Chapter 2

CORPORATE ENTREPRENEURSHIP
Causes for Interest in Corporate
Entrepreneurship
• Doing your own things and doing it in owns way.
• Concept of self actualization.
• Need for expression and freedom.
• Stimulating and capitalizing on individual potential.
• Overcoming resistance against flexibility, growth and
diversification.
• Social, cultural and business pressures.
• New Business venturing: Creation of new business
within an existing organization (SBU)
• Innovation: Constant improvement.
• Pro-activeness: Initiative and risk taking
 Managerial Vs Entrepreneurial
Decision Making
Managerial Entrepreneurial

Strategic Orientation
Efficient use of resources
Commitment to opportunity
Information gathering & return Opportunistic and go for
on resources
(Long Term Commitment)
Presence & generation of
opportunity and resources
don’t constraint strategic
thinking
window of opportunity and
adjust resources
accordingly.
(Short Term Commitment)
 Managerial Entrepreneurial
Commitment of Resources
Commitment of resources to Commitment of small amount
a large scale, continual and of resources in a multi-step
having in depth analysis manner with minimal risk at
first, whether investment each step.
can be easily reversed.
(Full Commitment) (Multi Stage Commitment)
Control of Resources
Focus on ownership, Less concerned about
accumulation of further ownership and control of
resources and effectiveness. resources and more
concerned with access to
others resources
 Managerial
Management Structure
Formalized, Hierarchical
clear roles and
responsibilities and highly
routinized work
Reward Philosophy
Rewards are typically
determined by amount of
resources that the manager
or employee controls
Entrepreneurial
Multiple informal networks,
few layers of bureaucracy,
quick decision making
Compensate employees on
the basis of their contribution
towards generation and
exploitation of opportunity
 Managerial Entrepreneurial
Growth Orientation
Slow steady and Great desire to grow at a
manageable growth rapid speed
Culture
Interested in ideas that Encourage employees to
revolve around centrally generate ideas,
controlled resources and experimentation and
limited opportunity creativity with focus on
recognition opportunity
ESTABLISHING A CULTURE FOR
CORPORATE ENTREPRENEURSHIP
Characteristics:
1. Organization Operates at frontiers of technology i.e.
most modern technology. Research and development and new
ideas are encouraged.

2. Experimentation: Trial and errors are encouraged.

This culture allows mistakes and failures in developing new
and innovative products.

3- No Initial Opportunity Parameter: Three are no

barriers to new product development and creation.
4- Resources are available and accessible

5- Multi disciplined Team Approach: Existence of cross

functional teams.

6- Establish a long term horizon

7- A volunteer involvement: Self motivated and self

selected and every one is not suitable for this activity.
8- Reward system is based on attainment of
established performance goals.

9- Sponsors and Champions are available

10- Whole hearted support by Top-Management

Physically and by providing resources.
LEADERSHIP CHARACTERISTICS
OF CORPORATE ENTREPRENEUR
1. Understands Environment:
Creativity and broad understanding of interval and
external environment
 
2. Visionary and Flexible:
Dream great dreams and overcome obstacles.
 
3. Create Management Options:
Open, encourage changes and creates something new
in organizational structure.
4. Encourage the Teamwork:
Utilizing multi-disciplined teams and he is a good diplomat.
 

5. Builds a coalition of supporters:

Encourage team members, motivates them and makes
everyone a hero.
 

6. Encourage Open Discussion:

Allow frankness, open discussion, disagreement and
criticism.

7. Persistent: He can deal with obstacles and frustration.

Establishing Corporate Entrepreneurship in
the Organization
• Step one:
– Secure a commitment to corporate
entrepreneurship in the organization by top,
upper, and middle management levels.
– Establish initial framework and embrace the
concept.
– Identify, select, and train corporate
entrepreneurs.
Establishing Corporate Entrepreneurship in the
Organization (cont.)
• Step two:
– Identify ideas and areas that top management
is interested in supporting.
– Identify amount of risk money available to
develop the concept.
– Establish overall program expectations and
target results of each corporate venture.
– Establish mentor/sponsor system.
• Step three:
– Use of technology to ensure organizational
flexibility.
Establishing Corporate Entrepreneurship in the
Organization (cont.)

• Step four:
– Identify interested managers to train
employees and share their experiences.
• Step five:
– Develop ways for the organization to get closer
to its customers.
• Step six:
– Learn to be more productive with fewer
resources.
Establishing Corporate Entrepreneurship in the
Organization (cont.)

• Step seven:
– Establish a strong support structure for corporate
entrepreneurship.
• Step eight:
– Tie rewards to the performance of the
entrepreneurial unit.
• Finally:
– Implement an evaluation system that allows
successful entrepreneurial units to expand and
unsuccessful ones to be eliminated.
Establishing Corporate Entrepreneurship in the
Organization (cont.)
• Problems and Successful Efforts
– A study found that new ventures started within a
corporation performed worse than those started
independently by entrepreneurs.
– Reasons cited:
• Corporation’s difficulty in maintaining a long-term
commitment.
• A lack of freedom to make autonomous decisions.
• A constrained environment.
– On average, independent start-ups become:
• Profitable twice as fast.
• End up twice as profitable.
Establishing Corporate Entrepreneurship in the
Organization (cont.)

– Companies that have adopted their own version

of the implementation process to launch new
ventures successfully:
• Minnesota Mining and Manufacturing (3M).
• Hewlett-Packard (HP).
• IBM.
Learning From Business Failure
• Business failure occurs when a fall in revenue or rise in
expense is of such magnitude that firm become
insolvent and unable to attract new debts and equity
funding and cannot operate under current ownership.
• Most common reason is insufficient experience.
• Loss of business may also generate negative emotional
response i.e. Grief; a feeling of anger, disbelief, guilt,
self blame, distress and anxiety.
• Learning from failure occurs when feedback information
generate Entrepreneurial knowledge.
• Grief affects information processing and ability to learn
from negative events.
Grief Recovery Process:
Recovery: Recovery starts when there is no longer negative
emotional response.
Process:
There are two process involved.
Loss Orientation:
An approach to grief recovery that involves working through and
processing some aspects of loss experience and as result of this
breaking emotional bonds to the object loss.
Restoration Orientation: (Try to buildup again)
An approach to grief recovery based on both avoidance and
Proactive-ness towards secondary sources of stress arising from
a major loss.

A Dual Process for Grief.

No one approach is best and it requires an oscillation.
Implications of Grief Recovery:

• Reduces feeling of shame & embarrassment

• Speeds up recovery process.
• Reduces stress and assist in treatment.
• Gives comfort to Entrepreneur.
• Makes Entrepreneur knowledgeable
The End