An Investigation Of The Relationship Between Venture Capital And Innovation Based On Corporate Data

The notion of venture capital is usually accompanied with innovation because of the former’s active role in emerging technology sectors. With the ever increasing scale and influence of venture capital industry and the extensive recognition of innovation’s important role in economic development, their relationship has captured an increasing amount of attention from both scholars and government. Relevant research abroad has grown toward maturity; while in our country, both theoretical and empirical works remain at initial phase. Relevant domestic empirical research is especially weak and unsystematic due to various problems including difficulty in acquiring samples and short timeline. Therefore, it is theoretically and practically meaningful to explore and analyze the relationship between venture capital and innovation in our country.After a systematic review of relevant theories and empirical works, this paper first determined to investigate venture capital’s impact on innovation and potential feedback. As to the substitute indicators of innovation, this paper selected patent numbers and total factor productivity after a detailed analysis on various categories of innovation indicators. Taking a micro perspective, this paper used corporation data from2006to2011as its study subject. The data, all manually collected by year and by company, include the amounts of venture capital received by328sample firms and the number of patents of1536companies from experimental group and control group. Then this paper adopted different methods to analyze different issues. To examine venture capital’s impact on innovation, this paper employed hybrid data model and panel data model on the basis of extended K-L Model; besides, this paper also adopted the propensity score matching(PSM) method and the difference-in-differences(DID) techniques which were widely used in foreign research. To investigate the feedback between venture capital and innovation, this paper employed relatively novel methods like panel Granger causality test and panel VAR(PVAR) model.From basic analysis of hybrid data regression and panel data regression, it is suggested that in the micro-level, venture capital has a positive influence on innovation in our country; moreover, its impact exceeds that of R&D expenses. Through propensity score matching, experimental group with venture capital and control group without venture capital were constructed. By comparison, this paper finds that venture capital prefers young, small-sized companies that have light-assets, belong to information technology industry and belong to national capital. Moreover, both the average treatment effect on the treated(ATT) calculated through propensity score matching method and difference-in-differences analysis results show that with other factors controlled, the innovation indicators of corporations with venture capital are obviously better than that of corporations without venture capital, and this difference also exhibits distinct time trend. In the end, this paper used panel Granger causality test and panel VAR model to examine the sequence of the relationship between venture capital and innovation. The results confirm that there exists an interactive relation between the two, and this relationship possesses dynamic characteristics.