Technological Diversification Through Corporate Venture Capital Investments: Creating Various Options to Strengthen Dynamic Capabilities

Abstract

Corporate venture capital (CVC) investment in technology-intensive entrepreneurial ventures has attracted increasing attention from established firms which recognize it as a useful learning investment strategy to create diversified technological options for future change. However, there is a lack of empirical research which examines the relationship between CVC investment and the corporate investors' technological diversification. In this study, we investigate the effects of CVC investments on corporate investors' technological diversity by using 20 years of panel data from corporate investors in five high-tech industries. As a result, we find that the total amount of CVC investments and the industrial diversity of portfolio companies exhibit curvilinear (inverted U-shape) relationships with the corporate investors' technological diversity. Moreover, the empirical results show that the absorptive capacity of corporate investors positively moderates the effects of CVC investments on the technological diversity.

Technological Diversification: A Systematic Review of Antecedents, Outcomes and Moderating Effects

“…). An inverted U‐shaped pattern was identified for the impact of both alliance partner technological distance (Lai and Weng ) and the diversification of a firm's corporate venture investments (Lee and Kang ) on technological diversification. For all types of inter‐organizational relationships, resource heterogeneity plays an important role.…”

“…Research on technological diversification has drawn primarily on the resource-based view of the firm (Barney 1991;Miller 2006;Ndofor et al 2015;Penrose 1959;Wernerfelt 1984) as well as the related notions of capabilities, dynamic capabilities (Lee and Kang 2015;Teece et al 1997) and the competence-based theory of the firm (Foss 1993;Lai et al 2010b;Piscitello 2000). The resource-based view of the firm also informed the theory of the technology-based firm.…”

What biological evolution teaches about sustainable engineering innovation

“…In studies dealing with diversity in national innovation systems (Cassiolato and Martins, 2000;Park and Gwangman, 2003), or global economic integration (Eliasson, 2003), the issue and potential of different types of science and engineering are not addressed. For instance, in a recent assessment of improved innovation potential via venture capital investment (Lee and Kang, 2015), the investment potential for firms using non-Occidental science and engineering was hardly addressed at all.…”

Corporate Venturing Evaluation: How Start-Up Performance is Measured in Corporate Venturing During the Collaboration Phase

“…According to literature, CV is the umbrella term for entrepreneurial activities regarding collaborations of established companies with new and inno-vative businesses (Chesbrough, 2002;Keil et al, 2008;Dushnitsky and Lenox, 2006;Freese, 2006). Alongside others collaboration forms, like alliances and joint ventures, CV focuses on establishing mutual beneficial relationships (Pekkola and Ukko, 2016;Lee and Kang, 2015). CV collaborations represents the closest form of relationships (Parung and Bititci, 2006).…”