Section 1

The Entrepreneurial Perspective

Chapter 2
Corporate Entrepreneurship
Interest in Corporate Entrepreneurship
There is an interest in entrepreneurship within organizations.
• An increasing social interest in “doing your own thing.”
• The entrepreneurial spirit is critical for innovation and grow.th
• Hypercompetition forces focus on product, productivity, and costs.
Developing corporate entrepreneurship, helps overcome resistance to flexibility, growth, and
diversification.
Entrepreneurial endeavors consist of four key elements:
• New business venturing.
• Organizational innovativeness.
• Self-renewal.
• Proactiveness.
Strategic Orientation and Commitment to Opportunity
Both entrepreneurship and strategy have important implications for the performance of the firm.
Strategic orientation are those factors that are inputs into the formulation of the firm’s strategy.
• Entrepreneurial management is driven by opportunity, not resources.
• Resources do not constrain entrepreneurially managed firms.
An entrepreneurial orientation toward opportunity allows firms to rapidly pursue opportunities, seizing
windows of opportunity.
• In contrast, traditional firms emphasize the collecting and analyzing of information.
• Sometimes missing the window of opportunity.
Commitment of Resources and Control of Resources
An entrepreneurial orientation toward the commitment of resources minimizes resources needed to
pursue an opportunity.
• Traditionally managed firms commit resources on a large scale.
Entrepreneurially managed firms are less concerned about ownership of resources than about access to
others’ resources.
In contrast, traditionally managed firms focus on the ownership and accumulation of resources.
 • They believe they are self-contained if they control their resources.
• They differ in their entrepreneurial orientation toward the control of resources.
Management Structure and Reward Philosophy
An entrepreneurial orientation toward management structure is organic with few layers and many
communication channels.
A traditionally managed firm’s structure is suited for internal efficiencies of allocating controlled
resources.
Entrepreneurially managed firms focus on pursuing opportunity representing new value for the firm, they
have an entrepreneurial philosophy towards rewards.
Traditionally managed firms reward based on responsibilities.
• Determined by the amount of resources an employee controls.
Growth Orientation and Entrepreneurial Culture
A firm with an entrepreneurial orientation toward growth has a strong desire to expand the firm, rapidly.
• Traditionally managed firms prefer growth to be slow and steady.
Culture distinguishes entrepreneurially and traditionally managed firms.
• Entrepreneurial orientation toward culture encourages the generation of ideas,
experimentation, and creative output.
• A traditionally managed firm’s culture means employees first assess the resources it
controls.
Most firms fall somewhere between traditionally managed and entrepreneurially managed.

Characteristics of an Entrepreneurial Environment

Organization operates on frontiers of technology.
New ideas are encouraged.
Trial and error is encouraged.
Failures are allowed.
No opportunity parameters.
Resources are available and accessible.
Multidiscipline teamwork approach.
Long time horizon.
Volunteer program.
Appropriate reward system.
Sponsors and champions available.
Support of top management.

Leadership Characteristics of Corporate Entrepreneurs

A corporate entrepreneur understands the environment.
They must be a visionary leader – a person dreaming great dreams.
They must be flexible and create management options.
They encourage teamwork, using a multi-disciplined approach.
Corporate entrepreneurs encourage open discussion.
Openness leads to a strong coalition of supporters.
A corporate entrepreneur must be persistent to make a new venture successful.
Establishing Corporate Entrepreneurship
The first step is to secure top management commitment.
Second, identify areas of interest and money available.
Third, use technology to make the company more flexible.
Fourth, interested managers will train employees.
Fifth, develop ways to get closer to customers.
Sixth, learn to be more productive with fewer resources.
Seventh, establish a strong support structure.
Eighth, tie rewards to performance of the entrepreneurial unit.
Finally, allow successful units to expand and unsuccessful ones to be eliminated.
Problems and Successful Efforts
One study found new ventures started within a corporation performed worse than those started
independently.
• Reasons included the corporation’s lack of long-term commitment, a lack of freedom to
make decisions, and a constrained environment.
There are successfully implemented corporate entrepreneurship.
• 3M allows employees to devote a percent of their time to independent projects - the most
successful being Post-It notes.
Problems are not insurmountable and implementing corporate entrepreneurship can lead to new products,
growth, and a new corporate environment and culture.
Learning From Failure
Sometimes initiatives fail to achieve their objectives and are terminated.
• This represents an opportunity to learn and avoid the same mistakes in the future.
Individuals using a dual process model of coping with negative emotions recover more easily.
• The dual process requires oscillating between two alternate approaches to loss.
• Loss orientation focuses on the loss event to create an account of the failure.
• A restoration orientation uses distraction to focus energy on other problems.
Practical Implications of the Dual Process
Knowledge that the feelings of loss are normal may reduce feelings of shame and embarrassment.
Realizing the psychological and physiological outcomes caused by the loss are “symptoms” can reduce
secondary sources of stress and assist with the choice of treatment.
There is a process of recover from a failure to learn, which offers some comfort that feelings of loss will
soon diminish.
The recovery and learning process can be enhanced by use of the dual process model of copying with
negative emotions.
Recovery from loss offers and opportunity to learn more about entrepreneurship.