What is the impact of country’s venture capital investment on its labour productivity?

Abstract

Purpose: The aim of the research is to answer the question of what the impact of ven­ture capital investment is on the labour productivity of countries. 
Methodology: This study aims to analyse whether the effect of venture capital invest­ment on countries’ labour productivity may occur when, in addition to the traditional lin­ear specification, a non-linear and delayed impact is considered. The proposed method is based on multiple regression models. 
Findings: Despite the fact that EU countries allocate much support to develop the ven­ture capital sector, the research results reveal that the impact of venture capital investment on labour productivity in EU-25 countries is insignificant. 
Originality: Much of the literature investigates the impact of venture capital invest­ment at the company or sectoral levels. However, researchers emphasise the need to expand the scope and analyse this impact not only at the company or sectoral level, but also at the country level. The analysis of research works on the impact of venture capital investment on economic development indicators of countries demonstrates that empirical research on the impact of venture capital investment on labour productivity of countries is under­developed. The study contributes to the scientific literature with one of the first attempts to investigate this topic. The empirical analysis is based on the European Union’s (EU) 25 countries.

Keywords: venture capital investment, labour productivity, innovation, European Union countries.

JEL Classification: G24, J24, O30.