Background and Purpose: In the past years, Corporate Venture Capital (CVC) investments have substantially gained relevance. Corporations engage in this practice to reap strategic benefits that are usually only associated with entrepreneurial ventures and thereby drive innovation. While the success of CVC investments is undisputed, scholars have failed to provide a full description of the process that leads to the creation of strategic value for corporations. Therefore, we want to investigate the strategic value creation process in CVC and build a comprehensive framework thereof. The research question is thus:

What is the process through which corporations create strategic value in CVC investments?

Methodology: In line with pragmatism, we chose the methods best suited to answer the research question: Primary data will be obtained in face to face interviews with key individuals involved in the strategic value creation process in Husqvarna Group Ventures. Following methods from Morse (1994) and Alvesson & Kärreman (2011), we then analyse the data in a dialogue with our frame of reference. After the identification of a breakdown, an unexpected result that cannot be explained by current academia, we continue to build the framework applying two interpretive repertoires. To do so, we combine our findings with the fragmented existing literature to depict the strategic value creation process.

Findings: We find that scholars have overlooked the complexity of the knowledge transfer, which is an integral part of strategic value creation. The CVC unit cannot directly access knowledge in their portfolio firms; instead, an active and involved effort needs to be made by the corporate to create learning opportunities, which can then be transformed into strategic value. The key to accessing knowledge can be found in what we call the knowledge sharing mechanism: An intricate interplay of relationships between the CVC unit and the portfolio firm. We find that corporates significantly commit to activities to build an environment that facilitates voluntary, reciprocal knowledge sharing.

Conclusion: Business units must establish and maintain interpersonal relationships with their portfolio firms to meet corporate objectives of innovation and strategic value creation through CVC. The relationship acts a channel for the knowledge transfer, and by extension, as an enabler of strategic value creation. We fill a gap in the existing literature and provide an all-encompassing framework depicting the strategic value creation process of CVC investments with a focus on the relationships between the CVC unit and the portfolio firm. Researchers have neglected this aspect until now.