Factors Affecting Value Creation Following Corporate Venture Capital Investments in Born-Global Social Ventures

As the importance of creating shared value has been growing, firms are pursuing strategies to invest in born-global social ventures to efficiently and effectively enter overseas markets. Nonetheless, these investments are not always successful. Specifically, understanding the success factors of investments in born-global social ventures is crucial. This study, based on the resource-advantage theory of competition, aimed to identify factors affecting value creation following corporate venture capital investments in born-global social ventures. We developed several propositions. First, The high asset value of the invested born-global social venture positively influences its cumulative abnormal return. The business fit between a CVC investor and the invested born-global social venture positively influences its cumulative abnormal return. The business fit between a CVC investor and the invested born-global social venture positively moderates the relationship between the high asset value of the investee and its CAR. A CVC investor’s brand strategy positively influences the cumulative abnormal return generated after investing in an invested born-global social venture. A CVC investor’s brand strategy positively moderates the relationship between high asset value of an invested born-global social ventures and its cumulative abnormal return. The level of business diversification of an investment firm negatively impacts the value creation of born-global social ventures after investment. The level of business diversification of an investment firm positively moderates the relationship between the high asset value of the invested born-global social venture and its cumulative abnormal return. Our study provided managerial guidelines for corporate venture capitalists in regard to value creation factors of those social ventures as investment targets.