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Höheres Beschäftigungswachstum durch Venture Capital? / Does Venture Capital Affect New Firms' Growth?


  • Engel Dirk

    () (Zentrum für Europäische Wirtschaftsforschung GmbH (ZEW), L 7,1, D-68161 Mannheim. Tel.: ++49/+6 21/12 35-1 82, Fax: ++49/+6 21/12 35-1 70)


The paper deals with the analysis of causal effects of venture capital finance for new firms' growth. The crucial criterion for venture capitalists to invest in young firms is the expectation of growth of those investments. Hence, selection biases between the group of venture-backed firms and non-venture-backed firms are evident. Most of recent studies take only a small amount of firm-specific characteristics into account to consider potential biases between both groups of firms. Therefore, the estimation of the causal effect of venture capital finance for new firm growth is potentially biased. Within a statistical matching procedure an adequate control group for comparison with the group of venture-backed firms is drawn. Matching procedure is successful, because the group of venture-backed firms does not differ from the control group regarding a large amount of firm-specific, founder-specific and firm-location characteristics. The estimation of causal effects shows significant higher average annual employment growth rates of German venture-backed firms. However, differences between industries on the one hand and regions on the other hand are observed.

Suggested Citation

  • Engel Dirk, 2003. "Höheres Beschäftigungswachstum durch Venture Capital? / Does Venture Capital Affect New Firms' Growth?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 223(1), pages 1-22, February.
  • Handle: RePEc:jns:jbstat:v:223:y:2003:i:1:p:1-22

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    References listed on IDEAS

    1. N. Berger, Allen & F. Udell, Gregory, 1998. "The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle," Journal of Banking & Finance, Elsevier, vol. 22(6-8), pages 613-673, August.
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    7. Donald B. Rubin, 1977. "Assignment to Treatment Group on the Basis of a Covariate," Journal of Educational and Behavioral Statistics, , vol. 2(1), pages 1-26, March.
    8. James J. Heckman & Hidehiko Ichimura & Petra Todd, 1998. "Matching As An Econometric Evaluation Estimator," Review of Economic Studies, Oxford University Press, vol. 65(2), pages 261-294.
    9. Bürgel, Oliver & Fier, Andreas & Licht, Georg & Murray, Gordon, 2000. "Internationalisation of high-tech start-ups and fast growth-evidence for UK and Germany," ZEW Discussion Papers 00-35, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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    Cited by:

    1. Belke, Ansgar & Fehn, Rainer & Foster, Neil, 2001. "Venture capital investment and labor market performance: a panel data analysis," Discussion Paper Series 50, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    2. Andrea Schertler, 2005. "European venture capital markets: fund providers and investment characteristics," Applied Financial Economics, Taylor & Francis Journals, vol. 15(6), pages 367-380.
    3. Bronwyn Hall, 2004. "The financing of research and development," Chapters,in: Financial Systems, Corporate Investment in Innovation, and Venture Capital, chapter 2 Edward Elgar Publishing.
    4. Engel, Dirk, 2002. "The Impact of Venture Capital on Firm Growth: An Empirical Investigation," ZEW Discussion Papers 02-02, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    5. Alm Bastian & Engel Dirk & Weyh Antje, 2014. "Does Switching to a Western German Employer Still Pay Off?: An Analysis for Eastern Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(5), pages 546-571, October.
    6. Michaela Fuchs & Antje Weyh, 2014. "The pre-exit performance of German plants - How long is the 'shadow of death'?," ERSA conference papers ersa14p1644, European Regional Science Association.
    7. Engel, Dirk, 2002. "Welche Regionen profitieren von Venture Capital-Aktivitäten?," ZEW Discussion Papers 02-37, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    8. Michael Peneder, 2006. "Venture Capital: An Overview of International Impact Analyses," WIFO Monatsberichte (monthly reports), WIFO, vol. 79(3), pages 161-172, March.
    9. Rainer Fehn & Thomas Fuchs, 2003. "Capital Market Institutions and Venture Capital: Do They Affect Unemployment and Labour Demand?," CESifo Working Paper Series 898, CESifo Group Munich.
    10. Marek Zinecker & Tomas Meluzin, 2011. "Private Equity And Venture Capital: An Empirical Analysis Of Investment And Divestments Activity In The Cee Region In The Time Of The Economic Crisis," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 6(2), pages 41-61, June.


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