From investment to innovation: a systematic review of how corporate venture capital drives business model innovation

Entrepreneurial ventures are a key source of innovation. Nowadays, ventures are backed by a wide array of investors whose complementary asset profiles differ significantly. We therefore assert that entrepreneurial ventures can no longer be studied as a homogeneous group. Rather, we harness the inherent dichotomy in the profiles of independent VCs and corporate investors to study ventures' innovation outcomes. Our sample consists of 545 U.S. biotechnology ventures founded between 1990 and 2003 and backed by independent venture capitalists ( VCs ) or corporate VCs ( CVC ). We find CVCs ' investees exhibit higher rates of innovation output, compared to independent VC ‐backed peers. Moreover, the performance of CVC ‐backed ventures is sensitive to their ability to leverage corporate assets, underscoring the role of CVC accessibility and FDA approval requirements as the mechanisms associated with CVC contribution . Copyright © 2014 John Wiley & Sons, Ltd.

Corporate venture capital in Germany: A comparative analysis of 2000 and 2003

In this paper we analyze the contingent benefits of receiving corporate venture capital (CVC) investment on tech ventures’ innovation outcome. First, we show that ventures receiving CVC investment have higher innovation performance in comparison to ventures that have received independent VC (IVC) investment only. Furthermore, the positive effect of having CVC investors is more pronounced for a focal tech venture’s innovation rate when the tech venture has more patents and higher alliance activity at the time the venture received its first CVC funding. We also show that tech venture can access more of the resources that a CVC can offer during favorable (or hot) market conditions, thanks to the venture’s increased bargaining power in favorable market conditions, hence further pronouncing the positive effects of CVC investment on the venture’s innovation rate. We tested our hypotheses on the biotech ventures that received venture capital funding between 1980 and 1997 and found supporting results for our hypo...

Exploring the Antecedents of Social Liabilities in CVC Triads — A Dynamic Social Network Perspective

The purpose of this dissertation is to examine the relationships between the structural and managerial characteristics of corporate venture capital (CVC) programs and the consequences of their CVC activities, and reveal the mechanisms that lead to enhanced CVC performance. It consists of three studies which draw from three research streams: agency theory, option theory, and learning theory. The first study examined how the portfolio configuration as for technology and industry diversification influences the growth option value of the whole portfolio, and how the structural characteristics of a CVC program such as syndication and autonomy, influence its CVC managers' investment decisions with regard to technology diversification. The results suggested that both technology diversification and industry diversification among portfolio companies were related to the growth value of their corporate investor in a U-shaped relationship. In addition, syndication activities of a CVC program were significantly related to technology diversification, while the autonomy of a CVC program was significantly related to industry diversification. The second study investigated how autonomy, incentive scheme, and monitoring mode of a CVC program would influence knowledge flows between the corporate investor and the portfolio companies, thereby impacting the corporate investor's innovativeness and the portfolio company's performance. The findings provided support for the negative impact of the VC-like incentive scheme and autonomy on knowledge transfer from portfolio companies to corporate investors. The third study investigated the impacts of four structural characteristics of a CVC program on its selection and valuation capabilities, including lifespan, stability, incentive schemes, and syndication with VC. The results showed strong impacts of syndication activity on the selection and valuation capabilities pertaining to financial returns, and mixed effects of lifespan and stability.

PurposeWhich venture capital is more beneficial in the product innovation of entrepreneurial ventures? The authors study the drawbacks and different effects of corporate venture capital (CVC) and independent venture capital (IVC) on the effectiveness and efficiency of product innovation in entrepreneurial ventures to answer this question.Design/methodology/approachThis study uses a panel dataset of 502 high-tech ventures and runs the Heckman model to correct potential endogeneity issues.FindingsThe authors find that CVC increases the product innovation effectiveness of entrepreneurial ventures, but decreases their efficiency. IVC reduces innovation effectiveness and enhances efficiency. However, CVC performs less positively, while IVC performs more positively in terms of innovation effectiveness and efficiency in the B2B market than in the B2C market.Practical implicationsThis study provides insights into how to leverage venture capital to develop new products effectively and efficiently.Originality/valueThis study moves beyond the current understanding of the finance-marketing interface. It delineates the two faces of venture capital and reveals the joint effects of equity stakes and market stakes between different types of venture capital and transaction markets in product innovation.

Purpose The purpose of this paper is to systematically analyze the literature on business model innovation by identifying its triggers, enablers, barriers, dimensions, outcomes and highlight avenues for future research. Design/methodology/approach A systematic literature review of papers on business model innovation was conducted based on the recommendations of Tranfield et al. (2003) from 2000–2019. A total of 70 conceptual and empirical studies on business model innovation research spanning from 2000 to 2019 were analyzed based on different classification schemes. Findings The systematic review approach of this paper offers a new perspective in understanding business model innovation, bridges the gap in the extant literature by providing consolidation regarding the triggers, enablers, barriers, dimensions and outcomes of business model innovation and indicating avenues for future research. Research limitations/implications A review of literature on business model innovation carried out in this paper is expected to open up new horizons for future researchers to develop and empirically test frameworks related to business model innovation. The five themes identified to shed light on important aspects of business model innovation. These themes are expected to not only strengthen the theoretical foundations of business model innovation but also help practitioners develop and implement business model innovations in their organizations. In particular, the themes related to the enablers, barriers, triggers and outcomes of business model innovation can provide useful insights for practitioners. Originality/value This study is the first of its kind that has provided consolidation regarding the triggers, enablers, barriers, dimensions and outcomes of business model innovation.

By highlighting conditions under which viable interorganizational relationships do not materialize, we explore the limitations of interorganizational knowledge acquisition. In the empirical context of corporate venture capital (CVC), we analyze a sample of 1,646 start‐up‐stage ventures that received funding during the 1990s. Under a regime of weak intellectual property protection (IPP), an entrepreneur‐CVC investment relationship is less likely to form when the entrepreneurial invention targets the same industry as corporate products. In contrast, under a strong IPP regime, industry overlap is associated with an increase in the likelihood of an investment relationship. Our findings suggest that many relationships do not form because the corporation will not invest unless the entrepreneur discloses his or her invention, and the entrepreneur may be wary of doing so, fearing imitation. To the extent that a CVC has greater capability and inclination to target same‐industry ventures, such industry overlap would exacerbate imitation concerns under a weak IPP regime, yet facilitate an investment relationship under a strong IPP regime. Beyond CVC, this insight may explain patterns of other interorganizational relationships, including research and development alliances and technology licensing between start‐ups and incumbents. Copyright © 2009 John Wiley & Sons, Ltd.

Purpose– The purpose of this paper is to investigate the relationship between corporate venture capital (CVC) investment and the level of knowledge transferred from start-ups to corporate investors. It also delineates the conditions under which CVC investment facilitates the knowledge transfer.Design/methodology/approach– A longitudinal design is used to examine annual snapshots of CVC investment and patent citing activities for the period from 1995 to 2005. This paper uses a negative binomial Poisson regression model to test proposed research hypotheses.Findings– The authors found that that there is an inverted U-shaped relationship between the number of CVC investments and the level of knowledge transferred from the start-up. The results of this study also found that knowledge diversity of the investing firm moderates the inverted U-shaped relationship.Originality/value– This research contributes to the search literature by conceptualizing CVC investment as a distant search process for sourcing external knowledge from start-ups. By arguing theoretically and demonstrating empirically the effects of tie strength of CVC structure and technological knowledge diversity on organizational knowledge transfer, this current study extends the previous understanding and applicability of social relations and technological diversity to understand CVC activity.

Purpose: The point of departure of this exploratory study is the gap between the increasing importance of business model innovation (BMI) in science and management and the limited conceptual assistance available. Therefore, the study identi es and explores scattered BMI insights and deduces them into an integrative framework to enhance our understanding about this phenomenon and to present a helpful guidance for researchers and practitioners. Design/Methodology/Approach: The study identi es BMI insights through a literature-based investigation and consolidates them into an integrative BMI framework that presents the key elements and dimensions of BMI as well as their presumed relationships. Findings: The study enhances our understanding about the key elements and dimensions of BMI, presents further conceptual insights into the BMI phenomenon, supplies implications for science and management, and may serve as a helpful guidance for future research. Practical Implications: The presented framework provides managers with a tool to identify critical BMI issues and can serve as a conceptual BMI guideline. Research limitations: Given the vast amount of academic journals, it is unlikely that every applicable scienti c publication is included in the analysis. The illustrative examples are descriptive in nature, and thus do not provide empirical validity. Several implications for future research are provided. Originality/Value: The study’s main contribution lies in the unifying approach of the dispersed BMI knowledge. Since our understanding of BMI is still limited, this study should provide the necessary insights and conceptual assistance to further develop the concept and guide its practical application.

The term business model innovation refers to the introduction of innovations that differ from state-of-the-art business models in the same field. Current research indicates that business model innovations are more resilient (e.g. to imitation) overall and more successful in the long term compared to traditional types of innovation (e.g. product innovations). Working on business model innovation, therefore, can provide valuable insights, particularly for start-ups looking to grow and scale up under conditions of extreme uncertainty. Business model innovation involves the innovation of two of four core elements of a business model: customer, value proposition, value chain and revenue mechanism. A business model can be described using these four elements in a sophisticated and comprehensive manner. Moreover, these elements help us to determine whether a business model innovation exists. However, do start-ups really use the advantages of business model innovation and to what extent? This research paper addresses this issue and examines the role business model innovation plays for start-ups as well as how it has been implemented. To gain these insights, we examine the business plans of 24 finalists of a Swiss innovation competition in 2021 in a multi-stage process. We systematically reviewed and analysed business plans individually using pre-defined innovation criteria for each of these four elements of a business model. The individual analysis allows a robust assessment to be able to make a comprehensible classification. On reviewing the results, we were surprised by how many of the analysed start-ups are pursuing business model innovations, and that they often innovate more than two elements of their business models. According to our findings, start-ups nowadays deal with business model innovation more often than they did in previous research studies. We can also show that business model innovations are often more complex than they were in the past.

The goal of this symposium is to review some important theoretical perspectives and provide guidance for researchers on new research directions in areas of interorganizational relationships and innovation. First, we will introduce emerging phenomena of interorganizational relationships between innovation-oriented firms/ventures and their various partners (e.g., government agencies, corporate venture capitalists, etc.) and how these ties contribute to firms’ innovation outcomes. Second, relatedly, we aim at discussing an emerging stream of literature emphasizing the tension between value creation and value appropriation in interorganizational relationships affecting firms’ innovation outcomes and performances. In this vein, invited panelists will identify avenues for future research at the nexus of interorganizational relationships and innovation.

PurposeThis paper aims to analyze the relationship between the use of management control systems (MCSs) and innovativeness in start-ups pursuing product innovation (PI), business model innovation (BMI) or ambidextrous innovation (both PI and BMI ).Design/methodology/approachThis paper reports on survey data collected at 143 European start-ups using a structured questionnaire sent to a member of the top management team at each firm.FindingsThe authors find that the control levers and their interdependencies associated with increased innovativeness significantly differ between the different forms of innovation.Practical implicationsThe study provides important guidance for entrepreneurs so that they can effectively support their innovation agenda with the MCSs tailored to their needs.Originality/valueThis research contributes to a growing literature that shows the positive role of MCSs in innovative and entrepreneurial processes. It adds to the understanding of the multifaceted nature of innovation and the crucial importance of BMI and ambidextrous innovation for the success of start-ups.

Existing literature has tended to focus on the positive benefits and outcomes of business model innovation (BMI), despite emerging evidence that BMI can also have a dark side, with negative consequences. We systematically review the existing BMI literature, articulating it around three clusters of negative consequences: those affecting the firm as an entity; those affecting the firm's stakeholders; and those that are specific or context‐dependent. In a similar fashion, we identify the driving factors and circumstances leading to these negative consequences and group them into four clusters: (1) managerial choices and processes, and three underpinning circumstances that influence such choices or processes; (2) trade‐offs between the new and current business models; (3) managers’ ability to manage BMI; and (4) context within which BMI is situated. The paper provides the first attempt to gather prior research on the phenomenon and thereby develop a conceptual understanding of the dark side of BMI. Furthermore, by proposing a model that explains how the dark side of BMI may occur, we inform ongoing debates on the theorization of the consequences that may derive from BMI and how these can be managed to support firms’ innovative growth, arguing how the disruptive innovation literature can only partially explain the phenomenon. Second, our model provides important foundations to further distil the complex link between BMI and performance. Finally, we suggest a number of future research avenues, accounting for different dimensions of the phenomenon.

This chapter deals with business model innovation (BMI) and innovation ecosystems. Across all countries and industries in the EU, approximately 1 out of 20 SMEs was classified as a business model innovator with CIS data (EC Research 2014). And BMI leads to higher profitability and growth. A 2006 study by IBM on Global CEOs suggests that that BMI had a higher correlation with operating margin growth than any other type of innovation. Evidence from the USA suggests that 40 % of the 27 companies founded in the 25 years to 2008 that grew their way into the Fortune 500 in the 10 years to 2008 did so through business model innovation (Johnson et al. 2008). Relatedly, an IBM Global Services Study suggests that business model innovators enjoy an operating margin increase that is 5 % more than that of competitors compared with a differential of only 1 % for product innovators (Gleed 2009). Moreover, the success of product innovations, process innovations, and other forms of innovations is also dependent on whether these innovations are consistent with the dominant business model of the firm that has created the product or process innovation. Hence, business models and innovations in business models provide a superstructure for the success or failure of other innovations. In addition, research findings also suggest that business model changes are one of the most sustainable forms of innovation (Sosna et al. 2010).