NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Effect of Venture Capital on Innovation Strategies

Marco Da Rin, María Fabiana Penas

NBER Working Paper No. 13636
Issued in November 2007
NBER Program(s):   CF

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.

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Document Object Identifier (DOI): 10.3386/w13636

Published: Entrepreneurial Financing, Advice, and Agency Costs, Roland Strausz. in Entrepreneurship: Strategy and Structure, Hellmann and Stern. 2009

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