A Process Model of Internal Corporate Venturing in The Diversified Major Firm

A Process Model of Internal Corporate Venturing in the Diversified Major Firm
Author(s): Robert A. Burgelman

Source: Administrative Science Quarterly, Vol. 28, No. 2 (Jun., 1983), pp. 223-244
Published by: Sage Publications, Inc. on behalf of the Johnson Graduate School of Management,
Cornell University
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A Process Model of
InternalCorporate Venturing in the Diversified
Major Firm
Robert A. Burgelman
This paper reports findings of a field study of the internal

corporate venturing (ICV)process in a diversified major
firm. It presents a grounded process model of the interlocking key activities of managers at different levels in the
organization, which constitutes the strategic process by
which new ventures take shape. Successful ICVefforts are
shown to depend on the availability of autonomous entrepreneurial activity on the part of operational level participants, on the ability of middle-level managers to conceptualize the strategic implications of these initiatives in more
general system terms, and on the capacity of top management to allow viable entrepreneurial initiatives to change
the corporate strategy.*
This paper examines the management of new ventures in a firm
of the "diversified major" or "related business" type. Such
firms are large agglomerates of widely diverse yet related
businesses grouped into divisions whose general managers
report to corporate management. In recent years, a substantial
literature has emerged on the relationships between strategy,
structure, degree of diversification, and economic performance
in the divisionalized firm (Chandler, 1962; Williamson, 1970;
Wrigley, 1970; Rumelt, 1974; Galbraithand Nathanson, 1979;
Caves, 1980). The actual processes of corporate entrepreneurship and strategic change, however, remain less well
understood. This is probably because these processes in such
firms are complex and are difficult and costly to research. While
large, diversified firms are clearly not representative of business organizations in general (Aldrich, 1979), they represent
such a large proportion of the total industrial activity in the
developed economies that efforts to construct a theory of
corporate entrepreneurship would seem valuable (Arrow,
1982).
? 1983 by Cornell University.

000 1-8392/83/2802-0223/$00.75
This paper is based on the author's doctoral
dissertation, which received a Certificate of
Distinction for Outstanding Research in the
field of Strategic Management, Academy
of Management and General Electric Company, 1980. L. Jay Bourgeois, Arthur P.
Brief, David B. Jemison, Leonard R. Sayles,
Stephen A. Stumpf, and Steven C. Wheelwright have made useful comments on
earlier drafts of this paper. The constructive
comments of three anonymousASQ reviewers have contributed significantly to
this final version. Support from the
Strategic Management Program of Stanford University's Graduate School of Business is gratefully acknowledged. My
thanksalsoto BarbaraSherwood forexcellent administrative assistance.
The research reported here investigates the process through

which a diversified major firm transforms R&Dactivities at the
frontier of corporate technology into new businesses through
internal corporate venturing (ICV).These new businesses enable the firm to diversify into new areas that involve competencies not readily available in the operating system of the
mainstream businesses of the corporation (Salter and
Weinhold, 1979). Previous systematic research of ICVhas not
clearly distinguished between new product and new business
development and has investigated the ICVdevelopment process only up to the "first commercialization" phase (von Hippel,
1977). The present study specifically examines the relationship
between project development and business development,
showing how new organizational units developed around new
businesses become integrated into the operating system of the
corporation either as new freestanding divisions or as new
departments in existing divisions. The rationale for studying
projects utilizing new technologies is that the strategic management problems involved in corporate entrepreneurship are
likelyto be most accentuated and most identifiable in projects in
which innovative efforts are radical (Zaltman, Duncan, and
Holbek, 1973).
Ansoff and Brandenburg (1971) discussed the strategic management problems of diversification through internal development in the divisionalized firm, and proposed that corporations
223/AdministrativeScience Quarterly,28 (1983): 223-244
create separate units within the corporate structure to facilitate

new venture development. During the seventies, many large
corporations adopted the new venture division (NVD)design
(Hanan, 1976; Hutchinson, 1976). Fast(1979), however,
showed that new venture divisions often occupy a precarious
position within the corporate structure because of erratic
changes in corporate strategy or in the political position of the
NVD in the corporate context. Argyris and Schbn (1978) provided anecdotal evidence of the various problems that impede
the effectiveness of the NVD in divisionalized firms. The
present study further elucidates the management problems
in herent in internal corporate ventu ring.
Frohman (1978), Quinn (1979), and Maidique (1980) suggested
categories of specialized roles to conceptualize the innovation
process in organizations. The present study uses a different
approach, documenting the key activities of persons on different hierarchical levels within the organization. The flow of
these interlocking activities is represented in a process model
of internal corporate venturing. Such a model is useful to
elucidate the "generative mechanisms" (Pondy, 1976) of corporate entrepreneurship. It indicates how the entrepreneurial
activities of individuals combine to produce entrepreneurship
at the level of the corporation, as well as how forces at the level
of the corporation influence the entrepreneurial activities of
these individuals.
METHODOLOGYAND RESEARCHDESIGN
A qualitative method was chosen as the best way to arriveat an
encompassing view of ICV.Concerns of external validity were
traded off against opportunities to gain insight into as yet
incompletely documented phenomena. The caveats pertaining
to field methods described by Kimberly(1979) are in order.
ICVproject development has a ten- to twelve-yeartime horizon
(Biggadike, 1979), and a truly longitudinal study was thus
beyond the available resources. Instead, a longitudinalprocessual approach (Pettigrew, 1979) was adopted. The ICV
process was studied exhaustively in one setting. Data were
collected on six ongoing ICVprojects that were in various stages
of development. The historical development of each case was
traced and the progress of each case during a fifteen-month
research period was observed and recorded. These materials
formed the basis for a comparative analysis of the six projects.
This approach should not be confused with the so-called
"comparative method" of early sociology, which used, often
selectively, cross-sectional data to support a prioritheories
most aptly called metaphors -of stages of development
(Nisbet, 1969). No such theory guided the present research, nor
is one proposed as a result of it.
In fact, because of the exploratory nature of the study and the
objective of generating a descriptive model of as yet incompletely documented phenomena, Glaser and Strauss's (1967)
strategy for the discovery of "grounded theory" was adopted.
This strategy requires the researcher " . . . at first, literallyto
ignore the literature of theory and fact on the area under study,
in order to assure that the emergence of categories will not be
contaminated by concepts more suited to different areas
(Glaser and Strauss, 1967: 37). It also requires joint collection,
224/ASQ,June 1983
Internal Corporate Venturing
coding, and analysis of the data. Data must be collected until

patterns have clearly emerged and additional data no longer add
to the refinement of the concepts.
The lack of previous research at the ICVproject level of analysis
made it fairly easy to follow these guidelines. By the same
token, great uncertainty existed as to what conceptual
framework would emerge from the data. Throughout the
research period, idea booklets were used to write down new
insights and interpretations of data already collected. These
ongoing, iterative conceptualization efforts resulted in the
creation of a new set of terms for the key activities in ICVand
provided the bits and pieces out of which the conceptual
framework finally emerged.
Research Setting
The research was carried out in one large, U.S.-based, hightechnologyfirm of thediversified majortypewhich Ishall refer
to as GAMMA. GAMMA had traditionallyproduced and sold
various commodities in large volume, but it had also tried to
diversify through the internal development of new products,
processes, and systems so as to get closer to the final user or
consumerand to catch a greater portion of the total value added
in the chain from raw materials to end products. During the
sixties, diversification efforts were carried out within existing
corporate divisions, but in the early seventies, the company
established a separate new venture division (NVD). Figure 1
illustrates the structure of GAMMA at the time of the study.
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ -~~CRORT
~
NEW VENTURE
MANGEEN
OPERATING
DIVISION (NVD)
BUSINESS
DEVELOPMENT
DEPARTMENT (BD)
(Business
(Business
Management)
SYSTEM
DIVISION
B
Business
~~~~~~~~~Management
R&D
R&D Management
(Research
DIVISION K
Bu
Management)
CORPORATE
R&DANDBUSINESS
RESEARCH
DEPARTMENTS
M aBusiness
Management
R&D Management
R
UNRELATED
DIVERSIFICATION
RELATEDDIVERSIFICATION
rNMCURRENTDOMAIN
Figure 1. The structure of GAMMA Corporation.
Data were obtained on the functioning of the NVD.The charters

of its various departments, the job descriptions of the major
positions in the division, the reporting relationships and mechanisms of coordination, and the reward system were studied.
Data were also obtained on the relationships of the NVD with
the rest of the corporation. In particular,the collaboration
225/ASQ, June 1983
between the corporate R&D department and divisional R&D

groups was studied. Finally,data were also obtained on the role
of the NVD in the implementation of the corporate strategy of
unrelated diversification to help explain why it had been
created, how its activities fit in the corporation's Strategic
Business Unit system, and how it articulated with corporate
management. These data describe the historical evolution of
the structural context of ICVdevelopment at GAMMA before
and during the research period. The bulk of the data was
collected in studying the six major ICVprojects in progress at
GAMMA at the time of the research.
Fermentation Products was in the earliest stage of development. The new business opportunity was still being defined and
no project had been formally started. Five people from this
project were interviewed, some several times, between
November 1976 and August 1977.
Fibre Components was a project for which a team of R&Dand
business people were investigating business opportunities and
their technical implications. Five people in this group were
interviewed between January 1977 and May 1977.
Improved Plastics had reached a point where a decision was
imminent as to whether the project would receive venture
status and be transferred from the corporate R&Ddepartment
to the venture development department of the NVD. Seven
people from this projectwere interviewed, some several times,
between February 1977 and April 1977.
Farming Systems had achieved venture status, but development had been limited to the one product around which it had
been initiallydeveloped. Efforts were being made to articulate a
broader strategy for further development of the venture. This
was achieved during the research period and an additional
project was started. Seven people were interviewed, some
several times, between November 1976 and August 1977.
Environmental Systems had also achieved venture status, but
was struggling to deal with the technical flaws of the product
around which its initialdevelopment had taken place. Italso was
trying to develop a broader strategy for further development. It
failed to do so, however, and the venture was halted duringthe
research period. Six people from the project were interviewed
between March 1977 and June 1977.
Medical Equipment was rapidlybecoming a mature new business. It had grown quickly around one major new product, but
had then developed a broader strategy that allowed it to
agglomerate medically related projects from other parts of the
corporation and to make a number of external acquisitions.
After the research period, this venture became a new freestanding division of the corporation. Eleven people were interviewed, some several times, between June 1976 and September 1977.
Data Collection
In addition to the participants in the six ICVprojects, I interviewed NVD administrators, people from several operating
divisions, and one person from corporate management. All in all,
sixty-one people were interviewed. Table 1 indicates the distribution of persons interviewed over job categories.
226/ASQ,June 1983

Table 1
Distribution of Persons Interviewed, by Job Title
Number:
Top management of the New Venture Division (NVD)
Director of NVD
Director of corporate R&D Department
Director of Business Research Department
Director of Business Development Department
Participants from corporate R&D Department
R&D managers
Group leaders
Bench scientists
Participants from Business Research Department
Business managers
Business researchers
Participants from Business Development Department
Venture managers
Business managers
Technology managers
Group leaders in venture R&Dgroup
Marketing managers
Marketing researchers
Operations managers
Project managers
Administration of NVD
Personnel managers
Operations managers
Participants from other operating divisions
R&Dmanagers
Group leaders
Corporate management
Executive staff
2
1
1
2
4
10
6
2
4
5
1
3
3
4
2
4
1
1
1
1
2
1
Total
61
The interviews were unstructured and took from one and a half
to four and a half hours. Tape recordings were not made, but
the interviewer took notes in shorthand. The interviewer usually began with an open-ended invitation to tell about workrelated activities, then directed discussion toward three major
aspects of the ICVdevelopment process: (1) the evolution over
time of a project, (2) the involvement of different functional
groups in the development process, and (3) the involvement of
different hierarchical levels in the development process. Respondents were asked to link particularstatements they made
to statements of other respondents on the same issues or
problems and to give examples, where appropriate.
A major benefit from this approach was that it was possible to
interview more people than originallyplanned. Respondents
mentioned names of relevant actors and were willing to help set
up interviews with them. It was thus possible to interview the
relevant actors in each of the ICVcases studied and to record
the convergence and divergence in their views on various key
problems and critical situations throughout the development
process. In some cases, it was necessary to go back to a
previous respondent to clarify issues or problems, and this was
always possible. After completing an interview, the interviewer
made a typewritten copy of the conversation. All in all, about
435 legal-size pages of typewritten field notes resulted from
these interviews.
227/ASQ,June 1983
The research also involved the study of documents. As could be

expected, the ICVproject participants relied little on written
procedures in their day-to-day working relationships with other
participants. One key set of documents, however, was the set
of written corporate long-range plans concerning the NVD and
each of the ICVprojects. After repeated requests, I received
permission to read the plans on site and to make notes. These
official descriptions of the evolution of each project between
1973 and 1977 were compared with the interview data.
Finally,occasional behavioral observations were made, for
example when other people would call or stop by during an
interview or in informal discussions during lunch at the research
site. These observations, though not systematic, led to the
formulation of new questions for further interviews.
A PROCESS MODEL OF ICV
A Stage Model
As the research progressed, four stages of ICVdevelopment
were identified-a conceptual, a pre-venture, an entrepreneurial, and an organizational stage. Table 2 indicates the stages
reached in each project, the number of projects observed for
each stage, and the number of real time observations of each
stage.
Table 2
Stages of Development
Project
Reached by Six ICV Projects
Conceptual
Stages
Pre-venture
Entrepreneurial
Medical Equipment
Environmental Systems
Farming Systems
Improved Plastics
Fibre Components
Fermentation Products
*
*
*
*
Projects observed
Real time observations
*
*
*
Organizational
*
*
*
Note: An asterisk indicates that the project reached this stage priorto the conclusion of the study.
This research design thus resulted in seven case histories. At

the project level, the comparative analysis of the six ICVcases
allowed the construction of a grounded stage model that
described the sequence of stages and their key activities. At the
level of the corporation, the research constituted a case study
of how one diversified major firm went about ICVand how the
corporate context influenced the activities in each stage of
development of an ICVproject.
A stage model describes the chronological development of a
project. It provides a description of the development activities
and problems in a series of stages, which is convenient for
narrative purposes. Such a model, however, is somewhat
deceptive because it does not capture the fact that strategic
activities take place at different levels in the organization
simultaneously as well as sequentially and, sometimes, in a
different order than would be expected.
228/ASQ, June 1983
ICVProcess
The process-model approach proposed by Bower (1970) for
strategic capital investment projects permits one to connect the
project and corporate level of analysis and to depict simultaneous as well as sequential strategic activities. Subsequent research has established the usefulness and generalizability of
the process-model approach for conceptualizing strategic decision making in and around projects other than capital investment in large, complex firms (Hofer, 1976; Bower and Doz,
1979).
The inductively derived process model for ICVat GAMMA
presented below shows how managers from different generic
levels in the organization got involved in the development of ICV
projects. The first step was to map the stages of ICVdevelopment onto the definition and impetus processes of the model.
The definition process encompassed the activities involved in
articulating the technical-economic aspects of an ICVproject.
Through the impetus process, it gained and maintained support
in the organization. Definition and impetus were identified as
the core processes of ICV.
The second step was to map the corporate-level findings onto
the strategic context and structural context determination
processes, which make up the corporate context in which ICV
development takes shape. Structural context refers to the
various organizational and administrative mechanisms put in
place by corporate management to implement the current
corporate strategy. Itoperated as a selection mechanism on the
strategic behavior of operational and middle-level managers.
Strategic context determination refers to the process through
which the current corporate strategy was extended to accommodate the new business activities resulting from ICVthat fell
outside the scope of the current corporate strategy. Strategic
and structural context determination were identified as the
overlaying processes of ICV.
The third step was the documentation of the managerial
activities that constitute these different processes.
Figure 2 maps the activities involved in ICVonto the process
model. Itshows howthe strategic process in and around ICVis
constituted by a set of key activities (the shaded area) and by a
set of more peripheral activities (the nonshaded area). These
activities are situated at the corporate, NVD, and operational
levels of management.
Figure 3, which can be superimposed on Figure 2, shows how
these different activities interlock with each other, forming a
pattern of connections. The relative importance of activities is
indicated by the different types of line segments. The data also
suggested a sequential flow of activities in this pattern, as
indicated by the numbers in Figure 3.
Figure 3 shows that ICVis primarilya bottom-up process and
depicts the key role performed by middle management. Looking at Figure 3, entrepreneurial activities at the operational and
middle levels (1, 2, 3) can be seen to interact with the selective
mechanisms of the structural context (5). These selective
mechanisms can be circumvented by activating, through organizational championing
(6), the strategic context, which
allows successful ICVprojectsto become retroactivelyratio229/ASQ,June 1983

=Key
OVERLAYING PROCESSES
CORE PROCESSES
activities
Corporate
Management
Definition
Impetus
MONITORING
AUTHORIZING
Strategic Context
Structural Context
RATIONALIZING
STRUCTURING
'
ORGANIZATIONAL
en)
J
NVD
Management
COACHING
STEWARDSHIP
CHAMPIONIN
IN
H
STRATEGIC
BUILDING
DELINEA
Group Leader/
Venture Manager
TECHNICALAND
NEED LINKING
GATEKEEPING
IDEA GENERATING
STRATEGIC
FORCING
BOOTLEGGING
A.~~~~
"I.~~~
NEGOTIATING
QUESTIONING
Figure 2. Key and peripheral activities in a process model of ICV.
OVERLAYING PROCESSES
CORE PROCESSES
Impetus
Definition
Corporate
Management
---------------
'4
Management
Context
Structural
Context
NVD
>
Strategic
~~~~~~2L
Group Leadern
Manager
-<)
Venture
[--J---------_
>
11
Sequence
of activities in the process

between
Strong connection
________-
Weak connection
Delayed effects
between
activities in the process

activities in the process
in the process
Figure 3. Flow of activities in a process model of ICV.
nalized by corporate management in fields of new business

delineated by the middle level (7, 8). These parts of the pattern,
represented by the full line segments in Figure 3, constitute the
major forces generated and encountered by ICVprojects.
The finely dotted lines in Figure 3 (4, 9) represent the connection between the more peripheral activities in the ICVprocess
and their linkages with the key activities. Corporate management was found to monitor the resource allocation to lCV
projects. Middle-level managers managed these resources and
facilitated collaboration between R&Dand business people in
the definition of new business opportunities; however, these
activities seemed to support, rather than drive the definition
process. Inthe same fashion, authorizing further development
was clearly the prerogative of corporate management, but this
230/ASQ, June 1983
was a result, not a determinant of the impetus process. Inthe

strategic context determination process, gatekeeping, idea
generating, and bootlegging activities by operational level participants were all found to be important in developing a basis for
further definition processes but seemed to be more a result of
the process than a determinant of it. Inthe process of structural
context determination, questioning of the structural context by
operational level participants and efforts by middle managers to
negotiate changes in it seemed to be reactive rather than
primary.
The broken line segments in Figure 3 (10, 1 1) indicate two
important delayed effects in the ICVprocess. First, the successful activation of the process of strategic context determination encouraged further entrepreneurial activities at the
operational level, thus creating a feedforward loop to the
definition process (10). Second, corporate management attempted to influence the ICVprocess primarilythrough its
manipulations of the structural context. These manipulations
appeared to be in reaction to the results of the previously
authorized ICVprojects. This created a feedback loop (11)
between the core and overlaying processes.
Figures 2 and 3 and the preceding overview of the process
model can now serve as a road map for detailed examination of
the interlocking key activities that constitute the major driving
forces in the four processes - definition, impetus, strategic
context determination, and structural context determination
that together constitute ICV.
DEFININGNEW BUSINESS OPPORTUNITIES
The case data of the present study suggest that the definition
process of an ICVproject encompasses the conceptualization
and pre-venture stages of the development process. As the
definition process takes shape, an idea for a new business
opportunity evolves into a concrete new product, process, or
system around which a pre-venture team of R&Dand business
people is formed. As a result of the successful technical and
market development efforts of this pre-venture team, a project
grows into an embryonic business organization. These stages
take place in the context of the corporate R&D department.
Criticalfor the definition of new business opportunities are
linking processes and product-chamrpioning activities.
Linking Processes
Inall of the cases studied, the initiationof the definition process
involved a double linkingprocess. Technical linkingactivities led
to the assembling of external and/or internal pieces of
technological knowledge to create solutions for new, or known
but unsolved, technical problems. Need linking activities involved the matching of new technical solutions to new, or
poorly served, market needs.
In five out of six cases, the definition of the new business
opportunity had its origin in technical linkingactivities in the
context of ongoing research activities in the corporate R&D
department. Inthe Fibre Components case, the idea came from
a business-oriented manager, but once the idea was to be made
concrete, technical linking activities began to dominate the
definition process there, too. This suggests "technology first"
(Schbn, 1967) as the dominantmode of conceivingof a new

231/ASQ, June 1983
venture. However, the case data also suggest that the continued viability of a project depended to a very great extent on
the integration of technical and marketing considerations in the
definition process.1
1
This is how the originator of the medical

equipment venture recounted a story that
illustrated the importance of integrating
technical and marketing considerations in
the definition process:
In 1968, we had a think tank session in
Connecticut. A scientist from our
government-sponsored
lab, I found out,
was working on a new way to handle and
transfer blood samples, an entirely new
concept,... but the scientist had very
fixed ideas about how the product
should look as a commercial product....
An outside group also had discovered
the existence of the scientist's idea and
followed closely his recommendations.
It was a small company, with a sales
volume of some eight million dollars. I
decided not to make "Chinese copies" of
their approach. I insisted on doing market research, and actually spent two
months full-time doing this. We ended
up with a radical departure from the
scientist's approach; we used only the
nucleus of his physical concepts. We had
found out some advisable product
characteristics from our market research, which led, for instance, to a
broader-sized "reader." We also combined the analyzer with a computer.
A furtherdiscussion of how this integration
is achieved and of the issues related to the
collaboration between R&Dand business
people in the definition process is provided
in Burgelman (1980).
2
In the words of the group leader:
As with most new ideas, people would
give little time to it. People "knew" that
SURF was "unpractical," sothe divisions
did not really get involved, except in an
informal way.
3
Argyris and Schbn (1978: 214) noted a

similar phenomenon in their Mercury case,
in which key participants were those who
could recognize "a Mercury problem." In
the present study, however, initiators were
more concerned with avoiding the work on
projects that would be perceived by top
management as not a GAMMA problem.
Projects were avoided in those areas in
which there had been failures in the past, in
those where there might be risk to the
corporation's image, orin areas having special legal liabilities.
4
Said the group leader:

But these pumps are costly, and people
at the management level are afraid to
commit themselves to such outlays. At
that time, however, an engineer came on
the project. He knew of the corporate
surplus lists and got some old pumps.
We rebuilt them and showed that we
could pump 35 percent to 49 percent
solutions. Having showed that, we could
now get the pumps we needed.
An important characteristic of ICVproject definition was its

autonomy from cu rrent corporate strategy. ICVproject initiators
perceived their initiatives to fall outside the current strategy but
felt that there was a good chance for them to be included in
future strategic development if they proved to be successful.
For instance, in the Improved Plastics project, SURF was a
process through which cheap plastics - a major business of
GAMMA- could be given certain properties of expensive
plastics. However, since knowledgeable and influential people
at GAMMAwere convinced that SURF could not work because
it was too violent a process, it was very difficult to obtain formal
support forwork in thisarea.2The leaderof the efforts in SURF
persisted, however, and was capable of developing an application of the process with plastic aerosol bottles. Later on, it
turned out that they had focused their efforts on the wrong size
bottles for commercial application, but in the meantime a basis
for corporate support had been demonstrated.
The key position in the definition process turned out to be that
of group leader, a first-line supervisory position, in the corporate
R&Ddepartment. This person had sufficient direct involvement
in the research activities to perform technical linking activities,
sufficient contact with the business side to be aware of market
needs and start the need linkingactivities, and sufficient
experience of the corporate tradition to know what might be
included in corporate strategy.3 Fermentation Products, Improved Plastics, Farming Systems, and Medical Equipment all
clearly illustrated the importance of the group leader in the
definition process. Fibre Components and Environmental Systems involved hig her levels of management in a very superficial
way in the initiatingphase, but it was the group leader who was
able to perform the concrete linkingactivities, and the higher
level involvement soon became very remote even in these two
cases.
Product Championing: Linking Definition and Impetus
Because group leaders were most deeply involved in the
definition process, they tended to take on the productchampioning activities (Schbn, 1967) that formed the connection between the definition and impetus processes. Product
championing was required to turn a new idea into a concrete
new project in which technical and marketing development
could begin to take shape. These activities required the abilityto
mobilize the resources necessary to demonstrate that what
conventional corporate wisdom had classified as impossible
was, in fact, possible. To overcome difficulties in resource
procurement resulting from this conventional wisdom, product
champions acted as scavengers, reaching for hidden or forgotten resources to demonstrate feasibility. SURF, for instance,
demonstrated the validity of its need for pumps by using
modified pumps from the corporate reserve list.4
Product championing also set the stage for the impetus process by creating market interest in the new product, process, or
system while, from the corporate point of view, it was still in the
definition process. To do so, the product champion sometimes
232/ASQ,
June 1983
cut corners in corporate procedures, as in a case where

unauthorized selling efforts were started from the R&Dsite
before the project had become an official venture.5 ICVprojects
of the nature investigated in this study thus had to be fought for
by their originators. Hiding their efforts until they could show
positive results clearly had survival value for product champions. Once such positive results were available, however,
pressure began to build to give a project venture status and to
transfer it to the business development department, where the
impetus process took further shape.
The importance of product championing was especially clear in
the cases where itwas lacking. Inthe Fibre Components case, a
product champion had notyet emerged, and this hampered the
momentum of the project. The more careful balance between
the technical and business considerations fostered in this case
seemed to make the emergence of a champion more difficult.
In Improved Plastics, the original product champion returned to
more basic research, and the subsequent reorganization of the
pre-venture team with greater balance between R&Dand
business people made the emergence of a new product
champion more difficult. Inthe Farming Systems, Environmental Systems, and Medical Equipment cases, however, a product
champion was able to develop a single product or system
around which an embryonic business organization could be
formed.
IMPETUS
As the product champion in this case explained:

When we proposed to sell the ANA
product by our own selling force, there
was a lot of resistance, out of ignorance.
Management did numerous studies, had
outside consultants on which they spent
tens of thousands of dollars; they looked
at XYZ Company for a possible partnership. Management was just very unsure
about its marketing capability. I proposed to have a test marketing phase
with 20to 25 installations inthefield. We
built our own service group; we pulled
ourselves up by the "bootstrap." I guess
we had more guts than sense.
The impetus process of an ICVproject encompasses the

entrepreneurial and organizational stages of development.
Major impetus was received when a project was transferred
with venture status to the business development department.
At this time it acquired its own organization, general manager,
and operating budget, thus becoming an embryonic new business organization in the department. In the course of the
impetus process, the embryonic business grew into a viable
one-product business and then, possibly, into a more complex
new business with several products. The impetus process
reached its conclusion in the decision to integrate this new unit
into the operating system of the corporation as a freestanding
new division or as a major new department of an existing
division. The data indicate that there were no clear general
criteria that guided the decisions to transfer projects to the
business development department. Although formal screening
models existed and the participants in all cases were very able in
quantitiative analysis, there was little reliance on formal analytical techniques in the ICVprocess. This is understandable, since
each project was unique and could not easily be judged by prior
experience. Not surprisingly, the transfer decision thus tended
to be greatly influenced by the success of the productchampioning activities. The latter allowed a project to reach a
threshold level of commercial activity which, in turn, created
pressure for it to be given venture status. Farming Systems,
Environmental Systems, and Medical Equipment all manifested
this pattern. The data on these cases also indicate that after a
project was transferred, its further development was highly
dependent on the combination of strategic forcing and strategic
building activities and their corollary forms of strategic neglect.
These activitiestogether give shape to the impetus process.

233/ASO, June 1983
Strategic Forcing
Inthe first phase of the impetus process, product-championing
activities were transformed into strategic forcing by the entrepreneurial venture manager. This transformation happened
naturally, because, in the cases studied, the product champion
had become the venture manager. Even though normative
theory might question this practice, there were very strong
pressures to let the technically oriented product champion
become the venture manager. These pressures were in part
motivational, because product champions were attracted by the
opportunity to become general managers, but they also resulted because there was nobody else around who could take
over and maintain momentum. Strategic forcing required that
the venture manager concentrate his efforts on the commercialization of the new product, process, or system. Inparticular,
it required a narrow and short-term focus on market
penetration.
The Medical Equipment case illustrates successful strategic
forcing. Under the impulse of a product champion/venture
manager, this ICVproject doubled its sales volume each year for
five consecutive years. This created the beachhead for further
development into a new, mature business.6 Such successful
strategic forcing created a success-breeds-success
pattern
that allowed the new venture to maintain support from top
management and facilitated collaboration from people in other
parts of the corporation who liked to be part of the action of a
winner. Inaddition, the success of strategic forcing allowed the
emerging venture organization to acquire substantial assets
that could not easily be disposed of, thus committing the
corporation.7
The Environmental Systems case, on the other hand, illustrates
unsuccessful strategic forcing. Inthis case, premature commercialization caused strategic forcing to degenerate into mere
selling, and technical people were forced to spend their time
correcting the technical flaws of systems already sold. The
resulting failure-breeds-failure pattern led first to a reduction of
the control of the product champion/venture manager, then to
management-by-committee, then to the termination of the
venture.
6
In the words of the venture manager:

We were convinced that we could develop simultaneously domestically and
internationally. We were fearless, and,
management being ignorant, we just
started to do it. What we did was, in fact,
a parallel international new development. That made our sales 55 percent
larger and allowed a larger profit fraction. If we had not done this, we might
have lost the business.
7
In the words of one of the key participants

in a venture:
The mechanism is to double each year
your size. The next step is then to acquire
assets that are not easily disposed of.
Then management cannot get rid of you
that easily, and you can relax if you have
a bad year.
The corollary of successful strategic forcing, however, was

strategic neglect of the development of the administrative
framework of the new venture. Strategic neglect refers to the
more or less deliberate tendency of venture managers to attend
only to performance criteria on which the venture's survival is
criticallydependent; that is, those related to fast growth. To
carry out the strategic forcing efforts, the entrepreneurial
venture manager attracted or was assigned generalist helpers
who usually took care of more than one of the emerging
fuctional areas of the venture organization. This was inexpensive and worked sufficiently well until the volume of activity
grew so large that operating efficiency became an important
issue. Also, as the new product, process, or system reached a
stage of maturity in its life cycle, the need for additional new
product development was increasingly felt. To deal with the
operating problems and to maintain product development,
some of the generalists were replaced with functional specialists who put pressure on the entrepreneurial venture man2341ASQ, June 1983
ager to pay more attention to administrative development. In

the cases studied, this led to severe friction between the
venture manager who continued to be pressured by forces in
the corporate context to maintain a high growth rate, and the
functional specialists.8
In the successful Medical Equipment venture, the venture
manager neglected the administrative development of the
venture and experienced increasingly strong conflicts with the
professional functional managers brought in to replace the
generalists. This became a problem especially in manufacturing. The venture manager also neglected to maintain close
relationships with the corporate R&Dgroup and focused everything on development efforts related to the original product.
The venture R&D group, seeking its own identity, sealed itself
off from corporate R&D.9One of the problematic results of this
was that the flow of new product development never got under
control. Eventually, the organizational problems and the difficulties in new product development required the replacement of
the venture manager.
This study of ICVthus reveals an important dilemma in the
process of radicalcorporate innovation. Successful strategic
forcing is required if a project is to gain and maintain impetus in
the corporate context. Yet, the very success of strategic forcing
seems to imply strategic neglect of the administrative development of the venture. This, in turn, leads to the ironic result
that the new product development may become a major
problem, and to the tragic result that the entrepreneur may
become a casualty in the process of gaining a beachhead for
the venture.
Strategic Building
Arrow (1974) uses "salutory neglect" to

denote the situation in which problems for
which there are no satisfactory solutions
are not placed on the agenda of the organization. Strategic neglect, independently
observed in the present study, has a similar
meaning. Arrow points out that neglect is
never productive. In the long run, and from
the perspective of the larger system, this
may be true, and of course the larger system will, in time, correct for neglect. From
the perspective of the entrepreneurial actor, however, strategic neglect of administrative issues was the necessary cost of
forcing growth.
9
Inthe words of one person who was transferred from corporate R&Dto the venture:
We were, at the time, basically separated
from the group in the venture. The group
there wanted to identify itself. They did it
to such an extent that they put a wall
between themselves and us.... In a way,
it was ironic. We were funded by the
venture, and the technology that we developed was not accepted by them!
Successful strategic forcing was a necessary, but not sufficient, condition for the continuation of the impetus process.
Strategic forcing had to be supplemented by strategic building
activities if the project was to overcome the limitations of a
one-product venture and maintain the growth rate required for
continued support from corporate management. Strategic building took place at the level of the business development (BD)
department manager (the venture manager's manager). Thus,
consistent with Kusiatin's (1976) and von Hippel's (1977) findings, the present study identifies the venture manager's manager as a key position in the ICVprocess.
Strategic building involved the articulation of a master strategy
for the broader field of new business development opened up
by the product champion/venture manager and the implementation of this strategy through the agglomeration of additional
new businesses with the original venture. This involved
negotiating the transfer of related projects from other parts of
the corporation and/or acquisition of small companies with
complementary technologies from the outside.
The Medical Equipment case illustrates successful strategic
building. From year to year, the written long-range plans
showed an increase in depth of understanding of what the real
opportunity was. Strategic plans grew more specific, and there
was a progression in identifying problems and solving them.
Based on this articulation of the principles underlying success,
the BD managernegotiatedthe transferof one majormedically

235/ASQ,June 1983
related project from one of the divisions and was able to identify
suitable acquisition candidates and convince top management
to provide the resources to get them.
Strategic building was iterative in nature. The evolving master
strategy reflected the learning-by-doing that resulted from the
assessment of the success of the strategic forcing efforts of
the venture manager. The BD manager learned to understand
the reasons for the success of these efforts and used this
insightto furtherarticulate the strategy. This, in turn, increased
his credibility and provided a basis on which to claim further
support of the venture.10
The Environmental Systems case illustrates how failure to
understand the nature of the opportunity prevented further
progress. Over a five-year period, the long-range plans remained vague about what the opportunity was. There was no
progress in terms of identifying and then solving problems. An
acquisition was actually made, but it turned out to be as much
technically flawed as the original system around which the
venture was formed.
The Farming Systems case illustrates how the impetus received from fairly successful strategic forcing can slow down,
and even halt, when strategic building is lacking. Only after a
new BD manager took over and an analysis was made of the
underlying principles of the business opportunity did the impetus process pick up again. The new BD manager discarded
the original product, which had been the vehicle for strategic
forcing, and articulated a new master strategy that led first to
the redirection of the R&Defforts and then to the acquisition of
two small companies with complementary technology.
10
Explaining his approach, one BD manager

said:
First, I look for demonstrated performance on an arbitrarily chosen-someFor
times not even the right one-tactic.
instance, developing a new analyzer may
not be the right move, but it can be done
and one can gain credibility by doing it.
So, what I am really looking for is the
ability to predict and plan adequately. I
want to verify your claim that you know
how to predict and plan, so you need a
"demonstration project" even if it is only
an experiment. The second thing that I
look for is the strategy of the business.
That is the most important milestone.
The strategy should be attractive and
workable. Itshould answerthe questions
where you want to be in the future and
how you are going to get there.... And
that, in turn, allows you to go to the
corporation and stick your neck out.
Strategic building, like strategic forcing, was accompanied by

strategic neglect in the Medical Equipment case. Because
forces in the corporate context emphasized fast growth, the
BD manager got absorbed in the search and evaluation of
companies that could be acquired, in negotiations with divisions
to transfer related projects, and in courting top management.
The coaching of the venture manager was, again more or less
deliberately, neglected, which seemed to suit the venture
manager. As a result, the emerging administrative problems in
the venture organization deteriorated from petty and trivialto
severe and disruptive, and some high-quality people left the
venture.
Right after his replacement, this manager

observed:
The personal orientations of the venture managers further

reinforced this tendency in the cases in my study. The venture
manager of Medical Equipment complained about a lack of
guidance from the BD manager, but he also pointed outthat the
situation gave him leeway for his mistakes. Furthermore, he
pointed out that because the venture was growing very fast,
there was little time for coaching. He also admitted that his
style was probably considered a bit "adversarial" by the BD
manager, and that this did not facilitate the coaching process.
I should have gotten help from my manand education.

agement-counseling
Most venture managers tend to come
from the technology side because these
ventures require a lot of high technology
input. But in the technology area there is
relatively little need for broad general
management skill development. I was
lacking that kind of judgment.
The venture manager of Environmental Systems also complained about a lack of guidance."1 This manager, however,
admitted that he had been eager to get the venture manager's
job in spite of his lack of experience. Others in the venture
organization pointed tothis manager's stubbornness and lackof
responsiveness to others' inputs.
11
236/ASQ, June 1983
The present study thus suggests a second important dilemma

in the strategic management process. The BD manager can
spend more time trying to guide the impetuous venture manager, but this may both interfere with the strategic forcing
efforts of the venture manager and limit the time available to
the BD manager for strategic building activities. Or, he can leave
the venture manager alone and let him run his course until the
problems in the growing venture organization require his replacement, but by that time the venture itself should have
reached a viable position in terms of commercial activity. The
data suggest that the forces exerted by the corporate context
-the emphasis on fast growth -seem to favor the second of
these possibilities.
Successful strategic forcing and strategic building created a
new business organization with several products and a sales
volume of about 35 million dollars in the case of Medical
Equipment, but important managerial problems remained to be
solved. First,the effects of the strategic neglect of the administrative framework of the venture became particularlypronounced. This administrative instability was exacerbated by
the factthatthere was not yeta strong common orientation, and
there was still a lot of opportunistic behavior on the part of
some key participants in the venture organization, who seemed
to work more to improve their resumes to get a better position
elsewhere than for the overall success of the venture. Also,
the delayed effects of the strategic neglect of new product
development in the original area of business manifested themselves. Furthermore, strategic building efforts had led to the
creation of a complex new business organization, where
growth could no longer be maintained solely by the hardwork of
the venture manager. New strategies forthe different business
thrusts had to be generated by the organization, but this
required that people work in a strategic planning framework in
which the concerns of the different new business thrusts could
be traded off and reconciled, and the participants were still
learning to do this.
Inaddition to these internal managerial problems, this new
venture also had to cope with the problem of securing its
position in the corporation. The venture's size made it visible in
the external and internal environments, and corporate management became increasingly aware of the differences in
modus operandi between the new business and the rest of the
corporation and of the effects of these differences on the
corporate image. NVD management thus was faced with the
problem of convincing corporate management that the new
venture was compatible with the rest of the corporation and
was moving toward institutionalization.
STRATEGICCONTEXT
For institutionalization to take place, an area of new venturing
must become integrated into the corporation's concept of
strategy. Adaptation of corporate strategy at GAMMA involved
complex interactions between managers of the NVD and
corporate management in the process of strategic context
determination.
Strategiccontext determinationrefers to the politicalprocess

throughwhich middle-levelmanagersattempt to convince top
237/ASQ,June 1983
management that the current concept of strategy needs to be

changed so as to accommodate successful new ventures.
Strategic context determination constitutes an internal selection mechanism that operates on the stream of autonomous
strategic behavior in the firm. The key to understanding the
activation of this process is that corporate management knows
when the current strategy is no longer entirely adequate but
does not know how it should be changed until, through the
selection of autonomous strategic initiatives from below, it is
apparent which new businesses can become part of the
business portfolio.12
Criticalactivities in this process involve delineating new fields of
business development and retroactive rationalizingof successful new venture activities. The link between the process of
strategic context determination and the impetus process of a
particularnew venture is constituted by organizational championing activities.
Organizational Championing: Linking Impetus and
Strategic Context Determination
The case data indicate that during the impetus process, organizational championing activities became the crucial linkbetween
the emerging new business organization and the corporate
context. Organizational championing involved the establishment of contact with top management to keep them informed
and enthusiastic about a particulararea of development. This, in
turn, involved the ability to articulate a convincing master
strategy for the new field, so as to be able to communicate
where the development was leading and to explain why
support was needed for major moves. These activities were
also performed at the level of the business development
manager.
Organizational championing was, to a large extent, a political
activity. The BD manager committed his judgment and put his
reputation on the line. Astute organizational champions learned
what the dispositions of top management were and made sure
that the projects they championed were consistent with the
current corporate strategy. More brilliantorganizational champions were able to influence the dispositions of top management and make corporate management see the strategic
importance of a particularnew business field for corporate
development.
12
The identification of the process of

strategic context determination leads to a
major extension of the process model. It
suggests that the corporate context is
more complex than was revealed by Bower's (1970) study of strategic capital investment projects. These projects were
situated in the operating system of the
corporation. Even t houg h t hey were clea rly
strategic because of the large amounts of
resources involved, they did not require a
change in the business portfolio of the
corporation. These projects fell within the
scope of and were induced by the current
concept of strategy of the corporation.
Organizational championing required more than mere political

savvy, however. It required the rare capacity to evaluate the
merit of the proposals and activities of different product
champions in strategic rather than in technical terms. Thus, in
the Medical Equipment venture, a sound master strategy for
the new venture and corresponding strategic building moves
allowed the organizational champion to convince top management that the medical field was an attractive and viable one for
the corporation. In the Environmental Systems venture, on the
other hand, the failure to come up with a master strategy
prevented the organizational champion from obtaining the
resources needed to straig hten out the technological problems
of the new venture and prevented him from engaging in
strategic building. His organizational championing was limited
to gaining more time, but eventually top management concluded that the opportunity just wasn't there. Finally,in the
238/ASQ, June 1983
Farming Systems venture, new impetus was developed as a

result of the involvement of the same person who was the
organizational champion in Medical Equipment.
Delineating
Through organizational championing based on strategic building, middle-level managers were capable of delineating in
concrete terms the content of new fields of business development for the corporation. It is a critical finding of this study that
these new fields became defined out of the agglomeration of
specific commercial activities related to single new products,
processes, or systems, developed at the level of venture
projects rather than the other way around. Delineating activities
were thus iterative and aggregative in nature. This was clearly
reflected in the written long-range plans of the NVD in 1975,
which stated: "Instead of dealing with an ever-growing number
of separate arenas, the NVD should henceforth focus its
attention on a critical few major fields, within each of which
arenas may be expanded, grouped together, or added."
Retroactive Rationalizing
To be sure, corporate management, too, got involved in the
process of strategic context determination. Top management
gave indications of interest in venture activity in certain general
fields and expressed concern about the fit of ongoing ICV
activities with corporate resources and strategy. Inthe final
analysis, however, corporate management's role was limited to
rejecting or rationalizing,retroactively, the ICVinitiatives of
lower-level participants in fields delineated by middle-level
management.
These findings corroborate and extend the findings of previous
research. They confirm the critical role of middle-level managers in shaping the strategy of internal development in the
diversified major firm (Kusiatin, 1976). More generally, these
findings also extend Kimberly's (1979) observation of the
paradox that the success of a new, nonconformist unit creates
pressures in the larger organizational context toward conformity, thereby affecting the very basis of success. Entrepreneurial and institutional existence seem to be inherently discrete
states, and middle-level management needs to bridge the
discontinuity.
STRUCTURAL CONTEXT
Given the limited substantive involvement of corporate management in the process of strategic context determination, how
do they try to exert control over the ICVprocess? The present
study suggests that they did so by structuring an internal
selection environment.
Structuring
As in the situation studied by Bower (1970), corporate management relied on the determination of the structural context in
its attempts to influence the strategic process concerning ICV.
The structural context includes the diverse organizational and
administrative elements whose manipulation is likely to affect
the perception of the strategic actors concerning what needs to
be done to gain corporate support for particularinitiatives. The
creationof the NVDas a separate organizationalunit,the

definitionof positionsand responsibilitiesinthe departmentsof
239/ASQ,June 1983
the NVD, the establishment of criteria for measuring and

evaluating venture and venture-manager performance, and the
assignment of either entrepreneurially or administratively inclined managers to key positions in the NVD all seemed
intended to affect the course of ICVactivity.
The corporate level seemed dominant in the determination of
structural context. Corporate management's manipulations of
the structural context seemed to be guided primarilyby
strategic concerns at their level, reflecting emphasis on either
expansion of mainstream businesses or diversification, depending on perceptions at different times of the prospects of current
mainstream businesses.
These changes in structural context did not reflect a wellconceived strategy for diversification, however, and seemed to
be aimed at consolidating ICVefforts at different levels of
activity rather than at guiding and directing these efforts. The
NVD was created in the early seventies because people in the
divisions had been engaging in what some managers called a
"wild spree" of diversification efforts. Corporate management
wanted to consolidate these efforts, although at a relatively
high level of activity. Key managers involved in those earlier
decisions pointed out that the direction of these consolidated
efforts was based on preceding lower level initiatives that had
created resource commitments, rather than on a clear corporate strategy of diversification.
The lack of a clear strategy for directing diversification was also
evident in 1977, when significant changes in the functioning of
the NVD took place. The newly appointed NVD manager
pointed out that corporate management had not expressed
clear guiding principles for further diversification beyond the
emphasis on consolidation and the need to reduce the number
of fields in which ICVactivity was taking place.
Selecting
Structural context determination thus remained a rather crude
tool for influencing ICVefforts. It resulted in an internal selection environment in which the autonomous strategic initiatives
emerging from below competed for survival. Inall the ICV
cases, strong signals of fast growth and large size as criteria for
survival were read into the structural context by the participants. This affected the process, if not so much the specific
content, of their behavior. The importance of product championing, strategic forcing, strategic building, and the corresponding forms of strategic neglect would seem to indicate this. The
inherent crudeness of the structural context as a tool for
influencing the ICVprocess provided, of course, the rationale as
well as the opportunity for the activation of the strategic
context determination process discussed earlier.
CONCLUSIONS AND IMPLICATIONS
The preceding discussion of a process model of ICVdoes not, to
be sure, treat the entire range of phenomena associated with
new ventures (Roberts, 1980) and corporate entrepreneurship
(Peterson, 1981). Reasons of focus as well as space constraints
prevent discussion of issues such as management of the
interfaces between business and R&D people and structural
and managerial innovation associated with the separate new
venture division.
240/ASQ, June 1983
The purpose here has been to construct a grounded model and

to use this model as a framework for insig hts into the generative mechanisms of one form of corporate entrepreneurship in
one type of large business organization. Verification is necessary to identify the generalizable relationships embedded in the
process model generated in this paper and to identify the
contingency factors that might explain variance across organizations in these relationships. The major insights gained from
this exploratory study of the ICVprocess are recapitulated
below and some major implications are briefly discussed.
First, the findings suggest strongly that the motor of corporate
entrepreneurship resides in the autonomous strategic initiatives of individuals at the operational levels in the organization.
High-technology ventures are initiated because entrepreneurially inclined technologists, usually at the group-leader
level, engage in strategic initiatives that fall outside the current
concept of corporate strategy. They risktheir reputations and, in
some cases, their careers, because they are attracted by the
perceived opportunity to become the general manager of an
important new business in the corporation. This stream of
autonomous strategic initiatives may be one of the most
important resources for maintaining the corporate capability for
renewal through internal development. Itconstitutes one major
source of variation out of which the corporation can select new
products and markets for incorporation into a new strategy.
Second, because of their very nature, autonomous initiatives
are likely to encounter serious difficulties in the diversified
major firm. Their proponents often have to cope with problems
of resource procurement, because they attempt to achieve
objectives that have been categorized by the corporation as
impossible. Because such initiatives require unusual, even
unorthodox, approaches, they create managerial dilemmas that
are temporarily resolved through the more or less deliberate
neglect of administrative issues during the entrepreneurial
stage. The success of the entrepreneurial stage thus depends
on behaviors that, paradoxically, have a high probabilityof
eliminating the key actors from participation in the organizational stage. There seems to be an inherent discontinuity in the
transition from entrepreneurial to institutionalized existence, as
well as a possible asymmetry in the distribution of costs and
benefits for the actors that may underlie the myth of the
entrepreneur as tragic hero in the large corporation.
Third, the study of ICVelucidates the key role of middle-level
managers in the strategy-making process in the diversified
major firm. The venture manager's manager performs the
crucial role of linkingsuccessful autonomous strategic behavior
at the operational level with the corporate concept of strategy.
Both the continuation of the impetus process of a particularICV
project and the change of the corporate strategy through the
activation of the process of strategic context determination
depend on the conceptual and politicalcapabilities of managers
at this level. The importance of this role seems to confirm the
above-mentioned discontinuity between entrepreneurial activity and the mainstream of corporate activity.
Fourth, corporate management's role in the ICVprocess seems
to be limited to the retroactive rationalizationof autonomous
strategic initiatives that have been selected
by both the external
environmentat the marketlevel and the internalcorporate

241/ASQ,June 1983
environment. Top management's direct influence in the ICV

process is through the manipulation of structural context.
These manipulations, however, seem to be predicated less on a
clearly formulated corporate strategy for unrelated diversification than on concerns of consolidation. Ironically,from this
perspective, the establishment of a separate, new venture
division may be more a manifestation of corporate management's uneasiness with autonomous strategic behavior in the
operating system than the adaptation of the structure to
implement a clearly formulated strategy. The present study
thus suggests that the observed oscillations in ICVactivity at
GAMMA may have been due to the lack of articulation between
these manipulations of the structural context and a corporate
strategy for unrelated diversification. It also provides further
corroboration for the similar findings of Fast (1979) on the
unstable position of NVDs in many corporations and for Peterson and Berger's (1971) suggestion that top management may
view corporate entrepreneurship more as insurance for coping
with perceived environmental turbulence than as an end in
itself.
Implications for Organization Theory and Strategic Management
The research findings presented in this paper can be related to
the current discussions in organization theory of the validity of
rationalversus natural selection models to explain organizational growth and development (Pfeffer and Salancik, 1978;
Aldrich, 1979; Weick, 1979). Relatively successful, large diversified major firms like GAMMA would seem to be representative of the class of organizations that have sufficient control over
their required resources to escape, to a great extent, the tight
control of external selection and to engage in strategic choice
(Child, 1972; Aldrich, 1979). The detailed, multilayered picture
of the strategic management process presented in this paper
suggests, however, that these strategic choice processes,
when exercised in radical innovation, take on the form of
experimentation and selection, rather than strategic planning.
This is fundamentally different from the view that administrative systems "program" their own radicalchange (Jelinek,
1979).
Further research is needed to establish the conditions under
which different systems for innovation in organizations can be
adequate. The limited evidence of the present study, however,
suggests that the tight coupling implied in the institutionalized
approach may be inadequate for organizations with multiple,
mostly mature technologies in their operating system. Inan
organization like GAMMA, there seems to be relatively little
opportunity for generating radical innovation from within the
operating system through the imposition of a strategic planning
approach.
Large, complex business organizations have separate variation
and selection mechanisms. Previously unplanned, radicallynew
projects at the product/market level are generated from the
relatively unique combination of productive resources of such
firms. Not all of these projects are adopted, not so much
because the market mayturn outto be unreceptive but because
they must overcome the selection mechanisms in the internal
administrativeenvironmentof the firm,which reflect, normally,

242/ASQ, June 1983
the current strategy of the corporation, i.e., the retained wisdom of previously selected strategic behavior. Thus, the experimentation and selection model draws attention to the possibility that firms may adopt externally unviable projects or may fail
to adopt externally viable ones and provides a clue to why firms
occasionally produce strange innovations.13 This analysis posits
a conceptual continuity between internal and external selection
processes, analogous to Williamson's (1975) analysis of external and internal capital markets, to explain the existence of the
conglomerate form of the divisionalized firm. Because corporate entrepreneurship, as exemplified by the ICVactivities in
this paper, seems to differ from traditional individualentrepreneurship, as well as from traditional organizational economic
activity, it may be necessary to devise different arrangements
between the corporate resource providers and their entrepreneurialagents. Further research, both theoretical and empirical,
would seem useful here.
The insig hts generated by the present study also have some
implications for further research on the management of the
strategy-making process in general. Comparative research
studies of a longitudinal-processual nature, carried out at multiple levels of analysis, are necessary to document and conceptualize the multilayered, more or less loosely coupled network
of interlocking, simultaneous, and sequential key activities that
constitute the strategy-making process. Following Bower
(1970), the present study has found it useful to focus the
research on a particularstrategic project rather than on the
strategy-making process in general. This is consistent with
Quinn's (1980: 52) observation that top managers "deal with
the logic of each subsystem of strategy formulation largely on
its own merits and usually with a different subset of people." A
concrete focus, it would seem, is more likelyto produce data on
the vicious circles, dilemmas, paradoxes, and creative tensions
that are embedded in the strategy-making process.
Comparative analysis of process models of various strategic
projects could produce grounded concepts and categories that
would initiallybe somewhat rudimentary and evocative. Hopefully, these would stimulate the imagination of other scholars
and provide the base for more formal and precise concepts of
managerial activity in the strategy-making process. Eventually,
this could lead to a general theory of the management of
strategic behavior in complex organizations and to the conceptual integration of content and process, formulation and
implementation.
13
In the course of the present study, anecdotal evidence for the emergence
of very
unusual projects was amply available. In
one case, a scientist pulled out a file with a
whole series of such abortive projects, e.g.,
the mining of gold from sea water.
The present study may then be viewed as an attempt to

augment the substratum of rudimentary and evocative concepts and categories. One result of this attempt is the identification of the new concepts of autonomous strategic behavior
and strategic context determination and categories of key
strategic activities. Further research along these lines may be
able to provide a clearer understanding of the interactions
between strategy, structure, and managerial activities and
skills.
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A Process Model of Internal Corporate Venturing in The Diversified Major Firm

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A Process Model of Internal Corporate Venturing in the Diversified Major Firm

Author(s): Robert A. Burgelman

This paper reports findings of a field study of the internal

? 1983 by Cornell University.

The research reported here investigates the process through

create separate units within the corporate structure to facilitate

Internal Corporate Venturing

coding, and analysis of the data. Data must be collected until

Figure 1. The structure of GAMMA Corporation.

Data were obtained on the functioning of the NVD.The charters

between the corporate R&D department and divisional R&D

Internal Corporate Venturing

The research also involved the study of documents. As could be

Reached by Six ICV Projects

Real time observations

This research design thus resulted in seven case histories. At

Internal Corporate Venturing

(6), the strategic context, which

allows successful ICVprojectsto become retroactivelyratio229/ASQ,June 1983

Figure 2. Key and peripheral activities in a process model of ICV.

of activities in the process

activities in the process

Figure 3. Flow of activities in a process model of ICV.

nalized by corporate management in fields of new business

Internal Corporate Venturing

was a result, not a determinant of the impetus process. Inthe

(Schbn, 1967) as the dominantmode of conceivingof a new

This is how the originator of the medical

Argyris and Schbn (1978: 214) noted a

Said the group leader:

An important characteristic of ICVproject definition was its

Internal Corporate Venturing

cut corners in corporate procedures, as in a case where

As the product champion in this case explained:

The impetus process of an ICVproject encompasses the

These activitiestogether give shape to the impetus process.

In the words of the venture manager:

In the words of one of the key participants

The corollary of successful strategic forcing, however, was

Internal Corporate Venturing

ager to pay more attention to administrative development. In

Arrow (1974) uses "salutory neglect" to

the BD managernegotiatedthe transferof one majormedically

Explaining his approach, one BD manager

Strategic building, like strategic forcing, was accompanied by

Right after his replacement, this manager

The personal orientations of the venture managers further

I should have gotten help from my manand education.

236/ASQ, June 1983

Internal Corporate Venturing

The present study thus suggests a second important dilemma

Strategiccontext determinationrefers to the politicalprocess

management that the current concept of strategy needs to be

The identification of the process of

Organizational championing required more than mere political

Internal Corporate Venturing

Farming Systems venture, new impetus was developed as a

creationof the NVDas a separate organizationalunit,the