the creation of new value by an existing organization or new venture that involves the assumption of risk
entrepreneurship
the process of discovering the evaluating changes in the business environment, such as a new technology, sociocultural trends, or shifts in consumer demand, that can be exploited
opportunity recognition
private individuals who provide equity investments for seed capital during the early stages of a new venture
angel investors
companies organized to place their investors’ funds in lucrative business opportunities
venture capitalists
funding a venture by pooling small investments from a large number of investors; often raised on the internet
crowdfunding
leadership appropriate for new ventures that requires courage, belief in one’s convictions, and the energy to work hard even in difficult circumstances and that embodies vision, dedication and drive, and commitment to excellence
entrepreneurial leadership
a strategy that enables a skilled and dedicated entrepreneur, with a viable opportunity and access to sufficient resources, to successfully launch a new venture
entrepreneurial strategy
a firm’s entry into an industry with a radical new product or highly innovative service that changes the way business is conducted
pioneering new entry
a firm’s entry into an industry with products or services that capitalize on proven market successes and that usually have a strong marketing orientation
imitative new entry
a firm’s entry into an industry by offering a product or service that is somewhat new and sufficiently different to create value for customers by capitalizing on current market trends
adaptive new entry
intense rivalry, involving actions and responses, among similar competitors vying for the same customers in a marketplace
competitive dynamics
acts that might provoke competitors to react, such as new market entry, price cutting, imitating successful products, and expanding production capacity
new competitive action
a firm’s awareness of its closest competitors and the kinds of competitive actions they might be planning
threat analysis
the extend to which competitors are vying for the same customers in the same markets
market commonality
the extend to which rivals draw from the same types of strategic resources
resource similarity
major commitments of distinctive and specific resources to strategic initiatives
strategic actions
refinements or extensions of strategies usually involving minor resource commitments
tactical actions
degree of concentration of a firm’s business in a particular industry
market dependence
a firm’s choice of not reacting to a rival’s new competitive action
forbearance
a firm’s strategy of both cooperating and competing with rival firms
co-opetition
the process of monitoring and correcting a firm’s strategy and performance
strategic control
a sequential method of organizational control in which 1. strategies are formulated and top management sets goals, 2. strategies are implemented, and 3. performance is measured against the predetermined goal set
traditional approach to strategic control
a method of organizational control in which a firm gathers and analyzes information from the internal and external environment in order to obtain the best fit between the organization’s goals and strategies and the strategic environment
informational control
a method of organizational control in which a firm influences the actions of employees through culture, rewards, and boundaries
behavioral control
a system of shared values and beliefs that shape a company’s people, organizational structures, and control systems to produce behavioral norms
organizational culture
policies that specify who gets rewarded and why
reward system
rules that specify behaviors that are acceptable and unacceptable
boundaries and constraints
the relationship among various participants in determining the direction and performance of corporations.The primary participants are 1. the shareholders, 2. the management, and 3. the board of directors
corporate governance
a mechanism created to allow different parties to contribute capital, expertise, and labor for the maximum benefit of each party
corporation
a theory of the relationship between principals and their agents, with emphasis on two problems: 1. the conflicting goals of principals ad agents, along with the difficulty of principals to monitor the agents, and 2. the different attitudes and the preferences toward risk of principals and agents
agency theory
a group that has fiduciary duty to ensure that the company is run consistently with the long-term interests of the owners, or shareholders, of a corporation and that acts as an intermediary between the shareholders and management
board of directors
actions by large shareholders to protect their interests when they feel that managerial actions of a corporation diverge from shareholder value maximization
shareholder activism
methods that ensure that managerial actions leader to shareholder value maximization and do not harm other stakeholder groups that are outside the control of the corporate governance system
external governance control mechanisms
an external control mechanism in which shareholders dissatisfied with a firm’s management sell their shares
market for corporate control
the risk to management of the firm being acquired by hostile raider
takeover constraint
conflicts between two classes of principals-controlling shareholders and minority shareholders-within the context of a corporate governance system
principal-principal conflicts
activities that enrich the controlling shareholders at the expense of the minority shareholders
expropriation of minority shareholders
a set of firms that, though legally independent, are bound together by a constellation of formal and informal ties and are accustomed to taking coordinated action
business groups
the formalized patterns of interactions that link a firm’s tasks, technologies, and people
organizational structure
an organizational form in which the owner-manager makes most of the decisions and controls activities, and the staff serves as an extension of the top executive
simple organizational structure
an organizational form in which the major functions of the firm, such as production, marketing, R&D, and accounting, are grouped internally
functional organizational structure
an organizational form in which products, projects, or a product markets are grouped internally
divisional organizational structure
an organizational form in which products, projects, or product-market divisions are grouped into homogeneous units
strategic business unit (SBU) structure
an organizational form that is variation of the divisional organizational structure in which the divisions have a high degree of autonomy both from other divisions and from corporate headquarters
holding company structure
an organizational form in which there are multiple lines of authority and some individuals report to at least two managers
matrix organizational structure
organizational designs that attempt to simultaneously pursue modest, incremental innovations as well as more dramatic, breakthrough innovations
ambidextrous organizational deisgns
managers’ exploration of new opportunities and adjustment to volatile markets in order to avoid complacency
adaptability
managers’ clear sense of how value is being created in the short term and how activities are integrated and properly coordinated
alignment
organizational forms that group similar or related business units under common management control and facilitate sharing resources and infrastructures to exploit synergies among operating units and help to create a sense of common purpose
horizontal organizational structures
a continually evolving network of independent companies that are linked together to share skills, costs, and access to one another’s markets
virtual organization
an organization in which non vital functions are outsourced, using the knowledge and expertise of outside suppliers while retaining strategic control
modular organization
an organizational design in which firms bridge real differences in culture, function, and goals to find common group that facilitates information sharing and other forms of cooperative behavior
barrier-free organization
organizations in which the boundaries, including vertical, horizontal, external, and geographic boundaries are permeable
boundaryless organizational designs
an organizational form in which international operations are in a separate, autonomous division. most domestic operations are kept in other parts of the organization
international division structure
a type of divisional organizational structure in which operations in geographic regions are grouped internally
geographic-area division structure
a type of matrix organizational structure that has one line of authority for geographic-area divisions and another line of authority for worldwide product divisions
worldwide matrix structure
a functional structure in which all departments have worldwide responsibilities
worldwide functional structure
a product division structure in which all divisions have worldwide responsibilities
worldwide product division structure
a business organization that, from inception, seeks to derive significant advantage from the use of resources and the sale of outputs in multiple countries
global start-up
the process of transforming organizations from what they are to what the leader would have them become
leadership
a strategic leadership activity of strategy analysis and strategy formulation
setting a direction
a strategic leadership activity of building structures, teams, systems, and organizational processes that facilitate the implementation of the leader’s vision and strategies
designing the organization
an organizational culture focused on core competencies and high ethical standards
excellent and ethical organizational culture
characteristics of individuals and organizations that prevent a leader from transforming an organization
barriers to change
a barrier to change that stems from people’s risk aversion
vested interest in the status quo
barriers to change that stem from an organizational design that impedes the proper flow and evaluation of the information
systemic barriers
a statement of the beliefs typically held by managers in a corporation
corporate credo
programs for building ethical organizations that have the goal of preventing, detaching, and punishing legal violations
compliance-based ethics programs
programts for building ethical organizations that combine a concern for law with an emphasis on managerial responsibility for ethical behavior, including 1. enabling ethical conduct; 2. examining the organization’s and member’s core guiding values, thoughts, and actions; and 3. defining the responsibilities and aspirations that constitute an organization’s ethical compass
integrity-based ethics programs
a system of right and wrong that assists individuals in decididng when an act is moral and immoral and/or socially desirable or not
ethics
the values, attituedes, and behaviroal patterns that define an organization’s operating culture and that determine what an organization holds as acceptable behavior
organizational ethics
the practices that firms use to promote an ethical business culture, including ethical role models, corporate credos, and codes of conduct, ethically based reward and evaluation systems, and consistently enforced ethical policies and procedures
ethical orientation
managers seeking out best examples of a particular practice as part of an ongoing effort to improve the corresponding practice in their own organization
benchmarking
benchmarking in which the examples are drawn from competitors in the industry
competitive benchmarking
benchmarking in which the examples are drawn from any organization, even those outside the industry
functional benchmarking
organizations that create a proactive, creative approach to the unknown; characterized by 1. inspiring and motivating people with a mission and purpose, 2. developing leaders, 3. empowering employees at all levels, 4. accumulating and sharing internal knowledge, 5. gathering and integrating external information, and 6. challenging the status quo and enabling creativity
learning organizations
an individual’s capacity for recognizing his or her own emotions and those of others, including the five components of self-awareness, self-regulation, motivation, empathy, and social skills
emotional intelligence (EI)
a leader’s personality characteristics and behavior that are the basis of the leader’s power
personal bases of power
barriers to change associated with the tendency for managers to look at issues from a biased or limited perspective based on their prior education and experience
behavioral barriers
barriers to change related to conflicts arising from power relationships
political barriers
a barrier to change that stems from people’s not having sufficient time for strategic thinking and reflection
personal time constraints
a leader’s ability to get things done in a way he or she wants them to be done
power
a formal management position that is the basis of a leader’s power
organizational bases of power
making decisions and taking action without certain knowledge of probable outcomes. some undertakings may also involve making substantial resource commitments in the process of venturing forward
risk taking
an intense effort to outperform industry rivals; characterized by a combative posture or an aggressive response aimed at improving position or overcoming a threat in a competitive marketplace
competitive aggressiveness
a willingness to introduce novelty through experimentation and creative processes aimed at developing new products and services as well as new processes
innovativeness
a forward-looking perspective characteristics of a marketplace leader that has the foresight to seize opportunities in anticipation of the future demand
proactivieness
independent action by an individual or a team aimed at bringing forth a business concept or vision and carrying it though completion
autonomy
the tendency for managers to irrationally stick with an investment, even one that is broken down into a sequential series of decisions, when investment criteria are not being met
escalation of commitment
the practices that businesses use in identifying and launching corporate ventures
entrepreneurial orientation
biases, blind spots, and other human frailties that lead to poor managerial decisions
managerial conceit
problem with investment decisions in which managers scheme to have a project meet investment approval criteria, even though the investment may not enhance firm value
back-solver dilemma
an individual working within a corporation who is willing to question the viability of a venture project by demanding hard evidence of venture success and challenging the belief system that carries a venture forward
exit champion
an investment analysis tool that looks at an investment or activity as a series of sequential steps, and for each step the investor has the option of 1. investing additional funds to grow or accelerate, 2. delaying, 3. shrinking the scale of, or 4. abandoning the activity
real options analysis (ROA)
an individual working within a corporation who brings entrepreneurial ideas forward, identifies what kind of market exists for the product or service, finds resources to support the venture, and promotes the venture concept to upper management
product champion
corporate culture in which change and renewal are a constant focus of attention
entrepreneurial culture
corporate entrepreneurship in which the venturing entity is separated from the other ongoing operations of the firm
focused approaches to corporate entrepreneurship
a group of individuals, or a division within a corporation, that identifies, or evaluates, and cultivates venture opportunities
new venture group (NVG)
a corporate new venture group that supports and nurtures fledgling entrepreneurial ventures until they can thrive on their own as stand-alone businesses
business incubator
the creation of new value for a corporation though investments that create either new sources of competitive advantage or renewal of the value proposition
corporate entrepreneurship (CE)
a firm-specific view of innovation that defines how a firm can create new knowledge and learn from an innovation initiative even if the project fails
strategic envelope
the use of new knowledge to transform organizational processes or create commercially viable products and services
innovation
efforts to create product designs and applications of technology to develop new products for end users
product innovation
efforts to improve the efficiency of organizational processes, especially manufacturing systems and operations
process innovation
an innovation that fundamentally changes existing pratices
radical innovation
an innovation that enhances existing practices or make small improvements in products and processes
incremental innovation