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The Effect of Corporate Venture Capital on Labor Income Share: Evidence from China

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  • Lanlan Sun

    (School of Economics and Management, Qingdao University of Science and Technology, Qingdao 266061, China)

  • Lu Zhang

    (School of Economics and Management, Qingdao University of Science and Technology, Qingdao 266061, China)

  • Shaolei Qu

    (School of Economics and Management, Qingdao University of Science and Technology, Qingdao 266061, China)

Abstract

This study examines the impact of corporate venture capital (CVC) on the labor income share of science and innovation enterprises, focusing on data from China’s Science and Technology Innovation Board (STIB) and Growth Enterprise Market (GEM) between 2010 and 2022. Empirical results reveal a significant inverted U-shaped relationship between CVC shareholding and the labor income share of invested firms. CVC increases the labor income share by enhancing corporate governance, encouraging digital transformation, and improving human capital quality, but this effect diminishes when CVC shareholding exceeds a certain threshold. The moderating role of media attention and the heterogeneity of this relationship across regions and financial conditions are further explored. Additionally, the study identifies a positive U-shaped connection between CVC shareholding and the corporate pay gap, highlighting CVC’s complex role in influencing income inequality within firms. This research contributes to the literature by unveiling the nonlinear effects of CVC on income distribution, offering new insights into its dual role in promoting innovation and equity. Practically, it provides actionable recommendations for firms to optimize CVC ownership and for policymakers to design targeted interventions that address regional and financial disparities. By bridging the gap between CVC investment strategies and labor income fairness, this study lays the foundation for a balanced approach to sustainable economic development.

Suggested Citation

  • Lanlan Sun & Lu Zhang & Shaolei Qu, 2025. "The Effect of Corporate Venture Capital on Labor Income Share: Evidence from China," IJFS, MDPI, vol. 13(2), pages 1-27, June.
    • Handle: RePEc:gam:jijfss:v:13:y:2025:i:2:p:100-:d:1671429
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    References listed on IDEAS

    as
    1. Brent Neiman, 2014. "The Global Decline of the Labor Share," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(1), pages 61-103.
    2. Bruno Decreuse & Paul Maarek, 2015. "FDI and the Labor Share in Developing Countries : A Theory and Some Evidence," Annals of Economics and Statistics, GENES, issue 119-120, pages 289-319.
    3. repec:oup:qjecon:v:129:y:2013:i:1:p:61-103 is not listed on IDEAS
    4. Joe, Jennifer R. & Louis, Henock & Robinson, Dahlia, 2009. "Managers’ and Investors’ Responses to Media Exposure of Board Ineffectiveness," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 44(3), pages 579-605, June.
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