The Effect of Corporate Venture Capital on Labor Income Share: Evidence from China

Lanlan Sun, Lu Zhang and Shaolei Qu ()
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Lanlan Sun: School of Economics and Management, Qingdao University of Science and Technology, Qingdao 266061, China
Lu Zhang: School of Economics and Management, Qingdao University of Science and Technology, Qingdao 266061, China
Shaolei Qu: School of Economics and Management, Qingdao University of Science and Technology, Qingdao 266061, China

IJFS, 2025, vol. 13, issue 2, 1-27

Abstract: This study examines the impact of corporate venture capital (CVC) on the labor income share of science and innovation enterprises, focusing on data from China’s Science and Technology Innovation Board (STIB) and Growth Enterprise Market (GEM) between 2010 and 2022. Empirical results reveal a significant inverted U-shaped relationship between CVC shareholding and the labor income share of invested firms. CVC increases the labor income share by enhancing corporate governance, encouraging digital transformation, and improving human capital quality, but this effect diminishes when CVC shareholding exceeds a certain threshold. The moderating role of media attention and the heterogeneity of this relationship across regions and financial conditions are further explored. Additionally, the study identifies a positive U-shaped connection between CVC shareholding and the corporate pay gap, highlighting CVC’s complex role in influencing income inequality within firms. This research contributes to the literature by unveiling the nonlinear effects of CVC on income distribution, offering new insights into its dual role in promoting innovation and equity. Practically, it provides actionable recommendations for firms to optimize CVC ownership and for policymakers to design targeted interventions that address regional and financial disparities. By bridging the gap between CVC investment strategies and labor income fairness, this study lays the foundation for a balanced approach to sustainable economic development.

Keywords: corporate venture capital (CVC); labor income share; innovations; digitalization; corporate governance (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2025
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