1. Corporate Entrepreneurship (CE)
C18TP
Corporate Entrepreneurship (CE)
Refer to Burns chapter 18.
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2. The ‘Embattled Corporation’
Corporations are facing dramatic changes in the way they do business. Four dimensions have been recognised through which environmental turbulence has created a need for new management practices:
Through customers
Through competitors
Through technology
Through legal, regulatory and ethical standards
Source: Morris, Kuratko and Covin (2011: 6)
Through customers – where fragmented market does not permit a ‘one size fits all’ approach to serving diverse customer groups and where rising customer expectations place greater emphasis on costly customisation (including investments in relationship and in more elaborate support functions).
Through competitors – where competitor's new products tempt existing customers away and place an additional burden on new product development, where the speed of innovation and imitation has improved (an intellectual property becomes less easy to protect), ad where technology changes have permitted small niche players to encroach on the more profitable markets of large diversified firms.
Through technology – where technological advance in information search and management, but also in customer management, production, sales, logistics and inventory management, and, perhaps more crucially, in the technologies of innovation, have raised new challenges for executives in large firms.
Through legal, regulatory and ethical standards – where increasing oversight has resulted in greater accountability to a wider group of stakeholders, growing litigation has raised the stakes on liability, more stringent regulatory environments have limited choice and forced companies to learn new ways to compete, and most recently, rising affluence in home countries has seen priorities shift amongst home stakeholder groups, leading to more public attempts to hold companies accountable for the social and environmental consequences of their actions.
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3. The Embattled Corporation Legal, Regulatory and Ethical Standards
Customers
Fragmented markets
Increasing customer expectations
Higher cost of customisation
Sustainable growth means learning new skills in serving global markets
Technology
To change ways they operate internally and how they compete externally based on:
New information management; production and service delivery; customer management; logistics and inventory management; sales force management; and product development technologies
The Embattled Corporation
Competitors
Increased expenditure in product development
Difficult to differentiate
Increased competition
Competitors specialising in narrow, profitable niches
Legal, Regulatory and Ethical Standards
Increased accountability, visibility and transparency to multiple stakeholders
Increased litigious environment and regulatory restrictions
Source: Morris, Kuratko and Covin (2011: 6)
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4. What is Corporate Entrepreneurship?
Corporate entrepreneurship is the term used to describe entrepreneurial behaviour in an established, larger organisation. It can be defined as: “the development of new business ideas and opportunities within large and established corporations” (Birkinshaw, 2003: 46).
The ‘developments’ include innovations of all types and new business through venturing.
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What’s the Difference?
Independent entrepreneurship is the process whereby an individual or group of individuals acting independently, create a new organisation.
Corporate entrepreneurship is the process whereby an individual or a group of individuals, in association with an existing organisation, create a new organisation or instigate renewal or innovation within that organisation.
The ‘developments’ include innovations of all types and new business through venturing.
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6. Characteristics of Corporate Entrepreneurship
The creation of new business units by an established firm
The development and implementation of entrepreneurial strategic thrusts
The emergence of new ideas from various levels in the organisation
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7. A Typology of Approaches to Corporate Entrepreneurship
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Source: Wolcott and Lippitz (2007)

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Schools of Thought
Birkinshaw (2003) identified four schools of thought in trying to pull together the corporate entrepreneurship literature:
Corporate Venturing
Intrapreneurship
Bringing the market inside
Entrepreneurial transformation
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Corporate Venturing
Concerned with:
The need for larger firms to manage new, entrepreneurial businesses separately from mainstream activity
Investment by larger firms in strategically important smaller firms
Organisation structures needed to encourage new businesses
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Key to success is good ‘strategic fit’:
Strong relationship with core competencies of venturing company - effective synergy or
Acquiring skills, technologies or customers that compliment the strategic direction of venturing company - effective knowledge transfer
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11. Advantages of Corporate Venturing
Facilitates innovation and knowledge import
External sources of finance may be easier to access
Facilitates creation of semi-autonomous units with their own cultures, incentives and business models
Often involves highly motivated staff
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12. Disadvantages of Corporate Venturing
Requires investment, normally equity, which can be risky
Requires investment in venture mechanisms that set up venture management and networks that search out, evaluate and generate deal flows
Investing company will not be in complete control of innovation
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Intrapreneurship
Concerned with:
How individuals may be encouraged to act more entrepreneurially in a large organisation
Systems and structures that inhibit initiative
Challenge those systems and act in entrepreneurial ways
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Pinchot (1985):
“Intrapreneuring ... as entrepreneurship inside of the corporation.”
Knight (1987):
“An intrapreneur is a employee who:... introduces and manages an innovative project within the corporate environment, as if he or she were an independent entrepreneur.”
Need for achievement, risk orientation, innovativeness and need for autonomy
Innovations are enforced in extreme cases by lone fighters
Intrapreneuring, first espoused by Pinchot (1985), is an attempt to take the mindset and behaviors that external entrepreneurs use to create and build businesses, and bring these characteristics to bear inside an existing and usually large corporate setting. Start-up entrepreneurs are often credited with being able to recognise and capture opportunities that others have either not seen or not thought worth pursuing. Companies wishing to spur innovation and find new market opportunities are most often interested in trying to inculcate some of these entrepreneurial values into their culture by creating “intrapreneurs”. In an attempt to improve shareholder value, Mott’s, the well-known food manufacturer, tried to create a cadre of internal entrepreneurs to spur innovation and new business development. They selected 18 candidates who were carefully screened to
serve in this capacity.
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Intrapreneurs
Result orientated
Ambitious
Competitive
Questioning
Self motivated
Comfortable with change
Dislike bureaucracy
Adept at politics
Clarity of direction
Good at resolving conflict
Able to work with others
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16. Needs of Intrapreneurs
Buffer to break rules
High level sponsor
Protection during difficult times
Motivation to pursue project
A culture that ‘tolerates’ intrapreneurship
Sponsor-intrapreneur mutual trust and respect
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17. Bringing the Market Inside
Concerned with:
Structural changes needed to encourage entrepreneurial behaviour
Market approach to resource allocation and people management
Spin offs and venture capital operations
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18. Entrepreneurial Transformation
Concerned with:
The need form large firms to adapt to an ever-changing environment
Changes in systems, structures and cultures that encourage entrepreneurship – entrepreneurial architecture
Leadership and strategies that encourage entrepreneurship
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Types of CE Outcomes
New corporate strategies
New ventures
New business models
New markets
New product or services
New internal processes
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20. Corporate entrepreneurial work environment
Structure
Culture
Resource Controls
Human Resource Management
Entrepreneurial Work Environment
Source: Morris et al. (2009: 432)
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References
Birkinshaw, J. (2003). The Paradox of Corporate Entrepreneurship: Post-Enron Principles for Encouraging Creativity without Crossing the Line. Strategy and Business Wolcott, R.C. and Lippitz, M. J. (2007). The Four Models of Corporate Entrepreneurship. MIT Sloan Management Review 49(1):
Knight, R.M. (1987). Corporate Innovation and Entrepreneurship: A Canadian Study. Journal of Product Innovation Management. 4(4):
Morris, M. H., Kuratko, D. F. and Covin, J. G. (2011). Corporate Entrepreneurship and Innovation (3rd ed.). USA: Cengage Learning.
Morris, M. H., van Vuuren, J., Cornwall, J. R. and Scheepers, R. (2009). Properties of balance: A Pendulum Effect in Corporate Entrepreneurship. Business Horizons 52
Pinchot, G. (1985). Intrapreneuring: Why You Don’t Have to Leave the Corporation to Become an Entrepreneur. New York: Harper & Row.
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