Internal vs external R&D : a real options approach

International audienceThis paper proposes a model that investigates firms' choice over internal R&D and corporate venture capital. Central to our model is an incumbent firm's ability to successfully deploy a startup firm's intellectual capital in the context of a corporate venture capital project and the degree of knowledge spillovers in the absence of a corporate venture capital engagement. Although a higher ability to integrate a startup's intellectual capital combined with a low degree of knowledge spillovers creates an incentive to engage in corporate venture capital, we show that this incentive is tempered by the future economic benefit the incumbent firm expects from the project