While both corporate venture capital (CVC) and R&D activities are essential for firms to produce innovation, the literature has been agnostic about the relationship between the two activities. This paper examines whether a complementary or substitutive effect exists between CVC and R&D activities in generating firm innovation outcomes and explores moderators based on organization learning mechanisms. By analyzing panel data on CVC and R&D investments made by US companies from 1993 to 2015, this paper finds that CVC and R&D substitute each other in generating patents. Furthermore, this paper finds that this substitutive relationship weakens when firms use dedicated CVC structures, and it shifts toward complementarity when firms accumulate CVC investing experience. This paper contributes to the literature on the relationship between CVC and R&D and that on organizational learning.
