The Effects Of Corporate Venture Capital, Founder's Management Control On Venture's R&D

At present,as the domestic and international economic environment tends to be more complicated,with the growing emerging industries and technological changes,the competitive markets enterprises face are becoming more open,volatile and highly uncertain.In order to capture and maintain a sustainable competitive advantage,seeking technological innovation is a crucial strategy for companies to cope with dynamic and complex environments.As the main window for enterprises to acquire technological innovation,Corporate Venture Capital(CVC)has achieved rapid development in the world in recent years.However,compared with the rapid growth of CVC in business practice,there still exists some literature gap in the research of CVC in academia: the existing research is mostly based on CVC investment enterprises,and there are few studies research from the perspective of invested companies.We still know little about the organizational mechanisms through which this relationship unfolds within the venture.As China's CVC industry has experienced explosive growth in recent years,CVC has gradually become an indispensable part of domestic venture capital.It is of importance to explore the technological innovation mechanism of new ventures in China's CVC investment scenario.For technology-oriented and resource-constrained startups,R&D investment is not only a vital source of technological innovation but also reflects the strategic decisionmaking direction of corporate governance for resource allocation.It can both measure the input of technological innovation of new ventures and the long-term strategic resource allocation decisions.Thus,we can explore the mechanism of CVC for technological innovation of new ventures from the impact of R&D investment.For CVC-backed new ventures,it is dominated by the founder who usually takes charge of high ownership and management rights,sharing unique corporate governance factors.On the other hand,CVC enters the invested enterprise as an equity investor.As the two major shareholders of the founding company,there may exit both exchanges of complementary resources and conflicts of interest between them.It is likely that there are interaction factors between CVC and the founder that will have effects on the decision-making of R&D investment of the new enterprises.Therefore,From governance theory,this paper research on the effect of CVC,founder's management right and their interaction on the invested companies,using the sample data of the 164 CVC investment companies listed on GEM in 2009-2017.The research found that CVC's equity share of investee companies and the founder's management control of new ventures have played a significant positive role in the R&D investment of new ventures.Moreover,based on knowledge learning and goal consistency,the interaction between CVC and founders also positively affects the R&D investment of new ventures.The paper has contributions in both theory and practice.For theory,the research enriches the CVC literature from the perspective of corporate governance,providing a new perspective of CVC and founder to explore the organizational mechanisms within the venture's innovation.For practice,the research results suggest that in order to encourage the desire of CVC company in providing complementary assets,CVC-backed venture could appropriately increase the ownership and the number of board of directors of CVC company in the new venture,and promote the communication between CVC company and venture.