Corporate venturing as a major corporate strategic initiative

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Corporate venturing as a major corporate strategic initiative

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Abstract

This paper reviews selected literature on internal corporate venturing in order to help build a venture management framework for scholars as well as managers. It includes a discussion of the various definitions authors have proposed, corporate venturing success drivers, and the different internal corporate venturing processes used by companies. We also identify several best practices for ensuring a successful internal corporate venturing project via a diversified venture portfolio that considers both risks and rewards. We also identify some of the qualities that team leaders and team members often exhibit to ensure that ventures are successfully managed. We also note that many internal corporate ventures are not successful. However, without risk-taking and initiating new ventures, companies are unlikely to experience success in their major innovation initiatives. Our paper presents current theoretical and managerial thinking about what it takes to successfully initiate and manage new corporate ventures.

Key Words: Corporate venturing, internal ventures, innovation, business and market development.

Abstract
Introduction and overview
Background
1. Why companies employ venture groups
Examples of corporate venturing
Drivers of corporate venturing success
Track record of venturing
Venture processes
Stages of development reached by six ICV projects
Venture strategies
Venture leadership
Product championing and ICVs
Venture teamwork
Managing new venture disappointment
Key success drivers in corporate venturing
Securing resources for new venture groups
Summary and future research directions
References

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[...] Mason and Rohner (2002) created a framework to assist companies in managing the flow and management of ideas (see Figure Figure Corporate Venturing Opportunity Filters Strategic Criteria Relevance Adjacencies Sponsor Current vs. Future Sustaining vs. Disruptive Strategic Filter Portfolio Criteria Value Synergy Cash Portfolio Filter Systematic vs. Opportunistic Seed vs. Expansion Venture Criteria Bell-Mason VDF Market Positioning Valuation Active vs. Passive Merge vs. IPO Venture Filter Mason, H. and T. Rohner 2002. The Venture Imperative: A New Model for Corporate Innovation. [...]

[...] and Van de Ven, A An Empirical Evaluation of the Internal Corporate Venturing Process. Strategic Management Journal 13: 93-109. George, R. and MacMillan, I Corporate Venturing: Venture Management Challenges. Journal of Business Strategy 85-91. Gompers, P Optimal Investment, Monitoring, and the Staging of Venture Capital. Journal of Finance 50: 1461-1489. Gompers, P Corporations and the Financing of Innovation: The Corporate Venturing Experience. Economic Review Federal Reserve Bank of Atlanta Gompers, P. and Lerner, J The Use of Covenants: An Analysis of Venture Partnership Agreements. [...]

[...] The identification of early indicators would help companies venture more efficiently We suggest that research on the above will make corporate venturing a more productive, less random corporate, strategic initiative. References Aiman-Smith, L. and S. Markham 2001. “Product Champions: Truths, Myths and Management,” Research-Technology Management 44-55. Aldrich, H Organizations and Environments. Englewood Cliffs, NJ: PrenticeHall. Arrow, K Innovation in Large and Small Firms. New York: Price Institute for Entrepreneurial Studies. Barrett, A Johnson & Johnson: Reinventing How It Invents. Business Week 3980(April 60. [...]

[...] The Venture Imperative: A New Model for Corporate Innovation. Harvard Business School Press: Boston, MA. McGrath, R Advantage from Adversity: Learning from Disappointment in Internal Corporate Ventures. Journal of Business Venturing 121- Miller, A. and Camp, B Exploring Determinants of Success in Corporate Ventures. Journal of Business Venturing 87-105. Mitsch, R.A Three Roads to Innovation. Journal of Business Strategy 1821. Nakata, C. and K. Sivakumar 1996. “National Culture and New Product Development: An Integrative Review,” Journal of Marketing 61-72. Nielsen, R., M. [...]

[...] Table Stages of Development Reached by Six ICV Projects Project Medical Equipment Environmental Systems Farming Systems Improved Plastics Fiber Components Fermentation Products Projects Observed Real Time Observation Conceptual * * * * * * Pre-Venture * * * * * Entrepreneurial * * * Organizational * 9 Source: Burgelman, P.A A Process Model of Internal Corporate Venturing in the Major Diversified Firm. Administrative Science Quarterly 28: 223-244. Note: An asterisk indicates that the project reached this stage prior to the conclusion of the study Venture Strategies 7.2 The primary reason to end ICV programs is their failure to deliver. [...]

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