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Corporate Entrepreneurship
Corporate Entrepreneurship
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The Entrepreneurial EconomyThe Entrepreneurial Economy
Factors in the emergence of the entrepreneurial Factors in the emergence of the entrepreneurial economy:economy:
The rapid evolution of knowledge and technology The rapid evolution of knowledge and technology promoted high-tech entrepreneurial start-ups.promoted high-tech entrepreneurial start-ups.
Demographic trends adding fuel to the proliferation of Demographic trends adding fuel to the proliferation of newly developing ventures.newly developing ventures.
The venture capital market became an effective The venture capital market became an effective funding mechanism for entrepreneurial venture.funding mechanism for entrepreneurial venture.
Our industry began to learn how to manage Our industry began to learn how to manage entrepreneurship.entrepreneurship.
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Most researchers agree that the term refers to Most researchers agree that the term refers to entrepreneurial activities that receive entrepreneurial activities that receive organizational sanction and resource organizational sanction and resource commitments for the purpose of innovative commitments for the purpose of innovative results (intrapreneurship).results (intrapreneurship).
The major thrust of intrapreneuring is to develop The major thrust of intrapreneuring is to develop the entrepreneurial spirit within organizational the entrepreneurial spirit within organizational boundaries, thus allowing an atmosphere of boundaries, thus allowing an atmosphere of innovation to prosper.innovation to prosper.
The Nature of Corporate Entrepreneurship
The Nature of Corporate Entrepreneurship
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Defining The ConceptDefining The Concept Corporate EntrepreneurshipCorporate Entrepreneurship
• Activities that receive organizational sanction and Activities that receive organizational sanction and resource commitments for the purpose of resource commitments for the purpose of innovative results.innovative results.
– A process whereby an individual or a group of individuals, A process whereby an individual or a group of individuals, in association with an existing organization, creates a in association with an existing organization, creates a new organization or instigates renewal or innovation new organization or instigates renewal or innovation within the organization.within the organization.
– A process that can facilitate firms’ efforts to innovate A process that can facilitate firms’ efforts to innovate constantly and cope effectively with the competitive constantly and cope effectively with the competitive realities that companies encounter when competing in realities that companies encounter when competing in international markets.international markets.
The Nature of Corporate Entrepreneurship
The Nature of Corporate Entrepreneurship
© 2007 Thomson/South-Western. All rights reserved. 3–5
Defining The ConceptDefining The Concept Under this definition, the following dimensions are Under this definition, the following dimensions are
important in corporate entrepreneurship process:important in corporate entrepreneurship process:
Strategic renewal (organizational renewal involving major Strategic renewal (organizational renewal involving major strategic and/or structural changes)strategic and/or structural changes)
Innovation (introducing something new to the Innovation (introducing something new to the marketplace)marketplace)
Corporate venturing (corporate entrepreneurial efforts Corporate venturing (corporate entrepreneurial efforts that lead to the creation of new business organizations that lead to the creation of new business organizations within the corporate organization)within the corporate organization)
The Nature of Corporate Entrepreneurship
The Nature of Corporate Entrepreneurship
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The Need for Corporate Entrepreneurship
The Need for Corporate Entrepreneurship
Rapid growth in the number of new and sophisticated Rapid growth in the number of new and sophisticated competitorscompetitors
Sense of distrust in the traditional methods of corporate Sense of distrust in the traditional methods of corporate managementmanagement
An exodus of some of the best and brightest people from An exodus of some of the best and brightest people from corporations to become small business entrepreneurscorporations to become small business entrepreneurs
International competitionInternational competition
Downsizing of major corporationsDownsizing of major corporations
An overall desire to improve efficiency and productivityAn overall desire to improve efficiency and productivity
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Sources Of and Solutions To Obstacles In Corporate Venturing
Sources Of and Solutions To Obstacles In Corporate Venturing
Source: Reprinted by permission of the publisher from “Corporate Venturing Obstacles: Sources and Solutions,” by Hollister B. Sykes and Zenas Block, Journal of Business Venturing (winter 1989): 161. Copyright © 1989 by Elsevier Science Publishing Co., Inc.
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Successful Innovative CompaniesSuccessful Innovative Companies
Factors in large corporations that are successful Factors in large corporations that are successful innovators:innovators:
Atmosphere and visionAtmosphere and vision
Orientation to the marketOrientation to the market
Small, flat organizationsSmall, flat organizations
Multiple approachesMultiple approaches
Interactive learningInteractive learning
SkunkworksSkunkworks
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Reengineering Corporate ThinkingReengineering Corporate Thinking
Steps to develop policies that will help innovative Steps to develop policies that will help innovative people reach their full potential:people reach their full potential:
1.1. Set explicit goalsSet explicit goals
2.2. Create a system of feedback and positive Create a system of feedback and positive reinforcementreinforcement
3.3. Emphasize individual responsibilityEmphasize individual responsibility
4.4. Give rewards based on resultsGive rewards based on results
5.5. Do not punish failures.Do not punish failures.
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Assessing Support for InnovationAssessing Support for Innovation
Does the firm encourage self-appointed intrapreneurs?Does the firm encourage self-appointed intrapreneurs?
Does the firm provide ways for intrapreneurs to stay with Does the firm provide ways for intrapreneurs to stay with their enterprises?their enterprises?
Are people permitted to do the job in their own way, or Are people permitted to do the job in their own way, or are they constantly stopping to explain their actions and are they constantly stopping to explain their actions and ask for permission?ask for permission?
Has the firm evolved quick and informal ways to access Has the firm evolved quick and informal ways to access the resources to try new ideas? the resources to try new ideas?
Has the firm developed ways to manage many small and Has the firm developed ways to manage many small and experimental products and businesses?experimental products and businesses?
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Assessing Support for Innovation (cont’d)
Assessing Support for Innovation (cont’d)
Is the system set up to encourage risk taking and to Is the system set up to encourage risk taking and to tolerate mistakes?tolerate mistakes?
Can the firm decide to try something and stick with the Can the firm decide to try something and stick with the experiment long enough to see if it will work, even when experiment long enough to see if it will work, even when that may take years and several false starts?that may take years and several false starts?
Are people in your company more concerned with new Are people in your company more concerned with new ideas or with defending their turf?ideas or with defending their turf?
How easy is it to form functionally complete, autonomous How easy is it to form functionally complete, autonomous teams in the firm’s corporate environment?teams in the firm’s corporate environment?
Do intrapreneurs face monopolies, or are they free to use Do intrapreneurs face monopolies, or are they free to use the resources of other divisions and outside vendors if the resources of other divisions and outside vendors if they choose?they choose?
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Innovative PhilosophyInnovative Philosophy
1.1. Encourage action.Encourage action.
2.2. Use informal meetings whenever possible.Use informal meetings whenever possible.
3.3. Tolerate failure and use it as a learning experience.Tolerate failure and use it as a learning experience.
4.4. Persist in getting an idea to market.Persist in getting an idea to market.
5.5. Reward innovation for innovation’s sake.Reward innovation for innovation’s sake.
6.6. Plan the physical layout of the enterprise to encourage informal Plan the physical layout of the enterprise to encourage informal communication.communication.
7.7. Expect clever Expect clever bootlegging bootlegging of ideasof ideas——secretly working on new secretly working on new ideas on company time as well as personal time.ideas on company time as well as personal time.
8.8. Put people on small teams for future-oriented projects.Put people on small teams for future-oriented projects.
9.9. Encourage personnel to circumvent rigid procedures and Encourage personnel to circumvent rigid procedures and bureaucratic red tape.bureaucratic red tape.
10.10. Reward and promote innovative personnel.Reward and promote innovative personnel.
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Encouraging an Intrapreneurial Environment
Encouraging an Intrapreneurial Environment
Steps to help restructure corporate thinking and Steps to help restructure corporate thinking and encourage an intrapreneurial environment:encourage an intrapreneurial environment:1.1. Early identification of potential intrapreneursEarly identification of potential intrapreneurs
2.2. Top management sponsorship of intrapreneurial Top management sponsorship of intrapreneurial projectsprojects
3.3. Creation of both diversity and order in strategic Creation of both diversity and order in strategic activitiesactivities
4.4. Promotion of intrapreneurship through Promotion of intrapreneurship through experimentationexperimentation
5.5. Development of collaboration between intrapreneurial Development of collaboration between intrapreneurial participants and the organization at largeparticipants and the organization at large
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Benefits of an Entrepreneurial Philosophy
Benefits of an Entrepreneurial Philosophy
Leads to the development of new products and Leads to the development of new products and services and helps the organization expand and services and helps the organization expand and grow. grow.
Creates a work force that can help the enterprise Creates a work force that can help the enterprise maintain its competitive posture.maintain its competitive posture.
Promotes a climate conducive to high achievers Promotes a climate conducive to high achievers and helps the enterprise motivate and keep its and helps the enterprise motivate and keep its best people.best people.
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Conceptualizing a Corporate Entrepreneurial Strategy
Conceptualizing a Corporate Entrepreneurial Strategy
Corporate Entrepreneurship (CE) StrategyCorporate Entrepreneurship (CE) Strategy A vision-directed, organization-wide reliance on A vision-directed, organization-wide reliance on
entrepreneurial behavior that purposefully and entrepreneurial behavior that purposefully and continuously rejuvenates the organization and shapes continuously rejuvenates the organization and shapes the scope of its operations through the recognition and the scope of its operations through the recognition and exploitation of entrepreneurial opportunity.exploitation of entrepreneurial opportunity.
It requires the creation of congruence between the It requires the creation of congruence between the entrepreneurial vision of the organization’s leaders entrepreneurial vision of the organization’s leaders and the entrepreneurial actions of those throughout and the entrepreneurial actions of those throughout the organization. the organization.
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Conceptualizing a Corporate Entrepreneurial Strategy (cont’d)
Conceptualizing a Corporate Entrepreneurial Strategy (cont’d)
Critical steps of a corporate entrepreneurial Critical steps of a corporate entrepreneurial strategy:strategy:
Developing the visionDeveloping the vision
Encouraging innovationEncouraging innovation
Structuring for an intrapreneurial climateStructuring for an intrapreneurial climate
Developing individual managers for corporate Developing individual managers for corporate entrepreneurshipentrepreneurship
Developing venture teams. Developing venture teams.
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Figure 3.1 The Corporate Entrepreneurship Strategy ProcessFigure 3.1 The Corporate Entrepreneurship Strategy Process
Source: Adapted from R. Duane Ireland, Donald F. Kuratko, and Jeffrey G. Covin, “Antecedents, Elements, and Consequences of Corporate Entrepreneurship,” Best Paper Proceedings: National Academy of Management (August 2003) CD Rom: L1–L6; and R. Duane Ireland, Jeffrey G. Covin, and Donald F. Kuratko, Corporate Entrepreneurship Strategy (in press, 2007).
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Model of the Corporate Entrepreneurship Strategy Process
Model of the Corporate Entrepreneurship Strategy Process
Corporate entrepreneurship strategy is Corporate entrepreneurship strategy is manifested through the presence of three manifested through the presence of three elements:elements: An entrepreneurial strategic visionAn entrepreneurial strategic vision
A proentrepreneurship organizational architectureA proentrepreneurship organizational architecture
Entrepreneurial processes and behavior as exhibited Entrepreneurial processes and behavior as exhibited across the organizational hierarchy.across the organizational hierarchy.
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Model of the Corporate Entrepreneurship Strategy Process
(cont’d)
Model of the Corporate Entrepreneurship Strategy Process
(cont’d)Linkages in the model:Linkages in the model:
1.1. Individual entrepreneurial cognitions of the organization’s Individual entrepreneurial cognitions of the organization’s membersmembers
2.2. External environmental conditions that invite entrepreneurial External environmental conditions that invite entrepreneurial activityactivity
3.3. Top management’s entrepreneurial strategic vision for the firmTop management’s entrepreneurial strategic vision for the firm
4.4. Organizational architectures that encourage entrepreneurial Organizational architectures that encourage entrepreneurial processes and behaviorprocesses and behavior
5.5. The entrepreneurial processes that are reflected in The entrepreneurial processes that are reflected in entrepreneurial behaviorentrepreneurial behavior
6.6. Organizational outcomes resulting from entrepreneurial actions.Organizational outcomes resulting from entrepreneurial actions.
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Figure 3.2 Shared VisionFigure 3.2 Shared Vision
Source: Jon Arild Johannessen, “A Systematic Approach to the Problem of Rooting a Vision in the Basic Components of an Organization,” Entrepreneurship, Innovation, and Change (March 1994): 47. Reprinted with permission from Plenum Publishing Corporation.
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Table 3.2 Objectives And Programs For Venture DevelopmentTable 3.2 Objectives And Programs For Venture Development
Source: Adapted by permission of the publisher from “Supporting Innovation and Venture Development in Established Companies,” by Rosabeth Moss Kanter, Journal of Business Venturing (winter 1985): 56–59. Copyright © 1985 by Elsevier Science Publishing Co., Inc.
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Types of InnovationTypes of Innovation
Radical InnovationRadical Innovation The launching of inaugural breakthroughs.The launching of inaugural breakthroughs. These innovations take experimentation and These innovations take experimentation and
determined vision, which are not necessarily managed determined vision, which are not necessarily managed but must be recognized and nurtured.but must be recognized and nurtured.
Incremental InnovationIncremental Innovation The systematic evolution of a product or service into The systematic evolution of a product or service into
newer or larger markets.newer or larger markets. Many times the incremental innovation will take over Many times the incremental innovation will take over
after a radical innovation introduces a breakthrough.after a radical innovation introduces a breakthrough.
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Figure 3.3 Radical Versus Incremental InnovationFigure 3.3 Radical Versus Incremental Innovation
Source: Harry S. Dent, Jr., “Reinventing Corporate Innovation,” Small Business Reports (June 1990): 33.
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Table 3.3 Developing And Supporting Radical And Incremental Innovation
Table 3.3 Developing And Supporting Radical And Incremental Innovation
Source: Adapted from Harry S. Dent, Jr., “Growth through New Product Development,” Small Business Reports (November 1990): 36.
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3M’s Innovation Rules3M’s Innovation Rules
Don’t kill a projectDon’t kill a project
Tolerate failureTolerate failure
Keep divisions smallKeep divisions small
Motivate the championsMotivate the champions
Stay close to the customerStay close to the customer
Share the wealthShare the wealth
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Structuring for a Corporate Entrepreneurial EnvironmentStructuring for a Corporate
Entrepreneurial Environment
Reestablishing the drive to innovate:Reestablishing the drive to innovate: Invest heavily in Invest heavily in entrepreneurial activitiesentrepreneurial activities that allow that allow
new ideas to flourish in an innovative environment.new ideas to flourish in an innovative environment. Provide nurturing and information-sharing activities.Provide nurturing and information-sharing activities. Employee perception of an innovative environment is Employee perception of an innovative environment is
critical.critical.
Corporate VenturingCorporate Venturing Institutionalizing the process of embracing the goal of Institutionalizing the process of embracing the goal of
growth through development of innovative products, growth through development of innovative products, processes, and technologies with an emphasis on processes, and technologies with an emphasis on long-term prosperity.long-term prosperity.
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Figure 3.4 Intrapreneurial Development: Joint Function of Individual and Organizational Factors
Figure 3.4 Intrapreneurial Development: Joint Function of Individual and Organizational Factors
Source: Deborah V. Brazeal, “Organizing for Internally Developed Corporate Ventures,” Journal of Business Venturing (January 1993): 80.
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Developing Individual Managers for Corporate Entrepreneurship
Developing Individual Managers for Corporate Entrepreneurship
Corporate Entrepreneurship Training Program Corporate Entrepreneurship Training Program (Corporate Breakthrough Training)(Corporate Breakthrough Training)
1.1. The Breakthrough ExperienceThe Breakthrough Experience
2.2. Breakthrough ThinkingBreakthrough Thinking
3.3. Idea Acceleration ProcessIdea Acceleration Process
4.4. Barriers and Facilitators to Innovative ThinkingBarriers and Facilitators to Innovative Thinking
5.5. Sustaining Breakthrough TeamsSustaining Breakthrough Teams
6.6. The Breakthrough Plan The Breakthrough Plan
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Corporate Entrepreneurship Assessment Instrument
Corporate Entrepreneurship Assessment Instrument
Key Entrepreneurial Climate FactorsKey Entrepreneurial Climate Factors Management supportManagement support
Autonomy/work discretionAutonomy/work discretion
Rewards/reinforcementRewards/reinforcement
Time availabilityTime availability
Organizational boundaryOrganizational boundary
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Facilitating Intrapreneurial Behavior Facilitating Intrapreneurial Behavior
Organizations foster intrapreneurial behavior by:Organizations foster intrapreneurial behavior by: Encouraging—not mandating—intrapreneurial activityEncouraging—not mandating—intrapreneurial activity Proper control of human resource policies related to Proper control of human resource policies related to
“selected rotation”“selected rotation” Sustaining a commitment to intrapreneurial projects Sustaining a commitment to intrapreneurial projects
long enough for momentum to occur.long enough for momentum to occur. Bet on people, not on analysis.Bet on people, not on analysis.
Rewarding intrapreneuring:Rewarding intrapreneuring: Allow inventor to take charge of the new ventureAllow inventor to take charge of the new venture Grant discretionary time to work on future projectsGrant discretionary time to work on future projects Make intracapital available for future research ideasMake intracapital available for future research ideas
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Table 3.4 The Ten Commandments Of An IntrapreneurTable 3.4 The Ten Commandments Of An Intrapreneur
Source: Adapted from Intrapreneuring by Gifford Pinchot III, 1985, 22. Copyright © 1985 by Gifford Pinchot III. Adapted by permission of HarperCollins Publishers.
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Developing Venture TeamsDeveloping Venture Teams
Venture TeamVenture Team A semiautonomous, self-directing, self-managing, A semiautonomous, self-directing, self-managing,
high-performing group of two or more people who high-performing group of two or more people who formally create and share the ownership of a new formally create and share the ownership of a new organization.organization.
The leader is called a “product champion” or an The leader is called a “product champion” or an “intrapreneur.”“intrapreneur.”
Collective EntrepreneurshipCollective Entrepreneurship Individual skills are integrated into a group; this Individual skills are integrated into a group; this
collective capacity to innovate becomes something collective capacity to innovate becomes something greater than the sum of its parts.greater than the sum of its parts.
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Figure 3.5 An Interactive Model of Corporate EntrepreneuringFigure 3.5 An Interactive Model of Corporate Entrepreneuring
Source: Jeffrey S. Hornsby, Douglas W. Naffziger, Donald F. Kuratko, and Ray V. Montagno, “An Interactive Model of the Corporate Entrepreneurship Process,” Entrepreneurship Theory and Practice (spring 1993): 31.
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Sustaining Corporate EntrepreneurshipSustaining Corporate Entrepreneurship
Sustained Corporate Entrepreneurship ModelSustained Corporate Entrepreneurship Model Based on theoretical foundations from previous Based on theoretical foundations from previous
strategy and entrepreneurship research.strategy and entrepreneurship research. Considers the comparisons made at the individual and Considers the comparisons made at the individual and
organizational level on organizational outcomes, both organizational level on organizational outcomes, both perceived and real, that influence the continuation of perceived and real, that influence the continuation of the entrepreneurial activity.the entrepreneurial activity.
Transformational triggerTransformational trigger• Something external or internal to the company (e.g., Something external or internal to the company (e.g.,
corporate entrepreneurial activity) that causes a change to corporate entrepreneurial activity) that causes a change to take place) initiates the need for strategic adaptation or take place) initiates the need for strategic adaptation or change.change.
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Figure 3.6 A Model of Sustained Corporate EntrepreneurshipFigure 3.6 A Model of Sustained Corporate Entrepreneurship
Source: Donald F. Kuratko, Jeffrey S. Hornsby, and Michael G. Goldsby, “Sustaining Corporate Entrepreneurship: Modeling Perceived Implementation and Outcome Comparisons at Organizational and Individual Levels,” International Journal of Entrepreneurship and Innovation 5(2) (May 2004): 79.
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Corporate Entrepreneurship at IBMCorporate Entrepreneurship at IBM
Emerging Business Opportunity (EBO) Program Emerging Business Opportunity (EBO) Program Key Rules:Key Rules: Think big . . . really big. Bring in the A-team. Start small. Establish unique measurement techniques.
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Key Terms and ConceptsKey Terms and Concepts
bootleggingbootlegging
championchampion
collective collective entrepreneurshipentrepreneurship
corporate corporate entrepreneurshipentrepreneurship
Corporate Corporate Entrepreneurship Entrepreneurship Assessment Instrument Assessment Instrument (CEAI)(CEAI)
entrepreneurial economyentrepreneurial economy
incremental innovationincremental innovation
interactive learninginteractive learning
intracapitalintracapital
intrapreneurshipintrapreneurship
radical innovationradical innovation
skunkworksskunkworks
top management supporttop management support
venture teamventure team