Strategic Media Venturing: Corporate Venture Capital Approaches of TIME Incumbents

Abstract

ABSTRACT Media firms act in rapidly changing and converging environments characterized by new entrants and increasing competition from related industries. As a reaction to this, the incumbents of the telecommunication, information technology, consumer electronics, media, and entertainment industry have increased their corporate venture capital activities. Corporate venture capital activities are a popular approach for gaining access to new innovative ideas and opportunities. Despite this practical relevance, the theoretical underpinning of corporate venture capital and the corporate venturing activities of media firms are poorly understood. Therefore, the purpose of this article is to close this gap by defining corporate venture capital as a bundle of dynamic capabilities (“organizational drivetrain”) and revealing the differences and commonalities of telecommunication, information technology, consumer electronics, media, and entertainment incumbents’ corporate venture capital approaches as response to the ongoing convergence of a technology-driven business environment. To do so, we conducted an exploratory study of 3,145 transactions by 68 telecommunication, information technology, consumer electronics, media, and entertainment incumbents in 2,163 start-up companies between 2002 and 2015, detecting, describing, and comparing their corporate venture capital approaches. The findings reveal a taxonomy of three different types of corporate investors, namely “aggressive,” “attentive,” and “dispersive.” While the aggressive approach covers the most active investors of the sample, who invest primarily in early-stage ventures, attentive investors show a more conservative investment behavior, focusing on their core business within their local proximity. In contrast, dispersive investors disproportionately fund established businesses in a broad array of industries. Hence, the study highlights a sector-dependent usage with incumbents of each telecommunication, information technology, consumer electronics, media, and entertainment sector preferring a different investment approach indicating the influence of previous path, positions, and processes.