The value of a reputation for sustaining commitment in interfirm relationships: The inclusion of corporate venture capitalists in investment syndicates

Abstract

We explore the importance of sustaining commitment in inter-firm relationships in the corporate venture capital setting. We find that a corporate investor's past behavior in terms of committing to investment relationships and not abandoning them prematurely confers reputational benefits that increase the likelihood of its participation in future investment opportunities. These reputational effects have a greater impact when the corporate investor has extensive patent stocks and has higher levels of potential slack. Our study highlights the value of sustaining commitment in interfirm relationships, and offers a deeper understanding of an important driver of corporate venture capital program investment opportunities.