Human capital in corporate venture capital units and its relation to parent firms' innovative performance

Abstract

Incumbent firms utilize corporate venture capital (CVC) as a vehicle to enhance their innovative performance. Still, little is known about the central individual in this context: the CVC unit head, who acts as a knowledge broker between portfolio ventures and the parent organization. We combine human capital theory with the attention-based view to investigate the effects of various facets of CVC unit heads' experience on parent firms' innovative inputs in the form of explorative and exploitative patenting and innovative outputs, specifically market and technological breakthrough innovation. Drawing on a dataset of U.S.-listed firms with CVC units, our findings contribute to the CVC literature in three ways. First, we introduce CVC unit heads' career experiences as new individual-level antecedents of parent firms' innovative performance. Second, we enhance the understanding of the CVC-core paradox, which is the tension between exploration and exploitation in the parent firm. Finally, by employing a combination of patents and new product introductions as metrics for innovative performance, we bridge the gap between learning and innovation in extant CVC research, demonstrating that the effects of CVC unit heads include customer-facing outcomes.