The Search of Complementarity in Explorative Strategies: The Relationship between Corporate Venture Capital Investments and Corporate Diversification

31 Pages Posted: 13 Nov 2009

See all articles by Federico Munari

Federico Munari

University of Bologna - Department of Management

Laura Toschi

University of Bologna - Department of Management

Date Written: November 11, 2009

Abstract

This paper uses data on 221 Corporate Venture Capital (CVC) funds created by 186 U.S. public firms during the period 1996–2006 to examine the presence of complementarity/substitution between corporate diversification and CVC fund diversification as different forms of exploration. Our results suggest that corporations undertake CVC investments to substitute corporate diversification if the focus is to explore new markets, and complement corporate diversification in the search of new technological domains. We also find that these relationships are sensitive to industry-specific factors: in high-tech sectors the substitution effect for the market side vanishes and the technological complementary effect is amplified.

Keywords: Exploration, Corporate Venture Capital, Complementarity, Diversification, Portfolio Choices

JEL Classification: M13, D83, G11

Suggested Citation

Munari, Federico and Toschi, Laura, The Search of Complementarity in Explorative Strategies: The Relationship between Corporate Venture Capital Investments and Corporate Diversification (November 11, 2009). Available at SSRN: https://ssrn.com/abstract=1503987 or http://dx.doi.org/10.2139/ssrn.1503987

Federico Munari

University of Bologna - Department of Management ( email )

Piazza Scaravilli 1
Bologna, Bologna 40126
ITALY
051-2093954 (Phone)
051-2093949 (Fax)

Laura Toschi (Contact Author)

University of Bologna - Department of Management ( email )

Via Capo di Lucca, 34
40126 Bologna
Italy
00390512090214 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
126
Abstract Views
772
rank
236,324
PlumX Metrics