Corporate venture capital as a real option in the markets for technology

Marco Ceccagnoli · Matthew John Higgins · Hyunsung D. Kang

87 citations0/0 files storedStrategic Management Journal

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Private Equity and Venture Capital Innovation and Knowledge Management Capital Investment and Risk Analysis

Abstract

Research Summary : We apply real options (RO) theory to understand the role of corporate venture capital (CVC) investments and its relationship with internal R&D capabilities in supporting the acquisition of external technologies. We formulate hypotheses about key drivers of the option value of CVC and the decision to exercise the RO using a dyadic dataset of global pharmaceutical firms and their biotech partners. Our findings suggest that the option value of CVC is higher for investors with weaker scientific capabilities; engaging the markets for technology in distant technological fields; and, when their innovation pipeline is tilted toward the late‐stage development process. Finally, the licensing of high‐value technologies is the most likely form of option exercise when technological uncertainty is reduced post‐CVC. Managerial Summary : Despite the fact that one of the main goals of corporate venture capital (CVC) investments in high‐tech industries is to gain a window on future technologies, the relationship between CVC and other strategies used to acquire external technologies, such as licensing, has not been adequately explored. To address this gap, we formulate hypotheses about key drivers of the decision to make CVC investments as a wait‐and‐see strategy in the markets for technology (MFT) using a longitudinal dataset of global pharmaceutical firms and their biotech partners. We find that investors' scientific capabilities, technological domains, and research pipelines impact investors' decisions to make CVC investments prior to other MFT transactions. In our research setting, investors typically acquire high‐value technologies via licensing when technological uncertainty is reduced post‐CVC.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 87 citations exist upstream.

References

1990Absorptive Capacity: A New Perspective on Learning and Innovation 2002Absorptive Capacity: A Review, Reconceptualization, and Extension 1989Innovation and Learning: The Two Faces of R & D 2000Collaboration Networks, Structural Holes, and Innovation: A Longitudinal Study 1998Relative absorptive capacity and interorganizational learning 1996Strategic alliances and interfirm knowledge transfer 2005Market value and patent citations 2001Recombinant Uncertainty in Technological Search

Cited by

2022Progress toward understanding tensions in corporate venture capital: A systematic review 2020Dumb money or smart money? Meta‐analytically unpacking corporate venture capital 2019To invest or to harvest?2020How Technological Overlap between Spinouts and Parent Firms Affects Corporate Venture Capital Investments in Spinouts: The Role of Competitive Tension 2020Strategic Objectives of Corporate Venture Capital as a Tool for Open Innovation

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.