Title: Trial by market: the Brightstar incubation experiment

Authors: Simon Ford, David Probert

Addresses: Centre for Technology Management, Institute for Manufacturing, University of Cambridge, 17 Charles Babbage Road, Cambridge, CB3 0FS, UK. ' Centre for Technology Management, Institute for Manufacturing, University of Cambridge, 17 Charles Babbage Road, Cambridge, CB3 0FS, UK

Abstract: Established firms accumulate a significant body of knowledge, expertise and capabilities that are often secondary to their central revenue generating activities. How do they leverage this expertise in non-core technology into future value creation opportunities? In this paper we examine an attempt by the telecommunications firm BT to create value from the accumulated knowledge within its laboratories by setting up an incubator. While conceived by the board as a mechanism for leveraging the value of non-core technology into the workplace, corporate support for the incubator was withdrawn after only three years and prompted the incubator to partner with a venture capital firm, NVP, in the spin-out of ventures. Through analysis of this single case we observe how entering into such a relationship reduces the transaction costs of accessing complementary resources, capabilities and competences, while simultaneously reducing a number of the risks associated with venturing for both parties. Partnering with the venture capitalist allows the established firm to get its intellectual property into the market, for it to be tested by the market and further developed.

Keywords: corporate incubators; technology incubation; corporate entrepreneurship; corporate spin-outs; business models; industrial ecosystems; telecommunications industry; BT; value creation; entrepreneurial venturing; transaction costs; venture capital; intellectual property.

DOI: 10.1504/IJEV.2010.034821

International Journal of Entrepreneurial Venturing, 2010 Vol.2 No.2, pp.185 - 200

Received: 16 Mar 2009
Accepted: 03 Dec 2009
Published online: 23 Aug 2010 *

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