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| Author: | Dushnitsky, G. Shapira, Z. |
| Title: | Entrepreneurial finance meets organizational reality: Comparing investment practices and performance of corporate and independent venture capitalists |
| Journal: | Strategic Management Journal
2010 : SEP, VOL 31:9, p. 990-1017 |
| Index terms: | entrepreneurship venture capital new enterprise investment financial performance performance appraisal compensation incentives pay |
| Language: | eng |
| Abstract: | The effect of compensation of corporate personnel on their investment in new technologies is explored with a focus on a specific corporate activity, that's corporate venture capital (CVC). On average, a performance gap btw. corporate investors and their independent counterparts is observed. The performance gap is sensitive to CVCs' compensation scheme: It is the largest when CVC personnel are awarded performance pay. In addtion to studying the association btw. incentives and performance, documented herein is also a direct relationship btw. incentives and the managers' actions. In conclusion, the three elements of the principal-agent framework are examined, thus offering direct evidence that compensation schemes (or incentives) shape investment practices (managerial action), and ultimately investors' outcome (performance). |
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