Venture Capital and Firm Technological Innovation: The Moderating Role of Product Market Competition

Abstract

Abstract: Taking the theoretical perspectives of agency theory and information asymmetry, this study examines the impact of venture capital (including the presence and degree of venture capital participation) on firm technological innovation (including innovation input and output). The moderating role that product market competition plays in the venture capital-technological innovation link is further investigated as it acts as an important external governing and competition mechanism. Using the mixed cross-sectional data of China's GEM listed firms from 2009 to 2015, our empirical analysis reveals that compared with firms that do not have venture capital participation, both innovation input and output are relatively higher for firms with the presence of venture capital participation. Moreover, the degree of venture capital participation is positively related to innovation input and output. Additionally, this study finds that product market competition enhances the positive effects of venture capital on firm technological innovation.

Key words: venture capital, innovation input, innovation output, product market competition

Song Jing, Hu Guyan, He Qi. Venture Capital and Firm Technological Innovation: The Moderating Role of Product Market Competition[J]. Management Review, 2021, 33(9): 77-88.

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