In recent years, the conditions of competition in the global environment have changed for the companies. The market is dominated by constant change, complex tasks and environmental turbulence. As knowledge, innovation and flexibility become an important resource for sustained competitive advantage and ‘Entrepreneurship’ is the crucial factor for success or survival. While small firms take the advantage of these conditions and become very successful due to their flexible structure and entrepreneurial spirit, large firms suffer more due to their mechanistic, bureaucratic and rigid structures. One of the solutions for companies to deal with the rigid bureaucratic structures is to induce Corporate Entrepreneurship in their structure. While CEOs are concerned about profitable organic growth, they find corporate entrepreneurship or creating a new business as one of the solution. As corporate entrepreneurship is becoming popular, it can be seen as a school within entrepreneurship theory. Since there is no generally accepted definition of entrepreneurship, the definition of corporate entrepreneurship also suffers from this problem.
Definition of Corporate Entrepreneurship (CE)
Corporate Entrepreneurship is the process whereby an individual or group of individuals, in association with an existing organization, create a new organization, or instigate renewal or innovation within that organization. Corporate Entrepreneurship is defined as two types of phenomena and processes: while one is about creating a new business within existing organizations through internal innovation or joint ventures, alliances, the second one is about the transformation of organization through strategic renewal. Corporate Entrepreneurship is also defined as a process in which teams within an establish organization create a new business which is distinct from parent company but leverages the parent’s asset, market positions, capabilities or other resources. Also Corporate Entrepreneurship is a new strategic dimension, initiative from below and autonomous business creation. These different definitions show that the meaning of Corporate Entrepreneurship (CE) is still ambiguous. In order to fully understand corporate entrepreneurship, different types of CE must be analyzed.
Types of Corporate Entrepreneurship
There are four types of corporate entrepreneurship:
- Corporate Venturing: It is the process of starting new ventures related to core business through investing in smaller innovative firms and different forms of corporate venturing units by larger firms
- Intrapreneurship: It is about the identification of employees who have entrepreneurial skills and it focuses on encouraging these employees to act in an entrepreneurial way within large organizations.
- Bring the market inside: This dimension takes a marketing approach to encourage entrepreneurial behavior by changing structure.
- Entrepreneurial Transformation: It is about the adaptation of organizational structure, and culture to changing environment and create a new organizational environment to encourage entrepreneurial activity. He also mentioned that according to this dimension, the individual behavior in the organization is influenced by leadership, strategy, systems, structures and culture.
Moreover, structurally complex firms to use simultaneously one or more forms of following CE in different parts of organization.
- The first one is sustained regeneration, which is stimulated by the firm’s culture, processes and structures to create new products in its existing market and also to enter with existing product into new markets. Here, companies know their product’s life cycle and they create strategies according to competitive expectations.
- The second type of CE is organizational rejuvenation. It is more about process and administrative innovations rather than product innovations. It enables organizations to improve the firm’s ability to execute strategies. It concerns about inducing entrepreneurship through organizational procedures and standards.
- Strategic renewal, which is the third one, is about how to change strategies to compete differently. While organizational rejuvenation is about the organization itself, strategic renewal is about both organization and environment. It consists of the ways to exploit the opportunities more profitably and how to explore new ideas in these changing circumstances.
- Domain Redefinition focuses on creating a new product market that competitors have not discovered yet or are not successful in that market. Domain redefinition aims to have first mover advantage in that new market.
Corporate venturing and Intrapreneurship are seen as techniques that bring the market inside and can help stimulating the entrepreneurial transformation since it covers the whole aspects of the organization. Furthermore, by comparing entrepreneurial transformation to the types mentioned above, it is observable that these types to some extent are also contained within the entrepreneurial transformation, because they cover aspects related to structure, culture, environment, and strategy which is what entrepreneurial transformation is about.
The Success Factors of Corporate Entrepreneurship:
There are five dimensions which shows that organization is entrepreneurial-oriented: The first dimension is autonomy indicating that employees must be empowered and encouraged to find the innovative products or new internal process. Employees must be supported to create innovative ideas. The second dimension is innovativeness. Organization must invest in research and development. The third dimension is pro-activeness which is related with organization’s willingness of being different by exploiting opportunities. Company must be future-oriented. The fourth dimension is competitive aggressiveness. The organization must both willingly and eagerly engage in a competition and conduct strategies that exploit the opportunities better than other competitors. The last dimension is risk taking which is one of the most important dimensions for Corporate Entrepreneurship.
Company must be aware of business, financial and professional risks associated with CE. There are four important corporate entrepreneurship success factors that must exist within an organization. The first factor is management support which is about promoting entrepreneurship in the organization. The management support consists of championing the innovative ideas, providing necessary resources, transparency within organization, being a coach or mentor rather than being a manager. The second factor is autonomy which points out that employees are ready to take risks and failure is tolerated by management. This factor must be strengthened by the organizational structure which facilitates the implementation of ideas. The third factor is reward and reinforcement. The effective reward system will enhance entrepreneurial behavior in organization and help employees to take risks. Both extrinsic (monetary) and intrinsic (recognition) rewards motivate employees to be more entrepreneurial. The last factor is time availability. There must be flexible time constraints which let employees to deal with a long term problem.
As a whole, it can be seen that corporate entrepreneurship success factors are highly related with entrepreneurial transformation mentioned in the types of corporate entrepreneurship. It can be understood that management support is highly related with leadership and culture (being a coach or mentor rather than being a manager) and structure (championing the innovative ideas, providing necessary resources, transparency within organization); autonomy is also related with structure; reward and reinforcement system can be stipulated by organizational culture, structure and leadership while time availability can be induced by both leadership and organizational culture.