Ownership concentration and innovativeness of corporate ventures

摘要

Highlights•We distinguish two mechanisms that govern the relationship between corporate venture investment and radical innovation.•These are the safety net that corporate sponsors provide and control incentives.•We provide large-scale empirical evidence showing that the safety net facilitates radical innovation success of corporate ventures (CVs).•The superior radical innovation success of CVs decreases with the corporate sponsor’s incentives to control the venture.•The impact of safety net and control incentives depend on the corporate sponsor’s position vis-à-vis her aspiration level.AbstractCorporate venture investments are an established means for incumbent firms to access radical innovation. Drawing from a behavioural agency framework, we distinguish two mechanisms that govern the relationship between corporate venture investment and radical innovation, the safety net that corporate sponsors provide and control incentives. While the safety net induces a gap between the radical innovation success of corporate ventures (CVs) and ventures without a corporate sponsor, the superior radical innovation success of CVs decreases with the corporate sponsor’s incentives to control the venture. The impact of the safety net and control incentives further depends on the corporate sponsor’s position vis-à-vis her aspiration level.