Vous êtes sur la page 1sur 21

Chapter 13: Strategic Entrepreneurship

Chapter 13
Strategic Entrepreneurship
KNOWLEDGE OBJECTIVES
1.
2.
3.
4.
5.
6.
7.
8.
9.

Definestrategicentrepreneurshipandcorporateentrepreneurship.
Defineentrepreneurshipandentrepreneurialopportunitiesandexplaintheirimportance.
Defineinvention,innovation,andimitationanddescribetherelationshipamongthem.
Describeentrepreneursandtheentrepreneurialmindset.
Explaininternationalentrepreneurshipanditsimportance.
Describehowfirmsinternallydevelopinnovations.
Explainhowfirmsusecooperativestrategiestoinnovate.
Describehowfirmsuseacquisitionsasameansofinnovation.
Explainhowstrategicentrepreneurshiphelpsfirmscreatevalue.

CHAPTER OUTLINE
Opening Case Googling Innovation
ENTREPRENEURSHIP AND ENTREPRENEURIAL OPPORTUNITIES
INNOVATION
ENTREPRENEURS
INTERNATIONAL ENTREPRENEURSHIP
INTERNAL INNOVATION
Strategic Focus The Razrs Edge: R&D and Innovation at Motorola
Incremental and Radical Innovation
Autonomous Strategic Behavior
Induced Strategic Behavior
IMPLEMENTING INTERNAL INNOVATIONS
Cross-Functional Product Development Teams
Facilitating Integration and Innovation
Creating Value from Internal Innovation
INNOVATION THROUGH COOPERATIVE STRATEGIES
Strategic Focus Does Whole Foods Really Obtain Innovation in Unnatural Ways?
INNOVATION THROUGH ACQUISITIONS
CREATING VALUE THROUGH STRATEGIC ENTREPRENEURSHIP
SUMMARY
REVIEW QUESTIONS
EXPERIENTIAL EXERCISES
NOTES

13-1

Chapter 13: Strategic Entrepreneurship


LECTURE NOTES
Chapter Introduction: This chapter helps to identify ways in which entrepreneurial insights
and activities can be harnessed in large firms. The principles identified here may certainly
help students see how this can be accomplished. In many ways, students are very motivated
by the topic, since it highlights the ways in which an attractive mind-set (entrepreneurship)
can be applied to what some students see as the less exciting corporate world.

OPENING CASE
Googling Innovation
Google it! Regardless of which search engine is used to surf the Web, Internet users commonly
google it. Google has become a generic. Globally, over 380 million people use Google in 35 different
languages to find what they want on the Internet. In addition to its search capabilities, Google expanded its
repertoire to include Web portal services such as Webmail, blogging, photo sharing, and instant messaging.
It also provides a number of other tools such as interactive maps, discussion groups, comparison shopping,
and an image library.
Google is best known as an innovation company because it continually develops and introduces new
services to the market. Google has established a corporate culture that promotes creativity and innovation.
For example, all employees are allowed 20 percent of their time to work on projects of their choosing.
Also, Google has a flat organization structure and few managers. Even project teams have no permanent
leader. Team members rotate as the project leader. Google is a relaxed and fun place to work, with free
snacks and meals, as well as video games available for break times. The attractiveness of its culture is
shown by the fact that Google has almost no turnover.
And Google also found a way to harness all of the ideas created by its employees and motivational
workplace. First, Google established an internal Web page for tracking new ideas. Each idea creator set
up a special Web page for her/his new idea. This information is posted on the intranet, which allows others
in the company to test the idea. Second, Google established a vice president of search products and user
experience. This vice president is an internal gatekeeper and recommends if and when a particular product
is ready for release to the market. The role is also used to span the boundary between the technical
(geeks) and the markets (marketing and sales).
Some believe that the best services offered outside of search have come through acquisitions and strategic
alliances. Regardless, Google uses innovation as a way to beat its competition even in international markets
such as China. The market leader in China is Baidu.com. But Google developed a research center in Beijing
to develop new products for the Chinese market, and introduced a Chinese-language brand name to
compete effectively in this market.
Google has put innovation at the very top of its priority list and has built an organization in which
innovation truly lives and breaths. Equate the 20 percent time allowance for working on
employee ideas to days per week. Thats the equivalent of one day per week that employees are
allowed and encourages to make a difference. But do your students see a down-side to lack of
structure? Might this environment foster a cat herding image? This opening case is packed
with dialogue kindling that students will embrace with gusto.

Definestrategicentrepreneurshipandcorporateentrepreneurship.

13-2

Chapter 13: Strategic Entrepreneurship


Entrepreneurship is the economic engine driving many nations economies in the global competitive landscape.
Entrepreneurship and innovation have become important for young and old, large and small organizations in all
types of industries.
Teaching Note: Research conducted by the Center for Entrepreneurial Leadership at the
Kauffman Foundation has shown that in recent years almost 100 percent of the new jobs in
the U. S. have been created by entrepreneurial firms of less than two years of age.
Strategic entrepreneurship is taking entrepreneurial actions using a strategic perspective. More specifically, it
involves engaging in simultaneous opportunity seeking and competitive advantage seeking behaviors to design
and implement entrepreneurial strategies to create wealth.
The focus in the chapter is on innovation and entrepreneurship within established organizations. This
phenomenon is called corporate entrepreneurship, which is the use or application of entrepreneurship within an
established firm.
Because of todays uncertain environment (i.e., a complex global marketplace), firms cannot easily predict the
future. As a result, they must develop strategic flexibility to have a range of strategic alternatives that they can
implement as needed. Creating tomorrows business requires a constant search for emerging opportunities.

Defineentrepreneurshipandentrepreneurialopportunitiesand
explaintheirimportance.

ENTREPRENEURSHIP AND ENTREPRENEURIAL OPPORTUNITIES


Entrepreneurship is the process by which individuals or groups identify and pursue entrepreneurial
opportunities without being immediately constrained by the resources they currently control.
Teaching Note: According to Schumpeter, entrepreneurship is a process of creative
destruction, through which existing products or methods of production are destroyed and
replaced with new ones. Thus, entrepreneurship is concerned with discovering and exploiting
profitable opportunities.
Entrepreneurial opportunities represent conditions in which new products or services can satisfy a need in the
market. The essence of entrepreneurship is to identify and exploit these opportunities.
After identifying opportunities, entrepreneurs take actions to exploit them and establish a competitive
advantage. To do that, actions must be valuable, rare, costly to imitate, and nonsubstitutable.

Defineinvention,innovation,andimitationanddescribethe
relationshipamongthem.

INNOVATION
Peter Drucker argues that innovation is a function of entrepreneurship, as well as the means that an entrepreneur
uses to create wealth-producing resources or enhance the potential of existing resources for creating wealth.
Entrepreneurship and innovation are important for large and small firms (and start-ups) as they compete in the
new competitive landscape. These are central to creativity, economic growth, productivity, and job creation.

13-3

Chapter 13: Strategic Entrepreneurship

Teaching Note: Innovation has long been recognized as vital to competitive success. For
example, Henry Ford, founder of Ford Motor Company, observed that, The competitor to be
feared is one who never bothers about you at all, but goes on making his own business better
all the time. Businesses that grow by development and improvement do not die. But when a
business ceases to be creative, when it believes it has reached perfection and needs to do
nothing but produceno improvement, no developmentit is done.
Innovation has an impact on firm outcomes.
Innovation is a key source of competitive success for firms competing in turbulent, competitive markets.
Innovation is intended to enhance a firms strategic competitiveness and financial performance.
Research shows that firms in global industries that invest more in innovation also achieve greater returns.
Schumpeter suggested that firms generally engage in three types of innovative activity:
invention, the act of creating or developing a new product (good or service) or process idea
innovation, the process of creating a commercializable product from invention
imitation, the adoption of innovation by similar firms, which often leads to standardization of the product or
process and lower pricesall of this while maintaining many of the same features
In the United States in particular, innovation is the most critical of the three types of innovative activity. Many
companies are able to create ideas that lead to inventions, but commercializing those inventions through
innovation has, at times, proved difficult. This difficulty is suggested by the fact that approximately 80 percent
of R&D occurs in large firms, but these same firms produce fewer than 50 percent of the patents.

Describeentrepreneursandtheentrepreneurialmindset.

ENTREPRENEURS
Entrepreneurs are individuals, acting independently or as part of an organization, who create a new venture or
develop an innovation and take on the risks involved in introducing it to the marketplace.
Entrepreneurs tend to demonstrate several characteristics, including those of being optimistic, highly
motivated, willing to take responsibility for their projects, and courageous. In addition, entrepreneurs tend to be
passionate and emotional about the value and importance of their innovation-based ideas.
Evidence suggests that successful entrepreneurs have an entrepreneurial mind-set. The person with an
entrepreneurial mind-set values uncertainty in the marketplace and seeks to continuously identify
opportunities with the potential to lead to important innovations. Because it has the potential to lead to
continuous innovation, individuals entrepreneurial mind-sets can be a source of competitive advantage for a
firm.
Top-level managers should try to establish an entrepreneurial culture that inspires individuals and groups to
engage in corporate entrepreneurship. For example, Steve Jobs of Apple Computer believes one of his key
responsibilities is to help Apple become more entrepreneurial and more like a start-up.
In most cases, knowledge must be transferred to others in the organization (even in smaller ventures) to enhance
the entrepreneurial competence of the firm. The transfer is likely to be more difficult in larger firms. Research
has shown, however, that units within firms are more innovative if they have access to new knowledge.
Managers will need to develop the capabilities of their human capital to build on their current knowledge base
while incrementally expanding that knowledge.

13-4

Chapter 13: Strategic Entrepreneurship


Developing innovations and achieving success in the marketplace require effective human capital. In particular,
a firm must have strong human capital throughout its workforce if employees are to develop an entrepreneurial
mind-set.

Explaininternationalentrepreneurshipanditsimportance.

INTERNATIONAL ENTREPRENEURSHIP
Entrepreneurship is a top priority in many countries of the world (e.g., Finland, German, Israel, Ireland).
A recent study of 42 countries found that the percentage of adults involved in entrepreneurial activity ranged
from a high of over 40 percent in Peru to a low of slightly over 3 percent in Belgium. The U.S. had a rate of
about 10 percent. Importantly, this study also found a strong positive relationship between the rate of
entrepreneurial activity and economic development in the country.
Research indicates that there is a direct relationship between entrepreneurship and collectivism: when
collectivism is emphasized, entrepreneurship declines. However, extremely high levels of individualism also
can have a negative impact on entrepreneurship. Thus, it is important to balance individualism and collectivism
(or the spirit of cooperation and group ownership of innovation).
With increasing globalization, a growing number of new ventures are born global (i.e., started as an
international concern). New ventures that enter international markets to increase their technological knowledge
thereby enhance their performance.
The probability of entering international markets increases when the firm has top executives with international
experience. Furthermore, the firm has a higher likelihood of successfully competing in international markets
when its top executives have international experience.
Because of the learning and economies of scale and scope afforded by operating in international markets, both
young and established internationally diversified firms often are stronger competitors in their domestic market
as well. Additionally, as research has shown, internationally diversified firms are generally more innovative.

Describehowfirmsinternallydevelopinnovations.

INTERNAL INNOVATION
Most innovation is developed through Research and Development (R&D). In fact, R&D may be the most
critical factor in gaining and sustaining a competitive advantage in some industries (e.g., pharmaceuticals).

STRATEGIC FOCUS
The Razrs Edge: R&D and Innovation at Motorola
As we look at the litany of innovation kudos and credits that Motorola has received from impartial and
independent juries, we are somewhat in awe that an organization as big as Motorola (Fortune 100) can
build such a consistent track-record through ongoing entrepreneurial strategies. Some of its more recently
received honors included:
2004 National Medal of Technology
2006 IEEE-Standards Association Corporate Award
2006 CES Mark of Excellence Award (for the best home wireless product)
2006 Best of ITS Award for Research and Innovation

13-5

Chapter 13: Strategic Entrepreneurship


2006 Nano 50th Award for Nano Emissive Display Technology
The National Medal of Technology is presented by the White House, and is the highest U.S. honor for
technological innovation. This medal was awarded for over 75 years of technological achievement and
leadership in the development of innovation electronic solutions, which have enabled portable and mobile
communications to become the standard across society.
Recently, Motorola is best known for its Razr wireless cell phone introduced in 2005. The Razr is an ultraslim phone with a highly attractive design, and in only three years after its introduction, Motorola was able
to increase its market share in this market from 13 percent in 2003 to 22 percent in 2006. Motorolas
entrepreneurial leverage is bolstered through the use of cooperative strategies (primarily outsourcing). In
addition to its own in-house R&D, the company makes use of the best technology minds globally with
research units in North, Central, and South America, Europe, and Asia. These research units are operating
on the cutting edge of technology and may have some radical new products on the horizon (e.g., a special
writing keypad).
But even as a technology leader, Motorola recently hit a speed-bump. Motorolas market share declined
and it was ousted as the number two handset manufacturer by Samsung. It posted a loss in the first quarter
of 2007. The reason for this drop in the market was a move to gain market share by cutting costs and prices
rather than continuing to introduce new products to the market. As a result, the company was caught with a
weak product portfolio at a time when competitors were introducing a host of new products.
This is an opportunity to engage your students in a dialogue as to the strategic options available
to entrepreneurial firms. Is elasticity within the lexicon of entrepreneurial firms that focus on
introducing innovation into the market? Is it possible to buy market share when competing with
innovative firms? Might there be more to this case than the authors addressed in the Strategic
Focus?

Effective R&D often leads to firms filing for patents to protect their innovative work. Increasingly, successful
R&D results from integrating the skills available in the global workforce. In the years to come, the ability to
have a competitive advantage based on innovation may accrue to firms that are able to meld the talent of human
capital from countries across the world.
Incremental and Radical Innovation
Most innovations are incremental. That is, they build on existing knowledge bases and provide small
improvements in the current product lines. Alternatively, radical innovations usually provide significant
technological breakthroughs and create new knowledge. Radical innovations are rare because of the difficulty
and risk involved in developing them.
Internal corporate venturing represents the set of activities used to create inventions and innovations within a
single organization. The internal corporate venturing process is illustrated in Figure 13.1.
Figure Note: Figure 13.1 should be used as a reference point by students during your
discussion of the process.
FIGURE 13.1
Model of Internal Corporate Venturing
This model illustrates the two approaches to internal corporate venturing:

13-6

Chapter 13: Strategic Entrepreneurship

Autonomous strategic behavior is a bottom-up process which enables product champions to pursue new
product ideas and sponsor them through a political process until they achieve commercial success.
Induced strategic behavior is a top-down process where product and process ideas are developed within the
context of a firms existing strategy, structure, and strategic vision.
Whichever process is followed takes place within and is affected by the structural and strategic context of the
organization. Each of these topics will be discussed in more detail in the sections that follow.

Autonomous Strategic Behavior


Autonomous strategic behavior is a bottom-up process in which new product champions pursue new product
ideasoften through a political processwhere they develop and coordinate the commercialization of a new
good or service until it reaches marketplace success.
A product champion is a member of an organization who has an entrepreneurial vision (or mental image) of a
new good or service and seeks to create support for its commercialization. Product champions play a critical
role in advancing innovations within the firm.
Autonomous strategic behavior is based on a firms knowledge and resources that are the sources of a firms
innovation, so a firms capabilities and competencies are the basis for new products and processes.
GE depends on autonomous strategic behavior on a regular basis to produce innovations. Essentially, the search
for services with market potential can start in any of GEs businesses. For example, an operating unit may look
for appropriate technology to improve the units function. After it masters that technology, it then shapes it into
a service it can sell to others.
Teaching Note: The following is another useful example on the topic. Using state-of-the-art
technology and relying in part on autonomous strategic behaviors among some of the firms
personnel, Callaway Golf Co. is known for reinventing industries. Callaway invented the
oversize club segment of the golf club industry when it introduced its Big Bertha club, but
the firm has also been seeking to reinvent the golf ball segment of the golfing industry.
To be effective, an autonomous process for developing new products requires that new knowledge be
continuously diffused throughout the firm. In particular, the diffusion of tacit knowledge is important for
development of more effective new products.
Induced Strategic Behavior
The second approach to creating internal corporate venturing is induced strategic behavior, a top-down process
where the current strategy and structure foster product innovations that are associated closely with the firms
current strategy and structure. In other words, strategy is filtered through the firms existing structural hierarchy,
a process that leads to internal innovations that are highly consistent with the firms current strategies.
IMPLEMENTING INTERNAL INNOVATIONS
Having processes and structures in place through which a firm can successfully implement the outcomes of
internal corporate ventures and commercialize innovations is critical. Indeed, the successful introduction of
innovations into the marketplace reflects implementation effectiveness.

13-7

Chapter 13: Strategic Entrepreneurship


Effective integration of the various functions involved in innovation processes is required to implement the
innovations resulting from internal corporate ventures. Increasingly, product development teams are being used
to integrate activities associated with different organizational functions.
Cross-Functional Product Development Teams
Cross-functional teams facilitate efforts to integrate activities associated with different organizational functions
(e.g., design, manufacturing, and marketing). In addition, new product development processes can be completed
more quickly and the products more easily commercialized when cross-functional teams work effectively.
Horizontal organization refers to changes in organizational processes where managing across functional units
becomes more critical than managing up and down functional hierarchies.
Teaching Note: Cross-functional teams group product development stages into parallel or
overlapping processes, which allows the firm to tailor its product development efforts to its
unique core competencies and to the needs of the market.
Some of the core horizontal processes that are critical to innovation efforts are formal; they may be defined and
documented as procedures and practices. More commonly, however, these processes are informalthat is, these
routines or ways of working evolve over time. Often invisible, informal processes are critical to successful
product innovations and are supported properly through horizontal organizational structures more so than
through vertical organizational structures.
There are two primary barriers that may prevent the use of cross-functional teams as a means of integrating
organizational functions: (1) independent frames of reference of team members and (2) organizational politics.
Research suggests that functional departments vary along four dimensions: time orientation, interpersonal
orientation, goal orientation, and formality of structure. Thus, individuals from different functional departments
have different orientations on these dimensions and will view product development activities in different ways.
Political activity may center on allocating resources to different functions. Interunit conflict may result from
aggressive competition for resources among those representing different organizational functions.
Facilitating Integration and Innovation
Shared values and effective leadership are important to achieving cross-functional integration and implementing
innovation. Highly effective shared values are framed around the firms vision and mission, and they become
the glue that promotes integration between functional units. Thus, the firms culture promotes unity and internal
innovation.
Strategic leadership is also highly important for achieving cross-functional integration and promoting
innovation. Leaders set goals and allocate resources. The goals include integrated development and
commercialization of new goods and services. Effective strategic leaders also ensure a high-quality
communication system to facilitate cross-functional integration.
Creating Value from Innovation
The model in Figure 13.2 shows how value can be created for the firm from internal processes designed to
develop and commercialize new goods and services. An entrepreneurial mind-set must be developed so that
managers and employees will seek to identify and exploit opportunities for new goods and services and new
markets. Cross-functional teams are important to promote integrated new product design ideas and commitment

13-8

Chapter 13: Strategic Entrepreneurship


to their implementation thereafter. 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 through development and commercialization of new products.
Figure Note: Figure 13.2 illustrates relationships discussed in the chapter that enable the
firm to appropriate value from innovation: barriers to integration, integration facilitating
methods, and the advantages of cross-functional integration. It can either be referred to in
summary form or used to summarize the preceding discussion.
FIGURE 13.2
Creating Value through Internal Innovation Processes
The model in this figure shows how firms can create value from the internal processes they use to develop and
commercialize new goods and services.
An entrepreneurial mind-set is necessary so that managers and employees will consistently try to identify
entrepreneurial opportunities the firm can pursue by developing new goods and services and new markets.
Cross-functional teams promote integrated new product ideas and commitment to their 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.

As the model in Figure 13.2 suggests, internal corporate ventures must be effectively managed to facilitate
cross-functional integration so a firm will be able to gain maximum value from its product design and
commercialization efforts.

Explainhowfirmsusecooperativestrategiestoinnovate.

INNOVATION THROUGH COOPERATIVE STRATEGIES


Virtually all firms lack the breadth and depth of resources (e.g., human capital and social capital) in their R&D
activities to develop internally a sufficient number of innovations. Firms frequently use cooperative strategies to
develop innovations and to quicken the pace at which some of their own innovations are distributed. In other
instances, they use cooperative strategies to align what they believe are complementary assets with the potential
to lead to future innovations.
Teaching Note: An alternative to internal innovation is to tap the resources available in other
organizations for the following reasons:
Knowledge is increasing rapidly, making it difficult for firms to remain up-to-date.
This vast knowledge base is also becoming increasingly specialized.
Firms may not possess the knowledge needed to commercialize goods and services.
Some countries may have access to resources and capabilities that enable firms located
there to create specialized products.

STRATEGIC FOCUS

13-9

Chapter 13: Strategic Entrepreneurship


Does Whole Foods Really Obtain Innovation in Unnatural Ways?
In 1980, Whole Foods entered business as a small organic food retailer in Austin, Texas. Twenty-six years
later, it was operating over 300 stores and had sales of $5.6 billion. It is the worlds largest natural food
retailer.
Whole Foods stands alone at the top of its industry. It markets more than 1500 items, of which two-thirds
are perishable. Ideas for many new products and concepts introduced by Whole Foods were generated
internally. An example of an internally generated concept is the development of a new stand-alone store
selling environmentally friendly goods ranging from clothes to housewares.
Not all of its new product introductions come from internal ideas. Whole Foods has been through a series
of outright acquisitions such as Allegro Coffee and cooperative alliances with upper-end Lord and Taylor
Department Stores to anchor a redevelopment project in Stanford, Connecticut. The cooperative aspect is
that each party will have unique cross-selling opportunities. In addition to these examples, Whole Foods
has acquired a plethora of other retail operations and producers. Undoubtedly, these businesses provide not
only growth, new customers and outlets, but also add new products to the Whole Foods portfolio. Whole
Foods used acquisitions as a means to enter international markets, buying a small natural food chain in the
United Kingdom. It then opened its first large new retail outlet in London in 2007.
Regardless of the use of alliances and acquisitions, Whole Foods continues to be innovative. It opened a
restaurant in its Chicago store and it became so popular for dinner among customers that it has now opened
restaurants in other store locations. The restaurants promote the organic foods sold in the stores.
Interestingly, Whole Foods is listed among the best companies to work.
Students should appreciate the successful blending of an internally generated innovative
strategy coupled with a cooperative strategy to build a business from scratch to being the worlds
leading organic food retailer in the world in just over 25 years. Does green present
opportunities to already existing businesses or just to tree-huggers?

The rapidly changing technologies of the twenty-first century competitive landscape, globalization, and the
need to innovate at world-class levels are primary influences on firms decisions to innovate by cooperating
with other companies. Indeed, some believe that because of these conditions, firms are becoming increasingly
dependent on cooperative strategies as a path to successful competition in the global economy.
Both entrepreneurial ventures and established firms use cooperative strategies (e.g., strategic alliances and joint
ventures) to innovate. Entrepreneurial ventures, for example, may seek investment capital as well as established
firms distribution capabilities to successfully introduce one of its innovative products to the market.
Alternatively, more established companies may need new technological knowledge and can gain access to it by
forming a cooperative strategy with entrepreneurial ventures.
Because of the importance of alliances, particularly in the development of new technology and in
commercializing innovations, firms are beginning to build networks of alliances (a form of social capital) to
help them obtain the knowledge and other resources necessary to develop innovations. Some firms now even
allow external firms to participate in their internal new product development processes.
Alliances formed for the purpose of innovation are not without risks. One important risk is that a partner will
appropriate a firms technology or knowledge and use it to enhance its own competitive abilities. To prevent or
at least minimize this risk, firms, particularly new ventures, need to select their partners carefully.

Describehowfirmsuseacquisitionsasameansofinnovation.

13-10

Chapter 13: Strategic Entrepreneurship


INNOVATION THROUGH ACQUISITIONS
Firms sometimes acquire companies to gain access to their innovations and to their innovative capabilities. One
reason companies do this is that the capital markets value growth; acquisitions provide a means to rapidly
extend one or more product lines and increase the firms revenues.
A key risk of acquisitions is that a firm may substitute an ability to buy innovations for an ability to produce
innovations internally. In support of this contention, research shows that firms engaging in acquisitions
introduce fewer new products into the market.

Explainhowstrategicentrepreneurshiphelpsfirmscreatevalue.

CREATING VALUE THROUGH STRATEGIC ENTREPRENEURSHIP


Newer entrepreneurial firms often are more effective than larger firms in identifying opportunities. These firms
tend to be more innovative as well because of their flexibility and willingness to take risks. Alternatively, larger
and well-established firms often have more resources and capabilities to exploit opportunities that are identified.
In general, entrepreneurial ventures need to improve their advantage-seeking behaviors while larger firms need
to improve their opportunity-seeking skills.
Teaching Note: It is interestingcertainly worthwhileto note that individual entrepreneurs
and small firms are responsible for a significant amount of innovation as measured by the
ratio of R&D input to R&D output. To wit:
80 percent of R&D activity is concentrated in large firms (10,000+ employees).
Large firms account for less than 50 percent of technological activity (measured by
patenting).
To be entrepreneurial, firms must develop an entrepreneurial mind-set among their managers and employees.
Managers must emphasize the management of their resources, particularly human capital and social capital.
The importance of knowledge to identify and exploit opportunities as well as to gain and sustain a competitive
advantage suggests that firms must have strong human capital. Social capital is critical for access to
complementary resources from partners in order to compete effectively in domestic and international markets.
By entering global markets that are new to them, firms can learn new technologies and management practices
and diffuse this knowledge throughout the entire enterprise. Furthermore, the knowledge firms gain can
contribute to their innovations. Research has shown that firms operating in international markets tend to be
more innovative.
By developing resources (human and social capital), taking advantage of opportunities in domestic and
international markets, and using the resources and knowledge gained in these markets to be innovative, firms
achieve competitive advantages. In so doing, they create value for their customers and shareholders.
Research shows that because of its economic importance and individual motives, entrepreneurial activity is
increasing across the globe. Furthermore, more women are becoming entrepreneurs because of the economic
opportunity entrepreneurship provides and the individual independence it affords. In the United States, for
example, women are the nations fastest growing group of entrepreneurs.
Teaching Note: Large firms can take several measures to act small and increase their
innovative capacity. These include the following:
Greater levels of individual autonomy can be created through the restructuring of a firm
into smaller and more manageable units (see Chapter 7).

13-11

Chapter 13: Strategic Entrepreneurship


The additional amounts of creativity and innovation that tend to be witnessed among those
granted more autonomy stimulates autonomous strategic behavior when a firm pursues
innovation through internal corporate ventures.
A firm can reengineer its operations to develop more efficient work-related processes and
to form channels through which customers interests can be expressed with greater clarity
and intensity.
Cross-functional teams provide opportunities for workers to think & act creatively.
When handled effectively, downsizing can create arrangements through which a firm is
able to focus efforts more on key taskse.g., those required for innovation.
Allocating significant levels of resources to R&D can stimulate innovation.
Cooperative arrangements can help to spawn innovations in the firm.

ANSWERS TO REVIEW QUESTIONS


1.

What is strategic entrepreneurship? What is corporate entrepreneurship? (pp. 368-369)

Strategic entrepreneurship is taking entrepreneurial actions using a strategic perspective. When engaging in
strategic entrepreneurship, the firm focuses on finding opportunities in its external environment that it can try to
exploit through innovations. Identifying opportunities to exploit through innovation is the entrepreneurship part
of strategic entrepreneurship, while determining the best way to manage the firms innovation efforts is the
strategic part. Thus, strategic entrepreneurship involves firms integrating their actions to find opportunities and
to successfully innovate as a primary means of pursuing them. In the twenty-first century competitive
landscape, firm survival and success increasingly is a function of a firms ability to continuously find new
opportunities and quickly produce innovations to pursue them.
The focus in Chapter 13 is on innovation and entrepreneurship within established organizations. This
phenomenon is called corporate entrepreneurship, which is the use or application of entrepreneurship within an
established firm. An important part of the entrepreneurship discipline, corporate entrepreneurship is widely
thought to be linked to the survival and success of established corporations. Indeed, established firms use
entrepreneurship to strengthen their performance and to enhance growth opportunities. Of course, innovation
and entrepreneurship play a critical role in the degree of success achieved by start-up entrepreneurial ventures
as well.
2. What is entrepreneurship and what are entrepreneurial opportunities? Why are these important for
firms competing in the twenty-first century competitive landscape? (pp. 369-370)
Entrepreneurship is the process by which individuals or groups 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 and when information about these imperfections is distributed asymmetrically across individuals.
Entrepreneurial opportunities come in a host of forms (e.g., the chance to develop and sell a new product and
the chance to sell an existing product in a new market). Firms should be receptive to pursuing entrepreneurial
opportunities whenever and wherever they may surface.
The competitive landscape of the twenty-first century presents firms with substantial change, a global
marketplace, and significant complexity and uncertainty. Because of this uncertain environment, firms cannot
easily predict the future and must therefore develop strategic flexibility to have a range of strategic alternatives
that they can implement as needed. They can do this by acquiring resources and building the capabilities that
allow them to take necessary actions to adapt to or proact in a dynamic environment. In this environment,
entrepreneurs and entrepreneurial managers design and implement actions that capture more of existing markets

13-12

Chapter 13: Strategic Entrepreneurship


from less aggressive and innovative competitors while creating new markets. In effect, they are trying to create
tomorrows businesses.
3. What are invention, innovation, and imitation? How are these concepts related? (pp. 370-371)
Peter Drucker argued that innovation is the specific function of entrepreneurship, whether in an existing
business, a public service institution, or a new venture started by a lone individual. Moreover, Drucker
suggested that innovation is the means by which the entrepreneur either creates new wealth-producing
resources or endows existing resources with enhanced potential for creating wealth. Thus, entrepreneurship
and the innovation resulting from it are important for large and small firms, as well as for start-up ventures, as
they compete. In fact, firms failing to innovate will stagnate. Indeed, the realities of competition in the twentyfirst century competitive landscape suggest that No company can maintain a long-term leadership position in a
category unless it is in a continuous process of developing innovative new products desired by customers.
This means that innovation should be an intrinsic part of virtually all of a firms activities.
Innovation is a key outcome firms seek through entrepreneurship and is often the source of competitive success,
especially in turbulent, highly competitive environments. For example, research shows that firms competing in
global industries that invest more in innovation also achieve the highest returns. In fact, investors often react
positively to the introduction of a new product, thereby increasing the price of a firms stock. Innovation, then,
is an essential feature of high-performance firms. Furthermore, innovation may be required to maintain or
achieve competitive parity, much less a competitive advantage in many global markets. The most innovative
firms understand that financial slack should be available at all times to support the pursuit of entrepreneurial
opportunities.
In his classic work, Schumpeter argued that firms engage in three types of innovative activity. Invention is the
act of creating or developing a new product or process. Innovation is the process of creating a commercial
product from an invention. Innovation begins after an invention is chosen for development. Thus, an invention
brings something new into being, while an innovation brings something new into use. Accordingly, technical
criteria are used to determine the success of an invention, whereas commercial criteria are used to determine the
success of an innovation. Finally, imitation is the adoption of an innovation by similar firms. Imitation usually
leads to product or process standardization, and many times products based on imitation are offered at lower
prices, but without as many features. Entrepreneurship is critical to innovative activity in that it acts as the
linchpin between invention and innovation.
4.

What is an entrepreneur and what is an entrepreneurial mind-set? (p. 371)

Entrepreneurs are individuals, acting independently or as part of an organization, who see an entrepreneurial
opportunity and then take risks to develop an innovation to pursue it. Often, entrepreneurs are the individuals
who receive credit for making things happen! Entrepreneurs are found throughout an organizationfrom toplevel managers to those working to produce a firms goods or services. Entrepreneurs tend to demonstrate
several characteristics, including those of being optimistic, highly motivated, willing to take responsibility for
their projects, and courageous. In addition, entrepreneurs tend to be passionate and emotional about the value
and importance of their innovation-based ideas.
Evidence suggests that successful entrepreneurs have an entrepreneurial mind-set. The person with an
entrepreneurial mind-set values uncertainty in the marketplace and seeks to continuously identify
opportunities with the potential to lead to important innovations. Because it has the potential to lead to
continuous innovations, individuals entrepreneurial mind-sets can be a source of competitive advantage for a
firm.
Entrepreneurial mind-sets are fostered and supported when knowledge is readily available throughout a firm.
Indeed, research has shown that units within firms are more innovative when they have access to new
knowledge. Transferring knowledge, however, can be difficult, often because the receiving party must have
adequate absorptive capacity (or the ability) to learn the knowledge. This requires that new knowledge be
linked to existing knowledge. Thus, managers need to develop the capabilities of their human capital to build on

13-13

Chapter 13: Strategic Entrepreneurship


their current knowledge base while incrementally expanding that knowledge to facilitate the development of
entrepreneurial mind-sets.
5.

What is international entrepreneurship? Why is it important? (pp. 372-373)

International entrepreneurship is the process of creatively discovering and exploiting opportunities that lie
outside a firms domestic markets in the pursuit of competitive advantage. As the practices suggested by this
definition show, entrepreneurship is a global phenomenon.
A key reason for this is that, in general, 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, among others. Thus, the decision to engage in international
entrepreneurship should be a product of careful analysis.
Because of its positive benefits, entrepreneurship is at the top of public policy agendas in many of the worlds
countries, including Finland, Germany, Ireland, and Israel, as well as others. Placing entrepreneurship on these
agendas may be appropriate in that some argue that regulation hindering innovation and entrepreneurship is the
root cause of Europes productivity problems. In Ireland, for example, the government is particularly
focused on encouraging new innovative enterprises that have growth potential and are export oriented. Some
believe that entrepreneurship is flourishing in New Zealand, a trend having a positive effect on the productivity
of the nations economy.
6.

How do firms develop innovations internally? (pp. 373-376)

Increasingly, successful R&D results from integrating the skills available in the global workforce. Firms seeking
internal innovations through their R&D must understand that Talent and ideas are flourishing everywhere
from Bangalore to Shanghai to Kievand no company, regardless of geography, can hesitate to go wherever
those ideas are. In the years to come, the ability to have a competitive advantage based on innovation may
accrue to firms able to meld the talent of human capital from countries across the world.
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. Larger, established firms,
certainly those competing globally, often try to use their R&D labs to create competence-destroying new
technologies and products. Being able to innovate in this manner can create a competitive advantage for a firm
in many industries. Although critical to long-term corporate success, the outcomes of R&D investments are
uncertain and often cannot be achieved in the short term, meaning that patience is required as firms evaluate the
outcomes that result from their R&D efforts.
7. How do firms use cooperative strategies to innovate and to have access to innovative abilities? (pp.
379-380)
It is difficult for a firm to possess all the knowledge required to compete successfully in its product areas over
the long term. Complicating this matter is the fact that the knowledge base confronting todays organizations is
not only vast, but also increasingly more specialized. Therefore, the knowledge needed to commercialize
inventions is frequently embedded within different corporations.
Strategic alliances are partnerships between firms whereby resources, capabilities, and core competencies are
combined to pursue common interests and goalsnamely, to gain either competitive parity or competitive
advantage relative to rivals. Used with increasing frequency, one important reason firms form alliances is to
produce or manage innovations (including sharing knowledge and skill sets between partners). Forming
alliances for this purpose can yield value creation.
Because of the importance of alliances, particularly in the development of new technology and in
commercializing innovations, firms are beginning to build networks of alliances that represent a form of social
capital to them. This social capital (in the form of relationships with other firms) helps them to obtain the

13-14

Chapter 13: Strategic Entrepreneurship


knowledge and other resources necessary to develop innovations. Knowledge from these alliances helps firms
develop new capabilities. Some firms now even allow other companies to participate in their internal new
product development processes.
On the other hand, alliances formed to innovate are not without risks. One important risk is that a partner will
appropriate a firms technology or knowledge and use it to enhance its own competitive abilities. To discourage
this outcome, a firm needs to select its partners carefully. (The ideal partner is one with complementary skills
as well as compatible strategic goals.)
8. How does a firm acquire other companies to increase the number of innovations it produces and
improve its capability to produce innovations? (p. 382)
Firms complete strategic acquisitions in an effort to continuously strengthen their ability to innovate. By
integrating the capabilities of acquisitions with those it already owns, firms can continue producing and
managing innovations in ways that create value for customers. Firms often seek innovation through more than
one of the three approaches available to produce and manage innovations (i.e., internal corporate ventures,
alliances, and acquisitions). Thus, firms can use alliances and acquisitions to appropriate what it hopes will be
full value from its innovation activities.
As with internal corporate venturing and strategic alliances, acquisitions are not a risk-free approach to
producing and managing innovations. A key risk of acquisitions is that a firm may substitute an ability to buy
innovations for an ability to produce innovations internally. Research suggests that this substitution may not be
in the firms best interests. For example, firms gaining access to innovations through acquisitions risk
reductions in both R&D inputs (investments in R&D) and R&D outputs (e.g., number of patents). Additional
research shows that firms engaging in acquisitions introduce fewer new products to market. These relationships
indicate that firms substitute acquisitions for internal corporate venturing processes. This substitution may take
place because firms lose strategic control and emphasize financial control of original (and especially acquired)
business units. Reduced innovation may not always be the result, but managers in acquiring firms should be
aware of this potential outcome.
9. How does strategic entrepreneurship help firms to create value as they compete in the twenty-first
century competitive landscape? (pp. 382-383)
Newer entrepreneurial firms often are more effective than larger firms in identifying opportunities. Some
believe that these firms tend to be more innovative as well because of their flexibility and willingness to take
risks. Alternatively, larger and well-established firms often have more resources and capabilities to exploit
opportunities that are identified. So, younger, entrepreneurial firms are generally opportunity seeking and more
established firms are often advantage seeking. However, to compete effectively in the landscape of the twentyfirst century, firms must identify and exploit opportunities, but do so while achieving and sustaining a
competitive advantage. Thus, newer entrepreneurial firms must learn how to gain a competitive advantage and
older more established firms must relearn how to identify entrepreneurial opportunities. The concept of strategic
entrepreneurship suggests that firms can be simultaneously entrepreneurial and strategic, regardless of their size
and age.
Many entrepreneurial opportunities remain in international markets. Thus, firms should seek to enter and
compete globally. Firms can learn new technologies and management practices from international markets and
diffuse this knowledge throughout the firm. Furthermore, the knowledge learned can contribute to a firms
innovations. Research has shown that firms operating in international markets tend to be more innovative. Small
and large firms are now regularly moving into international markets. Both types of firms must also be
innovative to compete effectively. Thus, with resources (human and social capital), taking advantage of
opportunities in domestic and international markets and using the resources and knowledge gained in these
markets to be innovative, firms achieve competitive advantages. In so doing they create value for their
customers and shareholders.
Firms that practice strategic entrepreneurship contribute to a countrys economic development. In fact, some
countries such as Ireland have made dramatic economic progress by changing the institutional rules for

13-15

Chapter 13: Strategic Entrepreneurship


businesses operating in the country. This could be construed as a form of institutional entrepreneurship.
Likewise, firms that seek to establish their technology as a standard, also representing institutional
entrepreneurship, are engaging in strategic entrepreneurship because creating a standard produces a sustainable
competitive advantage for the firm.
Research shows that because of its economic importance and individual motives, entrepreneurial activity is
increasing across the globe. Furthermore, many women are becoming entrepreneurs because of the economic
opportunity it provides and the individual independence it affords. In future years, entrepreneurial activity may
increase the wealth of less affluent countries and continue to contribute to the economic development of more
affluent countries. Regardless, the companies that practice strategic entrepreneurship are likely to be the
winners in the twenty-first century.

EXPERIENTIAL EXERCISES
Exercise 1: Do You Want to Be an Entrepreneur?
Would you make a good entrepreneur? In this exercise, we will explore how individual attributes and
characteristics contribute to entrepreneurial success. If you believe that you have the traits of a successful
entrepreneur, would you be more effective working within a large firm or starting your own business?
Complete the first stage of the exercise individually, then meet in small groups to discuss your answers.
Individual
Brainstorm a list of personal attributes or characteristics that could help (or hinder) a persons success as an
entrepreneur.
Next, evaluate the importance of each item on your list.
Finally, compare your prioritized list against your personal characteristics. Do you think that you are a good
candidate to be an entrepreneur? Why or why not?
Group
First, compare each persons list of attributes and characteristics. Combine similar items and create a
composite list.
Second, as a group, evaluate the importance of each item on the list. It is not important to rank order the
characteristics. Rather, sort them into categories very important, somewhat important, and minimally
important.
Then, discuss within your group which team member seems to be the best suited to be an entrepreneur.
Create a brief profile of how to describe that person if he or she were applying for a job at an innovative
company such as Google, Intel, or Motorola.
Whole Class
The instructor will ask for student volunteers to present their interview profiles.
Exercise 2: Global Differences in Entrepreneurial Activity
As described in the chapter, entrepreneurship is a global phenomenon. However, innovativeness varies
from country to country, as does the infrastructure to support new business development. These differences
have substantial implications for both persons wishing to start new businesses, as well as for companies
seeking local partners in different regions.

13-16

Chapter 13: Strategic Entrepreneurship


This exercise will acquaint you with the Global Entrepreneurship Monitor (GEM), an annual series of
studies that evaluate entrepreneurial activity in different regions of the world. GEM is a collaborative
initiative between the London Business School and Babson College. Working with experts in multiple
countries, they produce a series of annual reviews of entrepreneurial activity, both at the country level and
in a summary global report. Publications from the GEM Consortium are available online at
http://www.gemconsortium.org. GEM started in 1999 with reports on ten countries. By 2001, the scope had
broadened to twenty-nine countries. The 2007 reports include forty-three countries.
Working in teams, complete either Assignment A or Assignment B.
Assignment A
Compare entrepreneurial activities across countries.
1. Pick two countries that are located in the same region of the world (i.e., the Americas, Europe,
Asia-Pacific, or the Middle East).
2.

Review the most recent GEM country reports for your two selections.

3.

Prepare a brief PowerPoint presentation that identifies the similarities and differences between the
two countries. Include the levels of entrepreneurial activity, infrastructure, and
challenges/problems facing both nations.

Assignment B
Compare entrepreneurial activities over time.
1. Select one country that was included in both the 2001 and the most recent GEM surveys.

2.

Review the GEM reports for that country for both years

3.

Prepare a brief PowerPoint presentation that identifies the similarities and differences within the
country over time. Include the levels of entrepreneurial activity, infrastructure, and
challenges/problems. Overall, is the climate for entrepreneurship improving or worsening?

INSTRUCTOR'S NOTES FOR


EXPERIENTIAL EXERCISES

Exercise 1: Do you want to be an entrepreneur?


The purpose of this exercise is three-fold. First, the exercise forces students to think more deeply about the
concept of an entrepreneurial mind-set that is discussed in the chapter. Second, students self-assess how
their own characteristics might be useful in an entrepreneurial organization. Finally, a separate benefit of
this exercise is that it requires students to prepare a short presentation for a hypothetical job interview.
Working individually, students are asked to make an inventory of personal attributes to characteristics that
are important for entrepreneurial success. Next, they are asked to compare the relative importance of these
attributes, and assess themselves against the list.
Working in small teams, students are asked to compare their individual lists. Similar or duplicate items
should be consolidated, and a new master list created. When discussing the exercise in class, it may be
useful to ask (a) how similar the lists were from person to person, and (b) did the group review significantly
improve the list or not. Students then take the composite list and assess which attributes are the most
important, and which are considered the least important.

13-17

Chapter 13: Strategic Entrepreneurship


There are many different inventories of personal characteristics that are considered relevant to
entrepreneurial success. A paper by Lumpkin and Dess (Academy of Management Review, 1996, 21: 135172) identified the following five dimensions:
Autonomy
Innovativeness
Risk taking
Proactiveness
Competitive aggressiveness
Separately, van Eeden, Louw and Venter (Management Dynamics, 2005, 14(3): 26-43) created this list of
characteristics, based on a review of prior studies:
Goal setting and perseverance
Human relations ability
Communication ability
Competing against self-imposed standards
Dealing with failure
Self-confidence
Belief in self-determination
Risk taking
Taking initiative and seeking personal responsibility
Drive and energy level
Tolerance for ambiguity and uncertainty
Thinking ability
Use of outside resource persons
Knowledge seeking
Number sense
Money sense
Business knowledge

13-18

Chapter 13: Strategic Entrepreneurship


When discussing this step in the exercise in class, the instructor should ask a couple of teams to post their
lists on the board, and the relative importance of each item. Subsequently, ask the remainder of the class if
there are any important omissions, or for different opinions on the importance of the different traits. The
goal of the discussion is not to build an exhaustive, prioritized list. Rather, the list helps to serve as the
basis for discussion of different perspectives.
Next, each team was asked to pick one member who would be applying for a job in an innovative company
Google, Starbucks, and Motorola were listed as examples of such companies in the textbook. Each team
was instructed to create a profile of how their team member would describe themselves during a job
interview with one of these firms. Ask for a couple of student volunteers to give their mock job pitch.
After each presentation, ask the class:
What did the student do well?
How could the presentation be changed to make the student more desirable as an employee?
Exercise 2: Global differences in entrepreneurial activity
This assignment requires students to compare entrepreneurial trends, either across countries or within one
country over time. The goals of this exercise are to familiarize students with the Global Entrepreneurship
Monitor (www.gemconsortium.org), which is a helpful resource for doing country analysis. Additionally,
the exercise illustrates how innovation and entrepreneurship vary across nations, and over time.
This assignment differs from others in that teams are given a choice in the specifics of their analysis: they
can either do a comparison of two countries, or study trends in a single nation over time. The instructor
may wish to let student teams make this decision themselves, or, alternately, assign half of the teams to
each option. Student assignments for each option are as follows:
Assignment A: Comparison of entrepreneurial activities across countries.
4.

Pick two countries that are located in the same region of the world i.e., the Americas, Europe,
Asia-Pacific, or the Middle East.

5.

Review the most recent GEM country reports for your two selections.

6.

Prepare a brief PowerPoint presentation that identifies the similarities and differences between the
two countries. Include the levels of entrepreneurial activity, infrastructure, and
challenges/problems facing both nations.

Assignment B: Comparison of entrepreneurial activities over time.


4.

Select one country that was included in both the 2001 and the most recent GEM surveys. There
were 29 countries included in the 2001 survey.

5.

Review the GEM country reports for both years

6.

Prepare a brief PowerPoint presentation that identifies the similarities and differences within the
country over time. Include the levels of entrepreneurial activity, infrastructure, and
challenges/problems. Overall, is the climate for entrepreneurship improving or worsening?

Teams that select assignment B may have very different perceptions of the stability of entrepreneurial
activities, depending on the country they selected. Some nations, for example, can show a marked change
(either improvement or lost ground) in entrepreneurial activity over a five year window. In contrast, other
nations will report very similar profiles across the two time periods.

13-19

Chapter 13: Strategic Entrepreneurship

Prior to debriefing the assignment, it is important for the instructor to review the GEM global report, as
well as a sample single country report. These documents are available from the GEM website.
There are multiple avenues for providing feedback on these assignments. As with other exercises, the
instructor may ask a subset of teams to make presentations based on their PowerPoint files. An alternate
approach is more labor-intensive vis--vis the instructor, but has the added benefit of (a) ensuring that
students review the work of other teams, and (b) each team receives additional feedback on their
PowerPoint report. Take the following steps if using this approach:
1.

Assign each student as a peer reviewer to another team, with a comparable number of peer
reviewers per team.

2.

Post each teams PowerPoint file on the class Webpage (e.g., Blackboard or WebCT).

3.

Peer reviewers are to evaluate the work of another team. Based on this review, students should
write up a one-page single-spaced memo that includes:
a.

Interesting or unusual findings of the report

b.

Strengths: what the report did well

c.

Weaknesses: how the report could be improved.

To get the greatest utility from these peer reviews, structure them so that items (a) and (b) are each worth
25 percent, and item (c) is worth percent. When giving the assignment, indicate that item (c) will be
evaluated based on the provision of specific suggestions for improving the quality of the report.

ADDITIONAL QUESTIONS AND EXERCISES


The following questions and exercises can be presented for in-class discussion or assigned as homework.
Application Discussion Questions
1.
2.
3.
4.
5.
6.

During the 1980s and 1990s, the number of acquisitions grew, as did the amount of money available as
venture capital. Is there a relationship between the wave of acquisitions and the increase in available
venture capital?
Is the term corporate entrepreneurship an oxymoron? In other words, can corporationsespecially large
onesbe innovative?
Ask the students for an example of a product champion supporting an innovation in a corporation. What
were the results of the champions efforts?
The economies of countries such as Russia and China have historically been operated through centralized
bureaucracies. What can be done to infuse such economies with a commitment to corporate
entrepreneurship and the innovation resulting from it?
Have the students use the Internet to find an example of two corporate innovationsone brought about
through autonomous strategic behavior and one developed through induced strategic behavior. Which
innovation seems to hold the most promise for commercial success and why?
Are strategic alliances a way to enhance a firms technological capacity, or are they used more commonly
to maintain pace with technological developments in a companys industry? In other words, are strategic
alliances a tool of firms that have a technological advantage, or are they a tool of technologically
disadvantaged companies?

13-20

Chapter 13: Strategic Entrepreneurship

Ethics Questions
1.
2.
3.

4.

Is it ethical for a company to purchase another firm to gain ownership of its product innovations and
innovative capabilities? Why or why not?
Do firms encounter ethical issues when they use internal corporate-venturing processes to produce and
manage innovation? If so, what are these issues?
Firms that are partners in a strategic alliance may legitimately seek to gain knowledge from each other. At
what point does it become unethical for a firm to gain additional and competitively relevant knowledge
from its partner? Is this point different when a firm partners with a domestic firm as opposed to a foreign
firm? If so, why?
Small firms often have innovative products. When is it appropriate for a large firm to buy a small firm for
its product innovations and new product ideas?

Internet Exercise
The Web has made it both possible and necessary for many traditional businesses to market and sell their goods
and services on-line. Consumer goods and services such as banking, clothing, vacations, and grocery items can
be ordered through the Internet. Creating new, safe, and reliable methods to access, pay for, and deliver goods
and services via the Web has added to the list of innovations and management strategies that corporate
entrepreneurs need to explore to be successful. To find out more about entrepreneurship and innovation, explore
the following websites:
Babson Colleges Arthur M. Blank Center for Entrepreneurship at http://www.babson.edu/eship
EGOPHER, a site produced by St. Louis University at http://eweb.slu.edu/
The Kauffman Foundations EntreWorld at http://www.eventuring.org
*e-project: Americas most successful pizza delivery chains, including Dominos, Pizza Hut, and other regional
businesses, have long since relied on phone orders for delivery. How can the Internets capabilities be
integrated into their business? Weighing the pros and cons of ordering pizza on-line, make a list of ten
management concerns and techniques to consider to successfully promote, develop, and run an on-line
business in this lucrative market.

13-21

Vous aimerez peut-être aussi