Exploring Determinants of Success in Corporate Ventures

Examines the characteristics of young corporate ventures (CV) that can aid in predicting the financial performance of these ventures. Data used in the analysis were obtained from the PIMS database. Eighty-four ventures that had an average age of eight years were analyzed. The results show that it is important for these ventures to be in high-growth industries. The third of the ventures examined that had the highest growth had a return on investment (ROI) that was three times that of those ventures in the slow growth industries. Further, the analysis shows that involvement of the parent company through shared facilities, customers, or marketing strategy does not impact the success of the CVs. With respect to the variables that a CV has some control over, those that have the greatest impact included market share, position in a growth-share matrix, timing of market entry, scope of market definition, product characteristics, and vertical integration. Given these results, managers of both the parent company and the CV can impact the financial success of the new venture. (SRD)