Selecting corporate venturing forms in high-tech industries: A comprehensive framework
De Massis A
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The potential of Corporate Entrepreneurship (CE) in enabling established corporations to develop new businesses or to renew their existing businesses is increasingly recognised. Moreover, in current turbulent and fast moving contexts, entrepreneurial activities have put additional pressure on established companies to defend against increased competition and obsolescence, rendering CE initiatives an unquestionably important element for the long-term survival of growth-oriented companies (Markides, 1998; Hitt et al., 1999; Stringer, 2000). Sharma and Chrisman (1999) define CE as ‘the process whereby an individual or group of individuals that act in association with an existing organisation, create a new organisation or instigate renewal or innovation within that organisation’. This definition emphasises that CE is a multidimensional topic. CE is also described as a process through which a company can properly exploit accumulated knowledge (Ford et al., 2010). One of the features of CE is Corporate Venturing (CV). In academic literature as well as corporate practice a plethora of definitions of the term ‘corporate venturing’ have been proposed. In broad terms, CV refers to corporate entrepreneurial efforts by which existing corporations develop and broaden their businesses generally leading to the creation of new business entities. Since its inception in the late 1970s and up to now, the topic of CV has increasingly intrigued both scholars and practitioners (Block and MacMillan, 1993). The academic research has pointed out the positive relationship between the existence of various forms and manifestations of CV and firm’s performance (Kuratko et al., 1990; McGrath et al., 1992; Knight, 1997; Zahra et al., 1999). At the same time, the importance of CV in increasing firm’s performance is also witnessed by the knowledge that practitioners have generated while pursuing CV experiments (Block and MacMillan, 1993; Chesbrough, 2000). On the other hand, field studies have proposed a picture of CV in which failure is common (Fast, 1978, 1981; Berry, 1983; Kanter, 1985; Sykes and Block, 1989; Kanter et al., 1990, 1991; Gompers and Lerner, 2000), emphasizing the fact that the effective practice of CV is complex and involves some risks and non-obvious choices. However, from an academic perspective, the existing literature has discussed CV mainly in general terms and a detailed analysis of the different forms through which CV can be executed has been rather neglected. An exhaustive classification of the different forms of CV is therefore required. This chapter attempts to fill this gap through a study on CV initiatives undertaken to enter high-tech businesses. It provides a taxonomy of CV forms and proposes a comprehensive framework to select the most suitable option among the different CV forms. Given the technological intensity of the new businesses firms enter into, we claim this research effort can shed light on the condition and practices under which entrepreneurship, especially at the corporate level, can foster technological change and the promotion of innovation. The remainder of the chapter is composed of seven sections. Section 2 presents the research objective and methodology. In Section 3 the literature on corporate venturing is reviewed. Section 4 describes the proposed taxonomy of CV forms. In Section 5 a preliminary framework is suggested to assist corporate executives in selecting potentially suitable forms of corporate venturing, given specific venturing objectives and corporate circumstances. Section 6 applies the framework to four case-studies. Finally, in Section 7, the conclusions and the implications for further research are drawn.