IDEAS home Printed from https://ideas.repec.org/a/eee/tefoso/v203y2024ics0040162524001343.html

Some searches may not work properly. We apologize for the inconvenience.

   My bibliography  Save this article

Digital economy development and venture capital networks: Empirical evidence from China

Author

Listed:
  • Hu, Jinjin
  • Huo, Dong
  • Wu, Delin

Abstract

This paper examines the impact of digital economy on urban venture capital (VC) networks constructed from 44,122 inter-city VC events involving 285 cities in China from 2011 to 2019. Specifically, digital infrastructure, digital industry development, digital innovation capacity and digital inclusive finance are identified as four critical dimensions of digital economy. Further, panel regressions reveal that digital economy plays a pivotal role in facilitating the flow of VC resources, and thus positively influencing the agglomeration, radiation, and intermediation of cities embedded in the inter-city VC networks. Further, the results show heterogeneity in the focal impact of digital economy. First, it is stronger in central cities. Second, it follows an inverted-U shape, with the maximum effect observed at approximately 550 km distance between start-ups and investment centers. Third, digital economy has a stronger impact at the seed and start-up stages than at the expansion and maturity stages. These findings have implications for policy-making concerning the development of digital economy and the strategic planning of urban VC networks.

Suggested Citation

  • Hu, Jinjin & Huo, Dong & Wu, Delin, 2024. "Digital economy development and venture capital networks: Empirical evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 203(C).
    • Handle: RePEc:eee:tefoso:v:203:y:2024:i:c:s0040162524001343
    DOI: 10.1016/j.techfore.2024.123338
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0040162524001343
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.techfore.2024.123338?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lee, Chien-Chiang & Tang, Manting & Lee, Chi-Chuan, 2023. "Reaping digital dividends: Digital inclusive finance and high-quality development of enterprises in China," Telecommunications Policy, Elsevier, vol. 47(2).
    2. Islam, Mazhar & Fremeth, Adam & Marcus, Alfred, 2018. "Signaling by early stage startups: US government research grants and venture capital funding," Journal of Business Venturing, Elsevier, vol. 33(1), pages 35-51.
    3. Colombo, Massimo G. & D’Adda, Diego & Quas, Anita, 2019. "The geography of venture capital and entrepreneurial ventures’ demand for external equity," Research Policy, Elsevier, vol. 48(5), pages 1150-1170.
    4. Barnett, William A. & Hu, Mingzhi & Wang, Xue, 2019. "Does the utilization of information communication technology promote entrepreneurship: Evidence from rural China," Technological Forecasting and Social Change, Elsevier, vol. 141(C), pages 12-21.
    5. Satish Nambisan, 2017. "Digital Entrepreneurship: Toward a Digital Technology Perspective of Entrepreneurship," Entrepreneurship Theory and Practice, , vol. 41(6), pages 1029-1055, November.
    6. Lee, Chien-Chiang & Lou, Runchi & Wang, Fuhao, 2023. "Digital financial inclusion and poverty alleviation: Evidence from the sustainable development of China," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 418-434.
    7. Fisch, Christian, 2019. "Initial coin offerings (ICOs) to finance new ventures," Journal of Business Venturing, Elsevier, vol. 34(1), pages 1-22.
    8. Jiyoung Kimjeon & Per Davidsson, 2022. "External Enablers of Entrepreneurship: A Review and Agenda for Accumulation of Strategically Actionable Knowledge," Entrepreneurship Theory and Practice, , vol. 46(3), pages 643-687, May.
    9. Teece, David J., 2018. "Profiting from innovation in the digital economy: Enabling technologies, standards, and licensing models in the wireless world," Research Policy, Elsevier, vol. 47(8), pages 1367-1387.
    10. Schade, Philipp & Schuhmacher, Monika C., 2022. "Digital infrastructure and entrepreneurial action-formation: A multilevel study," Journal of Business Venturing, Elsevier, vol. 37(5).
    11. Lv, Chengchao & Song, Jie & Lee, Chien-Chiang, 2022. "Can digital finance narrow the regional disparities in the quality of economic growth? Evidence from China," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 502-521.
    12. Ferretti, Marco & Guerini, Massimiliano & Panetti, Eva & Parmentola, Adele, 2022. "The partner next door? The effect of micro-geographical proximity on intra-cluster inter-organizational relationships," Technovation, Elsevier, vol. 111(C).
    13. Zhang, Weike & Tian, Xiaoli & Yu, Ao, 2020. "Is high-speed rail a catalyst for the fourth industrial revolution in China? Story of enhanced technology spillovers from venture capital," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    14. Christian C Opp, 2019. "Venture Capital and the Macroeconomy," The Review of Financial Studies, Society for Financial Studies, vol. 32(11), pages 4387-4446.
    15. Li, Wenfei & Li, Donghui & Yang, Shijie, 2022. "The impact of internet penetration on venture capital investments: Evidence from a quasi-natural experiment," Journal of Corporate Finance, Elsevier, vol. 76(C).
    16. Venkataraman, Sankaran, 2004. "Regional transformation through technological entrepreneurship," Journal of Business Venturing, Elsevier, vol. 19(1), pages 153-167, January.
    17. Dushnitsky, Gary & Lenox, Michael J., 2006. "When does corporate venture capital investment create firm value?," Journal of Business Venturing, Elsevier, vol. 21(6), pages 753-772, November.
    18. Sarath Balachandran & Exequiel Hernandez, 2021. "Mi Casa Es Tu Casa: Immigrant Entrepreneurs as Pathways to Foreign Venture Capital Investments," Strategic Management Journal, Wiley Blackwell, vol. 42(11), pages 2047-2083, November.
    19. Paiola, Marco & Schiavone, Francesco & Khvatova, Tatiana & Grandinetti, Roberto, 2021. "Prior knowledge, industry 4.0 and digital servitization. An inductive framework," Technological Forecasting and Social Change, Elsevier, vol. 171(C).
    20. Cenamor, Javier & Parida, Vinit & Wincent, Joakim, 2019. "How entrepreneurial SMEs compete through digital platforms: The roles of digital platform capability, network capability and ambidexterity," Journal of Business Research, Elsevier, vol. 100(C), pages 196-206.
    21. Nambisan, Satish & Wright, Mike & Feldman, Maryann, 2019. "The digital transformation of innovation and entrepreneurship: Progress, challenges and key themes," Research Policy, Elsevier, vol. 48(8), pages 1-1.
    22. Eghbali, Mohammad-Ali & Rasti-Barzoki, Morteza & Safarzadeh, Soroush, 2022. "A hybrid evolutionary game-theoretic and system dynamics approach for analysis of implementation strategies of green technological innovation under government intervention," Technology in Society, Elsevier, vol. 70(C).
    23. Christian Haddad & Lars Hornuf, 2019. "The emergence of the global fintech market: economic and technological determinants," Small Business Economics, Springer, vol. 53(1), pages 81-105, June.
    24. Bat Batjargal, 2013. "Institutional Polycentrism, Entrepreneurs??? Social Networks, And New Venture Growth," William Davidson Institute Working Papers Series wp1060, William Davidson Institute at the University of Michigan.
    25. Rossi, Federica & Caloffi, Annalisa & Colovic, Ana & Russo, Margherita, 2022. "New business models for public innovation intermediaries supporting emerging innovation systems: The case of the Internet of Things," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    26. Zhang, Jiamin & Gu, Qian, 2021. "Turning a curse into a blessing: Contingent effects of geographic distance on startup–VC partnership performance," Journal of Business Venturing, Elsevier, vol. 36(4).
    27. Eiteneyer, Nils & Bendig, David & Brettel, Malte, 2019. "Social capital and the digital crowd: Involving backers to promote new product innovativeness," Research Policy, Elsevier, vol. 48(8), pages 1-1.
    28. Elia, Gianluca & Margherita, Alessandro & Passiante, Giuseppina, 2020. "Digital entrepreneurship ecosystem: How digital technologies and collective intelligence are reshaping the entrepreneurial process," Technological Forecasting and Social Change, Elsevier, vol. 150(C).
    29. Andrieu, Guillaume & Peter Groh, Alexander, 2021. "Strategic exits in secondary venture capital markets," Journal of Business Venturing, Elsevier, vol. 36(2).
    30. Veer, Theresa & Yang, Philip & Riepe, Jan, 2022. "Ventures' conscious knowledge transfer to close partners, and beyond: A framework of performance, complementarity, knowledge disclosure, and knowledge broadcasting," Journal of Business Venturing, Elsevier, vol. 37(3).
    31. Marchesani, Filippo & Masciarelli, Francesca & Bikfalvi, Andrea, 2023. "Smart city as a hub for talent and innovative companies: Exploring the (dis) advantages of digital technology implementation in cities," Technological Forecasting and Social Change, Elsevier, vol. 193(C).
    32. Maiti, Moinak, 2022. "Does development in venture capital investments influence green growth?," Technological Forecasting and Social Change, Elsevier, vol. 182(C).
    33. Verhoef, Peter C. & Broekhuizen, Thijs & Bart, Yakov & Bhattacharya, Abhi & Qi Dong, John & Fabian, Nicolai & Haenlein, Michael, 2021. "Digital transformation: A multidisciplinary reflection and research agenda," Journal of Business Research, Elsevier, vol. 122(C), pages 889-901.
    34. Wesley II, Curtis L. & Kong, Dejun Tony & Lubojacky, Connor J. & Kim Saxton, M. & Saxton, Todd, 2022. "Will the startup succeed in your eyes? Venture evaluation of resource providers during entrepreneurs' informational signaling," Journal of Business Venturing, Elsevier, vol. 37(5).
    35. de Reuver, Mark & Sørensen, Carsten & Basole, Rahul C., 2018. "The digital platform: a research agenda," LSE Research Online Documents on Economics 80669, London School of Economics and Political Science, LSE Library.
    36. Ismagilova, Elvira & Hughes, Laurie & Dwivedi, Yogesh K. & Raman, K. Ravi, 2019. "Smart cities: Advances in research—An information systems perspective," International Journal of Information Management, Elsevier, vol. 47(C), pages 88-100.
    37. White, Steven & Gao, Jian & Zhang, Wei, 2005. "Financing new ventures in China: System antecedents and institutionalization," Research Policy, Elsevier, vol. 34(6), pages 894-913, August.
    38. Bat Batjargal & Michael Hitt & Anne Tsui & Jean-Luc Arregle & Justin Webb & Toyah Miller, 2013. "Institutional Polycentrism, Entrepreneurs' Social Networks, and New Venture Growth," Post-Print hal-02313079, HAL.
    39. Cavallo, Angelo & Ghezzi, Antonio & Dell'Era, Claudio & Pellizzoni, Elena, 2019. "Fostering digital entrepreneurship from startup to scaleup: The role of venture capital funds and angel groups," Technological Forecasting and Social Change, Elsevier, vol. 145(C), pages 24-35.
    40. Liang, Feng Helen, 2017. "Does foreign direct investment improve the productivity of domestic firms? Technology spillovers, industry linkages, and firm capabilities," Research Policy, Elsevier, vol. 46(1), pages 138-159.
    41. Frederik von Briel & Per Davidsson & Jan Recker, 2018. "Digital Technologies as External Enablers of New Venture Creation in the IT Hardware Sector," Entrepreneurship Theory and Practice, , vol. 42(1), pages 47-69, January.
    42. Usai, A. & Fiano, F. & Messeni Petruzzelli, A. & Paoloni, P. & Farina Briamonte, M. & Orlando, B., 2021. "Unveiling the impact of the adoption of digital technologies on firms’ innovation performance," Journal of Business Research, Elsevier, vol. 133(C), pages 327-336.
    43. Jafari-Sadeghi, Vahid & Garcia-Perez, Alexeis & Candelo, Elena & Couturier, Jerome, 2021. "Exploring the impact of digital transformation on technology entrepreneurship and technological market expansion: The role of technology readiness, exploration and exploitation," Journal of Business Research, Elsevier, vol. 124(C), pages 100-111.
    44. Raghu Garud & Arun Kumaraswamy & Anna Roberts & Le Xu, 2022. "Liminal movement by digital platform‐based sharing economy ventures: The case of Uber Technologies," Strategic Management Journal, Wiley Blackwell, vol. 43(3), pages 447-475, March.
    45. Kerr, Jon & Coviello, Nicole, 2020. "Weaving network theory into effectuation: A multi-level reconceptualization of effectual dynamics," Journal of Business Venturing, Elsevier, vol. 35(2).
    46. Jimmy Huang & Ola Henfridsson & Martin J. Liu, 2022. "Extending Digital Ventures Through Templating," Information Systems Research, INFORMS, vol. 33(1), pages 285-310, March.
    47. Khan, Muhammad Zubair & Khan, Zafir Ullah & Hameed, Affan & Zada, Shehnaz Sahib, 2021. "On the upside or flipside: Where is venture capital positioned in the era of digital disruptions?," Technology in Society, Elsevier, vol. 65(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Peng Chen & Zhenjun Yan & Pengfei Wang, 2023. "How can the Digital Economy Boost the Performance of Entrepreneurs? A Large Sample of Evidence from China’s Business Incubators," Sustainability, MDPI, vol. 15(7), pages 1-24, March.
    2. Yáñez-Valdés, Claudia & Guerrero, Maribel & Barros-Celume, Sebastián & Ibáñez, María J., 2023. "Winds of change due to global lockdowns: Refreshing digital social entrepreneurship research paradigm," Technological Forecasting and Social Change, Elsevier, vol. 190(C).
    3. Santos, Susana C. & Liguori, Eric W. & Garvey, Erin, 2023. "How digitalization reinvented entrepreneurial resilience during COVID-19," Technological Forecasting and Social Change, Elsevier, vol. 189(C).
    4. Tobias Kollmann & Lucas Kleine-Stegemann & Katharina Cruppe & Christina Then-Bergh, 2022. "Eras of Digital Entrepreneurship," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 64(1), pages 15-31, February.
    5. Donbesuur, Francis & Zahoor, Nadia & Al-Tabbaa, Omar & Adomako, Samuel & Tarba, Shlomo Y., 2023. "On the performance of platform-based international new ventures: The roles of non-market strategies and managerial competencies," Journal of International Management, Elsevier, vol. 29(2).
    6. Weking, Jörg & Desouza, Kevin C. & Fielt, Erwin & Kowalkiewicz, Marek, 2023. "Metaverse-enabled entrepreneurship," Journal of Business Venturing Insights, Elsevier, vol. 19(C).
    7. Magnus Schückes & Tobias Gutmann, 2021. "Why do startups pursue initial coin offerings (ICOs)? The role of economic drivers and social identity on funding choice," Small Business Economics, Springer, vol. 57(2), pages 1027-1052, August.
    8. Jinqiu He & Huiwen Su, 2022. "Digital Transformation and Green Innovation of Chinese Firms: The Moderating Role of Regulatory Pressure and International Opportunities," IJERPH, MDPI, vol. 19(20), pages 1-21, October.
    9. Zahoor, Nadia & Zopiatis, Anastasios & Adomako, Samuel & Lamprinakos, Grigorios, 2023. "The micro-foundations of digitally transforming SMEs: How digital literacy and technology interact with managerial attributes," Journal of Business Research, Elsevier, vol. 159(C).
    10. Chenglei Xu & Shuxin Zhu & Boru Yang & Bin Miao & Yi Duan, 2023. "A Review of Policy Framework Research on Promoting Sustainable Transformation of Digital Innovation," Sustainability, MDPI, vol. 15(9), pages 1-26, April.
    11. Francisco Olmo-García & Fernando Javier Crecente-Romero & María Teresa Val-Núñez & María Sarabia-Alegría, 2023. "Entrepreneurial activity in an environment of digital transformation: an analysis of relevant factors in the euro area," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-10, December.
    12. Per Davidsson, 2023. "Making contributions: personal reflections from the co-creative evolution of entrepreneurship research," Small Business Economics, Springer, vol. 61(4), pages 1391-1410, December.
    13. Ancillai, Chiara & Sabatini, Andrea & Gatti, Marco & Perna, Andrea, 2023. "Digital technology and business model innovation: A systematic literature review and future research agenda," Technological Forecasting and Social Change, Elsevier, vol. 188(C).
    14. Balcerzak, Adam P. & Zinecker, Marek & Skalický, Roman & Rogalska, Elżbieta & Doubravský, Karel, 2023. "Technology-oriented start-ups and valuation: A novel approach based on specific contract terms," Technological Forecasting and Social Change, Elsevier, vol. 197(C).
    15. Jinkai Liang & Ke Du & Dandan Chen, 2023. "The Effect of Digitalization on Ambidextrous Innovation in Manufacturing Enterprises: A Perspective of Empowering and Enabling," Sustainability, MDPI, vol. 15(16), pages 1-23, August.
    16. Maria Elisavet Balta & Thanos Papadopoulos & Konstantina Spanaki, 2024. "Business model pivoting and digital technologies in turbulent environments," Post-Print hal-04513406, HAL.
    17. Zahra, Shaker A. & Liu, Wan & Si, Steven, 2023. "How digital technology promotes entrepreneurship in ecosystems," Technovation, Elsevier, vol. 119(C).
    18. Zhu, Xiumei & Li, Yue, 2023. "The use of data-driven insight in ambidextrous digital transformation: How do resource orchestration, organizational strategic decision-making, and organizational agility matter?," Technological Forecasting and Social Change, Elsevier, vol. 196(C).
    19. Bejjani, Melissa & Göcke, Lutz & Menter, Matthias, 2023. "Digital entrepreneurial ecosystems: A systematic literature review," Technological Forecasting and Social Change, Elsevier, vol. 189(C).
    20. Emilia Herman, 2022. "The Interplay between Digital Entrepreneurship and Sustainable Development in the Context of the EU Digital Economy: A Multivariate Analysis," Mathematics, MDPI, vol. 10(10), pages 1-28, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:tefoso:v:203:y:2024:i:c:s0040162524001343. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.sciencedirect.com/science/journal/00401625 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.