Corporate Entrepreneurship in the Digital Era: The Cascading Effect through Operations

This study examines a firm’s response to perceived changes in the environment, such as the growth of the digital era, at different levels of a firm—beginning with the adoption of corporate entrepreneurship (CE) down to process renewal (PR). We further explore if the technological intensity of a firm, high-tech or low-tech intensity, influences its choice of mode for organisational renewal (OR)—use of internal competence or outside acquisition—to exploit the opportunities created by the digital era. Using survey data from 170 firms, we test a sequential relationship among environmental changes (growth of the digital era), CE, OR and finally PR that involves operating procedures at the functional level. We conclude by identifying the study’s interdisciplinary contributions, which open new research avenues in the field of CE

Innovation Agents

The standard narrative of entrepreneurship is one of self-employed creative individuals working out of their garage or independently owned start-up companies. Intrapreneurship— where employees are responsible for being alert to new opportunities inside firms—is another model for developing innovations. Relatively little is known, however, about the latter process through which large, complex firms engage in groundbreaking corporate entrepreneurship. This Article’s focus is on these types of innovation agents. It provides a thorough account of the positive and negative spillovers of intrapreneurial firms while making the following key points: First, intrapreneurial companies utilize their economies of scale, scope, and age to deliver innovations to the masses. They transform ideas, labor, and raw materials into tangible assets that can be traded in the market. Second, in doing so they offer individual entrepreneurs opportunities to capitalize their knowledge. Sustaining entrepreneurs’ prospects for supra-competitive profits is the main engine that motivates the latter to invest in discoveries in the first place. Lastly, intrapreneurial firms also serve asgreenhouses for entrepreneurship through the migration of their own talented labor in the market. While these spillovers have tremendous societal benefits, they can also introduce harms. First, the race for the next breakthrough might result in anticompetitive behavior by rivals who conspire with employees-intrapreneurs to leave their firms and take with them confidential information. Second, intrapreneurs often aspire to undertake their own independent journey. In so doing, they leave secure positions and high salaries while carrying valuable knowledge and expertise. This, in return, often prompts intrapreneurial firms to act opportunistically and lock-in or lock-out intrapreneurs in restrictive and wasteful arrangements. As a solution, this Article proposes ways law can balance the positive and negative spillovers of intrapreneurship and ways the tax system can help achieve such result

The Influence of Strategic Leadership on Firm Inventive and Innovative Performance

Strategic leaders hold different beliefs regarding how much to invest in technological innovation, and how to manage it. While certain visionary leaders have created extraordinarily innovative organizations, little evidence exists regarding the degree to which strategic leaders generally influence the production of valuable inventions and new products. We examine how much of the variation in firms’ inventive (patent) and innovative (new product) performance strategic leaders explain. Based on a sample of Chief Executive Officers (CEOs) and Chief Scientific Officers (CSOs) who managed 27 large biopharmaceutical companies, from 1984 through 2004, we find that strategic leaders explain between 38% and 43% of the variation in inventive performance across firms, and that CEOs explain more of this variation than do CSOs. Stable firm characteristics are responsible for 27% of the variation in firms’ inventive performance. By contrast, 51% of the variation in innovative performance is attributable to firm differences, and CEOs and CSOs explain less than 4% of this. Finally, we show that CEOs and CSOs strongly influence the degree to which a firm derives inventive advantage from internal and external knowledge diversity

Growth Possibilities Found, Taken, and Lost

Growth possibilities found and taken affect long-term growth, profit, and competitiveness, but so do those that were missed. Due to limited literature on how opportunities are lost, this paper used field data to develop theoretical explanations of the decision-making process behind the phenomenon. The case research method was used to analyze comprehensive archival decision-making data on exploration and exploitation over a 20-year period at the DuPont Company, complemented by contemporaneous newspaper articles. Lost opportunities were analyzed using the counterfactual method of business and economic historians. Choices of which new domain to explore were based on attempts to manage risk from various sources. The decision whether to exploit new growth possibilities generated from exploration was influenced by the following heuristics: risk of action vs. inaction, few vs. many links with current and future businesses, and brief vs. long time horizon. When there was a significant deviation between the preferences of powerful individuals and the exploration-exploitation considerations of the organization, they exercised their power to influence choices. These cognitive and power dynamics combined to result in growth possibilities being found, taken, and lost

Transaction cost and property rights perspectives on entrepreneurship

Entrepreneurs in a competitive economy face three fundamental problems. They need to search for and discover a business opportunity (Kirzner, 1973), evaluate it (Knight, 1921), and then seize the opportunity to reap entrepreneurial profits (Schumpeter, 1911) (Langlois, 2007). The problem that we address is how the ability to exploit business opportunities is influenced by entrepreneurial search and the economic organization of entrepreneurship (Arrow, 1962; Lippman & Rumelt, 2003; Aghion et al., 2005; Foss et al., 2007). In many cases, the discovery for a new business opportunity needs to be motivated by expected gains, since the search and evaluation of business opportunities is a costly, resource-consuming process (Denrell, Fang & Winter, 2003; Nickerson & Zenger, 2004; Foss & Klein, 2005; Teece, 2007; Foss & Foss, 2008).1 We show the critical role of expectations for understanding of the economic organization of entrepreneurship, and argue that transaction cost economics, with its insistence on bounded rationality, but far-sighted contracting offers useful insights and presents rich opportunities for further theoretical and empirical research (cf. also Furubotn, 2002)

Innovation Agents

The standard narrative of entrepreneurship is one of self-employed creative individuals working out of their garage or independently owned start-up companies. Intrapreneurship--where employees are responsible for being alert to new opportunities inside firms--is another model for developing innovations. Relatively little is known, however, about the latter process through which large, complex firms engage in groundbreaking corporate entrepreneurship. This Article\u27s focus is on these types of innovation agents. It provides a thorough account of the positive and negative spillovers of intrapreneurial firms while making the following key points: First, intrapreneurial companies utilize their economies of scale, scope, and age to deliver innovations to the masses. They transform ideas, labor, and raw materials into tangible assets that can be traded in the market. Second, in doing so they offer individual entrepreneurs opportunities to capitalize their knowledge. Sustaining entrepreneurs\u27 prospects for supra-competitive profits is the main engine that motivates the latter to invest in discoveries in the first place. Lastly, intrapreneurial firms also serve as greenhouses for entrepreneurship through the migration of their own talented labor in the market. While these spillovers have tremendous societal benefits, they can also introduce harms. First, the race for the next breakthrough might result in anticompetitive behavior by rivals who conspire with employees-intrapreneurs to leave their firms and take with them confidential information. Second, intrapreneurs often aspire to undertake their own independent journey. In so doing, they leave secure positions and high salaries while carrying valuable knowledge and expertise. This, in return, often prompts intrapreneurial firms to act opportunistically and lock-in or lock-out intrapreneurs in restrictive and wasteful arrangements. As a solution, this Article proposes ways law can balance the positive and negative spillovers of intrapreneurship and ways the tax system can help achieve such result

O Papel da Aquisição de Conhecimento das Alianças Interorganizacionais na Relação Entre o Empreendedorismo Corporativo e o Desempenho: Insights das PME Portuguesas

The perspective of the relationship between corporate entrepreneurship (CE) and the performance of companies in the literature has been mainly directed to the study of the influence of external factors. Some studies have recently focused on interorganizational alliances’ role in CE and firm performance. In this context, our study aims to evaluate the role of knowledge acquisition from interorganizational alliances in the relationship between CE and performance. To this end, we opted for a quantitative study with primary data collected through questionnaires addressed to managers of a sample of 101 Portuguese small and medium-sized enterprises (SMEs) from different sectors. Through a hierarchical linear regression analysis, the results show that both EC and knowledge acquisition positively influence performance. However, the results also show that the moderating effect of knowledge acquisition on the relationship between CE and performance is negative and varies depending on the company’s knowledge-based resources.A perspetiva da relação entre empreendedorismo corporativo (EC) e o desempenho das empresas na literatura tem sido principalmente direcionada para o estudo da influência dos fatores externos. Apenas recentemente alguns estudos têm voltado a sua atenção para o papel que as alianças interorganizacionais têm no EC e o desempenho da empresa. Neste contexto, o nosso estudo tem como objetivo avaliar o papel da aquisição de conhecimento das alianças interorganizacionais na relação entre o EC e o desempenho. Para tal, optou-se por um estudo quantitativo com dados primários recolhidos através de questionários dirigidos a gestores de uma amostra de 101 pequenas e médias empresas (PME) portuguesas de diversos setores. Através de uma análise de regressão linear hierárquica, os resultados mostram que tanto o EC como a aquisição de conhecimento têm uma influência positiva no desempenho. Porém, os resultados também evidenciam que o efeito moderador da aquisição de conhecimento na relação entre EC e desempenho é negativo e varia dependendo do nível de recursos baseados no conhecimento que uma empresa possui

Evaluating the Diversification Strategy of a Semi-State Company in a Declining Market: A Case Study of An Post

This case study evaluated the diversification strategy of a semi-state company, An Post, operating in a declining market. The objective of this research was to evaluate the process by which diversification may take place. A qualitative methodology, using a phenomological and interpretivist approach was taken. Three in-depth, semi-structured interviews were conducted with senior managers within An Post. This data was complemented with a review of a range of contextual documentary sources. The results of these interviews were then analysed through thematic reduction to ascertain the key issues within the organisation relating to the diversification process. The postal market is regulated, and An Post, as a former monopoly, is subject to a number of controls on its dominant market position. This dominance, and regulation, comes largely from the provision of the loss-making Universal Service Obligation (USO) by the company. In order to continue funding the USO, An Post is engaging in a number of different diversifications, through innovation, partnerships and acquisitions. The company is attempting to lower costs, drive efficiencies and increase revenues in the core mails business. However, mail is still a declining market and these measures can only bring limited benefits. The company does not have an explicit diversification strategy. Management, however, are aware of the need for them to discover new revenue streams which can be used by the organisation to fund the USO. Subsidiaries of An Post are generally run autonomously. Air Business, one of the company’s largest subsidiaries, is largely run by local management, with An Post maintaining oversight through the Board. This is mainly due to the perceived culture within An Post as not being conducive to growth and entrepreneurship. The success of these subsidiaries, and the revenue they generate, has allowed the company to achieve its aim of cross-subsidisation. The commercialisation of the Group as a whole, and growing importance of subsidiaries as a proportion of turnover, has changed the nature of An Post over the last decade; the company is less dependent on mails revenue for overall growth. The utilisation of autonomous subsidiaries has created the means for the organisation to achieve more dynamic growth without affecting the core business. Through this growth, whether it comes from related or unrelated diversification, expansion or innovation, the company can maintain the USO without requiring a government subvention. The lack of a formal strategy does not preclude an organisation from being successful in achieving its goals. In the case of An Post, the lack of a strategy to diversify has not been an impediment to successful diversification. However, where diversification has been undertaken, more emphasis should be placed on evaluation of the factors which led to success. The case of Air Business suggests gaining market share should be the priority in any diversification