Related or Unrelated? A Behavioral and Entrepreneurial Action Perspective of Corporate Venturing Logic (Summary)
Frontiers of Entrepreneurship Research: Vol. 30: Iss. 17, Article 3
Posted: 20 Mar 2015
Date Written: 2010
Abstract
We conceptualize corporate venturing as an outcome of search where firms pursue new business through diversification into new markets. Research has generally concluded that ventures related to the current business outperform unrelated ventures. Yet, businesses often pursue opportunities that are divergent from their core business. We know little of why firms search across a broad spectrum of relatedness in their diversification decisions and why some firms enter unrelated businesses despite the documented performance hazards.
We develop a means-motive-opportunity model building from behavioral theory and an entrepreneurial action perspective to explain a firm’s venture search logic. Based on a firm’s prior performance relative to social and historical aspiration levels (motives) and available slack resources (means), the firm makes choices regarding new products or markets (opportunities). In contrast to arguments that suggest the search for solutions to problems and slack search are independent actions, we examine whether combinations of problemistic and slack search reveal four distinct venturing logics. By combining high and low levels of the search dimensions, we create four combinations that operate as different logics of relatedness/diversification in venturing decisions. The logics that emerge are efficiency, expansion, experiment, and escape.
Suggested Citation: Suggested Citation