14. Strategic Entrepreneurship Flashcards
Define entrepreneurship.
A process where an individual or group identify and pursue entrepreneurial activities without being immediately constrained by the resources they control.
What problems does a firm face if they are constrained by their resources?
1) Difficult to initiate entrepreneurial activities.
2) Internal resistance to change.
3) Inability to have creative destruction (destroying value of old products)
Why is it difficult for companies to continuously innovate? Give three reasons.
1) Uncertainty by organisational actors.
2) Typically only responsive to entrepreneurial activities in line of with current activities (narrowing scope of search effort)
3) Only 5-10% of actions based on opportunities are successful.
Define entrepreneurial opportunities.
Conditions where new goods/services can satisfy the market. Timing is essence (exploiting opportunities others do not see).
(selling new product or selling existing product in new markets)
What are the challenges associated with entrepreneurial opportunities? Give two.
1) Focus is too narrow.
2) The newer or more unknown opportunities are, the higher risk.
Those who take higher risks have 15% higher performances.
Define strategic entrepreneurship.
Taking actions using a strategic perspective.
How can opportunities in the external environment be exploited?
Internal adaption and innovation.
What dimensions exist in strategic entrepreneurship? And what do they entail?
Entrepreneurial dimension –> intense scanning activities
Strategic dimension –> internal selection of the best ways to manage adaption and innovation process of new opportunities
Define corporate entrepreneurship.
Entrepreneurship within an established firm.
Established firms launching a new business distinct from the parent company.
Define a startup venture.
New ventures that emerge without consolidated support by a parent firm.
What are the challenges startup ventures face?
High risk. Hard to gain external support of banks and venture capitalist.
Define venture capitalist.
Financial investments in external companies.
Forefront of entrepreneurship dimensions.
They are not bound by existing activities/sunken costs. Speeds up the product release date.
Define innovation.
Process of creating a commercial product from an invention. Bringing something new into use.
A source of competitive success (higher returns) especially in turbulent industries.
Define an invention.
Creating a new product or process.
What criteria are used to assess innovations and inventions?
Commercial criteria for innovations.
Technical criteria for inventions.
What is the difference between incremental and radical innovation?
Incremental (majority):
- upgrade of existing products in existing markets
- imitable, cheaper, less risk
- based on existing knowledge
Radical:
- breakthrough
- new market
- rare (difficult to develop and risky)
Define a product champion.
An organisational member with entrepreneurial vision that creates support to commercialise his idea.
Define autonomous strategic behaviour.
Bottom-up process where product champions create support to commercialise a new good/service until it succeeds in the market.
What does autonomous strategic behaviour require to be successful? Give three requirements.
A shift from informal support to formal support (when many employees back the idea).
It requires support from top-level managers (or else ideas will not hit the market).
Knowledge has to diffuse in the firm.
Define induced strategic behaviour.
Top-down process where a firm’s current strategy and structure foster a new related innovation (internal innovation).
Define entrepreneurial mindset.
Values uncertainty in the marketplace and seeks opportunities for innovations.
Required to develop internal corporate ventures. Venture = risky journey
What are processes required for successful implementation of internal innovations? What type of teams facilitate this?
1) Patterns of interactions
2) Coordination communication
3) Decision making
Product development teams facilitate this.
What do Cross Functioning Product Development Teams do?
Facilitate the efforts of different organisational functions (departments) towards the goal of implementing innovations.
What are characteristics of cross functioning product development teams?
- built on horizontal (everything) core processes that produce and manage innovations
- shared values and effective leadership to allocate resources towards goal
What are the two barriers that prevent the success of cross functional integration?
1) Independent frames of reference –> different perspectives (specialisation) of departments cause disagreements
2) Organisational politics –> aggressive competition of resources b/w organisational functions result to conflict (avoid this by not changing basic structures)
What dimensions do small and large firms excel in?
Small firms in opportunity seeking dimensions (radical innovations).
Large firms in advantage seeking dimensions (more resources available).
Define startup entrepreneurship and what it aims for.
Standalone firms take risks because of lack knowledge, experience and capital.
Aims to create unique goods that meets needs not met in industries (radical innovation).
