Edited by Rolf Wüstenhagen and Robert Wuebker
Chapter 9: Why Corporate Venture Capital Funds Fail: Evidence from the European Energy Industry
Tarja Teppo and Rolf Wüstenhagen* The first thing to ask is: Which CVC funds have been able to stay in existence for 10 years or longer? There are not that many that have been around for very long. This tends to be a very cyclical kind of a mechanism. Many, many companies started programs and then got rid of them. Professor Henry Chesbrough, UC Berkeley1 1 INTRODUCTION Corporate venture capital (CVC) funds are an important means for large firms to engage in innovation. However, academic literature as well as practical experience has provided ample evidence of the challenging nature of operating a CVC fund within a large incumbent organization. Venture capital researchers have demonstrated that CVC funds are volatile (Gompers and Lerner, 2001) and varying in success (Sykes, 1986; Siegel et al., 1988; Gompers and Lerner, 1998; Chesbrough, 2000). We argue that the understanding of CVC can be enhanced by answering the following research question: how does parent firm organizational culture affect the survival of a CVC fund? We investigate this research question in the context of an industry in which large, incumbent organizations are particularly relevant, and in which the need for innovation is increasingly acknowledged due to a variety of drivers in the energy industry. The energy industry is one of the largest sectors of the economy, and a number of environmental and geopolitical concerns, as well as new technological opportunities, have recently sparked interest in energy innovation. As a consequence, there is an increasing appetite in...
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