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The Effect of Venture Capital Investment on Corporate Innovation Performance  

Park, Jiyoung (Yonsei University)
Shin, Hyun-Han (Yonsei University)
Publication Information
Asia-Pacific Journal of Business Venturing and Entrepreneurship / v.15, no.1, 2020 , pp. 1-15 More about this Journal
Abstract
This study analyzes the innovation performance of venture firms according to existence of venture capital investment, and according to type and ownership of venture capital. Venture firms are IPO firms that are registered on KOSDAQ between the year 2000 and 2016. They are categorized as corporate venture capital-backed firms (CVC) and independent venture capital-backed firms (IVC). Using patent data from KIPO (Korean Intellectual Property Office), we employ the number of patents and the citations per patent as the measurement of the innovation output. We find the positive association between the venture capital-backed firms and the number of patents before going public. Corporate venture capital-backed firms are positively associated with the number of patents before and after IPO. However, we do not find strong evidence between the number of citations and the existence of venture capital investment or the type of venture capital. Lastly, we provide an inverse U-shaped relationship between the innovation performance and venture capital's ownership. In other words, the innovation output, both the number of patents and the number of citations, gradually increases as the venture capitalist's ownership increases, but also shows a decrease pattern, suggesting that the venture capitalist's ownership does not only spur the innovation but also gives a negative effect on venture firm's innovation output such as excessive intervention. Overall, we reveal that the most important factor for the innovation performance is not the existence of venture capital investment or the type of venture capital, but the ownership of the venture capitalist.
Keywords
Venture capital; Innovation; Patent; Corporate venture capital(CVC); Independent venture capital(IVC);
Citations & Related Records
Times Cited By KSCI : 5  (Citation Analysis)
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