How Investor–Investee Relatedness Matters in Corporate Venture Capital Investment

Innovation partnerships between technology ventures and established firms, particularly through corporate venture capital (CVC) investments, are key drivers of innovation performance. However, the joint effects of technology and market knowledge relatedness on CVC investors’ innovation remain unclear. Drawing on data from 470 CVC portfolios in the semiconductor and biopharmaceutical industries, this study examines how knowledge relatedness within CVC portfolios influences the exploratory patent performance of corporate investors. Our findings reveal that high technology relatedness within CVC portfolios negatively impacts investors’ exploratory patent performance, a trend exacerbated by increasing market relatedness. Conversely, corporate investors achieve greater innovation success when their CVC portfolios include ventures with either unrelated technology or market knowledge, but not both. This underscores the strategic importance of diversifying knowledge domains to maximize innovation potential.