Abstract: Drawing on behavioral agency perspective, we find that VC funding has a positive effect on innovation novelty of early-stage ventures but it has a negative effect on that of late-stage ventures. Based on a sample of 456 biotech ventures, we further find that structurally powerful CEOs, who are in a position to take greater risk, intensify the positive effect of VC funding on innovation novelty of early stage ventures and attenuate the negative effect of VC funding for late stage ventures. However, CEOs with expertise power, typically seeking more balanced innovation orientation, attenuate both the positive effect of VC funding on innovation novelty of early stage ventures and the negative effect of VC funding for late stage ventures.

Abstract: This study asks how organizational characteristics of the parent company where a patented invention is developed, i.e. teamwork and autonomy, affect the formation of inventor spinoffs. We also investigate the impact of creativity on inventor spinoffs. The empirical analysis is based on a large-scale survey of EPO patent inventors in the US, EU, Japan and Israel. Our investigation shows that: inventions resulting from teamwork activities are less likely to entail the formation of a new firm; granting management autonomy to employees decreases the chances of a spinoff, especially if the invention is developed by a team of inventors. Finally, inventions arising from pure creativity trigger spinoffs, particularly when the organization does not possess the complementary resources necessary to turn the invention into a successful innovation.

Abstract: Corporate spinouts expand explorative activities at the corporate system level, which increases variety in the search space of their parents. Because of the links with their parents, spinouts can facilitate parents’ learning of unfamiliar components more than other strategies. Using matching estimators on the patenting activities of 54 corporations and their spinouts, CVC investments, alliances, and acquisitions in the ICT industry, I show that firms are capable of producing patents of higher novelty when exploring knowledge developed by their spinouts as compared to exploring knowledge developed by their CVC firms, allied partners, and acquired firms. Moreover, I show that these differences are higher when the parent explores unfamiliar components. Building on absorptive capacity and knowledge recombination literature, I discuss the implications for theory and practice.

Abstract: In quest of competitive advantage, organizations engage in external knowledge search spanning technological and geographic space. However, organizations suffer from liabilities of distance. Building on the external knowledge search and organizational learning literatures, we propose that CVC investment enables incumbents to overcome these limitations, enhancing recombination of external knowledge generated by start-ups with incumbents’ existing knowledge base. We hypothesize that CVC investment enhances exploitation and exploration through investments in a portfolio of start-ups located in diverse technological and geographical space. We test our hypotheses with hand-collected data on 1,405 patent dyads in the medical device industry. We find incumbents engage in exploitation and exploration through CVC investment, but these are distinctly situated. Search in close technological and geographic space facilitates exploitation and suppresses knowledge recombination, while search in distant space facilitates exploration and knowledge recombination.