Internal corporate ventures’ similarity to and differentiation from parent firms

Objectives: Internal corporate venturing units (ICVUs) must strike a delicate balance to innovate: being similar enough to exchange resources with its parent firm, yet different enough from it to foster autonomy. Our goal is to understand how ICVUs and their parent firms enable ICVUs to achieve and maintain being both similar and different enough from their parent firms. Prior work: To understand how ICVUs can achieve being both similar and different enough from their parent firms, prior research focused on structural configurations. However, such structural approaches in the internal corporate venturing literature have theoretical and practical limitations. Theoretically, they treat the challenge of enabling ICVUs to be similar and different enough from their parent firms as a static condition that can be achieved through predefined structures or role specifications. This overlooks the relational dimension, that is, the complex day-to-day interactions between ICVUs and their parent firms. Yet, it is precisely these interactions that are decisive not only for achieving but, more importantly, for maintaining ICVUs being both similar and different enough. Practically, the literature on internal corporate venturing has focused almost exclusively on middle and top management teams. This overlooks the core workforce, that is, parent firms’ employees without management responsibilities. Overlooking this actor group is problematic as different actor groups within the parent firm have different understandings of their ICVU; especially the core workforce being the most critical. Furthermore, the core workforce is vital for the success of ICVUs, as they depend on their human resources and knowledge to innovate. Approach: We redefine the challenge of enabling ICVUs to achieve and maintain being similar and differentmenough from their parent firm from a static and structural to a relational and dynamic issue. To address this dynamic and relational dimension, we adopt boundary work as our analytical lens because it enables us to analyze the complex day-to-day interactions of ICVUs and their parent firms which influence similarity and difference over time. We chose a qualitative approach and followed two organizations over two-and-a-half years, thereby conducting 57 interviews (approx. 49 hours in total) and engaging in 10 informal exchanges and workshops (approx. 27 hours in total). We applied techniques consistent with grounded theory and the Gioia method. Results: We develop a process model of similarity and differentiation for ICVUs, showing that being similar and different enough is not a stable state. Instead, it is an unstable balance, conceptualized as oscillating continuously among being too similar, too different, and occasionally achieving moments of being similar and different enough. This unstable balance requires ongoing boundary work to access the core workforce’s resources whilst remaining sufficiently autonomous; and the unstable balance results from a complex interplay between the various actor groups at both the ICVUs and their parent firms engaging in boundary work increasing similarity or differentiation. Interestingly, not all boundary work is performed intentionally, which further complicates the unstable balance. We define this unintentional boundary work as boundary work that shapes boundaries without an actor’s awareness of either performing boundary work or the unintended consequences thereof. Implications and value: We found that for ICVUs being similar and different enough is a condition that is in an unstable balance. Although this allows the ICVUs to act autonomously and access resources, such an endeavor is fraught with friction. Crucially, unintentional boundary work in particular complicates efforts to achieve and maintain being similar and different.