Corporate Venturing by Employees: The Roles of Individual Specialization and Work Group Functional Diversity

Xu Han, The College of New Jersey, and Martine Haas, Management, The Wharton School

Abstract: Many large firms try to encourage entrepreneurial initiatives by their employees, but the question of which employees undertake such initiatives has not been explored. In this study, we argue that the formal division of labor within a firm affects employees’ likelihood of engaging in internal corporate venturing. Specifically, we propose that an employee’s propensity to pursue a corporate venture will be negatively associated with the functional specialization of their individual jobs but positively associated with the functional diversity of their work groups, due to the implications for cross-functional learning. Furthermore, the negative effects of individual specialization will be mitigated by group diversity. We test our hypotheses using a unique longitudinal employee-month dataset constructed from the detailed work histories of over 16,000 employees in a leading multinational corporation with a high-profile corporate venturing program. Our findings have implications for scholarly understanding of the micro-foundations of corporate entrepreneurship, and offer insight into how employees’ intra-organizational careers and contexts matter for entrepreneurial activities within firms.