Investigating the interactive effects between venture capital and urban innovation capabilities: New evidence from a spatial simultaneous equations model

This study analyzed the spatial interaction between venture capital and urban innovation capacity by constructing a spatial simultaneous equation involving 284 cities in China. The results show that venture capital and urban innovation capacity can promote each other. Improvement in the innovation ability of neighboring cities will promote the growth of urban innovation capacity and level of venture capital in the region, while the level of venture capital in the neighboring cities shows a considerably inhibition effect. Heterogeneity analyses show that the spatial spillover effects of venture capital and urban innovation capacity vary significantly by city attributes.