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Summary Exam Entreps Corporate Entrepreneurship and Innovation
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lOMoARcPSD|3013804Summary Exam Entreps - Corporate
Entrepreneurship and Innovation
Entrepreneurship and Innovation Management 348 (Universiteit
Stellenbosch)
, lOMoARcPSD|3013804
Ch. 1: The Entrepreneurial Imperative in
Established Organizations
1.1 Turbulent Environments and the Embattled
Corporation To understand modern corporations, we must consider their
“external” and their “internal” environments.
The external environment nowadays is all about change. Sampling of recent developments in eight
major domains of a company’s external environment:
- Technological Environment: Accelerated development of new technologies: rapid product
obsolescence; greater difficulty in protecting IP
- Economic environment: unpredictability of prices, costs, exchange rates, tax incentives
- Competitive environment: aggressive “take no prisoners” competition; highly innovative
competitors; competition from non-traditional sources with non-traditional tactics; threats
from niche players; competitors who are also customers or partners
- Labor environment: growing scarcity of skilled workers; employees more mobile and less
loyal; higher employee benefit costs; reliance on contract labor
- Resource environment: increasing resource scarcity; resources increasingly specialized
- Customer environment:
- Legal and regulatory environment
- Global environment
FIGURE 1-1
1.2 New Path to Sustainable Competitive Advantage
Important lessons are to be learned from this new competitive business environment. (1) The
turbulence in the external environment is causing a fundamental transformation in the internal
operations of companies. external change forces internal change. (2) There are no simple formulas
for success in the new competitive environment. Traditional models of bureaucracy, hierarchal
management systems, etc. do not work in the new environment. It is less clear what does work,
therefore, it is all about experimentation, right approach to control, leadership style and the rewarding
of employees. (3) The most important upside of this more complex, dynamic, and hostile environment
is that turbulence also means opportunity.
Sustainable competitive advantage derives from five key company capabilities:
- Adaptability: Ability to adjust to new technologies, customer needs, regulatory rules and
other changes in the environment without losing focus or causing significant disruption of
core operations and commitments;
- Flexibility: The ability to design company strategies, processes, and operational approaches
that can simultaneously meet the diverse and evolving requirements of customers,
distributors, suppliers, financiers, regulators, and other key stakeholders;
- Speed: The ability to act quickly on emerging opportunities, to develop new products and
services more rapidly, and to make critical operational decisions without lengthy
liberations;
, - Aggressiveness: An intense, focused and proactive approach to eliminating
competitors, delighting customers, and growing employees
- Innovativeness: A continuous priority placed on developing and launching new
products, services, processes, markets and technologies, and on leading the market
place.
1.3 What is Corporate Entrepreneurship?
Corporate entrepreneurship is a term used to describe entrepreneurial behavior inside established mid-
sized and large organization.
At a basic level, it involves the generation, development, and implementation of new ideas and
behaviors by a company. centers on innovation CE centers on enhancing the company’s ability to
acquire and act upon innovative
Ling et al. (2008) approached Corporate Entrepreneurship as the sum of a company’s innovation,
renewal, and venturing efforts. Under this definition, innovation, strategic renewal, and corporate
venturing are all important and legitimate parts of the concept of CE.
1.4 Why Companies Lose Their Entrepreneurial
Way: The Organizational Life Cycle
- Start Up and Early Growth: Launching of a venture and the initial penetration of the work. This
stage is highly creative. Work environment in early stages is exciting, stressful, demanding,
uncertain, experimental, and highly ambiguous. Organization is running informally, everybody
is helping out each other, employees feel they are part of something as the new venture begins
to achieve meaningful results. However, a crisis eventually results because the demands of
greater size requires more professionalized management, and more formal structures,
administrative systems, budgets, and controls.
- Growth through Discretion: Companies fail because they will not formalize. However, a
crisis develops from demands for greater autonomy on the part of lower-level managers
and employees. solution for most is to move towards greater delegation.
- Growth through Delegation: Delegation takes the form of creating semi-autonomous
product divisions and SBU’s. sustained growth again results. Management focuses only
on major strategic moves and acquisitions. However, next crisis arises. Losing control,
inconsistency, coordination is more difficult, communication among divisions is not timely.
- Growth through Coordination: Companies respond to this loss of control by centralizing
operations. Head office staff is developed to coordinate the different divisions and SBU’s.
Consistency and synergies are brought to the efforts of the various divisions and units,
resulting in the next period of sustained growth. However, the centralization over time tends
to breed bureaucracy, and a crisis of red tape eventually occurs myriad of procedures and
systems is created during this period. The organization has become too large and complex to
be managed through formal programs and rigid systems.
- Growth through Collaboration: It is difficult to replace bureaucrats and administrators with
innovators, and to transform a machine bureaucracy into an innovation factory. Hence, most
companies never make it to this next growth stage. In this stage, the nature of the enterprise
has to be reinvented, structures and procedures should be simplified, reduce head office staff,
reassign staff exerts to consulting teams assisting field operations, create matrix structures, etc.
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