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Abstract
Purpose - The purpose of this article is to develop a conceptual model addressing how environmental uncertainty resulting from disruptive technology affects an internal corporate venture's organization.
Design/methodology/approach - Based upon a review of two complementary theoretical perspectives - resource dependence theory and institutional theory, propositions regarding internal and external linkages and the internal organizational governance mechanisms of organizational structure and strategic control systems of ICVs are developed.
Findings - Resource dependence theory and institutional theory are both necessary to explain the organizational issues resulting from the uncertainty surrounding disruptive technology.
Research limitations/implications - A limitation is that this is a theoretical paper; empirical research is needed to test the theories presented in this paper.
Practical implications - To the extent that managers can be trained to recognize and understand the complexities of disruptive technology, their likelihood of appropriate organizational responses will be enhanced.
Originality/value - The paper presents a conceptual model of how to successfully manage an internal corporate venture in a disruptive technology environment.
Keywords Corporate ventures, Control systems
Paper type Conceptual paper
Large, established corporations with substantial resources not only possess financial and operating leverage, but also the necessary experience for generating innovations and launching new products (Chandler, 1992). However, even these large, innovative companies may fail when it comes to developing products that do not initially meet the needs of mainstream customers and appeal only to small or emerging markets (Bower and Christensen, 1995; Christensen and Bower, 1996; Walsh et aL, 2002). This competitive response is not universal - NCR provides an example of an established company that was able to respond to the dramatic shift in the business equipment market (Hill and Rothaermel, 2003). Nevertheless, often it is emerging entrepreneurial companies focusing exclusively on a radically different, small niche product that eventually transform an industry. The established companies lag, even though they may have been the initial source of the innovative products and technologies (Bower and Christensen, 1995). Recognizing this dilemma, many companies may place a tremendous premium on pursuing more exploration (developing new knowledge) relative to exploitation (improving existing knowledge) (Levinthal and March, 1993; March, 1991). To do this, many firms form internal corporate ventures (ICVs) to develop new products, and enter, even create, new industries (Burgelman,...