The Impact Of Social Trust On Corporate Venture Capital

As an important part of the strategic combination of enterprises,risky investment plays a key role in improving corporate performance,promoting product richness and diversification of organizational structure,and enhancing corporate competitiveness.Managers are the main decision-makers of enterprises,and the level of risk investment of enterprises reflects the level of risk-taking of managers in uncertain economic and social environments.Since risky investment has both high returns and high risks,and uncertainty and risk are its main characteristics,managers face the problem of how to choose risks and benefits in the decision-making process.Most managers pay more attention to the negative consequences of venture capital activities,and they are less likely to engage in risk-taking activities because of risk aversion.Social trust constitutes the basis of all transactions,and it runs through each individual's behavior selection process,and social trust is an important way to reduce uncertainty.The difference in regional trust level represents the individual risk perception,which affects risk selection.Therefore,it is necessary to study the social trust and the level of risk tolerance of managers.Previous research on corporate risk taking has focused on corporate characteristics such as firm size,performance,corporate governance,and board structure.Research on the level of corporate risk-taking at the manager level focuses on executive compensation,personality traits,and personal experiences.The research on the external environment is mainly the mechanism of formal system and enterprise risk-taking.Few literatures study how the level of social trust affects the risk perception of managers,and thus the decision-making differences.Most of the existing researches on social trust focus on social trust as a social norm,affecting individual behaviors by saving transaction costs,reducing uncertainty,generating reputational seclusion mechanisms,and promoting cooperation,but neglecting social trust and The intrinsic mechanism of risk.Trust itself is a subjective perception of the outcome of uncertainty,and it also represents an individual's subjective perception of risk and return.The level of trust represents the level of individual risk perception,while the risk perception of managers affects risk selection.Therefore,this paper studies the influence mechanism of social trust on manager's risk decision-making from the perspective of social trust and the theory of expected utility.All the A-share listed companies from 2007 to 2016 were selected as research samples,and the relationship between social trust and enterprise risk investment level was tested using a binary regression model.Three different dimensions were examined:legal environment level and industry competition.Degree is based on the nature of the enterprise to regulate its role,this study found that:(1)Social trust and corporate risk investment level show a significant positive correlation.The higher the level of social trust in the region where the enterprise is located,the more likely the manager is to conduct venture capital investment.The high social trust means low-risk perception,while the manager seeks to maximize the utility when making decisions,so the enterprise has a higher level of venture capital.(2)The level of regional legal environment plays a.regulatory role in the relationship between social trust and corporate risk investment level.The more perfect the regional legal system,the more beneficial it is to the role of social trust,and the role of social trust in the level of managerial risk commitment is more obvious..(3)The degree of competition in the industry regulates the relationship between social trust and the level of corporate risk investment.In industries with relatively low levels of uncertainty,managers have lower risk perceptions and strengthen the relationship between social trust and manager risk exposure(4)The nature of the enterprise also regulates the relationship between social trust and the level of corporate venture capital.However,it was found that social trust plays a stronger role in state-owned enterprises than non-state-owned enterprises.A new measurement method is selected for the independent variable and the measurement model,and the result is still robust.The results of this paper confirm the positive impact of social trust on managerial risk decision making.Compared with enterprises with low social trust,enterprises in high social trust regions have lower risk perceptions,thus changing risk attitudes and raising the level of venture capital.The theoretical contribution of this paper is to enrich the relevant literature on the mechanism of social trust,and further improve the discussion of the impact factors of enterprise risk-taking,and provide guidance for enterprises to better improve the risk-taking level of managers.