Venture Capital and Entrepreneurial Innovation: Research on the Data of GEM in China

This paper took GEM companies listed between 2009 and 2011 as example and used 2SLS method to analyze the relation between venture capital institutions and corporate innovation behavior. We found that venture capital institutions generally have no significant effect on GEM companies, while state-owned venture capital institutions are conductive to improvement of enterprise innovation behavior. Besides, if state-owned and non-state venture capital institutions invest in an enterprise at the same time, share holding of venture capital tend to decrease. Thus, the government should invest more to venture capital as well as support the development of private enterprise and foreign venture capital.