Contingencies to the Value of Partnering - Startup Innovation and Corporate Venture Capital

Startups are increasingly turning to the incumbent firms in their industries for venture capital. Yet, our understanding of how corporate investors shape entrepreneurial innovation remains sketchy. Studies examining this question agree that incumbent firms control resources that could be of value to startups but differ on whether these relationships facilitate effective access to them. I add to this research in two ways. First, I examine whether these relationships could also constrain the technologies startups pursue to reveal a tension inherent to these relationships between resource access on the one hand and the transmission of limitations on the other. I examine the mechanisms underlying each of these effects to identify specific aspects of startups' innovation outcomes affected by them. Second, I consider how each of these influences is moderated by the type of access startups' can get to the incumbent organization. I find that these relationships help startups turn their technologies into products, but that this relies on them having investor representatives with well-developed networks within the incumbent firm. I also find that these relationships limit the technological novelty of startups' inventions. This negative effect is amplified if startups interact with the established firm's corporate executives but is alleviated if they interact with the established firm's scientists/technologists. Through these findings, the study contributes to research on entrepreneurial innovation, interfirm relationships and corporate venture capital