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The Effect of Venture Capital on Innovation Strategies

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Author Info
Marco Da Rin
María Fabiana Penas

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Abstract

We examine a unique dataset of Dutch companies, some of which have received venture financing. The data include detailed information on innovation activities and other company characteristics. We analyse the role of venture finance in influencing innovation strategies. We find that venture capitalists push portfolio companies towards building absorptive capacity and towards more permanent in-house R&D efforts. By contrast, we find that public funding relaxes financial constraints, but does not lead to a build-up of absorptive capacity. Our results thus highlight the special role of venture capital in shaping companies' innovation strategies.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13636.

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Date of creation: Nov 2007
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Handle: RePEc:nbr:nberwo:13636

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Find related papers by JEL classification:
G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
O32 - Economic Development, Technological Change, and Growth - - Technological Change - - - Management of Technological Innovation and R&D
O38 - Economic Development, Technological Change, and Growth - - Technological Change - - - Government Policy

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