Strategic versus financial investors: the role of strategic objectives in financial contracting

Stefan Arping and Sonia Falconieri

Oxford Economic Papers, 2010, vol. 62, issue 4, pages 691-714

Abstract: Strategic investors, such as corporate venture capitalists, engage in the financing of start-up firms to complement their core businesses and to facilitate the internalization of externalities. We argue that while strategic objectives make it more worthwhile for an investor to elicit high entrepreneurial effort, they can also undermine his commitment to penalize poorly performing entrepreneurs by terminating their projects. Based on this tradeoff we develop a theory of financing choice between strategic and financial investors. Our framework provides insights into the design of corporate venturing deals and the choice between corporate venturing and independent venture capital finance. Copyright 2010 Oxford University Press 2009 All rights reserved, Oxford University Press.

Date: 2010
References: Add references at CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1093/oep/gpp038 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Strategic versus Financial Investors: The Role of Strategic Objectives in Financial Contracting
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:oup:oxecpp:v:62:y:2010:i:4:p:691-714

Ordering information: This journal article can be ordered from
http://www.oup.co.uk/journals

Access Statistics for this article

Oxford Economic Papers is edited by A. Banerjee and James Forder

More articles in Oxford Economic Papers from Oxford University Press
Address: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
Series data maintained by Oxford University Press ().