Impact of venture capital on innovation in key & core technology firms

Song Wang, Chuang Ma, Mei Yu and Xin Guo

Pacific-Basin Finance Journal, 2025, vol. 91, issue C

Abstract: Innovation holds a core position in development and serves as a pivotal force for driving China's economic transformation towards high-quality development. We select firms listed on the Shanghai Stock Exchange Science and Technology Innovation Board (SSE STAR Market) from 2019 to 2024 to investigate the impact of venture capital (VC) involvement on corporate innovation and analyze its mechanisms. The results indicate that earlier investment and higher shareholding by venture capital in STAR Market firms have significant effects on their innovation. Meanwhile, early-stage VC investment and shareholding have different effects on the innovation capabilities of STAR Market firms. Mechanism analysis reveals that venture capital promotes corporate innovation more significantly in firms facing higher industry competition and stronger financing constraints. Further heterogeneity analysis of STAR Market firms adhering to different listing standards shows that earlier investment and shareholding have a more pronounced promoting effect on firms listed under the second set of standards.

Keywords: Key & core technology; Science and technology innovation board market (STAR market); Innovation and entrepreneurship (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:91:y:2025:i:c:s0927538x25000939

DOI: 10.1016/j.pacfin.2025.102756

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