The Strategic Use of Corporate-Startup Engagement

Abstract

In the face of technological discontinuities and disruption, convergence and increased global com- petition, established firms need to transform their business models more rapidly, more frequently and more radically than in the past. In line with the open innovation paradigm, which states that firms can and should use both internal and external ideas and paths to market, corporates are now actively engaging with startups to deal with these rapidly changing conditions. Recently, an increase is also witnessed in the types of corporate-startup engagement that are available to corporates to create, interact with, collaborate with, invest in or acquire startups. History however shows that corporate- startup engagement is by no means easy. In the past, many engagement mechanisms such as corporate venturing have been widely adopted and soon abandoned. The lack of setting and pursuing clear objectives and failure to establish a link between startup engagement and overall corporate strategy are considered important reasons for the lack of long-term success. This research contributes to the strategic use of corporate-startup engagement by corporate management by exploring the relation between corporate strategy and the concepts of open innovation, corporate venturing and corporate-startup engagement. A new framework has been developed linking open innovation (with corporate-startup engagement as its subset) to corporate strategy and the innovation ecosystem.