The Four Models of Corporate Entrepreneurship
Abstract
I AM NOT PERMITTED TO POST OR SHARE MIT COPYRIGHTED MATERIAL. PLEASE SEARCH ONLINE FOR OTHERS WHO MAY HAVE POSTED THIS ARTICLE. THANK YOU. --------------------------------------------------------------------------------------------------------------------------------------------
How can established organizations build successful new businesses on an ongoing basis? In their study of nearly 30 corporations as diverse as Google, DuPont and Cargill, the authors identified two dimensions under the direct control of management that consistently differentiated how compa1 nies approach corporate entrepreneurship. The first is organizational ownership: Will the primary ownership for the creation of new businesses be focused in a designated group, or will it be diffused across the organization? The second is resource authority: Will projects be funded from a dedicated corporate pool of money or in an ad hoc manner, perhaps through business-unit budgets? Together the two dimensions generate a matrix with four basic models of corporate entrepreneurship: the opportunist, the enabler, the advocate and the producer. In the opportunist model (example: Zimmer Holdings), the company has no deliberate approach to corporate entrepreneurship, and new businesses are built mainly from the grassroots efforts of a few "project champions." Enabler companies (example: Google) provide funding and senior executive attention to prospective projects. In the advocate model (example: DuPont), the company strongly evangelizes for corporate entrepreneurship, but business units provide the primary funding. Lastly, producer companies (example: Cargill) establish and support a full-service group with a mandate for corporate entrepreneurship. Each of the four models has a different objective, function and set of challenges. Whichever model is chosen, the crucial thing to remember is that corporate entrepreneurship needs to be nurtured and managed as a strategic, deliberate act.
... Large firms are increasingly adopting entrepreneurial approaches. Wolcott and Lippitz (2007) define corporate entrepreneurship as the internal process by which teams within an established company ideate, champion, launch, and manage new ventures. Hence, companies embracing open innovation strategies seek startups as sources of external innovation (Kohler 2016). ...
... This model requires dedicated staff and resources from business units to manage partnerships with startups. In addition, the producer model involves significant financial investment by the corporation or a strong influence over startup financing (Wolcott and Lippitz 2007). One critical point about these models is the leadership. ...
... One critical point about these models is the leadership. It is critical to drive these programmes forward and ensure their success (Wolcott and Lippitz 2007). ...
Corporations actively pursue startups for rapid innovation, while startups seek to enhance their business models with larger companies’ support, creating an ideal partnership. However, the initiation of such relationships poses challenges for both parties. The study clarifies interaction pathways among entities and how partnerships create new technology evaluation models. The research used a qualitative methodology with content analysis techniques involving 18 interviews conducted with founders of Brazilian startups. By elucidating the real impact of such collaborations, the study offers valuable insights for practitioners and researchers seeking to understand and leverage the dynamics of startup-corporation relationships for mutual benefit and innovation.
... Large firms are increasingly adopting entrepreneurial approaches. Wolcott and Lippitz (2007) define corporate entrepreneurship as the internal process by which teams within an established company ideate, champion, launch, and manage new ventures. Hence, companies embracing open innovation strategies seek startups as sources of external innovation (Kohler 2016). ...
... This model requires dedicated staff and resources from business units to manage partnerships with startups. In addition, the producer model involves significant financial investment by the corporation or a strong influence over startup financing (Wolcott and Lippitz 2007). One critical point about these models is the leadership. ...
... One critical point about these models is the leadership. It is critical to drive these programmes forward and ensure their success (Wolcott and Lippitz 2007). ...
While complex, the synergy between startups and corporations offers a wealth of mutual benefits. This relationship, often viewed as a two-way street, involves not just startups gaining from corporations’ resources but also corporations benefiting from startups’ innovation and agility. The interdependence between startups and corporations, while potentially leading to a power imbalance, also presents an opportunity for both entities to grow. To gain a deep understanding, we asked why, what, and how and then outlined the involved components in the relationship between startups and corporations. We developed a systematic literature review (SLR) in two phases. The first one contemplates the period from 2015 to 2019. The second phase was carried out from 2020 until 2024. We used 71 academic references from the Scopus and Web of Science (WOS) databases. From these references, we constructed an emergent way framework that outlines the main stages of the way, including the motivation and the critical characteristics of collaboration. The framework also brings the most frequently observed relational path through the second phase of the SLR. The paper’s contribution paper is recognizing that each partnership is unique, and the framework is a starting point rather than a one-size-fits-all solution. The stages of the relationship outlined in the framework must be adapted to the specific context of the partnership. In essence, while the framework offers a valuable relational path, the success of corporate partnerships hinges on deciding which aspect these agents must work on to find a better solution in which to assimilate their collaboration.
... Both explain a common dependent variable where entrepreneurial action is aimed at forming and exploiting opportunities in an external environment. Wolcott and Lippitz (2007) describe corporate entrepreneurship as the process where teams in a company or organisation harness that entity's assets base and funding sources to develop new business ventures and initiatives with internal teams managing the project or projects. Shen, Heo, and Reis (2022) share and support the view of Douglas and Fitzsimmons (2013), who refer to intrapreneurship as corporate entrepreneurship performed inside organisations, a view also supported by Rubinskaya (2021). ...
... With the adhesive's ability to be applied and removed from surfaces easily, it became a major contributor to the product offer. According to Wolcott and Lippitz (2007), this invention revolutionised product development at 3M where innovators such as engineers and scientists were allowed to spend up to 15% of their work time developing their own projects. The implementation of these required exceptional managerial adaptation and culture change to facilitate creative slack time and ensure an appropriate return. ...
... In the context of corporate entrepreneurial thinking, Wolcott and Lippitz (2007) According to their research, the iPod should have been a Sony Corp. product as the Japanese company had a brand heritage, superior technology, and huge resources. It was Apple Inc.'s Steve Jobs who recognised the potential of portable digital music that could be unlocked in the creation of a new business which completely disrupted the traditional music market. ...
... Innovation as a process can best succeed in an open-minded business environment. While CE is considered the environment nurturing innovative culture, the larger companies grow, the less flexible they become in adjusting their well-established routines, and that is despite the advantage of a higher level of resources and a lower level of business risk (Brem andBorchard, 2013, Wolcott andLippitz, 2007). Companies practicing corporate innovation tend to be dynamic and prepared to recognize business opportunities faster while embracing the changes arising in the process (Kuratko et al., 2014). ...
... CE is a process through which individuals in an established firm pursue entrepreneurial opportunities to innovate, leveraging the parent company's assets, capabilities, and resources (Schönwälder and Weber, 2023;Wolcott and Lippitz, 2007). CE aspires to stimulate innovation from the internal organizational viewpoint by aligning potential opportunities with the resources to exploit them . ...
Entrepreneurship is a process that transpires over time. Every entrepreneurial journey is a unique process that is difficult to replicate in the exact way it happened. Entrepreneurial activities in an existing organization can, over time, form a specific staged process that allows a more structured way from generation to implementation of new ideas. Through its supporting structure, corporate entrepreneurship channels ideas through a process that helps people stay focused, systematic, and efficient in value creation. Entrepreneurship and innovation activities in this process are undeniably linked; however, the two disciplines do not address them uniformly. Therefore, the research describing the corporate entrepreneurial and innovation processes is not aligned. In this study, we aimed to analyze entrepreneurship and innovation process approaches comparatively in an existing business context and to propose the triple-bottom-line corporate entrepreneurial (conceptual) process model for innovation and business sustainability. We provided insight into the dynamics of the entrepreneurial process in the existing business over time: A roadmap to evaluate the enablers and the critical elements for the innovation to transform and sustain. We proposed a harmonized stage model of the corporate entrepreneurial innovation process, where stage output artifacts mark the progression of the process, making it measurable. We provided conclusions from the literature review, a generalized model, and propositions on critical aspects of the entrepreneurial innovation process to happen, transform, and sustain.
... For example, the development of desktop 3D printing has changed who can create a product by democratizing manufacturing, what is created by enabling individuals to design customized objects, where a product is created by allowing manufacturing to take place on a desktop, and how products are created by digitizing the manufacturing process (Stanko & Rindfleisch, 2023). Since its inception, the Innovation Radar has been successfully applied to a wide variety of innovation contexts, including service innovation (Grönroos & Voima, 2013;Nordin & Kowalkowski, 2010), social innovation (Gupta et al., 2020;Henke Jr & Zhang, 2010), digital innovation (Fukawa & Rindfleisch, 2023), and business model innovation Wolcott & Lippitz, 2007). Thus, we leverage this framework as the foundation for our conceptualization of innovation in the sharing economy. ...
The sharing economy has altered transactions between providers and users in at least two pivotal ways. First, sharing economy offerings are often crowdsourced from a wide range of providers rather than a single firm. Second, these offerings are typically temporarily accessed rather than permanently owned. The effect of these two characteristics on how offerings are exchanged has generated considerable interest from scholars across a wide range of domains, including economics, management, and marketing. However, little is known about the impact of the sharing economy (and crowdsourced provision and temporary access), upon the way offerings are created. As a result, the degree to which innovation in the sharing economy differs from how it is typically conducted is largely unknown. Our research seeks to address this question. Specifically, we begin by reviewing the literature on innovation in the sharing economy and then offer a conceptual framework that focuses on the role of crowdsourced provision and temporary access within the innovation process. We then assess this framework by examining innovations introduced by Uber since its inception. In addition, we explore the degree to which sharing platforms differ from a typical profit maximizing firm by conducting an econometric analysis of the price differences between Uber and a traditional taxi service. We conclude by highlighting the implications of our research and suggesting avenues for future inquiry in this domain.
... Hva er egentlig en spin-off? Vi definerer begrepet som en prosess hvor et team i en etablert bedrift avdekker, fremmer, etablerer og leder en ny virksomhet som er forskjellig fra morselskapet, men som utnytter morselskapets ressurser, markedsposisjon, kapabiliteter eller andre ressurser (Wolcott & Lippitz, 2007). Spinoff-prosesser involverer også eksterne partnere og kapabiliteter, men karakteriseres av at de engasjerer betydelige ressurser fra morselskapet, og at interne team typisk leder prosjektet. ...
Innovasjon Norge argumenterer i sin strategiplan «Drømmeløftet» (2015) for et sterkere søkelys på spin-off-etableringer, det vil si de etablerte bedriftenes parallell til entreprenørskap. I noen tilfeller ligger de etablerte bedriftenes innovative ideer så langt utenfor bedriftens virkeområde at ledelsen legger dem i en skuff. Innovasjon Norge argumenterer for at virkemiddelapparatet må vurdere muligheten for å utvikle virkemidler som hjelper bedriftene med å få de innovative ideene ut av skuffen og ut på markedet i form av spin-off. Internasjonalt har spin-off-etableringer vært ansett som en svært vellykket form for entreprenørskap, da den har en høyere overlevelses- og ansettelsesrate enn bedrifter etablert på andre måter (Andersson & Klepper, 2013). Også i Norge har spin-off-etableringer vist seg å være en vellykket form for entreprenørskap, men den har fått lite oppmerksomhet fra politikere og virkemiddelapparat (Nås mfl., 2003). Forskning har vist at forhold ved entreprenøren og det regionale støttesystemet er vitale faktorer for å lykkes med etablering av et nytt foretak (Ardichvili mfl., 2003), men hvilken rolle spiller morselskapet for spin-off-selskapets suksess? I denne artikkelen settes søkelyset på hvilken betydning morselskaper fra privat næringsliv har for spin-off-selskapets tidlige markedssuksess, definert som den første kundeavtalen og det første salget. Funn fra et prosjekt støttet av Regionalt forskningsfond Vestlandet som har studert spin-off-etableringer i små og mellomstore bedrifter (SMB) innenfor olje oggass, IKT og maritim næring i Haugesund- og Stavanger-regionen i perioden 2013–2014, viser at morselskapenes strategi for spin-off og deres organisatoriske, finansielle og relasjonelle strategiske praksiser er av avgjørende betydning for spin-off-selskapenes tidlige markedssuksess. Studiens praktiske implikasjoner presenteres avslutningsvis.
... For instance, Quinn (1985) and Stopford and Baden-Fuller (1994) stated that middle managers who are skilled at fostering communication amongst employees can stimulate interest in and commitment to corporate entrepreneurship, and Pinchott (1985) showed that middle managers who are skilled at communicating ideas to upper management help to advance the process (see also Floyd and Wooldridge 1992;King, Fowler, and Zeithaml 2001). Additionally, studies have shown that middle managers who are skilled 'enablers' or 'facilitators' (Wolcott and Lippitz 2007) are most likely to help their team find innovative solutions to problems and take risks in implementing innovative solutions. Furthermore, studies have shown that middle-level managers technical skills influence their initiation of, and support for, innovative activities. ...
This study examines whether, and how, top management influences middle management’s support of corporate entrepreneurship activities. Specifically, the study explores the influence of top management characteristics, i.e. strategic planning capacity and entrepreneurial orientation, on manager’s decision to support innovation adoption. We report on the findings from a vignette study. Research participants included a group of 259 experienced business professionals: 148 from the United States and 111 from China. The results suggest that the alignment of strategic planning capacity and entrepreneurial orientation influences middle management’s support for corporate entrepreneurship in both cultural settings.
On June 12th, 2014, Tesla decided to open its patents to everyone. The reason why Tesla decided to do so is uncertain and may never be answered objectively. However, the consequence of such a decision can be measured and it was hitherto uncovered by literature. In the present study, it is proposed to analyze this event through the value of Tesla's shares in the stock market and its potential competitors and suppliers by an event study design. It is important because just as Tesla's patents can be, the company that has been leading the development of electric cars, there may be many other companies whose patents could have a huge environmental impact. Therefore, it is interesting to know what effects this corporate decision has had. Through a law and economics approach, given the potential monopoly power that a patent right provides, by guaranteeing the exclusive use of a certain innovation, which can be translated into a competitive advantage for those who own it, the hypothesis is that during the studied period Tesla's market shares declined while competitors' and suppliers' rose. From the outcome, it is expected that inferences about the patent system and its use by this kind of industrial organization can be made.
The literature review outlines a three-step procedure for analyzing corporate venture (CV) tools in the manufacturing industry. Firstly, a selection of general CV tools from the literature was identified. Secondly, tools specific to the manufacturing industry were derived, and their properties were explained. Lastly, the general tools were compared to the specific tools to identify differences. The analysis produced two key findings. Firstly, six perspectives that influence the development and design of CV instruments in the manufacturing industry were identified. These perspectives included development, resources, financing, innovation, and methods. Secondly, the specific CV tools discussed in the manufacturing industry were identified, as well as those that are currently underrepresented. The analysis provides valuable insights for manufacturing companies that want to invest in start-ups and innovation. By identifying instruments that complement each other and can be combined effectively, companies can better plan and implement their investments, ultimately leading to more successful outcomes. Overall, the article highlights the importance of a systematic approach to analyzing CV tools in the manufacturing industry. The identification of specific tools and their properties, as well as the perspectives that influence their development, can help companies to make informed decisions when investing in start-ups and innovation.
The main objective of the research presented in the monograph is to identify - in theoretical terms and in the light of empirical research - the dimensions of entrepreneurial management that are important for small companies, and to assess their impact on the achieved results. The results of an in-depth analysis and synthesis of the existing scientific achievements in the field of the essence, types of entrepreneurship and its importance for the development of countries and organizations, contained in the world and Polish literature, are presented. Management practices used by small companies, determinants and strategies of their development as well as the use of modern management concepts were diagnosed. The concept of entrepreneurial orientation and entrepreneurial management and their impact on the results of economic organizations were presented. The dimensions of entrepreneurial management were defined, taking into account the specificity of small companies. The paper presents the results of empirical research on a sample of small companies that allow for the analysis and assessment of the level of implementation of the dimensions of entrepreneurial management. Recommendations were formulated to introduce the principles of entrepreneurial management into the practice of small businesses.
Purpose
To ascertain whether the choices CEOs were making about particular types of innovation and key enablers had any correlation with financial performance, IBM looked at a subset of our sample where publicly reported financial information was available.
Design/methodology/approach
The findings in this report are based on in‐depth, consultative interviews on the topic of innovation with 765 CEOs, business executives and public sector leaders from around the world.
Findings
For a subset, the authors compared their financial performance to that of an industry‐accepted list of their nearest competitors (up to ten companies with similar revenue and publicly available information). Some of their competitors were CEO study participants, but most were not. By taking a five‐year view, the researchers were able to identify which companies outperformed and under‐performed the average revenue growth, operating margin growth and historical operating margins of their closest competitors.
Research limitations/implications
Throughout the analysis, IBM used these top‐half and bottom‐half groupings to look for notable financial correlations. In this report, the term outperformers refers to the study participants that are in the top 50 percent based on this competitive comparison, and under‐performers are those that fall in the bottom 50 percent.
Practical implications
The authors report on how business leaders are seeking and finding new ways to adapt their business models to remain competitive in their current industry – or to seek growth by entering new industries.
Originality/value
Companies focusing on business model innovation have enjoyed significant operating margin growth, while those using products/services/markets and operational innovation have sustained their margins over time.
When does it make sense for companies to grow from within? When is it better to gain new capabilities or access to markets by merging with or acquiring other companies? When should you sacrifice the bottom line in order to nurture the top line? In a thought-provoking series of essays, five executives--Kenneth Freeman of Quest Diagnostics, George Nolen of Siemens USA, John Tyson of Tyson Foods, Kenneth Lewis of Bank of America, and Robert Creifeld of Nasdaq--describe how they have approached top-line growth in various leadership roles throughout their careers. They write candidly about their struggles and successes along the way, relaying growth strategies as diverse as the companies and industries they represent. The leaders' different tactics have almost everything to do with their companies' particular strengths, weaknesses, and needs. Freeman, for instance, emphasizes the importance of knowing when to put on the brakes. When he first became CEO of Quest, he froze acquisitions for a few years so the company could focus on internal processes and "earn the right to grow." But for Greifeld, it's all about innovation, which "shakes up competitive stasis and propels even mature businesses forward." The executives agree, though, that companies can grow (and can do so profitably) by distinguishing their offerings from those of other organizations. As Ranjay Gulati of Northwestern's Kellogg School of Management points out in his introduction to the essays, no matter what strategies are in play,"it's important to remember that growth comes in many forms and takes patience.... The key is to be ready to act on whatever types of opportunities arise."
How CEOs Manage Growth Agendas
- See
- R Instance
See, for instance, R. Gulati (introduction), "How CEOs Manage
Growth Agendas," Harvard Business Review 82 (July-August, 2004):
124-132.
Stall Points: Barriers to Growth for the Large Corporate Enterprise
- Corporate Strategy
- Board
Corporate Strategy Board, "Stall Points: Barriers to Growth for the
Large Corporate Enterprise" (Washington, D.C.: Corporate Strategy
Board, 1998).
- G Pohle
- M Chapman
G. Pohle and M. Chapman, "IBM Global CEO Study 2006: Business
Model Innovation Matters," Strategy and Leadership 34, no. 5 (2006): 34-40.
Innovation in technologies or products might actually be just a small part of creating business value; Starbucks Corp., for example, generates innovations in customer experience. Companies can innovate on any aspect of how they do business
- M Sawhney
- R C Wolcott
- I Arroniz
M. Sawhney, R.C. Wolcott and I. Arroniz, "The 12 Different Ways for
Companies to Innovate," MIT Sloan Management Review 47, no.3
(spring 2006): 75-81. Innovation in technologies or products might actually be just a small part of creating business value; Starbucks Corp., for
example, generates innovations in customer experience. Companies
can innovate on any aspect of how they do business, but it all has to fit
together as a coherent system.