CHAPTER 13

STRATEGIC Strategic Entrepreneurship

ACTIONS:
STRATEGY
IMPLEMENTATION
Strategic Management
Competitiveness and Globalization:
PowerPoint Presentation by Charlie Cook
Concepts and Cases Seventh edition
The University of West Alabama
© 2007 Thomson/South-Western.
All rights reserved. Michael A. Hitt • R. Duane Ireland • Robert E. Hoskisson
Strategic Entrepreneurship and Innovation
• Entrepreneurship is concerned with:
 The discovery of profitable opportunities
 The exploitation of profitable opportunities
• Firms that encourage entrepreneurship are:
 Risk takers.
 Committed to innovation.
 Proactive in creating opportunities rather than waiting
to respond to opportunities created by others.

© 2007 Thomson/South-Western. All rights reserved. 13–2

Entrepreneurial Opportunities
• Entrepreneurial Opportunities
 Conditions in which new products or services can
satisfy a need in the market.

• Entrepreneurs or entrepreneurial managers must

be able to:
 Identify opportunities not perceived by others.
 Take actions to exploit the opportunities.
 Establish a competitive advantage.

© 2007 Thomson/South-Western. All rights reserved. 13–3

Innovation Process
• The act of creating or developing a
Invention new product or process
• Brings something new into being.
• Technical criteria are used to
determine the success of an
invention.

© 2007 Thomson/South-Western. All rights reserved. 13–4

Innovation Process (cont’d)
• The process of creating a
Invention commercial product from an
invention.
• Brings something new into use.
• Commercial criteria are used to
Innovation
determine the success of an
innovation.

© 2007 Thomson/South-Western. All rights reserved. 13–5

Innovation Process (cont’d)

Invention

• The adoption of an innovation by

similar firms
Innovation • Usually leads to product or process
standardization.
• Products based on imitation often
are offered at lower prices but with
Imitation fewer features.

© 2007 Thomson/South-Western. All rights reserved. 13–6

The Importance of Innovation
• Innovation
 Is a key outcome firms seek through
entrepreneurship.
 Is often the source of competitive success.
• Corporate Entrepreneurship
 Innovations produced in large established firms.

© 2007 Thomson/South-Western. All rights reserved. 13–7

Cooperative Strategies for Entrepreneurship
and Innovation
• Cooperation and integration of knowledge and
resources is required to successfully
commercialize inventions.
 Entrepreneurial firms need investment capital and
distribution capabilities.
 Established companies need the technological
knowledge possessed by entrepreneurial firms.
• Firms innovate through the sharing their
knowledge and skills in a cooperative
relationship.

© 2007 Thomson/South-Western. All rights reserved. 13–8

Acquisitions to Buy Innovation
• Acquisitions
 Can rapidly extend the product line.
 Can quickly increase the firm’s revenues.
• Key risks of acquisitions
 The firm may substitute the ability to buy innovations
for an ability to produce innovations internally.
 The firm may lose intensity in R&D efforts.
 The firm may lose its ability to produce patents.

© 2007 Thomson/South-Western. All rights reserved. 13–9

Capital for Entrepreneurial Ventures
• Venture Capital Firms
 Seek high returns on their investment.
 Value the competence of the entrepreneur or the
human capital in the firm.
 Place weight on the expected scope of competitive
rivalry the firm is likely to experience.
 Evaluate the degree of instability in the market
addressed.

© 2007 Thomson/South-Western. All rights reserved. 13–10

Capital for Entrepreneurial Ventures
• 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.

© 2007 Thomson/South-Western. All rights reserved. 13–11

Creating Value through Strategic
Entrepreneurship
• Be effective in identifying opportunities.
• Be flexible and willing to take risks.
• Have sufficient resources and capabilities to exploit
identified opportunities.
• Sustain a competitive advantage while identifying and
exploiting opportunities.
• Develop an entrepreneurial mind-set among managers
and employees.
• Seek to enter and compete in international markets.

© 2007 Thomson/South-Western. All rights reserved. 13–12