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Macro Factors Affecting Corporate Venture Capital Investments: Effects of Industrial Boom, Exogenous Crisis, Economic Growth, Competition Intensity  

Kim, Doyoon (Yonsei Business Research Institute)
Shin, Dongyoub (Yonsei University, School of Business)
Publication Information
Asia-Pacific Journal of Business Venturing and Entrepreneurship / v.16, no.4, 2021 , pp. 101-113 More about this Journal
Abstract
This paper inquires the macro-economic factors that may affect the corporate venture capital (CVC) from an industrial organization theory perspective. Unlike existing studies focusing CVC investments related to parent corporates' strategic intention, we identified CVC firm as an independent financial investor affected by macro environment and industrial structure. Specifically, we empirically investigate whether and how industry's boom, exogenous crisis, economic growth, and competition intensity affect the CVC investment for a data set of investment in the U.S. based corporate venture capital industry, 1996-2017. The empirical data analyzed in the study contained a total of 84 U.S. based CVC firms and their 2,306 investments from 1996 until 2017. After conducting a time-series negative binomial analysis, our empirical analyses suggest that the CVC investments are affected negatively by exogenous crisis and competition intensity, and positively by industrial boom and economic growth. we found the significance and direction of our independent variables strongly supported all of our four hypotheses in a highly robust manner. The results of this study are expected to contribute the literatures of corporate venture capital and venture investment by illustrating which macro-economic and industrial structure factors affect CVC investment decision to adapt to dynamic environmental change beside strategic intention of CVC firm's parent corporates.
Keywords
Corporate Venture Capital; Boom and Bust; Industrial Crisis; Economic Growth; Competition Intensity;
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