The Effects of Venture Capital Investments on Industrial Innovative Opportunities and Technological Arbitrage Opportunities

Innovative opportunities and technological arbitrage opportunities are two types of entrepreneurial opportunities that could lead to technological progress and economic growth. This study investigates how venture capital investments flowing into an industry may impact both innovative opportunities and technological arbitrage opportunities presented in the industry. After examining 45 industries in the United States over the period of 1980-2015, we find that venture capital investments positively influence innovative opportunities and technological arbitrage opportunities at the industry level. In addition, the findings show that industry characteristics such as industry growth rate and industry dynamism could moderate the impact of venture capital investments on innovative opportunities. Moreover, this study verifies that innovative opportunities mediate the positive relationship between venture capital investments and technological arbitrage opportunities.