Gems from the Ashes: Capability Creation and Transformation in Internal Corporate Venturing

Thomas Keil (), Rita Gunther McGrath () and Taina Tukiainen ()
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Thomas Keil: Department of Industrial Engineering and Management, Helsinki University of Technology, FI-02015 TKK, Finland
Rita Gunther McGrath: Columbia Business School, New York, New York 10025
Taina Tukiainen: Helsinki Polytechnic Stadia, 00099 City of Helsinki, Finland

Organization Science, 2009, vol. 20, issue 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.

Keywords: corporate ventures; performance; failure; capability life cycles; coevolution (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:20:y:2009:i:3:p:601-620

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