Cognitive mapping the topic of corporate venturing

Cognitive mapping the topic of corporate venturing

Joseph Kim-keung Ho

Independent Trainer

Hong Kong, China

Abstract: The topic of corporate venturing in the subject of Business Management is complex. By making use of the cognitive mapping technique to conduct a brief literature review on the corporate venturing topic, the writer renders a systemic image on the topic of corporate venturing. The result of the study, in the form of a cognitive map on corporate venturing, should be useful to those who are interested in the topics of cognitive mapping, literature review and corporate venturing.

Key words: Corporate venturing, cognitive mapping, literature review

Introduction

As a topic in Business Management, corporate venturing is complex. It is thus useful to employ some learning tool to conduct its study, notably for literature review purpose. For a teacher in research methods, systems thinking and management, the writer is specifically interested in finding out how the cognitive mapping technique can be employed to go through a literature review on  corporate venturing. This literature review exercise is taken up and reported in this article.

On the cognitive mapping exercise for literature review

Literature review is an important intellectual learning exercise, and not just for doing final year dissertation projects for tertiary education students. On these two topics of intellectual learning and literature review, the writer has compiled some e-learning resources. They are the Managerial intellectual learning Facebook page and the Literature on literature review Facebook page. Conducting literature review with the cognitive mapping technique is not novel in the cognitive mapping literature, see Eden and Simpson (1989), Eden, Jones and Sims (1983), Open University (n.d) and the Literature on cognitive mapping Facebook page. In this article, the specific steps involved in the cognitive mapping exercise are as follows:

Step 1: gather some main points from a number of academic journal articles on Corporate venturing. This result in the production of a table (Table 1) with the main points and associated references.

Step 2: consolidate  the main points from Table 1 to come up with a table listing the cognitive map variables (re: Table 2).

Step 3: link up the cognitive  map variables in a plausible way to produce a cognitive map (re: Figure 1) on the topic under review.

The next section applies these three steps to produce a cognitive map on corporate venturing.

Descriptions of cognitive map variables on the corporate venturing topic

From the reading of some academic articles on Corporate venturing, a number of main points (e.g., viewpoints, concepts and empirical findings) were gathered by the  writer. They are shown in Table 1 with explicit referencing on the points.

Table 1: Main points from the corporate venturing literature and referencing

Main points from the corporate venturing literature	Referencing
Point 1: "Successful ICV [internal corporate venturing] are shown to depend on the availability of autonomous entrepreneurial activity on the part of operational level participants, on the ability of middle-level managers to conceptualize the strategic implications of these initiatives in more general system terms, and on the capacity of top management to allow viable entrepreneurial initiatives to change the corporate strategy".	Burgelman, R.A. 1983. "A Process Model of Internal Corporate Venturing in the Diversified Major Firm" Administrative Science Quarterly 28: 223-244.
Point 2: "Internal corporate ventures (ICVs) are entrepreneurial initiatives that originate within a corporate structure and are intended from their inception as new businesses (Kuratko, Covin, & Garrett, 2009). As entrepreneurial initiatives, ICVs attempt to develop new products and/or markets for the parent firm (Block & MacMillan, 1993). Doing so often demands that ICVs learn through experimentation, and they therefore require a great deal of freedom".	Garrett, Jr., R.P. and J.G. Covin. 2015. "Internal Corporate Venture Operations Independence and Performance" Entrepreneurial Theory and Practice July: 763-790.
Point 3: ".... corporate parents may feel a need for increased monitoring of their ventures due to the ventures’ lack of track records, and the parents’ lack of familiarity with the ICVs’ structures, cultures, and systems".	Garrett, Jr., R.P. and J.G. Covin. 2015. "Internal Corporate Venture Operations Independence and Performance" Entrepreneurial Theory and Practice July: 763-790.
Point 4: "... promising ventures could be maintained within the corporate core, allowing the venture to be nurtured by the core. Positioned as complementary to core businesses, these ventures were also better able to reciprocally support the health of the core businesses".	Garrett, Jr., R.P. and J.G. Covin. 2015. "Internal Corporate Venture Operations Independence and Performance" Entrepreneurial Theory and Practice July: 763-790.
Point 5: "Corporate venturing (CV) involves entrepreneurial efforts in which established business organizations invest in and/or create new businesses (Sharma & Chrisman, 1999). When the new business is created within the parent company’s organizational domain, internal CV is the label attached to the phenomenon. External CV involves investments that facilitate the founding and/or growth of external businesses—that is, those outside the parent company’s organizational domain. Joint CV is a form of external CV in which the parent company coinvests with another established parent organization(s) in the creation of a new, external business. All three approaches to CV are important means through which corporations can respond to the innovation imperatives felt throughout many industries".	Covin, J.G. and M.P. Miles. 2007. "Strategic Use of Corporate Venturing" Entrepreneurship Theory and Practice March: 183-207.
Point 6: "CV [corporate venturing] can enable firms to appropriate greater value from their core competencies by leveraging those competencies within product–market arenas operationally or strategically related to the firm’s business (Burgelman & Doz, 2001). CV can also be used to build new competencies that can extend the firm’s reach into “new-stream” opportunities previously outside the firm’s scope of operations (Kanter, 1989). Mason and Rohner (2002, p. 43) note that CV “creates a platform for organizations that makes the search for new and relevant business ideas a part of the company’s day-to-day strategy.” Some multi-business firms have embraced CV as a way to “leapfrog” out of declining businesses, transporting these corporations into new core businesses with better opportunities for growth".	Covin, J.G. and M.P. Miles. 2007. "Strategic Use of Corporate Venturing" Entrepreneurship Theory and Practice March: 183-207.
Point 7: "Firms have historically struggled with the successful employment of CV [corporate venturing] for long term growth and corporate renewal purposes, and much of this struggle relates to managerial uncertainty over how CV might be operationally linked to the firm’s overall strategic process and agenda".	Covin, J.G. and M.P. Miles. 2007. "Strategic Use of Corporate Venturing" Entrepreneurship Theory and Practice March: 183-207.
Point 8: "In recent years, academics as well as business practitioners have offered practical insights which help firms understand the strategic aspects of managing corporate new ventures (e.g. Burgelman, 1983; Burgelman and Chesbrough, 2001; Day, 1994; Nielsen et al., 1985; MacMillan et al., 1986; Brody and Ehrlich, 1998; see also the special issue of the Strategic Management Journal, Vol. 22, 2001, on strategic entrepreneurship). Corporate new venturing, or internal corporate venturing, can be defined as entrepreneurial activities inside the parent company. However, few scholarly works examine the influence of organizational conditions of parent companies that run successful new corporate ventures".	Enkel, E. and S. Goel. 2012. "Smoothing the corporate venturing  path: rules still count" Journal of Business Strategy 33(3), Emerald: 30-39.
Point 9: "Among other findings, researchers point out that political obstacles, which can limit the strategic options of corporate ventures, form a stumbling block to the deployment of available resources. Political obstacles clearly fall into the organizational risks category".	Enkel, E. and S. Goel. 2012. "Smoothing the corporate venturing  path: rules still count" Journal of Business Strategy 33(3), Emerald: 30-39.
Point 10: "The organizational structure for new ventures at the Indian subsidiary was explicit and robust. It consisted of a board supervising a new venture division comprised of senior managers in four basic areas: technical, commercial, marketing, and financial. There were clearly identified roles, responsibilities and decision-making mechanisms within that structure which allowed it to function effectively".	Enkel, E. and S. Goel. 2012. "Smoothing the corporate venturing  path: rules still count" Journal of Business Strategy 33(3), Emerald: 30-39.
Point 11: "Entrepreneurship has been commonly associated with new businesses that are set up outside existing companies (Morris, Kuratko & Covin, 2008: 33; Hoag & Seo, 2005: 3). However, many—if not most—new ventures are not set up “out of the blue”, but rather in close relation to and within existing companies. That is especially true in markets that are subject to considerable barriers to entry. A case in point is the media industry where economies of scale and scope, huge setup and sunk costs, and regulation (among others) are important factors that may restrict the access of new companies into the market. Though disruptive technologies like the Internet provide additional opportunities for new entrants, the majority of entrepreneurial activities still take place within established firms".	Hass, B.H. 2011. "Intrapreneurship and Corporate Venturing in the Media Business: A Theoretical Framework and Examples from the German Publishing Industry" Journal of Media Business Studies 8(1): 47-68.
Point 12: "Managers may find it helpful to use a conceptual model for asking the right questions in planning and executing the different stages of corporate ventures. We propose the following model based on our review. We place the major issues of corporate venturing into a single context composed of four distinct areas: design, resources, decisions, and monitoring".	Vaizler, B. and D. Gordon. 2012. "Raising the odds of corporate venturing: a review by Intel" Journal of Business Strategy 33(1), Emerald: 4-11.
Point 13: "Venture executives are encouraged to use a set of proven and tested tools in spotting and screening suitable topics for venturing. One such powerful tool is provided by Christensen’s renowned framework which allows identifying a disruptive initiative based on the following typology of innovation (Christensen, 1997; Christensen and Raynor, 2003): * Sustaining innovation (which can be either radical or incremental) improves performance of established products along existing dimensions of markets and customers; * Disruptive innovation interrupts these dimensions by bringing to market a very different value proposition from what previously existed. Typical products are cheaper, simpler, and more usable".	Vaizler, B. and D. Gordon. 2012. "Raising the odds of corporate venturing: a review by Intel" Journal of Business Strategy 33(1), Emerald: 4-11.
Point 14: "CE [corporate enterpreneurship]  is the ‘process whereby an individual or a group of individuals, in association with an existing organisation, create a new organisation or instigate renewal or innovation within that organisation’. CE is composed of SR and CV [corporate venturing]. SR [strategic renewal] refers to ‘corporate entrepreneurial efforts that result in significant changes to an organization’s business or corporate level strategy or structure’ and CV refers to ‘corporate entrepreneurial efforts that lead to the creation of new business organizations within the corporate organization’..".	Marchisio, G., P.Mazzola, S. Sciascia, M. Miles and J. Astrachan. 2010. "Corporate venturing in family business: The effects on the family and its members" Entrepreneurship & Regional Development 22(3-4), May-July, Routlege: 349-377.
Point 15: "Firms with growth aspirations have several ways of reaching their goals. Mergers, acquisitions, and joint ventures are a few of the better-known approaches to firm growth. Another route, which is of interest to both managers and researchers, is corporate venturing - growing a business from the inside out. The motives for launching a corporate venture include improving corporate profitability, (Zahra 1991), generating strategic renewal (Guth and Ginsberg 1990), fostering innovation (Baden-Fuller 1995) and gaining knowledge that may be parlayed into future revenue streams".	Thornhill, S. and R. Amit. 2000. "A dynamic perspective on internal fit in corporate venturing" Journal of Business Venturing 16, Elsevier: 25-50.
Point 16: "Little has been done, however, to empirically test whether the connection, or fit, between parent and venture influences CV [corporate venturing] performance. Although some authors have argued that high levels of relatedness between CP [corporate parent] and CV are desirable (Dougherty 1995; MacMillan, Block, and Narasimha 1986), others have contended that tight coupling is antithetical to venture success".	Thornhill, S. and R. Amit. 2000. "A dynamic perspective on internal fit in corporate venturing" Journal of Business Venturing 16, Elsevier: 25-50.
Point 17: "The advantages of a close fit between parent and venture include resource sharing (e.g., access by the venture to the parent’s suppliers and distributors) and the availability of internal corporate capital. On the other hand, ventures with greater autonomy may be free from the entrenched bureaucratic processes of the corporate parent and more flexible in their response to changing internal and external demands. Effective corporate venturing has been described as a balancing act with needs for creativity and change on one side and demands for cohesiveness and complementarity on the other".	Thornhill, S. and R. Amit. 2000. "A dynamic perspective on internal fit in corporate venturing" Journal of Business Venturing 16, Elsevier: 25-50.

With a set of main points collected, the writer produces a set of cognitive map variables. These variables are informed by the set of main points from Table 1. These variables are presented in Table 2.

Table 2: Cognitive map variables based on Table 1

Cognitive map variables	Literature review points
Variable 1: Drivers of interest in corporate venturing	Point 7: "Firms have historically struggled with the successful employment of CV [corporate venturing] for long term growth and corporate renewal purposes, and much of this struggle relates to managerial uncertainty over how CV might be operationally linked to the firm’s overall strategic process and agenda". Point 15: "Firms with growth aspirations have several ways of reaching their goals. Mergers, acquisitions, and joint ventures are a few of the better-known approaches to firm growth. Another route, which is of interest to both managers and researchers, is corporate venturing - growing a business from the inside out. The motives for launching a corporate venture include improving corporate profitability, (Zahra 1991), generating strategic renewal (Guth and Ginsberg 1990), fostering innovation (Baden-Fuller 1995) and gaining knowledge that may be parlayed into future revenue streams".
Variable 2: Improve intellectual understanding of corporate venturing	Point 2: "Internal corporate ventures (ICVs) are entrepreneurial initiatives that originate within a corporate structure and are intended from their inception as new businesses (Kuratko, Covin, & Garrett, 2009). As entrepreneurial initiatives, ICVs attempt to develop new products and/or markets for the parent firm (Block & MacMillan, 1993). Doing so often demands that ICVs learn through experimentation, and they therefore require a great deal of freedom". Point 5: "Corporate venturing (CV) involves entrepreneurial efforts in which established business organizations invest in and/or create new businesses (Sharma & Chrisman, 1999). When the new business is created within the parent company’s organizational domain, internal CV is the label attached to the phenomenon. External CV involves investments that facilitate the founding and/or growth of external businesses—that is, those outside the parent company’s organizational domain. Joint CV is a form of external CV in which the parent company coinvests with another established parent organization(s) in the creation of a new, external business. All three approaches to CV are important means through which corporations can respond to the innovation imperatives felt throughout many industries". Point 14: "CE [corporate enterpreneurship]  is the ‘process whereby an individual or a group of individuals, in association with an existing organisation, create a new organisation or instigate renewal or innovation within that organisation’. CE is composed of SR and CV [corporate venturing]. SR [strategic renewal] refers to ‘corporate entrepreneurial efforts that result in significant changes to an organization’s business or corporate level strategy or structure’ and CV refers to ‘corporate entrepreneurial efforts that lead to the creation of new business organizations within the corporate organization’..".
Variable 3: Effective corporate venturing practices	Point 1: "Successful ICV [internal corporate venturing] are shown to depend on the availability of autonomous entrepreneurial activity on the part of operational level participants, on the ability of middle-level managers to conceptualize the strategic implications of these initiatives in more general system terms, and on the capacity of top management to allow viable entrepreneurial initiatives to change the corporate strategy". Point 3: ".... corporate parents may feel a need for increased monitoring of their ventures due to the ventures’ lack of track records, and the parents’ lack of familiarity with the ICVs’ structures, cultures, and systems". Point 4: "... promising ventures could be maintained within the corporate core, allowing the venture to be nurtured by the core. Positioned as complementary to core businesses, these ventures were also better able to reciprocally support the health of the core businesses". Point 6: "CV [corporate venturing] can enable firms to appropriate greater value from their core competencies by leveraging those competencies within product–market arenas operationally or strategically related to the firm’s business (Burgelman & Doz, 2001). CV can also be used to build new competencies that can extend the firm’s reach into “new-stream” opportunities previously outside the firm’s scope of operations (Kanter, 1989). Mason and Rohner (2002, p. 43) note that CV “creates a platform for organizations that makes the search for new and relevant business ideas a part of the company’s day-to-day strategy.” Some multi-business firms have embraced CV as a way to “leapfrog” out of declining businesses, transporting these corporations into new core businesses with better opportunities for growth". Point 10: "The organizational structure for new ventures at the Indian subsidiary was explicit and robust. It consisted of a board supervising a new venture division comprised of senior managers in four basic areas: technical, commercial, marketing, and financial. There were clearly identified roles, responsibilities and decision-making mechanisms within that structure which allowed it to function effectively". Point 11: "Entrepreneurship has been commonly associated with new businesses that are set up outside existing companies (Morris, Kuratko & Covin, 2008: 33; Hoag & Seo, 2005: 3). However, many—if not most—new ventures are not set up “out of the blue”, but rather in close relation to and within existing companies. That is especially true in markets that are subject to considerable barriers to entry. A case in point is the media industry where economies of scale and scope, huge setup and sunk costs, and regulation (among others) are important factors that may restrict the access of new companies into the market. Though disruptive technologies like the Internet provide additional opportunities for new entrants, the majority of entrepreneurial activities still take place within established firms". Point 12: "Managers may find it helpful to use a conceptual model for asking the right questions in planning and executing the different stages of corporate ventures. We propose the following model based on our review. We place the major issues of corporate venturing into a single context composed of four distinct areas: design, resources, decisions, and monitoring". Point 13: "Venture executives are encouraged to use a set of proven and tested tools in spotting and screening suitable topics for venturing. One such powerful tool is provided by Christensen’s renowned framework which allows identifying a disruptive initiative based on the following typology of innovation (Christensen, 1997; Christensen and Raynor, 2003): * Sustaining innovation (which can be either radical or incremental) improves performance of established products along existing dimensions of markets and customers; * Disruptive innovation interrupts these dimensions by bringing to market a very different value proposition from what previously existed. Typical products are cheaper, simpler, and more usable". Point 17: "The advantages of a close fit between parent and venture include resource sharing (e.g., access by the venture to the parent’s suppliers and distributors) and the availability of internal corporate capital. On the other hand, ventures with greater autonomy may be free from the entrenched bureaucratic processes of the corporate parent and more flexible in their response to changing internal and external demands. Effective corporate venturing has been described as a balancing act with needs for creativity and change on one side and demands for cohesiveness and complementarity on the other".
Variable 4: Learn from corporate venturing practices	Point 8: "In recent years, academics as well as business practitioners have offered practical insights which help firms understand the strategic aspects of managing corporate new ventures (e.g. Burgelman, 1983; Burgelman and Chesbrough, 2001; Day, 1994; Nielsen et al., 1985; MacMillan et al., 1986; Brody and Ehrlich, 1998; see also the special issue of the Strategic Management Journal, Vol. 22, 2001, on strategic entrepreneurship). Corporate new venturing, or internal corporate venturing, can be defined as entrepreneurial activities inside the parent company. However, few scholarly works examine the influence of organizational conditions of parent companies that run successful new corporate ventures". Point 9: "Among other findings, researchers point out that political obstacles, which can limit the strategic options of corporate ventures, form a stumbling block to the deployment of available resources. Political obstacles clearly fall into the organizational risks category". Point 16: "Little has been done, however, to empirically test whether the connection, or fit, between parent and venture influences CV [corporate venturing] performance. Although some authors have argued that high levels of relatedness between CP [corporate parent] and CV are desirable (Dougherty 1995; MacMillan, Block, and Narasimha 1986), others have contended that tight coupling is antithetical to venture success".

The next step is to relate the cognitive map variables to make up a cognitive map on corporate venturing. The cognitive map and its explanation are presented in the next section.

A cognitive map on corporate venturing and its interpretation

By relating the four variables identified in Table 2, the writer comes up with a cognitive map on corporate venturing, as shown in Figure 1.

These cognitive  map variables, four of them altogether, are related to constitute a systemic image of corporate venturing. The links in the cognitive map (re: Figure 1) indicate direction of influences between variables. The + sign shows that an increase in one variable leads to an increase in another variable while a -ve sign tells us that in increase in one variable leads to a decrease in another variable.  If there no signs shown on the arrows, that means the influences can be positive or negative.  For further information on corporate venturing, readers are referred to the Literature on corporate venturing Facebook page.

Concluding remarks

The cognitive mapping exercise captures in one diagram some of the main variables involved in corporate venturing. The resultant cognitive map promotes an exploratory way to study corporate venturing in a holistic tone. The experience of the cognitive mapping exercise is that it can be a quick, efficient and entertaining way to explore a complex topic such as corporate venturing in Business Management. Finally, readers who are interested in cognitive mapping should also find the article informative on this mapping topic.

Bibliography

1.      Burgelman, R.A. 1983. "A Process Model of Internal Corporate Venturing in the Diversified Major Firm" Administrative Science Quarterly 28: 223-244.

2.      Covin, J.G. and M.P. Miles. 2007. "Strategic Use of Corporate Venturing" Entrepreneurship Theory and Practice March: 183-207.

3.      Eden, C. and P. Simpson. 1989. "SODA and cognitive mapping in practice", pp. 43-70, in Rosenhead, J. (editor) Rational Analysis for a Problematic World, Wiley, Chichester.

4.      Eden, C., C. Jones and D. Sims. 1983. Messing about in Problems: An informal structured approach to their identification and management, Pergamon Press, Oxford.

5.      Enkel, E. and S. Goel. 2012. "Smoothing the corporate venturing  path: rules still count" Journal of Business Strategy 33(3), Emerald: 30-39.

6.      Garrett, Jr., R.P. and J. G. Covin. 2015. "Internal Corporate Venture Operations Independence and Performance" Entrepreneurial Theory and Practice July: 763-790.

7.      Hass, B.H. 2011. "Intrapreneurship and Corporate Venturing in the Media Business: A Theoretical Framework and Examples from the German Publishing Industry" Journal of Media Business Studies 8(1): 47-68.

8.      Literature on cognitive mapping Facebook page, maintained by Joseph, K.K. Ho (url address: https://www.facebook.com/Literature-on-cognitive-mapping-800894476751355/).

9.      Literature on corporate venturing Facebook page, maintained by Joseph, K.K. Ho (url address: https://www.facebook.com/Literature-on-corporate-venturing-1395443227214601/).

10. Literature on literature review Facebook page, maintained by Joseph, K.K. Ho (url address: https://www.facebook.com/literature.literaturereview/).

11. Managerial intellectual learning Facebook page, maintained by Joseph, K.K. Ho (url address: https://www.facebook.com/managerial.intellectual.learning/).

12. Marchisio, G., P.Mazzola, S. Sciascia, M. Miles and J. Astrachan. 2010. "Corporate venturing in family business: The effects on the family and its members" Entrepreneurship & Regional Development 22(3-4), May-July, Routlege: 349-377.

13. Open University. n.d. "Sign graph" Systems Thinking and Practice (T552): Diagramming, Open University, U.K. (url address: http://systems.open.ac.uk/materials/T552/) [visited at April 10, 2017].

14. Thornhill, S. and R. Amit. 2000. "A dynamic perspective on internal fit in corporate venturing" Journal of Business Venturing 16, Elsevier: 25-50.

15. Vaizler, B. and D. Gordon. 2012. "Raising the odds of corporate venturing: a review by Intel" Journal of Business Strategy 33(1), Emerald: 4-11.