Driving Green Technology Innovation in Renewable Energy: Does Venture Capital Matter?

Green technology innovation (GI) is a crucial means of reducing the cost of deploying renewable energy (RE) and enhancing its stability. With declining government subsidies for RE, the question of whether venture capital (VC) can serve as a new corporate financing model to stimulate the GI performance of RE firms is a subject that has received limited attention in the academic literature. Based on data from 107 RE-listed firms in China from 2011 to 2020, we aim to analyze the influence ofVConGI inChina's RE enterprises using a fixed-effects model. Our findings indicate that VC significantly enhances the GI performance of Chinese RE firms. VC contributes to increasing monetary capital, alleviating financing constraints, and strengthening the research and development (R&D) investments of enterprises, thereby indirectly promoting GI. The study also suggests that the incentive effect of VCon GI is amplified by the levels of corporate social responsibility, R&D subsidies, and environmental regulation. Additionally, heterogeneity tests suggest that nonstate-owned, large, and middle and upstream RE firms are more likely to benefit from the promotion impact of VC on GI. Finally, based on these research findings, we have proposed targeted policy recommendations and managerial implications to better leverage the role of VC in driving GI in the Chinese RE industry.