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What drives CVC investments? An Empirical Test of Social Network Theory Predictions

Jean-michel Sahut (jmsahut@gmail.com), Eric Braune (erricbraune@gmail.com) and Frédéric Teulon
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Jean-michel Sahut: IDRAC Business School, France & HEG Fribourg-University of Applied Sciences Western Switzerland
Eric Braune: INSEEC, Lyon, France

Economics Bulletin, 2017, vol. 37, issue 3, 2030-2040

Abstract: Using data on corporate venture capital (CVC) investments by 284 US industrial companies between 2001 and 2013, we analyze the CVC expenditures of each based on their prior position in the syndication network and their financial resources. The generalized-method-of-moments models used show that the annual amount of CVC expenditures of these companies depends on the prior number of co-financing relations they have and their cash flows in the previous year, as well as their prior investments. However, the previous centrality of the industrial companies in syndication networks is insignificant, meaning that prior centrality in the VC network does not guide their current CVC expenditures. This result goes against social network theory, which stipulates that the network members strive to improve their centrality in the network they belong.

Keywords: corporate venture capital; social network theory; financing; syndication (search for similar items in EconPapers)
JEL-codes: C8 G2 (search for similar items in EconPapers)
Date: 2017-08-31
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