Corporate venturing benefits for the strategic innovative capacity of large companies

Corporate venturing benefits for the strategic

innovative capacity of large companies

Master thesis

Business Administration: Strategy & Innovation

Corporate venturing benefits for the strategic

innovative capacity of large companies

R.P. (Roland) Kok

Student number 1831038 Kuiperstraat 14, 7201 HJ Zutphen, The Netherlands

06 – 12 33 68 69 R.P.Kok@student.rug.nl

University assessor: K.J. (Killian) McCarthy University co-assessor supervisor: P.M.M. (Pedro) de Faria

University of Groningen Faculty of Economics and Business

Department of Innovation Management and Strategy

ARCADIS Nederland B.V.

Abstract

This thesis deals with the question if large companies can successfully engage in corporate venturing activities. It researches also if corporate venturing activities are beneficial for the strategic innovative capacity of large companies and what the most efficient way is to reap the strategic benefits. Using multiple hypotheses based on previous academic research, this thesis discusses and compares findings from interviewing nine considered experts with a corporate venturing or innovation related professional background. Further insights and answers by using a survey among other experts are obtained and processed into further motives and conclusions about corporate venturing to become more innovative. Results show that large companies that want to build a strategic position in interesting innovative categories by using corporate venturing, can only be successful when the corporate management supports it fully, with the ideal degree of flexibility and when both the culture of the venture and the large company interact and find synergy. Only then innovation, knowledge and strategic benefits can be benefitted from. This research shows that corporate venturing is only likely to be strategically beneficial when the crucial conditions are available in large companies and when these companies can interpret information flowing from venturing activities.

Preface

In the last week of February 2010, I started exploring the corporate venturing world. Multiple exploratory meetings gave me the guidance and the motivation to delve deeper into this interesting topic. ARCADIS Nederland B.V. (further mentioned as Arcadis) gave me the opportunity to research corporate venturing in a relation to innovation.

After seven months merely focusing on purely researching corporate venturing and writing my master thesis the moment to finish the project was there. I am glad that I had the opportunity to work for Arcadis, because the company was the perfect case for my research.

First, I would like to thank Arcadis for let me explore their organization and do my research. Without any distractions they gave me all freedom in an open, attractive and approachable working atmosphere. At Arcadis I got the opportunity to learn a lot about being part of a large organization. Multiple employees became very influential in the research and very useful information was gathered by their knowledge and channels. Specially, I would like to thank Toon Strijbosch, my supervisor at Arcadis, for his guidance and perfect interaction during the project. Overall, the very pleasant interaction and collaboration led me to new insights and experiences in the field of corporate venturing. Besides Toon, I also want to thank all the other colleagues and fellow graduate students at the department of business development from the Amersfoort office of Arcadis.

I also would like to thank Killian McCarthy, my thesis supervisor from the University of Groningen. The very useful feedback he gave me on writing this master thesis were very helpful in the process of writing this thesis. Besides that, the pleasant and informal way of discussion on this research process was for me the ideal path to graduate. Also, I would like to thank my second supervisor, Pedro de Faria, for his time and care spent in reading my master thesis.

Finally and at last, but certainly not at least, I am proud that I can admit that the support of family, friends, fellow students and especially my girlfriend helped me to motivate myself in writing this thesis as my ultimate last study document.

Management summary

Innovation is globally a topic that is always in discussion. Part of that discussion, engaging in corporate venturing activities to be strategically more innovative forms an interesting and important topic. The research is focused on large companies, where Arcadis Nederland B.V. is used as the company for the case-study. This thesis is aimed on researching how large companies successfully can engage in corporate venturing. Next to that, it is researched if corporate venturing is beneficial for their strategic innovative capacity and how benefits can be reaped. Literature shows that corporate venturing can be seen as an important source of innovation for corporations, but that effective implementation of it requires a clear view of the objectives, dedication to understanding the process, and discipline. One of the most challenging aspects of corporate venturing is finding the right people, and corporations must be willing to devote significant time, support and resources to working closely with their portfolio companies if they wish to gain satisfactory value from their external investments. Assumptions and stated theories are translated and presented in seven hypotheses.

This thesis research is adding in-depth value by using qualitative research approaches for testing the hypotheses by the use of interviews and a survey among experts. The sample for the case-study consisted of considered experts in the field of corporate venturing, innovation and affiliated fields like business development, due diligence and incubation. Findings from the case-study show that large companies enlarge their chances for being successful in both existing and potential future business by engaging in corporate venturing. Therefore corporate venturing should be at least be considered as a method for corporate innovation by large companies. The crucial factors for large companies to form a stable basis for corporate venturing activities are the commitment, support and understanding of the management and an appropriate culture that is ‘innovation-ready’.

Table of contents

1. Introduction ... 8

2. Literature review ... 13

2.1 Exploring corporate venturing ... 13

2.2 The importance of innovation for large companies ... 15

2.2.1 What is innovation? ... 15

2.2.2 Struggles towards innovation for established organizations ... 16

2.2.3 Pursuing radical innovation ... 18

2.2.4 Ambidextrous organizations ... 19

2.2.5 Internal ventures ... 21

2.3 Benefits of corporate venturing ... 23

2.3.1 Window on technology ... 23

2.3.2 Acquisition perspectives ... 24

2.3.3 Absorptive capacity ... 24

2.3.4 Open innovation ... 25

2.3.5 Networks and relationships ... 26

2.4 An innovative climate and the essential conditions to that ... 27

2.5 Connecting the benefits of corporate venturing to innovative capacity ... 29

Translation of studied theories... 34

3. Research methods ... 36

4. Results and findings ... 43

5. Conclusions and Discussion ... 54

References ... 63

Appendices ... 68

Appendix 1: Interview list with questions (in Dutch) ... 68

1.

INTRODUCTION

“Every company must venture if it wants to be successful in the long run …” (Mason and Rohner, 2002). Doing venturing the right way, they suggest, offers corporations several things that could not be obtain elsewhere, such as access to talented people, and focus on important new opportunities that do not fit the established business and culture. When large companies make investments, they have their own reasons to do so, but being innovative is the primary reason. Nevertheless, innovation is not just about opening new markets. It can also offer an organization new ways of serving established and mature ones (Tidd, Bessant and Pavitt, 2005).

Corporate venturing is one way to innovate. It is an investment method, which generates new business for the corporation, through the establishment of internal or external ventures (Von Hippel, 1977), to learn new competencies (Tidd, Bessant and Pavitt, 2005). Or, from the other perspective, corporate venturing is a way for start-ups to access rich resources of large corporations and all of their channels; the complementary assets (Teece, 1986). The codependency is interesting, because each side – the corporation and the start-up – wants to get what it needs. However, successful track records are exceptional for venturing activities. Blending new ventures and day-to-day operations of large companies are typically seen to be significantly problematic (Mason and Rohner, 2002).

Among academics innovation is a widely discussed topic (Fagerberg and Verspagen, 2009). Much research has been done on innovation, especially on the factors affecting its emergence. Innovation as a word comes from the Latin word ‘innovare’ which

literally means ‘to make something new’. There are many scientific definitions of innovation. Luecke and Katz (2003) state that innovation is “the introduction of a new thing or method”. Something can be considered as new when the selectors perceive the value of a thing or method as new (Gemser and Wijnberg, 2000). The more innovation is discussed, the more definitions arise. Besides academics, companies, regardless their size and nature, acknowledge that there is need for innovation to be able to respond to global changes and therefore

meaningful innovation is required to add value to the environment wherein companies operate (Mason and Rohner, 2002). Basically, most innovations in businesses have two main goals: to create value for end users; and to capture some of this value for its own purposes (Mol, Wijnberg and Carroll, 2005). To succeed at innovation, companies will need ideas from inside the organization, coming from research and development and business development. At the same time, companies also need ideas from outside the organization, coming from ventures for example. These ideas do not particularly come from corporate venturing. Consequently, as shown in figure 1, other mechanisms can also be linked to corporate innovation (Mason and Rohner, 2002).

In the ideal world, large companies are able to harvest creativity, centralize this in the organization to let it work in a tandem with the strategic goals to create a platform that allows continuous innovation. Unfortunately, the world of business is never perfect and harvesting creativity and innovation is not that easy.

Several large companies – such as DSM, Shell and Philips – already have venture capital funds. They started to use these to expand their portfolio, to add strategic value to their organization and to strive, in the end, for financial returns. DSM for example claims that venturing helps the company in exploring emerging markets and technologies in order to support DSM’s innovation and growth strategy. Next to that, they support the start-ups with knowledge, resources and networks. Teaming up with innovative players all over the world is one of the reasons why venturing is an integral part of DSM’s open innovation approach (“DSM-Venturing”, 2010). It may be expected that every company that is active in corporate venturing has different motives to create value.

A clear connection between the benefits of corporate venturing on the strategic innovative capacity of large companies stays unclear in existing scientific literature. Therefore it is worth an in-depth research to find out whether or not corporate venturing can be strategically beneficial for large companies and in what way it can be beneficial. Next to this, when it turns out to be beneficial, then what is the ideal path or structure to make those investments and to constrain the risks? Arcadis functions as the actual case-study company, where is tested whether or not findings from literature suit the practical environment of a large company.

Opinions of considered experts on the effectiveness of corporate venturing as a mechanism to be innovative vary largely. These varying insights are connected to a lot of conditions and assumptions regarding the topic. By focusing on corporate venturing as the mechanism to be innovative in a strategic way, the aim of this thesis will be to research what the ideal conditions are for a large company to let corporate venturing activities become most beneficial for their capacity to innovate. Consequently, the main research question is deducted from the described organizational innovation issues in this chapter and is defined as follows:

Can large companies successfully engage in corporate venturing, is it beneficial for their strategic innovative capacity, and if so, what is the most efficient way to reap its strategic benefits?

Sub questions:

1. What are the key benefits of corporate venturing for large companies?

2. What are the crucial conditions in large companies to be able to start successfully with corporate venturing?

3. How can strategic innovative capacity for large companies be measured?

In order to be able to answer the main research question properly, the sub questions are focused on the main topic, on the internal organization and on the possible practical implementation of new investment methods.

Relevance

of large companies in a theoretical way. Where multiple studies generally were focused on quantitative research methods of corporate venturing, this thesis builds on a qualitative method by interviewing experts to provide the research an in-depth insight with valid information. The combined definitions of relevant concepts in literature contribute to the validity of the outcomes of this research.

By answering all research questions during this study, it is possible to add insights on the first sentence of this chapter. ‘Do companies need to venture?’ From that point of view, this research can be seen as a starting point for a discussion on the effectiveness of corporate venturing initiatives on the strategic innovative capacity of large companies in a practical way, especially with focusing on consultancy and engineering services providing companies like Arcadis.

The next chapter discusses interesting findings from literature the relevant subjects and builds hypotheses on venturing motives and the relation with strategic innovativeness. Chapter three describes the methods of this research. Chapter four presents the results and chapter five describes the findings and implications. In the sixth chapter, the limitations are formulated and chapter seven concludes this research and the discussion coming that these conclusions. The final chapter is written about the contribution of this research.

Summary

This first section has briefly introduced the motivation and the background for writing this thesis. An introduction on what corporate venturing is, is made by using the theories of multiple authors. It directs to the statement that being innovative in a strategic way is related to focusing on strengthening the own reasons of existence of a company. Practical examples are elaborated on and the uniqueness of and the relation to the case-study company Arcadis is given. For large companies like Arcadis, an innovative climate contributes successfully to the core business. Next to that, the focus of this research and the relevance in both theoretical and practical way were described. The given problem that will be researched resolves around the question of how large companies can strategically benefit in their innovative capacity from corporate venturing activities. This thesis aims at discovering what the conditions are for an innovative large company that wants to engage in corporate venturing initiatives. Based on the focus of this research, the research questions is “Can large companies successfully engage in corporate venturing,

able to start successfully with corporate venturing?” and (iii) “How can strategic innovative capacity for large companies be measured?”. The relevance of theory can be found in the qualitative findings

2.

LITERATURE REVIEW

In the introductory chapter is, the main research question: ‘Can large companies successfully engage in

corporate venturing, is it beneficial for their strategic innovative capacity, and if so, what is the most efficient way to reap its strategic benefits?’ is defined. To answer this question and other questions

properly, relevant concepts and theories for this thesis are explained and clarified. Reviewing literature in this thesis is split up in two distinct sections. The first section discusses corporate venturing, the importance of an ‘innovation-ready’ large company, its conditions to become that, and the possible beneficial outcomes of corporate venturing activities. The second section describes successful connections of the benefits of corporate venturing to become strategically innovative and the further implications for later stages of this research. Considerations and assumptions in this chapter are translated into a number of hypotheses, which will be tested in the case-study, as described in the next chapter concerning the methods of this research.

2.1

Exploring corporate venturing

Corporate venturing is being active in generating new business for the corporation through establishing internal or external ventures (Von Hippel, 1977). Objectives for corporate venturing differ substantially. Where venture capitalists focus on financial returns, the primary objective for corporate venturing programs within large companies is strategic (Sykes, 1990). This means that it is primarily to increase the sales and profits of the corporation’s own business. When a company makes a strategic investment, it means that it seeks to identify and exploit synergies between itself and a new venture (Chesbrough, 2002). The other is financially, wherein the investing company is looking for attractive returns. This implies for this research that the focus will be on strategic corporate venture capital investments objectives, rather than on the financial aspects. Business developers at large companies often use corporate venturing as a business development strategy to invest in innovative ventures to create financial as well as strategic returns (Burgelman, 1983; Vintergaard, 2005).

positive way to the financial performance of a company (Zahra and Covin, 1995), although this is not the primary objective. From a broader point of view, corporate venturing as a term can be applied to all investments by an existing firm into new ventures to stimulate growth and to increase exposure to the potential opportunities generated by radical innovations (Maine, 2008). Most of all, corporate venturing is considered to be a useful strategy to search for new business opportunities (Winters and Murfin, 1988; Block and MacMillan, 1993).

A specific project can be called a corporate venture (Block and MacMillan, 1993) when 1) there is involvement in an activity that is new to the organization, 2) it is initiated or conducted internally, 3) there are significant higher risks of failures, greater uncertainty and/or large losses are involved than the organization’s core business, 4) it is managed separately at some time during its life and 5) it is undertaken for the purpose of increasing sales, profit, productivity or quality.

Corporate venturing is primarily useful for companies to grow and to respond to competitive pressures (Block and MacMillan, 1993). A survey by MacMillan, Block and Narasimha (1986) made clear that the most common reasons to engage in corporate venturing for organizations were to meet strategic goals and the maturity of the core business. Survival depends on constant

growth and defending the organization against competition. This defense implies that competitiveness cannot be maintained without innovation and the generation of new ventures (Block and MacMillan, 1993). The theories of Block and MacMillan (1993) connect with one of the avenues (table 1) for corporate growth by Winters and Murfin (1998).

A distinction needs to be made to make things more clear. Venturing efforts mainly consist of two forms, internal venturing and external venturing (Gompers and Lerner, 1998). Where internal venturing consists of firms who incubate certain new business opportunities themselves en deploy internal start-ups, there are also firms who invest in ventures/start-ups with a strategic goal, which is external venturing. Like stated before, besides these corporate venturing initiatives, also venture capital funds do exist that focus on financial benefits. It is said (Block and MacMillan, 1993) that in terms of the percentage of success and failure, venture capital funds outperform corporate venturing activities. On the other hand, it is supposed to be normal that just one out of the ten investments is going to be a blockbuster, two or three can be defined as mediocre and the rest is among the losers side.

Avenues for Corporate Growth (Corporate Development tools)

 Base business growth

 Internal R & D

 Technology licensing

 Venture capital funding  _Acquisition

Chesbrough (2002) makes things clear in a broader context and offers a framework that suggests when different types of investment are likely to make sense. He describes corporate venture capital as the investment of corporate funds directly in external start-up companies. This implies that it excludes investments made through an external fund managed by a third party. Although the exclusions of several venturing aspects that Chesbrough (2002) creates, it relates to the theory of Gompers and Lerner (1998).

Chesbrough (2002) has different theories about the degree of relatedness between the investor and the investee. It remains unclear if the relation empowers the creative process of a start-up or if it destroys its creative process. It is possible that the investor’s resources and processes can become liabilities for the start-up, instead of capabilities, especially when the start-up operates in new markets or with disruptive services and technologies. Diffusing disruptive technologies throughout the market may be limited when a start-up makes use of the investor’s channels, although Chesbrough (2002) states that an external venture may offer the investing company an opportunity to build new and different capabilities to gain new insights and market opportunities.

Organizations that are not prepared to engage in internal venturing as an absolute necessity for achieving strategic goals, should not undertake venturing efforts (Chesbrough, 2002). Stating this, it is though clear that large companies need to be innovative and use venturing in a way to survive competitively which enhances their strategic innovative capacity. It is however not necessary to be always ready to instantly engage in venturing activities and start a random new business internally. The relatedness to existing business determines the degree of support of the organization normally and when such a relation is unclear and the organization is not ready for new technologies, would this imply that it is not valuable? Several links are possible, whether it is a tight or a loose link, mostly creating and supporting new business cannot always be done in an existing environment, so then the new business would probably perform better as a separate organization (Chesbrough, 2002).

2.2

The importance of innovation for large companies

micro level and cause either a marketing or technological change. Really new innovations are everything in between. Closely connected to these definitions, the authors make a distinction between macro innovations and micro innovation. Macro innovations can be defined as innovations which are new to the world, market or industry where micro innovations are especially new to the firm or customer.

2.2.2 Struggles towards innovation for established organizations

Common characteristics for market leaders are the attention for new technologies and the focus they have on lead customers. These new technologies and lead customers are used to become innovative and even transform the own core business (Mason and Rohner, 2002). However, innovating can be difficult for established companies and established companies often struggle with attempts to pursue corporate innovation. Being paralyzed by existing markets can become risky, because often opportunities in new market are not recognized.

Corporate business development (CBD) is needed and is described by Burgelman, Christensen and Wheelwright (2009) describe as an important function. It is a function which makes acquisitions, outside equity investments in strategic companies and finances technology or business ideas that were generated inside the company. An interesting statement here is remarkable at departments like CBD: ‘We are making the company do things that they do not want to do and driving major objectives that do not fit the company’s core’. Venture capital activities can be seen as such a ‘thing’ that companies do not want to do, because it does not fit the core often. However, the core is only the core in the day-to-day business and it cannot be said that it will be the same in the upcoming future. The goal in CBD is to seek for acceleration processes in value creation for the company. Making investments to accelerate the market wherein the company operates will possibly have major benefits. Next to that, the investments can also be focusing on improving own capabilities by the exchange of knowledge and skills. For companies this would mean regarded to the context of the research that especially the funding and investments aspects and the strategic relationships aspects of CBD are most important.

practices is perhaps the most major adaptation challenge for companies who want to start with corporate venturing initiatives.

Gianfrate and Zanetti (2008) state that within the venture capital industry, the corporate venture capital investments have proven to be at least as successful as venture capital investments carried out by 'independent' or 'pure' players. However, these corporate sponsored initiatives tend to be more short-lived, cyclical and unstable. They continue by stating that corporate venturing usually seeks both financial returns and strategic benefits. Gianfrate and Zanetti (2008) showed that strategic and financial performances are unlikely to be both maximized, thus leading to struggles towards innovation and instability of investing programs: risk. Benson and Ziedonis (2009) mention two main reluctances. Independent venture capitalists are often reluctant to share information with corporate investors who enter the venturing market. They lack a track record as a trustworthy partner and have not yet established a reputation. The second is the reluctance to accept funds from an organization that is not committed to corporate venture capital investments. Venturing initiatives are often short-lived like Gianfrate and Zanetti (2008) stated and are also vulnerable for exiting when senior management support fades away (Benson and Ziedonis, 2009). These relate to the risk of new entry in the world of venturing activities.

Struggling also occurs when companies adjust venturing activities and related strategies on current market environment and financial influences. Naturally venturing opportunities are very different in a downturn period than in a booming period. Although fluctuations like these, venturing activities cannot be stop-and-start activities. Not a single venturing program can become valuable, unless it has inherent strategies that are able to deal with recessions and booming periods.

2.2.3 Pursuing radical innovation

Radical innovations are those innovations that consist of new technologies that result in new markets (Garcia and Calantone, 2002). These authors state that discontinuities occur on macro and on micro level when radical innovations are introduced. It is a strategy for large companies who want to focus on radical innovations, to develop ventures who operate separately, so with other goals, other organizational processes and a completely other culture (Maine, 2008). These ventures are therefore used as mechanisms to explore radical innovations. Although large companies have more resources and complementary assets than start-ups (Teece, 1986; Maine, 2008), they tend to go on developing new products in-house focused on existing customers with existing technologies and methods. Using this approach, only incremental innovations can be of a major focus then, because of the disincentives regarding radical innovations for large companies. A culture appropriate to allocate resources in an efficient way also deals with a culture of experimentation that is required for the inherently higher risks of radical innovation (Sykes and Block, 1989; Maine, 2008).

The limitations established organizations have regarding radical innovations are recognized in two ways (Maine, 2008) which are already described previously: external venturing, which monitors and invests in new ventures and internal venturing, as a method to capture more value from technologies developed in-house, but still while insulating R&D efforts from a risk-adverse culture of an established organization in a matured market.

These theories about exploring radical innovation lead to:

2.2.4 Ambidextrous organizations

Management must constantly look behind them, checking what has been done in the past, while also focusing forward, with preparing innovations that will define the future (O’Reilly III and Tushman, 2004). It is a huge managerial challenge to explore new opportunities while focusing and working hard to exploit existing capabilities. A lot of firms are successful in refining current market offerings, but often fail when it comes to pioneering radical innovation. Established firms often lack the flexibility to explore new markets, because they basically focus on core activities and existing customers. O’Reilly III and Tushman (2004) tested theories of advices on how to adapt as a firm to the exploitation-exploration trade-off. Successful companies at both exploitation of the present and exploration of the future seem to share important characteristics. Succeeding is possible when separations are made between new exploratory unites from the traditional exploitative ones. A link with corporate ventures can be seen here. These units have different processes, cultures and structures, but they keep maintaining links across units at senior executive levels. Companies who are able to separate this successfully are called ambidextrous organizations. From the Latin roots of the word ambidextrous can be taken that it literally means ‘right on both sides’. Pursuing incremental innovation in core business and seeking for radical or disruptive innovations are successfully implemented by ambidextrous organizations. All these innovation types have different targets, some may be aimed at the firm’s current customers, some are aimed to an existing market beyond a current scope and some are focused on serving new markets that need to be defined clearly first. Results from the study of O’Reilly III and Tushman (2004) showed that ambidextrous organizations outperform

other project structures. Organizational design and management practices had direct and significant impact on the performance of the breakthrough initiative and on the traditional business. Launching breakthroughs were more successful in ambidextrous organizations and more than 90% of the

achieved their goals of producing real innovations, where none of the cross-functional teams and only a quarter of the functional designs were successful.

What generally can be said according to O’Reilly III and Tushman (2004) is that at a theoretical level ambidextrous organizations outperform other organizational types. Its structure allows interaction between the units while preventing contamination. Next to that, important resources are shared, without being overwhelmed with the traditional paradigm of the existing business. At the same time, existing business is not being distracted of new ventures so they can continue focusing on what they are good in and refine daily operations to serve their current customer base.

Based on the findings at two ambidextrous organizations O’Reilly III and Tushman (2004) found key managerial and organizational characteristics that allow companies to both exploit and explore. As shown in figure 2, several characteristics and focus aspects are determining the alignment. Next to these, managers and executives need to be ambidextrous in a way to have the ability to understand and be sensitive to the needs of the different kinds of businesses. Even if these people are not ambidextrous themselves, they must at least be supporting and committed to operating on both business sides. This support and commitment expresses itself in a clear and compelling vision, wherein both exploitation and exploration are permitted to coexist next to each other. All the findings of this research make clear that not only can an established company renews itself through the discontinuous or radical innovations, but it can do so without destroying existing business.

the internal venture. It can be taken from both the findings of O’Reilly III and Tushman (2004) and Hill and Birkinshaw (2006) that strategic performance for corporate ventures is determined by the interplay between exploration and exploitation and the relational context with influencing parties. The combination of these theories lead to:

Hypothesis 2: Strategic performance of large companies that use corporate venturing is determined by the interplay between both the exploitation and the exploration of business.

2.2.5 Internal ventures

Maine (2008) describes that internal corporate ventures have a higher risk and higher potential reward than external corporate ventures. Active management of risks is increasing the success of venturing activities in firms. But however, short assessment periods, a risk adverse culture and micromanagement are detrimental to internal corporate ventures (Block and MacMillan, 1993; Maine, 2008). Chances of success of a corporate venture can be increased where lower technical and market product risk are found, but where radical innovation is of a high risk (Sykes, 1986; Maine, 2008). Therefore the uncertainties that are into play with pursuing radical innovation need to be evaluated by a credible and influential committee who understands that time needs to be given to those processes. Mostly these committees consist of higher management, executives and board members (Maine, 2008).

investigated in a study, where relatedness of the new venture’s business to its parent firm’s existing business is the major problem.

Failures for internal ventures relate to market-related problems, like a too narrowed market, inaccurate market research and distribution problems. Conflicts between persons are also determining success or failure. Top management often found that there were wrong venture managers and vice versa, venture managers stated that impatience and conflicts with other managers were the reasons for failure. Von Hippel (1977) researched a sample of two selections; commercial successes and commercial failures. Findings showed that ventures often vary in size, structure, scale and goals. Internal venture practitioners state that small scale is the most appropriate for successful internal venturing, because doing it this way, fast reaction time is guaranteed and necessary integration of specialties is ensured. Integrating outside personnel with experience in the proposed marketplace in the venture is also determining success for the venture. The parent and established firm can be seen as the venture sponsor. There is no relation between the distance of a sponsor from a venture and the success of that venture. This is regardless of whether the venture is sponsored in a formal way, or by sponsoring it as a side-project. However, it is commonly considered that close contact with the CEO or top management is necessary to weather the upcoming storms for the ventures. Von Hippel (1977) states that it is not easy to define factors and characteristics for a manager of an internal venture. However, somehow they have to relate to characteristics of a successful entrepreneur. According to Carter & Jones-Evans (2006) these are: a risk-taken propensity, the need for achievement, locus of control, over-optimism and a desire for autonomy. A more cryptic one is ‘the dark side’ as a characteristic, which relates to entrepreneurial behavior that is not always logically interpretable. What basically can be said is that the motivation that venture managers need to have is to believe in the business opportunity by breaking through existing barriers. However, it needs to be in a proportional perspective because of its relation to the parent firm. Another constructive finding of Von Hippel (1977) was that a venture manager, who had a previous larger project to take care of than the internal venture project size, relates to project failure. This implies that it must be avoided to assign a manager to an internal venture that had bigger challenges in the past within the firm. However and after all, entrepreneurship is not equal to managing an internal venture.

strategic initiatives of individuals at the operational levels in the organization. Corporate entrepreneurs face the challenge of recognizing opportunities in new or existing markets and by developing new businesses within matured organizations (Elfring, 2005). They desire to engage in strategic initiatives that fall outside the corporate strategy’s scope (Burgelman, 1983). Attracted by the perceived opportunities, these employees risk their reputation and even their careers due to the management positions they see in the new business. These autonomous strategic initiatives are according to Burgelman (1983) one of the most important resources for renewing through internal development.

These theories and factors that are into play regarding the success of internal ventures lead to:

Hypothesis 3: Internal corporate ventures can only be successful when there is management support, when the right people who use the right investor’s channels people are involved and when the right degree of freedom to operate is available.

2.3

Benefits of corporate venturing

Strategic objectives of venturing programs provide a ‘window’ on unknown areas, where potential new business can be harvested and where a lot of acquisition targets are in sight. Having that ‘window’ makes early insight into the potential of new markets and products possible, because a lot of development in new growth areas comes from innovative start-ups (Block and MacMillan, 1993). Using venture divisions just as centers for venture operations is not useful. Using them as opportunity finders, ‘talent scouts’ and evaluators is much more useful (Block and MacMillan, 1993).

information gained through venturing activities might improve dimensions of a firm’s absorptive capacity; identifying potential acquisition targets and valuing the potency of the acquisition target’s technological possibilities.

2.3.2 Acquisition perspectives

Acquisition is the most perceived benefit to a corporation from venture capital involvement (Winters and Murfin, 1988). But it is a mistake to define venture capital investing as the first step to cheap acquisitions. It depends of the stages of investing. The authors define strategic benefits from corporate venture capital investments in examples like (already mentioned) acquisitions, technology licenses, product marketing rights, international business, ‘window on new technology’, internal venturing- “intrapreneurship” and contacts. These contacts to high innovative start-ups can be beneficial in a way that acquiring licenses of new technologies add value to the firm.

The theories of Benson and Ziedonis (2009) are based upon statements about firms which are consistently engaged in venture financing who earn greater returns when acquiring startups, than firms with more sporadic patterns of investing. This seems to be an interesting and favorable theory to help convincing the board of directors of companies of the benefits of corporate venturing. MacMillan, Block and Narasimha (1986) state that an often used effective tactic is that venture capitalists weather the problems of start-ups and then acquire the resulting ongoing firm in a later stage. Access to detailed information of new technologies is filtered by venture capitalists. It helps organizations in their decisions with adding knowledge to possible acquisition cases about, for example the entrepreneur, the patents they have and the value of the company (Gompers, 2002).

2.3.3 Absorptive capacity

Information gained through venturing activities can improve the absorptive capacity of an organization, but its effects will heavily rely on the strength of its internal technological capabilities (Benson and Ziedonis, 2009). The authors state that acquisition performance will be enhanced, when more resources go to external information gathering.

it to commercial ends” is called the absorptive capacity. A link with ‘window on new technology’ can be made here, like Benson and Ziedonis (2009) state. Absorptive capacity relies on the strength which organizations have of their internal bases on knowledge and expertise and on the actions they take to involve in a network of external innovativeness. It is said that absorptive capacity is a reason for companies to invest in R&D (internal innovations) instead of simply buying the results (external innovations and novel technologies or patents). A trade-off between investments at the ideal moment and acquisition can be seen here, because developing absorptive capacity in a certain period will make it easier to accumulate it in the next one. Is it really as simple as Cohen and Levinthal (1990) state? Is it true that the more a firm invests in R&D activities, the more it will be able to fully appreciate the value of new external information? Also other areas can be explored to develop a firm’s absorptive capacity (Zahra and George, 2002). A split up in two different capacities is made: the potential absorptive capacity and the realized absorptive capacity. Where the indicators to evaluate elements of absorptive capacity that the authors suggest seem to not relate to this research, it is useful to define potential absorptive capacity.

Knowledge acquisition is the first of two elements which “refers to a firm’s capability to identify and acquire externally generated knowledge that is critical to its operations.” The second one is the assimilation capability which “refers to the firm’s routines and processes that allow it to analyze, process, interpret and understand the information obtained from external sources.” A clear relation can be seen to corporate venture capital investments here, because without a proper identification of externally generated knowledge (in the form of start-ups), corporate venturing is doomed to fail.

Realizing absorptive capacity can be made up of the capacity to refine routines and combine the newly acquired knowledge and the existing knowledge. Another capability is the capacity to apply the newly acquired knowledge in product or services which add strategic or financial benefits to the firm.

2.3.4 Open innovation

early exiting (and reducing the risks of financial losses) as ‘corporate venturing is a fairly flexible investment instrument’.

Given the success of venture capital in creating new entrepreneurial companies and technologies, corporations have also looked to the open innovation model, as just another approach to become innovative (MacMillan, Roberts, Livada and Wang, 2008).

2.3.5 Networks and relationships

Knowledge acquisition would be most effective if firms would ally with the highest quality partners (Dushnitsky and Shaver, 2009). Revealing novelties and upcoming innovations is for young firms (or start-ups) often a risk for not establishing an interorganizational relationship with an established firm. These partnerships are though key strategies for external knowledge acquisition. If young firms choose to not share their invention to a matured and established firm because of imitation concerns, then this implies that there is only access left to less innovative partners.

The interesting outcome of the study was related to the degree of a strong or weak intellectual property regime; a weak regime has imitation concerns and start-ups are not likely to seek for financial backing. Gompers (2002) suggests that entrepreneurs often fear theft and misappropriation of their business and try to avoid investors. Next to that, often the best interest for the organization that invests is not always the best for the start-up and vice versa.

However, the interorganizational relationships can also be beneficial for start-ups. Value-added services for start-ups can be seen here, like corporate laboratories, supplier networks, marketing and distribution channels (Teece, 1986) and access to customer relationships of the firm (Maine, 2008). Complementary assets like these can be valuable in the development of young companies, because also technological know-how is important for the diffusion of technologies (Chesbrough, 2002). Here also lies a trade-off between corporate investors and venture capitalists, because the commitment to the portfolio may be completely different (Block and MacMillan, 1993). Besides that, making a commercial translation from ideas and concepts to sales and turnover can be empowered and accelerated by corporate investors (Benson and Ziedonis, 2009).

opportunities, makes that the connection and feeling to the business activities of potential acquisition target is growing.

Synergy is most frequently gained through technological complementarities between two organizations (Graebner, 2004). Related to this, again, is investing in internal knowledge (R&D). This does not only affect superior valuation and knowledge of and in entrepreneurial discoveries, but also reduces competition in the field of the acquisition of start-ups. Matured firms tend to allocate internal R&D resources in a risk-averse fashion and this results in avoiding innovations that overturn existing owned technologies and production capabilities (Maine, 2008). Naturally focusing on own core business is crucial to be a key player in the market, but limiting the company needs to overcome to let corporate venturing have a chance. Internal venturing has the biggest risks, but also the largest potential rewards. Maine (2008) investigated the successful evolution of an internal venture within a large incumbent firm.

From the sections about absorptive capacity, open innovation and networks and relationships it can be hypothesized that:

Hypothesis 4: Without an objective understanding of information about what is happening in new, emerging and current markets and without the capabilities to interpret that information, there is no reason for large companies to engage in corporate venturing.

Hypothesis 5: Synergy through complementarities can be gained for large companies by using corporate venturing activities, which stimulate open innovation and result in networks with innovative start-ups.

2.4

An innovative climate and the essential conditions to that

This implies that organizational innovativeness can be seen as an aspect of the organizational culture’s openness and pro-activeness towards innovation. So this makes that the higher the level of organizational innovativeness, the greater the innovative capacity.

Hurley and Hult (1998) changes the generally settled mechanism of organization learning into innovation as the central mechanism by which firms comply to their environment and by developing capabilities. In this mechanism, the orientation to innovation and the capacity to implement innovations successfully determines the rate of development of the firm and the potency in achieving superior performance. The study of Hurley and Hult (1998) made clear that a group’s culture which has more receptivity to innovations is associated with higher levels of innovation.

Considering that organizational innovativeness is important for understanding organizational learning it is useful to link these. Especially the culture seems to be the determining factor for more innovativeness. A finding from the study of Hurley and Hult (1998) made clear that when group members are encouraged in their organization to learn and develop, to influence group decisions, both the group and the organization have more innovativeness. Here the strong link between people development and the innovativeness of an organizational culture is clearly consistent with the theories about absorptive capacity by Cohen and Levinthal (1990), because they indicated that the absorptive capacity of the organization is linked to the absorptive capacity of the members of the organization. When the organizational culture affects organization innovativeness, this has strategic implications. A culture cannot be selected or created from scratch and therefore when organizations search for innovation, they have to deal with norms and values in the organization. In the end this implies that continuous innovation can occur largely because of the directors’ broad vision towards what can be accomplished actually within the organization. Creating an innovative culture needs system changes and full support towards it.

firms, idea collection from different departments provides different perspectives and hereby the variety of ideas increases. A relation to the quality of ideas can be seen here, because simply generating ideas is not enough. The generation of ideas however, has a positive impact on innovative capacity. Stimulating creativity and idea generation can be facilitated by formal systems and policies and supported by reward systems. Firms that are able to reduce the time between a generated idea and the commercialization of these ideas reap the benefits of the first-mover advantage. The last predictor of the four is the acquisition of technology and the exploitation of it, regardless if it is internally developed or if it is provided from the external environment.

Combining the theories of both Hurley and Hult (1998) about the need for an innovative culture and Cohen and Levinthal (1990) about the need for investment in R&D activities makes that organizations will better be able to transform insights from the environment to real added value: innovative capacity. These two factors can therefore be seen as determinants for success to create the ideal ‘corporate venturing ready organization’. In can be interpreted that:

Hypothesis 6: The development of people, the level of innovativeness of a large company’s culture and the involvement in corporate venturing activities are linked to the learning capacity of the organization.

2.5

Connecting the benefits of corporate venturing to innovative capacity

This section further elaborates on the previous described corporate venturing and innovation related aspects and mechanisms. First existing theories on the use of corporate venturing and its relation to innovation are used to focus towards the case-study. These include studies found in academic literature as well as in books written by considered experts. Besides these codified theories, a combination with tacit theories derived from meetings during the internship at Arcadis is used. Based on these, a number of additional hypotheses are drawn up.

The best basis for successful venturing activities

investments is not equal to taking more risk, but in the end you can be able to manage the risk without losing the grip.

What is venturing success? To define success is not simple. Venturing provides companies the flexibility to experiment and to try things without the fear of failing. “Failing is equal to learning” people often say and therefore failures can be translated into opportunities to learn. Failing ventures have more value for companies than for venture capital firms. Frequently there is something valuable that can be absorbed from the venture back into the company, like a technology or method that can be applied to existing business units or business development in the future. A major advantage can be seen here: the opportunity to reap the benefits of knowledge and apply this throughout the whole company.

Corporate venturing can be seen as an innovation strategy which enhances company growth. When corporate venturing is structured well, it becomes a platform for companies to scout the market for relevant business ideas next to the daily business strategy. The reasons for not participating or starting with venturing are simply commonly not valid, just as where the type of core business is not relevant. Unfamiliarity is just an excuse for less innovativeness. It is not a single bet, but spreading and managing by a portfolio.

Discontinuous business models cause problems for average companies, because the corporate cultures cannot handle much change at the same time (Mason and Rohner, 2002). The culture in ventures is often very different than the dominant corporate culture. This causes radical other approaches to manage, staff and budget areas within the venture. It is questionable

if matured large companies need to apply to rapid innovations. Are companies really forced by their competitive markets to innovate on a regular basis? What is a fact is that technology is crucial in every business and from a competitive point of view it should be of a major interest. The solution of renewing life cycles of a company depends on the willingness and enthusiasm of a company. Not innovating and adapting to the new economic and technological development will not instantly lead to the death of an organization, but it can be disastrous in the long run.

Market life cycle

Corporate venturing is suitable for every company, regardless of their core business, both for continuous and incremental innovations and for discontinuous and radical innovations.

Related to the innovation distinctions of Garcia and Calantone (2002) are the statements by Mason and Rohner (2002). From the theories of Mason and Rohner (2002) can be taken that creating new products or new services regardless of the market stage can be done within the internal organization. When the degree of disruptiveness is bigger it becomes questionable if large companies are able to innovate internally. Where some innovative products and/or services can be created, some simply cannot. When the degree of disruptiveness is simply too high, company structures are not suitable for these types of innovations. What can be said then is that the higher the degree of disruptiveness, the higher the need for developing this business in a venture is (figure 3). Burgelman (1984) has an affiliated theory (figure 4), but relates the mechanism for innovation in another way. His theory makes clear that the interaction between market and technology is important in defining the ideal way to innovate.

Creating new business is however unpredictable, especially because organizations never know when the time comes when newness is expected and needed by customers. Creating new business is not simply a stop-and-go process, but is being proactive in market sensing.

As stated, new business is not likely to be generated by existing organizational structures. Venturing is the mechanism that can be used to create new business to become strategically innovative. Therefore this research focuses on the benefits for strategic

innovation aspects by using corporate venturing as a mechanism.

The major benefits of how large companies can benefit from corporate venturing for their innovative capacity lies in structuring the venturing efforts. To buy innovations (M&A) from the shelf will lose the opportunity to learn and to use these breakthrough ideas to strengthen the own core business and create sustainable competitive advantage. The venturing process is what in the end makes a large company more innovative. Figure 5 is a derivative from figure 3,

Base

Base

Related Unrelated

Related

Unrelated Joint venture

where is shown which processes suit which stage of business. It is shown that some innovation types can be managed by current organization processes of large companies. This means that existing departments and people can manage some innovation types. Growth and emerging markets with a high degree of disruptiveness are however such distractions of the exploitative core business that ventures are the ideal method to innovative to have the highest chance for success. Building positions in fast growing new categories is best obtained by using the exploratory approach of venturing. Being actively involved in emerging markets which are absolutely not well defined well in a business setting, can only be converted into long term growth possibilities by using a venture that is liberated from the corporate structure to be able to operate in freedom.

What venturing processes do to an organization is helping and transforming ways of thinking in a tandem. This means that ventures benefit from the experiences and industry knowledge of large companies and to deploy this through ventures. The other way around, the unstructured, creative chaos and out-of-the-box thinking is flown through venturing activities back into the corporate processes.

Market life cycle

emerging growth mature decline improved service / product new to departments new to company new to the world Disruptiveness

Build position in segments that (are about to) grow

fast

Grow / defend margins and market share Defend margins and market share Technology push Build position in established yet attractive segments

Build position in fast growing new categories

Create long term growth

options

‘New business’ innovation types which could be managed by ventures

‘Existing business’ innovation types which are

managed by current organizational processes

This is illustrated in figure 6, influenced by figure 3 and 5. Being active in generating new business by using ventures enhances the level of innovativeness within the large company. Where the channels and benefits of the large company are used to create the ideal backup for the venture, the ideal start is developed. The combination between only the ideal instruments of the large company and the freedom and flexibility to operate is the best basis for venturing activities. The other way around, by active

involvement of both the venturing unit and the business units of the large company innovation can be leverages and successful venturing initiatives can be anchored in the organization. This position of where to operate to become in the most efficient way strategically innovative can be called the ‘sweet spot’. According to the theory of Collis and Rukstad (2008) this is where in the end customers’ needs are met in a way where rivals cannot come. This is exactly what happens when large companies innovate when using corporate venturing to do so. Corporate venturing leads to potential future core business and a creative part of developing a strategy for this is finding the ‘sweet spot’ that aligns the company’s capabilities. Correct ‘sweet spot’ alignment strategy may result in first-mover advantages, acquiring an early spin-off and even setting the new market standards (Mason & Rohner, 2002). There is a major paradox however in

Market life cycle

emerging growth mature decline improved service / product new to departments new to company new to the world Disruptiveness Build position in segments

that (are about to) grow fast

Grow / defend margins and market share Defend margins and market share Technology push Build position in established yet attractive segments Create long term growth options

Build position in fast growing

new categories

‘Sweet spot’

Paradox: Company cultures clash as emerging and established businesses collide Business leverage , corporate growth , profitability

Innovation leverage and venturing initiatives sustainability

this. When existing exploitative business meets exploratory new business, there is the momentum that cultures between these clashes. The borders of the ‘sweet spot’ are the areas where the gatekeepers are located. These people are crucial in both helping the ventures with the company’s best assets and using the output of the venture to let the large company benefit from the level of innovation of the venture.

The interpretations of previous described theories combined with more practically focused assumptions result in:

Hypothesis 7: An innovative culture combined with corporate venturing results in innovative capacity.

Translation of studied theories

Corporate venturing can be seen as an important source of technological innovation for corporations (Markham et al., 2005). However, effective implementation requires a clear view of the objectives, dedication to understanding of the processes, and discipline. One of the most challenging aspects of corporate venturing is finding the right people, and corporations must be willing to devote significant time, support and resources to working closely with their portfolio companies if they wish to gain satisfactory value from their external investments.

Literature provides much evidence that searching for innovative ventures and business opportunity discovery are important managing processes. Corporate venturing literature is influenced by previous research and its implication for managing investment processes, but uncovering the ideal path to engage in corporate venturing, remains partly folded so far. Factors that influence the stages in the corporate venturing processes define the potential success or failure of a venturing program, regardless of the used methods. Deeper delving into venture capital processes will give a better chance to recognize and to discover, but unfortunately it then still provides a limited amount of gathered intelligence (Winters and Murfin, 1998).

Hypothesis 1: Radical innovation can arise by using corporate venturing, both by internal and external corporate venturing initiatives.

Hypothesis 2: Strategic performance of large companies that use corporate venturing is determined by the interplay between both the exploitation and the exploration of business.

Hypothesis 3: Internal corporate ventures can only be successful when there is management support, when the right people who use the right investor’s channels people are involved and when the right degree of freedom to operate is available.

Hypothesis 4: Without an objective understanding of information about what is happening in new, emerging and current markets and without the capabilities to interpret that information, there is no reason for large companies to engage in corporate venturing.

Hypothesis 5: Synergy through complementarities can be gained for large companies by using corporate venturing activities, which stimulate open innovation and result in networks with

innovative start-ups.

Hypothesis 6: The development of people, the level of innovativeness of a large company’s culture and the involvement in corporate venturing activities are linked to the learning capacity of the organization.

Hypothesis 7: An innovative culture combined with corporate venturing results in innovative capacity.

3.

RESEARCH METHODS

This section elaborates on the methodological foundation of this research. First, the collection of data is discussed, followed by a description of the participants of this research. Subsequently, the design of this researched is explained, followed by a description of balancing the value of the data outcomes and its consistency.

Data collection method

The theoretical part of this research consists of literature from secondary data sources. These data sources were systematically and objectively located and evaluated with the aim to create ideal methods for analyzing corporate venturing literature in relation to innovation. The online databases Science Direct and Business Source Premier were used to harvest useful academic insights from journals. Additional input was gained by using multiple books on corporate venturing, and managing innovation.

The non-theoretical part of this research is in form of a case study at the company Arcadis. All empirical data in this research was gathered by interviewing and by executing a survey. Since this research is aimed at answering ‘how’ questions, it was best to choose for the case study approach. (Baxter and Jack, 2008; Yin, 2009).

Research participants

The fact that the case study is executed at Arcadis is of a major influence for this research and it is also a large benefit. The brand and firm size make it easy to get access to experts and also to people who work at Arcadis. Arcadis is an interesting company to research, because of its core business. Delivering high quality consultancy and engineering services is what Arcadis does. Companies that deliver services to their clients are mostly not involved in corporate venturing. At least, during this

research there has not been found a comparable service company in the size of Arcadis (3000 employees in the Netherlands) that is actively involved in corporate venturing initiatives to strengthen their innovative capacity. The openness of the employees and the culture of Arcadis is a benefit for this research, because individuals are interested in sharing thoughts, opinions and experiences towards corporate innovation and corporate venturing potency.

Current initiatives for corporate growth at Arcadis are mergers and acquisitions, alliances, partnerships and contracting. All these initiatives (as shown in figure 7) are important for serving customers and for their core business, and probably this also relates to firms of a comparable size. The context and reason to research corporate venturing as a possible way to add value to the strategic innovative capacity for companies is provided by the department of business development at Arcadis. They see corporate venturing as a possible innovative opportunity to grow, not only by simply expanding the company’s scope, but also by obtaining knowledge, creating collaboration and other strategic benefits of these investments. The underlying thought here is that most of Arcadis’ divisions are very experienced in the improvement of existing activities, but that focus on solely their own portfolio can be destructive for the development of future activities in a broader perspective.

As stated before, the brand and firm size of Arcadis is attractive for experts to interact with and therefore doing this research at Arcadis makes it easy to get access to experts and also to people who work at Arcadis. Individuals in table 1 are chosen and contacted by making use of exploratory findings on Arcadis Portaal (internal community website), observation at the Arcadis organization in Amersfoort, the network of employees at the Business Development Department, by the use of Twitter requests and by using website information to contact certain experts.

20 questions. Interviewing this way led in the end to approximately 200 answers by the nine interviewees which implied that multiple questions were answered more than three times. During the period of interviewing it occurred that certain interview questions turned out to be less applicable to the case and could be skipped that way.

Name: Professional background:

Rob Jansen Innovation management within the division Mobility of Arcadis, Participates actively in ARCADIS’ ‘Ondernemerslab’; a platform for corporate entrepreneurship and innovation within Arcadis

Renee Talens Senior advisor at Arcadis and active involvement in the ‘Blauwalg’ project. This project is considered to have a potential amount of innovativeness and is ready for incubation in Arcadis or at least extra funding to make it a success.

Edgar Neo Entrepreneur and business accelerator who is actively involved in funding start-ups. Robert Kroon Development manager at Arcadis within the division Mobility. Actively

involvement in management issues related to complex projects.

Yvonne Engelen Managing director of DSM Venturing and multiple years of experience in corporate venturing activities in a multinational company.

Bart Verweij Partner at Tactstone Ventures and an expert in new business development. Ger Zwartendijk Director Nyenrode Business Incubator.

Mark Rutherglen Senior advisor at PRC (a company owned by Arcadis) and winner of the ‘Ondernemerslab’ in 2008.

Marc Raessen Manager of the department of strategy and policy within the division Mobility of Arcadis.

Table 2 Research design

The nine interviews were developed and based on literature findings and findings from observation. The reason for using interviews to gather data is the need for validity in the research by using the in-depth information, opinions and visions of several experts. During the interviews, a memory list was used to guarantee that the specific questions were asked the same way to the different interviewees. To strengthen the objectivity of the interview phase, an interview guide was developed, which defined the methods of the interviews. All interviews were digitally recorded, put into analyzable documents and digitally stored to be able to compare them in advance of the quantitative case study.

in this study is based on a 5-point scale, from strongly agree to strongly disagree or from very important to very unimportant and an option for respondents who do not have an opinion on a certain statement. Dawes (2008) proved that a 5-point Likert scale is an effective way to gather data outcomes compared to the mean scores: these are slightly higher compared to a 10-point scale. However, potential huge deviations between the survey results and the interview results are compared and additionally researched. This has led to conclusions that are based on literature, interview answers and respondents’ inputs. The survey was online stored by using the database of www.thesistools.com.

The population of the survey is defined as follows: knowledgeable professionals and experts in business fields who are related to corporate venturing and innovation. Criteria were that individuals need to have considered expert knowledge of corporate venturing, innovation, incubation or venture capital. These people were not likely to be found in high concentrations within Arcadis. However, employees of Arcadis who were contacted to fill in the survey, can be considered as experts in affiliated business fields to corporate venturing and innovation, like for example due diligence and business development. These affiliated business fields, derived from the human resources system at Arcadis, called KARDIS. Combining these business fields made the sample consist of knowledgeable people who added value to this research by functioning as respondents. In the end, the total amount of respondents added reliability to the study and besides that, the consistency of the previous research stages could be measured. The goal was to have at least 80 respondents.