Chapter 4

The Forms of
Corporate
Entrepreneurship
Copyright (c) 2007 by Donald F. Kuratko All rights reserved.

E
Introduction
Entrepreneurship manifests in
companies in two ways:
Corporate Venturing addition of

new businesses to the corporation

Strategic Entrepreneurship highly
consequential innovations that are
adopted in the firms pursuit of
competitive advantage

Introduction

Delineating Different Forms that Corporate Entrepreneurship Can Take

Corporate
Entrepreneurship

Corporate Venturing
Internal corporate
venturing
Cooperative corporate
venturing
External corporate
venturing

Strategic Entrepreneurship
Strategic renewal
Sustained regeneration
Domain redefinition
Organizational rejuvenation
Business model
reconstruction

E
Modes of Corporate Venturing
Internal corporate venturing new

businesses created and owned by the

corporation
Cooperative corporate venturing new
businesses are created and owned by the
corporation together with one or more
external development partners
External corporate venturing new
businesses are created by parties outside
the corporation and subsequently
invested in or acquired by the corporation

Corporate Venturing
What is a new business?
Corporate Growth Strategy Matrix
New
Markets
Market
Focus
Current
Markets

Market
Developm
ent
Strategy

Diversificat
ion
Strategy

Market
Product
Penetratio Developm
ent
n
Strategy
Strategy Product
Focus

When a company finds itself dealing with new categories of customers and
selling them products or services that are new to the firm

E
Corporate Venturing
The Domain of a New Business
Market
Creation

Market Focus of
the
Entrepreneurial
Initiative

New
Busine
ss

*New
Market

Market
Extension
Existing
Market

Existin
g
Busine
Existing
ss
Product in
Current
Industry

* The point of reference for new is new to the firm

Product
Extension in
Current
Industry

*New
Product in
Current
Industry

Product Focus of the

Entrepreneurial Initiative

New Industry
Entry and/or
Creation

Corporate Venturing
Motives for Corporate Venturing
Leveraging to exploit existing

competencies in new product or

market arenas
Learning to acquire new
knowledge and skills that may be
useful in existing product or market
arenas

E
Corporate Venturing
Leveraging
To exploit under-utilized

resource
To extract further value from
existing resources
To introduce competitive
pressure onto internal suppliers
To spread the risk and cost of
product development
To divest non-core activities

Corporate Venturing

Learning
To learn about the process of

venturing
To develop new
competencies
To develop managers

Corporate Venturing
Corporate venturing directly investing
corporate funds into external business startups
Chesbroughs framework for linking corporate
venture capital investments with a companys
larger strategic agenda can be sorted into
categories according to:
1.) their objectives (strategic or financial)
2.) the degree to which the new business being
invested in (typically as a start-up) has
operational capabilities

Corporate Venturing
Four pure types of corporate
venture capital investment:
1.) Driving investments
2.) Enabling investments
3.) Emergent investments
4.) Passive investments

Strategic Entrepreneurship: Innovating in Pursuit of

Competitive Advantage
Form of
Strategic
Entrepren
eur

Focus of the
The
Typical
Entrepreneurial Entrepreneurial Frequency of
Initiative*
Event
the
Entrepreneurial
Event

Strategic
Renewal

Strategy of the firm

Adoption of a new strategy

Low

Sustained
Regeneration

Products offered by the firm

or markets served by the firm

Introduction of a new product

into a pre-existing product
category or introduction of an
existing product into a new
(to the firm) but pre-existing
market

High

Domain
Redefinition

New competitive space

Creation of new or
reconfiguration of existing
product categories or market
space

Low

Organizational
Rejuvenation

Organization structure,
processes, and/or capabilities
of the firm

Enactment of a major,
internally-focused innovation
aimed at improving strategy
implementation

Low-to-moderate

Business Model
Business model of the firm
Design of a new or redesign
Low
Reconstruction
ofinanthe
existing
model firms, one or more of its businesses
*The focus
of the entrepreneurial event can be the entire firm or,
case ofbusiness
multi-business

The Business Model as a Vehicle for Corporate

Entrepreneurship
A Firms Business Model:
a concise representation of how an
interrelated set of decision variables
in the areas of venture strategy,
architecture, and economics will be
addressed to create sustainable
competitive advantage in defined
markets

E
The Business Model as a Vehicle for Corporate
Entrepreneurship
A business model should address six basic
questions:
1.) How does the firm create value
2.) For whom does the firm create value
3.) What is our source of internal advantage or
core competency
4.) How does the firm externally differentiate
itself in the marketplace
5.) What is the firms model for making money
6.) What is the managements growth
ambition and over what time period

The Business Model as a Vehicle for

Corporate Entrepreneurship
Decisions in these six areas can
be made at three levels:
1.) Foundation level
2.) Proprietary level
3.) Rules level

E
The Open Innovation Revolution
Open innovation a firm is not
solely reliant upon its own
innovative resources for new
technology, product, or business
development purposes. Rather,
the firm acquires critical inputs to
innovation from outside sources.

The Open Innovation Revolution

Four reasons companies are increasingly

choosing to pursue open innovation models:
1.) Importing new ideas is a good way to
multiply the building blocks of innovation
2.) Exporting ideas is a good way to raise cash
and keep talent
3.) Exporting ideas gives companies a way to
measure an innovations real value and to
ascertain whether further investment is
warranted
4.) Exporting and importing ideas helps
companies clarify what they do best