Divergent trajectories on frontier innovations: A comparison of international venture capital-invested ventures between China and the United States

Sunny Li Sun, Roberto S. Santos and Lingling Qin

Technovation, 2024, vol. 137, issue C

Abstract: How do international venture capital (IVC)-invested ventures (IIVs) between the U.S. and China generate new knowledge differently and follow distinct growth trajectories? Given that venture capital (VC) is critical for financing frontier innovations among new ventures, comparing U.S. and Chinese IIVs is essential for informing national innovation policy. Based on the organizational ecology perspective, we propose that U.S. and Chinese new ventures have divergent trajectories in frontier innovations. We identify 1782 first-round IVC investments in U.S. and Chinese new ventures operating in the computer software, e-commerce, biotechnology, semiconductors, and artificial intelligence sectors between 2010 and 2020 along with their 2825 patents (317 Chinese patents and 2508 U.S. patents). Our findings indicate that Chinese IIVs exhibit greater variation in terms of technological distance, search scope, and knowledge coupling, compared to U.S. IIVs. However, Chinese IIVs’ frontier innovations have more divergent technological trajectories and attract fewer followers than U.S. IIVs, based on patent citations. In a firm-level analysis, we find that Chinese IIVs are less likely to receive a subsequent financing round. Further, IIVs with greater technological distance and search scope, and with higher impact patents, have more opportunities to receive the next round of funding.

Keywords: International venture capital; International venture capital-invested venture; Innovation; Organizational ecology; Knowledge generation; Technological trajectories (search for similar items in EconPapers)
JEL-codes: G24 O31 O33 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:techno:v:137:y:2024:i:c:s0166497224001445

DOI: 10.1016/j.technovation.2024.103094

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