Modeling the Impacts of Venture Capital Investment on Firm Innovation | Zendy

Han Qiao | Zendy; Sen Zhang | Zendy; Yao Xiao | Zendy

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Modeling the Impacts of Venture Capital Investment on Firm Innovation

Author(s) -

Han Qiao,

Sen Zhang,

Yao Xiao

Publication year - 2021

Publication title -

discrete dynamics in nature and society

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.264

H-Index - 39

eISSN - 1607-887X

pISSN - 1026-0226

DOI - 10.1155/2021/8661152

Subject(s) - business , venture capital , industrial organization , sample (material) , matching (statistics) , investment (military) , quality (philosophy) , propensity score matching , china , order (exchange) , finance , philosophy , chemistry , statistics , mathematics , chromatography , epistemology , politics , political science , law

Taking firms listed on the Chinese Growth Enterprise Market (GEM) in 2008–2017 as the sample, this study investigates the impact of venture capital (VC) investment on Chinese firm innovation using propensity score matching and a difference-in-differences (PSM-DID) model. The results show that, overall, firms’ innovation inputs and outputs do not show obvious enhancement due to VC entry, but instead show a strong and then weak inhibitory effect. VCs have heterogeneous impacts on firm innovation; that is, compared to other types of firms, firms with technology-dependent characteristics and firms whose actual controllers are experts in the same industry can effectively mitigate the adverse impact of VC on innovation inputs and gradually promote growth in the quantity and quality of the innovation outputs after the second year of VC entry. This study not only reveals the impact of VC on firm innovation activities in the Chinese capital market but also provides empirical evidence to help improve the financial innovation service system and the use of the capital market to promote innovation in China.

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