ENTREPRENEURSHIP THEORY AND PRACTICE ASSIGNMENT 2

CORPORATE ENTREPRENEURSHIP;
1. DIFFERENCES BETWEEN INTRAPRENEURSHIP AND ENTREPRENEURSHIP 2. CLASSIFICATION OF CORPORATE ENTREPRENEURSHIP 3. HOW TO NURTURE ENTREPRENEURSHIP

Group 1 1. Franc ! "a#a$$a 2. O-. a/0o An 1a A2 n3 3. Apo&o1 S1%&&a T%&' ()12*+*2,2 T%&' ()*24+(5*1 T%&' (),1**+(((

CORPORATE ENTREPRENEURSHIP 1.( In1ro-uc1 on

Corporate entrepreneurship is an evolving area of research. Today there is no universally acceptable definition of corporate entrepreneurship. Despite the growing interest of corporate entrepreneurship, there appears to be nothing near a consensus on what it is. Some scholars emphasizing its analogy to new business creation by individual entrepreneurs, view corporate entrepreneurship as a concept that is limited to new venture creation within existing organizations. ( urgelman, !"#$%. &thers argue that the concept of corporate entrepreneurship should encompass the struggle of large firms, to renew themselves by carrying out new combination of resources that alter the relationships between them and their environment. ( aumol, !"#'( urgelman !"#)%. *ccording to +ahra (!""!%, corporate entrepreneurship refers to the process of creating new business within established firms to improve organizational profitability and enhance a firm,s competitive position or the strategic renewal of existing business. urgelman conceptualizes the definition of corporate entrepreneurship as a process of extending the firms, domain of competence and corresponding opportunity set through internally generated new resource combinations. Despite the different views of different scholars on the sub-ect, the implication of corporate entrepreneurship is that entrepreneurial activities are explicitly supported within established organizations, provided with organizational resources and accomplished by company employees. The term intraprenuership was coined in *merica in the late ./s, several senior executives of big corporations in *merica left their -obs to start their own businesses because the top bosses were

not receptive to innovative ideas. These executives turned entrepreneurs, achieved phenomenal success in their new ventures and some posed a threat to the corporations they left. * few years ago, industrialists all over the world started devising ways of stopping the flight of their brightest executives. 0n !".', 1orman 2acras wrote in the 3ondon economist that successful big corporations should become confederations of entrepreneurs. *n *merican management expert 4ifford 5inchot wrote his famous boo6 intrapreneuring in !"#7 and used the term intrapreneurs to describe the persons who resigned from their well paid executive positions to launch their own venture. 8hat was needed were a system and an organizational culture within a large organization that would allow the executives to operate li6e entrepreneurs. 5inchot suggested the creation of a system that will provide selected executives a status within the corporation similar to that of an entrepreneur in society. The notion of intrapreneurship re9uires that managers inside the company should be encouraged to be entrepreneurs within the firm rather than go out side. :ac6 8elsh, chairman of the general electric corporation of ;S* observes, one 6ey to alluring entrepreneurial managers to flourish is to give them a sense of ownership of their businesses as if they were their small autonomous business, create an environment that exalts ris6 ta6ing. 8hat is need in large bureaucratic companies is a strong and healthy ris6 ta6ing culture where ris6 ta6ing managers are assured of security and rewards.

1.1 T.% - 66%r%nc% 0%1#%%n %n1r%pr%n%ur!. p an- n1rapr%n%ur!. p

0t is clear that scholars view the two concepts in different ways. There is no universally acceptable definition for both the terms entrepreneurship and intrapreneurship. To appreciate the difference between the two, we must loo6 at the distinction between an entrepreneur and an intrapreneur.

*n entrepreneur is an independent business man who bears full ris6s of his business, whereas an intrapreneur is semi independent and does not fully bear the ris6 of the business he develops and operates. The entrepreneur himself raises the necessary capital from various sources and guarantees the return to people who give him finance. 8hile the intrapreneur neither raises the capital himself nor guarantees any returns to the suppliers of capital. *n entrepreneur operates from outside an organization whereas an intrapreneur is an <organizational man, operating from within the organization. 4iven the above distinctions, we can conclude that entrepreneurship is a creative and innovative response to the environment and an ability to recognize, initiate, and exploit an economic opportunity. 0t is a function of handling an economic activity, underta6ing ris6s, creating some thing new and organizing and coordinating resources. 8hile the implication of intrapreneurship is that entrepreneurial activities are explicitly supported within established organizations, provided with organizational resources and accomplished by company employees. The innovative employees disrupt the company in constructive ways to instigate new product or services. Therefore, there is a thin line that distinguishes intrapreneurship from entrepreneurship. &ne can conclude that intrapreneurship is entrepreneurship within a corporation.

1.2 C&a!! 6 ca1 on o6 corpora1% %n1r%pr%n%ur!. p

=ans schollhammer provides five classification of intra>corporate entrepreneurship. ?ach classification implies a supportive environment and a cooperate endeavor within an organization that benefits not only the corporation but also the innovative manager.

A-/ n !1ra1 7% %n1r%pr%n%ur!. p' here, the firm moves a step beyond formal research and development pro-ects to encourage greater innovation and commercial development of new inventions. The distinction that ma6es @AD entrepreneurial is a philosophy of corporate enthusiasm for supporting researchers while providing extensive resources for ma6ing new ideas commercial realities. 5ersonnel in @AD will be only partial contributors, implementation relies on contribution form many other departments as well as from an entrepreneurial team. Oppor1un !1 c %n1r%pr%n%ur!. pB formal structural ties are loosened in this model as intrapreneurs are given the freedom to pursue opportunities both for the organization and through external mar6ets. Cor example, DuadEgraphics, the company that prints ;S news and world report, has ta6en opportunistic entrepreneurship a step further when printing technology begun to change rapidly with computers, the company challenged its engineers to design state> of> the> art e9uipment. They did so but they also convinced management that the technology itself was mar6etable. The company then created a separate subsidiary, DuadEtech, and gave its engineers executive control and the autonomy to sell technology openly to anyone. *lthough they are isolated from the parent company, they have significant support for innovation. Ac8u ! 1 7% %n1r%pr%n%ur!. pB the ac9uisition concept is one of the corporate managers in search of external opportunities such as other firms and entrepreneurial start ups that can enhance the corporate profile through mergers, ac9uisitions, -oint ventures and licensing agreements. @ather than develop ideas internally, corporations actively court other firms that have proprietary 6nowledge or promising products. Cor instance ma-or companies such as 42, 0 2, and 4eneral ?lectric have created -oint ventures or new subsidiaries through ac9uisition. I/ 1a1 7% %n1r%pr%n%ur!. p' sometimes bordering on corporate espionage, imitative entrepreneurship ta6es advantage of other firms, ideas and simply brings to bear the weight of

corporate muscle to control mar6ets. The :apanese have suffered this label for years, perhaps rightly so, in many instances they have studied *merican products, found ways to improve on those products at lower costs and exported them to *merican mar6ets. The fact remains that if a company provides consumers with valuable products or services, they are not interested in how it all came about. 0mitation is a way of sha6ing out less efficient producers as more capable firms ta6e the initiative. Incu0a1 7% %n1r%pr%n%ur!. p; 8hen new ideas materialize, they must be developed to the stage of feasible commercialization. This incubative process is necessary for any corporate endeavor and the pattern for this activity has been to create pro-ect teams charged with high impact implementation programs. these teams are expected to put an innovation through its paces, to sub-ect the idea to torture, to test mar6et prototypes and then to either 6ill the pro-ect or push for implementation. *s a result, the incubative process has evolved towards a pattern more reflective of this oriented entrepreneurship. * team is established as a semi autonomous new venture development unit that often has seed capital, access to corporate resources freedom of independent action and responsibility for implementation from inception to commercialization.

1.3 Ho# 1o nur1ur% n1rapr%n%ur!. p

To promote entrepreneurship within a corporate environment, firms must release their grip on efficiency and instead embrace the failures which enable them to learn new ideas and methods, they must empower the innovative leaders with access to senior management, and e9uip them with the support of cross>functional teams. Cor instance, large conglomerates li6e :ohnson and :ohnson have realized strong performance by emphasizing and encouraging entrepreneurial activities within their organizations. They have built a competitive advantage by focusing on innovation and the ability to develop products and services

in a broad mar6et scope. Their success is attributed to a flat and decentralized corporate structure, based on small autonomous business units that support the intrapreneurs. ?ncouraging entrepreneurial activities within a firm means promoting a ris6 ta6ing culture as well as tolerating the failures when they occur. The appropriate value from successful innovation can be enormous for the firm, leading to new mar6et opportunities or increased process efficiency. The gains will rely on structures and mechanisms such as a renewal of corporate vision to encompass innovation, support and buy>in from all levels of management, direct channel of communication between the entrepreneurs and senior managers and a focusing effect from personal ris6 to the entrepreneur. To nurture the intrapreneurs, organizations need to organize them in a separate hierarchy with very minimal layers of management between the intrapreneurs and senior management. The intrapreneur must be given autonomy and the ability to ma6e decisions. This increased level of autonomy will result in the intrapreneur,s ability to fail at an earlier stage of each venture, which naturally leads to more successes. The organization needs to assign commensurate levels of accountability( this will serve to further focus innovation, and reinforce conviction and drive. The mechanisms to promote intrapreneurship do not necessarily rely on a complete organizational restructuring. =owever important structures and mechanisms will need to be designed to realize continued success in innovation. @enewed corporate vision that treats innovation as fundamental. Support from senior and middle management. 0dentification and development of intra>corporate entrepreneurs through mentors and leadership development programs

Direct channels of communication between intrapreneurs and senior management.

1.+ conc&u! on!

The concept of corporate entrepreneurship is controversial in part because of the muddy definitions of entrepreneurship and in part because of ambiguity about the roles of managers within their established organizations. *t one end there are those who view the concept as a contradiction( that corporate entrepreneurship does not exist because salaried employees who innovate ta6e little or no personal ris6 in the process, and they seldom reap rewards for their achievements. *t the other end, they are cast in a heroic term as corporate commandos who alter the course of their companies through tenacious innovation. Despite all the controversies surrounding corporate entrepreneurship, organizations are responding to its importance and creating a favorable environment within their organizations so as to retain them. There is a growing interest in corporate entrepreneurship as a means for corporations to enhance the innovative abilities of their employees and also increase corporate success through the creation of new corporate ventures.

R%6%r%nc%!
D*F0D, =. =olt (!""G%. ?ntrepreneurshipB new venture creation 5rentice>hall of 0ndia, 1ew Delhi H !!/ //!

4;5T*, C. . and S@010F*S*1, 1.5. ?ntrepreneurial Development. Third revised edition Sultan Chand and Sons educational publishers G), Daryagan-, 1ew Delhi> !!///G

=*1S, Schollhammer, Iinternal corporate entrepreneurship,J in Calvin *. Kent, Donald 3. Sexton, and Karl =. vesper, eds. (5rentice>hall, !"#G%

*;2&3, 8. : (!"#'%B I?ntrepreneurship and a century of growth,J -ournal of business venturing, !(G%, !$!> !$7(

;@4?32*1, @obert *.(!"#)%B I a process model of 0nternal Corporate Fenturing in the diversified ma-or firmJ, administrative science Duarterly, G#, GG)>GG$.