Question

Mia and Irene are debating the role of society in regulation. Mia says the investors and stock colors play An important roll in funding new product development. Irene says that there is also potential for downside or problem with their involvement. What is Irene most likely referring to?

Answer 1

Irene is likely referring to the downside of investor involvement, such as a resistance to risk, imperfect information, and potential barriers to equitable participation leading to innovation losses.

Step-by-step explanation:

When Mia says that investors and stockholders play an important role in funding new product development, Irene is most likely referring to the potential downsides or problems with their involvement, such as resistance to large-scale innovation due to the risks involved, which often include massive corporate and personal losses when experiments fail or products do not gain traction. There's also the issue of imperfect information, where outside investors may not be fully aware of the firm's actual situation compared to those running the company. Furthermore, the involvement of private investors has implications for corporate governance, equity participation, and innovation losses due to barriers to equitable participation in certain demographics within industries, potentially affecting economic growth and social equity.