Part I

The Entrepreneurial Mind-Set

Chapter 3
The Entrepreneurial
Mind-Set in Organizations:
Corporate Entrepreneurship

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 Defining the Concept of Corporate
Entrepreneurship and Innovation
• Corporate Entrepreneurship
 A process whereby an individual or a group of
individuals, in association with an existing
organization, creates a new organization or instigates
renewal or innovation within the organization.
• Corporate Entrepreneurship Strategy
 A vision-directed, organization-wide reliance on
entrepreneurial behavior that purposefully and
continuously rejuvenates the organization and shapes
the scope of its operations through the recognition and
exploitation of entrepreneurial opportunity.
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 3.1 Defining Corporate Entrepreneurship

Source: Michael H. Morris, Donald F. Kuratko, and Jeffrey G. Covin, Corporate Entrepreneurship & Innovation (Mason, OH, Thomson), 2008, p. 81.
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 Table
3.2 Sources of and Solutions to Obstacles in Corporate
Venturing
Traditional Management Adverse Recommended
Practices Effects Actions
Enforce standard procedures Innovative solutions blocked, Make ground rules specific
to avoid mistakes funds misspent to each situation
Manage resources for efficiency Competitive lead lost, Focus effort on critical issues
and ROI low market penetration (e.g., market share)
Control against plan Facts ignored that should replace Change plan to reflect new learning
assumptions
Plan for the long term Nonviable goals locked in, Envision a goal, then set interim
high failure costs milestones, reassess after each
Manage functionally Entrepreneur failure and/or Support entrepreneur with managerial
venture failure and multidiscipline skills
Avoid moves that risk Missed opportunities Take small steps, build out from
the base business strengths
Protect the base business Venturing dumped when base Make venturing mainstream,
at all costs business is threatened take affordable risks
Judge new steps from Wrong decisions about competition Use learning strategies,
prior experience and markets test assumptions
Compensate uniformly Low motivation and inefficient Balance risk and reward,
operations employ special compensation
Promote compatible individuals Loss of innovators Accommodate “boat rockers”
and “doers”

Source: Reprinted by permission of the publisher from “Corporate Venturing Obstacles: Sources and Solutions,” by Hollister B. Sykes
and Zenas Block, Journal of Business Venturing (winter 1989): 161. Copyright © 1989 by Elsevier Science Publishing Co., Inc.
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 3–4
 Types of Innovation
• Radical Innovation
 The launching of inaugural breakthroughs.
 These innovations take experimentation and
determined vision, which are not necessarily managed
but must be recognized and nurtured.
• Incremental Innovation
 The systematic evolution of a product or service into
newer or larger markets.
 Many times the incremental innovation will take over
after a radical innovation introduces a breakthrough.

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 Table
3.3 Objectives and Programs for Venture Development

Objectives Programs
Make sure that current systems, Reduce unnecessary bureaucracy, and
structures, and practices do not present encourage communication across
insurmountable roadblocks to the departments and functions.
flexibility and fast action needed for
innovation.

Provide the incentives and tools for Use internal “venture capital” and special
intrapreneurial projects. project budgets. (This money has been
termed intracapital to signify a special fund
for intrapreneurial projects.) Allow
discretionary time for projects (bootlegging
time).

Seek synergies across business areas Encourage joint projects and ventures
so new opportunities are discovered in among divisions, departments, and
new combinations. companies. Allow and encourage
employees to discuss and brainstorm new
ideas.

Source: Adapted by permission of the publisher from “Supporting Innovation and Venture Development in Established Companies,” by
Rosabeth Moss Kanter, Journal of Business Venturing (winter 1985): 56–59. Copyright © 1985 by Elsevier Science Publishing Co., Inc.
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 Table
3.4 Developing and Supporting Radical and Incremental
Innovation
Radical Incremental
Stimulate through challenges and puzzles. Set systematic goals and deadlines.
Remove budgetary and deadline constraints Stimulate through competitive pressures.
when possible.
Encourage technical education and exposure Encourage technical education and
to customers. exposure to customers.
Allow technical sharing and brainstorming Hold weekly meetings that include
sessions. key management and marketing staff.
Give personal attention—develop relationships Delegate more responsibility.
of trust.
Encourage praise from outside parties. Set clear financial rewards for meeting
goals and deadlines.
Have flexible funds for opportunities that arise.
Reward with freedom and capital for new
projects and interests.

Source: Adapted from Harry S. Dent, Jr., “Growth through New Product Development,” Small Business Reports (November 1990): 36.
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