Strategic information sharing between ventures and CVCs during socialization: The importance of active investors in weak IP regimes

Abstract

Information sharing between corporate venture capital (CVC) investors and ventures is beneficial for both parties. By sharing information, ventures can optimize their resource access and CVCs can optimize their investments. However, when ventures share information, they risk misappropriation. We use the resource dependence theory to hypothesize that the probability to share new information during the socialization process is lower if there is business overlap between the venture and the CVC’s parent. We argue that active investors mitigate this negative effect. Their role is particularly relevant in economies where ventures face institutional voids due to weak IP regimes. Using more than 800 observations of some 300 ventures in the ICT industry in Europe and Latin America, we find empirical support for active investors filling institutional voids in countries with a weak IP regime.

Keywords: Strategic information sharing; early stage ventures; corporate venture capital, resource dependence theory; IP regime; institutional voids

JEL Classification: G24, M13, O34