Companies need to rethink their innovation strategies in an increasingly disruptive business environment. The long-term success of large established companies depends not only on their ability to leverage their current capabilities and improve efficiency but also on taking risks and exploring unknown areas. To meet this challenge, established companies are increasingly relying on corporate incubators to fuel innovation and growth with entrepreneurial mindset. Drawing on Zollo and Winter’s (Organization Science_13:339-351, 2002) deliberate learning model in conjunction with Christensen’s [Christensen, C.M., Anthony S.D., and Roth E.A, Seeing What’s Next? Using the Theories of Innovation to Predict Industry Change, 2004] resource-processes-values (RPV) theory, this paper attempts to answer the question “how can the entrepreneurial mindset fostered in corporate incubators drive the innovation capabilities in parent companies?” The study of four corporate incubators set up by companies from different industries reveals several factors that enable the entrepreneurial spirit fostered by corporate incubators to boost the innovation capability in their parent companies. These factors comprise the recruitment of employees with entrepreneurial potential, investments in knowledge articulation and codification, and a leadership that legitimizes the incubator as a means for the company to develop new ideas and provide support to entrepreneurs inside the organization.
Introduction
The accelerating pace of technological change is leading to the redefinition of many industries, forcing companies to make innovation their priority (Dobbs, Manyika, & Woetzel, 2016). To be able to compete with game-changing newcomers, large established companies increasingly look to start-ups as a significant source of innovation (Kohler, 2016). Start-ups launch new products and services and devise new business models that disrupt the competitive advantages of incumbent firms (Roessler & Velamuri, 2015). Hence, although the evidence is far from comprehensive, start-ups are considered more innovative than established firms (Criscuolo, Nicolaou, & Salter, 2012). To benefit from the entrepreneurial and innovative dynamism of start-ups, large companies have begun to set up corporate incubators, which have emerged as a modern tool for innovation management (Weiblen & Chesbrough, 2015).
Becker and Gassmann (2006, p. 2) define corporate incubators as “specialized corporate units that hatch new businesses by providing physical resources and support” which is the definition we will adopt for the purposes of this paper. Their role is to develop new growth opportunities for the incubator’s parent company (IPC) by enabling the development of small teams capable of operating in a more flexible and unbureaucratic environment, which certainly increases the pace of their actions. In addition, incubatees are encouraged to adopt alternative approaches that are innovative to IPC’s traditional thinking and organizational patterns (Von Zedtwitz, 2003).
However, not all companies that have set up internal incubators fully exploit the true potential of these structures to generate innovation and strengthen their competitive advantage. The combination of entrepreneurial activity and corporate capabilities seems to be ideal for fostering innovative projects, but the inherent differences between large companies and start-ups make their collaboration a challenge (Kohler, 2016; Weiblen & Chesbrough, 2015). To capitalize on incubatees’ entrepreneurial mindset and innovative potential, IPCs must create the necessary conditions to detect and capture organizational learning occurring in their corporate incubators.
The existing literature offers many different best-practice approaches for corporate incubators (e.g., Kohler, 2016; Von Zedtwitz, 2003; Weiblen & Chesbrough, 2015). But only limited attention is paid to the opportunity to foster entrepreneurial spirit within an organization through internal incubation. Therefore, we propose to answer the following question: “how can the entrepreneurial mindset fostered in corporate incubators drive the innovation capability in parent companies?” Using Zollo and Winter’s (2002) deliberate learning model in conjunction with Christensen, Anthony, and Roth (2004) resource-processes-values model, we study four corporate incubators set up by companies from different industries in order to examine and explain the mechanisms by which the entrepreneurial mindset fostered within an incubation structure can be transferred back to its IPC.
