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Examining the decision to spin off new corporate ventures

Author

Listed:
  • Isabel Pizarro

    (Department of Business Administration, Universidad Pablo de Olavide)

  • Julio DeCastro

    (Department of Strategic Management & Entrepreneurship Instituto de Empresa, Madrid)

  • Jose Luis Gal‡n

    (Department of Business Administration, Universidad de Sevilla)

Abstract

When developing a new venture, a company is faced with the problem of balancing between its autonomy and its control. Utilizing both transaction-cost and resource-based theories, we analyze how entrepreneurial managers’ perceptions of the strategic relationship between firm and corporate venture (CV) determine the choice of internalizing or externalizing the CV. The results indicate that managers would encourage externalization of a CV if its near-term profitability forecast were low; if the risks involved were high; or if the technological synergies with the firm were low. For high market relatedness, managers would encourage internalization of the CV when the importance of the new competences is high

Suggested Citation

  • Isabel Pizarro & Julio DeCastro & Jose Luis Gal‡n, 2011. "Examining the decision to spin off new corporate ventures," Working Papers 11.06, Universidad Pablo de Olavide, Department of Business Administration.
    • Handle: RePEc:pab:wpbsad:11.06
    as

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    File URL: http://www.upo.es/serv/bib/wpbsad/bsad1106.pdf
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    References listed on IDEAS

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    Keywords

    Corporate ventures; internalization; spin off; strategic importance; operational relatedness;
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