Partnership venture capital and post-IPO innovation behaviours in China

Abstract

Venture capital, an incubator of technological innovation, generally pursues IPO as a successful exit channel. However, numerous China's venture capital institutions still hold shares after IPO since they have long-term strategic goals. This study investigates how partnership venture capital affects companies' post-IPO innovation behaviours based on a sample of 479 Chinese listed companies in the growth enterprise market (GEM) from 2009 to 2017. As revealed by the results, partnership venture capital can expedite enterprise innovation, particularly exploratory innovation. The result exhibits robustness to a number of estimation techniques, including PSM, Heckman's selection model and instrumental variable. Partnership venture capital with a government background and syndicate partnerships can significantly inhibit companies' innovation. This study provides empirical evidence to interpret innovation in terms of partnership venture capital.