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Management Science Vol. 54, Issue n°3 (2008) pp. 505-521

Corporate Venturing, Allocation of Talent, and Competition for Star Managers

Jean-Etienne De Bettignies 1, Gilles Chemla 2

(2008-03-05)

We provide new rationales for corporate venturing (CV), based on competition for talented managers. As returns to venturing increase, firms engage in CV for reasons other than capturing these returns. First, higher venturing returns increase managerial compensation, to which firms respond by increasing the power of incentives. Managers increase effort, prompting firms to reallocate them to new ventures, where the marginal product of effort is highest. Second, as returns to venturing become large, CV emerges as a way to recruit/retain managers who would otherwise choose alternative employment. We derive several testable empirical predictions about the determinants and structure of CV.

1 :	Queen's University (QUARG)
	Queen's University, Kingston, Ontario
2 :	Dauphine Recherches en Management (DRM)
	CNRS : UMR7088 – Université Paris IX - Paris Dauphine

Équipe de recherche : DRM UMR7088 CNRS - Equipe du CEREG

Discipline

:

Humanities and Social Sciences/Business administration

Mots-Clés : corporate venture capital – venture capital – failure – competition – entrepreneur – manager

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Contributeur : Salem Tacine <>

Submitted on : Thursday, 5 March 2009 10:29:15

Updated on : Friday, 6 March 2009 10:17:09