Loading...
Please wait, while we are loading the content...
Resource dependence : What do you need and when do you need it ?
| Content Provider | Semantic Scholar |
|---|---|
| Author | Obeid, Hamzeh |
| Copyright Year | 2017 |
| Abstract | CVC investors in venture capital syndicates: need and opportunity Hamzeh Obeid. Hasselt University. 2015. March, 2019. hamzeh.obeid@uhasselt.be State-of-the-art The formation of equity-based ties between large corporations (corporate venture capital investors, or CVC) and privately-held, entrepreneurial ventures has been the subject of a debate in management literature. Adopting the perspective of investee ventures, some scholars have argued that CVC investors pose an acute risk as partners (Katila et al., 2008; Hallen et al., 2014), while others have wondered whether all corporate investors can be deemed equally as dangerous (Diestre & Rajagopalan, 2012). This research on the antecedents to CVC investments undoubtedly intersects with a broader stream of literature on the syndication of venture capital investments (e.g. Keil et al., 2010), and which explains partnerships in syndicates using the profiles of their members. Research gap Existing research leaves the following two caveats in our understanding of CVC investments. First, it treats CVC investors as a homogeneous group whose members are equally dangerous, thus overlooking their industry relatedness to portfolio companies, which is a main determinant of their perception by ventures and their shareholders. Secondly, existing research is still lacking in studying how syndication dynamics apply as antecedents to CVC investments. Given the peculiarity of their profiles as investors established in existing research, we ask: Do the dynamics of need and opportunity apply to CVC investments? Theoretical arguments We draw on the resource-based view and the research on defensive strategies (e.g. Katila et al., 2008), to contend that the knowledge resources held in a syndicate affect the relatedness between their portfolio companies and CVC investors through shaping the need for partnership with the latter as well as the opportunity to partner with them. Furthermore, we investigate how market conditions shape the opportunity to partner with corporations. Essentially, we expect that the industry profiles of CVC investors are sensitive to activity in exit markets in the focal industries of portfolio companies. Method We use a sample of all corporate venture capital investments in high-tech industries in the years between 1995-2010 to test our arguments. Our dependent variable is industry relatedness between corporate investor and venture, which we measure by matching their 4-digit SIC codes. Our independent variables of interest are: industry knowledge, exit experience, and market conditions. It is important in conducting this analysis to control for aspects related to the underlying portfolio companies, such as their maturity. Furthermore, controls for industry-specific resource needs are also incorporated in our model. Results We estimated our model using a zero-inflated ordered probit regression. Our interest lies in investigating how the profiles of existing VC investors impact the relatedness between future corporate investors and portfolio companies. Our results show a positive and strongly significant effect of industry knowledge of VC investors on the relatedness between CVC investors and investees. Regarding exit market conditions, our analysis of the effects of public market and takeover market conditions shows significant effects for both, albeit with opposite signs. Active IPO markets witness more relatedness between CVCs and ventures while takeover markets witness the opposite. Finally, we find that the effect of takeover market conditions is moderated by the experience of existing VC shareholders. Referenced works: Diestre, L., & Rajagopalan, N. (2012). Are all “sharks” dangerous? new biotechnology ventures and partner selection in R&D alliances. Strategic Management Journal, 33(10), 1115–1134. https://doi.org/10.1002/smj.1978 Hallen, B. L., Katila, R., & Rosenberger, J. D. (2014). How Do Social Defenses Work? A Resource-Dependence Lens on Technology Ventures, Venture Capital Investors, and Corporate Relationships. Academy of Management Journal, 57(4), 1078–1101. https://doi.org/10.5465/amj.2012.0003 Katila, R., Rosenberger, J. D., & Eisenhardt, K. M. (2008). Swimming with Sharks: Technology Ventures, Defense Mechanisms and Corporate Relationships. Administrative Science Quarterly, 53(2), 295–332. https://doi.org/10.2189/asqu.53.2.295 Keil, T., Maula, M. V. J., & Wilson, C. (2010). Unique Resources of Corporate Venture Capitalists as a Key to Entry Into Rigid Venture Capital Syndication Networks. Entrepreneurship Theory and Practice, 34(1), 83–103. https://doi.org/10.1111/j.1540-6520.2009.00366.x Jelcodes: M13,1 |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | https://conference.druid.dk/acc_papers/siyczevlnm08p8azo878nrcgac4fi6.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
