Corporate Venture Capital: An Empirical Investigation of Innovation-Related Factors Influencing European Corporates in selecting Internal or External Corporate Venture Capital Units

Abstract

In the dynamic landscape of venture capital (VC), corporate venture capital (CVC) has emerged as a pivotal strategy for non-financial firms aiming to invest in innovation through startups. This thesis examines the structural choices (internal vs. external) made by European corporations when establishing CVC units. A subject that remains underexplored despite its potential significance. Our final sample includes 189 European corporations with active CVC units from 2000-2022, resulting in a panel dataset of 4,347 observations, 1,754 of which are active CVC units. This thesis utilizes an empirical model that incorporates quantitative data, including financial metrics and patent information from the parent company, alongside venture investment data from both the parent company and its CVC unit. The findings reveal that innovation-related factors such as absorptive capacity, value of patents & innovation, and industry patent protection could influence the structural setup of a CVC unit. However, the lack of statistical significance in determining these effects, suggests that other factors could influence how European corporations structure their CVC units. The insights gathered from this study not only deepen academic knowledge but also offer guidance for European corporations considering how their CVC unit should be structured based on innovation-related factors.