Compensation incentive, misappropriation risk, and startup innovation: the role of corporate venture capital manager in resource transfer

ABSTRACT

Existing studies on the impact of corporate venture capital (CVC) on startup innovation primarily focus on the capability of CVC parent to provide resources for startups. This study examines the role of CVC managers’ motivation in facilitating resource transfer to startups. Utilizing a unique disclosure requirement for investments by Chinese public firms in venture capital (VC) funds, and a hand-collected database on CVC managers’ compensation, our study explores the impact of compensation incentives on CVC managers with respect to startup innovation and the moderating effect of misappropriation risk by the CVC parent. Our two-stage regression model reveals that stronger compensation incentives positively impact startup innovation. Moreover, the effects diminish if the misappropriation risk by the CVC parent increases. These findings underscore that while strong compensation incentives for CVC managers enhance their motivation to facilitate resource transfer from the CVC parent to startups, this is mitigated in contexts with a heightened misappropriation risk.

KEYWORDS:

• Corporate venture capital
• compensation incentive
• misappropriation risk
• startup innovation
• resource transfer

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. It should be noted that SIPO does not mandate the disclosure of patent citation information (Dang and Motohashi 2015). The decision to disclose such information is left to the discretion of the patent applicant. Consequently, while it is possible to collect patent citation data, the reliability of this data remains uncertain.

Additional information

Funding

This work was supported by the National Social Science Fund of China (22BGL042).