Strategic Managment

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For use with Strategic Management: Competitiveness and Globalization (EMEA Edition) by Henk W. Volberda, Robert E. Morgan, Patrick Reinmoeller, Michael A. Hitt, R. Duane Ireland and Robert E. Hoskisson 1408019183© 2011 Cengage Learning

Chapter 14

STRATEGIC ENTREPRENEURSHIP

LEARNING OBJECTIVES

Studying this chapter should provide you with the strategic management knowledge needed to:

1. Define strategic entrepreneurship and corporate entrepreneurship.

2. Define entrepreneurial opportunities and explain their importance.

3. Define potential hurdles for established firms to pursue entrepreneurship.

4. Define invention, innovation and imitation, and describe the relationship among them.

5. Explain the difference between autonomous and induced strategic behaviour.

6. Describe how firms internally develop innovations.

7. Describe start-up entrepreneurship and venture capital.

8. Explain how strategic entrepreneurship helps firms create

value.

Opening case: The continuing innovation revolution at Nokia: the case of car navigation

With the Nokia case in mind, why is it important to be proactive in a dynamic industry?

2. How was Nokia able to enter the market of navigation devices? What was their competitive edge?

3. Think of future developments in the market, how will Nokia be able to sustain their competitive advantage?

Entrepreneurship and entrepreneurial actions

Entrepreneurship is the process by which individuals, teams or organisations can identify and pursue opportunities without being constrained by the resources they currently control

Entrepreneurial opportunities are conditions in which new goods or services can satisfy a need in the market

Innovation

Incremental and radical innovation

Autonomous strategic behaviour

Induced strategic behaviour

Implementing internal innovations

Cross-functional product development teams

Creating value from internal innovation

Entrepreneurs are individuals, acting independently or as part of an organisation, who perceive an entrepreneurial opportunity and then take risks to develop an innovation to exploit it

The functions of start-up entrepreneurship and venture capital

Start-up entrepreneurship – founding entity – high risk

Venture capital – strong risk evaluation – seeking profit potential

Closing case: The case of the Dutch life sciences sector

1. What are the uses of venture capital? Which ones hold for Octoplus especially?

2. Which phase in innovation development do you think is best suited to attracting venture capital?

3. Do you think venture capital is useful in all industries? Compare static and dynamic industry environments.

4. If you were to start a company would you

consider venture capital as a potential

business partner?

Summary

Strategic entrepreneurship is taking entrepreneurial actions using a strategic perspective
Corporate entrepreneurship uses this behaviour within organisations to stimulate growth and performance
Innovative activity includes invention, innovation and imitation
Incremental and radical innovation is supported by cross-functional integration, shared values and strategic leadership
Innovation is produced by internal innovation, start-up entrepreneurship and venture capital
Entrepreneurs see opportunities and take action to develop innovations to exploit them, fostered by an entrepreneurial mindset
Start-up entrepreneurship is not constrained by parent firms, industry standards and is likely to develop novel business solutions
Venture capital investments are rising both for existing firms

and start-ups.

Review questions

1. What is strategic entrepreneurship? What is corporate entrepreneurship?

2. What is entrepreneurship, and what are entrepreneurial opportunities? Why are they important for firms competing in the twenty-first century competitive landscape?

3. What are potential hurdles for firms aiming to pursue entrepreneurial opportunities?

4. What are invention, innovation and imitation? How are these concepts interrelated?

5. How do firms develop innovations internally?

6. What is autonomous/induced strategic behaviour?

7. How do firms realize integration between entrepreneurial efforts and existing activities?

8. What is start-up entrepreneurship and how may

entrepreneurship help at industry level?

9. What is venture capital, what are its functions?

10. How does strategic entrepreneurship help firms to create

value?