Why do incumbents fund startups? A study of the antecedents of corporate venture capital in China

Gary Dushnitsky and Lei Yu

Research Policy, 2022, vol. 51, issue 3

Abstract: Established firms are instrumental in funding entrepreneurial ventures, a practice known as corporate venture capital (CVC). Yet, our knowledge of the reasons firms engage in CVC is calibrated mainly on data from the United States and Europe. Such a restricted focus limits our understanding of CVC practices and objectives. Accordingly, we adopt an abductive approach to study the antecedents of CVC in China. The country is a vibrant entrepreneurial setting, second only to the USA in total startup numbers and funding amounts. We construct a comprehensive data of Chinese CVCs during the late 2010s by integrate Chinese and international databases. Cross-industry analyses of CVC patterns underscore a novel objective; one that is predominantly associated with harnessing growth through market expansion rather than the prevailing view of CVC as a window on technology. The findings mirror the features of the Chinese setting, where entrepreneurs profit from the dramatic expansion in economic activity and serve as a vehicle to leverage the global innovation frontier.

Keywords: Corporate Venture Capital; Venture Capital; Startups; Innovation; China (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:51:y:2022:i:3:s0048733321002559

DOI: 10.1016/j.respol.2021.104463

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