Corporate Venturing, allocation of talent, and competition for star managers
De Bettignies, Jean-Etienne; Chemla, Gilles (2006), Corporate Venturing, allocation of talent, and competition for star managers, AFFI (Association Française de Finance) :, 2006-12, Paris, France
TypeCommunication / Conférence
Conference titleAFFI (Association Française de Finance) :
MetadataShow full item record
Abstract (EN)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.
Subjects / KeywordsFailure; Investments policy; Manager; competition
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