The Influence Of Venture Capital On Technology Innovation In China-An Empirical Study

From 1960s on, U.S. always leads the technology innovation trend of the world and enjoys a sharp economic growth introducing by technology innovation. Behind the growth of technology innovation, venture capital in U.S. has expierenced a rapid growth. Goverments around the globe believe that venture capital has spured technology innovation in U.S.. They develop venture capital industry within their country in order to duplicate the success of the fast growing of U.S. venture capital industry. China is no exception, from 1998 on, venture capital industry within China has experienced a sharp growth. The amount of venture capital disribution has grown from 333 million yuan in 1998 to 333945 million yuan in 2008. During this time, technology innovation in China has been growing rapidly. Under this background, this paper concentrates on how venture capital influence technology innovation and the influence of venture capital on technology innovation in China.The study of this paper can be divided into theoretical analysis and emperical study. Based on theoretical analysis, previous literatures always focus on one aspect of the mechanism of how venture capital influences technology innovation,they havn t summarized the mechanism of how venture capital influences technology innovation. Based on previous studys, this paper summarizes how Venture capital influences technology innovation, and then categorizes the related factors of technology innovation into input factors and influence factors. Based on this category, this paper developes a production function of technology innovation which includes R&D, venture capital, human capital and other influence factors . Based on the emperical study, this paper developes a experical model using the theoretical model developed before, and uses related data from 1991 to 2008 as database. After an emperical study using nonlinear regression, linear regression and ridge regression, the results show that R&D investment and human capital are tow major influence factors of technology innovation, venture capital has no significant influence on technology innovation.Finally, this paper gives some policy suggestion and suggests possible directions for further research based on a summary of key conclusions.