CHAPTER17 Flashcards
(13 cards)
What is corporate entrepreneurship ?
• is the process whereby an individual or a group
of individuals, in association with an existing business, creates a new
business or instigates renewal or innovation within the organisation
- may be formal or informal activities aimed at
creating new businesses in established companies through product and
process innovations and market developments.
These activities may take
place at the corporate, division (business), functional, or project levels, with
the unifying objective of improving a company’s competitive position and
financial performance
Explain the three types of corporate venturing:
1 Internal corporate venturing : is when new businesses are created and
owned by the organisation. Example: Development Bank of Southern Africa
(DBSA)
2 Cooperative corporate venturing : refers to entrepreneurial activity in
which new businesses are created and owned by the organisation together
with one or more external development partners. Example: Ster-Kinekor
3 External corporate venturing : refers to entrepreneurial activity in which
new businesses are created by parties outside the organisation which is
invested in or acquired by the organisation. Example: Standard Bank and
University of Johannesburg
In the domains of corporate entrepreneurship
There are five forms of strategic entrepreneurship, name and explain them ?
- Strategic renewal : refers to the corporate entrepreneurship phenomenon
whereby the organisation seeks to redefine its relationship with its markets
or industry competitors by fundamentally altering how it competes. - Sustained regeneration .
regularly and continuously introduce new products and services or enter
new markets. - Domain redefinition : refers to the corporate entrepreneurship phenomenon
whereby the organisation proactively creates a new product-market arena
that others have not recognised or actively sought to exploit. - Organisational rejuvenation : seeks to sustain or improve its competitive
By altering its internal processes, structures, and/or capabilities. - Business model reconstruction : applying
entrepreneurial thinking to the design or redesign of its core business
model(s) to improve operational efficiencies
The importance of corporate innovation
The benefits of instilling CE in an organisation can be summarised as follows:
– Competitive advantage is gained and sustained at all levels.
– The existing organisation is rejuvenated and revitalised.
– New products, services, and processes are developed.
– Entrepreneurial opportunities are pursued.
– New businesses are created within existing organisations.
– Strategic renewal of existing operations is fostered.
– There is improved growth and profitability.
– Corporate competitiveness is sustained.
– Financial performance is increased.
– New value is created.
a model for sustainabed corporate entrepreneurship
The five organisational antecedents can be described as follow:
Top management support
for CE captures the encouragement and willingness of managers
to facilitate CE activity within an organisation.
• Work discretion and autonomy of employees
refers to the discretion given to employees
and the extent to which they are empowered to make decisions about performing their work
in the way they believe is most effective.
• Appropriate use of rewards.
Rewards and reinforcement develop the motivation of
individuals to engage in innovative, proactive, and moderate risk-taking behaviour.
• Resource and time availability.
To consider acting in entrepreneurial ways, employees need
to perceive resources as accessible for CE activities.
• Supportive organisational structure and flexible organisational boundaries.
Asupportive organisational structure provides the administrative mechanism by which ideas
are evaluated, chosen, and implemented.
What are the Critical aspects related to corporate entrepreneurship strategy?
• Developing the vision.
The vision must be clearly articulated by the organisation’s leaders,
but the specific objectives are developed by the managers and employees of the organisation.
• Encouraging innovation. Organisations must understand and develop innovation as the key
element in their strategy.
• Structuring for a corporate entrepreneurial climate. To develop employees as a source of
innovations for corporations, companies need to provide more nurturing and information-
sharing activities.
• Developing individual managers for corporate entrepreneurship. As a way for
organisations to develop key environmental factors for entrepreneurial activity, a corporate
entrepreneurship training programme often induces the change needed in the work
atmosphere.
• Developing venture teams. Venture teams are a new strategy for many organisations. They
are referred to as self-directing, self-managing or high performing.
The triggers that force the organisation to act in entrepreneurial ways
The influence of the external environment?
• Munificent, opportunity-rich environments
– Organisations instigate innovative strategies or formulate responses to the external
environment that surrounds them. An environment characterised by change and new
opportunities encourages organisations to capitalise on these opportunities by acting in
creative and innovative manners.
• Hostile, threatening environments
– Environmental hostility refers to environmental conditions where changes are
unfavourable and the rivalry between competitors could create threats to an
organisation’s survival. Declining demand for the organisation’s products, competitive
rivalry and limited resources may contribute to the perceived threats posed by the
environment.
The triggers that force the organisation to act in entrepreneurial ways
The influence of the internal environment?
• The influence of organisational age and the venture life cycle
– The age of an organisation can be linked to the venture life cycle through
which organisations progress. Organisations experience the natural
patterns of life cycle stages, from initial venture development through
start-up activities, venture growth, stabilisation or maturity, innovation
or decline
Other internal triggers that lead to entrepreneurial activity:
– Declining market share, profits or sales
– New sales targets
– Poor quality of an existing product or service
– Customer and supplier complaints
– Senior management initiative
– Personal initiative of one or more employees
– Strategic growth target
– Availability of new equipment, new resources or new distribution
channel
– New management
– Geographical expansion
– Employee trai
Implementation of corporate entrepreneurship
Structured development interventions?
– An orientation to CE and its relationship to innovation
– Guidelines for breakthrough ideas using CE techniques
– Performance motivation, creativity, innovation and opportunity
– Assessing the current climate
– Form of CE
– Business planning
– Functional skills
Implementation of corporate entrepreneurship
The role of the team – outside and within the organisation?
the following key roles are visible in the
CE process:
• Initiator. The initiator triggers a new entrepreneurial event.
• Sponsor/facilitator. This is the leader or a major sponsor of the initiative
who pushes for its acceptance and completion.
• Champion. The champion drives and directs the process and oversees the
implementation process.
• Innovation facilitator. This person serves as a translator between the
language, culture and needs of the sponsor’s world.
• Supporter. The supporter augments the team.
• Reactor. The reactor plays the role of devil’s advocate
Implementation of corporate entrepreneurship
The role of top management?
with entrepreneurial top management teams are more successful
at implementing innovative, entrepreneurial strategies and obtaining a better
return on their investments.
• Top management can influence the entrepreneurial process in several ways:
– Strategic leaders, because of their positions, have a unique and
comprehensive view of CE activities.
– Great organisations are driven by clear, inspiring visions.
– Strategic leaders may influence innovation through the selection,
promotion and ongoing support of CE champions.
– Entrepreneurial top management teams also need to create an enabling
corporate culture.
Implementation of corporate entrepreneurship
Formal corporate entrepreneurship programmes?
A formal programme to stimulate CE and innovation can take various forms
1 Corporate venturing. New business creation involves six major stages in which the
roles of management and venture management need to be recognised and
implemented
- The stage is set when senior management decides whether venturing is
strategically desirable and necessary for the organisation. - Ventures are chosen.
- The venture is planned, organised and started.
- The venture needs to be monitored and controlled.
- The venture should be championed
- An organisation should learn from experience with the venture process.
2 Establishing a formal champion’s programme. A formal champion’s programme
encourages ambitious and talented entrepreneurs throughout the organisation to
suggest, develop, champion, and implement new CE initiatives
A more comprehensive approach to assess CE, is the entrepreneurial
health audit? How do we implement it.
- The first step involves assessing the organisation’s level of entrepreneurial
intensity (EI). - The second step involves diagnosing the climate for corporate
entrepreneurship using the Corporate Entrepreneurial Health Instrument
(CEAI). - These can be used as input to construct a gap analysis. Low CEAI scores
suggest the need for training and development activities to enhance the
organisation’s readiness for entrepreneurial behaviour, as well as the
successful use of a corporate entrepreneurial strategy
