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Governmental venture capital and corporate digital transformation: evidence from China

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  • Jia, Yingdan
  • Li, Jingwen
  • Zhang, Jindan

Abstract

This paper investigates and confirms the positive effects of governmental venture capital (GVCs) on corporate digital transformation. The empirical evidence reveal that each standard deviation increase in GVC participation raises digital transformation intensity by 0.34 % relative to the mean. Reducing the degree of information asymmetry, easing financing constraints, and improving the level of risk taking offered by GVCs participating in listed firms are the three plausible underlying channels through which GVCs promote corporate digital transformation. This paper enriches the research on GVCs and the mechanism on corporate digital transformation and provides evidence for GVCs to participate in the non-venture capital market. Our findings demonstrate GVCs' significant role in post-IPO firms' sustainable development, clarifying how government participation shapes strategic investment decisions. These insights are crucial for optimizing state-market hybrids to promote strategic development and sustainable economic growth.

Suggested Citation

  • Jia, Yingdan & Li, Jingwen & Zhang, Jindan, 2025. "Governmental venture capital and corporate digital transformation: evidence from China," Finance Research Letters, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:finlet:v:84:y:2025:i:c:s1544612325010736
    DOI: 10.1016/j.frl.2025.107815
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    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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