The Role of Venture Capital Investment in Startups’ Sustainable Growth and Performance: Focusing on Absorptive Capacity and Venture Capitalists’ Reputation

Jihye Jeong, Juhee Kim, Hanei Son and Dae-il Nam
Additional contact information
Jihye Jeong: Daedeok Venture Partners LLC, Daejeon 34126, Korea
Juhee Kim: Institute for Business Research and Education, Korea University, Seoul 02841, Korea
Hanei Son: HEC Paris, 78350 Jouy-en-Josas, France
Dae-il Nam: Management Department, Korea University Business School, Seoul 02841, Korea

Sustainability, 2020, vol. 12, issue 8, 1-13

Abstract: This study provides evidence on how venture capital (VC) investment affects startup firms’ sustainable growth and performance. Despite the rich and abundant research on the relationship between VC investment and startup performance, there is no clear evidence about the contribution of VC investment on the performance and market value of invested firms. In order to accurately measure the impact of VC investment, this study explored how VC investment at each stage of growth affects a startup’s sustainable growth and performance. Based on signaling theory and information asymmetry, this study proposed a positive link between initial-stage VC investment and a startup’s growth and performance. Using a sample of 363 firms listed from 2000 to 2007, this study demonstrated that startups are sustained and perform better as they receive their VC investment at the initial stage. The level of potential absorptive capacity positively moderated this association, unlike realized absorptive capacity, which did not show significant moderating effects.

Keywords: venture capital investment; startup’s sustainability; investment round; absorptive capacity; reputation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://www.mdpi.com/2071-1050/12/8/3447/pdf (application/pdf)
https://www.mdpi.com/2071-1050/12/8/3447/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:12:y:2020:i:8:p:3447-:d:349362

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().