Aspirations, Innovation, and Corporate Venture Capital: A Behavioral Perspective

42 Pages Posted: 7 Dec 2011

See all articles by Vibha Gaba

Vibha Gaba

INSEAD Entrepreneurship and Family Enterprise

Shantanu Bhattacharya


Date Written: December 6, 2011


Corporate venture capital (CVC) is increasingly viewed as an important mechanism for external R&D that can help fuel innovation, growth, and strategic renewal opportunities for established firms. However, despite the popularity of CVC units, the conditions prompting decision-makers to adopt and retain such units are not well understood. In this study, we examine when and why firms pursue CVC units to tap external markets for new ideas and technologies. We draw insights from the behavioral theory of the firm to argue that innovation performance relative to aspirations is a crucial driver of its decision to pursue CVC units, and we test our arguments by examining both the adoption and termination of CVC units for a sample of firms in the information technology sector during the period 1992–2003. Results show that a firm is more likely to adopt and less likely to terminate a CVC unit when its innovation performance is closets to its aspiration levels. Furthermore, innovation performance relative to social rather than historical aspirations is a better predictor of CVC adoption and termination. This study contributes to the technology entrepreneurship literature by demonstrating that managerial aspirations for innovation-related goals are an important driver of CVC initiatives within firms.

Suggested Citation

Gaba, Vibha and Bhattacharya, Shantanu, Aspirations, Innovation, and Corporate Venture Capital: A Behavioral Perspective (December 6, 2011). INSEAD Working Paper No. 2011/126/OB/TOM, Available at SSRN: or

Vibha Gaba (Contact Author)

INSEAD Entrepreneurship and Family Enterprise ( email )

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Shantanu Bhattacharya


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