Corporate Entrepreneurship: Partial Divestitures as a Real Option

Scholars in strategy and entrepreneurship have discussed the benefits and difficulties of keeping ventures inside the firm versus separating them through divestitures and the balance between control and autonomy. Using an in‐depth analysis of cases of partial divestitures, this study examines the organizational arrangement that arises from divestitures with a retained parent‐unit relationship. The emerging framework connects the parent‐unit relationship and its modifications along the divestiture's objective – specifically, the exploration carried out by the unit. Partial divestitures are designed as real options, for firms to manage corporate venturing, taking advantage of the flexibility that such arrangement may grant.