CHAPTER 10

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CORPORATE
ENTREPRENEURSHIP &
INNOVATION
 Knowledge Objectives
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Studying this chapter should provide you with the

strategic management knowledge needed to:
Define and explain strategic entrepreneurship.
Describe the importance of entrepreneurial opportunities,
innovation, and entrepreneurial capabilities.
Discuss the importance of international entrepreneurship.
Describe autonomous and induced strategic behaviorthe two
forms of internal corporate venturing.
Discuss how cooperative strategies such as strategic alliances
are used to develop innovation.
Explain how firms use acquisitions to increase their
innovations and enrich their innovative capabilities.
 The Strategic
Management
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Process

Figure 1.1

Copyright 2004 South-Western. All rights reserved.

 Strategic Entrepreneurship
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Strategic Entrepreneurship
Taking entrepreneurial actions using a strategic perspective
Engaging in simultaneous opportunity seeking and
competitive advantage seeking behaviors
Designing and implementing entrepreneurial strategies to
create wealth

Strategic entrepreneurship actions can be taken by:

Individuals
Corporations
 Strategic Entrepreneurship and Innovation
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Entrepreneurship is concerned with:

The discovery of profitable opportunities

The exploitation of profitable opportunities

Firms that encourage entrepreneurship are:

Risk takers

Committed to innovation

Proactive in creating opportunities rather than waiting to

respond to opportunities created by others
 Entrepreneurial Opportunities
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Entrepreneurial Opportunities
Conditions in which new products or services can satisfy a
need in the market

Entrepreneurs or entrepreneurial managers must be

able to:
Identify opportunities not perceived by others
Take actions to exploit the opportunities
Establish a competitive advantage
 Innovation Process
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The act of creating or developing a

Invention
new product or process
Brings something new into being
Technical criteria are used to
determine the success of an
invention
 Innovation Process
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Invention The process of creating a

commercial product from an
invention
Brings something new into use.
Innovation Commercial criteria are used to
determine the success of an
innovation
 Innovation Process
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Invention

The adoption of an innovation by

similar firms
Innovation Usually leads to product or
process standardization
Products based on imitation often
are offered at lower prices but
Imitation with fewer features
 The Importance of Innovation
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Innovation
Is a key outcome firms seek through entrepreneurship

Is often the source of competitive success

Corporate Entrepreneurship
Innovations produced in large established firms
 Entrepreneurs
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Entrepreneurs
Individuals acting independently or as part
of an organization who create a new
venture or develop an innovation, take
risks entering innovations into the
marketplace
Can be any manager or employee in an
organization
 Entrepreneurial Capabilities
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Entrepreneurial capabilities include:

Intellectualcapital
Entrepreneurial mind-set

Transfer of entrepreneurial competence to

others in the organization
Effective human capital
 International Entrepreneurship
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Entrepreneurship can:
Fuel economic growth

Create employment

Generate prosperity for

citizens

There is a strong positive

relationship between the rate of
entrepreneurial activity and
economic development in a
nation
 International Entrepreneurship
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There must be a balance

(in the culture) between
individual initiative and
the spirit of cooperation and
group ownership of innovation

Successful entrepreneurial firms

Provide appropriate autonomy

Offer incentives for individual initiative

Promote cooperation and group ownership of an

innovation
 Incremental and Radical Innovation
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Incremental Innovation Radical Innovation

Most innovations are Are rare because of
incremental difficulty and risk

Provides small increments in Provides significant

current product lines technological
breakthroughs
Improves existing knowledge
and processes Creates new knowledge
and processes
Can create value
Can create value
Internal Corporate Venturing: A Model
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 Internal Corporate Venturing
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The set of activities used to create inventions and

innovations through internal means
R&D spending is linked to success in internal corporate
venturing

Product champions
Organizational member with an entrepreneurial vision of a
new good or service who seeks to create support for its
commercialization. They play critical roles in moving
innovations forward.
 Internal Corporate Venturing
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Autonomous strategic behaviour is a bottom-up

process in which product champions:
Pursue new ideas, often through a political process
By means of which they develop and coordinate the
commercialization of a new good or service until it achieves
success in the marketplace

Forms of internal corporate venturing

Autonomous strategic behavior
Induced strategic behavior
 Venturing: Strategic Behaviors
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Autonomous Strategic Behavior

Based on a firms knowledge and resources

that are the sources of the firms
innovation

A firms technological capabilities and

competencies are its basis for new
products and processes
 Venturing: Strategic Behaviors
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Induced Strategic Behavior

A top-down process whereby the firms current
strategy and structure foster product innovations

Thestrategy in place is filtered through a

matching structural hierarchy

Innovations are associated closely with that

strategy and structure
Implementing New Product Development
and Internal Ventures
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To be innovative and develop internal ventures

requires:
An entrepreneurial mindset
Risk propensity
An emphasis on execution

Individuals with an entrepreneurial mindset

Engage the energies of everyone in their domain both
inside and outside the organization
 Cooperative Strategies for Entrepreneurship
and Innovation 12
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Cooperation and integration of knowledge and resources is required

to successfully commercialize inventions
Entrepreneurial firms need investment capital and distribution
capabilities
Established companies need the technological knowledge
possessed by entrepreneurial firms
Firms innovate through the sharing their knowledge and skills in a
cooperative relationship.
Entrepreneurial new ventures, may seek investment capital as well as
distribution capabilities of more established firms to implement a
new product idea and introduce it to the market.
Alliances between large pharmaceutical firms and biotechnology
companies have increasingly formed to integrate knowledge &
resources to develop new products & bring top market.