Study note on internal corporate venture

Study note on internal corporate venture

References with extracted contents

Stephen K. Callaway, Robert D. Hamilton, (2006) "Exploring disruptive technology: the structure and control of internal corporate ventures" International Journal of Organizational Analysis, Vol. 14 Issue: 2, pp.87-106.

"As a firm focuses on its current customers, it generates a distinctive set of capabilities that evolve over time (Levinthal and Myatt, 1994). Slater and Narver (1998, 1999) discussed the importance of being market-oriented, representing a long-term commitment to understanding expressed and latent customers’ needs as opposed to focusing on current expressed needs of current customers. Bower and Christensen (1995) argued that companies with a solitary focus on their existing customer base may be oblivious to potential emerging markets since mainstream customers may initially be uninterested in the new product performance attributes";

"One of the most important strategic management decisions for DT [disruptive technology] ICVs [internal corporate ventures] pertains to their level of corporate independence and autonomy (Christensen and Bower, 1996) versus the extent of integration into the rest of the company. Company headquarters may closely monitor and control the new venture operations, or the ICV may be granted substantial independence";

Garrett, Jr., R.P. and J.G. Covin. 2015. "Internal Corporate Venture Operations Independence and Performance: A Knowledge-Based Perspective" Entrepreneurship Theory and Practice July: 763-790 [DOI: 10.1111/etap.12059].

"McGrath, Keil, and Tukiainen (2006) found that 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. The possibility that the structural positioning of ICVs [internal corporate ventures] has little effect on their performance is also supported by quantitative research";

"Parent–venture market familiarity is defined as “the extent to which the venture is similar to other businesses of the corporation in terms of markets served” (Johnson, 2005, p. 41). Parent–venture market familiarity is intended to capture the extent to which parent knowledge is relevant to the venture’s domain, as noted above";

"Opportunity identification mode is defined as the degree to which the ICV originated as an opportunistic initiative versus a deliberate/planned initiative. This definition of opportunity identification mode captures the extent to which the venture’s founding is based on well-considered data and information as the parent carefully plans—or does not carefully plan—the entry of the ICV into the intended market";

"...we define venture planning autonomy as “the extent to which the venture’s management team [versus corporate parent management] is responsible for establishing goals, timetables, and strategy for the venture.” Venture planning autonomy can affect the extent to which the parent can learn from the ICV—and vice versa—over the course of the venture’s operations, and as such is a relevant knowledge flow consideration";

McGrath, R.G. 1995. "Advantage from adversity: learning from disappointment in internal corporate ventures" Journal of Business Venturing 10, Elsevier: 121-142.

"In competitive markets, no advantage is likely to remain in place indefinitely. The reality is that opponents will mobilize to eliminate advantage by creating or acquiring new competences of their own (D'Aveni 1994). This suggests that it is imperative for a firm to be able to generate new competences, to renew the firm's competitive advantages. So, why venture? Because venturing is one of the core processes through which existing firms acquire valuable new competences (Burgelman 1983)";

"Acquiring competence through venturing, however, can be fraught with ambiguity and uncertainty. Many decisions must be made today when information will only be revealed after investments are made (Arrow 1974; Dixit and Pindyck 1994). Such conditions require a healthy amount of trial-and-error learning (Daft and Lengel 1986). Errors, leading to disappointment, are a natural and inevitable part of the process";

Covin, J.G., R.P. Garrett Jr., D.F. Kuratko and D.A. Shepherd. 2015. "Value proposition evolution and the performance of internal corporate ventures" Journal of Business Venturing 30, Elsevier: 749-774.

"Internal corporate ventures (ICVs) are exploratory initiatives that originate within a corporate structure and are intended from their inception as new businesses for the corporation (Burgelman, 1983; Sharma and Chrisman, 1999). Because ICVs are aimed at business domains that are, by definition, new to the corporation, they are necessarily exploratory vehicles, defined here as entities through which acts of new entry or new value creation are implemented and for which a paucity of contextual knowledge exists regarding the targeted operating domain";

"The ability of businesses to identify and enact value propositions their target markets judged as desirable is widely regarded as a key to competitive success (Anderson et al., 1993; Lanning, 1998). All businesses have value propositions. As observed by Morris et al. (2005: 729), “There is no business without a defined value proposition, and the creation of value provides a justification for the business entity.” However, ICVs are challenged to identify and enact sound value propositions without the benefit of historical business operations that inform their choices";

Burgelman, R.A. and L. Välikangas. 2005. "Managing Internal Corporate Venturing Cycles" MIT Sloan Management Review 46(4) Summer: 26-34.

"Thirty years of systematic study of internal corporate venturing has revealed that many major corporations experience a strange cyclicality in their ICV activity. .... Periods of intense ICV activity are followed by periods when such programs are shut down, only to be followed by new ICV initiatives a few years later";

"Early research efforts suggested that the interplay between the prospects of a company’s mainstream businesses and the availability of uncommitted financial resources created a strong force driving ICV cyclicality. There are four common situations that can result from that interplay...  Situation 1: “ICV Orphans”.... Situation 2: “All-Out ICV Drive”.... Situation 3: “ICV Irrelevance”.... Situation 4: “Desperately Seeking ICV”...";

"To some extent, corporate venturing may follow the ups and downs of the economy. When cash is readily available, corporations invest in new-venture programs; when cash becomes short, the programs are terminated. However, the macroeconomic explanation for ICV cyclicality is probably partial at best";