Corporate Entrepreneurship: Nothing Ventured, Nothing Gained?
28 Pages Posted: 25 Nov 2008
Date Written: August 2004
Recent literature has suggested that adopting elements of the organization of independent venture capital (VC) firms may enhance the performance of corporate venture (CV) units (Chesbrough, 2000; Sahlman, 1990). This assertion has only been subject to minimal empirical research: typically restricted to small-sample qualitative studies or to examining the respective influences of independent VC firms and CV units on the performance of portfolio firms (Gompers & Lerner, 1998; Maula & Murray, 2001).
A longitudinal survey of 95 CV units across three continents found mixed empirical support for the suggestion. Of the VC structures and practices investigated, strongest support was found for CV unit engagement with the VC community which was consistently associated with superior corporate venturing performance along both strategic and financial dimensions. VC-like equity-based compensation systems were not found to influence CV performance even where CV units were strongly focused on financial goals. Overall, the adoption of VC practices, partially mediated by venture unit performance, was positively associated with CV unit survival. These results suggest that selective adoption of elements of the VC model may enhance CV unit performance and survival.
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