When do incumbents learn from entrepreneurial ventures?: Corporate venture capital and investing firm innovation rates

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:
Correlation analysis
Enterprises
Entrepreneurs
Entrepreneurship
Innovation
Innovations
Intellectual property
Investment
Investment policy
Policy studies
Science and technology
Studies
Venture capital
Venture capital companies
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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. [PUBLICATION ABSTRACT]
ISSN:0048-7333
1873-7625
DOI:10.1016/j.respol.2005.01.017