Corporate Entrepreneurship as a Business Development Strategy

University dissertation from Stockholm : KTH

Abstract: Previous research has generated a substantial body of knowledge regarding the exploration and exploitation of opportunities, two of the main manifest activities of entrepreneurship. This thesis does not primarily examine any of these activities; instead it investigates an important question regarding what happens between them. It seeks to answer why some of the identified opportunities are selected for exploitation. It does so by building on, and contributing to, a research stream that struggles with the link between the entrepreneurial activity of firms and theory about strategy.One of the main contributions of this thesis is the identification of a number of strategic motive dimensions that are associated with the pursuit of corporate ventures. It also demonstrates how these motives are related to significant venture differences, thereby connecting corporate entrepreneurship to strategy in a means-ends relationship. In other words, it provides insight into how strategy is the why of entrepreneurship, and entrepreneurship is the how of strategies (that involve business development).The analysis was based on quantitative data from 274 venture attempts in 222 firms, belonging to a population of 1737 small- and medium-sized manufacturing firms in Sweden. Target respondents were the CEO:s.The findings indicate that venture selection can be influenced by both offensive and defensive strategic motives. In addition, it turned out that ventures can be of both proactive and reactive nature. Together, these two dimensions describe how the venture relates to the firm’s strategic circumstances. To better understand top managers’ intentions, the two dimensions were complimented with measurements of what the firm tries to affect with the venture, i.e. to which facet of business the venture efforts are directed (economy, competition, or competence development). The three dimensions, identified through factor analysis, were labeled “posture”, “adaptive style”, and “orientation”. Alternative non-strategic motives, as well as items for validity evaluation, were included in the survey for comparison. Combinations of the motive dimensions were then presented as “motive profiles”, for four types of ventures identified through clustering techniques.Furthermore, another important contribution is the examination of Roberts & Berry’s hypothesis: That the extent and direction of business development determine the amount of uncertainty faced during venture execution, which in turn is proposed to influence the probability of a positive outcome. Regarding these issues, the study was able to refine the mixed findings in previous research, through the investigation of larger firm- and venture-level samples. The obtained results imply that the distance between the venture and the current business of the firm, in terms of products and technologies, is unimportant for venture outcome. However, a small negative effect of market uncertainty, in turn related to market development distance, was confirmed.