PhD Dissertation Defense, Hanei Son, Strategy and Business Policy

Congratulations to Dr Hanei Son, Strategy and Business Policy, who successfully defended her Doctoral Dissertation at HEC Paris on June 13, 2023. 

Specialization: Strategy and Business Policy

Topic: Three essays on Corporate Venture Capital Investment: Fostering Organizational Learning through Early-Stage Ventures

Supervisors: Pierre Dussauge, Professor, HEC Paris, Supervisor; John Mawdsley, Associate Professor, HEC Paris, Co-Supervisor

Jury Members:

• Giada Di Stefano,  Associate Professor of Management and Technology, Bocconi University 
• Ha Hoang, Professor of Management, ESSEC Business School 
• Hye-Jun Kim, Assistant Professor of Strategy and Business Policy, HEC Paris 
• Corey Phelps, Dean of the Michael F. Price College of Business, Professor of Entrepreneurship, Oklahoma University 
• Pierre Dussauge, Professor of Strategy and Business Policy, HEC Paris, Supervisor
• John Mawdsley, Associate Professor of Strategy and Business Policy, HEC Paris, Co-supervisor

Abstract:

This dissertation examines the implications on corporate innovation and other learning outcomes of incumbents that build relationships with early-stage ventures through Corporate Venture Capital(CVC) investments. As entrepreneurial ventures draw the attention as external sources of valuable knowledge and skills, past literature has investigated how incumbents build inter-organizational relationships with these ventures through CVC investments. Among them, early-stage ventures without a visible product or service are often considered to be uncertain investment targets in terms of their technologies and potential performance. Contrary to this view, empirical evidence shows that number of incumbents are participating in early-stage CVC deals. This raises an intriguing question about what corporate investors can achieve by targeting such ventures with higher uncertainty. However, theories and empirical examinations on this topic are relatively limited in previous studies. In my first essay, I examine whether firms achieve greater innovative performance when increasing their early-stage CVC investments. I theorize that knowledge of early-stage ventures can be relatively more accessible for firms, as it is mostly intangible and not yet embodied in products and eventually develops corporate investors’ integrative and exploitative skills for innovation. I find that early-stage CVC investments indeed increase firms’ short-term innovation even after controlling for total CVC investments and the investment in Independent Venture Capital (IVC)-backed ventures of corporate investors. Furthermore, I find empirical support that greater industry diversity of a firm’s CVC portfolio attenuates this relationship by adding knowledge complexity to organizational learning. This study contributes to the CVC and organizational learning literature by highlighting the importance of early-stage ventures as external sources of innovation for incumbents. In my second essay, I extend discussion on CVC literature about CVC governance by examining corporate investors’ decision on the formation of exclusive ties with early-stage ventures depending on the type of CVC structure. Focusing on exclusive access to valuable resources as a key advantage of early-stage CVC investments, I theorize that while exclusivity can serve as a strategy for corporate investors to form strong bonds with early-stage ventures, a trade-off exists as information asymmetries arise from the lack of external information to value these ventures as partners. Through an empirical analysis, I demonstrate that corporate investors with autonomous CVC units are more likely to opt for exclusive ties with early-stage ventures, as opposed to integrated CVC units, which are more sensitive to risk and managerial consent. In addition, this trend is moderated by the knowledge originality of corporate investors’ existing knowledge stocks. This study expands the understanding of the organizational features of corporate investors as they influence investment decisions and the role of knowledge stocks on firms’ explorative behavior. In my third essay, I examine the relationship between CVC investments and Corporate Social Performance (CSP), and propose that certain aspects of CVC investments can lead to positive outcomes from a CSR perspective. Specifically, I focus on early-stage CVC investments, which require resource acquisition under conditions of uncertainty. I theorize how accumulating resources through continuous investments in early-stage ventures can contribute to higher social outcomes. This research suggests that it is not just a single early-stage investment that impacts CSR, but rather the accumulated experience gained through such investments that can be positively associated with external evaluations of CSR.

Keywords: Corporate Venture Capital, Early-Stage Investment, Exclusivity, Corporate Social Performance.

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