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

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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)

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.

Suggested Citation

  • Thomas Keil & Rita Gunther McGrath & Taina Tukiainen, 2009. "Gems from the Ashes: Capability Creation and Transformation in Internal Corporate Venturing," Organization Science, INFORMS, vol. 20(3), pages 601-620, June.
  • Handle: RePEc:inm:ororsc:v:20:y:2009:i:3:p:601-620
    DOI: 10.1287/orsc.1080.0373
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    7. Terrien, Clara & Maniak, Rémi & Chen, Bo & Shaheen, Susan, 2016. "Good Practices for Advancing Urban Mobility Innovation: A Case Study of One-Way Carsharing," Institute of Transportation Studies, Research Reports, Working Papers, Proceedings qt53z3h2gt, Institute of Transportation Studies, UC Berkeley.
    8. Masucci, Monica & Parker, Simon C. & Brusoni, Stefano & Camerani, Roberto, 2021. "How are corporate ventures evaluated and selected?," Technovation, Elsevier, vol. 99(C).
    9. Zahra, Shaker A. & Nambisan, Satish, 2012. "Entrepreneurship and strategic thinking in business ecosystems," Business Horizons, Elsevier, vol. 55(3), pages 219-229.
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    19. Waldkirch, Matthias & Kammerlander, Nadine & Wiedeler, Conrad, 2021. "Configurations for corporate venture innovation: Investigating the role of the dominant coalition," Journal of Business Venturing, Elsevier, vol. 36(5).
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