Working Paper: NBER ID: w13636
Authors: Marco Da Rin; Mara Fabiana Penas
Abstract: We examine a unique dataset of Dutch companies, some of which have received venture financing. The data include detailed information on innovation activities and other company characteristics. We analyse the role of venture finance in influencing innovation strategies. We find that venture capitalists push portfolio companies towards building absorptive capacity and towards more permanent in-house R&D efforts. By contrast, we find that public funding relaxes financial constraints, but does not lead to a build-up of absorptive capacity. Our results thus highlight the special role of venture capital in shaping companies' innovation strategies.
Keywords: venture capital; innovation strategies; absorptive capacity; public funding
JEL Codes: G24; O32; O38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Venture Capital (G24) | Buildup of Absorptive Capacity (F35) |
| Public Funding (H49) | Buildup of Absorptive Capacity (F35) |
| Public Funding (H49) | Innovation Activities (O31) |
| Venture Capital (G24) | Likelihood of Engaging in In-house R&D (make) (O39) |
| Venture Capital (G24) | Make-and-Buy Strategy (L23) |