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Keywords

venture capital; reputation; relationship strength; relationship quality; enterprise innovation

Abstract

With the continuous development of China’s venture capital market, the venture capital industry shows a remarkable trend of network development, and the venture capital network plays a unique role in fostering innovation among start-ups. This paper selects newly listed companies on the Growth Enterprise Market (GEM) from January 1, 2010 to December 31, 2022, and those listed on the Science and Technology Board from July 22, 2019 to December 31, 2022 as research samples. Based on the perspective of venture capital networks, this paper focuses on the relationship strength and relationship quality in the relationship embedding of venture capital networks, and conducts empirical research on the relationship between the two and their interaction with the innovation ability of start-ups, as well as the moderating effect of venture capital reputation in the process. The findings are as follows: Firstly, both the relationship strength and relationship quality of venture capital networks have a significant positive effect on the innovation ability of start-ups. Relationship strength enhances the innovation ability of start-ups by enhancing the average connection strength between venture capital institutions and the self-service network. Venture capital institutions with high relationship quality often occupy the position of structural holes in the network, so they can obtain the heterogeneous information with innovative value in time, and rely on resource control advantages to deliver knowledge and information to target enterprises, thereby improving the innovation ability of start-ups. Secondly, the interaction between venture capital network relationship strength and relationship quality has a complementary effect on the innovation ability of start-ups. In the venture capital network, high relationship quality enables start-ups to obtain innovation resources, and high relationship strength promotes the efficient implementation of innovation plans. The advantages of network relationship strength and relationship quality of venture capital institutions are superimposed, which can maximize the innovation ability of start-ups. Finally, the reputation of venture capital institutions has a positive moderating effect on the relationship between the quality of venture capital network relationships and the innovation ability of start-ups, but has no significant moderating effect on the relationship between the strength of venture capital network relationships and the innovation ability of start-ups. The research findings presented in this paper hold significant implications for the practical undertakings of venture capital endeavors. Firstly, venture capital institutions ought to proactively enhance their relational ties with joint partners and engage in multifaceted collaborative efforts. Concurrently, they should prioritize fostering partnerships with diverse investment institutions to occupy a greater number of structural holes, thereby broadening their network reach and influence. Secondly, in the context of venture capital institutions, it is imperative to consider the interplay between relationship strength and relationship quality within the venture capital network. By harmonizing these two dimensions, venture capital institutions can synergistically leverage their respective benefits, ultimately maximizing the innovative capacity of start-ups. Thirdly, venture capital institutions should accumulate experience and knowledge in joint investment, actively exchange information and resources with other partners, and focus on enhancing their own reputation to enhance their ability to drive enterprise innovation. Fourthly, venture capital institutions must prioritize both the embeddedness of venture capital network relationships and investment reputation, without neglecting either aspect, in order to achieve success in the fiercely competitive venture capital market. The research findings of this paper enrich the relevant studies on venture capital networks and supplement and refine the existing theoretical framework of venture capital’s role in promoting enterprise innovation.

DOI

10.16315/j.stm.2024.03.004

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