IDEAS home Printed from https://ideas.repec.org/p/ipt/wpaper/202601.html

Cross-regional venture capital flows in Europe: The role of entrepreneurial ecosystems and proximity

Author

Listed:

Abstract

This paper examines whether, and under which conditions, regional entrepreneurial ecosystems mitigate spatial frictions in cross-regional venture capital (VC) investments. Using a dyadic panel of VC flows across 267 European NUTS-2 regions over 2008-2022, we estimate gravity-style regressions with high-dimensional fixed effects, distinguishing investments by stage and investor origin. Our results show that spatial frictions, particularly geographic and economic distance, remain important determinants of VC allocation. At the same time, regions with stronger entrepreneurial ecosystems attract higher VC inflows and exhibit lower sensitivity to institutional and structural differences. Differences across investor origins suggest that ecosystem legibility is most valuable when institutional uncertainty is high, such as for cross-border investors.

Suggested Citation

  • Compano Ramon & Johanyak Csaba & Testa Giuseppina & Zhen Ni & Testa Giuseppina & Tuebke Alexander, 2026. "Cross-regional venture capital flows in Europe: The role of entrepreneurial ecosystems and proximity," JRC Working Papers on Corporate R&D and Innovation 2026-01, Joint Research Centre.
    • Handle: RePEc:ipt:wpaper:202601
    as

    Download full text from publisher

    File URL: https://publications.jrc.ec.europa.eu/repository/handle/JRC146136
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. W. J. Henisz, 2000. "The Institutional Environment for Economic Growth," Economics and Politics, Wiley Blackwell, vol. 12(1), pages 1-31, March.
    2. Janna Alvedalen & Ron Boschma, 2017. "A critical review of entrepreneurial ecosystems research: towards a future research agenda," European Planning Studies, Taylor & Francis Journals, vol. 25(6), pages 887-903, June.
    3. Michael Spence, 2002. "Signaling in Retrospect and the Informational Structure of Markets," American Economic Review, American Economic Association, vol. 92(3), pages 434-459, June.
    4. Hannigan, Timothy R. & Briggs, Anthony R. & Valadao, Rodrigo & Seidel, Marc-David L. & Jennings, P. Devereaux, 2022. "A new tool for policymakers: Mapping cultural possibilities in an emerging AI entrepreneurial ecosystem," Research Policy, Elsevier, vol. 51(9).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gnekpe, Christian & Jimenez, Alfredo, 2023. "Smoke signal: When firms' patent strategy and local patent protection system affect equity stakes in cross-border acquisitions," Journal of International Management, Elsevier, vol. 29(6).
    2. Moyra Marval, 2025. "International linkages between entrepreneurial ecosystems: understanding the role of corporate accelerators," Small Business Economics, Springer, vol. 65(3), pages 1407-1426, October.
    3. Ranjani Kumari & Jyoti Verma & Rajeev Verma & Vikas Arya & Armando Papa, 2025. "Flying High With Entrepreneurial Ecosystems—A Systematic Literature Review to Determine the Factors of Entrepreneurial Ecosystem Development," Business Strategy and the Environment, Wiley Blackwell, vol. 34(8), pages 10551-10589, December.
    4. Feldman, Maryann & Fleming, Lee & Heaton, Sohvi & Desai, Sameeksha & Teece, David, 2022. "Uncommon methods and metrics for local entrepreneurial ecosystems," Research Policy, Elsevier, vol. 51(9).
    5. Li Cai & Naiheng Sheng & Garry D. Bruton & Haijing Yu, 2025. "Redefining the entrepreneurial ecosystem in China from a network-based view: A review and proposal for future research," Small Business Economics, Springer, vol. 64(2), pages 775-803, February.
    6. Yanwen Jiang & Mikiharu Noma, 2025. "Do geographic distance, cultural distance, and political hazards equally matter for Japanese firms' outbound mergers and acquisitions? A firm‐ and deal‐level empirical analysis," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 39(1), pages 3-33, May.
    7. Hajer Habib, 2023. "Remittances and Labor Supply: Evidence from Tunisia," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 1870-1899, June.
    8. Jialing (Catherine) Lin & Zhimin Zhou & Fucheng Zheng & Xinru Jiang & Ninh Nguyen, 2023. "How do hotel star ratings affect the relationship between environmental CSR and green word‐of‐mouth?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(5), pages 2651-2663, September.
    9. Ferdinand Thies & Sören Wallbach & Michael Wessel & Markus Besler & Alexander Benlian, 2022. "Initial coin offerings and the cryptocurrency hype - the moderating role of exogenous and endogenous signals," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(3), pages 1691-1705, September.
    10. Rod Mccoll & Yann Truong & Antonella La Rocca, 2019. "Service guarantees as a base for positioning in B2B," Post-Print hal-02326105, HAL.
    11. Nakabayashi, Masaki, 2011. "Schooling, employer learning, and internal labor market effect: Wage dynamics and human capital investment in the Japanese steel industry, 1930-1960s," MPRA Paper 30597, University Library of Munich, Germany.
    12. Simon Fink, 2013. "Policy Convergence with or without the European Union: The Interaction of Policy Success, EU Membership and Policy Convergence," Journal of Common Market Studies, Wiley Blackwell, vol. 51(4), pages 631-648, July.
    13. Kuebart, Andreas & Ibert, Oliver, 2019. "Beyond territorial conceptions of entrepreneurial ecosystems: The dynamic spatiality of knowledge brokering in seed accelerators," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 63(2-4), pages 118-133.
    14. Benischke, Mirko H. & Guldiken, Orhun & Doh, Jonathan P. & Martin, Geoffrey & Zhang, Yanze, 2022. "Towards a behavioral theory of MNC response to political risk and uncertainty: The role of CEO wealth at risk," Journal of World Business, Elsevier, vol. 57(1).
    15. Christine M. Chan & Lei Shi & Jingtao Yi, 2024. "Home country’s economic and political institutions: firms’ ownership decisions in cross-border acquisitions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 55(8), pages 1020-1037, October.
    16. Shih‐Chu Chou & Zhe‐An Li & Tawei Wang & Ju‐Chun Yen, 2023. "How the quality of initial coin offering white papers influences fundraising: Using security token offerings white papers as a benchmark," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 30(1), pages 3-18, January.
    17. Chen, Xuchang & Wu, Changqi & Xie, Xuanli, 2025. "Foreign ownership and corporate litigation risk," Journal of Business Research, Elsevier, vol. 189(C).
    18. Mario D’Arco & Vittoria Marino & Riccardo Resciniti, 2024. "Stop business with Russia! Exploring the representation and perceived authenticity of corporate activism in response to Russia-Ukraine war," Italian Journal of Marketing, Springer, vol. 2024(1), pages 55-76, March.
    19. Pauline Brunner & Karim Messeghem, 2025. "Exploring the construction of social capital within the student entrepreneurship sub-ecosystem," Post-Print hal-04993466, HAL.
    20. Zhang, Hongjuan & Young, Michael N. & Tan, Justin & Sun, Weizheng, 2018. "How Chinese companies deal with a legitimacy imbalance when acquiring firms from developed economies," Journal of World Business, Elsevier, vol. 53(5), pages 752-767.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ipt:wpaper:202601. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Publication Officer (email available below). General contact details of provider: https://edirc.repec.org/data/ipjrces.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.