This paper analyzes the effects of corporate venture capital (CVC) and independent venture capital (IVC) backing on technological innovation and value creation in invested companies. Using data on Chinese listed companies, we show that CVC investment can induce higher firm value than can IVC investment. By considering different dimensions of complementary assets, technological fit, geographical proximity, and product market relations, we explore the mechanism through which CVC contributes to innovation and value creation in invested companies in China.

Contemporary research on entrepreneurship has showed that social capital can improve the success rate of entrepreneurial activities, but focusing too much on social capital can also divert entrepreneurs’ attention to certain firm activities such as technological innovation. The purpose of this study is to explore such a paradox in order to better understand the impact of social capital on firms’ technological innovation performance in China. The current study explores this paradox with the data from 249 public listed Chinese firms that have received venture capital investment. The results show that both venture capitalists’ social ties and entrepreneurs’ social ties negatively affect these firms’ technological innovation performance, including total patents granted, R&D expenditure, and total factor productivity. In other words, venture capitalists’ social ties as well as entrepreneurs’ social ties actually impede, rather than facilitate their firms’ technological innovation. The results also show that entrepreneurs’ social capital mediates the impact of venture capitalists’ social capital on technological innovation performance. Managerial and policy implications for entrepreneurship research and technological innovation are then discussed for future research.

Based on 351 sample observations of companies listed on the Growth Enterprise Market (GEM) and Small & Medium Enterprise (SME) Board in China, this paper analyzes how the technological fit between corporate venture capital (CVC) parent companies and CVC-backed start-ups is related to CVC-backed start-ups’ innovation performance, as well as the mediating role of the allocation of control rights within CVC-backed start-ups in explaining the relationship. We find that technological fit has a positive effect on CVC-backed start-ups’ innovation inputs, while it has an inverted U-shaped relationship with start-ups’ innovation outputs. Technological fit also has a positive effect on the control rights acquired by CVCs, while the control rights allocation has no significant effect on innovation inputs, but significantly promotes innovation outputs. This suggests that the impact of technological fit on CVC-backed start-ups’ innovation performance arises from both the direct effect of technological fit and the mediating effect of the control rights acquired by CVCs.

Background: Entrepreneur was the key factor of venture capital-backed star-ups, and control rights serve as an important incentive to attract entrepreneurs’ human capital investment. Objective: In this article, we investigate the ways in which the specificity and exclusiveness of entrepreneurs’ human capital impact the allocation of residual control right (RCR) and specific control right (SCR) in entrepreneurial firms, based on the comprehensive effect of various control right benefits. Methods: Using panel data for a mixed regression model, we test theoretical hypotheses with survey data collected from entrepreneurial firms in various industries in China. Results: We find that when the venture capitalist’s (VC) strategic benefits are less than the entrepreneur’s private benefits, the VC’s RCR is negatively related to the specificity of the entrepreneur’s human capital and is positively related to the exclusiveness of the entrepreneur’s human capital. The VC’s SCR is positively related to the specificity and is negatively related to exclusiveness. When the VC’s strategic benefits are greater than the entrepreneur’s private benefits, the VC’s RCR is positively related to the specificity of the entrepreneur’s human capital and is negatively related to the exclusiveness. The VC’s SCR is positively related to both the specificity and exclusiveness. Conclusion: The impacts of specificity and exclusiveness of human capital are more significant for high-tech companies than for traditional companies. It is necessary for different types of VC-backed firms to implement classified governance over the control rights.