Government venture capital and innovation performance in alternative energy production: The moderating role of environmental regulation and capital market activity

Du, Qunyang; Li, Zhongyuan; Du, Min; Yang, Tianle

Abstract

Energy shortages and environmental concerns have prompted governments to focus on alternative energy production innovation. Although studies examine the association between government venture capital and green innovation, there remains a gap in understanding how the different characteristics of government venture capital affect innovation. This study examines the effects of government venture capital on the innovation performance of alternative energy production. Using negative binominal regression and system generalised method of moments models with data from 30 provinces in China for the period spanning from 2003 to 2019, we find that government venture capital exerts an inverted U-shaped effect on the innovation performance of alternative energy production. In addition, environmental regulation strengthens this inverted U-shaped effect, while capital market activity alleviates it. Moreover, we confirm that government venture capital affects alternative energy production innovation through the R&D investment channel. Our study enriches the resource-based view, agency theory and the institution-based view by shedding light on how the different characteristics of government venture capital affect alternative energy production innovation. The findings suggest that policymakers should strike a balance between government intervention and market mechanisms.

Citation

Du, Q., Li, Z., Du, M., & Yang, T. (2024). Government venture capital and innovation performance in alternative energy production: The moderating role of environmental regulation and capital market activity. Energy Economics, 129, Article 107196. https://doi.org/10.1016/j.eneco.2023.107196

• Journal Article Type: Article
• Acceptance Date: Nov 12, 2023
• Online Publication Date: Nov 22, 2023
• Publication Date: 2024-01
• Deposit Date: Jan 23, 2024
• Publicly Available Date: Nov 23, 2025
• Journal: Energy Economics
• Print ISSN: 0140-9883
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 129
• Article Number: 107196
• DOI: https://doi.org/10.1016/j.eneco.2023.107196
• Keywords: Alternative energy production innovation, Government venture capital, R&D investment, Environmental regulation, Capital market activity
• Public URL: http://researchrepository.napier.ac.uk/Output/3491352