Transferability of the Venture Capital Model to the Corporate Context: Implications for the Performance of Corporate Venture Units
Strategic Entrepreneurship Journal, Vol. 3, No. 1, pp. 3-27
Posted: 2 Sep 2008 Last revised: 29 Apr 2009
Date Written: March 1, 2009
While recent literature has advocated the transfer of venture capital (VC) practices and structures to corporate venture (CV) units, the wisdom of this advice has not been subject to rigorous empirical scrutiny. We test the implications of the VC model for CV unit performance using a longitudinal database combining survey, archival and survival data on 95 CV units. VC model elements of high-powered incentives, autonomous organization, investment syndication, investment staging, and specialization were each associated with higher CV unit performance. Critically, different elements of the VC model predicted improvements in either strategic or financial performance in CV units. Survival of the CV unit was strongly associated with employing the VC model, partially mediated by enhanced performance.
Keywords: Corporate venture unit, Venture capital, Financial performance, Strategic performance, Survival, Practice transfer
JEL Classification: D21, G24, M13, M21, O32
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