Corporate Entrepreneurship &
Finance
Lecture 1 | The What and Why
The why
Corporate entrepreneurship and innovation – why today?
- New entrants
- Entrepreneurship and innovation is driving the rise and fall of industries in the 21 st century.
- The rise of entrepreneurial method.
Nowadays:
- Many of the disruptors have become established incumbents – they know the disruption game.
- The incumbents are not sitting still, they join the race for disruption by embracing
environmental change.
- The head runners are constantly transforming their companies:
Dual transformation: changing what the company does, and how they do it.
How to do this: via corporate entrepreneurship and innovation.
Innovation; challenge but necessary
Innovation has become a major strategic goal within organizations as they pursue competitive
advantage. The new leadership challenge is about promoting a new vision, fostering new
possibilities, opening up new horizons, and inspiring others to unleash their entrepreneurial mindsets
to create new venture concepts.
Research found that innovation is about creating a context in which others are both willing & able to
do the hard work of innovation.
The what
= Corporate entrepreneurship are activities aimed at creating new businesses in established
companies through product and process innovations. These activities take place with the objective of
improving a company’s competitive position and performance.
Corporate entrepreneurship has a positive effect on:
- Financial performance.
- Strategic performance: learning capabilities, knowledge management, acquiring new skills and
technologies.
Organisations that engage in intrapreneurial activities are expected to achieve higher levels of
growth and profitability than organizations that do not.
CE vs. Intrapreneurship: it is sort of the same thing, but looked at from a different perspective.
- CE: focuses on studying innovation behaviour at the level of the organization, often lacking the
perspective of the individual intrapreneur.
- Intrapreneurship: is about the implementation of innovations in organizations, where the
adaptation is initiated and wanted by and employee in a bottom-up way.
CE vs. Corporate Innovation:
, - Corporate innovation: is about the implementation of creative ideas or opportunities in
established countries.
- CE: behaviour level, they are formal or informal activities aimed at creating new businesses in
established countries.
o Corporate entrepreneurship can be innovation but is not necessarily always so.
o Corporate entrepreneurship sets the context for innovation by providing the
infrastructure needed to support and sustain innovation over time.
Management vs. corporate entrepreneurship
Myth: all we have to do to become entrepreneurial is hiring people with the right intrapreneurial
traits.
- You also have to look at the organizational context in which entrepreneurship takes place.
Model of CE
The organizational context interacts with the employees, it activates traits. Only when the
organizational context is right, the intrapreneurial employees will lead to the desired outcomes.
These 2 organizational context variables were most important.
,Four modes of CE:
Two axes:
1. Organizational ownership: the primary ownership for the creation of new businesses
(focused in a designated group of diffused across the organization).
2. Resource authority: the dedication vs. ad hoc nature of resource availability (is there a
dedicated pot of resources allocated to corporate entrepreneurship or is the budget
provided ad hoc or via other business units?).
Four modes (EPOA)
1. Opportunist model: no designated organizational ownership or resources, CE is based on the
efforts and serendipity or project champions.
2. Enabler model: employees across the organization are willing to develop new concepts if
they are given adequate support. Dedicated resources enable intrapreneurs to pursue
opportunities. Managers are in some way the enablers.
3. Advocate model: the company assigns the organizational ownership for the creation of new
businesses to a specific unit, while intentionally providing no or moderate budget. The unit
serves as evangelists and facilitates CE in conjunction with business units.
4. Producer model: establishing a (sub)organization or unit with significant dedicated funds and
the main objective to encourage and support intrapreneurs.
, Lecture 2 | Entrepreneurial Orientation and Strategic
Entrepreneurship
Elements of CE
- Organizational renewal: fundamentally changing certain aspects of the organizations. Changing
the way you operate.
- New ventures: any product or business unit you set up as new. Within the organization
(internal), outside of the organization (external, new sector or something).
How do organizations promote renewal and venturing
- Intensity of Entrepreneurial behaviour in Top-level
managers: investment decisions, allocation of
resources, are they actively promoting CE?
- Look at organizational processes; what are the
processes that we use to promote CE (for example;
give people a voice)
- Intrapreneurs: look at the individuals, under which
circumstances can they be successful?
History of Entrepreneurial Orientation (EO)
EO was developed to capture what it means for a firm to behave entrepreneurial. In order to be
deemed “Entrepreneurial”, firms are expected to score high on three dimensions:
- Innovativeness
- Proactiveness
- Risk-taking
2 dominant conceptualizations of EO:
1. Miller/Covin & Slevin (top-management orientation):
o Three components: innovativeness, proactiveness, risk-taking.
o Components capture a combination of firm-level behaviour (proactiveness and
innovativeness) and managerial dispositions (risk-taking, i.e. how much money are
you allocating towards entrepreneurial projects, etc).
o Focus more on manager herself & behaviour and on ‘what is the organization doing
and what are they achieving’?
2. Lumpkin & Dess (organizational configuration):
o Five components: innovativeness, proactiveness, risk-taking, autonomy and
competitive aggressiveness.
o Instead of behaviour or dispositions, they focus on one thing; practices = anything
managers do to promote entrepreneurship (i.e. how managers/firms achieve new
entry). Not so much on the manager herself, but the policies she implements.
o Focus on organizational routines, processes.
o Focus on configuration; multiple ways in which you can achieve the same thing.
Example:
Organization that develops a product, but they had to invest a lot to do it, but they were not the first
to develop this product. They score reasonably high on innovativeness, high on risk-taking, but low
on proactiveness. Is this an Entrepreneurial Organisation?
Covin/Slevin: No
Lumpkin & Dess: Yes
