Entrepreneurship and Small Business Development

Lecture 8: Corporate Entrepreneurship

Chapter 18 Burns; Corporate Garage; Wesselling et al

What is corporate entrepreneurship?

Can large firms also be entrepreneurial? Is it in their interests to be so? What pressures are there for them not to be entrepreneurial?

How is an intrapreneur different to an entrepreneur? Is it easier to be an intrapreneur or an entrepreneur?

Why should a large company want to spin out a new venture with good opportunities?

Corporate entrepreneurship is simply bring entrepreneurship into large company. It is often defined as a process that goes on inside an existing firm and that may lead to new business ventures, the development of new products, services or processes and the renewal of strategies and competitive postures. Corporate Entrepreneurship activities can enhance a company’s success by promoting product and process innovations.  Corporate Entrepreneurship is embodying risk taking, pro-activeness and radical product innovations (Ferreira, 2000).  These Corporate Entrepreneurship activities can improve organizational growth and profitability and, depending on the company’s competitive environment, their impact may increase over time.  The empirical evidence is compelling that Corporate Entrepreneurship improves company performance by increasing the firm’s pro-activeness and willingness to take risks, and by pioneering the development of new products, process and services through enriching its competitiveness.

The existing of corporate entrepreneurship is important for a company because it injects a novel model to overcome disruptive innovation which prevent incumbent from failing. Christensen in the book The Innovator’s Dilemma (1997) claimed that the best companies can still fail, often because they miss out on new waves of innovation.  This is true to be coined as “The Incumbent’s Curse”. To be more precise, technology has equalised the power between small and big firm which make incumbent’s business model obsolete. For a new entrant, it lowers the barrier of entry, cost and therefore heighten the competition; Large companies faced the challenge of corporate aging and disruptive innovation which can potentially bring the whole company down. Technological change is obviously main source for economic growth but some firm may resist with it due to the consideration of stability.

In fact, perceived it as disruptive innovation, is perhaps not appropriate. The core concepts have been widely misunderstood and its basic tenets frequently misapplied. Many researchers, writers and consultants use “disruptive innovation” to describe any situation in which and industry is shaken up and previously successful incumbents stumble. Since the new technological paradigm will lead to an improved product or service, it would be rational to reap the fruits of progress, embracing the advancement of technology. From the perspective of customers, disruptive innovation is benefit because it foster a completely new business model that provide convenient to them.