| China is striving for the goal of high-quality development,which needs the whole country to adhere to an innovation-driven development strategy while ensuring economic growth.Such a goal has put forward higher requirements for Chinese enterprises.As major players in economic development and technological innovation,enterprises are facing dual goals.Although management research has already recognized that firms pursue multiple goals simultaneously,studies have largely concentrated on a single performance goal—profitability.Few studies have explored the joint effect of multiple goals,hindering our further understanding of firms’ complex decision-making processes and behavior.Meanwhile,with a medium-high level economic growth rate and the rapid development of digital technologies,the competitive environment of firms is changing significantly.Industrial boundaries are becoming increasingly blurred,and the traditional business model is challenged by emerging market forces.The only constant is change.In such a context,firms have to be cautious about any subtle change in the environment and develop an insight into future possibilities.Corporate venture capital(CVC)is an effective tool to improve firms’ understanding of market dynamics.Recently,an increasing number of large Chinese enterprises have adopted CVC activities to explore emerging ecosystems,learn from new technologies and business models,and support collaboration with startups.CVC is not only an alternative to gain financial returns,it also serves as a tool to conduct open innovation,enabling corporate investors to overcome limitations of internal R&D by removing the cognitive myopia of established firms.Based on the background above,this paper examines how multiple goals are prioritized and pursued in organizations in the context of corporate venture capital.More specifically,this paper tries to answer the question of how the financial and innovation goals jointly affect the adoption of CVC activities as well as CVC strategies.This paper argues that the attainment discrepancy both on financial and innovation goals will motivate enterprises to adopt CVC activities,and will have an impact on their investment strategies.Furthermore,when facing negative performance feedback for both financial and innovation goals,how CVC activities are affected is determined by the organization’s distribution of attention on these two goals.And the distribution of attention is situationally dependent.In addition,this study emphasizes the important role of the CVC unit structure in how the CVC manager’s attention is allocated between financial and innovation goals.Therefore,this dissertation is split into three separate but interdependent studies.Study 1 examines how financial and innovation outcomes both independently and jointly influence firms’ decisions to adopt CVC activity.Study2 focuses on how performance feedback on financial and innovation goals both independently and jointly affect corporate investors’ investment strategies in two dimensions—industry and geographical location.Study 3 adopts CVC unit-level analysis to explore whether the organizational structure of CVC units affects their responses to the dual performance feedback.These three studies are logically progressive.The first one focuses on whether to adopt CVC activity,while the latter two studies focus on how to invest;Study 1 and Study 2 take the corporate investor as a whole,while Study 3 considers the individual CVC unit as the minimum analysis unit.First,Study 1 takes listed companies in Shanghai and Shenzhen stock markets from 2008 to 2018 as the sample for empirical analysis,and finds that the negative performance feedback both on financial and innovation will increase the likelihood of CVC adoption.The larger the negative attainment discrepancy on financial or innovation goals,the more likely the organization is to adopt CVC.When further examining the joint effect of dual performance feedback,it is found that when problems occur simultaneously,how the financial goal affects organizations’ responses to the innovation goal is dependent on certain boundary conditions.When there is a higher level of organizational slack or a CEO with technical background,the negative financial performance feedback will strengthen the relationship between innovation attainment discrepancy and CVC adoption.Second,Study 2 takes A-share listed corporate investors from 2008 to 2018 as the sample.Results of empirical analysis show that corporate investors will respond to the negative financial performance feedback by increasing the proportion of investment in unrelated-industry and nonlocal startups.However,negative performance feedback on innovation leads to an increase in unrelated-industry and local investment.Furthermore,the joint impact of dual goals on CVC strategy depends on the decision maker’s understanding of the relationship between financial and innovation goals.When the corporate investor has a higher absorptive capacity,sufficient organizational slack,or when the CEO has a relatively short tenure,its response to the decline in innovation performance will be strengthened especially when the financial goal is not satisfied.Third,based on the empirical analysis at the CVC-unit level,Study 3 finds that response of the CVC unit to the parent firm’s performance feedback on both financial and innovation goals is consistent with the prediction at the corporate investor level.The CVC unit’s proportion of investments in unrelated industries increases with the decrease of performance relative to the aspiration level on both financial and innovation goals.However,the autonomy of CVC unit moderates such a relationship.For an autonomous CVC unit,the positive impact of the negative innovation attainment discrepancy on its tendency to invest in unrelated industries is weakened.In addition,an analysis of the dual goals’ joint effect indicates that when the CVC unit is externallystructured,negative financial performance feedback will weaken its response to the innovation goal.This research makes several contributions.First,by showing how multiple interdependent goals serve as inputs to strategic decisions,this study provides a more comprehensive framework of performance feedback interpretation.This extends the Behavioral Theory of the Firm by examining how organizations respond to performance feedback concerning multiple goals,which is of great significance for our deeper understanding of the complex organizational behavior.Second,this research reconciles the contradictory views of how multiple goals jointly affect organizational behavior,and further proposes boundary conditions.Based on the attention-based view,this study finds that decision-makers may have a different understanding of the relationship of dual goals under different situations,and thus respond differently.Third,this study also expands the literature on CVC motivation and CVC strategy.Existing research has not paid enough attention to the mode and strategy of corporate venture capital,however,this paper’s focus on the CVC strategy in the investment industry and location will enhance our understanding of CVC strategic choices.Fourth,the autonomy of CVC unit is introduced as an important factor affecting the allocation of attention between financial and innovation goals.Such a combination of multiple goals,organizational structure,and responsive behavior not only makes up for the neglect of structural factors in the explanation of multiple goals triggering organizational responses in behavioral theory,but also expands studies on the structural design of CVC program. |
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