Corporate Venturing: Creating New Businesses Within the Firm
Introduction
In a world which innovators are kings, interest in internal corporate ventures has grown tremendously. In my literature review, I would like to share my insights from reading the book titled “Corporate venturing: creating new businesses within the firm” by Zenas Block and Ian C. MacMillan. In this book, the authors shared their views on the importance of corporate venturing especially in this competitive global economy. Also, other aspects of venturing like the management, organisation and control of the ventures are also covered in great detail. However, much focus will be placed on the imminent need for corporate ventures and also issues like what determines the new venture success. I would also discuss the difficulties faced by managers in ventures as after all; venturing is not as simple as one would like it to be. In the later part of my review, I would also provide some evaluations in relation to this topic.
What is a corporate venture?
We consider a project a venture when it:
• Involves an activity new to the organisation
• Is initiated or conducted internally
• Involves significantly higher risk of failure or large losses than the organisation’s base business
• Is characterised by greater uncertainty then the base business
• Is undertaken for the purpose of increasing sales, profits, productivity or quality
• Will be managed separately at some point during its life (Block & Macmillan, 1993)
In essence, it is a practice where a large firm takes an equity stake in a small but innovative or specialist firm, to which it may also provide management and marketing expertise. The objective of such venture is to be able to gain a specific competitive advantage. It is very important to be able to distinguish between is a corporate venture and an extension of a normal business activity as even till today, there are many misinterpretations of what entails a venture. Hence, I see the importance of being able to understand what a corporate
In a world which innovators are kings, interest in internal corporate ventures has grown tremendously. In my literature review, I would like to share my insights from reading the book titled “Corporate venturing: creating new businesses within the firm” by Zenas Block and Ian C. MacMillan. In this book, the authors shared their views on the importance of corporate venturing especially in this competitive global economy. Also, other aspects of venturing like the management, organisation and control of the ventures are also covered in great detail. However, much focus will be placed on the imminent need for corporate ventures and also issues like what determines the new venture success. I would also discuss the difficulties faced by managers in ventures as after all; venturing is not as simple as one would like it to be. In the later part of my review, I would also provide some evaluations in relation to this topic.
What is a corporate venture?
We consider a project a venture when it:
• Involves an activity new to the organisation
• Is initiated or conducted internally
• Involves significantly higher risk of failure or large losses than the organisation’s base business
• Is characterised by greater uncertainty then the base business
• Is undertaken for the purpose of increasing sales, profits, productivity or quality
• Will be managed separately at some point during its life (Block & Macmillan, 1993)
In essence, it is a practice where a large firm takes an equity stake in a small but innovative or specialist firm, to which it may also provide management and marketing expertise. The objective of such venture is to be able to gain a specific competitive advantage. It is very important to be able to distinguish between is a corporate venture and an extension of a normal business activity as even till today, there are many misinterpretations of what entails a venture. Hence, I see the importance of being able to understand what a corporate
References: Ewing Marion Kauffman Foundation (2011): Right sizing the US venture capital industry http://www.kauffman.org/research-and-policy/right-sizing-the-venture-capital-industry.aspx Kenneth Liss (2000), Harvard business school: Corporate Venturing: Entrepreneurship on the Inside Leena Rao (2010), Study: U.S http://techcrunch.com/2010/07/13/report-u-s-venture-capital-industry-expected-to-shrink-while-emerging-markets-grow/ Mike Docherty(2004), Innovation.net weblog:http://venture2.typepad.com/innovationnet/corporate_venturing/ Robert A. Burgelman and Liisa Välikangas (2005), Managing Internal Corporate Venturing Cycles Zenas Block & Ian C.MacMillan (1995), Corporate Venturing: Creating new Businesses within the Firm