Corporate Entrepreneurship represents a paradigm shift in how established firms approach innovation and growth. By embracing entrepreneurial principles within a corporate structure, companies can foster a culture of innovation, adaptability, and strategic renewal. This article looks into the concept of Corporate Entrepreneurship, its historical roots, benefits, challenges, and a comparative view of its application in the US and EU, culminating with a perspective on its future relevance.

What is Corporate Entrepreneurship?

Corporate Entrepreneurship involves the initiation and management of innovative, risk-taking processes within a corporation. It’s a strategy where companies develop new products, services, or processes, often diverging from their core operations, to drive growth and competitive advantage. Corporate Entrepreneurship can take various forms, including internal innovation (intrapreneurship), strategic alliances, or corporate venturing.

This process forms the foundation for boosting revenue and innovation in the company. It provides a clear idea about the resources and environment required for support and motivation. Corporate entrepreneurship can motivate entrepreneurs to take the necessary action and guide the company toward its goals.

In a broader context, corporate entrepreneurship refers to the development of new ideas and opportunities within large or established businesses, directly leading to the improvement of organizational profitability and an enhancement of competitive position or the strategic renewal of an existing business.

The Origin of Corporate Entrepreneurship

The concept of corporate entrepreneurship can be traced back to the early 1970s, with the first academic papers on the subject appearing in 1972. However, the term “corporate entrepreneurship” was not coined until 1982, by Howard Edward Haller in his Master’s in Management Thesis.

In the 1970s, the focus of research was on how to develop entrepreneurship within existing organizations. Researchers were interested in understanding the factors that led to successful corporate ventures and how companies could create a culture that supported innovation and risk-taking.

In the 1980s, the concept began to gain wider recognition and acceptance. Gifford Pinchot III, an American venture capitalist and author, popularized the term “intrapreneurship” to describe the act of entrepreneurship within a large company. Pinchot’s book, “Intrapreneuring: Why You Don’t Have to Leave the Corporation to Become an Entrepreneur” (1985), was highly influential and helped to legitimize the concept.

In the 1990s, research began to focus more on the strategic implications. Researchers were interested in how it could be used to help companies achieve their strategic goals. They also began to study the different types of activities, such as corporate venturing, new product development, and process innovation.

Today, corporate entrepreneurship is a recognized and important field of study. There are numerous academic journals, conferences, and books devoted to the topic. It is also a common topic in business school curricula.

Here are some of the key milestones in the development of corporate entrepreneurship:

• 1972: The first academic papers were published.
• 1978: Gifford Pinchot III and Elizabeth Pinchot co-author a paper on “intra-corporate entrepreneurs.“
• 1982: Howard Edward Haller coined the term “corporate entrepreneurship” in his Master’s in Management Thesis.
• 1985: Gifford Pinchot III publishes his influential book, “Intrapreneuring: Why You Don’t Have to Leave the Corporation to Become an Entrepreneur.“
• 1990s: Research begins to focus on the strategic implications
• 2000s: World-wide acceptance and large and notable companies embraced the innovative powers
• Today: Corporate entrepreneurship is a recognized and important field of study.

In the “Handbook of Entrepreneurship Research, An Interdisciplinary Survey and Introduction” (Zoltan J. Acs, David B. Audretsch) they use a quote (Dess, Lumpkin, and McGee (1999)), “Virtually all organizations—new start-ups, major corporations, and alliances among global partners—are striving to exploit product-market opportunities through innovative and proactive behavior”, and Barringer and Bluedorn (1999) suggested that in light of the dynamism and complexity of today’s environments, “… entrepreneurial attitudes and behaviors are necessary for firms of all sizes to prosper and flourish.”

Benefits of Embracing Corporate Entrepreneurship

• Innovation and Growth: It fosters a culture of innovation, enabling firms to develop new products and services, thereby driving growth.
• Competitive Advantage: By continuously innovating, companies can stay ahead of industry trends and maintain a competitive edge.
• Employee Engagement: Initiatives often lead to higher employee engagement and retention, as staff feel more involved and valued.
• Flexibility and Adaptation: It equips companies to quickly adapt to market changes, reducing the risk of obsolescence.

Main Challenges in Implementing Corporate Entrepreneurship

• Cultural Resistance: Shifting a corporate culture to embrace risk and innovation can be challenging, especially in well-established firms.
• Resource Allocation: Balancing resources between core operations and entrepreneurial ventures is a critical challenge.
• Managing Risk: It involves taking calculated risks, which, if not managed properly, can lead to failures.

Corporate Entrepreneurship: US vs. EU Perspectives

The approach to Corporate Entrepreneurship in the US and EU presents some notable differences:

• Risk Tolerance: US firms generally display a higher tolerance for risk, conducive to more aggressive such strategies.
• Regulatory Environment: The EU’s more stringent regulatory framework can impact the speed and scope of initiatives.
• Cultural Factors: European firms often focus more on sustainable and socially responsible practices, reflecting broader societal values.

Examples of Successful Corporate Entrepreneurship

• Google (Alphabet Inc.): Known for its ‘20% time’ policy, Google encourages employees to spend time on personal projects, leading to innovations like Gmail and AdSense.
• BMW: BMW’s venture capital arm, BMW i Ventures, invests in innovative startups, aligning new technologies with its core business.
• 3M: Known for its “15% time” policy, which allows employees to spend up to 15% of their work time on their own projects. This policy has led to the development of many successful new products, including Post-it Notes and Scotch tape.

Examples of Corporate Entrepreneurship failures

Running a strategy focusing on intrapreneurship or other innovation strategies involves risk-taking and innovation, and not all ventures lead to success. Google, as seen earlier, has a strong emphasis on this, and has had its share of failed products that originated from this approach. Here are a few examples:

1. Google Glass: Launched in 2013, Google Glass was a groundbreaking product in wearable technology. However, due to privacy concerns, limited functionality, high cost, and a lack of clear use cases, it failed to resonate with the general public. Google eventually halted its consumer sales in 2015, although it has since been repurposed for specialized enterprise applications.
2. Google Wave: Introduced in 2009, Google Wave was a platform designed for real-time communication and collaboration. Despite its innovative approach, it struggled with user adoption due to its complexity and lack of a clear purpose, leading Google to discontinue the service in 2010.
3. Google Buzz: Launched in 2010, Google Buzz was an early attempt at a social networking service, integrated into Gmail. It faced immediate privacy concerns, as it publicly disclosed users’ frequent Gmail contacts without explicit consent. Google Buzz was eventually discontinued in 2011.
4. Google+: Google’s most notable attempt at entering the social networking space, Google+ was launched in 2011. Despite initial growth, it struggled to compete with established players like Facebook and Twitter. User engagement was low, and it faced various challenges, including a significant data breach. Google+ was officially shut down for consumers in 2019.
5. Project Ara: This was an initiative to create a modular smartphone where users could swap out hardware components such as the camera or battery. Despite the innovative concept, the project faced numerous technical challenges and market viability issues, leading to its cancellation in 2016.

The Outlook for Corporate Entrepreneurship

The future is bright and increasingly relevant for this way of working and creating new innovations. In an era marked by rapid technological advancements and shifting consumer preferences, this is a critical strategy for sustained corporate success.

• Technological Advancements: Emerging technologies like AI and IoT offer new avenues for initiatives.
• Globalization: As markets become more interconnected, it provides a pathway for firms to tap into global opportunities.
• Sustainability: With a growing emphasis on sustainability, such innovative strategies will play a pivotal role in developing eco-friendly and socially responsible business models.

Conclusion: Corporate Entrepreneurship as the Future of Business Innovation

In conclusion, Corporate Entrepreneurship represents not just a strategy but a necessary evolution in the business landscape. It offers a blend of stability and innovation, allowing established firms to navigate the complexities of modern markets. As companies worldwide adapt to this new frontier, this way of working will undoubtedly shape the future of business innovation.

Subscribe to the blog: