An Empirical Investigation on the Relationship between Corporate Venturing Investment and Corporate Value
Date Issued
2007
Date
2007
Author(s)
Huang, Chih-Hung
DOI
zh-TW
Abstract
Sustaining corporate growth has been a central task for general management. Of great importance and attention, both in the practitioner world and in academic research, is how to implement corporate venturing investments (CVIs) function to grow new businesses and sustain growth. Previous research suggests that the performance of CVIs will be as successful as those invested by independent venture capitalists if they have a clear strategic link to the corporate development. However, there are scant empirical studies investigating the extent of impact on the corporate value due to differential strategies of CVIs. Specifically, the present research intends to explore the impact of CVIs on the parent firm’s value and the extent of differential value impact attributable to the way of configuring CVIs with respect to the parent firms.
Based on the literature in diversification strategies and CVIs research, we establish several testable hypotheses concerning the impact of (1) the extent of investments, (2) vertical and related investments, and (3) the extent of investments made by their venture capital arms on corporate value. We took the CVIs made by the top fifty publicly listed companies, based on their market capitalization, in Taiwan as empirical context. In addition, we undertook several case-based explorations to enhance result presentation from econometric analysis.
Our empirical results show that the making investments that are related to the focal firm’s value will be positively associated with the parent firm’s value due to potential synergy creation between new ventures and the existing businesses. Furthermore, we also found that system integrators in the technology-based industries who invest more in their vertical value chain will positively affect company value. Finally, making new venture investments through venture capital companies reveal positive impact on the investing firm’s value as these collaborating partners would bring up rigorous investment evaluation, market discipline and scrutiny to improve the success likelihood of new ventures. Implications of these results to practices and future research are also discussed.
Subjects
企業創業投資
公司價值
相關多角化
垂直佈局
Corporate Venturing Investments
Corporate Value
Related Diversification
Vertical Integration
Type
thesis
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