Ph.D. candidate
Gary Dushnitsky

Dissertation: “Limitations to inter-organizational knowledge acquisition: The paradox of corporate venture capital”

My dissertation investigates limitations to knowledge acquisition through partnerships, by exploring the conditions under which partnerships with innovative parties do not start. In the context of corporate venture capital (i.e. equity investment in entrepreneurial ventures by established firms), I argue that many mutually profitable partnerships are not formed because a corporation is not interested in investing unless prospective ventures demonstrate they possess quality innovations, and quality ventures are wary of doing so.

Building on economics of information, I develop a formal model of the conditions affecting the intensity of the problem. Next, I conduct an empirical study using a sample of 50,000 venture capital investments in US ventures during the 1990s.

The results underscore the paradox of corporate venture capital; many corporations view their investment activity as an early alert system for novel and potentially substituting entrepreneurial technologies, but those entrepreneurs are most likely to avoid the corporation in the first place.

Moreover, organizing the investment activities in a way that serves as an effective window on technology post-investment is found to deter quality entrepreneurs in the first place, hence reducing overall CVC effectiveness.

Stern Faculty Committee: Zur Shapira (co-chair), Myles Shaver (co-chair), Ari Ginsberg, Michael Lenox, Bernard Yeung