Relationships between corporate governance and corporate entrepreneurship are of growing research interest because company boards often influence firm risk-taking, proactiveness and innovativeness (Covin and Slevin 1986, Zahra 1996, Zahra, Neubaum, and Huse 2000). Zahra (1996) demonstrated a correlation between insider-dominated boards and heightened corporate entrepreneurship. However, the designs and effects of interlocking boards have received scant attention in the corporate entrepreneurship literature.

This research examines interlocking boards as a network for the contagion of one type of corporate entrepreneurship activity: corporate venture capital investment (CVC) (Rogers 1962, Mizruchi 1996, Gompers 2002). The following question is asked: Is a focal firm more likely to make CVC investments if it has numerous interlocking board ties with other firms which make CVC investments?

Prior research has shown that organizational structures (such as the M-form organization) and organizational practices (such as acquisition strategies/acquisition intensity) diffuse according to interlocking board ties (Palmer, Jennings & Zhou 1993, Haunschild 1993). I examine if corporate venture capital investment, one form of external corporate venturing, also diffuses according to interfirm board ties (Schildt, Maula & Keil 2005).