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International Analysis of Venture Capital Programs of Large Corporations and Financial Institutions

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  • Luc Armel G. Da Gbadji
  • Benoit Gailly
  • Armin Schwienbacher

Abstract

In this article, we investigate what drives large companies (nonfinancial corporations and financial institutions) worldwide to run venture capital (VC) programs, specifically targeting Fortune Global 500 companies. Such a decision involves trade–offs between expected strategic and financial benefits and costs of managing and financing a portfolio of ventures, which are influenced by the institutions and regulations that affect innovation–oriented entrepreneurship. We determine that companies are more likely to run a program if they are based in countries in which the market for early–stage investments is well developed and innovation–related resources are more widely available. Moreover, companies based in countries with costly personal bankruptcy regulations are less likely to run a VC program, which is consistent with the prediction that these regulations discourage entrepreneurial initiatives. These findings emphasize the importance of favorable local conditions for an affiliated VC program. We observe no evidence, however, that unfavorable local conditions affect the degree of internationalization of programs, suggesting that running international programs entails significant extra costs. Finally, no significant difference emerges between U.S.–based and Western European–based companies.

Suggested Citation

  • Luc Armel G. Da Gbadji & Benoit Gailly & Armin Schwienbacher, 2015. "International Analysis of Venture Capital Programs of Large Corporations and Financial Institutions," Entrepreneurship Theory and Practice, , vol. 39(5), pages 1213-1246, September.
    • Handle: RePEc:sae:entthe:v:39:y:2015:i:5:p:1213-1246
    DOI: 10.1111/etap.12105
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    2. Joern H. Block & Christian O. Fisch & Mirjam van Praag, 2017. "The Schumpeterian entrepreneur: a review of the empirical evidence on the antecedents, behaviour and consequences of innovative entrepreneurship," Industry and Innovation, Taylor & Francis Journals, vol. 24(1), pages 61-95, January.
    3. Paola Garrone & Luca Grilli & Boris Mrkajic, 2018. "The role of institutional pressures in the introduction of energy‐efficiency innovations," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1245-1257, December.
    4. Da Rin, Marco, 2016. "Financing Growth through Venture Capital in Asia and the Pacific," Other publications TiSEM 9fb91a28-6b54-41ce-a01d-9, Tilburg University, School of Economics and Management.
    5. Barreto, Tais S. & Lanivich, Stephen E. & Cox, Kevin C., 2022. "Temporal orientation as a robust predictor of innovation," Journal of Business Research, Elsevier, vol. 138(C), pages 287-300.
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    8. Joanna Malecka & Teresa Luczka, 2017. "The Private Equity Market in Poland and in Central and Eastern Europe: Selected Aspects," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 15(65), pages 69-85.
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