← Search

Management Science Vol. 54 No. 3 2008

Corporate Venturing, Allocation of Talent, and Competition for Star Managers

Jean-Etienne de Bettignies1; Gilles Chemla2

1 Queen's School of Business, Queen's University, Kingston, Ontario K7L 3N6, Canada · 2 Imperial College London, DRM-CNRS; and CEPR, Tanaka Business School, Imperial College London, South Kensington Campus, London SW7 2AZ, United Kingdom

open access

Abstract

We provide new rationales for corporate venturing, based on competition for talented managers. As returns to venturing increase, firms engage in corporate venturing for reasons other than capturing these returns. First, higher venturing returns increase managerial compensation, to which firms respond by increasing incentives. Managers increase effort, prompting firms to reallocate them to new ventures, where the marginal product of effort is highest. Second, as returns to venturing become large, corporate venturing emerges as a way to recruit/retain managers who would otherwise choose alternative employment. We derive several testable empirical predictions about the determinants and structure of corporate venturing.

DOI
10.1287/mnsc.1070.0758
Volume
54
Issue
3
Pages
505-521
Language
en
Sources
bibtex:phds-export.bib openalex crossref

Cite