TY - JOUR
T1 - How technological overlap between spinouts and parent firms affects corporate venture capital investments in spinouts
T2 - The role of competitive tension
AU - BAE, JOONHYUNG
AU - LEE, JOON MAHN
N1 - Funding Information:
We are grateful for the constructive feedback of our editor, H. Kevin Steensma, and the three anonymous reviewers, as well as Benjamin Hallen, Dennis H. Park, Emily Cox Pahnke, Heejin Woo, Jennifer Tae, J. P. Eggers, Kyle Mayer, Natarajan Balasubramanian, Martin Ganco, Myles Shaver, Umit Ozmel, Wonsang Ryu, and Yongwook Paik. We also received helpful comments from seminar participants at the Academy of Management Annual Meeting, Midwest Strategy Meeting, Strategic Management Society Conference, Chinese University of Hong Kong, Hong Kong Baptist University, KAIST, Korea University, Purdue University, Sungkyunkwan University, and UNIST. The first author appreciates the guidance of his dissertation committee members—Thomas Brush, Fabrice Lumineau, Tony Tong, and Jovan Grahovac. This study is partially supported by the Korea University Business School Research Grant. All remaining errors are ours. Joonhyung Bae is the first author and led the process of publishing this article. Joon Mahn Lee is the corresponding author, and all correspondence concerning this article should be addressed to joonmahn@korea.ac.kr.
Publisher Copyright:
© 2021 Academy of Management. All rights reserved.
PY - 2021
Y1 - 2021
N2 - Drawing on the literature on entrepreneurship and competitive dynamics, we investigate how technological overlap between spinouts and parent firms influences corporate investors' decisions regarding investments in spinouts. We suggest that a high level of technological overlap between a spinout and its parent firm deters potential corporate investors from making an investment in the spinout because of competitive tension arising from anticipated hostile actions by the parent firm. We further suggest that these negative effects are contingent on the tradeoffs between competitive risks and benefits. Our findings show that the negative effects are amplified when parent firms have a strong litigiousness in claiming their intellectual property rights. However, we find that the negative effects are mitigated when corporate investors can expect benefits from gaining indirect access to parent firms' technological knowledge. Using a sample of corporate venture capital investments in the U.S. medical device industry, we find evidence that supports our hypotheses.
AB - Drawing on the literature on entrepreneurship and competitive dynamics, we investigate how technological overlap between spinouts and parent firms influences corporate investors' decisions regarding investments in spinouts. We suggest that a high level of technological overlap between a spinout and its parent firm deters potential corporate investors from making an investment in the spinout because of competitive tension arising from anticipated hostile actions by the parent firm. We further suggest that these negative effects are contingent on the tradeoffs between competitive risks and benefits. Our findings show that the negative effects are amplified when parent firms have a strong litigiousness in claiming their intellectual property rights. However, we find that the negative effects are mitigated when corporate investors can expect benefits from gaining indirect access to parent firms' technological knowledge. Using a sample of corporate venture capital investments in the U.S. medical device industry, we find evidence that supports our hypotheses.
UR - http://www.scopus.com/inward/record.url?scp=85085483038&partnerID=8YFLogxK
U2 - 10.5465/AMJ.2018.0223
DO - 10.5465/AMJ.2018.0223
M3 - Article
AN - SCOPUS:85085483038
SN - 0001-4273
VL - 64
SP - 643
EP - 678
JO - Academy of Management Journal
JF - Academy of Management Journal
IS - 2
ER -