Corporate Entrepreneurship

Pawe Godek, Ph.D.

Ewelina Sotysiak
Magorzata Zubiel
Piotr Bartenbach
Bartomiej Staszczyk

Idea for corporate venturing as a tool for improving corporate

entrepreneurship and innovativeness.

Todays managers face a competitive environment of increasing rates of

globalization and technological change. To cope with such a dynamic environment,
companies need to renew themselves and generate sufficient internal variety to be on
top. Corporate venturing is a vital tool to generate growth and innovation and what
is more, it is associated with higher firm performance. The popularity of corporate
venturing has increased rapidly in recent years partly to take advantage of the rapid
changes in new technology and to participate in the attractive returns made by the
independent venture capital funds. What is more, corporate venture capital is the
corporate worlds answer to investing in entrepreneurial start-ups. Rather than
relying on their own innovation, corporate venture capital is an attempt to benefit
from innovations from the market place to maintain profitable growth.
The fundamental idea behind venturing is to use the advantages of small firm
capabilities to explore new opportunities and large firm capabilities to make the best
use of existing competencies.
Corporate Venturing can take many forms, but the most common is when a
large company, financially invests in the acquisition of shares of a smaller company. A
large enterprise creates a separate fund specifically to invest in a company at start-up
or early development stage. Corporate Venturing is usually an investment in sectors
that are characterized by above-average growth and high rates of return, such as
technology or pharmaceuticals sector.

The reason why large companies invest in such firms is that by providing
financial and managerial support, they gain access to new ideas and technologies
invented or created by those who are considered small.
We are able to distinguish four generally accepted models of Corporate
Venturing. Venture harvesting stands for transferring intangible goods such as
Intellectual Property or other, also tangible solutions, into cash through sale or its
licensing arrangements. A successful example of this approach is Lucent New
Ventures Group which has created commercial-oriented approach towards
Intellectual Property and technologies yet not discovered and developed by
corporations. Venture innovation uses venturing techniques where management
believes it is possible to improve an existing business activity by i.e. acquiring some
lately developed technology. For example, Shells GameChanger program was all
about idea of spending 10% of technical budget for exploring and expanding new
technology in branch of their interest. Furthermore, numerous of Eco-system
venturing corporations, such as it is in case of Intel Capital program, invest in their
suppliers, customers, distributors or companies who have complementary ideas and
technologies. By doing so, they straightforwardly help stimulate growth in the core
business activities and spread more and more creativeness and innovativeness
around.
In conclusion, corporate venturing allows companies to increase their
corporate entrepreneurship and the overall innovativeness of the firm. Large
enterprises invest in smaller companies which have access to the development of
newer technologies and products or services, and therefore gain by adapting them
into their business. Corporate venturing is a way for smaller companies to be able to
do their research and development, however they give up these ideas to the parent
company which is investing. Either way, customers have the ability to buy these new
innovative products, which is considered to be a benefit to both the investing
company and the research company, especially because they not only increase their
profit but they also are able to expand and grow.

BIBLIOGRAPHY:
1. BB_Corporate_venturing_management_fad_lasting_trend.pdf
2. Dow Venture Capital, http://www.dow.com/venture/,
3. Global Corporate Venturing, August
2010 http://www.globalcorporateventuring.com/article.php/357/the-powerof-innovation-at-utilities