How Traditional Companies can Foster Innovation through Collaboration with Startups

Established businesses are facing enormous challenges in order to ensure their long-term growth and their overall competitiveness. The speed of innovation has increased significantly and due to digitization, they are threatened by innovative startups which arise in their initial business area. To obtain and expand their competitive advantage, they are forced to identify innovation opportunities and realize new products in a faster sequence. To do so, they often rely on startups as a source of innovation. The thesis evaluates, if the process of identification, evaluation and realization of innovation opportunities, is transferable to corporates in the case of collaboration with startups. Besides, it describes common cooperation models, identifies challenges and gives practical implications for managers. The theoretical part includes a comprehensive literature review regarding the relevant concepts whereas the empirical section contains qualitative interviews with managers of established companies and experts operating in the intersection of these two parties. The findings indicate that the process is transferable to established companies, but more likely to occur in business units that are independent from the core organization. Furthermore, the thesis reflects that the abilities to identify and evaluate innovation opportunities are particularly important for collaboration success. The presence of an overarching vision, as well as the encouragement of entrepreneurship within the company, are highly important. Both should be initiated and supported by executive-level decision makers. The research identifies organizational and cultural differences, as well as non-existent internal processes and structures, as the main challenges during collaboration. Cultural distinctions primarily occur in form of different structures, working methods and speed. The research results indicate that startup guides are a possible solution. The thesis links the concepts of open innovation and knowledge entrepreneurship and answers the question if the cooperation with startups could support traditional companies to overcome The Innovators Dilemma described by Clayton Christensen. Furthermore, it outlines challenges and influencing factors during collaboration and gives practical implications to corporates. The research is especially relevant for managers of traditional businesses who want to increase their company's level of innovation in the long term.