The Effect of Venture Capital on Innovation Strategies

40 Pages Posted: 29 Nov 2007 Last revised: 29 Oct 2014

See all articles by María Fabiana Penas

María Fabiana Penas

Universidad Torcuato Di Tella

Marco Da Rin

Tilburg University, Department of Finance; Tilburg Law and Economics Center (TILEC); European Corporate Governance Institute (ECGI)

Date Written: November 2007

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.

Suggested Citation

Penas, María Fabiana and Da Rin, Marco, The Effect of Venture Capital on Innovation Strategies (November 2007). NBER Working Paper No. w13636. Available at SSRN: https://ssrn.com/abstract=1033761

María Fabiana Penas

Universidad Torcuato Di Tella ( email )

Saenz Valiente 1010
C1428BIJ Buenos Aires
Argentina

Marco Da Rin (Contact Author)

Tilburg University, Department of Finance ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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