Chapter 13 –
Strategic Entrepreneurship
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Knowledge Objectives
Studying this chapter should provide you with the
strategic management knowledge needed to:
1. Define and explain strategic entrepreneurship.
2. Describe the importance of entrepreneurial
opportunities, entrepreneurial capabilities, and
innovation.
3. Describe autonomous and induced strategic
behavior – the two forms of internal corporate
venturing.
4. Discuss how strategic alliances and M&A are used
to develop and commercialize innovations.
5. Discuss the importance of international
entrepreneurship.
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The Strategic
Management
Process
Strategy Implementation
Chapter 10
Corporate
Governance
Chapter 11
Organizational
Structure and
Controls
Chapter 13
Strategic
Entrepreneurship
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Agenda
1. Introduction to Corporate Entrepreneurship
2. Innovation
3. Organizing for Corporate Entrepreneurship
4. International Entrepreneurship
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Corporate Entrepreneurship
SOURCE: “How failure breeds success”, Business Week, July 10, 2006: 44-45.
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Entrepreneurship
Entrepreneurial Opportunities
 Conditions in which new products or services can
satisfy a need in the market
Entrepreneurship is concerned with
 the discovery of profitable opportunities not
perceived by others,
 the exploitation of profitable opportunities, and
 establish a competitive advantage based on
opportunities
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Corporate Entrepreneurship
Entrepreneurs
 Individuals acting independently or as part of an
organization who create a new venture or
develop an innovation and take risks entering
innovations into the marketplace
 Can be any manager or employee in an
organization
Corporate entrepreneurship
 Process whereby an individual or a group in an
existing organization creates a new venture or
develops an innovation
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Entrepreneurial Capabilities
Firms that encourage entrepreneurship are:
 Risk takers
 Committed to innovation
 Proactive in creating opportunities rather than
waiting to respond to opportunities created by
others
Entrepreneurial capabilities include:
 Intellectual & human capital
 Entrepreneurial mind-set
 Transfer of entrepreneurial competence to
others in the organization
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Agenda
1. Introduction to Corporate Entrepreneurship
2. Innovation
3. Organizing for Corporate Entrepreneurship
4. International Entrepreneurship
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Innovation Process
Invention
The act of creating or
developing a new product or
process
Brings something new into
being
Technical criteria are used to
determine the success of an
invention
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Innovation Process – cont’d
Invention
The process of creating a
commercial product from an
invention
Brings something new into use
Innovation
Commercial criteria are used to
determine the success of an
innovation
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Innovation Process – cont’d
Invention
The adoption of an innovation
by similar firms
Usually leads to product or
process standardization
Innovation
Products based on imitation
often are offered at lower
prices but with fewer features
Imitation
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Incremental & Radical Innovation
Incremental Innovation
Radical Innovation
Most innovations are
incremental
Are rare because of
difficulty and risk
Provides small
increments in current
product lines
Provides significant
technological
breakthroughs
Improves existing
knowledge and
processes
Creates new
knowledge and
processes
Can create value
Can create value
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Incremental & Radical Innovation
Radical
Innovation
Fiber-optic
cable
Internet
browser
Online auction
exchanges
Laparoscopic
Speech
Polyester
“keyhole”
recognition
surgery
software
Bubble
wrap
Enterprise
resource
planning
(ERP)
Incremental
Innovation
Frozen
yogurt
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Innovation Pyramid
Source: Kanter, E. R., cited in: Business Week, March, 2007: 3.
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Agenda
1. Introduction to Corporate Entrepreneurship
2. Innovation
3. Organizing for Corporate Entrepreneurship
4. International Entrepreneurship
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Internal Corporate Venturing
Set of activities used to create inventions and
innovations through internal means
Spending on R&D is linked to success of internal
corporate venturing
Successful entrepreneurial firms
 Provide appropriate autonomy
 Offer incentives for individual initiative
 Promote cooperation and group ownership of an
innovation
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Strategic Venturing Behaviors
Induced Strategic Behavior
 A top-down process whereby the firm’s current
strategy and structure foster product innovations
 The strategy in place is filtered through a
matching structural hierarchy
 Innovations are associated closely with that
strategy and structure
Autonomous Strategic Behavior
 Bottom-up process based on a firm’s wellsprings
of knowledge and resources
 A firm’s technological capabilities and
competencies are its basis for new products and
processes
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Internal Corporate Venturing: A
Model
Source: Adapted from Burgelman, R. A. (1983). “A model of the interactions of strategic behavior,
corporate context, and the concept of strategy”, Academy of Management Review, 8: 65.
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Product Champion
Organizational member with an entrepreneurial vision
of a new product or service and who seeks to create
support for its commercialization
Play critical role in moving innovations forward
“Sell” new business ideas to the organization
Particularly important for autonomous strategic
behavior
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Cross–Functional Product
Development Teams
Facilitate integration of
activities associated with
different organizational
functions (design,
manufacturing, marketing, etc.)
New product development
processes can be completed
more quickly
Cross-functional
Product Development
Team
Products can be more easily
commercialized when crossfunctional teams work
effectively
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Barriers to Cross-Functional
Teams Effectiveness
Different orientations and perceptions
 Individuals from separate functions have
different orientations on issues
 Perceive product development activities in
different ways
Organizational politics
 Aggressive competition for resources among
different organizational functions
 Must achieve cross-functional integration with
minimal political conflict
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Cooperative Strategies & M&A
Unlikely that firms possess all the knowledge and
resources required for it to be entrepreneurial and
innovative in a dynamic, competitive market
To gain access to other organization’s knowledge
and resources and to commercialize innovations,
firms
 Enter into strategic alliances and/or networks
of alliances
 Engage in acquisitions of other organizations
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Agenda
1. Introduction to Corporate Entrepreneurship
2. Innovation
3. Organizing for Corporate Entrepreneurship
4. International Entrepreneurship
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International Entrepreneurship
Entrepreneurship can:
 Fuel economic growth
 Create employment
 Generate prosperity for
citizens
There is a strong positive
relationship between the rate of
entrepreneurial activity and economic development in
a nation
While entrepreneurship is a global phenomenon, the
rate of entrepreneurship differs across countries
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International Entrepreneurship
Source: Global Entrepreneurship Monitor (07/01/2007).
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International Entrepreneurship
There must be a balance
(in the culture) between
 individual initiative and
 the spirit of cooperation
and group ownership of
innovation
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