Strategic Entrepreneurship Journal

Cover image for Vol. 10 Issue 4

Edited By: Mike Wright, Rajshree Agarwal, G. T. Lumpkin, and Christoph Zott

Online ISSN: 1932-443X

Associated Title(s): Global Strategy Journal, Strategic Management Journal

Virtual Special Issue Introduction

Corporate Venturing Virtual Special Issue
Gary Dushnitsky and Julian Birkinshaw

To view the articles for this virtual special issue, click HERE.

For established firms operating in dynamic markets, a key strategic imperative is to be alert and responsive to new opportunities (Stevenson and Jarillo,1980). As part of this entrepreneurial mindset, many large firms have opted to pursue corporate venturing activities. These include Internal Corporate Venturing initiatives, whereby a firm stimulates entrepreneurial activity and new business development within its boundaries, and also External Corporate Venturing activities, whereby the firm engages with external constituencies such as entrepreneurial ventures and venture capital firms.

This Virtual Special Issue (VSI) brings together seminal studies that have appeared in Strategic Management Society journals over the last 35 years, which collectively advance our understanding of the corporate venturing phenomenon. The VSI by no means offers an exhaustive perspective on what is by now a vast and dynamic literature. Rather, it points to a number of interesting studies which have shaped our knowledge of corporate venturing.

Corporate venturing is a form of corporate entrepreneurship that includes a focused and (ideally) persistent vehicle for channelling a firm’s innovation efforts. These vehicles have a variety of names, including corporate venturing unit, venture capital unit, new venture division, incubator and skunkworks. The goal of corporate venturing initiatives is to build (at times, with a view of creative destruction) on corporate resources and capabilities in order to introduce new technologies, enter new markets, and drive overall corporate growth. Accordingly, it is often perceived as a way to help firms balance exploration and exploitation. To that end, corporate venturing programs, whether internally or externally oriented, share a key structural feature, namely some level of separation from the core businesses. Research has shown that it is not a trivial task to get the level of separation right. Corporate venturing initiatives often fail to get a good balance between encouraging high-risk and potentially high-growth activities with harnessing the resources and knowledge of the firm.

Internal corporate venturing

Internal corporate venturing refers to those initiatives where the locus of entrepreneurship lies within the boundaries of the firm. The seminal work of Burgelman (1985) was instrumental in demystifying corporate venturing activities, and unravelling its inner workings. He charts its key structural feature, the establishment of a NewVenture Division (NVD), and discusses the strategic challenges involved in running an entrepreneurial program within a large established corporation. His findings highlight the role of managers, and specifically the symbiotic relationship between top and middle managers. The latter group navigates and advances ambiguous projects, while the former group plays a key role in facilitating bottom-up efforts, rather than just dictating top-down corporate objectives.

Importantly, the success of internal venturing is not indifferent to the outside world. Garud and Van de Ven (1992) uncover the interplay between a firm’s internal venturing efforts and the broader constraints the firm is facing. They start with the observation that – much like any entrepreneurial activity – corporate venturers often experience negative outcomes. What are the boundary conditions beyond which those individuals are likely to persist with venturing activities? Their evidence suggests that external factors (i.e., the presence of slack resources and a context with a high level of ambiguity) are instrumental to continuous venturing activity. Stopford and Baden-Fuller (1994) also take a broad perspective on corporate venturing, examining the range of approaches used by a sample of established UK firms to renew themselves over a number of years. They show how the interaction between multiple aspects of venturing (and entrepreneurship more generally) is important to the overall success of the renewal efforts of these firms.

Birkinshaw (1997) studies corporate venturing in a very specific context, the subsidiary units of large multinational firms, and focuses on the autonomous process through which subsidiary managers push their ideas forward for support within the parent company. His key insight is that such initiatives can be directed both towards external opportunities and also towards internal improvements in the configuration and operation of the multinational firm as a whole.

Our understanding of corporate venturing has also benefited from multiple methodological approaches. Burgelman (1985) and Garud & Van de Ven (1992) utilize rich data gleaned through deep case studies of a single corporation. Barringer and Bluedorn (1999) use survey methodology to gain insight into top management perspective and practices (i.e., scanning intensity, planning flexibility, planning horizon, locus of planning, and control attributes) and the success of firms’ venturing success. Ahuja and Lampert (2001) engage in large-sample econometric analysis. Importantly, the nature of their data allows them to employ a longitudinal perspective that is absent from survey-based studies. They find that a firm is more likely to achieve breakthrough innovation when its venturing efforts are directed at experimentation with novel (i.e., technologies in which the firm lacks prior experience), emerging (technologies that are recent or newly developed in the industry), and pioneering (technologies that do not build on any existing technologies) technologies.

External corporate venturing

External corporate venturing refers to those initiatives where a firm seeks to harness innovation and entrepreneurship that takes place beyond its boundaries. While this phenomenon has been in existence since the 1970s (Rind, 1981), it rose to prominence during the dotcom boom of the late 1990s. Research has shown that external business development activities of this sort can enhance and complement firm-level innovative outcomes by tapping into external knowledge. For example, Keil, Maula, Schildt and Zahra (2008) investigated a broad set of venturing strategies, including corporate venture capital, alliances, joint ventures and acquisitions. Their key finding echoes a long standing insight in the world of external venturing: different venturing strategies are useful in driving firm-level innovation, but primarily as a function of the relatedness (i.e., industry, market or technological) between the firm and its partners.

An important feature of external corporate venturing is the nature of interaction with those beyond the firm’s boundaries. This is a key point of difference from the internal corporate venturing literature, which focuses on leveraging existing corporate personnel. It follows that the advantage a firm derives from external venturing is contingent on the quality of the parties it gains access to (Stuart, 2000). But, if those partners are aware that their innovations could be grafted, they may forego the relationship in the first place. Along these lines, Dushnitsky and Shaver (2009) underscore a key challenge that is unique to external corporate venturing: under certain conditions, highly innovative partners may deliberately avoid engagement with an external venturing program, thus limiting its innovation potential.

Another feature of external corporate venturing is that one can often get access to data on the decision to initiate venturing activates. The feature is advantageous to strategy scholars, who have often observed and studied the structure of (internal) venturing programs, but with much less information about the decision-making process that led to their launch. Research has now shown that the decision to launch an external venturing program is driven by both economic and behavioural factors. In terms of economic factors, Dushnitsky and Lenox (2005) show that changes in the quality and nature of external innovation sources (e.g., innovative start-ups) increase the marginal gains from external corporate venturingcompared to internal R&D, increasing the likelihood of corporate venturing activity. In terms of behavioural factors, Gaba and Bhattacharya (2012) show how a firm is more likely to launch an external venturing program when its innovation performance is lagging that of other firms in the industry.

Similar to internal venturing, external corporate venturing faces substantial organizational challenges. Unlike internal venturing, there is a salient ‘ideal design’ for autonomous venturing program; that of the independent venture capitalist. Hill, Maula, Birkinshaw and Murray (2009) point to the tension a firm confronts as it decides whether to structure its external venturing program in line with corporate or venture capital-based organizational characteristics. They further find that the organization choice predicts not only the financial success of the program, but also its strategic contribution to the corporation as a whole.

Finally, there is also evidence that external partners may benefit from engaging with corporate venturing programs. Park and Steensma (2012) find that corporate venture backing is associated with greater financial success for new ventures (compared to those which only get backing from VCs). Further, Park and Steensma (2013) show that external ventures also exhibit gains in terms of their innovation outcomes.


Strategy scholars have generated a substantial body of knowledge regarding the structure and performance of internal and external corporate venturing efforts. In the 21st century, established firms continue to experiment with new- and old-format corporate venturing structures, and while there has been a considerable increase in our understanding of what works, the overall success rate of such activities continues to be highly variable.

We believe there is considerable scope for further research in corporate venturing in the years ahead. Future work could shed more light on the strategic performance of corporate venturing and the economic and organizational mechanisms that drive it. For example, there is room for further work on how the organization of the venturing activity (e.g. its level of autonomy, the incentives it is using) influences its performance (e.g. financial results, strategic value). Such findings will inform the corporate venturing literature, and will also afford broader insights into the organization of innovation more generally (i.e., the role of markets versus organizations). Another potentially fruitful area of research would be to investigate the plethora of venturing activities, and advance our understanding of the role and interaction among them. Relevant work could touch on the theme ofportfolio composition (e.g., a focus on one type of activity versus a portfolio of several activities), its geographical dispersion (e.g., within region versus across the globe), temporal considerations (e.g., sequencing versus concurrent), as well as the organizational mechanisms that facilitate or hinder cross-activity complementarities. There is also an opportunity for more process-based research in this area. While some of the original studies of corporate venturing (e.g. Burgelman, 1985) provided insights into how firms established and managed their venturing units, the emphasis over the last twenty years has shifted understanding the broader patterns across firms and sectors. It would be valuable for researchers to revisit some of the ideas developed by Burgelman and others, to see how the innovation process (as it applies specifically to corporate venturing) has evolved.

With the overall amount of effort dedicated to corporate venturing activities continuing to rise, this continues to be a fertile domain for academic research. We hope that by showcasing some of the best studies done on corporate venturing over the last thirty years, we will inspire further research in this area.


1. Rind, K.W. 1981. The role of venture capital in corporate development. Strategic Management Journal.

2. Burgelman. R.A. 1985. Managing the new venture division: research findings and implications for strategic management. Strategic Management Journal.

3. Stevenson, H. and J-C Jarillo. 1990. A paradigm of entrepreneurship: Entrepreneurial management. Strategic Management Journal. 11, 17.27.

4. Garud, R. and A.H. Van de Ven. 1992. An empirical evaluation of the internal corporate venturing process. Strategic Management Journal. 13: 93–109.

5. Stopford, J. and C. Baden Fuller. 1994. Creating corporate entrepreneurship. Strategic Management Journal.

6. Birkinshaw, J. 1997. Entrepreneurship in multinational corporations: The role characteristic of subsidiary initiatives. Strategic Management Journal.

7. Barringer, B.R. and A.C. Bluedorn. 1999. The relationship between corporate entrepreneurship and strategic management. Strategic Management Journal.

8. Stuart, T. 2000. Interorganizational alliances and the performance of firms: A study of growth and innovation rates in a high-technology industry. Strategic Management Journal, 21: 791-811

9. Ahuja, G. and Morris Lampert, C. 2001. Entrepreneurship in the large corporation: a longitudinal study of how established firms create breakthrough inventions. Strategic Management Journal, 22: 521–543.

10. Dushnitsky, G. and M.J. Lenox. 2005. When do firms undertake R&D by investing in new ventures? Strategic Management Journal.

11. Keil, T., M. Maula, H. Schildt, and S.A. Zahra. 2008. The effect of governance modes and relatedness of external business development activities on innovative performance. Strategic Management Journal, 29(8): 895-907.

12. Dushnitsky, G. and J.M. Shaver. 2009. Limitations to interorganizational knowledge acquisition: the paradox of corporate venture capital. Strategic Management Journal.

13. Hill, S. A., M. Maula, J. Birkinshaw and G. Murray. 2009. Transferability of the venture capital model to the corporate context: Implications for the performance of corporate venture units. Strategic Entrepreneurship Journal.

14. Park, H.D. and H.K. Steensma. 2012. When does corporate venture capital add value for new ventures? Strategic Management Journal.

15. Gaba, V. and S. Bhattacharya. 2012. Aspirations, innovation, and corporate venture capital: A behavioral perspective. Strategic Entrepreneurship Journal.

16. Park, H.D. and H.K. Steensma. 2013. The Selection and Nurturing Effects of Corporate Investors on New Venture Innovativeness. Strategic Entrepreneurship Journal.

Virtual Special Issue on Innovation, Intellectual Property and Strategic Management
Will Mitchell and Aija Leiponen
DOI: 10.1002/smj.2282

SMS Virtual Special Issue on Intellectual Property and Strategic Management video introduction by Aija Leiponen.

To view the articles for this virtual special issue, click HERE.

We are pleased to introduce our inaugural Virtual Special Issue on Intellectual Property and Strategy. This virtual collection reviews the foundations of this literature and more recent directions to promote scholarly and managerial conversations and further research on these topics.

Ever since the resource-based view of the firm (Barney, 1991; Peteraf, 1993; Wernerfelt, 1984) and the notion of dynamic capabilities (Teece, Pisano, and Shuen, 1997), unique resources that typically are generated through innovation have been at the heart of our thinking of strategic management. Competitive differentiation is created through “isolating mechanisms” (Rumelt, 1984) that enable firms to strategically prevent imitation. Intellectual property rights and contractual control rights are two types of isolating mechanisms that have occupied central positions in strategic management research, and more recently in strategic entrepreneurship and global strategy research. However, the importance of these mechanisms varies across firms and industries. Hall (1992) suggested in an early survey study that, overall, reputation and knowhow were quite a bit more important for sustainable advantage than contracts and IP rights, and Cohen et al. (2000) showed in a more recent survey that most managers emphasized speed to market over formal rights. Nevertheless, these formal legal rights can be powerful strategic tools in certain industries or situations, as discussed below.

From a strategic viewpoint, competences and governance are strongly complementary frameworks in explaining firm behavior and performance. Williamson (1999) projected “a lively research future for these two perspectives, individually and in combination.” Lively indeed it has been, and this collection attempts to showcase the key studies within strategic management, entrepreneurship, and global business.

Governance: In attempting to understand how knowledge and innovation influence competition and firm performance, the governance viewpoint sheds light on how knowledge assets and innovation activities are organized and controlled. Strategic management of intellectual property is a critical element in the “governance of competencies.” For example, Aggarwal and Hsu (2009) find that the commercialization modes of innovations significantly depend on the appropriation environment in terms of enforceability of intellectual property rights, and Agarwal, Audretsch and Sarkar (2010) argue that the IP landscape, including spillovers and spill-ins of knowledge, influences incentives and organization forms of entrepreneurship. More generally, the IP regime is a significant moderating factor for entrepreneurial behavior: it determines whether innovators choose to exploit their own human capital or that of others (Autio and Acs, 2010). It also moderates the knowledge sourcing of multinational enterprises (Cantwell and Mudambi, 2011). Nevertheless, according to Burgelman and Hitt (2007), many important research questions remain to be addressed, for example, how valuable formal IP protection is to entrepreneurial promotion and growth, and how firms protect their most valuable intellectual assets outside of formal (protection) devices.

Patents: Much of strategic management research has focused on patents, which are demonstrably a strategically relevant method of appropriation for high tech firms. In a study of Australian firms, Jensen et al. (2011) estimate that the patent premium is as high as 40-50% independent of how value to the company is measured. Similarly, in Grimpe and Hussinger’s (2013) study of acquisitions, the pre-emptive power of the target’s patents is found to significantly increase acquisition price. By enhancing the value of the firm perceived by investors, patents can also reduce the costs associated with asymmetric information in obtaining external finance (Levitas and McFadyen, 2009). Along the same lines, Hsu and Ziedonis (2013) find that patents hold significant signaling value. Formal appropriation mechanisms may thus not only provide the usual competitive exclusion, they may also enhance firms’ access to and terms of trade related to strategic inputs.

Markets: The market perspective on technology emphasizes the strength of IP rights as a key determinant of tradability. Furthermore, Fosfuri (2006) argues that IP trading in the form of patent licensing depends on the market structure. IP licensing has a positive effect on firms in the form of additional revenue, and a negative effect due to profit dissipation in product markets. Highly concentrated market structures imply that profit dissipation will dominate, reducing incentives to license, whereas if the market is highly competitive, the revenue effect will dominate, and firms are more likely to license.

Litigation: In very aggressive IP markets, IP strategies must account for the threat and potential benefits of litigation. Somaya (2003) argues that the engagement of firms in litigation depends on how valuable the affected assets are. Litigiousness also significantly depends on the industry context, for example, whether the relevant technologies are systemic. Furthermore, tough reputation of patent enforcement alone can deter rivals from utilizing knowledge spillovers, for example, arising from inventor mobility (Agarwal, Ganco and Ziedonis, 2009; see also Ganco, Ziedonis and Agarwal, 2014).

Innovation and business development: Intellectual property strategies are used to appropriate returns from innovation activities, but they also interact with innovation and business development strategies in important ways. Reitzig and Puranam (2009) examine organizational features that may influence whether firms gain fast approval of their patent applications. Specifically, they find that cross-functional involvement in IP generation and utilization facilitates a more timely patent protection performance. Such cross-functional coordination may thus help both IP creation and its protection. In turn, Mulotte, Dussauge, and Mitchell (2012) and Singh and Mitchell (2005) find that initial licensing and/or pre-entry alliance strategies sometimes constrain subsequent independent attempts to develop new products, with the constraints stemming from cognitive and/or competitive barriers.

Voluntary disclosure: Whereas much of the literature on IP strategies has focused on optimizing protection of intellectual assets, voluntarily disclosing information about innovations can also be a useful IP strategy. Pacheco-de-Almeida and Zemsky (2013) suggest that voluntary disclosure reduces competitive pressure when it induces imitators to wait and copy rather than concurrently invest and compete. However, this strategy may be a two-edged sword that ends up softening the incentives for leaders to invest in R&D in the first place, hence a complex strategy to implement.
Control rights: Leiponen (2008) and Carson and John (2013) have examined the governance of intellectual assets from a property-rights theoretic perspective, and Adegbesan and Higgins (2010) analyze control right allocation in strategic alliances from a closely related bargaining perspective. Control rights such as IP ownership, market exclusivity, or technology use restrictions defined in contracts between trading or innovation partners shape the incentives of the trading parties to invest in incontractible assets or effort. Through decisions about sharing IPRs with partners, firms can thus influence partners’ behavior in the relationship. Leiponen (2008) finds that service providers that retain rights to intellectual assets created in a vertical relationship are more likely to innovate, whereas Carson and John emphasize that control rights can be used to reduce service providers’ opportunism. Similarly, Contractor, Woodley and Piepenbrink (2011) find that strategic alliance agreement provisions such as territorial restrictions or partnership exclusivity significantly predict alliance behavior in terms of the degree of interaction between the partners, and Conti (2013) suggests that the availability of non-compete agreements to control technological spillovers influences the direction of invention. Control rights to intellectual assets can thus be strategically deployed to incentivize or prevent certain behaviors by partners.

Taking stock: Scholars of strategic management, global strategy, and strategic entrepreneurship have long studied the determinants and implications of strategies pertaining to intellectual assets theoretically and empirically, with larger and smaller samples, and have explored a wide and rich field of research questions. Perhaps because of data availability, much of this research has focused on patenting. Indeed, a hot debate revolves around the patent system more broadly, and the strategic implications of patent assertion entities (or non-practicing entities, or patent trolls), more specifically. Patents will thus continue to be a fruitful context for strategic management research. A separate stream of research has examined contractual methods of governing and appropriating returns from intellectual assets. Although the cost of original research data is much greater in this latter type of research, it appears to be more than offset by the rewards from testing and extending predictions from organizational theories. However, rich research opportunities are also available around other formal or informal methods of appropriation, such as copyrights, trade secrets, and speed to market. Most recently, considering the emerging “data economy” where big data assets promise ample and complex innovation opportunities for firms, strategic management scholars could usefully guide managers in strategic decisions around big data governance and business models.

Barney, Jay (1991), Firm Resources and Sustained Competitive Advantage, Journal of Management; 17(1): 99-120.

Wesley M. Cohen, Richard R. Nelson, John P. Walsh (2000), Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not). NBER Working Paper No. 7552, February 2000.

Rumelt, D.P., (1984), Towards a Strategic Theory of the Firm. Alternative theories of the firm; 2002, (2) pp. 286–300, Elgar Reference Collection. International Library of Critical Writings in Economics, vol. 154. Cheltenham, U.K. and Northampton, Mass.: Elgar.

To view the articles for this virtual special issue, click HERE.