BUS 308 Corporate Entrepreneurship Summary


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Toward a Reconciliation of the Definitional Issues in the Field of Corporate Entrepreneurship.pdf

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1042-2587-99-233$1 .50 Copyright 1999 by Baylor UOIverslty Toward a Reconciliation of the Definitional Issues in the Field of Corporate Entrepreneurship Pramodita Sharma James J _Chrisman Although authors generally agree on the nature of entrepreneurial activities within existing firms , differences in the terminology used to describe those activities have created confu- sion_This article discusses existing definitions in the field of corporate entrepreneurship, reconciles these definitions, and provides criteria for classifying and understanding the activities associated with corporate venturing. S cholars have begun to pay increasing attention to entrepreneurial activities within existing organizations (e_g., Birkinshaw, 1997; Burgelman, 1983; Caruana, Morris, & Vella, 1998; Drucker, 1985; GUlh & Ginsberg. 1990; Kanter, 1983 : Miller, 1983; Pinchot. 1985; Zahra, 1986, 1995, I 996). Unfortunately, and simi lar to the study of entrepreneurship in general, there has been a striking lack of consistency in the manner in which these activities have been defined. A number of scholars have expressed concern about this lack of universally acceptable definitions (e.g., Jennings & Lumpkin, 1989; Stopford & Baden-Fuller, 1994; Wortman, 1987; Zahra, 1991). Although the choice of definitions in behavioral sciences generally remains subject to debate (Hoy, 1995), a clearly stated set of definitions is necessary for scientific understanding, explanation , and prediction (McKelvey. 1982). Moreover, clearly stated and agreed-upon definitions makes it easier for researchers to bui ld on each other's work, and for practitioners to decide whether research findings are applicable to their situation . Because the field of corporate entrepreneurship is still in its infancy. the time is ripe to work on the clarification of existing terminology. This article represents one effort to systematize the use of terminology in the field of corporate entrepreneurship. To do this we first review some of the existing definitions and illustrate how they are contradictory. This review is conducted to provide a grounding from wh ich a framework of definitions can be developed lhat covers the field of corporate entrepreneurship. In developing this framework we go from a general to a specific point of view in order to clarify the existing boundaries of' the field, reconci le the various terms used to describe the phenomena of interest, and illustrate the territory they cover. Each of the definitions we will propose are broad, by intention . We are of the opinion that broad definitions of concepts are preferable to narrow definitions at this stage in the field's development for several reasons. First, broad definitions are less likely to exclude as-yet-unspecified problems, issues, or organizations that are potentially important or Spring. 1999 11 interesting. Therefore, starting broad makes it less likely that the definitions will become outmoded and in need of revision as new issues are discovered. Furthermore, broad definitions are more amenable. and more resilient. to the discovery and classification of unique populations and subpopulations of firms and events since they avoid premature or arbitrary decisions about the variables that delineate one group from another. Broad definitions make it possible for the natures of different organizations and events to emerge through empirical research and theories of differences. Finally. broad definitions are more likely to be acceptable to most scholars since most will find a place for the topic or sites of research that are of interest to them. In sum, broad definitions better reflect the early stage of development of the field, avoid the need for excessive retrenchmem as new knowledge becomes available, and provide considerable latitude for a theoretical and empirical process to emerge that will eventually permit the unique parts of the whole to be classified. defined. and understood in relation to that whole. After we have presented our framework of definitions pertaining to corporate entrepreneurship, we then proceed to discuss some of the critical constructs by which internal corporate venturing efforts might be classified to illustrate the possibilities of the approach taken. We focus on internal corporate venturing because it is the sub-area that has been perhaps the most thoroughly studied thus far and is. therefore, the most amenable to further classi ficatory efforts. EXISTING DEFINITIONS Entrepreneurship Before discussing existing definitions in the field of corporate entrepreneurship, we briefly turn our attention to the term "entrepreneurship." Entrepreneurship has meant different things to different people (Gartner, 1990; McMullan & Long, 1990). The historical development of the term has been documented by various authors (e.g .• Gartner, 1988; Hisrich, 1986; Livesay, 1982; McMullan & Long. 1983). The earliest reference of the term has been traced to Richard Cantillon's work (1734). To him, entrepreneurship was self-employment with an uncertain return (McMullan & Long, 1990). In a recent study. Gartner (1990) identified two distinct clusters of thought on the meaning of entrepreneurship. The first group of scholars focused on the characteristics of entrepreneurship (e.g., innovation, growth, uniqueness, etc.) while the second group focused on the outcomes of entrepreneurship (e.g .. creation of value). Scholars who subscribe to the notion that entrepreneurship should be defined by its characteristic attributes appear to be the largest group, accounting for 79% of Gartner's sample. Among members of this group, most seem to rely on variations of one of two definitions of entrepreneurship: Schumpeter's (1934) or Gartner's (1988). To Schumpeter (1934). an entrepreneur is a person who carries out new combinations, which may take the form of new products, processes, markets. organizational forms, or sources of supply. Entrepreneurship is, then, the process of carrying out new combinations. In contrast. Gartner states that "Entrepreneurship is the creation of organizations" (1988, p. 26). Gartner was careful to specify that this was not offered as a definition but rather as "an attempt to change a long held and tenacious viewpoint in the entrepreneurship field" toward "what the entrepreneur does, not who the entrepreneur is" (p. 26). Nevertheless, it is clear from the literature that a large number of researchers in entrepreneurship have employed this definition, including Gartner himself (e.g .• Bygrave, 1993; Gartner, Bird, & Starr, 1991; Learned, 1992). Whereas both these definitions have merit. it should be clear that despite their 12 ENTREPRENEURSHIP THEORY and PRACTICE overlaps, each covers a somewhat different territory. Thus, while the carrying out of new combinations (i.e., an innovation of product, process, etc.) may result in the creation of a new organization, it does not necessarily have to do so. Likewise, the creation of a new organization may involve a new combination; however, there are many new organizations that can make no claim to innovative activity. The debate about what entrepreneurship is will surely rage on for the foreseeable future in spite of the best arguments of scholars on any side of the debate. Yet there are clear advantages to attempts to reconcile the language used in the field, as ambiguity in terminology holds back the development of cohesive, explantory. or predictive theories (Low & MacMillan, 1988). As explained below, in this article, we seck definitions that do not exclude what has been termed entrepreneurship or corporate entrepreneurship in the past, are most likely to cover those aspects of entrepreneurship and corporate entrepreneurship that will draw the attention of scholars in the future. and will faci litate the reconciliation of the theory and research on entrepreneurship and corporate entrepreneurship. Corporate Entrepreneurship Terminology In recent years, the entrepreneurial abilities of corporate organizations has become a major subject of discussion both among practitioners and academicians. With this broadening of perspective. entrepreneurship has become more a hypothetical and abstract term attached to any individual or group creating new combinations (e.g., Lumpkin & Dess, 1996: Pass, Lowes, Davies, & Kronish, 1991), either on their own or attached to existing organizations. This is renected in some academic writings. For example, Covin and Slevin (1991) have suggested that the three entrepreneurial postures of risk taking, innovativeness, and proactiveness, brought forth by Miller (1983). can be applied to corporate processes as well as to new independent ventures. Collins and Moore (1970) have differentiated between "independent" and "administrative" entrepreneurs, with the former creating new organizations from scratch, and the lauer creating new organizations within or adjunct to existing business structures. More recently, Lumpkin and Dess ( 1996) have stated that launching a new venture can be done either by a start-up firm or an existing firm. Although there is an increasing recognition of the entrepreneurial activities within existing firms, ambiguities continue to plague attempts to define such activities. In fact, the language problem is, if anything, more acute when entrepreneurship is applied to a corporate setting. While the terms "entrepreneurship" or "independent entrepreneurship" are used to describe entrepreneurial efforts of individuals operating outside the context of an existing organization, a variety of terms arc used for the entrepreneurial efforts within an existing organization such as corporate entrepreneurship (Burgelman. 1983; Zahra, 1993), corporate venturing (Biggadike, 1979), intrepreneuring (Pinchot, 1985), internal corporate entrepreneurship (Jones & Butler. 1992), internal entrepreneurship (Schollhammer, 1982; Vesper, 1984). strategic renewal (Guth & GinSberg, 1990), and venturing (Hornsby. Naffziger, Kuratko, & Montagno, 1993). A list of definitions used in the literature for these related terms is presented in Table I. Definiti onal Ambiguities A careful examination of Table I reveals that the same term is sometimes used differently by different authors. and some authors use different terms to describe the same phenomenon. Examples of these definitional ambiguities are provided below and highlighted in Table 2. Spring, 1999 13 Table 1 Existing Definitions Authorls & Yr. Definition suggested CORPORATE ENTREPRENEURSH IP Burgchnan (198]) Corporate entrepreneur;hip refeN to the process whereby the firm .. engage in diversification through Internal development. Such dlvcr;ification requires new re ..ourcc combinations to extend the finn'., activities in area .. unrclalcd. or marginally related. to its current domam of Chung & Gibbons (1997) Corporale cntrcprcncursrup is an organizational process for lran .. forming individual ideal! into through Ibe m:magemenl of uncerlainlles (p. 14 ). collective Corporate ex tendmg the finn's domain of competence and corrc'>r>inClll> endeavors within the corporate framcworl.. (p. 30). Montagna (1993) Robert... & Berry (1985) Stapford & Baden-Fuller (1994) Zahm (1996) Zajac. Golden. Shone]] (1991) & Peten-o (1985) Piochol III (1985) Guth & (1990) Stopford & BlIden-Fuller (1994) Zahra (J 993. 1995. 1996) Internal ventures arc a finn's attempts to enter different marl..cls or develop substantially different products from those of ils existing hase by "clling up a separate entity with in the existing corporate body (p. 6). New Business Venturing OCCUN when 'indlvidual'i ilnd small learns form entrepreneurial groups Inside an organil.ation capable of pcNuading otherll to aller their behavior, thus innucncing the creation of new corporate resources' (p. 522). by expanding oper-Jtions in existing Venturing means that the finn will enter new or new markets (p. 1715). Internal corporate Venturing involve!;; 'the creation of an 1I1temally-\laffed venture unit that i.. semi-autonomous. with the organtz3tion ma1lltaining ultjmate authority' (p. 171). INTRAPRENEURSHIP Intraprcneurshlp IS the de\ielopment within a large organization of internal markeL" and rclatl\:ely small and independent unit" de<;igncd to create, intcmally tCllt-markel. and expand improved and/or innovative lItaff "ervices, technologic.. or method .. within the organization. Thl'l is different from the large organization entreprencurship/\ienture units whO'ie purpose is (0 de\ielop profitable pollliions 111 external marl-eLI, (p_ 181). Intrapreneurs arc any of the "dreamer.. who do." Those who t.1ke hand.\-on responsibility for creatlllg innovation of any kind within an organizallon. They may be the creators or IIlventor.. but are always the dreamer.. who figure out how to lurn an idea into a profitable reallly (p. ix). STRATEG IC or ORGANIZATIONAL RENEWAL Strategic renewal involves the creation of ncw wealth through ncw combinations of resources (p.6). Organizat ional rencwal alters thc resource pattern of bu .. inc!o.s to achieve beller and sustainable overall economic pertonnance. To be su<,t:linable, morc pcrva... ive effort is needed, involving more than a few IIldividuals and the finance function (p. 522), Renewal means revitalizing a company's business through 1I1nOVall011 and changing its compeli tive profile. It means revitali7ing the company's opcraLions by changing the scope of iL.. business, its compctilive approaches or both. II al ..o meanli building or acquiring new capabilities and then creauvely leveraglllg them to add value for shareholders. (1995. p. 227: 1996. p. 1715). concept, reorgani7..ation Renewal hm; many facets. including the n!definitlOn of thc changcs for innovation .... Renewal is achieved and the Introduction of through the redefinition of a firm's through the creative redeployment of resources, leading to new combinaLions of products and technologies (l993. p. 321). Burgelman (1983) defines corporate entrepreneurship as "the process whereby the firms engage in diversification through internal development. Such diversification requires new resource combi nations to extend the firm's activities in areas unrelated, or marginally related, to its current domain of competence" (p. 1349). Biggadike (1979), on the other hand, describes corporate venturing as "marketing a product or service that the parent company has not previously marketed and that requires the parent company 10 obtain new equipment or new people or new know ledge" (p. 104). Taking a still different approach, Ellis and Taylor (1987) define corporate venturing as "a strategy of unrelatedness to present activities, to adopt the structure of an independent unit and to involve a process of assembling and configuring novel resources" (p. 528). Spring. 1999 15 Table 2 Examples of Some Definitional Ambiguities Au thors and terms used Ellis & Taylor (1987) CV Chllructerislics Extent of Innovation . . to cxi<'ling bu<;inesse.<. Structural autonomy CE Hurgclman (1983) Uiggadike (1979) CE CV as ..cmbhng & configuring novel rCl>Ourcc.<. reqUire)' new resource unrelated to present activities aCilvi ti c .. in arcas unrcJatcd or marginally related to current domain of competence combination ... reqUires obtaining ne\\equipment. or people. or knowledge to introduce a new product or serv ice independellt Untl Corporate Entrcprcneur;;hlp CV - Corporale Venturing It is observed that all three definitions describe the creation of a new business in an area that requires innovative resource combinations. A closer observation of these definitions, however, ...
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The Unique Nature of Corporate Entrepreneurship Summary
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Sharma and Chrisman (1999) noted that there is no specific definition of entrepreneurial
activities within existing organizations and scholars have started paying close attention (for
example Birkinshaw, 1997; Burgelman, 1983; Caruana, Morris, & Vella, 1985; Zahra, 1986, 1995,
1996 among others). They note the concerns being raised by different authors on the inconsistent
or unsystematic definition of the entrepreneurial activities in the corporate entrepreneurship (no
universally acceptable definitions). Some of the authors raising concerns included: Jennings &
Lumpkin, 1989; Stopford & Baden-Fuller, 1994; Wortman, 1987; and Zahra, 1991. A clear set of
activities definitions is crucial for scientific understanding and explanations and helps researchers
to build and develop each other's work in the corporate entrepreneurship hence the need for the
terminology clarification.
The article seeks to systematize the corporate definitions and use of the terminology from
different scholars and authors by first reviewing the existing definitions and unfold how they
contradict each other. ...

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