CH 2- Corporate entrpreneurship

Question 1

What is entrepreneurial intensity?

Answer 1

An increase in both the degree and frequency of entrepreneurial activity within an organisation.

measures how entrepreneurial a company is

Question 2

What are the axes in entrepreneurial intensity graph?

Answer 2

• X-Axis (Frequency of Entrepreneurial Actions): Measures how often entrepreneurial actions occur within the organization, ranging from low frequency (infrequent activities) to high frequency (constant entrepreneurial behavior).
• Y-Axis (Degree of Entrepreneurship): Measures the impact, novelty, and risk of these entrepreneurial actions, ranging from low degree (incremental improvements) to high degree (high-risk, innovative actions).

Question 3

What is radical innovation?

Answer 3

Radical innovation refers to a type of innovation that brings about significant, groundbreaking changes, often creating entirely new markets or drastically altering existing ones. It involves the development of entirely new technologies, products, or business models that disrupt current industry practices, offering solutions that are fundamentally different from what existed before.

unpredictable in terms of success and adoption

Question 4

What is incremental innovation?

Answer 4

Involves small, continuous improvements to existing products, services, or processes. It is less risky and is often aimed at improving efficiency or adding features without altering the overall structure of the product.

Question 5

What do the four quadrants in entrepreneurial intensity graph signify?

Answer 5

1. Quadrant I (Low Frequency, Low Degree):
   * Meaning: Organizations rarely engage in entrepreneurial activities, and when they do, these actions are minor and low-impact.
   * Example: Conservative companies that make occasional, small improvements to existing products or processes.
2. Quadrant II (High Frequency, Low Degree):
   * Meaning: Organizations frequently engage in entrepreneurial actions, but these are usually low-risk and incremental.
   * Example: Companies that consistently tweak or optimize existing operations without major innovation.
3. Quadrant III (Low Frequency, High Degree):
   * Meaning: Organizations rarely engage in entrepreneurial activities, but when they do, these actions are highly innovative and risky.
   * Example: Firms that occasionally introduce disruptive products or services but do not innovate regularly.
4. Quadrant IV (High Frequency, High Degree):
   * Meaning: Organizations that are both consistently and significantly entrepreneurial, engaging in frequent and high-impact innovations.
   * Example: Industry leaders who continuously disrupt markets with groundbreaking products or services.

Question 6

Why is Quadrant IV considered the ideal scenario?

Answer 6

Quadrant IV represents the highest level of entrepreneurial intensity, where companies frequently engage in highly impactful and innovative actions, leading to a strong competitive edge and continuous market leadership.

Question 7

What is the benefit of increasing entrepreneurial activity for businesses?

Answer 7

Increasing entrepreneurial activity can make an organisation more able to cope with with change, innovate and gain competitive advantage as a result.

Question 8

What is organisational culture?

Answer 8

Web of unspoken, prevalant norms, basic beliefs and assumptions about the ‘right’ way to behave.

Question 9

Why are newer, smaller businesses more likely to innovate radically?

Answer 9

Larger, bureaucratic organisations fail to adapt due to complexity of operations. Also, traditional management focuses on efficiency and effectiveness rather than creativity and innovation.

Question 10

How does Figure 2.2 (Hierarchy of Terminology) help clarify corporate entrepreneurship?

Answer 10

Figure 2.2 shows a hierarchy of terms related to corporate entrepreneurship:
* Entrepreneurial Transformation: Major changes in an organization to make it more entrepreneurial.
* Strategic Renewal: Shifts in strategy to respond to changes and innovations, often to reverse a decline.
* Strategic Entrepreneurship: Focuses on how entrepreneurial activities contribute to long-term strategy.
* Entrepreneurial Orientation: Describes the organization’s behavioral tendencies towards entrepreneurship.

Question 11

What is Entrepreneurial Architecture, and how does it relate to corporate entrepreneurship?

Answer 11

Entrepreneurial architecture refers to the structure and resources within an organization that foster sustained entrepreneurial activities. It encompasses both internal and external mechanisms:

• Internal Corporate Venturing: Encouraging innovation and new business creation within the company through intrapreneurship or venture teams.
• External Corporate Venturing: Includes strategies like acquisitions, partnerships, and alliances that help innovate by leveraging external entities.

Question 12

What do the terms Internal and External Corporate Venturing mean?

Answer 12

• Internal Corporate Venturing: Developing new businesses or innovations inside the organization, often through structured initiatives like venture teams.
• External Corporate Venturing: Engaging with external partners or making acquisitions to foster innovation and expansion from outside the organization.

Question 13

What are venture teams?

Answer 13

A group developing new producst or businesses and operating within a company that is not owned by them.

Question 14

What is intrapreneurship?

Answer 14

Intrapreneurship refers to entrepreneurial behavior within an established organization, where employees act like entrepreneurs by developing new ideas, innovations, or projects. However, instead of doing this in their own startup, they do it inside the company they work for.

Question 15

What is Entrepreneurial Orientation, and how is it linked to Entrepreneurial Architecture?

Answer 15

Entrepreneurial orientation refers to the consistent pattern of entrepreneurial behavior within a company. This behavior is facilitated by an organization’s entrepreneurial architecture—the culture, leadership, structure, and strategy that encourage entrepreneurship at all levels.

Question 16

Why are internal and external mechanisms important for corporate entrepreneurship?

Answer 16

These mechanisms ensure that entrepreneurial activities can thrive both inside and outside the organization. Internal mechanisms focus on fostering radical entrepreneurship through intrapreneurship, while external mechanisms bring innovation by engaging with external entities such as partners or acquisitions.

Question 17

What is Entrepreneurial Orientation (EO)?

Answer 17

Entrepreneurial Orientation (EO) is a term that describes the entrepreneurial climate and strategy development process in larger firms. It is a key construct in corporate entrepreneurship, which focuses on how established companies can behave entrepreneurially to foster innovation and growth.

Question 18

What are the three core dimensions commonly associated with EO?

Most conceptualisations of EO include 3 core dimensions

Answer 18

• Innovativeness: This dimension assesses how much a firm encourages innovation through its structures, strategies, and systems.
• Risk-taking: This refers to the willingness of the firm to engage in risky strategies to pursue growth.
• Pro-activeness: This dimension indicates how quickly and effectively a firm pursues new opportunities.

Question 19

What additional dimensions have been identified to broaden the scope of EO (entrepreneurial orientation)?

2 additional dimensions that broaden the scope of EO

Answer 19

• Competitive Aggressiveness: This relates to how a firm interacts with competitors, often through bold marketing strategies.
• Internal Autonomy: This emphasizes the importance of allowing individuals or teams within the firm the freedom to propose and develop new ideas.

Question 20

How is EO linked to corporate entrepreneurship?

Answer 20

EO is associated with not only new venture creation but also improved financial performance. Firms that exhibit high levels of EO are more likely to succeed in the marketplace.

Question 21

What is the overall significance of EO in corporate strategy?

Answer 21

High levels of EO are associated with improved performance and the successful pursuit of new ventures, underscoring its significance in corporate strategy and the need for firms to adopt an entrepreneurial mindset to thrive in competitive environments.

Question 22

What is Entrepreneurial Architecture?

Answer 22

Entrepreneurial architecture refers to the structural framework within an organization that embeds entrepreneurial characteristics and behaviors through four primary pillars: leadership and management, culture, structure (including systems), and strategies. This architecture is modeled after the traits and decision-making processes of successful entrepreneurs.

Question 23

What are the four pillars of organizational architecture in entrepreneurial architecture?

Answer 23

1. Leadership and Management: This pillar emphasizes the importance of leaders who exemplify entrepreneurial traits, such as vision, risk-taking, and adaptability. Leaders are crucial in shaping the organization’s direction and encouraging entrepreneurial thinking throughout the firm.
2. Culture: A culture that supports innovation and risk-taking is essential for fostering entrepreneurship. This includes promoting shared values and goals that align with entrepreneurial behavior, creating an environment where employees feel empowered to contribute ideas.
3. Structure (Including Systems): The organizational structure should facilitate quick decision-making, collaboration, and flexibility. This might involve less hierarchical management structures that allow for greater autonomy and encourage innovation.
4. Strategies: The strategies developed by the organization should align with its entrepreneurial goals, enabling the firm to pursue new opportunities and adapt to changing market conditions.

Question 24

How does the generalized approach to organizational architecture work?

Answer 24

The generalized approach involves examining the entire organizational architecture and identifying elements that can enhance entrepreneurial orientation. By understanding how these components interact, organizations can encourage entrepreneurship more effectively. This approach contrasts with other frameworks that may focus on only a few dimensions of behavior.

Question 25

How does entrepreneurial architecture adapt to different environments?

Answer 25

Entrepreneurial architecture is not a one-size-fits-all model; it can be tailored to fit the specific needs of different organizations, industries, and markets. Various components may take on more or less importance depending on the context in which a firm operates, allowing for greater flexibility and responsiveness.

Question 26

What is the difference between internal and external organizational architecture?

Answer 26

• Internal Architecture: Focuses on the organization’s employees and fosters a distinctive culture characterized by collectivism and shared objectives. A strong internal architecture promotes teamwork but can also lead to inflexibility if too homogeneous.
• External Architecture: Engages with stakeholders outside the organization, such as customers, partners, and suppliers. This architecture is built on trust and collaboration, often leading to shared resources and information. Examples include regional clusters of small firms that benefit from skilled labor and infrastructure.

Question 27

How are leadership, culture, and structure interconnected?

Answer 27

Leadership, culture, and structure are interdependent; each reinforces the others. An appropriate leadership style is crucial for aligning with the organization’s culture and structure. If one pillar is misaligned with the others, the organization may struggle to function effectively. Different tasks and situations require different leadership styles, emphasizing the need for adaptability.

Question 28

How does complexity theory relate to entrepreneurial architecture?

Answer 28

Complexity theory suggests that organizations must create an environment that encourages self-organization and adaptability. This involves developing systems, structures, and leadership styles that allow for flexibility and responsiveness to change. The ability to self-organize enables organizations to manage unpredictable changes more effectively.

Question 29

What are the benefits of having a strong entrepreneurial architecture?

Answer 29

A robust entrepreneurial architecture creates a competitive advantage by fostering a culture of innovation and adaptability. It is a valuable asset, as it enables organizations to respond to market changes more effectively, making it difficult for competitors to replicate. This sustainable approach to entrepreneurship positions firms for long-term success in uncertain environments.

Question 30

What is entrepreneurial architecture?

Answer 30

Entrepreneurial architecture refers to the structured framework organizations use to integrate entrepreneurial behaviors into their core. It consists of four main elements: leadership, culture, structure, and strategies, which work together to make the organization flexible, innovative, and adaptive.

Question 31

What are the four pillars of entrepreneurial architecture?

Answer 31

• Leadership (and Management): Encouraging innovation and empowering employees.
• Culture: Fostering an environment of risk-taking, creativity, and shared values.
• Structure: Decentralized decision-making that allows flexibility and quick responses.
• Strategies: Adaptable and responsive to changes in the external environment.

Question 32

How does leadership play a role in entrepreneurial architecture?

Answer 32

Leadership shapes the organization’s direction, structure, and culture. The leader acts like an architect, creating a flexible and dynamic organization that can quickly adapt to new opportunities. Entrepreneurial leaders encourage innovation and empower lower-level employees to make decisions.

Question 33

What is an entrepreneurial culture?

Answer 33

An entrepreneurial culture promotes risk-taking, innovation, and ownership among employees where everyone shares common goals and works collaboratively to achieve them, promoting creativity and encouraging learning from failures.

Question 34

How is the structure of an entrepreneurial organization different?

Answer 34

Entrepreneurial organizations tend to have decentralized structures, meaning decisions are made closer to where the action is happening, not just at the top; this enables quick decision making.

Question 35

Why are strategies important in entrepreneurial architecture?

Answer 35

Entrepreneurial strategies are flexible and dynamic, allowing organizations to pivot when needed. Rather than rigid planning, the strategy is about constantly adapting.

Question 36

What are relational contracts, and why are they important?

Answer 36

Relational contracts are informal agreements based on trust and mutual interest, rather than formal, legal contracts. They are important because they encourage cooperation, build long-term relationships, and foster an environment where people work together towards shared goals, rather than simply following rules or written contracts.

Question 37

How does entrepreneurial architecture lead to a sustainable competitive advantage?

Answer 37

Because it is based on flexibility, trust, and continual learning, entrepreneurial architecture helps organizations build capabilities that competitors can’t easily replicate. The unique culture, routines, and relationships become a sustainable edge in fast-changing environments.

Question 38

Is entrepreneurial architecture suitable for all organizations?

Answer 38

Not necessarily. Entrepreneurial architecture is most valuable in dynamic, fast-changing industries. For companies in stable environments, it may not be as necessary, since their competitive landscape doesn’t demand the same level of flexibility and innovation.

Question 39

How do relationships impact entrepreneurial organizations?

Answer 39

In entrepreneurial organizations, relationships are more than just partnerships—they are based on trust and mutual support. These deep relationships create a sense of community and shared purpose, motivating all stakeholders (employees, customers, suppliers) to collaborate and help the organization succeed.

Question 40

What is organizational knowledge, and how is it developed?

Answer 40

Organizational knowledge refers to the collective understanding and routines within an organization that allow it to adapt to changes and respond to challenges. It’s developed through shared experiences and the application of information, rather than just individual knowledge. This shared knowledge becomes an asset that the organization uses to innovate and make strategic decisions.

Question 41

How do trust and flexibility benefit an organization’s architecture?

Answer 41

Trust allows members of the organization to cooperate and share knowledge freely, while flexibility enables the organization to quickly adapt to changes in the market.
When trust is established, relationships are stable, and decision-making becomes more agile, allowing the company to innovate without getting bogged down in formal processes.

Question 42

How does organizational knowledge provide a competitive advantage?

Answer 42

Organizational knowledge provides a competitive advantage because it’s rooted in deep, informal relationships and shared routines that are difficult for competitors to replicate. This makes the organization more innovative, adaptive, and resilient in the face of competition.

Question 43

What challenges do larger organizations face in fostering entrepreneurial architecture?

Answer 43

Larger organizations struggle to replicate the informal, trust-based relationships that come naturally to smaller firms. Building a similar architecture in a large organization requires effort, but it can result in strong networks that enhance innovation and flexibility if successful.

Question 44

What is experiential learning?

Answer 44

It’s a process where learning happens through doing. Entrepreneurs often learn by trial and error, using their experiences to make better decisions in the future.

Question 45

Why is experiential learning important for organizations?

Answer 45

It allows individuals, especially in startups, to quickly adapt to challenges and innovate by learning directly from mistakes and successes. In larger organizations, this kind of hands-on learning needs to be systematized so everyone can benefit from shared experiences.

Question 46

What is the difference between knowledge and information sharing?

Answer 46

Information is just data passed between people, but knowledge means understanding and applying that data to improve decision-making. It involves learning the “why” behind information, which leads to more meaningful actions and innovation.

Question 47

Why is unlearning important in organizations?

Answer 47

Unlearning refers to letting go of old routines and practices that no longer serve the organization. This allows for new behaviors and approaches that better fit current challenges, enhancing the organization’s ability to adapt and innovate.

Question 48

What does it mean to be a learning organization?

Answer 48

A learning organization is one that promotes continuous learning among its employees and adapts based on that knowledge. It constantly evolves by encouraging experimentation, learning from both successes and failures, and sharing insights across the organization.

Question 49

What are the key traits of a learning organization?

Answer 49

• Systematic problem-solving: Addressing issues in a structured way.
• Experimentation: Encouraging new ideas and approaches.
• Learning from past experiences: Using history to inform future decisions.
• Learning from best practices: Adopting insights from external sources.
• Knowledge transfer: Sharing knowledge effectively across the organization.

Question 50

What is the wheel of learning?

Answer 50

The wheel of learning is a continuous cycle that starts with forming concepts, testing them, learning from experience, and reflecting on whether the concept needs to be changed or improved. This cycle includes learning know-how (practical skills) and know-why (understanding the reasons behind success or failure).

Question 51

What is double-loop learning?

Answer 51

Double-loop learning involves not just improving methods (know-how) but also questioning the underlying assumptions and mental models (know-why). This deeper form of learning helps to understand root causes of problems and leads to systematic, long-term solutions.

Question 52

What is dominant logic, and why is it important to challenge it?

Answer 52

Dominant logic refers to the ingrained mindset or mental models that an organization uses to view itself and its environment. Challenging dominant logic by asking “why” or “why not” helps to reframe thinking and encourages creativity and innovation, allowing organizations to spot new opportunities.

Question 53

How does organizational architecture influence dominant logic?

Answer 53

Over time, the architecture of an organization can reshape its dominant logic by embedding double-loop learning. This allows managers to rethink their approaches, fostering a more creative and entrepreneurial mindset.

Question 54

Why is the wheel of learning important for long-term success?

Answer 54

The continuous cycle of learning ensures that organizations don’t just solve problems in the short term but develop deeper insights that improve long-term decision-making and innovation. This accumulated learning becomes part of the organization’s collective memory, contributing to its competitive advantage.

Question 55

Is entrepreneurial architecture appropriate for all organizations?

Answer 55

No, it’s not suitable for every business. In stable, unchanging environments where efficiency is the main goal (like low-cost/low-price models), building entrepreneurial architecture might add unnecessary complexity and costs.

Question 56

What are the disadvantages of entrepreneurial architecture in stable environments?

Answer 56

• Higher Costs: Entrepreneurial systems can be expensive to maintain compared to traditional, efficiency-focused structures.
• Inappropriate Behavior: It might encourage creativity and flexibility, which are unnecessary in environments that prioritize consistency and routine.

Question 57

Why should companies in stable environments still be cautious?

Answer 57

Even stable markets can experience disruptive shifts, which could make a company’s business model obsolete. If the market suddenly changes, businesses without a flexible architecture may struggle to adapt.

Question 58

What happens if an organization’s architecture doesn’t match its environment?

Answer 58

The organization will likely fail to prosper. A poor fit between the business architecture and the commercial environment prevents companies from responding effectively to market demands, leading to inefficiency and loss of competitiveness.

Question 59

What types of environments require entrepreneurial architecture?

Answer 59

1. Technologically Advanced Markets: These markets value new technologies, and companies must respond quickly to gain a first-mover advantage.
2. Creativity-Driven Markets: Industries like video gaming or other creative sectors thrive on innovation and new ideas, making entrepreneurial structures essential.
3. Rapidly Changing Markets: New or evolving markets require agility, as customer needs shift quickly and competitors spend heavily on advertising to capture attention.
4. Interconnected Markets: Small changes in customer needs or trends can have a big impact, making rapid response crucial.
5. Information-Driven Markets: Where up-to-date knowledge is key, companies need to stay ahead by constantly adapting to changes in both information and customer needs.
6. Price-Sensitive Markets: These markets often face new, price-competitive entrants, requiring companies to innovate while maintaining low costs.
7. Declining Markets: As products near the end of their life-cycle, companies must innovate to remain relevant or rebalance their product portfolio.

Question 60

Why should an entrepreneur’s personal character traits be reflected in the organization’s architecture?

Answer 60

The personal character traits of entrepreneurs drive creativity, risk-taking, and innovation. To build a sustainable entrepreneurial organization, these same traits must be integrated into its architecture to promote a culture of opportunity spotting, empowerment, and adaptability.

Question 61

What are some key personal traits of entrepreneurs that should influence the organization’s architecture?

Answer 61

• Innovation and Opportunity Spotting: The organization should encourage constant searching for new ideas and market opportunities.
• Vision: Employees need to share a strong, clear vision of what the organization can become.
• Motivation and Achievement: Employees should be motivated through goal-setting and recognition to drive achievement.
• Ownership and Growth: Staff should feel a sense of belonging and ownership in the organization’s success.
• Culture of Fun and Confidence: A positive, “can-do” culture where work is enjoyable and people are confident in the organization’s success.

Question 62

How should decision-making be structured in an entrepreneurial organization?

Answer 62

The architecture should encourage decentralized decision-making. This means pushing decision-making authority down to lower levels in the hierarchy, empowering staff to make the right choices without excessive managerial control. A “light touch” management style ensures flexibility while still providing direction.

Question 63

How does an entrepreneurial architecture handle risk and failure?

Answer 63

Entrepreneurial architecture must foster balanced risk-taking and view failure as a learning opportunity. The organization should not penalize failure unnecessarily but always look to learn from it and celebrate successes to build confidence.

Question 64

Why is communication crucial in an entrepreneurial architecture?

Answer 64

Open communication allows for the free sharing of information and knowledge, enabling the organization to react quickly to environmental changes and capitalize on opportunities. It also supports continuous learning and improvement.

Question 65

What management traits of an entrepreneur should be reflected in the organization’s architecture?

Answer 65

• Strategic Vision: Creating a shared sense of purpose and strategic intent.
• Strong Relationships: Building deep, trusting relationships with stakeholders inside and outside the organization (staff, customers, suppliers).
• Adaptive Management: Managing through relationships, not just formal hierarchies, and using networks to gather knowledge and reduce risks.
• Collaborative Environment: Encouraging team collaboration and sharing of knowledge to facilitate ongoing strategizing.

Question 66

How should decisions be made in an entrepreneurial organization?

Answer 66

Entrepreneurial architecture supports an incremental and adaptive decision-making approach, where decisions are made step by step. This allows for learning as the organization goes, reducing risks and adjusting strategy based on real-time experiences and feedback.

Question 67

What is the overall goal of building an entrepreneurial architecture?

Answer 67

The architecture should provide the dynamic capabilities that allow the organization to adapt to emerging markets, changes, and opportunities. It is about creating a flexible framework where the entrepreneurial mindset can thrive, leading to innovation and shareholder value creation.