In This Article Expand or collapse the "in this article" section Corporate Venture Capital

  • Introduction
  • A Review of the CVC Literature

Management Corporate Venture Capital
Gary Dushnitsky, Lei Yu
  • LAST MODIFIED: 25 April 2022
  • DOI: 10.1093/obo/9780199846740-0211


Corporate venture capital (CVC) is defined as an equity investment by an established corporation in privately held entrepreneurial ventures. The phenomenon involves the following players: the parent corporation; the corporate venture capital unit; and the entrepreneurial ventures. The corporation launches a CVC unit with the goal of realizing financial and/or strategic objectives. Through its investment in entrepreneurial ventures, the corporation deploys financial, technological, and managerial resources. From the venture’s perspective, CVC-backing is an important source not only for capital but also for advice and complementary assets. Finally, the CVC unit plays an important role of linking the incumbent corporation and entrepreneurial ventures. To that end, the CVC unit utilizes the parent corporation’s resources and knowledge to select and nurture ventures. The unit also helps the parent corporation to realize its financial and strategic objectives. The existing body of work offers various insights. There are studies that focus on the startups and others investigate the corporations that fund them, as well as the CVC units that are responsible for this activity. These studies underscore the antecedents to CVC investments and the consequences to the parent corporation. Similarly, extant works offer a nuanced understanding of startups’ decision to seek CVC-backing and the implications of that. A close reading of the CVC articles below also charts avenues for future work. For example, the interaction between CVC investments and other external venturing activities has received some attention yet there is an opportunity to further understand how does a firm choose among these options and further integrates among them. The structure and governance of CVC units is found to play a key role in shaping incumbents and startups outcomes, yet data limitation implies that systematic analysis is lacking. From the venture perspective, extant studies generate conflicted results regarding whether CVC-backing can improve ventures’ innovation and growth. Future works can further explore the benefits and costs of CVC-backing, and the net effects on ventures. Finally, it is important to note that the vast majority of the articles study CVC investments by US (and, sometimes European) corporations in selected industries (e.g., pharmaceuticals, medical devices, semiconductors, telecommunication) during two decades (the 1990s and 2000s). It follows that our understanding of CVC objectives and impacts are calibrated for a particular setting. As CVC practices are undertaken by corporations in other industries (food, finance, energy, etc.) and further diffuse to other parts of the world, it is crucial that one should revisit implicit assumptions and keep an open eye for new patterns and implications.

A Review of the CVC Literature

The purpose of this article is to organize and synthesize the large body of work on the topic of corporate venture capital. To that end, the CVC literature is grouped into five main topics. The first three topics focus on the corporation’s perspective and the last two are from the perspective of the ventures. The topics are as follows: (1) corporate antecedents, the factors driving established corporations to pursue CVC investments; (2) corporate consequences, the effect of CVC investment on the parent corporation; (3) the Organization and Governance of the CVC Unit; (4) startup antecedents, the factors driving entrepreneurial ventures to seek CVC-backing; and (5) startup consequences, the impact of CVC-backing on entrepreneurial ventures’ performance. The article is structured as follows. It first introduces the three topics concerning the parent corporation’s perspective. The relationship between the three topics is briefly discussed up front. Each topic opens with a synthesis of the key findings and proceeds to highlight seminal studies, where each study is summarized in a separate paragraph, including a description of the research question, sample, method, and key findings. Next, the remaining two topics are based on ventures’ perspective. Following the same procedure, each subsection starts by synthesizing key findings under the research topic, and proceeds to outline individual papers.

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