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A tale of dual institutional logics: the impact of government venture capital involvement on SMEs’ green innovation performance

Author

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  • Qingyun Lu
  • Rui Shen

Abstract

We examine the impact of government venture capital (GVC) on the green innovation of small and medium-sized enterprises (SMEs) by simultaneously considering the state and market logics embedded in GVC firms. Drawing on a longitudinal analysis of VC-backed SMEs in China over 2009–2019, we find that SMEs with GVC backing demonstrate superior green innovation performance compared to those purely backed by independent venture capital (IVC) firms. Furthermore, we find that this positive relationship between GVC involvement and green innovation is weakened by regional political uncertainty and the presence of IVC firms. Our study contributes to the literature on the financing of green innovation by highlighting how GVC firms’ distinct state logic helps overcome the barriers to funding and nurturing SMEs’ green innovations. We also advance the GVC literature by revealing how institutional logics interact with regional institutional environments to facilitate SMEs’ green innovations.

Suggested Citation

  • Qingyun Lu & Rui Shen, 2026. "A tale of dual institutional logics: the impact of government venture capital involvement on SMEs’ green innovation performance," Venture Capital, Taylor & Francis Journals, vol. 28(2-3), pages 307-332, July.
    • Handle: RePEc:taf:veecee:v:28:y:2026:i:2-3:p:307-332
    DOI: 10.1080/13691066.2025.2539752
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