Springer Nature is making SARS-CoV-2 and COVID-19 research free. View research | View latest news | Sign up for updates

Corporate venture capital in the IT sector and relationships in VC syndication networks


This paper investigates the degree to which incumbent information technology (IT) companies efficiently capture information from venture capital (VC) networks. It focuses particularly on the extent to which intangible or financial resources increase the number of relationships with venture capitalists and influence the central position of IT companies within VC networks. Generalized-method-of-moments (GMM) methodology is used herein to analyze the revision of decision-making processes concerning corporate venture capital (CVC) investments conducted by IT companies. To date, the sample used in this study is the first to exclusively focus on CVC investment decisions following the burst of the IT bubble in 2001. The CVC practices of 184 IT companies over the period between 2004 and 2016 are studied, revealing that the R&D investments made by these companies, along with the amount of CVC investments made, strongly impact the number of relationships they forge and maintain and the centrality of their position in VC networks.

This is a preview of subscription content, log in to check access.


  1. Aalbers, R., Dolfsma, W., & Koppius, O. (2013). Individual connectedness in innovation networks: on the role of individual motivation. Research Policy, 42(3), 624–634.

  2. Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte-Carlo evidence and an application to employment equations. Review of Economic Studies, 58(2), 277–297.

  3. Basu, S., Phelps, C., & Kotha, S. (2011). Towards understanding who makes corporate venture capital investments and why. Journal of Business Venturing, 26(2), 153–171.

  4. Belderbos, R., Jacob, J., & Lokshin, B. (2018). Corporate venture capital (CVC) investments and technological performance: Geographic diversity and the interplay with technology alliances. Journal of Business Venturing, 33(1), 20–34.

  5. Birkinshaw, J., & Hill, S. A. (2005). Corporate venturing units: vehicles for strategic success in the new Europe. Organizational Dynamics, 34(3), 247–257.

  6. Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115–143.

  7. Bonacich, P. (2007). Some unique properties of eigenvector centrality. Social Networks, 29(4), 555–564.

  8. Borgatti, S. P. (2005). Centrality and network flow. Social Networks, 27(1), 55–71.

  9. Brander, J. A., Amit, R., & Antweiler, W. (2002). Venture-capital syndication: Improved venture selection vs. the value-added hypothesis. Journal of Economics and Management Strategy, 11(3), 423–452.

  10. Brown, J. R., Fazzari, S. M., & Petersen, B. C. (2009). Financing innovation and growth: cash flow, external equity, and the 1990s R&D boom. Journal of Finance, 64(1), 151–185.

  11. Chesbrough, H. W. (2006). Open innovation: the new imperative for creating and profiting from technology. Boston: MA.: Harvard Business School press.

  12. Chesbrough, H. (2000). Designing corporate ventures in the shadow of private venture capital. California Management Review, 42(3), 31–49.

  13. Cohen, W. M., Nelson, R., & Walsh, J. (2000). Protecting their intellectual assets: appropriability conditions and why U.S. manufacturing firms patent (or not). National Bureau of Economic Research, Working Paper 7552.

  14. Coleman, J. S. (1988). Social capital in the creation of human capital. American Journal of Sociology, 94, S95–S120.

  15. Dimov, D., & De Clercq, D. (2006). Venture capital investment strategy and portfolio failure rate: a longitudinal study. Entrepreneurship Theory and Practice, 30(2), 207–223.

  16. Dushnitsky, G. (2006). Corporate venture capital: past evidence and future directions. In M. Casson, B. Yeung, A. Basu, & N. Wadeson (Eds.), Oxford entrepreneurship handbook (pp. 387–431). New York: Oxford University Press.

  17. Dushnitsky, G., & Lenox, M. J. (2005). When do firms undertake R&D by investing in new ventures? Strategic Management Journal, 26(10), 947–965.

  18. Dushnitsky, G., & Lenox, M. J. (2006). When does corporate venture capital investment create firm value? Journal of Business Venturing, 21(6), 753–772.

  19. Ernst & Young (2015). Global Venture Capital Trends: Back to reality.

  20. Fazzari, S. M., & Athey, M. J. (1987). Asymmetric information, financing constraints, and investment. The Review of Economics and Statistics, 69(3), 481–487.

  21. Fershtman, C., & Gandal, N. (2011). Direct and indirect knowledge spillovers: the ‘social network’ of open-source projects. RAND Journal of Economics, 42(1), 70–91.

  22. Freeman, J. (1999). Venture capital as an economy of time. In R. T. A. J. Leenders, & S. Gabbay (Eds.). Social: corporate social capital and liability. Norwell, MA: Kluwer, 460-482.

  23. Freeman, L. C. (1978). Centrality in social networks conceptual clarification. Social Networks, 1(3), 215–239.

  24. Giot, P., & Schwienbacher, A. (2007). IPOs, trade sales and liquidations: modelling venture capital exits using survival analysis. Journal of Banking & Finance, 31(3), 679–702.

  25. Gompers, P. A., & Lerner, J. (2000a). The determinants of corporate venture capital success. In R. Morck (Ed.), Concentrated corporate ownership (pp. 17–50). Chicago: University of Chicago Press.

  26. Gompers, P., & Lerner, J. (2000b). Money chasing deals? The impact of fund inflows on private equity valuation. Journal of Financial Economics, 55(2), 281–325.

  27. Gompers, P., & Lerner, J. (2001). The venture capital revolution. Journal of Economic Perspectives, 15(2), 145–168.

  28. Guo, B., Lou, Y., & Perez-Castrillo, D. (2015). Investment, duration, and exit strategies for corporate venture capital and independent venture capital – backed startups. Journal of Economics & Management Strategy, 24, 415–455.

  29. Hill, S. A., Maula, M. V. J., Birkinshaw, J. M., & Murray, G. C. (2009). Transferability of the venture capital model to the corporate context: implications for the performance of corporate venture units. Strategic Entrepreneurship Journal, 3(1), 3–27.

  30. Hochberg, Y. V., Ljungqvist, A., & Lu, Y. (2007). Whom you know matters: venture capital networks and investment performance. Journal of Finance, 62(1), 251–301.

  31. Hochberg, Y. V., Ljungqvist, A., & Lu, Y. (2010). Networking as a barrier to entry and the competitive supply of venture capital. The Journal of Finance, 65(3), 829–859.

  32. Holtz-Eakin, D., Newey, W., & Rosen, H. S. (1988). Estimating vector autoregressions with panel data. Econometrica, 56(6), 1371–1395.

  33. Iacobucci, D., & Hoeffler, S. (2016). Leveraging social networks to develop radically new products. Journal of Product Innovation Management, 33(2), 217–223.

  34. Ivanov, V., & Masulis, R. (2008). Strategic alliances and corporate governance in newly public firms: Evidence from corporate venture capital. In Paper presented at the EFA 2007 Ljubljana. Meetings: Paper.

  35. Keil, T., Maula, M. V. J., & Wilson, C. (2010). Unique resources of corporate venture capitalists as a key to entry into rigid venture capital syndication networks. Entrepreneurship Theory & Practice, 34(1), 83–103.

  36. Kortum, S., & Lerner, J. (2000). Assessing the contribution of venture capital to innovation. RAND Journal of Economics, 31(4), 674–692.

  37. Kothari, S. P., Laguerre, T. E., & Leone, A. J. (2002). Capitalization versus expensing: evidence on the uncertainty of future earnings from current investments in PP&E versus R&D. Review of Accounting Studies, 7(4), 355–382.

  38. Lantz, J. S., & Sahut, J. M. (2005). R&D investment and the financial performance of technological firms. International Journal of Business, 10(4), 251–269.

  39. Lee, S. U., Gunno, P., & Kang, J. (2018). The double-edged effects of the corporate venture capital unit's structural autonomy on corporate investors' explorative and exploitative innovation. Journal of Business Research, 88, 141–149.

  40. Manigart, S., De Waele, K., Wright, M., Robbie, K., Desbrières, P., Sapienza, H. J., et al. (2002). Determinants of required return in venture capital investments: a five-country study. Journal of Business Venturing, 17(4), 291–312.

  41. Maula, M. V. J., & Murray, G. C. (2001). Corporate venture capital and the creation of US public companies, Presented at the 20th Annual Conference of the Strategic Management Society.

  42. Maula, M., Autio, E., & Murray, G. (2005). Corporate venture capitalists and independent venture capitalists: what do they know, who do they know and should entrepreneurs care? Venture Capital, 7(1), 3–19.

  43. Moran, P. (2005). Structural vs. relational embeddedness: social capital and managerial performance. Strategic Management Journal, 26(12), 1129–1151.

  44. Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187–221.

  45. Noyes, E., Brush, C., Hatten, K., & Smith-Doerr, L. (2014). Firm network position and corporate venture capital investment. Journal of Small Business Management, 52(4), 713–731.

  46. Park, B., & Vermeulen, E. P. M. (2015). Debunking myths in corporate venture capital: what works, what doesn’t, and how to make it happen. Lex research topics in corporate law & economics working paper, 2015-3.

  47. Plummer, L. A., & Acs, Z. J. (2014). Localized competition in the knowledge spillover theory of entrepreneurship. Journal of Business Venturing, 29(1), 121–136.

  48. Powell, W. W. (1990). Neither market nor hierarchy: network forms of organization. In B. M. Staw & L. L. Cummints (Eds.), Research in organizational behavior, 12 (pp. 295–336). Greenwich CT: JAI Press.

  49. Powell, W. W., Koput, K. W., Smith-Doerr, L., & Owen-Smith, J. (1999). Network position and firm performance: organizational returns to collaboration in the biotechnology industry. Research in the Sociology of Organizations, 16(1), 129–159.

  50. Rajan, R. G., & Zingales, L. (1998). Power in a theory of the firm. Quarterly Journal of Economics, 113(2), 387–432.

  51. Roodman, D. (2007). A note on the theme of too many instruments. In Washington, DC: working papers 125. Center for: Global Development.

  52. Sorenson, O., & Stuart, T. (2001). Syndication networks and the spatial distribution of venture capital investments. American Journal of Sociology, 106(6), 1546–1588.

  53. Stuart, T. E., & Sorenson, O. (2007). Strategic networks and entrepreneurial ventures. Strategic Entrepreneurship Journal, 1(3–4), 211–227.

  54. Windmeijer, F. (2005). A finite sample correction for the variance of linear efficient two-step GMM estimators. Journal of Econometrics, 126(1), 25–51.

  55. Wirtz, P. (2006). Compétences, conflits et création de valeur: Vers une approche intégrée de la gouvernance. Finance Contrôle Stratégie, 9(2), 187–221.

  56. Wright, M., & Lockett, A. (2003). The structure and management of alliances: syndication in the venture capital industry. Journal of Management Studies, 40(8), 2073–2102.

  57. Zhang, L., Gupta, A. K., & Hallen, B. L. (2017). The conditional importance of prior ties: a group-level analysis of venture capital syndication. Academy of Management Journal, 60(4), 1360–1386.

Download references

Author information

Correspondence to Eric Braune.

Additional information

Publisher’s note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Braune, E., Lantz, J., Sahut, J. et al. Corporate venture capital in the IT sector and relationships in VC syndication networks. Small Bus Econ (2019).

Download citation


  • Venture capital
  • Corporate venture capital
  • Network
  • Financing
  • Syndication
  • Startup

JEL Classifications

  • G24
  • L26
  • M13
  • O32