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Chapter 13 Strategic and Corporate Entrepreneurship 

Strategic entrepreneurship: taking entrepreneurial actions through a strategic perspective Entrepreneurship dimension: identifying opportunities in the external environment to exploit through innovations o Strategic dimension: determining the best way to manage the firm’s innovation efforts

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Corporate entrepreneurship: the use or application of entrepreneurship within an established firm Critical to the survival and success of established organizations as well as startup entrepreneurial ventures (or “startups”) o Three ways organizations can innovate  Internally  By cooperating (e.g., strategic alliances)  Through acquisitions

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Entrepreneurship  o

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Entrepreneurs Individuals, acting independently or as part of an organization, who perceive an entrepreneurial opportunity and then take risks to develop an innovation to exploit it

Entrepreneurial Mind-set Person who values uncertainty in the marketplace and seeks to continuously identify opportunities with the potential to lead to important innovations Firms that foster entrepreneurship are: o Risk takers o Committed to innovation o Proactive in creating opportunities rather than waiting to respond to opportunities created by other

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Innovative Activities

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Invention The act of creating or developing a new product or process Brings something new into being Technical criteria determine the success of an invention

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Innovation Process of creating a commercial product from an invention Brings something new into use Commercial criteria determine the success of an innovation

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Imitation Adoption of an innovation by similar firms Results of imitation  Product or process standardization  Products made with fewer features  Products offered at lower prices

Internal Innovation With internal innovation firms take deliberate efforts to develop inventions and innovations within the organization. o o 

Often called internal corporate venturing Firm internal innovation is reflected in efforts in research and development (R&D) and patents

Firms innovate internally in two ways: Autonomous strategic behavior Induced strategic behavior Firms produce two types of internal innovations: o Incremental innovations o Radical innovation o o

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Types of Internal Innovation 

Autonomous strategic behavior A bottom up process in which product champions pursue new ideas, often through a political process, by means of which they develop and coordinate the commercialization of a new good or service until it achieves success in the marketplace o Can facilitate incremental and radical innovations o Primarily - Radical Innovation

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Induced strategic behavior A top down process whereby the firm’s current strategy and structure foster innovations that are closely associated with the current strategy and structure o Can facilitate incremental and radical innovations o Primarily - Incremental Innovation

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Types of Internal Innovations Incremental Innovation

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Is evolutionary and linear in nature Most innovations are incremental Build on existing knowledge bases and provide small improvements in current product lines/processes Primarily - induced strategic behavior

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Radical Innovation Is revolutionary and nonlinear in nature Is rare because of difficulty and risk involved Provide significant technological breakthroughs and creates new knowledge Requires creativity Use new technologies to serve newly created markets Primarily - autonomous strategic behavior

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Innovation Through Cooperative Strategies

Most firms lack the breadth and depth of resources in their R&D activities to continually develop innovations and remain competitive. 

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To successfully develop and commercialize inventions, firms may need to cooperate and integrate knowledge and resources o Entrepreneurial new venture firms may need investment capital and distribution capabilities o More established companies may need new technological knowledge possessed by newer entrepreneurial firms To innovate via cooperative relationships, firms must share their knowledge and skills – strategic alliances and joint ventures allow this to occur

Innovation Through Acquisitions Firms can acquire companies to gain access to new innovations and innovative capabilities. This can rapidly extend the firm’s product line and increase the firm’s revenues. 

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KEY RISK: a firm may substitute its ability to buy innovations for its ability to produce innovations internally and thus o Lose its intensity in R&D efforts o Lose its ability to produce patents Research demonstrates that subsequent to acquisitions, firms introduce fewer new products into the market

Process Management Tools The use of process management tools can improve an organization’s strategy implementation efforts. Each tool has to do with making improvements to how a firm performs a business process or series of activities.  o o o o o o

Common process improvement tools include: Best Practices- a technique for performing an activity or business process that has been shown to consistently deliver superior results compared to other methods Benchmarking - a tool for improving a company’s own internal activities that is based on learning how other companies perform them and borrowing their best practices Reengineering - involves radically redesigning and streamlining how an activity is performed with the intent of achieving dramatic improvements in performance Total Quality Management- a philosophy of managing a set of business practices that emphasizes continuously improving the performance of every task and value chain activity Six Sigma Quality Programs- utilize advance statistical methods to improve quality by reducing defects and variability in the performance of business processes Lean Manufacturing- a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination; centered on preserving value with less work

SA2: Entrepreneurial opportunities: are conditions in which new goods or services can satisfy a need in the market. SA2: The three types of innovative activity include all of the following EXCEPT: implementation. SA3. Products developed through ____ are often offered at lower prices without as many features than products developed through ____. imitation, innovation

SA4. Entrepreneurs tend to have all the following characteristics EXCEPT prefer certainly about projects. SA5. Panera Bread develops and produces its own dough-based products, but it works with manufacturing partners to create new soups. Panera Bread is therefore: pursuing innovation through both internal and cooperative strategies. SA6. Innovations that involve significant technological breakthroughs and create new knowledge: involve substantial uncertainty and risk. SA7. One of the distinguishing differences between the two sources of internal corporate venturing (autonomous strategic behavior and induced strategic behavior) is whether the innovation process: is encouraged through a bottom-up or top-down process. SA8. Induced strategic behavior is a process that fosters product innovations that: are aligned closely with current strategy and structure. Q1. Google promotes creativity and innovation and has a flat organization structure with few managers where team members rotate as project leaders. The company is considered a relaxed and fun place to work with free snacks, meals, and video games available for break times. Together, these attributes help to describe their: organization's culture. Q2. ________ is the process whereby individuals or groups identify and pursue opportunities without being immediately constrained by the ________ they currently control. Entrepreneurship, resources Q3. Innovation is: the creation of a commercial product. Q4. The entrepreneurial mind-set consists of all the following characteristics EXCEPT: being objective about projects. Q5. A nation's level of entrepreneurial activity is ________ a nation's level of ________. positively related to, economic development Q6. The number of patents held by an organization is a rough guide to: the level of innovation in a firm. Q7. Internal corporate venturing involves each of the following EXCEPT: strategic networks positioning. Q8. ________, as a form of internal innovation is a ________ process. Induced strategic behavior, top-down Q9. The competition for resources among different operational functions within a firm often leads to: organizational politics. Q10. ________ is(are) critical in order for a firm to gain access to complementary resources from partners in a cooperative alliance. Social capital Q1. ________ are conditions in which new goods or services can satisfy a need in the market. Entrepreneurial opportunities Q2. The employee who took the discovery of a poorly-sticking glue and developed in into the original Post-It Note was engaged in: innovation. Q3. The act of creating a new product or process is: invention. Q4. The effect of Netflix on the retail video/DVD rental stores may be an example of: creative destruction.

Q5. The ultimate goal of entrepreneurial innovation is to: create wealth for the firm's owners. Q6. The firm that innovates through imitation tends to: produce a standardized product with fewer features. Q7. A poorly-educated and trained workforce will lack _________, which will impede the transfer of knowledge from person to person within the firm. absorptive capacity Q8. A key reason that entrepreneurship has become a global phenomenon is that: in general, internationalization leads to improved firm performance. Q9. Viewing national culture as an influence on the level of entrepreneurship, all of the following are true EXCEPT: entrepreneurship in collectivistic cultures increases if individual incentive is rewarded. Q10. Panera Bread uses the same type of equipment and ingredients to create its artisan breads as do its competitors, its improvements in the production process are: based on intangible assets. Q11. Investments in research and development: have uncertain outcomes. Q12. Significant technological breakthroughs and the creation of new knowledge are the result of: radical innovations. Q13. Autonomous and induced strategic behavior are forms of: internal corporate venturing. Q14. Jackie views herself as an "internal agent for innovative products" within her company. Currently, she is engaged in organizational politics to move forward the acceptance of a lighting system that resets the body's biorhythm. Jackie is a(an): product champion. Q15. The strategic context in internal corporate venturing is strongly influenced by: political processes. Q16. The most successful firms: reinvent their industry over time. Q17. ________ is a form of internal corporate venturing that results in innovations that are closely associated with the firm's current strategy and structure. Induced strategic behavior Q18. Organizational politics that impede the effective integration of cross-functional teams arise mostly from: competition over resources. Q19. Cross-functional work teams require ________ in order to be effective. a horizontal organizational structure Q20. Cross-functional teams are more likely to be well-integrated and an effective tool for innovation where there is effective leadership and: shared values. Q21. Other than distribution capabilities, the major goal of new entrepreneurial firms in partnering with established firms is: investment capital. Q22. An example of a cooperative strategy to achieve innovation is: an alliance with another firm. Q23. Strategic alliances: expose the parties to a loss of proprietary knowledge.

Q24. The involvement of WalMart and Netflix in DVD rental and retailing is an example of innovation: a cooperative strategy.

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Q25. Firms involved in acquisitions for the purpose of innovation: tend to introduce fewer new products into the market. Q26. Acquisitions tend to be viewed favorably by the capital markets because: acquisitions provide a means to rapidly extend product lines and increase revenues. Q27. Newer entrepreneurial firms tend to be better at ________ than are larger, established firms. identifying opportunities Q28. GreenBox and Global Pulp are engaged in a cooperative alliance. In order for GreenBox to have access to Global Pulp's complementary resources, GreenBox must have: high levels of social capital Q29. Some countries, such as Ireland, have changed the rules for businesses operating in the country in order to encourage innovation. This can be considered: institutional entrepreneurship. Q30. Women are the fastest growing group of entrepreneurs in the United States because of the economic opportunity of entrepreneurship and the: individual independence it offers. Q1. ________ refer(s) to the complex set of ideologies, symbols, and core values that are shared throughout the firm and that influence how the firm conducts business. Organisational culture Q2. ________ is taking entrepreneurial actions using a strategic perspective. Strategic entrepreneurship Q3. ________ is the use or application of entrepreneurship within an established firm. Corporate entrepreneurship Q4. ________ is the process by which individuals or groups identify and pursue entrepreneurial opportunities without being immediately constrained by the resources they currently control. Entrepreneurship Q5. ________ are conditions in which new goods or services can satisfy a need in the market. Entrepreneurial opportunities Q6. ________ is the act of creating or developing a new product or process. Invention Q7. ________ is the process of creating a commercial product from an invention. Innovation Q8. ________ is the adoption of a similar innovation by different firms. Imitation Q9. _______ are individuals, acting independently or as part of an organisation, who see an entrepreneurial opportunity and then take risks to develop an innovation to exploit it. Entrepreneurs Q10. The person with ________ values uncertainty in the marketplace and seeks to continuously identify opportunities with the potential to lead to important innovations. an entrepreneurial mind-set Q11. ______ is a process in which firms creatively discover and exploit opportunities that are outside their domestic markets in order to develop a competitive advantage.International entrepreneurship Q12. _____ innovations build on existing knowledge bases and provide small improvements in the current product lines. Incremental Q13. ____ innovations usually provide significant technological breakthroughs and create new knowledge. Radical

Q14. ___ is a bottom-up process in which product champions pursue new ideas, often through a political process, by means of which they develop and coordinate the commercialisation of a new good or service until it achieves success in the marketplace. Autonomous strategic behaviour Q15. ____ is an organisational member with an entrepreneurial vision of a new good or service who seeks to create support for its commercialisation. product champion Q16. ___ is a top-down process whereby the firm's current strategy and structure foster innovations that are closely associated with that strategy and structure. Induced strategic behaviour Q17. While the iPod likely resulted from ________ strategic behaviour, the iPhone is probably a result of ________ strategic behaviour. autonomous; induced Q18. An ________ mind-set is required to be innovative and to develop successful internal corporate ventures. Entrepreneurial Q19. ____ facilitate efforts to integrate activities associated with different organisational functions, such as design, manufacturing, and marketing. Cross-functional teams Q20. ____ organisational structures support the use of cross-functional teams in their efforts to integrate innovation-based activities across organisational functions. Horizontal Q21. Two primary barriers that may prevent the successful use of cross-functional teams as a means of integrating organisational functions are independent frames of reference of team members and: organisational politics. Q22. ____ and effective leadership are important for achieving cross-functional integration and implementing innovation. Shared values Q23. Firms practicing ________ contribute to a country's economic development. strategic entrepreneurship Q24. The markets for ________ innovations are well-defined, product characteristics are well understood, profit margins tend to be lower, production technologies are efficient, and competition is primarily on the basis of price. incremental Q25. ____ innovations are rare because of the difficulty and risk involved in developing them. Radical Q26. Internal ________ is the set of activities firms use to develop internal inventions and especially innovations. corporate venturing Q27. Increasingly, product development teams are being used to ________ the activities associated with different organisational functions. integrate Q28. Research suggests that functional departments vary along four dimensions: time orientation, interpersonal orientation, goal orientation, and : formality of structure. Q29. Virtually all firms ________ the breadth and depth of resources (e.g., human capital and social capital) in their R&D activities needed to internally develop a sufficient number of innovations to meet the needs of the market and remain competitive. lack Q30. The rapidly changing technologies of the 21st century competitive landscape, globalisation, and the need to innovate at world-class levels are primary influences on firms' decisions to ________ by cooperating with other companies. innovate...