Corporate Venturing, Allocation of Talent, and Competition for Star Managers

40 Pages Posted: 5 Dec 2003

See all articles by Jean-Etienne de Bettignies

Jean-Etienne de Bettignies

Queen's University - Smith School of Business

Gilles Chemla

Imperial College Business School; CNRS ; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: November 20, 2007

Abstract

We provide new rationales for corporate venturing (CV), based on competition for talented managers. As returns to venturing increase, firms engage in CV for reasons other than capturing these returns. First, higher venturing returns increase managerial compensation, to which firms respond by increasing the power of incentives. Managers increase effort, prompting firms to reallocate them to new ventures, where the marginal product of effort is highest. Second, as returns to venturing become large, CV emerges as a way to recruit/retain managers who would otherwise choose alternative employment. We derive several testable empirical predictions about the determinants and structure of CV.

Keywords: corporate venture capital, venture capital, failure, competition, entrepreneur, manager

JEL Classification: G24, G32, M13, M12

Suggested Citation

de Bettignies, Jean-Etienne and Chemla, Gilles, Corporate Venturing, Allocation of Talent, and Competition for Star Managers (November 20, 2007). Sauder School of Business, The University of British Columbia, Forthcoming, Available at SSRN: https://ssrn.com/abstract=459427 or http://dx.doi.org/10.2139/ssrn.459427

Jean-Etienne De Bettignies (Contact Author)

Queen's University - Smith School of Business ( email )

Smith School of Business - Queen's University
143 Union Street
Kingston, Ontario K7L 3N6
Canada

Gilles Chemla

Imperial College Business School ( email )

South Kensington Campus
London SW7 2AZ, SW7 2AZ
United Kingdom
+44 207 594 9161 (Phone)
+44 207 594 9210 (Fax)

CNRS ( email )

Dauphine Recherches en Management
Place du Marechal de Lattre de Tassigny
Paris, 75016
France
331 44054970 (Phone)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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