chapter 12

Question 1

__________ refers to efforts to create designs and applications of technology to develop new products, while __________ refers to efforts to improve the efficiency of organizational systems such as manufacturing and operations.
A. Radical innovation; incremental innovation
B. Breakthrough innovation; instrumental innovation
C. Product innovation; process innovation
D. Product innovation; service innovation

Answer 1

C. Product innovation; process innovation

Question 2

Whereas __________ are often associated with a low cost leader strategy, __________ are frequently an important aspect of a differentiation strategy.
A. process innovations; product innovations
B. product innovations; service innovations
C. radical innovations; instrumental innovations
D. marketing innovations; management innovations

Answer 2

A. process innovations; product innovations

Question 3

Incremental innovations
A. are usually highly disruptive.
B. usually represent technological breakthroughs.
C. are usually small improvements in products and processes.
D. nearly always can be patented.

Answer 3

C. are usually small improvements in products and processes.

Question 4

Radical innovations
A. often result in quick profits.
B. often represent technological breakthroughs.
C. usually apply to products and processes simultaneously.
D. usually cannot be patented.

Answer 4

B. often represent technological breakthroughs.

Question 5

__________ produce fundamental changes that can transform a company or even revolutionize an industry, while __________ enhance existing practices and often represent evolutionary applications of fundamental breakthroughs.
A. Technological breakthroughs; product-market breakthroughs
B. New technologies; new paradigms
C. Incremental innovations; radical innovations
D. Radical innovations; incremental innovations

Answer 5

D. Radical innovations; incremental innovations

Question 6

Innovations that extend sales in an existing market, usually by enabling new products or services to be sold at higher margins are known as 
A. radical innovations.
B. disruptive innovations.
C. technology innovations.
D. sustaining innovations.

Answer 6

D. sustaining innovations.

Question 7

All of the following are characteristics of a disruptive innovation EXCEPT
A. It is usually more sophisticated technologically.
B. It appeals to less demanding customers.
C. It is typically a less expensive solution for meeting a need.
D. It usually takes root in a new market or the low-end of an existing market.

Answer 7

A. It is usually more sophisticated technologically.

Question 8

All of the following are dilemmas faced by corporations trying to manage the innovation process EXCEPT
A. launching incremental rather than “preemptive” innovations.
B. emphasizing marketing over management innovations.
C. preferring experience over initiative.
D. choosing internal rather than external staffing.

Answer 8

B. emphasizing marketing over management innovations.

Question 9

The innovation dilemma known as building capabilities versus collaborating refers to
A. developing innovation skills internally versus partnering with qualified outsiders.
B. building innovative products in-house versus outsourcing.
C. building credibility by launching products ahead of potential collaboration partners.
D. all of these.

Answer 9

A. developing innovation skills internally versus partnering with qualified outsiders.

Question 10

The innovation dilemma known as seeds versus weeds refers to
A. choosing to pursue radical rather than incremental innovations.
B. choosing to pursue product rather than process innovations.
C. promoting organizational stars onto innovation teams rather than involving all employees in innovation efforts.
D. none of these.

Answer 10

D. none of these.

Question 11

42. (p. 438) Creative intelligence involves the ability to see patterns in data, integrating data, and making insights. The four patterns of actions that help build creative intelligence are
    A. observing, experimenting, cataloging, and networking.
    B. questioning, observing, integrating, and networking.
    C. questioning, observing, experimenting, and networking.
    D. observing, experimenting, cataloging, and integrating.
    The key attribute that firms need to develop in their managers in order to improve their innovative potential is creative intelligence. Creative intelligence is driven by a core skill of associating (the ability to see patterns in data and integrating different questions, information, and insights) and four patterns of action: questioning, observing, experimenting, and networking.

Answer 11

C. questioning, observing, experimenting, and networking.

Question 12

Individuals with highly innovative DNA traits have the ability to connect seemingly unrelated questions, problems, and ideas from different fields, allowing them the opportunity to creatively see opportunities others miss. In the text, this is referred to as 
A. associating.
B. integrating.
C. visioning.
D. allocating.

Answer 12

A. associating

Question 13

In the 1990s, DuPont used its knowledge of plastics to develop biodegradable plastic products. This is an example of
A. focusing on process rather than product innovation.
B. defining its innovation efforts within the context of its “strategic envelope.”
C. radical innovation.
D. public relations, since plastics are not biodegradable.

Answer 13

B. defining its innovation efforts within the context of its “strategic envelope.”

Question 14

The advantages of collaborating with strategic partners in order to innovate include
A. obtaining skills and new knowledge from outside sources.
B. making firms identify their own strengths and weaknesses.
C. managers clarifying what an innovation project requires to be successful and who will accomplish it.
D. all of these.

Answer 14

D. all of these.

Question 15

The W. L. Gore organization, a highly innovative company, uses several approaches and “rules of thumb” to encourage innovation. Which of the following is NOT one of them?
A. It requests that all risk-taking activities have a financial pay-off within one year.
B. It celebrates failure rather than condemning it.
C. It promotes person-to-person communications rather than e-mails.
D. It uses small teams to promote creativity and autonomy.

Answer 15

A. It requests that all risk-taking activities have a financial pay-off within one year.

Question 16

In a typical corporation, which of the following impact how the people within the corporation recognize entrepreneurial opportunities?
A. structural features that guide and constrain action
B. corporate culture
C. organizational systems that foster learning and manage rewards
D. all of these

Answer 16

D. all of these

Question 17

Two common forms of a focused approach to corporate entrepreneurship include
A. internal collaboration and internal venturing.
B. social capital and collaboration capital.
C. business incubators and new venture groups.
D. focus groups and business incubators.

Answer 17

C. business incubators and new venture groups.

Question 18

According to the text, __________, which support fledgling startups are often used to pursue specific entrepreneurial ventures developed by __________.
A. collaboration partners; strategic partners
B. business incubators; new venture groups
C. product champions; corporate venture capitalists
D. lower-level managers; upper-level managers

Answer 18

B. business incubators; new venture groups

Question 19

Corporate business incubators typically provide some or all of the following functions EXCEPT 
A. physical space.
B. mentoring.
C. funding.
D. student interns.

Answer 19

D. student interns.

Question 20

A culture of entrepreneurship is one in which
A. the search for venture opportunities permeates every part of the organization.
B. every value chain activity is viewed as a source of entrepreneurial value creation.
C. employees at every level are attuned to opportunities to help create new businesses.
D. all of these occur.

Answer 20

D. all of these occur.

Question 21

Common features of a dispersed approach to corporate entrepreneurship include all of the following EXCEPT
A. semi-autonomous new venture groups.
B. use of product champions.
C. a top-down approach to supporting entrepreneurial behavior.
D. an entrepreneurial culture.

Answer 21

A. semi-autonomous new venture groups

Question 22

In corporations with a strong entrepreneurial culture, the willingness and ability to change
A. is imposed from the top-down.
B. is considered a core capability.
C. often leads to instability.
D. often worries stakeholders such as suppliers and creditors.

Answer 22

B. is considered a core capability.

Question 23

Product champions
A. are typically senior executives.
B. are usually inventors of some sort.
C. scavenge for resources and encourage others to back promising new ideas.
D. are strong supporters of the status quo.

Answer 23

C. scavenge for resources and encourage others to back promising new ideas.

Question 24

Project \_\_\_\_\_\_\_\_\_\_ involves justifying whether an opportunity is attractive in the marketplace; project \_\_\_\_\_\_\_\_\_\_ involves evaluating the strategic and economic impact of a new venture. 
A. impetus; definition
B. definition; impetus
C. reward; development
D. development; focus

Answer 24

B. definition; impetus

Question 25

On average, approximately what percentage of corporate ventures reaches profitability within six years? 
A. 80 percent.
B. 65 percent.
C. 50 percent.
D. 35 percent.

Answer 25

C. 50 percent.

Question 26

Financial reasons for undertaking internal corporate venturing include
A. strengthening competitive position.
B. obtaining above average returns.
C. adding to the corporation’s resource base.
D. all of these.

Answer 26

B. obtaining above average returns.

Question 27

Strategic reasons for undertaking a corporate venture include which of the following?
A. entering into new markets
B. expanding capabilities by acquiring new knowledge
C. building the corporation’s base of resources
D. all of these

Answer 27

D. all of these

Question 28

All of the following are questions that should be answered when evaluating the performance of corporate venturing efforts EXCEPT which of these?
A. Is the venture attracting external venture funding?
B. Is the venture considered to be a market success?
C. Does the venture add to the worth of the firm internally?
D. Does the value proposition offered by the venture insulate it from competitive attack?

Answer 28

A. Is the venture attracting external venture funding?

Question 29

A manager whose role is to question the viability of corporate venture projects is known as a(n) 
A. product champion.
B. exit champion.
C. rising star.
D. mentor.

Answer 29

B. exit champion.

Question 30

Whereas __________ are willing to violate procedures and operate outside normal channels, __________ gather hard data and develop a strong case for why a project should be killed.
A. senior managers; entrepreneurial leaders
B. strategic managers; financial managers
C. exit champions; product champions
D. product champions; exit champions

Answer 30

D. product champions; exit champions

Question 31

Options exist when the owner of the option has
A. the obligation, but not the right to engage in a transaction.
B. the right, but not the obligation to engage in a transaction.
C. the right and obligation to engage in a transaction.
D. neither the right, nor the obligation to engage in a transaction.

Answer 31

B. the right, but not the obligation to engage in a transaction.

Question 32

Real options analysis is most appropriate when
A. the total investment required is small, but the environment is uncertain.
B. the investment required can be justified by Discounted Cash Flow (DCF) techniques.
C. a small investment up front can be followed by a series of subsequent investments.
D. there is no prospect of obtaining additional knowledge before making subsequent investments.

Answer 32

C. a small investment up front can be followed by a series of subsequent investments.

Question 33

One of the pitfalls of real options analysis is that managers may have an incentive and know-how to "game the system" and "back-solve" a formula to get a proposal approved. This can give rise to 
A. managerial conceit.
B. the illusion of control.
C. escalation of commitment.
D. agency problems.

Answer 33

D. agency problems.

Question 34

Which of the following is NOT one of the dimensions of entrepreneurial orientation? 
A. proactiveness
B. risk taking
C. autonomy
D. opportunism

Answer 34

D. opportunism

Question 35

Which of the following statements about skunkworks is FALSE?
A. They are independent work units.
B. They are used to encourage creative thinking and brainstorming.
C. They refer to a specialized type of outside contractor that corporations use to develop entrepreneurial ideas.
D. They help managers set aside their usual routines and practices.

Answer 35

C. They refer to a specialized type of outside contractor that corporations use to develop entrepreneurial ideas.

Question 36

After 15 teams created 128 different phones, Chris Galvin, former CEO of Motorola, recently eliminated the autonomous teams being used to develop new wireless phones. This was necessary because such teams
A. often lack coordination.
B. sometimes waste resources on projects with questionable feasibility.
C. sometimes create inefficiencies through duplication of effort.
D. all of these.

Answer 36

D. all of these.

Question 37

Which of the following dimensions of entrepreneurial orientation is described as "a forward-looking perspective characteristic of a marketplace leader that has the foresight to seize opportunities"? 
A. proactiveness
B. risk taking
C. autonomy
D. competitive aggressiveness

Answer 37

A. proactiveness

Question 38

All of the following statements about innovativeness are true EXCEPT which of these?
A. It refers to making decisions and taking risks without certain knowledge of probable outcomes.
B. It refers to a firm’s efforts to find new opportunities and novel solutions.
C. It involves creativity and experimentation.
D. It is aimed at developing new products, services, and processes.

Answer 38

A. It refers to making decisions and taking risks without certain knowledge of probable outcomes.