Corporate Venturing, Allocation of Talent, and Competition for Star Managers

Jean-Etienne de Bettignies and Gilles Chemla ()
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Gilles Chemla: Imperial College London, DRM-CNRS; and CEPR, Tanaka Business School, Imperial College London, South Kensington Campus, London SW7 2AZ, United Kingdom

Management Science, 2008, vol. 54, issue 3, 505-521

Abstract: We provide new rationales for corporate venturing, based on competition for talented managers. As returns to venturing increase, firms engage in corporate venturing for reasons other than capturing these returns. First, higher venturing returns increase managerial compensation, to which firms respond by increasing incentives. Managers increase effort, prompting firms to reallocate them to new ventures, where the marginal product of effort is highest. Second, as returns to venturing become large, corporate venturing emerges as a way to recruit/retain managers who would otherwise choose alternative employment. We derive several testable empirical predictions about the determinants and structure of corporate venturing.

Keywords: corporate venturing; corporation; rival investor; star managers; effort; competition (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (36)

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Working Paper: Corporate Venturing, Allocation of Talent, and Competition for Star Managers (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:54:y:2008:i:3:p:505-521

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