14. Strategic Entrepreneurship

Question 1

Define entrepreneurship.

Answer 1

A process where an individual or group identify and pursue entrepreneurial activities without being immediately constrained by the resources they control.

Question 2

What problems does a firm face if they are constrained by their resources?

Answer 2

1) Difficult to initiate entrepreneurial activities.
2) Internal resistance to change.
3) Inability to have creative destruction (destroying value of old products)

Question 3

Why is it difficult for companies to continuously innovate? Give three reasons.

Answer 3

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.

Question 4

Define entrepreneurial opportunities.

Answer 4

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)

Question 5

What are the challenges associated with entrepreneurial opportunities? Give two.

Answer 5

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.

Question 6

Define strategic entrepreneurship.

Answer 6

Taking actions using a strategic perspective.

Question 7

How can opportunities in the external environment be exploited?

Answer 7

Internal adaption and innovation.

Question 8

What dimensions exist in strategic entrepreneurship? And what do they entail?

Answer 8

Entrepreneurial dimension –> intense scanning activities

Strategic dimension –> internal selection of the best ways to manage adaption and innovation process of new opportunities

Question 9

Define corporate entrepreneurship.

Answer 9

Entrepreneurship within an established firm.

Established firms launching a new business distinct from the parent company.

Question 10

Define a startup venture.

Answer 10

New ventures that emerge without consolidated support by a parent firm.

Question 11

What are the challenges startup ventures face?

Answer 11

High risk. Hard to gain external support of banks and venture capitalist.

Question 12

Define venture capitalist.

Answer 12

Financial investments in external companies.

Forefront of entrepreneurship dimensions.

They are not bound by existing activities/sunken costs. Speeds up the product release date.

Question 13

Define innovation.

Answer 13

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.

Question 14

Define an invention.

Answer 14

Creating a new product or process.

Question 15

What criteria are used to assess innovations and inventions?

Answer 15

Commercial criteria for innovations.

Technical criteria for inventions.

Question 16

What is the difference between incremental and radical innovation?

Answer 16

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)

Question 17

Define a product champion.

Answer 17

An organisational member with entrepreneurial vision that creates support to commercialise his idea.

Question 18

Define autonomous strategic behaviour.

Answer 18

Bottom-up process where product champions create support to commercialise a new good/service until it succeeds in the market.

Question 19

What does autonomous strategic behaviour require to be successful? Give three requirements.

Answer 19

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.

Question 20

Define induced strategic behaviour.

Answer 20

Top-down process where a firm’s current strategy and structure foster a new related innovation (internal innovation).

Question 21

Define entrepreneurial mindset.

Answer 21

Values uncertainty in the marketplace and seeks opportunities for innovations.

Required to develop internal corporate ventures. Venture = risky journey

Question 22

What are processes required for successful implementation of internal innovations? What type of teams facilitate this?

Answer 22

1) Patterns of interactions
2) Coordination communication
3) Decision making

Product development teams facilitate this.

Question 23

What do Cross Functioning Product Development Teams do?

Answer 23

Facilitate the efforts of different organisational functions (departments) towards the goal of implementing innovations.

Question 24

What are characteristics of cross functioning product development teams?

Answer 24

• built on horizontal (everything) core processes that produce and manage innovations
• shared values and effective leadership to allocate resources towards goal

Question 25

What are the two barriers that prevent the success of cross functional integration?

Answer 25

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)

Question 26

What dimensions do small and large firms excel in?

Answer 26

Small firms in opportunity seeking dimensions (radical innovations).

Large firms in advantage seeking dimensions (more resources available).

Question 27

Define startup entrepreneurship and what it aims for.

Answer 27

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).