The current paper addresses the relationship between top management teams (TMTs) and corporate venturing (CV). We argue that TMTs portray an active role in CV rather than the passive role of acting as gatekeepers to the corporate resources as has been previously argued (Brazeal and Herbert, 1999). We assume that when faced with a decision to support a CV project TMTs must gather information in order to decide.
Building on network theory we are argue that TMTs use their interpersonal networks (social capital) inside and outside the organization to obtain information to aid in the evaluation of a CV project. Likewise we propose that TMTs with grater member heterogeneity will poses a large collective network granting them access to more non-redundant information in order to evaluate the CV project.
Conversely, we suggest that while access to information through a diverse network may aid TMTs in choosing an appropriate CV project to support, it may prove to be hindrance later on. The effect of the wealth of information available to the TMTs when choosing a CV project may result in the TMT being overconfident of the success of the project. In turn, overconfidence of the project’s success may cause TMTs to disregard negative feedback on a failing CV project they have sponsored resulting in an escalation of commitment behavior.
"THE MORE YOU KNOW, THE HARDER YOU FALL? SOCIAL CAPITAL, OVERCONFIDENCE AND ESCALATION OF COMMITMENT IN CORPORATE (INTERACTIVE PAPER),"
Frontiers of Entrepreneurship Research: Vol. 29
, Article 10.
Available at: http://digitalknowledge.babson.edu/fer/vol29/iss19/10