The Implications of the Structural Choice of CVC Units on the Incumbent's Innovativeness

Anna-Lena Sajdak & Jan Felix Brümmer

Student thesis: Master thesis

Abstract

By highlighting the importance of the relationship between incumbents and venture firms for the generation of economic rents, we explore the often-disregarded aspect of the structural setup of corporate venture capital (CVC) programs and their influence on the investor’s knowledge creation. We examine the relationship of the corporation with venture firms in the rent-generation process to answer our research question on how the structural choice of CVC units influences the degree of innovativeness of incumbents. To do so, we abstract the totality of structural characteristics into two distinct legal forms, namely internal and external CVC units. We empirically investigate their association with their parent organizations’ level of knowledge creation by developing a model for the relational rent-generation for CVC activities. A quantitative analysis of 477 global CVC units with data from 1985 to 2015 does not find evidence on superiority of one specific structural mode but reveals that the investment experience significantly moderates the relationship between unit structure and innovativeness. Our mixed results emphasize the complexity of the structural design of CVC programs by highlighting shortcomings of the employed categorization based on the legal structure and thus unveils the need for future research for a better understanding of the underlying dynamics.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2020
Number of pages185
SupervisorsFrancesco Di Lorenzo