See 2017

13 September 2017

Creative constructions: THE importance of fraud and froth in emerging technologies

Date: 13 September 2017
Time: 12.30 - 14.00 hrs
Venue: Ravelijn, RA 1315
Speakers: Prof. Jonathan Coopersmith1, Department ofHistory, Texas A&M University


The promise of emerging technologies (ETs) has long attracted inventors, developers, promoters and investors seeking to profit from “the Next Big Thing.” Irrational exuberance and fraudulent and frothy as well as honest firms are in inherent component in the creative construction of successful ETs, as demonstrated by a range of 19th, 20th, and 21st century examples.The appearance of fraudulent and frothy firms – firms that intended to succeed commercially but quickly failed – reflected the enthusiasm of promoters and investors, the reality of technological and market uncertainty, and the larger competitive and opaque business environment.

These fraudulent and, to a lesser degree, frothy firms acted as an invisible “scam tax” on legitimate firms that harmed them by creating distrust and doubt, sometimes to the extent of painting all but the best known firms with the taint of dishonesty and incompetence. These firms raised the cost of doing business for all firms by absorbing financing and resources, not only directly but by requiring entrepreneurs and investors to perform due diligence and comply with regulations developed to prevent fraud.

Especially in ETs, the gradations among honest, frothy, and fraudulent firms may be less clear than expected. Attempts to reduce ET risk, uncertainty, fraud, and froth include creation of experts, independent analysis, regulation, and due diligence. None have proved fully successful, partly because the financial innovation that often accompanies technological innovation often evades external efforts at regulating it.