Forms of Corporate Entrepreneurship

Corporate entrepreneurship is one that generates and exploits new technologies, products, or businesses under the corporate umbrella of an established firm. Corporate entrepreneurship can speed up processes inside the company and helps to invent and commercialize innovative products or services.

Corporate entrepreneurship is the process by which teams within an established company conceive, foster, launch and manage a new business that is distinct from the parent company but leverages the parent’s assets, market position, capabilities or other resources. Corporate entrepreneurship is also more than the development of new products; it also implies innovations to existing products or brands. Corporate entrepreneurship is also defined as the process of stimulating innovative ideas and processes. The common goal of the concept is creating wealth. This definition differs from the other two definitions above in the sense that it doesn’t mention the protection of an established firm as a characteristic of corporate entrepreneurship.

Innovation was the single common theme underlying all forms of corporate entrepreneurship. The concept of corporate entrepreneurship is namely effective when a company has to deal with rapidly changing environments. In these environments it is often difficult to predict what will happen in the future. To deal with the changing business environments, companies can prepare for the unexpected by building opportunity-focused organizations. In this way the companies is able to capture new business opportunities by the resources and people available.

To conclude, corporate entrepreneurship is an innovative way to create new products, technologies or business. Thus, it is about the creation of something new.

Important Forms of Corporate Entrepreneurship

There are four different forms of corporate entrepreneurship: corporate venturing, intrapreneuring, organizational transformation and industry rule bending. These four forms of corporate entrepreneurship are explained below.

1. Corporate Venturing

Corporate venturing is about the creation of a new business inside the established firm, with the focus on a new product or market opportunity. The concept of corporate venturing is often used with the goal of generating new revenue and creating value for companies’ shareholders. Internal corporate venture is defined as an entrepreneurial initiative that is originated within the corporate structure and is created with the goal of creating a new business for the organization. Corporate venturing is about entering new markets with new or current products or launching new products in existing or new markets. However, corporate venturing brings along some culture problems between the established and new company.

2. Intrapreneuring

Intrapreneuring can be seen as the exercise of entrepreneurship, but within a large company. In this view, the role of an intrapreneur can be compared with the role of an entrepreneur. Hereby, it is very important to create a balance between allowing him the freedom to make his own decisions and while working between the strategic boundaries of the firm. Mostly some current managers are denoted to work as intrapreneurs in order to identify new business opportunities, because they often already possess entrepreneurial competences. These individuals form entrepreneurial groups and try to persuade others to reproduce their behavior. In this way the intrapreneurs hope to create new corporate resources. To create successful intrapreneurship, top management of companies has to ensure that managers (intrapreneurs) feel supported by them when searching for new innovation opportunities. Otherwise intrapreneurship will not be effective. Besides that, management has to take care that they provide intrapreneurs enough freedom to work on the things they like with sufficient resources and failing opportunities.

3. Organizational Transformation

Organizational renewal is a more expansive notion of a complete business (legally or economically defined) altering its resource pattern to achieve better and sustainable overall economic performance. The goal of organizational renewal or transformation is often to improve a firm’s performance. Examples of organizational transformation forms are de-layering, cost cutting and downsizing. It is not advisable to change the organizational structure of a company neither the human resource policy, but managers have to start with revitalizing small operations to be effective in the organizational transformation process. To make the transformation successful, the involvement of top management is very important when transforming the organization; top management should make timely adjustments in their business models in order to cope optimally with changing environments. Besides that, a flexible organization is of advantageous when transforming a company.

Organizational transformation is not about the creation of a new business. However, it still is a form of corporate entrepreneurship because it is about the creation of something new; a transformed organization. An example of such an innovation is business model innovation, which seems to be as important as the creation of new products and services. Business model innovation ensures that companies can more easily capture growth opportunities.

4. Industry Rule-Bending

Just a few companies have tried to create new opportunities by changing the industry. The form industry rule-bending is a sort of transformation that focuses on changing the rules in the industry in which the company is engaged to create new opportunities in the field of entrepreneurship and innovation. This form of corporate entrepreneurship is also termed as frame-breaking change, because not only the enterprise itself has to be transformed, but also its industry. Changing the industry creates opportunities for growth and innovation. A company can be successful by following the rules in a right way, but the company will be most successful when transforming the rules in order to let them suit the company. Results that can be created by industry rule-bending are for example high quality at low costs and speed or efficiency. In order to set up a successful industry rule-bending strategy, some managers as corporate entrepreneurs and let them search for rule-bending opportunities. Over time, this focus can be broadened towards organizational renewal.

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