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CHAPTER 13 ENTREPRENEURIAL IMPLICATIONS FOR STRATEGY

CHAPTER 13 ENTREPRENEURIAL IMPLICATIONS FOR STRATEGY. KNOWLEDGE OBJECTIVES. IMPORTANT DEFINITIONS . Organizational culture: the complex set of ideologies, symbols, and core values shared throughout the firm and that influence how the firm conducts business

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CHAPTER 13 ENTREPRENEURIAL IMPLICATIONS FOR STRATEGY

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  1. CHAPTER 13ENTREPRENEURIAL IMPLICATIONS FOR STRATEGY

  2. KNOWLEDGE OBJECTIVES

  3. IMPORTANT DEFINITIONS • Organizational culture:the complex set of ideologies, symbols, and core values shared throughout the firm and that influence how the firm conducts business • The social energy that drives—or fails to drive—the organization • Strategic entrepreneurship:entrepreneurial actions (exploiting found opportunities in the external environment) through a strategic perspective (innovation efforts) • Entrepreneurship dimension:identifying opportunities to exploit through innovations • Strategic dimension:determining the best way to manage the firm’s innovation efforts

  4. ENTREPRENEURSHIP AND ENTREPRENEURIAL OPPORTUNITIES • Entrepreneurship is concerned with: • The discovery of profitable opportunities • The exploitation of profitable opportunities • Entrepreneurship: the process by which individuals or groups identify and pursue entrepreneurial opportunities without the immediate constraint of the resources they currently control

  5. KEY CHAPTER POINTS THREE ‘I’s • Three types of innovation activities according to Schumpeter • ●Invention • ● Innovation • ● Imitation THREE WAYS TO INNOVATE • ● Internal - autonomous vs. induced • ● Cooperative strategies (e.g., strategic alliances) • ● Acquisitions

  6. INNOVATION • Innovation is the “specific function of entrepreneurship” (Drucker) It is “the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth” (Drucker) • It is a source of competitive success, especially in turbulent and highly competitive environments • For global markets, innovation is key for competitive parity at a minimum, much less for competitive advantage

  7. INNOVATION Invention • The act of creating or developing a new product or process • Brings something new into being • Technical criteria determine the success of an invention

  8. INNOVATION Invention Innovation • Process of creating a commercial product from an invention • Brings something new into use • Commercial criteria determine the success of an innovation

  9. INNOVATION Invention Innovation Imitation • Adoption of an innovation by similar firms • Usually leads to product or process standardization • Products based on imitation often are offered at lower prices and without as many features • Results of imitation • Product or process standardization • Products made with fewer features • Products offered at lower prices

  10. INTERNAL INNOVATION • Firms take deliberate efforts to develop inventions and innovations within the organization, selecting from several types of innovation and the specific processes through which each type is produced. • Most innovation is due to research and development (R&D): • Investments are uncertain • Often not achieved in the short term

  11. INTERNAL INNOVATION • Internal Corporate Venturing refers to the set of activities firms use to develop internal inventions and innovations: autonomous and induced

  12. INTERNAL INNOVATION • ■ Bottom-up process in which product champions pursue new ideas, often through a political process, to develop and coordinate the commercialization of a new good or service • ■ Product champion: individual with an entrepreneurial vision of a new good or service who seeks to create support in the organization for its commercialization • ■ Autonomous strategic behavior is focused on firm’s knowledge and resources • ■ Knowledge must be continuously diffused throughout the firm

  13. INTERNAL INNOVATION Induced strategic behavior • Top-down process whereby the firm’s current strategy and structure foster product innovations that are closely associated with that strategy and structure

  14. INNOVATION THROUGH COOPERATIVE STRATEGIES • To successfully commercialize inventions, firms may need to cooperate and integrate knowledge and resources • Entrepreneurial new venture firms may need investment capital and distribution capabilities • More established companies may need new technological knowledge possessed by newer entrepreneurial firms • To innovate via cooperative relationships, firms must share their knowledge and skills – strategic alliances and joint ventures allow this to occur

  15. INNOVATION THROUGH ACQUISITIONS • Rapidly extend the product line • Increase the firm’s revenues • KEY RISK: a firm may substitute its ability to buy innovations for its ability to produce innovations internally • A firm may: • Lose its intensity in R&D efforts • Lose its ability to produce patents • Research demonstrates that subsequent to acquisitions, firms introduce fewer new products into the market • This is because firms focus on the financial controls at the expense of strategic control

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