1. The Unique Nature of Corporate Entrepreneurship
Chapter 2
The Unique Nature of Corporate Entrepreneurship
Copyright (c) 2011 by Donald F. Kuratko All rights reserved.

2. Dispelling the Myths:
“Entrepreneurs are born, not made”
“Entrepreneurs must be inventors”
“There is a standard profile or prototype of the entrepreneur”
“All you need is luck to be an entrepreneur”
“Entrepreneurs are extreme risk takers (gamblers)”

3. Dispelling the Myths:
“Entrepreneurial people are academic and social misfits”
“All entrepreneurs need is money”
“Ignorance is bliss for entrepreneurs”
“Most entrepreneurial initiatives fail”
“Entrepreneurship is unstructured and chaotic”

4. 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

5. 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

6. 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

7. 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

8. 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

9. Major differences continued
How Corporate Entrepreneurship Differs
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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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.

16. 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)