Assessing the Contribution of Venture Capital to Innovation
Volume: Volume 31, No. 4
Issue: Winter 2000
Pages: pp. 674-692
Authors: Samuel Kortum and Josh Lerner
Title: Assessing the Contribution of Venture Capital to Innovation
Abstract: We examine the influence of venture capital on patented inventions in the United States across twenty industries over three decades. We address concerns about causality in several ways, including exploiting a 1979 policy shift that spurred venture capital fundraising. We find that increases in venture capital activity in an industry are associated with significantly higher patenting rates. While the ratio of venture capital to R&D averaged less than 3% from 1983-1992, our estimates suggest that venture capital may have accounted for 8% of industrial innovations in that period.
JEL Classification
Innovation and Invention: Processes and Incentives (O310 )
Investment Banking Venture Capital Brokerage (G240 )
Intellectual Property Rights: National and International Issues patents, copyrights (O340 )
Innovation Inventions Venture Capital