The Effect of Private Equity and Venture Capital on Corporate Innovation and Growth
This study tests the impact of venture capital financing on corporate performance by applying a two-stage propensity score matching on Austrian micro-data. Controlling for differences in industry, location, legal status, size, age, credit rating, export and innovation behaviour, the findings assert the financing function of venture capital, showing that recipients lacked access to satisfactory alternative sources of capital. Furthermore they identify a positive selection effect, because venture capital is invested in firms with high performance potential. Additionally the results confirm a value adding function in terms of a genuine causal impact on firm growth, yet not on innovation output.