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

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  • 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)

Abstract

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
    DOI: 10.1515/jbnst-2003-0102
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    Cited by:

    1. Ansgar Belke & Rainer Fehn & Neil Foster, 2001. "Venture Capital Investment and Labor Market Performance: A Panel Data Analysis," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 197/2001, Department of Economics, University of Hohenheim, Germany.
    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: Anthony Bartzokas & Sunil Mani (ed.), 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 - Leibniz Centre 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. Ansgar Belke & Rainer Fehn & Neil Foster, 2001. "Venture Capital Investment and Labor Market Performance: A Panel Data Analysis," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 197/2001, Department of Economics, University of Hohenheim, Germany.
    7. 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.
    8. Engel, Dirk, 2002. "Welche Regionen profitieren von Venture Capital-Aktivitäten?," ZEW Discussion Papers 02-37, ZEW - Leibniz Centre for European Economic Research.
    9. Michael Peneder, 2006. "Venture Capital: Ergebnisse internationaler Wirkungsanalysen," WIFO Monatsberichte (monthly reports), WIFO, vol. 79(3), pages 161-172, March.
    10. Rainer Fehn & Thomas Fuchs, 2003. "Capital Market Institutions and Venture Capital: Do They Affect Unemployment and Labour Demand?," CESifo Working Paper Series 898, CESifo.
    11. 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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