Management Control Systems in a Corporate Venture Capital Backed Start-up: An Exploration and Exploitation Perspective

Sammanfattning: This study was aimed at examining the application of Management Control Systems (MCS) and the learning consequences of these in start-ups. This was done through a single-case study of a Corporate Venture Capital (CVC) investor and its start-up, thus analysing the impact of an external investor previously overlooked in research, which mainly has been confined to Venture Capital (VC) investors. Using Merchant & Van der Stede's (2007) object-of-control framework, we find the CVC to implement extensive results- and action controls, while personnel/cultural controls seem to be of less interest. Thus, the controls implemented by CVC and VC investors appear to be similar despite the differences in structure and investment rationale. However, we find action controls to be more emphasized by the CVC. Drawing upon March's (1991) concept of organizational learning through exploration and exploitation, we analysed the effect of the control mechanisms on learning between and within the CVC and start-up. Notwithstanding the recognized exploratory aim of CVC investments, the control mechanisms implemented nevertheless seem to primarily facilitate exploitation. The CVC investor appears to be largely influenced by its parent company, thereby being restricted in implementing controls facilitating exploration. An understanding of the crucial effects of the control mechanisms can be expected to significantly facilitate managers' possibility to align these with the aim of the investments.