Corporate Venture Capital Models for Promoting Radical Innovation

Abstract

Because of the substantial technical, market, organizational and resource uncertainties associated with radical innovation projects, project team members and the managers who sit on decision-making boards frequently view traditional resource allocation processes as ineffective. Yet, the resource acquisition effort necessitated by inefficient or ineffective project funding mechanisms requires substantial time and energy from the project team, thereby diminishing the capacity of the team to focus on resolving technical and market uncertainties. Firms recognizing this difficulty are experimenting with new corporate venture capital models. This exploratory study employs in-depth, semi-structured interviews with representatives of Lucent, 3M, Norte I Networks, and Proctor & Gamble to obtain a rich description of the venture capital models that are emerging in support of radical innovation.