scholarly journals Firm Structure and Environment as Contingencies to the Corporate Venture Capital-Parent Firm Value Relationship

2018 ◽  
Vol 42 (3) ◽  
pp. 498-522 ◽  
Author(s):  
Varkey K. Titus ◽  
Brian S. Anderson
Keyword(s):  
Venture Capital ◽  
Firm Value ◽  
Contingency Theory ◽  
Corporate Venture Capital ◽  
Research Model ◽  
Firm Structure ◽  
Parent Firm ◽  
Investment Opportunities ◽  
Corporate Venture ◽  
Selection Of

Corporate venture capital (CVC) is a valuable strategic tool associated with numerous innovative outcomes. However, less is known about whether CVC investing creates value for the investing (or parent) firm. Drawing from the attention–based view and contingency theory, we suggest that an increase in firm value from CVC investing is contingent on attentional mechanisms that discipline the selection of new investment opportunities. We posit that increases in firm value associated with CVC investing accrues to firms adopting specific operational structures and operating in particular environmental contexts. We find support for our research model in a sample of 95 companies between 2000 and 2008.

scholarly journals The effects of corporate venture capital on value creation and innovation of European public owned firms

2021 ◽  
Vol 18 (4) ◽  
pp. 117-133
Author(s):  
Giacomo Bider ◽  
Gimede Gigante
Keyword(s):  
Venture Capital ◽  
Value Creation ◽  
Firm Value ◽  
Corporate Venture Capital ◽  
Listed Firms ◽  
The North ◽  
European Public ◽  
Negative Effect ◽  
Corporate Venture ◽  
And Performance

The practice of corporate venture capital (CVC) has been widely adopted by corporations that invest in highly disruptive start-ups with the aim of fueling innovation and gain strategic advantages. Even if a wide consensus exists on the strategic benefits and performance of CVC investors in the North American venture capital industry, scarce information is available on the European CVC ecosystem. Therefore, the scope of this research is to investigate whether CVC activity, measured as the number of investments, deal size, and the number of realized exits is beneficial for value creation and innovation for European listed companies. Using a panel of CVC investors linked to European listed firms, it is found evidence that CVC activity creates firm value in the period under consideration (2008–2019), confirming North American’s past evidence. Surprisingly, exits convey a negative effect on firm value, suggesting that CVC performance may not be satisfactory enough. Moreover, when considering innovation, evidence is presented that investing in rounds with a higher deal size positively affects investor’s patenting levels, indicating that the later the start-up’s stage in its life cycle, the higher the possibility for the CVC investor to effectively absorb its technology. The relationship is true also for lagged CVC activity, confirming deferred effects on innovation demonstrated on US companies. The findings shed light on the European CVC ecosystem and give room for additional research on CVC investors’ exit performance and co-investors’ benefits on patenting levels

A framework for screening and portfolio selection in corporate venture capital

2020 ◽  
Vol 37 (3) ◽  
pp. 475-495
Author(s):  
Tim Alexander Herberger ◽  
Felix Reinle
Keyword(s):  
Venture Capital ◽  
Portfolio Selection ◽  
Peer Group ◽  
Corporate Venture Capital ◽  
Decision Criteria ◽  
Theoretical Frameworks ◽  
Screening Process ◽  
Content Type ◽  
Corporate Venture ◽  
Selection Of

Purpose The purpose of this paper is to outline and demonstrate a method for screening and selection of potential portfolio companies (PCs) during the screening phase in corporate venture capital. Design/methodology/approach The use of the data envelopment analysis (DEA) enables the consideration of individual, heterogeneous and multidimensional decision criteria in portfolio selection and the preceding screening process by the investor. Findings The result of this method is a relative ranking of the PCs, with all the PCs considered serving as peer group. A weighting of individual criteria is not necessary because it is part of the functionality of DEA. The authors validate the proposed approach in a case study and show that it can be well combined with other models and theoretical frameworks. Practical implications The method is particularly useful in two cases. First, if a highly specialized investor wishes to use a variety of individual selection criteria for portfolio selection. Second, if an investor only has insufficient (financial) data on potential PCs, but still wants to make a (pre-) selection based on observable (qualitative) characteristics. This model helps to make consistent, intersubjectively comprehensible decisions based on valid decision criteria and helps to optimize the decision-making process in the context of portfolio selection in CVC. Originality/value This method allows the systematic selection of an attractive group from a large number of potential PCs, based on observable characteristics and taking into account individual strategic investment objectives, without having to make assumptions about underlying distributions or weights of decision criteria.

scholarly journals Moderating Factors in Distant Investment of Corporate Venture Capital

2019 ◽  
Vol 5 (1) ◽  
pp. 19 ◽  
Author(s):  
Shinhyung Kang ◽  
JungTae Hwang
Keyword(s):  
Venture Capital ◽  
Target Selection ◽  
Corporate Venture Capital ◽  
Information Cost ◽  
Business Units ◽  
Moderating Factors ◽  
Corporate Venture ◽  
Venture Capital Firms ◽  
Selection Of

The role of venture capital as mediator and gatekeeper is well acknowledged and geographical barriers for open innovation have been questioned, but venture capital firms’ distant investments have been investigated only rarely. The strategic benefits accrued from corporate venture capital (CVC) investment depend on the selection of target ventures. Prior research, however, overlooked the incurred information cost for identifying a potential target. Considering that innovative ventures often reside in distant locations, this paper aims to investigate what factors alleviate the information cost for CVCs when identifying target ventures in distant locations. We expect a CVC’s target selection in distant locations will be limited to the ventures under a tight appropriability regime, ventures within the same industries as a CVC’s business units, and ventures with pre-existing investors that a CVC has prior ties with. The hypotheses are tested with the data on CVC investments in the U.S. between 2006 and 2013. The results empirically support the hypotheses.

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