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Corporate entrepreneurship and creativity in large firms: the practice of start-up contests

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The organization of start-ups contests by large mature firms appears as a growing practice to stimulate corporate entrepreneurship. We explore this phenomenon to characterize the mutual benefits for large firms and start-ups. We show the influence of two factors on the nature of the relationship between large mature firms and start-ups. The first is the product oriented or service oriented innovation processes of large firms. The second is the distance between the core technological fields of large firms and start-up. Based on these two factors we propose a categorization of start-ups contests in four types: early co-development, co-development close to market, acceleration and outsourcing. The cases we study show the strong influence of the technologies linked to Internet in the development of the start-ups contests. Accelerating programs that accompany the practice of start-ups contests rely on the creation of private accelerators that play an important role as boundary spanners and gatekeepers. JEL Codes: M13
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CORPORATE ENTREPRENEURSHIP AND CREATIVITY IN LARGE
FIRMS: THE PRACTICE OF START-UP CONTESTS
Véronique Schaeffer
De Boeck Supérieur | « Journal of Innovation Economics & Management »
2015/3 n°18 | pages 25 à 51
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start-up contests », Journal of Innovation Economics & Management 2015/3 (n°18), p. 25-51.
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n° 18 – Journal of Innovation Economics & Management – 2015/3 25
CORPORATE
ENTREPRENEURSHIP
AND CREATIVITY IN LARGE
FIRMS: THE PRACTICE
OF START-UP CONTESTS
Véronique SCHAEFFER
Université de Strasbourg, France
schaeffer@unistra.fr
A report on innovation in large companies, published by a think tank
involving 130 large firms, stresses the importance of the integration of
innovative SMEs as key players in the innovation networks of large firms
(Cigref, 2008). They consider that the creativity of large firms suffers from
innovation processes which are over formalised and ways of thinking which
are dominant, whilst in SMEs, where innovators enjoy more freedom, new
ideas can emerge more spontaneously. However, the advantage of small firms
in terms of innovation is not so obvious. Although small firms operate in
situations that seem more suited to creative activities, the lion’s share part
of innovation comes from large ones. Many years ago, Damanpour (1992)
showed that large firms are more innovative than small ones in the manu-
facturing sector. This evidence was less clear in the service sector. He also
showed that the relationship between the size of the firm and the degree
of innovation depends on many factors, such as how size is measured, the
type of organisation, the scope of innovation considered, and the progress
made in adopting innovation. Terziovski (2010) explores how the innova-
tion practices of SMEs differ from those in large firms. He concludes that
SMEs have to learn from large firms about how to work out clear innovation
strategies and formalise the innovation process. This lack of formalisation
would partly explain why large firms are more innovative than small ones in
the manufacturing sector.
In this paper we explore the complementarity between large firms and
start-ups through start-up contests organised by large firms. The organisa-
tion of start-up contests is nothing new, but most of them were organised by
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Véronique SCHAEFFER
26 Journal of Innovation Economics & Management – 2015/3 – n° 18
public incubators. What is new is the increasing involvement of large firms
in the implementation of start-up contests. Several large mature firms have
recently created start-up contests for renewing their networks. We are going
to explore the phenomenon through 8 cases of contests organised by large
firms. We will analyse the strategic basis of this emerging practice adopted by
large firms and the mutual benefits for large and small innovative firms. The
first part looks at corporate entrepreneurship in large firms and the role of
start-ups as external partners. The second part deals with the methodologi-
cal aspects and introduces the cases that we are going to analyse. The third
part presents the results, which are discussed in the fourth part.
CORPORATE ENTREPRENEURSHIP
AND EXTERNAL PARTNERS: A REVIEW
A key challenge for corporate entrepreneurship and the ability of firms to
change and maintain their competitiveness over time is the relationship
between entrepreneurial and habitual activities. We are going to explore
the organisational conditions which make it possible to introduce change.
Then we consider how openness and more specifically openness to start-ups,
is dealt with in the open innovation literature.
Corporate entrepreneurship and creativity
Entrepreneurs are not only the founders of firms; they may be salaried
employees whether they are in a managerial position or not (Schumpeter,
1939). Considering the cases of some exceptional innovators, Griffin et
al. (2009) give a portrayal of an innovator acting as an entrepreneur in an
organisational context. The most important elements that they identify are
their excellent awareness and understanding of the needs of the customers
of the company, their tremendous tenacity in their search for a solution to
the needs that they have identified and their ability to exert a political influ-
ence within their organisation to convince the top management to support
their project.
The emergence of a new business in any firm will not on its own make
it an entrepreneurial firm (Birkinshaw, 1997). The employees belonging
to a research and development group are involved in innovative activi-
ties, but they are not entrepreneurs. Their behaviour corresponds to one
which is expected, according to norms and guidelines (Kanter, 1982).
Entrepreneurship supposes that individuals depart from the existing prac-
tices. They have to acquire and use influence and power to obtain resources
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Corporate entrepreneurship and creativity in large firms
n° 18 – Journal of Innovation Economics & Management – 2015/3 27
from higher a hierarchical level in order to pursue their projects. For Miller
(1983) entrepreneurial activities also suppose that the firm undertakes some
risks and acts as a kind of pioneer of innovation and not as a follower on the
market. Incremental innovation is not in the sphere of corporate entrepre-
neurship, which deals with discontinuous innovation.
The innovations introduced by entrepreneurs are the engine of the com-
petition renewal. They are also a threat for the existing activities and pro-
mote continuous growth within the economy. In order to resist that threat
and revitalize their competitiveness, established firms have to develop and
maintain internal entrepreneurial activities (Miller, Friesen, 1985). This
corporate entrepreneurship (Guth, Ginsberg, 1990) takes three main forms
which allow them to co-exist in a same firm (Stopford, Baden-Fuller, 1994):
the first is corporate venturing (Kuratko, Montagno, Hornsby, 1990), the
second is the strategic renewal of existing organisations and the third is the
change in the rules of competition in an industry. In this article on how large
firms benefit from the creativity of start-ups, we focus on the second form.
To carry out an innovation, others activities as well as entrepreneurial
ones are necessary. These non-entrepreneurial activities coexist with the
entrepreneurial ones. In large mature firms, the relationship and connection
between innovation and the current activities are key points in determin-
ing the ability to renew the competitive advantage (Dougherty and Hardy,
1996). This is a crucial organisational challenge for the firm, which depends
on the ability of an organisation to develop its ambidexterity (March, 1991).
Tushman and O’Reilly (1996) analyse the characteristics of an ambidex-
trous organisation able to implement both incremental and radical change,
through a continuous alignment of strategy, structure, people and culture.
As companies grow, they develop structures and systems to control the
increasing complexity. As a consequence it becomes more and more difficult
to propose and implement change. There is a structural inertia linked to the
growing resistance which is rooted in the size, the complexity, the systems,
the process and procedures. There is also a cultural inertia that partly results
from success. “The more successful an organisation has been, the more insti-
tutionalized or ingrained these norms, values and lessons become” (Tushmann,
O’Reilly, 1996, p. 18). The culture of the firm is a key factor for short-term
success, but when confronted with discontinuous change it can lead to a
systematic rejection of new ideas and it may become an obstacle to change
(Leonard-Barton, 1992). The dynamic capabilities approach focuses on the
mechanisms by which some firms reconfigure and renew their resources to
keep their competitive advantage over time, despite changes in their envi-
ronment (Teece et al., 1997). To pursue incremental and discontinuous
change simultaneously, an ambidextrous firm must have multiple structures
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Véronique SCHAEFFER
28 Journal of Innovation Economics & Management – 2015/3 – n° 18
and cultures. Beside structures dedicated to the effectiveness of current
activities, there are internal structures dedicated to entrepreneurial activi-
ties. The launch of a start-up contest is initiated in this last kind of structure.
The structures dedicated to entrepreneurial activities manage the early
phases of the innovation process. This phase is often called the fuzzy front
end of innovation (Smith, Reinertsen, 1991). It is a critical phase for the
success of new product development projects (Cooper, 1988; Cooper,
Kleinschmidt; 1987, Khurana, Rosenthal, 1997). It can lead to incremental
or discontinuous innovation but specifically it is crucial for discontinuous
innovation because it is the stage where opportunities of business appear
and problems are structured (Reid, De Brentani, 2004). The relationship
that the firm has with the environment is very important at this stage for
harnessing technological or commercial opportunities.
The description of the R&D process often refers to product-focussed firms.
Service-focussed firms also innovate, but the organisation of the innovation
process is very different. Services are intangible and are not designed in the
same way as products. According to Chesbrough (2011), it is much harder
to describe services and how the customers perceive them. Few service firms
have R&D structures like industrial firms and generally the formal stage
gates described before do not exist in the service-focussed innovation pro-
cess. Customers participate throughout the innovation process. The profiles
of R&D employees are also different in service focussed firms. Chesbrough
(2011) cites the case of IBM and Xerox that hire sociologists, anthropolo-
gists and economists for their R&D functions. In service-focussed innova-
tion as well as in product-focussed innovation, the relationship between the
firm and its environment is crucial for powering creativity and change.
Considering both product-focussed and service focussed firms, we will
analyse how start-up contests can contribute to the fertility of innovation,
in large mature firms.
The role of start-ups in open innovation practices
During the fuzzy front end for discontinuous innovation there are three criti-
cal decision-making interfaces (Reid, De Brentani, 2004). The first is the
boundary spanner, which links the firm to its environment and provides the
organisation with information about new market needs or new technologi-
cal paths. The second is the gatekeeper interface. Its role is to evaluate the
relevance of information coming from the environment for the organisa-
tion. The gatekeeper and the boundary spanner have to be very much in
tune with the environment and may be the same person. The third interface
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Corporate entrepreneurship and creativity in large firms
n° 18 – Journal of Innovation Economics & Management – 2015/3 29
is the project interface, where the information which is considered as rel-
evant is integrated within specific projects, which will be considered later
during this first screening phase. In an open innovation perspective, bound-
ary spanners and gatekeepers play important roles, because they determine
the perception of the opportunities existing in the environment.
A stable network based on strong relations is vital for current opera-
tions and incremental change but can become an obstacle for discontinu-
ous change (Ahmadjian, Lincoln, 2001; Birkinshaw et al., 2007; Nieto,
Santamaria, 2007). A large firm needs multiple networks, to benefit simul-
taneously from stable relations for the effectiveness of its on-going activities
and to avoid the rigidities that stem from this stability (Dittrich, Dyusters,
2007). To stimulate corporate entrepreneurship and enable discontinuous
change, the development of the network may go in various directions: new
technology providers, individuals or organisations able to solve technical
problems, venturing networks, cross-industry relations, communities of
practices, self-selecting volunteer partners and start-ups.
For large mature firms, the aim of a start-up contest is to detect inno-
vations developed outside and to meet future partners. Start-up contests
organised by large firms are recent phenomena that do not appear in the
typologies of open innovation practices. However, innovation contests have
been studied (Jeppense, Lakhani, 2010; Boudreau et al., 2011). The principle
of innovation contests is to place a problem which needs to be solved in the
wider arena, in order to increase the diversity of the solutions proposed and
stimulate innovation. In start-up contests, large firms do not propose solu-
tions for precise technological problems as in innovation contests. Their
aim is within a technological and market area, to detect innovation projects
which are in the development stage or already existing innovations.
The aim of a contest is to increase the cognitive distance with partners.
It can be an obstacle to innovation, because while it reduces the common
knowledge base of those concerned, it reduces their ability to communicate
and to work together (Johnson, Lundvall, 1992). But it can also stimulate
innovation because it allows new combinations of knowledge and the expan-
sion of the cognitive space in which innovation can emerge (Noteboom et
al. 2007). Large mature firms are complex organisations and they need to be
structured and to have formalized processes in order to be efficient. Dougherty
(1996) shows that innovation has no legitimacy as far as middle manage-
ment is concerned, which is focussed on the control of processes and the
reduction of risks. Collaboration with small firms can stimulate innovation
processes in large ones (Lambert, Schaeffer, 2010). The complementarily
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Véronique SCHAEFFER
30 Journal of Innovation Economics & Management – 2015/3 – n° 18
between them relies on the differences in their values, their organisation
and their business (Qian, Li, 2003; Terziovski, 2010).
Birkinshaw et al. (2007) study the management challenges associated
with the development of the networks guided by the search for distant part-
ners to enable discontinuous changes. The first difficulty is to find these new
partners, which are unknown and far away from the firm. There is a com-
bination of geographical, technological and institutional barriers. The sec-
ond difficulty is the possibility of working together and sharing knowledge,
which can be a hindrance for ideological, demographic, cultural or legal
reasons. For a large mature firm, the development of links with small firms,
and more specifically to start-ups produces these difficulties which leads to
the need to search for a distant partner. Large mature firms and start-ups do
not meet each other naturally and large firms have to use techniques such as
contests to bring about this meeting.
The links between large mature firms and start-ups take root in all
the various practices associated with open-innovation. Chesbrough and
Crowther (2006) studied open innovation in non high-tech or mature
industries. They reveal a set of practices associated with inbound open inno-
vation (Chesbrough, 2003) in this industrial context. They identify as a
success factor a top-down approach to ensure an alignment between open
innovation efforts and business growth objectives of the firm. Open innova-
tion is used in two kinds of situations. The first is the improvement of a cur-
rent business. In this situation, the firm uses outside sources of innovation
to make the market approach faster and, cheaper while minimizing the risks
by investing in technologies already proven in other applications. The adop-
tion of external technologies requires internal champions, who can defend
the integration of the technology in the development process of the product
and can interact with many other functions in the firm to make this integra-
tion successful.
The second situation considered by Chesbrough and Crowther (2006)
concerns the exploration of a new business for generating new sources of
growth. The time horizon is longer than in incremental innovation. Open
innovation starts with the identification, at a high level and in a top-down
approach, of a set of strategic emerging technologies that will be central
for growth in the future (such as nanotechnologies, environmental tech-
nologies, information technologies). The process of identifying these tech-
nologies is linked to the strategic planning process. In the broad strategic
technological area, they focus on sub-areas relevant to their strategy. These
investments represent a major risk and so companies make small invest-
ments in the beginning and sometimes give external partners access to
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Corporate entrepreneurship and creativity in large firms
n° 18 – Journal of Innovation Economics & Management – 2015/3 31
internal resources for a co-development. In the short term, the aim is not to
generate income but to evaluate the emerging technologies.
Several authors (Dahlander, Gann, 2010; Huizingh, 2011; Penin et al.,
2011) have proposed typologies for the multiple practices associated with
open innovation. These typologies are based on a distinction between
inbound and outbound practices (Chesbrough, 2003). In the inbound
practices, the links between large firms and start-ups are associated with
the buyout of start-ups or the acquisition of patents or licences. In these
open innovation situations the aim for large firms is to tap into the patents
portfolio of the start-ups by means of a financial transaction. Conversely,
Chesbrough (2003) considers situations where big firms externalise ideas
into small firms or start-ups. He studied Xerox and its Palo Alto Research
Center (PARC). In this case, the best achievements in respect of research
conducted at PARC occurred when researchers left Xerox and went over
to small firms and start-ups. In this inside-out process, because the proj-
ect owners were outside the deep vertical integration of the model used by
Xerox, they had to create their own business model in order to market their
technologies. In these contexts they had to come up with completely new
models in order to harness the value of their technologies. This spin-out
policy of Xerox led to the marketing of PARC technologies being more
successful.
We will explore more deeply the nature of the links between a large firm
and a start-up, when they meet each other through a contest. Our research
will be based on the case of 8 start-up contests launched in France by large
mature firms.
METHODOLOGY AND PRESENTATION
OF THE CASES
In this article we explore the mutual benefits for large firms and start-ups,
when they meet through contests organised by large firms. What are the
benefits for each other? Why does this new form of open innovation emerge?
As this is an emerging phenomenon and almost nothing has been written
about it (as far as we know), we tried to find out how it really works by
observing the existing start-up contests in France. We listed a set of start-ups
contests organised in France by large firms so as to analyse the contribu-
tion of start-ups to the creativity of large firms and the contribution of large
firms to the development of start-ups. We used information available in the
business press and by incubators via their websites. Many start-up contests
are existing but in most cases they are organised by incubators. We selected
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Véronique SCHAEFFER
32 Journal of Innovation Economics & Management – 2015/3 – n° 18
only those organised by a large firm. We found 8 start-up contests organised
by large firms in France in 2014 (table 1). A few others exist but we didn’t
find them using this method. Among these eight contests, 3 were organised
by large firms from the digital and software sector and 5 by firms from very
different fields: high tech industry, electronic equipment industry, airline,
distribution of cultural goods and the French Post Office. We chose to keep
this diversity of firms in our study, to characterise start-ups contests as a
global phenomenon and not as a phenomenon specific to industrial firms or
to the numeric field.
Table 1 – Presentation of the 8 start-ups contests
Sector Revenues
(M)Headcount Headcount
in R&D Name of
the contest Theme
of the contest
Siemens
High tech
industry,
health,
energy
78 300 400 000 32 000 Grand prix de
l’innovation
Different each
year
IBM Hardware
and software 100 000 430 000 3000 IBM Global
Entrepreneur
Software-
based product
or service
SFR
Telecom-
munications
operator
10 000 9 000 NC
SFR Jeunes
Talents
Start-Up
Innovative
service or
product in
the digital
sector for
mobile phone
operators
Orange Telecom-
munications 41 000 164 000 4500 Orange Fab
France
Products and
services which
revolutionize
the way we
communicate
La Poste
Post,
Insurance,
Bank
22 000 266 000 Start’in Post
E-commerce –
Local services
and Internet –
Digital security
Schneider
Electric
Electricity
and energy
mana gement
23 600 160 000 11 000
Challenge
Open-
Innovation.
club
Product or
services for
habitat
Air
France Air carrier 25 500 95 000 Fab’line for
the future
Sustainable
development
FNAC
Retailer for
cultural and
electronic
products
3900 16 700 Prix start-up
FNAC
Distribution
of cultural
products to
business
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Corporate entrepreneurship and creativity in large firms
n° 18 – Journal of Innovation Economics & Management – 2015/3 33
We had the opportunity of interviewing the manager for long-term
innovation at Siemens about the organisation of R&D and the importance
of external partners in innovation. For the others large firms, we used the
interviews with the manager for open innovation and from start-up contests
available in online magazines which specialise in start-ups or on the websites
of the firms. We also used these institutional web sites of firms to detail their
global activities, their R&D work and their innovation strategies. These sec-
ondary sources of information do not reveal all the motivations of the firm
but give information to characterise their technological field and to show
the importance placed on open innovation practices in their institutional
communication.
We analysed the rules of the contests organised by the major firms to
characterise the mutual contribution of small and large firms. The rules
of the context stipulate what kind of SMEs is targeted by large firms. The
rewards offered by large firms have been used as indicators for the potential
benefits for a start-up to collaborate with a large mature firm. We also con-
sidered the role played by incubators in the promotion of the contest and in
the relationship with start-ups.
What did we learn from the eight French
start-up contests?
We analysed the characteristics of the relations between big firms and start-
ups participating to the start-ups contests, by considering the reasons why
large mature firms organised a start-up contests, the distance between the
technological fields of big firms and start-ups, the mutual benefits for large
firms and start-ups, and the role of incubators. This analyse leads us to pro-
pose a classification of start-ups contests and to show the role of incubators
in the practices of start-ups contests.
Why did they organise a start-up contest?
We collected a set of official statements from the managers for start-ups con-
tests in the firms. The sources were the media or the institutional websites
of the firms (table 2). They explained the reasons why they want to work
with start-ups.
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Véronique SCHAEFFER
34 Journal of Innovation Economics & Management – 2015/3 – n° 18
Table 2 – The contribution of start-ups to the innovative potential
of large firms
Siemens
The most important innovations will come from outside the firm, and more
specifically from young start-ups. In a big firm, everyone converges progressively
towards an identical vision of the world”. Source: Manager for innovation in a
French subsidiary of Siemens
IBM
Today the world is connected (…) Developing technology opens new markets
and new opportunities for entrepreneurs. These entrepreneurs are the SMEs of
tomorrow, and a source of growth and economic dynamism”. Source: IBM website
SFR
These young firms provide the opportunity of identifying innovative markets,
fulfilling new projects in line with the strategy of SFR (…)”. Source: numéricable-SFR
website
Orange
Open innovation is a high priority for a telecom operator in this major Internet
revolution (…) our open innovation strategy, organised so as to innovate always
with greater speed and agility” (CEO of Orange). Source: votreargent.lexpress.fr
(translation)
La Poste
The start-up which is very flexible comes to work with the group La Poste which
is actually rather less flexible, but which has a powerful sales force at its disposal
(Director of Start’in post). Source: dailymotion (translation)
Schneider
Electric
(…) identify innovative solutions at an early stage, and evaluate and possibly
integrate them in the firm (...) The objective is to have solutions that can be
marketed as quickly as possible” (Directeur marketing France). Source: You tube
(translation)
Air France With Lab’Line, Air France wish (…) the development of innovative products and
services”. Source: Maddyness (translation)
FNAC The contest is a way for the FNAC to be at the forefront so as to be able to detect
the nuggets of tomorrow”. Source: Le Figaro.fr (translation)
These statements about the reasons why they want to work with start-
ups are elements of the official communication of the companies. They do
not necessarily reveal the deep reasons of the strategic choices, but in all
cases, the firms underlined their willingness to benefit from the innovative
potential (Siemens, IBM, SFR, Schneider Electric, Air France, FNAC) and
the flexibility (La Poste, Orange) of start-ups, in respect of powering their
own innovative potential. They are in a moving environment and to remain
competitive they have to move the frontiers of their businesses. They use
start-ups contests to introduce innovations fasters and to go towards new
businesses. Start-up contests are a way for all these large firms of becoming
visible in this fast moving world of start-ups, and especially in the digital
field. There is a kind of race to find promising projects and to develop part-
nerships with these young firms.
This contest is a part of the strategy of the distribution group, which wants to
become a major player in the connected things sector. (…) This sector is already
showing signs of promise in terms of sales, but is also very competitive. (…)
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Corporate entrepreneurship and creativity in large firms
n° 18 – Journal of Innovation Economics & Management – 2015/3 35
Telecom operators, especially Orange and SFR, have positioned themselves in this
market.” (A. Bompard, CEO of la FNAC1)
The 8 firms replaced start-up contests in a more global open innovation
strategy, based on several practices (table 3). They all used what is called
inbound practices in open innovation literature (Chesbrough, 2003). They
are very open to their environment through a variety of practices: commu-
nity of users, innovation challenges, spin-in, crowdsourcing, and collabora-
tions with many partners.
Table 3 – Open innovation strategy of the eight large firms
About open innovation…
Siemens
A company’s R&D department is no longer its only source of innovation;
customers, suppliers, other companies, and online communities also play a part in
the development process”. Source: Website Siemens
IBM IBM is one of the first companies that have engaged an open innovation strategy
(cf. Chesbrough, 2003).
SFR In an open innovation approach, SFR relies on partnerships with big firms or start-
ups to develop innovative services”. Website SFR
Orange Orange (…) is developing a genuine open innovation strategy, covering all the
areas for research and innovation within the Group”. Site: Orange
La Poste
To accelerate the pace of its development and be present in the latest
technological developments, the group La Poste operates an open innovation policy
on its ecosystem”. Source: Site legroupe.la poste
Schneider
Electric
Our R&D is open to the outside world: Schneider Electric establishes strong R&D
partnerships with leading organizations worldwide”. Source: site Schneider-Electric
Air France
Several open innovation practices: crowdsourcing, creation of Lab’line, start-up
contests, co-creation of the incubator Welcome City Lab.
Sources: sites welcomecitylab.com & .ennomotive
FNAC
Kobo, SFR, Apple, Google, Samsung, even Disney: these are business builders
from specialists which have signed strategic partnerships with us, and which have
the potential of optimising our position in our markets and conquering new one”.
Source: site FNAC
For Siemens and IBM this openness is not an emerging phenomenon but
has over time become a part of the corporate culture and takes many forms
such as spin out, communities of users, collaborations, or innovation chal-
lenges. In all of the cases, open innovation does not replace in-house efforts
in respect of innovation, but seeks to develop synergies between internal
and external innovation efforts. For the firms, which have their business in
non high-tech sectors such as La Poste, FNAC and Air France, the openness
is more recent.
1. Source: Le Figaro.fr, http://www.lefigaro.fr/societes/2014/10/05/20005-20141005ART-
FIG00155-la-fnac-lance-un-concours-pour-start-up.php
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Véronique SCHAEFFER
36 Journal of Innovation Economics & Management – 2015/3 – n° 18
The distance between the technological fields
The subject of the contests and their age (table 4) show that the wide impact
of the Internet linked technologies is an important factor explaining their
development.
Table 4 – Subjects of the contests and distance between technological fields
Large
companies Year of
creation Subject
of the contest Big firm and start-ups
technological distance
Siemens 2001 Different each year (in 2014: idea of new
venture related to exoskeleton)
Close fields
IBM 2010 Cloud – Big data and analytics – Mobile –
Security
SFR 2011 Internet of things – High speed – Digitizing –
Cloud – Big data
Orange 2013
Connected house – Mobility – New media –
E-commerce – Design/creation – Cloud – Big
data
La Poste 2014 E-commerce – Local services and Internet of
things – Numeric security
Distant fields
Schneider
Electric 2014 Energy – Comfort – Home automation
Air France 2014 Test and show innovations in the field of
responsible travel
FNAC 2014 Innovative product or service – Internet of things
Among the 8 start-up contests, 7 were organised for the first time after
2010, and 6 of them were as a result of the development of the Internet
of things and big data, commonly called web 3.0. The emergence of Web
3.0 has a very wide impact on economic activities in many sectors (OECD,
2014). In OECD, 25% of the patents about information and communication
technologies also concern another domain. Moreover, the development of
start-ups contests results from the attraction that the digital sector holds for
investors. In 2011 the industries in the field of information, communication
and digital technologies attracted around 25% of the investments of firms
from the OECD area in terms of R&D. In 2014, one third of the patent
applications concerned technologies linked to information and communica-
tion and over the last ten years, the proportion of patents for data extraction
has more than tripled. The labour productivity is over 60% more than the
average. The sector proved more resistant than the others to the economic
downturns between 2009 and 2012, with an increase in the number of firms,
a high proportion of firms with a high growth and a survival rate higher than
in industries and services. The high speed of growth in this sector and the
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Corporate entrepreneurship and creativity in large firms
n° 18 – Journal of Innovation Economics & Management – 2015/3 37
belief that the digital economy has a high growth potential are factors that
lead firms to organise start-ups contests, to identify them at an early stage
and invest in their capital.
When we consider the main technological area of the big firms and the
technological fields of the contests, we can identify two kinds of openness
to external technologies, whether big firms and the start-ups are in the same
technological field or in distant fields.
The first kind of openness corresponds to the search for external innova-
tions close to the core technological field of the firm. In our study, this is the
case for Siemens, IBM, SFR and Orange. Siemens explores future market
needs and future technological solutions related to the exoskeleton. This
theme is very exploratory and was chosen in line with the long-term vision
of the future technological challenges the firm could have to face and which
guide its learning efforts. IMB, SFR and Orange are stakeholders in the field
of telecommunication and transfer of data. They created start-up contests
dedicated to digital services and software products in 2010, 2011 and 2013.
Cloud computing, big data, Internet of things and mobile applications have
led to an improvement in their current services and products, and also to
new commercial opportunities. SFR and Orange are competitors in the tele-
phone, mobile phone and Internet access sector. The competition in this
sector is strong and the prices are continuously decreasing, thus reducing
margins. The firms have to innovate continuously in order to remain com-
petitive in a fast moving technological environment. They diversify their
activities, through the development of new services based on the digital
technologies, which apply to markets where the competition is more open.
The aim of this diversification is to benefit from the dynamism of the fields
of Internet of things and machine to machine communication (M2M).
The second kind of openness corresponds for large firms to the search
for external innovations in distant technological fields. This is what we
observe for Schneider Electric, Air France, the FNAC and La Poste. Except
Air France, which chose the theme of sustainable development in air trans-
port (but is otherwise involved in the creation of an incubator dedicated to
tourism in the digital field), the three others, Schneider Electric, La Poste
and la FNAC organised contests relating to digital services and software
products.
Schneider Electric produces electrical equipment and faces a technologi-
cal revolution, which is changing the way things are used as well as the mar-
ket. Its industrial customers do not simply buy electrical products, as before.
Their needs have evolved towards global solutions for managing the use of
energy. So besides products, the firm has to develop a range of services based
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Véronique SCHAEFFER
38 Journal of Innovation Economics & Management – 2015/3 – n° 18
on digital technologies for making electrical systems smart. La Poste is the
French Post Office. The development of Internet has led to decreasing vol-
umes in mail distribution and la Poste has to diversify its activities in insur-
ance and banking, and also to adapt its business to paperless mail, through
the development of digital services. The FNAC distributes cultural goods.
Its business is about paperless information, which affects cultural goods, such
as music and books. Internet has also been a driving force for the develop-
ment of e-commerce, which has changed the way people make their pur-
chasers and led to the emergence of new competitors in the distribution
sector. The traditional activity of distribution of cultural goods has had to
adapt as the Internet develops. The aim is not to develop together techno-
logical competences as in the contests in technological fields closed to core
competences, but to exploit a commercial complementarity.
Depending on their technological distance with start-ups, big firms do
not have the same interest for the technological knowledge embedded in
the innovation offered by the winning start-ups. When they are close they
internalise new technological or market related knowledge. When they are
distant, they do not integrate the technological knowledge per se, but inte-
grate the innovation as a whole that contains technological expertise. This
last kind of relationship is the result of the emergence of new value chains
in the economy, induced by the emergence of new technology providers spe-
cialised in digital technologies, which have a wide impact on many sectors.
Large mature firms are interested in these technologies as users but these do
not constitute their core skills and they are more involved in an outsourcing
strategy than in a technological learning strategy.
Mutual benefits for big firms and start-ups
The relations that the big firms want to develop with the winning start-ups
establish are not the same in all cases, as evidenced by the criteria chosen to
select the winning start-ups and projects, the rewards on offer in the contests
and the long term perspectives for the relation (table 5).
The rewards proposed by the big firm to the winning start-ups of the
contests reveal the existence of two different kinds of partnerships. Some
firms (Siemens, Schneider Electric, IBM) propose a partnership based on the
co-development of products or services with start-ups, whereas others firms
essentially provide commercial resources.
When we consider the kind of activity of the big firms involved in the
8 contests we study and their R&D efforts, differences between industry and
service-focussed firms effectively appear (table 6) and seem to explain these
two kinds of partnership between big firms and start-ups.
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Corporate entrepreneurship and creativity in large firms
n° 18 – Journal of Innovation Economics & Management – 2015/3 39
Table 5 – Criteria announced in the contest rules
Maturity of the
innovative project Rewards Long term perspectives
for the relation
Siemens Fuzzy front end Support in the development Integrate the product in the
product portfolio
Schneider
Electric Development
Support in the development
and marketing of an innovative
product or service
Launch of the product by
Schneider Electric in 1 year
IBM Development
Supporting product development
Access to IBM softwares for
3 years
Selection for a European
and international start-up
competition
SFR Development
Access to experts (finance,
market, media…) for one year –
Availability of technical resources
– Communication
Benefit from the
commercial network of the
operator
Orange Close to market
Incubation for 3 months –
Coaching – Expertise – Access to
a network
Benefit from the
commercial network of the
operator
La Poste Development Business tests – Acceleration –
Support over one year
To be defined: becoming a
provider or integration of
the service in the portfolio
Air France Development
Possibility of testing innovation in
Air France flight and relaying it to
Air France customers
Include the service in Air
France catalogue
FNAC Development 10,000 in FNAC gift vouchers Marketing of the product
Table 6 – In-house R&D
Activity R&D / revenues Patents Venture capital
Siemens Industry 6% 65,000 Yes
IBM Industry 6% 6,500 Yes
Schneider
Electric Industry 5% 400/year Yes
SFR High tech services 0.9% NC Yes
Orange High tech services 2% NC Yes
La Poste Services / / Yes
Air France Services / / /
FNAC Services / / /
Mature industrial firms (Siemens, IBM, Schneider Electric) had higher
investments in R&D than the 5 others firms, which are in the service sec-
tor. SFR and Orange are telecommunication operators and have in-house
research. La Poste, Air France and FNAC are in traditional service sectors
and have no internal R&D, as is usual in their service sector.
Chesbrough (2011) stresses the existence of differences between the
organisation of R&D and the innovation processes whether they are product
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Véronique SCHAEFFER
40 Journal of Innovation Economics & Management – 2015/3 – n° 18
or service-focussed. In open innovation the role of in-house research is very
important because a firm can benefit from the search for distant answers to
a problem, but only if it has the ability to choose the appropriate answers,
to evaluate their consequences and to combine this new knowledge with
the current knowledge of the firm (Afuah, Tucci, 2012). For firms which
have in-house R&D, this combinative capacity exists and they can engage
in co-development with the start-ups and combine internal and external
knowledge.
Identification of four kinds of relationships resulting
from the contests
We have identified two criteria to explain the kind of relationships between
big firms and winning start-ups of the contests: the distance between their
technological fields and the industrial or service oriented activity of the big
firm. The conjunction of these two criteria leads us to identify four kinds of
relations between big firms and start-ups, depending on whether the tech-
nological fields are close or distant and whether innovation in the big firm is
product or services focussed. Table 7 below summarizes the results.
Table 7 – A typology of relationships between large firms and start-ups
Industry Service
Start-ups and big firm in
close technological fields
Early co-development
(Siemens, IBM)
Acceleration
(SFR, Orange)
Start-ups and big firms in
distant technological fields
Co-development close to market
(Schneider Electric)
Outsourcing
(Air France, FNAC, La Poste)
Early co-development
For the industrial firms which have major in-house R&D activities, the
aim of the contest is to link up partners so as to co-develop products or
services. The relations between start-ups and big firms leading to early co-
development of products or services result from contests oriented towards
the exploration of future needs of the consumers or of future technological
solutions. IBM and Siemens are industrial companies with highly developed
R&D activities. They offer to support start-ups in the development of their
project (table 5). This allows start-ups to benefit from their technological,
strategic and commercial expertise, and their commercial network if the col-
laboration leads to the product being launched.
Siemens selects a project at a very early stage in the innovation process.
In 2014, the call for projects was for students in their last year of engineering
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Corporate entrepreneurship and creativity in large firms
n° 18 – Journal of Innovation Economics & Management – 2015/3 41
school who have a new venture project. The winner of the contest will
become a partner to co-generate knowledge with a team of researchers
from Siemens, to contribute to a product concept and future development
together. As part of the contest, they are clearly looking for external ideas
for new products which can benefit from external creativity. Siemens takes
a long-term view. All the other contests of our study are medium or short
term focussed.
For IBM, cloud and big data appeal to a continuous development of the
technologies on which products and services are based, and completely
change the way their customers work and then open new opportunities
for innovation. Their openness to start-ups is a catalyst for incremental
or radical innovation. In some cases they incorporate technologies devel-
oped outside to improve the current products or services. In other cases
start-ups bring new ideas that can lead to new businesses. In both cases,
there is a common creation of knowledge through interactive learning
and the benefits of the collaboration for the big firms are faster and greater
innovation.
Co-development close to market
Schneider Electric is also a firm that has a major R&D function and which
is very innovative. The digital technologies have taken on an ever more
important role for the firm but are not its traditional core technologies. The
theme of the concept is very focused on specific application in house auto-
mation. Schneider Electric is interested in the possible applications of digital
technologies in products and services for homes. The firm launched start-up
contest to carry out a search in its environment for existing solutions, which
could be added to their products portfolio in a short term.
They also offer co-development opportunities for the winning start-ups,
but the projects they are searching for start-ups having mature projects, close
to market. This innovative strategy is less costly, less risky and faster than an
internal innovation process. The digital field is a very dynamic one and has
a high entrepreneurial potential, which make possible this kind of strategy.
Acceleration
There are two possible strategic objectives in these cases: contribution to the
improvement of the technological service of the big firm in an incremental
innovation approach and external growth through a diversification of the
services offered. In both cases, they can provide start-ups with accelerating
services. They do not co-develop a service, but provide resources to promis-
ing start-ups. They take a share in the capital of the start-ups as part of their
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Véronique SCHAEFFER
42 Journal of Innovation Economics & Management – 2015/3 – n° 18
commitment. The benefits for start-ups are the accelerating services (advice
and capital) and the access to a large commercial network. Acceleration is
not only a search for new ideas in these cases, but also a financial principle
at stake, with the investment in promising start-ups. The existence of an
accelerator or an incubator allows the firm to detect the projects before tra-
ditional venture capitalists do and to support them. The ability to identify
the promising projects is a key aspect for the venture capitalist.
The two contests in the telecommunication sector (SFR, Orange)
focused specifically on digital technologies. The firms have created their
own accelerator to attract projects, which are already close to being mar-
keted. The subject of the contest is very wide and concerns digital technolo-
gies and digital services. The large firms can use the projects developed by
the winning start-ups to improve the performance of their current services
(for example projects relating to high speed, cloud) or can integrate them in
their portfolio of services.
Outsourcing
FNAC, La Poste and Air France are service-oriented companies. There is
a double innovation strategy in the contests that they organise. The first is
to find external solutions that can contribute to the improvement of their
services. This is an incremental innovation approach. The external projects
that are concerned by this approach are linked to a specific theme concern-
ing transport, distribution of cultural goods or local services. Start-ups can
benefit from advice and from the commercial network for testing and dis-
tributing their products should the project be successful. The second is to
diversify the activities of the group and to invest in the digital economy,
which is seen as having a huge growth potential. La Poste has consider-
ably diversified its activity and is now also actively involved in the digital
field. In respect of these new activities the group has the same approach as
SFR and Orange. It also proposes accelerating services to firms in the digital
field. Recently, Air France has also co-created an accelerator in the digital
field and FNAC has a partnership with an accelerator of Orange. There is a
development of the traditional services towards high-tech services. This can
lead to new complementarities between the telecom operators and tradi-
tional service sectors, which are moving towards digital services.
The role of incubators and accelerators
Big firms and start-ups are distant stakeholders and do not meet naturally.
They do not operate in the same arena and so do not have the opportunity
to work together. Large firms organise start-up contests to generate visibility
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Corporate entrepreneurship and creativity in large firms
n° 18 – Journal of Innovation Economics & Management – 2015/3 43
among these potential partners. They use incubators and accelerators as
intermediaries with the start-ups (table 8).
Table 8 – The role of incubators in the contests
Companies Incubator as partner for the contest
Siemens Public incubators
IBM Incubator (software & digital technologies)
SFR Accelerator (digital field)
Orange Accelerator (digital field)
La Poste Accelerator (digital field)
Schneider Electric /
Air France Public incubators
FNAC /
Incubators play the role of a relay, in that they distribute information
about the start-up contests. The creation of the first contest by Siemens
followed on from the creation of 30 public incubators in France in the year
2000. This phenomenon is not specific to France. The number of incuba-
tors in the world has doubled between 1990 and 2000. Air France also has a
public incubator as a partner, which relays information about the contest to
start-ups. The contest covers a very wide scope of subjects and can concern
many technological areas. The generalist character of public incubators is
adapted to this kind of contest.
The four firms from the telecom and software sector have created their
own incubator. This kind of incubator is often called an accelerator. They
are not generalists in their role as a public accelerator, but are rather special-
ised in technology directly linked to information and communication tech-
nologies. Their role is downstream of the public incubator. They support
existing start-ups, which are already in a development phase. They can help
them with their marketing requirements as well as enable them to benefit
from their commercial network. Generally they take up shares in the capital
of the start-ups that they have selected, so the partnership makes financial
sense. Firms that create accelerators also possess venture capital funds.
Schneider Electric and FNAC also organised a contest in the specific
fields of habitat and distribution of cultural goods respectively. They used
specialised media to broadcast the information about the contest. Their
contest is not specific to start-ups as it can also concern existing SMEs (less
than 4 years for FNAC). They do not have internal incubator for organising
their start-up contest, but Schneider Electric has owned a venture capital
fund since 2000 and at the end of 2014 FNAC joined Orange Fab, which is
Orange’s accelerator for the digital sector.
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Véronique SCHAEFFER
44 Journal of Innovation Economics & Management – 2015/3 – n° 18
DISCUSSION
As part of our analysis of the eight contests we need to discuss three aspects:
the contribution of start-ups to the entrepreneurial activities of large mature
firms, the impact of Internet technologies on the development of start-up
contests, and the role of incubators as boundary spanners and gatekeepers.
Contribution of start-ups to the performance
of large mature firms
Our study shows the willingness of large mature firms to benefit from the cre-
ativity of start-ups so as to be able to offer new products and services. Beside
the start-up contests they have introduced several open innovation prac-
tices such as those described in Dahlander and Gahn (2010), or Penin et al.
(2011): spin-out, spin-in, licence-in, collaboration with user communities,
innovation challenges… Start-ups contests are new practices, not described
in the open innovation literature. They allow large mature firms to integrate
innovations invented externally into their business through a partnership or
through a licence-in.
Large firms suffer from cultural and structural rigidities (Tushman,
O’Reilly, 1996). The relationship that they develop with start-ups is based
on the complementarity between the two learning contexts. The large firms
benefit from the creativity of small firms and they benefit in return from the
commercial and technical expertise, funding, technical equipment, access to
the market, and commercial networks of big firms.
Just like other innovation contests, start-up contests involve the mass
distribution of a problem in order to increase the diversity of responses and
to collect creative solutions (Jeppensen, Lakhani, 2010). The specificity of a
start-up contest is that the problem which is distributed is not just a techno-
logical one. It goes much further. Start-ups bring projects which are nearly
ready for the market place and which may represent a major advantage for
big firms in terms of creativity but also of time to market. These contests
effectively increase the entrepreneurial potential of large firms. They lead
to the integration of new products or services in their portfolio and open up
new businesses.
Start-ups contests lead to win-win relations between big firms and start-
ups. The large firm will enrich its perception of the needs of the market
through the perception of external entrepreneurs which are remote from the
firm and able to perceive new needs on the market and have a sound under-
standing of these needs. As underlined by Griffin et al. (2009) the excellent
understanding of the need of customers is a key aspect that is typical of all
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Corporate entrepreneurship and creativity in large firms
n° 18 – Journal of Innovation Economics & Management – 2015/3 45
outstanding innovators. The big firm can help start-ups market their inno-
vation by offering them their experience of the project management for a
planned product launch. As noted by Terziovski (2010) SMEs have to learn
from large firms about the ways of managing an innovational project. They
can also benefit from their commercial network.
There is also another important benefit stemming from the incorpora-
tion of outside innovation for big firms. Start-up contests are practices that
stimulate creativity and also reduce the risk taken by the large firm. There
are two main challenges for large firms during the fuzzy front end of innova-
tion. The first is the emergence of new ideas, which determine the ability
to be creative. The second is the management of the risks associated with
investing in projects that will not succeed and/or result in the early elimina-
tion of good ideas. A high selectivity at an early stage hinders creativity and
a low selectivity is costly. The start-up contest is also a way of externalising
risks associated with the fuzzy front end of innovation. Large firms select
projects that have already reached the phase of a viable product concept
or are already at the development stage. They support the projects after the
more risky phase that precedes product development.
The contests lead to different kinds of relationships with the winning
start-ups. In order to put some detail on these relationships we introduced
two characteristics of the firm. The first characteristic is the industrial or
service activity of the firm. As underlined by Chesbrough (2011), in service
sectors, even in the case of very innovative firms, they generally do not have
an R&D structure unlike innovative industrial firms. Furthermore, the role
of customers during the service-focussed innovation process is essential. We
showed that industrial firms which launched start-ups contests enter a co-
development process with the start-up. For service firms the relationship is
less interactive. For these big service firms, the contests target projects which
are close to being marketed. They generally provide the start-up with infor-
mation relating to market. In both cases the start-up benefits from the com-
mercial network of the large firm, but in the industrial case there is always a
co-creation of technological expertise.
The second characteristic that we introduced is the distance between the
technological fields of the big firm and the start-ups. When big firms are far
from the technological field of the start-ups, their relationship is not based
on the co-creation of technological knowledge. They have a user-producer
link. Then, the subjects of the contests focus on more precise applications of
the technologies and projects that are targeted are closer to the market. The
firms search outside for innovations relating to the technological expertise
that they do not have. In low-tech services, firms have no internal R&D,
and they outsource innovation.
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Véronique SCHAEFFER
46 Journal of Innovation Economics & Management – 2015/3 – n° 18
Internet technologies and the development
of start-up contests
The wide impact of web 3.0 brings about a new way of considering value
creation in many sectors of activity. In some cases, the development of the
digital economy causes the disappearance of traditional activities (La Poste
and FNAC), but also offers opportunities for new business. In other cases,
the development of the digital sector creates technological conditions that
stimulate the introduction of new services associated with traditional activi-
ties (Schneider Electric). The dynamism of the entrepreneurial activities
in the digital sector leads the firm to seek out within their environment,
remote solutions which may be hidden, in order to innovate faster and more
cheaply.
There are many other examples, which demonstrate the wide impact
of the digital field. L’Oréal has set up an incubator (Connected Beauty
Incubator) in the Silicon Valley in order to be close to an environment
which is able to provide it with creativity in the field of connected things
within the cosmetics industry. In car manufacturing, PSA Peugeot-Citroën
considers that its core business is no longer the production of cars but the
production of solutions for mobility. With the development of the Internet
of things, in addition to producing objects, manufacturers have to produce
smart solutions. In the past, they were product-focussed but now they also
have to develop more and more services associated with their products.
As shown by Chesbrough (2011) in the case of IBM, these services have
enormous commercial potential in terms of revenues. This development is a
challenge for the organisation of R&D but also an opportunity to gain new
competitive advantages in the market place.
Many firms diversified their activities in the digital field and are in
competition to attract the more promising start-ups. With the emergence
of smart phones, mobile phones have become mobile computers and the
boundary between the business of a telecommunication operator and an
Internet access provider has changed. With the Internet of things, the net-
work of things and the issues associated with big data, many traditional sec-
tors are affected, and the digital field has become a subject of interest for
many business concerns. The race is on to identify as soon as possible the
more promising start-ups by offering them acceleration services. The contest
is a way of making visible to start-ups the willingness of big firms to collabo-
rate or to invest.
This wide impact and the attractiveness of the numeric field are the
cause of the dual principle in play in the organisation of a start-up con-
test by stakeholders from the digital and information sector. They have an
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Corporate entrepreneurship and creativity in large firms
n° 18 – Journal of Innovation Economics & Management – 2015/3 47
open-innovation strategy which is clear for all to see. They integrate new
knowledge on subjects such as high speed, cloud, and digitization. They
have also an investment strategy which operates through their investment
funds. They invest in firms which have a high growth potential. Beside their
accelerators, they have their investment funds. This financial approach also
explains the presence of banks as partners of the accelerators and incuba-
tors. In 2014, the French Bank Crédit Agricole set up an incubator called
the Village in Paris. The bank has a partnership with large firms such as
Microsoft, HP and Somfy. They provide a large part of the financial resources
needed for the incubator. Their interest is to be involved in the selection of
the projects proposed by young firms and to then be in a position to identify
promising potential partners. Another bank, BNP Paribas has launched in
Paris an accelerator called WAI (We Are Innovation), to support young
start-ups. One of the aims is to be close to the firms perceived as the poten-
tial future key players in the business dynamic and to be in a good position
to attract them as clients.
The incubators as boundary spanners
The dynamic nature of entrepreneurial activities in large firms relies on their
ability to combine internal and external knowledge, in many different ways
(Noteboom et al., 2007, Teece et al., 1997). According to Afuah and Tucci
(2012), when a stakeholder has a problem to solve, the alternative it per-
ceives depends on its past experiences and on the proximity of its current
position. If the solution is not present in its vicinity it can conduct a distant
search. A local search can be compared to exploitation and a distant search
to an exploration. Start-ups contests are a search for distant partners. Start-
ups are not in the vicinity of large firms and start-up contests are a way of
accessing hidden distant knowledge. To make the meeting between these
two distant partners possible, some actors play the role of innovation inter-
mediaries. In many start-ups contests, incubators play this role of interface
between the start-ups and the others partners of the entrepreneurial eco-
system. They are visible both for large firms and for start-ups. They have
knowledge about the local entrepreneurial activities and about the others
actors of the entrepreneurial local ecosystem. They play the role of boundary
spanners by reducing the distance between large firms and young start-ups.
Incubators can be public or private. In our study concerning start-ups
contests organised in France, the private incubators are specialised in digital
technologies and are often called accelerator. The public incubators can also
focus on a technology or can be generalists, depending on the local entrepre-
neurial dynamism and technological specialisation. Public incubators and
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Véronique SCHAEFFER
48 Journal of Innovation Economics & Management – 2015/3 – n° 18
accelerators do not play the same role in the local ecosystems of entrepre-
neurship. Accelerators are downstream of public incubators. They support
projects in the acceleration phase and target already mature projects in the
digital field. From a financial point of view, these accelerators are a way
for large firms of detecting promising start-ups and of participating in their
capital in order to benefit from the economic dynamism of the digital field.
In an innovation approach, these accelerators are an economic force cre-
ated by large firms for detecting interesting projects in its environment. So
beside their role of boundary spanners they also play the role of a gatekeeper.
A gatekeeper has to possess a deep technological knowledge in order to be
able to evaluate the relevance of external technologies for the firm and to
evaluate the technological challenge linked to the concepts on offer (Reid,
De Brentani, 2004).
As emphasized by Afuah and Tucci (2012) there are a number of factors
which can represent a hurdle to distant searching, because local stakehold-
ers searching for distant knowledge have to locate, evaluate, transfer and
recombine the distant knowledge with their existing stock of knowledge.
In start-up contests, there is a jury, which selects the best opportunities.
Accelerators combine all the expertise needed to assume this function and
play the role of boundary spanner and gatekeeper, dedicated to the detection
of promising concepts of products created in external start-ups. The winning
start-ups do not just offer technological solutions. They offer innovations
and the evaluation requires both technological and market related expertise.
These skills are put together in accelerators.
CONCLUSION
The recent development of start-up contests appears to be a phenomenon
which has been most heavily influenced by the development of technolo-
gies, linked to the Internet, but which affects many business sectors. Firms
have to rethink their product and services portfolio by integrating technolo-
gies related to the Internet of things and big data, because they are stake-
holders within the digital sector or because their activities are impacted by
these technologies. At the same time, start-ups play an important role in
the dynamic force that the digital and Internet sector represent, and are
seen as the engine of economic growth. Large firms, facing the necessity
to introduce discontinuous innovations in a shifting technological sector,
and to reinvent the way of devising solutions for their customers, seek out
external ideas for powering the development of their business. They search
for distant and diverse answers in their environment to stimulate their own
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Corporate entrepreneurship and creativity in large firms
n° 18 – Journal of Innovation Economics & Management – 2015/3 49
entrepreneurial activities. In order to link up with these distant players, one
of the tools they use is the start-up contest. These contests contribute to the
efficiency of corporate entrepreneurship in three ways: They increase all the
opportunities which are part of innovation; they reduce the time needed
for marketing and they reduce the risk by skipping the fuzzy front end of
innovation.
The continuous technological development leads large firms to inte-
grate new technological expertise, when they are high tech firms, but also
to redefine their business models (Chesbrough, 2003). The development of
private accelerators for start-ups are an organisational setting suitable for
hosting, either physically or virtually, young start-ups and to contribute to
the refinement of their business model. The win-win situation that makes
start-ups contests organised by large firms, the success story that they are, is
the complementarity of their assets: the technical expertise and the creativ-
ity of start-ups and the resources, the expertise in R&D and marketing, the
commercial network of the large firm.
This study was a preliminary exploration of this emerging practice. In
most of the firms of our sample there are others forms of searching for dis-
tant partners. It would be interesting to explore their complementarity, and
to supplement this first approach by interviewing the different stakeholders
involved so to have a better appreciation of what motivates them. A wider
sample would make it possible to refine the identification of the contingency
factors and to confirm the features of these contests.
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