Can Venture Capital Break the “Solow Paradox” of R&D?
QIU Yu1, PAN Pan2
1.School of Accounting, Southwestern University of Finance and Economics, Chengdu, 611130; 2.Business School, Central South University, Changsha 410083
Abstract Under the “new normal” of China’s economy, breaking the “solow paradox” of R&D is the key for firms to break through technical barriers and achieve strategic change. Based on the two dimensions of innovation input and innovation output with the data of GEM listed firms from 2009-2015, this paper examines the relationship between venture capital (VC) and firms’ R&D performance. The results show that, firstly, VC improves the firms’ R&D performance and helps to break the “solow paradox” of R&D. Specifically, VC reduces R&D investment and increases the patent output. Secondly, this correlation is more significant in areas with slow market progress or in domestic enterprises with relatively backward technology and management experience. Thirdly, the results still hold after using DEA efficiency evaluation as proxy variable of firms’ R&D performance. Further tests show that, VC-financed firms transform more R&D achievements into future performance.
2019, Vol. 36 
