The Impact of Corporate Venturing on a Firm’s Competence Modes

Abstract

In this conceptual paper we investigate how corporate venturing influences an organization’s competences. The impact of various types of corporate ventures on the portfolio of strategic options of a firm’s competence modes (Sanchez, 2004a; Sanchez and Heene, 2002) will be assessed by distinguishing two fundamentally different dimensions of corporate venturing, technology and product (Block & MacMillan, 1993). We argue that the level of product and factor market dynamism mediates the effect of corporate venturing on a firm’s competence modes. Corporate ventures that significantly increase the level of product or factor market dynamics will lead to an increased flexibility in all five competence modes. These ventures will have a direct effect on the lower-order competence modes and an indirect, lagged effect on higher-order competence modes through feedback loops. The developed framework and the propositions contribute to managing the ability of a firm to change its coordination-, resource and operating flexibility in order to sustain value creation.flexibility;corporate venturing;competence-based management;product and factor market dynamism