1. The Forms of Corporate Entrepreneurship
Chapter 4
The Forms of Corporate Entrepreneurship
Copyright (c) 2007 by Donald F. Kuratko All rights reserved.

2. 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

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

4. 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

5. 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”

6. 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

7. 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

8. 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

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

10. Corporate Venturing
Corporate venturing – 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

11. Corporate Venturing
Four pure types of corporate venture capital investment:
1.) Driving investments
2.) Enabling investments
3.) Emergent investments
4.) Passive investments

12. 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

13. 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”

14. 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

15. 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

16. 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.”

17. 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