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Entrepreneurial Strategy and Coopetition. Boeing’s strategy in the Air Traffic Management

Entrepreneurial Strategy and Coopetition. Boeing’s strategy in the Air Traffic Management. Colette Depeyre Hervé Dumez & Alain Jeunemaître École polytechnique, Université Paris-Ouest, University of Oxford . Preliminary remark. We are not specialists of entrepreneurs and entrepreneurship

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Entrepreneurial Strategy and Coopetition. Boeing’s strategy in the Air Traffic Management

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  1. Entrepreneurial Strategy and Coopetition.Boeing’s strategy in the Air Traffic Management Colette Depeyre Hervé Dumez & Alain Jeunemaître École polytechnique, Université Paris-Ouest, University of Oxford International Workshop on Co-opetition and Entrepreneurship, 25 & 26/06/2009

  2. Preliminary remark • We are not specialists of entrepreneurs and entrepreneurship • Presentation is about an attempt to understanding entrepreneurial strategy and how it relates to co-opetition perspective International Workshop on Co-opetition and Entrepreneurship, 25 & 26/06/2009

  3. The approach • Review of literature on entrepreneurship from Cantillon onwards • Propositions characterising the notion • Selection of a case study (Boeing and the Air Traffic Management in 2000-2004) • Discussion of the propositions from case study analysis International Workshop on Co-opetition and Entrepreneurship, 25 & 26/06/2009

  4. The litterature • The entrepreneur as a function (the French school – Cantillon, Say, Walras) • The entrepreneur as a figure (individual or organizational) • The entrepreneur as a relational position in a field • The strategic content of the entrepreneurial action • The temporality of the entrepreneurial action • The outcomes of the entrepreneurial action (difficult to assess) International Workshop on Co-opetition and Entrepreneurship, 25 & 26/06/2009

  5. Proposition 1. The entrepreneur as a function • The entrepreneur bears a risk. Either she finances her project herself, or she raises funds. The risk can be financed by a « slack of resources » (Ahuja & Lampert, 2001). International Workshop on Co-opetition and Entrepreneurship, 25 & 26/06/2009

  6. Proposition 2. The entrepreneur as a figure • The entrepreneurial figure can be an individual or an organisation. In the later case, the entrepreneurial strategy may be developed by a new entrant or an incumbent or dominant firm (Methé et alii, 1997 ; Ahuja & Lampert, 2001 ; Greenwood & Suddaby, 2006 ; Depeyre & Dumez, 2009). International Workshop on Co-opetition and Entrepreneurship, 25 & 26/06/2009

  7. Proposition 3. The entrepreneur as a relational position • An entrepreneurial strategy is implemented by an incumbent or dominant firm situated at the interface of many organisational fields. It often consists of transferring a practice from one field to another (for example a particular know-how). Doing so, the firm creates a major uncertainty in the organizational field and disturbs the ongoing co-opetitive relationships in its environment. International Workshop on Co-opetition and Entrepreneurship, 25 & 26/06/2009

  8. Proposition 4. The strategic content of the entrepreneurial action • The purpose of an entrepreneurial strategy is the creation of a market (Casson, 2005 ; Pitelis & Teece, 2009). Here, the analysis focuses on the co-opetitive dimension. A firm attempting to create a market shall cooperate with competitors to embark them on the idea of a new market ensuring its own growth, and, at the same time compete to confiscate the revenues of the added value International Workshop on Co-opetition and Entrepreneurship, 25 & 26/06/2009

  9. Proposition 5. The temporality of the entrepreneurial action • An entrepreneurial strategy develops within a particular dynamics (quick success or failure, “discontinuous change” – Schumpeter - or crystallization in the sense of Arendt). International Workshop on Co-opetition and Entrepreneurship, 25 & 26/06/2009

  10. Proposition 6. The outcomes of entrepreneurial action • Assessing the outcomes of an entrepreneurial strategy proves difficult. There may be short or long term wins or losses, tangible or intangible, profitable ones for players as unprofitable to others. International Workshop on Co-opetition and Entrepreneurship, 25 & 26/06/2009

  11. The case study : Boeing and the Air Traffic Management • Boeing is not a supplier of ATM systems (FAA, LM & Raytheon) • Years 1999 and 2000, Boeing acquired two specialised firms (Jeppesen and the Preston Group) • November 2000, Boeing set up a subsidiary, Boeing ATM (it will grow from 40 to 250 people in two years, half of them being engineers) • June 2001, Boeing announced a plan to revolutionize the ATM a few hours after the FAA has disclosed its Operational Evolution Plan • Boeing set up a Working Together Team, the members of which were the ATM stakeholders • Boeing got contracts in the ATM business (often in partnership) • 2004, Boeing terminated its subsidiary, Boeing ATM, (part of the ATM staff reallocated to the Phantom Works) International Workshop on Co-opetition and Entrepreneurship, 25 & 26/06/2009

  12. The case study : what Boeing said • Our strategy is long term and undirect (we only want to sell more planes - “our ability to grow our largest single business could be constrained” if ATM does not improve dramatically) • Stress is put on the role played by satellites in the revolutionary technology shift (Boeing has acquired Hughes and is a dominant player in satellites) International Workshop on Co-opetition and Entrepreneurship, 25 & 26/06/2009

  13. The case study : what Boeing did not say • The FAA (monopsony in the market) has proved unable to do the job and must be marginalised (Boeing said it in private...) • Boeing refused to unveil its business plan (contracts did not match the financing of a 250 people unit) • Consequently the stakes were high, the issue being : was Boeing to run the new ATM system in place of the FAA ? International Workshop on Co-opetition and Entrepreneurship, 25 & 26/06/2009

  14. Discussion • Proposition 1. Using a slack of resources, Boeing bears the risk (large investment to be seen as credible and committed) • Proposition 2. Boeing illustrates that a large dominant firm may adopt a revolutionary entrepreneurial strategy • Proposition 3. Boeing’s position is quite particular. The firm has diverse (private customers and government – civil and defense contracts), but focused (work with the client to define requirements for large technological systems, use of powerful simulation tools, work with suppliers to develop the system) activities, which allows analogic innovation from one of these activities to another (entrepreneurial strategy). Doing so major uncertainty in the market putting competitive (FAA) and cooperative (LM, Raytheon) pressures on traditional market participants. Boeing made use of invitation to cooperate to new players (Department of Defense, Eurocontrol) International Workshop on Co-opetition and Entrepreneurship, 25 & 26/06/2009

  15. Discussion • Proposition 4. Boeing attempts to reshuffle an existing market (FAA the buyer, LM and Raytheon the suppliers) in favor of a new one (transatlantic, users-oriented). Boeing has to choose a credible position in between the Walrasian auctionner (altruist) and a monopolist. This position is a mix of cooperation and competition. • Proposition 5. The entrepreneurial strategy is a crystallization of different, heterogeneous trends generating the appearance of the systems of systems. The raise was quick, and so was the decline. • Proposition 6. The outcome is difficult to assess. Boeing has brought its subsidiary to an end. The project has failed. But Boeing is now a player in the field. Boeing’s strategy has triggered a European programme, in which Boeing is taking part (Nextgen Sesar coordinating efforts) International Workshop on Co-opetition and Entrepreneurship, 25 & 26/06/2009

  16. Results • The six perspectives on the entrepreneur concept have been illustrated in the case study • The entrepreneurial strategy is defined in reference with the creation of a market • It points to co-opetition in a already structured organisational field, the creation of a market having to blend co-operation and competition • The firm in the position of the entrepreneur has to adopt a self-restrained strategy International Workshop on Co-opetition and Entrepreneurship, 25 & 26/06/2009

  17. Thanks for your attention International Workshop on Co-opetition and Entrepreneurship, 25 & 26/06/2009

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