Revisiting the Role of Corporate Venture Capital

Abstract

There has been ongoing explosive growth in global corporate venture capital (CVC) investments. Record growth was witnessed in 2021 after a 133% year-over-year increase in total global CVC investment amounts (CBInsights, 2021). This dissertation investigates the role of CVC, especially from a strategic perspective, in the digital era. In the first study, by focusing on the regulation of data privacy, I investigate how firms utilize CVC as a tool to navigate changing policy environments. I propose a theoretical framework for the strategic value of data and find that more CVC investments are made between competing firms when data become costly to obtain. The second study focuses on examining the market’s disciplining mechanism on all VC investors. I show that, by exiting at the right time, investors can prevent reputation loss after investing in fraudulent firms. In the third study, I examine whether investments made by CVC parent companies affect competition. I find that a “Kill Zone” effect exists in CVC, in which, when the CVC arm of a large technology company invests in another company for the first time, both new entries and investment deals slow down throughout the industry. Overall, this dissertation contributes to the literature on CVC, regulation of data privacy, and innovation. By examining and rethinking the strategic role of CVC, this dissertation seeks to help practitioners—including managers, policymakers, and entrepreneurs—exploit, regulate, and respond to the rising power of non-independent institutional investors.