C18TP

Corporate Entrepreneurship (CE)

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 The ‘Embattled Corporation’
Corporations are facing dramatic changes in the way they
do business. Four dimensions have been recognised
through which environmental turbulence has created a
need for new management practices:
1.Through customers
2.Through competitors
3.Through technology
4.Through legal, regulatory and ethical standards

Source: Morris, Kuratko and Covin (2011: 6)

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 Customers
•Fragmented markets
•Increasing customer
expectations
•Higher cost of customisation
•Sustainable growth means
learning new skills in serving
global markets
Competitors
•Increased expenditure in
product development
•Difficult to differentiate
•Increased competition
•Competitors specialising in
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narrow, profitable niches
Technology
To change ways they operate
internally and how they
compete externally based on:
•New information
management; production and
service delivery; customer
management; logistics and
inventory management; sales
force management; and
product development
The technologies
Embattled
Corporation
Legal, Regulatory and
Ethical Standards
•Increased accountability,
visibility and transparency to
multiple stakeholders
Source: Morris, Kuratko and Covin (2011: 6)
•Increased litigious
environment and regulatory
restrictions
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 What is Corporate
Entrepreneurship?
Corporate entrepreneurship is the term used to
describe entrepreneurial behaviour in an established,
larger organisation. It can be defined as:

“the development of new business ideas and

opportunities within large and established
corporations” (Birkinshaw, 2003: 46).

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 What’s the Difference?
Independent entrepreneurship is the process
whereby an individual or group of individuals acting
independently, create a new organisation.

Corporate entrepreneurship is the process

whereby an individual or a group of individuals, in
association with an existing organisation, create a
new organisation or instigate renewal or innovation
within that organisation.

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 Characteristics of Corporate
Entrepreneurship
• The creation of new business units by an
established firm

• The development and implementation of

entrepreneurial strategic thrusts

• The emergence of new ideas from various levels

in the organisation

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A Typology of Approaches to Corporate
Entrepreneurship

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Source: Wolcott and Lippitz (2007)
 Schools of Thought
Birkinshaw (2003) identified four schools
of thought in trying to pull together the
corporate entrepreneurship literature:
•Corporate Venturing
•Intrapreneurship
•Bringing the market inside
•Entrepreneurial transformation
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 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

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Key to success is good ‘strategic fit’:

• Strong relationship with core competencies of

venturing company - effective synergy

or

• Acquiring skills, technologies or customers that

compliment the strategic direction of venturing
company - effective knowledge transfer

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 Advantages of Corporate
Venturing
• Facilitates innovation and knowledge
import
• External sources of finance may be easier
to access
• Facilitates creation of semi-autonomous
units with their own cultures, incentives
and business models
• Often involves highly motivated staff
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 Disadvantages of Corporate
Venturing

• Requires investment, normally equity, which can

be risky
• Requires investment in venture mechanisms that
set up venture management and networks that
search out, evaluate and generate deal flows
• Investing company will not be in complete
control of innovation

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 Intrapreneurship
Concerned with:
• How individuals may be encouraged to act
more entrepreneurially in a large
organisation
• Systems and structures that inhibit initiative
• Challenge those systems and act in
entrepreneurial ways
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Pinchot (1985):
“Intrapreneuring ... as entrepreneurship inside of the corporation.”

Knight (1987):
“An intrapreneur is a employee who:... introduces and manages
an innovative project within the corporate environment, as if he or
she were an independent entrepreneur.”

•Need for achievement, risk orientation, innovativeness and need

for autonomy

•Innovations are enforced in extreme cases by lone fighters

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 Intrapreneurs
• Result orientated
• Ambitious
• Competitive
• Questioning
• Self motivated
• Comfortable with change
• Dislike bureaucracy
• Adept at politics
• Clarity of direction
• Good at resolving conflict
• Able to work with others

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 Needs of Intrapreneurs
• Buffer to break rules
• High level sponsor
• Protection during difficult times
• Motivation to pursue project
• A culture that ‘tolerates’ intrapreneurship
• Sponsor-intrapreneur mutual trust and
respect
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 Bringing the Market Inside

Concerned with:
• Structural changes needed to
encourage entrepreneurial behaviour
• Market approach to resource
allocation and people management
• Spin offs and venture capital
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Entrepreneurial Transformation
Concerned with:
• The need form large firms to adapt to an
ever-changing environment
• Changes in systems, structures and
cultures that encourage entrepreneurship
– entrepreneurial architecture
• Leadership and strategies that encourage
entrepreneurship

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Types of CE Outcomes
• New corporate strategies
• New ventures
• New business models
• New markets
• New product or services
• New internal processes
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Corporate entrepreneurial work environment

Structure

Human
Resource Entrepreneurial Work Resource
Management Environment Controls

Culture Source: Morris et al. (2009: 432)

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References
•Birkinshaw, J. (2003). The Paradox of Corporate Entrepreneurship: Post-Enron
Principles for Encouraging Creativity without Crossing the Line. Strategy and
Business Wolcott, R.C. and Lippitz, M. J. (2007). The Four Models of Corporate
Entrepreneurship. MIT Sloan Management Review 49(1): 75-82.
•Knight, R.M. (1987). Corporate Innovation and Entrepreneurship: A Canadian
Study. Journal of Product Innovation Management. 4(4): 284-297.
•Morris, M. H., Kuratko, D. F. and Covin, J. G. (2011). Corporate
Entrepreneurship and Innovation (3rd ed.). USA: Cengage Learning.
•Morris, M. H., van Vuuren, J., Cornwall, J. R. and Scheepers, R. (2009).
Properties of balance: A Pendulum Effect in Corporate Entrepreneurship.
Business Horizons 52
•Pinchot, G. (1985). Intrapreneuring: Why You Don’t Have to Leave the
Corporation to Become an Entrepreneur. New York: Harper & Row.

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