Section 1

The Entrepreneurial
Perspective

Chapter 2
Corporate Entrepreneurship

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 LEARNING OBJECTIVES

01: To understand the causes of interest in corporate

entrepreneurship.
02: To introduce the “entrepreneurial” mode of managing firms and
distinguish it from the traditional mode.
03: To provide a scale for capturing the extent to which
management adopts entrepreneurial or traditional behaviors.
04: To discuss how established firms can develop an
entrepreneurial culture and the challenges of doing so.
05: To acknowledge that projects fail and people feel bad about it,
and to introduce the dual process model for maximizing learning
from failure experiences.
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 Interest in Corporate Entrepreneurship
There is an interest in entrepreneurship within organizations.
• An increasing social interest in “doing your own thing.”
• The entrepreneurial spirit is critical for innovation and grow.th
• Hypercompetition forces focus on product, productivity, and costs.

Developing corporate entrepreneurship, helps overcome

resistance to flexibility, growth, and diversification.

Entrepreneurial endeavors consist of four key elements:

• New business venturing.
• Organizational innovativeness.
• Self-renewal.
• Proactiveness.

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 Strategic Orientation and Commitment to Opportunity
Both entrepreneurship and strategy have important implications
for the performance of the firm.
Strategic orientation are those factors that are inputs into the
formulation of the firm’s strategy.
• Entrepreneurial management is driven by opportunity, not resources.
• Resources do not constrain entrepreneurially managed firms.

An entrepreneurial orientation toward opportunity allows firms

to rapidly pursue opportunities, seizing windows of opportunity.
• In contrast, traditional firms emphasize the collecting and analyzing of
information.
• Sometimes missing the window of opportunity.

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 Commitment of Resources and Control of Resources
An entrepreneurial orientation toward the commitment of
resources minimizes resources needed to pursue an opportunity.
• Traditionally managed firms commit resources on a large scale.

Entrepreneurially managed firms are less concerned about

ownership of resources than about access to others’ resources.

In contrast, traditionally managed firms focus on the ownership

and accumulation of resources.
• They believe they are self-contained if they control their resources.
• They differ in their entrepreneurial orientation toward the control of
resources.

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 Management Structure and Reward Philosophy
An entrepreneurial orientation toward management structure is
organic with few layers and many communication channels.

A traditionally managed firm’s structure is suited for internal

efficiencies of allocating controlled resources.

Entrepreneurially managed firms focus on pursuing opportunity

representing new value for the firm, they have an
entrepreneurial philosophy towards rewards.

Traditionally managed firms reward based on responsibilities.

• Determined by the amount of resources an employee controls.

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Growth Orientation and Entrepreneurial Culture
A firm with an entrepreneurial orientation toward growth has a
strong desire to expand the firm, rapidly.
• Traditionally managed firms prefer growth to be slow and steady.

Culture distinguishes entrepreneurially and traditionally

managed firms.
• Entrepreneurial orientation toward culture encourages the generation
of ideas, experimentation, and creative output.
• A traditionally managed firm’s culture means employees first assess
the resources it controls.

Most firms fall somewhere between traditionally managed and

entrepreneurially managed.

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 Characteristics of an Entrepreneurial Environment

Organization operates on Multidiscipline teamwork

frontiers of technology. approach.

New ideas are encouraged. Long time horizon.

Trial and error is encouraged. Volunteer program.

Failures are allowed. Appropriate reward system.

No opportunity parameters. Sponsors and champions

available.
Resources are available and
accessible. Support of top management.

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Leadership Characteristics of Corporate Entrepreneurs

A corporate entrepreneur
understands the environment.
Corporate entrepreneurs
They must be a visionary encourage open discussion.
leader – a person dreaming
great dreams. Openness leads to a strong
coalition of supporters.
They must be flexible and
create management options. A corporate entrepreneur
must be persistent to make a
They encourage teamwork, new venture successful.
using a multi-disciplined
approach.

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 Establishing Corporate Entrepreneurship
The first step is to secure top
management commitment.
Second, identify areas of
interest and money available.
Third, use technology to make
the company more flexible.
Fourth, interested managers
will train employees.
Fifth, develop ways to get
closer to customers.
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Sixth, learn to be more
productive with fewer
resources.
Seventh, establish a strong
support structure.
Eighth, tie rewards to
performance of the
entrepreneurial unit.
Finally, allow successful units
to expand and unsuccessful
ones to be eliminated.
 Problems and Successful Efforts
One study found new ventures started within a corporation
performed worse than those started independently.
• Reasons included the corporation’s lack of long-term commitment, a
lack of freedom to make decisions, and a constrained environment.

There are successfully implemented corporate entrepreneurship.

• 3M allows employees to devote a percent of their time to
independent projects - the most successful being Post-It notes.

Problems are not insurmountable and implementing corporate

entrepreneurship can lead to new products, growth, and a new
corporate environment and culture.

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 Learning From Failure
Sometimes initiatives fail to achieve their objectives and are
terminated.
• This represents an opportunity to learn and avoid the same mistakes
in the future.

Individuals using a dual process model of coping with negative

emotions recover more easily.
• The dual process requires oscillating between two alternate
approaches to loss.
• Loss orientation focuses on the loss event to create an account of the
failure.
• A restoration orientation uses distraction to focus energy on other
problems.

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 Practical Implications of the Dual Process
Knowledge that the feelings of loss are normal may reduce
feelings of shame and embarrassment.

Realizing the psychological and physiological outcomes caused

by the loss are “symptoms” can reduce secondary sources of
stress and assist with the choice of treatment.

There is a process of recover from a failure to learn, which offers

some comfort that feelings of loss will soon diminish.

The recovery and learning process can be enhanced by use of

the dual process model of copying with negative emotions.

Recovery from loss offers and opportunity to learn more about

entrepreneurship.

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