Venture Capital as a Catalyst for Innovation and Economic Growth in Emerging Economies: A Systematic Review and Future Research Agenda

Ahmed I. Kato ()
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Ahmed I. Kato: Department of Applied Management, College of Economic and Management Sciences, University of South Africa, Pretoria 0003, South Africa

Administrative Sciences, 2025, vol. 15, issue 11, 1-24

Abstract: Venture capital (VC) is vital for innovation and economic growth, providing capital and networks to early-stage firms. While research shows a generally positive impact, challenges and failures are often overlooked, potentially creating a skewed perception of success. A review of 72 articles reveals that VC investment is concentrated in developed nations and a few emerging economies, highlighting uneven growth and the need for government interventions to promote a more balanced landscape. The review emphasises the critical importance of examining contextual factors, such as institutional frameworks and technological infrastructure, in assessing the effectiveness of venture capital in various emerging economies. This systematic review offers several key contributions with practical implications for policymakers, private investors, and the business community. First, it provides evidence-based insights into the effectiveness of VC in fostering innovation and economic growth, informing the design of targeted policies to support SME development. Second, it offers a nuanced understanding of the factors that influence the success of VC-backed SMEs in emerging economies, enabling more informed investment decisions. Third, building upon existing research, this study asserts its contribution by providing valuable, practical guidance for entrepreneurs. It offers a deeper understanding of the VC landscape, outlining both its potential benefits and inherent challenges. This enables entrepreneurs to develop more informed strategies for engaging with VC funding and maximising its impact on their businesses. The study also acknowledges limitations related to database restrictions, language bias, and limitations in search terms, suggesting avenues for future research to contribute to shaping venture capital investments and overall economic growth.

Keywords: venture capital; innovation; economic growth; emerging economies; high-growth firms (search for similar items in EconPapers)
JEL-codes: L M M0 M1 M10 M11 M12 M14 M15 M16 (search for similar items in EconPapers)
Date: 2025
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