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Corporate Venturing, Allocation of Talent, and Competition for Star Managers

  • Jean-Etienne De Bettignies

    (QUARG - Queen's University - Queen's University, Kingston, Ontario)

  • Gilles Chemla

    (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris Dauphine - Paris IX)

We provide new rationales for corporate venturing (CV), based on competition for talented managers. As returns to venturing increase, firms engage in CV for reasons other than capturing these returns. First, higher venturing returns increase managerial compensation, to which firms respond by increasing the power of incentives. Managers increase effort, prompting firms to reallocate them to new ventures, where the marginal product of effort is highest. Second, as returns to venturing become large, CV emerges as a way to recruit/retain managers who would otherwise choose alternative employment. We derive several testable empirical predictions about the determinants and structure of CV.

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Paper provided by HAL in its series Post-Print with number halshs-00365942.

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Date of creation: 05 Mar 2008
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Publication status: Published, Management Science, 2008, Vol. 54, Issue n°3, pp. 505-521
Handle: RePEc:hal:journl:halshs-00365942
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00365942/en/
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