Internal Ventures: Drivers of Innovation - An exploratory study of the management of internal ventures in ambidextrous organizations

Abstract: Companies have a desire to survive. For that purpose they must be continuously profitable. They need to focus on sales today, but they also have to innovate to stay competitive tomorrow. Doing both is demanding and difficult. From an organizational perspective there are different ways to approach these two tasks. Internal venturing is one of these approaches and has been increasingly popular among organizations in the recent past. How these are managed can be viewed from two perspectives; from the parent company's and the venture's own perspective. While the parent company's perspective has been given plenty of attention in research, the perspective of the venture - how it is managing itself and how having a corporate parent affects it - has been largely neglected to this day and is requested by scholars. This thesis therefore set out to make an exploratory multiple case study to address this gap in organizational ambidexterity research. To explore how internal ventures are managed by their management teams and what the managerial issues are, four internal ventures were studied and in total 18 interviews were conducted. A theoretical framework, based on existing ambidexterity research, was applied in this study. It points out seven factors for organizations to address in order to be ambidextrous. The application of the framework suggests that internal ventures only manage certain of the seven factors actively in an explorative way. Furthermore, it is shown that the ventures strategically build the competencies and the explorative culture they require to reach their strategic goals, through recruitment. The ventures are also able to leverage different capabilities and resources of the parent company. It can be seen that the relationship with the parent is also influenced by the degree to which the internal venture is integrated in it. Lastly, the thesis proposes an alternative perspective of internal ventures as organizational teenagers, which are dependent on their parents, but do not need constant control and supervision. This is reflected in the way they identify with their parent, which results in an either loyal or rebellious identity. The thesis advances the research on both ambidexterity and internal venturing. In addition both parent companies and internal ventures can benefit from understanding what the managerial issues are in order to understand how these relate to organizational ambidexterity as well as to address them early on.