A Study Of The Cooperative Effects Of Science And Technology Ventures And VC

It is extremely critical that choosing proper financial strategy for science and technology ventures and the governance afterward also is a key to developing to mature big firms for these small ones. As a very important financial strategy, VC gradually receives both the scholars and entrepreneurs’attention. However, Science and technology ventures traditionally have to meet a lot of strict requirements to be a qualified investee so as to get the money. Nowadays, firms need to have some unique characteristics to be outstanding to cooperate with VC. It is the combination of characteristics and the advantages of VC that tend to maximize the cooperation effect of them. Also, both entrepreneur capability and innovative type are important factors that impact Science and technology ventures to make their financial strategy. So, it is reasonable and valuable to explore the interactive relationship between firms’characteristics and financial strategy.When VC goes into firms, its non-financial value-added and social capital will make more effort to help firms develop well. And in this situation, VC tend to be one type of equity finance, so its financial governance become the key problem—which governance mechanism should be chosen to control procedure-related relational risk and improve outcome-oriented cooperative effect.General VC related researches are most based on principal-agent theory and focus on VC problems in one-way moral hazards or adverse selection perspective. This paper is in a creative alliance-perspective combining resource-based theory, transaction cost theory and social capital theory, so as to investigate the relationship between Science and technology ventures and the VC companies, and also from Science and technology venture’s governance mechanism’s view, how to balance between relational risk and cooperative effect.So, this paper is organized as follows: firstly, based on resource-based theory and innovative theory, it analyzes Science and technology ventures’internal characteristics on financial strategy and finds that both its entrepreneur capability and innovation level have significant effect on its financial strategy. Based on Williamson’s corporate finance theory, concerning Science and technology ventures and venture capital partner’s bilateral moral hazards, the paper argues that the process of finance actually can be construed as a mechanism, which also could be view in the strategic alliance’s research perspective, so we can use the alliance’s governance mechanism tools to exam its factors which affect cooperation effect. There are three important parts:①Based on resource-based theory and innovative theory, this research firstly carves out two indexes from internal characteristics’perspective of Science and technology ventures, which are entrepreneur capability and innovative type, and then exam their impact on venture capital finance strategy. Considering environment uncertainty, we exam technology uncertainty, market uncertainty and organizational uncertainty’s direct or moderating impacts on finance strategy and innovation.②From the point of Science and technology venture’s financial market failure and defect of its governance mechanism, we argue the necessity of using venture capital as an important financial strategy in theory. According to Williamson’s corporate finance theory, combining actual bilateral relationship risk, we view the relationship of Science and technology ventures and venture capital partner in alliance perspectives, which are supported by literature. Then, using alliance scope and informal governance mechanism theory, we exam the mechanism after venture capital go into Science and technology ventures, and explore the role of non-financial value-added, social capital and their impact on cooperation effect.③In the view of strategic alliance, we empirically investigate a firm’s characteristics and the unique advantage of venture capital partner’s impact on their cooperation effect. As two sides are of quite different functions and statue in alliance, we analyze its individual contribution to all cooperation effect and also consider the impact of venture capital on governance mechanisms after it goes into firms. Based on theoretical analysis and empirical model, using structural equation model and statistic methods, this research arrives to the following conclusions:①Entrepreneur capability and innovation level are most important factors which impact Science and technology venture’s finance strategy. Entrepreneur capability is consist of opportunity capability and operational capability,and innovation level is make up of radical innovation and incremental innovation. Science and technology ventures with high degree of opportunity capability and radical innovation tend to receive more favor by venture capital,and firms with more operational capability and incremental innovation tend to choose debt finance.②Uncertain environment have significantly impact on innovative degree and financing choices. Technology uncertainty, market uncertainty and organizational uncertainty have negative relationship with VC. Furthermore, incremental innovation leads to higher negative effect to venture capital when organizational uncertainty increasing, and radical innovation leads to lower positive effect to venture capital when technology uncertainty increasing..③Cooperative effect is a paradox between relationship risk and cooperation performance, making relationship risk increase and cooperation performance decrease. After the Science and technology ventures have to choose venture capital, entrepreneur capability and innovation degree have significant impact on the degree of cooperative effect. Opportunity capability is a dynamic capability and negatively related to relationship risk and positive related to cooperation performance. Degree of innovation is the concept positive related to asset specificity and relationship risk,rather than cooperation performance. Seems to go against the concept of cooperative effect, it needs further study effect of venture capital’s role in the cooperation.④Further analysis founds that venture capital provided by non-value-added services and social capital has a direct impact and indirect effects of regulation on the cooperation effect. Directly affect is that the social capital reduces relationship risk to promote cooperation performance. Non-capital value-added services have a U-shaped relationship with relationship risk, while it has an inverted U-shaped relationship with cooperation performance. We get The conclusion that the union range change will lead to changes in the relationship risk and cooperation performance. Moderating effect of venture capital has shown to reduce relationship risk and increase cooperation performance. This explains after the Science and technology venture introduced the positive relationship between the degree of innovation and relationship risk is reduced. Reveals the Science and technology venture improved governance mechanism after introduce the risk capital investment.This paper from the characteristics of Science and technology ventures themselves explore the main factors affect the financing strategy, and from the union perspective using the resource based theory, transaction cost economics and social capital theory to explore cooperation effect of the Science and technology ventures introduce venture capital. This research is a further development of transaction cost economics, deepen the governance mechanisms of the Science and technology ventures, and have some reference and guidance about Science and technology ventures choose venture capital.