SBANC Newsletter
January 24, 2006
Issue 405-2006
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QUOTE
"Most new jobs won’t come from our biggest employers. They will come
from our smallest. We’ve got to do everything we can to make entrepreneurial
dreams a reality."
--
Ross Perot
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FEATURE PAPER
Corporate Venture Capital and Innovation
The following paper was written by L. Gregory Henley of the University of South
Florida. It was presented
at
the
2006
USASBE/SBI Joint Conference in Tucson, Arizona.
Abstract
This article examines the strategic fit between large investing
firms and the small companies they invest in. Investigation of corporate
venture capital indicates that small companies having a low degree
of strategic fit with the investing
firm receive funding just as frequently as those that are closely aligned.
This is revealing because
few CEO’s would consider
acquiring another large firm that did not share a perceived high degree
of strategic fit with the focal firm’s core business. Even more
enlightening is that the majority of minority investments are in small
companies that are
vertically related to the investing
firm.
Introduction
To
remain competitive, firms must continually innovate. Firms have
responded by undertaking corporate entrepreneurship involving
(1) creating new businesses within the existing business and/or
(2) transforming existing businesses
through strategic renewal (Guth and Ginsberg, 1990) that alters business
resource patterns (Stopford
and Baden-Fuller, 1994). Internal or corporate venturing has received
the majority of
corporate entrepreneurship attention, both in academic research and
in managerial actions (Biggadike,
1979, Burgelman, 1983; Venkataraman et al., 1992). Yet, new ventures
may be more effective
when started outside the firm than inside (Fast and Pratt, 1981;
Weiss, 1981). In addition,
some large firms are risk-averse, reluctant to create change and
might suffer from a “liability of largeness” that
hampers their ability to produce radical innovations. As a result,
large firms may benefit from extending their boundaries by partnering
with and investing in small entrepreneurial
companies. The purpose of this paper is to introduce an underutilized
strategic
vehicle – the minority
investment - that corporate strategists can add to their arsenal
that already includes acquisition, internal ventures, joint ventures,
etc. Used strategically rather than to generate
quick financial returns as a traditional venture capitalist might,
the large firm can capitalize
on the innovative ability of small companies. This paper explores
corporate venture capital which
entails large firms taking minority equity stakes in smaller, entrepreneurial
companies that
may identify opportunities, develop products and implement new technologies
more quickly than the large
firm.
Read
the Entire Paper...
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CONFERENCES
The
Data Warehousing Institute
|
| Who: |
The
Data Warehousing Institute
|
| What: |
World
Conference
|
| Where: |
Caesars
Palace, Las Vegas, Nevada, USA |
| When: |
February
19-24, 2006 |
|
|
|
Sustainable
Opportunities Summit
|
| Who: |
Leeds
School of Business, University of Colorado at Boulder
|
| What: |
Sustainable
Opportunities Summit
|
| Where: |
Leeds
School of Business, Boulder, Colorado, USA |
| When: |
February
22-25, 2006 |
| |
|
2006
ACME Conference
|
| Who: |
Association
of Collegiate Marketeing Educator (ACME)
|
| What: |
2006 ACME Conference
|
| Where: |
Oklahoma
City, Oklahoma, USA |
| When: |
March 1-4, 2006 |
| |
|
JSBM
& the College of Business at Florida Atlantic University
|
| Who: |
Journal
of Small Business Management (JSBM)/College of Business
at Florida
Atlantic University
|
| What: |
2nd
Annual Office Depot Small Business Research Forum on
Small Business & Entrepreneurial Marketing
|
| Where: |
Ft. Lauderdale, FL |
| When: |
March 18, 2006 |
| |
|
International
Academy of
E-Business
|
| Who: |
International
Academy of E-Business
|
| What: |
6th
Annual Conference
|
| Where: |
Sheraton
Studio City Resort Hotel in Orlando, Florida, USA |
| When: |
March 23-26, 2006 |
|
|
|
CALLS FOR PAPERS
2006
Family Enterprise Research Conference
|
| Who: |
Schlegel Center
for Entrepreneurship
|
| What: |
2006 Family Enterprise Research Conference
(FERC)
|
| Where: |
Sheraton on the Falls in Niagara Falls, Ontario,
Canada |
| When: |
April 28-30, 2006 |
Submission
Deadline:
January 31, 2006
|
|
|
|
14th
Nordic Conference on Small Business Research
|
| Who: |
Entrepreneurship
& Small
Business Research Institute/ Swedish Foundation
of Small Business Research
|
| What: |
14th Nordic Conference on Small Business
Research
|
| Where: |
Stockholm, Sweden |
| When: |
May 11-13, 2006 |
Submission
Deadline:
February 1, 2006
|
|
|
|
The
Macromarketing Society
|
| Who: |
The Macromarketing
Society
|
| What: |
"Macromarketing
- The Future of Marketing?"
|
| Where: |
Queenstown, New Zealand |
| When: |
June 6-8, 2006 |
Submission
Deadline:
February 7, 2006
|
|
|
|
2006
CIBER Conference on Language & International Business
|
| Who: |
Georgia Institute
of Technology
|
| What: |
2006
CIBER Conference on Language & International Business
|
| Where: |
Atlanta, Georgia,
USA |
| When: |
April 5-9, 2006 |
Submission
Deadline:
February 17, 2006
|
|
|
|
Institute
for Business & Finance Research
|
| Who: |
Institute
for Business & Finance Research (IBFR) |
| What: |
The
2006 Global Conference on Business & Finance (GCBF)
|
| Where: |
Hotel
Herradura: Golf Resort & Conference Center in San Jose,
Costa Rica |
| When: |
May 31-June 3, 2006 |
Submission
Deadline:
March 17, 2006
|
|
|
|
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TIP OF THE WEEK
The
Source of Business Ideas
Do you recall seeing
a new product or service in a store, or maybe hearing about an idea
on
radio or television, and thinking, "Now,
why didn't I think of that?" In fact, most of the ideas that are
turned into new businesses, or result in "new and improved" products
and services, come from information and observations that we are surrounded
by every day. Does it seem to you that successful business owners must
possess unusual powers of observation or use top-secret strategies
unknown to anybody else when seeking ideas for new businesses or innovations
to their existing businesses? It's far more likely that these people
have learned to pay attention to the cues that are around them and
to ask many questions of things that most people take for granted,
such as the way Dave Kapell did when making Magnetic Poetry. This search
and capture of new ideas that lead to business opportunities is called
opportunity recognition. Researchers in the field of entrepreneurship
and small business believe that opportunity recognition behavior is
the most basic and important entrepreneurial behavior.
The exact reasons
why entrepreneurs seem to be better able to find ideas that work
are unclear. The notion of entrepreneurial alertness
is one that has captured the attention of scholars in the field.
This phrase means that entrepreneurs have a special set of observational
and thinking skills that help them identify good opportunities. Some
overlooked, without actually launching, a formal search for opportunities.
Others suggest that we also consider the motivations of entrepreneurs
to search for new ideas. For example, if an owner of a fast-food
restaurant
notices that customers are asking for substitutions of healthier
ingredients to the food items, she may be motivated to contact her
suppliers to
ask about obtaining new ingredients and to change the menu and increase
the healthy offerings on the menu to keep customers satisfied, possibly
bringing in more customers.
Ideas for new businesses
come form a great variety of sources. A person who desires to start
a business may
begin searching for opportunities
that exist in the marketplace, perhaps as a way to use skills and
knowledge
that he or she has acquired in college or in work experience. In
the nationwide Panel Study of Entrepreneurial Dynamics, a sample
of 480
entrepreneurs were asked whether the business idea or the decision
to start some kind of business came first:
What
Came First for New Businesses
|
| Business
idea |
37% |
| Decision
to start a business |
42% |
| Idea and
decision were simultaneous |
21% |
|
| Katz,
Jerome A., and Richard P. Green. Enterepreneurial Small
Business. New York: McGraw-Hill/Irwin, 2007. 79. |
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ANNOUNCEMENTS
Congratulations
to Dianne H.B. Welsh
Dianne
H.B. Welsh has been named the James W. Walter Distinguished Chair
of Entrepreneurship, Professor of Management, and Director of the
Florida Entrepreneur & Family Business Program in the John H.
Sykes College of Business at The University of Tampa. The Chair is
named in honor of one of Tampa Bay and Florida's great entrepreneurs
and the founder of Walter Industries, a NYSE company.
The
SBANC Newsletter is provided as a service to the members of our affiliates:
Academy of Collegiate Marketing Educators (ACME),
Association for Small Business & Entrepreneurship (ASBE),
Decision Sciences Institute (DSI),
Federation of Business Disciplines (FBD),
International Council for Small Business (ICSB),
Institute for Supply Management (ISM),
The International Small Business Congress (ISBC),
Marketing Management Association (MMA),
Small Business Administration (SBA),
Service Corps of Retired Executives (SCORE),
Small Business Institute (SBI),
Society for Marketing Advances (SMA),
United States Association for Small Business & Entrepreneurship
(USASBE), U.S.
Department of Veterans Affairs (VA), and Western Decision Sciences
Institute (WDSI). If you are interested in membership or
would like further information on one of our affiliates, please see
our web
site at http://www.sbaer.uca.edu
SBANC STAFF
Main Office Phone: (501) 450-5300
Dr.
Don B. Bradley III, Executive Director of SBANC &
Professor of Marketing;
Direct Phone: (501) 450-5345 Ashley
Ford, Development Intern
Olivia
Johnson, Development Intern Garion
McCoy, Development Intern
Brandon
Tabor, Development Intern
To subscribe or
unsubscribe to the SBANC Newsletter, please E-mail SBANC at sbanc@uca.edu |
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