Impact of Venture Capital Institutions' Social Networks on the Innovation Performance of Invested Companies

Innovation is an important issue for the overall development of China. We analyzed listed companies supported by venture capital institutions to explore the impact of network embeddedness of venture capital institutions on innovation performance. Social network theory was used to construct an investment network between venture capital institutions and invested companies based on investment events from January 2001 to July 2020. We applied social network and multiple regression analysis approaches and found that the network embeddedness of venture capital institutions has a significant negative impact on the innovation of invested companies. We also found that the reputation of venture capital institutions, the industry of the invested companies, and the network mode of venture capital all affect the relationship between the embeddedness of venture capital institutions and the innovation performance of the invested companies. This work suggests strategies for venture capital institutions to better promote innovation based on network embeddedness.