The Difference Between Actual Performance And Desired Level,Corporate Venture Capital And Innovation Output

According to “the development of China’s corporate venture capital CVC in 2021”,China’s corporate venture capital(hereinafter referred to as CVC)with non-financial incumbent enterprises as the main investors has exceeded 20 billion RMB,accounting for about 20% of the total amount of venture capital.Therefore,corporate venture capital has become the backbone of China’s venture capital market.In 2021,the number of investment cases disclosed by Tencent Investment created by Tencent reached 212.The top two areas of investment were culture and entertainment enterprises different from Tencent’s main business(Internet service)and enterprise service enterprises,which constituted one of Tencent’s main businesses.Huawei established Hubble Investment in2019,which mainly invests in the information and communication technology enterprises with the same main business as Huawei.Practice shows that it has become a strategic choice and an important way for incumbent enterprises to carry out corporate venture capital activities to obtain innovation advantages.So,what causes the incumbent enterprises to carry out corporate venture capital activities and what types of corporate venture capital activities? Do different types of corporate venture capital activities have different impacts on innovation output? These have become hot issues.Research has focused on the motivation,antecedents and consequences of incumbent enterprises’ corporate venture capital.Previous studies found that the incumbent enterprises carried out corporate venture capital mainly out of strategic objectives,financial objectives and the need to deal with environmental uncertainty.The research on the influencing factors for incumbent enterprises to carry out corporate venture capital mainly focus on the characteristics of senior executives and senior management teams,enterprise resources and capabilities,external competition and policy environment.The research on the results of corporate venture capital carried out by incumbent enterprises mainly focuses on innovation output,financial performance and long-term development capability of enterprises.The existing research has greatly enriched people’s understanding of corporate venture capital,but there are still some deficiencies.Firstly,with the deepening of research,scholars have increasingly noticed the importance of corporate venture capital to the innovation output of incumbent enterprises.However,research on the antecedents of promoting incumbent enterprises to carry out corporate venture capital is relatively scarce.This will make it difficult for us to comprehensively understand the corporate venture capital activities of the incumbent enterprises.Secondly,there are conflicting conclusions in some studies on the antecedents of corporate venture capital,especially on the issue that “the difference between actual performance and desired level” affect incumbent enterprises’ corporate venture capital activities.This will make it difficult for us to correctly understand the relationship between “the difference between actual performance and desired level” and incumbent enterprises’ corporate venture capital,and to effectively guide incumbent enterprises to make corporate venture capital decisions based on “the difference between actual performance and desired level”.In addition,previous studies have found that both enterprise characteristics and CEO characteristics have an important moderating effect on the relationship between “the difference between actual performance and desired level” and incumbent enterprises’ strategic behaviors,especially innovation activities.However,few studies focus on the contextual factors that affect the relationship between “the difference between actual performance and desired level” and corporate venture capital.This will make it difficult for us to fully understand the situation where the difference in “the difference between actual performance and desired level” affects the company’s corporate venture capital,and to guide enterprises to make corporate venture capital decisions based on “the difference between actual performance and desired level” under specific circumstances.Finally,although previous studies have confirmed the role of corporate venture capital in promoting innovation output of incumbent enterprises,few studies have studied its situational conditions.This makes it impossible for us to help incumbent enterprises obtain innovation output more effectively based on the actual situation of incumbent enterprises.Based on this,according to the Behavioral Theory of the Firm,this research divides corporate venture capital into exploratory corporate venture capital and exploitative corporate venture capital according to whether the incumbent enterprises and their invested enterprises belong to the same industry.This research focus on two issues: "The impact and boundary conditions of “the difference between actual performance and expected performance” and “the difference between expected performance and actual performance” on the incumbent enterprises to carry out exploratory corporate venture capital activities and exploitative venture capital activities" and "When the actual performance is lower than the expected goal or higher than the expected goal,the impact of exploratory corporate venture capital activities and exploitative venture capital activities on the incumbent enterprises’ innovation output".Specifically,this study takes2008-2019 as the time window,199 listed companies in Shanghai Stock Exchange and Shenzhen Stock Exchange as the research object,and adopts the negative binomial regression.First of all,when the actual performance is lower than the expected goal or higher than the expected goal,the direct effect of “the difference between actual performance and desired level” and “the difference between expected performance and actual performance” on exploratory corporate venture capital and exploitative corporate venture capital activities,as well as the moderating effect of social status of enterprise and social status of CEO are tested.Secondly,when the actual performance is lower or higher than the expected goal,the direct effect of exploratory corporate venture capital and exploitative corporate venture capital on the innovation output of incumbent enterprises are tested.The empirical results of this study show that:(1)when the actual performance is lower than the desired goal,“difference between expected performance and actual performance” is positively correlated with exploratory corporate venture capital;“difference between expected performance and actual performance” is negatively correlated with exploitative corporate venture capital;(2)When the actual performance is higher than the desired goal,there is an inverted U-shaped relationship between“difference between actual performance and expected performance” and exploratory corporate venture capital;“difference between actual performance and expected performance” is positively correlated with exploitative corporate venture capital;(3)Firm’s social status weakens the relationship between “difference between expected performance and actual performance” and exploratory corporate venture capital;Firm’s social status weakens the relationship between “difference between actual performance and expected performance” and exploratory corporate venture capital.Firm’s social status strengthens the relationship between “difference between actual performance and expected performance” and exploitative corporate venture capital.(4)CEO’s social status strengthens the relationship between “difference between expected performance and actual performance” and exploratory corporate venture capital;CEO’s social status strengthens the relationship between “difference between expected performance and actual performance” and exploitative corporate venture capital.CEO’s social status strengthens the relationship between “difference between actual performance and expected performance” and exploratory corporate venture capital.CEO’s social status weakens the relationship between “difference between actual performance and expected performance” and exploitative corporate venture capital.(5)When the actual performance is lower than the expected performance,exploratory corporate venture capital is positively correlated with the innovation output of incumbent firms;When the actual performance is higher than the expected performance,exploitative corporate venture capital is positively related to the innovation output of the incumbent firm.The conclusion of this study has important theoretical significance.Firstly,based on whether the incumbent enterprises and the start-ups belong to the same industry,this study divides corporate venture capital into exploratory corporate venture capital and exploitative corporate venture capital.This study empirically analyzes the different effects of “difference between expected performance and actual performance” and“difference between actual performance and expected performance” on exploratory corporate venture capital and exploitative corporate venture capital,and reconciles the conflicting conclusions drawn from the existing research on the impact of “the difference between actual performance and desired level” on corporate strategic decision-making.Secondly,based on the theory of firm behavior,this study explores the antecedents of corporate venture capital,identifies the relationship between “the degree of difference between actual performance and expected performance” and exploratory corporate venture capital and exploitative corporate venture capital,and promotes the research on antecedents of corporate venture capital.Furthermore,this study verifies the moderating effect of firm’s social status and CEO’s social status on the relationship between incumbent enterprises’ “the difference between actual performance and desired level” and exploratory corporate venture capital and exploitative corporate venture capital,and provides ideas for further developing the theory of corporate behavior.Finally,this study explores the impact of exploratory corporate venture capital and exploitative corporate venture capital on innovation output of incumbent enterprises under the situation of“actual performance is lower than desired level” and “actual performance is higher than desired level”,which enriches the relevant research on antecedents and contextualization of innovation output.