Dumb money or smart money? Meta‐analytically unpacking corporate venture capital

Abstract

AbstractResearch SummaryAs an important strategic tool for entrepreneurial ventures and for established corporations alike, corporate venture capital (CVC) has attracted significant research attention. However, extant studies are equivocal about CVC's performance impact, and measurement approaches vary widely. Separating CVC performance into its corporate and venture elements, we conducted a meta‐analytic structural equation model (MASEM) analysis to quantitatively synthesize 151 effect sizes from 68 studies. While results indicate that CVC does create value for both investing corporation and invested venture, they also hint at different magnitudes for, and nuanced interrelationships between, the various performance aspects. We highlight implications for CVC scholarship in terms of measurement and theory.Managerial SummaryWhat is the bottom line impact of corporate venture capital (CVC)? While CVC is attractive to both startups and corporations, potential benefits are different for each participant—for example, capital and industry contacts for the startup, learning and financial returns for the corporation. The multiple and potentially competing benefits complicate the assessment of CVC's performance impact. Our quantitative summary of 68 empirical studies shows that CVC creates value for startups and corporations alike, but in varying magnitude, suggesting that the benefits are not equally shared between partners and across performance aspects. The nuanced distribution and interrelationship among CVC outcomes have practical implications for startup leaders and corporate investors as they enter into and manage CVC investments.