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Henri Burgers and Vareska Van de Vrande

Burgers and van de Vrande recognize the important role of the individual agent in the pursuit of corporate venturing (CV). They review the literature and distill three different views of corporate entrepreneurs. The first is “outcome driven” where the focus is on the results of CE, without directly considering the individuals engaged in the process. This view ignores the individual and has tilted research to focus on formal CE activities. Entrepreneurship is a nexus between individuals and opportunities, and this view ignores this intimate and powerful link. The second view centers on the “context of CE” where individual behavior is defined and shaped by organizational realities such as level of autonomy and the support of middle managers. This view is important for separating corporate entrepreneurs who identify and pursue opportunities inside the firm from independent entrepreneurs who might define an opportunity and then pursue it externally. The third view is a more individual driven notion of CE. The authors then develop an integrative model that connects these three views, allowing the identification of seven different types of corporate entrepreneurs. Using data from the panel study of entrepreneurial dynamics (PSED), the authors show how these entrepreneurs differ in their human capital endowments and the characteristics of opportunities they pursue. This study highlights the critical value of human capital and understanding context in determining CE and those individuals who undertake these activities.
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Gary Dushnitsky and Miles Shaver

This chapter examines the role of corporate venture capital (CVC) in enabling companies to gain access to innovations created by startups. These innovations can be a substitute or complement to a firm’s own innovations and ongoing market activities. Dushnitsky and Shaver reason that incumbents who use CVC typically rely on the disclosures made by the entrepreneurial startups themselves and, therefore, can fairly reliably assess the potential effect of their technologies. Using data from over 2500 startups, the authors identify 167 CVC investments. Their analyses reveal that CVC investments are likely to occur where there is complementarity in the products of corporate investors and startups. Their results also reinforce the importance of strategic objectives that companies have when they make their CVC investments. Interestingly, their results reflect a fundamental difference between CVC activities and other modes of venturing; in CVC investments, companies typically transact with startups with which they have no relationship, and thus focus more on what these new ventures have to offer in terms of complementarity.
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Zeki Simsek and Ciaran Heavey

Simsek and Heavey regard corporate entrepreneurship (CE) as an organizational dynamic capability that requires considerable knowledge and resources. They develop a relational view of CE where firms use their alliances to gain the knowledge and skills essential to make CE successful. They argue that the portfolio of these alliances influences the effect of CE on a firm’s performance. The authors also theorize that this effect rises when the complementarity of the firm’s resource portfolio increases as well as its asset specificity, tacit knowledge and related first-mover advantages rises. They use data collected from the top management teams of 120 small to medium companies operating throughout New England to test these hypotheses. Simsek and Heavey find CE to positively impact firm performance. They also find the interaction of resource complementarity and asset specificity to be positively related to company performance, enhancing the effect of CE on firm performance. The interaction effect of CE and portfolio knowledge specificity is significant but negative. The interaction effect with first-mover advance is negative but lacks significance. Overall, Simsek and Heavey’s discussion and empirical findings support the proposition that alliances do more than fill gaps in a firm’s resources. Alliances also help support CE and increase its potency in affecting firm performance. However, the authors observe that not all alliance portfolios are alike in their effect on the CE–performance relationship. Their results, therefore, reinforce the view that organizations often need to go beyond their boundaries to garner the resources needed for CE—an activity that often suffers from resource scarcity and unevenness in the supply of these resources.
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Elton L. Scifres, James J. Chrisman and Esra Memili

Scifres, Chrisman and Memili examine the role of environmental change in fueling corporate entrepreneurship (CE) activities in the US banking industry, which has been the subject of considerable upheaval because of technological and regulatory changes. These environmental shifts have added much dynamism, but have also introduced considerable hostility into the industry. As a result, the pursuit of CE has become essential for achieving strategic renewal and effective adaptation. Using data from 797 US banks which experienced an environmental revolution, Scifres et al. advance three hypotheses: a) more organizations will engage in strategic change; b) most of these strategic changes will be incremental in nature; c) incremental rather than radical changes will be more strongly correlated with organizational performance. Scifres et al. use five strategic groups to test their hypotheses. They find that more of the banks pursued strategic change than showed no such change, supporting their prediction. Analyses also revealed that the majority of firms engaged in incremental changes. Analysis of covariance showed a curvilinear relationship between the degree of change in strategic renewal and bank performance. Banks that undertook incremental changes experienced lower declines in their financial performance compared to other strategic groups. In a way, these are counterintuitive findings but they make the point that companies that aggressively pursue strategic renewal through CE may pay a price—that is, too much change further disrupts internal operations and depresses performance. Managers need to be careful as they embark upon strategic renewal efforts amid rapid and unpredictable environmental changes.
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Shaker A. Zahra, Donald O. Neubaum and James C. Hayton

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Susan A. Hill and Stylianos Georgoulas

Hill and Georgoulas present a thorough analysis and review of the vast literature on internal corporate venturing (ICV). The review underscores the diversity of research foci and approaches, which would account for the varying interpretations and findings reported in the literature. Their analysis spans the 1960–2009 period, providing a rare glimpse into the evolution of theory and empirical research in this core area of CE. The discussion covers the forms of ICV; how it differs from other modes of venturing; its role in the parent firm’s strategy and organization; how the parent’s strategy influences the use of and results from ICV; how a firm’s organizational context may influence ICV outcomes; and the various ICV processes firms undertake. The authors take great care to identify several organizational variables that influence ICV outcomes, particularly autonomy, top management support, corporate evaluation systems, reward systems and human capital. Likewise, the authors highlight the temporal dimension of ICV operations. Readers should gain much from considering the trends uncovered in this vast review of the literature that covers different levels of analyses and modes of organizing ICV. The analyses reported also show some interesting changes in the research focus, reflecting changes in corporate practices. The authors also identify important future research questions. Their discussion reinforces the centrality of ICV as a core research issue, the multiplicity of issues examined within this body of research, the progress made to date and the challenges awaiting future research.
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Gina Colarelli O’Connor

O’Connor discusses the consequences when companies fail to adapt, transform and renew themselves on the path to innovation. She explores the important question of how incumbents can develop an organizational capability for transformational renewal by building a sustained competency for CE. O’Connor notes the divergent views in a firm’s inability or even unwillingness to engage in path-breaking or transformational change even when the need is evident. She notes that some researchers overlook the role of managers in promoting transformational change. The author also notes that the dynamic capability perspective gives prominence to this role. One pitfall of this perspective, however, is accepting notions of path dependency, where past practices shape future action. Instead, O’Connor argues that entrepreneurial activities can move organizations toward new opportunities and create new paths for breakthrough innovation, setting the stage for transformation. Some of these entrepreneurial activities are indigenously driven. The firm, therefore, needs to work hard to capture the learning that happens within these activities to promote breakthrough innovations. Her field work and surveys of managers provide rich data to identify serious barriers in this regard. These include lack of clarity about the strategic intent; inconsistent action with that intent; not managing resource constraints and organizational challenges; and treating breakthrough innovations as rare events. O’Connor observes that managerial mindsets and inaction may delay or even prevent the development of a sustained capability to engage in breakthrough innovations, a key foundation for the formulation and development of new capabilities.
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Mariann Jelinek and Diana Day

Jelinek and Day examine the growing role of corporate venture capital (CVC) and the hurdles corporations face in managing their CVC programs. They note that traditional venture capitalists (VCs) are more aggressive and willing to take greater risks than CVC investors. They also observe that CVC investments are neither steady nor systematic, a fact that reflects shifts in corporate fortunes and macroeconomic conditions. Jelinek and Day also note that several factors combine to limit CVC units’ access to the best emerging technologies, highlighting the great difficulties encountered in turning CVC into an effective means of corporate strategic transformation. Using Monsanto as an example, the authors develop several interesting insights into ways that can give CVC greater strategic potency and relevance. Their analyses show the importance of having purposeful intelligent actors; emphasize the importance of engagement across multiple levels as the organizational processes unfold at different parts of the organization; and note the need to pay attention to the organizational form and processes associated with CVC. Jelinek and Day’s discussion also underscores the necessity of the CVC’s unit addressing multiple goals of multiple people—a key ingredient in successful collaboration that promotes discovery across the boundaries of organizational units.
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Edited by Shaker A. Zahra, Donald O. Neubaum and James C. Hayton

Corporate entrepreneurship is about remaking organizations; it affects organizational cultures and systems, which, in turn, influence the magnitude, direction and content of corporate entrepreneurship activities. This Handbook hopes to synthesize what we know and clarify what we need to know about key issues such as strategic renewal, innovation and venturing activities within established companies, giving direction to future research.
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Thomas Keil, Shaker A. Zahra and Markku Maula

Keil, Zahra and Maula discuss the importance of corporate venture capital (CVC) as a learning mechanism, a theme that is consistent with some of the arguments presented by Basu et al. and Jelinek and Day. Specifically, they note that while there is consensus on the importance of learning as a strategic benefit of CVC, evidence is mixed. Existing studies highlight the contingent learning benefits of CVC, whereas others highlight barriers to such learning. Keil et al. use the organizational learning perspective to develop their arguments, adopting a “portfolio” perspective on CVC investment where the firm has a combination of different investments with different motives, goals and time horizons. Keil and colleagues propose that the characteristics of such a portfolio could influence the potential explorative and exploitative learning of incumbents who need to be adept at managing and balancing exploration and exploitation. A key point that the authors propose is that learning through CVC investments differs from other inter-organizational relationships. In managing this portfolio, there is a great need for knowledge integration as a means of making sense of what the firm learns through CVC. Their analysis and model indicate that the volume of CVC investments can significantly influence the explorative and exploitative learning an organization may experience. The extent of this learning depends greatly on the degree of core business relatedness, venture relatedness, dispersion and autonomy and the existence of knowledge transfer and integration mechanisms.