Despite the resources they possess, incumbent firms often lack the ability to develop new radical innovations, technologies, and business models to cope with fast technological changes in their industry and from other industries. In this regard, engaging with startups provides many benefits as it can constitute an effective way for incumbents to gain quick access to novel technologies, likely to disrupt their core business or relevant for entering new markets. Collaborating with startups may help in monitoring technology evolutions and market developments, and also brings more strategic flexibility than using internal R&D.
However, incumbent corporations engaging with startups may also face significant challenges. To begin, identifying the relevant startups is increasingly difficult as a result of their surging number.
Furthermore, major structural differences exist between incumbents and startups, often leading to difficulties in organizational compatibility. Lastly, determining whether and which third parties (e.g., accelerators or business incubators, etc.) to include in the process of engaging with startups also constitutes critical decisions for incumbents.
In this context, this research aims to address the current gap in the literature on the topic and to provide both managers and scholars with a better understanding of how the process of corporate engagement with startups unfolds, in particular in terms of internal and external governance. Indeed, while the corporate venturing and open innovation literature have identified several of the benefits and challenges involved, we still lack a good understanding of how this process is actually managed by corporations, and in particular which are the key success factors, governance structure and stakeholders involved. To that end, we use the entrepreneurial ecosystem as a lens and we draw on data collected from semi-structured interviews with senior executives from multiple multinational companies involved in corporate engagement with startups.