INVESTING OUTSIDE YOUR COMFORT ZONE: THE EFFECT OF CATEGORIZATION BREADTH AND GRANULARITY ON CORPORATE VENTURE CAPITAL INVESTENT

This study theorizes how managerial categorization influences firms’ external search. First, the categorization breadth by top managers leads them to scan the periphery of the competitive environment and increase the firm’s proclivity for corporate venture capital (CVC) investment. Second, the categorization granularity by top managers leads to more caution and decreases the firm’s proclivity for CVC investment. I analyzed US banks’ firms’ CVC investment in fintech start-ups from 2013 through 2021 and found that categorization breadth increases the level of a firm’s CVC investment in fintechs, and categorization granularity decreases the level of a firm’s CVC investment in fintechs.