Home > Awards > 2016 Awards – Winners > The Life Cycle of Corporate Venture Capital Coller Institute of Venture 2016 Research Runner-Up Award, awarded to Song Ma, Yale School of Management

The Life Cycle of Corporate Venture Capital Coller Institute of Venture 2016 Research Runner-Up Award, awarded to Song Ma, Yale School of Management

SongMa-SQUARE

Song Ma is an Assistant Professor of Finance at Yale School of Management (SOM). He is also an affiliated faculty member at Yale Law School Center for the Study of Corporate Law and Yale SOM Program on Entrepreneurship. He joined Yale SOM Faculty in 2016.

Professor Ma’s main research interests are corporate finance, entrepreneurial finance, and economics of innovation. His current research agenda focuses on understanding economic frictions in the process of financing and organizing innovation and entrepreneurial activities, and how to mitigate those frictions through financial and organizational arrangements. He also studies how entrepreneurship contributes to economic growth and the underlying mechanism.

His research has been featured in top academic journals such as the Journal of Finance, been presented in numerous academic conferences, and won several awards.

Dr. Ma received his PhD in Finance from Duke University’s Fuqua School of Business in 2016, and was award 2016 Top Finance Graduate Award. He obtained his BA in Economics from Zhejiang University in 2010.

Work Abstract

The Life Cycle of Corporate Venture Capital

Song Ma

This paper establishes the life-cycle dynamics of Corporate Venture Capital (CVC) to explore the information acquisition role of CVC investment in the process of corporate innovation. I exploit an identi cation strategy that allows me to isolate exogenous shocks to a firm’s ability to innovate. Using this strategy, I first find that the CVC life cycle typically begins following a period of deteriorated corporate innovation and increasingly valuable external information, lending support to the hypothesis that fi rms conduct CVC investment to acquire information and innovation knowledge from startups. Building on this analysis, I show that CVCs acquire information by investing in companies with similar technological focus but have a diff erent knowledge base. Following CVC investment, parent firms internalize the newly acquired knowledge into internal R&D and external acquisition decisions. Human capital renewal, such as hiring inventors who can integrate new innovation knowledge, is integral in this step. The CVC life cycle lasts about four years, terminating as innovation in the parent  firm rebounds. These fi ndings shed new light on discussions about firm boundaries, managing innovation, and corporate information choices.