Recent Reports & Studies: Kortum & Lerner: The Relationship of VC to Innovation

Using patent filing and quality as a measure of innovation, “a dollar of venture capital appears to be about three times more potent in stimulating patenting than a dollar of traditional corporate R&D,” according to a July 2000 paper by Samuel Korton (Boston University) and Josh Lerner (Harvard University). The authors report in Assessing the Contribution of Venture Capital to Innovation that, although venture capital averaged less than three percent of corporate R&D from 1983-1992, it was responsible for almost eight percent of US industrial innovations during the same time period. 

The findings are based on a study of the influence of venture capital on patent activity across 20 industries over three decades. The authors hope the study is the first of many to quantify the impact of venture capital on innovation. The paper can be found on line at: http://www.people.hbs.edu/jlerner/publications.html