Strategic EntrepreneurshipPPT

STRATEGIC
ENTREPRENEURSHIP
It is the process by which
individuals, teams, or
organizations identify and
pursue entrepreneurial
opportunities without being
immediately constrained by
the resources they currently
control.
Entrepreneurship
The essence of
entrepreneurship is to identify
and exploit entrepreneurial
opportunities—that is,
opportunities others do not
see or for which they do not
recognize the commercial
potential—and manage risks
appropriately as they arise.
Hitt, M., Ireland, R., Hoskisson, R. 2016 12th Ed. Strategic Management Competitiveness &
Globalization Concepts and Cases
 These are conditions in which new goods
or services can satisfy a need in the
market.
 These opportunities exist because of

competitive imperfections in markets
and among the factors of production
used to produce them or because they
Entrepreneurial were independently developed by
entrepreneurs.
Opportunities
 Entrepreneurial opportunities come in
many forms, such as the chance to
develop and sell a new product and the
chance to sell an existing product in a
new market.
Hitt, M., Ireland, R., Hoskisson, R. 2016 12th Ed. Strategic Management Competitiveness & Globalization
Concepts and Cases
 It is a framework firms use
to effectively integrate
their entrepreneurial and
strategic actions.
 More formally, it involves

taking entrepreneurial
Strategic
actions using a strategic
Entrepreneurship perspective.
 In this process, the firm

tries to find opportunities in
its external environment
that it can exploit through
innovations.
Hitt, M., Ireland, R., Hoskisson, R. 2016 12th Ed. Strategic Management Competitiveness & Globalization Concepts
and Cases
 Identifying opportunities to
exploit through innovations is the
entrepreneurship dimension of
strategic entrepreneurship.
 Determining the best way to

competitively manage the firm’s
innovation efforts is the strategic
Strategic dimension.
Entrepreneurship
 Thus, firms using strategic
entrepreneurship integrate their
actions to find opportunities,
innovate, and then implement
strategies for the purpose of
appropriating value from the
innovations they have developed
to pursue identified
opportunities.
and Cases
Corporate Entrepreneurship
 Entrepreneurship and innovation that takes place in established
organizations. .
 It is critical to the survival and success of for-profit organizations as

well as public agencies.
 Of course, innovation and entrepreneurship play a critical role in the

degree of success achieved by startup entrepreneurial ventures as
well.
Hitt, M., Ireland, R., Hoskisson, R. 2016 12th Ed. Strategic Management Competitiveness & Globalization Concepts and Cases
International Entrepreneurship
 It is a process in which firms creatively discover and exploit opportunities
that are outside their domestic markets.
 A key reason that firms choose to engage in international entrepreneurship

is that, in general, doing so enhances their performance.
 Nonetheless, those leading firms generally understand that taking

entrepreneurial actions in markets outside the firm’s home setting is
challenging and not without risks, including:
 risks of unstable foreign currencies,
 market inefficiencies,
 insufficient infrastructures to support businesses, and
 limitations on market size.
Thus, the decision to engage in international entrepreneurship needs to be a product

of careful analysis.
Entrepreneurs
 They are individuals, acting independently or as part of an
organization, who perceive an entrepreneurial opportunity and then
take risks to develop an innovation and exploit it.
 The person with an entrepreneurial mind-set values uncertainty in

markets and seeks to continuously identify opportunities in those
markets that can be pursued through innovation.
 Because it has the potential to lead to continuous innovations, an

individual’s entrepreneurial mind-set can be a source of competitive
advantage for a firm.
Characteristics of Entrepreneurs:
 Highly motivated
 Willing to take responsibility for their projects
 Self-confident
 Often optimistic
 Passionate and emotional about the value and
importance of their innovation-based ideas
 Able to deal with uncertainty
 more alert to opportunities than others
 To be successful, entrepreneurs often need to have
good social skills and to plan exceptionally well.
 Invention is the act of creating or
developing a new product or
process.
 Innovation is a process used to

create a commercial product
from an invention. Thus,
Three innovation follows invention in
that invention brings something
Types of
new into being while innovation
brings something new into use.
Innovative  imitation is the adoption of a

similar innovation by different
Activities firms.
Entrepreneurship is critical to
innovative activity because it acts
as the linchpin between invention
and innovation.
and Cases
 Internal Innovations
3
Approaches  Innovation through Cooperative
Strategies
Firms Use
to Innovate  Innovation through Acquisitions
Concepts and Cases
 It is the most critical of the three
types of innovative activities.
 The reason for this is that
while many companies are
able to create ideas that
lead to inventions,
commercializing those
inventions sometimes proves
to be difficult.
It is “the means by which the

Innovation

entrepreneur either creates new
wealth-producing resources or
endows existing resources with
enhanced potential for creating
wealth.”
 Thus, entrepreneurship and
the innovation resulting from
it are critically important for
all firms seeking strategic
competitiveness and above-
average returns.
and Cases
Internal Innovation
 Efforts in firms’ research and development (R&D) function are one
primary source of internal innovations.
 Through effective R&D, firms are able to generate patentable

processes and goods that are innovative in nature.
 R&D and the new products and processes it can spawn affect a firm’s
efforts to earn above-average returns while competing in today’s global
environment.
2 Types of Internal Innovation
 Firms invest in R&D to produce two types of innovations:
 INCREMENTAL INNOVATIONS– the common type of
innovation; they build on existing knowledge bases and
provide small improvements in current products.
 NOVEL OR BREAKTHROUGH INNOVATIONS - They

usually provide significant technological changes
(breakthroughs) and create new knowledge.
Incremental Innovations
 Companies introduce more incremental than novel
innovations to markets, largely because they are cheaper,
easier, and faster to produce, and involve less risk.
 They exploit an existing technology to provide an

improvement over a current product.
 Example: Adding a different kind of whitening agent to a

soap detergent is an example of an incremental
innovation, as are minor improvements in the
functionality in televisions (e.g., slightly better picture
quality).
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Novel or e
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Breakthrough i
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Innovations Because they

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Developing new processes is a critical part
of producing novel innovations.
Novel innovations have the potential to

contribute more significantly to a firm’s
efforts to earn above-average returns,
Novel or although they also are more risky.
Breakthrough
Innovations Because novel innovation creates new
knowledge and uses only some or little of a
firm’s current product or technological
knowledge, creativity is required;
Strong, supportive leadership is required for

the type of creativity and imagination
needed to develop novel innovations.
 It is the set of activities firms use to
develop internal inventions and especially
innovations.
 2 TYPES OF ICV:
 Autonomous Strategic Behaviors
 Induced Strategic Behaviors
Internal
Corporate  Each venturing type facilitates
development of both incremental and
novel innovations.
Venturing
(ICV)  However, a larger number of novel
innovations spring from autonomous
strategic behavior, while a larger number
of incremental innovations come from
induced strategic behavior.
Concepts and Cases
Internal Corporate
Venturing (ICV)
Concepts and Cases
 It results in influences to change
aspects of the firm’s strategy and
the structure in place to support
its implementation.
 It is a bottom-up process in which

product champions pursue new
ideas, often through a political
process, by means of which they
develop and coordinate the
actions required to innovate and
to bring the innovation to the
Autonomous market.
Strategic
 A product champion is an
Behaviors individual with an entrepreneurial
mind-set who seeks to create
support for developing an
innovation.
 Example: Quirky
and Cases
It is a top-down process whereby
the firm’s current strategy and
structure foster innovations that
are closely associated with that
strategy and structure.
Induced In essence, it results in internal

innovations that are consistent
with the firm’s current strategy.
Strategic Thus, the firm’s CEO and its top
management team play an active
and key role in induced strategic
Behavior behavior.
Induced innovation allows the firm

and its managers to determine the
type and amount of innovation
desired.
 An entrepreneurial mind-set
is critical to firms’ efforts to
innovate internally.
 Having processes and

structures in place through
which a firm can successfully
Implementing exploit developed innovations
is critical.
Internal
Innovations  Effective integration of the
functions involved in internal
innovation efforts—from
engineering to manufacturing
and distribution—is required
to implement the incremental
and novel innovations
resulting from internal
corporate ventures.
and Cases
 They facilitate efforts to
integrate activities associated
with different organizational
functions, such as design,
manufacturing, and marketing.
 New product development

processes can be completed more
quickly and the products can be
more easily commercialized when
cross-functional teams work
Cross- collaboratively.
Functional
 Team members’ independent
Development frames of reference and
organizational politics are two
Teams barriers with the potential to
prevent effective use of cross-
functional teams to integrate the
activities of different
organizational functions.
and Cases
Facilitating Integration and Innovation
Shared values and effective leadership are important for achieving cross-
functional integration and implementing internal innovations
 Shared values - As part of culture, shared values are framed around
the firm’s vision and mission and become the glue that promotes
integration between functional units.
 Effective leadership - leaders are responsible for setting goals and
allocating resources needed to achieve them.
 Effective strategic leaders also ensure a high-quality communication system
to facilitate cross-functional integration.
Creating Value from Internal Innovation
An entrepreneurial mind-set is
foundational to the firm’s efforts to
consistently identify entrepreneurial
opportunities that it can pursue
strategically with and through
innovations.
Creating
Value from Cross-functional teams are important
for promoting integrated new
product design ideas and gaining
Internal commitment to their subsequent

implementation.
Innovation
Effective leadership and shared
values promote integration and vision
for innovation and commitment to it.
 The end result of successful
innovations is the creation of
value for stakeholders such as
customers and shareholders.
Creating  However, competitive rivalry

affects the degree of success a
firm achieves through its
Value from innovations.
 Thus, firms must carefully
Internal study competitors’
responses to their
Innovation innovations to have the

knowledge required to
know how to adjust their
innovation-based efforts,
and even when to abandon
those efforts if market
conditions indicate the
need to do so.
and Cases
 Rapidly changing technologies,
globalization, and the need to
innovate at world-class levels are
primary influences on firms’
decisions to innovate by
cooperating with other
companies.
Innovation  Alliances with other firms can

provide information on new
through business opportunities and the

innovations that might be
developed to exploit them.
Cooperative
Strategies  Risks of alliances include conflict
that is natural when firms try to
work together to reach a mutual
goal and the risk that a partner
will appropriate their technology
or knowledge and use it for its
own benefit.
and Cases
 Firms sometimes acquire
companies to gain access to their
innovations and to their inno-
vative capabilities
 For example, Microsoft
acquired Mojang AB in 2014
to gain access to the
technological capabilities of
Minecraft.
Innovation  A key risk of acquisitions is that a

firm may substitute an ability to
buy innovations for an ability to
through develop them internally.
Acquisitions  Additionally, firms that emphasize

innovation and carefully select
companies to acquire that also
emphasize innovation and the
technological capabilities on
which innovations are often based
are likely to remain innovative.
and Cases

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STRATEGIC

 These opportunities exist because of

 More formally, it involves

 In this process, the firm

 Determining the best way to

 It is critical to the survival and success of for-profit organizations as

 Of course, innovation and entrepreneurship play a critical role in the

 A key reason that firms choose to engage in international entrepreneurship

 Nonetheless, those leading firms generally understand that taking

Thus, the decision to engage in international entrepreneurship needs to be a product

 The person with an entrepreneurial mind-set values uncertainty in

 Because it has the potential to lead to continuous innovations, an

 Innovation is a process used to

Innovative  imitation is the adoption of a

It is “the means by which the

 Through effective R&D, firms are able to generate patentable

 NOVEL OR BREAKTHROUGH INNOVATIONS - They

 They exploit an existing technology to provide an

 Example: Adding a different kind of whitening agent to a

Innovations Because they

Novel innovations have the potential to

Strong, supportive leadership is required for

 It is a bottom-up process in which

Induced In essence, it results in internal

Induced innovation allows the firm

 Having processes and

 New product development

Internal commitment to their subsequent

Creating  However, competitive rivalry

Innovation innovations to have the

Innovation  Alliances with other firms can

through business opportunities and the

Innovation  A key risk of acquisitions is that a

Acquisitions  Additionally, firms that emphasize

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