Does Product Market Competition Drive CVC Investment? Evidence from the U.S. IT Industry

References

• Aggarwal R, Gopal R, Gupta A, Singh H (2012) Putting money where the mouths are: The relation between venture financing and electronic word-of-mouth. Inform. Systems Res. 23(3):976–992.Link, Google Scholar
• Aghion P, Tirole J (1994) The management of innovation. Quart. J. Econom. 109(4):1185–1209.Crossref, Google Scholar
• Aghion P, Bloom N, Blundell R, Griffith R, Howitt P (2005) Competition and innovation: An inverted-U relationship. Quart. J. Econom. 120(2):701–728.Google Scholar
• Ahuja G, Katila R (2001) Technological acquisitions and the innovation performance of acquiring firms: A longitudinal study. Strategic Management J. 22(3):197–220.Crossref, Google Scholar
• Alcacer J, Chung W (2007) Location strategies and knowledge spillovers. Management Sci. 53(5):760–776.Link, Google Scholar
• Arellano M, Bond S (1991) Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Rev. Econom. Stud. 58(194):277–297.Crossref, Google Scholar
• Arora A (1996) Contracting for tacit knowledge: The provision of technical services in technology licensing contracts. J. Development Econom. 50(2):233–256.Crossref, Google Scholar
• Arrow K (1962) Economic welfare and the allocation of resources for invention. Nelson R, ed. The Rate and Direction of Inventive Activity: Economic and Social Factors (National Bureau of Economic Research, Princeton University Press, Princeton, NJ), 609–626.Crossref, Google Scholar
• Basu S, Phelps C, Kotha S (2011) Towards understanding who makes corporate venture capital investments and why. J. Bus. Venturing 26(2):153–171.Crossref, Google Scholar
• Benson D, Ziedonis RH (2009) Corporate venture capital as a window on new technologies: Implications for the performance of corporate investors when acquiring startups. Organ. Sci. 20(2):329–351.Link, Google Scholar
• Benson D, Ziedonis RH (2010) Corporate venture capital and the returns to acquiring portfolio companies. J. Financial Econom. 98(3):478–499.Crossref, Google Scholar
• Block Z, Ornati OA (1988) Compensating corporate venture managers. J. Bus. Venturing 2(1):41–51.Crossref, Google Scholar
• Blundell R, Bond S (1998) Initial conditions and moment restrictions in dynamic panel data models. J. Econometrics 87(1):115–143.Crossref, Google Scholar
• Blundell R, Griffith R, Van Reenen J (1999) Market share, market value and innovation in a panel of British manufacturing firms. Rev. Econom. Stud. 66(228):529–554.Crossref, Google Scholar
• Bobba M, Coviello D (2007) Weak instruments and weak identification, in estimating the effects of education, on democracy. Econom. Lett. 96(3):301–306.Crossref, Google Scholar
• Bonanno G, Haworth B (1998) Intensity of competition and the choice between product and process innovation. Internat. J. Indust. Organ. 16(4):495–510.Crossref, Google Scholar
• Boudreau KJ, Lacetera N, Lakhani KR (2011) Incentives and problem uncertainty in innovation contests: An empirical analysis. Management Sci. 57(5):843–863.Link, Google Scholar
• Bresnahan TF, Greenstein S (1999) Technological competition and the structure of the computer industry. J. Indust. Econom. 47(1):1–40.Crossref, Google Scholar
• Cassiman B, Veugelers R (2006) In search of complementarity in innovation strategy: Internal R&D and external knowledge acquisition. Management Sci. 52(1):68–82.Link, Google Scholar
• Chamberlin E (1933) The Theory of Monopolistic Competition (Harvard University Press, Cambridge, MA).Google Scholar
• Chesbrough HW (2002) Making sense of corporate venture capital. Harvard Bus. Rev. 80(3):90–99.Google Scholar
• Chesbrough HW (2006) Open Innovation: The New Imperative for Creating and Profiting from Technology (Harvard Business Press, Boston).Crossref, Google Scholar
• Cockburn IM, Henderson RM (1998) Absorptive capacity, coauthoring behavior, and the organization of research in drug discovery. J. Indust. Econom. 46(2):157–182.Crossref, Google Scholar
• Cohen WM (2010) Fifty years of empirical studies of innovative activity and performance. Handbook Econom. Innovation 1:129–213.Crossref, Google Scholar
• Cohen WM, Levinthal DA (1990) Absorptive capacity: A new perspective on learning and innovation. Admin. Sci. Quart. 35(1): 128–152.Crossref, Google Scholar
• Dasgupta P, Stiglitz J (1980) Uncertainty, industrial structure, and the speed of R&D. Bell J. Econom. 11(1):1–28.Crossref, Google Scholar
• De Clercq D, Fried VH, Lehtonen O, Sapienza HJ (2006) An entrepreneur’s guide to the venture capital galaxy. Acad. Management Perspectives 20(3):90–112.Crossref, Google Scholar
• Diener K, Piller FT (2010) The Market for Open Innovation: Increasing the Efficiency and Effectiveness of the Innovation Process (RWTH Aachen University, Aachen, Germany).Google Scholar
• Dixit AK, Stiglitz JE (1977) Monopolistic competition and optimum product diversity. Amer. Econom. Rev. 67(3):297–308.Google Scholar
• Dushnitsky G, Lenox MJ (2005a) When do firms undertake R&D by investing in new ventures? Strategic Management J. 26(10):947–965.Crossref, Google Scholar
• Dushnitsky G, Lenox MJ (2005b) When do incumbents learn from entrepreneurial ventures? Corporate venture capital and investing firm innovation rates. Res. Policy 34(5):615–639.Crossref, Google Scholar
• Dushnitsky G, Lenox MJ (2006) When does corporate venture capital investment create firm value? J. Bus. Venturing 21(6):753–772.Crossref, Google Scholar
• Edelson H (2001) The downside of a corporate VC fund. Directors Boards 25(3):41–44.Google Scholar
• Fichman RG (2004) Going beyond the dominant paradigm for information technology innovation research: Emerging concepts and methods. J. Assoc. Inform. Systems 5(8):314–355.Google Scholar
• Fulghieri P, Sevilir M (2009) Organization and financing of innovation, and the choice between corporate and independent venture capital. J. Financial Quant. Anal. 44(6):1291–1321.Crossref, Google Scholar
• Gaba V, Meyer AD (2008) Crossing the organizational species barrier: How venture capital practices infiltrated the information technology sector. Acad. Management J. 51(5):976–998.Crossref, Google Scholar
• Galasso A, Simcoe TS (2011) CEO overconfidence and innovation. Management Sci. 57(8):1469–1484.Link, Google Scholar
• Gilbert RJ, Newbery DMG (1982) Preemptive patenting and the persistence of monopoly. Amer. Econom. Rev. 72(3):514–526.Google Scholar
• Godoe H (2000) Innovation regimes, R&D and radical innovations in telecommunications. Res. Policy 29(9):1033–1046.Crossref, Google Scholar
• Gompers P, Lerner J (2001) The venture capital revolution. J. Econom. Perspectives 15(2):145–168.Crossref, Google Scholar
• Gompers PA, Lerner J (1998) What drives venture capital fundraising? Brookings Papers on Economic Activity: Microeconomics, Washington, DC, 149–192.Google Scholar
• Grant RM (1996) Toward a knowledge-based theory of the firm. Strategic Management J. 17(S2):109–122.Crossref, Google Scholar
• Grossman GM, Helpman E (1991) Quality ladders in the theory of growth. Rev. Econom. Stud. 58(193):43–61.Crossref, Google Scholar
• Hall BH, Jaffe AB, Trajtenberg M (2001) The NBER patent citations data file: Lessons, insights and methodological tools. Working Paper, National Bureau of Economic Research, Cambridge, MA.Crossref, Google Scholar
• Han K, Oh W, Im KS, Chang RM, Oh H, Pinsonneault A (2012) Value cocreation and wealth spillover in open innovation alliances. MIS Quart. 36(1):291–325.Crossref, Google Scholar
• Hart OD (1983) The market mechanism as an incentive scheme. Bell J. Econom. 14(2):366–382.Crossref, Google Scholar
• Hoberg G, Phillips G (2010) Product market synergies and competition in mergers and acquisitions: A text-based analysis. Rev. Financial Stud. 23(10):3773–3811.Crossref, Google Scholar
• Hoberg G, Phillips G (2016) Text-based network industries and endogenous product differentiation. J. Political Econom. Forthcoming.Crossref, Google Scholar
• Hotelling H (1929) Stability in competition. Econom. J. 39(153):41–57.Google Scholar
• Huang Y, Singh PV, Srinivasan K (2014) Crowdsourcing new product ideas under consumer learning. Management Sci. 60(9): 2138–2159.Link, Google Scholar
• Iansiti M (2000) How the incumbent can win: Managing technological transitions in the semiconductor industry. Management Sci. 46(2):169–185.Link, Google Scholar
• Joshi K, Chi L, Datta A, Han S (2010) Changing the competitive landscape: Continuous innovation through IT-enabled knowledge capabilities. Inform. Systems Res. 21(3):472–495.Link, Google Scholar
• Katila R, Rosenberger JD, Eisenhardt KM (2008) Swimming with sharks: Technology ventures, defense mechanisms and corporate relationships. Admin. Sci. Quart. 53(2):295–332.Crossref, Google Scholar
• Kim N, Lee H, Kim W, Lee H, Suh JH (2015) Dynamic patterns of industry convergence: Evidence from a large amount of unstructured data. Res. Policy 44(9):1734–1748.Crossref, Google Scholar
• Kleis L, Chwelos P, Ramirez RV, Cockburn I (2012) Information technology and intangible output: The impact of IT investment on innovation productivity. Inform. Systems Res. 23(1):42–59.Link, Google Scholar
• Kortum S, Lerner J (2000) Assessing the contribution of venture capital to innovation. RAND J. Econom. 31(4):674–692.Crossref, Google Scholar
• Lane PJ, Lubatkin M (1998) Relative absorptive capacity and interorganizational learning. Strategic Management J. 19(5):461–477.Crossref, Google Scholar
• Lee C-H, Venkatraman N, Tanriverdi H, Iyer B (2010) Complementarity-based hypercompetition in the software industry: Theory and empirical test, 1990–2002. Strategic Management J. 31(13): 1431–1456.Crossref, Google Scholar
• Lee CM, Ma P, Wang CC (2015) Search-based peer firms: Aggregating investor perceptions through Internet co-searches. J. Financial Econom. 116(2):410–431.Crossref, Google Scholar
• Lee T, Wilde LL (1980) Market structure and innovation: A reformulation. Quart. J. Econom. 94(2):429–436.Crossref, Google Scholar
• Leimeister JM, Huber M, Bretschneider U, Krcmar H (2009) Leveraging crowdsourcing: Activation-supporting components for IT-based ideas competition. J. Management Inform. Systems 26(1):197–224.Crossref, Google Scholar
• Lerner J (2013) Corporate venturing. Harvard Bus. Rev. 91(10):86–94.Google Scholar
• Levin RC, Cohen WM, Mowery DC (1985) R&D appropriability, opportunity, and market structure: New evidence on some Schumpeterian hypotheses. Amer. Econom. Rev. 75(2):20–24.Google Scholar
• MacMillan I, Roberts E, Livada V, Wang A (2008) Corporate venture capital (CVC): Seeking innovation and strategic growth. National Institute of Standards and Technology, U.S. Department of Commerce, Washington, DC.Google Scholar
• Malhotra A, Gosain S, El Sawy OA (2005) Absorptive capacity configurations in supply chains: Gearing for partner-enabled market knowledge creation. MIS Quart. 29(1):145–187.Crossref, Google Scholar
• March JG (1991) Exploration and exploitation in organizational learning. Organ. Sci. 2(1):71–87.Link, Google Scholar
• McAfee A, Brynjolfsson E (2008) Investing in the IT that makes a competitive difference. Harvard Bus. Rev. 86(7/8):98–107.Google Scholar
• Melville N, Gurbaxani V, Kraemer K (2007) The productivity impact of information technology across competitive regimes: The role of industry concentration and dynamism. Decision Support Systems 43(1):229–242.Crossref, Google Scholar
• Mendelson H (2000) Organizational architecture and success in the information technology industry. Management Sci. 46(4):513–529.Link, Google Scholar
• Mendelson H, Pillai RR (1999) Industry clockspeed: Measurement and operational implications. Manufacturing Service Oper. Management 1(1):1–20.Link, Google Scholar
• Mowery DC (1999) U.S. Industry in 2000: Studies in Competitive Performance (National Academies Press, Washington, DC).Google Scholar
• Myers SC, Majluf NS (1984) Corporate financing and investment decisions when firms have information that investors do not have. J. Financial Econom. 13(2):187–221.Crossref, Google Scholar
• Nelson RR, Winter SG (2009) An Evolutionary Theory of Economic Change (Harvard University Press, Cambridge, MA).Google Scholar
• Nerkar A, Paruchuri S (2005) Evolution of R&D capabilities: The role of knowledge networks within a firm. Management Sci. 51(5):771–785.Link, Google Scholar
• Nickell SJ (1996) Competition and corporate performance. J. Political Econom. 104(4):724–746.Crossref, Google Scholar
• Nowak MJ, Grantham CE (2000) The virtual incubator: Managing human capital in the software industry. Res. Policy 29(2):125–134.Crossref, Google Scholar
• Pavlou PA, El Sawy OA (2010) The “third hand”: IT-enabled competitive advantage in turbulence through improvisational capabilities. Inform. Systems Res. 21(3):443–471.Link, Google Scholar
• Roberts B (2006) Show me the technology. Electronic Bus. 36(8):52–56.Google Scholar
• Roodman D (2009) How to do xtabond2: An introduction to difference and system GMM in Stata. Stata J. 9(1):86–136.Crossref, Google Scholar
• Rothaermel FT (2001) Incumbent’s advantage through exploiting complementary assets via interfirm cooperation. Strategic Management J. 22(6–7):687–699.Crossref, Google Scholar
• Sahaym A, Steensma HK, Barden JQ (2010) The influence of R&D investment on the use of corporate venture capital: An industry-level analysis. J. Bus. Venturing 25(4):376–388.Crossref, Google Scholar
• Sambamurthy V, Bharadwaj A, Grover V (2003) Shaping agility through digital options: Reconceptualizing the role of information technology in contemporary firms. MIS Quart. 27(2):237–263.Crossref, Google Scholar
• Schildt HA, Maula MV, Keil T (2005) Explorative and exploitative learning from external corporate ventures. Entrepreneurship Theory Practice 29(4):493–515.Crossref, Google Scholar
• Schumpeter JA (1942) Capitalism, Socialism and Democracy (Harper & Row, New York).Google Scholar
• Sutton J (1991) Sunk Costs and Market Structure (MIT Press, Cambridge, MA).Google Scholar
• Swanson EB, Ramiller NC (2004) Innovating mindfully with information technology. MIS Quart. 28(4):553–583.Crossref, Google Scholar
• Tambe P, Hitt LM, Brynjolfsson E (2012) The extroverted firm: How external information practices affect innovation and productivity. Management Sci. 58(5):843–859.Link, Google Scholar
• Tang J (2006) Competition and innovation behaviour. Res. Policy 35(1):68–82.Crossref, Google Scholar
• Tanriverdi H (2005) Information technology relatedness, knowledge management capability, and performance of multibusiness firms. MIS Quart. 29(2):311–334.Crossref, Google Scholar
• Tanriverdi H, Lee C-H (2008) Within-industry diversification and firm performance in the presence of network externalities: Evidence from the software industry. Acad. Management J. 51(2):381–397.Crossref, Google Scholar
• Tirole J (1988) The Theory of Industrial Organization (MIT Press, Cambridge, MA).Google Scholar
• Tong TW, Li Y (2011) Real options and investment mode: Evidence from corporate venture capital and acquisition. Organ. Sci. 22(3):659–674.Link, Google Scholar
• Van de Vrande V, Lemmens C, Vanhaverbeke W (2006) Choosing governance modes for external technology sourcing. R&D Management 36(3):347–363.Crossref, Google Scholar
• Vasudeva G, Anand J (2011) Unpacking absorptive capacity: A study of knowledge utilization from alliance portfolios. Acad. Management J. 54(3):611–623.Crossref, Google Scholar
• Wadhwa ANU, Kotha S (2006) Knowledge creation through external venturing: Evidence from the telecommunications equipment manufacturing industry. Acad. Management J. 49(4):819–835.Crossref, Google Scholar
• Walsh ST, Kirchhoff BA, Newbert S (2002) Differentiating market strategies for disruptive technologies. IEEE Trans. Engrg. Management 49(4):341–351.Crossref, Google Scholar