Corporate venture capital as a means of radical innovation: Relational fit, social capital, and knowledge transfer

The authors begin with an elaboration of a new theoretical concept: “relational fit”, which consists of social capital and knowledge relatedness. They continue with an empirical analysis of the influence that “relational fit” between German corporate venture capital units (CVCs) and their innovative portfolio companies (PCs) has on knowledge transfer and knowledge creation in the CVC–PC dyad and subsequently on the PC's organizational performance. PC success is found to have dual significance for the corporation: high returns for the CVC unit and strategic potential for radical innovation. Integrating two hitherto neglected aspects of social capital – “conative fit” and “affective fit” – into their framework of “relational fit” the authors extend social capital theory. By combining the latter with the knowledge-based view of the firm they thereby demonstrate the interrelatedness and combined importance of the two concepts. Hence, “relational fit,” proves to facilitate knowledge transfer and creation, which enhance organizational performance.