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1.1. Define strategic entrepreneurship and corporateDefine strategic entrepreneurship and corporateentrepreneurship.entrepreneurship.
2.2. Define entrepreneurship and entrepreneurialDefine entrepreneurship and entrepreneurialopportunities and explain their importance.opportunities and explain their importance.
3.3. Define invention, innovation, and imitation and describeDefine invention, innovation, and imitation and describethe relationship among them.the relationship among them.
4.4. Describe entrepreneurs and the entrepreneurial mindDescribe entrepreneurs and the entrepreneurial mind--set.set.
5.5. Explain international entrepreneurship and itsExplain international entrepreneurship and itsimportance.importance.
Studying this chapter should provide you with the strategicmanagement knowledge needed to:
Strategic Entrepreneurship and InnovationStrategic Entrepreneurship and Innovation
••Entrepreneurship is concerned with:Entrepreneurship is concerned with:The discovery of profitable opportunitiesThe discovery of profitable opportunities
The exploitation of profitable opportunitiesThe exploitation of profitable opportunities
••Firms that encourage entrepreneurship are:Firms that encourage entrepreneurship are:Risk takers.Risk takers.
Committed to innovation.Committed to innovation.
Proactive in creating opportunities rather than waitingProactive in creating opportunities rather than waitingto respond to opportunities created by others.to respond to opportunities created by others.
Conditions in which new products or services canConditions in which new products or services cansatisfy a need in the market.satisfy a need in the market.
••Entrepreneurs or entrepreneurial managers mustEntrepreneurs or entrepreneurial managers mustbe able to:be able to:
Identify opportunities not perceived by others.Identify opportunities not perceived by others.
Take actions to exploit the opportunities.Take actions to exploit the opportunities.
Establish a competitive advantage.Establish a competitive advantage.
Innovation Process (contInnovation Process (cont’’d)d)
••The adoption of an innovation byThe adoption of an innovation bysimilar firmssimilar firms
••Usually leads to product orUsually leads to product orprocess standardization.process standardization.
••Products based on imitation oftenProducts based on imitation oftenare offered at lower prices but withare offered at lower prices but withfewer features.fewer features.
••EntrepreneursEntrepreneursIndividuals acting independently or as part of anIndividuals acting independently or as part of an
organization who create a new venture or develop anorganization who create a new venture or develop aninnovation, take risks entering innovations into theinnovation, take risks entering innovations into themarketplace.marketplace.
Can be any manager or employee in an organization.Can be any manager or employee in an organization.
••Entrepreneurial capabilities include:Entrepreneurial capabilities include:Intellectual capitalIntellectual capitalEntrepreneurial mindEntrepreneurial mind--setsetTransfer of entrepreneurial competence to othersTransfer of entrepreneurial competence to othersEffective human capitalEffective human capital
••There is a strong positiveThere is a strong positiverelationship between the raterelationship between the rateof entrepreneurial activity andof entrepreneurial activity andeconomic development in aeconomic development in anation.nation.
International Entrepreneurship (contInternational Entrepreneurship (cont’’d)d)
••There must be a balanceThere must be a balance(in the culture) between(in the culture) betweenIndividual initiative andIndividual initiative andThe spirit of cooperation andThe spirit of cooperation and
group ownership of innovation.group ownership of innovation.
••Successful entrepreneurial firms:Successful entrepreneurial firms:Provide appropriate autonomy.Provide appropriate autonomy.Offer incentives for individual initiative.Offer incentives for individual initiative.Promote cooperation and group ownership ofPromote cooperation and group ownership of
Incremental and Radical InnovationIncremental and Radical Innovation••Incremental InnovationIncremental InnovationIs the usual case forIs the usual case for
FIGUREFIGURE 13.113.1 Model of Internal Corporate VenturingModel of Internal Corporate Venturing
Source: Adapted from R. A. Burgelman, 1983, A model of the interactions of strategic behavior,corporate context, and the concept of strategy, Academy of Management Review, 8: 65.
••The set of activities used to create inventionsThe set of activities used to create inventionsand innovations through internal means.and innovations through internal means.R&D spending is linked to success in internalR&D spending is linked to success in internal
corporate venturing.corporate venturing.
••Product ChampionProduct ChampionAn organizational member with an entrepreneurialAn organizational member with an entrepreneurial
vision of a new good or service who seeks to createvision of a new good or service who seeks to createsupport for the visionsupport for the vision’’s commercialization.s commercialization.
••A bottomA bottom--up process in which productup process in which productchampions:champions:Pursue new ideas, often through a political process.Pursue new ideas, often through a political process.
Develop and coordinate the commercialization of aDevelop and coordinate the commercialization of anew good or service until it achieves success in thenew good or service until it achieves success in themarketplace.marketplace.
••Forms of internal corporate venturing:Forms of internal corporate venturing:Autonomous strategic behaviorAutonomous strategic behavior
••Autonomous Strategic BehaviorAutonomous Strategic BehaviorBased on a firmBased on a firm’’s knowledge and resources that ares knowledge and resources that are
the sources of the firmthe sources of the firm’’s innovation.s innovation.
A firmA firm’’s technological capabilities and competenciess technological capabilities and competenciesare its basis for new products and processes.are its basis for new products and processes.
••Induced Strategic BehaviorInduced Strategic BehaviorA topA top--down process whereby the firmdown process whereby the firm’’s currents current
strategy and structure foster product innovations.strategy and structure foster product innovations.
The strategy in place is filtered through a matchingThe strategy in place is filtered through a matchingstructural hierarchy.structural hierarchy.
Implementing New Product DevelopmentImplementing New Product Developmentand Internal Venturesand Internal Ventures••To be innovative and develop internal venturesTo be innovative and develop internal ventures
requires:requires:An entrepreneurial mindsetAn entrepreneurial mindsetRisk propensityRisk propensityAn emphasis on executionAn emphasis on execution
••Individuals with an entrepreneurial mindsetIndividuals with an entrepreneurial mindsetEngage the energies of everyone in their domain bothEngage the energies of everyone in their domain both
inside and outside the organization.inside and outside the organization.
••New product developmentNew product developmentprocesses can be completedprocesses can be completedmore quickly.more quickly.Products can be more easilyProducts can be more easily
commercialized when crosscommercialized when cross--functional teams workfunctional teams workeffectively.effectively.
CrossCross--functionalfunctionalProduct DevelopmentProduct Development
CrossCross––Functional Product Development TeamsFunctional Product Development Teams
••Product developmentProduct developmentstages are grouped intostages are grouped intoparallel or overlappingparallel or overlappingprocesses, allowing theprocesses, allowing thefirm to tailor its productfirm to tailor its productdevelopment effortsdevelopment efforts
Unique coreUnique corecompetenciescompetencies
Needs of the marketNeeds of the marketCrossCross--functionalfunctional
Barriers to CrossBarriers to Cross--Functional TeamsFunctional TeamsEffectivenessEffectiveness••Different orientations and perceptionsDifferent orientations and perceptionsIndividuals from separate functions have differentIndividuals from separate functions have different
orientations on issues.orientations on issues.••Create differing approaches to product developmentCreate differing approaches to product development
activities.activities.
••Organizational PoliticsOrganizational PoliticsCause aggressive competition for resources amongCause aggressive competition for resources among
different organizational functions.different organizational functions.••Organizations must achieve crossOrganizations must achieve cross--functional integration withfunctional integration with
minimal political conflict.minimal political conflict.
Facilitating Integration and InnovationFacilitating Integration and Innovation
••Shared ValuesShared ValuesAre framed around the firmAre framed around the firm’’s strategic intent ands strategic intent and
mission.mission.Become the glue that promotes integration betweenBecome the glue that promotes integration between
functional units.functional units.
••Effective LeadershipEffective LeadershipSets goals and allocates resourcesSets goals and allocates resources
••Goals include integrated development and commercializationGoals include integrated development and commercializationof new goods and servicesof new goods and services
Cooperative Strategies for EntrepreneurshipCooperative Strategies for Entrepreneurshipand Innovationand Innovation••Cooperation and integration of knowledge andCooperation and integration of knowledge and
resources is required to successfullyresources is required to successfullycommercialize inventions.commercialize inventions.Entrepreneurial firms need investment capital andEntrepreneurial firms need investment capital and
distribution capabilities.distribution capabilities.
Established companies need the technologicalEstablished companies need the technologicalknowledge possessed by entrepreneurial firms.knowledge possessed by entrepreneurial firms.
••Firms innovate through the sharing theirFirms innovate through the sharing theirknowledge and skills in a cooperativeknowledge and skills in a cooperativerelationship.relationship.
Acquisitions to Buy InnovationAcquisitions to Buy Innovation
••AcquisitionsAcquisitionsCan rapidly extend the product line.Can rapidly extend the product line.
Can quickly increase the firmCan quickly increase the firm’’s revenues.s revenues.
••Key risks of acquisitionsKey risks of acquisitionsThe firm may substitute the ability to buy innovationsThe firm may substitute the ability to buy innovations
for an ability to produce innovations internally.for an ability to produce innovations internally.
The firm may lose intensity in R&D efforts.The firm may lose intensity in R&D efforts.
The firm may lose its ability to produce patents.The firm may lose its ability to produce patents.
Capital for Entrepreneurial VenturesCapital for Entrepreneurial Ventures
••Venture Capital FirmsVenture Capital Firms
Seek high returns on their investment.Seek high returns on their investment.
Value the competence of the entrepreneur or theValue the competence of the entrepreneur or thehuman capital in the firm.human capital in the firm.
Place weight on the expected scope of competitivePlace weight on the expected scope of competitiverivalry the firm is likely to experience.rivalry the firm is likely to experience.
Evaluate the degree of instability in the marketEvaluate the degree of instability in the marketaddressed.addressed.
Capital for Entrepreneurial VenturesCapital for Entrepreneurial Ventures
••Initial Public Offerings (IPOs)Initial Public Offerings (IPOs)
Are new stock priced to reflect the firmAre new stock priced to reflect the firm’’s highs highpotential.potential.
Often yield much larger equity investments than canOften yield much larger equity investments than canbe obtained from venture capitalists.be obtained from venture capitalists.
Investment bankers frequently play major roles in theInvestment bankers frequently play major roles in thedevelopment and offering ofdevelopment and offering of IPOsIPOs..
Firms that have previously received venture capitalFirms that have previously received venture capitalbacking usually receive greater returns frombacking usually receive greater returns from IPOsIPOs..
Creating Value through StrategicCreating Value through StrategicEntrepreneurshipEntrepreneurship
••Be effective in identifying opportunities.Be effective in identifying opportunities.
••Be flexible and willing to take risks.Be flexible and willing to take risks.
••Have sufficient resources and capabilities to exploitHave sufficient resources and capabilities to exploitidentified opportunities.identified opportunities.
••Sustain a competitive advantage while identifying andSustain a competitive advantage while identifying andexploiting opportunities.exploiting opportunities.
••Develop an entrepreneurial mindDevelop an entrepreneurial mind--set among managersset among managersand employees.and employees.
••Seek to enter and compete in international markets.Seek to enter and compete in international markets.