Entrepreneurship/Intrapreneurship
Robert D. Hisrich University of Tulsa
ABSTRACT: This article examines the aspects and char-
acteristics of entrepreneurship and intrapreneurship from
a psychological perspective. The importance of both in
contributing new products and services so vital to economic
development and growth is discussed. The characteristics
of entrepreneurs are discussed in terms of (a) the desir-
ability and possibility of being an entrepreneur; (b) the
childhood family environment of the entrepreneur; (c) the
education level of the entrepreneur and spouse; (d) personal
values, age, work history, and motivation of the entrepre-
neur; and (e) role models and support systems. The typical
corporate versus the intrapreneurial culture is examined
with respect to developing a climate for intrapreneurship
as well as the characteristics of intrapreneurs. Although
intrapreneurship may not be the right environment for
every corporate culture, the possibilities that come from
establishing it in an organization rather than from
achieving results in the more traditional corporate culture
are dismissed.
The importance of innovation in the development of new
products, processes, and services for the market is widely
recognized. As early as the 1930s, Schumpeter (1934)
linked innovation and the innovation process to the en-
trepreneur. According to Schumpeter, when the economy
is in a stationary state, profit-motivated entrepreneurs
will innovate to raise marginal productivity and increase
profits. Who are these entrepreneurs? What is their mo-
tivation? Can they be a part of an existing organization?
In spite of the increased interest in entrepreneurship,
a concise, universally accepted definition has not yet
emerged. The term has taken on different meanings since
its inception in French in the middle ages when it was
literally translated as between-taker or go between. Most
of the definitions of entrepreneurship note that the term
refers to behaviors that include demonstrating initiative
and creative thinking, organizing social and economic
mechanisms to turn resources and situations to practical
account, and accepting risk and failure.
To an economist, an entrepreneur is one who brings resources,
labor, materials, and other assets into combinations that make
their value greater than before, and also one who introduces
changes, innovations, and a new order. To a psychologist, such
a person is typically driven by certain forces--need to obtain
or attain sornethln~; to experiment, to accomplish, or perhaps
to escape authority of others . . . . To one businessman an en-
trepreneur appears as a threat, an aggressivecompetitor, whereas
to another businessman the same entrepreneur may be an ally,
a source of supply, a cUstomer, or someone good to invest in..
•. The same person is seen by a capitafist philosopher as one
who creates wealth for others as well, who finds better ways to
February 1990 • American Psychologist
Copyright 1990 by the American Psychological Association, Inc. 00034)66X/90/$00.75
Vol. 45, No. 2, 209-222
I I
utilize resources, and reduce waste, and who produces jobs others
are glad to get. (Vesper, 1980, p. 2)
Each of these views entrepreneurs from a slightly
different perspective, and each definition is somewhat re-
strictive. Entrepreneurs are found in all professions---ed-
ucation, medicine, research, law, architecture, engineer-
ing, social work, manufacturing, and distribution. To in-
dude all types of entrepreneurial behavior, there is a much
broader definition: "Entrepreneurship is the process of
creating something different with value by devoting the
necessary time and effort, assuming the accompanying
financial, psychic, and social risks, and receiving the re-
suiting rewards of monetary and personal satisfaction"
(Hisrich & Peters, 1989, p. 6). For persons who actually
start their own business, the experience is filled with en-
thusiasm, frustration, anxiety, and hard work. There is a
high failure rate due to poor sales, intense competition,
or lack of capital. The Small Business Administration
(SBA) reports, for example, that four out of five new busi-
nesses fail within their first five years. The financial and
emotional risks indeed are very high.
Due in part to the high risks and costs involved, a
hybrid form of entrepreneurship has emerged that is
called intrapreneurship (Pinchot, 1985). An intrapreneur
is a corporate entrepreneur; this allows entrepreneurship
to occur in an existing organization. Intrapreneurs, fike
entrepreneurs, take new ideas and develop solid, func-
tioning, and, it is hoped, profitable businesses. Intrapre-
neurs possess the same entrepreneurial spirit as entre-
prenenrs.
The vigor of this entrepreneurial spirit in the United
States has posed some questions for psychologists who
are frequently asked to deal with entrepreneurship and
intrapreneurship. Business organizations, city and state
governments, and universities all want to foster this en-
trepreneurial spirit. What is it? Who has it? How can it
be enhanced?
Characteristics of Entrepreneurs
As may be expected, entrepreneurs and intrapreneurs are
similar in many respects. They are leaders who have an
impact on their cultures, particularly those around them
who share in their vision of the creation of something
new of value and wealth with potential for new employ-
ment. In 1987, almost 850,000 new companies were
formed compared to 200,000 in 1965 and only 90,000
in 1950 (Birch, 1987). In addition to these in that year,
there were about 400,000 new partnerships and 300,000
newly self-employed people. These 1.5 million new en-
tities correspond to the average annual 1.5 million new
private sector jobs created each year in the economy.
209
 Entrepreneurship has resulted in several million new
businesses being formed throughout the world, even in
controlled economies such as China, Hungary, and Po-
land. Indeed, millions of company formations occur de-
spite recession, inflation, high interest rates, lack of in-
frastructure, economic uncertainty, and the fear of failure
(Hisrich, 1986). These company formations are very per-
sonal human processes that, although unique, have some
common characteristics. Like all processes these entail a
movement from something to somethingma movement
from a present life-style to forming a new enterprise.
Change From Present Life-Style
The decision to leave a present career and life-style is not
an easy one. It takes a great deal of energy to change and
create something new. Although persons tend to start
businesses in familiar areas, two work environments tend
to be particularly good in spawning new enterprises: re-
search and development and marketing. Persons develop
new product ideas or processes and often leave to form
a new company when the new idea is not accepted by
the present employer; similarly, some employees in mar-
keting become familiar with the market and unfilled cus-
tomers' wants and needs and often start new enterprises
to fill these needs.
Disruption also causes a person to leave a present
life-style. A significant number of companies are formed
by people who have retired, who are relocated due to a
move by the other member in a dual-career family, or
who have been fired. There is probably no greater force
than personal ~lislocation to galvanize a person into ac-
tion. A study in one major city in the United States in-
dicated that the number of new business listings in the
Yellow Pages increased by 12% during a layoff period
(I4_isrich, 1984). Another cause of disruption and resulting
company formation is the completion of an educational
degree. For example, a student who does not receive a
promotion after completing a master's degree in business
administration may decide to start a new company.
What causes this change due to personal disruption
to result in a new company's being formed instead of
something else? The decision to start a new company
occurs when a person perceives that it is both desirable
and possible.
Desirable. It is hypothesized that the perception that
starting a new company is desirable results in part, from
a person's culture, subculture, family, teachers, and peers
(Hisrich, 1986). A culture that values the successful cre-
ation of a new business will spawn more company for-
mations than one that does not; this is evident in the
company formation rate for the United States versus for
the Soviet Union. For example, the American culture
places a high value on being your own boss, having in-
dividual opportunity, being a success, and making
m o n e y u a l l aspects of entrepreneurship. Therefore, it is
Correspondence concerning this article should be addressed to Robert
D. Hisrich, Bovaird Chair of Entrepreneurship, The University of Tulsa,
600 South College, Tulsa, OK 74104.
210
not surprising to find a high rate of company formation
in the United States. On the other hand, successfully es-
tablishing a new business and making money is not as
highly valued, and failure may be a disgrace in the cultures
of some countries, such as Ireland and Norway.
However, even an entire culture is not totally for or
against entrepreneurship. Many different subcultures that
shape value systems are operant within a cultural frame-
work. There are pockets of entrepreneurial subcultures
in the United States, of which the more widely recognized
ones are: Route 128, Silicon Valley, Dallas-Fort Worth,
and the North Carolina Triangle. These subcultures sup-
port and even promote entrepreneurship---forming a new
company--as one of the best occupations. No wonder
more people actively plan to form new enterprises in these
supportive environments.
There are of course variations within these subcul-
tures (such as the one in Silicon Valley) caused by family
traits and the overall parental relationship. Parents who
are supportive and encourage independence, achieve-
ment, and responsibility have an influence on the child's
desire for entrepreneurial activity (Bowen & Hisrich,
1986).
It is hypothesized that the encouragement to form
a company is further influenced by teachers. Teachers
can significantly influence persons with regard not only
to business careers but to entrepreneurship as one possible
career path. Schools with exciting courses in entrepre-
neurship and innovation tend to spawn entrepreneurs and
can actually drive the entrepreneurial environment in an
economic area. For example, the number of entrepre-
neurship courses taken increases the interest in starting
a new venture. The Massachusetts Institute of Teclmology
and Harvard are located near Route 128; Stanford is in
the Silicon Valley; the University of North Carolina,
North Carolina State, and Duke are the points of the
North Carolina Triangle; and University of Texas facili-
tates the activity in the Dallas-Fort Worth area. A strong
education base is almost a prerequisite for entrepreneurial
activity and company formation in an area.
Finally, it is felt that peers are very important in the
decision to form a company. An area with an entrepre-
neurial pool and meeting places where entrepreneurs and
potential entrepreneurs meet and discuss ideas, problems,
and solutions spawns more new companies than an area
without these features. For example, technology-oriented
persons get together regularly at Tulsa Tech Talk to discuss
technical problems as well as commercial feasibility and
company formation. This has resulted in several new
ventures.
Possible. Although the desire generated from the
culture, subculture, family, teachers, and peers needs to
be present before any action is taken, the second part of
the equation centers around the question: What makes
it possible to form a new company? Several factors--
government, background, marketing, role models, and
finances--contribute to creating a new venture. The gov-
ernment contributes by providing the infrastructure to
support a new venture. It is no wonder that more tom-
February 1990 * American Psychologist
panies are formed in the United States, given its roads,
communication and transportation systems, utilities, and
economic stability, than in other countries with what may
be available there. Even the tax rate for companies and
individuals in the United States is better than countries
such as Ireland or England. Countries that have a re-
pressive tax rate, particularly for individuals, can suppress
company formation because a significant monetary gain
cannot be achieved even though the social, psychological,
and financial risks are still present.
The entrepreneur also must have the background
needed to make the company formation possible.
Knowledge acquired from formal education and previous
business experience makes a potential entrepreneur feel
capable of forming and managing a new enterprise. Al-
though educational systems are important because they
provide the needed knowledge of business, people still
tend to start successful businesses in fields in which they
have worked. In fact, in many cases the idea for the new
company occurs while the person is working in a partic-
ular business position. Indeed, entrepreneurs are not
born; they develop.
Marketing also plays a critical role in forming a new
company. Not only must a market of sufficient size be
present, but also the marketing know-how of putting to-
gether the best total package of product, price, distribu-
tion, and promotion to ensure successful product
launching. A company is more easily formed in an area
where there is market demand and not just new tech-
nology aiming at the same market. Some companies that
are based on new technology often find that there is no
market for this technology and may in time cease to exist.
Perhaps one of the most powerful influences that
make company formation seem possible are role models.
To see someone else do something and succeed makes it
easier to picture oneself doing a similar, and of course,
better, activity. A frequent comment of entrepreneurs
when informally queried about their motivation for start-
ing their new venture is, "If that person could do it, so
can I!"
Finally, financial resources needed to form a new
company must be readily available. Although the majority
of the start-up money for any new company comes from
personal savings, credit, friends, and relatives, there is
still often a need for seed (start-up) capital or other types
of risk capital (Wetzel, 1986). Risk-capital investors play
an essential role in the development and growth of en-
trepreneurial activity. When seed capital is readily avail-
able, more new companies form; this is evident in the
increased number of company formations in the United
States when there is abundant risk (seed) capital (Wetzel,
1986).
This entrepreneurial decision process occurs in a
diverse group of persons with a wide variety of charac-
teristics and backgrounds. Before I consider the various
characteristics and backgrounds of the typical entrepre-
neur, understand that there is really no such thing as a
typical entrepreneurial profile. Entreprenenrs come from
a variety of educational backgrounds, family situations,
February 1990 * American Psychologist
and work experiences. An entrepreneur may have pre-
viously been a nurse, secretary, assembly line worker,
salesperson, mechanic, homemaker, manager, or engineer.
An entrepreneur can be a man or a woman, Black or
White, college educated or not college educated.
Although many of the various aspects of an entre-
preneur's background have been explored, only a few have
differentiated the entrepreneur from the general populace
or managers. The background areas explored include
childhood family environment, education, personal val-
ues, age, and work history.
Childhood Family Environment
Specific topics in the family environment of the entre-
preneur while growing up include birth order, parent's
occupation and social status, and relationship with the
parents. The impact of birth order has had conflicting
research results since Hennig and Jardim (1977) found
that female executives tend to be first born. Being first
born or an only child is postulated to result in the child's
receiving special attention and, thereby, developing more
self-confidence. In a national sample of 468 female en-
trepreneurs, Hisrieh and Brush (1984) found 50% to be
first born. However, in many studies of male and female
entrepreneurs the first-born effect has not been present
(Bowen & Hisrich, 1986). Because the relation to entre-
prenenrship has been only weakly demonstrated, further
research on the first-born syndrome is needed to deter-
mine if it really does have an effect on a person's becoming
an entrepreneur (Auster & Auster, 1981; Chusmin, 1983;
Sexton & Kent, 1981).
In terms of the occupation of the entrepreneurs'
parents, there is strong evidence that entrepreneurs tend
to have self-employed or entrepreneurial fathers. Female
entrepreneurs are as likely to report self-employed or en-
trepreneurial fathers as male entrepreneurs. The inde-
pendent nature and flexibility of self-employment ex-
emplified by the father or mother is ingrained at an early
age. As one entrepreneur stated, "My father was so con-
sumed by the venture he started and provided such a
strong example, it never occurred to me to go to work
for anyone else." This feeling of independence is&ten
further enforced by the presence of an entrepreneurial
mother. Although the results are much less consistent,
female entrepreneurs, at least, appear to have more than
their share of entrepreneurial mothers (see Table 1). Al-
though there are no comparative studies of nonentrepre-
neurs, the overall parental relationship appears to be a
very important aspect of the childhood family environ-
ment in establishing a person's desire for entrepreneurial
activity. Parents who are supportive and encourage in-
dependence, achievement, and responsibility appear to
be very important for female entrepreneurs (Hisrich &
Brush, 1986). A national study of female entrepreneurs
indicated that they tend to grow up in middle- to upper-
class environments in which families are likely to be rel-
atively child-centered and be similar to their fathers in
personality (Hisrich & Brush, 1984).
211
Table 1
Occupations of Entrepreneurs' Parents
~ of entTepreneumIn gee~ral or male enb-epreneursonly
Brockhaus (1982) cited four studies suggesting that
entrepreneurs tend to have entrepreneurial fathers.
Brockhaus and Nord (1979) found that 31 St. Louis
male entrepreneurs were no more likely then male
managers to have entrepreneurial fathers.
Cooper end Dunkalberg (1984) reported that 47.5% of
1,394 entrepreneurs had parents who owned a
business.
Jacobowitz end Vidler (1983) found that 72% of mid-
Atlantic state entrepreneurs had parents or close
relatives who were self-employed.
Shapero and Sokol (1982) reported that 50% to 58% of
company founders in the United States had self-
employed fathers (at a time when salf-employed
persons were only 12% of the work force). They
cited data on the same pattern in nine other cultures.
No~e. Data are from "The FemaleEntrepreneur: A Career DevelopmentPerspective" by Donald D. Bowen and Robert D. Hisdch, 1986, Academy of Management
Review, 11, p. 399.
I I
Education
The education of the entrepreneur has received significant
research attention (see Table 2). Education was important
in the upbringing of most entrepreneurs. Its importance
is reflected not only in the level of education obtained
but also in the fact that it continues to play a major role
as entrepreneurs try to cope with problems and to correct
deficiencies in business training. Although a formal ed-
ueation is, of course, not necessary for starting a new
business, as reflected in the success of such high school
dropouts as Andrew Carnegie, William Durant, Henry
Ford, and William Lear, it does provide a good back-
ground, particularly when it is related to the field of the
venture. In terms of type and quality of education, female
entrepreneurs appear to experience some disadvantage.
Although nearly 70% of all female entrepreneurs have a
college degree, many with graduate degrees, the most
popular college majors are English, psychology, education,
and sociology, and a few have degrees in engineering, sci-
ence, or math (Hisrich & Brush, 1986). Both male and
female entrepreneurs have cited educational needs in the
areas of finance, strategic planning, marketing (particu-
larly distribution), and management. Entrepreneurs in-
formally have indicated the importance of being able to
deal with people and communicate clearly.
Personal Values
Although there have been many studies to indicate that
personal values are important for entrepreneurs, fre-
212
Studies of female e ~
Hisrich and Brush (1983) reported a nationwide sample of
468 female entrepreneurs; 36% had entrepreneurial
fathers; 11% had entrepreneurial mothers.
Mescon and Stevens (1982) found that 53% of 108
Arizona real estate brokers had fathers who were
entrepreneurs. No mothers were entn)lxeneurs.
Sexton end Kent (1981) found that 40°/o of 48 Texas
female entrepreneurs had entrepreneurial
fathers end 13% entrepreneurial mothers (vs. 13% and
11% for 45 female executives).
Waddell (1983) found that 63.8% of 47 female
entrepreneurs reported entrepreneurial fathers, end
31.9% reported entrepreneudel mothers (vs. 42.5%
end 8.5% for female managers er¢l 36.2% end 8.5%
for secretaries).
Watkins end Watkins (1983) found that 37% of 58 British
female entrepreneurs had self-employed fathers (self-
employment in the male United Kingdom labor force is
9%). Sixteen percent of mothers were whole or part
owners of businesses (female self-employment was
4o/0).
quently these studies fail to indicate that entrepreneurs
can be differentiated on these values from managers, un-
successful entrepreneurs, or even the general population.
For example, whereas entrepreneurs appear to be effective
leaders in that they are able to communicate their vision
for the company in such a way that others cooperate, the
degree of this leadership has not been thoroughly re-
searched nor does the amount distinguish them from
successful managers. Although personal value scales for
leadership as well as support, aggression, benevolence,
conformity, creativity, veracity, and resource-seeking are
important for identifying entrepreneurs, they frequently
identify successful persons as well (Brockhaus & Horwitz,
1986). However, studies have shown that the entrepreneur
has a different set of attitudes about the nature of the
management process and business in general (Gasse,
1977). Indeed, the nature of the enterprise and the op-
portunism, intuition, and individuality of the entrepre-
neur diverge significantly from the bureaucratic organi-
zation and the planning, rationality, and predictability of
its managers. Perhaps all these traits are encompassed in
a winning image that allows the entrepreneur to create
and nurture the new venture. In one study, winning
emerged as the best term to describe companies that have
an excellent overall reputation ("To the Winners," 1986).
Five consensus characteristics of these companies were:
superior quality in products; quality service to customers;
flexibility, or the ability to adapt to changes in the mar-
ketplace; high-caliber management; and honesty and eth-
February 1990 • American Psychologist
Table 2
Amount of Education of Entrepreneurs
Sttclkm Findings Comments

Entrepreneurs in general
Brockhaus (1982) Reviewed four studies concluding that All samples were small and limited to
entrepreneurs tend to be better one geographical area or industry.
educated than the general
population, but less so than
managers.
Cooper & Dunkelberg (1984) This was a national survey of 1,805
small business owners that showed
that a larger proportion of business
starters or purchasers
(approximately 64%) have less than
a college degree compared to those
who inherit or are brought in to run
the business (57%).
Gasse (1982) Reported four studies in which Education level varied with industry
entrepreneurs were better educated (e.g., high tech).
than the general public.
Jacobowltz & Vidler (1982) Results of interviews with 430 The sample was composed of
entrepreneurs showed that they did Pennsylvania and New Jersey
not prosper in schools; 30% were entrepreneurs; 11% were female.
high school dropouts. Only 11%
graduated from a four-year college.

Male versus female entrepreneurs

Humphreys & McClung (1981) Of the female entrepreneurs, 54.8% Oklahoma sample of 86 female
were college graduates. This entrepreneurs from all areas of the
surpasses the rate for men and state.
women in general, and for male
managers and administrators.
Charboneau (1981 ) Quoted 1977 Census Bureau study Also quotes SBA study with similar
showing that the average female finding.
entrepreneur is a college graduate.
DeCarlo & Lyons (1979) Female entrepreneurs have more 122 female entrepreneurs drawn at
education than the average adult random in mid-Atlantic states.
female. Non-minority female
entrepreneurs have more education
than minority female entrepreneurs.
Hisrich & Brush (1983) This nationwide survey showed that
68% of 468 female entrepreneurs
were at least college graduates.
Mescon & Stevins (1982) Two thirds had attended college; 15% Sample of 108 female real estate
had pursued graduate degrees. brokerage owners in Arizona.
Sexton & Kent (1981) Female entrepreneurs were slightly Interviewed 93 women (48 female
less educated than female entrepreneurs) from Texas.
executives (44% and 51% college
graduates, respectively). Younger
female entrepreneurs were better
educated than female executives of
companies.
Note. Data are from "The Female Entrepreneur:. A Career Development Perspective" by Donald D. Bowen and Robert D. Hisrich, 1986, Academy of Management
Rev/ew, 11, p. 397.
I I I II

its in business practices. A successful entrepreneur is al- Age

most always characterized as a winner; it is almost a pre-
requisite for them actually to become one ("To the The relation of age in the entrepreneurial career process
Winners," 1986). has also been carefully researched (Ronstadt, 1982, 1983).

February 1990 • American Psychologist 213

In evaluating these results, however, it is important to
differentiate between entrepreneurial age (the age of the
entrepreneur reflected in the experience in the field of
the feature or being self-employed) and chronological age.
As is discussed in the next section, entrepreneurial ex-
perience is one of the best predictors of success particu-
larly when the new venture is in the same field as previous
business experience.
In terms of chronological age, entrepreneurs initiate
their entrepreneurial careers at a wide variety of ages.
Although an average age has little meaning, generally
when appropriate training and preparation are present,
earlier starts in an entrepreneurial career are better than
later ones. Also there are milestone years that occur in
approximate five-year intervals between 25 and 50 when
a person is more inclined to start an entrepreneurial career
(Ronstadt, 1984). As one entrepreneur succinctly stated
in one survey, "I felt it was now or never in terms of
starting a new venture when I approached 30." Generally
male entrepreneurs tend to start their first significant
venture in their early 30s, whereas female entrepreneurs
tend to do this in their middle 30s.
Work History
Work history is not only a negative displacement (through
lack of employment) in the decision to launch a new
entrepreneurial venture hut is also important in the
growth and eventual success of the new venture launched.
Although dissatisfaction with various aspects of one's
job--challenge, promotional opportunities, frustration,
and boredom--often motivates the launching of a new
venture, previous technical and industry experience is
important once the decision to launch has been made.
Particularly important experience areas are: obtaining fi-
nancing, such as bank financing and venture capital; de-
veloping the best product or service for the market; es-
tablishing manufacturing facilities; developing channels
of distribution; and preparing the marketing plan for
market introduction.
As the venture becomes established and starts grow-
ing, managerial experience and skills become increasingly
important. Although most ventures start with managing
one's own activities and those of a few part- or full-time
employees, as the number of employees increases along
with the size, complexity, and geographical diversity of
the business, managerial skills come more and more into
play. This is particularly true when the new venture re-
quires the presence of other managers.
In addition to managerial experience, entrepreneu-
rial experience is important. It is generally easier to start
a second, third, or fourth venture than it is to start the
first one. The need for entrepreneurial experience in-
creases as the complexity of the venture increases. Most
entrepreneurs indicate that their most significant venture
is not their fLrstone (Hisrich & Brush, 1986). Throughout
their entrepreneurial careers entrepreneurs are exposed
to more corridors of new venture opportunities than
workers in other career paths.
214
Motivation
What motivates an entrepreneur to take all the risks in
launching a new venture and to pursue an entrepreneurial
career despite the overwhelming odds against success
when the SBA indicates that 75% of all businesses fail
within the first five years? Although many people are in-
terested in starting a new venture and even have the back-
ground and financial resources to do so, few decide to
actually start their own business. Persons who are com-
fortable and secure in a job situation, have a family to
support, and like their present life-style and reasonably
predictable leisure time often do not want to take the
risks associated with venturing out alone.
Although the motivations for venturing out alone
vary greatly, the reason cited most frequently in a national
survey of 468 female entrepreneurs for becoming an en-
trepreneur is independence, that is, they do not want to
work for anyone else (Hisrich & Brush, 1984). This desire
to be one's own boss is what drives both male and female
entrepreneurs to accept all the social, psychological, and
financial risks and work the numerous hours needed to
create and nurture a successful new venture. Nothing less
than this motivation would be strong enough to success-
fuUy launch a new venture. Other motivating factors differ
between male and female entrepreneurs (Hisrich & Peters,
1989). Money is the second reason for starting a new
venture for men, whereas job satisfaction, achievement,
opportunity, and money are the reasons in rank order for
women.
Role Models and Support Systems
Several entrepreneurs have informally mentioned that one
of the most important facts to influence them in their
career choice are role models. Role models can be parents,
brothers or sisters, other relatives, successful entrepreneurs
in the surrounding community, or nationally touted en-
trepreneurs. Frequently successful entrepreneurs provide
a catalyst for potential entrepreneurs who scrutinize them
to launch a venture. As one entrepreneur indicated to
me in a personal interview, "After evaluating Ted and his
success as an entrepreneur, I knew I was much smarter
and could do a better job. So, I started my own business."
Role models also can serve in a supportive capacity
as mentors during and after the launch of the new ven-
ture. Indeed, an entrepreneur needs a strong support and
advisory system in every phase of the new venture. This
support system is perhaps most crucial during the start-
up phase in providing information, advice, and guidance
on such matters as organizational structure, needed fi-
nancial resources, marketing, and market segments. Be-
cause entrepreneurship is a social role embedded in a
social context, it is important for an entrepreneur early
on to establish connections to these support resources.
As initial contacts and connections expand, they
form a network with similar properties prevalent in a
social network-density (extensiveness of ties between two
persons) and centrality (the total number of persons in
the network). The strength of the tie between the entre-
February 1990 ° American Psychologist
preneur and any individual in the network is, of course,
dependent on the frequency, level, and reciprocity of the
relationship. The more frequent, the more in-depth, and
the more mutually beneficial a relationship is, the stronger
and more durable is the network between the entrepre-
neur and the individual (Aldrich, Rosen, & Woodward,
1987; Carsrud, Gaglio, & Olm, 1986).
Moral Support Network
It is important for every entrepreneur to establish a moral
support system of family and friends---a cheering squad.
This cheering squad is particularly important during the
many difficult times and the loneliness that occur
throughout the entrepreneurial process. The majority of
entrepreneurs in a sample of 468 indicated that their
spouse was their biggest supporter (Hisrich & Brush,
1984). This support provides more understanding during
the excessive amount of time that needs to be devoted to
the new venture.
Friends also play key roles in a moral support net-
work. Not only can friends provide advice that is often
more honest than that received from other sources, but
they also provide encouragement, understanding, and
even assistance. Entrepreneurs can confide in friends
without fear of criticism.
Finally, relatives (children, parents, grandparents,
aunts, and uncles) can also be a strong sources of moral
support, particularly if any are also entrepreneurs. As
one entrepreneur stated, "The total family support I re-
ceived was the key of my success. Having an understand-
ing cheering squad giving me encouragement allowed me
to persist through the many difficulties and problems"
(Hisrich & Brush, 1986).
Professional Support Network
In addition to moral encouragement, the entrepreneur
needs advice, information, and resources throughout the
establishment and growth of the new venture. These can
be obtained through networking.
Although a large number of business formations oc-
cur without any major planning, conceptually a strong
situational determinant in developing a new venture is
the density of the entrepreneur's business contacts or
linkages. The process of sharing contacts and obtaining
resources has been found to have a significant relationship
with business foundings and profitability (Aldrich et al.,
1987). Although developing contacts was significant for
business foundings,maintaining contactswas a significant
predictor for early profit.
What should be the composition of these contacts
and of the networks itself?.One network group should be
business associates who are themselves self-employed,
because they have experienced the process of starting and
developing a business. Besides these, there are other cat-
egories of persons who would be valuable: clients or buyers
of the entrepreneur's product or service; suppliers; experts
in various business matters (lawyers, financiers, bankers,
marketing experts, and accountants); and colleagues or
associates from trade associations of professional groups.
February 1990 * American Psychologist
The client group is a particularly important group
to cultivate. This group not only represents the sources
of revenue to the venture but can also be the best source
of advertising--word of mouth. There is nothing better
than word-of-mouth advertising from satisfied customers
to help establish a winning business reputation and pro-
mote goodwill. Customers, excited about the entrepre-
neur's concern about the product or service to fulfill their
need, happily provide valuable feedback on the product
or service that is offered as well as on new products or
services that are being developed.
Suppliers are another important ingredient in the
professional support network because they help establish
credibility with creditors and customers as well. A new
venture needs to establish a solid track record with sup-
pliers in order to build a good relationship and ensure
adequate availability of raw materials and other resources.
Suppliers can also provide good information on the nature
and trends in the industry as well as the nature and di-
rection of competition.
Besides mentors and business associates, trade as-
sociations can provide an excellent mechanism for a
professional support network. Trade association members
can be developed into a regional or national network and
should be carefully cultivated to keep the new venture
competitive. Trade associations are familiar with any new
developments and can provide overall industry data.
Finally, personal affiliations of the entrepreneur can
also form a valuable professional support network. Af-
filiations developed with people through hobbies, sporting
events, clubs, civic involvements, and school alumni
groups are excellentpotentialsources of referrals,advice,
and information.
Regardless of the actual nature, each entrepreneur
needs to establishboth a morale and a professionalsup-
port network. These contactsprovide confidence,support,
advice, and information. As one entrepreneur indicated,
"In your own business,you are all alone. There is a def-
initeneed to establishsupport groups to share problems
with and gain overallsupport for the new venture" (His-
rich & Brush, 1984).
Male Versus F e m a l e Entrepreneurs
Even though there has been significantgrowth in female
self-employment, much of what isknown about the char-
actcristics of entrepreneurs, their motivations, back-
grounds, families,educational background, occupational
experience, and problems isbased on studiesof male en-
trepreneurs(Carsrud & Olin, 1986).This isnot surprising
because, according to the Small Business Administration,
men make up the majority of those who startand own
their own businesses.
Although, overall,men and w o m e n entrepreneurs
are very similar,in some respects women entrepreneurs
possess differentmotivations, business skilllevels,and
occupational backgrounds than their male counterparts
(Hisrich & Brush, 1986). Factors in the start-upprocess
of a business for male entrepreneurs are also dissimilar
to those for women, especiallyin such areas as support
215
systems, sources of funds, and problems encountered.
Although there are more similarities than differences,
male and female entrepreneurs do differ in several ways.
For instance, in terms of motivation, men are often mo-
tivated by the drive to control their own destiny, to make
things happen. This drive often stems from disagreements
with their bosses or a feeling that they can run things
better. In contrast, women tend to be more motivated by
independence and achievement that arise from frustration
with a job in which they have not been allowed to perform
at the level of which they are capable.
Departure points and reasons for starting the busi-
ness are similar for both men and women. Both generally
have a strong interest and experience in the area of their
venture. However, for men the transition from a past oc-
cupation to the new venture is often facilitated when the
new venture is an outgrowth of a present job, sideline, or
hobby. Women, on the other hand, often leave a previous
occupation with only a high level of job frustration and
enthusiasm for the new venture rather than extensive
managerial experience, which makes the transition more
difficult.
Start-up financing is another area where male and
female entrepreneurs differ. Whereas men often list
investors, bank loans, or personal loans, in addition to
personal funds, as sources of start-up capital, women
usually rely solely on personal assets or savings--reflecting
the fact that the service companies typically formed gen-
erally need little, if any, start-up capital.
Occupationally, there are also differences between
men and women entrepreneurs. Although both groups
tend to have at least some experience in the field of their
ventures, men more often are recognized specialists in
their field or have attained competence in a variety of
business skills. In addition, the nature of their experience
is often in manufacturing, finance, or technical areas.
Most women, in contrast, usually have administrative ex-
perience, which is limited to the middle management
level, usually in more service-related areas such as edu-
cation, secretarial, or retail sales.
In terms of personality, there are strong similarities
between male and female entrepreneurs. Both tend to be
energetic, goal oriented, and independent. However, men
are often more confident and less flexible and tolerant
than women, which can result in different management
styles for the new venture.
The backgrounds of male and female entrepreneurs
tend to be similar except that most women are a little
older when they embark on their venture (35-45 vs. 25-
35) and their educational backgrounds are different. Men
often have studied in technical or business-related areas,
whereas most women have a liberal arts education.
Support groups also provide a point of contrast be-
tween the two. Men usually list outside advisors (e.g.,
lawyers and accountants) as most important supporters
with the spouse second. Women list their spouses first,
close friends second, and business associates third. More-
over, women usually rely extensively on a variety of
sources for support and information such as trade asso-
216
ciations and women's groups, whereas men are not as
likely to have as many outside supporters.
Finally, businesses started by men and women en-
trepreneurs differ in terms of the nature of the venture.
Women are more likely to start a business in a service
related area--retail, public relations, or educational ser-
v i c e s - w h e r e a s men are more likely to enter manufac-
turing, construction, or high-tech fields. The result is often
smaller women-owned businesses with lower net earnings.
However, opportunities for women are greater than ever;
women are starting businesses at a faster rate than m e n m
almost three times the rate--according to the SBA.
Corporate Versus Intrapreneurial Culture
The various business and sociological conditions have in-
deed given rise to a new era in American business, the
era of the entrepreneur. There are probably no better
known entrepreneurs than Sam Walton and Steve Jobs.
Walton, the entrepreneur who founded the Wal-Mart
empire, has been frequently identified as the richest man
in America. After successful retail careers with J. C. Pen-
ney and Ben Franklin stores, Sam Walton opened his first
Wal-Mart store in Rogers, Arkansas in 1952, a first step
in his plan to operate discount stores in smaller cities and
towns that are largely ignored by discount chains. The
plan developed into one of the most profitable retail em-
pires in the country today. Steve Jobs became a successful
entrepreneur through his obsession with electronics. He
joined with Steve Wozniak to design and build the first
easy-to-use personal computer. The first 200 of these
primitive computers were produced in 1976 in Steve
Jobs's parents' garage by using parts purchased on credit.
This primitive computer was the basis of the highly suc-
cessful Apple II, first sold in 1977. Jobs's obsession with
his own vision, through which he had started Apple
Computer, also created problems and almost the demise
of the company. He refused to allow the Apple II to be
marketed as a business computer and insulated managers
in different divisions of the company from each other.
After a bitter struggle in 1985, Steve Jobs was asked to
resign from the company he founded. However, his ob-
session continues to be at work as Steve Jobs has an-
nounced a new computer--the first product of his new
company NEXT.
The current media exposure and success of these
and other entrepreneurs are threatening to established
corporations. In some cases, small, aggressive, entrepre-
neurially driven firms have developed new products and
become dominant in their markets. Recognizing the
problem, some companies are attempting to create the
same entrepreneurial spirit, the challenges and rewards
ofentrepreneurship, within their own organizations. But
what are the differences between corporate and entrepre-
neurial cultures? Between managers, entrepreneurs, and
intrapreneurs?
The typical corporate culture has a climate and re-
ward system that favors conservative decision making.
Emphasis is on gathering a large amount of data on which
to base a rational decision, and risky decisions often are
February 1990 • American Psychologist
postponed until enough hard facts can be gathered or a
consultant is hired to illuminate the unknown. This was
just one of the many problems encountered by Art Fry
in his attempt to launch Post-It Notes within the tradi-
tional organizational structure of 3M. The results of the
surveys conducted by the marketing department of po-
tential customers about the concept of a paper with a
weak adhesive on it were terrible. Of course, because there
had never before been a piece of paper capable of attach-
ing and detaching easily, people really could not imagine
how to use it. To overcome this difficulty, Fry distributed
samples in several different formats (including the little
yellow note pads that are presently marketed) to em-
ployees as well as executives throughout 3M. By moni-
toring the usage over time and comparing the usage rates
with Magic Tape, 3M's biggest orifice supply seller, Fry
discovered that people used the note pads more, and he
convinced top management that there was indeed a mar-
ket. In many companies there are frequently so many
sign offs and approvals required for a large scale project
such as Post-It Notes that no individual feels personally
responsible (Fast, 1979).
Although traditional corporate cultures do vary
greatly from a more bureaucratic inflexible system to a
more entrepreneurial flexible one, in the extreme cases
the usually guiding principles are: Follow the instructions
given; do not make any mistakes; do not fail; do not take
initiative but wait for instructions; stay within your turf;
and protect your backside. This restrictive environment
is not conducive to creativity, flexibility, independence,
and risk takingNthe characteristics of entrepreneurs and
intrapreneurs. The guiding principles of a good entre-
preneurial-intrapreneurial climate are quite different:
Develop visions, goals, and action plans; take action and
be rewarded; suggest, try, and experiment; create and de-
velop regardless of the area; and take responsibility and
ownership. This environment, of course, supports indi-
viduals in their effort to create something new.
In addition to the corporate climate, there are dif-
ferences in the shared values and norms of the two cul-
tures. The extreme traditional corporation is hierarchical
in nature with established procedures, reporting systems,
lines of authority and responsibility, instructions, man-
dates, standardized hours, and control mechanisms. These
cultural aspects support the corporate climate in prohib-
iting new venture creation. The culture of a strong intra-
preneurial firm is in stark contrast. Instead of an hier-
archical structure with all the accompanying problems,
an intrapreneurial climate has a flat organizational struc-
ture with networking, teamwork, sponsors, and mentors
abounding. Close working relationships are established
that allow vision and objectives to be accomplished
through an atmosphere of trust and counsel. Tasks are
viewed as fun activities (not chores) with participants
gladly putting in the amount of hours necessary to get
the job done. Instead of building barriers to protect turfs,
advice and cross-fertilization freely occur within and
across functional areas and even divisions.
As may be expected, these two different cultures re-
February 1990 • American Psychologist
fieet different types of individ~]atq and management styles.
A comparison of traditional managers, entrepreneurs, and
intrapreneurs indicates these differences (see Table 3).
Although traditional managers are motivated primarily
by promotion and typical corporate rewards, entrepre-
neurs and intrapreneurs thrive on independence and the
ability to create. Intrapreneurs expect their performance
to be suitably rewarded, as do entrepreneurs, except the
source and form of the reward may differ.
The difference between the three groups is also re-
flected in their time orientation. Managers emphasize the
short runmreturn on investment, sales, price of stock,
and profits; entrepreneurs are concerned with the long
runmthat the enterprise last, that it exist instead of go
bankrupt, and that sales and profit enable it to survive
and grow; and intrapreneurs, a product of both the large
and the small, are somewhere in between. Similarly the
primary mode of activity of intrapreneurs falls between
the delegation employed by managers and the direct in-
volvement of entrepreneurs. Whereas intrapreneurs and
entrepreneurs are both moderate risk takers, managers
are much more cautious about taking any risks at all.
"Protecting one's backside" is a way of life of many tra-
ditional managers. These managers attempt to avoid mis-
takes and failures at almost any cost. On the other hand,
entrepreneurs usually fail at least once, and intrapreneurs
learn to conceal risky projects until the last possible mo-
ment.
Although the traditional manager reports to those
in the corporation at a higher level in the organization,
entrepreneurs serve themselves and of course their cus-
tomers, and intrapreneurs add sponsors to these two cat-
egories. Instead of building strong relationships with those
around them as is the case with entrepreneurs and intra-
preneurs, managers tend to follow the relationships in-
dicated in the formal organizational chart.
Climate for Intrapreneurship
How can the climate for intrapreneurship be established
in an organization? In establishing an intrapreneurial en-
vironment, certain factors and leadership characteristics
need to be operant (Hisrich & Peters, 1989; Kanter, 1983;
Pinchot, 1985). The first characteristic is that the orga-
nization operates on the frontiers of technology and new
ideas are encouraged and supported, not discouraged, as
frequently occurs in firms where rapid return on invest-
ment and high sales volume requirements exist. It is par-
ticularly important that research and development operate
on the cutting edge of the technology of the industry in
order for new ideas to be continually generated.
Second, experimentation must be encouraged. New
products or services do not instantaneously appear but
rather are often a result of a series of trials and errors. It
took time and some product failures before the first mar-
kemble computer appeared. A company that wants to
establish an intrapreneurial spirit has to first establish an
environment that allows mistakes and failures. Even
though this is in direct opposition to the established cor-
porate career and promotion system, without the oppor-
217
 I I I . I I

Table 3
Comparison of Entrepreneurs, Intrapreneurs, and Traditional Managers
Trait Traditional managers En~rs Intr~oreneurs

Primary motives Promotion and other traditional Independence, opportunity Independence and ability to
corporate rewards, such as to create, and money. advance in the corporate
office, staff, and power. setting receiving the
corporate rewards.
Time orientation Short run--meeting quotas and Survival and achieving 5 to Between entrepraneufial and
budgets, weekly, monthly, 10-year growth of traditional managers
quarterly, and the annual business. depending on urgency to
planning horizons. meet self-imposed and
corporate timetables.
Activity Delegates and supervises more Direct involvement. Direct involvement more than
than direct involvement. delegation.
Risk Careful. Moderate risk taker. Moderate risk taker.
Status Concerned about status No concern about status Not concerned about
symbols. symbols. traditional corporate status
symbols---desires
independence.
Failure and mistakes Tries to avoid mistakes and Deals with mistakes and Attempts to hide risky
surprises. failures. projects from view until
ready.
Decisions Usually agrees with those in Follows dream wi{h Able to get others to agree to
upper management decisions. help achieve dream.
positions,
Who serves Others. Self and customers. Self, customers, and
sponsors.
Family history Family members worked for Entrepreneurial small- Entrepreneurial small-
large organizations. business, professional, business, professional, or
or farm background. farm background.
Relationship with others Hierarchy as basic relationship. Transactions and deal Transactions within hierarchy.
making as basic
relationship.
Note. An extensively modified version of this table appeared in Intrapreneuring by G. Pinchot, 1985, New York: Harper & Row. Copyright 1985 by Harper & Row.
Usedby permission.
I II I Ii11/ I I I III I I I I I I

tunity to fail, few if any corporate intrapreneurial ventures
will be undertaken. Almost every entrepreneurial career
has at least one failure.
Third, an organization should ensure there are no
initial opportunity parameters to inhibit free creative
problem solving. Frequently, various turfs in an organi-
zation are protected, which frustrates attempts by poten-
tial intrapreneurs to establish new ventures. In one con-
sulting experience with a Fortune 500 company, the at-
tempt at establishing an intrapreneurial environment ran
into problems and eventually failed when the potential
intraprenenrs were informed that a proposed product was
not possible because it was in the domain of another di-
vision.
Fourth, the resources of the firm must be available
and easily accessible. As one intrapreneur stated, "If my
company really wants me to take the time, effort, and
career risks to establish a new venture then it needs to
have money and people resources on the line." Very often
funds are not allocated to the task of creating something
new but rather are committed to solving problems that
have more immediate impact on the bottom line. When
these funds are available, all too often the established
reporting requirements make them so difficult to obtain
that frustration and dissatisfaction occur.
Fifth, a multidiscipline, team-work approach needs
to be encouraged. This open approach with participation
by individuals regardless of area is the antithesis of cor-
porate organizational structure and theory. Take for ex-
ample the formation of Wil Tel, an intrapreneurial di-
vision of The Williams Company, a typically structured
oil and gas company with the traditional fines of authority
and responsibility. The company was hard hit by the
recessions in the energy and agricultural industries, which
resulted in a 69% decrease in profits in a short period of
time. Roy Wilkins, an executive in one division of the
company, championed the expenditure of $200 million
to run fiber optic cable through a network of unused
pipeline, which allowed the company to enter the tele-
communication industry just as AT&T was breaking up.
The success of this intrapreneurial venture is attributed
in part to the availability of Joe Williams, president of
The Williams Company, to any member of the Wil Tel
team and to his commitment of resources to an extremely

218 February 1990 * American Psychologist

risky venture in a field totally foreign to the company. In
successful eases of intrapreneurship, one key ingredient
is skunkworks that involve key people before the venture
is formally recogniTed and announced. These skunkworks
are frequently the unnoticed version of the intrapreneurial
venture. Take, for example, the case of Michael Phillips.
He was able to launch a string of major banking inno-
vations including consumer certifieates of deposit, sim-
plified checking accounts, and Master Charge in the Bank
of California before management was fully aware of his
activities. When they did become aware, Michael Phillips
was able to show success rather than just ideas, which
made it difficult for any valid objections. A company un-
derstanding this tendency can actually facilitate internal
venturing by legitimizing and formalizing the skunk-works
that are already occurring. Developing the needed team
work for intrapreneurship is further complicated by the
fact that team members' promotion and overall career
within the corporation is related to performance in their
current position, not their contribution to the new intra-
preneurial venture. Organizations interested in establish-
ing a strong intrapreneurial environment need to rec-
ognize and credit team members' contfibotion to the in-
trapreneurial effort.
Besides encouraging team work, the corporate en-
vironment must establish a long time horizon for evalu-
ating the success of the overall program as well as that of
each individual venture. If a company is not willing to
invest money with no expectation of return for five to ten
years, then it should not attempt to create an internal
venturing program (Siegel, Siegel, & MacMillan, 1988).
This patient money in the corporate setting is no different
than the investment-return time horizon used by venture
capitalists who invest in a start-up entrepreneurial effort.
Sixth, the spirit ofintrapreneurship cannot be forced
on persons; it must be on a volunteer basis. There is a
difference between corporate thinking and intrapreneurial
thinking~ and individuals perform much better on one
side or the other of the continuum. The majority of man-
agers in a corporation are not capable of being successful
intrapreneurs. This self-selection of participants must be
accompanied by a policy to allow each participant to carry
a project through to completion. This is in opposition to
most corporate procedures for new product development
and introduction, in which different departments and
persons are involved in each stage of the development
process. An intrapreneur, willing to spend the excess hours
and effort to create a new venture, falls in love with the
venture and will do almost anything to help ensure its
success.
Seventh, the intrapreneur needs to be appropriately
rewarded for all the energy and effort expended in the
creation of the new venture. Broad performance objec-
tives should be established, and the intrapreneur should
receive rewards on their attainment. Of course, an equity
or ownership position in the new venture is the best mo-
tivational reward for the amount of activity and effort
needed for success (Block & Ornati, 1987).
Eighth, a corporate environment favorable for in-
February 1990 • American Psychologist
trapreneurship has sponsors and champions throughout
who not only support the creative activity and any re-
sulting failures but who have the planning flexibility to
establish new objectives and directions as needed. As one
manager indicated in a personal interview, "For a new
business venture to succeed the intrapreneur needs to be
able to alter plans when needed and not be concerned
about how close they come to achieving the previously
stated objectives." Corporate structures frequently mea-
sure managers on their ability to come in close ~to plan
regardless of the quality of performance reflected in this
accomplishment (MacMillan, Block, & Narashima,
1986).
Finally, and perhaps most important, the intrapre-
neurial activity must be wholeheartedly supported and
embraced by top management (George & MacMillan,
1985). Top management must support the effort by phys-
ical presence as well as making sure the personnel and
financial resources are easily available. Without top man-
agement support a successful intrapreneurial environ-
ment cannot be created.
Characteristics of Intrapreneurs
Within this overall corporate environment, there are cer-
tain characteristics that appear to be needed to at least
some extent for a person to be a successful intrapreneur.
These include understanding the environment, being vi-
sionary and flexible, creating management options, en-
couraging team work, encouraging open discussion,
building a coalition of supporters, and persisting.
In order to establish a successful intrapreneurial
venture, creativity and a broad understanding of the in-
ternal and external environments must be present. Cre-
ativity, perhaps at its lowest level in large organizations,
generally tends to decrease with age and education.
The person who is going to establish a successful
new intraprenenrial venture must also be a visionary
leaderma person who dreams great dreams. Although
there are many definitions of leadership, the one that best
describes the needed intrapreneurial leadership is "a
leader is like a gardener. When you want a tomato, you
take a seed, put it in fertile soil, and carefully water under
tender care. You don't manufacture tomatoes you grow
them." Martin Luther King, Jr., said, "I have a dream,"
and thousands followed in spite of overwhelming obsta-
des. In order to establish a successful new venture, the
intrapreneurial leader must have a dream and work
against all the obstacles and inertia to achieve it by selling
the dream to others. Chuck House did this on the moon
monitor project (an intrapreneurial venture at Hewlett
Packard) by allowing others to help develop the final vision
through exploring markets particularly meaningful to
them (Pinchot, 1985).
The third characteristic is that the intrapreneur must
be flexible and an experienced venture champion (De-
Sarbo, MacMillan, & Day, 1987). An intrapreneur does
not mind the store but is playful and irreverent. By chal-
lenging the beliefs and assumptions of the corporation,
an intrapreneur has the opportunity of creating something
219
 new. Of course, this is not the standard of operation taught
in most graduate and undergraduate business schools.
The intrapreneur must encourage team work and
use a multidisciplined approach. Again, this violates the
organizational practices taught in most business schools
that are embodied in the established corporate structure.
In every new company formation, a broad range of busi-
ness skills, such as engineerin~ production, marketing,
and finance, are needed. Obtaining these skills in forming
a new venture usually requires crossing the established
departmental lines, structure, and reporting system. This
crossing can of course cause some significant disruption,
particularly when unconfident turf-protecting managers
are involved. To minimize the negative impact of any
disruption caused, the intrapreneur must also be a good
diplomat.
In developing the team needed for creating some-
thing new, open discussion must always be encouraged.
Many corporate managers have forgotten the frank, open
discussions and disagreements that were a part of their
educational process and instead spend time building pro-
tective barriers in their "corporate empire." A successful
new intrapreneurial venture can only be formed when
the team involved feels the freedom to disagree and break
down an idea until the best solution is reached. The degree
of openness obtained in the team is dependent on the
degree of openness of the intrapreneur. One of the keys
to success in building a strong open team is to avoid hostile
conflicts. This comes naturally to many intrapreneurs
like HullO Aldikacti. In developing the intrapreneurial
venture--the Fiero--in the Pontiac division of General
Motors, Hulki kept the focus of all the team discussions
on the product and its effect on the customers, not on
personalities of the team. Through his own behavior and
comments, the focus was kept on what was best for the
new car that the team was struggling to build instead of
individuals and their respective turfs (Pinchot, 1985).
Openness assists in developing a strong coalition of
supporters and encouragers. The intrapreneur must en-
courage and affirm each team member, particularly dur-
ing problem times. This encouragement is one of the re-
placements of the usual motivators of career path and
job security, which are not operational in establishing a
new intrapreneurial venture. A good intrapreneur makes
everyone a hero.
Finally, but not of least importance, is persistence.
Throughout the establishment of any new intrapreneurial
venture, frustration and obstacles will occur. Only by
persistence on the part of the intrapreneur will these be
overcome and a new venture be created and successful
commercialization result.
Establishing Intrapreneurship or
Entrepreneurial Spirit in the Organization
An organization needs to implement a procedure to es-
tablish an intrapreneurial environment. Although this can
be done by employees of the organization, it is frequently
easier to use an outsider to facilitate the process. This is
particularly advantageous when the environment of the
220
organization is very traditional in nature and has a history
of very little change.
The first step in this process is to secure commitment
by top management to establishing intrapreneurship in
the organization. Without this commitment the organi-
zation will never go through all the corporate cultural
changes necessary for implementation. Once the top
management of the organization has committed to the
concept, it should be introduced throughout the organi-
zation through seminars in which the aspects of intra-
preneurship are presented and strategies are developed
to transform the organizational culture into an intrapre-
neurial one. During this process general guidelines need
to be established for developing intrapreneurial ventures.
After the initial framework is established and the concept
embraced, intrapreneurial leaders need to be identified,
selected, and trained. The training should focus on ob-
taining resources within the organization, identifying vi-
able opportunities and their markets, and developing the
appropriate business plan.
Ideas and general areas that top management are
willing to support should be delineated along with the
amount of risk money that is available for initial seed
funding to further develop the concept. Also, overall pro-
gram expectations and the target results of each intra-
preneurial venture should be established. These should
be as specific as possible in terms of the time frame, vol-
ume, profitability, and impact on the organization. Along
with the intrapreneurial training, a mentor-sponsor sys-
tem should also be established. Without sponsors or
champions aboundin~ there is not much possibility that
the culture of the organization can be transformed into
an intrapreneurial one.
After the initial commitment and training, a group
of managers interested in the program should train and
share experiences with other members. My experience
has indicated that these training sessions should be con-
ducted about one day per month over an eight-month
period. Informational items about intrapreneurship in
general and the specifics of the company's activities should
be disseminated through the company's newsletter or
some other vehicle.
It is essential that concrete activities occur within
the eight-month period that develop ideas into marketable
products or services, the basis of the new business venture
units. The intrapreneurial team will need to develop a
business plan, obtain customer reaction and some initial
intentions to buy, and learn how to coexist within the
organizational structure during this process.
A strong organizational support structure for intra-
preneurship should slowly emerge. This is particularly
important because intrapreneurship is a secondary activ-
ity in the organization, not the primary one. Because in-
trapreneurial ventures do not immediately impact the
bottom line, they can be easily overlooked and not receive
the attention and funding needed. Providing the invest-
ment funds necessary for an intraprenenrial venture to
develop and compete in external markets is essential for
the success of the program. To be successful a venture
February 1990 • American Psychologist
needs flexible, innovative behavior, and the intrapreneurs
must have complete authority over expenditures. When
the intrapreneur has to justify expenses on a daily basis,
it is really not a new venture but merely an operational
extension of the funding source (Miller & Friesen, 1982;
Peterson & Berger, 1971).
Rewards need to be tied to the performance of the
intrapreneurial unit. This encourages the team m e m b e r s
to work harder and compete more effectively while they
directly benefit from their efforts. Because the intrapre-
neurial venture is a part of the larger organization, most
of the compensation will probably need to be in the form
of salary. However, incentives should be established to
reward such things as performance and cooperation with
other areas of the c o m p a n y as well as to reward other
areas of the c o m p a n y that cooperate and support the in-
trapreneurial venture.
Finally, an evaluation system needs to be established
that allows successful intrapreneurial units to expand and
unsuccessful ones to be eliminated. An intrapreneurial
unit should expand as the market demand warrants.
Constraints can be established to ensure that the expan-
sion is not in juxtaposition to the mission statement of
the overall organization. Similarly, intrapreneurial ven-
ture units that do not perform should not be allowed to
exist just because of vested interests. In order to have a
successful intrapreneurial environment, i t is just as im-
portant to allow some ventures to fail as to allow efficient
ones to expand. Some ventures of course may be contin-
ued even if unprofitable if the venture is positively im-
pacting some other part o f the larger organization, block-
ing some competitive entrance, or laying the groundwork
for entering some new strategic business area.
Through these efforts and by developing intrapre-
neurial leaders and effectively managing creativity and
leadership in the organization, a corporate culture can
slowly be changed to an intrapreneurial one. In this new
intrapreneurial culture, self-actualization can occur when
people do indeed create something new of value and are
not worried about protecting their backside and minding
the store. The guiding principle of management then be-
comes that it is easier to beg forgiveness than to ask per-
mission.
The Future
But what about the future? Will there be more managerial
and less entrepreneurial-intrapreneurial emphasis? Part
of the answer to this question lies in the viability, accep-
tance, and interest in the field by persons in other disci-
plines, such as industrial/organizational psychologists.
There are m a n y roles industrial/organizational psychol-
ogists can perform in relation to entrepreneurs and in-
trapreneurs. For example, they can help develop university
curricula for entrepreneurs and intrapreneurs, contribute
to the development of the theory of entrepreneurship-
intrapreneurship that needs to emerge, or help identify
potential sources for intrapreneurs in an organization.
By evaluating and researching the constructs and theories
in their field as they apply to entrepreneurship and in-
February 1990 * American Psychologist
trapreneurship, industrial/organizational psychologists
can significantly contribute to the understanding o f the
overall process as well as the development of an integrated
theory. Through this effort they not only will contribute
to the understanding of the field but will help organiza-
tions successfully apply the knowledge gained.
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