The Impacts Of Venture Capital On Chinese Firms’ Innovation Performance

A large number of studies have shown that in the western mature capital market, as the main financing channel of start-up firm, venture capital (VC) plays an important effect on high-tech enterprise technology innovation activity. By contrast, VC started late in our country, but it developed very rapidly. In 2012, China’s venture capital market has become the world’s second, only after the United States. But the domestic academic circle’s research about the relationship between venture capital and enterprise technology innovation is just in start-up phase. In general, the domestic research about relationship between venture capital and the start-up firms’technology innovation activities has many deficiencies on research perspective, indicators and sample selection, research depth and so on. This study deeply analyzes the effect and action mechanism of VC on firm’s technical innovation activities from the perspective of new product development performance.For furtherly researching on the relationship between VC and the firms’ new product development performance, this paper summarizes the basic features VC firstly. Then based on the related literature about VC, this paper makes the literature review about the relationship between VC and technology innovation. On this basis, this paper put forward the research hypothesis from three aspects:VC participation, VC background capital, venture capital syndication and the features of VC-invested firms.This study selected the non-listed company data from the China Industry Enterprises Database(1999-2009) as the research sample, and combine with the investment events and list of VC institutions provided by Zdatabase, then gets 1638 non-listed companies as the final sample through the matched sample design. The empirical results show that as a whole, compared with non-VC backed firms, VC backed firms have significantly higher innovation performance. Furtherly, different background VC backed firms have significant differences in terms of innovation performance. Specifically compared with domestic VCs, VCs with foreign background plays a stronger role in improving the innovation performance; compared with government VCs, the private VCs plays a stronger role in improve the innovation performance; In addition, venture capital syndication investment doesn’t have difference with single VC investment in improving the innovation performance, and firms financed by "hybrid" venture capital syndication cooperation pattern doesn’t implement different innovation performance with "pure" cooperation pattern; VC have different influence on firms’innovation performance from different institution, industry, or develop stage, ownership, Specifically compared with firms in less institutionally developed regions, VC plays a stronger role in improving the innovation performance in the firms from more institutionally developed regions; compared with young firms, VC have a more significant influence on mature firms’ innovation performance; in addition, Compared with the state-owned firms, VC have a more significant influence on innovation performance of private firms;finally, VC don’t have significant difference in improving firms’innovation performance between high-tech industry and traditional industry.This paper’s innovative points are that (1) selecting the new product development performance as a measure indicator can comprehensively reflect the enterprise’s technology innovation activities; (2) analyzing the effect of VCs’ capital background and venture capital syndication on firms’technology innovation activities, helps us have a deeper understanding of the VCs’effect on technology innovation activities from the micro level; (3) comparing the influences of VCs have on firms’innovation performance of different types, this paper help us have deeply understand on what factors affect the relationship between VCs and firms’innovation performance from the macro, middle and micro three levels; (4) different with previous studies, This study selects the non-listed company as the research sample, and reflect the screening and value-added services of VC more clearly, so the research conclusion is more valuable to VC institutions, start-up firms and policymaker.