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We analyzed corporate venture capital (CVC) activities of Japanese corporations through case studies of six major electronics companies over the past 15 years. All six companies started their CVC operations in the mid-1990s, mostly in Silicon Valley, with subsequent expansion to other regions. All CVCs we studied emphasize strategic return rather than financial return as the CVC mission. A corporation's strategic motive of having a CVC function is either the exploration or exploitation of external technologies. The orientation between exploration and exploitation varies among companies, but a common pattern exists in the structure of CVC operations. When the strategic emphasis of CVC is to explore new technologies outside of the corporation, a CVC tends to invest through external venture capital funds and when the CVC goal is to exploit external technologies for the businesses of the parent corporation, CVC operations are preferred to have internal direct investment functions. The CVC operations often show changes in goals and structures because of factors such as management change and the parent company's performance, but some common evolution patterns can be identified. An explorative CVC often evolves into an exploitive CVC, but not vice versa. A CVC with internal direct investment functions typically seeks to make operations more independent from the parent corporation as they accumulate CVC knowledge, but the corporation often avoids losing control of the CVC by restricting its autonomy. Strategic return and financial return are not mutually exclusive goals of a CVC. A CVC should be positioned to pursue various kinds of strategic goals under the condition that an investment will be recovered financially. Financial success is important to secure continuation of CVC operations even if the CVC is purely strategically driven.
Date of Conference: 27-30 June 2011