Exploration in large, established firms: idea generation and corporate venturing

Hill, Susan (2008) Exploration in large, established firms: idea generation and corporate venturing. Doctoral thesis, University of London: London Business School.

Abstract

Exploration - "experimentation with new alternatives" [1] – presents an ongoing challenge to large, established firms. A myriad of inertial factors encourages firms, instead, to exploit their existing competences and paradigms, with adverse consequences for their long-term adaptability. Corporate entrepreneurship (CE) may, however, provide one avenue for incumbent firms to pursue exploration. This dissertation comprises two empirical studies that examine CE as a vehicle for exploration. The first study examines idea generation via dispersed CE (i.e. entrepreneurial initiatives originating across an organization [2]). It investigates knowledge-based and information-processing antecedents of corporate entrepreneurial idea generation. It draws on exploratory research with 20 knowledge-workers in a multi-national FMCG company; a survey of 388 knowledge-workers across three diverse multinational organizations, supplemented by supervisory ratings; and longitudinal case studies of knowledge-workers observed over a year. A new unit of analysis – the "idea set" – is introduced to aid understanding of the genesis of corporate entrepreneurial ideas. Its questionnaire-based instrument shows evidence of convergent, divergent and predictive validity. Using this construct, somewhat different sets of individual knowledge, contextual stimuli, and cognitive processes are found to underlie the novelty and volume of ideas corporate knowledge-workers generate. The second study addresses focused CE (i.e. a mandated organizational unit within a parent firm identifying and nurturing new business opportunities) via corporate venture (CV) units. It utilises exploratory interviews, a survey of CV unit managers, and survival and investment data on an international set of 95 CV units. Well-established theoretical perspectives are introduced to better account for multiple performance outcomes in such units. Specifically, configurational analysis demonstrates the importance of the internal alignment of relationships, systems and activities within types of CV units on their performance. In addition, the likelihood of CV survival is found to be enhanced by it acting ambidextrously - i.e. engaging simultaneously in both exploration and exploitation.

References:
1) March, J. G. 1991. Exploration and exploitation in organizational learning. Organization Science, 2(1): 71-87.

2) Birkinshaw, J 1997. Entrepreneurship in multinational corporations: The characteristics of subsidiary initiatives. Strategic Management Journal, 18(3): 207-229.