Paths and Mechanism for Venture Capital Promoting Innovation
Venture capital promoting innovation has been accepted as a conclusion in many articles. But little has been contributing to the disclosure of paths and mechanism for venture capital promoting innovation. This paper is to examine the definition and characteristics of innovation and venture capital, analyze their internal relationship and locate the path for venture capital work on innovation. Innovation is a comprehensive process involving technology, organization, trade and finance with high risk and high reward. Lots of studies told that the main innovators are small businesses. But there are many obstacles for small businesses to commercialize their innovative products as a result of asymmetric information. Venture capital is money provided by professionals who invest alongside management in young, rapidly growing companies that have the potential to develop into significant economic contributors. Generally venture capital assist in the development of new products or services and take higher risks with the expectation of higher rewards, which is in accordance with innovation. Therefore venture capital play an active role in small businesses growing up and resulting innovation. But venture capitalists focus on high profits from commercializing innovative products rather than innovation itself. They put little money in companies at the seed stage and also at the mature stage. With their support, innovative products are transformed into merchandizes and innovators become entrepreneurs. High profits and satisfactory from commercializing innovative product encourage people deal with more technology innovation and build up more companies which bring prosperity in a nations economy. The reason for venture capital not other traditional financers promoting innovation is that venture capital has a set of unique operating mechanism, under which agent problems and moral hazard resulting from asymmetric information can be resolved efficiently. Under this mechanism, venture capital operates successfully and promotes innovative activities by ways of providing funds, setting up suitable organization and channeling information.
Venture Capital Innovation Mechanism and Paths.
LI Zhaohui Mannie Manhong LIU ZHU Liqun
Management Department, North China Institute of Science and Technology. Sanhe, Hebei, China School of Finance, Renmin University of China. Beijing, China Accounting Department, North China Institute of Science and Technology. Sanhe, Hebei, China
国际会议
The Fifth InternationalSymposium on Management of Technology(ISMOT07)(第五届技术与创新管理国际研讨会)
杭州
英文
1276-1280
2007-06-01（万方平台首次上网日期，不代表论文的发表时间）