Intellectual Capital and Firm Performance in the Context of Venture-Capital Syndication Background in China

Yuzhong Lu,Yuanjun Zhao,Zengrui Tian,Guillermo Andres Buitrago,Shuai Zhang,Shuiwen Gao,Thiago Christiano Silva

doi:10.1155/2021/3425725

Abstract

This paper is intended to investigate the role of Venture-Capital Syndication (VCS) background in the relationship between intellectual capital (IC) and portfolio firm performance (PFP); specifically, this article examines the moderating effect of VCS’s leading firm background and member heterogeneity on the effect of IC on PFP. This study used a modified VAIC model to measure IC to compose a 4-component variable including human capital, structural capital, relational capital, and innovation capital. The data were collected from VCS-backed and listed firms in China during 2014 to 2018 applying the pooled OLS model for hypotheses test, Generalized Method of Moments (GMMs) to reduce endogeneity and unobserved factor control, and also return on equity (ROE) instead of ROA for the robustness test. Empirical results showed that IC and its components can improve PFP for VCS-backed firms in China; in detail, IC showed greater impact on performance of firms invested by foreign lead investors than in private or government VCS, specially reflected in the impact of innovation capital on PFP. Furthermore, IC showed weaker impact on PFP of mixed VCS-backed firms compared to pure VCS-backed firms and showed diminished effect on higher VCS member heterogeneity mainly reflected in the impact of relational capital on firm performance. These findings propose a new way of combining IC and VC to improve firm performance and are beneficial to theoretical development of IC and VC as well as a perspective for VC firm managers to choose suitable partners prior to join a VCS.

Highlights

In a knowledge-based economy, there have been growing consensus about the relevance of Intellectual Capital on firms long-term profit [1,2,3], even more, intangible assets are being identified as one of their core capabilities [4]
We argue that a positive influence of IC on portfolio firm performance is significantly higher in the context of funded venture capital (FVC)-led syndication than in domestic private venture capital (DPVC)-led or government-funded venture capital (GVC)-led syndication. erefore, in emerging economies, especially the case of China, DPVCs and GVCs would need to learn from the advanced investment management experience and skills of FVCs in line with the local environment, to increase the efficiency of firm intellectual capital
(2) From the perspective of venture-capital syndication (VCS) leading type, the return on assets (ROA) of DPVC-led syndication backed firms is higher than that those of FVC-led or GVC-led; value-added intellectual coefficient (VAIC)-value on the GVC-led and DPVC-led are similar, both being higher than FVC-led ones. is result shows difference with previous research hypothesizes, so further analysis needs to be done

Summary

Introduction

In a knowledge-based economy, there have been growing consensus about the relevance of Intellectual Capital on firms long-term profit [1,2,3], even more, intangible assets are being identified as one of their core capabilities [4]. It is helpful to empirically examine whether the impact of intellectual capital on firm performance vary depending on the VCS background For hypothesis testing, this empirical study used the TM modified Pulic’s VAIC model to measure IC [41, 46], assessing it in terms of four components: (1) human capital, (2) structural capital, (3) relational capital, and (4) innovation capital. Our model expects that all components of IC may influence the performance of VCS-backed firms, moderated by the background of VCS This exercise tested moderation by FVC-led, DPVC-led versus GVC-led syndication, as well as the moderating effect of cooperation model and member heterogeneity. Erefore, in emerging economies, especially the case of China, DPVCs and GVCs would need to learn from the advanced investment management experience and skills of FVCs in line with the local environment, to increase the efficiency of firm intellectual capital. The particularity of this research setting provides a fresh perspective on intellectual capital management of portfolio firm for performance as well as relevant implications for portfolio firms in emerging countries

Literature Review and Hypothesis Development

Methodology

Variable Definition and Measurement

Empirical Results and Analysis

Empirical Result Analysis