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Journal of Financial and Quantitative Analysis Vol. 60 No. 1 2025

Corporate Venture Capital and Firm Scope

Y. Zhang

Peking University HSBC Business School

Abstract

This study examines whether and how corporate venture capital (CVC) spurs changes in firm scope. Using two text-based measures of firm scope, I provide evidence that CVC investments are strongly correlated with subsequent changes in firm scope among CVC parent firms, including seeding emerging businesses and creating new segments or divisions. Further evidence is consistent with an experimentation view, with more promising ventures having a stronger strategic impact on the scope changes of parent firms. Moreover, the study finds that post-CVC scope changes are primarily built internally and rarely involve killer acquisitions. These changes create value for CVC parents.

DOI
10.1017/s0022109023001370
Volume
60
Issue
1
Pages
336-373
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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