Abstract

Applying Resource Dependency Theory (Pfeffer and Salancik, 1978) and its offshoot, the Embeddedness Perspective (Granovetter, 1985), this empirical study explores new explanations for why companies make corporate venture capital (CVC) investments. The research objective is to extend existing diffusion research, which has already demonstrated that information about new practices and organizational forms tends to diffuse through interlocking boards1 (Davis, 1991; Haunschild, 1993; Palmer, Jennings and Zhou, 1993; Mizruchi, 1996). In particular, the paper examines the relationship between a company’s CVC investments and its connection to other entrepreneurial firms via interlocking boards of directors. It asks whether CVC information—i.e., information about the activities and requirements of CVC investment—is transmitted from one firm to another through the linkages of interlocking boards, thereby affecting the likelihood of CVC investment.

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