Chapter 2 Entrepreneurial Intentions and Corporate Entrepreneurship

McGraw-Hill/Irwin Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Hisrich Peters Shepherd

Managerial Versus Entrepreneurial Decision Making

Entrepreneurial management is distinct from traditional management in terms of:
Strategic orientation. Commitment to opportunity. Commitment of resources. Control of resources. Management structure. Reward philosophy. Growth orientation. Entrepreneurial culture.
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Table 2.1 Distinguishing Entrepreneurially from Traditionally Managed Firms

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Managerial Versus Entrepreneurial Decision Making

Strategic orientation- factors that are inputs into the formulation of the firms strategy
Entrepreneurial -Driven by the presence of opportunities for new entry -Acquiring necessary resources is secondary Traditional managment -To use resources efficiently -Type and resources the firm has represent a key starting point for future

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Managerial Versus Entrepreneurial Decision Making

Commitment to opportunity
Entrepreneurial -Committed to take action on potential opportunities -Can pursue opportunity rapidly- making the most window of opportunity -Able to withdraw resources rapidly if find it is not the right opportunity- minimize losses Traditional managment -Place emphasis on information that derived from data collection & analysis eg: return on resources deployed -Large initial investment will be made once pursuing opportunity with intention to stay longer

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Managerial Versus Entrepreneurial Decision Making

Commitment to resources
Entrepreneurial -Focus on minimize resources required to pursue particular opportunity -Put small amt of resources each step- small risk -Can change direction rapidly Traditional managment -Use resources at large scale -Based on past events -Not easily reversed

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Managerial Versus Entrepreneurial Decision Making

Control of resources
Entrepreneurial -Less concerned abour ownership of resources -Concerned more about having access to other;s resources Traditional managment -Focus on ownership of resources & accumulation of further resources

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Managerial Versus Entrepreneurial Decision Making

Management structure
Entrepreneurial -Few layers of bureaucracy between top mgt & customer -Multiple informal communication channels -Able to communicate & take action faster -More structured both for internal and external networks Traditional managment -Structure well suited with internal efficiencies of controlling resources -Formalized hierarchy -Higly routinized work -Layers of middle managment

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Managerial Versus Entrepreneurial Decision Making

Reward philisophy
Entrepreneurial -Focsed on pursuing opportunities for new entry that represent new value -Compensates employees based on the contibution toward discovery/ generation and exploitation of opportunity Traditional managment -Managed rewards based on responsibilities that is determined by amt of resources each employee controls

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Managerial Versus Entrepreneurial Decision Making

Growth orientation
Entrepreneurial Traditional managment

-Desire to expand firm size rapidly

-Prefer slow and steady growth- manageable growth

Entrepreneurial culture
Entrepreneurial -Encourage employees to generate ideas, experiment & creative task Traditional managment -Intersted in ideas that revolve around currently controlled resources- limit the scope of opportunities
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Managerial Versus Entrepreneurial Decision Making (cont.)

Causes for Interest in Corporate Entrepreneurship
Increasing interest in doing your own thing and doing it on ones terms. New search for meaning and impatience has caused more discontent in structured organizations. Organizations are encouraging corporate entrepreneurship i.e. stimulating, and capitalizing on, employees who think that something can be done differently and better.
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Managerial Versus Entrepreneurial Decision Making (cont.)

Corporate entrepreneurship is most strongly reflected in the following endeavors:
New business venturing (corporate venturing) - The creation of a new business within an existing organization- by redefine companys product, develop new mkt or form formally autonomous/semiautonomous units/firm Innovativeness - Product and service innovation, with emphasis on development and innovation in technology. - Include new product dev, prod. Improvement, new production methods and procedures

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Managerial Versus Entrepreneurial Decision Making (cont.)

Self-renewal -Transformation through renewal of the key ideas on which an organization is built. - Includes a redefination of buss. Concept, reorganization, introduction of systemwide changes to increase innovation Proactiveness - Includes initiative, risk taking, competitive aggressiveness, and boldness.

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Table 2.3 - Characteristics of an Entrepreneurial Environment

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Table 2.4 - Leadership Characteristics of a Corporate Entrepreneur

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