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The power of market: Venture capital and enterprise digital transformation

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  • Peng, Huan
  • Bumailikaimu, Sulidan
  • Feng, Ting

Abstract

Driving the digital transformation of enterprises with the power of the capital market is a new key to comprehensively promoting the development of the digital economy. In this context, we investigate the impact of venture capital on the digital transformation of enterprises. Based on the data of A-share listed companies in Shanghai and Shenzhen from 2008 to 2022, we find that venture capital can promote digital transformation. State-owned and syndicated venture capital have more significant impacts on promoting digital transformation. In terms of the mechanism of action, venture capital plays three roles: financial assistance, governance empowerment, and capability support. It helps enterprises to obtain credit support and ease financing constraints, improve management efficiency and curb myopia, increase investment in R&D personnel and innovation output, and thus promote digital transformation. In addition, venture capital can enhance its value-added role through digital transformation and provide sufficient market incentives for it to promote digital transformation. Our study enriches the literature on venture capital and enterprise digital transformation and provides empirical reference for leveraging market forces to accelerate enterprise digital construction.

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  • Peng, Huan & Bumailikaimu, Sulidan & Feng, Ting, 2024. "The power of market: Venture capital and enterprise digital transformation," The North American Journal of Economics and Finance, Elsevier, vol. 74(C).
    • Handle: RePEc:eee:ecofin:v:74:y:2024:i:c:s1062940824001438
    DOI: 10.1016/j.najef.2024.102218
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    More about this item

    Keywords

    Venture capital; Enterprise digital transformation; Enterprise value;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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