INTRAPRENEURSHIP

The essence of entrepreneurship is innovation leading to wealth creation and sustained growth
through the identification of existing and emerging customer dissatisfaction and developing
solutions to eliminate them. Intrapreneurship is a term used to describe the entrepreneurial
behaviour inside established organizations that involves:

Formal or informal activities that create new systems in established firms through innovations
aimed at improving a company’s competitive position and financial performance.

The birth of new businesses with, within or outside an existing firm. This results in the creation
of semi-autonomous or autonomous organisational entities that reside inside or outside the
existing firm.

Significantly changing an organisation’s business or corporate level strategy or structure, which

alter pre-existing relationships within the organisation or between the organisation and its
external environment and in most cases will involve some sort of innovation.

Intrapreneurship is a process whereby an individual or a group of individuals, in association with

an existing organization, create a new organization or instigate renewal or innovation within that
organization. To this end, we need to appreciate the paradoxes in Intrapreneurship namely, the
coexistence of “new” and “existing”, and the close association of the “individual” and the
“organization”.

REASONS FOR INTRAPRENEURSHIP

Building a new venture within an established corporation is always a challenging proposition.

However, in today’s dynamic business environment, many business managers realise the
importance of intrapreneurship arising from:

 Threats to businesses from technological innovations with potential to disrupt existing

markets
 Changes in external environment of businesses
 Growth and Diversification of businesses due to mature markets

MUBS – BBA/BPSM III 2017/18 Entrepreneurship Development - Lecture Notes

Page 1
  The need to retain talent and to satisfy the ambitions of key employees, Companies that
do not want to lose creative talent would offer to fund their ideas.
 A need to divest non-core activities,
 The need to combat cyclical demands of mainstream activities,
 The need to develop new technological or market competencies and
 Sheer profit motive.

Intrapreneurship can make a significant difference to a company’s ability to compete. It can be

used to improve competitive positioning and transform corporations, their markets, and
industries when opportunities for value-creating innovations are developed and exploited.

BENEFITS OF INTRAPRENEURSHIP

A key benefit of intrapreneurship may be to improve performance by increasing the company’s

proactiveness and willingness to take risks by pioneering the development of new products,
processes, and services. Other Strategic benefits in a nutshell include:

 Discovery of unmet customer needs and unserved emerging markets

 Potentially high return on investment, if succeeded
 Supplements to internal research and product/service development investments
 Development of new business relationships
 Preparing potential candidates for strategic alliance or acquisition
 Reducing the risk of missing a new turn in technological development
 Preventing competitors from acquiring a breakthrough technology
 Motivating internal talents to outperform outside ventures
 Testing the waters - intrapreneurship initiatives, by virtue of being small, get
thoroughly sieved before big investments are made.
 Cost Effectiveness - most intrapreneurship initiatives use far less resources than a
regular development project. By pursuing multiple ventures the firm can diversify its
risk and improve its efficiency.

MUBS – BBA/BPSM III 2017/18 Entrepreneurship Development - Lecture Notes

Page 2
  Flexibility and Manageability - Managing a small team of people is easier than
managing organizational entities; and resources given to the intrapreneurship initiatives
are usually more flexible.

CONDITIONS THAT FAVOUR INTRAPRENEURSHIP

Some of the internal and external factors that facilitate a successful intrapreneurship supporting
culture in an organization include:

 Dynamism and competitiveness of the environment of the corporation – A dynamic

and competitive environment shorten the life of any competitive advantages; and forces
corporations to engage into constant innovation.
 The values and traits of the top management team – Management that values and
authorizes the expression of unorthodox ideas and perceives change positively tends to
favour intrapreneurship.
 The culture and structure of the corporation - A corporation structured as a learning
organization - based on equality, open information, little hierarchy, and a culture that
encourages adaptability and participation - is more likely to be conducive to
intrapreneurship. It allows ideas, which can help an organization seize opportunities and
handle crises, to bubble up from anywhere.
 The level of performance of organization - For some organizations, poor corporate
performance could lead to conservatism. Others perceive crisis as an excellent
innovation opportunity. Likewise, while good performance may lead to conservatism in
some organisations, it may also spur action for more growth in others.
 Right Selection mechanisms - These selection mechanisms should ensure strategic
alignment of intrapreneurship initiatives while preserving their operational autonomy.
Such processes need to reduce the risks in intrapreneurship by insuring that the
intrapreneurial initiatives fall within an acceptable scope, consume a reasonable amount
of resources, and do not generate excessive conflict. They also need to ensure that they
do not dump the entrepreneurial spirit.

MUBS – BBA/BPSM III 2017/18 Entrepreneurship Development - Lecture Notes

Page 3
  Right Retention mechanisms - Intrapreneurs are key resources whose exit can damage
the corporation’s human and social capital. Therefore, managers should monitor the
motivations and expectations of each intrapreneur in order to retain them.

How to Foster Intrapreneurship

Most organisations lose their entrepreneurial spirit as they progress from the turbulences of start-
up and early growth to a “well-managed” business. Structure and systems replace initiatives and
excitement, and some of the practices that contribute to the successful management of resources
tend to hinder the pursuit of opportunity. Therefore, firms must create systems that focus
individual, group and firm behaviours towards entrepreneurship.

An entrepreneurial organisation will institutionalise practices that establish an organisational

environment in which innovation is considered an accepted and appropriate response to
organisational problems; thereby developing a passion for innovation, a culture that encourages
creativity, and a willingness to accept change. Organisations wishing to become more
entrepreneurial can choose to adopt:

 ‘Surface Entrepreneurship’ where entrepreneurial initiatives cover only specific parts of

the organisation, or
 ‘Deep Entrepreneurship’ initiatives that attempt to introduce entrepreneurship across the
entire organisation.

Focused (Surface) Entrepreneurship

Mature Organisations with strategies, people attitudes, structure and control systems that have
proved to be successful in the past may not like to overhaul these winning structures. To explore
new growth avenues, they tend to promote entrepreneurship by introducing it in some areas and
assigning it to certain individuals within the organisation who are tasked with developing new
products and services, protected from the restrictions of the big organisation.

This is a low risk approach, where the entire organisation does not become entrepreneurial, and
the existing strategies are not threatened. Also, this can be a first step to test the waters before
undertaking an organisation wide initiative that changes the set-up of the entire organisation.
MUBS – BBA/BPSM III 2017/18 Entrepreneurship Development - Lecture Notes

Page 4
However, Innovation goes beyond the efforts of individuals. It is therefore difficult to make such
focused entrepreneurship sustainable; and use of financial incentives creates perceptions of
inequity that could even result in the sabotage of the entrepreneurial initiative.

Deep (Organisation wide) Entrepreneurship

In this case, organisations wholeheartedly support entrepreneurial initiatives and conditions

make everyone flexible, making entrepreneurship a shared value that drives behaviour in
conscious and subconscious ways. Entrepreneurship is socialised into an entrepreneurial culture
that rewards and promotes people with an entrepreneurial outlook. Entrepreneurship runs across
every element of the organisation, starting with its mission and covering strategy, structure,
systems, processes and people skills and attitude. New knowledge creation, forming and
disbanding organisational units is normal in such organisations, which provides for flexible
boundaries among organisational sub-units.

Common approaches to intrapreneurship

Different organizations approach intrapreneurship in different ways. Below are some of the
common approaches:

 Administrative intrapreneurship: The company forms an administrative arm (normally

called the research and development – R&D Team) to spearhead and encourage greater
creativity and innovation
 Opportunistic Intrapreneurship: The Company opens up its structures to allow
individuals to pursue opportunities both internal and external to the organization, with the
company using its resources to exploit the new innovations it finds attractive.
 Acquisitive Intrapreneurship: The organization looks out for other firms and
entrepreneurial start-ups that have developed, tested and perfected new innovations that
could be beneficial to their operations. They then acquire the innovative firms or their
innovations through mergers, takeovers, joint ventures, licensing agreements, buy outs etc…

MUBS – BBA/BPSM III 2017/18 Entrepreneurship Development - Lecture Notes

Page 5
 Imitative Intrapreneurship: Firms copy and take advantage of other firms’ innovations,
and employee their corporate muscle and superior resources to control the market for the
new product or service.
 Incubative Intrapreneurship: The Company creates new teams as semi-autonomous new
venture development units, provides them with seed capital and allows them independent
action to develop an idea from inception to commercialisation. The company can then
reintegrate the innovation into its mainstream operations once market viability has been
proven.

MUBS – BBA/BPSM III 2017/18 Entrepreneurship Development - Lecture Notes

Page 6