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Do VC Firms of Different Ownership Structures Exert Heterogeneous Impact on the SMEs’ Profitability?

Xi Yang, Su-Sheng Wang


This article is to investigate the heterogeneous effect of Venture Capital?VC, in abbreviated form?on the profitability performance of small and medium sized enterprises (SMEs, in abbreviated form) in China, from the perspective of VC firms’ different ownership structures. Our regression results show that the Chinese entrepreneurial firms backed by VC firms can present significantly positive superiority over the non VC backed peers in the performance of profitability; the VC firms can exert the positive impact on the profitability performance of the SMEs. After focusing on the VCs’ characteristics in the ownership structures, it is proven that the foreign VC firms can have the strongest positive impact on the ventures’ profitability performance; the Chinese private VC firms can have the positive impact on the SMEs’ profitability, but the impact is weaker than that of foreign VCs and stronger than that of governmental VC in a positive way; the governmental VC firms exert the significantly negative effect on the ventures’ profitability.


Venture capital; SMEs; Ownership Structures; Profitability

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