Research On Bilateral Moral Hazards And Governance In Corporate Venture Capital Market

In the first part of the article, we discuss the bilateral moral hazard in corporate venture investment with pointing out that entrepreneurs use low-efficiency radical innovation to prevent big partners from stealing knowledge. The second part of the article, using resource based theory, searches for the reason why entrepreneurs'bargain power in alliances is decreasing and creates a two-period game model, under incomplete contract theory, to analyze the game equilibrium in different legal environments. It is proposed by the article that by introducing the independent venture capital as a mediator between the entrepreneur and big companies the risk of moral hazard can be lowered down. The last part of the article suggests the joint investment can be helpful to the healthy operation of China's corporate venture capital market.