The Impact Of Domestic Venture Capital On The Establishment Of Enterprises And The Spatial Agglomeration Of New Firms

The intervention of venture capital directly affects the development path and performance. Different from the past paper, this paper analyses the relation between venture capital and enterprise growing from the perspective of motivating the establishment of enterprise and the agglomeration of new firms. Based on the panel data of 1997-2014 in 31 provincial administrative regions, we build traditional regression model to reveal the impact of domestic venture capital on the establishment of enterprises, and then build a spatial econometric model to reveal the impact of venture capital on the spatial agglomeration of new firms.The result of the panel regression considered endogenous implies that venture capital does exert positive influence on the establishment of the enterprise by stimulating the entrepreneurship. At the same time, spatial autocorrelation test testifies that new firms show significant positive correlation in space. Based on Wald test and LM test, we chose spatial lag model. Spatial lag model basing on 0-1 matrix and distance matrix reveals that venture capital does good to the spatial agglomeration of new firms and enterprise creation activities have spatial spillover effect for the geographical affiliation. In other words, the creation activities of local enterprise are not only affected by venture capital, but also affected by the enterprise creation activities of other regions.Enterprises are the cells of the market, and entrepreneurship is an important engine of region economic growth. Therefore, China should develop venture capital vigorously and stimulate the entrepreneurship to promote regional economic growth. In addition, in order to promote more enterprises to be built, the government should pay attention to geographical affiliation to make venture capital playing a greater role.