28.12.2013 Views

Entrepreneurializing the Organization: Archetypes of Commitment to ...

Entrepreneurializing the Organization: Archetypes of Commitment to ...

Entrepreneurializing the Organization: Archetypes of Commitment to ...

SHOW MORE
SHOW LESS

You also want an ePaper? Increase the reach of your titles

YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.

<strong>Entrepreneurializing</strong> <strong>the</strong> <strong>Organization</strong>: <strong>Archetypes</strong> <strong>of</strong> <strong>Commitment</strong> <strong>to</strong><br />

Corporate Entrepreneurship and Implications for Strategic<br />

Entrepreneurship<br />

Theodore T. Herbert and Deborah V. Brazeal<br />

Abstract<br />

Institutionalizing entrepreneurship within <strong>the</strong> corporation can be an effective means by which <strong>to</strong> gain competitive<br />

advantage. Yet <strong>the</strong>re are many approaches by which this can be done. We propose four archetypes which represent<br />

gradations <strong>of</strong> commitment <strong>to</strong> corporate entrepreneurship and discuss <strong>the</strong>ir various attributes and potential for<br />

gaining sustainable competitive advantage. The linkage between <strong>the</strong>se archetypes and <strong>the</strong>ir "fits" (Miller, 1983)<br />

with <strong>the</strong> strategic and competitive postures <strong>of</strong> <strong>the</strong> firm is explored as a crucial and initiating point for corporate<br />

entrepreneurship programs. The traditional role <strong>of</strong> <strong>the</strong> <strong>to</strong>p management team is re-defined in formulating a strategy<br />

for innovativeness.<br />

Introduction<br />

In response <strong>to</strong> <strong>the</strong> rapid rate <strong>of</strong> change in competition and <strong>the</strong> pressures <strong>of</strong> technological advances, corporate<br />

executives are unanimous in <strong>the</strong>ir stated desire <strong>to</strong> make <strong>the</strong>ir employees and <strong>the</strong>ir organizations more<br />

"entrepreneurial". The traditional view has been that this is accomplished through individual creative people and,<br />

more recently, teams <strong>of</strong> individual creative people. Consequently, <strong>the</strong> stereotypical "entrepreneurial" organization<br />

has been seen less as an organization in which innovativeness is an embedded part <strong>of</strong> <strong>the</strong> organization's process and<br />

structure, and more <strong>the</strong> "place" within which (a) innovations have been developed, (b) innovative people happen <strong>to</strong><br />

reside and work, and (c) whose controls are capable <strong>of</strong> being overcome so that <strong>to</strong>p management can reluctantly<br />

agree <strong>to</strong> accept <strong>the</strong> innovation. Corporate executives <strong>the</strong>n seek <strong>to</strong> find means by which <strong>to</strong> unleash <strong>the</strong> creative<br />

talents <strong>of</strong> <strong>the</strong>ir people and <strong>to</strong> lower <strong>the</strong> built-in barriers <strong>to</strong> new ideas that could bubble up from <strong>the</strong> depths <strong>of</strong> <strong>the</strong><br />

organization.<br />

On <strong>the</strong> short list <strong>of</strong> approaches that encourage <strong>the</strong> creativity that leads <strong>to</strong> pr<strong>of</strong>itable innovations is <strong>to</strong> inundate<br />

marketing people and scientists (or o<strong>the</strong>r "creatively-inclined" people such as knowledge workers) with<br />

exhortations <strong>to</strong> "think outside <strong>the</strong> box", <strong>to</strong> think "sidewise" about problems, and <strong>to</strong> "network" with o<strong>the</strong>rs with<br />

different perspectives. Ano<strong>the</strong>r approach is <strong>to</strong> <strong>of</strong>fer rewards and recognition's <strong>to</strong> successful innova<strong>to</strong>rs. Too,<br />

supervisors and o<strong>the</strong>r gatekeepers are exhorted <strong>to</strong> be receptive <strong>to</strong> new ideas, <strong>to</strong> wink at and ignore time taken from<br />

assigned projects and applied <strong>to</strong> pet (although unauthorized) ideas. By-passes <strong>to</strong> bureaucratic procedures similarly<br />

are created for new ideas. And formal procedures may be established by which <strong>to</strong> winnow out and bless for fur<strong>the</strong>r<br />

development those project proposals which seem most likely <strong>to</strong> fit <strong>the</strong> needs for new product development<br />

schedules or have <strong>the</strong> potential <strong>to</strong> provide useful new directions for research or development. There is a wide range<br />

<strong>of</strong> corporate approaches <strong>to</strong> overcoming built-in barriers <strong>to</strong> creativity and innovation, and <strong>the</strong> approaches range<br />

widely in how well <strong>the</strong>y work.


A listing <strong>of</strong> all <strong>the</strong> various techniques employed <strong>to</strong> encourage creativity in organizational settings would fill a book<br />

(for a partial listing and discussion, see Herbert & Brazeal, 1998). A great deal <strong>of</strong> importance and attention has<br />

been given, appropriately enough, <strong>to</strong> <strong>the</strong> need <strong>to</strong> enhance innovation in organizations. At <strong>the</strong> same time, <strong>the</strong> study<br />

and application <strong>of</strong> Corporate Entrepreneurship has been developing in encouraging directions and rates. We <strong>the</strong>n<br />

feel that <strong>the</strong>re may be some utility in considering <strong>the</strong> relative effectiveness <strong>of</strong> corporate efforts <strong>to</strong> enhance <strong>the</strong>ir<br />

innovativeness, adopting a contingency approach <strong>of</strong> exploring <strong>the</strong> conditions under which such efforts are<br />

differentially appropriate or differentially effective. We also believe <strong>the</strong>re <strong>to</strong> be some usefulness <strong>to</strong> be gained by<br />

framing and understanding patterns <strong>of</strong> entrepreneurial devices and entrepreneurship-enhancing methods. These<br />

patterns <strong>of</strong> practice can be, we believe, stipulated and organized by considering <strong>the</strong>m as a finite number <strong>of</strong><br />

archetypes or models <strong>of</strong> common practice. Our paper makes that attempt.<br />

Entrepreneurship and <strong>the</strong> <strong>Organization</strong><br />

Making a corporation more creative, more innovative, more entrepreneurial has gone from being a nicety or a<br />

slogan; it is now a minimum requirement in many industries simply <strong>to</strong> stay in <strong>the</strong> competitive game. Since it has<br />

become a challenge taken more seriously than ever before, <strong>the</strong> question <strong>of</strong> how <strong>to</strong> do it has become one asked in<br />

deadly earnestness. And, in fact, <strong>the</strong> notion <strong>of</strong> introducing entrepreneurship within <strong>the</strong> established organization is<br />

even more complicated than it might seem. The complication is two-fold.<br />

First, while <strong>the</strong>re are similarities between <strong>the</strong> two, (individual) entrepreneurship and corporate entrepreneurship are<br />

very different, but ra<strong>the</strong>r rarely differentiated when one speaks <strong>of</strong> increasing <strong>the</strong> corporation's entrepreneurial<br />

potential. Indeed, <strong>the</strong> (unspoken) presumption is that increasing <strong>the</strong> entrepreneurial potential <strong>of</strong> (some <strong>of</strong>) <strong>the</strong><br />

corporation's employees is <strong>the</strong> same as increasing <strong>the</strong> entrepreneurial potential <strong>of</strong> <strong>the</strong> corporation as a whole. The<br />

classic conception <strong>of</strong> entrepreneurship is that <strong>of</strong> <strong>the</strong> individual, independent entrepreneur who assumes financial<br />

and o<strong>the</strong>r risks in order <strong>to</strong> exploit a new idea or product possibility; and that <strong>the</strong> risks <strong>of</strong> failure uniquely devolve<br />

upon <strong>the</strong> entrepreneur. In corporate entrepreneurship, however, individual or group entrepreneurship is fostered<br />

within a preexisting organizational setting; <strong>the</strong> organization provides support for <strong>the</strong> development and exploitation<br />

<strong>of</strong> one or more innovations which are deemed strategically and financially consistent with <strong>the</strong> supporting<br />

organization's mission. Thus, executives attempting <strong>to</strong> implant entrepreneurial activities, support for <strong>the</strong>m, and<br />

rewards for <strong>the</strong>m typically and by definition are interested in corporate entrepreneurship. Corporate executives are<br />

attempting <strong>to</strong> introduce new procedures by which <strong>to</strong> induce higher levels <strong>of</strong> innovation; higher levels <strong>of</strong><br />

innovativeness will yield, it is intended, greater market share, product-line extensions, technological dominance, or<br />

o<strong>the</strong>r pr<strong>of</strong>itability-related states. The conditions and intentions within spin-<strong>of</strong>fs, LBOs or MBOs (management buyouts),<br />

or o<strong>the</strong>r instances <strong>of</strong> similar nature are exceptions.<br />

The second complication stems from <strong>the</strong> functionality <strong>of</strong> entrepreneurship: Entrepreneurship for what? If <strong>the</strong> intent<br />

is <strong>to</strong> get burned-out employees <strong>to</strong> take more interest in <strong>the</strong>ir jobs by making suggestions on how <strong>to</strong> do <strong>the</strong>ir work<br />

better, <strong>the</strong>n <strong>the</strong>re will be a specific list or menu <strong>of</strong> focused programs (such as suggestion boxes, job re-engineering,<br />

"empowerment" programs, etc.) from which <strong>to</strong> choose. These entrepreneurial efforts will differ dramatically from<br />

those employed by <strong>the</strong> corporation for which <strong>the</strong> intent is <strong>to</strong> develop and introduce radical new means <strong>of</strong><br />

technological advances at all steps in its value chain, (Porter, 1980) in order <strong>to</strong> revolutionize its industry. The<br />

content <strong>of</strong> any entrepreneurial program is highly contingent on <strong>the</strong> purpose(s) sought, a point which should be<br />

ra<strong>the</strong>r obvious.


However, <strong>the</strong>re are those who prefer <strong>to</strong> (1) emphasize entrepreneurial activity as specific outcome-enhancer, (2)<br />

propose an organization-wide shift <strong>to</strong> an entrepreneurial culture, (3) focus on <strong>the</strong> attributes <strong>of</strong> <strong>the</strong> individual who<br />

displays entrepreneurial skills, or (4) opt for structural solutions <strong>to</strong> organizationally-sourced restrictions <strong>to</strong><br />

entrepreneurial activity, among o<strong>the</strong>rs. Each brings with it a very different set <strong>of</strong> prescriptions for accomplishing<br />

that perspective, as well as <strong>the</strong> potential breadth and depth <strong>of</strong> entrepreneurial behaviors and achievements. Some <strong>of</strong><br />

<strong>the</strong> means (Lengnick-Hall, 1992) by which <strong>the</strong> firm's internally-focused entrepreneurial activities can be undertaken<br />

are: through traditional R&D units (structural), through <strong>the</strong> efforts <strong>of</strong> individual employees or intrapreneurship<br />

(individual), or through units dedicated <strong>to</strong> <strong>the</strong> development <strong>of</strong> new products or technologies by internal ventures<br />

(structural outcome-enhancer). An additional vehicle is available through external means <strong>to</strong> achieve innovation,<br />

that <strong>of</strong> joint venture activities and acquisition, by which <strong>to</strong> import entrepreneurial talent or traditions. In o<strong>the</strong>r<br />

words, <strong>the</strong>re exist multiple means or venues <strong>to</strong> achieving <strong>the</strong> entrepreneurial spirit within <strong>to</strong>day's corporate form.<br />

Understanding <strong>the</strong>se two complications deeply leads <strong>to</strong> ano<strong>the</strong>r understanding. "Entrepreneurship" is not a unitary,<br />

monolithic consideration, but is ra<strong>the</strong>r a concept that covers a broad range or menu <strong>of</strong> activities and intentions. The<br />

activities undertaken should be a function <strong>of</strong> <strong>the</strong>ir intended purposes. The obvious (or at least <strong>the</strong> more commonly<br />

cited) purpose is <strong>to</strong> increase <strong>the</strong> innovation productivity <strong>of</strong> <strong>the</strong> corporation's employees.<br />

The strategic rationale for that purpose apparently is rarely articulated, however. Why is it important <strong>to</strong> increase <strong>the</strong><br />

innovation productivity or innovation potential? Is it <strong>to</strong> revive a moribund set <strong>of</strong> products? To solve long-standing<br />

inadequacies that have led <strong>to</strong> poor financial performance? To attract and retain crucial highly talented knowledge<br />

workers? To achieve a distinctive cost advantage at each stage <strong>of</strong> <strong>the</strong> firm's value chain? To find and provide<br />

competitive advantage in exceeding cus<strong>to</strong>mers' expectations through high value-added and premium prices?<br />

Each <strong>of</strong> <strong>the</strong>se alternative objectives have important strategic and competitive implications. Each determine (or at<br />

<strong>the</strong> least, suggests) <strong>the</strong> type <strong>of</strong> corporate entrepreneurship efforts <strong>to</strong> be undertaken. One notices that this insight<br />

implies strongly that <strong>the</strong> driving competitive strategy <strong>of</strong> <strong>the</strong> firm dictates <strong>the</strong> broad entrepreneurial nature <strong>of</strong> <strong>the</strong><br />

firm's efforts and those resources supportive <strong>of</strong> those efforts. In short, strategy and entrepreneurial efforts must "fit"<br />

(Miller, 1985) or be consistent with each o<strong>the</strong>r if corporate entrepreneurship is <strong>to</strong> succeed in any particular<br />

corporation.<br />

Note that this perspective is not entirely consistent with <strong>the</strong> corporate entrepreneurship literature, which tends <strong>to</strong><br />

emphasize an internal, process-oriented view <strong>of</strong> innovation. In scope and context, this literature seems <strong>to</strong> take as<br />

given (1) <strong>the</strong> externally-imposed (but generalized) necessity for innovation and (2) <strong>the</strong> organizational impetus (or<br />

<strong>the</strong> granting <strong>of</strong> slack) for <strong>the</strong> development <strong>of</strong> new initiatives. Specifically, individuals at non-executive levels<br />

realistically perceive that <strong>the</strong>ir organizational structural boundaries, <strong>the</strong> corporate culture, and current strategic<br />

priorities and directions are fixed, closed both <strong>to</strong> negotiation or <strong>to</strong> radically different interpretations o<strong>the</strong>r than those<br />

established by upper management. Thus, entrepreneurs embedded within <strong>the</strong> organizational layers are continually<br />

attempting <strong>to</strong> operate within (or despite) predefined organizational parameters. To innovate outside <strong>the</strong> strategic<br />

context or mission <strong>of</strong> <strong>the</strong> organization is not likely ever <strong>to</strong> gain <strong>to</strong>p management approval or resources; research and<br />

development, product development, and business development units are explicit organizational mechanisms<br />

normally given <strong>the</strong> assignment <strong>to</strong> ensure innovations or innovative programs in selected, strategically important<br />

areas. The innova<strong>to</strong>r, <strong>the</strong>n, must operate within organizational boundaries and processes which are (for all intents<br />

and purposes) fixed; it still may be possible <strong>to</strong> navigate <strong>the</strong> set boundaries, but probably not without difficulty.


Since discretion is a function <strong>of</strong> <strong>the</strong> member's authority level in <strong>the</strong> organization, in o<strong>the</strong>r words, forward-thinking<br />

<strong>to</strong>p management teams can and do actively perceive a broader range <strong>of</strong> alternatives which may also be riskier and<br />

more costly in nature. Simply put, individuals at lower organizational levels are more likely <strong>to</strong> limit innovations <strong>to</strong><br />

those <strong>of</strong> an incremental nature entirely within <strong>the</strong> strategic context <strong>of</strong> <strong>the</strong> organization; <strong>to</strong>p management teams have<br />

<strong>the</strong> authority <strong>to</strong> change strategic direction radically and, thus, perceive no internal limits <strong>to</strong> <strong>the</strong> kinds <strong>of</strong> innovations<br />

pursued. Entrepreneurship <strong>the</strong>n is a variable, not a fixed process or a constant -- except when it is explicitly defined<br />

<strong>to</strong> be so by higher authority.<br />

Entrepreneurship as a Strategic Variable<br />

In o<strong>the</strong>r words, <strong>the</strong> specific means by which "entrepreneurship" is implanted within a corporation and <strong>the</strong><br />

specification <strong>of</strong> <strong>the</strong> content <strong>of</strong> <strong>the</strong> "entrepreneurship" program depend on <strong>the</strong> firm's objectives and strategies. And if<br />

corporate entrepreneurship is strategic, <strong>the</strong>n its content should be <strong>the</strong> result <strong>of</strong> a process <strong>of</strong> strategic decisionmaking<br />

or formulation. The corporate entrepreneurship approach best suited <strong>to</strong> <strong>the</strong> corporation's competitive<br />

situation should be formulated as an explicit process by <strong>the</strong> corporation's <strong>to</strong>p management team ("TMT"), typically<br />

<strong>the</strong> <strong>to</strong>p two executive levels in <strong>the</strong> corporation, including <strong>the</strong> President/CEO (Hambrick & Mason, 1984). One<br />

reason for such an assignment <strong>of</strong> responsibility is that <strong>the</strong> decision involves organization-wide considerations.<br />

Ano<strong>the</strong>r is that <strong>the</strong> result requires a re-formulation <strong>of</strong> executive responsibilities and resources <strong>to</strong> implement <strong>the</strong> new<br />

strategy for entrepreneurship, no matter how minor or how far-reaching it may prove <strong>to</strong> be. The point is that <strong>the</strong><br />

decision for strategic entrepreneurship (Herbert & Brazeal, 1998) leads <strong>to</strong> resource re-allocations and <strong>to</strong>ugh<br />

decisions on where <strong>the</strong> future <strong>of</strong> <strong>the</strong> organization lies, and not upon mouthing pretty (but empty) words.<br />

Top Management's Role<br />

In fact, this recognition <strong>of</strong> <strong>the</strong> TMT's strategic role runs contrary <strong>to</strong> <strong>the</strong> his<strong>to</strong>rical view <strong>of</strong> senior executives'<br />

responsibilities in corporate applications <strong>of</strong> entrepreneurship. Heret<strong>of</strong>ore, <strong>the</strong> roles <strong>of</strong> <strong>the</strong> TMT have been viewed as<br />

strategy formulation, setting policy, and championing <strong>the</strong> status quo, i.e., as being <strong>the</strong> harsh evalua<strong>to</strong>r <strong>of</strong> new or<br />

provocative ideas from lower levels. The TMT has <strong>of</strong>ten been seen, <strong>the</strong>n, as a major stumbling block <strong>to</strong> innovative<br />

efforts, if not by direct involvement in obstructing new ideas, <strong>the</strong>n by <strong>the</strong> sin <strong>of</strong> apathy or by omitting <strong>the</strong><br />

establishing <strong>of</strong> processes and vehicles supportive <strong>of</strong> innovativeness.<br />

The traditional perception <strong>of</strong> <strong>the</strong> TMT at best has been as a collective facilita<strong>to</strong>r <strong>of</strong> entrepreneurial activities which<br />

are pursued at lower levels in <strong>the</strong> organizational structure.<br />

Yet strong executive leadership may prove <strong>to</strong> be a central fac<strong>to</strong>r by which <strong>to</strong> infuse <strong>the</strong> organizational context with<br />

opportunity-seeking values and cultural norms, since innovations created by lower level employees reside within<br />

<strong>the</strong> existing strategic context <strong>of</strong> <strong>the</strong> organization as defined by <strong>the</strong> TMT. The <strong>to</strong>p management team, however,<br />

views and has responsibility for <strong>the</strong> organization as an entity, ra<strong>the</strong>r than as an amalgam <strong>of</strong> isolated and technicallyspecialized<br />

sets <strong>of</strong> resources separated by departmental or project boundaries.<br />

Collectively, TMT members have <strong>the</strong> capability <strong>to</strong> initiate decisions and strategic directions that impact <strong>the</strong><br />

complete organization's operations. The TMT has almost absolute authority <strong>to</strong> redefine or reconceptualize <strong>the</strong><br />

organization's strategic context; <strong>to</strong> establish, reinforce, or extinguish entrepreneurial or more traditional cultural<br />

norms; <strong>to</strong> undertake significantly different strategic directions for <strong>the</strong> organization; or <strong>to</strong> commit resources <strong>to</strong><br />

untried or untested programs or strategic directions, such as expanding internationally. In fact, Barringer and<br />

Bluedorn (1996) found that <strong>the</strong> extent <strong>of</strong> corporate entrepreneurship was highly dependent on a variety <strong>of</strong> strategic<br />

management activities, such as environmental scanning, planning flexibility, broad locus <strong>of</strong> planning, and an<br />

emphasis on strategic controls.


Such an intimate intertwining <strong>of</strong> strategy, <strong>to</strong>p executives, and entrepreneurship is evocative <strong>of</strong> a need <strong>to</strong><br />

reconceptualize <strong>the</strong> relationship as that <strong>of</strong> "strategic entrepreneurship" (Herbert & Brazeal, 1998). The role <strong>of</strong> <strong>the</strong><br />

TMT as a direct participant or genera<strong>to</strong>r <strong>of</strong> innovations opens <strong>the</strong> door for more dramatic, radical innovations<br />

indicative <strong>of</strong> discontinuous changes and potentially industry-altering changes. The TMT must prove <strong>to</strong> be a major<br />

player in championing, managing, and transitioning <strong>the</strong> processes <strong>of</strong> change and innovation (Bantel & Jackson,<br />

1989). We think that this contextual and driving fac<strong>to</strong>r has <strong>the</strong> opportunity <strong>to</strong> identify and explain much <strong>of</strong><br />

corporate entrepreneurial conditions, processes, and outcomes, from <strong>the</strong> unique perspective <strong>of</strong> environment,<br />

competition, and strategy -- entrepreneurship as competitive advantage.<br />

Resultant States <strong>of</strong> Entrepreneurialism in Corporations<br />

If, as we have argued, TMT values, economic realities, and strategic considerations lead <strong>to</strong> varying degrees <strong>of</strong><br />

entrepreneurialism within organizations -- as an explicit outcome <strong>of</strong> strategic decision-making by <strong>to</strong>p executives --<br />

<strong>the</strong>n it should follow logically that <strong>the</strong>re exists no one condition <strong>of</strong> corporate entrepreneurship. Supportive <strong>of</strong> <strong>the</strong><br />

concept is Covin and Slevin's (1989) suggesting a continuum along which firms may be arrayed, that <strong>of</strong><br />

conservativism-entrepreneurialism. Their "conservative" firm was risk-averse, noninnovative, and reactive, while<br />

"entrepreneurial" firms were risk-taking, innovative, and proactive; by implication, many different configurations<br />

lie between <strong>the</strong> two end points. Firms may be more entrepreneurial or less entrepreneurial, and may be identified<br />

and categorized according <strong>to</strong> some criterion. Building on <strong>the</strong> notion that definitive configurations <strong>of</strong> entrepreneurial<br />

orientation exist across corporations, we anticipate that some corporations will<br />

• remain staunchly un-entrepreneurial in <strong>the</strong>ir actions while preaching <strong>the</strong> virtues <strong>of</strong> being responsive and<br />

entrepreneurial,<br />

• o<strong>the</strong>rs will focus on fostering innovations in products or in processes,<br />

• ano<strong>the</strong>r set will seek <strong>to</strong> encourage <strong>the</strong>ir employees <strong>to</strong> submit new ideas <strong>to</strong> <strong>the</strong>ir hierarchical superiors for<br />

approval or implementation,<br />

• still o<strong>the</strong>rs will lurch <strong>to</strong>ward instilling an ongoing culture <strong>of</strong> entrepreneurship, and<br />

• a remainder will remain clueless as <strong>to</strong> what entrepreneurship is but will, with surprise and pleasure,<br />

welcome <strong>the</strong> random instances <strong>of</strong> innovative behaviors by employees (when <strong>the</strong>y don't contradict <strong>the</strong> biases<br />

<strong>of</strong> upper management or prove <strong>to</strong> be inconvenient <strong>to</strong> exploit).<br />

<strong>Archetypes</strong> <strong>of</strong> Entrepreneurialism in Corporations<br />

Thus, we suggest a range <strong>of</strong> outcome-configurations associated with <strong>the</strong> organization's orientation <strong>to</strong><br />

entrepreneurship, shown as Figure 1. The intent is <strong>to</strong> represent <strong>the</strong> different, systematic outcomes <strong>of</strong> <strong>to</strong>tality (or<br />

non-existence, or intermediate levels) <strong>of</strong> focus engendered within <strong>the</strong> organization on wide-ranging and deeplyengrained<br />

entrepreneurial activities. Each <strong>of</strong> <strong>the</strong> four is discussed below as an archetype, or model or pro<strong>to</strong>type,<br />

which is intended <strong>to</strong> capture its distinguishing characteristics.


Level <strong>of</strong><br />

<strong>Commitment</strong>:<br />

Figure 1 -- <strong>Archetypes</strong> as Gradations <strong>of</strong> <strong>Commitment</strong> <strong>to</strong><br />

Entrepreneurship within <strong>Organization</strong>s<br />

Non-existent Low Medium<br />

Total<br />

<strong>Commitment</strong><br />

Type <strong>of</strong><br />

<strong>Organization</strong>:<br />

The<br />

Entrepreneurially<br />

Challenged Firm<br />

The Accidentally<br />

Entrepreneurial<br />

<strong>Organization</strong><br />

The<br />

Entrepreneurially<br />

Oriented<br />

<strong>Organization</strong><br />

The<br />

Entrepreneurial<br />

<strong>Organization</strong><br />

The Entrepreneurially-Challenged Firm<br />

Anchoring <strong>the</strong> near end <strong>of</strong> <strong>the</strong> continuum is <strong>the</strong> Entrepreneurially-Challenged Firm, which is oblivious <strong>to</strong> <strong>the</strong><br />

concept <strong>of</strong> new methods or products/services, and which employs a culture <strong>of</strong> denial <strong>to</strong> any new idea or risk.<br />

Employees wishing <strong>to</strong> incrementally modify or improve even considerably outdated processes and procedures are<br />

shunned, punished financially and in o<strong>the</strong>r ways, and viewed as trouble-makers.<br />

Is this an effective archetype? Surprisingly, <strong>the</strong> answer is "Yes", but under very specific conditions. This type <strong>of</strong><br />

firm must exist in a placid, non-turbulent environment, with competitive protection such as having been granted a<br />

governmental monopoly and with little or no possibility <strong>of</strong> technological substitutes or advances. It must also have<br />

an internal structure and work process finely-tuned ei<strong>the</strong>r <strong>to</strong> efficiency or <strong>to</strong> lack <strong>of</strong> excesses which are guaranteed<br />

<strong>to</strong> alienate its governmental benefac<strong>to</strong>r. In this case, <strong>the</strong> strategy is that nothing is broken (no realistic challenges<br />

exist), and hence nothing needs <strong>to</strong> change. Is this realistic over <strong>the</strong> long term? Probably not. When <strong>the</strong> inevitable<br />

requirements for change, creativity, innovation, and adaptation occur, such an organization is highly vulnerable.<br />

But this "strategy" <strong>of</strong> being non-entrepreneurial does have a logic.<br />

The Entrepreneurial <strong>Organization</strong><br />

At <strong>the</strong> far end <strong>of</strong> <strong>the</strong> continuum, we suggest, is <strong>the</strong> archetype <strong>of</strong> <strong>the</strong> entire organization which is dedicated <strong>to</strong> and<br />

structured <strong>to</strong> facilitate <strong>the</strong> development, creation, and implementation <strong>of</strong> innovative processes, concepts, products,<br />

or services. This represents <strong>the</strong> emerging conceptualization <strong>of</strong> <strong>the</strong> Entrepreneurial <strong>Organization</strong>. <strong>Organization</strong>s<br />

which are "entrepreneurial" are those that have serious commitments <strong>to</strong> both incremental and radical innovations as<br />

strategically important <strong>to</strong> <strong>the</strong> competitiveness <strong>of</strong> <strong>the</strong> organization and tactically important <strong>to</strong> its operations and<br />

processes. Successful entrepreneurial organizations are able <strong>to</strong> produce a stream <strong>of</strong> innovations, systematically and<br />

consistently. This firm is likely <strong>to</strong> employ programs <strong>of</strong> Corporate Entrepreneurship, Intrapreneuring, or New<br />

Enterprise Venturing within <strong>the</strong> confines <strong>of</strong> <strong>the</strong> existing (traditional) corporate structure. Examples include <strong>the</strong> 3M<br />

Corporation (which introduced 500 new products in 1997 alone (O'Reilly, 1997) or o<strong>the</strong>r paragons <strong>of</strong><br />

institutionalized innovation, such as smaller s<strong>of</strong>tware companies, in which all employees, regardless <strong>of</strong> position,<br />

department, or rank, are expected (if not required) <strong>to</strong> spend a given percentage <strong>of</strong> <strong>the</strong>ir time working on projects <strong>of</strong><br />

<strong>the</strong>ir own undertaking, if not interest; some have formalized expectations <strong>of</strong> rates <strong>of</strong> new product introductions, for<br />

example, or <strong>of</strong> market share proportions between "old" and "new" products or services. Such firms do not limit<br />

<strong>the</strong>ir projects <strong>to</strong> product enhancements or cost-saving production engineering endeavors, but are likely <strong>to</strong> be found<br />

in o<strong>the</strong>r portions <strong>of</strong> <strong>the</strong>ir value chains, such as in <strong>the</strong> warehouse, logistics, evaluation procedures, and o<strong>the</strong>r<br />

fundamental business responsibilities.


For those organizations which have strategic intentions <strong>of</strong> developing, nurturing, and maintaining entrepreneuriallyoriented<br />

individuals and innovation-spawning processes and an internal environment <strong>of</strong> creativity, <strong>the</strong> involvement<br />

<strong>of</strong> <strong>to</strong>p management can be inferred when consistent innovation is observed in a firm. Implanting major<br />

entrepreneurial initiatives has been realistically noted as necessitating a massive structural overhaul <strong>of</strong> <strong>the</strong> current<br />

organizational system (Cooper, Willard, & Woo, 1986). Without <strong>the</strong> TMT's explicit and vigorous support, most<br />

organizations simply cannot make <strong>the</strong> significant and necessary changes demanded for flexible assignments, fluid<br />

structural arrangements, and personal responsiveness on a day-<strong>to</strong>-day basis in marketing, operations, finance, and<br />

development. By being proactive in <strong>the</strong> defining and establishing <strong>of</strong> appropriate conditions, <strong>the</strong> <strong>to</strong>p management<br />

team explicitly encourages <strong>the</strong> innovation process among interested parties through <strong>the</strong> building <strong>of</strong> an<br />

entrepreneurial organizational environment and human resource practices that actively promote entrepreneurial<br />

activities and thinking. The probability <strong>of</strong> innovative outcomes is enhanced substantially when <strong>the</strong> entrepreneurial<br />

process is defined as a systemic institutional phenomenon <strong>of</strong> crucial strategic importance. Thus, effective corporate<br />

entrepreneurship is strategic, mission-driven, and institutionalized within <strong>the</strong> entrepreneurial organization.<br />

The Entrepreneurially-Oriented <strong>Organization</strong><br />

Somewhere <strong>to</strong> <strong>the</strong> left <strong>of</strong> <strong>the</strong> Entrepreneurial <strong>Organization</strong> is <strong>the</strong> Entrepreneurially-Oriented <strong>Organization</strong> within<br />

which members' improvements <strong>to</strong> pre-existing process or products are encouraged by policy and by process, <strong>to</strong>ward<br />

incremental improvements, but without <strong>the</strong> single-minded focus on turning all organizational resources <strong>to</strong> <strong>the</strong> end<br />

<strong>of</strong> developing breakthrough technologies. Entrepreneurially-Oriented <strong>Organization</strong>s are less likely <strong>to</strong> develop<br />

radical innovations which might necessitate dramatic departures from current organizational strategy, although<br />

refinements which do not impact negatively (that is, requiring interfacing processes with or procedures in, say,<br />

ano<strong>the</strong>r department <strong>to</strong> be changed <strong>to</strong> accommodate <strong>the</strong> innovation) on <strong>the</strong> status quo, are considered ra<strong>the</strong>r<br />

positively. Stereotypical suggestion-box inputs might be good examples <strong>of</strong> <strong>the</strong> types <strong>of</strong> improvements deemed<br />

proper within such an organization.<br />

There are a number <strong>of</strong> situations within which one might expect <strong>to</strong> find <strong>the</strong> Entrepreneurially-Oriented<br />

<strong>Organization</strong>. One instance in which this archetype is effective is that <strong>of</strong> a mature industry with a relatively nonturbulent<br />

environment, modest product/service substitutes potentially or actually available, non-intense rivalry<br />

among relatively equally-sized competi<strong>to</strong>rs, and relatively powerful suppliers and/or cus<strong>to</strong>mers. Under <strong>the</strong>se<br />

circumstances, industry change occurs slowly, and pr<strong>of</strong>its are fairly-equally distributed; given <strong>the</strong> maturity <strong>of</strong> <strong>the</strong><br />

industry and thus its normal value chains, incremental improvements are useful for modest pr<strong>of</strong>itability and<br />

productivity improvements, since major innovations are not likely <strong>to</strong> occur and o<strong>the</strong>r innovations are nonproprietary<br />

or easily copied. In this instance, <strong>the</strong>n, <strong>the</strong> archetype seems appropriate for its orientation <strong>to</strong><br />

entrepreneurship, which "fits" its likely competitive strategy.<br />

This archetype can be less effective, <strong>to</strong>o, under o<strong>the</strong>r circumstances. A timid or ineffective TMT can hide behind a<br />

random or half-hearted commitment <strong>to</strong> corporate entrepreneurship in this archetype, while still claiming <strong>to</strong><br />

encourage innovativeness. Since we have argued that corporate entrepreneurship is a strategic function, that is,<br />

derived from a firm's strategic and competitive position and also <strong>of</strong> crucial importance <strong>to</strong> fulfilling <strong>the</strong> firm's<br />

strategy, a tepid stance on innovativeness and absent a strategic posture on building competitive advantage through<br />

innovation places <strong>the</strong> firm as being "stuck in <strong>the</strong> middle" (Porter, 1980) with no discernable advantage or direction.<br />

Under many competitive realities, such a position is dangerous.


The Accidentally-Innovative <strong>Organization</strong><br />

And, <strong>of</strong> course, <strong>to</strong> <strong>the</strong> left <strong>of</strong> <strong>the</strong> Entrepreneurially-Oriented <strong>Organization</strong> must lie <strong>the</strong> Accidentally-Innovative<br />

<strong>Organization</strong>, in which individual improvements, modifications, or innovative applications happen by chance ra<strong>the</strong>r<br />

than by intent. As much as we would prefer o<strong>the</strong>rwise, we suspect that a plurality, if not a majority, <strong>of</strong> firms <strong>to</strong>day<br />

would be categorized under this archetype. Why should this be so common? We believe that many TMTs perceive<br />

<strong>the</strong>ir responsibilities as being divorced from <strong>the</strong> difficult integrative task <strong>of</strong> relating <strong>the</strong> firm's competitive strategy<br />

<strong>to</strong> building its advantage through institutionalized programs <strong>of</strong> innovativeness/entrepreneurship. They may place<br />

<strong>to</strong>o much faith on technical or technological skills as determining fac<strong>to</strong>rs in marketing success, for example, and<br />

assume that <strong>the</strong> critical fac<strong>to</strong>r may be budget and resource allocations based on hoped-for outcomes (like increases<br />

in market share or product development) ra<strong>the</strong>r than <strong>the</strong> more subtle processes involved in building <strong>the</strong> strategic<br />

intent for widespread entrepreneurship. The randomsuccess pattern <strong>of</strong>ten experienced <strong>of</strong> such a non-strategy<br />

reinforces <strong>the</strong> archetype, and becomes <strong>the</strong> conventional wisdom <strong>of</strong> <strong>the</strong> firm, that beefing up <strong>the</strong> marketing (or<br />

R&D) budget leads <strong>to</strong> success and that a more inclusive approach is not necessary. And that may be sufficient for<br />

such a firm. But as a matter <strong>of</strong> opportunity foregone, such an approach may not be sustainable or effective for long.<br />

Are <strong>Archetypes</strong> Useful?<br />

As a perspective on <strong>the</strong> preceding archetypes and <strong>the</strong>ir bases or effects on <strong>the</strong> strategic realities <strong>of</strong> corporations, we<br />

note again that configurations <strong>of</strong> entrepreneurial efforts may be derived by academician or business<br />

practitioner/executive. Each archetype has a foundational logic which can be used as a test for consistency <strong>of</strong><br />

strategy or for consistency <strong>of</strong> entrepreneurial elements. For example, if cost competition drives <strong>the</strong> need for<br />

innovation within <strong>the</strong> firm, <strong>the</strong>n a tightly-coordinated program for reviewing all steps in <strong>the</strong> value chain <strong>of</strong> <strong>the</strong><br />

corporation may well be a first and logical step <strong>to</strong> undertake. O<strong>the</strong>r programs may be valuable on <strong>the</strong>ir own merits,<br />

such as brains<strong>to</strong>rming sessions by promotion and advertising specialists, but may divert time and budget away from<br />

<strong>the</strong> critical issue facing <strong>the</strong> corporation. We suggest that understanding <strong>the</strong> functionality <strong>of</strong> entrepreneurship<br />

"entrepreneurship for what?" -- is a crucial determining fac<strong>to</strong>r in corporate entrepreneurship. The alignment <strong>of</strong><br />

corporate entrepreneurship with competitive advantages sought and with competitive challenges is earnestly <strong>to</strong> be<br />

sought by responsible executives. Given such an environment, <strong>the</strong>n <strong>the</strong> creative and innovative efforts undertaken<br />

within <strong>the</strong> corporation may properly and approvingly be termed, "strategic entrepreneurship", and <strong>the</strong> corporation<br />

and its various innovation programs properly and approvingly be considered, "entrepreneurialized."<br />

Conclusion and Summary<br />

The role <strong>of</strong> innovations in organizations is central: Not <strong>the</strong> random innovation or <strong>the</strong> chance breakthrough, but<br />

innovations created as <strong>the</strong> result <strong>of</strong> a corporate strategy for entrepreneurship. Incremental innovations are minima,<br />

not maxima, and are <strong>the</strong> bare minimum simply for keeping up with competi<strong>to</strong>rs. But true competitive advantage<br />

stems from radical innovations. While <strong>the</strong> occasional or one-<strong>of</strong>f innovation -- incremental and/or radical -- is not<br />

unusual, what is difficult is creating and managing <strong>the</strong> sustained process by which multiple innovations --<br />

incremental and/or radical -- across multiple organizational levels at different stages <strong>of</strong> <strong>the</strong> innovation process,<br />

demanding significant and system-wide changes (Brazeal & Herbert, in press).<br />

We point out that archetypes <strong>of</strong> commitment <strong>to</strong> corporate entrepreneurship may prove useful in considering <strong>the</strong><br />

relationship between strategy and nature <strong>of</strong> entrepreneurial efforts, and <strong>the</strong>nce <strong>to</strong> sustainable competitive advantage<br />

and performance (Zahra, 1991). As one archetype, <strong>the</strong> successful entrepreneurial organization produces<br />

systematically and consistently a stream <strong>of</strong> innovations. The ability <strong>to</strong> do so is dependent on having an appropriate<br />

internal state, culture, and legitimizing processes, <strong>the</strong>se having been initiated and structured through <strong>the</strong> TMT's<br />

commitment <strong>to</strong> a philosophy <strong>of</strong> risk taking, proactivity, and innovative behaviors (Covin & Slevin, 1991; Guth &


Ginsberg, 1990; Jennings & Lumpkin, 1989). O<strong>the</strong>r archetypes are <strong>the</strong> entrepreneurially-oriented firm, <strong>the</strong><br />

accidentally-entrepreneurial firm, and <strong>the</strong> entrepreneurially-challenged firm. Despite <strong>the</strong> tendency <strong>to</strong> highly-value<br />

entrepreneurship as a concept, without fur<strong>the</strong>r investigation, we caution that gradations <strong>of</strong> commitment <strong>to</strong><br />

entrepreneurship are a more effective vehicle for evaluating <strong>the</strong> effectiveness <strong>of</strong> <strong>the</strong> entrepreneurial efforts as <strong>the</strong>y<br />

relate <strong>to</strong> <strong>the</strong> firm's strategic and competitive challenges.<br />

Crucial as an underpinning <strong>to</strong> our suggestions is <strong>the</strong> observation that corporate entrepreneurship is -- or must<br />

become -- a strategic function <strong>of</strong> <strong>the</strong> corporation, an activity <strong>the</strong> responsibility for which lies in <strong>the</strong> <strong>to</strong>p executive<br />

<strong>of</strong>fices because <strong>of</strong> TMT duties for <strong>the</strong> strategic direction and control <strong>of</strong> <strong>the</strong> corporation. Corporate entrepreneurship<br />

will rest, not with <strong>the</strong> individual innova<strong>to</strong>r but within <strong>the</strong> structural framework and deliberatively-imposed<br />

processes <strong>of</strong> <strong>the</strong> corporation, carefully initiated, cultivated, and maintained by <strong>to</strong>p executives through structure and<br />

cultural engineering <strong>to</strong> ensure that entrepreneurial values, behaviors, and processes are consistently implemented<br />

throughout <strong>the</strong> entire organization.<br />

The more complex configuration <strong>of</strong> entrepreneurial program contents, <strong>the</strong> firm's strategic and competitive intents,<br />

and <strong>to</strong>p management team processes are felt <strong>to</strong> <strong>of</strong>fer a view more consistent with <strong>the</strong> realities faced by corporations<br />

<strong>to</strong>day. The configuration is also believed <strong>to</strong> <strong>of</strong>fer opportunities by which <strong>to</strong> evaluate corporate entrepreneurship<br />

programs and strategies, and <strong>to</strong> <strong>of</strong>fer insights for prescribing an appropriate process for optimizing <strong>the</strong><br />

entrepreneurial potential <strong>of</strong> firms.<br />

References<br />

Bantel, Karen A., and Jackson, Susan E., Top Management and Innovations in Banking: Does <strong>the</strong> Composition <strong>of</strong><br />

<strong>the</strong> Top Team Make a Difference? Strategic Management Journal, 10 (1989), 107-124.<br />

Barringer, B.R., and Bluedorn, A.C., The Structure <strong>of</strong> Corporate Entrepreneurship and <strong>the</strong> Relationship between<br />

Corporate Entrepreneurship and Strategic Management, presented at <strong>the</strong> annual meeting <strong>of</strong> <strong>the</strong> Academy <strong>of</strong><br />

Management, August 1996.<br />

Brazeal, Deborah V., and Herbert, Theodore T., The Genesis <strong>of</strong> Entrepreneurship, Entrepreneurship: Theory and<br />

Practice, Special Issue, in press.<br />

Cooper, A.C., Willard, G.E., and Woo, C.Y., Strategies for High-Performing New and Small Firms: A<br />

Reexamination <strong>of</strong> <strong>the</strong> Niche Concept, Journal <strong>of</strong> Business Venturing, 1 (1986), 247-260.<br />

Covin, J.G., and Slevin, D.P.., A Conceptual Model <strong>of</strong> Entrepreneurship as Firm Behavior, Entrepreneurship:<br />

Theory and Practice, 16 (1991): 7-25.<br />

Guth, William D., and Ginsberg, Ari, Guest Edi<strong>to</strong>r's Introduction: Corporate Entrepreneurship, Strategic<br />

Management Journal, 11(1990), 5-15.<br />

Herbert, Theodore T., and Brazeal, Deborah V. The <strong>Organization</strong> <strong>of</strong> <strong>the</strong> Future: Corporate Entrepreneurship on <strong>the</strong><br />

Fly. Presented at <strong>the</strong> annual meeting <strong>of</strong> <strong>the</strong> United States Association for Small Business and Entrepreneurship,<br />

Clearwater, Florida, January 1998.<br />

Hambrick, Donald C,, and Mason, Phyllis A., Upper Echelons: The <strong>Organization</strong> as a Reflection <strong>of</strong> Its Top<br />

Managers, Academy <strong>of</strong> Management Review, 9 No. 2 (1984), 193-206.


Jennings, D.F., and Lumpkin, J.R., Functionally Modeling Corporate Entrepreneurship: An Empirical Integrative<br />

Analysis, Journal <strong>of</strong> Management, 15, No. 3 (1989), 485-502.<br />

Lengnick-Hall, Cynthia A., Innovation and Competitive Advantage: What We Know and What We Need <strong>to</strong> Learn,<br />

Journal <strong>of</strong> Management, 18 No. 2 (1992), 399-429.<br />

Miller, Danny, The Correlates <strong>of</strong> Entrepreneurship in Three Types <strong>of</strong> Fit, Management Science, 29 (1983), 770-91.<br />

O'Reilly, B., The Secrets <strong>of</strong> America's Most Admired Corporations: New Ideas, New Products, Fortune, March 3,<br />

1997, 60-64.<br />

Porter, Michael E. Competitive Advantage: Creating and Sustaining Superior Performance (New York: Free Press,<br />

1985).<br />

Porter, Michael E. Competitive Strategy: Techniques for Analyzing Industries and Competi<strong>to</strong>rs (New York: Free<br />

Press, 1980).<br />

Zahra, Shaker A. Predic<strong>to</strong>rs and Financial Outcomes <strong>of</strong> Corporate Entrepreneurship: An Explora<strong>to</strong>ry Study.<br />

Journal <strong>of</strong> Business Venturing, 6 (1991), 259-285.<br />

About <strong>the</strong> Authors<br />

Theodore T. Herbert is Pr<strong>of</strong>essor <strong>of</strong> Management in <strong>the</strong> Crummer Graduate School <strong>of</strong> Business at<br />

Rollins College. Deborah V. Brazeal is Associate Pr<strong>of</strong>essor <strong>of</strong> Management in <strong>the</strong> Center for Entrepreneurship and<br />

Innovation at California State Polytechnic University.<br />

Contact details:<br />

Dr. Theodore T. Herbert<br />

Crummer Graduate School <strong>of</strong> Business<br />

Rollins College<br />

1000 Holt Avenue 2722,<br />

Winter Park, Florida 32789-4499 U.S.A.<br />

Tel. (407) 646-2530<br />

Fax (407) 646-1550<br />

E-Mail: THerbert@Rollins.edu<br />

Dr. Deborah V. Brazeal<br />

Center for Entrepreneurship and Innovation<br />

California State Polytechnic University<br />

Pomona, California 91768 U.S.A.<br />

Tel. (909) 869-2368<br />

Fax (909) 869-4353<br />

E-Mail: DBrazeal@CSUPomona.edu

Hooray! Your file is uploaded and ready to be published.

Saved successfully!

Ooh no, something went wrong!