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

Jean-Etienne de Bettignies and Gilles Chemla
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Gilles Chemla: DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique

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Abstract: We provide new rationales for corporate venturing (CV), based on competition for talented managers. As returns to venturing increase, firms engage in CV for reasons other than capturing these returns. First, higher venturing returns increase managerial compensation, to which firms respond by increasing the power of 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, CV 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 CV.

Keywords: corporate venture capital; venture capital; failure; competition; entrepreneur; manager (search for similar items in EconPapers)
Date: 2008-03-05
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00365942v1
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Citations: View citations in EconPapers (27)

Published in Management Science, 2008, Vol. 54 (Issue n°3), pp. 505-521

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Journal Article: Corporate Venturing, Allocation of Talent, and Competition for Star Managers (2008)
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