The Entrepreneurial

Revolution

Chapter 1
Welcome to the new
age of uncertainty
Classical mechanistic
views of change

McMillan 2004
New, modern, dynamic
views of change

McMillan 2004
How do I plan if But I’m the boss. Why do
I can’t predict people keep questioning
the future? me?

What do I do if
centralised Where do I
control doesn’t get all the
work? information
I need?
 How do I deal with
the shift in sources
of value from How do I deal with the shift
physical to virtual from an age of opportunity
assets? to one of austerity?

How do I
How do I deal maintain
with change from maximum
an industrial to a flexibility?
knowledge
economy?
 Can Big Firms Survive?

Corporations have to dismantle

bureaucracies to survive.
Economies of scale are giving way
to economies of scope, finding the
right size for synergy, market
flexibility and, above all, speed….

John Naisbitt, 1994

Can Big Firms Survive?

To survive, big companies

today are all deconstructing
themselves and creating new
structures, many as
autonomous units
John Naisbitt, 1994
 Did you Know?

• One in three families in the USA now

has someone involved in a start-up
• 95% of the wealth in the USA has been
created since 1980
• SMEs now generate 50% of GDP and
over 50% of exports in the USA
 Did you Know?

• Over 95% of firms are SMEs

• They generate two thirds of employment
• But two thirds of them have two or less
employees
• 50% cease trading within 3 years
 Did you Know?

The fastest growing 4% of SMEs will

generate 50% of the jobs in that
group within 10 years
 The Entrepreneurial
Revolution
The entrepreneurial revolution is here to
stay, having set the genetic code of the
US and global economy for the 21st
century, and having sounded the death
knell for Brontosaurus Capitalism of
yesteryear
Jeffrey Timmons, 1999
 Entrepreneurs

‘Entrepreneurs shift economic

resources from an area of lower
productivity into an area of higher
productivity and greater yield’
John-Baptiste Say

• They innovate
• They thrive in & create change
• They accept risk & uncertainty
• They are defined by their actions
Corporate Entrepreneurship

Basic literature strands:

• Entrepreneurial transformation
• Corporate venturing
• Intrapreneurship
• Bringing the market inside
 Corporate Venturing
Concerned with:
• The need for larger firms to manage
new, entrepreneurial businesses
separately from mainstream activity
• Investment by larger firms in
strategically important smaller firms
• Organisation structures needed to
encourage new businesses
• Management of disruptive technologies

Galbraith (1982), Burgelman (1983), Drucker (1985), Christensen (1997)

 Intrapreneurship

Concerned with:
• How individuals may be encouraged to act
more entrepreneurially in a large
organisation
• Systems, structures & cultures that inhibit
entrepreneurship
• The character & personality of the
individual behaving in this way

Kanter (1982), Pinchot (1985)

 Bringing the Market Inside

Concerned with:
• Structural changes needed to encourage
entrepreneurial behaviour
• Market approach to resource allocation &
people management
• Spin offs & venture capital operations

Hamel (1999), Foster & Kaplan (2001)

 Entrepreneurial
Transformation

Also called:
• Organizational regeneration
• Sustained regeneration
• Domain redefinition
• Strategic renewal
 Entrepreneurial
Transformation
Concerned with:
• The need form large firms to adapt to an
ever-changing environment
• Changes in systems, structures & cultures
that encourage entrepreneurship
• Leadership & strategies that encourage
entrepreneurship

Peters & Waterman (1982), Ghoshal & Bartlett (1997), Kanter (1989),
Tushman & O’Reilly (1996), Burns (2005)
 Entrepreneurial
Transformation
Replicating within the company:
R E
• The entrepreneur’s character traits
U
E CT
• Their approach to managing change
CH IT
through uncertainty
AR
• Their very DNA
 Transformation through
Entrepreneurial Architecture

LEADERSHI
P

CULTURE STRATEGIE
S
STRUCTURE
S
Thinking….
The terminology in the fields of corporate entrepreneurship
and innovation could be
confusing. Thus it seems to be necessary to fi
rst review some of the definitions used and to
present some basic structures in these fields.
Sharma and Chrisman present an overview of
the different definitions in the field of
entrepreneurship:
A variety of terms are used for the entrepreneurial efforts
within an existing organization
such as corporate entrepreneurship (Burgelman, 1983 ;
Zahra, 1993), corporate venturing
(Biggadike, 1979), intrepreneuring (Pinchot, 1985), internal
corporate entrepreneurship
(Jones & Butler, 1992), internal entrepreneurship
(Schollhammer, 1982 ; Vesper, 1984),
strategic renewal (Guth & Ginsberg, 1990) and venturing
(Hornsby, Naffziger, Kuratko &
Montagno, 1993).
Entrepreneurship encompasses acts of organizational
creation, renewal or innovation that
occur within or outside an existing organization.
Entrepreneurs are individuals or groups of indivi
duals, acting independently or as part of a
corporate system, who create new organizations, or
instigate renewal or innovation within
an existing organization.
[1]
Burgelman, in his work, also proposes a definition of
Entrepreneurship:
Corporate entrepreneurship refers to the process whereby
firms engage in diversification
through internal development. Such diversification requires
new resource combinations to
extend the firm’s activities in areas unrelated or marginally
related to its current domain
of competence and corresponding opportunity set.
[2]
This definition can be compared with the one proposed by Sharma & Chrisman:
Corporate entrepreneurship is the process wher
eby an individual or a group of individuals
in association with existing organization, create a new organization or instigate
renewal or
innovation within that organization.
[1]
-------------
Bibliographical references:
[1]
Toward a reconciliation of the definitional issues in the field of Corporate
Entrepreneurship
Pramodita Sharma, James J. Chrisman, In:
Entrepreneurship theory and practice, 1999
[2]
Corporate entrepreneurship and strategic management: insights from a process
study
Robert A. Burgelman, In: Management Science, 1983
 Corporate entrepreneurship (CE) has long been seen as
a very interesting research field among scholars and
managers[1]. Therefore, it is widely held that CE has
generated considerable contribution and is an important
driver of success. In addition, leadership and human
resource management (HRM) practices are the main
contributors to make a firm’s ability to be proactive,
innovative and able to accept risk. Our approach focuses
on the role of CE in cultivating and inducing business
development that enables the managers in manufacturing
firms to respond and adapt to changes in Malaysia
context. Moreover, leaders through its influencing power
develop entrepreneurship culture in firms contributes to
the company’s growth through innovations, competitive
advantages, new concepts and effective strategies both in
domestic and international operations.