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Risky information exchange: how network position can cause difficulties for corporate innovation
Luleå University of Technology, Department of Business Administration, Technology and Social Sciences, Innovation and Design.
2009 (English)In: Proceedings of the Twenty-ninth Annual Entrepreneurship Research Conference, 2009Conference paper (Refereed)
Abstract [en]

To enhance innovation effectiveness, many incumbent corporations make equity investments in young technological startups. Four out of five corporate investors syndicate at least some of their investments with other incumbents. While syndication practices may be beneficial to incumbent corporations, in this study we elaborate on the notion of information exchange paradox to demonstrate that syndication may be detrimental to corporate innovation. Using a unique data set of investment decisions of 163 corporations over four years, we show that for some corporations the losses of participating in syndicate networks may outweigh the gains. In particular, we demonstrate that syndication network centrality negatively moderates the ability of a corporation to benefit from its investments. We also show that the effect is particularly strong in highly concentrated industries but is virtually non-existent in industries with low concentration. This supports a contingency view of syndication and implies that benefiting from equity investments in startups is a non-trivial task for managers of incumbent corporations.

Place, publisher, year, edition, pages
2009.
Series
, Frontiers of Entrepreneurship Research, ISSN 0740-7416 ; 29
Research subject
Entrepreneurship and Innovation
Identifiers
URN: urn:nbn:se:ltu:diva-38976Local ID: d8b7798e-6988-4eb8-98eb-316dc864ef55OAI: oai:DiVA.org:ltu-38976DiVA: diva2:1012484
Conference
Babson College Entrepreneurship Research Conference : 03/06/2009 - 06/06/2009
Projects
Fastelaboratoriet - VINNEXC
Note
Godkänd; 2009; 20110831 (ysko)Available from: 2016-10-03 Created: 2016-10-03Bibliographically approved

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Anokhin, SergeyÖrtqvist, DanielThorgren, SaraWincent, Joakim
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