An Empirical Evaluation of the Internal Corporate Venturing Process

Examines the internal corporate venturing process by comparing trial-and-error learning with action persistence. The model developed focuses on two key concepts – uncertainty and ambiguity. To examine numerous hypotheses that result from this model, data were gathered from a venture within a large diversified corporation that was to develop cochlear implants, beginning in 1978 and ending in 1989 when the venture was terminated. The chronology of events that occurred were tracked and classified in terms of the following dichotomous variables: outcomes, actions, plans, corporate sponsor involvement, and external environmental events. Three distinct periods emerge from the data: agenda setting (1978-80), expansion (1980-85), and contraction (1985-89). Results indicate that there was strong action persistence during the expansion period. This period was characterized by ambiguity (uncertainty about the goals or appropriate technical strategies) and slack resources within the firm. This combination allowed the entrepreneurs to continue with a particular course of action despite negative outcomes. Environmental changes were shown to explain the level of corporate sponsors' involvement during this period. Conversely, the contraction period was marked by trial-and-error learning. Opposite to the expansion period, negative outcomes were shown to predict corporate sponsors' involvement during this period. The findings of this analysis can be applied to similar ventures marked by uncertainty and ambiguity. (SRD)