SUBSTANTIVE GROUNDED THEORY OF INTERNAL CORPORATE VENTURING
The genesis of Inside Corporate Innovation was my doctoral dissertation
research at Columbia Business School in the mid-to-late 1970s (Burgelman,
1980). Len Sayles was my extremely supportive thesis advisor (and co-author of
Inside Corporate Innovation), and Mike Tushman a very helpful dissertation
committee member. The dissertation research used quasi-longitudinal field
research and the method of grounded theorizing (Glaser and Strauss, 1967) to
study the internal corporate venturing process in a large diversified major firm.
The ICV research involved studying multiple cases of succeeding and
failing internal corporate ventures in different stages of development. It traced the
history of each of these ventures and followed their further development in real
time over a period of almost a year. This part of the research used Sayles’s
(1964) applied anthropological research approach to study the evolving dynamic
working relationships between corporate R & D, Business Research and Business
Development managers throughout the entire ICV process, from an idea in
exploratory R & D to a multi-product new business. This produced a descriptive
model of the “Stages in ICV Development: ” Conceptualization (Stage 1), Pre-Venture (Stage 2), Entrepreneurial (Stage 3) and Organizational (Stage 4), and
how these stages transformed into each other.
Having decided, after the first interviews, to focus the research on strategy-making in the ICV process, I used Bower’s (1970) process model approach to
document how the simultaneous as well as sequential strategic activities of
actors situated at multiple levels in a complex organizational system - a new
venture division (NVD) in a large corporation - helped shape ICV strategy-making
and the dynamics of the NVD over time.
The combination of the process model and applied anthropological
research method produced insight in patterns of “success breeding success” and
“failure breeding failure,” and resulted in the creation of a new set of categories of
interlocking key leadership activities ( “technical and need linking,” “product
championing,” “strategic forcing,” “strategic building,” “organizational
championing,” “delineating,” “retroactive rationalizing,” “selecting,” “structuring”) of
executives of different levels in the organization that became building blocks in
my attempt to construct a process model of ICV in the tradition of the process
model of Bower and his doctoral students at the Harvard Business School (Bower
and Doz, 1977).
Constructing the process model of ICV, however, required resolving the
anomaly that all the newly found categories of key activities associated with ICV
could not be mapped onto Bower’s process model of strategic capital investment.
Resolving this anomaly required extending the received process model to
encompass “strategic context determination.” Strategic context determination was
the part of the corporate strategy-making process that became activated by
senior executives overseeing ICV project-level initiatives (through strategic
building, organizational championing, and delineating) that were trying to
convince top management to change the existing corporate strategy (through
retroactive rationalization) going forward (Burgelman, 1983b).
The ICV study also developed additional insights into the use of the New
Venture Division (NVD) as an organization design for corporate entrepreneurship.
It examined strategic leadership challenges in the relations between Corporate
R & D management and Business Research and Business Development
management within the NVD. It also studied the causes of frictions in the upward
relationships of the NVD with corporate-level management and in the lateral
relations with mainstream division-level management (Burgelman, 1995).
IMPLICATIONS AND CONCLUSIONS
The substantive grounded theory of ICV and the formal grounded theory of
the strategy-making process and the role of corporate entrepreneurship
presented in an integrated fashion in Inside Corporate Innovation have suggested
a new way to think about the role of strategy-making in firm evolution. For
instance, the Bower-Burgelman process model of strategic resource allocation
has become part of received knowledge in the strategy field (Mintzberg,
Ahslstrand and Lampel, 1998). Looking forward, the recent research by Mirabeau
and Maguire (2014) has provided perhaps a first step in further examining the
different types of strategic behavior in large, complex organizations that drives
the four strategy categories identified by Mintzberg (1978). Further research on
how the types of leadership behaviors and dynamic managerial relationships in
the Sayles/Mintzberg tradition, and exemplified in the ICV study, give shape to
what is called “dynamic capabilities” (e.g., Teece, 2013) would also seem to be
potentially fruitful, both for theory development and for managerial practice.
With respect to managerial practice, Inside Corporate Innovation has also
provided insights into a new approach for strategically managing the ICV
process (Burgelman, 1984a) and for examining the appropriateness and
effectiveness of various alternative designs for corporate entrepreneurship as a
function of “strategic importance” and “operational relatedness” (Burgelman,
1984b). This made it possible to derive the three key strategic leadership
challenges – exploitation of existing opportunities, generating new opportunities,
and balancing exploitation and generation over time – listed in the quote from the
Epilogue that opens this retrospective review of Inside Corporate Innovation.
More than thirty years later, I believe that the extensive literatures about
exploitation/exploration and ambidexterity clearly support the proposition that the
three strategic leadership challenges derived from the substantive and formal
grounded theory presented in Inside Corporate Innovation remain as salient for
established companies as they were then. The strategic process and
organization design tools provided for augmenting established companies’
corporate entrepreneurial capability also remain highly relevant.