1. The Forms of Corporate Entrepreneurship
Chapter 4
The Forms of Corporate Entrepreneurship
Copyright (c) 2011 by Donald F. Kuratko All rights reserved.

2. Question 1: What are the two (2) ways in which corporate entrepreneurship is manifested?

3. Introduction Entrepreneurship manifests in companies in two ways:
Corporate Venturing – addition of new businesses to the corporation
Strategic Entrepreneurship – highly consequential innovations that are adopted in the firm’s pursuit of competitive advantage

4. Corporate Entrepreneurship
Introduction
Different Forms that Corporate Entrepreneurship Can Take
Corporate Entrepreneurship
Corporate Venturing
Internal corporate venturing
Cooperative corporate venturing
External corporate venturing
Strategic Entrepreneurship
Strategic renewal
Sustained regeneration
Domain redefinition
Organizational rejuvenation
Business model reconstruction

5. Question 2:What are the three (3) forms of corporate venturing?

6. Modes of Corporate Venturing
Internal corporate venturing – new businesses created and owned by the corporation
Cooperative corporate venturing – new businesses are created and owned by the corporation together with one or more external development partners
External corporate venturing – new businesses are created by parties outside the corporation and subsequently invested in or acquired by the corporation

7. Question 3: How can we classify a corporate venture as resulting in a “new business”? In other words, how can we define a “new business”?

8. Corporate Growth Strategy Matrix
Corporate Venturing
What is a new business?
Corporate Growth Strategy Matrix
New Markets
Market Development Strategy
Diversification
Strategy
Market
Penetration
Product Development
Market Focus
Current Markets
Product Focus
“When a company finds itself dealing with new categories of customers and selling them products or services that are new to the firm”

9. Corporate Venturing New Business The Domain of a New Business
Market Creation
New Business
Existing Business
*New Market
Market Focus of the Entrepreneurial Initiative
Market Extension
Existing Market
Product Extension in Current Industry
*New Product in Current Industry
Existing Product in Current Industry
New Industry Entry and/or Creation
Product Focus of the Entrepreneurial Initiative
* The point of reference for new is new to the firm

10. Question 4: According to Tidd and Taurins (1999), what are the two (2) primary motivations for corporate venturing?

11. Corporate Venturing Motives for Corporate Venturing
Leveraging – to exploit existing competencies in new product or market arenas
Learning – to acquire new knowledge and skills that may be useful in existing product or market arenas

12. Leveraging Corporate Venturing To exploit under-utilized resource
To extract further value from existing resources
To introduce competitive pressure onto internal suppliers
To spread the risk and cost of product development
To divest non-core activities

13. Learning Corporate Venturing To learn about the process of venturing
To develop new competencies
To develop managers

14. Question 5: What is corporate venture capital investment
Question 5: What is corporate venture capital investment? Which forms of corporate venturing us it?

15. Corporate Venturing
Corporate venture capital investment – directly investing corporate funds into external business start-ups
Chesbrough’s framework for linking corporate venture capital investments with a company’s larger strategic agenda can be sorted into categories according to:
1.) their objectives (strategic or financial)
2.) the degree to which the new business being invested in (typically as a start-up) has operational capabilities

16. Linkage between Operational Capabilities Objectives of CVC Investment
Corporate Venturing
Linkage between Operational Capabilities
Tight
Loose
Objectives of CVC Investment
Strategic
Driving Investment
Enabling Investment
Financial
Emergent Investment
Passive Investment

17. Question 6: What is strategic entrepreneurship?

18. Strategic Entrepreneurship
Corporate entrepreneurship that corresponds to a broader array of entrepreneurial initiatives that do not necessarily involve new added businesses
Each method of SE involves innovations that are adopted to increase a firm’s competitive advantage

19. Question 7: What are the five (5) forms of strategic entrepreneurship?

20. Strategic Entrepreneurship: Innovating in Pursuit of Competitive Advantage
Form of Strategic Entrepreneur
Focus of the Entrepreneurial Initiative*
The Entrepreneurial Event
Typical Frequency of the Entrepreneurial Event
Strategic
Renewal
Strategy of the firm
Adoption of a new strategy
Low
Sustained
Regeneration
Products offered by the firm or markets served by the firm
Introduction of a new product into a pre-existing product category or introduction of an existing product into a new (to the firm) but pre-existing market
High
Domain
Redefinition
New competitive space
Creation of new or reconfiguration of existing product categories or market space
Organizational
Rejuvenation
Organization structure, processes, and/or capabilities of the firm
Enactment of a major, internally-focused innovation aimed at improving strategy implementation
Low-to-moderate
Business Model
Reconstruction
Business model of the firm
Design of a new or redesign of an existing business model
*The focus of the entrepreneurial event can be the entire firm or, in the case of multi-business firms, one or more of its businesses

21. Strategic Entrepreneurship
Strategic Renewal
Purpose: to redefine its relationship with its markets or industry competitors by fundamentally altering how it competes
Focus: the firm’s strategy
Represents a fundamental repositioning of the firm within its competitive environment
Given the severity, this is infrequently attempted

22. Strategic Entrepreneurship
Sustained Regeneration
Purpose: regularly and continuously introduce new products and services or enter new markets
Focus: the firm’s products/product markets
Represents consistent, incremental innovations
May result in new business, but not often
Happens frequently (by definition)

23. Strategic Entrepreneurship
Domain Redefinition
Purpose: proactively create a new product market that others have not recognized or actively sought to exploit
Focus: a firm’s new product market arena
Represents the pioneering of a new product category, giving rise to new industries or redefining existing industries
Definitely creates a new business
Very infrequently attempted

24. Strategic Entrepreneurship
Organizational Rejuvenation
Purpose: to sustain or improve its competitive standing by altering its internal environment
Focus: a firm’s processes, structures, and/or capabilities
Helps a firm change without changing it’s strategy, product offerings, or markets
Can involve major or minor changes
Minor changes are common, but major changes are less frequent

25. Strategic Entrepreneurship
Business Model Reconstruction
Purpose: redesigning a firm’s core business model to improve efficiency or better differentiate itself from competitors
Focus: a firm’s business model (everything!)
Represents changing the fundamental way that a business operates
Very infrequently attempted

26. Question 8: What is a business model
Question 8: What is a business model? What are the six (6) questions that should be addressed in a firm’s business model?

27. The Business Model as a Vehicle for Corporate Entrepreneurship
A Firm’s Business Model: “a concise representation of how an interrelated set of decision variables in the areas of venture strategy, architecture, and economics will be addressed to create sustainable competitive advantage in defined markets”

28. The Business Model as a Vehicle for Corporate Entrepreneurship
A business model should address six basic questions: 1.) How does the firm create value 2.) For whom does the firm create value 3.) What is our source of internal advantage or core competency 4.) How does the firm externally differentiate itself in the marketplace 5.) What is the firm’s model for making money 6.) What is the management’s growth ambition and over what time period

29. The Business Model as a Vehicle for Corporate Entrepreneurship
Decisions in these six areas can be made at three levels: 1.) Foundation level 2.) Proprietary level 3.) Rules level

30. Question 9: How do the different levels of a business model differ?

31. The Business Model as a Vehicle for Corporate Entrepreneurship
1.) Foundation level- “What do we do?”
Represents decisions regarding what the business is and is not
2.) Proprietary level- “How do we do it?
Represents how a business implements such decisions
3.) Rules level- “What are the rules that govern how we do it?
Delineates guiding principles that govern the execution of the decisions made at the previous levels
Refer to Table 4-4 for example

32. Question 10: What is “open innovation”
Question 10: What is “open innovation”? What are the advantages and disadvantages of open innovation?

33. The Open Innovation Revolution
Open innovation – “a firm is not solely reliant upon its own innovative resources for new technology, product, or business development purposes. Rather, the firm acquires critical inputs to innovation from outside sources.”
Consistent with an open-systems perspective of organizations

34. The Open Innovation Revolution
Four reasons companies are increasingly choosing to pursue open innovation models: 1.) Importing new ideas is a good way to multiply the building blocks of innovation 2.) Exporting ideas is a good way to raise cash and keep talent 3.) Exporting ideas gives companies a way to measure an innovation’s real value and to ascertain whether further investment is warranted 4.) Exporting and importing ideas helps companies clarify what they do best