Professional Documents
Culture Documents
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Learning Objectives
Define strategic entrepreneurship and corporate entrepreneurship.
Define entrepreneurship and entrepreneurial opportunities and explain
their importance.
Define invention, innovation, and imitation, and describe the
relationship among them.
Describe entrepreneurs and the entrepreneurial mind-set.
Describe how firms internally develop innovations.
Explain how firms use cooperative strategies to innovate.
Describe how firms use acquisitions as a means of innovation.
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What is
entrepreneurship?
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Entrepreneurship
Entrepreneurship: the process by which individuals or
organisations identify and exploit entrepreneurial opportunities
without being immediately constrained by the resources they
currently control.
‘Creative destruction’ of existing and replacement of new products or
methods of production
One of the major economic engines driving economic growth,
creating employment and generating prosperity in the global
competitive landscape
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Entrepreneurial Opportunities
Entrepreneurial Opportunities: conditions in which new
products or services can satisfy a need in the market
Existence due competitive imperfections in markets and among the
factors of production, while others not recognising the potential.
Opportunity exploration versus opportunity exploitation
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Entrepreneurs
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Entrepreneurs
Entrepreneurs: Individuals acting independently or as part of
an organisation, who see an entrepreneurial opportunity and
then take risks to develop an innovation to exploit it.
Identify opportunities not perceived by others
Take actions to exploit the opportunities
Entrepreneurial Mindset values uncertainty in the
marketplace and seeks to continuously identify opportunities
with the potential to lead to important innovations.
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Corporate Entrepreneurship
Corporate entrepreneurship: the use or application of
entrepreneurship within an established firm
Risk takers committed to innovation
Proactive in creating opportunities rather than waiting to respond to
opportunities created by others
Strategic Entrepreneurship: Taking entrepreneurial actions
from a strategic perspective to create wealth
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Corporate
entrepreneurship VS
Strategic
Enterpreneurship
Entrepreneurship and Innovation
Then how do firms explore and exploit entrepreneurial
opportunities?
Innovation: means by which the entrepreneur either creates
new wealth-producing resources or endows existing resources
with enhanced potential for creating wealth.
“Specific function of entrepreneurship”
Source of competitive success, especially in turbulent and highly
competitive environment.
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Innovative Activities
Invention
Innovation
Imitation
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Innovative Activities: Three I’s
Invention
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Internal Innovation
Internal innovation: the set of activities to develop internal
inventions and innovations, selecting from several types of
innovation and the specific processes through which each type
is produced
R&D spending linked to success in internal corporate venturing
Uncertain investment and often not achieved in short-term
Incremental versus novel innovation
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Internal Innovation
Incremental innovation: building on existing knowledge
bases and providing small increments in current product lines
Novel innovation: generating significant technological
breakthroughs and creating new knowledge
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Incremental Versus Radical Innovation
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Autonomous Strategic Behaviour
Autonomous Strategic Behaviour: a bottom-up process in
which product champions pursue new ideas and develop and
coordinate the commercialisation of a new good or service
until it achieves success in the marketplace.
Product Champion: an individual with an entrepreneurial vision of a
new good or service who seeks to create support for the vision’s
commercialisation
Often achieved through product champion’s informal networks and
social capital and firm’s technological capabilities and resources
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Induced Strategic Behaviour
Induced Strategic Behaviour: a top-down process whereby
the firm’s current strategy and structure foster product
innovations.
The strategy in place is filtered through a matching structural
hierarchy.
It results in internal innovations that are consistent with the firm’s
current strategy.
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Autonomous Versus Induced Strategic Behaviour
Radical Incremental
Innovation Innovation
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Value Creation Through Internal Venturing
Entrepreneurial start-ups
Possessing strategic flexibility and willingness to take risks
More radical innovation
Well-established firms
Possessing more resources and capabilities to exploit identified
opportunities
More incremental innovation
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Cross-Functional Product Development Teams
Cross-functional product development teams facilitate
integration of activities associated with different organisational
functions.
Products can be more easily (and hence quickly)
commercialised when cross-functional teams
work effectively.
Cross-functional
Product Development
Team
© 2015 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as 24
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Barriers to Cross-Functional Teams Effectiveness
Different orientations and perceptions: individuals from
separate functions have different orientations on issues.
Differing approaches to product development activities
Organisational Politics: aggressive competition for resources
among different organisational functions.
Shared values, effective leadership and communication integrate
functional units and mitigate organisational politics.
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Other Innovative Approaches
Innovation though cooperative strategies: sharing knowledge
and skills with partners (e.g., collaborative advantage)
Entrepreneurial firms need investment capital and distribution
capabilities.
Established companies need the technological knowledge
possessed by entrepreneurial firms.
Innovation though acquisition: acquiring the knowledge and
capabilities from the target firms
Rapid extension of product line and increase in firm’s revenue
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Value Creation Through Strategic Entrepreneurship
Be flexible and willing to take risks
Identify and exploit opportunities with sufficient resources and
capabilities to launch strategic actions
Sustain a competitive advantage while identifying and exploiting
opportunities.
Foster an entrepreneurial mind-set among managers and employees.
Emphasise resource management, particularly human capital and
social capital.
Seek to enter and compete in international markets.
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Where does entrepreneurial capital
come from?
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Venture Capital Firm
Venture capital (VC) firms are institutions which invest in
companies in exchange for equity in the companies they
invest in, which usually have a novel technology or business
model in high technology industries.
Seeking high returns on investment
Consideration of the expected scope of competitive rivalry.
Evaluation of the degree of instability in the market addressed.
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SoftBank
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Photo Sources: wikipedia
Initial Public Offerings
Initial Public Offerings (IPOs) are new stock priced to reflect
the firm’s high potential.
Often yield much larger equity investments than can be obtained
from venture capitalists.
Investment bankers frequently play major roles in the development
and offering of IPOs.
Firms that have previously received venture capital backing usually
receive greater returns from IPOs.
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NASDAQ
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Photo Sources: wikipedia