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- 1. CHAPTER 13 Strategic Entrepreneurship
2. K NOWLEDGEO BJECTIVES
- Define strategic entrepreneurship and corporate entrepreneurship.
- Define entrepreneurship and entrepreneurial opportunities and explain their importance.
- Define invention, innovation, and imitation and describe the relationship among them.
- Describe entrepreneurs and the entrepreneurial mind-set.
- Explain international entrepreneurship and its importance.
Studying this chapter should provide you with the strategic management knowledge needed to: 3. K NOWLEDGEO BJECTIVES(contd)
- Describe how firms internally develop innovations.
- Explain how firms use cooperative strategies to innovate.
- Describe how firms use acquisitions as a means of innovation.
- Explain how strategic entrepreneurship helps firms create value.
Studying this chapter should provide you with the strategic management knowledge needed to: 4. Strategic Entrepreneurship
- Strategic Entrepreneurship
- Taking entrepreneurial actions using a strategic perspective.
- Engaging in simultaneous opportunity seeking and competitive advantage seeking behaviors.
- Designing and implementing entrepreneurial strategies to create wealth.
- Strategic entrepreneurship actions can be taken by:
5. Strategic Entrepreneurship and Innovation
- Entrepreneurship is concerned with:
- The discovery of profitable opportunities
- The exploitation of profitable opportunities
- Firms that encourage entrepreneurship are:
- Risk takers.
- Committed to innovation.
- Proactive in creating opportunities rather than waiting to respond to opportunities created by others.
6. Entrepreneurial Opportunities
- Entrepreneurial Opportunities
- Conditions in which new products or services can satisfy a need in the market.
- Entrepreneurs or entrepreneurial managers must be able to:
- Identify opportunities not perceived by others.
- Take actions to exploit the opportunities.
- Establish a competitive advantage.
7. Innovation Process
- The act of creating or developing a new product or process
- Brings something new into being.
- Technical criteria are used to determine the success of an invention.
Invention 8. Innovation Process (contd)
- The process of creating a commercial product from an invention.
- Brings something new into use.
- Commercial criteria are used to determine the success of an innovation.
Invention Innovation 9. Innovation Process (contd)
- The adoption of an innovation by similar firms
- Usually leads to product or process standardization.
- Products based on imitation often are offered at lower prices but with fewer features.
Invention Innovation Imitation 10. The Importance of Innovation
- Is a key outcome firms seek through entrepreneurship.
- Is often the source of competitive success.
- Corporate Entrepreneurship
- Innovations produced in large established firms.
- Individuals acting independently or as part of an organization who create a new venture or develop an innovation, take risks entering innovations into the marketplace.
- Can be any manager or employee in an organization.
- Entrepreneurial capabilities include:
- Intellectual capital
- Entrepreneurial mind-set
- Transfer of entrepreneurial competence to others
- Effective human capital
12. International Entrepreneurship
- Entrepreneurship can:
- Fuel economic growth
- Create employment
- Generate prosperity forcitizens
- There is a strong positive relationship between the rate of entrepreneurial activity and economic development in a nation.
13. International Entrepreneurship (contd)
- There mustbe a balance(in the culture) between
- Individual initiative and
- The spirit of cooperation and group ownership of innovation.
- Successful entrepreneurial firms:
- Provide appropriate autonomy.
- Offer incentives for individual initiative.
- Promote cooperation and group ownership of an innovation.
14. Incremental and Radical Innovation
- Incremental Innovation
- Is the usual case for innovation in organizations.
- Provides small increments in current product lines.
- Improves existing knowledge and processes.
- Can create value.
- Radical Innovation
- Is rare because of difficulty and risk.
- Provides significant technological breakthroughs.
- Creates new knowledge and processes.
- Can create value.
15. FIGURE 13.1 Model of Internal Corporate Venturing Source:Adapted from R. A. Burgelman, 1983, A model of the interactions of strategic behavior, corporate context, and the concept of strategy,Academy of Management Review,8: 65. 16. Internal Corporate Venturing
- The set of activities used to create inventions and innovations through internal means.
- R&D spending is linked to success in internal corporate venturing.
- Product Champion
- An organizational member with an entrepreneurial vision of a new good or service who seeks to create support for the visions commercialization.
17. Internal Corporate Venturing (contd)
- A bottom-up process in which product champions:
- Pursue new ideas, often through a political process.
- Develop and coordinate the commercialization of a new good or service until it achieves success in the marketplace.
- Forms of internal corporate venturing:
- Autonomous strategic behavior
- Induced strategic behavior
18. Venturing: Strategic Behaviors
- Autonomous Strategic Behavior
- Based on a firms knowledge and resources that are the sources of the firms innovation.
- A firms technological capabilities and competencies are its basis for new products and processes.
- Induced Strategic Behavior
- A top-down process whereby the firms current strategy and structure foster product innovations.
- The strategy in place is filtered through a matching structural hierarchy.
19. Implementing New Product Development and Internal Ventures
- To be innovative and develop internal ventures requires:
- An entrepreneurial mindset
- Risk propensity
- An emphasis on execution
- Individuals with an entrepreneurial mindset
- Engage the energies of everyone in their domain both inside and outside the organization.
20. CrossFunctional Product Development Teams
- Facilitate integration of activities associated with different organizational functions.
- Design, manufacturing, marketing, etc.
- New product development processes can be completed more quickly.
- Products can be more easily commercialized when cross-functional teams work effectively.
Cross-functional Product DevelopmentTeam 21. CrossFunctional Product Development Teams
- Product development stages are grouped into parallel or overlapping processes, allowing the firm to tailor its product development efforts
- Unique core competencies
- Needs of the market
Cross-functional Product DevelopmentTeam 22. Barriers to Cross-Functional Teams Effectiveness
- Different orientations and perceptions
- Individuals from separate functions have different orientations on issues.
- Create differing approaches to product development activities.
- Organizational Politics
- Cause aggressive competition for resources among different organizational functions.
- Organizations must achieve cross-functional integration with minimal political conflict.
23. Facilitating Integration and Innovation
- Shared Values
- Are framed around the firms strategic intent and mission.
- Become the glue that promotes integration between functional units.
- Effective Leadership
- Sets goals and allocates resources
- Goals include integrated development and commercialization of new goods and services
- Effective Communication
24. FIGURE 13.2 Creating Value through Internal Innovation Processes 25. Cooperative Strategies for Entrepreneurship and Innovation
- Cooperation and integration of knowledge and resources is required to successfully commercialize inventions.
- Entrepreneurial firms need investment capital and distribution capabilities.
- Established companies need the technological knowledge possessed by entrepreneurial firms.
- Firms innovate through the sharing their knowledge and skills in a cooperative relationship.
26. Acquisitions to Buy Innovation
- Can rapidly extend the product line.
- Can quickly increase the firms revenues.
- Key risks of acquisitions
- The firm may substitute the ability to buy innovations for an ability to produce innovations internally.
- The firm may lose intensity in R&D efforts.
- The firm may lose its ability to produce patents.
27. Capital for Entrepreneurial Ventures
- Venture Capital Firms
- Seek high returns on their investment.
- Value the competence of the entrepreneur or the human capital in the firm.
- Place weight on the expected scope of competitive rivalry the firm is likely to experience.
- Evaluate the degree of instability in the market addressed.
28. Capital for Entrepreneurial Ventures
- Initial Public Offerings (IPOs)
- Are new stock priced to reflect the firms high potential.
- Often yield much larger equity investments than can be obtained from venture capitalists.
- Investment bankers frequently play major roles in the development and offering of IPOs.
- Firms that have previously received venture capital backing usually receive greater returns from IPOs.
29. Creating Value through Strategic Entrepreneurship
- Be effective in identifying opportunities.
- Be flexible and willing to take risks.
- Have sufficient resources and capabilities to exploit identified opportunities.
- Sustain a competitive advantage while identifying and exploiting opportunities.
- Develop an entrepreneurial mind-set among managers and employees.
- Seek to enter and compete in international markets.