here as they are completed.
You can read an article summarizing the current stagnation in breakthrough innovation, its implications for economic productivity and long-term prosperity, and new evidence—based on the measures we are developing, on some of the most widely discussed technologies of our era, including artificial intelligence.
Read article: Are we living through an era of extraordinary technological progress, or a drought of genuine breakthroughs?