Corporate venture capital and strategic search: Performance spillovers in parent companies from sticking to the core business

Can corporations investing in startups achieve an impact on their own performance, or are they simply fishing in the dark? Building on that firms develop structural resource constraints due to prior investments in fixed assets, we draw on two types of problemistic search to examine whether CVC activities aligned with a firm’s core business—or those diverging from it—are more effective. Using a unique sample of 95 European firms with CVC programs between 2009 and 2019, we find that exploitation-oriented CVC investments, those in sync with a company’s core business, positively influence the relationship between capital intensity and corporate’s return on investment. This positive effect is particularly pronounced when companies face a performance shortfall relative to their historical benchmarks. We discuss the trade-offs between local and non-local CVC search and highlight how structural constraints—particularly the combination of high capital intensity and exploitative CVC—shape firms’ ability to convert external search into financial performance gains.