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The Impact of Venture Capital on Innovation Behaviour and Firm Growth

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  • Michael Peneder

    (WIFO)

Abstract

Proposing a novel research design for firm-level impact studies, I investigate the effects of venture capital financing on corporate performance by applying a two-stage propensity score matching on Austrian micro-data. Controlling for differences in industry, location, legal status, size, age, credit rating, export and innovation behaviour, the findings (i) assert the financing function of venture capital, showing that recipients lacked access to satisfactory alternative sources of capital; (ii) identify selection effects, where venture capital is invested in firms with high performance potential; and finally (iii) confirm the value adding function in terms of a genuine causal impact of venture capital on firm growth, yet not on innovation output.

Suggested Citation

  • Michael Peneder, 2010. "The Impact of Venture Capital on Innovation Behaviour and Firm Growth," WIFO Working Papers 363, WIFO.
  • Handle: RePEc:wfo:wpaper:y:2010:i:363
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    References listed on IDEAS

    as
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    Cited by:

    1. Garry A. Gabison, 2015. "Venture Capital Principles in the European ICT Ecosystem: How can they help ICT innovation?," JRC Working Papers JRC98783, Joint Research Centre (Seville site).
    2. Matthew Beacham & Bipasa Datta, 2013. "Who Becomes the Winner? Effects of Venture Capital on Firms’ Innovative Incentives - A Theoretical Investigation," Discussion Papers 13/33, Department of Economics, University of York.
    3. Rosenbusch, Nina & Brinckmann, Jan & Müller, Verena, 2013. "Does acquiring venture capital pay off for the funded firms? A meta-analysis on the relationship between venture capital investment and funded firm financial performance," Journal of Business Venturing, Elsevier, vol. 28(3), pages 335-353.
    4. Fabio Bertoni & Diego D’Adda & Luca Grilli, 2016. "Cherry-picking or frog-kissing? A theoretical analysis of how investors select entrepreneurial ventures in thin venture capital markets," Small Business Economics, Springer, vol. 46(3), pages 391-405, March.
    5. Michael Peneder, 2013. "On the "Valley of Death" of Venture Capital Finance," WIFO Monatsberichte (monthly reports), WIFO, vol. 86(8), pages 637-648, August.
    6. Krzysztof Dziekoñski & S³awomir Ignatiuk, 2016. "Venture capital and private equity investment preferences in selected countries," "e-Finanse", University of Information Technology and Management, Institute of Financial Research and Analysis, vol. 11(3), pages 128-137, February.
    7. Antal-Pomázi, Krisztina, 2011. "A finanszírozási források szerepe a kis- és középvállalkozások növekedésében
      [The role of sources of finance in the growth of small and medium-sized enterprises]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(3), pages 275-295.
    8. repec:spr:intemj:v:14:y:2018:i:1:d:10.1007_s11365-017-0463-6 is not listed on IDEAS
    9. Spyros Arvanitis & Tobias Stucki, 2013. "The Impact of Venture Capital on the Persistence of Innovation Activities of Swiss Start-ups," KOF Working papers 13-332, KOF Swiss Economic Institute, ETH Zurich.
    10. repec:eee:tefoso:v:127:y:2018:i:c:p:112-126 is not listed on IDEAS
    11. Werner Hölzl & Andreas Reinstaller, 2013. "Financing Constraints of Technology-based Start-up Firms. Results of a Survey," WIFO Monatsberichte (monthly reports), WIFO, vol. 86(8), pages 649-662, August.
    12. Murmann Johann Peter & Korn Jenny & Worch Hagen, 2014. "How Fast Can Firms Grow?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(2-3), pages 210-233, April.
    13. Guo, Liang & Wei, Yinghong Susan & Sharma, Ruchi & Rong, Ke, 2017. "Investigating e-business models’ value retention for start-ups: The moderating role of venture capital investment intensity," International Journal of Production Economics, Elsevier, vol. 186(C), pages 33-45.
    14. Heinz Hollenstein, 2013. "Internationalisation of Research and Development: Determinants, Effects and Policy," WIFO Monatsberichte (monthly reports), WIFO, vol. 86(12), pages 985-992, December.
    15. Laure-Anne Parpaleix & Kevin Levillain & Blanche Segrestin, 2018. "Financing innovation: two models of private equity investment," Post-Print hal-01768986, HAL.

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    Keywords

    venture capital; entrepreneurship; firm growth; propensity score matching;

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