The Forms of
Corporate
Entrepreneurship
Copyright (c) 2011 by Donald F. Kuratko All rights reserved.
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
Different Forms that Corporate Entrepreneurship Can Take
Corporate
Entrepreneurship
Corporate Venturing
• Internal corporate
venturing
• Cooperative corporate
venturing
• External corporate
venturing
Strategic Entrepreneurship
• Strategic renewal
• Sustained regeneration
• Domain redefinition
• Organizational rejuvenation
• Business model
reconstruction



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
What is a new business?
Corporate Growth Strategy Matrix
New
Markets
Market
Focus
Current
Markets
Market
Development
Strategy
Diversification
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”
The Domain of a New Business
Market
Creation
Market Focus of
the
Entrepreneurial
Initiative
New
Business
*New
Market
Market
Extension
Existing
Market
Existing
Business
Existing
Product in
Current
Industry
* The point of reference for new is new to the firm
Product
Extension in
Current
Industry
*New
Product in
Current
Industry
Product Focus of the
Entrepreneurial Initiative
New Industry
Entry and/or
Creation
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
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
Learning



To learn about the process of
venturing
To develop new competencies
To develop managers
Corporate venture capital investment – 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
Linkage between Operational Capabilities
Loose
Strategic
Driving Investment
Enabling Investment
Financial
Objectives of CVC
Investment
Tight
Emergent Investment
Passive Investment
 Corporate
entrepreneurship that
corresponds to a broader array of
entrepreneurial initiatives that do not
necessarily involve new added
businesses
 Each method of SE involves innovations
that are adopted to increase a firm’s
competitive advantage
Form of
Strategic
Entrepreneur
Focus of the
Entrepreneurial
Initiative*
The Entrepreneurial
Event
Typical Frequency of
the Entrepreneurial
Event
Strategic
Renewal
Strategy of the firm
Adoption of a new strategy
Low
Sustained
Regeneration
Products offered by the firm
or markets served by the firm
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
High
Domain
Redefinition
New competitive space
Creation of new or
reconfiguration of existing
product categories or market
space
Low
Organizational
Rejuvenation
Organization structure,
processes, and/or
capabilities of the firm
Enactment of a major,
internally-focused innovation
aimed at improving strategy
implementation
Low-to-moderate
Business Model
Reconstruction
Business model of the firm
Design of a new or redesign
of an existing business model
Low
*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
Strategic
Renewal
• Purpose: to redefine its relationship with its
markets or industry competitors by
fundamentally altering how it competes
• Focus: the firm’s strategy
• Represents a fundamental repositioning of
the firm within its competitive environment
• Given the severity, this is infrequently
attempted
Sustained
Regeneration
• Purpose: regularly and continuously
•
•
•
•
introduce new products and services or
enter new markets
Focus: the firm’s products/product markets
Represents consistent, incremental
innovations
May result in new business, but not often
Happens frequently (by definition)
Domain Redefinition
• Purpose: proactively create a new product
•
•
•
•
market that others have not recognized or
actively sought to exploit
Focus: a firm’s new product market arena
Represents the pioneering of a new product
category, giving rise to new industries or
redefining existing industries
Definitely creates a new business
Very infrequently attempted
Organizational Rejuvenation
• Purpose: to sustain or improve its competitive
•
•
•
•
standing by altering its internal environment
Focus: a firm’s processes, structures, and/or
capabilities
Helps a firm change without changing it’s
strategy, product offerings, or markets
Can involve major or minor changes
Minor changes are common, but major
changes are less frequent
Business
Model Reconstruction
• Purpose: redesigning a firm’s core business
model to improve efficiency or better
differentiate itself from competitors
• Focus: a firm’s business model (everything!)
• Represents changing the fundamental way
that a business operates
• Very infrequently attempted
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”
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
Decisions in these six areas can be made at
three levels:
1.) Foundation level
2.) Proprietary level
3.) Rules level
1.) Foundation level- “What do we do?”
•
Represents decisions regarding what the business
is and is not
2.) Proprietary level- “How do we do it?
•
Represents how a business implements such
decisions
3.) Rules level- “What are the rules that
govern how we do it?
•
Delineates guiding principles that govern the
execution of the decisions made at the previous
levels
Refer to Table 4-4 for example
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.”
•
Consistent with an open-systems perspective of
organizations
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