An Empirical Test of the Relational View in the Context of Corporate Venture Capital

• Author: Virgil Raibulet,Christiana Weber,Boris Bauke
• Published date: 01 September 2016
• Date: 01 September 2016
• DOI: http://doi.org/10.1002/sej.1231

AN EMPIRICAL TEST OF THE RELATIONAL VIEW IN THE

CONTEXT OF CORPORATE VENTURE CAPITAL

CHRISTIANA WEBER,* BORIS BAUKE, and VIRGIL RAIBULET

Institute of Management and Organization Theory, Leibniz University, Hanover,

Germany

Research summar y: Thisstudy focuses on Dyer and Singh’s (1998) relational view in the

context of corporate venture capital(CVC) investors and their portfolio companies, who

mutually strive for interorganizational rent generation. Aiming to better understand this

relational rent-generation process, our article entirely operationalizes and refines Dyer

and Singh’s (1998) model. While our findings attest strong explanatory power to the

original model inthe context of CVC investment relationships, theysuggest the existence

of additional relationships betweenthe constructs of the relational view. Specifically, we

identified relation-specific assets as well as knowledge-sharing routines as mediators

between complementary resources and capabilitiesand relational rent.

Managerial summary: In this article, the relational view as an existing theory on

interorganizational relationships is applied and tested using quantitative data in the

context of corporate venture capital (CVC) investments. Our analysis confirms that

relation-specific assets and knowledge-sharing routines, as well as complementary

resources and capabilities, lead to relational rent. This is supernormal profit creation

for both CVC investors and portfolio companies. The relationships are, however, not as

straightforward as the original theory suggests, with complementary resources and

capabilities being antecedents for knowledge-sharing routines and relation-specific

assets which, subsequently, lead to the desired rent. Counterintuitively, informal self-

enforcing governance mechanisms (trust) appear to foster relationship satisfaction, but

not necessarily create relational rent or immediate tangible benefits. Copyright © 2016

Strategic Management Society

INTRODUCTION

The relational view (RV), introduced by Dyer and

Singh in 1998, is an eminent and highly cited

interorganizational theory attempting to explain

competitive advantage by specifically focusing on

dyadic relationships as the unit of analysis.By making

the dyad the focal unit of analysis, the RV suggests

that there are elements within this dyad, i.e., specific

to the relationship and not to the individual parties,

that result in jointly generated supernormal returns,

or relational re nts. A citation analysis of p revious

literature dealing with the RV in the last two decades

reveals a large gap between the overall number of

citations on the one hand and the number of articles

actually applying the RV as a theoretical foundation

on the other hand. While there has been a discussion

on whether the RV really has a right to exist or

whether it is simply old wine in new skins (Dyer,

1999; Molina,1999), first empirical researchindicates

that the RV has, indeed,additional explanatory power

over and above existing theories (Mesquita, Anand,

and Brush, 2008). Notwithstanding, a comprehensive

Keywords: corporate venture capial; relational view; relational

rent; mediationanalysis; mediation effect

*Correspondence to: Christiana Weber, Leibniz University,

Koenigsworther Platz 1, 30167 Hanover, Germany. E-mail:

christiana.weber@ufo.uni-hannover.de

Strategic Entrepreneurs hip Journal

Strat. EntrepreneurshipJ.,10:274–299 (2016)

Published onlinein Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1002/sej

Copyright © 2016 Strategic Management Society

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analysis of the entire RV is, to the best of our

knowledge, still missing, as the RV has mainly been

used to back up single arguments. Very few notable

exceptions aim at furthering our understanding of

the RV through empirical evidence (Dyer and Hatch,

2006; Maula, Autio, and Murray, 2003; Mesquita

et al., 2008), and little research that deals with the

overall framework exists.

This article is, thus, inspired by the idea of fully

empirically testing the RV. Corporate venture capital

(CVC) investing serves as a particularly suitable

empirical context for this endeavor, as CVC

investments are direct equity investments made by

established companies in privately held entrepreneurial

ventures (Maula, 2007) with the purpose of combining

and complementing competencies and resources in a

dyadic relationship to eventually mutually generate

value, that is relational rent. These investments are best

understood as boundary-spanning activities or interfirm

relationships (Weber and Weber, 2011) involving, on

the one side, the incumbent with its CVC unit and its

business units and, on the other side, a young innovative

venture that becomes a portfolio company (PC) of the

CVC unit through an investment made by the latter.

Beyond the mere testing of the original RV model,

our article particularly aims at refining it. Based on the

RV and integrating additional research that has

emerged since 1998, w e attempt to deepen our under-

standing of relational rent generation and enhance the

applicationfeasibility of the RV. Building specifically

upon earlier qualitative researchon the RV in the field

of CVC (Weber et al., 2016), we examine the role of

complementarities by testing if and how far this

determinant’s effect on relational rent is m ediated

through the other three determinants. To do so, we

present three models following Baron and Kenny’s

(1986) instructions on how to identify mediation

effects. Model 1, the direct model, mirrors the RV as

originallyproposed by Dyer and Singh (1998).Model

2, the full model, shows the direct and indirect effects

of complementary resources and capabilities on

relational rent generation in a single model. Model

3, the mediated model, shows only theindirect effects

of complementary resources and capabilities on

relational rent generation. With these findings, we

provide evidencefor additional relationships between

the RV’s conceptual elements that have not been

investigated empirically before. Thereby, our work

advances the literature on the RV, and, therewith, also

contributes to our understanding of rent generation

within CVC investment relationships.

THEORYAND HYPOTHESES

The relational view and corporate venture capital

investments

The RV developed by Dyer and Singh (1998) is an

interorganizational theory attempting to explain

competitive advantage by specifically focusing on

dyadic relationships—as opposed to individual firms

(Mesquita et al., 2008)—as the unit of analysis. The

RV posits that four determinants lead to relational

rent, which is defined as ‘supernormal profit jointly

generated in an exchange relationship that cannot be

generated by eitherfirm in isolation’(Dyer and Singh,

1998: 662). The four determinants of relational rent

are ‘relation-specific assets,’‘knowledge-sharing

routines,’‘complementary resourcesand capabilities,’

and ‘effective governance mechanisms’(Dyer and

Singh, 1998) (see Figure 1).

Extensive research from strategic management

involving the RV has, directly or indirectly, focused

primarilyon the rent-generating effectsof usually only

one of the determinants listed earlier (e.g., Dyer and

Nobeoka, 2000), with few researchers taking more

than one determinant into account (e.g., Liu et al.,

2010). In the context of CVC investing, research has

identified that some of t hese individual determinants

represent the reason as to why CVC firms exist and

how they operate (e.g., Dushnitsky and Shaver, 2009;

Gompers and Lerner, 1998; Maula et al., 2003).

Nevertheless,the RV’s entire framework has not been

applied in the context of CVC, far from being further

investigated and d eveloped. This situation persists

despite the existence of selected notable empirical

findings explicitly documenting interrelatedness

between some of the four determinants of relational

rent. One of these exceptions stems from Mesquita

et al. (2008). By utilizing the possibilities of structural

equation modeling (SEM) to treat multiple equations

simultaneously and the introduction of interaction

effects, the authors show that the determinants of

relational rent do not operate without affecting each

other. Other notable exceptions come from Maula

et al. (2003) and Maula et al.(2006,2009),

contributing to RV and CVC research alike. The

authors also apply structural equation modeling

(SEM) to CVC-portfolio firm dyads and find that

one determinant of relational rent—complementary

resources and capabilities—appears to be a

precondition foranother, relation-specific assets. This

then, ultimately,results in increased relational rentsin

the form of knowledge transfer. To the best of our

Relational View and Corporate Venture Capital 275

Copyright©2016 Strategic Management Society Strat. Entrepreneurship J.,10:274–299(2016)

DOI: 10.1002/sej