Asia Pacific Journal of Management

, Volume 29, Issue 3, pp 729–752 | Cite as

Business groups and institutional upheaval in emerging economies: Corporate venturing in Korea



In this paper we detail the nature of market-oriented institutional upheaval and its implications for business groups in Korea during the late 1990s. Employing case study methodology we identify four projects that were nurtured under corporate venture programs in response to this upheaval: two internal incubating projects and two new venture investment projects. We analyze these cases employing the concepts of resource fit and organizational misfit. Based upon these in-depth case analyses we generate a conceptual framework that managers can rely on for the choice of organizing mode of corporate venture projects. We conclude by discussing managerial implications and future research directions.


Corporate venture program Financial crisis Market-oriented institutional upheaval Resource fit Organizational misfit Korea LG CNS LG Electronics 


  1. Ahlstrom, D., & Bruton, G. D. 2010. Rapid institutional shifts and the co-evolution of entrepreneurial firms in transition economics. Entrepreneurship: Theory and Practice, 34: 531–554.CrossRefGoogle Scholar
  2. Alakent, E., & Lee, S. 2010. Do institutionalized traditions matter during crisis? Employee downsizing in Korean manufacturing organizations. Journal of Management Studies, 47: 509–532.CrossRefGoogle Scholar
  3. Allen, S. A., & Hevert, K. T. 2007. Venture capital investing by information technology companies: Did it pay?. Journal of Business Venturing, 22: 262–282.CrossRefGoogle Scholar
  4. Amsden, A. H. 1989. Asia’s next giant: South Korea and late industrialization. New York and Oxford: Oxford University Press.Google Scholar
  5. Auerbach, C. F., & Silverstein, L. B. 2003. Qualitative data: An introduction to coding and analysis. New York: New York University Press.Google Scholar
  6. Bae, J., & Rowley, C. 2001. The impact of globalization on HRM: The case of South Korea. Journal of World Business, 36: 402–428.CrossRefGoogle Scholar
  7. Bae, J., Rowley, C., Kim, D. H., & Lawler, J. 1997. Korean industrial relations at the crossroads: The recent labour troubles. Asia Pacific Business Review, 3: 148–160.CrossRefGoogle Scholar
  8. Block, Z., & MacMillan, I. 1993. Corporate venturing: Creating new businesses within the firm. Boston: Harvard Business School Press.Google Scholar
  9. Block, Z., & Ornati, O. A. 1987. Compensating corporate venture managers. Journal of Business Venturing, 2: 41–51.CrossRefGoogle Scholar
  10. Bruton, G. D., & Rubanik, Y. 2002. Resources of the firm Russian high-technology startups and firm growth. Journal of Business Venturing, 17: 553–576.CrossRefGoogle Scholar
  11. Burgelman, R., & Valikangas, L. 2005. Venturing cycles. MIT Sloan Management Review, 46(4): 26.Google Scholar
  12. Burgers, J., Jansen, J., Van den Bosch, F., & Volderda, H. 2009. Structural differentiation and corporate venturing: The moderating role of formal and informal integration mechanisms. Journal of Business Venturing, 24: 206–220.CrossRefGoogle Scholar
  13. Burton, J. 2000. Seoul reform at risk as ruling party falters. Financial Times, Mar. 24: 12.Google Scholar
  14. Chesbrough, H. 1999. The organizational impact of technological change: A comparative theory of national institutional factors. Industrial and Corporate Change, 8: 447–485.CrossRefGoogle Scholar
  15. Chesbrough, H. 2000. Designing corporate ventures in the shadow of private venture capital. California Management Review, 42: 31–49.Google Scholar
  16. Christensen, C. M., & Raynor, M. E. 2003. The innovator’s solution: Creating and sustaining successful growth. Boston: Harvard Business School Press.Google Scholar
  17. Covin, J., & Miles, M. 1999. Corporate entrepreneurship and the pursuit of competitive advantage. Entrepreneurship: Theory and Practice, 23: 47–63.Google Scholar
  18. Covin, J. G., & Miles, M. P. 2007. Strategic use of corporate venturing. Entrepreneurship Theory and Practice, 31: 183–207.CrossRefGoogle Scholar
  19. Dean, T. J., Meyer, G. D., & DeCastro, J. 1993. Determinants of new-firm formations in manufacturing industries: Industry dynamics, entry barriers, and organizational inertia. Entrepreneurship: Theory & Practice, 17: 49–60.Google Scholar
  20. Dushnitsky, G., & Lenox, M. J. 2005. When do incumbents learn from entrepreneurial ventures? Corporate venture capital and investing firm innovation rates. Research Policy, 34: 615–639.CrossRefGoogle Scholar
  21. Dushnitsky, G., & Lenox, M. J. 2006. When does corporate venture capital investment create firm value?. Journal of Business Venturing, 21: 753–772.CrossRefGoogle Scholar
  22. Dushnitsky, G., & Shaver, J. 2009. Limitations to interorganizational knowledge acquisition: The paradox of corporate venture capital. Strategic Management Journal, 30: 1045–1064.CrossRefGoogle Scholar
  23. Eisenhardt, K. M. 1989. Building theory from case study research. Academy of Management Review, 14: 532–550.Google Scholar
  24. Fang, T. 2010. Asian management research needs more self-confidence: Reflection on Hofstede (2007) and beyond. Asia Pacific Journal of Management, 27: 155–170.Google Scholar
  25. Freeman, J., Carroll, G. R., & Hannan, M. T. 1983. The liability of newness: Age dependence in organizational death rates. American Sociological Review, 48: 692–710.CrossRefGoogle Scholar
  26. Gilbert, C. G. 2005. Unbundling the structure of inertia: Resource versus routine rigidity. Academy of Management Journal, 48: 741–763.CrossRefGoogle Scholar
  27. Gilbert, C. G. 2006. Change in the presence of residual fit: Can competing frames coexist?. Organization Science, 17: 150–167.CrossRefGoogle Scholar
  28. Gompers, P., & Lerner, J. 1999. The venture capital cycle. Cambridge: The MIT Press.Google Scholar
  29. Kanter, R. M. 1989. When giants learn to dance: Mastering the challenges of strategy, management, and careers in the 1990s. New York: Simon & Schuster.Google Scholar
  30. Kanter, R. M. 2001. Evolve!: Succeeding in the digital culture of tomorrow. Boston: Harvard Business School Press.Google Scholar
  31. Keil, T., McGrath, R., & Tukiainen, T. 2009. Gems from the ashes: Capability creation and transformation in internal corporate venturing. Organization Science, 20: 601–620.CrossRefGoogle Scholar
  32. Khanna, T., & Palepu, K. 1997. Why focused strategies may be wrong for emerging countries. Harvard Business Review, 75: 41–51.Google Scholar
  33. Khanna, T., & Yafeh, Y. 2007. Business groups in emerging markets: Paragons or parasites?. Journal of Economic Literature, 45: 331–372.CrossRefGoogle Scholar
  34. Kim, H. 2010. Business groups in South Korea. In A. M. Colpan, T. Hikino & J. R. Lincoln (Eds.). The Oxford handbook of business groups: 157–179. New York: Oxford University Press.CrossRefGoogle Scholar
  35. Kim, H., Hoskisson, R. E., Tihanyi, L., & Hong, J. 2004. The evolution and restructuring of diversified business groups in emerging markets: The lessons from chaebols in Korea. Asia Pacific Journal of Management, 21(1): 25–48.CrossRefGoogle Scholar
  36. Kim, L. 1997. Imitation to innovation: The dynamics of Korea’s technological learning. Boston: Harvard Business School Press.Google Scholar
  37. Lee, J. K., & Lim, C. S. 2008. A field study of the system of internal corporate venturing in public companies: A company case. The Korean Venture Management Review, 11(2): 65–92. in Korean.Google Scholar
  38. Lee, K., Peng, M. W., & Lee, K. 2008. From diversification premium to diversification discount during institutional transitions. Journal of World Business, 43: 47–65.CrossRefGoogle Scholar
  39. Lee, S. H., Beamish, P. W., Lee, H. U., & Park, J. H. 2009. Strategic choice during economic crisis: Domestic market position, organizational capabilities and export flexibility. Journal of World Business, 44: 1–15.CrossRefGoogle Scholar
  40. Lee, S. H., & Lee, S. M. 2009. The changing face of Korean strategic management. In C. Rowley & Y. Paik (Eds.). The changing face of Korean management. New York: Routledge.Google Scholar
  41. Lee, Y. (Ed.). 2002. New paradigm in business research: Small-sized, medium-sized, and venture firms and marketing. Seoul: Bakyungsa. (in Korean).Google Scholar
  42. Levinthal, J., & March, J. 1993. The myopia of learning. Strategic Management Journal, 14: 95–112.CrossRefGoogle Scholar
  43. Lincoln, Y. S., & Guba, E. G. 1985. Naturalistic inquiry. Beverly Hill, CA: Sage Publications.Google Scholar
  44. MacMillan, I. C., Block, Z., & Narasimha, P. N. S. 1986. Corporate venturing: Alternatives, obstacles encountered, and experience effects. Journal of Business Venturing, 1: 177–191.CrossRefGoogle Scholar
  45. March, H. 1991. Exploration and exploitation in organizational learning. Organization Science, 8: 71–87.CrossRefGoogle Scholar
  46. McGrath, R. G., Keil, T., & Tukiainen, T. 2006. Extracting value from corporate venturing. MIT Sloan Management Review, 48(1): 50–56.Google Scholar
  47. Narayanan, V., Yang, Y., & Zahra, S. 2009. Corporate venturing and value creation: A review and proposed framework. Research Policy, 38: 58–76.CrossRefGoogle Scholar
  48. Newman, K. L. 2000. Organizational transformation during institutional upheaval. Academy of Management Review, 25: 602–619.Google Scholar
  49. Peng, M. W., & Delios, A. 2006. What determines the scope of the firm over time and around the world?. Asia Pacific Journal Management, 23(4): 385–405.CrossRefGoogle Scholar
  50. Prahalad, C., & Bettis, R. 1986. The dominant logic: A new linkage between diversity and performance. Strategic Management Journal, 7: 485–501.CrossRefGoogle Scholar
  51. Ramaswamy, K., Li, M., & Petitt, B. S. 2010. Why do business groups continue to matter? A study of market failure and performance among Indian manufacturers. Asia Pacific Journal of Management. doi: 10.1007/s10490-010-9215-7.Google Scholar
  52. Rind, K. W. 1981. The role of venture capital in corporate development. Strategic Management Journal, 2(2): 169–180Google Scholar
  53. Rowley, C., Sohn, T., & Bae, J. (Eds.). 2002. Managing Korean business: Organization, culture, human resources and change. Portland, OR: Frank Cass.Google Scholar
  54. SERI. 2001. CEO Information: 295. Seoul: Samsung Economic Research Institute. (in Korean).Google Scholar
  55. Siegel, R., Siegel, E., & MacMillan, I. C. 1988. Corporate venture capitalists: Autonomy, obstacles, and performance. Journal of Business Venturing, 3: 233–247.CrossRefGoogle Scholar
  56. Siggelkow, N. 2007. Persuasion with case studies. Academy of Management Journal, 50: 20–24.CrossRefGoogle Scholar
  57. Simsek, Z. 2009. Organizational ambidexterity: Towards a multilevel understanding. Journal of Management Studies, 46: 597–624.CrossRefGoogle Scholar
  58. Sorrentino, M., & Williams, M. 1995. Relatedness and corporate venturing: Does it really matter. Journal of Business Venturing, 10: 59–73.CrossRefGoogle Scholar
  59. Staw, B. M., Sandelands, L., & Dutton, J. 1981. Threat rigidity effects in organizational behavior. Administrative Science Quarterly, 26: 501–524.CrossRefGoogle Scholar
  60. Steier, S. P. 2009. Familial capitalism in global institutional contexts: Implications for corporate governance and entrepreneurship in East Asia. Asia Pacific Journal of Management, 26(3): 513–535.CrossRefGoogle Scholar
  61. Stinchcombe, A. L. 1965. Organizations and social structure. In J. G. March (Ed.). Handbook of organizations: 153–193. Chicago: Rand McNally.Google Scholar
  62. Strauss, A., & Corbin, J. 1990. Basics of qualitative research: Grounded theory procedures and techniques. Newbury Park, CA: Sage Publications.Google Scholar
  63. Sykes, H. B. 1990. Corporate venture capital: Strategies for success. Journal of Business Venturing, 5: 37–47.Google Scholar
  64. Sykes, H. B. 1992. Incentive compensation for corporate venture personnel. Journal of Business Venturing, 7: 253–265.CrossRefGoogle Scholar
  65. Teece, D. J. 1986. Profiting from technological innovation. Research Policy, 15: 285–305.CrossRefGoogle Scholar
  66. Teece, D. J., Pisano, G., & Shuen, A. 1997. Dynamic capabilities and strategic management. Strategic Management Journal, 18: 509–533.CrossRefGoogle Scholar
  67. Thornhill, S., & Amit, R. 2000. A dynamic perspective of internal fit in corporate venturing. Journal of Business Venturing, 16: 25–50.Google Scholar
  68. World Bank. 1993. The East Asian miracle: Economic growth and public policy. Oxford: Oxford University Press.Google Scholar

Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  1. 1.Korea University Business SchoolSeoulSouth Korea
  2. 2.M. J. Neeley School of BusinessTexas Christian UniversityFort WorthUSA

Personalised recommendations