Strategic investments in entrepreneurial brand ventures by large incumbents

Abstract

Purpose

Consumer product firms renowned for marketing appear to be complementing brand creation, extension and acquisition with minority equity investments in entrepreneurial brand ventures (EBVs) for strategic purposes. Similarly, EBVs are looking for growth and resources that can be accessed via inter-organizational partnerships. This flourishing industry practice and the paucity of empirical research indicates the potential for new studies. The research objective was to examine why and how large incumbents were implementing strategic brand venturing (SBV), and with this understanding to develop a framework useful for descriptive and normative purposes.

Design/methodology/approach

This qualitative research study comprised in-depth interviews and multiple data sources across seven case studies drawn from US subsidiaries of global firms within the consumer products industry. Grounded in resource theory, the dimensions of strategic brand equity investments are abductively derived.

Findings

The findings delineate 16 process capabilities within four aggregate clusters entailing, the designing of the SBV program, opportunity identification, brand entrepreneur partnerships and venture portfolio management. Prefaced by endogenous and exogenous antecedents, these process capabilities help to contribute strategic and financial value when implemented.

Research limitations/implications

This qualitative research study yielded analytical rather than statistical generalizations. A range of market and economic factors exist in the United States contributing towards a favorable entrepreneurial and brand incubation climate. This may render the SBV concept as contingent and contextual. Furthermore, the view of brand entrepreneurs' regarding the design of the process model were not explicitly sought but inferred from the discourses of the venturing units interviewed.

Practical implications

The article outlines several important implementation imperatives for corporations endeavoring to competitively advantage their brand portfolios via adoption of a minority equity investing strategy in EBVs. Practitioners are cautioned against myopically adopting this process alone as a success heuristic given other factors may impact success such as changes in corporate strategy or upper echelon sponsorship.

Social implications

Mission preservation for social brand ventures being tethered to a large incumbent may need to be taken into account prior to and during SBV relationships.

Originality/value

The research contributes to the call for greater insights into the investment processes used in venturing relationships as well as coverage of new industry sectors beyond technology industries that often characterize corporate venture capital studies. Several novel findings emerged related to the importance of—the industry ecosystem; symbiosis between the founding brand entrepreneur and brand culture; synchronization of investment strategies with an emerging brand life-cycle model and serendipitous corporate entrepreneurial opportunities.