Nature of

Corporate
Entrepreneurship
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Corporate Entrepreneurship
Activities that receive organizational sanction
and resource commitments for the purpose of
innovative results.

• A process whereby an individual or a group of

individuals, in association with an existing
organization, creates a new organization or
instigates renewal or innovation within the
organization.

• A process that can facilitate firms’ efforts to

innovate constantly and cope effectively with the
competitive realities that companies encounter
when competing in international markets.
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Corporate Entrepreneurship Process

Strategic Corporate
Innovation
Renewal Venturing

Corporate
Entrepreneurship
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Entrepreneurship
Within Corporate
Environment
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Factors in the emergence of the

entrepreneurial economy:
• The rapid evolution of knowledge and
technology promoted high-tech
entrepreneurial start-ups.
• Demographic trends adding fuel to the
proliferation of newly developing ventures.
• The venture capital market became an
effective funding mechanism.
• Industries began to learn how to manage
entrepreneurship.
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The Need for Corporate Entrepreneuring

•Rapid growth in the number of new and sophisticated
competitors
•Sense of distrust in the traditional methods of corporate
management
•An exodus of some of the best and brightest people
from corporations to become small business
entrepreneurs
•International competition
•Downsizing of major corporations
•An overall desire to improve efficiency and
productivity
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Sources of and Solutions to Obstacles
in Corporate Venturing
Traditional Management Adverse Recommended
Practices Effects Actions
Enforce standard procedures Innovative solutions blocked, Make ground rules specific
to avoid mistakes funds misspent to each situation
Manage resources for efficiency Competitive lead lost, Focus effort on critical issues
and ROI low market penetration (e.g., market share)
Control against plan Facts ignored that should replace Change plan to reflect new
assumptions learning
Plan for the long term Nonviable goals locked in, Envision a goal, then set interim
high failure costs milestones, reassess after each
Manage functionally Entrepreneur failure and/or Support entrepreneur with
venture failure managerial and multidiscipline
skills
Avoid moves that risk Missed opportunities Take small steps, build out from
the base business strengths
Protect the base business Venturing dumped when base Make venturing mainstream,
at all costs business is threatened take affordable risks
Judge new steps from Wrong decisions about competition Use learning strategies,
prior experience and markets test assumptions
Compensate uniformly Low motivation and inefficient Balance risk and reward,
operations employ special compensation
Promote compatible individuals Loss of innovators Accommodate “boat rockers”
and “doers”
Source: Reprinted by permission of the publisher from “Corporate Venturing Obstacles: Sources and Solutions,” by Hollister B. Sykes and Zenas Block,
Journal of Business Venturing (winter 1989): 161. Copyright © 1989 by Elsevier Science Publishing Co., Inc.
Types of
Innovation
Incremental and
Radical
Innovation
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Types of Innovation
Radical Innovation
ØThe launching of inaugural breakthroughs.
Ø These innovations take experimentation and
determined vision, which are not necessarily managed
but must be recognized and nurtured.

Incremental Innovation
ØThe systematic evolution of a product or service into
newer or larger markets.
ØMany times the incremental innovation will take over
after a radical innovation introduces a breakthrough.
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Objectives and Programs for Venture Development
Objectives
Make sure that current systems,
structures, and practices do not
present insurmountable roadblocks
to the flexibility and fast action
needed for innovation.
Provide the incentives and tools for
intrapreneurial projects.
Seek synergies across business
areas so new opportunities are
discovered in new combinations.
Programs
Reduce unnecessary bureaucracy,
and encourage communication
across departments and functions.
Use internal “venture capital” and
special project budgets. (This money
has been termed intracapital to
signify a special fund for
intrapreneurial projects.) Allow
discretionary time for projects
(sometimes referred to as
“bootlegging” time).
Encourage joint projects and
ventures among divisions,
departments, and companies. Allow
and encourage employees to discuss
and brainstorm new ideas.
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Objectives and Programs for Venture Development
Radical
Stimulate through challenges and
puzzles.
Remove budgetary and deadline
constraints when possible.
Encourage technical education and
exposure
to customers.
Allow technical sharing and
brainstorming sessions.
Give personal attention—develop
relationships of trust.
Encourage praise from outside
parties.
Have flexible funds for opportunities
that arise.
Reward with freedom and capital for
new projects and interests.
Incremental
Set systematic goals and deadlines.
Stimulate through competitive
pressures.
Encourage technical education and
exposure
to customers.
Hold weekly meetings that include
key management and marketing staff.
Delegate more responsibility.
Set clear financial rewards for
meeting goals
and deadlines.
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Rules for an Innovative Environment

1. Encourage action.
2. Use informal meetings whenever possible.
3. Tolerate failure and use it as a learning experience.
4. Persist in getting an idea to market.
5. Reward innovation for innovation’s sake.
6. Plan the physical layout of the enterprise to encourage
informal communication.
7. Expect clever bootlegging of ideas—secretly working on new
ideas on company time as well as personal time.
8. Put people on small teams for future-oriented projects.
9. Encourage personnel to circumvent rigid procedures and
bureaucratic red tape.
10. Reward and promote innovative personnel.
Other Types
of Innovation
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