Abstract: Past research documents that corporations have two performance objectives for CVC investment; to win financial rewards, and to gain access to information about technologies, firms, and markets that is difficult to obtain through other channels.We draw on the strategic factor market and merger and acquisition literatures to explore the prospect that corporations may indeed have a third strategic motive to undertake CVC investment: To acquire the knowledge and skills needed to make strategically valuable acquisitions. Results lend strong support to our conjectures.

Abstract: Why do companies undertake the risk of investing in a venture entrepreneur? Extant literature on corporate venture capital (CVC) has not profoundly explored the drivers of this phenomenon. Former research on CVC, both on its antecedents and consequences, has been dominated by organizational learning theory. However, the sole focus on CVC as instrument for organizational learning has no strong argument and brought us inconsistent results. The purpose of this paper is to broaden the perspective of research on CVC. Our study argues that companies use corporate venture capital to pro-actively control the market they operate. Through the integration of extant literature on CVC and the findings of evolutionary economists, complemented with own qualitative research we present an alternative framework for the restrictive organizational learning perspective.

Abstract: This study examines the incidence and performance of spinouts relative to other types of new ventures by incorporating selection processes underlying the formation of spinouts. We exploit inter-industry heterogeneity in characteristics along with parent firms’ size and founder quality. Using a matched employer-employee dataset of new ventures covering 30 U.S. states, our evidence is broadly consistent with greater information asymmetry aiding spinouts formed in the same industry as parent firms, and capital intensity acting as an entry barrier to those spinouts. We also find evidence that that spinouts formed outside of parent-firm industries are founded by lower-earning founders, and those spinouts primarily enter low-end segments. Furthermore, incorporating selection appears to significantly affect the estimates of performance differences between spinouts and other types of new ventures.

Abstract: A spin-out happens when a former employee quits the parent company to start a new venture. Theories do not agree on whether the “spin-out entrepreneur” will start the company in the same market or in a different market with her innovative contribution.
We investigated a sample of 250 entrepreneurs and 120 spin-out companies to understand what led an entrepreneur or a group of founders to enter the same or different market. We also explored how knowledge can recombine in a multi-founders team.
Our results contribute to theory, suggesting that spin-out entrepreneurs usually move to different and innovative industries. Our evidence supports the positive effect of different experiences within the team that induce greater innovation.