Corporate Entrepreneurship

Corporate Entrepreneurship

Corporate Entrepreneurship can be seen as the process whereby an individual or a group creates a new venture within an existing organization, revitalizes and renews an organization ,or innovates. Zahra’s(1986) definition of corporate entrepreneurship suggests aformal or informal activity aimed at creating new businesses in established firms through product and process innovations and market developments,whereas sathe(1985) defines corporate entrepreneurship as a process of organizational renewal. Corporate Entrepreneurship has emerged as a much needed ingredient contributing towards the growth of any organization under a changing business environment.

Corporate entrepreneurship (CE) is widely considered as a vital means to stimulate and sustain the overall competitiveness of an organization. Both practitioners and researchers have recognized the challenges of pursuing entrepreneurship within a corporation. CE is the result of the joint activities of an organization’s members, activities that pursue strategic objectives and constitute strategic roles. Thus, to face the challenges that CE poses for both theory and practice we need to advance our understanding of the activities and strategic roles involved in the CE process and their implications for performance. While strategic roles have been extensively studied, most studies analyze the strategic role of top managers and ignore the contribution of middle managers. Moreover, while there is a growing body of empirical evidence of a positive relationship between CE initiatives and performance, little research emphasizes the contribution of middle managers’ strategic roles to superior performance.

Innovation and entrepreneurship are often regarded as overlapping concepts. This can be traced back to probably the most well known definition of entrepreneurship, by Schumpeter (1934: 74), who defines entrepreneurs as individuals that carry out new combinations (i.e. innovations). Schumpeter distinguishes four roles in the process of innovation: the inventor, who invents a new idea; the entrepreneur who commercializes this new idea; the capitalist, who provides the financial resources to the entrepreneur (and bears the risk of the innovation project); the manager, who takes care of the routine day-to-day corporate management. These roles are most often executed by different persons (see for example Kenney 1986). The literature on entrepreneurship recognizes a variety of entrepreneurial roles in economic change, such as:

1. The person who bears uncertainty (Knight 1921);

2. An innovator (Schumpeter 1934);

3. A decision maker (Casson 2003);

4. An industrial leader (Schumpeter 1934);

5. An organizer and coordinator of economic resources (Marshall 1890);

6. An arbitrageur, alert to opportunities (Kirzner 1973; 1997);

7. An allocator of resources among alternative uses (Schultz 1975).

These roles all implicitly carry an economically positive connotation with them. However, if entrepreneurs are defined to be persons who are ingenious and creative in finding ways that add to their own wealth, power, and prestige (Baumol 1990), then it is to be expected that not all of their activities will deliver a productive contribution to society (cf. Murphy et al. 1991). For other reasons, many entrepreneurs do not directly contribute to an increase in for example national income: some entrepreneurship is more adequately characterized as a non-profit-seeking activity (cf. Benz 2006). Greater independence and self-fulfillment are more often mentioned as important motivations to become self-employed than increasing earning power (EOS Gallup 2004). Empirical studies have even shown that (on average) entry into self-employment has a negative effect on the monetary income of individuals (Hamilton 2000; Parker 2004). Being an entrepreneur may be rewarding because it entails substantial non-monetary benefits, like greater autonomy, broader skill utilization, and the possibility to pursue one’s own ideas; i.e. more freedom (cf. Sen 1999). These wide ranging effects of entrepreneurship are reflected in entrepreneurship policy.

There have been dozens of definitions of entrepreneurship. The first of those is the phenomenon that some people, rather than working for somebody else under an employment contract, strike out on their own and become self-employed. These economic entities involve some element of innovation at start-up, and some degree of innovativeness is needed to survive over time. However, innovation is not central to this phenomenon. It is to the second social reality. This reality involves the development