CONTEMPORARY AREAS IN ENTREPRENEURSHIP

Introduction
This chapter covers emerging topical issues about entrepreneurship. The subject of area
of entrepreneurship has continued to expand and among key thematic areas are
corporate venturing, strategic entrepreneurship, social entrepreneurship, global
entrepreneurship, e-entrepreneurship and entrepreneurial marketing, among others.
This topic takes a seminar approach to help in exploring various sub themes related in
these contemporary areas of entrepreneurship. The seminar approach discusses various
research papers in these topical areas.

Figure 20: Contemporary areas of entrepreneurship

Corporate Entrepreneurship
 

Corporate entrepreneurship can be described as the activity in a corporation that aims

at identifying new opportunities beyond the core business or generating new business
for the company. It has to do with encouraging and fostering the entrepreneurial spirit
to take advantage of the knowledge generated in the firm to develop the
entrepreneurial function in large firms. Also referred to as “venture management” or
“intrapreneurship” it envisages “innovation”, “sustained regeneration”, “organizational
rejuvenation”, “strategic renewal”, “domain redefinition” (Covin & Miles, 1999).
Corporate entrepreneurship enjoys close relationship between with business strategy
(strategic entrepreneurship) as the decision to encourage and invest in new product
development and new ventures in a company is an eminently and highly strategic issue
that most companies have acceded to. Guth and Ginsberg (1990) summarized
corporate entrepreneurship into innovation venturing and strategic renewal which was
impacted by environment, role of strategic leadership, organizational behavior form and
results orientation of the organization.

Figure 21: Conceptual view of corporate entrepreneurship

 
In a nutshell corporate entrepreneurship focuses on entrepreneurial actions within
established enterprises especially the large organizations. This phenomenon has been
identified a critical characteristic that sustains the strategic renewal of an existing
business. It refers to the development of new ideas and opportunities within large or
established businesses that would directly lead to a reloading of a new innovation curve
for the improvement of organizational profitability and an enhancement of competitive
position. Corporate entrepreneurship is activated through innovation-based initiatives
that generates renewed venturing within existing firms and when carried out as planned
management paradigm it then constitutes strategic entrepreneurship to become the
long term characteristic that defines such an entrepreneurial firm. The tragedy of
established firms is to celebrate their success far too long and thus lose the nexus of
market turbulence which inevitably remain surprising and a phenomenal cyclic creative
destruction. When a firm is keen on its replication of successes by frequent self-renewal
through new and innovative products then it keeps its pace riding on the high waves
that would drown the iconic stars of yesterday. The concepts of corporate
entrepreneurship goes back to the 1970s when Peterson and Berger (1971) introduced
it as a strategy and leadership style adopted by large organizations to cope with the
increasing level of market turbulence. However, it became a separate research
discipline 1980s through the works of Burgelman (1983) and Miller (1983), and in
particular Pinchot (1985) book on intrapreneurship. Similar terms used with corporate
entrepreneurship include intrapreneurship, strategic renewal, entrepreneurial
management, strategic entrepreneurship and corporate venturing, among others.

Covin and Miles (1999) categorized four forms of corporate venturing to include:

1.    Sustained regeneration: This refers to organizational level entrepreneurial activity

in regular and continuous introduction of new products and services or new markets
entry. It involves cultures, structures and systems supportive of innovation where
change is promptly embraced and competitors are battled in aggressive market share
challenge. While introducing new products and services or entering new markets, these
businesses deliberately kill older products and services from their product lines in an
effort to improve overall competitiveness and break the norm from copycats through
rapid product life cycle management strategies.

2.    Organizational rejuvenation: This is a corporate entrepreneurship phenomenon

whereby the businesses alters its internal processes, structures and capabilities in order
to sustain or improve its competitive standing. The business would improve execution
its business strategies both pre-existing and new ones.

3.    Strategic renewal: This refers to the corporate entrepreneurship phenomenon

whereby the business makes a paradigm shift in its strategy so as to fundamentally
alter how it competes and redefine its relationship with its markets or industry
competitors.

4.    Domain redefinition: In this corporate entrepreneurship phenomenon the business

proactively creates a new product-market arena that others have not recognized or
actively sought to exploit. It takes the competition to a new arena either as a first or
early mover and seek a sustainable competitive advantage and create the industry
standard or define the benchmark against which later entrants are judged.
 

The four key elements of corporate entrepreneurial endeavours are (1.) New business
venturing, (2.) Innovativeness, (3.) Self-renewal, and (4.) Proactiveness. The New
Business Venturing is the creation of a business within an existing organization, and
Organizational Innovativeness delivers the Product and service innovation, with an
emphasis on development and innovation in technology. It includes new product
development, product improvements, and new production methods and procedures.
The Self-Renewal element is the transformation of an organization through the renewal
of the key ideas on which it is built. It causes redefinition of the business concept,
reorganization, and the introduction of system wide changes to increase innovation. The
element of pro-activeness manifests initiative and risk-taking. Proactive organizations
tend to take risks by committing significant resources to new combinations that might
have a likelihood of failure.

Corporate entrepreneurship as entrepreneurial management paradigm is different from

traditional management in eight (8) ways. (1.) Strategic Orientation, (2.) Commitment
to Opportunity, (3.) Commitment of Resources (4.) Control of Resources, (5.)
Management Structure (6.) Reward Philosophy, (7.) Growth Orientation, and (8.)
Entrepreneurial Culture. The Strategic Orientation takes a focus on those factors that
are inputs into the formulation of the firm's strategy. It is driven by perception of
opportunity instead of been driven by controlled results. Commitment to Opportunity
occurs by a commitment to taking action on potential opportunities in a revolutionary
way of a short time duration instead of evolutionary with long duration. The pursuit of a
particular opportunity requires Commitment of Resources carefully minimizing the
resources that would be required. Control of Resources revolves around how to access
others' resources to use or rent instead of owning them so the firm overcomes the
constraint of its possessed resources even by employing or control resources it does not
own. The Management Structure is more organic and tends to be flat instead of a tall
hierarchy such that it has few layers of bureaucracy between top management and the
customer and typically has multiple informal networks. The Reward Philosophy hinges
on pragmatic employees compensation schemes based on their value creation
contribution toward the discovery and generation and exploitation of opportunity
instead of responsibility & seniority. A focus on Growth Orientation places top priority to
acceptance of risk to achieve growth instead of safe, slow, and steady growth. The
Entrepreneurial Culture encourages employees to broadly search for opportunities and
generate ideas, experiment, and engage in other tasks that might produce
opportunities instead of restricting them/denying those resources and punishing failure
for trying.

A favourable corporate entrepreneurial environment can be created through rapid

adoption of technology, creation of purposeful structures for collecting, evaluating and
rewarding new ideas, tolerance to failure of new ideas, and top management support
and identification of innovation champions. The Corporate Entrepreneur needs to be
visionary and flexible with good foresight the business environment turbulence, one
who encourages teamwork and persistence with capability for building coalition of
supporters who believe in where firm should go and carry through that change
tirelessly. Further, the capacity for a firm to innovate as required for corporate
entrepreneurship has been evaluated with different variables:

Table 14: Characteristics evaluated in corporate entrepreneurship

Key Characteristic Factor

Entrepreneurial
Education, Experience, Entrepreneurial founding team
Demographics
Firm Characteristics Age, Size, Ownership structure, Legal form
Skills and Competencies Scientific knowledge, Business qualification
Incremental or disruptive change, R&D inputs,
Research and Development
Customization, New or established
Best-selling product/service, Product/service portfolio,
Product/Service
Technological content of product/service,
Characteristics Novelty
Number of customers, Market size, Number and type of
Market Development customers, Domestic or international markets, Who is
customer, Timing of first international sales
Financial of the firm Debt, Equity, Personal inputs
Exporting, Export markets, Type of country sell in, Mode
Internationalization
of international sales, Use of foreign agents
 

Strategic entrepreneurship
Strategic Entrepreneurship is integration of two disciplines - entrepreneurship and
strategic management. Whereas entrepreneurship focuses on identifying opportunities
through innovation, strategic management focuses on firm's direction in choice of its
competition means that determines its application of resources and innovation efforts.
Strategic management defines a firm's "efforts to exploit its today's competitive
advantages as a foundation for tomorrow's competitive advantages”. Therefore
Strategic entrepreneurship (SE) involves simultaneous opportunity-seeking and
advantage-seeking behaviours to attain superior firm’s performance. Small enterprises
are relatively effective in identifying opportunities but are less successful in developing
competitive advantages needed to build appropriate value from those opportunities. On
the contrary, large and established firms often are relatively more effective in
establishing competitive advantages but are less able to identify new opportunities.
Therefore, SE provides a unique, distinctive construct through which firms are able to
create wealth by both pro-active opportunity identification and effective exploitation of
competitive advantage. An entrepreneurial mind-set that raises an entrepreneurial
culture and entrepreneurial leadership, and encourages the strategic management of
resources and applying of creativity to develop innovations are important dimensions of
SE.

 
Social entrepreneurship
 

Social entrepreneurship is about applying practical, innovative and sustainable

approaches to benefit society in general, with an emphasis on those who are
marginalized and poor. The term captures a unique approach to economic and social
problems cutting across all sectors and disciplines such as education, health, welfare
reform, human rights, workers' rights, environment, economic development, agriculture
and so forth. Social organizations such as religious bodies often birth institutions to
carry on a livelihoods agenda touching on areas of issues that affect people. These
institutions by their interaction of the beneficiaries and their going concern become
enterprises regarded as social enterprises. One way of keeping them going is to call for
donations and keep a fixated management orientation married to the tradition of “how
we do things”. However, by adopting a perspective of new way of thinking, such an
enterprise may craft a new approach to raising its funds, its outreach agenda and
internal organization so as to standout and achieve beyond normal expectations. This is
where social entrepreneurship flourishes exemplified by a combination of innovative
risk taking approach where the leader is pragmatic and pro-active opportunity seeker
capable of creating new combinations to achieve a social mission. Good examples
include Mother Teresa, Richard Branson, Professor Yunus, among others. Social
entrepreneurs pursue people oriented goals such as poverty alleviation with
entrepreneurial zeal. They apply business methods and courage to innovate and
overcome traditional practices of social services providers such as education, health,
environment and humanitarian aid. A social entrepreneur behaves like a business
entrepreneur driven by social innovation and transformation to build strong and
sustainable social enterprises set up as not-for-profits organizations.

Characteristics of a social entrepreneur

Such as person is a leader and a pragmatic visionary who demonstrates the following
characteristics:

1.       Achieves large scale, systemic and sustainable social change through a new
invention, a different approach, a more rigorous application of known technologies or
strategies, or a combination of these.

2.       Focuses first and foremost on the social and/or ecological value creation and tries
to optimize the financial value creation.

3.       Innovates by finding a new product, a new service, or a new approach to a social
problem.

4.       Continuously refines and adapts approach in response to feedback.

 
Social entrepreneur behaviour
Social entrepreneurs have been found to exhibit some common traits or behaviour that
include:

1.        An unwavering belief in the inherent capacity of all people to contribute

meaningfully to economic and social development

2.        A driving passion to make it happen.

3.        A practical but innovative stance to a social problem, often using market
principles and forces, coupled with determination that allows them to break away from
constraints imposed by ideology or field of discipline, and pushes them to take risks that
others wouldn't dare.

4.        A zeal to measure and monitor their impact. Entrepreneurs have high standards,
particularly in relation to their own organization’s efforts and in response to the
communities with which they engage. Data, both quantitative and qualitative, are their
key tools, guiding continuous feedback and improvement.

5.        A healthy impatience. Social Entrepreneurs cannot sit back and wait for change
to happen or the right environment for they are the change drivers themselves.

Social entrepreneurship organizational models

In view of the approaches taken the outcome organizational models in social
entrepreneurship include:

i.                Leveraged non-profit ventures

The entrepreneur sets up a non-profit organization to drive the adoption of an

innovation that addresses a market or government failure. In doing so, the entrepreneur
engages a cross section of society, including private and public organizations, to drive
forward the innovation through a multiplier effect. Leveraged non-profit ventures
continuously depend on outside philanthropic funding, but their longer term
sustainability is often enhanced given that the partners have a vested interest in the
continuation of the venture.

ii.                Social business ventures

The entrepreneur sets up a for-profit entity or business to provide a social or ecological
product or service. While profits are ideally generated, the main aim is not to maximize
financial returns for shareholders but to grow the social venture and reach more people
in need. Wealth accumulation is not a priority and profits are reinvested in the
enterprise to fund expansion. The entrepreneur of a social business venture seeks
investors who are interested in combining financial and social returns on their
investments.

iii.                Hybrid non-profit ventures

The entrepreneur sets up a non-profit organization but the model includes some degree
of cost-recovery through the sale of goods and services to a cross section of institutions,
public and private, as well as to target population groups. Often, the entrepreneur sets
up several legal entities to accommodate the earning of an income and the charitable
expenditures in an optimal structure. To be able to sustain the transformation activities
in full and address the needs of clients, who are often poor or marginalized from
society, the entrepreneur must mobilize other sources of funding from the public and/or
philanthropic sectors. Such funds can be in the form of grants or loans, and even quasi-
equity.

Global entrepreneurship
Global entrepreneurship is a domain of entrepreneurship characterized by firms trading
beyond their national borders. Global entrepreneurs are professionals who use their
global understanding and connections to identify transnational and cross-cultural
opportunities and turn them into new value-creating initiative. While entrepreneurship
usually means the creation of a new business, the scope of many global leaders' efforts
go beyond business creation. Value creation obviously happens in established
companies every day and many global leaders act as intrapreneurs pursuing
opportunities from within an organizational context. Global entrepreneurs also include
non-profit social enterprises that work across national borders.

Global entrepreneurs typically create value in three distinct ways:

1.            The first is by tapping into commonalities – or convergence - between markets

and cultures. This approach is exemplified by organizations trying to bring a standard
brand promise to diverse cultures and communities. This means a brand could be
selling as a global brand such as Intel, Samsung, Toyota, Equity Bank and many others.

2.            The secondly category of global entrepreneurs tap into distinct comparative

advantages between communities - divergence among regions in order to access better
value. For example, design work is done in one country then assembled in another.

3.            The third category global entrepreneurs who access networks and create
value by building platforms that allow global exchange.
 

The goal of GE is to:

1.    Offset sales declines in the domestic market

2.    Increase sales and profits

3.    Extend products’ life cycles

4.    Lower manufacturing costs

5.    Lower product cost

6.    Improve competitive position

7.    Raise quality levels

8.    Become more customer-oriented

Strategies for going global include (1.) e-commerce (2.) use of international value added
resellers (VAR) networks (3.) establishing off-shore locations (4.) importing (5.)
exporting (6.) joint ventures (7.) international franchising (8.) foreign licensing (9.)
countertrading and bartering.

E-entrepreneurship
E-entrepreneurship refers to establishing a new company to carry out innovative
business idea within the Net Economy. Good examples include e-bay, Google and Jumia.
An e-entrepreneur uses an electronic platform of data networks to offer its products
and/or services based upon a purely electronic creation of value. One can create an e-
shop or an e-commerce website to promote products and services and conduct
commercial exchanges including sales of goods and services, sometimes within limits of
national borders. E-entrepreneurship provides a level playing ground for small
businesses to compete with established retails chains by aggregating virtual goods
instead of physical goods. It also gives a higher return on investment by eliminating
expensive operational costs of a business.

Entrepreneurial marketing
The central part of entrepreneurial marketing is gaining competitive advantage by
combining the two disciplines of entrepreneurship and marketing. It focuses on the role
of brand development and the role of network relationships as mechanisms for
customer value proposition creation (Thomas et al., 2012). Within entrepreneurial
marketing strategies are activities for enhancing the brand image and reputation,
product development in terms of quality, uniqueness and diversity, entrenching
innovation as the growth driver of industry competitive advantage and in improving
profitability (Vrontis & Paliwoda, 2008). The extent that a marketing undertaking
demonstrates some amount of innovativeness, risk-taking, and pro-activeness, can be
considered an entrepreneurial marketing. Conventional marketing in practice ignores
this orientation which has been found central to entrepreneurship (Morris et al., 2002).

Theories advancing entrepreneurial marketing strategies emphasize on marketing and

entrepreneurship interface paradigm to explore how well existing marketing models and
the traditional marketing paradigm fit their environment, behavior and processes found
in entrepreneurial organizations. The construct uses the three parameters of
entrepreneurial orientation of a firm (innovativeness, risk-taking and pro-activeness)
and pragmatic marketing construct of market orientation (customer centricity and
competitor focus). On the basis of these firms are evaluated on how effectively they
identify opportunities, develop appropriate products and services and deliver services to
the target customers while ensuring value creation for the customers to create a
sustained competitive advantage.

 
Chapter summary
This chapter reviewed some of the contemporary areas in the domain of
entrepreneurship. They included key thematic areas of research such as corporate
venturing, strategic entrepreneurship, social entrepreneurship, global entrepreneurship,
e-entrepreneurship and entrepreneurial marketing, among others.

Chapter review questions

1.      Distinguish corporate entrepreneurship from strategic entrepreneurship.

2.      Why is global entrepreneurship gaining considerable attention in many countries?

3.      Identify different options on entry into global entrepreneurship.

4.      Define the term entrepreneurial marketing and explain benefits of such a mindset
within the firm.
5.      Advice a new e-entrepreneur on different requirements for carrying out e-
entrepreneurship.

6.      What distinguishes social entrepreneurship and why social entrepreneurship?

7.      A mission hospital should ensure that its revenue model generates adequate
revenue and surpluses while still pursuing its social objectives. Discuss.

8.      Identify challenges that are faced by going global in global entrepreneurship.

9.      Distinguish an entrepreneur from an intrapreneur and state FIVE reasons for

considering corporate entrepreneurship.

10.   Identify elements or factors that comprise entrepreneurial marketing.