Corporate Entrepreneurship
Group Report
Case: Fox Searchlight
Ilija Trbojevic - 10820515
Lotte van Nieuwland - 11280212
Hessel de Groot - 11809051
Dion Meixner - 11059001
Dion Das - 11821825
Tutorial Group 2
Team C
Table of contents
Introduction
p. 2
Fox Searchlight’s entrepreneurial orientation
p. 2
Strategy and entrepreneurial orientation at Fox Searchlight
p. 3
Intrapreneur at Fox Searchlight
p. 4
Internal corporate venturing at FOX Searchlight
p. 5
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This report is going to discuss and relate the topic of corporate entrepreneurship to the case of Fox
Searchlight. Fox Searchlight is a U.S. based film studio, founded by Tom Rothman in 1994. Tom
Rothman’s entrepreneurial journey and creation of Fox Searchlight will be further elaborated during
the report. The report is structured as follows: the first section is going to discuss how organizations
foster an entrepreneurial organization, followed by a brief explanation of the relationship between an
entrepreneurial orientation and an organization’s strategy towards it, thereafter the concept of
intrapreneurship will be explained and its relation to a corporate venture, and finally the paper ends
with a brief discussion on the occurrence of internal venturing.
Fox Searchlight’s entrepreneurial orientation
An entrepreneurial orientation is related to the company’s policies and practices that creates the
foundation for entrepreneurial decisions and actions. According to this definition entrepreneurial
orientation is based on the following dimensions which are: innovativeness, risk-taking, and
proactiveness (Brettel, 2015).
Innovativeness relates to what extent the company or entrepreneur is novel, unique, or
different in order to achieve a goal. These types of innovations can be categorized into discontinuous
innovation, dynamically continuous innovation, continuous innovation and imitation.
According to the article of Fox Searchlight, Tom Rothman came up with a four -page business
plan with the idea of creating a studio with its own independent aesthetic but the global distribution
power of a major studio, later known as Fox Searchlight (Gregg Kilday, 2018). This idea is
characterized by continuous innovation because Tom tried to enhance his idea of a “new type” studio
with the features of “normal” major studios.
Risk-taking is a broad concept and can be subdivided under individual or organizational level.
It involves a willingness to pursue opportunities that have the reasonable likelihood of losing or
significant performance discrepancies (Morris, 2010). If Peter Chernin, at that time head of the movie
company at Fox, did not take the risk by implementing the idea of Tom Rothman, Fox Searchlight
would never have existed. As Tom quotes: “The real reason Searchlight exist today is because Peter
Chernin took the risk on it” (Gregg Kilday, 2018). This again signifies the importance of risk-taking in
the degree of entrepreneurial orientation.
Proactiveness defines the way entrepreneurs or companies are acting on their environments
rather than reacting to their environments (Venkatraman, 1989). It is the continuous process of seeking
new opportunities and trying to implement them proactively. Tom Rothman saw the opportunity and
need of creating a studio with its own aesthetic but with the global distribution power of a major
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studio. In order to implement this idea, he had to sell I to someone. To accomplish this, he called
every studio to try to get a meeting, but he could not get one. Instead of giving up he continued the
search and finally met Peter Chernin who liked his vision and took the risk to implement the idea of
Tom Rothman. This is an example of being proactive, Tom saw an opportunity in the movie
environment and started to act on it, even when his idea was refused a couple of times he continued to
present his idea till he finally met the right person to implement it.
In essence the degree of dimensions of entrepreneurial orientation apply equally well at the
individual level as they do at the organizational level ( Morris, 2010). Implementing the right degree
of these dimensions spoken of before gives an organization the chance to foster entrepreneurial
orientation
Strategy and entrepreneurial orientation at Fox Searchlight
In order to discuss the relationship between strategy and entrepreneurial orientation, the definition of
strategy must be given. Porter (1996) explains the difference between strategy and operational
effectiveness. ‘’Strategy is about performing different activities than competitors perform or about
performing similar activities in different ways, while operational effectiveness is concerned with
activities that enable the firm to perform similar activities better than the competitors.’’ In the case of
Fox Searchlight, they definitely perform different activities in different and better ways. Fox
Searchlight is one of the companies that gained the most awards in the film scene. Slumdog
Millionaire, 12 Years a Slave, The Shape of Water and Birdman all have won the Academy for Best
Picture at the 81th, 86th, 87th and 90th Academy Awards, alongside 15 different Academy Awards
combined.
Now, entrepreneurship can be integrated with strategy. This process involves two aspects. The
first aspect is entrepreneurial strategy, this is concerned with applying creativity and entrepreneurial
thinking to the development of a core strategy for the firm. The article ‘’Conceptualizing Corporate
Entrepreneurship Strategy’’ by Ireland, Covin and Kuratko (2009) gives us a more specific
explanation of entrepreneurial strategy. They define it as ‘’a vision-directed, organization-wide
reliance on entrepreneurial behavior that purposefully and continuously rejuvenates the organization
and shapes the scope of its operation through the recognition and exploitation of entrepreneurial
opportunity’’. Fox Searchlight main strategy is creating value to the customer via direct-to-consumer
streaming services by making modern, unique and sophisticated films in the genres comedy-drama,
horror, art-house and foreign films. (Lindahl, 2019). Fox Searchlight can be seen as a highly
entrepreneurial company because it scores very high on the innovativeness and proactiveness scale.
Their films are novel, unique and different, they change the way people think about modern films and
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they make drastic improvements in the film industry in the case of film technology. Fox Searchlight
uses new and different film techniques for the films they make. Techniques that have not been used
before. Also, Fox Searchlight seeks new opportunities in their current line of operations (such as
publishing short films via youtube) and introducing new products ahead of competition (award
winning films with challenging themes that change the way people perceive modern films).
The second aspect is strategy for entrepreneurship, this is concerned with the need to develop
a strategy for the entrepreneurial activities of the firm (Morris, Kurakto,& Covin, 2010). In 2019 Fox
Searchlight acquired the Oscar-nominated live action short film ‘’Skin’’. This is a change in strategy,
as they now were tapping into the relatively unexplored market of acquiring short films. ‘’Skin’’ is the
fourth film acquired by Fox Searchlight in one year. With the new streaming platform Disney+
coming up, companies that were tasked to acquire new content now might turn to shorts because of
the high demand in the market of movies. Fox Searchlight co-president Nancy Utley explained that
the new platform is not the reason they acquired short movies. She explained that the Fox Searchlight
Youtube channel is the place to put the acquired movies on. The company expected to grow their
current Youtube customer base with higher quality offerings. With the goals to increase advertisement
revenues via the platform. Using this strategy also gives Fox Searchlight an easy and cheaper way to
cooperate with filmmakers in a competitive moment in the market of movies, giving them the freedom
and the time to use new techniques and technologies. While at the same time staying an
entrepreneurial firm. (Kohn, 2019).
Intrapreneur at Fox Searchlight
In the following section, Tom Rothman (founder of FOX Searchlight) and his entrepreneurial traits
will be discussed. In order to do so, two terms need to be explained: entrepreneurship and
intrapreneurship. Entrepreneurs and intrapreneurs are the same in the sense that they seek to create
value and do so by exploiting an opportunity (Stevenson & Jarillo-Mossi, 1986). However,
intrapreneurship is further related to the context in which it occurs. Intrapreneurship can be described
as: “The identification and exploitation of opportunities by individual workers to (also) advance their
organization, which is generally characterized by employees’ innovation, proactive and risk-taking
behaviors” (De Jong, Parker, Wennekers and Wu, 2011). In the case of FOX Searchlight, Tom
Rothman can be considered an intrapreneur.
The intrapreneur will score high on two dimensions: conceptualization and implementation.
Conceptualization refers to the amount of dreaming one can do, while implementation refers to the
actions one will undertake in order to realize this conceptualization (Morris et al., 2010). As Tom
Rothman mentioned in an interview with The Hollywood Reporter, he tried to share his vision with
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every studio he could find, and undertook all actions necessary to realize this vision when Fox took on
his business plan for the new venture now known as Fox Searchlight.
The intrapreneur has several traits that differ from the entrepreneur. As the corporate context
of the intrapreneur is what differentiates these two forms, it follows naturally that the traits of
intrapreneurs are moderately affected by the corporation. Intrapreneurs can be identified as team
players that take on a certain amount of risk (not as much as a startup entrepreneur, and not as little as,
for example, a manager), and have the ability to turn their vision into a profitable reality. These are
only a few of the identified traits of intrapreneurs. De Jong (2016) even argues that there are certain
antecedents of intrapreneurial behavior. One trait that helped Tom Rothman develop FOX Searchlight
was his ability of team building. With his efforts and his teams skills and help, FOX Searchlight was
created to be the successful studio it is known as today.
FOX Searchlight was the implementation of Tom Rothman’s vision. With his business plan he
was able to convince Peter Chermin to take the risk in setting up the new venture at FOX. With his
new team and Peter Chermin’s help, Tom Rothman was able to put together the architecture of FOX
Searchlight that still exists today.
Internal corporate venturing at FOX Searchlight
Burgelman and Välikangas explain that the definition of Internal Corporate Ventures (ICVs) is
entrepreneurial initiatives that arise within a corporate structure. These ICVs are intended from
inception as new businesses for the corporation, are frequently used by established companies as a
means to achieve competitive advantages or to overcome poor prospects in their core businesses
(2005). The force that drives the ICV cyclicality is the interplay between the availability of financial
resources and the prospects of a company’s current mainstream business. This interplay has created
four possible outcomes.
First of all are the ‘ICV orphans’ which will happen when there are available financial
resources and the current business of the company is sufficient. When the company is not committed
to any financial resources, it can support internal-venturing projects. However, they will only do this
when the prospects of the mainstream business are sufficient to meet the company’s profitable growth
objectives. ICV orphans are not motivated to support ICV actively and top management is more likely
to pay lip service to it. The second possible outcome is the ‘all-out ICV drive’ in which the company
has financial resources available but the current business is insufficient. In this situation the top
management is more motivated for ICV projects and they will create new-venture divisions in which
existing ICV orphan projects can be placed. The third possible outcome is the ‘ICR irrelevance’, in
which there are little financial resources available and the current business is sufficient. Because there
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are no financial resources, the top management is not interested in ICV. They need to focus on their
core businesses to exploit opportunities. The last outcome is the ‘desperately seeking ICV’. There are
no resources available and the business is insufficient. The top management is desperate and will latch
on the first reasonable-looking ICV project that comes their way. However, the possibility that this is a
failure, is high (Burgelman & Välikangas, 2005).
Tom Rothman was the founder of FOX searchlight and had the opportunity to sell his
company for €300 million. However, Sam Goldwyn did not approve selling the company because his
father’s name was on the company. Therefore, Rothman had to come up with a new idea.
In the case of Fox searchlight, determining the best fitting ICV outcome has to be done by
analyzing the integration of the company to Fox itself at the time. Two key components have to be
taken into consideration here, first one being the availability and commitment of financial resources
for Fox searchlight and second being likeliness to meet expected goals by core businesses of Fox.
Searchlight became independent-film branch of Twentieth Century Fox Film Corporation, a
company which is considered as one of the Big Six film studios in the United States. However, prior
to its acquisition Fox Corporation already produced and published independent and foreign films
under 20th Century-Fox International Classics, which was replaced after the addition of the new
studio. This indicates that Fox had a considerable amount of financial resources to dedicate to
Searchlight.
Twentieth Century Fox had been operating successfully since 1935. During its lifetime it had
successfully acquired and integrated several film studios. Prior to 1994 the company had already
produced some of the greatest hits in the industry like Star Wars. This would imply that Fox didn’t
have major obstacles in achieving its expected goals.
When a company has uncommitted financial resources and is likely to meet core targets, the
most probable ICV outcome would be ICV orphans. This is further supported by the fact that Fox
searchlight managed to maintain a substantial amount of operating and administered independence
from top management, as it had its own production and distribution channels.
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