Publication: Employee entrepreneurship and signaling role of corporate venturing decisions
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KU-Authors
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Embargo Status
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Abstract
This paper develops a signaling model to examine firms' corporate venturing decisions about projects proposed by their current employees. When the firm has better information, vis-a-vis the market, about the entrepreneurial ability of the employee, its decision to implement the worker's project serves as a signal of high ability. This provides the firm with an incentive to distort the corporate venturing decision to conceal information from the market. The model provides a rationale for why the likelihood of corporate venturing decreases with the worker's tenure at the firm. Also, the analysis shows that higher degrees of competition in the firm's core business weaken its incentive to distort project implementation, thereby leading to higher levels of corporate venturing activity.
Source
Publisher
Elsevier
Subject
Economics
Citation
Has Part
Source
Labour Economics
Book Series Title
Edition
DOI
10.1016/j.labeco.2022.102270