Developing the selection and valuation capabilities through learning: The case of corporate venture capital
The objective of this paper is to examine the impacts of experience intensity, experience diversity and acquisitive experience on the development of selection and valuation capabilities that help the parent (investor) company generate higher short-term financial returns and improve long-term strategic performance. Based on our analysis of 2110 cases of CVC investments in the VenureXpert data base, we find that industry diversity of a CVC program's experience is positively related to its selection of portfolio companies with relatively high financial potential. The CVC program's experience intensity, stage diversity of its experience, and syndication improve its selection of portfolio companies with greater strategic potential. In addition, stage diversity may enhance valuation capability. We also find that experience accumulation is more effective when a CVC program invests in a portfolio company in the later stage rather than in the early stage.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Manigart, S. & Bruining, J. & Lockett, A. & Meuleman, M., 2002. "Why Do European Venture Capital Companies Syndicate?," ERIM Report Series Research in Management ERS-2002-98-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
- Dean A. Shepherd, 1999. "Venture Capitalists' Assessment of New Venture Survival," Management Science, INFORMS, vol. 45(5), pages 621-632, May.
- Henrik Bresman & Julian Birkinshaw & Robert Nobel, 1999. "Knowledge Transfer in International Acquisitions," Journal of International Business Studies, Palgrave Macmillan, vol. 30(3), pages 439-462, September.
- Paul Gompers & Anna Kovner & Josh Lerner, 2007.
"Specialization and Success: Evidence from Venture Capital,"
in: Entrepreneurship: Strategy and Structure
National Bureau of Economic Research, Inc.
- Paul Gompers & Anna Kovner & Josh Lerner, 2009. "Specialization and Success: Evidence from Venture Capital," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(3), pages 817-844, 09.
- Shaker A. Zahra & Harry J. Sapienza & Per Davidsson, 2006. "Entrepreneurship and Dynamic Capabilities: A Review, Model and Research Agenda," Journal of Management Studies, Wiley Blackwell, vol. 43(4), pages 917-955, 06.
- Shepherd, Dean A. & Zacharakis, Andrew, 2002. "Venture capitalists' expertise: A call for research into decision aids and cognitive feedback," Journal of Business Venturing, Elsevier, vol. 17(1), pages 1-20, January.
- Gompers, Paul & Lerner, Josh, 2000. "Money chasing deals? The impact of fund inflows on private equity valuation," Journal of Financial Economics, Elsevier, vol. 55(2), pages 281-325, February.
- Thomas Keil, 2004. "Building External Corporate Venturing Capability," Journal of Management Studies, Wiley Blackwell, vol. 41(5), pages 799-825, 07.
- Sophie Manigart & Andy Lockett & Miguel Meuleman & Mike Wright & Hans Landstrm & Hans Bruining & Philippe Desbrieres & Ulrich Hommel, 2002.
"Why do European Venture Capital Companies syndicate?,"
Vlerick Leuven Gent Management School Working Paper Series
2002-20, Vlerick Leuven Gent Management School.
- Sophie Manigart & Miguel Meuleman, 2002. "Why do European Venture Capital Companies syndicate?," Finance 0210006, EconWPA.
- Joshua Lerner, 1994. "The Syndication of Venture Capital Investments," Financial Management, Financial Management Association, vol. 23(3), Fall.
- Macmillan, Ian C. & Siegel, Robin & Narasimha, P. N. Subba, 1985. "Criteria used by venture capitalists to evaluate new venture proposals," Journal of Business Venturing, Elsevier, vol. 1(1), pages 119-128.
- Mike Wright, 1998. "Venture Capital and Private Equity: A Review and Synthesis," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 25(5&6), pages 521-570.
- Henderson, Rebecca. & Cockburn, Iain., 1994. "Measuring competence? : exploring firm effects in pharmaceutical research," Working papers 3712-94., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Dushnitsky, Gary & Lenox, Michael J., 2005. "When do incumbents learn from entrepreneurial ventures?: Corporate venture capital and investing firm innovation rates," Research Policy, Elsevier, vol. 34(5), pages 615-639, June.
- Linda Argote & Sara L. Beckman & Dennis Epple, 1990. "The Persistence and Transfer of Learning in Industrial Settings," Management Science, INFORMS, vol. 36(2), pages 140-154, February.
- Mike Wright & Andy Lockett, 2003. "The Structure and Management of Alliances: Syndication in the Venture Capital Industry," Journal of Management Studies, Wiley Blackwell, vol. 40(8), pages 2073-2102, December.
- Rosenberg, Nathan & Steinmueller, W Edward, 1988. "Why Are Americans Such Poor Imitators?," American Economic Review, American Economic Association, vol. 78(2), pages 229-34, May.
- Norton, Edgar & Tenenbaum, Bernard H., 1993. "Specialization versus diversification as a venture capital investment strategy," Journal of Business Venturing, Elsevier, vol. 8(5), pages 431-442, September.
- Yoshikawa, Toru & Phan, Phillip H. & Linton, Jonathan, 2004. "The relationship between governance structure and risk management approaches in Japanese venture capital firms," Journal of Business Venturing, Elsevier, vol. 19(6), pages 831-849, November.
When requesting a correction, please mention this item's handle: RePEc:eee:jbvent:v:24:y:2009:i:3:p:261-273. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.