IDEAS home Printed from https://ideas.repec.org/p/nus/nusewp/wp0109.html
   My bibliography  Save this paper

On the Strategic Use of Corporate Venture Financing for Securing Demand

Author

Listed:
  • Yohanes E. Riyanto

    () (National University of Singapore)

  • Armin Schwienbacher

    () (The University of Namur, Center for Research in Finance and Management (CeReFiM) and UC Berkeley, Haas School of Business)

Abstract

In this paper, we focus on the strategic role of corporate venture financing by a corporation in securing own demand. When the headquarter finances the venture through the corporate venture capitalist, he commits himself to compensate the venture for the effort to increase the complementarity between its product and the headquarter's product. The headquarter therefore faces the following trade-off: either be more aggressive ex post in the product market (by undercutting more its rivals) or use corporate venture financing to affect the venture's product innovation outcome to weaken ex post competition with substitute products. This allows him to secure demand for his own product.

Suggested Citation

  • Yohanes E. Riyanto & Armin Schwienbacher, 2001. "On the Strategic Use of Corporate Venture Financing for Securing Demand," Departmental Working Papers wp0109, National University of Singapore, Department of Economics.
  • Handle: RePEc:nus:nusewp:wp0109
    as

    Download full text from publisher

    File URL: http://www.fas.nus.edu.sg/ecs/pub/wp/wp0109.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Philippe Aghion & Jean Tirole, 1994. "The Management of Innovation," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 1185-1209.
    2. Steven J. Davis & Jack MacCrisken & Kevin M. Murphy, 2001. "Economic Perspectives on Software Design: PC Operating Systems and Platforms," NBER Working Papers 8411, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andrea Schertler, 2005. "European venture capital markets: fund providers and investment characteristics," Applied Financial Economics, Taylor & Francis Journals, vol. 15(6), pages 367-380.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nus:nusewp:wp0109. 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: (). General contact details of provider: http://edirc.repec.org/data/denussg.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.