Venture Capital as a Catalyst for Innovation and Economic Growth in Emerging Economies: A Systematic Review and Future Research Agenda

Abstract

Venture capital (VC) is vital for innovation and economic growth, providing capital and networks to early-stage firms. While research shows a generally positive impact, challenges and failures are often overlooked, potentially creating a skewed perception of success. A review of 72 articles reveals that VC investment is concentrated in developed nations and a few emerging economies, highlighting uneven growth and the need for government interventions to promote a more balanced landscape. The review emphasises the critical importance of examining contextual factors, such as institutional frameworks and technological infrastructure, in assessing the effectiveness of venture capital in various emerging economies. This systematic review offers several key contributions with practical implications for policymakers, private investors, and the business community. First, it provides evidence-based insights into the effectiveness of VC in fostering innovation and economic growth, informing the design of targeted policies to support SME development. Second, it offers a nuanced understanding of the factors that influence the success of VC-backed SMEs in emerging economies, enabling more informed investment decisions. Third, building upon existing research, this study asserts its contribution by providing valuable, practical guidance for entrepreneurs. It offers a deeper understanding of the VC landscape, outlining both its potential benefits and inherent challenges. This enables entrepreneurs to develop more informed strategies for engaging with VC funding and maximising its impact on their businesses. The study also acknowledges limitations related to database restrictions, language bias, and limitations in search terms, suggesting avenues for future research to contribute to shaping venture capital investments and overall economic growth.

1. Introduction

Venture capital (VC) has emerged as a formidable engine for innovation, entrepreneurship, progress and economic growth in the global economy (Florida & Smith, 1990; Samila & Sorenson, 2011; Pradhan et al., 2017; Cumming et al., 2023). Venture capital drives economic growth by funding high-potential startups, fostering innovation and enhancing market competitiveness Bertoni et al. (2011); (Cole et al., 2016; Cappellari & Gucciardi, 2024; Sidei et al., 2025; Kato, 2025). This support extends far beyond mere financial injection, encompassing strategic guidance, technical expertise, and crucial network connections. Unlike traditional financing, which is often inaccessible to young and unproven enterprises, VC investors provide risk capital to early-stage firms with high-growth potential, stimulating new venture creation, generating jobs for a growing youth population, (Kolmakov et al., 2015) and promoting key sectors such as agriculture and renewable energy and overall competitiveness in the global market (Sipola, 2022). While the existing literature often portrays VC as a powerful catalyst for growth, a more nuanced perspective reveals conflicting evidence regarding its overall impact on innovation and economic growth. A closer examination of these disparities reveals several critical gaps that compel further research, particularly concerning emerging economies.

Start-up firms, despite their economic potential, often face difficulties in securing adequate funding to engage in technological innovation, develop new business models, and achieve sustainable growth (Ahlstrom & Bruton, 2006; Rossi et al., 2018; Kolmakov et al., 2015; Palmieri & Ferilli, 2024). As a result, these firms frequently seek strategic alliances with external investors, including venture capital (VC) firms, angel investors, and microfinance institutions, to strengthen their capacity to develop new products, launch ventures, and expand into new markets (Kato, 2024, 2025). The unwavering benefits of VC financing for early-stage firms have driven significant scholarly interest across disciplines such as finance, entrepreneurship, technology, and social sciences (Spillan & Ziemnowics, 2002). This is evidenced by a notable surge in publications exploring emerging trends, opportunities, and challenges within these fields (Cumming et al., 2023).

Notwithstanding the significance of VC investment, which is well-documented in the literature, its precise impact on fostering innovation and economic growth in the unique contexts of emerging economies in Asia and Africa requires further investigation. Existing studies on VC investment present a complex and often contradictory landscape. A handful of studies have investigated the role of VC in innovation, entrepreneurship, and economic growth (e.g., Timmons & Bygrave, 1986; Samila & Sorenson, 2011; Pradhan et al., 2017), but again, they have largely focused on developed nations within the European Economic Area (EEA) and the United States of America. This emphasis has resulted in a significant knowledge gap in our understanding of VCs’ ultimate effect on economic growth in developing countries in Asia and Africa. These regions have unique socio-economic, technological, and political environments, making it essential to investigate the specific challenges faced by SMEs in emerging economies (Mahadea & Pillay, 2008).

Conversely, some researchers note that this relationship is not universal; the impact of VC varies by business stage, with mature-stage companies potentially benefiting more than early-stage businesses (Kato & Tsoka, 2020; Kato & Chiloane-Tsoka, 2024) due to the underrepresentation of early-stage investments, which can hinder job creation and economic growth. Additionally, some scholars find no discernible connection between VC and the growth of SMEs (Colombo & Murtinu, 2017; Tykvová, 2018). These researchers argue that it is inaccurate to assume that all business entrepreneurs universally seek this form of investment. Indeed, some SME founders harbour reservations regarding VC funding approaches, particularly the potential dilution of control associated with equity share arrangements. This apprehension stems from a desire to maintain autonomy in strategic decision-making and operational management, which may be perceived as compromised by the involvement of external VC investors.

More importantly, several studies argue that VC, especially when coupled with government funding, may overcrowd the market, potentially hindering the progress of nascent startup firms (Baldock, 2015; Bertoni et al., 2019; Figueiredo & Bendelá, 2024; Lu & Shen, 2025). To strengthen this argument, scholars have posited that VC firms’ pursuit of quick, high-return exits—often through trade sales or Initial Public Offerings (IPOs)—can create a conflict of interest with the early-stage companies they fund (Gompers, 1996; Lerner & Nanda, 2020; Eldar & Grennan, 2024). This pressure for short-term gains, sometimes called “grandstanding,” is driven by the limited lifespan of VC funds, typically around 10 years (Gompers, 1996).

Moreover, recent works have also highlighted the geographic concentration of VC investment, often driven by investor proximity (Sorenson & Stuart, 2001; Lutz et al., 2013), leaving many promising firms in more remote locations without access to the transformative benefits of VC for innovation and growth (Palmieri & Ferilli, 2024). To this end, the existing discrepancies in theoretical perspectives and conflicting findings in empirical studies have created a significant knowledge gap regarding how VC investments can effectively drive innovation capabilities and the growth of HGFs in emerging economies (K.-H. Tsai & Wang, 2004, 2005). Future research should prioritise examining how strategic VC investments in SMEs can specifically promote innovation and economic growth within these distinct contexts (Yoo et al., 2024).

This study aims to address the ongoing debate about whether VC investments can spur innovation and economic growth in emerging economies of Asia and Africa by providing a comprehensive review of the most significant and impactful relevant published articles in Business management, entrepreneurship, and econometrics and finance research between 2002 and 2024, with a particular focus on estimating the causal effects of VC in emerging markets. Through a systematic analysis of 72 published studies indexed in the Scopus database, this review investigates the potential causal relationships between VC investment, innovation, and economic growth in emerging economies. The systematic review was concluded in August 2025. The study is guided by a primary research question to assist in evaluating a broad spectrum of Scopus open-access articles concerning this study area. Qn1. How does VC impact innovation and economic growth within high-growth SMES in emerging markets?

This systematic review offers several key contributions with practical implications for policymakers, private investors, and the business community. First, it provides evidence-based insights into the effectiveness of VC in fostering innovation and economic growth, informing the design of targeted policies to support SME development. Second, it offers a nuanced understanding of the factors that influence the success of VC-backed SMEs in emerging economies, enabling more informed investment decisions. Third, for the business community, particularly SME founders and managers, it provides valuable guidance on navigating the VC landscape, understanding the potential benefits and challenges of VC funding, and developing strategies to maximise the impact of VC investment on their businesses.

The rest of the paper is organised as follows. Section 1 explains the conceptual framework of VC, looking at its net effect on innovation and economic growth of emerging countries. Section 2 highlights the methods employed to search, synthesise, and analyse the literature. Section 3 presents the results of the review. In Section 4, the results are discussed, and existing gaps in the literature are identified. Section 5 provides a conclusion, summarizing the results and their implications for both practical application and theoretical understanding.

1.1. Venture Capital Concept

Venture capital is a form of equity financing provided to early-stage firms with high growth potential, wherein VC firms acquire a stake in the business and a board seat to monitor their investment performance (Lerner, 2010; Cattafi et al., 2025). For example, Sequoia Capital invested in Google during its early stages, contributing significantly to its growth and success. Understanding the interplay between VC, innovation, and economic growth necessitates the application of theoretical frameworks that shed light on the underlying dynamics at work. VC financing iswidely acknowledged in several foundational theories, including agency theory (Arthurs & Busenitz, 2003) and contracting in institutional theory and contracting in VC (Zacharakis et al., 2007), with each offering distinct insights into the VC–entrepreneur relationship and its influence on firm growth.

While these theories provide valuable perspectives, they also encounter mixed reactions and limitations in fully capturing the complexities of VC financing, especially within emerging economies (Ahlstrom & Bruton, 2006). This study builds upon well-established theoretical frameworks that clarify the connections between VC, innovation, and economic growth, drawing from the disciplines of economics, entrepreneurship, and finance.

Agency Theory: This dominant theory surrounding the VC landscape highlights the crucial role that agency theory plays, as noted by several scholars. It posits that entrepreneurs often seek VC financing to bridge the financing gap necessary for the growth of their innovative firms. In this context, VCs offer the essential patient capital to SMEs with high growth potential, while the main firms supervise the SME operations, creating a principal–agent dynamic (Jarchow & Röhm, 2023; Cattafi et al., 2025; Yoo et al., 2024).

Institutional Theory: This foundational concept provides rich insights into the dynamics at play, enriching our understanding and analysis. Shedding light on the institutional theory, VCs rely on a stable institutional environment characterised by a predictable rule of law and a reliable enforcement regime to facilitate and protect their investments. Yet, beyond legal stability, VCs seek environments with efficient corporate control and capital markets that enable smooth exits from investments, along with systems that exhibit minimal corruption (Bertoni et al., 2019; Morawczyński, 2020).

In conclusion, while institutional theory and agency theory provide a valuable foundation for understanding VC markets, their limitations become apparent when applied to developing nations. The reliance on stable institutions, predictable legal environments, and efficient capital markets, as highlighted by institutional theory, may not fully reflect the realities of developing economies. Similarly, agency theory’s focus on principal–agent relationships and the assumption of a financing gap may not account for the unique challenges and opportunities faced by entrepreneurs in emerging markets. Future research should explore the nuances of VC dynamics in developing nations, including the influence of informal networks, alternative financing sources, and the role of government policies in shaping the VC landscape. Additionally, a deeper understanding of the geographic concentration of VC activity and its relationship to existing practices in developed economies is essential for fostering a more inclusive and equitable VC ecosystem in developing countries

1.2. Venture Capital and High-Growth SMEs in Emerging Economies

Despite the rapid growth in the literature available in advanced economies, an inadequate number of studies have examined the interrelations between VC, innovation, and economic growth, particularly in emerging economies, which present a unique set of challenges and opportunities (K.-H. Tsai & Wang, 2005; Buah, 2017; Kato & Tsoka, 2020). Recent work by Lerner (2010) highlights a key tension in the VC landscape: while VC investment is often associated with driving the growth of innovative firms, the primary goal of VC investors is not necessarily to foster long-term growth but to generate high financial returns within a defined timeframe. VCs provide funding to startup companies in exchange for equity (Jarchow & Röhm, 2023; Cappellari & Gucciardi, 2024), and their typical fund lifespan of 10 years incentivises them to seek deals where a smaller investment can yield substantial returns within a shorter period (Gompers, 1996). This focus on maximising return on investment explains why VC investment tends to concentrate on high-growth companies in sectors like technology, where the potential for rapid scaling and market disruption is high (Florida & Smith, 1990). Hence, this underscores a critical gap in our understanding of its impact on the continent due to limited data focusing on early-stage investments and the lack of sector-specific expertise.

Large firms enjoy ample opportunities for capital to finance their business operations and growth. In stark contrast, HGFs in developing nations face significant challenges in accessing alternative financing options (Kolmakov et al., 2015; Pradhan et al., 2017; Tykvová, 2018; Bertoni et al., 2019). This is primarily due to their lack of solid historical financial performance and the high-risk nature of the projects they pursue. Such projects are inherently difficult for banks and traditional financial sources to assess. In these scenarios, VC financing emerges as the definitive solution. Numerous studies have demonstrated that VC is crucial for the scaling and expansion of SMEs. Additionally, VC plays a vital role in facilitating access to other sources of external finance. Beyond extending capital to HGFs, VC investors also often provide non-financial resources, such as business know-how and management expertise, by participating directly in the management of the firm, by providing advice, and by connecting the firm with potential clients, suppliers, and other investors.

Research suggests that VC can significantly contribute to the growth and innovation of high-tech start-ups (Rosenbusch et al., 2013; Pantea & Tkacik, 2024). Small- and Medium-sized enterprises with growth potential typically seek financing from VC investors, other than traditional lenders, such as banks, during their early growth stage. In the more developed economies of the United Kingdom, Canada, and the United States, VCs have filled this gap by providing capital to early-stage ventures with good growth potential (Cumming et al., 2019). The availability of such capital has helped to promote the emergence of numerous high-growth firms in the United Kingdom, the United States, and several other developed economies. This has led many to conclude that VC is a crucial factor in fostering a region’s economic growth (Cappellari & Gucciardi, 2024).

Despite the appealing nature of these claims, the reality is that VC funding for HGFs in developing nations is exceedingly limited. VC investors typically employ a meticulous screening process, leveraging their substantial experience and knowledge to identify promising start-ups and small enterprises that demonstrate high potential for growth and innovation (Bertoni et al., 2019; Tykvová, 2018; Palmieri & Ferilli, 2024). This rigorous evaluation not only assesses the viability of the business model but also considers market conditions, the capabilities of the founding team, and potential scalability. As a result, a significant portion of small firms find themselves excluded from access to VC funding, as this form of investment is specifically tailored to firms that exhibit exceptional promise rather than to enterprises that fall within the realm of mediocrity (Godke Veiga & McCahery, 2019; Yin et al., 2024; Kato, 2025).

Venture capital’s impact is well-documented in the literature, with some studies supporting its proficiency in fostering innovation, creating jobs, and fuelling economic growth (Samila & Sorenson, 2011; Mbhele, 2012; Šarić, 2017). On the contrary, some scholars argue that the current literature on VC contains notable gaps, particularly concerning its application and impact in emerging economies like Asia and Africa. A dominant bias exists towards successful, technology-focused ventures in developed markets (Lerner, 2010; Demirel & Parris, 2015; Lerner & Nanda, 2020; Spillan & Ziemnowics, 2002), neglecting the high failure rates inherent in VC and overlooking its potential negative consequences, such as conflicts of interest and pressure for premature exits driven by fund cycles. Furthermore, research often overlooks VC’s limited accessibility for most startups (Bertoni et al., 2011), especially those in critical sectors like agriculture and manufacturing, and fails to adequately account for the unique institutional, regulatory, and market contexts of emerging economies (Kato, 2025). This creates a skewed and incomplete understanding of VC’s true influence on firm growth, innovation strategies, and sustainable economic development outside of Silicon Valley, signalling a clear need for more nuanced, context-specific research.

1.3. Venture Capital and Barriers to Innovation

Past research demonstrates that VC financing is associated with accelerated innovation and commercialisation, leading to greater growth in wages and overall firm scale (Buah, 2017; Milton-Smith, 2001). However, the precise impact of VC on innovation varies across the different stages of company development. Caselli et al. (2009) explored 37 Italian venture-backed firms that went public through IPOs, and the findings revealed that innovation is critical at the initial investment stage but may become less of a focus once the company receives funding and prioritises other economic and managerial aspects. Similarly, previous literature suggests that VC investment may not foster successful growth in emerging economies, where public policies frequently fall short in creating a supportive environment for both foreign investors and local entrepreneurs looking to develop their VC sectors (Bocken, 2015; Bertoni et al., 2019; Morawczyński, 2020; Zhang & Zhou, 2025). This narrow viewpoint fails to capture the intricate ecosystem necessary for VC to effectively translate into meaningful innovation and economic growth for high-tech companies. This review aims to fill some of these existing gaps in the literature with a new dataset, which highlights the critical importance of access to appropriate financing for unlocking the full potential of innovative SMEs.

Notwithstanding a growing body of research examining the impact of VC on high-growth firms, Levasseur et al. (2022) argue that the use of diverse research methods and the scattered nature of findings across individual studies create a significant gap in our understanding of this field. The lack of a comprehensive and systematic analysis across various contexts using standardised methodologies hinders our ability to draw robust conclusions about the causal relationship between VC finance, innovation and economic growth outcomes. Furthermore, data supporting the transformative impact of VC in these countries is often fragmented and limited, further complicating the picture (Caselli et al., 2009; Pantea & Tkacik, 2024). Many entrepreneurs have been left unaware of how VC investments operate, a challenge compounded by the lack of VC investors in the region, making funding less accessible for aspiring entrepreneurs who might benefit from this model. This fragmented research landscape and limited data availability make it difficult to develop effective policies and investment strategies that can leverage VC finance to propel innovation and economic growth.

2. Method

2.1. Study Identification and Sample

To comprehensively identify the specific existing literature on the role of VC in fostering innovation capabilities and economic growth in SMEs, particularly within emerging economies, this study adopted the rigorous four-step PRISMA (Preferred Reporting Items for Systematic Reviews and Meta-Analyses) guidelines, as outlined by Page et al. (2021). As a requirement for compliance to the PRISMA guidelines, this review paper has been registered on Center for Open Science project ID; osf.io/7g9y2. The PRISMA approach was chosen due to its ability to ensure reliable and valid reproducible data through a rigorous, step-by-step process of searching and screening relevant literature. In this case, the researcher was assured of selecting and synthesising studies relevant to the role of VC in innovation and economic growth in emerging economies.

The primary source of data for this review is the Scopus Database. The choice of Scopus-indexed documents for this review is grounded in the database’s role in encouraging high-quality research in several high-impact journals and its strength in supporting quality research and research visibility. Given that it is a Centre for millions of reputable articles, Scopus provides a comprehensive and reliable database for identifying relevant studies on VC, innovation, and economic growth. While we recognize that Scopus’s subscription-based model may limit access to valuable data for non-subscribers, it remains a highly trusted database for systematic reviews and meta-analyses

To ensure comprehensive coverage of relevant literature, the researcher employed specific key terms to search for documents indexed in the Scopus database, covering the period from 1999 to 31 August 2025. These terms, such as “venture capital AND innovation AND economic growth AND Small and medium enterprises,” helped the researcher to strategically combine and align the search results with the research topic.

Recent studies posit that SLRs play a crucial role in generating and evaluating theories related to the underlying causes of specific phenomena (Tranfield et al., 2003). This approach can address questions that individual studies may not be able to answer on their own (Page et al., 2021). Furthermore, this methodology provides a rigorous and transparent approach to synthesising research evidence, effectively eliminating prejudice and ensuring replicability.

2.2. Inclusion and Exclusion Measures

The initial search yielded a total of 150 documents, extracted from the Scopus database. The search covered the period from 1999 to 31 August 2025, encompassing approximately the past 25 years of research. This time restriction was implemented to prioritise recent studies with content matching the scope of the present study. Focusing exclusively on published studies ensures that the included research has successfully undergone a peer-review process, enhancing the robustness and reliability of the results. The search protocol focused on the role of VC in innovation and economic growth in emerging economies. Our study follows similar methods used in earlier studies with a specific focus on regional expansion (Barbosa de Moraes et al., 2013; Bocken, 2015; Pantea & Tkacik, 2024).

The review focuses exclusively on peer-reviewed articles because of the credibility associated with Scopus-indexed accredited journals, which are known for publishing verified knowledge through rigorous double-blind review processes (Tahai & Meyer, 1999). We acknowledge that this selection process may overlook important studies; however, this omission is balanced by the fact that the selected articles tend to have higher citation rates, indicating the replicability of their findings. This rigorous methodology has yielded a diverse and robust understanding of the complex relationship between VC, innovation, and economic growth within the emerging economies context. This approach aligns with the methodologies employed in similar reviews (Kersten et al., 2017).

Figure 1 provides a visual representation of the systematic data search and screening methodology, delineating the inclusion and exclusion criteria employed to identify relevant articles for subsequent analysis.

As illustrated in Figure 1, the screening phase involved a multi-stage process of exclusion based on predefined PRISMA criteria. First, the dataset was filtered to remove document types deemed less suitable for the review’s objectives. This included the exclusion of conference papers (29), book chapters (18), books (4), reviews (4), and data/retracted articles (2), as the focus was on original research articles that had undergone rigorous peer review. This decision was made to ensure the inclusion of studies with robust methodologies and validated findings.

Next, the remaining 93 articles were screened for language, with non-English papers (2 Chinese, 1 Lithuanian, 1 Russian, 1 Spanish) being excluded. This decision, while potentially limiting the scope of the review, was necessary to ensure consistency and facilitate in-depth analysis, as well as to mitigate potential translation biases. The 88 English-language papers then underwent an assessment of their study areas. Articles outside the scope of Business Management and Accounting, Economics, Econometrics and Finance, Social Sciences, and Decision Sciences were excluded to maintain a focus on studies directly relevant to VC, innovation, and economic growth. After removing 6 duplicate articles, the remaining 72 articles were thoroughly assessed for eligibility based on a full-text review, ensuring that they met the predefined inclusion criteria. The final dataset comprised 72 articles that met all inclusion criteria, providing a robust foundation for synthesising the existing knowledge on the impact of VC on innovation and economic growth of SMEs. This rigorous and transparent approach, guided by the PRISMA guidelines, ensures the reliability and validity of the review’s findings, contributing to a deeper understanding of this complex and important topic.

Figure 1 below illustrates the step-by-step process of identifying and screening data, adhering to the PRISMA guidelines.

3. Results

3.1. Systematic Review Scope and Coverage

The primary focus of this study is to evaluate the progress of VC, innovation, and economic growth in emerging economies. We employed a meta-analysis approach to extract essential information from the selected documents, encompassing study characteristics, methodologies, key findings, and effect sizes. The results from multiple studies were synthesised to determine the overall impact of VC on innovation and economic growth in SMEs in emerging countries. Additionally, the study investigated the heterogeneity of VC effects and study distributions across various geographical regions, as illustrated in Figure 2.

3.2. Overview of Article Publications by Year

Next, an analysis of published articles per year vs. the number of citations is presented in Figure 2. Among the publications over the past 20 years, ranging from 2003 to 2024, most articles were published after 2010. Such a trend demonstrates an increasing interest of researchers in this area, drawn from improved data availability about VC’s impact on economic growth, with contributions from empirical studies with definite research methods.

As shown in Figure 2, the analysis of the number of journal articles published each year from 1999 to 31 August 2025 reveals fluctuating research activity focusing on VC’s influence on innovation and the economic growth of SMEs in emerging economies. The earliest year in the dataset, 1999, contains a single publication. The period from 2000 to 2011 displays sporadic research output, with several years showing minimal or no publications. Specifically, the years 2000, 2010, and 2011 recorded no publications, suggesting a lull in research interest during that time. From 2012 to 2019, the number of publications remained relatively low, with most years recording between one and four documents. A slight rise is observed from 2013 to 2016, with the highest number of publications in this period occurring in 2015 (6 documents).

The most notable finding is the recent rise in publications from 2020 onwards, indicating renewed interest in this topic. The year 2024 stands out with the highest number of publications (9), suggesting a peak in research activity. The increasing number of publications from 2020 to 2025 demonstrates a growing recognition of the importance of VC in fostering innovation and economic growth among SMEs in emerging economies. Since the analysis of publications in 2025 covers until August 2025, this figure is expected to grow by the end of the year. This recent cyclical pattern in research activity indicates a rising focus on the role of VC in emerging economies.

3.3. Overview of Distribution of the Article by Journals

In this subsection, published articles were analysed, focusing on the journals in which they appeared while reflecting on the citation counts as the primary metric for assessing the research impact in the field of how VC influences SMEs’ innovation abilities and economic growth in emerging economies.

As illustrated in

Table 1. Analysis by Journal.

Journals	Citations
Journal of Cleaner Production	295
Research Policy	276
Business Strategy and the Environment	246
China Finance Review International	191
R and D Management	129
International Small Business Journal	115
Corporate Board: Role, Duties and Composition	111
Technological Forecasting and Social Change	84
Small Business Economics	68
European Journal of Innovation Management	63
Sustainability (Switzerland)	59
Economics of Innovation and New Technology	55
Technology Analysis and Strategic Management	54
European Business Organisation Law Review	43
International Journal of Entrepreneurship and Innovation Management	41
Technovation	34
South African Journal of Economic and Management Sciences	28
Journal of Entrepreneurship	21
Venture Capital	21
Environment and Planning C: Government and Policy	20
Journal of Technology Management and Innovation	15
International Journal of Technology and Globalisation	14
Journal of King Abdulaziz University, Islamic Economics	14
Social Sciences and Humanities Open	13
Journal of Small Business and Entrepreneurship	12
Central Asia and the Caucasus	11
China Economic Journal	11
Engineering Economics	11
European Research Studies Journal	11
Industry and Innovation	11
Academy of Entrepreneurship Journal	7
Cogent Business and Management	6
Critical Perspectives on International Business	6
Cogent Economics and Finance	5
Enterprise Development and Microfinance	5
Journal of Internet Banking and Commerce	5
Problems and Perspectives in Management	5
Review of Managerial Science	5
Management (Croatia)	4
Singapore Economic Review	4
Economics Bulletin	3
Journal of East-West Business	3
Asia Pacific Business Review	2
Comparative Economic Research	2
Journal of International Food and Agribusiness Marketing	2
Administrative Sciences	1
European Business Law Review	1
Journal of Asian Economics	1
Managerial and Decision Economics	1
Grand Total	2145

Source: Author’s Compilation.

, the analysis of citations across journals reveals a diverse range of publications contributing to the discourse on VC’s impact on innovation and the economic growth of SMEs. In light of this, several high-impact journals demonstrate a significant influence in shaping the field, particularly those with over n = 50 citations. To begin with, The Journal of Cleaner Production leads with n = 295, followed by Research Policy (n = 276) and Business Strategy and the Environment (n = 246), indicating a strong focus on sustainable practices and strategic considerations in VC research. China Finance Review International (n = 191) highlights the unique dynamics of VC in the Chinese context. Additionally, R and D Management (n = 129), International Small Business Journal (n = 115), Corporate Board: Role, Duties and Composition (n = 111), Technological Forecasting and Social Change (n = 84), Small Business Economics (n = 68), European Journal of Innovation Management (n = 63), Sustainability (Switzerland) (n = 59), Economics of Innovation and New Technology (n = 55), and Technology Analysis and Strategic Management (n = 54) all contribute significantly to the field, addressing various aspects of innovation, entrepreneurship, and strategic management. Several of these journals boast with 5-year impact factor of 3.0 and above. Publishing in high-impact-factor journals is particularly crucial for VC research focused on emerging economies. These publications ensure that rigorous, context-relevant findings reach key stakeholders—policymakers, investors, and entrepreneurs—who can translate research into actionable strategies.

However, due to the time lag required for articles to gain recognition and accumulate citations, numerous high-impact journals with a proven track record exhibit lower citation counts below the n = 50 for recent publications, potentially overlooking valuable insights about the field. Therefore, it is important to consider a range of metrics, including journal impact factor, article downloads, and social media mentions, to gain a more comprehensive understanding of the influence and relevance of VC research.

3.4. Analysis of Citation by Year

Figure 3 illustrates the evolving impact of VC research on innovation and SME growth in emerging economies from 1999 to August 2025, as reflected in citation counts. The initial period (1999–2002) shows limited citation activity, suggesting a slow initial recognition of VC research’s importance. A notable surge occurred in 2003, with 173 citations, indicating an initial increase in interest. However, this was followed by a decline in 2004, reflecting fluctuating attention. From 2005 to 2011, citation activity was moderate, peaking in 2005 (125 citations) and 2008 (200 citations). Lower citation counts in 2007, 2009, 2012, and 2014 suggest an inconsistent understanding of VC’s role during these years. A significant turning point occurred in 2015, with 416 citations, marking a substantial increase in the recognition of VC’s influence. Subsequent years show fluctuating but generally higher citation activity, with peaks in 2019 (289 citations) and 2022 (287 citations). The most recent period (2023–2025) reveals a decline, with only 1 citation recorded in 2025. Such fluctuation may indicate a shift in research focus or a need for novel approaches. The considerable year-to-year variation in citation activity suggests inconsistent attention to the topic.

Considering the previous analyses, the concentration of research in developed countries (e.g., the UK, US) aligns with higher citation counts in those regions, reflecting their established VC ecosystems. Additionally, the increase in publications from 2020–2025 corresponds with moderate citation activity, suggesting that recent research is still gaining recognition. The citation trends suggest that while VC’s role in innovation and economic growth has gained significant recognition over the past 25 years, attention has been inconsistent. The peak in 2015 indicates a pivotal moment, but the recent decline warrants further investigation to understand potential shifts in research focus.

3.5. Distribution of Articles by Country

An analysis was conducted to determine the geographic distribution of the 72 articles included in this systematic literature review. This analysis identifies the countries in which the research was conducted, providing insights into the geographic focus of studies examining the impact of VC on innovation and economic growth in SMEs. The following table summarises the distribution of articles by country.

As shown in Figure 4, the distribution of citations across countries from 2000 to 21 August 2025 highlights the varying levels of scholarly attention given to the impact of VC on innovation and economic growth within high-growth SMEs in emerging markets. The United Kingdom (UK) leads with 413 citations, indicating a significant and sustained interest in the topic. Italy follows with 253 citations, while Turkey (n = 246), France (n = 174) and Sweden (n = 129) show substantial engagement, indicating a strong focus on the impact of VC, possibly driven by its robust innovation ecosystem. These figures suggest a notable research focus in European countries, perhaps supported by well-established VC ecosystems and research institutions. Similarly, the United States (n = 131) tops the list in North America, and Brazil (n = 47) emerges as a promising destination for VC investment in the region.

In contrast, several countries in Asia and Africa also demonstrate considerable interest. To begin with, Malaysia (n = 191) stands at the top of the list in Asian emerging economies, followed by Taiwan (n = 112) and China (n = 74), demonstrating a notable presence in the VC industry. Cooperatively, the VC industry in Africa has also witnessed growing interest, though not comparable to its counterparts in Asia, with South Africa (n = 74) leading in Africa, followed by Tanzania (n = 34) and Uganda (n = 6) at the bottom. All these results combined reflect the growing importance of VC in these rapidly emerging economies. Low numbers are observed not only in Africa but across other regions as well; for instance, Japan and Belgium have very low numbers of citations (n = 2) each, suggesting limited scholarly attention to the topic. It is also worth noting that some countries like Ukraine reported 1 publication, but again have 0 citations, indicating a complete absence of reproducible published research on this subject within the country during the specified period.

3.6. Analysis of Research Methods

To gain a comprehensive understanding of the methodological approaches employed in the existing literature, an analysis of the research methods used in the 72 studies included in this systematic review was conducted. This analysis provides insights into the dominant research paradigms and approaches used by scholars studying the impact of Vc on innovation and economic growth in SMEs. The following table summarises the distribution of research methods across the included studies:

As illustrated in Figure 5, Quantitative methods dominate the research landscape, accounting for 87% (63 out of 72) of studies. These studies typically employ statistical analysis, econometric modelling, and survey-based techniques to examine the relationship between VC investments and various outcome variables, such as firm performance, innovation output, and economic growth indicators. The prevalence of quantitative studies suggests a strong emphasis on empirical evidence and generalizability. These studies often demonstrate a positive correlation between VC investments and SME growth, highlighting the importance of VC in providing financial resources, expertise, and networks to high-potential ventures.

Qualitative methods are less common, with only 7 studies employing approaches such as case studies, interviews, and grounded theory. These studies offer in-depth insights into the experiences, perspectives, and decision-making processes of VCs, entrepreneurs, and other stakeholders. Importantly, Systematic literature reviews are scarce, with only 2 studies employing this approach. These reviews synthesise existing research findings to identify key themes, trends, and gaps in the literature.

While SLRs often highlight the need for more rigorous and context-specific studies, it is evident that they are generally scarce on research activities involving VC’s impact on SMEs in emerging economies. The dominance of quantitative methods suggests a need for more nuanced and comprehensive SLR investigations for a better balance between quantitative and qualitative methods to provide a more holistic understanding of VC’s role in fostering innovation and economic growth in SMEs within emerging economies.

4. Discussion

4.1. Venture Capital and Innovation in Emerging Economies

This section delves into the key findings of the systematic literature review, exploring the nuanced ways in which VC fosters innovation and drives economic growth in the specific context of emerging economies, while also considering the importance of contextual factors such as institutional frameworks and technological infrastructure.

The analysis of publications by country reveals a concentration of research in developed countries such as the UK (n = 413), Italy (n = 253), Turkey (n = 246), and Sweden (n = 129) within the European Economic Area, demonstrating a notable presence of growing research in the field. This aligns with the well-established VC ecosystems and research financial infrastructures in these regions (Sidei et al., 2025). In North America, the research landscape also indicates a strong focus on developed economies, with the United States (n = 131) standing out as a key player, while Brazil (n = 47) emerges as a significant destination for VC investment in Latin America. Similarly, several Asian countries also demonstrate considerable interest, with Malaysia (n = 191), Taiwan (n = 112) and China (n = 74) showing a notable presence in the field, reflecting the growing importance of VC in these rapidly emerging economies. On the other hand, research is nascent in Africa, with South Africa at the forefront and a few countries like Tanzania and Uganda emerging lately.

The research landscape indicates a strong focus on developed economies, with the UK, Italy, Turkey and Sweden leading in Europe. In North America, the United States dominates, while VC research is nascent in Africa, with South Africa at the forefront. Several Asian countries also demonstrate considerable interest, with Malaysia, Taiwan and China showing a notable presence in the VC industry, reflecting the growing importance of VC in these rapidly emerging economies. This concentration of VC research in developed economies and specific emerging markets aligns with prior studies (Romaní & Atienza-Ubeda, 2006; Mbhele, 2012; Wang, 2023; Avnimelech & Teubal, 2008) that highlighted the role of developed economies in driving VC research due to their advanced financial systems and innovation policies, as well as the importance of a robust innovation ecosystem in fostering VC activity. Notably, the high citation counts in countries like the UK, Italy, and Malaysia suggest these regions could serve as valuable case studies for understanding best practices and potential pitfalls in leveraging VC for innovation and economic growth; this is consistent with Brzozowska (2008), who emphasised the significance of learning from successful VC models in different countries.

In contrast, some scholars seemingly do not agree that VC positively impacts the innovation capacities of portfolio companies and ultimately the overall economic growth of emerging economies, attributed to the inherent limitations and potential biases within current research. Since several studies focus on successful VC-backed firms (Du et al., 2024; Khan & Hussain, 2024), such a one-sided view of the performance of VC-funded companies exaggerates the positive impact of VC, neglecting the challenges faced by companies that fail to secure funding (Timmons & Bygrave, 1986; Freňáková et al., 2019). As a result, Potential biases within research can further complicate the analysis. Precisely, scholars unconsciously favour findings that align with pre-existing beliefs about the role of VC, potentially overlooking evidence that contradicts their assumptions (Du et al., 2024).

To reinforce this argument, mounting literature posits that several existing studies have focused primarily on regions such as Europe, China, and North America (Baldock, 2015; Kang, 2020; Bǎtrâncea, 2022; Agstner, 2024), leaving emerging markets in Asia and Africa underexplored. This underscores the necessity for future research in this area to generate fresh insights and knowledge. Worse still, the existing literature on this topic is relatively limited, potentially leading to a less comprehensive understanding of the diverse dynamics at play (Mbhele, 2012; Lingelbach, 2013).

Furthermore, the unique economic conditions, regulatory frameworks, and institutional structures across emerging economies make it challenging to generalise findings from one region to another (Lee & Wang, 2003; Kaivanto & Stoneman, 2007; Avnimelech & Teubal, 2008). Data availability and accessibility can also pose significant challenges, hindering rigorous empirical research (Alperovych et al., 2018; Owen et al., 2023). Considering these limitations, the use of a more holistic approach, encompassing a wider range of data sources, including qualitative studies and regional specificities, is a crucial step towards achieving a more comprehensive understanding.

Lately, there has been growing attention in the literature to identify whether innovation is a result of VC investments or if VC is driven by innovation. Several scholars posit that Innovation plays a crucial role in the success and long-term survival of high-growth firms. The implementation of innovative business practices significantly affects their ability to survive and grow (Andreassi, 2003; Mahadea & Pillay, 2008). Although innovative SMEs need substantial investments to drive technological innovation, they often lack the resources to boost their learning capacity, which ultimately limits their ability to innovate effectively (Cieply, 2001; Gulyayeva et al., 2016; Demirel & Danisman, 2019). In such circumstances, VC is recognised as a prominent financial source for innovative start-ups (Corsi & Prencipe, 2018).

VCs inevitably transfer knowledge to the chosen innovation firms, pigeon-holed with their own valuable new knowledge and high growth potential to facilitate them while monitoring and advising their portfolio companies (Romaní & Atienza-Ubeda, 2006; Berger & Hottenrott, 2021). This type of knowledge transferred from VCs can help venture-backed firms acquire important information about connected technological innovation, thus improving their innovation abilities (Festel et al., 2015; Cumming et al., 2019; Islam & Khan, 2021).

4.2. Venture Capital and Economic Growth of Emerging Economies

The state of VC research, as evidenced by patterns in journal citations, offers important insights into the ways in which this funding model influences innovation and the economic expansion of SMEs in these areas. With a significant 295 citations, the Journal of Cleaner Production leads the area. Research Policy comes in second with 276 citations, and Business Strategy and the Environment comes in third with 246 citations. These numbers demonstrate the field’s strong emphasis on resilience, sustainability, and economic growth. With 191 citations, the China Finance Review International highlights the dynamics of VC in the Chinese environment. Technological Forecasting and Social Change (84 citations), Corporate Board: Role, Duties, and Composition (111 citations), International Small Business Journal (115 citations), R&D Management (129 citations), Small Business Economics (68 citations), European Journal of Innovation Management (63 citations), Sustainability (Switzerland) (59 citations), Economics of Innovation and New Technology (55 citations), and Technology Analysis and Strategic Management (54 citations) collectively reveal a growing academic interest. This body of research indicates a move towards a more integrated and comprehensive approach to VC investments, where financial returns are increasingly weighed alongside environmental and social impacts, influencing the innovation and growth pathways of SMEs in emerging economies (Mahadea & Pillay, 2008; Kang, 2020; Sadiq et al., 2022).

These findings align with previous studies that have emphasized the importance of VC in fostering innovation and economic growth in emerging economies. Bocken (2015) demonstrates the importance of sustainable VC, which can drive innovation in SMEs. Demirel and Danisman (2019) show how eco-innovation, often financed by VC, contributes to firm growth in the circular economy. Also, Sadiq et al. (2022) found that green finance, including VC, matters for sustainable entrepreneurship and environmental corporate social responsibility, enhancing the growth prospects of SMEs. Moreover, Mangematin et al. (2003) examined the development of SMEs and the heterogeneity of trajectories in biotechnology, highlighting how capital can shape these trajectories. Holgersson (2013) explored patent management in entrepreneurial SMEs, indicating how capital can influence innovation appropriation.

McGowan et al. (2011) studied the impact of incubator organizations, often supported by capital, on opportunity recognition and technology innovation. Gabrielsson and Huse (2005) called for theoretical reflections on “outside” directors in SME boards, which can bring expertise and networks to venture-backed F. S. Tsai et al. (2009) examined the co-evolution of business incubation and national innovation systems, demonstrating how VC can play a role in this co-evolution. Yi et al. (2023) investigated whether VC helps promote open innovation in China, a key emerging economy. Torres de Oliveira et al. (2022) show the barriers to innovation and innovation performance in emerging economies, highlighting the role of VC in overcoming these barriers. Demirel and Parris (2015) show access to finance for innovators in the UK’s environmental sector, a factor that is also relevant in emerging economies. Mina et al. (2021) looked at the public funding of innovation, which can complement VC investments. Colombo et al. (2016) show the participation of new technology-based firms in EU-funded R&D partnerships, indicating how VC can facilitate access to these partnerships.

However, one unprecedented result is the increasing attention to sustainability and social impact in VC research, as evidenced by the high citation counts for journals like the Journal of Cleaner Production and Business Strategy and the Environment (Bocken, 2015). This suggests a growing recognition of the need for VC investments to align with broader societal goals, which can drive innovation and economic growth more sustainably. Although that may sound encouraging, significant gaps remain in understanding the specific mechanisms through which VC promotes innovation and economic growth in SMEs within emerging economies.

While studies have identified key factors and trends, more research is needed to explore the nuances of these relationships in different contexts. The findings highlight the need for more integrated models of VC that incorporate sustainability, strategic management, and institutional context, specifically in the context of SMEs in emerging economies (Torres de Oliveira et al., 2022; Avnimelech & Teubal, 2008; Demirel & Parris, 2015; Mina et al., 2021).

In addition, the findings suggest that VCs should consider environmental and social factors in their investment decisions, and that policymakers should create supportive ecosystems that foster sustainable VC practices, ultimately benefiting SMEs in these regions (Colombo et al., 2016; Bǎtrâncea, 2022; Wonglimpiyarat, 2007; Godke Veiga & McCahery, 2019; Kaivanto & Stoneman, 2007).

Despite the promising results, several unprecedented results emerge from the analysis. First, Malaysia leads Asian countries in VC research, surpassing China, which has been a renowned leader for decades. Second, Italy and Turkey present overwhelming results, exceeding those of the US, a global leader in the VC industry with its prominent Silicon Valley. These findings challenge conventional wisdom and suggest a shift in the geographic dynamics of VC research and activity. Furthermore, the results highlight several existing gaps in previous studies. Colombo et al. (2016), Hua et al. (2016), and Haro de Rosario et al. (2016) primarily focused on developed economies, neglecting the unique challenges and opportunities in emerging markets. Šarić (2017) and Rossi et al. (2018) emphasised the role of institutional factors but did not fully explore the cultural and social aspects. Kang (2020) examined the impact of VC on innovation but did not delve into the specific mechanisms through which it promotes economic growth in different contexts.

Whereas the VC industry has witnessed increasing attention in Africa, the low citation figures from South Africa, Tanzania, and Uganda, compared to countries like Malaysia, highlight existing gaps in research and knowledge creation; this disparity underscores the need for more comprehensive investigations into the unique dynamics and challenges within these underrepresented regions, a point also made by Mbhele (2012). Institutional frameworks and financial market development are crucial for fostering VC activity, as evidenced by the success of the UK and the US, with their strong legal systems and deep capital markets. The emerging interest in VC in Africa, however, suggests a potential shift. According to Sidei et al. (2025), the VC business provides a route for initial public offerings (IPOs), which encourages VC investments in innovative SMEs. Regarding South Africa, the Johannesburg Stock Exchange is very instrumental in supporting this journey.

The findings highlight the need for tailored strategies based on regional contexts. Developed economies should focus on sustaining innovation and fostering high-growth ventures, while emerging markets need to build infrastructure and regulatory frameworks to attract VC investments. The growing attention to VC in Africa offers opportunities for investors and policymakers to develop local ecosystems and promote entrepreneurship (Lu & Shen, 2025). Future research should investigate the dynamics and challenges in underrepresented regions, examining the influence of government policies, cultural factors, and social networks.

4.3. Venture Capital Growth in Emerging Economies

The distribution of citations from 1999 to August 2025 reveals a multifaceted landscape of scholarly attention to VC’s impact on high-growth SMEs, particularly in developed economies. The United Kingdom leads with significant sustained interest (413 citations), followed by Italy (253) and Turkey (246), underscoring a robust focus within European countries. The United States (131) dominates North America, while Brazil (47) emerges as a promising region for VC investment. Interestingly, Malaysia (191) surpasses China (74), showcasing a notable presence in the Asian emerging economies, with Taiwan closely following (112 citations). In Africa, South Africa leads (74 citations), yet the overall VC industry witnesses growing interest, though not comparable to its counterparts in Asia, with Tanzania (34) and Uganda (6) at the bottom. The citation landscape shows an urgent need for the field to be explored to its fullest potential to uncover and address the unique needs of VC and private equity.

While early years showed minimal activity, a significant turning point occurred in 2015 with a single article recording over n = 296 (Block et al., 2018). This suggests a growing awareness of VC’s potential to drive innovation and economic growth, particularly in SMEs within emerging economies. These findings align with several prior studies that have highlighted the importance of the VC financing model. Bocken (2015) emphasised the role of sustainable VC in promoting sustainable start-up success, which resonates with the overall trend of increasing attention to sustainability in VC research. Kang (2020) explored the balance between sustainable profit and unsustainable growth in VC investments, providing a nuanced perspective on the potential benefits and drawbacks.

Several studies have explored VC in the context of small- and medium-sized enterprises (SMEs). Kato (2025) provided a review of VC financing and SME expansion within emerging markets, with a specific focus on Uganda, identifying key regional challenges and possibilities. Marx et al. (2021) analysed special purpose acquisition companies (SPACs), shedding light on alternative funding approaches. Karimkhani et al. (2022) investigated the determinants influencing innovation in VC-backed companies, offering insights into investment decisions. Similarly, Yi et al. (2023) examined the impact of VC on promoting open innovation, with evidence from the rapidly developing Chinese economy. Furthermore, Kato (2024) explored building resilience and sustainability in small businesses through sustainable VC investment in sub-Saharan Africa, emphasizing the significance of context-specific strategies. While Cappellari and Gucciardi (2024) investigated the impact of VC in equity investments and environmental concerns, they added further understanding of VC’s broader effects.

While previous explorations provide valuable insights, the transformative impact of VC on enhancing innovation and driving economic growth in emerging economies remains largely unexplored. Therefore, it is crucial to conduct more systematic reviews to consolidate the findings that emphasise the catalytic role of VC in these regions. Furthermore, many studies that have attempted to investigate VC have done so in isolation, focusing on aspects such as innovation, SME performance, or profitability, without considering how this funding model can simultaneously drive both innovation and economic growth. Understanding this phenomenon is essential for contributing to the prosperity and economic development of emerging economies.

Moreover, the existing literature primarily focused on developed economies and may not fully capture the dynamics in emerging markets (Colombo et al., 2016). Precisely, some of these studies tend to overlook the unique challenges and opportunities in emerging economies, such as limited access to capital (Ahlstrom & Bruton, 2006; Bocken, 2015), underdeveloped institutional frameworks, and cultural differences (Ahlstrom & Bruton, 2006; Zacharakis et al., 2007). Therefore, Significant gaps remain in understanding the specific mechanisms through which VC promotes innovation and economic growth in emerging economies. While studies have identified key factors and trends, more research is needed to explore the nuances of these relationships in different contexts

5. Conclusions

This systematic literature review aimed to synthesise the existing knowledge in emerging economies on the impact of VC on innovation capabilities and economic growth of SMEs. Through a rigorous and transparent review guided by PRISMA guidelines, 72 high-quality and relevant articles were analysed that offered a comprehensive overview of the current state of research in the VC industry. The analysis revealed a strong consensus in the literature regarding the positive impact of VC on innovation and economic growth of SMEs in emerging economies. Specifically, the review highlighted that VC investments are often associated with increased innovation output, enhanced productivity, and improved financial performance of SMEs (Yi et al., 2023; Kang, 2020; Brzozowska, 2008; Hua et al., 2016).

The findings also underscored the importance of considering contextual factors, such as institutional frameworks, cultural norms, and technological infrastructure (Romaní & Atienza-Ubeda, 2006; Mbhele, 2012; Lingelbach, 2013), in understanding the effectiveness of VC in different emerging economies. Furthermore, the analysis of research methods revealed a dominance of quantitative approaches, suggesting a need for more qualitative studies to provide deeper insights into the underlying mechanisms and processes through which VC influences SME innovation and growth.

5.1. Contributions to Theory and Practice

This study makes specific contributions to both theory and practice based on the analysis of the 72 articles included in this systematic review. This review contributes to theory by providing a comprehensive overview of the current state of knowledge on VC’s impact on innovation and economic growth of SMEs in emerging economies. This synthesis highlights the diverse range of methodologies and contexts studied, offering a nuanced understanding of the topic. The analysis identifies dominant themes in the literature, such as the positive relationship between VC investments and innovation output, the importance of institutional frameworks, and the role of technological infrastructure. Furthermore, the review highlights the prevalence of quantitative research methods in the existing literature, suggesting a need for more qualitative studies to provide deeper insights into the underlying mechanisms and processes through which VC influences SME innovation and growth.

Practically, this study offers valuable insights for policymakers, VCs, and SME managers. For policymakers, it underscores the importance of creating supportive institutional environments that foster VC investments and promote SME innovation. For VCs, it highlights the need to consider contextual factors and adopt tailored investment strategies that align with the specific characteristics of emerging economies. For SME managers, it emphasises the importance of leveraging VC to enhance innovation capabilities and drive economic growth. Therefore, tailored investment strategies that align with the specific characteristics of emerging economies are crucial. VCs should focus on building local networks and developing a deep understanding of the cultural and institutional nuances of these markets. It also identifies key gaps in the literature, highlighting the need for more research on the role of contextual factors and the underlying mechanisms through which VC impacts SME performance.

5.2. Limitations and Future Research Avenues

While this study offers valuable insights, it is important to acknowledge its limitations, which were carefully managed to minimise their potential impact on the findings. The review was limited to articles indexed in the Scopus database. To mitigate this limitation, Scopus was chosen for its comprehensive coverage of high-quality, peer-reviewed journals across various relevant disciplines, ensuring a robust and reliable foundation for identifying relevant studies. Future research could expand the scope of the review by including other databases such as Web of Science and Google Scholar to capture a broader range of publications.

The focus on English-language articles may have introduced a language bias. While this decision was necessary to ensure consistency and facilitate in-depth analysis, it may have overlooked valuable research published in other languages. Future research could address this limitation by including non-English articles, using translation services to analyse their content. In addition, the article relied on predefined search terms that may not have captured all relevant studies. To minimise this limitation, a comprehensive set of search terms was developed based on a thorough understanding of the research topic and related literature. Future research could refine the search strategy by using alternative keywords and exploring different combinations of search terms.

Despite these limitations, the study provides a valuable synthesis of the existing literature on VC and innovation in emerging economies. Future research should build on these findings by addressing the limitations outlined above and exploring new avenues of inquiry, such as the role of government, VC, public policy and entrepreneurial ecosystems in shaping VC growth in emerging economies. Additionally, future research should focus on conducting more qualitative studies to provide deeper insights into the underlying mechanisms through which VC impacts SME innovation and growth. Furthermore, research should explore the role of contextual factors, such as institutional frameworks, cultural norms, and technological infrastructure, in shaping the effectiveness of VC in different emerging economies.

While VC is gaining traction in Africa, the limited research output from countries like South Africa, Tanzania, and Uganda, relative to regions such as Malaysia, indicates a significant gap in knowledge creation. This disparity, as highlighted by Mbhele (2012), calls for deeper exploration into the specific conditions and obstacles within these less-studied areas. To effectively address the evolving economic landscape, the business community, private investors, and policymakers must collaborate to find solutions that bridge the infrastructural gaps within emerging economies. This collaborative approach is crucial for unlocking venture capital investments, fostering innovation, and driving sustainable economic growth, despite the varying capacities of these economies to adapt and respond. Moreover, the importance of robust institutional frameworks and well-developed financial markets in promoting VC activity is underscored by the success of countries like the UK and the US, which benefit from strong legal systems and deep capital markets.