Organization and Success Factors of Internal Corporate Venturing Programs: A Case Study Using Inductive Methodology

Abstract

This case study focuses on an inductive research project on internal corporate venturing at a multinational consumer goods company. Emphasis is placed on practicalities of conducting inductive research in a business company, including issues of access, sampling, data management, and establishing trust with respondents. This case study illustrates that realities of in-field research may be different from researchers’ preconceived notions of the research process and suggest some ways of dealing with issues like difficulties in criteria sampling, data handling mistakes, and changing research design during the course of the project. It emphasizes the importance of a flexible approach to design and process of inductive research, whereby researchers are best able to capitalize on opportunities arising during the course of their projects while at the same time ensuring robustness of their work. The case study should be of interest to those who engage in inductive and otherwise qualitative organizational research and wish to gain familiarity with the practical side of such projects.

Learning Outcomes

By the end of this case, students should be able to

  • Identify some of the reasons for the choice of inductive research methodology
  • Discuss issues related to gaining access to organizational research sites and the importance of gatekeepers in that process
  • Appreciate the importance of being flexible and capable of “thinking on your feet” while doing inductive research and of capitalizing on emerging opportunities
  • Describe some ways of gaining respondents’ trust and eliciting high-quality input from them
  • Appreciate the importance of having effective data and document management systems in place while working with sensitive organizational data

Introduction

This case study focuses on an inductive research project on internal corporate venturing (ICV) at two sites of a multinational consumer goods company. ICV denotes “corporate venturing activities that result in the creation of organizational entities that reside within an existing organizational domain” (Sharma & Chrisman, 1999). Compared to external corporate venturing that refers to firms’ pursuit of entrepreneurial opportunities outside their boundaries through joint ventures, spin-offs, and corporate venture capital investments (Sharma & Chrisman, 1999), ICV is a creative pursuit of innovativeness by firms’ employees (Baron, 2007; D. L. Day, 1994). ICV is an important avenue of creating innovation (J. D. Day, Mang Richter, & Roberts, 2001; Morris, Kuratko, & Covin, 2010), achieving growth (e.g., Burgelman, 2012; Kuratko, 2007), enacting strategic renewal and driving entrepreneurial transformation of organizations (e.g., Bartlett & Goshal, 1996; Ferreira, 2001; Phan, Wright, Ucbasaran, & Tan, 2009; Zahra, 2015), developing competitive advantage for the future (e.g., Borch, Huse, & Senneseth, 1999; Ireland, Kuratko, & Morris, 2006a, 2006b), bridging the “technology strategy/business strategy gap” (e.g., Kanter, North, Richardson, Ingols, & Zolner, 1991a), and improving financial performance (e.g., Zahra & Covin, 1995). Because ICV is, by definition, tightly linked to the company, what comes to the fore is the internal organizational environment in which ventures emerge and operate.

In the several decades before the start of my project, the internal organizational environment, in which new ventures emerge and operate, had been recognized as one of the critical success factors in corporate venturing of established companies (Ferreira, 2002; Kanter, 1985; Kuratko, 2007). However, even though the role of the internal organizational environment was widely acknowledged, understanding of its specific aspects that enable or impede successful corporate venturing was still lacking.

A number of studies had focused on effects of the organizational environment on the inception of corporate ventures. Kuratko, Montagno, and Hornsby (1990) advanced a five-factor model that included top management support, reward and resource availability, organizational structure and boundaries, risk taking, and time availability to account for emergence of corporate entrepreneurial activities. Only the first three of these factors were supported in the empirical analyses by Kuratko and colleagues and in further research (Barringer & Milkovich, 1998; Covin & Slevin, 1991; Naman & Slevin, 1993; Stopford & Baden-Fuller, 1994). Thus, as far as the role of organizational environment in inception of new ventures is concerned, the findings are still tentative, which reveals that there is a “need for further research on the internal organizational factors that foster entrepreneurship” (Hornsby, 2002).

Motivation for the Research Project

I was interested in the topic of organization and success factors of ICV because of two major reasons. First, having studied relevant literature before, I was surprised at how little consensus there was about what organizational factors help or hinder ICV, which I believed presented an excellent opportunity to make a useful research contribution. In 1991, Kanter et al. noted that the organizational environment of new corporate ventures had been “viewed largely as a backdrop or context for the venture” (Kanter et al., 1991a). Little had changed by 2014, when I started my project, for while the literature continued to recognize the internal environment as a critical factor in corporate venturing, Hornsby, Kuratko, and Zahra (2002) acknowledged that “there is no agreement on which key internal organizational factors stimulate corporate entrepreneurship.” This situation suggested that there was a strong need for research into this phenomenon.

Second, my prior empirical work on a similar project and knowledge of the literature in this area prepared me well for a project on ICV. Thus, my second consideration was feasibility in terms of my own skills and preparation.

Research Site Access

Gaining access to companies is an important issue in qualitative organizational research. Because results of such studies depend, to a large extent, on the input of members of an organization, securing access to a company is of paramount importance. I was able to gain access to the company in which the study was done due to an arrangement with the company management: I was granted research access in exchange for a report with my recommendations for improvement of ICV that I was to provide at the conclusion of my project. In turn, this arrangement came about in the following way. Once, talking about an unrelated subject to a colleague who had vast industry connections because of his long corporate career, I mentioned my previous research experiences in corporate entrepreneurship and my desire to continue studying this topic. The colleague thought that he knew a company whose management was interested in improving their corporate venturing program and suggested he would contact them on my behalf to see if my collaboration with them would be possible. Several weeks after that conversation the colleague introduced me to a senior manager at a large diversified multinational consumer goods company (denoted Alpha in my article (Makarevich, 2017) and in this case study) headquartered in a European country and operating numerous brands in many national markets. Thus, in effect, my colleague acted as a gatekeeper and played a crucial role in my gaining access to the company.

Corporate management at Alpha’s headquarters (denoted Alpha HQ) was keen to promote ICV as a source of innovation that was alternative and complementary to Alpha’s powerful R&D effort. At the time of the project, they were unsatisfied with both the rate at which corporate ventures were started at Alpha HQ and with the success rate of those ventures.

The senior manager I was introduced to viewed my prior experience of research and advising on corporate venturing positively and was interested in obtaining my recommendations. As a result, the company granted me access to members of the organization, as well as internal documentation on the conditions that I would keep the company’s anonymity, handle the documents with confidentiality, and provide a report with practical recommendations for improving their ICV. The senior manager appointed the Knowledge Management Group (KMG) as facilitators of my research at Alpha.

Choice of Methodology and Study Design: Inductive Case Study Research

I realized that the lack of insight into factors of organizational environment that facilitate or hinder ICV meant an opportunity to generate such insights. For this task, inductive research methodology is most appropriate. Inductive research starts with none or little preconceived notions, theories, or explanations of a phenomenon and seeks to produce an explanation or a theory based on observations and data collected in the field. Thus, the main strength of inductive methodology is in its ability to help researchers generate new insights and explanations, as opposed to engage in confirming or disconfirming previously advanced theories or explanations.

I started with an idea of conducting a case study (Yin, 2013) of a single company. To be even more precise, the case study I had in mind would focus on Alpha headquarters as the hub of Alpha’s worldwide operations. However, having started conducting pilot interviews, I was—by accident—introduced to a representative of Alpha India, the Indian subsidiary of Alpha: as I was being introduced to a potential respondent at Alpha HQ by one of the KMG managers, he noticed in the adjacent room an Alpha India senior manager who was at the HQ on a business trip. In passing, the KMG manager mentioned to me: “By the way, they are doing pretty well with their venturing program,” referring to Alpha India. This prompted me to request an interview with the Alpha India manager. The KMG group arranged that and I was able to conduct a pilot interview with him. The information that emerged about Alpha India’s ICV program was very different from what I had managed to gather so far in my pilot interviews at Alpha HQ: Alpha India claimed to have achieved substantial success with their ICV program and took pride in how well run the program was. This contrasted significantly with the sense of dissatisfaction with the ICV program at HQ. Given this new information, I decided to change the design of the study and conduct a comparative study of the two sites of Alpha. Besides the possibility to compare and contrast the two sites, this design also allowed me to hold constant relevant factors that affect venturing at both Alpha HQ and Alpha India, for example, corporate-level strategy, corporate goals with regard to venturing, product markets, technology, global operations, R&D, and company-wide routines and organizational practices. It thus let me focus better on the differences in organization of ICV at the two sites and factor of ICV success.

Sampling

Because issues of validity are always important in qualitative research (e.g., Denzin, 2006), they were prominently on my mind when I was deciding on sampling of respondents for my study. In particular, I wanted to employ the triangulation technique as a means to ensure validity of my findings. In a research setting, triangulation refers to using multiple data sources and perspectives to produce a richer, more robust, and comprehensive account (e.g., Denzin, 2006; Patton, 2002). I sought to use triangulation across several dimensions: data types (documentation vs. interviews), data sources (public information vs. internal company documents vs. confidential interview responses), and respondents’ rank and position within Alpha. Guided by these considerations, I aimed at obtaining a criteria sample including senior managers, managers and employees, and current and past venture team members at both Alpha HQ and Alpha India. (Criteria sampling refers to including in the sample respondents who meet pre-defined criteria, such as rank, role, and experience within the company.)

In reality, my final sample of respondents was the result of a combination of criteria sampling with snowball sampling and convenience sampling. (Snowball sampling refers to including in the sample relevant respondents recommended and/or introduced to by prior respondents. Convenience sampling refers to including in the sample relevant respondents who are available for an interview during the course of research.) Guided by my sampling expectations, KMG managers did their best to introduce me to individuals meeting my criteria. However, some of the individuals they identified were not available for interviews and I chose other relevant respondents who were available. Thus, I used convenience sampling to certain extent. Sometimes and especially in the case of Alpha India, KMG managers could not identify relevant individuals; thus, I resorted to snowball sampling, whereby I asked my respondents about other individuals they knew who met my criteria. In some cases, this resulted in direct introductions to new respondents. Overall, using this combination of sampling methods, I obtained a sample of respondents who met my criteria.

Data Collection

Interview Guide Construction

I used an interview guide with broad, open-ended questions to ensure higher accuracy of retrospective accounts (Golden, 1992; Miller et al., 1997). Such questions were also particularly appropriate for the goal of my study, which was exploratory in nature and aimed at identifying (vs. confirming) new factors affecting success of ICV programs. In the course of the interviews, I added more focused questions to obtain an explanation of particular points made by respondents. The interview guide was revamped after a few initial, pilot interviews which revealed which questions needed to be modified or eliminated and what questions needed to be added to make interviewees’ task of providing quality responses easier. I continued work on the interview guide even after the pilot interviews, however, making minor adjustments throughout.

Conducting Interviews

One decision I faced in conducting my interviews was whether to record them. I would have preferred to have interviews recorded, but I was concerned about interviewees’ willingness to speak frankly on tape. This concern emerged when I was introduced to my first informants at Alpha by a KMG Senior manager. In my initial interactions with these informants I sensed that while they were mandated to help me with my research, they may have had concerns about expressing negative views on Alpha’s organizational matters to an outside agent like me. For example, one of the respondents used the expression “dirty laundry,” which reflected their reservations about revealing information or providing judgments that did not portray the company only in positive ways. These concerns might have been exacerbated by the fact that my respondents knew that I would provide a report to Alpha’s Senior management and, because they did not know how many other people I would interview and I was introduced to them by a Senior manager, they may have feared that it would be easy for Alpha management to attribute information provided to particular informants.

Taking these concerns into consideration, I decided on the following approach. First, in my pilot interviews with Alpha informants I, first of all, promised full confidentiality and assured my respondents that their information would not be attributable to particular individuals in my report. I also indicated that I would interview a number of Alpha respondents, which further diminished the possibility of attribution. Likewise, I explained that in my final report I will only provide information based on respondents’ inputs in an aggregated form.

I opted not to record pilot interviews. Instead, I took detailed notes during the interviews. After the interviews, as soon as the circumstances permitted, I expanded the notes and added additional observations and my thoughts for further questions, as well as ideas on how to improve the interview guide. Shortly after these pilot interviews, I sent my summaries of the interviews to my respective respondents and asked them to check their accuracy. This helped me to achieve two goals: (a) to ensure integrity of my research (Creswell, 2003) and (b) to build trust with my respondents. The respondents added some minor clarification points and corrected minor statements in my summaries and acknowledged that the summaries were, overall, accurate. Building on this, I suggested that further interviews with them be recorded, so that accuracy would improve even further and that I could capture their inputs more fully. All of my respondents agreed to this and all further interviews were recorded and transcribed verbatim. Transcribed interviews contributed greatly to the integrity of my work and also made it much easier to subject interview data to analyses described in the “Data Analysis” section.

Data and Document Management

According to my agreement with Alpha’s senior management, I obtained access to all relevant internal documentation pertinent to corporate venturing, in addition to publicly available information (e.g., on the company website and in annual reports). I was able to borrow some documents for the period of my project and bring them to my office. Some other documents I was only able to access on the site of Alpha HQ and not allowed to take outside. Terms of access were decided on a case-by-case basis by Alpha’s KMG managers who provided me with initial introductions to respondents within the company.

On one occasion, I made a mistake by taking away a report that I was only supposed to access on site. This happened due to my confusion about the terms of access to this document. A KMG manager called me on the phone the next day to inquire about the report. Realizing my mistake, I acknowledged it, apologized for it, assured the manager that the document is secure in a locked cabinet in my office, and arranged to bring it back to Alpha HQ on my next visit 2 days afterward. Even though the incident had the potential to undermine my credibility and limit my access to internal Alpha documentation and therefore was a blunder on my part, understanding of Alpha’s management and my handling of it allowed for a smooth resolution and, as far as I know, did not have adverse effects on my research. After the incident, I rethought my document handling practices to eliminate confusion and ensure that such incidents would not happen again.

Data Analysis

In analyzing the data, I used proven methods for qualitative data analysis that have gained wide acceptance in qualitative research and have been shown to produce reliable results. Because I studied two sites within Alpha, I was in a position to compare and contrast them in terms of organization and outcomes of their ICV programs. Specifically, to identify success factors of integrated venturing programs and their linkages to different organizational features of these programs, I used across-case variance techniques (Eisenhardt & Graebner, 2007) and within-case process-tracing (Corbin & Strauss, 2014). This mixed approach increases validity when analyses build on few cases. To combine process and variance analysis, I proceeded along four distinct but overlapping stages (e.g., Edman, 2016):

  • Data coding into Attribute and Effect categories: for each site, use descriptive (Wolcott, 1994) and in vivo (Corbin & Strauss, 2014; Glaser & Strauss, 2009) techniques to code data from interviews and company documents, create aggregate categories, and divide the categories into Attribute categories capturing organizational features of ICV programs and Effects categories capturing significant factors in ICV performance.
  • Within-case analysis: construct descriptive cases of each ICV program to identify potential causal mechanisms between the Attribute categories and the Effects categories (George & Bennett, 2005).
  • Cross-case comparison: use matrix displays (Miles & Huberman, 1994) to compare and contrast Alpha HQ and Alpha India across both their Attribute and Effect categories.
  • Theorizing the link between the Attributes and Effects of ICV programs: use process-tracing (George & Bennett, 2005) to theorize causal mechanisms between the attributes and the effects of the Alpha’s ICV programs.

These steps are described in more detail in my article (Makarevich, 2017).

Lessons Learned

Access to Research Site
  • Spreading the word about your research aspirations can result in valuable social network effects, whereby you may, for example, get access to a company through a third party (a gatekeeper) introduction. Gatekeepers play an important role in one’s access to companies and finding the right gatekeepers can make your task of gaining access to potential research sites easier. My mentioning to a colleague my desire to do a project on corporate entrepreneurship illustrates these points: even though I was not aware of my colleague’s connections to a suitable company for my research and was not targeting him for an introduction, his learning about my project aspirations and our professional connection resulted in him taking on the role of a gatekeeper and facilitating my access to a company.
  • Gaining the backing of senior management at a company where research is done can not only open a lot of doors and facilitate employees’ participation but may also create a conflict of interest in participants in cases where negative information about a company may be transferred.
  • Offering something of value to the company (e.g., practical recommendations for improvement in a specific area based on your research) can be instrumental in gaining access and eliciting cooperation.
Research Design

Being agile in absorbing information emerging in the field, analyzing it quickly, and being capable of “thinking on your feet” is important in qualitative research projects and can allow you to capitalize on new opportunities. Not being rigidly attached to a specific research design and being capable of rethinking your approach as more information becomes available and new opportunities emerge is important.

Conducting In-Field Interviews

Being sensitive to the context in which research is done is important, because it has consequences for the quality of input you obtain from respondents and integrity of your research. Building trust with respondents can be accomplished by (a) providing a strong assurance of confidentiality upfront; (b) developing a relationship gradually, one step at a time; and (c) demonstrating accuracy and integrity of your work.

Data and Document Management

When working with sensitive company documents, it is important to have an effective document management system in place. If a mistake in document handling does happen, it is very important to take quick and effective measures to correct it and alleviate concerns about confidentiality and security.

Exercises and Discussion Questions

  • Why was my choice of inductive methodology appropriate for the study of organizational conditions for ICV?
  • What are some of the important issues to consider when planning to gain access to a company for a research project?
  • What does the triangulation technique involve and why is it valuable for qualitative research projects?
  • In this case study, I described some ways in which I sought to elicit respondents’ trust and obtain high-quality input from them. What are some other ways to elicit respondents’ trust you can think of?
  • How could I have prevented the mistake in document handling I made in the course of my project?

Further Reading

Corbin, J., & Strauss, A. (2014). Basics of qualitative research: Techniques and procedures for developing grounded theory. Thousand Oaks, CA: SAGE.
Denzin, N. (2006). Sociological methods: A sourcebook (
5th ed.
). New Brunswick, NJ: Aldine Transaction.
George, A. L., & Bennett, A. (2005). Case studies and theory development in the social sciences. Cambridge, MA: MIT Press.
Glaser, B. G., & Strauss, A. L. (2009). The discovery of grounded theory: Strategies for qualitative research. Piscataway, NJ: Transaction Publishers.
Patton, M. Q. (2002). Qualitative research and evaluation methods. Thousand Oaks, CA: SAGE.
Wolcott, H. F. (1994). Transforming qualitative data: Description, analysis, and interpretation. Thousand Oaks, CA: SAGE.
Yin, R. K. (2013). Case study research: Design and methods. Thousand Oaks, CA: SAGE.

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