International Analysis of Venture Capital Programs of Large Corporations and Financial Institutions

Entrepreneurship Theory & Practice, Forthcoming

41 Pages Posted: 12 May 2011 Last revised: 2 Apr 2014

See all articles by Luc Armel G. Da Gbadji

Luc Armel G. Da Gbadji

Louvain School of Management (UCL)

Benoit Gailly

Louvain School of Management (UCL)

Armin Schwienbacher

SKEMA Business School

Multiple version iconThere are 2 versions of this paper

Date Written: February 17, 2014

Abstract

In this article, we investigate what drives large companies (non-financial corporations and financial institutions) worldwide to run venture capital (VC) programs, specifically targeting Fortune Global 500 companies. Such a decision involves trade-offs between expected strategic and financial benefits and costs of managing and financing a portfolio of ventures, which are influenced by the institutions and regulations that affect innovation-oriented entrepreneurship. We determine that companies are more likely to run a program if they are based in countries in which the market for early-stage investments is well-developed and innovation-related resources are more widely available. Moreover, companies based in countries with costly personal bankruptcy regulations are less likely to run a VC program, which is consistent with the prediction that these regulations discourage entrepreneurial initiatives. These findings emphasize the importance of favorable local conditions for an affiliated VC program. We observe no evidence, however, that unfavorable local conditions affect the degree of internationalization of programs, suggesting that running international programs entails significant extra costs. Finally, no significant difference emerges between U.S.-based and Western European-based companies.

Suggested Citation

Armel G. Da Gbadji, Luc and Gailly, Benoit and Schwienbacher, Armin, International Analysis of Venture Capital Programs of Large Corporations and Financial Institutions (February 17, 2014). Entrepreneurship Theory & Practice, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1836870 or http://dx.doi.org/10.2139/ssrn.1836870

Luc Armel G. Da Gbadji (Contact Author)

Louvain School of Management (UCL) ( email )

Belgium

Benoit Gailly

Louvain School of Management (UCL) ( email )

Belgium

Armin Schwienbacher

SKEMA Business School ( email )

Avenue Willy Brandt
Euralille, 59777
France

HOME PAGE: http://sites.google.com/view/armin-schwienbacher

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