Did Government Venture Capital Fund Innovative but Less Profitable companies? Evidence from China

Jing Zhang; Yueqi Fan; Ye Liu

doi:10.5465/AMBPP.2021.11223abstract

Did Government Venture Capital Fund Innovative but Less Profitable companies? Evidence from China

Jing Zhang
, Yueqi Fan
, Ye Liu^*

^*Corresponding author for this work

Department of Economics and Finance

Research output: Chapters, Conference Papers, Creative and Literary Works › RGC 32 - Refereed conference paper (with host publication) › peer-review

Abstract

Governmental venture capital (GVC) is a typical dual-purpose hybrid entity, which aims to increase social welfares as well as making profits for investors. Yet little is known about how the dual purposes shape GVC’s investment strategies that interact with private venture capital’s (PVC). Applying a two-sided matching model, we develop a structural model to examine whether GVCs invested in innovative but less profitable companies that ignored by PVCs. Using the data of Chinese VC industry in 2000-2012, we find supports for our hypotheses. These fresh results suggest that GVC commendably fulfill their social mission while pursuing economic benefits in a competitive environment. Moreover, GVCs are at least not worse than PVCs in nurturing companies in term of achieving IPO/M&A, and they support company innovation effectively in term of patent application.

Original language	English
Title of host publication	Academy of Management Annual Meeting Proceedings 2021
Editors	Sonia Taneja
Publisher	Academy of Management
DOIs	https://doi.org/10.5465/AMBPP.2021.11223abstract
Publication status	Published - Aug 2021
Event	81st Annual Meeting of the Academy of Management (AOM 2021) - Virtual Duration: 29 Jul 2021 → 4 Aug 2021 https://aom.org/events/annual-meeting/annual-meeting-theme-2021 https://my.aom.org/ProgramDocs/2021/pdf/AOM_2021_Annual_Meeting_Program.pdf https://2021.aom.org/agenda#/?limit=20&scroll=item,FRxLSrh8Ne9NWvNLD,FRxLSrh8Ne9NWvNLD,160.7998046875,299&skip=319&sortByFields[0]=startsAt&sortByOrders[0]=1&uid=5XY6MHnDTXR8oaF74

Publication series

Name	Academy of Management Proceedings
Number	1
Volume	2021
ISSN (Print)	0065-0668
ISSN (Electronic)	2151-6561

Conference

Conference	81st Annual Meeting of the Academy of Management (AOM 2021)
Abbreviated title	AOM Annual Meeting 2021
Period	29/07/21 → 4/08/21
Internet address	https://aom.org/events/annual-meeting/annual-meeting-theme-2021 https://my.aom.org/ProgramDocs/2021/pdf/AOM_2021_Annual_Meeting_Program.pdf https://2021.aom.org/agenda#/?limit=20&scroll=item,FRxLSrh8Ne9NWvNLD,FRxLSrh8Ne9NWvNLD,160.7998046875,299&skip=319&sortByFields[0]=startsAt&sortByOrders[0]=1&uid=5XY6MHnDTXR8oaF74

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Research Unit(s) information for this publication is provided by the author(s) concerned.

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@inproceedings{08a21eda7b784784bd20d6804bb2e283,

title = "Did Government Venture Capital Fund Innovative but Less Profitable companies? Evidence from China",

abstract = "Governmental venture capital (GVC) is a typical dual-purpose hybrid entity, which aims to increase social welfares as well as making profits for investors. Yet little is known about how the dual purposes shape GVC{\textquoteright}s investment strategies that interact with private venture capital{\textquoteright}s (PVC). Applying a two-sided matching model, we develop a structural model to examine whether GVCs invested in innovative but less profitable companies that ignored by PVCs. Using the data of Chinese VC industry in 2000-2012, we find supports for our hypotheses. These fresh results suggest that GVC commendably fulfill their social mission while pursuing economic benefits in a competitive environment. Moreover, GVCs are at least not worse than PVCs in nurturing companies in term of achieving IPO/M\&A, and they support company innovation effectively in term of patent application.",

author = "Jing Zhang and Yueqi Fan and Ye Liu",

note = "Research Unit(s) information for this publication is provided by the author(s) concerned.; 81st Annual Meeting of the Academy of Management (AOM 2021), AOM Annual Meeting 2021 ; Conference date: 29-07-2021 Through 04-08-2021",

year = "2021",

month = aug,

doi = "10.5465/AMBPP.2021.11223abstract",

language = "English",

series = "Academy of Management Proceedings",

publisher = "Academy of Management",

number = "1",

editor = "Sonia Taneja",

booktitle = "Academy of Management Annual Meeting Proceedings 2021",

url = "https://aom.org/events/annual-meeting/annual-meeting-theme-2021, https://my.aom.org/ProgramDocs/2021/pdf/AOM\_2021\_Annual\_Meeting\_Program.pdf, https://2021.aom.org/agenda\#/?limit=20\&scroll=item,FRxLSrh8Ne9NWvNLD,FRxLSrh8Ne9NWvNLD,160.7998046875,299\&skip=319\&sortByFields[0]=startsAt\&sortByOrders[0]=1\&uid=5XY6MHnDTXR8oaF74",

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Zhang, J, Fan, Y & Liu, Y 2021, Did Government Venture Capital Fund Innovative but Less Profitable companies? Evidence from China. in S Taneja (ed.), Academy of Management Annual Meeting Proceedings 2021. Academy of Management Proceedings, no. 1, vol. 2021, Academy of Management, 81st Annual Meeting of the Academy of Management (AOM 2021), 29/07/21. https://doi.org/10.5465/AMBPP.2021.11223abstract

Did Government Venture Capital Fund Innovative but Less Profitable companies? Evidence from China. / Zhang, Jing; Fan, Yueqi; Liu, Ye.
Academy of Management Annual Meeting Proceedings 2021. ed. / Sonia Taneja. Academy of Management, 2021. (Academy of Management Proceedings; Vol. 2021, No. 1).

Research output: Chapters, Conference Papers, Creative and Literary Works › RGC 32 - Refereed conference paper (with host publication) › peer-review

TY - GEN

T1 - Did Government Venture Capital Fund Innovative but Less Profitable companies? Evidence from China

AU - Zhang, Jing

AU - Fan, Yueqi

AU - Liu, Ye

N1 - Research Unit(s) information for this publication is provided by the author(s) concerned.

PY - 2021/8

Y1 - 2021/8

N2 - Governmental venture capital (GVC) is a typical dual-purpose hybrid entity, which aims to increase social welfares as well as making profits for investors. Yet little is known about how the dual purposes shape GVC’s investment strategies that interact with private venture capital’s (PVC). Applying a two-sided matching model, we develop a structural model to examine whether GVCs invested in innovative but less profitable companies that ignored by PVCs. Using the data of Chinese VC industry in 2000-2012, we find supports for our hypotheses. These fresh results suggest that GVC commendably fulfill their social mission while pursuing economic benefits in a competitive environment. Moreover, GVCs are at least not worse than PVCs in nurturing companies in term of achieving IPO/M&A, and they support company innovation effectively in term of patent application.

AB - Governmental venture capital (GVC) is a typical dual-purpose hybrid entity, which aims to increase social welfares as well as making profits for investors. Yet little is known about how the dual purposes shape GVC’s investment strategies that interact with private venture capital’s (PVC). Applying a two-sided matching model, we develop a structural model to examine whether GVCs invested in innovative but less profitable companies that ignored by PVCs. Using the data of Chinese VC industry in 2000-2012, we find supports for our hypotheses. These fresh results suggest that GVC commendably fulfill their social mission while pursuing economic benefits in a competitive environment. Moreover, GVCs are at least not worse than PVCs in nurturing companies in term of achieving IPO/M&A, and they support company innovation effectively in term of patent application.

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DO - 10.5465/AMBPP.2021.11223abstract

M3 - RGC 32 - Refereed conference paper (with host publication)

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BT - Academy of Management Annual Meeting Proceedings 2021

A2 - Taneja, Sonia

PB - Academy of Management

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Y2 - 29 July 2021 through 4 August 2021

ER -

Did Government Venture Capital Fund Innovative but Less Profitable companies? Evidence from China

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