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This paper investigates the effect of compensation of corporate personnel on their investment in new technologies. The authors focus on a specific corporate activity, namely Corporate Venture Capital (CVC), describing minority equity investment by established-firms in entrepreneurial ventures. The setting offers an opportunity to compare corporate investors to investment experts, the Independent Venture Capitalists (IVCs). On average, they observe a performance gap between corporate investors and their independent counterparts. Interestingly, the performance gap is sensitive to CVCs' compensation scheme: it is the largest when CVC personnel are awarded performance pay.
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