Parent firm

: baby venture relationship in the Corporate Venture Capital activity : firm structure and environment as contingencies

Abstract

The steady growth of Corporate Venture Capital (CVC) activities demonstrates the importance for companies to continuously create innovations to sustain and increase competitive advantages. Gaining access to external sources of knowledge from entrepreneurial initiatives by using CVC investments compliments the internal R&D sourcing. Focusing on U.S listed parent firms of CVC units, this dissertation explores the impact of industry and firm-specific factors on CVC investment activity in high technology industries, as well as related effects on the company value. I employ a U.S American panel dataset for the period from 2000 to 2020 consisting of 2.678 firm-year observations. Using the aggregate count of investments conducted as CVC activity,I find that higher absorptive capacity leads to significantly higher CVC activity. Conversely, I cannot find a significant relationship between environmental munificence and CVC activity. Moreover, I present evidence that firms which pursue CVC activities experience value creation and find that that parent firm value increases among firms making CVC investments that are operationally diffuse and operate in high munificent environments as well as for firms with a concentrated operational structure in low munificent environments. This study illustrates that managers should be aware of these effects when deciding to invest in entrepreneurial ventures with the strategic intentions to source for innovations.

Date of Award	30 Jun 2021
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Fátima Shuwaikh (Supervisor)