Venture Capital, Entrepreneurship, and Economic Growth
AbstractUsing a panel of U.S. metropolitan areas, we find that increases in the supply of venture capital positively affect firm starts, employment, and aggregate income. Our results remain robust to a variety of specifications, including ones that address endogeneity. The estimated magnitudes imply that venture capital stimulates the creation of more firms than it funds, which appears consistent with two mechanisms: First, would-be entrepreneurs anticipating financing needs more likely start firms when the supply of capital expands. Second, funded companies may transfer know-how to their employees, thereby enabling spin-offs, and may encourage others to become entrepreneurs through demonstration effects. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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Bibliographic InfoArticle provided by MIT Press in its journal The Review of Economics and Statistics.
Volume (Year): 93 (2011)
Issue (Month): 1 (February)
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- Da Rin, M. & Hellmann, T. & Puri, M.L., 2011.
"A Survey of Venture Capital Research,"
2011-044, Tilburg University, Tilburg Law and Economic Center.
- Da Rin, M. & Hellmann, T. & Puri, M.L., 2011. "A Survey of Venture Capital Research," Discussion Paper 2011-111, Tilburg University, Center for Economic Research.
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- Edward L. Glaeser & Sari Pekkala Kerr & William R. Kerr, 2012.
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NBER Working Papers
18333, National Bureau of Economic Research, Inc.
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- Ana Paula Faria & Natália Barbosa, 2013. "Does venture capital really foster innovation?," NIPE Working Papers 03/2013, NIPE - Universidade do Minho.
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- Arqué-Castells, Pere, 2012. "How venture capitalists spur invention in Spain: Evidence from patent trajectories," Research Policy, Elsevier, vol. 41(5), pages 897-912.
- Bender, Marko & Lutz, Eva, 2009. "Patterns in spatial proximity between venture capital investors and investees in Germany: an empirical analysis," CEFS Working Paper Series 2009-06, Center for Entrepreneurial and Financial Studies (CEFS), Technische Universität München.
- Ufuk Akcigit & William R. Kerr, 2012.
"Growth Through Heterogeneous Innovations,"
12-08, Center for Economic Studies, U.S. Census Bureau.
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- Ramana Nanda & Matthew Rhodes-Kropf, 2010. "Financing Risk and Innovation," Harvard Business School Working Papers 11-013, Harvard Business School, revised Dec 2011.
- Alqatawni, Tahsen, 2013. "The Relationship Conflict between Venture Capital and Entrepreneur," MPRA Paper 48005, University Library of Munich, Germany.
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