Abstract
Separating corporate venture capital (CVC) unit from its parent company has become the prevailing view in the structural design of CVC programs. However, such a separation may come at a cost. We draw on institutional view, arguing that the CVC program’s structural independence may incur its concern for lack of legitimacy in the eyes of the parent. To mitigate the risk of illegitimacy, an external CVC unit will decrease exploratory investment in unfamiliar industries and concentrate in the industry that the parent firm operates in. The negative relationship between structural independence and exploratory investment is further contingent on the CVC unit’s experience of exits via IPO, the parent firm’s number of subsidiaries and the regional collectivism where unit is located. The analysis of an unbalanced panel of 363 CVC programs in China from 2007 to 2019 provides empirical supports for our arguments.
Published Version
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