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Handbook of Research on Venture Capital

Edited by Hans Landström

This Handbook provides an excellent overview of our knowledge on the various facets of managerial venture capital research. The book opens with a thorough survey of venture capital as a research field; conceptual, theoretical and geographic aspects are explored, and its pioneers revisited. The focus then shifts to the specific environs of venture capital.
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Chapter 16: Entrepreneurs’ Perspective on Corporate Venture Capital (CVC): A Relational Capital Perspective

Shaker A. Zahra and Stephen A. Allen


Shaker A. Zahra and Stephen A. Allen Introduction The relationship between industry incumbents and new ventures has been a subject of much interest in the literature (Zahra et al., 1995; Gompers and Lerner, 1999; 2001; Zahra, 2006a; 2006b). Traditional analyses have emphasized the potential role of new ventures in displacing industry incumbents as a natural part of the process of Schumpeterian creative destruction (Christensen, 1997). More recent analyses highlight a ‘co-specialization’ dynamic, where new ventures excel in discovery and invention and incumbents are better equipped to successfully exploit and commercialize these discoveries. Research applying the co-specialization dynamic recognizes the rivalrous nature of the relationship that might exist between incumbents and new ventures but also highlights opportunities for fruitful collaboration (Chesbrough, 2002). Corporate venture capital (CVC) is one approach some incumbents have used to connect with new ventures in and outside their industries (Keil, 2002; Dushnitsky, 2004; Keil et al., 2005; Maula et al., 2005; Rosenberger et al., 2005). Maula (see Chapter 15) has comprehensively reviewed and summarized the relationship between CVC and other activities that companies undertake to venture into new fields, internally or externally. Maula’s review suggests that companies use CVC for multiple reasons, giving these transations distinctiveness. As Maula indicates, CVC refers to equity-linked investments that incumbents make in young, privately held companies – where the investor is a financial intermediary of a non-financial corporation. While CVC programs can generate substantial direct financial gains or losses (Allen and Hevert, 2007), incumbents may also use these programs to gain...

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