See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/278739155

Embracing innovation as strategy: the role ofnew business development in

corporate renewal

Article · December 2005

CITATIONS READS

6 974

2 authors, including:

Wim Vanhaverbeke
Surrey Business School
234 PUBLICATIONS 13,755 CITATIONS

SEE PROFILE

Some of the authors of this publication are also working on these related projects:

MOOI - Managing and Organising open innovation View project

Rural Entrepreneurship View project

All content following this page was uploaded by Wim Vanhaverbeke on 23 June 2015.

The user has requested enhancement of the downloaded file.

246 CREATIVITY AND INNOVATION MANAGEMENT

Embracing Innovation as Strategy:

Corporate Venturing, Competence
Building and Corporate
Strategy Making
Wim Vanhaverbeke and Nico Peeters

Large diversified companies companies do not have good track records in managing discon-
tinuous change and in turning breakthrough innovations into long-term growth and profit
engines. Their existing technological capabilities tend to facilitate cognitive inertia, path
dependency and low levels of experimentation. However, some companies seem to find a
dynamic balance between exploitation and exploration, between path creation and path
dependence. We focus on how these established firms manage that continuous change process,
and more specifically we seek to answer how corporate strategy, competence building and new
business development interact in rejuvenating a company. Furthermore, we investigate how
these concepts are at play on an operational level by looking at corporate practices in large
companies that have a track record of successful strategic rejuvenation.

n a business environment characterized strategy implies that a firm’s strategic vision

I by rapid and disruptive technological
changes, incumbents have to acquire new
actually is a ‘moving target’. A successful
innovating company therefore resolves the
technological capabilities and explore new duality between current strategy, new compe-
business opportunities in order to stay profit- tencies and future strategy: an ambidextrous
able in the long run. New business develop- organization possesses that capability, with
ment as an organizational practice can be an corporate venturing (new business develop-
effective carrier to build novel competencies. ment) as an effective operational mode to rec-
Yet, these competencies or the technology oncile the inherent incongruence in the
they constitute may be imitable. It is the company.
meta-capability of integrative innovation
management that is the basis for the firm’s
competitive strength. It is the way new busi- Introduction
ness development practices interact with new
competence building and corporate strategy The competitive landscape is changing rap-
that makes successful new business develop- idly. Significant discontinuities such as glo-
ment hard to replicate, and therefore a source balization, deregulation, blurring industry
of sustainable profitability. New business boundaries through new business models,
development can only be legitimized if the technological convergence and disintermedia-
corporate strategy is creating a misfit between tion pose new managerial challenges forcing
current competencies and those that are managers to create new competencies
required to compete effectively in the future. (Prahalad, 1998). Similarly, discontinuous tech-
New competencies in turn further challenge nological innovations (Tushman & Anderson,
the extant strategy, thereby opening new stra- 1986) may threaten the strategic position of
tegic perspectives. This dynamic interplay incumbents. While radical innovations have
between (technological) competencies and the potential to turn core competencies into

© Blackwell Publishing Ltd, 2005. 9600 Garsington Road, Oxford OX4

Volume 14 Number 3 2005 2DQ and 350 Main St, Malden, MA 02148, USA.
EMBRACING INNOVATION AS STRATEGY 247

‘core rigidities’ (Leonard-Barton, 1992), new markets or industries through new business
technologies also enable companies to create development practices. In a second section, we
competitive advantage both in existing and in report how we conducted a series of inter-
new, yet unstructured industries. views to get a detailed case study on corporate
Many scholars have argued that most com- entrepreneurship and related management
panies – with a few notable exceptions such as practices within DSM, a large Dutch chemical
GE’s successful entry in the CT scanner in- company. The results of this case study are
dustry, Du Pont’s biodegradable polymer reported in the third section. In this case study
(Biomax), Motorola’s mobile telephone busi- we link some of the theoretical concepts dis-
ness, Hewlett-Packard’s development of the cussed in the first section to concrete and rich
ink jet and ink business, and Corning’s optical routines and procedures in the company. In
fibre business – do not have good track records the last section we analyse the mutual relation-
in managing discontinuous change and in ship between corporate entrepreneurship,
turning breakthrough innovations into long- competence building and the strategy-making
term growth and profit engines (Christensen, process.
1997; Prahalad, 1998; Prahalad & Hamel, 1990;
Tushman & O’Reilly, 1996). Furthermore,
incumbents are on average not adept to man- Conceptual Framework
age the challenges and reap the business
opportunities related to the emergence of dis- New Business Development as
ruptive or discontinuous technologies (Bower an Organizational Carrier for
& Christensen, 1995; Christensen, 1997; Competence Building
Dougherty & Heller, 1994; Dougherty &
Hardy, 1996; Leifer et al., 2000). Lastly, even New business development can be a valuable
companies with strong technological capabili- process for a company to effectively tackle the
ties systematically have problems converting challenges posed by emerging radical technol-
discontinuous technological innovations into ogies. Confronted with new technologies, a
competitive advantage in new industries, company has to develop new competencies
applications or markets. to meet the technological and commercial
An intriguing question then is: why do requirements of the growth opportunities.
some firms manage to profitably exploit non- Some large diversified companies develop a
traditional business opportunities and why do semi- or quasi-autonomous organization
others appear to be bound to their existing and within the company to learn new competen-
maturing set of businesses? More specifically, cies and to acquire the required technologies
we will look at exploiting business opportuni- (Burgelman, 1983, 1995; Christensen, 1997;
ties that are based on radical technological Lynn, 1998; Tidd, Bessant & Pavitt, 2001).
innovations. That is: corporate venturing or new business
We will review this question from a dual development1 projects commonly function as
perspective. In a first section, we provide a drivers for competence development and
conceptual framework for the understanding deployment – an essential condition to suc-
of innovation and particularly the manage- cessfully manage radical innovation.2
ment of new venture initiatives based on new Several authors (Bakker, Jones & Nichols,
technologies. We will see how new business 1994; Floyd & Wooldridge 1999; Helfat &
development functions as a carrier for compe- Raubitschek, 2000; Hoskisson & Busenitz,
tence building, and that the integrative man-
agement of innovation in general – or the new 1
New business development (NBD) (Roberts &
business development process in particular – Berry, 1985) is used as synonym for corporate ven-
can be understood as a dynamic capability turing (CV) (Block & MacMillan, 1995; Von Hippel,
from which the firm derives its competitive 1988), corporate incubators (Hansen et al., 2000)
advantage. New business development (NBD) and corporate entrepreneurship (Ellis & Taylor,
will then be connected to corporate strategy, 1987; Kuratko, Montagno & Hornsby, 1990; Zahra
and the dynamic interaction between both will & Covin, 1995).
2
be explored. More specifically, we provide Some authors (Christensen, 1997; Christensen &
some organizational practices that have to be Raynor, 2003; Hamel, 2002) are also critical about
present in order to get mutually stimulating the success of dedicated ‘new business develop-
ment’ units. They are more in favour of dispersed
effect between new business development,
corporate entrepreneurship. Many firms do have
competence building and strategy formation. indeed bad experiences with new business devel-
The result is a resilient or ambidextrous com- opment experiments, but usually because they did
pany where corporate strategy stretches the not had the right organizational context in which it
company towards new competence building, could play its role as a carrier for corporate renewal
which allows it to enter competitively in new (see also Chesbrough, 2003).

© Blackwell Publishing Ltd, 2005 Volume 14 Number 3 2005

248 CREATIVITY AND INNOVATION MANAGEMENT

2002; Kazanjian, Drazin & Glynn, 2002; Zahra, opportunities in technological capabilities and
Nielsen & Bogner, 1999) highlight the impor- market trends and translate these entrepre-
tance of new product development to the neurial insights into valuable products for cus-
development and exploitation of capabilities tomers. Each time an NBD-team starts a new
and knowledge, and thereby bring the role of NBD-project it attracts people, resources, and
product development, venturing initiatives technological or market know-how and
and corporate entrepreneurship into the directs them toward a common goal. It moves
(dynamic) analysis of resources, capabilities knowledge from the idea phase to the full
and knowledge. They indicate how firms can commercialization of a product. During that
utilize competencies and knowledge to intro- entrepreneurial process the team encounters
duce sequences of new products that in turn continuously technological problems and
may extend the competencies of the company. market uncertainties that have to be resolved
Successful new product development and progressively as the project proceeds. This in
commercialization build on but also broaden turn boosts the company’s knowledge and
the knowledge and capability base of the com- skills about markets and technologies. As a
pany. Hence, new product and business result, NBD is one of the most important
development or other types of corporate ven- “organizational carriers” to bolster a firm’s
tures – for example, internationalization initi- technological capabilities over time.
atives – are the organizational carriers to In this way, NBD compels organizations to
extend existing competencies and to build broaden their knowledge and technology
new ones. More specifically, Bakker, Jones and base, but at the same time it is the organiza-
Nichols (1994) argue that the concept of cor- tional carrier through which new competen-
porate competencies increases the efficiency cies are developed or acquired. Entering new
and effectiveness of the NBD-process, which, businesses implies the development of new
in turn, enables the company to build compet- technological competencies, as the company
itive advantage in new, attractive business can no longer solely exploit its current com-
areas. petencies. To enable companies to optimally
learn new technological capabilities they need
Managing New Business Development as a not only a strong in-house technological infra-
structure, but also a strong external technol-
Dynamic Capability ogy acquisition capability, as internal R&D
Companies have to deepen their knowledge with knowledge and technology from outside
base in their core technologies to stay ahead of are considered to be complements, reinforcing
the competition in the current markets. But each other’s productivity (Cohen & Levinthal,
technologies mature and firms usually have to 1990; Duysters & Hagedoorn, 2000; Lane &
broaden their technology base in technological Lubatkin, 1998). This imported knowledge
areas that are required to compete effectively can take various forms, ‘including new
industries which are promising but new to employees, purchased equipment, licensed
them. Companies face considerable organiza- technologies, or acquisitions of other compa-
tional challenges if the most attractive growth nies. Sources of imported knowledge include
opportunities lie outside their current applica- customers (Von Hippel, 1988), suppliers
tions and technologies. This challenge largely (Leonard-Barton, 1992), alliance partners
derives from the fact that the decision to (Gomes-Casseres, 1989; Kogut, 1988), uni-
develop new businesses creates a fruitful versities, government laboratories and con-
misfit between the existing competencies and sultants’ (Kazanjian, Drazin & Glynn, 2002,
those that are required. Bakker, Jones and p. 179). Put differently, as technological pace
Nichols (1994, p. 15) formulate it as follows: and complexity are increasing, companies
‘NBD endeavors the need to overcome the have to complement internal development
misfit of the current organization with the with external acquisition of technology
desired organization by identifying, acquiring through external ventures (e.g. having a
and developing competencies’. minority holding in venture capital funds
NBD functions in the first place as an “orga- or start-ups), alliances and acquisitions
nizational carrier” through which new compe- (Granstrand et al., 1992; Lambe & Spekman,
tencies are developed or acquired in order to 1997).
create new, profitable businesses. Companies As a result, internal and external learning
try to stay ahead of (potential) competitors by should therefore be managed in an integrative
investing in research and development and way. A common organizational instrument to
external technology sourcing (Chesbrough, do so is the incorporation of NBD into a semi-
2003; Keil 2002). But technology investments or quasi-autonomous new venture division
only pay off when they are commercialized; (Brown & Eisenhardt, 1997; Fast, 1978;
that is when companies spot value-creating Schoonhoven & Jelinek, 1990) or a corporate

Volume 14 Number 3 2005 © Blackwell Publishing Ltd, 2005

EMBRACING INNOVATION AS STRATEGY 249

incubator (Hansen et al., 2000). The advan- maintain focus and coherence among the
tages of such a semi-autonomous unit – that firm’s activities (Chesbrough & Rosenbloom,
usually reports only to senior management – 2002). This drive towards internal consistency
are multiple.3 First, the ventures that are too is likely to stifle initiatives that experiment,
risky for managers of existing business units open up new business opportunities and cre-
get nurtured for a considerable time. Second, ate variations and heterogeneity. If these ten-
because of its autonomy the small unit can dencies towards internal consistency are
explore new technologies and build new com- present, it is clear that a companies that want
petencies, as it can hire dedicated front-line to balance exploration and exploitation
managers (project champions), tap into the (March, 1991; Benner & Tushman, 2002, 2003)
capabilities of the central R&D lab (and shap- face paradoxical management requirements
ing its explorative research), negotiate licence and have to be managed in a fashion that is
agreements or establish alliance with com- distinct from the traditional roles of strategy,
panies that have (complementary) technology structure and systems (Ghoshal & Bartlett,
or market know-how (Leonard-Barton, 1992). 1997).
Maybe the most important advantage is that Long-term involvement of firms in new
experienced unit-members become experts in business development activities indicates that
detecting and evaluating new venture oppor- they mastered the ability to recognize new
tunities, in establishing a social network out- business opportunities and to subsequently
side the company and in acquiring external build the competencies to capitalize on those
technology from different sources. In this way, opportunities. This ability can be understood
the unit becomes a valuable vehicle for knowl- as a dynamic capability helping firms to
edge building (Kazajian, Drazin & Glynn, achieve competitive advantage (Eisenhardt &
2002). Martin, 2000; Helfat, 1997; Teece, Pisano &
On the other hand, many firms have not Shuen, 1997). Long-term involvement of a
been successful in managing new business company in new business development activ-
development or focused corporate entrepre- ities indicates that it has developed the capa-
neurship (Chesbrough, 2003). Autonomous bility to handle the conflicting demands of
business units exploring new business oppor- mainstream and new stream businesses.
tunities for the company have been crushed Successfully managed NBD thus helps a firm
by the power mainstream businesses that are build competitive advantage, and as an
cash-generators and have a have a short-term enabler of new competence development, it is
financial focus. ‘New business development’ crucial for the rejuvenation of technological
units are almost by definition peripheral in a capabilities and the long-term profitability of a
company where the majority of the managers company.
at all levels are preoccupied with incremental In the next subsection, we will explore the
innovations, improvements, operational effi- relationship between NBD, new competence
ciency, cost cuts and ‘narrow’ market share building and strategy formation. We argue
competition. Nurturing radical innovations that successful and sustained NBD involve-
and exploring attractive business opportu- ment allowing a company to detect new path
nities for the future growth of the company is creation and generating options for future
at odds with the dominant logic within the business opportunities can only be achieved if
firm. Prahalad and Bettis (1986) introduced it has also developed organizational routines
this term: it is a set of heuristic rules, norms or practices that structure and spur compe-
and beliefs that managers create to guide their tence building and strategy formation. The
actions. Dominant logic facilitates the co- relationship between NBD and competence
ordination among the different parts of the building on the one hand and NBD and strat-
company and it filters out ideas and initiatives egy formation on the other hand, has received
that do not comport with it. Hence, it is a some attention in the literature (Bakker Jones
selection mechanism that allows a company to & Nichols, 1994; Burgelman, 1983; Dess et al.,
1999; Dougherty, 1995; Thornhill & Amit, 2000;
Tushman & O’Reilly, 1996). We will argue that
3
This semi-autonomy does not imply that the ven- NBD, strategy formation and competence
ture unit is not controlled at all. On the contrary, building have to be linked to each other to
Thornhill and Amit (2000) find empirical evidence understand the different roles NBD can play in
that high venture autonomy are charactistic of low
an established company.
performing ventures in large companies. Barringer
and Bluedorn (1999) furthermore show that strate-
gic controls that reward creativity and the pursuit Strategy as a Moving Target
of new business opportunities through radical inno-
vations have a significant impact on the entrepre- Releasing the innovative forces in a company
neurship intensity in companies. does not automatically translate into the

© Blackwell Publishing Ltd, 2005 Volume 14 Number 3 2005

250 CREATIVITY AND INNOVATION MANAGEMENT

desired competence building that secures the (future) strategy.4 In other words, the corpo-
firm’s future revenue streams. If there is no rate strategy-making process is fostered by
sense of overall direction in the company, the ongoing technology building process: a
chaos is likely to emerge; operational business strong commitment to and deep knowledge
units that are managed as profit centres will of a particular technology field allow ‘a com-
stick to incremental innovations with short- pany to see a strategy that other firms fail to
term revenues; central lab researchers will imagine’ (Itami & Numagami, 1992, p. 127).
focus on challenging breakthrough inventions Hence, the continuous interaction between
that cannot be developed as corporate ven- corporate strategy and NBD leads to the co-
tures because of inadequate technology or evolution of both, where they mutually nur-
market feasibility; individual intrapreneurs ture each other in an iterative process. That
may start up a venture that has to be spun- is: there is a dynamic interaction between
out or divested later on because there is no technology development and corporate strat-
way to integrate it in the company. Burgel- egy (Burgelman, 1983; Hamel & Prahalad,
man (1983, 1986) claims that a company needs 1994; Itami & Numagami, 1992; Kazanjian,
to allow for initiatives that do not fit with its Drazin & Glynn, 2002; Zajac, Kraatz &
current strategy, but they always have to be Bresser, 2000).5 The development of technol-
screened in terms of alignment with the com- ogy and strategy are intrinsically related
pany’s future strategy. The need for cohesive- to each other and are complementary, but
ness and complementarity between the their joint dynamics can only be understood
mainstream businesses and the NBD activi- if they are related to corporate entrepre-
ties has also been stressed by others (Barrin- neurship activities. Others have shown
ger & Bluedorn, 1999; Lengnick-Hall, 1992; that corporate entrepreneurship and core
Thornhill & Amit, 2000; Tushman & Nadler, competencies are mutually constitutive
1986). (Burgelman, 1983; Dougherty, 1995). Compa-
Indeed, when firms have the ambition to nies are gradually building new competen-
rejuvenate competencies or to build new ones, cies by nurturing external ventures, creating
they have to have a sense of overall strategic new internal ventures and developing new
direction. Corporate strategy as ‘stretch’ – an businesses. However, the same process drives
overarching corporate purpose (Ghoshal & the cognition of new strategic perspectives
Bartlett, 1997) or strategic intent (Hamel & and, as a consequence, a ‘strategic vision’ has
Prahalad, 1994) – leads to a substantial ‘misfit’ to be considered as a moving target. Build-
between a company’s extant competencies ing new competencies leads to the cognition
and its ambitions (Hamel & Prahalad, 1994). of new strategic opportunities putting the
This misfit creates a tension between the current strategic vision under continuous
exploitation of current competencies and the pressure to adapt accordingly. Consequently,
exploration of new ones (March, 1991), we argue that entrepreneurial activities, corpo-
between control and stability on the one hand rate strategy and competence building have to
and flexibility and creativity on the other hand be considered simultaneously to understand
(Zahra, Nielsen & Bogner, 1999). Strategy as
stretch provides a direction but also identifies
4
the major competencies to build or upgrade, Itami and Numagami (1992) emphasize this pos-
and is therefore a crucial part of strategic itive effect of cognitive processes. The literature has
renewal processes (Ghoshal & Bartlett, 1997; emphasized the negative effects focusing on the
Volberda, BadenFuller & van de Bosch, 2001). inability to unlearn (Hamel & Prahalad, 1994) the
impact of technological trajectories and organiza-
Furthermore, the tension stimulates managers tional inertia (Ahuja & Lampert, 2001; Cohen &
and employees the get committed to learning Levinthal, 1990; Dougherty, 1995; Leonard-Barton,
processes accelerating in this way the building 1992; Levinthal & March, 1993).
of new competencies. 5
The same need for a dynamic framework is ech-
Strategic vision does not only give direc- oed in the literature about technological capa-
tion and sense to the development of new bilities, where technology-based companies face
competencies, but it is at the same time facil- an apparent paradox: companies have to take
itated by the corporate venturing process advantage of the existing technical capabilities –
and explorative technological research that competencies – without being hampered by the
goes with it. With each new venture the technological trajectory they followed in the past
(Helfat & Raubitschek, 2000; Henderson & Clark,
company learns about new technologies, 1990; Leonard-Barton, 1992; Teece, Pisano & Shuen,
applications and markets, which in turn 1997; Zajac, Kraatz & Bresser, 2000). The tension
sharpen the recognition of new strategic between leveraging existing capabilities and the
opportunities: the current technological com- creation of new ones through entrepreneurial activ-
petencies of a company or the deepening or ities is also at the core of the emergent literature
extension of it may drive the cognition of about strategic entrepreneurship (Hitt et al., 2002).

Volume 14 Number 3 2005 © Blackwell Publishing Ltd, 2005

EMBRACING INNOVATION AS STRATEGY 251

the crucial role of corporate ventures in how Methods

established companies change and learn at
the corporate level. There is no unifying paradigm in the research
field of (corporate) entrepreneurship leaving
us with the option to adopt an explorative
From Dominant Logic to Continuous Change
research design and to focus on empirically
Strategy as stretch puts the innovative derived rather than theoretical models. More-
organization constantly under pressure: the over, the dynamics between corporate ven-
development of new competencies through tures, the strategy-making process and
co-ordinated actions of R&D labs and new competence building are complex and contin-
business development units brings the com- gent to the organizational context. The link-
pany closer to being in line with its strategic ages between venture activities, competencies
vision. At the same time, however, these new and strategy are highly embedded in the
competencies, which are for instance based on broader corporate culture and are not always
deep knowledge of a particular technology, made explicit. In order to capture this com-
stimulate people from central R&D labs, new plexity and embeddedness, we chose to work
venture managers or others to envision new with an explorative case study method (Glaser
business opportunities. The company has to & Strauss, 1967).
further adapt its corporate strategy if these We made two choices. First, we focused on a
opportunities are not fully in line with the cur- single company – DSM, a Dutch chemical
rent strategy. manufacturer – in order to get fine-grained
New business development – which might information about these linkages that are in
be the firm’s response to discontinuous the literature as yet an incompletely docu-
(technological) change in the environment – mented phenomenon. The detailed descrip-
thus simultaneously creates ‘fit’ and ‘stretch’. tion of these linkages comes at the expense of
This apparent incongruence challenges man- external validity. Next, the detailed informa-
agement, facing the task to prepare the orga- tion could only be obtained by semi-struc-
nization not only to develop the appropriate tured in-depth interviews, with managers
competencies to implement the current strat- from different parts of the company. Since cor-
egy, but also to envision how the leveraging of porate entrepreneurship is almost by defini-
these novel competencies determines the stra- tion opposed to the mainstream businesses, it
tegic position of the company in tomorrow’s was important to interview managers from
competitive landscape. different parts of the company. We conducted
Tushman and O’Reilly (1996) suggest that interviews with nine managers during a two-
only an ‘ambidextrous organization’ is ready year period. Four of them had different posi-
to successfully cope with this apparent para- tions in the corporate venturing unit, one was
doxical challenge. Corporate ventures consti- member of the board, two interviewees were
tute one way to create ‘ambidexterity’ in a respectively head of Corporate Planning
company as they are favourable for ‘hosting and Development and head of Corporate
multiple contradictory structures, processes Research, and the last two were general man-
and cultures within the same firm’ (Tushman agers of operational business units. The inter-
& O’Reilly, 1996, p. 24). In this way, a company views were semi-structured and took usually
can succeed to simultaneously exploit its cur- two to three hours.
rent competencies and explore new technolo- As we conducted interviews we focused our
gies (March, 1991) – not passively undergoing attention on the question why the corporate
the contextual (technological) changes, but venture unit could play a significant role in the
proactively shaping its own future. In other discussions about corporate strategy making
words, it is a continuously changing, learning and competence building although it was
company. small in terms of budget or number of em-
How a large company can successfully ployees. We focused on the organizational
tackle those challenges and become ambidex- mechanisms or routines that enabled this. We
trous by developing its dynamic innovation constantly compared information from the
capability is explained and illustrated in the most recent interview with that of prior inter-
following section. We take DSM as an exam- views with other managers. In cases where
ple: we examine how the company manages to inconsistent information emerged we con-
rejuvenate its technological capabilities and ducted a follow-up interview until the incon-
sustain its competitive advantage thanks to sistencies were resolved or new insights were
the strong interactions between strategic flex- made explicit.
ibility, competence building and the creation
of corporate ventures beyond its current mar-
kets or technologies.

© Blackwell Publishing Ltd, 2005 Volume 14 Number 3 2005

252 CREATIVITY AND INNOVATION MANAGEMENT

The Extended Role of Corporate synergies at the intersection of both technolo-

Venturing at DSM gies were identified as key technological
search areas to find new sources for innova-
Setting tive successes giving the company a competi-
tive edge as a multi-speciality player in the
DSM is a Dutch Speciality Chemicals and long run.
Materials company that is active worldwide: How the company managed the transition
in 2003 the group had annual sales of close to from a bulk chemical firm to a multi-specialist
€6.1 billion and employed about 26,000 peo- player can best be understood by taking a
ple. The company was founded in 1902 as a closer look at the internal processes that
state-owned coal-mining company, yet a cen- underpin the company’s strategic flexibility.7
tury of change led the firm from coal mining
over petrochemicals to speciality chemicals.
New business development and corporate Strategic Vision
venturing over time grew in importance as Innovation is explicitly captured as a value
instruments to drive these strategic changes, driver in DSM’s strategic vision: innovation is
and our interest lies in the management pro- believed to be the key to the long-term pro-
cesses underpinning the innovation initiatives fitability of the firm. In order to stimulate
and successful redefinition of DSM’s strategy. innovation within the company, strategy
The most recent strategic reorientation of formulation processes are fully interactive,
DSM reduced the firm’s business portfolio embracing all levels of the organization (Gen-
from the original three clusters ‘Life Science eral Management, Business Groups, Corpo-
Products’ (LSP, including biotechnology), rate R&D, Board of Directors and so on).
‘Performance Materials’ (PM, particularly The company has institutionalized a formal
elastomers, resins, plastics) and ‘Industrial ‘Corporate Strategy Dialogue’ and a ‘Busi-
Chemicals’ (IC, mainly petrochemicals) to two. ness Strategy Dialogue’ for that purpose –
DSM sold its petrochemicals business to the complemented by continuous informal
Saudi Arabian company SABIC in 2002, and dialogue and debate within the organization.
now concentrates entirely on LSP and PM. The These interactive processes assure the bottom-
company aims to achieve sales of around €10 up stream of innovative ideas within the
billion by 2005, with at least 80 percent of sales firm, on corporate and business level respec-
accounted for by specialities (LSP and PM). tively. Furthermore, through a ‘Business
DSM’s management intends to become a Technology Analysis’ (BTA) new techno-
leader in the strategic group of global ‘multi- logical developments (internal as well as
specialty’ players6 by readjusting the e- external) are systematically monitored and
company’s product portfolio in terms of focus evaluated in view of the new dimensions
and size. they can give to the company’s strategy. Top
In line with its strategic vision to become a priorities are subsequently identified, and
global multi-speciality player DSM defined (resource) provisions for the implementation
biotechnology and performance materials as thereof are made. These are formalized in a
its two technological mainstays. Potential ‘Strategic Contract’ with the Board of Direc-
tors, in which long-term performance is
defined both in terms of financial criteria and
6
(incremental as well as radical) innovation
In the chemical industry trends are leading initiatives to achieve sustainable corporate
towards a structure with three strategic groups
growth. In this way, a balance between short-
(Porter, 1985) of chemical companies. First, large
conglomerates (sales of over €25 billion, e.g. Dow term responsibility for business performance
Chemical, DuPont, Bayer and BASF). Second, and long-term responsibility for sustainabil-
highly focused pure play specialists (sales usually ity in the future is achieved.
not surpassing the €3 billion mark, e.g. Lonza,
Givaudan and Novozymes). Lastly, the global
‘multi-speciality’ players (size of roughly €5 to 15 Innovation in Action
billion in annual sales, e.g. AKZO Nobel, CIBA, A strategic vision that puts innovation at the
Clariant, Degussa, ICI, Rhodia, and Rohm & Haas) core of the company’s activities, would not be
offering a portfolio consisting predominantly of a viable if the company did not systematically
set of chemical specialties. Somewhat outside this
chemical spectrum are the large global oil compa-
7
nies, which are relevant for chemicals as they Based on in-depth interviews with several man-
increasingly dominate the petrochemical business, agers at DSM, a.o. Emmo Meijer, Chief Technology
and the group of large global pharmaceutical Officer at DSM, and Robert Kirschbaum of ‘DSM
and food processing companies, which are also Venturing and Business Development’ and com-
consolidating. pany documents.

Volume 14 Number 3 2005 © Blackwell Publishing Ltd, 2005

EMBRACING INNOVATION AS STRATEGY 253

organize and develop competencies for the business development unit is a separate busi-
exploration of new technologies on the one ness group that organizes new business devel-
hand, and the commercial exploitation of opment initiatives as well as the firm’s
these novel technologies on the other hand. external venturing activities. This business
The exploration of new technologies is group is actively involved in new business
embedded in the mission of DSM’s R&D. At development (internal corporate ventures),
least 10 percent of the company’s R&D budget investments in venture capital funds and in
is assigned to Corporate R&D for the explora- promising start-up companies (external ven-
tion of novel technologies that cannot at first turing), and equity and non-equity alliances
sight be housed in a business group. The with universities and other businesses with
remaining 90 percent of the firm’s research complementary technologies or other intangi-
budget is allocated to R&D within each busi- ble assets such as knowledge about and exper-
ness group, partially for the realization of tise in manufacturing. ‘DSM Venturing &
incremental innovations, partly for explora- Business Development’ is, as it were, the
tion of radical innovations. R&D can thus be breeding ground for truly path-creating inno-
considered the most open function in DSM: it vations (Garud & Karnoe, 2001), rooting in
interacts with the entire knowledge infrastruc- DSM.
ture, internally as well as externally. Internal A constant element in this innovation pro-
and external ventures and the related explor- cess is the interaction between technology and
ative technological research are the key drivers strategy. DSM’s innovation initiatives – inter-
to the development of competencies in this nal and external venturing, sustaining or
respect. disruptive – find their origin in the early
As for the integration and implementation exploration of new scientific domains or novel
of novel technologies into DSM, the company technologies. DSM’s acquaintance with new
has set up a Corporate Research Board, where technologies drives the cognition of new stra-
corporate R&D and (mainstream!) business tegic opportunities and at the same time lays
group directors discuss and think together the foundations for the building of new com-
about new scientific and technological devel- petencies. This mutual interaction between
opments. This not only makes the business strategy and technology is in itself a forceful
groups aware of and familiar with new tech- driver in the firm’s innovative ventures. The
nologies, it also increases the businesses’ competitive advantage of the company lies not
willingness to market newly developed tech- so much in the technologies or resources the
nologies. The Corporate Research Board thus firm develops or acquires, but in the integral
facilitates the absorption of new technologies process it had designed to manage innovation
in the business, stimulating technological company-wide.
innovation.
A ‘Stage-Gate’ process has been designed to
further smooth the progress of bottom-up
Imagining Options for the Future
innovation and the absorption of new technol- As Hamel and Prahalad (1994) have argued,
ogies: ideas are generated by the research com- competition for the future is competition for
munity, and their feasibility is subsequently opportunity share rather than market share.
evaluated by a Research Council, in which DSM too embarked on a search for profitable
Corporate R&D joins forces with the R&D business opportunities. It therefore explored
Directors of the business groups per cluster. new technological areas, at the same time
The Research Council in question will also for- related to, yet remote from its current technol-
mulate the innovation initiative in a project ogy base in LSP and PM. At the intersection of
proposal, to be approved by the Corporate both biotechnology and materials science it
Research Board. The Corporate Research discovered ‘bioterials’. Bioterials can be
Board will – in view of the company’s strategy defined as each material of which the pro-
– make the ultimate ‘go’ or ‘kill’ decision. duction has been realized through bio-based
Thus, innovation is ‘stratified’ in an objective processes (e.g. biocatalysis (emzymes) or bio-
process, so as not to suppress creativity and processing) instead of synthetic chemistry. The
avoid bureaucracy, while a firm connection is advantages are that traditional products are
established between corporate R&D and busi- now produced based on renewable resources
ness units. that some of these products are biodegradable,
The final ‘go’ decision for an innovation or that production costs are considerably
project also implies the allocation of a project lower. The potential value of the growing
to a particular business or by absence of a busi- business opportunities at the intersection of
ness group into which the new technology can biotechnology and chemical processes has
be integrated to ‘DSM Venturing & Business recently also been highlighted by industry
Development’ to nurture the innovation. This watchers (Bachmann et al., 2000), while the

© Blackwell Publishing Ltd, 2005 Volume 14 Number 3 2005

254 CREATIVITY AND INNOVATION MANAGEMENT

recognition of the strategic potential for DSM agement practices that the company has
in this area has been growing steadily as a implemented, and which are in fact a mere
result of the company’s ongoing technology formalization of its underlying values and
developments and acquisitions in these fields. culture. The company’s true innovative capa-
DSM is consequently committed to further bility is rooted and embedded in that cul-
develop its expertise in bioterials, and to fine- ture, allowing it to reconcile the need for
tune its strategy of becoming a leading global stability and control with the recognition that
multi-speciality player. uncertainty and risk are inevitable in the
The opportunity identified in bioterials did exploration of new strategic directions. The
thus fit with the corporate strategic objective company could be considered as an ambidex-
of becoming a global leader in the multi- trous organization: it ‘is able to compete suc-
speciality industry group. Because of the per- cessfully by both increasing the alignment or
ceived benefits of high added-value activities fit among strategy, structure, culture, and
in this research area, characterized by high processes, while simultaneously preparing
growth and more stable profit levels, manage- for the inevitable revolutions required by dis-
ment had reoriented the company’s strategy continuous environmental change’ (Tushman
in this direction. As a consequence, building & O’Reilly, 1996, p. 11).
technological capabilities in this field was set In other words, the company has succeeded
forth as a stretching goal. In that sense, corpo- in making innovation systemic: innovation
rate strategy was a driver for new competence has become a corporate capability integrated
building (bioterials). It is an illustration how in the entire organization (Välikangas, 2003).
current strategy cultivates the firm’s future Innovation ís the strategy of DSM and its ‘goal
technology. is [to be] an organization that is constantly
Yet, at the same time, DSM’s new strategic making its future rather than defending its
focus on bioterials was in itself the result of an past’ (Hamel & Välikangas, 2003, p. 2).
ongoing recognition process that was a ‘by-
product’ of the research and development
efforts and technology acquisitions in the Discussion and Conclusion
areas of biotechnology and materials science.
Researchers and managers identified bioteri- This paper focuses on the question of how
als because of their acquaintance with and companies can achieve competitive advantage
knowledge about both technologies (Cohen & in new and attractive business areas when this
Levinthal, 1990): in other words, current requires the development of new (technologi-
technology drives the cognition of future cal) competencies and a shift in corporate
strategy. strategy.
The combination of biotechnology and We have argued that most successful com-
materials science indicates a consistent panies build new competencies through a
streamlining of the technological coherence sequence of corporate venturing initiatives
within the company. New business develop- (Dougherty, 1995; Leonard-Barton, 1992). The
ment (bioterials), at the intersection of two creation of new business based on new tech-
existing business (LSP and PM), was the car- nologies forces companies to extend existing
rier for the development of these new techno- competencies and to build new ones. In
logical competencies, that at the same time ‘fit’ other words, corporate venturing can be con-
and ‘stretch’ the company’s strategy. This goes sidered as an ‘organizational carrier’ to build
to show that corporate strategy and technolog- competencies.
ical competencies mutually interact, generat- Competence building and corporate ventur-
ing a process of continuous technological ing are at the same time intrinsically related to
competence building and providing a direc- corporate strategy making. The relationship
tion for future competence building that is in between corporate venturing and corporate
line with the stretched strategic goal-setting. strategy is typically a dynamic one: corporate
The company’s strategy then indeed becomes strategy may activate and direct new business
a ‘moving target’, fostering innovation. development and the accompanying compe-
The ability to actualize innovation and tence building, but the latter also drives and
capitalize on new opportunities originates in refines the former. On the one hand, a ‘strate-
DSM’s ‘openness’ to new developments in gic vision’ challenges the organization by cre-
science and technology: this openness is not ating a misfit between what the company is
only a matter of external co-operative and what it intends to become, by showing the
dynamics (external ventures, alliances) but gap between the existing resources and those
also of internal practices (internal ventures) required to live up to its ambitions. On the
and corporate culture. Its origin can be traced other hand, new competence building also
back to the processes, procedures and man- drives and refines the cognition of corporate

Volume 14 Number 3 2005 © Blackwell Publishing Ltd, 2005

EMBRACING INNOVATION AS STRATEGY 255

strategy (Itami & Numagami, 1992). Compe- opportunities. In this way, the corporate ven-
tencies and corporate strategy co-evolve and, turing unit plays a potentially crucial role in
consequently, a strategic vision can be consid- the dynamics of corporate strategy. However,
ered a ‘moving target’ for innovation. these new ideas can only be integrated into the
Managing that iterative process whereby heart of the corporate strategy when there
strategy drives competencies and competen- exist organizational routines that allow other
cies drive strategy poses a major organiza- parts of the company to become convinced of
tional challenge to the innovating company. their value. This has not come automatically
Successful innovation should provide the firm given the fundamentally different objectives
with a competitive edge in extant or new mar- of mainstream and new stream businesses
kets or industries. We identified the integra- (Chesbrough, 2003). In most companies these
tive management of innovation, whereby new strategic opportunities get suffocated by
innovation becomes a dynamic capability, sys- the ‘dominant logic’ of the mainstream busi-
temic to the organization, as the key to sustain- nesses. But DSM installed different organiza-
ability. Innovation is no longer merely a tool tional routines and procedures – with the
for the implementation of the strategy but it ‘Corporate Strategic Dialogues’ as the most
actually is strategy. important one – assuring that new ideas from
This implies that a firm manages to recon- different parts of the company could be dis-
cile apparent paradoxes between strategic fit cussed as potential building blocks for the
and the need for reinventing itself in view of a future corporate strategy. At DSM, corporate
changing technology or market context. An venturing is a practice that forces the firm to
ambidextrous organization possesses that adapt its competencies over time and acts as a
ability, and we observed how the integrative catalyst to recognize new strategic options.
management of innovation – new business Corporate entrepreneurship is traditionally
development in particular – offers a suitable considered as an organizational instrument
organizational framework in which the multi- to generate new business opportunities.
ple and often contradictory demands of Dougherty (1995) argued that it also plays a
mainstream businesses and the new business crucial role in competence building and that
development activities of the company can not venturing and a firm’s core competencies are
only coexist but do actually nurture the inno- mutually constitutive. In this paper, we have
vative capability of the firm. provided some evidence that the full potential
This has been illustrated by the continuous of corporate venturing can only be understood
corporate change process within DSM. In this if one relates it not only to competence build-
company, strategy making is intertwined with ing but also to corporate strategy-making
new business development initiatives and processes.
competence building. The strategic vision on
the corporate level legitimizes entrepreneurial
activities throughout the company and pro- References
vides criteria to select new initiatives. The
corporate strategy at DSM facilitates the Ahuja, G. and Lampert, C.M. (2001) ‘Entrepreneur-
participation of managers and employees ship in the large corporation: A longitudinal
from virtually all hierarchical levels within study of how established firms create break-
the company to participate in the planning through inventions’, Strategic Management Jour-
process. This, in turn, spurs creativity and nal, 22, 521–43.
facilitates the recognition of new business Bachman, R., Bastianelli, E., Riese, J. and Schlenzka,
W. (2000) ‘Using plants as plants’, McKinsey Quar-
opportunities. Mainstream businesses recog-
terly, 93–9.
nize these opportunities based on current mar- Bakker, H., Jones, W. and Nichols, M. (1994) ‘Using
ket needs or existing technological capabilities core competencies to develop new business’,
in the company. The corporate venturing unit Long Range Planning, 27(6), 13–27.
on the contrary starts from business opportu- Barringer, B.R. and Bluedorn, A.C. (1999) ‘The rela-
nities that require new competence building or tionship between corporate entrepreneurship
the exploration of new markets. and strategic management’, Strategic Management
When the company builds new competen- Journal, 20, 421–44.
cies as a result of its corporate venturing activ- Benner, M.J. and Tushman, M.L. (2003) ‘Exploita-
ities, managers also become aware of new tion, Exploration, and Process Management: The
Productivity Dilemma Revisited.’ Academy of
strategic opportunities. Corporate venturing
Management Review, 28(2), 238–56.
activities drive researchers and engineers to Benner, M.J. and Tushman, M.L. (2002) ‘Process
explore novel technologies, such as ‘bioterials’ Management and Technological Innovation: A
in the case of DSM. The increasing acquain- Longitudinal Study of the Photography and Paint
tance with the new technological fields drives Industries,’ Administrative Science Quarterly, 47,
in its turn the cognition of new strategic 676–706.

© Blackwell Publishing Ltd, 2005 Volume 14 Number 3 2005

256 CREATIVITY AND INNOVATION MANAGEMENT

Block, Z. and MacMillan, I.C. (1995) Corporate ven- Ellis, R.J. and Taylor, N. (1987) ‘Specifying entrepre-
turing. Harvard Business School Press, Boston. neurship’. In Churchill, N.C., Hornaday, J.A.,
Blyler, M. and Coff, R.W. (2003) ‘Dynamic capabil- Kirckoff, B.A., Krasner, O.J. and Vespers, K.H.
ities, social capital, and rent appropriation: ties (eds), Frontiers of entrepreneurship research. Babson
that split pies’, Strategic Management Journal, 24, College, Wellesley, MA, 527–42.
677–86. Fast, N.D. (1978) ‘New venture departments: Orga-
Bower, J.L. and Christensen, C.M. (1995) ‘Disrup- nizing for innovation’, Industrial Marketing Man-
tive technologies: Catching the wave’, Harvard agement, 7(2), 77–97.
Business Review, January–February, 43–53. Floyd, S.W. and Wooldridge, B. (1999) ‘Knowledge
Brown, S.L. and Eisenhardt, K.M. (1997) ‘The art of creation and social networks in corporate entre-
continuous change: Linking complexity theory preneurship: The renewal of organizational
and time paced evolution in relentlessly shifting capability’, Entrepreneurship Theory and Practice,
organizations’, Administrative Science Quarterly, Spring, 123–43.
42, 1–34. Garud, R. and Karnoe, P. (2001) ‘Path creation as a
Burgelman, R.A. (1983) ‘A process model of inter- process of mindful deviation’. In Garud, R.,
nal corporate venturing in the diversified major Karnoe, P. (eds.), Path dependence and creation,
firm’, Administrative Science Quarterly, 28, 223– Lawrence Earlbaum Associates, London.
44. Ghoshal, S. and Bartlett, C.A. (1997) The individual-
Burgelman, R.A. (1986) Managing corporate entre- ized corporation. HarperCollins, New York.
preneurship. In M. Horwitch, (ed.), Technology in Glaser, B.J. and Strauss, A.L. (1967) The discovery of
the modern corporation. Pergamon Press, New grounded theory. Aldine, Chicago.
York. Gomes-Casseres, B. (1989) ‘Joint ventures in the face
Burgelman, R.A. (1995) Strategic management of tech- of global competition’, Sloan Management Review,
nology and innovation. Irwin, Boston. 30(3), 17–27.
Chesbrough, H. (2003) Open innovation. Harvard Granstrand, O., Bohlin, E., Oskarsson, C. and
Business School Press, Harvard MA. Sjöberg, N. (1992) ‘External technology acquisi-
Chesbrough, H. and Rosenbloom, R.S. (2002) ‘The tion in large multi-technology corporations’,
role of the business model in capturing value R&D Management, 22(2), 111–33.
from innovation: evidence from Xerox Corpora- Hamel, G. (2002) Leading the revolution: How to thrive
tion technology’, Industrial and Corporate Change, in turbulent times by making innovation a way of Life.
11(2), 529–55. Plume, New York.
Christensen, C.M. (1997) The innovator’s dilemma: Hamel, G. and Välikangas, L. (2003) ‘The Quest for
When new technologies cause great firms to fail. Har- Resilience’, Harvard Business Review, September,
vard Business School Press, Boston MA. 2–63.
Christensen, C.M. and Raynor, R.E. (2003) The inno- Hamel, G. and Prahalad, C.K. (1994) Competing for
vator’s solution: creating and sustaining successful the future. Harvard Business School Press, Boston
growth, Harvard Business School Press, Boston, MA.
MA. Hansen, M.T., Chesbrough, H.W., Nohria, N. and
Cohen, W.M. and Levinthal, D.A. (1990) The inno- Sull, D. (2000) ‘Networked incubators: Hothouses
vator’s solution: Creating and sustaining success- of the new economy’, Harvard Business review,
ful growth, Harvard Business School Press, 78(5), 74–84.
Boston MA. Helfat, C.E. (1997) ‘Know-how and asset comple-
Dess, G.G., Lumpkin, G.T. and McGee, J.E. (1999) mentarity and dynamic capability accumulation:
‘Linking corporate entrepreneurship to strategy, the case of R&D’, Strategic Management Journal,
structure, and process: Suggested research direc- 18(5), 339–60.
tions’, Entrepreneurship Theory and Practice, 23(3), Helfat, C.E. and Raubitschek, R.S. (2000) ‘Product
85–102. sequencing: co-evolution of knowledge, capabil-
Dougherty, D. (1995) ‘Managing your core uncom- ities and products’, Strategic Management Journal,
petencies for innovation’, Entrepreneurship Theory 21, 961–79.
and Practice, 19(3), 113–135. Henderson, R.M. and Clark, K.B. (1990) ‘Achitec-
Dougherty, D. and Heller, T. (1994) ‘The ille- tural innovation: The configuration of existing
gitimacy of successful product innovation in product technologies and the failure of estab-
established firms’, Organization Science, 5(2), 200– lished firms’, Administrative Science Quarterly, 35,
18. 9–30.
Dougherty, D. and Hardy, C. (1996) ‘Sustained Hitt, M.A., Ireland, R.D., Camp, S.M. and Sexton,
product innovation in large mature organiza- D.L. (eds.) (2002) Strategic entrepreneurship: Creat-
tions: overcoming innovation-to-organization ing a new mindset. Blackwell: Oxford.
problems’, Academy of Management Journal, 39 (5), Hoskisson, R.E. and Busenitz, L.W. (2002) ‘Mar-
1120–53. ket uncertainty and learning distance in cor-
Duysters, G. and Hagedoorn, J. (2000) ‘Core porate entrepreneurship entry mode choice’.
competencies and company performance in In Hitt, M.A., Ireland, R.D., Camp, S.M. and
the world-wide computer industry’, Journal of Sexton, D.L. (eds.), Strategic entrepreneurship:
High Technology Management Research, 11(1), Creating a new mindset, Blackwell, Oxford, pp.
75–91. 151–72.
Eisenhardt, K.M. and Martin, J.A. (2000) ‘Dynamic Itami, H. and Numagami, T. (1992) ‘Dynamic inter-
capabilities: What are they?’, Strategic Manage- action between strategy and technology’, Strate-
ment Journal, 21, 1105–21. gic management Journal, 13, 119–35.

Volume 14 Number 3 2005 © Blackwell Publishing Ltd, 2005

EMBRACING INNOVATION AS STRATEGY 257

Kazanjian, R.K., Drazin, R. and Glynn, M.A. (2002) organizational culture’. In Tushman, M. and
‘Implementing strategies for corporate entrepre- Anderson, P. (eds.) Managing strategic innovation
neurship: A knowledge-based perspective’. In and change. Oxford University Press, Oxford.
Hitt, M., Ireland, R.D., Camp, M.S. and Sexton, Teece, D., Pisano, G. and Shuen, A. (1997) ‘Dynamic
D.L. (eds.), Strategic entrepreneurship: Creating a capabilities and strategic management’, Strategic
new mindset, Blackwell, Oxford, pp. 173–99. Management Journal, 18(7), 509–33.
Kogut, B. (1988) ‘Joint ventures: theoretical and Thornhill, S. and Amit, R. (2000) ‘A dynamic per-
empirical perspectives’, Strategic Management spective of internal fit in corporate venturing’,
Journal, 9(4), 319–32. Journal of Business Venturing, 16, 25–50.
Kuratko, D., Montagno, R. and Hornsby, J. (1990) Tidd, J., Bessant, J. and Pavitt, K. (2001) Managing
‘Developing an intrapreneurial assessment innovation: Integrating technological, market and
instrument for effective corporate entrepreneur- organizational change, 2nd edn. Wiley, Chichester.
ial environment’, Strategic Management Journal, 11, Tushman, M. and Anderson, P. (1986) ‘Techno-
Summer, 49–58. logical discontinuities and organizational envi-
Lambe, C.J. and Spekman, R.E. (1997) ‘Alliances, ronments’, Administrative Science Quarterly, 31,
external technology acquisition, and discontinu- 439–65.
ous technological change’, Journal of product inno- Tushman, M. and Nadler, D. (1986) ‘Organizing for
vation management, 14, 102–16. innovation’, California Management Review, 3(1),
Lane, P.J. and Lubatkin, M. (1998) ‘Relative absorp- 73–84.
tive capacity and interorganizational learning’, Tushman, M. and O’Reilly III, C.A. (1996) ‘Ambi-
Strategic Management Journal, 19, 461–77. dextrous organizations: managing evolutionary
Leifer, R., McDermott, C.M., O’Connor Colarelli, G., and revolutionary change’, California Management
Peters, L.S., Rice, M. and Veryzer, R.W. (2000) Review, 38(4), 8–30.
Radical innovation: How mature companies can out- Välikangas, L. (2003) ‘Manage Innovation as a Cor-
smart upstarts. Harvard Business School Press, porate Capability’, Chemical Engineering Progress,
Boston MA. January, 64–9.
Lengnick-Hall, C.A. (1992) ‘Strategic configurations Volberda, H.W., Baden-Fuller, C. and van den
and designs for corporate entrepreneurship: Bosch, F.A.J. (2001) ‘Mastering strategic renewal:
Exploring the relationship between cohesiveness mobilising renewal journeys in multi-unit firms’,
and performance’, Journal of Engineering and Tech- Long Range Planning, 34, 159–78.
nology Management, 9(2), 17–154. Von Hippel, E. (1988) The sources of innovation.
Leonard-Barton, D. (1992) ‘Core capabilities and Oxford University Press, New York.
core rigidities: A paradox in managing new prod- Zahra, S.A. and Covin, J.G. (1995) ‘Contextual
uct development’, Strategic Management Journal, influences on the corporate entrepreneurship-
13, 111–25. performance relationship: A longitudinal analy-
Levinthal, D.A. and March, J.G. (1993) ‘The myopia sis, Journal of Business Venturing, 10(1), 43–58.
of learning’, Strategic Management Journal, Winter Zahra, S.A., Nielsen, A.P. and Bogner, W.C. (1999)
special issue, 14, 95–112. ‘Corporate entrepreneurship, knowledge, and
Lynn, G.S. (1998) ‘New product team learning: competence development’, Entrepreneurship
Developing and profiting from your knowledge Theory and Practice, 23(3), 169–89.
capital’, California Management Review, 40(4), 74– Zajac, E.J., Kraatz, M.S. and Bresser, R.K.F. (2000)
93. ‘Modeling the dynamics of strategic fit: A norma-
March, J.G. (1991) ‘Exploration and exploitation tive approach to strategic change’, Strategic Man-
in organizational learning’, Organization Science, agement Journal, 21, 429–53.
2(1), 71–87.
Peteraf, M.A. (1993) ‘The cornerstone of competi-
tive advantage’, Strategic Management Journal,
14(3), 179–91.
Porter, M.E. (1985) Competitive advantage: Creating
and sustaining superior performance. The Free Press: Wim Vanhaverbeke is at the Department
New York. of Business Studies – Limburg University
Prahalad, C.K. (1998) ‘Managing discontinuities: Centre, and Eindhoven Centre for Inno-
The emerging challenges’, Research – Technology vation Studies – Eindhoven University of
Management, May–June, 14–22. Technology.
Prahalad, C.K. and Bettis, R.A. (1986) ‘The domi- Limburg University Centre, Department
nant logic: a new link between diversity and of Business Studies, Universitaire Campus,
performance’, Strategic Management Journal, 7, building D, 3590 Diepenbeek, Belgium and
485–511. Eindhoven Centre of Innovation Studies,
Prahalad, C.K. and Hamel, G. (1990) ‘The core com- Eindhoven University of Technology, P.O.
petence of the corporation’, Harvard Business Box 5135600, MB Eindhoven, The Nether-
Review, 68(3), 79–91. lands.
Roberts, E.B. and Berry, C.A. (1985) ‘Entering new e-mail: [email protected]
business: selecting strategies for success’, Sloan Nico Peeters is at the Eindhoven Centre
Management Review, Spring, 3–17. for Innovation Studies – Eindhoven Univer-
Schoonhoven, B.C. and Jelinek, M. (1990) ‘Dynamic sity of Technology.
tension in innovative, high technology firms:
managing rapid technological change through

© Blackwell Publishing Ltd, 2005 Volume 14 Number 3 2005

View publication stats