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Distribution dynamics in European venture capital

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  • Stolpe, Michael

Abstract

This paper evaluates the evolution of European venture capital investments since 1990, using the distribution dynamics methodology. It tests and rejects the hypothesis that the international allocation of venture capital investments is driven by a pathdependent process of agglomeration, in which a country's initial advantage is transformed into a long-term lead. Instead, the evidence from a cross section of 13 European countries is more favourable for the alternative hypothesis, which explains international variations in venture capital investments as part of countries' different patterns of specialization. The robustness of these findings and implications for government policy are discussed.

Suggested Citation

  • Stolpe, Michael, 2003. "Distribution dynamics in European venture capital," Kiel Working Papers 1191, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwkwp:1191
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    File URL: https://www.econstor.eu/bitstream/10419/3132/1/kap1191.pdf
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    References listed on IDEAS

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    1. Black, Bernard S. & Gilson, Ronald J., 1998. "Venture capital and the structure of capital markets: banks versus stock markets," Journal of Financial Economics, Elsevier, vol. 47(3), pages 243-277, March.
    2. Stolpe, Michael, 1995. "Technology and the dynamics of specialization in open economies," Open Access Publications from Kiel Institute for the World Economy 738, Kiel Institute for the World Economy (IfW).
    3. Quah, Danny, 1993. "Empirical cross-section dynamics in economic growth," European Economic Review, Elsevier, vol. 37(2-3), pages 426-434, April.
    4. Schertler, Andrea & Stolpe, Michael, 2000. "Venture mania in Europe: Its causes and consequences," Kiel Discussion Papers 358, Kiel Institute for the World Economy (IfW).
    5. Jeng, Leslie A. & Wells, Philippe C., 2000. "The determinants of venture capital funding: evidence across countries," Journal of Corporate Finance, Elsevier, vol. 6(3), pages 241-289, September.
    6. Maria Luisa Mancusi, 2003. "Geographical concentration and the dynamics of countries' specialization in technologies," Economics of Innovation and New Technology, Taylor & Francis Journals, pages 269-291.
    7. Laura Bottazzi & Marco Da Rin, 2002. "Venture capital in Europe and the financing of innovative companies," Economic Policy, CEPR;CES;MSH, vol. 17(34), pages 229-270, April.
    8. James M. Poterba, 1989. "Venture Capital and Capital Gains Taxation," NBER Chapters,in: Tax Policy and the Economy, Volume 3, pages 47-68 National Bureau of Economic Research, Inc.
    9. Quah, Danny, 1993. " Galton's Fallacy and Tests of the Convergence Hypothesis," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(4), pages 427-443, December.
    10. Leleux, Benoit & Surlemont, Bernard, 2003. "Public versus private venture capital: seeding or crowding out? A pan-European analysis," Journal of Business Venturing, Elsevier, vol. 18(1), pages 81-104, January.
    11. Schertler, Andrea, 2002. "Path dependencies in venture capital markets," Kiel Working Papers 1120, Kiel Institute for the World Economy (IfW).
    12. Geweke, John & Marshall, Robert C & Zarkin, Gary A, 1986. "Mobility Indices in Continuous Time Markov Chains," Econometrica, Econometric Society, vol. 54(6), pages 1407-1423, November.
    13. Bygrave, William D., 1987. "Syndicated investments by venture capital firms: A networking perspective," Journal of Business Venturing, Elsevier, vol. 2(2), pages 139-154.
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    More about this item

    Keywords

    Distribution dynamics; Markov chains; New technology-based firms; Venture capital;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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