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Driving sustainable transformation: How venture capital boosts corporate ESG performance through green innovation and financial constraint alleviation
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DOI：10.1016/j.jik.2026.101111.png)
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Abstract
En 中文
How can venture capital (VC), a key driver of business innovation, be channeled to foster corporate sustainability? This investigation unpacks the critical influence of VC on enhancing corporate environmental, social, and governance (ESG) performance—a key indicator of sustainable innovation. Analyzing Chinese non-financial A-share listed companies from 2009 to 2022, we demonstrate that VC significantly elevates ESG standards by unleashing green innovation and easing financing constraints, with VC time duration exerting a dynamic U-shaped moderating effect on this impact. This dual channel enables portfolio firms to overcome the principal barriers to ESG adoption. The effects are strategically contingent, revealing that the VC–ESG link is stronger for state-owned firms, those with diffuse ownership, and those facing heightened external uncertainty or regulatory pressure. We also demonstrate that different VC types specialize in distinct roles; for example, green VC syndicates excel across both channels, while state-backed VC predominantly accelerates green innovation. These findings crystallize VC’s function as a transmission belt for knowledge and innovation, not just capital. The research provides a nuanced framework for aligning investment strategies with sustainable outcomes and calls for further inquiry into VC’s influence on innovation-driven, resilient business models.
Keywords:
Venture capital
Corporate ESG performance
Financing constraints
Green innovation
G24
G34
M14
M41
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