Corporate

Entrepreneurshi
p
 The Entrepreneurial Economy
Factors in the emergence of the entrepreneurial
economy:
 The rapid evolution of knowledge and technology
promoted high-tech entrepreneurial start-ups.
 Demographic trends adding fuel to the proliferation of
newly developing ventures.
 The venture capital market became an effective
funding mechanism for entrepreneurial venture.
 Our industry began to learn how to manage
entrepreneurship.

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 The Nature of Corporate
Entrepreneurship
Most researchers agree that the term refers to
entrepreneurial activities that receive
organizational sanction and resource
commitments for the purpose of innovative
results (intrapreneurship).
The major thrust of intrapreneuring is to develop
the entrepreneurial spirit within organizational
boundaries, thus allowing an atmosphere of
innovation to prosper.

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 The Nature of Corporate
Entrepreneurship
Defining The Concept
 Corporate Entrepreneurship
• Activities that receive organizational sanction and
resource commitments for the purpose of
innovative results.
– A process whereby an individual or a group of individuals,
in association with an existing organization, creates a
new organization or instigates renewal or innovation
within the organization.
– A process that can facilitate firms’ efforts to innovate
constantly and cope effectively with the competitive
realities that companies encounter when competing in
international markets.

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 The Nature of Corporate
Entrepreneurship
Defining The Concept
 Under this definition, the following dimensions are
important in corporate entrepreneurship process:

Strategic renewal (organizational renewal involving major

strategic and/or structural changes)
Innovation (introducing something new to the
marketplace)
Corporate venturing (corporate entrepreneurial efforts
that lead to the creation of new business organizations
within the corporate organization)

© 2007 Thomson/South-Western. All rights reserved. 3–5

 The Need for Corporate
Entrepreneurship
Rapid growth in the number of new and sophisticated
competitors
Sense of distrust in the traditional methods of corporate
management
An exodus of some of the best and brightest people from
corporations to become small business entrepreneurs
International competition
Downsizing of major corporations
An overall desire to improve efficiency and productivity

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 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 Companies
Factors in large corporations that are successful
innovators:
 Atmosphere and vision
 Orientation to the market
 Small, flat organizations
 Multiple approaches
 Interactive learning
 Skunkworks

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 Reengineering Corporate Thinking
Steps to develop policies that will help innovative
people reach their full potential:
1. Set explicit goals
2. Create a system of feedback and positive
reinforcement
3. Emphasize individual responsibility
4. Give rewards based on results
5. Do not punish failures.

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 Assessing Support for Innovation
Does the firm encourage self-appointed intrapreneurs?
Does the firm provide ways for intrapreneurs to stay with
their enterprises?
Are people permitted to do the job in their own way, or
are they constantly stopping to explain their actions and
ask for permission?
Has the firm evolved quick and informal ways to access
the resources to try new ideas?
Has the firm developed ways to manage many small and
experimental products and businesses?

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 Assessing Support for Innovation
(cont’d)
Is the system set up to encourage risk taking and to
tolerate mistakes?
Can the firm decide to try something and stick with the
experiment long enough to see if it will work, even when
that may take years and several false starts?
Are people in your company more concerned with new
ideas or with defending their turf?
How easy is it to form functionally complete, autonomous
teams in the firm’s corporate environment?
Do intrapreneurs face monopolies, or are they free to use
the resources of other divisions and outside vendors if
they choose?
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 Innovative Philosophy
1. Encourage action.
2. Use informal meetings whenever possible.
3. Tolerate failure and use it as a learning experience.
4. Persist in getting an idea to market.
5. Reward innovation for innovation’s sake.
6. Plan the physical layout of the enterprise to encourage informal
communication.
7. Expect clever bootlegging of ideas—secretly working on new
ideas on company time as well as personal time.
8. Put people on small teams for future-oriented projects.
9. Encourage personnel to circumvent rigid procedures and
bureaucratic red tape.
10. Reward and promote innovative personnel.

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 Encouraging an Intrapreneurial
Environment
Steps to help restructure corporate thinking and
encourage an intrapreneurial environment:
1. Early identification of potential intrapreneurs
2. Top management sponsorship of intrapreneurial
projects
3. Creation of both diversity and order in strategic
activities
4. Promotion of intrapreneurship through
experimentation
5. Development of collaboration between intrapreneurial
participants and the organization at large

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 Benefits of an Entrepreneurial
Philosophy
Leads to the development of new products and
services and helps the organization expand and
grow.
Creates a work force that can help the enterprise
maintain its competitive posture.
Promotes a climate conducive to high achievers
and helps the enterprise motivate and keep its
best people.

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 Conceptualizing a Corporate
Entrepreneurial Strategy
Corporate Entrepreneurship (CE) Strategy
 A vision-directed, organization-wide reliance on
entrepreneurial behavior that purposefully and
continuously rejuvenates the organization and shapes
the scope of its operations through the recognition and
exploitation of entrepreneurial opportunity.
 It requires the creation of congruence between the
entrepreneurial vision of the organization’s leaders
and the entrepreneurial actions of those throughout
the organization.

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 Conceptualizing a Corporate
Entrepreneurial Strategy (cont’d)
Critical steps of a corporate entrepreneurial
strategy:
 Developing the vision
 Encouraging innovation
 Structuring for an intrapreneurial climate
 Developing individual managers for corporate
entrepreneurship
 Developing venture teams.

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 Figure 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

Corporate entrepreneurship strategy is

manifested through the presence of three
elements:
 An entrepreneurial strategic vision
 A proentrepreneurship organizational architecture
 Entrepreneurial processes and behavior as exhibited
across the organizational hierarchy.

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 Model of the Corporate
Entrepreneurship Strategy Process
(cont’d)
Linkages in the model:
1. Individual entrepreneurial cognitions of the organization’s
members
2. External environmental conditions that invite entrepreneurial
activity
3. Top management’s entrepreneurial strategic vision for the firm
4. Organizational architectures that encourage entrepreneurial
processes and behavior
5. The entrepreneurial processes that are reflected in
entrepreneurial behavior
6. Organizational outcomes resulting from entrepreneurial actions.

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 Figure 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 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 Innovation
Radical Innovation
 The launching of inaugural breakthroughs.
 These innovations take experimentation and
determined vision, which are not necessarily managed
but must be recognized and nurtured.
Incremental Innovation
 The systematic evolution of a product or service into
newer or larger markets.
 Many times the incremental innovation will take over
after a radical innovation introduces a breakthrough.

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 Figure 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

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 Rules
Don’t kill a project
Tolerate failure
Keep divisions small
Motivate the champions
Stay close to the customer
Share the wealth

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 Structuring for a Corporate
Entrepreneurial Environment

Reestablishing the drive to innovate:

 Invest heavily in entrepreneurial activities that allow
new ideas to flourish in an innovative environment.
 Provide nurturing and information-sharing activities.
 Employee perception of an innovative environment is
critical.
Corporate Venturing
 Institutionalizing the process of embracing the goal of
growth through development of innovative products,
processes, and technologies with an emphasis on
long-term prosperity.
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 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

Corporate Entrepreneurship Training Program

(Corporate Breakthrough Training)
1. The Breakthrough Experience
2. Breakthrough Thinking
3. Idea Acceleration Process
4. Barriers and Facilitators to Innovative Thinking
5. Sustaining Breakthrough Teams
6. The Breakthrough Plan

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 Corporate Entrepreneurship
Assessment Instrument

Key Entrepreneurial Climate Factors

 Management support
 Autonomy/work discretion
 Rewards/reinforcement
 Time availability
 Organizational boundary

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 Facilitating Intrapreneurial Behavior
Organizations foster intrapreneurial behavior by:
 Encouraging—not mandating—intrapreneurial activity
 Proper control of human resource policies related to
“selected rotation”
 Sustaining a commitment to intrapreneurial projects
long enough for momentum to occur.
 Bet on people, not on analysis.
Rewarding intrapreneuring:
 Allow inventor to take charge of the new venture
 Grant discretionary time to work on future projects
 Make intracapital available for future research ideas

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 Table 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 Teams
Venture Team
 A semiautonomous, self-directing, self-managing,
high-performing group of two or more people who
formally create and share the ownership of a new
organization.
 The leader is called a “product champion” or an
“intrapreneur.”
Collective Entrepreneurship
 Individual skills are integrated into a group; this
collective capacity to innovate becomes something
greater than the sum of its parts.

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 Figure 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 Entrepreneurship
Sustained Corporate Entrepreneurship Model
 Based on theoretical foundations from previous
strategy and entrepreneurship research.
 Considers the comparisons made at the individual and
organizational level on organizational outcomes, both
perceived and real, that influence the continuation of
the entrepreneurial activity.
 Transformational trigger
• Something external or internal to the company (e.g.,
corporate entrepreneurial activity) that causes a change to
take place) initiates the need for strategic adaptation or
change.

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 Figure 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 IBM
Emerging Business Opportunity (EBO) Program
Key Rules:
 Think big . . . really big.
 Bring in the A-team.
 Start small.
 Establish unique measurement techniques.

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 Key Terms and Concepts
bootlegging entrepreneurial economy
champion incremental innovation
collective interactive learning
entrepreneurship intracapital
corporate intrapreneurship
entrepreneurship radical innovation
Corporate skunkworks
Entrepreneurship
Assessment Instrument top management support
(CEAI) venture team

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