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Venture capital and innovation strategies

Marco Da Rin () and María Fabiana Penas

Industrial and Corporate Change, 2017, vol. 26, issue 5, 781-800

Abstract: Venture capital investors are specialized financial intermediaries that provide funding for technological innovation with the goal of realizing a capital gain within a few years. We are the first to examine the association of venture capital funding with a company’s choice of innovation strategies. We employ a unique data set of over 10,000 innovative Dutch companies, some of which received venture financing. The data include detailed information on patent applications, innovation activities, and other company characteristics. We find that companies backed by venture capital focus on the build-up of absorptive capacity by engaging in both in-house R&D and in the acquisition of external knowledge. Companies that receive public funding, instead, are able to relax their financing constraints and perform more innovation activities without focusing solely on absorptive capacity. Our results also suggest that the correlation between venture capital funding and the build-up of absorptive capacity is not only due to a selection effect. We derive implications of these findings for corporate strategy and public policy.

JEL-codes: G24 O31 O32 O38 (search for similar items in EconPapers)
Date: 2017
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Related works:
Working Paper: Venture Capital and Innovation Strategies (2015) Downloads
Working Paper: Venture Capital and Innovation Strategies (2015) Downloads
Working Paper: Venture Capital and Innovation Strategies (2015) Downloads
Working Paper: Venture Capital and Innovation Strategies (2015) Downloads
Working Paper: Venture Capital and Innovation Strategies (2015) Downloads
Working Paper: Venture Capital and Innovation Strategies (2015) Downloads
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