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Corporate venture capital and the boundaries of the firm11For comments and suggestions, I thank Jan Bena (discussant), Thomas Chemmanur, Thomas Hellmann (discussant), Joel Houston, Jongsub Lee, Josh Lerner, Jiasun Li, Tse-Chun Lin, Liangfei Qiu, Song Ma (discussant), Jay Ritter, David Robinson, Merih Sevilir (discussant), Yuehua Tang, Xuan Tian, Tieying Yu, participants at the 2019 Georgia State University - Review of Financial Studies FinTech Conference, the 2018 Annual Conference on Financial Economics and Accounting (CFEA), Northern Finance Association Annual Meeting (NFA), Emerging Trends in Entrepreneurial Finance Conference, Wharton Innovation Doctoral Symposium, and Oxford Finance Job Market Workshop. Special thanks to the UF Alumni Doctoral Support Fund for providing financial assistance to facilitate access to the PitchBook data. All remaining errors are my own

Author

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  • Shan, Hongyu

Abstract

This study presents a novel measure of the overlap between a Corporate Venture Capital (CVC) investor and an entrepreneurial firm in the product, market, and technology spaces. Using this measure, we present an alternative parallel framework to understand an incumbent's decision to invest in or acquire a startup, grounded in the boundaries of the firm theory. The CVC's distinct features regarding property rights and incomplete contracting are preferred when the overlap is low. Also, CVC investments spur the greatest ex-post change in firm scope when the startup has moderate (vs. low or high) overlap with the corporate investor.

Suggested Citation

  • Shan, Hongyu, 2025. "Corporate venture capital and the boundaries of the firm11For comments and suggestions, I thank Jan Bena (discussant), Thomas Chemmanur, Thomas Hellmann (discussant), Joel Houston, Jongsub Lee, Josh L," Journal of Business Venturing, Elsevier, vol. 40(4).
    • Handle: RePEc:eee:jbvent:v:40:y:2025:i:4:s088390262500028x
    DOI: 10.1016/j.jbusvent.2025.106500
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    Keywords

    Corporate venture capital; Boundaries of the firm; Machine learning; Product market;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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