Recent research has documented that CVC investments could provide a corporate investor with the learning opportunities for new technologies, thereby stimulating technological innovation and creating growth value for the corporate investor (e.g. Chesbrough, 2002; Chesbrough & Tucci, 2003; Dushnitsky & Lenox, 2005a; Schildt, Maula, & Keil, 2005). The literature, to date, has tended to focus on the independent impact of individual investment. However, CVC investments almost always involve multiple investments in a certain period of time; namely there simultaneously exists more than one entrepreneurial company in the portfolio. It is quite possible that portfolio companies interact with each other, and that the portfolio companies as a whole may impact the corporate investor in a way different from their independent individual impacts. Thus, in this study we propose that sub-additivity in costs through resource sharing, and super-additivity in value because of complementarities (Tanriverdi & Venkatraman, 2005) would result in a curvilinear relation between portfolio diversification and growth value of its parent company. In addition, we also investigate the extent to which the structural characteristics of a CVC program such as autonomy and syndication influence its CVC managers’ investment decisions with regard to the two types of diversification.
Yang, Yi and Narayanan, V. K.
"THE GROWTH VALUE FROM CVC PORTFOLIO DIVERSIFICATION: INDUSTRY AND TECHNOLOGY (SUMMARY),"
Frontiers of Entrepreneurship Research: Vol. 27
, Article 18.
Available at: http://digitalknowledge.babson.edu/fer/vol27/iss3/18