Limitations to interorganizational knowledge acquisition: the paradox of corporate venture capital

Abstract

By highlighting conditions under which viable interorganizational relationships do not materialize, we explore the limitations of interorganizational knowledge acquisition. In the empirical context of corporate venture capital (CVC), we analyze a sample of 1,646 start-up-stage ventures that received funding during the 1990s. Under a regime of weak intellectual property protection (IPP), an entrepreneur-CVC investment relationship is less likely to form when the entrepreneurial invention targets the same industry as corporate products. In contrast, under a strong IPP regime, industry overlap is associated with an increase in the likelihood of an investment relationship. Our findings suggest that many relationships do not form because the corporation will not invest unless the entrepreneur discloses his or her invention, and the entrepreneur may be wary of doing so, fearing imitation. To the extent that a CVC has greater capability and inclination to target same-industry ventures, such industry overlap would exacerbate imitation concerns under a weak IPP regime, yet facilitate an investment relationship under a strong IPP regime. Beyond CVC, this insight may explain patterns of other interorganizational relationships, including research and development alliances and technology licensing between start-ups and incumbents. of giving them early warning of what we were up to.Charles Ferguson, founder of Vermeer Technologies Inc. (Ferguson, 1999) Interorganizational partnership is an important strategy for knowledge acquisition that would be most effective if firms would ally with the highest quality partners. However, this is not a trivial task, as illustrated by the above quotes. Microsoft seeks investments in innovative start-ups; yet Vermeer-a pioneer in the field of Web editors and an ideal target for such an investment strategy-chose not to disclose its activities as fears of imitation outweighed the substantial benefits associated with Microsoft backing.

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An Approach for R&D Partner Selection in Alliances between Large Companies, and Small and Medium Enterprises (SMEs): Application of Bayesian Network and Patent Analysis

“…However, SMEs require R&D collaboration with large corporations in spite of risks on misappropriation of technology secrets according to resource-based theory and, to achieve it, protection on their own critical technology by strong Intellectual Property Policy (IPP) is critical [20]. In addition, the increase of multi-technological products of large cooperation causes R&D outsourcing and collaboration.…”

Building an Investment Case

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