Two's company, three's a crowd: The impact of corporate venture capital unit's investment partners on the corporate investor's innovation performance

2021 ◽  
Author(s):  
Ruling Zhang ◽  
Killian J. McCarthy ◽  
Xiao Wang
Keyword(s):  
Venture Capital ◽  
Innovation Performance ◽  
Corporate Venture Capital ◽  
Corporate Venture ◽  
The Impact

Corporate venture capital program autonomy, corporate investors’ attention and portfolio diversification

2016 ◽  
Vol 9 (3) ◽  
pp. 302-321 ◽  
Author(s):  
Yi Yang ◽  
Tianxu Chen ◽  
Lei Zhang
Keyword(s):  
Venture Capital ◽  
Negative Relationship ◽  
Portfolio Diversification ◽  
Corporate Venture Capital ◽  
Investment Portfolio ◽  
Content Type ◽  
Corporate Venture ◽  
Corporate Investors ◽  
The Impact ◽  
Linear Regressions

Purpose – From the attention-based view, the purpose of this paper is to examine how structural autonomy of a corporate venture capital (CVC) program influences its CVC managers’ investment decisions with regard to investment portfolio diversification. Design/methodology/approach – This study collects data from VentureXpert, Compustat, and the US Patent Office. The final sample consists of 868 CVC portfolio-year observations from 1990 to 2004. Panel linear regressions and hierarchical linear regressions are used in the analysis. Findings – The major finding of this study reveals that that structural autonomy of a CVC program is significantly related to its investment portfolio diversification. In addition to the direct effect, the authors also find that CVC structure autonomy moderates the relationship between corporate investor’s strategic attention and its CVC portfolio diversification. Specifically, when the autonomous level of a CVC program is high, the negative relationship between its parent’s relative growth potentials and CVC portfolio diversification will become positive, and the positive relationship between its parent’s business diversification and CVC portfolio diversification will become negative. Originality/value – The CVC literature has suggested the impact of CVC portfolio diversification on value creation for corporate investors (e.g. Yang et al., 2014), however, few studies have investigated why some corporate investors diversify their portfolio of venture companies while others do not. To fill such a gap, this study identifies antecedents of CVC portfolio diversification such as CVC structural autonomy and corporate investor’s strategic attention as well as their interactive impacts. The finding also provides valuable managerial implications on CVC program designs.

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