Review of Financial Studies Vol. 33 No. 1 2020
The Life Cycle of Corporate Venture Capital
Abstract
This paper investigates why industrial firms conduct Corporate Venture Capital (CVC) investment in entrepreneurial companies. I test alternative views on CVC by exploiting the entry, investment, and termination decisions of CVC divisions. CVC entry concentrates in firms that experience deteriorations of internal innovation. At the investment stage, CVCs select startups with a similar technological focus but that have a non-overlapping knowledge base, and they integrate technologies generated from these ventures that create strategic value. CVCs are terminated when parent firms’ innovation recovers. Overall, the strategic desire to fix innovation weaknesses after adverse shocks motivates firms to adopt CVCs. Received November 15, 2017; editorial decision March 2, 2019 by Editor Francesca Cornelli.
- DOI
- 10.1093/rfs/hhz042
- Volume
- 33
- Issue
- 1
- Pages
- 358-394
- Language
- en
- Sources
- bibtex:phds-export.bib crossref openalex