**5.2 Corporate venturing: inside-out**

Investigating inside-out methods of corporate venturing, we first identify business accelerators. That is a process which provides various levels of support and could include funding and mentoring to start-up companies. Here, the large organization provides support to smaller, external start-ups, with the hope that they would innovate independently. If successful, the sponsoring company could absorb the smaller one, either the entire company or parts of its innovation outcomes.

Corporate spinoffs are well known. Those involve the sponsoring company developing a smaller organization that becomes somewhat independent of it, even *Corporate Entrepreneurship: Innovation in Global, Corporate Environments DOI: http://dx.doi.org/10.5772/intechopen.111805*


#### **Table 1.**

*Case study of inside***-***out corporate venturing using university expertise to create a corporate spinoff.*

though the sponsoring company may maintain some level of investment. Divestiture is similar, but in this case, the sponsoring company sells off its interest in the company it spins out. **Table 1** provides a case-study example of a corporate spinoff that used expertise from a research university.

Idea incubators are departments within an organization that develop ideas for new products, services, and companies, and they then manage a pipeline of those ideas.

With IP outlicensing, it is important to know that IP stands for intellectual property. That means the developer of that product or idea has legal rights to it. Licensing is a legal agreement that allows someone who does not hold the rights to the intellectual property to use it for product or service development and/or commercialization, for a fee to the license holder. In this case, the corporate sponsor holds the rights to the IP and licenses it to an external organization.

A joint venture is a business combination. In this situation, two independent organizations come together and develop a third, independent organization. The two organizations can have varying levels of investment in the organization according to their agreement; however, the joint venture is recognized as a third, independent organization.

Open innovation and crowd sourcing have become popular in recent years. Usually, we think of them from an outside-in perspective. However, here, in both methods, it is the innovators and corporate entrepreneurs who are developing the ideas or models that are then further developed outside the organization and then returned to it, if successful.

#### **5.3 Corporate venturing: outside-in**

The second area of corporate venturing acknowledged in the model is outside-in. Here, there are seemingly more methods; however, some of them are similar to those used in the inside-out model, except that they come from outside the organization and are pulled into it.

Of those that were not mentioned in the inside-out section, or that are in need further explanation, we begin with corporate venture capital (CVC). We have discussed venture capital in this chapter, and usually that is investment that is managed by an investment group that takes a measure of control of an organization they fund. In the CE model under corporate venture capital, a large organization would fund a start-up, and while that sounds like something that should be inside-out, it fits into outside-in. That is because after the organization provides funding, it expects to adopt the innovations discovered through the CVC, and then it commercializes them. At times, the funding organization absorbs the entire start-up organization that it helped fund through CVC.

Earlier we mentioned a business combination called a joint venture. That was in the inside-out section of corporate venturing. In this section of corporate venturing, we mention two other types of business combinations, and those are mergers and acquisitions. They are usually mentioned together and can be referenced as M&A (mergers and acquisitions). A merger is a business combination that primarily involves equals. They come together to form a third company, but unlike a joint venture, it is only that merged organization that survives. The other two organizations are absorbed into it. An acquisition is the outright purchase of another company. Many times, especially with independent start-ups, large corporate organizations will purchase them for their innovations, although there are other reasons to pursue an acquisition.

Another type of outside-in CV we mention is open innovation. There are different types of open innovation, but what they have in common is that they are all structured to pull innovation out of a typical R&D group and remove it from a formulaic process and into a more open environment. Similarly, crowd sourcing, which is also identified as outside-in corporate venturing, engages participation from individuals outside an organization, primarily for ideation or development of ideas for new products or services.

The next method is an R&D consortia, and that refers to efforts to pull in corporate entities, independent research groups, government entities or agencies or colleges and universities to collaborate to develop new innovations.

Finally, reverse innovation pitches engage smaller organizations and startups to add to innovation development in a larger organization. Here, the large organization develops a pitch, or several, to get the interest of some smaller organizations to work on the innovation issue, which is funded by the large organization.

#### **5.4 Strategic renewal**

The final category of our CE model is strategic renewal. Here again, we refer to earlier research conducted by Zahra for a definition. In it, he says strategic renewal, 'refers to revitalizing the company's operations by changing the scope of its business, its competitive approach or both' ([34], p. 1715). Under strategic renewal, we identify two specific types. One is a new business model, and the other is process reengineering. Business models refer to the way an organization creates and delivers value to its customers. It includes the types of products or services it will provide, the costs associated with developing those and the intended target markets for them. It also outlines how customers will access the product or service, whether that is in a retail outlet, directly from the company, or another method. Perhaps most importantly, a business model outlines how the company will make money.

Process Reengineering is a procedure that requires a company to completely revamp how it is conducting business by focusing on processes in the organization and redesigning them for better efficiency and better value.

*Corporate Entrepreneurship: Innovation in Global, Corporate Environments DOI: http://dx.doi.org/10.5772/intechopen.111805*
