Organizing a Venture Factory: Company Builder Incubators and the Case of Rocket Internet

Abstract

We study the phenomenon of “company builders” – a recent type of business incubators that create new ventures in a factory-like manner, i.e., with a focus on efficiency and scale, and by using standardized processes and shared resources. To characterize this novel organizational form and delineate it from existing incubator models, we conceptualize incubator organizations as hybrid governance structures along key dimensions of the market-hierarchy spectrum. We contextualize and extend our conceptual arguments through an in-depth study of Rocket Internet, the incubator that pioneered an extreme company builder strategy by replicating successful Internet business models. We argue that while traditional incubators lean toward the market end of the market-hierarchy spectrum, company builders are truly hybrid organizational forms in that new ventures are assembled and scaled up in a centrally-coordinated manner. Referring to cooperation and coordination as basic organizational challenges, we discuss the stability, advantages, and pitfalls of the company builder model, as well as its applicability to other domains. Our findings make contributions to work on organizing venturing processes, novel organizational forms, and business model replication.