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The Effect of Venture Capital on Innovation Strategies

  • Marco Da Rin
  • María Fabiana Penas

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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Publication status: published as Entrepreneurial Financing, Advice, and Agency Costs , Roland Strausz. in Entrepreneurship: Strategy and Structure , Hellmann and Stern. 2009
Handle: RePEc:nbr:nberwo:13636
Note: CF
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  1. Marco Da Rin & Giovanna Nicodano & Alessandro Sembenelli, 2004. "Public Policy and the Creation of Active Venture Capital Markets," Working Papers 270, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
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  13. Rachel Griffith & Stephen Redding & John Van Reenen, 2000. "Mapping the Two Faces of R&D: Productivity Growth in a Panel of OECD Industries," CEP Discussion Papers dp0458, Centre for Economic Performance, LSE.
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  38. repec:ner:tilbur:urn:nbn:nl:ui:12-192935 is not listed on IDEAS
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