The current economy is at a critical point in the transformation from factor-driven pattern to innovation-driven pattern, and innovation capability has become a new standard to measure the level of economic development of a country. In recent years, China′s innovation capacity has continued to grow. And as an important carrier for implementing innovation activities, enterprises have been widely concerned about the improvement of their innovation capacity and the growth of investment in innovation. As an important player in China′s economic activities, the investment in innovation of private enterprises is directly related to whether China can fully realize industrial upgrading and high-quality development. However, according to the research and analysis report of China′s top 500 private enterprises, among the top 500 private enterprises in 2020, 62 enterprises have the R&D intensity of more than 3%, and 7 enterprises have that of more than 10%. It can be seen that China′s private enterprises lack a strong sense of innovation. And 80% of China′s private enterprises are family enterprises, an important part of private enterprises. They are of indispensable importance in the development of the national economy. It can be further inferred that the innovation problem of private enterprises is to a large extent the innovation problem of family enterprises. Therefore, there is an urgent need to find the crux of inhibiting the investment in innovation of family enterprises. Due to China′s credit market condition, the size of enterprises and the different financial institutions chosen can lead to different costs and efficiency of financial services. This will undoubtedly reduce the scope and amount of financing, affecting the investment in innovation of family enterprises. Therefore, financing is very important for family companies to invest in innovation. In addition, the business environment has received wide attention in recent years. It is closely related to enhancing the core competitiveness of regional development and stimulating regional innovation vitality. Therefore, the business environment and financing structure are important factors affecting the investment in innovation of family enterprises. 

      This paper takes 506 family enterprises during 2015-2018 as the research sample and uses panel regression models to explore the impact of different financing structures on family enterprises′ investment in innovation. The moderating role of business environment in the relationship between financing structure and family enterprises′ investment in innovation is also explored. The threshold model is also introduced to further discuss the differences in the impact of equity financing and debt financing on the investment in innovation of family enterprises under different business environment. It provides a reasonable reference for the innovation development of family enterprises for decision making.

      The main findings of this study are as follows: first, the impact of different financing methods on family enterprises′ investment in innovation is different. Equity financing is beneficial to the increase of family enterprises′ investment in innovation, while debt financing plays the opposite effect. For family enterprises, equity financing is more consistent than debt financing for firms to enhance their investment in innovation. Second, after adding the business environment factor, we find that there is a significant positive moderating effect of business environment in the relationship. On firms′ investment in innovation, a good business environment is conducive to enhancing the promotion effect of equity financing, and weakening the inhibiting effect of debt financing. Third, further analysis of the threshold effect reveals that the moderating effect is not significant when the level of business environment is low. When the business environment is relatively perfect, the business environment can play its positive moderating role in the relationship between equity financing, debt financing and investment in innovation.

        Finally, by combining the findings of this study, the author of this paper makes the following policy recommendations: first, the government needs to switch its functions. An orderly competition and perfect business environment is needed to alleviate the problem of difficult and high cost of enterprise financing, and guide more capital into the innovation field, such as improving the financing guarantee system; providing risk compensation and rule of law protection for financial institutions and stakeholders; building an all-round financial support system and a multi-level banking service system, and creating an effective risk identification and sharing mechanism as well as an information sharing mechanism among financial institutions. Second, family enterprises can moderately increase external financing, actively develop financing channels, adopt various financing methods to obtain funds for innovation projects and support investment in the innovation of enterprises.