Defining Entrepreneurship
Corporate Entrepreneurship
Firm’s capabilities possessed to develop new goods or
services and manage the innovation process
Invention
Creating or developing a new product or process idea
Innovation
Creating a commercializable product from invention
Imitation
Adoption of innovation by a population of similar firms
Transparency 13-1
Successful Entrepreneurship
The key to success with entrepreneurship and
innovation is moving from the invention of ideas
to effective commercialization and acceptance in
the marketplace
Transparency 13-2
Innovation and Competitive Advantage
Characteristics of
Innovations which
lead to...
Competitive
Advantage
Transparency 13-3
Innovation and Competitive Advantage
Commercially
Difficult for
Exploitable
Competitors
with Present
to Imitate
Capabilities
Competitive
Advantage
Provides
Significant
Timely
Value to
Customers
Transparency 13-4
Appropriating Value from Innovation
The goal or end point is
developing a system which
allows the firm to extract value
Value
effectively from their internal Appropriation
innovative capabilities from
Innovation
Transparency 13-5
Appropriating Value from Innovation
Cross-
Functional Value
Integration/ Appropriation
from
Design Innovation
Teams
Cross-functional design teams
can help to break down barriers
to entrepreneurship within firms
Transparency 13-6
Appropriating Value from Innovation
Barriers to Integration
Different Time Orientation
Interpersonal Orientation
Cross- Value
Different Goal Orientation
Functional Appropriation
Formality of Structure
Integration/ from
Design Teams Innovation
These factors tend to reduce the
effectiveness of Cross-functional
integration or design teams
Transparency 13-7
Appropriating Value from Innovation
Barriers to Integration
Different Time
Orientation
Interpersonal
Orientation
Different Goal Cross- Value
Orientation Functional Appropriation
Formality of Integration/ from
Structure Innovation
Design Teams
Facilitators of Integration
These factors tend to
Shared Values increase the effective-
Leaders’ Vision ness of Cross-functional
Budget allocation
integration or design
Effective Communication
Transparency 13-8 teams
Appropriating Value from Innovation
Barriers to Integration
Different Time Time to
Orientation
Interpersonal Market
Orientation
Different Goal Cross- Value
Orientation Functional Appropriation
Formality of Integration/ Product from
Structure
Design Teams Quality Innovation
Facilitators of
Integration
Creation of
Shared Values
Customer
Leaders’ Vision
Value
Budget Allocation
Effective
Communication
Transparency 13-9
Appropriating Value from Innovation
Barriers to Integration
Different Time Time to
Orientation
Interpersonal Market
Orientation
Different Goal Cross- Value
Orientation Functional Appropriation
Formality of Integration/ Product from
Structure
Design Teams Quality Innovation
Facilitators of
Integration
Creation of
Shared Values
Customer
Leaders’ Vision
Value
Budget Allocation
Effective
Communication
Transparency 13-10
Cooperating to Produce Innovation
Strategic Alliances
Alliances can help to foster innovation by
combining the knowledge and resources of two
or more partners
Firms must focus on building knowledge,
identifying core competencies and developing
strong human resources to manage these projects
Firms can also give away their core competencies
by outsourcing to alliance partners rather than
developing their own capabilities over time
Transparency 13-11
Acquiring Innovative Capability
Many firms now use acquisitions of other firms as
a substitute for developing innovations internally
This can reduce risk and lower costly R&D
investments
The drawback is that firms can eventually lose
their ability to generate innovations internally
Many firms now use acquisitions of other firms as
a substitute for developing innovations internally
Transparency 13-12
Small Firms and Innovation
Small firms have created most of the new jobs in
the U.S. in the 1990s
While large firms account for over 80% of the
world’s R&D spending, individuals or small
firms are granted more than half of U.S. patents
Many small firms are created when employees
leave large firms to start their own businesses,
frequently continuing to interact with their former
firms to develop innovations and new products
Transparency 13-13