ENTREPRENEURIAL FINANCE MEETS ORGANIZATIONAL REALITY: COMPARING INVESTMENT PRACTICES AND PERFORMANCE OF CORPORATE AND INDEPENDENT VENTURE CAPITALISTS

• 成果类型: Article
• 署名作者: Dushnitsky, Gary; Shapira, Zur
• 署名单位: University of London; London Business School; New York University
• 刊物名称: STRATEGIC MANAGEMENT JOURNAL
• ISSN/ISSBN: 0143-2095
• DOI: 10.1002/smj.851
• 发表日期: 2010
• 页码: 990-1017
• 关键词: principal-agent framework; incentives; COMPENSATION; CORPORATE ENTREPRENEURSHIP; venture capital

摘要

This paper investigates the effect of compensation of corporate personnel on their investment in new technologies. We focus on a specific corporate activity, namely corporate venture capital (CVC), describing minority equity investment by established-firms in entrepreneurial ventures. The setting offers an opportunity to compare corporate investors to investment experts, the independent venture capitalists (IVCs). On average, we observe a performance gap between corporate investors and their independent counterparts. Interestingly, the performance gap is sensitive to CVCs' compensation scheme: it is the largest when CVC personnel are awarded performance pay. Not only do we study the association between incentives and performance but we also document a direct relationship between incentives and the actions managers undertake. For example, we observe disparity between the number of participants in venture capital syndicates that involve a corporate investor, and those that consist solely of IVCs. The disparity shrinks substantially, however, for a subset of CVCs that compensate their personnel using performance pay. We find a parallel pattern when analyzing the relationship between compensation and another investment practice, staging of investment. To conclude, the paper investigates the three elements of the principal-agent framework, thus providing direct evidence that compensation schemes (incentives) shape investment practices (managerial action), and ultimately investors' outcome (performance). Copyright (C) 2010 John Wiley & Sons, Ltd.