Search Results (25)

Drawing on institutional theory and agency theory, this study examines whether venture capital (VC) and private equity (PE) ownership acts as a complement to, or substitute for, investor protection in shaping equity financing, debt financing, and leverage decisions in high-tech entrepreneurial firms. The analysis is based on a panel dataset of 403 high-tech entrepreneurial firms from 11 European countries over the period 2009–2013. To address potential endogeneity and reverse causality between external finance and VC/PE investment, the study employs two-stage least squares (2SLS) regression models using an instrumental-variable approach. The results provide tentative evidence that VC/PE ownership is associated with stronger debt-related financing outcomes, particularly leverage, in countries characterised by weaker investor protection, suggesting a possible substitutive relationship in debt-related financing outcomes. However, these findings should be interpreted cautiously given the limitations associated with the instrumental-variable strategy. The study contributes to the literature on entrepreneurial finance, corporate governance and law and finance by showing how firm-level governance mechanisms interact with national institutional settings in shaping financing decisions. Full article

Given the urgent need for corporate green transformation in the context of global climate governance, the sustainable development goals, and China’s dual carbon goals, this study examines the spillover effects of venture capital networks formed through common shareholder ties on green technology innovation from a complex network perspective. Based on regression analysis of panel data from Chinese A-share STAR and ChiNext Market listed companies between 2015 and 2023, we find the following: (1) Within venture capital networks, enterprises with higher centrality and structural hole positions exhibit more significant green technology innovation performance. (2) This facilitation effect varies across firm types. Private enterprises, foreign-invested enterprises and enterprises with weaker ESG performance rely more heavily on network advantage for innovation. (3) The mechanism analysis shows that occupying advantageous positions in venture capital networks enables firms to increase R&D personnel and R&D expenditure, thereby strengthening their ability to absorb external knowledge and transform innovation resources, which further enhances green technology innovation output. Full article

Focusing on the role of government industrial funds in bridging the equity gap, in this paper, we examine how the establishment of government industrial funds (GIFs) affects enterprise innovation and the underlying mechanism of the guiding and synergistic effects on social capital. By conducting an empirical study employing a fixed-effect model comprising panel data of Chinese industrial enterprises covering the recent period of 2014 to 2024, we found that GIFs play a positive role in promoting local enterprise innovation. We also provide supporting evidence that China’s GIFs are effectively designed in bridging the equity gap, which hinders innovation, and that they are productive in alleviating the structural friction of the venture capital market. The findings of this study also offer some new evidence regarding the influence of fund-level characteristics on the innovation-promoting effect of GIFs, which has not been previously explored for the Chinese context. Our research also reveals the “seeding” role and “patient capital effect” of GIFs, which guide social capital to gather towards early-stage and long-term funds, improve the structural supply shortage in the local venture capital market, and thereby alleviate the financing gap for corporate innovation. The focus on early-stage and long-term capital is an innovative perspective of this paper. Our results also indicate that private capital, as an important participant in government industrial funds, can positively moderate the innovation-promoting effect of government industrial funds. The impact of funds’ internal governance mechanisms on their innovation-promoting effect is also one of the unique contributions of this paper. Full article

Access to business financing in Europe has historically been a challenge for small and medium-sized enterprises (SMEs), which represent a significant share of economic activity and employment in Europe. This issue has been significantly intensified since the global financial crisis, disproportionately affecting this segment. This study analyzes firm-level determinants influencing access to alternative financing sources, including crowdfunding, venture capital, and other non-bank channels, using data from the 2023 SAFE covering 15,855 firms across Europe. Results indicate that firm size significantly affects access, with larger, established firms more likely to secure such funding. However, younger, innovation-driven firms demonstrate a higher propensity to pursue equity and crowdfunding options, driven by their need for flexible and early-stage capital. Sectoral patterns also emerge: industrial firms more often obtain public grants, while service-sector firms lead in adopting equity-based and crowdfunding models. The findings highlight the critical role of innovation capacity and international orientation in broadening financial access. Digital platforms are identified as key enablers in democratizing funding, particularly for SMEs. This research advances understanding of SME financing dynamics within evolving financial landscapes and provides actionable insights for policymakers and practitioners aiming to promote inclusive and sustainable access to finance. Full article

This study examines the impact of corporate venture capital (CVC) on the labor income share of science and innovation enterprises, focusing on data from China’s Science and Technology Innovation Board (STIB) and Growth Enterprise Market (GEM) between 2010 and 2022. Empirical results reveal a significant inverted U-shaped relationship between CVC shareholding and the labor income share of invested firms. CVC increases the labor income share by enhancing corporate governance, encouraging digital transformation, and improving human capital quality, but this effect diminishes when CVC shareholding exceeds a certain threshold. The moderating role of media attention and the heterogeneity of this relationship across regions and financial conditions are further explored. Additionally, the study identifies a positive U-shaped connection between CVC shareholding and the corporate pay gap, highlighting CVC’s complex role in influencing income inequality within firms. This research contributes to the literature by unveiling the nonlinear effects of CVC on income distribution, offering new insights into its dual role in promoting innovation and equity. Practically, it provides actionable recommendations for firms to optimize CVC ownership and for policymakers to design targeted interventions that address regional and financial disparities. By bridging the gap between CVC investment strategies and labor income fairness, this study lays the foundation for a balanced approach to sustainable economic development. Full article

China’s corporate venture capital (CVC) overseas investment began in the late 20th century and has expanded significantly over the years. By 2021, more than 265 Chinese institutions and companies had engaged in cross-border investments, contributing over USD 100 billion. These investments present a unique opportunity to examine the reverse technology spillover effect on China’s technological development. Using a Difference-in-Differences model and regression analysis, we investigate whether China’s CVC overseas investments drive technological progress. Our findings reveal three key insights: (1) these investments have a positive impact on China’s technological advancement, (2) the effect is stronger when the host country has a higher level of technology, and (3) larger investment amounts amplify the impact. This research not only highlights the transformative potential of cross-border CVC investments but also demonstrates how enterprises can leverage reverse innovation spillovers to accelerate China’s technological progress. Additionally, we introduce a novel approach to studying this phenomenon, contributing to the existing scholarship on global innovation dynamics. Full article

This research focuses on how market sentiment affects corporate governance in the Chinese market. The sample covers the years from 2014 to 2023. Market sentiment is estimated using a cross-sectional absolute deviation (CSAD) model, and earnings quality is used as an indicator of the consequences of corporate governance. Both mutual fund shareholding and the number of firm visits by mutual fund analysts are verified as effective corporate governance instruments that work well in a regular market but become ineffective when the market sentiment is high. The reason for this is that managers’ expectations change, and they may believe that disclosing good news during high-sentiment market periods significantly increases the share prices and helps them meet their performance requirements. In a high-sentiment market, an incentive contract encourages managers to take on projects with inappropriate risk or even manipulate earnings. One potential solution is to adopt venture capital firms’ high-water mark and clawback clauses to prevent managers from focusing on short-term goals rather than seeking long-term business sustainability. Full article

This research highlights the critical role that entrepreneurial capital (EC) plays in organizational development and resilience by examining the connections between EC and the success of new joint ventures (NJVs) in developing nations. Corporate social responsibility (CSR) is becoming more popular in the early phases of a company’s growth because of its capacity to improve credibility and competitive differentiation. Traditionally associated with well-established corporations. This study uses a mediated-moderation model to explore theories on how EC affects the disruptive innovation, economic, social, legal, and environmental sustainability of NJVs. Using quantitative survey data from 270 NJVs, this paper highlights the strategic interdependencies influencing NJV trajectories, as well as the functions of disruptive innovation and CSR. The findings demonstrate that EC greatly enhances NJVs performance in every category, promoting CSR and innovative projects. NJVs benefit from early CSR participation because it reduces risks and boosts entrepreneurial vitality. Disruptive innovation transforms EC into measurable performance advantages. This study has important policy and management implications because it shows that NJVs can stay ahead of the competition and improve their performance by strategically using EC for CSR and innovation projects. Overall, this study emphasizes how crucial CSR is to the startup environment, supporting resilient and long-term growth in emerging economies. Full article

In this paper, we empirically examine the impact of venture capital investment on the dividend policy of the invested companies using a sample of list companies from China’s ChiNext market during the period 2014 to 2019. Our empirical results show that different types of VC investments have different impacts on the dividend policies of the invested companies. To be specific, we found independent venture capital companies (IVCs) promote the company’s dividend payment and increase the level of dividend payments while corporate venture capital (CVC) inhibits the company’s dividend payment. The joint participation of multiple types of venture capital investment (syndication) also increases the company’s dividend distribution. Our main contributions are two-fold. First, we provide a comprehensive analysis in the field of VC and dividend policy; second, we differentiate VC from the perspective of investment objectives and examine its different impacts on the dividend policies of the invested companies. Full article

Innovation is one of the primary approaches by which companies address the progressively severe social, environmental, and market pressures that they face, and it is a crucial route for companies to maintain sustainable development. Venture capital (VC) plays a significant role in promoting enterprise innovation, especially breakthrough innovation. Venture capital can increase executive compensation and corporate innovation. Previous studies have also indicated that compensation incentives can be beneficial to corporate innovation. Although the relationships between two of these three variables have been validated, the relationship between VC, executive compensation, and corporate innovation has not yet received ample consideration. Our research focuses on the connections among these three variables, and we chose corporate for our sample, which listed corporations on the Shenzhen and Shanghai stock exchanges in the period from 2009 to 2017. We found that VC has a mediating effect on innovation through executive compensation incentives, although not necessarily a full mediation effect—merely a partial one. Moreover, we found that VC primarily plays the role of a compensation incentive by amplifying the internal salary gap of corporate. By employing invention patents to replace explanatory variables, using a Heckman two-stage method, and utilizing propensity score matching (PSM) for robustness testing, the validity of the conclusion was confirmed. In addition, we discovered that experienced VC or companies with lower governance quality are more likely to use compensation incentives to promote corporate innovation. This study provides valuable insight for VC in cultivating corporate innovation, as well as for corporates looking to boost their innovation. Full article

Venture capital has a significant positive impact on corporate innovation. However, innovation has great risks. Investors often lack sufficient confidence in innovation, which often leads to investors stopping their investment or to inadequate support for innovation behavior. Therefore, enhancing investor confidence is crucial. Monitoring is considered to be the most direct and common way to promote investor confidence. This paper mainly focus on the effect of venture capitalist monitoring on corporate innovation. We use companies listed in the Shenzhen and Shanghai stock exchanges from 2009 to 2017 as samples. We performed a metrological test and a series of robustness tests and found that venture capitalists on boards play a significant role in promoting corporate innovation. When dividing the sample according to the experience of venture capital or the governance level of the corporation, we found that venture capitalists on boards with high experience or in corporations with high-quality governance have a greater impact on corporate innovation. Furthermore, we studied the monitoring mechanism of venture capital on boards and found that the monitoring of venture capital can alleviate managers’ anxiety about being dismissed due to innovation failure. Full article

We investigate how state-owned corporate venture capital differs from privately owned corporate venture capital in fostering innovation among startups. Based on the data of Chinese A-share listed companies and the startups in their portfolios that they invested in between 2009 and 2018, we find that startups backed by state-owned corporate venture capital are less innovative than startups backed by privately owned corporate venture capital. Using a two-stage least-squares analysis yields the same results. Further, we find evidence consistent with two potential mechanisms: Investors of state-owned corporate venture capital provide weaker technical support and are less tolerant of failure. These results have important implications for stakeholders, management, and policy makers who care about incentivizing young and rapidly growing companies to innovate more effectively. Full article

Due to the increased need for the efficient use of public funds and the importance of private investment, there have been many studies on the effects of these factors on corporate performance. However, few studies have been conducted based on an integrated perspective. In addition, most studies have investigated cases in leading countries and have rarely studied latecomer countries. Therefore, this study investigated the step-by-step effects of government support on firm performance (innovation performance, venture capital (hereafter VC) investment, and financial performance) based on the data on in vitro diagnostic (hereafter IVD) firms in Korea. In particular, we demonstrate the sequential effects of these variables with a time lag. The results of the panel regression analysis indicate that government R&D support improved the innovation performance of IVD firms, but this increased innovation performance did not attract VC investment. Meanwhile, VC investment has a positive impact on a firm’s financial performance. These findings have policy implications and suggest that government support plays a pivotal role in a company’s innovation performance, and thus continuous investment is required. However, innovation performance negatively affects short-term financial performance, and thus technology commercialization should be supported. Full article

Corporate Venture Capital (CVC) has been receiving increasingly more attention all over the world as a special way for accessing new ideas and innovative opportunities through minor-share investing in established companies. The purpose of CVC investments may either be purely financial or to pursue strategic goals. Organisations often seek to take actions that impact positively on sustainability by assembling related knowledge and technologies. These resources may come from invested startups through the use of a CVC programme. This research aims to measure and analyse the Corporate Venture Capital programmes of companies listed in the ISE B3 Corporate Sustainability Index. To this end, a three-step methodology was conducted. First, a systematic review of the literature took place, followed by a review of companies based on secondary sources such as their websites. Finally, a survey was developed and was opted to survey companies through their Investor Relationship (IR) public channels. Results show that 27 of the companies listed in the ISE B3 Index have CVC programmes that contemplate organizational initiatives besides investment. In this sense, one can claim that at least 70% of the ISE B3 Index companies are somehow involved in CVC operations. The results contribute to the literature on corporate venture capital and sustainability by showing that companies spend from 10% to 15% of their capital in sustainable businesses in order to remain competitive. Full article

This paper studies the difference between startup investments by private equity funds (buyout funds; PE) and venture capital funds (VC). PEs, which have traditionally invested in mature companies, have been increasingly investing in later-stage startups in recent years. Based on Crunchbase’s data on EU startup investments from 2011 to the first half of 2021, we find that: (1) later-stage VC-backed startups and PE-backed startups differ in terms of the industry domain, (2) PE-backed startups tend to have higher revenue when they receive investments, and (3) VC-backed startups are more likely to exit via Initial Public Offering (IPO) and slightly less likely to exit via Mergers and Acquisitions (M&A) than PE-backed startups. These results connect previous studies on VC and PE and deepen our understanding of later-stage startup investment. It also suggests that PE invests differently than VCs and provides new added value to the startup ecosystem. In addition, it adds insights into corporate behavior in new business domain expansion. Full article