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Gems from the ashes: Capability creation and transformation in internal corporate venturing


Keil, Thomas; McGrath, Rita G; Tukiainen, Taina (2009). Gems from the ashes: Capability creation and transformation in internal corporate venturing. Organization Science, 20(3):601-620.

Abstract

Our longitudinal study of the entire population of internal corporate ventures within a large European electronics manufacturer finds that the conventional focus in the corporate venturing literature to evaluate ventures based on business growth and financial performance may be misguided. Instead, we found that ventures are temporary conduits for capability development and play a primary role in launching the founding stage of new capability life cycles. Ventures' main contribution was often to transfer valuable capabilities to other ventures or the firm's existing business units. The benefit from investing in ventures was therefore largely independent of their commercial success. Furthermore, estimation of success rates proved highly sensitive to the stage of the ventures at which sampling began. These findings suggest the need to reconceptualize the notion of early stage ventures and their success. We further found that the venturing process can be conceptualized as a nested system of simultaneous selection at both the venture and the capability level. We show that these selection processes are distinct yet operate in a coevolutionary way and are amenable to proactive management.

Abstract

Our longitudinal study of the entire population of internal corporate ventures within a large European electronics manufacturer finds that the conventional focus in the corporate venturing literature to evaluate ventures based on business growth and financial performance may be misguided. Instead, we found that ventures are temporary conduits for capability development and play a primary role in launching the founding stage of new capability life cycles. Ventures' main contribution was often to transfer valuable capabilities to other ventures or the firm's existing business units. The benefit from investing in ventures was therefore largely independent of their commercial success. Furthermore, estimation of success rates proved highly sensitive to the stage of the ventures at which sampling began. These findings suggest the need to reconceptualize the notion of early stage ventures and their success. We further found that the venturing process can be conceptualized as a nested system of simultaneous selection at both the venture and the capability level. We show that these selection processes are distinct yet operate in a coevolutionary way and are amenable to proactive management.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Language:English
Date:2009
Deposited On:13 Jun 2013 11:43
Last Modified:05 Apr 2016 16:49
Publisher:Informs - The Institute for Operations Research and the Management Sciences
ISSN:1047-7039
Publisher DOI:https://doi.org/10.1287/orsc.1080.0373
Other Identification Number:merlin-id:8134

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