【公开学术报告】Impact of Government Sponsorship on the Social Capital and Economic Performance of Venture Capital Firms

Impact of Government Sponsorship on the Social Capital and Economic Performance of Venture Capital Firms

Guest Speaker:     Xiaoteng WU (NUS)

Date & Time:        15:00-16:30 (Beijing Time), Tue. 26^th, Sept. 2023

Classroom:        Room 2101, Tongji Building A

ABSTRACT

Prior research has demonstrated that government policies are instrumental in promoting entrepreneurship. However, the effect of a single policy can be difficult to discern when multiple policies are in place. Leveraging an unanticipated policy transition from diverse preferential policies for businesses to government sponsorship in China in 2014, we examine the impact of government sponsorship on venture capital firms. We use the synthetic difference-in-differencesstyle approach to overcome the identification challenge of constructing an appropriate counterfactual for firms receiving government sponsorship. We find that firms with government sponsorship are associated with an increase in social capital but not superior economic performance. Analysis of mechanisms shows that government-sponsored firms are more likely to make geographically distant investments, which entail inter-organizational partnerships but do not outperform proximate investments.

Keywords: entrepreneurship, public-private partnership, networks, venture capital firms, policy