When do incumbents learn from entrepreneurial ventures?

In this paper, we focus on the potential innovative benefits to corporate venture capital (CVC), i.e. equity investments in entrepreneurial ventures by incumbent firms. We propose that corporate venture capital programs may be instrumental in harvesting innovations from entrepreneurial ventures and...

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Bibliographic Details
Published in:Research policy 2005-06, Vol.34 (5), p.615-639
Main Authors: Dushnitsky, Gary, Lenox, Michael J.
Format: Article
Language:English
Subjects:
Appropriability
Corporate venture capital
Innovation
Technology entrepreneurship
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Summary:In this paper, we focus on the potential innovative benefits to corporate venture capital (CVC), i.e. equity investments in entrepreneurial ventures by incumbent firms. We propose that corporate venture capital programs may be instrumental in harvesting innovations from entrepreneurial ventures and thus an important part of a firm's overall innovation strategy. We hypothesize that these programs are especially effective in weak intellectual property (IP) regimes and when the firm has sufficient absorptive capacity. We analyze a large panel of public firms over a 20-year period and find that increases in corporate venture capital investments are associated with subsequent increases in firm patenting.
ISSN:0048-7333
1873-7625
DOI:10.1016/j.respol.2005.01.017