Government, Venture Capital and the Growth of European High-Tech Entrepreneurial Firms

55 Pages Posted: 26 May 2012 Last revised: 2 Sep 2014

See all articles by Luca Grilli

Luca Grilli

Polytechnic University of Milan - Department of Management, Economics and Industrial Engineering

Samuele Murtinu

University of Groningen

Date Written: January 22, 2014

Abstract

Using a new European Union-sponsored firm-level longitudinal dataset, we assess the impact of government-managed (GVC) and independent venture capital (IVC) funds on the sales and employee growth of European high-tech entrepreneurial firms. Our results show that the main statistically robust and economically relevant positive effect is exerted by IVC investors on firm sales growth. Conversely, the impact of GVC alone appears to be negligible. We also find a positive and statistically significant impact of syndicated investments by both types of investors on firm sales growth, but only when led by IVC investors. Our results remain stable after controlling for endogeneity, survivorship bias, reverse causality, anticipation effects, legal and institutional differences across countries and over time and are stable with respect to potential non-linear effects of age and size of entrepreneurial firms. Overall, our analysis casts doubt on the ability of governments to support high-tech entrepreneurial firms through a direct and active involvement in VC markets.

Keywords: Governmental venture capital, Firm growth, High-tech entrepreneurship, Public policy, Syndication

JEL Classification: L26, G24, M13, H11, G28

Suggested Citation

Grilli, Luca and Murtinu, Samuele, Government, Venture Capital and the Growth of European High-Tech Entrepreneurial Firms (January 22, 2014). Research Policy 43(9), 1523-1543.. Available at SSRN: https://ssrn.com/abstract=2066867 or http://dx.doi.org/10.2139/ssrn.2066867

Luca Grilli

Polytechnic University of Milan - Department of Management, Economics and Industrial Engineering ( email )

Via Lambruschini 4C - building 26/A
Milano, 20156
Italy

Samuele Murtinu (Contact Author)

University of Groningen ( email )

Postbus 72
9700 AB Groningen
Netherlands

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