Corporate venturing is key to innovation

Corporate venturing is the notion of large industrial organisations either developing, sponsoring or investing in startup companies to develop innovative products or services – and it’s effective even in times of crisis, according to new research from the Rotterdam School of Management, Erasmus University (RSM).

The research, conducted in close collaboration with Corporate Venturing Network, found that corporate venturing managers use a variety of coping mechanisms during challenging periods, consisting of risk reduction, rationalization, opportunity recognition, partner reliability and networking. While all of them were still coming to grips with the effects of the COVID-19 pandemic, these coping mechanisms allowed them to keep their operations running as well as possible.

According to Prof. Vareska van de Vrande, Professor of Collaborative Innovation and Business Venturing: “We wanted to understand how the COVID-19 pandemic was affecting innovation and venturing in organizations, as innovation and venturing itself are fraught with uncertainty, yet can also be used as a coping mechanism to explore new opportunities for growth.

“Maintaining an innovation agenda is paramount for the long-term survival of organizations. However, when faced with external shocks, organizations tend to freeze innovation activities, especially the ones that require a larger financial commitment and where the results are more uncertain and further in the future. Our research shows what managers can do to keep their innovation activities running.

“Although we expected firm resilience to be highly dependent on the extent to which these firms were hit in their core operations, we found no evidence for this conjecture. Instead, we found that the organizations with a history of corporate venturing matters were able to sustain operations, while firms with a short history or no history at all were experiencing major difficulties to keep things going.” Says Corina Kuiper from Corporate Venturing Network.

The researchers conducted a series of interviews during the first lockdown and a second round in fall 2020. During these interviews they spoke with more than 35 companies that are leading in the area of corporate venturing. The interviews were supported by a questionnaire. Based on the insights, they compiled a guidebook for managers and a Pandemic Resilience Scan with which companies can see for themselves how well they are prepared for the next pandemic.The full research is here:https://corporateventuringentrepreneurship.com/resilience-scan

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