FINNOV

Synopsis: Work Package 3 explores the connection between modes of innovation financing and the innovative performance of firms. Different sources and forms of capital are committed to risky investment in innovation and the way in which these are translated into value can vary considerably, as do the outcomes of innovation venturing from the viewpoint of firm growth. A variety of capital and credit instruments, and different combinations thereof, are used across countries and sectors of the economy. Our first objective towards the overarching goals of the FINNOV research programme is to gather, structure and discuss what the state-of-the-art literature posits and/or show about risk capital and innovation. The specific focus of this review is corporate venture capital. While venture capital, which we will address in a separate review, has arguably captured most of the scholarly and policy attention over the past decade, corporate venture capital (CVC) is emerging as an important, if yet underestimated, theme in the innovation and entrepreneurship research areas. In this paper we review propositions and findings about this organisational form of investment in innovative enterprise. We cover its objectives, determinants and outcomes. We also highlight strengths and weaknesses of data sources, methods and empirical evidence in order to identify gaps in the literature that will be addressed at forthcoming stages of FINNOV.