Dimensions of Dependence: An Analysis of Entrepreneurial Ventures Ties to Established Corporations

Abstract

This study focuses on the antecedents to the formation of ties between privately- held ventures and incumbent corporations. We focus specifically on the role of the resource needs of ventures and how these resource needs affect the relatedness of the CVC investors with whom they choose to partner. Two forms of resource need are thus investigated: operational and social. We find that the need for complementary assets in research and development leads ventures to establish ties to more related CVC investors. This effect is found strongest in early stage ventures. In the later stages, ventures become less driven by operational resources and more by the social context in which they operate. The increased formation of independent ventures in public offerings leads ventures to seek greater legitimacy by forming ties to related CVC investors, all while increased intensity of takeover activities leads ventures to less related CVCs.