Organizing for internally developed corporate ventures

Abstract

If innovation is to be pursued as a long-term strategic move for prosperity rather than a survival tactic in troublesome times, an alternative focus is needed. Energies should be redirected toward maintenance responsibilities involving the overall corporate system rather than limiting efforts to venture initiation activities. While previous studies have investigated correlates of corporate entrepreneurship and its subsequent effect on organizational performance, few researchers have demonstrated any viable means of maintaining internally developed ventures (Biggadike 1979; Jennings et al. 1990; Jennings and Young 1990; Zahra 1991). This research piece posits long-term maintenance of an innovative organization as a joint function of identifying and securing the loyalty of innovative-minded individuals and building appropriate organizational factors (e.g., structural and reward system) to retain them. In order to address this objective, this study examines the relationship between a set of key individual and organizational factors and a set of outcome variables consisting of specific job attitudes (job satisfaction, organizational commitment) and propensity to leave the organization for two types of managers, autonomous venture managers (AVMs) and departmental managers (DMs). This study surveyed upper middle level managers in Fortune 500 companies in organizational positions where the scope of their positions appeared to include the potential for innovation or autonomous action. Managers were classified as autonomous venture managers (AVMs) or departmental managers (DMs) based on autonomy and independence in decision-making. Managers who were heads of autonomous business units (e.g., venture groups) were classified as AVMs while those who were not heads of such units were classified as DMs. Separate regression equations were constructed relating the set of individual and organizational factors to each of the aforementioned outcome variables for AVMs and DMs. It was hypothesized that significantly different individual and organizational factors would emerge across the outcome variables such that a distinctive response pattern would be present for both types of managers. Regression analysis and Chow tests indicated that only the organizational commitment model was significantly different for AVMs and DMs. The job satisfaction and propensity to leave models were not significantly different for the AVMs and DMs. Consequently, the overriding finding suggests that separate reward and structural alternatives are not necessary or even desirable for the two groups of managers. Further, the individual characteristics for the AVMs and DMs were descriptive of both groups. The challenge for organizational management practices appears to be the careful construction and nurturing of an innovative organizational environment to create potential for creative activities. Explicit actions that management in large, established organizations may take to build effectively an innovative organizational environment include the following: 1. Making available both formal and informal structural outlets for creative activities to all managers. This means actively building venture groups as well as allowing free time to pursue projects of one's own undertaking. 2. Reinforcing the opportunity to engage in innovative activities for all managers via financial and non-financial rewards. 3. Recruiting for corporate entrepreneuring positions within the organization. Collectively, the managers were found to be potentially creative, resourceful individuals interested in innovation.