From corporate responsibility to opportunity : corporate impact venturing as a driver of sustainability-oriented innovation

Abstract

Innovation is a critical driver of enterprise growth and competitive advantage and, consequently, to value creation. Enterprises complement internal innovation efforts with knowledge acquired from outside their boundaries including through corporate venture capital (CVC), i.e., equity investments in external young ventures. When investing in sustainability-oriented ventures, enterprises create and appropriate value by generating a social/environmental return alongside a financial return, in the process integrating sustainability as a driver of competitive advantage and improved performance. The purpose of this research was to understand the motivation and willingness, influencing factors and perceived value of adopting this strategy for Maltese enterprises. Three research questions were addressed: (1) What is the motivation and willingness of established enterprises to engage in corporate venture capital? (2) What are the factors influencing corporate venture capital and corporate impact venturing? (3) How do enterprises value these partnerships for their strategic/financial/social return? A qualitative method was adopted. Data collection included a survey to identify those established enterprises that have engaged in CVC and seven semi-structured interviews with relevant CEOs of enterprises to collect deeper information. The survey was fully completed by 18 respondents who fell within the targeted population. Thematic analysis was applied and three main themes with further sub-themes were identified. The findings show that growth, innovation, competitiveness, capabilities and knowledge creation are key motivators of Maltese companies that engage in CVC activities. Factors that drive this investment include talent, culture and mindset, financial considerations, deal flow as well as market pressures. The findings also suggest that incumbents perceive that the value generated by these partnerships is material in monetary and strategic terms. Lastly, the findings illustrate that although established enterprises display a priori disposition to engage in CVC, the perceived partial benefits of sustainability-oriented ventures could lead to biased investment choices with adverse consequences to their competitiveness.