ch12 discussion blue

8/8/2019 Ch12 Discussion Blue

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2004 by South-Western/Thomson Learning 1

Strategic EntrepreneurshipStrategic Entrepreneurship

Robert E. Hoskisson

Michael A. Hitt

R. Duane Ireland

Chapter 12Chapter 12


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Chapter 2Chapter 2Strategic LeadershipStrategic Leadership

Chapter 4Chapter 4

The InternalThe Internal

OrganizationOrganization

Chapter 6Chapter 6

Competitive Rivalry andCompetitive Rivalry and

Competitive DynamicsCompetitive Dynamics

Chapter 9Chapter 9

International StrategyInternational Strategy

Chapter 1Chapter 1

Introduction toIntroduction to

Strategic ManagementStrategic Management

Chapter 3Chapter 3

The ExternalThe External

EnvironmentEnvironment

Chapter 5Chapter 5

BusinessBusiness--LevelLevel

StrategyStrategy

Chapter 8Chapter 8Acquisition andAcquisition and

Restructuring StrategiesRestructuring Strategies


Corporate GovernanceCorporate Governance

Strategic IntentStrategic Intent

Strategic MissionStrategic Mission

Chapter 7Chapter 7

CorporateCorporate--Level StrategyLevel Strategy


Cooperative StrategyCooperative Strategy


Strategic EntrepreneurshipStrategic Entrepreneurship

Strategic

Analysis

StrategicThinking

Creating

Competitive

Advantage

Monitoring

And Creating

Entrepreneurial

Opportunities

The Strategic Management ProcessThe Strategic Management Process


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Discussion QuestionsDiscussion QuestionsClick

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More discussion questions

1. What is strategic entrepreneurship

and why is it important?

2. What are the two major types ofinnovation?

3. What are the two central processes

associated with internal corporate

venturing?


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Discussion Questions (cont.)Discussion Questions (cont.)Click

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4. Will horizontal organization in general

and cross-functional teams in

particular facilitate appropriation ofvalue from innovation?

5. Are strategic alliances a viable way to

get innovations? What are the tradeoffs

with strategic entrepreneurshipthrough alliances?

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More discussion questions


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Discussion Questions (cont.)Discussion Questions (cont.)6. How do acquisitions affect innovative

inputs (R&D) and outputs (patents)?

How does a firm prevent innovationproblems associated with the

acquisition process?

7. How can venture capital be used as an

external approach to strategicentrepreneurship?


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Discussion Question 1Discussion Question 1

What is strategic entrepreneurshipand why is it important?


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Strategic EntrepreneurshipStrategic Entrepreneurship Strategic entrepreneurship:Strategic entrepreneurship: takingtaking

entrepreneurial actions using a strategicentrepreneurial actions using a strategic

perspectiveperspective engaging in simultaneous opportunity seekingengaging in simultaneous opportunity seeking

and competitive advantage seeking behaviorsand competitive advantage seeking behaviors

designing and implementing entrepreneurialdesigning and implementing entrepreneurial

strategies to create wealthstrategies to create wealth

These actions can be taken by individualsThese actions can be taken by individuals

or by corporationsor by corporations


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Entrepreneurial OpportunitiesEntrepreneurial Opportunities Entrepreneurial opportunities areEntrepreneurial opportunities are

conditions in which new products orconditions in which new products or

services can satisfy a need in the marketservices can satisfy a need in the market Entrepreneurs or entrepreneurialEntrepreneurs or entrepreneurial

managers must be able to:managers must be able to:

identify opportunities not perceived by othersidentify opportunities not perceived by others

take actions to exploit the opportunitiestake actions to exploit the opportunities

establish a competitive advantageestablish a competitive advantage


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InnovationInnovation Three types of innovative activityThree types of innovative activity

invention brings something new into beinginvention brings something new into being

innovation brings something new into useinnovation brings something new into use

imitation is the adoption of an innovation byimitation is the adoption of an innovation bysimilar firmssimilar firms

Innovation is a key outcome firms seekInnovation is a key outcome firms seekthrough entrepreneurship and is often thethrough entrepreneurship and is often the

source of competitive successsource of competitive success Innovations produced in large establishedInnovations produced in large established

firms are often referred to as corporatefirms are often referred to as corporateentrepreneurshipentrepreneurship


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EntrepreneursEntrepreneurs Entrepreneurs are:Entrepreneurs are:

individuals acting independently or as part ofindividuals acting independently or as part of

an organizationan organization

who create a new venture or develop anwho create a new venture or develop an

innovation and take risks entering them intoinnovation and take risks entering them into

the marketplacethe marketplace

EntrepreneursEntrepreneurs

can be independent individualscan be independent individuals

can surface in an organization at any levelcan surface in an organization at any level


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International EntrepreneurshipInternational Entrepreneurship Entrepreneurship canEntrepreneurship can

fuel economic growthfuel economic growth

create employmentcreate employment generate prosperity for citizensgenerate prosperity for citizens

There is a strong positive relationshipThere is a strong positive relationship

between the rate of entrepreneurialbetween the rate of entrepreneurial

activity and economic development in aactivity and economic development in anationnation


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International EntrepreneurshipInternational Entrepreneurship There must be a balanceThere must be a balance

(in the culture) between(in the culture) between

individual initiative andindividual initiative and the spirit of cooperation andthe spirit of cooperation and

group ownership of innovationgroup ownership of innovation

Successful entrepreneurial firmsSuccessful entrepreneurial firms

provide appropriate autonomyprovide appropriate autonomy

incentives for individual initiativeincentives for individual initiative

promote cooperation and group ownership ofpromote cooperation and group ownership of

an innovationan innovationClick

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Discussion Question 2Discussion Question 2

What are the two major types ofinnovation?


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Innovation Types:Innovation Types:

most innovations are incrementalmost innovations are incremental

builds on existing knowledge basesbuilds on existing knowledge bases

provides small improvements in theprovides small improvements in the

current product linescurrent product lines

IncrementalIncremental

innovationinnovation

Incremental InnovationIncremental Innovation


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RadicalRadicalinnovationinnovation

Innovation TypesInnovation Types

provides significant technologicalprovides significant technological

breakthroughsbreakthroughs

creates new knowledgecreates new knowledge

is rare because of difficulty and riskis rare because of difficulty and risk

requires substantial creativityrequires substantial creativity

radical innovations are often bestradical innovations are often best

developed in separate units thatdeveloped in separate units that

start internal venturesstart internal ventures

IncrementalIncremental

innovationinnovation

Radical InnovationRadical Innovation

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Discussion Question3


What are the two central

processes associated with internal

corporate venturing?


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Internal Corporate VenturingInternal Corporate VenturingConcept of corporate strategyConcept of corporate strategy

Strategic contextStrategic context

AutonomousAutonomous

strategicstrategic

behaviorbehavior

Structural contextStructural context

InducedInduced

strategicstrategic

behaviorbehavior


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Internal Corporate Venturing:Internal Corporate Venturing:

Autonomous strategic behavior is aAutonomous strategic behavior is a

bottombottom--up process in which productup process in which product

champions:champions:

pursue new ideas, often through a politicalpursue new ideas, often through a political

processprocess

develop and coordinate the commercializationdevelop and coordinate the commercialization

of a new good or service until it achievesof a new good or service until it achieves

success in the marketplacesuccess in the marketplace

Autonomous Strategic BehaviorAutonomous Strategic Behavior


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A product champion is an organizationalA product champion is an organizational

member with an entrepreneurial vision ofmember with an entrepreneurial vision of

a new good or service who seeks to createa new good or service who seeks to create

support for its commercializationsupport for its commercialization

Autonomous strategic behaviorAutonomous strategic behavior

based on a firms wellsprings of knowledgebased on a firms wellsprings of knowledge

and resources that are the sources of theand resources that are the sources of thefirms innovationfirms innovation

a firms technological capabilities anda firms technological capabilities and

competencies are the basis for new productscompetencies are the basis for new products

and processesand processes


Autonomous Strategic BehaviorAutonomous Strategic Behavior


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Induced strategic behavior is a topInduced strategic behavior is a top--downdown

process wherebyprocess whereby

the firms current strategy and structure fosterthe firms current strategy and structure fosterproduct innovationsproduct innovations

innovations are associated closely with thatinnovations are associated closely with that

strategy and structurestrategy and structure


Induced Strategic BehaviorInduced Strategic Behavior


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To be innovative and develop internalTo be innovative and develop internal

ventures requiresventures requires

an entrepreneurial mindsetan entrepreneurial mindset risk propensityrisk propensity

an emphasis on executionan emphasis on execution

Individuals with an entrepreneurialIndividuals with an entrepreneurial

mindsetmindset engage the energies of everyone in theirengage the energies of everyone in their

domaindomain

both inside and outside the organizationboth inside and outside the organization


Induced Strategic BehaviorInduced Strategic Behavior

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Will horizontal organization in

general and cross-functionalteams in particular facilitate

appropriation of value from

innovation?


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CrossCross--Functional ProductFunctional Product

Development TeamsDevelopment Teams facilitate efforts to integratefacilitate efforts to integrate

activities associated with differentactivities associated with different

organizational functionsorganizational functions

design, manufacturing, marketing,design, manufacturing, marketing,etc.etc.

new product developmentnew product development

processes can be completed moreprocesses can be completed more

quicklyquickly products can be more easilyproducts can be more easily

commercialized when crosscommercialized when cross--

functional teams work effectivelyfunctional teams work effectively

Cross functionalCross functional

productproduct

development teamdevelopment team


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CrossCross--Functional ProductFunctional Product

Development TeamsDevelopment Teams product development stages areproduct development stages are

grouped into parallel orgrouped into parallel or

overlapping processesoverlapping processes

this approach allows the firm tothis approach allows the firm totailor its product developmenttailor its product development

effortsefforts

unique core competenciesunique core competencies

needs of the marketneeds of the marketCross functionalCross functional

productproduct

development teamdevelopment team


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Barriers to CrossBarriers to Cross--FunctionalFunctional

Team EffectivenessTeam Effectiveness Different orientations and perceptionsDifferent orientations and perceptions

individuals from separate functions haveindividuals from separate functions have

different orientations on issuesdifferent orientations on issues perceive product development activities inperceive product development activities in

different waysdifferent ways

Organizational politicsOrganizational politics

aggressive competition for resources amongaggressive competition for resources amongdifferent organizational functionsdifferent organizational functions

must achieve crossmust achieve cross--functional integration withfunctional integration with

minimal political conflictminimal political conflict


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Creating Value Through InternalCreating Value Through Internal

Innovation ProcessesInnovation Processes

Creating valueCreating value

through innovationthrough innovation

EntrepreneurialEntrepreneurial

mindsetmindset

Cross functionalCross functional

product developmentproduct development

teamsteams

Facilitating integrationFacilitating integrationand innovationand innovation

Shared valuesShared values

EntrepreneurialEntrepreneurial

LeadershipLeadership

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Are strategic alliances a viable

way to get innovations? What arethe tradeoffs with strategic

entrepreneurship through

alliances?


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Cooperative Strategies forCooperative Strategies for

Entrepreneurship and InnovationEntrepreneurship and Innovation Firms may need to cooperate and integrateFirms may need to cooperate and integrate

knowledge and resources to successfullyknowledge and resources to successfully

commercialize inventionscommercialize inventions

entrepreneurial new venture firms may needentrepreneurial new venture firms may need

investment capital and distribution capabilitiesinvestment capital and distribution capabilities

more established companies may need newmore established companies may need new

technological knowledge possessed by newertechnological knowledge possessed by newer

entrepreneurial firmsentrepreneurial firms

To innovate through a cooperativeTo innovate through a cooperative

relationship, firms must share their knowledgerelationship, firms must share their knowledge

and skillsand skills

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How do acquisitions affect

innovative inputs (R&D) and outputs

(patents)? How does a firm prevent

innovation problems associated with

the acquisition process?


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Acquisitions to Buy InnovationAcquisitions to Buy Innovation AcquisitionsAcquisitions

rapidly extend the product linerapidly extend the product line

increase the firms revenuesincrease the firms revenues

A key risk of acquisitions is that a firmA key risk of acquisitions is that a firm

may substitute the ability to buymay substitute the ability to buy

innovations for an ability to produceinnovations for an ability to produce

innovations internallyinnovations internally firm may lose intensity in R&D effortsfirm may lose intensity in R&D efforts

firm may lose ability to produce patentsfirm may lose ability to produce patents


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How can venture capital be usedas an external approach tostrategic entrepreneurship?


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Capital forCapital for

Entrepreneurial VenturesEntrepreneurial Ventures Venture capital firmsVenture capital firms

seek high returns on their investmentseek high returns on their investment

value competence of the entrepreneur or thevalue competence of the entrepreneur or the

human capital in the firmhuman capital in the firm

place weight on the expected scope ofplace weight on the expected scope of

competitive rivalry the firm is likely tocompetitive rivalry the firm is likely to

experienceexperience

evaluate degree of instability in the marketevaluate degree of instability in the market

addressedaddressed


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Capital forCapital for

Entrepreneurial VenturesEntrepreneurial Ventures Initial public offerings (IPOs)

new stocknew stock

firm needs high potential in order to sell newfirm needs high potential in order to sell new

stockstock

often quite larger than the amounts obtainedoften quite larger than the amounts obtained

from venture capitalistsfrom venture capitalists

investment bankers frequently play major rolesinvestment bankers frequently play major roles

in the development and offering ofIPOsin the development and offering ofIPOs

firms that have also received venture capitalfirms that have also received venture capital

backing usually receive greater returns frombacking usually receive greater returns from

IPOsIPOs


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Creating Value ThroughCreating Value Through

Strategic EntrepreneurshipStrategic Entrepreneurship Newer entrepreneurial firms often are

more effective than larger firms in

identifying opportunities

Larger and well-established firms often

have more resources and capabilities to

exploit opportunities

Firms can be simultaneouslyentrepreneurial and strategic regardless of

their size and age


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Creating Value ThroughCreating Value Through

Strategic EntrepreneurshipStrategic Entrepreneurship To be entrepreneurial firms must

develop an entrepreneurial mindset among

managers and employees

emphasize the development of their resources,

especially human and social capital

seek to enter and compete in international

markets

Enterpreneurial firms can achieve

competitive advantages and create value

for their customers and shareholders

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