Corporate

Entrepreneurship &
Innovation 3 ed. rd

Michael H. Morris
Oklahoma State University
Donald F. Kuratko
Indiana University
Jeffrey G. Covin
Indiana University
Copyright (c) 2011 by Donald F. Kuratko All rights reserved.
“Wealth in the new regime flows
directly from innovation, not
optimization; that is, wealth is not
gained by perfecting the known, but
by imperfectly seizing the
unknown.”
~Kevin Kelly,
“New Rules for the New Economy,” Wired

Copyright (c) 2011 by Donald F. Kuratko All rights reserved.

 E Section I
Building Blocks for Corporate Entrepreneurship
Section I introduces basic concepts, tools and
frameworks that help explain how entrepreneurial
behavior can occur within established organizations.
 Chapter One: The New Entrepreneurial Imperative
 Chapter Two: The Unique Nature of Corporate Entrepreneurship
 Chapter Three: Levels of Entrepreneurship in Organizations:
Entrepreneurial Intensity
 Chapter Four: The Forms of Corporate Entrepreneurship
 Chapter Five: Entrepreneurship in Other Contexts: Non-Profit and
Government Organizations

Copyright (c) 2011 by Donald F. Kuratko All rights reserved.

E Section I
Building Blocks for Corporate Entrepreneurship

Copyright (c) 2011 by Donald F. Kuratko All rights reserved.

Chapter 1
The New Entrepreneurial
Imperative
 E
Turbulent Environments and the Embattled Corporation

The changing domain of the external

environment
•Technological •Legal
•Economic •Regulatory
•Competitive •Global
•Labor •Customer
•Resource •Social
•Customer •Supplier
“Managers face shortened decision windows and diminishing opportunity streams,
meaning they must act quickly or find themselves missing out on opportunities”
 E
Turbulent Environments and the Embattled Corporation
Customers Technology
Fragmented markets and rapidly rising Firms have to change the ways they
customer expectations are forcing operate internally and how they
firms to customize their products, compete externally based on:
cultivate longer-term customer -New information management
relationships and learn new skills in technologies
serving global markets -New production and service
delivery technologies
-New customer management
technologies
The
Embattled
Corporation
Competitors Legal, Regulatory and Ethical
Standards
Lead customers to entirely new market
spaces Firms are increasingly accountable to
multiple forcing management to make
Quickly mimic which makes it harder difficult choices and deliver results
to differentiate while behaving responsibly

Attack firms’ most profitable areas of Increasingly litigious environment

business by specializing in narrow,
Increasing regulatory restrictions
profitable niches
 E
The New Path to Sustainable
Competitive Advantage
Achieving a sustainable competitive advantage
derives from five key company capabilities
 Adaptability

 Flexibility

 Speed

 Aggressiveness

 Innovativeness
Entrepreneurship is the core source of “sustainable competitive
advantage”
E
What is Entrepreneurship?
Seven perspectives on the nature of
entrepreneurship
 Creation of wealth
 Creation of enterprise

 Creation of innovation

 Creation of change

 Creation of employment

 Creation of value

 Creation of growth
 E
What is Entrepreneurship?
The most common key words found in
the definition of entrepreneurship
 Starting / Founding / Creating
 New Business / New Venture

 Innovation / New Products / New Market

 Pursuit of Opportunity

 Risk-taking / Risk Management / Uncertainty

 Profit-seeking / Personal Benefit

E
What is Entrepreneurship?

An encompassing definition of
entrepreneurship
“Entrepreneurship is the process
of creating value by bringing
together a unique combination of
resources to exploit an
opportunity.”
E
What is Entrepreneurship?

Entrepreneurship involves a process

Entrepreneurs create value where there
was none before
Entrepreneurs put resources together in
a unique way
Entrepreneurship is opportunity-driven
behavior
E
What is Corporate Entrepreneurship?
“Corporate entrepreneurship is a term
used to describe entrepreneurial
behavior inside established mid-sized
and large organizations.”

Other popular related terms

 Organizational entrepreneurship
 Intrapreneurship
 Corporate venturing
E
Management Versus Entrepreneurship

“Management is the process of

setting objectives and
coordinating resources,
including people, in order to
attain them.”
E
Management Versus Entrepreneurship

Managers focus more on the current

situation and how to improve
efficiency and effectiveness

Entrepreneurs focus less on the current

situation and more on what can be
E
Management Versus Entrepreneurship
The Manager The Entrepreneur
• Planner • Visionary
• Strategist • Opportunity-seeker
• Organizer • Creator
• Staffer The • Innovator
Entrepreneurial
• Motivator Manager • Calculated Risk-taker
• Budgeter • Resource Leverager
• Evaluator • Change Agent
• Coordinator • Active and Adaptive
Concept Implementer
• Supervisor
 E
Why Companies Lose their Entrepreneurial Way:
The Organizational Life Cycle

Greiner’s 5 stages of a company’s evolution

 Creativity

 Direction

 Delegation

 Coordination

 Collaboration
 E
Why Companies Lose their Entrepreneurial Way:
The Organizational Life Cycle

The evolutionary process of companies:

Next Stage

Crisis
Companies enter a Point Begin Decline
particular growth stage
and prosper until reaching
a crisis point Failure

Acquisition Candidate
 E
Why Companies Lose their Entrepreneurial Way:
The Organizational Life Cycle

Start up and early growth

Growth through direction
Growth through delegation
Growth through coordination
Growth through collaboration
 E
Why Companies Lose their Entrepreneurial
Way: The Organizational Life Cycle
Stage 1 Stage 2 Stage 3 Stage 4 Stage 5
Creativity Direction Autonomy Coordination Collaboration

Management Focus Make &Sell Efficiency of Expansion of Consolidation of Problem solving

operations market organizatio &
n innovation

Organization Informal Centralized & Decentralized & Line-staff & Matrix of teams
Structure Functiona geographic product
l al groups

Top Management Individualistic & Directive Delegative Watchdog Participative

Style entrepreneuri
al

Control System Market results Standards & Reports & profit Plans & Mutual goal
cost centers investment setting
centers centers

Management Ownership Salary & merit Individual bonus Profit sharing & Team bonus
Reward increases stock
System options

(Source: Adapted from Larry E. Greiner, “Evolution and Revolution as Organizations Grow” Harvard Business Review, July-August, 1972 p. 45)
E
The Entrepreneurial Imperative:
A Persistent Sense of Urgency

Managers within an organization tend

to become reactive by responding to
the changes brought about by the
external environment but let
entrepreneurial fires within the
company dwindle and diminish
E
The Entrepreneurial Imperative:
A Persistent Sense of Urgency
Managers must ask themselves the following questions to avoid
inevitable diminishing returns and refocus on new directives and
entrepreneurial avenues:

 How much more cost savings can the company wring out of
its current business? Are managers within the firm working
harder and harder for smaller and small efficiency gains?

 How much more revenue growth can the company squeeze

out of its current business? Is the company paying more and
more for customer acquisition and market share gains?
E
The Entrepreneurial Imperative:
A Persistent Sense of Urgency
• How much longer can the company keep propping up its share
price through share buybacks, spin-offs, and other forms of
financial engineering? Is top management reaching the limits
of its ability to push up the share price without actually
creating new wealth?
• How many more scale economies can the company gain from
mergers and acquisitions? Are the costs of integration
beginning to overwhelm the savings obtained from slashing
shared overhead costs?
• How different are the strategies of the four or five largest
competitors in the industry from the company’s strategy? Is it
getting harder and harder to differentiate the company from its
competitors?
E
A Model of Corporate Entrepreneurship

Copyright (c) 2011 by Donald F. Kuratko All rights reserved.