Entrepreneurship
Course Instructor
Engr. Asnaf Aziz
1-1
Corporate Entrepreneurship
Learning Objectives:
1. To understand the causes of interest in corporate
entrepreneurship.
2. To introduce the “entrepreneurial” mode of managing firms
and distinguish it from the traditional mode.
3. To provide a scale for capturing the extent to which
management adopts entrepreneurial or traditional
behaviors.
4. To discuss how established firms can develop an
entrepreneurial culture and the challenges of doing so.
5. To acknowledge that projects fail and people feel bad
about it, and to introduce the dual process model for
maximizing learning from failure experiences.
1-2
Corporate entrepreneurship
Corporate Entrepreneurship is a process used to develop new
businesses, products, services or processes inside of an
existing organization
To create value and generate new revenue growth through
entrepreneurial thought and action
1-3
Corporate entrepreneurship
Entrepreneurial actions within an established organization
Less flexibility and not meeting the employees suggestions on
improvements leads to dissatisfaction
It may lead loss of best employees
e.g. Steve jobs (Apple Macintosh – Next)
Dennis Stemmle (Idea of battery operated, plain paper copier) of
Xerox
Therefore large scale companies allow their employees to start
joint venture within employer organization
1-4
Corporate entrepreneurship
Developing a spirit of entrepreneurship within the existing
organization by overcoming the resistance against flexibility,
growth, and change
An increase in corporate entrepreneurship culture reflects an
increase in social, cultural, and business pressures toward
entrepreneurial action.
1-5
CE Intentions Within Existing
Organizations
Top management must create an environment that encourages
employees to think and act entrepreneurially
Employees will realize that entrepreneurial action within the
firm is both personally desirable and feasible
1-6
Corporate entrepreneurship
Intrapreneurship / corporate entrepreneurship consist of
creating something new by redefining
the company’s current products or services,
developing new markets,
or forming more formally autonomous or semiautonomous
units or firms.
1-7
Corporate entrepreneurship
Formations of new corporate ventures are the most salient
manifestations of corporate entrepreneurship.
Organizational innovativeness refers to product and service
innovation, with an emphasis on development and innovation in
technology.
It includes new product development, product improvements,
and new production methods and procedures.
1-8
Objectives of Corporate
Entrepreneurship
Cultivate innovation and creativity within enterprise
Creating an entrepreneurial organization
Organizing around teams
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Need for Corporate
Entrepreneurship
Rapid growth in the number of new and sophisticated
competitors
The failure rate for entirely new business initiatives remains high
for new products and services, more than ninety percent for
transformational efforts.
Departure of some of the best and brightest people from
corporations to become small business entrepreneurs
Three out of five organizations say they are weak when it comes
to execution and they see corporate entrepreneurship as a way
to close the gap between idea generation and execution.
An overall desire to improve efficiency and productivity
1-10
Corporate Entrepreneurship
Influencing Factors
Compensation and Incentive System
Organization Culture
Top Management Support
Resource Availability
Organization Policies
Risk Taking and Failure Tolerance
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Entrepreneurial Focus Conceptual Dimension Administrative Focus
Presence or Generation of Strategic Orientation Opportunities using existing
opportunity for new entry and resources are considered for
less concern about future
resources(secondary step)
Revolutionary with short Action on potential Long duration considerable
duration opportunities emphasis on information
Many stages with minimal Commitment of resources A single stage with complete
exposure (step by step) commitment
Rent of required resources Control/Use of resources Ownership of resources
Less bureaucratic Management structure Hierarchy
Informal communication clear
channels roles and responsibilities,
highly routinized work,
Compensates employees Reward Philosophy Based on responsibility and
based on their contribution seniority
toward the discovery/
generation and exploitation of
opportunity
Rapid growth top priority, risk Growth Orientation Safe, slow and steady
accepted to achieve growth
Search for new opportunities Entrepreneurial Culture Opportunity search restricted
by controlled resources;
failure punished
1-12
Characteristics of an entrepreneurial
environment
The overall characteristics of a high entrepreneurial
environment are summarized in Table 2.3.
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Characteristics of an
entrepreneurial environment
Organization operates on the frontiers of technology.
Since research and development are key sources for
successful new product ideas
The firm must operate on the cutting edge of the industry’s
technology, encouraging and supporting new ideas instead of
discouraging them
New ideas encouraged
Firms must remove obstacles to creativity in the new product
development process.
In one Fortune 500 company, an attempt to establish an
entrepreneurial environment ran into problems and
eventually failed when the potential entrepreneurs were
informed that a proposed new product and venture was not
possible because it was in the domain of another division. 1-14
Characteristics of an
entrepreneurial environment
Trial and error encouraged
Successful new products or services usually do not appear fully
developed; they evolve.
It took time and some product failures before the first smart
phone appeared.
A company wanting to establish an entrepreneurial spirit has
to establish an environment that allows mistakes and failures
in developing new and innovative products.
Failures allowed
Almost every entrepreneur has experienced at least one failure
in establishing a successful venture.
1-15
Characteristics of an
entrepreneurial environment
Entrepreneurial firms make highly accessible resources for
experimentation, level of resources available such as money
and time
Entrepreneurial firms construct and encourage
multidisciplinary teams to work on new ventures
This open approach, with participation by needed individuals
regardless of area, is the opposite of the typical corporate
organizational structure.
1-16
Characteristics of an
entrepreneurial environment
Besides encouraging teamwork, the corporate environment must
establish a long time horizon for evaluating the success of the
overall program as well as the success of each individual
venture.
If a company is not willing to invest money without a guarantee
of return for 5–10 years, it should not attempt to create an
entrepreneurial environment.
The spirit of corporate entrepreneurship cannot be forced upon
individuals; it must be on a volunteer basis.
1-17
Characteristics of an
entrepreneurial environment
Entrepreneurial firms need to create a reward system that
encourages creativity, risk taking, and even failure
The corporate entrepreneur needs to be appropriately rewarded
for all the energy, effort, and risk taking expended in the
creation of the new venture
Rewards should be based on the attainment of established
performance goals.
1-18
Characteristics of an
entrepreneurial environment
Most importantly, an entrepreneurial firm is one that has a
top management team that wholeheartedly supports and
embraces the entrepreneurial actions of employees
That is, through their physical presence and allocating
sufficient resources to new ventures, managers explicitly and
implicitly send signals to the employees that their
entrepreneurial endeavors are valued and supported.
Without top management support, a successful
entrepreneurial environment cannot be created.
1-19
Establishing Corporate
Entrepreneurship in the Organization
Step one:
Secure a commitment to corporate
entrepreneurship in the organization by top, and
middle management levels.
Establish initial framework and embrace the
concept
Identify, select, and train corporate entrepreneurs.
1-20
Establishing Corporate
Entrepreneurship in the Organization
Step two:
Identify ideas and areas that top management is
interested in supporting
Identify amount of risk money available to develop
the concept
Establish overall program expectations and target
results of each corporate venture
Establish mentor/sponsor system
Step three:
Use of technology to ensure organizational
flexibility 1-21
Establishing Corporate
Entrepreneurship in the Organization
Step four:
Identify interested managers to train employee
and share their experiences
Step five:
Develop ways for the organization to get closer to
its customers.
Step six:
Learn to be more productive with fewer resources.
1-22
Establishing Corporate
Entrepreneurship in the Organization
Step seven:
Establish a strong support structure for corporate
entrepreneurship.
Step eight:
Tie rewards to the performance of the
entrepreneurial unit.
Finally:
Implement an evaluation system that allows
successful entrepreneurial units to expand and
unsuccessful ones to be eliminated. 1-23
Establishing Corporate
Entrepreneurship in the Organization
Problem
A study found that new ventures started within a
corporation performed worse than those started
independently by entrepreneurs.
Reasons cited:
Corporation’s difficulty in maintaining a long-term
commitment.
A lack of freedom to make autonomous decisions.
A constrained environment.
1-24
An Innovation Environment
Encourage action/ideas
Use informal meetings whenever possible
Tolerate failure and use it as a learning experience
Persist in getting an idea to market
Plan the physical layout of the enterprise to encourage
informal communication
Expect clever of ideas—secretly working on new ideas
on company time as well as personal time
Put people on small teams for future-oriented projects
Reward and promote innovative personnel
1-25
Steps of CE Strategy
Developing the vision
Encouraging innovation
Structuring for an entrepreneurial climate
Developing individual managers for corporate
entrepreneurship
Developing venture teams.
1-26
Organizational Activities for CE
Participative decision making
Involvement of specialized personal
Participative development of performance
objectives
Risk taking by Managers
1-27
Leadership Characteristics of
Corporate Entrepreneurs
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