Title: The effects of venture capital on firm innovation: the role of absorptive capacity

Authors: Abderrahim Laachach; Younes Ettahri

Addresses: National School of Business and Management, Abdelmalek Essaadi University, Road of Airport, B.P. 1255, 90 000, Tangier, Morocco ' National School of Business and Management, Abdelmalek Essaadi University, Road of Airport, B.P. 1255, 90 000, Tangier, Morocco

Abstract: The concept of absorptive capacity is currently receiving attention in the literature and the underlying drivers of innovation. The present article emphasises the contribution of venture capitalists to the innovation process, in particular through absorptive capacity. Building on the increasing importance of the structural equation modelling (SEM) as a substantial analytical tool for testing cause-effect-relationships models with latent variables, we used the partial least squares structural equation modelling (PLS-SEM) to test the structural and the measurement model of our research. The sample of this study consisted of 62 venture capital backed Moroccan firms. The results reveal that the innovation is largely associated upstream with the absorptive capacity in venture capital backed firms. However, the contribution of venture capitalists to innovation is relatively limited, particularly for radical innovation. Furthermore, the firm size has no significant impact on innovation and absorptive capacity.

Keywords: absorptive capacity; venture capital; knowledge transfer; incremental innovation; radical innovation.

DOI: 10.1504/IJBIR.2023.132899

International Journal of Business Innovation and Research, 2023 Vol.31 No.3, pp.407 - 432

Received: 05 May 2020
Accepted: 17 Mar 2021
Published online: 16 Aug 2023 *

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