A DYNAMIC PERSPECTIVE OF INTERNAL FIT IN CORPORATE VENTURING STEWART THORNHILL York University, Toronto, Ontario, Canada RAPHAEL AMIT The University of British Columbia, Vancouver, BC, Canada EXECUTIVE SUMMARY Managers of corporate parents and their ventures have long been faced with the question of how closely to tie the parent and venture. A close connection may enable a venture to capitalize on the competencies and resources of the parent. However, venture autonomy could prevent corporate inertia and bu- reaucracy from constraining venture growth. The lack of consensus on this issue leads us to the first of two comple- mentary research questions that we address in this paper: “What is the effect of internal strategic fit between a corporate parent and its venture on venture performance?” We suggest that a tight fit is positively associ- ated with venture performance because of the venture’s access to its parent’s resources. Managers and researchers alike have often observed that growing enterprises are dynamic entities. In the case of corporate ventures, this implies that the relationship between parent and venture evolves over time. Our second research question directly addresses this issue by asking: “Does the relationship between a corporate parent and its venture(s) evolve over time, and if so, how?” We identify two dimensions of the fit between corporate parents and their ventures: relational and economic. A relational fit reflects organizational culture and structure, while an economic fit is a function of the needs of the venture and the resources of the parent. We develop a series of hypotheses and test them with survey data from 97 Canadian corporate ventures. For the purposes of this study, we define success as the ability of a firm to meet internal milestones on schedule. We find that the degree of fit between a corporate parent and its venture does affect the success of a venture, and that success is associated with high levels of awareness, commitment, and connection. Further, the relational dimension of the parent-venture interface appears to have a greater association with venture success than does the economic dimension. Our data support the idea that the parent-venture relationship is dynamic in nature as ventures in our sample generally lessened their economic connections with their parents as they matured (or vice- versa). We did find, however, that the relational bonds remained more or less intact. The exceptions to Address correspondence to Dr. Stewart Thornhill, York University, Schulich School of Business, 4700 Keele Street, Toronto, ON, M6P 2R7, Canada; Phone: (416) 736-2100 (x77908); Fax: (416) 736-5687; E-mail: sthornhill@ssb.yorku.ca The authors are most grateful for the generous financial support of the Social Sciences and Humanities Research Council of Canada (Grant # 412930005). The authors are also grateful to the editor and the two anonymous JBV reviewers for their valuable comments and suggestions. Journal of Business Venturing 16, 25–50  2000 Elsevier Science Inc. All rights reserved. 0883-9026/01/$–see front matter 655 Avenue of the Americas, New York, NY 10010 PII S0883-9026(99)00040-3