1. Strategic Entrepreneurship
Chapter 14
© 2006 by Nelson, a division of Thomson Canada Limited. 14-1

2. Chapter 3
External The Strategic
Strategic
.
Inputs
Environment
The Strategic Management
Strat. Intent
Management
Process
.
Chapter 4 Strat. Mission
Internal
Environment
Process
Strategy Formulation Strategy Implementation
Strategic Actions
Chapter 5 Chapter 6 Chapter 7 Chapter 11 Chapter 12
Bus. - Level Competitive Corp. - Level Corporate Structure
Strategy Dynamics Strategy Governance & Control
Chapter 8 Chapter 9 Chapter 10 Chapter 13 Chapter 14
Acquisitions & International Cooperative Strategic Entrepreneurship
Restructuring Strategy Strategies Leadership & Innovation
Outcomes
Strategic
Chapter 2 Chapter 1 Feedback
Above Average Strategic
Returns Competitiveness
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3. Strategic Entrepreneurship
Knowledge objectives
2. Define & explain strategy.
3. Describe the importance of entrepreneurship.
4. Discuss the importance of international
entrepreneurship & describe why its practice is
increasing.
5. Describe the two forms of internal corporate
venturing: autonomous and induced strategic
behaviour.
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4. Strategic Entrepreneurship
Knowledge objectives (continued)
5. Discuss how cooperative strategies, such as strategic
alliances are used to develop innovation.
6. Explain how firms use acquisitions to increase their
innovations and enrich their innovative capabilities.
7. Describe the importance of venture capital & initial public
offerings to entrepreneurial activity.
8. Explain how the practice of strategic entrepreneurship
creates values for customers & shareholders of all
types of firms, large and small, new & established.
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5. Strategic Entrepreneurship
The use of entrepreneurial actions based on
a strategic perspective.
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6. Defining Entrepreneurship
Corporate Entrepreneurship
An individual or a group in an organization creates a
new venture or develops an innovation.
Invention
Creating or developing a new
product or process.
Innovation
Creating a commercial product
from an invention.
Imitation
Adoption of innovation by a
population of similar firms.
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7. Successful Entrepreneurship
The key to success with
entrepreneurship and
innovation is moving from the
invention of ideas to effective
commercialization and
acceptance in the
marketplace.
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8. Innovation
• Innovation is the process of creating a
commercial product from an invention.
• invention brings something new into being
• innovation brings something new into use
• Innovation is a key outcome firms seek through
entrepreneurship and is often the source of
competitive success.
• Innovations produced in large established firms
are often referred to as corporate
entrepreneurship.
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9. Entrepreneurs
• Entrepreneurs
– are individuals acting independently or as part of an
organization
– create a new venture or develop an innovation and
take risks entering them into the marketplace
• Entrepreneurs
– can be independent individuals
– can surface in an organization at any level
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10. International Entrepreneurship
• Entrepreneurship can
– fuel economic growth
– create employment
– generate prosperity for citizens
• There is a strong positive relationship between the rate
of entrepreneurial activity and economic development in
a nation.
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11. International Entrepreneurship
• There must be a balance (in the culture)
between
– individual initiative and
– the spirit of cooperation and group ownership of
innovation
• Successful entrepreneurial firms
– provide appropriate autonomy
– incentives for individual initiative
– promote cooperation and group ownership of an
innovation
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12. Innovation Types:
Incremental Innovation
• most innovations are incremental
Incremental
innovation • builds on existing knowledge bases
• provides small improvements in the
current product lines
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13. Innovation Types
Radical Innovation
Incremental • provides significant technological
innovation breakthroughs
• creates new knowledge
Radical
innovation • is rare because of difficulty and risk
• requires substantial creativity
• radical innovations are often best
developed in separate units that start
internal ventures
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14. Internal Corporate Venturing
Corporate Entrepreneurship can occur as
either a bottom-up process or as a top-
down process.
Autonomous strategic behaviour is a bottom-up
process through which Product Champions pursue
new product ideas to commercialization.
Product Champions are individuals who have an
entrepreneurial vision for a new product & seek
support for its commercialization.
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15. Model of Internal Corporate Venturing
Concept of Corporate Strategy
Strategic Context Structural Context
Autonomous Induced
Strategic Strategic
Behaviour Behaviour
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16. Internal Corporate Venturing:
Autonomous Strategic behaviour
• Autonomous strategic behaviour is a bottom-
up process in which product champions:
– pursue new ideas, often through a political
process
– develop and coordinate the commercialization of a
new good or service until it achieves success in
the marketplace
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17. Internal Corporate Venturing
Autonomous Strategic
• behaviour champion is an organizational
A product
member with an entrepreneurial vision of a
new good or service who seeks to create
support for its commercialization.
• Autonomous strategic behaviour is
– based on a firm’s wellsprings of knowledge and
resources that are the sources of the firm’s
innovation
– a firm’s technological capabilities and
competencies are the basis for new products and
processes
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18. Internal Corporate Venturing
Induced Strategic Behaviour
• Induced strategic behaviour is a top-down
process whereby
– the firm’s current strategy and structure foster product
innovations
– innovations are associated closely with that strategy
and structure
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19. Internal Corporate Venturing
Induced Strategic Behaviour
• To be innovative and develop internal ventures
requires
– an entrepreneurial mindset
– risk propensity
– an emphasis on execution
• Individuals with an entrepreneurial mindset
– engage the energies of everyone in their domain
– both inside and outside the organization
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20. Cross-Functional
Product Development Teams
• Facilitate efforts to integrate activities
associated with different
organizational functions.
• Design, manufacturing, marketing,
etc.
• New product development processes
can be completed more quickly.
Cross-functional • Products can be more easily
commercialized when cross-
product
functional teams work effectively.
development team
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21. Cross-Functional
Product Development Teams
• Product development stages are
grouped into parallel or overlapping
processes.
• This approach allows the firm to
tailor its product development efforts.
– unique core competencies
– needs of the market
Cross functional
product
development team
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22. Barriers to Integration
Long time line: Different functional Short time line:
R&D time orientation Production
Qualitative: Different functional language Quantitative:
HRM and interpersonal orientation Accounting
Customer Cost
satisfaction: Different goal reduction:
Sales orientation Production
Informal: Formality of Formal:
R&D structure Manufacturing
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23. Barriers to Appropriating Value From
Integration
Different Time
Innovation
Orientation Cross-functional design teams can
Interpersonal help to break down barriers to
Orientation entrepreneurship within firms
Different Goal
Orientation Cross-
Formality of Functional Value
Structure Appropriation
Integration/
from
Facilitators of Design Innovation
Integration Teams
Shared Values
Leaders’ Vision
Facilitators of Integration tend to
Budget Allocation
increase the effectiveness of
Effective
Cross-functional integration or
Communication design teams
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24. Creating Value
through Internal Innovation Process
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25. Barriers to Appropriating Value from
Integration
Different Time
Innovation
Orientation Facilitators & Teams
Interpersonal help the firm improve
Orientation
Time to
Different Goal
Orientation Cross-
Market
Formality of Functional Value
Structure
Integration/ Product Appropriation
Quality from
Facilitators of Design Innovation
Integration Teams
Shared Values
Customer
Leaders’ Vision
Value
Budget Allocation
Effective
Communication
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26. Cooperative Strategies for Entrepreneurship
and Innovation
• Firms may need to cooperate and integrate
knowledge and resources to successfully
commercialize inventions.
– entrepreneurial new venture firms may need
investment capital and distribution capabilities
– more established companies may need new
technological knowledge possessed by newer
entrepreneurial firms
• To innovate through a cooperative relationship,
firms must share their knowledge and skills.
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27. Acquisitions to Buy Innovation
• Acquisitions
– rapidly extend the product line
– increase the firm’s revenues
• A key risk of acquisitions is that a firm may
substitute the ability to buy innovations for an
ability to produce innovations internally.
– firm may lose intensity in R&D efforts
– firm may lose ability to produce patents
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28. Capital for Entrepreneurial Ventures
• Venture capital firms
– seek high returns on their investment
– value competence of the entrepreneur or the human
capital in the firm
– place weight on the expected scope of competitive
rivalry the firm is likely to experience
– evaluate degree of instability in the market addressed
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29. Capital for Entrepreneurial Ventures
• Initial public offerings (IPOs)
– new stock
– firm needs high potential in order to sell new stock
– often quite larger than the amounts obtained from
venture capitalists
– investment bankers frequently play major roles in the
development and offering of IPOs
– firms that have also received venture capital backing
usually receive greater returns from IPOs
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30. Creating Value through Strategic
Entrepreneurship
• Newer entrepreneurial firms are often more effective than
larger firms in identifying opportunities.
• Firms must develop an entrepreneurial mindset among their
managers & employees.
• Managers must emphasize the development of their
resources, particularly human capital & social capital.
• Firms should seek to enter & compete in International
markets.
• Firm that seek to establish their technology as a standard
are engaging in strategic entrepreneurship as creating a
standard produces a sustainable competitive advantage for
the firm.
© 2006 by Nelson, a division of Thomson Canada Limited. 14-30