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Engine in the digital wave: How venture capital accelerates the transformation journey of GEM enterprises

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  • Han, Huiyuan
  • Chen, Juanjuan
  • Yu, Chenhui

Abstract

Venture capital is increasingly recognized as a crucial catalyst for high-tech enterprises, particularly in the context of high-quality development. This study aims to uncover the underlying mechanisms through which venture capital impacts the digital transformation of organizations. Utilizing a comprehensive dataset of firms listed on China's Growth Enterprise Market (GEM), we employ panel effects regression and propensity score matching (PSM) to analyze the relationship between venture capital and digital transformation. Our findings indicate that corporate R&D expenditure acts as a partial mediator in this relationship, and that venture capital significantly enhances the degree of digital transformation within firms. Furthermore, our heterogeneity analysis reveals that non-state-owned enterprises derive greater benefits from venture capital in terms of digital transformation compared to state-owned enterprises. These results highlight the pivotal role of venture capital in driving digital transformation and suggest that its impact may vary across different ownership structures.

Suggested Citation

  • Han, Huiyuan & Chen, Juanjuan & Yu, Chenhui, 2025. "Engine in the digital wave: How venture capital accelerates the transformation journey of GEM enterprises," Finance Research Letters, Elsevier, vol. 85(PA).
    • Handle: RePEc:eee:finlet:v:85:y:2025:i:pa:s1544612325010955
    DOI: 10.1016/j.frl.2025.107837
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    References listed on IDEAS

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