"Social influence, learning, and the abandonment of corporate venture capital practices"

Abstract

Listen

Translate article

The adoption and diffusion of practices has been the subject of intense study, but much less is known about why firms abandon practices they had formerly adopted. Studies of practice abandonment have found that abandonment processes mirror adoption processes of mimesis and contagion, such that firms abandon previously adopted practices when their social referents do. However, unlike adoption decisions where organizations must rely on the experiences and behaviors of others, firms have their own direct experience to draw on when deciding to abandon previously adopted practices. We propose that the firm’s implementation and ongoing management of a practice influence its abandonment decision and also condition its response to contagion pressures for abandonment. We test our hypotheses using data on the abandonment of corporate venture capital units by a sample of information technology firms. Results suggest that firm’s utilization of a practice and staffing choices influence abandonment decisions. We furthe...