The trade-off between innovation value and risk: the roles of external venture capital and internal innovation assets

Purpose Research generally believes that both corporate venture capital (CVC) and independent venture capital (IVC) promote the innovation value of entrepreneurial ventures, but their roles in innovation risk remain unclear. To reveal the bright and dark sides of CVC and IVC, we compare their influence on innovation performance and performance variability of entrepreneurial ventures as well as their interaction effects with innovation assets through physical and intellectual assets. Design/methodology/approach This study uses a panel dataset consisting of 630 high-tech ventures and the Heckman selection model to test the hypotheses and correct the endogenous problems. Findings We find that CVC improves the innovation performance of entrepreneurial ventures but at the cost of increasing their performance variability, whereas IVC is the opposite. We also find the combination effect of external and internal capital of entrepreneurial ventures. CVC and IVC complement intellectual assets to enhance innovation performance and dance with physical assets to reduce variability. Originality/value We use a value-risk dyadic perspective to reveal the bright side and dark side of CVC and IVC. We unveil the interplay mechanism between internal and external capital of entrepreneurial ventures and develop some kinds of capital configuration strategies to balance innovation value and risk.