1. Corporate Entrepreneurship & Innovation
Week 12
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2. Impact of Innovation on Firm Outcomes
Key source of competitive success
Enhances a firm’s strategic competitiveness and financial performance.
Firms competing in global industries that invest more in innovation also achieve the highest returns.
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3. Corporate Innovation
Some firms nurture innovation and corporate entrepreneurship
This can be a source of strategic competitiveness
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4. Innovative Activity Three stages:
Invention Creating or developing a new product or process idea
Innovation Creating a commercial product from invention
Imitation Adoption of innovation by a group of similar firms
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5. Successful Entrepreneurship
The key to success with entrepreneurship and innovation is moving from invention of an idea to its effective commercialisation and acceptance in the marketplace
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6. Innovation and Competitive Advantage
Commercially
Exploitable
with Present Capabilities
Difficult for
Competitors to Imitate
Characteristics of innovations that lead to:
Competitive Advantage
Provides Significant Value to Customers
Timely
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7. Entrepreneurship
Schumpeter called entrepreneurship ‘creative destruction’
The focus is on discovery and exploitation of opportunities that may prove profitable.
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8. Entrepreneurial Firms
Firms involved with entrepreneurship are:
Risk takers
Committed to innovation
Proactive (i.e., they try create their own opportunities)
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9. Corporate Entrepreneurship
A firm’s ability to develop new goods or services and to manage the innovation process
The key to success with entrepreneurship and innovation is moving from invention of an idea to its effective commercialisation and acceptance in the marketplace
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10. Corporate Entrepreneurship
A situation where an individual or group within an organisation creates a new venture or develops innovation
The sum of a firms innovation, renewal and venturing efforts
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11. Entrepreneurs Agents of economic growth that introduce new products,
new production methods, and
other innovations
that stimulate economic activity.
Can surface at any level in the firm
Form innovative
production processes or
service delivery mechanisms.
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12. Organisational Entrepreneurs
Organisational entrepreneurs engage in
entrepreneurship by:
taking risks
acting aggressively
acting proactively in their firms
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13. International Entrepreneurship
Top priority in many countries (eg Ireland, France, Finland)
China has tension between collectivism and individualism
When collectivism emphasised, entrepreneurship declines
Need to have a balance
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14. Internal Corporate Venturing
Innovation is necessary but not sufficient condition to competitive success
Need processes and structures in place so that the firm can successfully implement the outcomes of internal corporate ventures is as crucial as the actual innovations themselves
Two types
Autonomous Strategic Behavior
Induced Strategic Behavior
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15. Autonomous Strategic Behavior
Autonomous strategic behaviour is a bottom-up process through which product champions pursue new product ideas through to commercialisation
Product champions are individuals who have an entrepreneurial vision for a new product and who seek support for its commercialisation
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16. Induced Strategic Behavior
A top-down process in which the current strategy and structure foster closely associated product innovations
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17. Concept of Corporate Strategy
Model of Internal Corporate Venturing
Concept of Corporate Strategy
Strategic Context
Structural Context
Autonomous
Strategic
Behaviour
Induced
Strategic
Behaviour
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18. Using Product Development Teams
Emphasises horizontal organisation rather than vertical
Processes to support innovation can be:
Formal Defined & documented as procedures & practices
Informal Routines or ways of working that evolve over time
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19. Barriers to horizontal integration
Specialization has encouraged development of
divergent functions, different roles, and functional
differentiation based on four factors.
Time orientation, as some functions are short-term oriented while others are long-term oriented
Interpersonal orientation
Goal orientation, with some goals focused on efficiency and others on effectiveness
Formality of structure (informal v’s formal)
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20. Barriers to Horizontal Integration
Functional specialisation may hinder cross-functional integration
Organisational politics, especially those centered around protecting historical resource allocation processes, may inhibit integration
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21. 4 Methods for Facilitating Integration
Shared values or corporate culture
Leadership
Goals and budgets
Effective communication systems
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22. Shared Values
Are expressed through the firm’s corporate culture (as discussed in Chapter 12)
Should be clearly linked with the firm’s strategic intent and strategic mission
Can reduce political conflict and promote coupling between and among functional specialties
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23. Leadership
Enforces the importance to the firm of the value-creating potential of innovation
Emphasizes the value-creating potential of innovation and, in turn, encourages the integration of functional activities
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24. Goals and Budgets
Relate to the formulation of goals and allocation of budgeted resources necessary to achieve them
Represent specific targets for the integrated design and production of new goods and services
Can serve as self-reinforcing strategies to encourage and support cross-functional integration
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25. Effective Communication
Leads to:
Increased motivation
More and better information
Sharing of knowledge across cross-functional team members
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26. Appropriating Value from Innovation
Barriers to Integration
Different Time Orientation
Interpersonal Orientation
Different Goal Orientation
Formality of Structure
Time to Market
X-Functional Integration/
Design Teams
Value Appropriation from Innovation
Product Quality
Facilitators of Integration
Shared Values
Leaders’ Vision
Budget Allocation
Effective Communication
Creation of Customer Value
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27. Appropriating Value from Innovation
Decrease or reduce time-to-market
Improve product quality
Create value for customers
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28. Cooperating to Produce Innovation
Strategic Alliances
Can help foster innovation by combining the knowledge and resources of two or more partners
Firms must focus on building knowledge, identifying core competencies and developing strong human resources to manage such projects
Firms can also give away core competencies by outsourcing to alliance partners rather than developing their own capabilities over time
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29. Strategic Alliances Few firms possess all the Knowledge, Resources,
Capabilities &
Core competencies
to pursue internal innovation
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30. Risks of Strategic Alliances
Gain competitive parity or competitive advantage relative to rivals
Produce and manage innovative goods or services
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31. Strategic Alliances Success depends upon: Focusing on knowledge
Identifying core competencies
Developing human resource policies to manage and retain core competencies
Choosing partners with complimentary skills and compatible goals and strategic orientations
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32. Acquiring Innovative Capability
Many firms now acquire other firms as a substitute for developing innovations internally
Acquiring innovative capability can reduce risk and lower costly R&D investments
A major drawback is that firms can eventually lose their ability to generate innovations internally
May result in reductions in expenditure on R&D and number of patents as a % of sales
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33. Buying Innovation
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34. Venture Capital New enterprises backed by venture capital
Provide important sources of innovation and new technology
Are a major source of new wealth creation in the domestic economy (shown from financial figures to be particularly relevant in the U.S.)
Create new jobs and expenditure on R&D
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35. Venture Capital Strategic benefits of investing in venture capital
Ability to invest early and observe what happens to the new venture
Movement toward subsequent acquisitions, technology licensing, product marketing rights, and possibly the development of international opportunities
Gaining a ‘window’ on future technological development
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36. Venture Capital & Australian Innovation
In the USA, available venture capital is about A$40 billion, whereas in Australia it is about A$400 million
Many of Australia’s leading innovations (for example the Sarich engine) are relocated to the USA in order to gain funding for the commercialisation process
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37. Entrepreneurship in Small Business
Small business and individual entrepreneurs account for significant portion of innovation measured by comparing R&D input with R&D output
Small firms created most new jobs in the USA in the 1990s
While large firms account for over 80% of the world’s R&D spending, individuals or small firms are granted more than half of new US patents
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38. Small Firms and Innovation
Many small firms are created when employees leave large firms to start their own businesses
Ex-employees frequently continue to interact with their former firms to develop innovations and new products
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39. Large Firms Innovative Capacity
To improve large firm innovative capacity:
‘Act small’
Greater levels of individual autonomy can be created through the restructuring of a firm into smaller and more manageable units (see Chapter 7).
The additional amounts of creativity and innovation that tend to be witnessed among those granted more autonomy stimulates autonomous strategic behaviour when a firm purses innovation through internal corporate ventures.
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40. Large Firms Innovative Capacity
A firm can reengineer its operations to develop more efficient work-related processes and to form channels through which customers’ interests can be expressed with greater clarity and intensity.
Cross-functional work teams can provide opportunities for personnel to think and act creatively.
When handled effectively, downsizing can create arrangements through which a firm is able to focus efforts more on key tasks, such as those required to produce innovations.
Allocating significant levels of resources to research and development can stimulate innovation.
Cooperative arrangements can help to spawn innovations in the firm.
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41. Exam Revision Competitive advantage & above average returns
Vicarious liability
Tangible & intangible resources
International strategy
Trust
Restructuring strategies
Changes in management from eCommerce
Essay Topic
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42. Essay Topic
Describe 2 organisational designs that have emerged as a result of technological advancement
Not
Vertical (around before technology)
M-Form (results from diversification)
Global (around before technology)
Examples
Virtual
Network
Horizontal
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43. Role of technology in organisational design
Essay Topic
Role of technology in organisational design
Not organisational structure
All organisations use technology but it doesn’t always have a role in design
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