1. The Unique Nature of Corporate Entrepreneurship
Chapter 2
The Unique Nature of Corporate Entrepreneurship

2. Question 1: What are the six (6) steps of the entrepreneurial process?

3. Entrepreneurial Realities: Understanding the Process
This process consists of six stages:
Identifying the opportunity
Defining the business concept
Assessing the resource requirements
Acquiring the necessary resources
Implementing and managing the concept
Harvesting the venture

4. Question 2: What are three (3) key questions that an entrepreneurial manager must consider when looking for opportunities?

5. Entrepreneurial Realities: Understanding the Process
Identifying the opportunity
An opportunity is “a favorable set of circumstances creating a need or an opening for a new business concept or approach”
Most new product failures are the result of little to no market demand or need, no matter the innovative, state-of-the-art advances
Key opportunity-based questions facing managers: (1) source(s) of opportunity; (2) size of opportunity; and (3) sustainability of opportunity

6. Entrepreneurial Realities: Understanding the Process
Defining the business concept
A business concept is “an innovative approach for capitalizing on an opportunity”
New product or service
New process for accomplishing a task
A good business concept should:
Fulfill a user’s need(s)
Unique
Not easy to imitate
Reasonably implemented
Profitable

7. Question 3: What are some non-financial resources required or recommended for entrepreneurial success?

8. Entrepreneurial Realities: Understanding the Process
Assessing the Resource Requirement
Money is necessary, but not sufficient to an entrepreneurial venture
Entrepreneurial success if often a function of other resources
Insight/opportunity recognition abilities
Contact network (e.g., customers, suppliers, etc.)
Prior knowledge/skills
Motivated employees/team members
Many other things…

9. Question 4: What is “resource leveraging”
Question 4: What is “resource leveraging”? How can it help entrepreneurs develop a concept?

10. Entrepreneurial Realities: Understanding the Process
Acquiring the Necessary Resources
Beyond simply purchasing resources, entrepreneurs obtain resources in novel ways (e.g. resource leveraging)
Their unconventional ability to acquire resources without letting go of precious financial capital
Resources developed by entrepreneurs are more likely to create advantages (Barney, 1986)
Lessens risk and increases the firm’s flexibility

11. Entrepreneurial Realities: Understanding the Process
Implementing and Managing the Concept
Typically a hectic, uncertain, and ambiguous proposition
Important to have tolerance and adaptability
Given a significant time horizon for most innovations, successful entrepreneurs often set intermediate targets to track progress; “firefighting” mentality = loose sight of overall goal

12. Question 5: Why is an exit strategy important?

13. Entrepreneurial Realities: Understanding the Process
Harvesting the venture
Product/service life cycles decreasing and resources are becoming more quickly obsolete
Threats to business are increasing, but so are opportunities
Harvesting a venture involves how returns will be realized, over what time period, and the eventual outcome of the venture
E.g., absorbed/purchased other business entity, spun off, replaced, eliminated, “die”, etc.

14. How Corporate Entrepreneurship Differs
“Entrepreneurship is the process of creating value by bringing together a unique combination of resources to exploit an opportunity.”
The Entrepreneurial Context is never defined, thus, entrepreneurship can occur in:
Start-up ventures
Small firms
Mid-sized companies
Large conglomerates
Non-profit organizations
Public sector agencies

15. Question 6: What are some of the similarities between traditional start-up entrepreneurs and corporate entrepreneurs? What are some of the differences?

16. How Corporate Entrepreneurship Differs
Similarities between start-up and corporate entrepreneurship
Both involve opportunity recognition and definition
Both require a unique business concept that takes the form of a product, service or process
Both are driven by an individual champion who works with a team to bring the concept to fruition
Both require that the entrepreneur be able to balance vision with managerial skill, passion with pragmatism, and proactiveness with patience
Both involve concepts that are most vulnerable in the formative stage, and that require adaptation over time

17. Similarities (continued):
Both entail a window of opportunity within which the concept can be successfully capitalized upon
Both are predicated on value creation and accountability to a customer
Both find the entrepreneur encountering resistance and obstacles, necessitating both perseverance and an ability to formulate innovative solutions
Both entail risk and require risk management strategies
Both find the entrepreneur needing to develop creative strategies for leveraging resources
Both involve significant ambiguity
Both require harvesting strategies

18. How Corporate Entrepreneurship Differs
Major differences
Start-up Entrepreneurship
Corporate Entrepreneurship
Entrepreneur takes the risk
Company assumes the risks, other than career-related risk
Entrepreneur “owns” the concept or innovative idea
Company owns the concept, and typically the intellectual rights surrounding the concept
Entrepreneur owns all or much of the business
Entrepreneur may have no equity in the company, or a very small percentage
Potential rewards for the entrepreneur are theoretically unlimited
Clear limits are placed on the financial rewards entrepreneurs can receive
One mis-step can mean failure
Vulnerable to outside influence
More room for errors, company can absorb failure
More insulated from outside influence
Independence of the entrepreneur; although the successful entrepreneur is typically backed by a strong team
Interdependence of the champion with many others; may also have to share credit with any number of people

19. Major differences continued
Start-up Entrepreneurship
Corporate Entrepreneurship
Flexibility in changing course, experimenting or trying new directions
Rules, procedures and bureaucracy hinder the entrepreneur’s ability to maneuver
Speed of decision-making
Longer approval cycles
Little security
Job security
No safety net
Dependable benefit package
Few people to talk to
Extensive network for bouncing around ideas
Limited scale and scope initially
Potential for sizeable scale and scope fairly quickly
Severe resource limitations
Access to finances, R&D, production facilities for trial runs, an established sales force, an existing brand, distribution channels that are in place, existing databases and market research resources, and an established customer base

20. Question 7: How might these differences help or hinder corporate entrepreneurship? In other words, what differences make CE easier or harder for entrepreneurial managers?

21. Question 8: What role does company politics or political skill play on corporate entrepreneurship?

22. How Corporate Entrepreneurship Differs
Corporate entrepreneurs face three major challenges linked to the need for interorganizational political skills:
Achieving credibility or legitimacy for the concept and the entrepreneurial team
Obtaining resources
Overcoming inertia and resistance

23. Question 9: What are the three (3) main reasons successful corporate innovators continue to work for established businesses as opposed to starting their own venture? How can that help managers identify ways to keep entrepreneurial employees and encourage entrepreneurial attitudes and behaviors?

24. How Corporate Entrepreneurship Differs
Corporate entrepreneurs remain in the corporate environment rather than starting their own ventures for three main reasons:
The size of the resource base that they can tap into
The potential to operate on a fairly significant scope and scale fairly quickly
The security they enjoy when operating in an existing company
Organizational politics is one of the main reasons corporate entrepreneurs leave the company

25. How Corporate Entrepreneurship Differs
To cultivate an environment of entrepreneurship within an organization, managers must:
Create environments where employees have a sense that resources can be accessed if a idea is sound
Find ways to reinforce the ability of anyone in the firm to champion an idea and get it implemented
Invest in the development of people

26. Rules for Fostering an Innovative Organization
Rule #1 - Unreasonable Expectations
Rule #2 - Elastic Business Definition
Rule #3 - A Cause, Not a Business
Rule #4 - New Voices
Rule #5 - An Open Market for Ideas
Rule #6 - Create an Open Market for Capital
Rule #7 - Open a Market for Talent
Rule #8 - Low-Risk Experimentation

27. Question 10: What are the seven (7) primary ways entrepreneurship appears in organizations? Briefly describe them.

28. Where to Find Entrepreneurship within a Company
Seven Ways in Which Entrepreneurship is Manifested in Established Companies
Traditional R&D
Ad Hoc Venture Teams
New Venture Divisions or Groups
Champions and the Mainstream
Acquisitions
Outsourcing
Hybrid Forms

29. Question 11: According to the Guth and Ginsburg (1990) model, what two types of processes are within the domain of corporate entrepreneurship? What are the four (4) factors that drive their activity and performance?

30. General Frameworks for Understanding Corporate Entrepreneurship
Fitting Corporate Entrepreneurship Into Strategic Management
ENVIRONMENT
STRATEGIC
ORGANIZATION
ORGANIZATION
Competitive
LEADERS
CONDUCT / FORM
PREFORMANCE
Technological
Characteristics
Strategy
Effectiveness
Social
Values/Beliefs
Structure
Efficiency
Political
Behavior
Process
Stakeholder
Satisfaction
Culture
(2)
(3)
(4)
(5)
(1)
CORPORATE
ENTREPRENEURSHIP
Innovation / Venturing
Strategic Renewal
within Established
of Established
Corporations
Corporations
Source: William D. Guth and Ari Ginsberg, “Corporate Entrepreneurship,” Strategic Management Journal 11 (Summer 1990): 5-15.

31. General Frameworks for Understanding Corporate Entrepreneurship
A Model of Sustained Corporate Entrepreneurship
External
Transformational
Trigger
Corporate
Entrepreneurial
Activity
Organizational
Antecedents
Rewards
Management Support
Resources (i.e. time availability)
Supportive Organizational Structure
Risk Taking
Individual
Behavior
Perceived
Activity-Outcome
Relationship
Perceived Decision
Outcome-Relationship
Outcomes
existence
perception
(Individual Comparison)
(Firm Comparison)

32. Question 12: What are the three (3) main drivers of corporate entrepreneurship activity according to Ireland, Covin, and Kuratko (2009)? And FYI, Duane Ireland is a proud TTU alumni!