The dual nature of power in corporate venturing

Richard John Tunstall, University of Glamorgan

H208, Business School, University of Glamorgan, Pontypridd. Mid Glamorgan. CF37

1DL. United Kingdom.
Tel: +44 (0) 1443 483720

Abstract
This paper explores the conflicting dual nature of power in social activity as
identified by Wenger (1998), in the specific context of corporate venturing. Drawing
on Giddens’ (1984) concept of duality, Wenger (1998) argues that power requires a
form of social consensus in order to become socially effective, but that that the
ownership of consensus always remains open to negotiability. The paper therefore
considers the conflict and consensus that may arise from attempts to form consensus
over power relationships in corporate venturing, through relationships between
corporate venture unit managers, intrapreneurs and external SME partners in
forming strategic alliances and spin-outs. As these relationships develop in the
creation of new organisations this consensus may become increasingly transient as
communities of practice interact and form and the ownership of financial and
knowledge resources owned by each community is negotiated. As a conceptual paper
this papers purpose is to contribute to the debates on corporate venturing and ‘open’
innovation by exploring both the social interactions between diverse communities,
who may have differing ways of doing, and the consensus they may form on the
nature of shared power relationships. This paper further aims to contribute to the
debate on power in organisations by exploring the role of power in transient internal
and external organisational relationships.

Background to Corporate Venturing

Corporate venturing may be described as new business development within an
existing firm (MacMillan and Block, 1995) with the potential for the creation of spin-
out small businesses developed by internal employees. Corporate venturing has been
further linked to the over-arching concept of corporate entrepreneurship; being the
pursuit of entrepreneurship within existing firms, which may also include
organisational innovation, with resulting new product development, and strategic
renewal, with the potential for the re-imagination of an organisation (Guth and
Ginsberg, 1990).

One particular concern within the study of corporate entrepreneurship has been the
extent to which employees may be encouraged or hindered in developing new
business opportunities. Previous studies have concentrated on issues regarding the
antecedents which facilitate the action of ‘intrapreneurs’ (entrepreneurs within the
organisation) and the effect of organisational structures upon individual action in the
context of corporate entrepreneurship and corporate venturing specifically (Antoncic
and Hirisch, 2003, Kuratko et al., 2004), yet there has been little focus on the
contribution of post-struturalist viewpoints to the debate.

Structuration Theory
The focus of the concept of structuration is to find a way out of the conceptual
divisions caused by the ideological separation of objectivist and subjectivist
approaches to the social sciences. (Giddens, 1984) criticises objectivism due to the
way in which it implies that social structures are “systems in the strong sense” (p. 54,
Parker, 2000), in that they are formed either by the external environment or by their
own maintaining or transforming natures, through the functional or evolutionary laws
of development. Meanwhile human beings are seen as interacting as an effect of these
laws, leaving them as “agents in the weak sense” (ibid), constrained by “socialisation
processes which mould their personalities and values to conform to the requirements
of ‘social order’”. Giddens (ibid) rejects objectivism, as it is unable to explain
irregularities and low predictability of social system developments, and retains an
interest only in how institutions develop, and the role of human agency.

On the other hand, subjectivity allows for human beings to be free agents, driven by
personal free will. “Actors are therefore agents in the strong sense, or bearing
responsibility for outcomes, because, being free, they could have done other than they
did, and systems are systems only in the weak sense of exhibiting regularities” (p.55,
Parker, 2000). While Giddens (ibid) retains a focus on subjectivism, he criticises it for
being unable to explain unintended consequences of action, and the occurrence of
patterns and regularity in social systems, and uses this as the basis for his structuration
theory.

Giddens' main interest is the social predicament of human beings. In relation to social
interaction he sees them as reflexive individuals; “The self is the agent characterised
by the agent” (p.43, Giddens, 1984) but that they cannot make sense of their
experience of themselves without accessing others’ subjectivity, which is done
through face-to-face interaction with other actors in the immediate moment in time;
“This is the interactional…condition of endlessly reviewing interpretations to
determine their relevance in the light of changing circumstances.” (Parker, 2000,
p.57). In relation to the role of structures, while Giddens sees these as being formed
by actors he also claims that these structures are what enable actors to do what they
do. Structures are therefore, “the prerequisites for human action” (Parker, 2000, p.57)
an example of which would be language, which enables actors to interpret, evaluate
and influence situations in which they act.

From this view of the ways in which agency and structures are formed, Giddens
(1984) goes on to suggest his way of addressing the issue of a dualism of objectivity
and subjectivity, through replacing the concept of dualism with that of duality – that
neither structure nor agency have an independent existence – they are dependent on
each other. As structures (comprised of rules and resources) give agency meaning, so
in acting through practice, actors decide whether to sustain or create new structures.

Communities of Practice
Warren (2004) argues that Wenger’s (1998) proposal of the concept of ‘communities
of practice’ (CoP) is a development of Giddens’ structuration theory, though also
relying on many other theorists. Wenger certainly pays homage to Giddens’ influence
(Wenger, 1998, p. 281), however at the same time he neglects to reference the post-
structurationists (Archer, 1995) and (Mouzelis, 1989) at any point, and appears to
subsequently take a largely subjectivist stance while not addressing some of the
subsequent problems which (Parker, 2000) identifies.

Key to an understanding of Wenger’s perspective on structures, is his view of the

local-global interaction – that the global is only made relevant through the local – that
agents can only make sense and develop meaning through local structures. Hence it
could be argued that through his focus on practice, Wenger’s main concern becomes
those micro-structures which actors actually come into contact with. It is of course
also clear that in forming this specific focus, Wenger shows himself to mainly be
interested in the behaviour of actors at an individual level and largely aligned to
subjectivity.

(Wenger, 1998) sets out to develop a social theory of learning and argues that the
components of this, each understood as ‘ways of talking’, are meaning (how actors
individually and collectively describe their world as meaningful), practice (“ways of
talking about the historical and social resources, frameworks & perspectives that can
sustain mutual practice in action” (Wenger,1998, p.5)), communities (social
configurations where common activities (described as ‘enterprises’) are seen as worth
pursuing and in which forms of participation are described as competence) and
identity (how learning changes who actors are and creates personal histories of
‘becoming’). Wenger proposes that the term ‘Communities of Practice’ is a form of
entry into this conceptual framework.

Wenger sees identity as a duality of the relationships between the social and the
individual, in that individuals define who they are through self-experience in
participation and through how individuals and others reify that perception of ‘self’.
Largely then, Wenger considers identity to be developed through how one identifies
oneself in the context of the communities with which one engages. For instance,
Wenger considers that one issue affecting identity is the extent to which we define the
familiar and unfamiliar and who we are and are not through the extent to which we
are participants or non-participants in the various communities of practice which we
become aware of. Clearly different individuals have different experiences, and
Wenger considers that identity is also formed from the extent to which we reconcile
multi-membership of different communities such as work, family units and social life
into one identity.

The duality of power

For Giddens (1984) it is inappropriate to see power purely as a constricting force that
restricts individual action and choice or source of conflict, but that instead action
involves power as a form of “transformative capacity” (p.15, Giddens, 1984), the
“power to achieve outcomes” (p.257). As a feature of the duality of structure, Giddens
(1984) argues that it is not enough to simply equate power to individual intent or will,
or to see power as alternatively a property of the social community. Instead he argues
that power is not intrinsically connected to the achievement of sectional interests, but
is a characteristic of action by which actors draw upon and reproduce the resources of
social systems (being ‘allocative’ materials - the means of production and products;
‘authoritative’ co-ordination of human beings in mutual association and; ‘life
chances’ of self-development and expression) in the course of interaction. Giddens
presumes a balance of autonomy and dependence between actors or collectives over
periods of time, while allowing that all forms of dependence offer some resources for
subordinates to influence the activities of their superiors.

Wenger’s (1998) interest in the concept of a duality of power focuses on the context
of communities of practice, and within this context he argues that power is not purely
construed in terms of conflict or domination, but that it also includes an aspect of
coalescence (p.189). Power, as a property of social communities, is seen as deriving
both from belonging and from exercising control over meaning. To Wenger, power
has a dual structure, reflecting the interplay between identity (with a community and
shared meanings) and negotiability (of meaning). Wenger also proposes that the
consequences of identification without negotiability include marginality and
vulnerability, while the consequences of negotiability without identification include
isolation and cynicism (p.208).

The role of allocative resources in corporate venturing

In considering the interplay of individuals in the pursuit of corporate venturing, it is
perhaps most relevant to draw upon Wenger given his interest in social communities
against Giddens’ wider focus on society. In the context of Wenger’s way of dealing
with issues of power, it is particularly relevant to consider identity and meaning,
These may be seen to have a relevance to Gidden’s emphasis on authoritative
resources (roughly speaking, social resources), but in addition to this in the context of
entrepreneurship, may also be relevant to include a consideration of the role of
allocative resources (roughly speaking, economic resources), given that the central
role of entrepreneurs lies in transforming economic resources (Schumpeter, 1934).

While there have been some recent attempts to apply struturation theory to
entrepreneurship, this has been limited, yet “applying structuration to the study of
entrepreneurship enables us to recognise how social structures affect and encourage
entrepreneurial activity, particularly in terms of resource availability or restraint.”
(Jack and Anderson, 2002). A concern for issues regarding resource availability
would appear to be as applicable to intrapreneurs as it is to entrepreneurs as one of the
key differences between these types identified by scholars largely relates resources
availability and restraint. Both are considered to encounter risk in terms of potential
loss or gain of resources, and both are considered to be significantly affected by the
amount of access they have to existing resources (Ross and Unwalla, 1986, Pinchot,
1985).

The case of intrapreneurship and allocative resources in the context of corporate

venturing perhaps most clearly highlights issues regarding power relationships and
the potential for conflict. While entrepreneurs may be traditionally viewed as
involved in the utilisation of limited personal resources, intrapreneurs utilise the
resources of the parent organisation, which while potentially enhancing the prospects
of a new venture, also place a burden of risk with the parent as well as the
intrapreneur (Ross and Unwalla, 1986, Pinchot, 1985, Luschinger and Bagby, 1987).
This situation sets the stage for a dependent relationship based on levels of risk and
forms of control in which often neither party is traditionally engaged.

An organisation may engage in corporate entrepreneurship for the purpose of

generating new sources of financial returns and/or engaging in the strategic renewal
of the organisation (McNally, 1997). In terms of strategic renewal, commentators
have expressed the importance of corporate venturing in driving innovation within
organisations (MacMillan and Block, 1995, Husted and Vintergaard, 2004) and
diversification (Burgelman, 1983), while in terms of financial returns, (Miles and
Covin, 2002) have indicated that corporate venturing can enable organisations to
engage in the venture capital industry and invest in customers and suppliers who they
may wish to develop. Despite this, it has been argued that often the impetus to engage
or disengage from corporate venturing , and to which it may be seen as ‘in vogue’
within an organisation or industry, is more dependent upon the general economic
situation (Chesborough, 2003) and the resulting shifts in organisational strategic focus
(Tunstall and Jordain, 2003). In terms of the external environment, (Guth and
Ginsberg, 1990) argue that corporate venturing is largely an external activity, as its
focus is on getting products and business to the external market, equally (Zahra, 2005)
argues that achieveing fit between the organisation and the dynamic environment is
very important, but that any fit is ultimately temporary.

The pressures experienced by organisations engaged in corporate venturing, and the

amount of reliance intrapreneurs may have upon the resources of the parent
organisation, may imply that the balance of power, from an allocative resource
perspective, lies squarely with the parent organisation. However scholars often
comment on the importance of corporate entrepreneurship in maintaining the long-
term survival of organisations (Zahra and Covin, 1995, Zahra et al., 1999, Keil, 2004)
and the key role of intrapreneurs in facilitating this (Pinchot, 1985, Morris, 1998).
From considering recent commentators such as (Chesborough, 2003) it would appear
that the key role of individual entrepreneurs in developing corporate ventures has
abated as organisations move from protecting R&D research and looking purely
internally for intrapreneurial individuals to develop new business projects, to
increasingly looking outside to external entrepreneurs and SME’s in the pursuit of
corporate venturing programmes and organisational survival.

In addition to the different purposes and pressures for corporate venturing

experienced by organisations, it has been identified that the individuals developing a
new venture with a large organisation have purposes and pressures of their own. The
benefits for intrapreneurs may include the ability to take responsibility for a project
with potential for both enhance personal status and large financial returns (Ross &
Unwalla, 1986). In achieving these rewards, intrapreneurs may utilise the resources of
their employer in developing new ventures and so while potentially expecting the
same returns as ‘traditional’ entrepreneurs do not necessarily face the same elements
of risk to personal resources. Yet the relationship between intrapreneurs and their
employer does bear more risk for the intrapreneur than a traditional employee-
employer relationship as intrapreneurs are considered to place personal position,
salary and even employment prospects at risk (Pinchot, 1985).

(Kuratko et al., 2004) argue that in order to sustain corporate entrepreneurship, the
demands of both the organisaiton (in achieving strategic goals) and the individual (in
perceiving and receiving desired personal goals) must both be satisfied. From this
perspective while it appears that allocative resources are of particular relevance in
power relationships between the organisation and intrapreneurs, it also appears that
there is an element of equlibrium between these different demands in the context of
corporate venturing given the intrinsic dependency both parties have upon each other.
However the effect of changing environmental demands may mean that an
organisations, and any external venture capitalist, involvement with corporate
venturing and its requirements may change over time, while equally the role of
individuals engaged in corporate venturing may change as they move from employee
to intrapreneur to external entrepreneur.
Identification and negotiability in corporate venturing
In considering the roles played out within the context of corporate venturing,
Wenger’s concept of communities of practice may allow a way of considering
Gidden’s concept of ‘authoritative’ resources and ‘life chances’. As indicated issues
related to power may be particularly acute in relation to the effect of change generated
through the interplay of individual, organisation and external environment (Sathe,
1989), with particular effects on self-identity for intrapreneurs, through changing
engagement with communities of practice.

When it comes to identifying the role of intrapreneurs, this has often been carried out
by comparing this role to that of ‘traditional’ employee and entrepreneurship roles
(Pinchot, 1985, Luschinger and Bagby, 1987), other commentators have considered
the effect on motivation for existing employees when encountering the higher rewards
of intrapreneurs (Terezano, 1999), yet little attempt has been made to further analyse
the effect of this ‘special’ behaviour and motivation on self-identity for intrapreneurs.
(Corbett and Hmieleski, 2007) as an exception have approached this issue by arguing
that corporate entrepreneurs develop different cognitions to entrepreneurs due to the
specific event schema they encounter as part of their role within a large organisation,
and that this may create conflict and upheaval as they move from working within a
large venture to setting up a new venture, with subsequent changes in cognition.
However, the authors only offer a set of cognitions for intrapreneurs (viewed as
employees) and entrepreneurs, giving little indication of the effects of changing
identity upon intrapreneurs.

In considering intrapreneurial identification, from a community of practice (CoP)

perspective, it may be possible to view this as a transitory or transformational state.
Initially an intrapreneur, as employee, may be embedded within CoP’s formed within
the individuals working practice, both in form of internal deparmental and cross-
departmental relationships, as well as professional relationships with external
individuals. However through engaging in intrapreneurial activities, such an
individual may effectively alienate themselves from some existing CoP’s, while
acting as a cross-boundary broker for others and joining new existing and emerging
CoP’s. As (from Wenger’s perspective) identitification is is a key aspect of
membership of CoP’s, the effect of changing participation could be likely to have a
subsequent effect on an intrapreneur’s identity, a key source of meaning and power
(Wenger, 1998). Being able to identify with membership of a CoP engaged in the
enterprise of corporate venturing may become a source of power for the intrapreneur,
as they leave CoP’s within their orginial department where their ideas may have
marginalised or sidelined, and replace this with a CoP where all members are
mutually focussed on innovation, resource acquisition and new business creation.
However as Wenger (1998) indicates, simple identification is meaningless without the
ability to negotiate meaning. In an environment where organisational strategic needs
may change due to external environmental changes and the resulting perception of
corporate venture projects by senior managers, the inability to negotiate meaning,
through, for instance, debating the value of the corporate venture initiative to the
organisation may leave the intrapreneur effectively powerless, vulnerable and
marginalised.

In the context of negotiability of meaning, Wenger’s other aspect of power, this may
perhaps most noticeably reside within the political behaviour of the intrapreneur
within the organisation. (Prasad, 1993) has argued that the because of the conflict
arising from the demands of organisational structures and the actions of intrapreneurs,
these individuals may have to engage in organisational politics in order to enhance the
potential of the opportunity they have identified and in order to drive change.
Furthermore, (Echols and Neck, 1998) have argued that while it is useful to consider
the effect of structures and organisational politics upon intrapreneurs, these may differ
from organisation to organisation, partly due to the extent in which structures enable
or restrict corporate entrepreneurship. As an example, while Prasad (1993) has argued
that intrapreneurs may need to engage in existing organisational politics, Pinchot
(1985) argues that restrictive organisational structures may force the intrapreneur to
work underground, using senior management ‘sponsors’ where necessary and be
constantly prepared to be sacked for one’s beliefs. These overt and subverted ways of
dealing with organisational structures and politics may in effect become the means of
negotiability of identity for intrapreneurs, as they struggle to have ideas realised and
retain the support of their organisational sponsors and resouce-providers. From a CoP
perspective, this may position intrapreneurs as brokers between CoP’s, such as their
own existing departmental relationships, the new venture project team (formed or
unformed) and senior CoP’s such as the board of directors or corporate venture unit
management team. As indicated by Wenger in considering power, it is this ability to
negotiate; to exercise control of what CoP’s one belongs to; that may allow
intrapreneurs to develop power within the organisation. However the risk of working
in this broker position between CoP’s may result in the individual losing a sense of
identification with any particular CoP’s within the organisation – not at home and
made peripheral within their original working relationships, not settled within a new
corporate venture team (which may not have become an effective CoP), or sidelined
and made peripheral by senior management as a ‘maverick’. The effect of this, as
indicated by Wenger (1998) would be to make the intrapreneur’s power meaningless,
leaving them isolated and cynical.

Conclusion
Through exploring the contribution of Giddens’ and Wenger’s perspectives on power,
it is perhaps possible to re-evaluate corporate venturing as a complex interplay of
allocative and social resource configuration. While power may be argued to chiefly lie
with the organisation and senior managers as controllers of economic resources which
corporate ventures need in order to develop and survive, this is tempered by the often
undiscussed view of intrapreneurs as economic resource holders with the ‘means of
production’ in the form of new business concepts – with resulting possibility of not
only increasing economic resources, but also in acting as accelerators of strategic
renewal. As a result when considering the issue of allocative resources, from
Gidden’s perspective, all resource holders may have the power to increase or reduce
economic resources through their actions. The promise of increased allocative
resources encourages collaboration, but threat of loss may encourage mistrust and
fear, and the central issue for power relationships may lie within social relationships
between senior managers and intrapreneurs.

While the issue of social identity may be more distinguishable for ‘traditional’
entrepreneurs. It may be more contentious in corporate venturing, where there is
tension over ‘belonging’ – whether the organisation and its communities of practice
see the intrapreneur as ‘part of us’ or not. Intrapreneurs equally may be concerned
about their relation to the parent organisation, both within their original relationships
within departments, and those new and emerging relationships with newly formed
corporate venture projects and senior management teams. Meanwhile existing
employees may see those peers who engage in ventures as being treated as ‘special’
and existing managers may see the movement of employees to new ventures as a loss
of resource, with resulting conflict. Ultimately in considering the issue of power in
corporate venturing the key issue then may lie in issue of both identitification and
negotiation of meaning – which can both give actors freedom of action and also act as
form of constriction where individuals feel themselves to have been pushed out of
identity they wish to have.

Previous empirical studies of corporate entrepreneurship and corporate venturing tend

to limit descriptions of power relationships to simplified archetypes of
employer/employee and entrepreneur/employee dichtomies. By considering the post-
structuralist approaches utilised within management and entrepreneurship studies in
general, such as structuration theory and communities of practice, researchers may be
able to appraise the complexities of changing and emergent power relationships
within corporate venturing more deeply. By taking an exploratory appraisal of the
ways in which struturation theory and communities of practice may act as a lense to
evaluate existing debates in corporate venturing, this paper has attempted to take the
first steps on this journey.

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