000189297 001__ 189297
000189297 005__ 20180317092539.0
000189297 0247_ $$2doi$$a10.1111/jpim.12039
000189297 022__ $$a0737-6782
000189297 02470 $$2ISI$$a000322709500011
000189297 037__ $$aARTICLE
000189297 245__ $$aExternal Venturing and Discontinuous Strategic Renewal: An Options Perspective
000189297 260__ $$aHoboken$$bWiley-Blackwell$$c2013
000189297 269__ $$a2013
000189297 300__ $$a20
000189297 336__ $$aJournal Articles
000189297 520__ $$aThis study examines the relationship between a firm's venturing activities and its undertaking of strategic renewal. The study was motivated by some important gaps in the corporate entrepreneurship literature on venturing and renewal. The extant literature has not focused on the different types and dimensions of firms' renewal activities. In particular, discontinuous renewal involving shifts in firms' core businesses is not well understood. Moreover, the conditions that drive firms to undertake strategic renewal have not been examined. For example, it is not known how venturing increases or reduces the benefits of undertaking renewal. This study focuses on a discontinuous form of renewal involving major changes in firms' core businesses and examines firms' external venturing activities that complement their internal development. We examine corporate venture capital (CVC) investments, which are direct minority equity investments made by established companies in privately held ventures. Discontinuous renewal is conceptualized as resulting from a set of related, and often sequential, managerial decisions. The first managerial decision is to initiate growth in a business that is relatively newer or smaller for the organization. The second decision is to move away, or even withdraw completely, from the current core business that enabled prior growth and prosperity for the firm and served as its primary revenue earner. Employing a real options perspective, we argue that CVC investments create growth options in new and existing businesses but do not result in firms' withdrawal from existing businesses. Therefore, we expect CVC activity to be negatively associated with the likelihood of a firm undertaking discontinuous renewal. We also propose that the benefits of withdrawing from existing businesses are even lower, and the costs even higher, for firms in dynamic industries and for firms that possess strong internal capabilities. The predictions of the study are tested using longitudinal data on 477 firms from the 1990 Fortune 500 list for the period 1990-2000. We find support for all our predicted hypotheses. These results help address important limitations in the corporate entrepreneurship literature. The study also contributes to the real options and organizational capabilities literatures.
000189297 700__ $$aBasu, Sandip$$uCUNY Bernard M Baruch Coll, Zicklin Sch Business, New York, NY 10010 USA
000189297 700__ $$0240773$$aWadhwa, Anu$$g169976
000189297 773__ $$j30$$k5$$q956-975$$tJournal Of Product Innovation Management
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000189297 909C0 $$0252172$$pCET$$xU11254
000189297 917Z8 $$x113441
000189297 937__ $$aEPFL-ARTICLE-189297
000189297 973__ $$aEPFL$$rREVIEWED$$sPUBLISHED
000189297 980__ $$aARTICLE