Does Governmental Venture Capital Spur Invention and Innovation? Evidence from Young European Biotech Companies

Posted: 28 Feb 2018

See all articles by Fabio Bertoni

Fabio Bertoni

EM Lyon (Ecole de Management de Lyon) - Department of Economics, Finance, Control

Tereza Tykvova

University of Hohenheim - Faculty of Business, Economics and Social Sciences

Date Written: 2015

Abstract

This paper explores whether and how governmental venture capital investors (GVCs) spur invention and innovation in young biotech companies in Europe. To gauge invention we focus on the simple patent stock at the company level, while innovation is proxied by the citation-weighted patent stock. Our findings indicate that GVCs, as stand-alone investors, have no impact on invention and innovation. However, GVCs boost the impact of independent venture capital investors (IVCs) on both invention and innovation. We conclude that GVCs are an ineffective substitute, but an effective complement, of IVCs. We also distinguish between technology-oriented GVCs (TVCs) and development-oriented GVCs (DVCs). We find that DVCs are better at increasing firm’s inventions, and that TVCs, combined with IVCs, support innovations.

Keywords: Governmental venture capital, Independent venture capital, Patenting, Invention, Innovation, Biotechnology

Suggested Citation

Bertoni, Fabio and Tykvova, Tereza, Does Governmental Venture Capital Spur Invention and Innovation? Evidence from Young European Biotech Companies (2015). Research Policy, Vol. 44, No. 4, 925-935, Available at SSRN: https://ssrn.com/abstract=3126146

Fabio Bertoni

EM Lyon (Ecole de Management de Lyon) - Department of Economics, Finance, Control ( email )

23, av. Guy de Collongue BP 174
69132 Ecully Cedex
France

Tereza Tykvova (Contact Author)

University of Hohenheim - Faculty of Business, Economics and Social Sciences

Germany

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