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Unformatted text preview: Chapter 4 The Forms of Corporate Entrepreneurship
Copyright (c) 2007 by Donald F. Kuratko All rights reserved. E Introduction Entrepreneurship manifests in companies in two ways: Corporate Venturing addition of new businesses to the corporation Strategic Entrepreneurship highly consequential innovations that are adopted in the firm's pursuit of competitive advantage E Introduction
Corporate Entrepreneurship Delineating Different Forms that Corporate Entrepreneurship Can Take Corporate Venturing Internal corporate venturing Cooperative corporate venturing External corporate venturing -corporate venture capital Strategic Entrepreneurship Strategic renewal Sustained regeneration Domain redefinition Organizational rejuvenation Business model reconstruction E of Corporate Venturing Modes Internal corporate venturing new businesses created and owned by the corporation Cooperative corporate venturing new businesses are created and owned by the corporation together with one or more external development partners External corporate venturing new businesses are created by parties outside the corporation and subsequently invested in or acquired by the corporation Corporate Venturing
What is a new business?
Corporate Growth Strategy Matrix
New Markets Market Focus Current Markets E Market Diversificatio Development n Strategy Strategy Market Penetration Strategy Product Development Strategy Product Focus "When a company finds itself dealing with new categories of customers and selling them products or services that are new to the firm" E Venturing Corporate
The Domain of a New Business
Market Creation *New Market Market Extension Existing Market New Business Market Focus of the Entrepreneurial Initiative Existing Business
Existing Product in Current Industry Product Extension in Current Industry * The point of reference for new is new to the firm Product Focus of the Entrepreneurial Initiative *New Product in Current Industry New Industry Entry and/or Creation E Venturing Corporate
Motives for Corporate Venturing Leveraging to exploit existing competencies in new product or market arenas Learning to acquire new knowledge and skills that may be useful in existing product or market arenas E Venturing Corporate
Leveraging To exploit under-utilized resource To extract further value from existing resources To introduce competitive pressure onto internal suppliers To spread the risk and cost of product development To divest non-core activities Corporate Venturing E Learning To learn about the process of venturing To develop new competencies To develop managers Corporate Venturing
Corporate venturing directly investing corporate funds into external business start-ups Chesbrough's framework for linking corporate venture capital investments with a company's larger strategic agenda can be sorted into categories according to: 1.) their objectives (strategic or financial) 2.) the degree to which the new business being invested in (typically as a start-up) has operational capabilities E Corporate Venturing Four pure types of corporate venture capital investment: 1.) Driving investments 2.) Enabling investments 3.) Emergent investments 4.) Passive investments E E Strategic Entrepreneurship: Innovating in Pursuit of Competitive Advantage
Form of Strategic Entrepreneur
Strategic Renewal Sustained Regeneration Focus of the Entrepreneurial Initiative*
Strategy of the firm Products offered by the firm or markets served by the firm The Entrepreneurial Event Typical Frequency of the Entrepreneurial Event
Low High Adoption of a new strategy Introduction of a new product into a pre-existing product category or introduction of an existing product into a new (to the firm) but pre-existing market Creation of new or reconfiguration of existing product categories or market space Enactment of a major, internally-focused innovation aimed at improving strategy implementation Domain Redefinition New competitive space Low Organizational Rejuvenation Organization structure, processes, and/or capabilities of the firm Low-to-moderate Business Model Business model of the firm Design of a new or redesign Low Reconstruction of an existing business model *The focus of the entrepreneurial event can be the entire firm or, in the case of multi-business firms, one or more of its businesses The Business Model as a Vehicle for Corporate Entrepreneurship A Firm's Business Model: "a concise representation of how an interrelated set of decision variables in the areas of venture strategy, architecture, and economics will be addressed to create sustainable competitive advantage in defined markets" E EBusiness Model as a Vehicle for Corporate The
A business model should address six basic questions: 1.) How does the firm create value 2.) For whom does the firm create value 3.) What is our source of internal advantage or core competency 4.) How does the firm externally differentiate itself in the marketplace 5.) What is the firm's model for making money 6.) What is the management's growth ambition and over what time period The Business Model as a Vehicle for Corporate Entrepreneurship Decisions in these six areas can be made at three levels: 1.) Foundation level 2.) Proprietary level 3.) Rules level E E The Open Innovation Revolution Open innovation "a firm is not solely reliant upon its own innovative resources for new technology, product, or business development purposes. Rather, the firm acquires critical inputs to innovation from outside sources." E The Open Innovation Revolution Four reasons companies are increasingly choosing to pursue open innovation models: 1.) Importing new ideas is a good way to multiply the building blocks of innovation 2.) Exporting ideas is a good way to raise cash and keep talent 3.) Exporting ideas gives companies a way to measure an innovation's real value and to ascertain whether further investment is warranted 4.) Exporting and importing ideas helps companies clarify what they do best ...
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This note was uploaded on 08/25/2009 for the course ENTR 3312 taught by Professor Staff during the Spring '08 term at University of Houston.
- Spring '08