CHAPTER 13. STRATEGIC ENTREPRENEURSHIP Strategic entrepreneurship is taking entrepreneurial actions using a strategic perspective.

Firms look up their opportunities in its external environment that it can try to exploit through innovations. Identifying opportunities to exploit through innovations is the entrepreneurship dimension of strategic entrepreneurship. Firms can develop innovations by using cooperative strategies, such as strategic alliances, and by acquiring other companies to gain access to their innovations and innovative capabilities. Corporate entrepreneurship is the use or application of entrepreneurship within an established firm. Established firms use entrepreneurship to strengthen their performance and to enhance growth opportunities. Entrepreneurship and Innovation Entrepreneurship is the process by which individuals, teams, or organizations identify and pursue entrepreneurial opportunities without being immediately constrained by the resources they currently control. Entrepreneurial opportunities are conditions in which new goods or services can satisfy a need in the market. These opportunities exist because of competitive imperfections in markets and among the factors of production used to produce them or because they were independently developed by entrepreneurs. Evidence suggests that entrepreneurship is the economic engine driving many nations economies in the global competitive landscape. Innovation is either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth. The realities of competition in the competitive landscape of the twenty-first century suggest that to be market leaders, companies must regularly develop innovative products desired by customers. Innovation is a key outcome firms seek through entrepreneurship and is often the source of competitive success in highly competitive environments. Innovation is the process of creating a commercial product from an invention which is the act of creating or developing a new product or process. Imitation is the adoption of a similar innovation by different firms. Imitation usually leads to product or process standardization, and products based on imitation often are offered at lower prices, but without as many features.
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Entrepreneurs are individuals who perceive an entrepreneurial opportunity and then take risks to develop an innovation to pursue it. Entrepreneurs tend to demonstrate several characteristics: highly motivated, willing to take responsibility for their projects, self-confident, and often optimistic. In addition, entrepreneurs tend to be passionate and emotional about the value and importance of their innovation-based ideas. International entrepreneurship is a process in which firms creatively discover and exploit opportunities that are outside their domestic markets in order to develop a competitive advantage. Entrepreneurship has become a global phenomenon is because internationalization leads to improved firm performance. Nonetheless, decision makers should recognize that the decision to internationalize exposes their firms to various risks, including those of unstable foreign currencies, problems with market efficiencies, insufficient infrastructures to support businesses, and limitations on market size. Internal Innovation In established organizations, most innovation comes from efforts in research and development (R&D) which is with effective performance often leads to firms filing for patents to protect their innovative work. It seems possible that in the twenty-first century competitive landscape, R&D may be the most critical factor in gaining and sustaining a competitive advantage in some industries, such as pharmaceuticals. Although critical to long-term corporate success, the outcomes of R&D investments are uncertain and often not achieved in the short term, meaning that patience is required as firms evaluate the outcomes of their R&D efforts. Incremental and Radical Innovation Firms produce two types of internal innovations, incremental and radical innovations, when using their R&D activities. Most innovations are incremental, that is they build on existing knowledge bases and provide small improvements in the current product lines. In contrast to incremental innovations, radical innovations usually provide significant technological breakthroughs and create new knowledge. Radical innovations, which are revolutionary and nonlinear in nature, typically use new technologies to serve newly created markets. Because they establish new functionalities for users, radical innovations have strong potential to lead to significant growth in revenue and profits.
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Radical innovations are rare because of the difficulty and risk involved in developing them. The value of the technology and the market opportunities are highly uncertain. Because radical innovation creates new knowledge and uses only some or little of a firms current product or technological knowledge, creativity is required. Autonomous Strategic Behavior & Induced Strategic Behavior Autonomous strategic behavior is a bottom-up process in which product champions pursue new ideas, often through a political process, by means of which they develop and coordinate the commercialization of a new good or service until it achieves success in the marketplace. Induced strategic behavior is a top-down process whereby the firms current strategy and structure foster innovations that are closely associated with that strategy and structure. An entrepreneurial mind-set is required to be innovative and to develop successful internal corporate ventures. Having processes and structures in place through which a firm can successfully implement the outcomes of internal corporate ventures and commercialize the innovations is critical. Indeed, the successful introduction of innovations into the marketplace reflects implementation effectiveness. Effective integration of the various functions involved in innovation processes is required to implement the incremental and radical innovations resulting from internal corporate ventures. Cross-functional integration is often vital to a firms efforts to develop and implement internal corporate venturing activities and to commercialize the resulting innovation. The crossfunctional teams now commonly include representatives from external organizations such as suppliers. Additionally, integration and innovation can be facilitated by developing shared values and effectively using strategic leadership. Shared values and effective leadership are important for achieving cross-functional integration and implementing innovation. Effective strategic leaders also ensure a high-quality communication system to facilitate cross-functional integration. A critical benefit of effective communication is the sharing of knowledge among team members. Effective communication thus helps create synergy and gains team members commitment to an innovation throughout the organization.

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Creating Value from Internal Innovation Cross-functional teams are important for promoting integrated new product design ideas and commitment to their subsequent implementation. Effective leadership and shared values promote integration and vision for innovation and commitment to it. The end result for the firm is the creation of value for the customers and shareholders by developing and commercializing new products. Innovation through Cooperative Strategies & Acquisition To gain access to the specialized knowledge commonly required to innovate in the complex global economy, firms may form a cooperative relationship such as a strategic alliance with other companies, some of which may be competitors. Acquisitions are another means firms use to obtain innovation. Innovation can be acquired through direct acquisition, or firms can learn new capabilities from an acquisition, thereby enriching their internal innovation abilities. The practice of strategic entrepreneurship by all types of firms, large and small, new and more established, creates value for all stakeholders, especially for shareholders and customers. Strategic entrepreneurship also contributes to the economic development of countries. RM 13. OVERCOMING BARRIERS TO OPEN INNOVATION AT APPLE, NINTENDO AND NOKIA Open innovation essentially requires balancing internal capabilities and external resources by having core competencies in management, R&D, and commercialization. There are three levels of barriers to open innovation: cognitive, behavioral, and institutional. In Apple, it focuses on the cognitive level. Though open innovation refers to relying also on external sources, the best ideas dont have to come from outside. Nokia focuses on the behavioral level. Nokia is about developing competitive advantage through process leadership. Resources are gained through sourcing and then combined with internally generated knowledge. Nintendos development and launch of the Wii gaming console can be defined as a socio-cultural invention. Innovation in Japanese firms tends to traditionally rely on incremental development. In summary, open innovation is contextual. In the study cases, the companies were common in being able to reinvent themselves in mature markets and gain market share by launching novel products.
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