This research program focuses on corporate equity investment in start-up ventures. In the 1990s, the venture capital industry outperformed established technology corporations in identifying promising new business opportunities, accelerating the progress of new ventures through the early developmental stages, and helping start-ups achieve liquidity. Consequently, leading technology corporations moved to stimulate innovation and growth by creating internal corporate venture capital (CVC) units modeled on the practices of venture capitalists (VCs), often by collaborating with each other or partnering with VC firms.
The buoyant economy and soaring stock market of the 1990s encouraged a variety of experiments in corporate venturing. By January 2001, over 300 U.S. corporations had active corporate venturing arms. These experiments produced innovative organizational forms, as well as precarious and mercurial ones. Many corporations discovered it is difficult to replicate the practices and achieve the results of independent VCs. Much of the knowledge that VCs possess is tacit, and some of their key practices clash with the compensation systems and organizational cultures of the corporations within which the new venturing arms were embedded.
Then economic recession rekindled Darwinian selection. During the first quarter of 2001, corporate venture investing fell 81 percent and has continued to falter. Some 40 corporations had either shuttered or idled their in-house venturing operations by year's end. Our study seeks to identify the factors that are enabling some corporate venturing programs to adapt and survive, while others go the way of those unsuccessful prehistoric life forms.
Further details on the research are available on the study's website.
