ME-302 Entrepreneurship

Course Instructor/s:
Prof. Dr. Muhammad Naeem Khan
Engr. Muhammad Arsalan Khan

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CORPORATE ENTREPRENEURSHIP

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Learning Objectives:

1. To understand the causes of interest in corporate

entrepreneurship.
2. To introduce the “entrepreneurial” mode of managing firms and
distinguish it from the traditional mode.
3. To provide a scale for capturing the extent to which
management adopts entrepreneurial or traditional behaviors.
4. To discuss how established firms can develop an entrepreneurial
culture and the challenges of doing so.
5. 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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 Corporate entrepreneurship
 Corporate Entrepreneurship is a process used to
develop new businesses, products, services or
processes inside of an existing organization to
create value and generate new revenue growth
through entrepreneurial thought and action.
 The resistance against flexibility, growth, and
diversification can, in part, be overcome by developing
a spirit of entrepreneurship within the existing
organization, called corporate entrepreneurship.
 An increase in corporate entrepreneurship reflects an
increase in social, cultural, and business pressures
toward entrepreneurial action.

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 Corporate entrepreneurship
 Intrapreneurship / corporate entrepreneurship
consist of creating something new of value either by
redefining the company’s current products or services,
developing new markets, or forming more formally
autonomous or semiautonomous units or firms.
 Formations of new corporate ventures are the most
salient manifestations of corporate entrepreneurship.
Organizational innovativeness refers to product and
service innovation, with an emphasis on development
and innovation in technology. It includes new product
development, product improvements, and new
production methods and procedures.

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Characteristics of an entrepreneurial
environment
 The overall characteristics of a high entrepreneurial
environment are summarized in Table 2.3.

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 Characteristics of an
entrepreneurial environment
 The first of these is that the organization operates on the
frontiers of technology. Since research and development are
key sources for successful new product ideas, the firm must
operate on the cutting edge of the industry’s technology,
encouraging and supporting new ideas instead of discouraging
them, as frequently occurs in firms that require a rapid return on
investment and a high sales volume.
 Secondly, entrepreneurial firms must remove obstacles to
creativity in the new product development process. Frequently in
an organization, various “turfs” are protected, frustrating attempts
by potential entrepreneurs to establish new ventures. In one
Fortune 500 company, an attempt to establish an entrepreneurial
environment ran into problems and eventually failed when the
potential entrepreneurs were informed that a proposed new
product and venture was not possible because it was in the
domain of another division.
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 Characteristics of an
entrepreneurial environment
 Thirdly, entrepreneurial firms must encourage experimentation
to facilitate trial-and-error learning. Successful new
products or services usually do not appear fully developed;
they evolve. It took time and some product failures before the
first smart phone appeared. A company wanting to establish
an entrepreneurial spirit has to establish an environment that
allows mistakes and failures in developing new and innovative
products.

 Without the opportunity to fail in an organization, few, if

any, corporate entrepreneurial ventures will be developed.
Almost every entrepreneur has experienced at least one failure
in establishing a successful venture.

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 Characteristics of an
entrepreneurial environment
 Entrepreneurial firms make highly accessible resources for
experimentation, slack resources such as money and time. As one
corporate entrepreneur stated, “If my company really wants me to
take the time, effort, and career risks to establish a new venture,
then it needs to put money and people resources on the line.”
 Entrepreneurial firms construct and encourage multidisciplinary
teams to work on new ventures. This open approach, with
participation by needed individuals regardless of area, is the
opposite of the typical corporate organizational structure. An
evaluation of successful cases of corporate entrepreneurship
indicated that one key to success was the existence of
“skunkworks*” involving relevant people.

*(A skunkworks project is a project developed by a relatively small and loosely structured group of people who
research and develop a project primarily for the sake of innovation. The term originated with Lockheed's World War
II Skunk Works project.)

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 Characteristics of an
entrepreneurial environment
 Besides encouraging teamwork, the corporate environment must
establish a long time horizon for evaluating the success of the
overall program as well as the success of each individual
venture. If a company is not willing to invest money without a
guarantee of return for 5–10 years, it should not attempt to
create an entrepreneurial environment.
 The spirit of corporate entrepreneurship cannot be forced upon
individuals; it must be on a volunteer basis. There is a
difference between corporate thinking and entrepreneurial
thinking, with certain individuals performing much better on one
side of the continuum or the other. Most managers in a
corporation are not capable of being successful corporate
entrepreneurs. An individual willing to spend the excess hours
and effort to create a new venture needs the opportunity and the
accompanying reward of completing the project.
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 Characteristics of an
entrepreneurial environment
 Entrepreneurial firms need to create a reward system that
encourages creativity, risk taking, and even failure. The corporate
entrepreneur needs to be appropriately rewarded for all the energy,
effort, and risk taking expended in the creation of the new venture.
Rewards should be based on the attainment of established
performance goals.
 An entrepreneurial firm develops sponsors, develops *product
champions, and matches the two. That is, a corporate environment
favorable for corporate entrepreneurship has sponsors and champions
throughout the organization who not only support the creative activity
but also have the planning flexibility to establish new objectives and
directions as needed. As one corporate entrepreneur stated.

*(A product champion is someone who sees value in a product, and creates and develops the product in a systematic fashion.
The product champion entices decision makers to invest, sell or promote the product. The product champion also keeps
the product in consumer's minds.)

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 Characteristics of an
entrepreneurial environment
 Finally, and perhaps most importantly, an entrepreneurial
firm is one that has a top management team that
wholeheartedly supports and embraces the entrepreneurial
actions of employees.
 That is, through their physical presence and allocating
sufficient resources to new ventures, managers explicitly and
implicitly send signals to the employees that their
entrepreneurial endeavors are valued and supported. Without
top management support, a successful entrepreneurial
environment cannot be created.

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 Leadership Characteristics of
Corporate Entrepreneurs
 Within a corporate environment, certain individual
characteristics have been identified that constitute
a successful corporate entrepreneur.
 These characteristics include:

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