Innovation under dual logics: how private and government venture capital shape the innovation-high growth trajectory of SMEs in emerging economies

Innovation is widely viewed as a key driver of small and medium-sized enterprises’ (SMEs) development. However, this relationship may take a different form in developing economies, where SMEs face sharper resource constraints and regulatory uncertainty. These conditions make the conversion of innovation into high growth more institutionally contingent. Meanwhile, although prior studies have widely emphasized the benefits of external equity capital, they have paid limited attention to the institutional requirements imposed by different investors, which may diverge or even conflict. Drawing on the institutional logics perspective, this study examines how private venture capital (PVC) and government venture capital (GVC), as carriers of the market logic and state logic respectively, moderate the relationship between innovation and Chinese SMEs’ high growth. We find that innovation significantly promotes SMEs’ high growth, and that both PVC and GVC strengthen this effect. However, the joint presence of PVC and GVC does not generate additional gains. These findings enrich research on SME high growth in developing economies and offer practical implications for managers and policymakers seeking to support innovation-driven growth.