Aspirations, Innovation, and Corporate Venture Capital: A Behavioral Perspective

By Vibha Gaba, Shantanu Bhattacharya. 2012

159 citations recorded by the source corpus.

Corporate venture capital (CVC) is increasingly viewed as an important mechanism for external R&D that can help fuel innovation, growth, and strategic renewal opportunities for established firms. However, despite the popularity of CVC units, the conditions prompting decision-makers to adopt and retain such units are not well understood. In this study, we examine when and why firms pursue CVC units to tap external markets for new ideas and technologies. We draw insights from the behavioral theory of the firm to argue that innovation performance relative to aspirations is a crucial driver of its decision to pursue CVC units, and we test our arguments by examining both the adoption and termination of CVC units for a sample of firms in the information technology sector during the period 1992–2003. Results show that a firm is more likely to adopt and less likely to terminate a CVC unit when its innovation performance is closets to its aspiration levels. Furthermore, innovation performance relative to social rather than historical aspirations is a better predictor of CVC adoption and termination. This study contributes to the technology entrepreneurship literature by demonstrating that managerial aspirations for innovation-related goals are an important driver of CVC initiatives within firms.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/1250e561ee1556d81b1bd5751407780a93c0f154

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Citations in the corpus

A Review and Road Map of Entrepreneurial Equity Financing Research: Venture Capital, Corporate Venture Capital, Angel Investment, Crowdfunding, and Accelerators (2017, background): “Additionally, when innovation performance is above aspiration levels, a firm is less likely to initiate or continue existing CVC activities and is also less likely to launch a CVC unit when performance is below aspirations (Gaba & Bhattacharya, 2012).”
CEOs’ Regulatory Focus and Risk-Taking When Firms Perform Below and Above the Bar (2021, methodology): “…aspirations, we followed prior research and first used the weighted moving average of a firm’s past performance in terms of return on assets (ROA) as a reference point to determine aspirations (Gaba & Bhattacharya, 2012; Levinthal & March, 1981): aspirations ROA aspirationsit it it= + −( ) −α α1 1.”
Organizational Structure, Information Processing, and Decision-Making: A Retrospective and Road Map for Research (2020, background): “In the literature on adaptation, for example, theories of performance feedback propose that attention to goals is sequential and basedon the need to resolve pressing problemsor to close gaps between performance and aspirations (e.g., Cyert & March, 1963; Gaba & Bhattacharya, 2012; Greve, 2008).”
Managerial Risk Taking (2016, unknown): “…& Miller, 2008; J. Y. Kim, Finkelstein, & Haleblian, 2015), entrance into new markets (Barreto, 2012), innovation (Chen, 2008; Chen & Miller, 2007; Gaba & Bhattacharya, 2012; Gaba & Joseph, 2013; Greve, 2003; O’Brien & David, 2014; Vissa, Greve, & Chen, 2010), illegal behavior (Baucus & Near,…”
Only the Brave: Product Innovation, Service Business Model Innovation, and Their Impact on Performance (2016, background): “Investment in R&D activities has been used extensively as the indicator for product innovation (Chen and Miller 2007; Gaba and Bhattacharya 2012) and, given the manufacturing industry sample and general tendency for service innovations to be developed outside R&D, we decided it safe to assume that…”