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LAUREATE
EDUCATION INC
40 I '""'"""'""h;p -...-.:-..----· -+------------~------··--·---- - ·------
- ---·--···· ----------------------------------------------··--------------
-----

ENTREPRENEURIAL INTENTIONS AND
CORPORATE ENTREPRENEURSHIP
1
To introduce the importance of perception of feasibility and
desirability in explaining
entrepreneurial intentions.
2
To understand the role of individuals' background
characteristics in explaining
3
To demonstrate that management can influence the intentions of
those within
established organizations.
4
To discuss how established firms can develop an entrepreneurial
culture.
5
To provide a scale for capturing the extent to which
management adopts
entrepreneurial or traditional behaviors.
I
Entrepreneurship, Eighth Edition I 41

----------·--~-- ----~------··-·------------ ---- -----· -----·----- --- --
·-----------·-·----~---
OPENING PROFILE
ROBERT MONDAVI
Robert G. Mondavi, the son of poor Italian immigrants, began
making wine in California
in 1943 when his family purchased the Charles Krug Winery in
Napa Valley, where he
served as a general manager. In 1966, at the age of 54, after a
severe dispute over con-
trol of the family-owned winery, Robert Mondavi used his
personal savings and loans
from friends to start the flagship Robert Mondavi Winery
in Napa Valley with his eldest son, Michael Mondavi.
Robert's vision was to create wines in California that could
successfully compete with the greatest wines of the world.
As a result. Robert Mondavi Winery became the first in
California to produce and mar-
ket premium wines that were expected to compete with premium
wines from France,
Spain, Italy, and Germany.
To achieve this objective Robert believed that he needed to

build a Robert Mondavi
brand in the premium wine market segment. This resulted in the
initial production of
a limited quantity of premium wines using the best grapes,
which brought the highest
prices in the market and had the highest profit margins per
bottle. However, he soon
realized that this strategy, while establishing the brand, did not
allow the company to
generate enough cash flow to expand the business. To solve this
problem Robert de-
cided to produce less expensive wines that he could sell in
higher volumes. He dedi-
cated time and effort to finding the best vineyards in Napa
Valley for the company's
production of grapes. In addition, he signed long-term contracts
with growers in Napa
Valley and worked closely with each grower to improve grape
quality.
Robert Mondavi built a state-of-the-art winery that became a
premium wine-
making facility as well as conveying a unique sense of Mondavi
wines to the visitors. Soon
the new winery became a place where the best practices in the

production of premium
wines were developed, eventually establishing the standard in
the wine industry.
Robert Mondavi was the first winemaker to assemble experts
with various back-
grounds in the fields of viticulture and wine-making to give
advice on the new wines.
He also developed new technology that allowed special handling
of grapes and the
cold fermentation of white wines. Furthermore, Mondavi's
company created process
innovations, such as steel fermentation tanks, vacuum corking
of bottles, and aging of
wines in new French oak barrels. Dedicated to growing vines
naturally, Robert Mondavi
35
42
I
I . J Entrepreneurship
__ l______ - ----- ----- --- --- -- ------· -_ _, __ -- -__ _,_ - ---·--
- ----- --- .. -
36 PART 1 THE ENTREPRENEURIAL PERSPECTIVE

introduced a natural farming and conservation program that
allowed enhanced grape
quality, environmental protection, and worker health. Moreover,
from the very begin-
ning, the company promoted the presentation of wine as part of
a sociable way of
everyday living. Robert Mondavi W inery was one of the first
wineries to present con-
certs, art exhibitions, and culinary programs.
In his book, Robert Mondavi describes his search for
innovation:
From the outset, I wanted my w inery to draw inspiration and
methods from the traditional
Old World chateaux of France and Italy, but I also wanted to
become a model of state-of-
the-art technology, a pioneer in research and a gathering place
for the finest minds in our
industry. I wanted our winery to be a haven of creativity,
innovation, excitement, and that
unbelievable energy you find in a start-up venture when
everyone is committed, heart and
soul, to a common cause and a common quest.
In 1972 Mondavi's hard work and dedication to his venture were

formally recog-
nized when the Los Angeles Times Vintners Tasting Event
selected the 1969 Robe rt
Mondavi Winery Cabernet Sauvignon as the top wine produced
in Californ ia.
Despite Robert Mondavi's relentless efforts, things did not
always go smoothly. A
noticeable improvement in the quality and reputation of the
Robert Mondavi wines
during the 1970s did not spark the interest of reputable five-star
restaurants and top
wine shops across the country. So, for over a decade, Mondavi
traveled throughout the
country and abroad, promoting Napa Valley wines and the
Robert Mondavi brand
name. Often, while dining alone on business trips, Mondavi
offered restaurant em-
ployees the opportunity to taste his wine. Slowly, Mondavi got
his wines on the wine
lists of the top five-sta r restaurants in the United States. By the
end of the 1970s,
restaurant owners, famous wine connoisseurs, and industry
critics were eager to be in-
troduced to Robert Mondavi products. Recognizing the

increased popularity of his
wines, Mondavi began slowly raising the prices of his wines to
the price level of com-
parable French wines. Subsequently, the company expanded it s
capacity to produce
500,000 cases of premium wines annually.
About this time Robert Mondavi started building a portfolio of
premium w ine
brands to satisfy the needs of consumers in various price and
quality segments of the
domestic wine market. As a result, from the late 1970s until the
1980s Robert Mondavi
diversified its portfolio through acquisition and further growth
of the Woodbridge,
Byron, and Coastal brands of California wine. Most of these
acquisitions were financed
through long-term debt.
In the early 1990s Robert Mondavi faced financial difficulties
as a resu lt of the
rapid expansion; the increased competition; and a phylloxera
infestation of several
of the company's vineyards, which necessitat ed replanting.
After contemplating the

matter for several years, Robert Mondavi decided to raise
enough capital to con-
tinue expansion of his company while maintaining family
control of the company.
On June 10, 1993, Robert Mondavi issued 3.7 million shares of
stock at $13.50 a
share and began trading on the NASDAQ as MONO. The initial
public offering (IPO)
raised approximately $49.95 million, bringing the company's
market capita lization
to $2 13.3 million .
I
-~. --~-·· --·------- - ·--------, ·---~
CHAPTER 2 ENTREPRENEURIAL INTENTIONS AND
CORPORATE ENTREPRENEURSHIP 37
The IPO was structured with two classes of stock: Class A
common stock issued to
the Mondavi family, and Class B common stock offered to the
public. Class A shares
carried ten votes per share, and Class B shares carried one vote
per share. This structure

allowed the Mondavi family to retain 90 percent ownership of
the company and, subse-
quently, to preserve control over the company's destiny. Robert
Mondavi stock was
trading at $8 a share a few days after the initia l offering and at
$6.50 a share six
months later, slashing the company's value, and the Mondavi
fami ly's wealth, by half.
One factor affecting the price decrease in the stock was the
difficulty that the in-
vestment community and analysts had in valuing Robert
Mondavi due to a lack of in-
formation on the wine industry. There .were only two other
publicly traded wine
companies, both in low-end wine categories. To help solve this
problem, Robert
Mondavi began educating investors, trying to convince them
that it is possible to
build a strong, globally recognized business selling premium
wines. As part of his
knowledge-building and awareness-creation campaign, Robert
sent teams to New
York, Boston, and Chicago, who brought wine presentations,
recept ions, and tastings

to the investors. According to Robert Mondavi, "Well, we had
to mount an effective
campaign and take it right to them, and not just explain our
approach but put our
wines right in their hands! Let them taste, in their own mouths,
our expertise and
commitment to excellence."
At the same time the company was continuing its innovating
efforts, creating in
1994 a revolutionary, capsule-free, flange-top bottle design,
which became widely ac-
cepted in the industry.
In the mid-1990s, the company started engaging in various
multinational partner-
ships on a 50:50 basis: Its partnership with the Baron Philippe
de Rothschild of
Chateau Mouton Rothschild in Bordeaux, France, resulted in the
creation of Opus
One wine in 1979; with the Frescobaldi family of Tuscany,
Italy, Mondavi launched
Luce, Lucente, and Danzante wines in 1995; with the Eduardo
Chadwick family of
Chile, it introduced Ca/iterra wines in 1996; and with
Australia's largest premium pro-

ducer, Southcorp, it began producing and marketing new wines
from Australia and
California in 2001.
Today, the company continues to pursue its goals around the
world with its unique
cultural and innovative -spirit and its consistent growth
strategy, reaching revenue of
over $441 million in 2002. The company produces 20 unique
and separate labels repre-
senting more than 80 individual wines from California, Italy,
Chile, and France and sells
its wines in more than 80 countries. Some of the popular Robert
Mondavi fine wine
labels such as Robert Mondavi Winery, Robert Mondavi Coastal
Private Selection, and
Woodbridge Wine·ry have gained enormous popularity among
wine lovers in the United
States as well as the rest of the world. The company remains a
close family business.
Recognized as the global representative of California wines,
Robert Mondavi has
been a major force in leading the U.S. wine industry into the
modern era and has de-

voted his life to creating a fine wine culture in America.
Through hard work and a con-
stant striving for excellence, he has achieved his goal of causing
California wines to be
viewed as some of the great wines of the world.
I
44 ! Entrepreneurship
__ ...__ ............ __ -~.-... -:r--------------------.. ---·-· -·---- -----
--
entrepreneurial
intentions The
motivational factors that
influence individuals to
pursue entrepreneurial
outcomes
entrepreneurial
self-efficacy The
conviction that one can

successfully execute the
entrepreneurial process
perceived desirability
The degree to which an
individual has a favorable
or unfavorable evaluation
of the potential
entrepreneurial outcomes
THE INTENTION TO ACT ENTREPRENEURIALLY
Entrepreneurial action is most often intentional. Entrepreneurs
intend to pursue certain op-
portunities, enter new markets, and offer new products- and this
is rarely the process of
unintentional behavior. Intentions capture the motivational
factors that influence a behav-
ior; they are indications of how hard people are willing to try,
of how much of an effort they
are planning to exert to perform the behavior. As a general rule,
the stronger the intention
to engage in a behavior, the more likely should be its
performance. 1 Individuals have
stronger intentions to act when taking action is perceived to be
feasible and desirable .
Entrepreneurial intentions can be explained in the same way.
The perception of feasibility has much to do with an
entrepreneur's self-efficacy. Entre-
preneurial self-efficacy refers to the conviction that one can

successfully execute the be-
havior required; people who believe they have the capacity to
perform (high self-efficacy)
tend to perform well. Thus, it reflects the perception of a
personal capability to do a partic-
ular job or set of tasks . High self-efficacy leads to increased
initiative and persistence and
thus improved performance; low self-efficacy reduces effort and
thus performance. Indeed,
people with high self-efficacy think differently and behave
differently than people with low
self-efficacy.2 Self-efficacy affects the person's choice of
action and the amount of effort
exerted. Entrepreneurship scholars have found that self-efficacy
is positively associated
with the creation of a new independent organization. 3
Not only must an individual perceive entrepreneurial action as
feasible for entrepre-
neurial intention to be high, the individual must also perceive
this course of action as
desirable. Perceived desirability refers to an individual's
attitude toward entrepreneurial
action- the degree to which she has a favorable or unfavorable
evaluation of the poten-
tial entrepreneurial outcomes. 4 For example, creative actions
are not likely to emerge un-
less they produce personal rewards that are perceived as
relatively more desirable than
more familiar behaviors .5
Therefore, the higher the perceived desirability and feasibility,
the stronger the intention
to act entrepreneurially. We next investigate the background
characteristics of entrepreneurs
to understand why some individuals are more likely to engage in

entrepreneurship than
other individuals. That is, we examine how background
characteristics provide an indica-
tion of whether certain individuals are more or less likely to
perceive entrepreneurial action
as feasible and/or desirable and therefore whether they are more
or less likely to intend to
be entrepreneurs.
ENTREPRENEUR BACKGROUND AND CHARACTERISTICS
Education
Although some may feel that entrepreneurs are less educated
than the general population,
research findings indicate that this is clearly not the case.
Education is important in the
upbringing of the entrepreneur. Its importance is reflected not
only in the level of education
obtained but also in the fact that it continues to play a major
role in helping entrepre-
neurs cope with the problems they confront. Although a formal
education is not necessary
for starting a new business- as is reflected in the success of
such high school dropouts as
Andrew Carnegie, William Durant, Henry Ford, and William
Lear- it does provide a
good background, particularly when it is related to the field of
the venture. For example,
entrepreneurs have cited an educational need in the areas of
finance, strategic planning,
marketing (particularly distribution), and management. The
ability to communicate
clearly with both the written and the spoken word is also
important in any entrepreneurial
activity.

'"'"'""" "h; p, E;ghth Ed;tloo I - ---~·-···--~· ·---------- -··-· -----
-------------- ~----------------- ------------- -·--------+
$ ETHICS
ETHICAL CONDUCT OF
ENTREPRENEURS VERSUS
MANAGERS
Understanding the factors that contribute to and in-
fluence the ethical conduct of managers and entrepre-
neurs is important for the future of the U.S. economic
system as well as the economic system of the world.
The significance of these factors becomes all the more
salient when operating in a hypercompetitive global
economy. In such an environment, competitors aggres-
sively disrupt the status quo and seek to change the
rules of competition. While current businesses impact
t he ethical standards used in present business deal-
ings, emerging entrepreneurial companies set the eth-
ical tone for the future economic system of the world.
Although the United States has strong laws, such as
he Foreign Corrupt Practices Act of 1977, and pro-
motes ethical behavior on the part of managers and
entrepreneurs, the ethical attitudes of these groups are
otwell understood. How will managers and entrepre-
eurs react in certain situations? Will they have high
eth ical standards in their internal and external deal-
ings? Will managers, because of their more bureau-
cratic environment, have higher ethical standards than
entrepreneurs? Or, will entrepreneurs, because their

iness practices more closely reflect their personal
lues, have higher ethical attitudes than managers?
In one study, 165 entrepreneurs and 128 managers
ere surveyed using a detached measuring instru-
ent containing binary, response questions, scenar-
os, and comprehensive demographic information.
Generally, entrepreneurs and managers differed
ly slightly in their views regarding the ethics of vari-
activities and their ethical perceptions regarding
others. There were few differences in the two groups
regarding their evaluation of the ethical nature of 12
circumstances and 7 scenarios. The similarities in eth-
ical _ attitudes between the two groups of decision
makers seem to be one of the important findings,
which can be explained by similar legal, cultural, and
educational factors that affect the ethical attitudes of
both groups. Some significant differences consistently
indicate that entrepreneurs are more prone to hold
ethical attitudes.
The findings ind icate that managers need to sacri-
fice their personal values to those of the company
more than entrepreneurs. Also, entrepreneurs consis-
tently demonstrate higher ethical attitudes in the in-
ternal dealings of the company, such as not taking
longer than necessary for a job and not using com-
pany resources for personal use. These findings are
consistent with the theory of property where we
would expect someone to be more ethical in dealing
with his or her own property. This finding suggests
that, through increased ownership, managers might

be motivated to have more ethical dealings with
their company's assets. Profit-sharing companies (man-
agers and other key employees) can therefore per-
haps reduce the possibilities of moral hazard and op-
portunistic behavior within the company through
some type of managerial ownersh ip . Likewise, long-
term relationships with customers and the commu-
nity in general have to be reflected in the property of
the company through philanthropic acts and differ-
ent liability accounts.
Source: From Branko Bucar and Robert Hisrich, "Ethics of
Business
Managers vs. Entrepreneurs," Journal of Developmental
Entrepre-
neurship 6, no. 1 (2001). Reprinted with pennission of The
Journal
of Developmental Entrepreneurship. All rights reserved.
Even general education is valuable because it facilitates the
integration and accumula-
tion of new knowledge, providing individuals with a larger
opportunity set (i.e., a broader
base of knowledge casts a wider net for the discovery or
generation of potential opportuni-
ties), and assists entrepreneurs in adapting to new situations. 6
The general education (and
experiences) of an entrepreneur can provide knowledge, skills,
and problem-solving abili-
ties that are transferable across many different situations.
Indeed, it has been found that
while education has a positive influence on the chance that a
person will discover new op-
portunities, it does not necessarily determine whether he will
create a new business to ex-
ploit the discovered opportunity.7 To the extent that individuals

believe that their education
has made entrepreneurial action more feasible, they are more
likely to become entrepre-
neurs. As entrepreneurs it is likely that aspects of their ethics
differ from other managers,
as is discussed in the article in the Ethics box.
39
l
46 I Entrepreneurship
._ ______ ,--------··----~- -------- ----·--·----- -----------··-----·-
work history The past
work experience of an
individual
role models Individuals
whose example an
entrepreneur can aspire
to and copy
Age
The relationship of age to the entrepreneurial career process
also has been carefully re-

searched. 8 In evaluating these results, it is important to
differentiate between entrepreneur-
ial age (the age of the entrepreneur reflected in his or her
experience) and chronological age
(years since birth). As discussed in the next section,
entrepreneurial experience is one of the
best predictors of success, particularly when the new venture is
in the same field as the pre-
vious business experience.
In terms of chronological age, most entrepreneurs initiate their
entrepreneurial careers
between the ages of 22 and 45. A career can be initiated before
or after these ages, as long
as the entrepreneur has the necessary experience and financial
support, and the high energy
level needed to launch and manage a new venture successfully.
Also, there are milestone
ages every five years (25, 30, 35, 40, and 45) when an
individual is more inclined to start
an entrepreneurial career. As one entrepreneur succinctly stated,
"I felt it was now or never
in terms of starting a new venture when I approached 30."
Generally, male entrepreneurs
tend to start their first significant venture in their early 30s,
while women entrepreneurs
tend to do so in their middle 30s. However, an entrepreneurial
career is quite popular later
in life when the children have left home, there are fewer
financial concerns, and individu-
als start to think about what they would really like to do with
the rest of their lives. 9
Work History
Work history can influence the decision to launch a new
entrepreneurial venture, but it also

plays a role in the growth and eventual success of the new
venture. While dissatisfaction
with various aspects of one's job-such as a lack of challenge or
promotional opportuni-
ties, as well as frustration and boredom-often motivates the
launching of a new venture,
previous technical and industry experience is important once the
decision to launch has
been made. Experience in the following areas is particularly
important: financing, product
or service development, manufacturing, development of
distribution channels, and prepa-
ration of a marketing plan.
As the venture becomes established and starts growing,
managerial experience and skills
become increasingly important. Although most ventures start
with few (if any) employees, as
the number of employees increases, the entrepreneur's
managerial skills come more and more
into play. In addition, entrepreneurial experiences, such as the
start-up process, making deci-
sions under high levels of uncertainty, building a culture from
"scratch," raising venture cap-
ital, and managing high growth, are also important. Most
entrepreneurs indicate that their
most significant venture was not their first one. Throughout
their entrepreneurial careers, they
are exposed to many new venture opportunities and gather ideas
for many more new ventures.
Finally, previous start-up experience can provide entrepreneurs
with expertise in running an
independent business as well as benchmarks for judging the
relevance of information, which
can lead to an understanding of the "real" value of new entry

opportunities, speed up the busi-
ness creation process, and enhance performance. 10 Previous
start-up experience is a relatively
good predictor of starting subsequent businesses. 11 To the
extent that start-up experience pro-
vides entrepreneurs with a greater belief in their ability to
successfully achieve entrepreneurial
outcomes, this increased perceived feasibility will strengthen
ROLE MODELS AND SUPPORT SYSTEMS
One of the most important factors influencing entrepreneurs in
their career path is their
choice of a role model. 12 Role models can be parents, brothers
or sisters, other relatives, or
other entrepreneurs. Successful entrepreneurs frequently are
viewed as catalysts by potential
moral-support network
Individuals who give
psychological support to
an entrepreneur
professional-support
network Individuals
who help the entrepreneur
in business activities

Eo<~P''"'""hlp, E;ghth Ed;tioo I
--- - -··--- -- ·- ------ ·--· --- -- - -- ----· -------- ~ -
entrepreneurs. As one entrepreneur succinctly stated, "After
evaluating Ted and his success
as an entrepreneur, I knew I was much smarter and could do a
better job. So I started my
own business." In this way, role models can provide important
signals that entrepreneurship
is feasible for them.
Role models can also serve in a supportive capacity as mentors
during and after the
launch of a new venture. An entrepreneur needs a strong support
and advisory system in every
phase of the new venture. This support system is perhaps most
crucial during the start-up
phase, as it provides information, advice, and guidance on such
matters as organizational
structure, obtaining needed financial resources, and marketing.
Since entrepreneurship is a
social role embedded in a social context, it is important that an
entrepreneur establish con-
nections and eventually networks early in the new venture
formation process.
As initial contacts and connections expand, they form a network
with similar properties
prevalent in a social network--density (the extensiveness of ties
between the two individ-
uals) and centrality (the total distance of the entrepreneur to all
other individuals and the to-
tal number of individuals in the network). The strength of the

ties between the entrepreneur
and any individual in the network is dependent upon the
frequency, level, and reciprocity
of the relationship. The more frequent, in-depth, and mutually
beneficial a relationship, the
stronger and more durable the network between the entrepreneur
and the individual. 13 Al-
though most networks are not formally organized, an informal
network for moral and pro-
fessional support still greatly benefits the entrepreneur.
Moral-Support Network
It is important for each entrepreneur to establish a moral-
support network of family and
friends-a cheering squad. This cheering squad plays a critical
role during the many diffi-
cult and lonely times that occur throughout the entrepreneurial
process. Most entrepreneurs
indicate that their spouses are their biggest supporters and allow
them to devote the exces-
sive amounts of time necessary to the new venture.
Friends also play key roles in a moral-support network. Not
only can friends provide ad-
vice that is often more honest than that received from other
sources, but they also provide
encouragement, understanding, and even assistance.
Entrepreneurs can confide in friends
without fear of criticism. Finally, relatives (children, parents,
grandparents, aunts, and un-
cles) also can be strong sources of moral support, particular! y
if they are also entrepreneurs.
As one entrepreneur stated, "The total family support I received
was the key to my success.
Having an understanding cheering squad giving me
encouragement allowed me to persist

through the many difficulties and problems."
Professional-Support Network
In addition to encouragement, the entrepreneur needs advice and
counsel throughout the
establishment of the new venture. This advice can be obtained
from a mentor, business
associates, trade associations, or personal affiliations-all
members of a professional-
support network.
Most entrepreneurs indicate that they have mentors. How does
one find a mentor? This
task sounds much more difficult than it really is. Since a mentor
is a coach, a sounding
board, and an advocate-someone with whom the entrepreneur
can share both problems
and successes-the individual selected needs to be an expert in
the field. An entrepreneur
can start the "mentor-finding process" by preparing a list of
experts in various fields-
such as in the fundamental business activities of finance,
marketing, accounting, law, or
management-who can provide the practical "how-to" advice
needed. From this list,
47
48 I '"''"'~"'""h;p -· ·-~ - ~~+-''--·-----------·----------·--· ·--· --·-
-------------- ·-------------··--------·-----------
AS SEEN IN ENTREPRENEUR MAGAZINE

HOT OR NOT?
DO YOU BELIEVE THIS DIGITAL FRIDGE
TECHNOLOGY REPRESENTS AN
OPPORTUNITY?
Why, oh why, must employees stop working just be-
cause they're having lunch or stoking up on caffeine?
They won't if your lunchroom is equipped with the
Multi-Media Refrigerator ($8,000) from LG Electron-
ics (www.lgappliances.com). A 25.5-cubic-foot refrig-
erator with an Internet connection and built-in LCD,
the digital fridge lets workers keep researching Web
projects and reading e-mail while they munch. The
fridge has a built-in TV, camera, and Web radio so
you can stretch videoconferences through coffee
breaks. Here's a morale booster: Alternate photos of
your office manager with those pencil requisition
training videos on its LCD.a
DO YOU BELIEVE THIS "SMALL
WORLD" TECHNOLOGY REPRESENTS
AN OPPORTUNITY?
Rick Snyder, CEO of Ardesta, a holding firm in Ann
Arbor, Michigan, has a mantra: "Smaller, faster, better,
cheaper." He's talking about "small tech," a term
that describes nanotechnology, microtechnology, and
micro-electromechanical systems (MEMS). Nanotech-
nology in particular has gotten a lot of coverage as
big companies like Hewlett-Packard and Intel have
begun to introduce nano into computing. It's hard to
pinpoint exactly what small tech is because it has so
many wide-ranging applications. "I would call it
more of a revolution than an evolution," says Snyder.
Nanotechnology, for example, deals with matter at
an atomic and molecular level-that is, with matter
often described as being less than the width of a

human hair in size. It's appearing in everything from
stainproof coating for fabrics to scratch-resistant
coating for eyeglasses to miniscule computer chip cir-
cuits from HP Labs.
Research funding for small tech is enormous.
Ardesta is devoted to investing in and helping launch
various small tech ventures with an ultimate goal of
bringing actual products to market. Many businesses
in this fledgling technological area are small entre-
preneurial start-ups and spin-offs from research insti-
tutions. Life sciences and materials manufacturing
are two industries that will really feel the early effects
of the growing small tech market. Eventually, though,
small tech will touch just about everything. Snyder
calls it pervasive and transparent.
Some applications are out already and operating
in your business right under your nose. Microtech is
built into inkjet cartridges and portable projectors.
At SmaiiTimes.com, a clearinghouse for information
on small technology, the section devoted to applica-
tions is an eye-opener: A recent visit to the site brought
up articles on nanotech use in products such as tennis
rackets and LCD monitors, among others.
There are a million microscopic reasons to get ex-
cited, but it's important to keep them all in perspec-
tive. Snyder sees an accelerating growth curve over
the next five years as small tech makes its way into
real-life markets. But you shouldn't expect companies
to shout "nano" or "MEMS" in their product adver-
tising. The way you'll know small tech has touched
your business is when Snyder's mantra comes into
play: "Smaller, faster, better, cheaper."b

•source: Mike Hogan, "Employees Can Munch and Work on the
Web at the Same Time with This Time-Saver," Entrepreneur
(Febru-
ary 2003), pp. 18-22.
bSource: Reprinted with permission of Entrepreneur Media,
Inc.,
"Nanotechnology Will Soon Mean Big Changes in the Way You
Do
Business," by Amanda C. Kooser, March 2003, Entrepreneur
maga-
zine: www.entrepreneur.com.
an individual who can offer the most assistance should be
identified and contacted. If the
selected individual is willing to act as a mentor, he or she
should be periodically apprised
of the progress of the business so that a relationship can
gradually develop.
42
Another good source of advice can be cultivated by establishing
a network of business
associates. This group can be composed of self-employed
individuals who have experi-
enced starting a business; clients or buyers of the venture's
product or service; experts such
as consultants, lawyers, or accountants; and the venture's
suppliers. Clients or buyers are a
particularly important group to cultivate. This group represents
the source of revenue to the
venture and is the best provider of word-of-mouth advertising.
There is nothing better than

Eotr•P~"'""h;p, E;gh<h Edttloo I 49
--------------------------- ---------· ---. ---- ----~------
word-of-mouth advertising from satisfied customers to help
establish a winning business
reputation and promote goodwill.
Suppliers are another important component in a professional-
support network. A new
venture needs to establish a solid track record with suppliers to
build a good relationship
and to ensure the adequate availability of materials and other
supplies. Suppliers also
can provide good information on the nature of trends, as well as
competition, in the
industry.
In addition to mentors and business associates, trade
associations can offer an excel-
lent professional-support network. Trade association members
can help keep the new
venture competitive. Trade associations keep up with new
developments and can pro-
vide overall industry data.
Finally, personal affiliations of the entrepreneur also can be a
valuable part of a
professional-support network. Affiliations developed with
individuals through shared hob-
bies, participation in sporting events, clubs, civic involvements,
and school alumni groups
are excellent potential sources of referrals, advice, and

information. Each entrepreneur
needs to establish both moral- and professional-support
networks. These contacts provide
confidence, support, advice, and information. As one
entrepreneur stated, "In your own
business, you are all alone. There is a definite need to establish
support groups to share
problems with and to obtain information and overall support for
the new venture."
Therefore, it is important to recognize that entrepreneurial
activity is embedded in
networks of interpersonal relationships. These networks are
defined by a set of actors
(individuals and organizations) and a set of linkages between
them, and they provide indi-
viduals access to a variety of resources necessary for
entrepreneurial outcomes. 14 These re-
sources may assist in efforts to discover and exploit
opportunities, as well as in the creation
of new independent organizations. 15 The trust embedded in
some of these networks pro-
vides potential entrepreneurs the opportunity to access highly
valuable resources. For ex-
ample, business networks are composed of independent firms
linked by common interests,
friendship, and trust and are particularly important in
facilitating the transfer of difficult-
to-codify, knowledge-intensive skills that are expensive to
obtain in other ways. 16 These
networks also create opportunities for exchanging goods and
services that are difficult to
enforce through contractual arrangements, which facilitates the
pursuit of opportunities. 17
To the extent that a network provides an individual greater

belief in his or her ability to
access resources critical to the successful achievement of
entrepreneurial outcomes, this
increased perceived feasibility will strengthen entrepreneurial
intentions .
MINORITY ENTREPRENEURS
Another individual characteristic among entrepreneurs that has
been studied is gender. There
has been significant growth in female self-employment, with
women now starting new ven-
tures at a higher rate than men. In fact, women are starting
businesses in the United States at
twice the rate of all businesses and are staying in business
longer. According to the latest data
from the Census Bureau and the Small Business
Administration's (SBA) Office of Advocacy,
28 percent of all private companies are women-owned
businesses. The Census Bureau's 2002
survey of business owners found that 6.5 million companies had
female owners, 13.2 million
had male owners, and 2.7 million were equally owned by males
and females. Women-owned
businesses grew at twice that national rate for all private
companies from 1997 to 2002. Nearly
one-third of women-owned businesses are connected with health
care and social services.
Based on more recent statistics (as of 2008) reported by the
Center for Women's Business
Research, 10.1 million firms are owned by women (50%
ownership or more), employing
more than 13 million people, and generating $1.9 trillion in
sales (www.nfwbo.org).

50 -~ Entrepreneurship
AS SEEN IN ENTREPRENEUR MAGAZINE
PROVIDE ADVICE TO AN ENTREPRENEUR ABOUT
IMPROVING A BUSINESS
THROUGH CERTIFICATION AS A WOMAN-OWNED
BUSINESS
Is becoming a certified Women's Business Enterprise
(WBE) really beneficial? We spoke with women entre-
preneurs from a variety of industries to find out. Be-
ing certified as a Women's Business Enterprise (WBE)
means a third-party certifying entity has confirmed
that a business is at least 51 percent owned, managed,
and controlled by a woman or women. The leading
certifier is the Women's Business Enterprise National
Council (WBENC), which certifies to a national standard
and has 14 partner organizations across the country.
WHAT'S IN IT FOR YOU?
One of WBENC's goals is to achieve equal procure-
ment opportunities for women . As a WBE, a business
is recognized by more than 500 major U.S. corpora-
tions and eligible to apply for their supplier diversity
programs. WBENC provides members access to data-
bases of information, including contact information
for programs and procurement executives and listings
of sourcing opportunities. Members also are listed in
the WBENC database that corporations and govern-
ment agencies use to find WBEs.
BUT GETTING CERTIFIED IS ONLY
STEP ONE
"Although [my company] had been certified through
the City of Charlotte, North Carolina, for several

years, we hadn't been able to convert that into actual
contracts," says Beverly Green, 32, owner of Change-
Ad Letter Co ., a $2 million-plus manufacturer of elec-
trical sign components. Further research showed she
had been missing out on many opportunities . "I'd
previously thought the value of certification was
gaining local and regional government work, and
that can be true." But Green's target market was cor-
porations. Once she accessed WBENC's data on corpo-
rate purchasing practices, she was able to use this
information to win major corporate accounts. Julie
Rodriguez, 44, is president and CEO of Epic Cos., a $12
million-plus Harvey, Louisiana, supplier of commercial
divers and utility vessels to the oil and gas industry.
"Like everything else in life, you get out of [WBE]
what you put in," she says. "The program has more
to offer than just certification."
GETIING CERTIFIED
Applications and instructions for certification are
available at www.wbenc.org; you can either complete
the application online or print it and mail it in. Fees
range from free to about $200, depending on the cer-
tifying entity and scope (local, regional, or national),
and must be renewed annually. "The process is time-
consuming, and the paperwork can be overwhelming,
though this varies depending on the level of certifica-
tion," says Green. "My national certification took
about six months." National applications can require
more than 100 pages of documentation. Women busi-
ness owners say getting certified is worth the effort.
Says Green, "Networking with other women-owned
businesses and getting involved in organizations such
as WBENC can lead to many opportunities and help
open doors you would never have thought of."

ADVICE TO AN ENTREPRENEUR
A successful woman entrepreneur has read the above
article and comes to you for advice:
In the corporate world I hit the glass ceiling, and that is the
reason why I became an entrepreneur. As an entrepreneur
you are rewarded for good products and a good business,
and gender has not really been an issue to date. Do you think
that I should get certified as a "woman-owned" business? Is
it worth filling out all that paperwork? Is it fair that I in-
crease my access to possible government contracts by being
certified as a woman -owned business? Or should I think
about it more as a competitive advantage because every en-
trepreneur tries to best their competitive advantage into
profits?
Source: Reprinted with permission of Entrepreneur Media, Inc.,
"Proof Positive: Want the Full Benefits of a Woman-Owned
Busi-
ness? Get Your Company Certified," by Aliza Pilar Sherman,
Febru-
ary 2003, Entrepreneur magazine: www.entrepreneur.com.
There has also been a significant increase in the number of
Asian, African American,
Hispanic, and Native American majority owned firms. Of U.S.
businesses, Hispanic
Americans owned 5.8 percent; Asian Americans, 4.4 percent;
African Americans, 4 percent;
and American Indians, about 1 percent. This 15.8 percent
minority share of U.S . busi-
nesses in 2002 reflects the continuation of a positive trend-14.6
percent share in 1997,
44

'"'"'""'""h;p, e;ghth Edltloo I
- --- -------------- ·-·~-
12.5 percent share in 1992, 9.3 percent share in 1987, and 6.8
percent share in 1982. With an
increase in the encouragement of entrepreneurship among
minority groups, particularly in
their formative high school years, and the increase in the
number of role models, more
minorities are likely to select entrepreneurship as a viable
career option.
More and more women and ethnic minorities perceive an
entrepreneurial career as per-
sonally feasible and desirable.
ENTREPRENEURIAL INTENTIONS WITHIN
EXISTING ORGANIZATIONS
Earlier in this chapter, we have shown that acting
entrepreneurially is something that people
choose to do based on their perceptions of the desirability and
feasibility of creating a new
venture to pursue an opportunity. However, existing companies
also can pursue opportunities,
but this requires that the management of these firms create an
environment that encourages
employees to think and act entrepreneurially. Such an
environment is one that helps people
realize that entrepreneurial behavior within the firm is both
personally desirable and feasi-

ble. This builds a strong entrepreneurial intention and, as
discussed earlier in this chapter,
the general rule is that the stronger the intention to engage in
entrepreneurial action, the
more likely it will happen. To create such a culture requires a
different orientation toward
the management of the firm, to which we now tum.
MANAGERIAL VERSUS ENTREPRENEURIAL DECISION
MAKING
Howard Stevenson, a professor at Harvard University, believes
that entrepreneurship represents
a mode of managing an existing finn that is distinct from the
way existing firms are tradition-
ally managed. Entrepreneurial management is distinct from
traditional management in terms
of eight dimensions: (1) strategic orientation, (2) commitment
to opportunity, (3) commitment
of resources, (4) control of resources, (5) management structure,
(6) reward philosophy,
(7) growth orientation, and (8) entrepreneurial culture. 18 The
nature of the differences
among these dimensions is represented in Table 2.1 and
described in greater detail below. 19
TABLE 2.1 Distinguishing Entrepreneurially from Traditionally
Managed Firms
Entrepreneurial Focus
riven by perception of opportunity
"evol utionary with short duration
any stages with minimal exposure

:= 'sodic use or rent of required resources
Conceptual Dimension Administrative Focus
Strategic orientation Driven by controlled resources
Commitment to opportunity Evolutionary with long duration
Commitment of resources A single stage with complete
commitment
out of decision
Control of resources Ownership or employment of required
resources
-=a with multiple informal networks Management structure
Hierarchy
:::ased on value creation Reward philosophy
=" "d growth is top priority; risk Growth orientation
= ~ pted to achieve growth
- :: oti ng broad search for opportunities Entrepreneurial culture
Based on responsibility and seniority
Safe, slow, and steady ·
Opportunity search restricted by
controlled resources; failure punished
- lbis table is taken from T. Brown, P. Davidsson, and J.
Wiklund, "An Operationalization of Stevenson's
Conceptualization of Entrepreneurship as
~~::i·ry-Based Firm Behavior," Strategic Management Jouma/22
(2001) , p. 955.

51
52
--~------.. --------------------------·-·------------- ----·---------------
-------- --------- -~---------~--------------------·-----------
strategic orientation
A focus on those factors
that are inputs into the
formulation of the firm's
strategy
entrepreneurial
orientation toward
opportunity
A commitment to taking
action on potential
opportunities
entrepreneurial
orientation toward

commitment of resources
A focus on how to
minimize the resources
that would be required in
the pursuit of a particular
opportunity
Strategic Orientation and Commitment to Opportunity
The first two factors that help distinguish more
entrepreneurially managed firms from those
that are more traditionally managed relate to strategic issues-
strategic orientation and
commitment to opportunity. An emphasis on strategy in
developing a deeper understanding
of entrepreneurship at the firm level is not surprising because
both entrepreneurship and
strategy have important implications for the performance of the
firm.
Strategic orientation refers to those factors that are inputs into
the formulation of the
firm's strategy. We can think of it as the philosophy of the firm
that drives its decision about
strategy; the way that it looks at the world and the way it looks
at itself and these percep-
tions are the driving factors behind the firm's strategy. The
strategy of entrepreneurial man-
agement is driven by the presence or generation of opportunities
for new entry and is less
concerned about the resources that may be required to pursue

such opportunities. Acquir-
ing and marshaling the necessary resources represents a
secondary step for the entrepre-
neurially managed firm and perhaps part of the thinking about
the implementation of
discovered opportunities. Resources do not constrain the
strategic thinking of an entrepre-
neurially managed firm. In contrast, the strategy of traditional
management is to use the re-
sources of the firm efficiently. Therefore, the type and the
amount of resources that the firm
has (or knows it can readily access) represent a key starting
point for thinking strategically
about the future of the firm. Only those opportunities that can
be pursued effectively using
existing resources are considered the appropriate domain of
further strategic thinking.
Both entrepreneurship and strategy are more than simply
thinking about the future of the
firm, they are also concerned with the firm taking action. It is
through its actions that a firm
is judged, often by analysis of its financial and competitive
performance. Entrepreneurially
and traditionally managed firms can be distinguished in terms of
their commitment to
opportunity. More entrepreneurially managed firms have an
entrepreneurial orientation
toward opportunity in that they are committed to taking action
on potential opportunities
and therefore can pursue opportunities rapidly, making the most
of windows of opportunity.
They also are able to withdraw their resources from a particular
opportunity and do so
rapidly, such that if initial feedback from the pursuit of an
opportunity provides informa-

tion suggesting that it might not be the right opportunity for the
firm, then management can
"pull the plug," minimizing losses from the initial pursuit. In
contrast, traditionally man-
aged firms tend to place considerable emphasis on information;
information is derived from
data collection and analysis of that information to determine,
say, the return on resources
to be deployed. If the traditionally managed firm chooses to
pursue the given opportunity,
it would be with a much larger initial investment and the
intention of remaining in that line
of business for a considerable time.
Commitment of Resources and Control of Resources
It is important to note that entrepreneurs still care about the
resources they must com-
mit to the pursuit of an opportunity, but they have an
entrepreneurial orientation toward
the commitment of resources that is focused on the opportunity.
Thoughts of resources
turn more to how the firm can minimize the resources that
would be required in the pur-
suit of a particular opportunity. By minimizing the resources
that the firm must invest to
initially pursue an opportunity, the amount of resources at risk
if the opportunity does
not "pan out" is also minimized. For example, entrepreneurially
managed firms may
"test the waters" by committing small amounts of resources in a
multistep manner with
minimal (risk) exposure at each step. This small and
incremental process of resource
commitment provides the firm the flexibility to change direction
rapidly as new information

entrepreneurial
orimtation toward control
of resources A focu s on
how to access others'
re source s
mtrepreneurial
orientation toward
management structure
More organic focus-has
few layers of bureaucracy
between top management
and the customer and
typically has multiple
informal networks
rnrrepreneurial
p ilosoplzy toward
r ·ards One that

compensates employees
llased on their
tribution toward the
.5scovery/generation and
!2;ploitation of
:JPPC>rtunity
Eot~P""'""hip, Eigh<h Eddioo I -- ... -- ------ -.. ··--·--- --. --- --
-· ----- - ---- -- ·---- --·· ·-l--
about the opportunity or the environment comes to light.
Psychologically, these smaller
sunk costs help stop entrepreneurially managed firms from
becoming entrenched with a
particular course of action, especially if that course of action
turns out to be a losing
one. In contrast, when traditionally managed firms decide to
commit resources to an op-
portunity, they do so on a large scale. That is, rather than put a
toe in to test the water,
they make calculations based on the ambient temperature over
the last week, the density
of the water, and whether a pool cover has been used or not. If,
based on that calcula-
tion, the water is theoretically deemed to be sufficiently warm,
the traditional manager
commits to that assessment with a full swan dive . Having made

a large commitment of
resources the firm often feels compelled to justify the initial
decision to commit, and so
the initial commitment gains momentum that maintains the
status quo of continual re-
source commitment. Therefore, a traditionally managed firm
uses in-depth analysis of
available information to go for it or not-and if they do go for it,
then the investment of
resources is not easily reversed.
Over and above their commitment of resources,
entrepreneurially and traditionally man-
aged firms differ in their control of resources. Entrepreneurially
managed firms are less
concerned about the ownership of resources and more concerned
about having access to
others' resources, including financial capital, intellectual
capital, skills, and competencies.
Entrepreneurially managed firms operate from the standpoint,
"Why do I need to control
resources if I can access them from others?" Access to resources
is possible to the extent
that the opportunity allows the firm to effectively deploy others'
resources for the benefit of
the entrepreneurial firm and the owner of the invested
resources. In contrast, traditionally
managed firms focus on the ownership of resources and the
accumulation of further re-
sources. They believe that if they control their own resources
then they are self-contained.
For these firms , the control that comes with ownership means
that resources can be de-
ployed more effectively for the benefit of the firm. They have
an entrepreneurial orientation
toward the control of resources.

Management Structure and Reward Philosophy
An entrepreneurial orientation toward management structure is
organic . That is, the
organizational structure has few layers of bureaucracy between
top management and the
customer and typically has multiple informal communication
channels. In this way,
entrepreneurially managed firms are able to capture and
communicate more information
from the external environment and are sufficiently "fluid" to be
able to take quick action
based on that information.
In addition, entrepreneurially managed firms are more
structured to make use of both
their internal networks (for example, through informal
communication channels at work)
and external networks (with buyers, suppliers, and financial
institutions), which provide
information and other resources important in the
discovery/generation and exploitation of
opportunities. In contrast, the traditionally managed firm has a
structure well suited for the
internal efficiencies of allocating controlled resources. There is
a formalized hierarchy with
clear roles and responsibilities , highly routinized work, and
layers of middle management
to "manage" employees' use of the firm's resources.
Traditionally managed firms have
structures that are typically inwardly focused on efficiency
rather than on detecting and rap-
idly acting on changes in the external environment.
Firms are organized not only by their structures but also by
their reward philosophy. The

entrepreneurially managed firm is focused on pursuing
opportunities for new entry that rep-
resent new value for the firm (and hopefully for others,
including society as a whole). It is
not surprising then that entrepreneurially managed firms have
an entrepreneurial philosophy
53
54 I '""'P~'""hip
-· ~--- --~~-- ··- --- ------- -·- ·-- ---· -· ---- ·- ··-··---· ·-----· ··-
-·--· -···-----·· ---·-···-··-· ------·--··· ---- ----- -- -·· ---- -
entrepreneurial
orientation toward
growth A focus ou
rapid growth
culture The
environment of a
particular organization
entrepreneurial
orientation toward
culture A focus on

encouraging employees
to generate ideas,
experiment, and engage
in other tasks that might
produce opportunities
toward rewards that compensates employees based on their
contribution toward the discovery/
generation and exploitation of opportunity. Given the organic
structure described earlier,
employees often have the freedom to experiment with potential
opportunities and are re-
warded accordingly. The traditionally managed firm rewards
management and employees
based on their responsibilities, where responsibilities are
typically determined by the
amount of resources (assets and/or people) that each manager or
employee controls. Pro-
motion is a reward that provides a manager control of even
more resources and, therefore,
further scope for rewards.
Growth Orientation and Entrepreneurial Culture
In a firm that has an entrepreneurial orientation toward growth
there is a great desire to
expand the size of the firm at a rapid pace. Although
traditionally managed firms may also
desire to grow, they prefer growth to be slow and at a steady
pace. That is, they prefer a
pace of growth that is more "manageable" in that it does not
"unsettle the firm" by putting

at risk the resources that the firm controls and thus does not put
at risk the jobs and power
of top management.
Culture also distinguishes entrepreneurially and traditionally
managed firms. A firm
with an entrepreneurial orientation toward culture encourages
employees to generate
ideas, experiment, and engage in other tasks that might produce
creative output. Such
output is highly valued by entrepreneurial management because
it is often the source of
opportunities for new entries. Opportunities are the focus of the
entrepreneurially man-
aged firm.
In contrast, the traditionally managed firm begins with an
assessment of the resources
that it controls, and this is reflected in its organizational
culture. So while a traditionally
managed firm is still interested in ideas, it is mostly interested
in ideas that revolve around
currently controlled resources. With only ideas considered that
relate to currently con-
trolled resources, the scope of opportunities discovered and
generated by a traditionally
managed firm is limited.
It is unlikely that there are many firms that are "purely"
entrepreneurially managed or
purely traditionally managed; most firms fall somewhere in
between. Table 2.2 presents a
scale for determining how entrepreneurially managed a
particular firm is. The higher the
score, the more entrepreneurially managed the firm is.

Causes for Interest in Corporate Entrepreneurship
Earlier we acknowledged that established firms can be
considered entrepreneurial, and we
highlighted some of the differences between firms that are more
entrepreneurially managed
and those that are more traditionally managed. This interest in
entrepreneurship within es-
tablished businesses has intensified due to a variety of events
occurring on social, cultural,
and business levels. On a social level, there is an increasing
interest in "doing your own
thing" and doing it on one's own terms. Individuals who believe
strongly in their own tal-
ents frequently desire to create something of their own. They
want responsibility and have
a strong need for individual expression and freedom in their
work environment. When this
freedom is not there, frustration can cause that individual to
become less productive or even
leave the organization to achieve self-actualization elsewhere.
This new search for meaning,
and the impatience involved, has recently caused more
discontent in structured organiza-
tions than ever before. When meaning is not provided within the
organization, individuals
often search for an institution that will provide it.
Corporate entrepreneurship is one method of stimulating, and
then capitalizing on, indi-
viduals in an organization who think that something can be done
differently and better.
'""'P""'""h;p, E;ghth Edd;oo I .. ··-··--· ----- -- --- ... ----- -- --- -
- ----+-

TABLE 2.2 Scale to Capture How Entrepreneurially a Firm Is
Managed
As we define our strategies, our major
concern is how to best utilize
the sources we control.
We limit the opportunities we pursue
on the basis of our current resources.
The resources we have significantly
influence our business strategies.
Since our objective is to use our
resources, we will usually invest heavily
and rapidly.
We prefer to totally control and own
th e resources we use.
We prefer to use only our own resources
in our ventures.
In exploiting opportunities, access to
money is more important than just
having the idea.
We prefer tight control of funds and
operations by means of sophisticated
control and information systems.
We strongly emphasize getting things

d on e by following formal processes
and procedures.
Ve strongly emphasize holding to tried
and true management principles and
dustry norms.
ere is a strong insistence on a uniform
an agement style throughout the firm.
ere is a strong emphasis on getting
e and staff personnel to adhere closely
- th eir formal job descriptions.
employees are evaluated and
pensated based on their responsibilities.
- • em ployees are usually rewarded by
- otion and annual raises.
- - em pl oyee's standing is based on the
nt of responsibility s/he has.
Strategic Orientation
12345678910
12345678910
12345678910
Resource Orientation
1 2 3 4 56 7 8 9 10

12345678910
12345678910
12345678910
Management Structure
12345678910
12345678910
12345678910
12345678910
12345678910
Reward Philosophy
12345678910
12345678910
12345678910
We are not constrained by the resources
at (or not at) hand .
Our fundamental task is to pursue
opportunities we perceive as valuable and
then to acquire the resources to exploit
them.
Opportunities control our business

strategies.
Since we do not need resources to
commence the pursuit of an
opportunity, our commitment of
resources may be in stages.
All we need from resources is the ability
to use them.
We like to employ resources that we
borrow or rent.
In exploiting opportunities, having the
idea is more important than just having
the money.
We prefer loose, informal control. There is
a dependence on informal relations.
We strongly emphasize getting things
done even if this means disregarding
formal procedures.
We strongly emphasize adapting freely to
changing circumstances without much
concern for past practices.
Managers' operating styles are allowed to
range freely from very formal to very
informal.
There is a strong tendency to let the
requirements of the situation and the
personality of the individual dictate
proper job behavior.

Our employees are evaluated and
compensated based on the value they
add to the firm.
We try to compensate our employees by
devising ways that they can benefit from
the increased value of the firm.
An employee's standing is based on the
value s/he adds.
55
56 I '"'"'""'"""'' -~-----~ ·---- ---------------------------------------·-
----
Growth is not necessarily our top objective.
Long-term survival may be at least as
important.
It is generally known throughout the firm
that steady and sure growth is the best
way to expand.
It is difficult to find a sufficient number
of promising ideas to utilize all of our
resources.
Changes in the society-at-large se ldom
lead to commercially promising ideas
for our firm .

It is difficult for our firm to find ideas
that can be converted into profitable
products/services.
Growth Orientation
12345678910
12345678910
Entrepreneurial Culture
12345678910
1 2 3 4 56 7 8 9 10
12345678910
that growth is our top objective.
that our intention is to grow as big and as
fast as possible.
We have many more promising ideas than
we have time and resources to pursue.
Changes in the society-at-large often give
us ideas for new products and services.
We never experience a lack of ideas that
we can convert into profitable
products/services.

Source: This table is taken from T. Brown, P. Davidsson, and J.
Wiklund, "An Operationalization of Stevenson's
Conceptualization of Entrepreneurship as
Opportunity-Based Firm Behavior," Strategic Management
Joumal22 (2001) , Appendix.
Most people think of Xerox as a large, bureaucratic Fortune 100
company. Although, in
part, this may be true of the $15 billion giant company, Xerox
has done something unique
in trying to ensure that its creative employees do not leave like
Steve Jobs did to form
Apple Computer, Inc. In 1989, Xerox set up Xerox Technology
Ventures (XTV) for the
purpose of generating profits by investing in the promising
technologies of the company,
many of which would have otherwise been overlooked.20 Xerox
wanted to avoid mistakes
of the past by having "a system to prevent technology from
leaking out of the company,"
according to Robert V. Adams, president of XTV.
The fund has supported numerous start-ups thus far, similar to
Quad Mark, the brain-
child of Dennis Stemmle, a Xerox employee of 25 years.
Stemmle's idea was to make a
battery-operated, plain paper copier that would fit in a briefcase
along with a laptop
computer. Although Xerox's operating committee did not
approve the idea for 10 years, it
was finally funded by XTV and Taiwan's Advanced Scientific
Corporation. As is the case
with all the companies funded by XTV, the founder and key
employees of a company own
20 percent of it. This provides an incentive for employees like
Dennis Stemmle to take the

risk, leave Xerox, and form a technology-based venture.
XTV provides both financial and nonfinancial benefits to its
parent, Xerox. The funded
companies provide profits to the parent company as well as the
founders and employees,
and now Xerox managers pay closer attention to employees'
ideas as well as internal tech-
nologies. Is XTV a success? Apparently so, if replication is any
indication. The XTV con-
cept contains an element of risk in that Xerox employees
forming new ventures are not
guaranteed a management position if the new venture fails. This
makes XTV different from
most entrepreneurial ventures in companies. This aspect of risk
and no guaranteed em-
ployment is the basis for AT&T Ventures, a fund modeled on
XTV.
What Xerox recognized is what hundreds of executives in other
organizations are also
becoming aware of: It is important to keep, or instill, the
entrepreneurial spirit in an organ-
ization to innovate and grow. This realization has
revolutionized management thinking. In
a large organization, problems often occur that thwart creativity
and innovation, particularly
in activities not directly related to the organization's main
mission. The growth and diver-
sification that can result from flexibility and creativity are
particularly critical since large,
corporate

entrepreneurship
Entrepreneurial action
within an established
organization
I
Entrepreneurship, Eighth Edition + 57
-·----- ·---···---------------·--· _____ .........._ __ _
vertically integrated, diversified corporations are often more
efficient in a competitive mar-
ket than smaller firms.
The resistance against flexibility, growth, and diversification
can, in part, be overcome
by developing a spirit of entrepreneurship within the existing
organization, called corpo-
rate entrepreneurship. An increase in corporate entrepreneurship
reflects an increase in
social, cultural, and business pressures. Hypercompetition has
forced companies to have an
increased interest in such areas as new product development,
diversification, increased pro-
ductivity, and decreasing costs by methods such as reducing the
company's labor force.
Corporate entrepreneurship is most strongly reflected in
entrepreneurial activities as
well as in top management orientations in organizations. These

entrepreneurial endeavors
consist of the following four key elements: new business
venturing, innovativeness, self-
renewal, and proactiveness. 21
New business venturing (sometimes called corporate venturing)
refers to the creation of
a new business within an existing organization. These
entrepreneurial activities consist of
creating something new of value either by redefining the
company's current products or
services, developing new markets, or forming more formally
autonomous or semiau-
tonomous units or firms. Formations of new corporate ventures
are the most salient mani-
festations of corporate entrepreneurship. Organizational
innovativeness refers to product
and service innovation, with an emphasis on development and
innovation in technology. It
includes new product development, product improvements, and
new production methods
and procedures .
Self-renewal is the transformation of an organization through
the renewal of the key
ideas on which it is built. It has strategic and organizational
change connotations and in-
cludes a redefinition of the business concept, reorganization,
and the introduction of sys-
temwide changes to increase innovation. Proactiveness includes
initiative and risk taking,
as well as competitive aggressiveness and boldness, which are
particularly reflected in the
orientations and activities of top management. A proactive
organization tends to take risks
by conducting experiments; it also takes initiative and is bold

and aggressive in pursuing
opportunities. Organizations with this proactive spirit attempt to
lead rather than follow
competitors in such key business areas as the introduction of
new products or services, op-
erating technologies, and administrative techniques.
Establishing a Culture for Corporate Entrepreneurship
How can the culture for corporate entrepreneurship be
established in an organization? In
establishing an entrepreneurial environment within an
established organization, certain fac-
tors and leadership characteristics need to be present. 22 The
overall characteristics of a
good entrepreneurial environment are summarized in Table 2.3.
The first of these is that the
organization operates on the frontiers of technology. Since
research and development are
key sources for successful new product ideas , the firm must
operate on the cutting edge of
the industry's technology, encouraging and supporting new
ideas instead of discouraging
them, as frequently occurs in firms that require a rapid return on
investment and a high
sales volume.
Second, experimentation-trial and error-is encouraged.
Successful new products or
services usually do not appear fully developed; instead, they
evolve. It took time and some
product failures before the first marketable computer appeared.
A company wanting to es-
tablish an entrepreneurial spirit has to establish an environment
that allows mistakes and
failures in developing new and innovative products . This is in
direct opposition to the es-

tablished career and promotion system of the traditional
organization. Yet without the op-
portunity to fail in an organization, few, if any, corporate
entrepreneurial ventures will be
developed. Almost every entrepreneur has experienced at least
one failure in establishing a
I
58 ~~. Entrepreneurship
TABLE 2.3 Characteristics of an Entrepreneurial Environment
• Organization operates on frontiers of technology
• New ideas encouraged
• Trial and error encouraged
• Fa ilures allowed
• No opportunity parameters
• Resources availab le and accessib le
• Multidiscipline teamwork approach
• Long time horizon
• Vo lunteer program
• Appropriate reward system

• Sponsors and champions available
• Support of top management
successful venture. The importance and the difficulty of
learning from the experience are
discussed in Chapter 1.
Third, an organization should make sure that there are no initial
organizational obstacles
that inhibit creativity in new product development. Frequently
in an organization, various
"turfs" are protected, frustrating attempts by potential
entrepreneurs to establish new ven-
tures. In one Fortune 500 company, an attempt to establish an
entrepreneurial environment
ran into problems and eventually failed when the potential
entrepreneurs were informed
that a proposed new product and venture was not possible
because it was in the domain of
another division.
Fourth, the resources of the finn need to be available and easily
accessible. As one cor-
porate entrepreneur stated, "If my company really wants me to
take the time, effort, and ca-
reer risks to establish a new venture, then it needs to put money
and people resources on the
line." Often, insufficient funds are allocated not to creating
something new, but instead to
solving problems that have an immediate effect on the bottom
line. Some companies-
like Xerox, 3M, and AT&T -have recognized this problem and
have established separate
venture-capital areas for funding new internal as well as
external ventures. Even when re-

sources are available, all too often the reporting requirements
become obstacles to obtain-
ing them.
Fifth, a multidisciplined team approach needs to be encouraged.
This open approach,
with participation by needed individuals regardless of area, is
the antithesis of the typical
corporate organizational structure. An evaluation of successful
cases of corporate entrepre-
neurship indicated that one key to success was the existence of
"skunkworks" involving rel-
evant people. Developing the needed teamwork for a new
venture is further complicated by
the fact that a team member's promotion and overall career
within the corporation are based
on his or her job performance in the current position, not on his
or her contribution to the
new venture being created.
Besides encouraging teamwork, the corporate environment must
establish a long time hori-
zon for evaluating the success of the overall program as well as
the success of each individual
venture. If a company is not willing to invest money without a
guarantee of return for 5 to
10 years, it should not attempt to create an entrepreneurial
environment. This patient atti-
tude toward money in the corporate setting is no different from
the investment/return time
horizon used by venture capitalists and others when they invest
in an entrepreneurial effort.
Entrepreneurship, Eighth Edition ~~59 .

Sixth, the spirit of corporate entrepreneurship cannot be forced
upon individuals; it must
be on a volunteer basis. There is a difference between corporate
thinking and entrepre-
neurial thinking (discussed earlier and summarized in Table
2.1), with certain individuals
performing much better on one side of the continuum or the
other. Most managers in a cor-
poration are not capable of being successful corporate
entrepreneurs. Those who do emerge
from this self-selection process must be allowed the latitude to
carry a project through to
completion. This is not consistent with most corporate
procedures for new product devel-
opment, where different departments and individuals are
involved in each stage of the de-
velopment process . An individual willing to spend the excess
hours and effort to create a
new venture needs the opportunity and the accompanying
reward of completing the proj-
ect. A corporate entrepreneur falls in love with the newly
created internal venture and will
do almost anything to help ensure its success.
The seventh characteristic of a good entrepreneurial
environment is a reward system.
The corporate entrepreneur needs to be appropriately rewarded
for all the energy, effort,
and risk taking expended in the creation of the new venture.
Rewards should be based on
the attainment of established performance goals. An equity
position in the new venture is

one of the best rewards for motivating and eliciting the amount
of activity and effort needed
for success.
Eighth, a corporate environment favorable for corporate
entrepreneurship has sponsors
and champions throughout the organization who not only
support the creative activity but
also have the planning flexibility to establish new objectives
and directions as needed. As
one corporate entrepreneur stated, "For a new business venture
to succeed, the corporate
entrepreneur needs to be able to alter plans at will and not be
concerned about how close
they come to achieving the previously stated objectives."
Corporate structures frequently
measure managers on their ability to come close to objectives,
regardless of the quality of
performance reflected in this accomplishment.
Finally, and perhaps most important, the entrepreneurial activity
must be wholeheartedly
supported and embraced by top management, both by their
physical presence and by mak-
ing sure that the necessary personnel and financial resources are
available. Without top
management support, a successful entrepreneurial environment
cannot be created.
Leadership Characteristics of Corporate Entrepreneurs
Within this overall corporate environment, certain individual
characteristics have been
identified that constitute a successful corporate entrepreneur.
As summarized in Table 2.4,
these include understanding the environment, being visionary
and flexible, creating man-

agement options, encouraging teamwork, encouraging open
discussion, building a coalition
of supporters, and being persistent.
TABLE 2.4 Leadership Characteristics of a Corporate
Entrepreneur
• Understands the environment
• Is visionary and flexible
• Creates management options
• Encourages teamwork
• Encourages open discussion
• Builds a coalition of supporters
• Persists
--~o_J Entrepreneurship
An entrepreneur needs to understand all aspects of the
environment. Part of this ability
is reflected in the individual's level of creativity, which
generally decreases with age and
education in most individuals. To establish a successful
corporate venture, the individual
must be creative and have a broad understanding of the internal
and external environments
of the corporation.

The person who is going to establish a successful new venture
within the firm must also
be a visionary leader-a person who dreams great dreams.
Although there are many defi-
nitions of leadership, the one that best describes what is needed
for corporate entrepre-
neurship is: "A leader is like a gardener. When you want a
tomato, you take a seed, put it in
fertile soil, and carefully water under tender care. You don't
manufacture tomatoes; you
grow them." Another good definition is that "leadership is the
ability to dream great things
and communicate these in such a way that people say yes to
being a part of the dream."
Martin Luther King, Jr., said, "I have a dream," and articulated
that dream in such a way
that thousands followed him in his efforts, in spite of
overwhelming obstacles. To establish
a successful new venture, the corporate entrepreneur must have
a dream and overcome ob-
stacles to achieving it by selling the dream to others.
The third necessary leadership characteristic is that the
corporate entrepreneur must be
flexible and create management options. A corporate
entrepreneur does not "mind the
store," but rather is open to and even encourages change. By
challenging the beliefs and as-
sumptions of the corporation, a corporate entrepreneur has the
opportunity to create some-
thing new in the organizational structure.
The corporate entrepreneur needs a fourth characteristic: the
ability to encourage team-
work and use a multidisciplined approach. This also violates the

organizational practices
and structures taught in most business schools that are apparent
in established organiza-
tional structures. In forming a new venture, putting together a
variety of skills requires
crossing established departmental structure and reporting
systems. To minimize disruption,
the corporate entrepreneur must be a good diplomat.
Open discussion must be encouraged to develop a good team for
creating something
new. Many corporate managers have forgotten the frank, open
discussions and disagreements
that were a part of their educational process. Instead, they spend
time building protective
barriers and insulating themselves in their corporate empires. A
successful new venture
within an established firm can be formed only when the team
involved feels free to disagree
and to critique an idea to reach the best solution. The degree of
openness among the team
members depends on the degree of openness of the corporate
entrepreneur.
Openness leads also to the establishment of a strong coalition of
supporters and encour-
agers. The corporate entrepreneur must encourage and affirm
each team member, particu-
larly during difficult times. This encouragement is very
important, as the usual motivators
of career paths and job security are not operational in
establishing a new corporate venture.
A good corporate entrepreneur makes everyone a hero.
Last, but not least, is persistence. Throughout the establishment
of any new venture,

frustration and obstacles will occur. Only through the corporate
entrepreneur's persistence
will a new venture be created and successful commercialization
result.
ESTABLISHING CORPORATE ENTREPRENEURSHIP
IN THE ORGANIZATION
Over and above the creation of an organizational culture and the
leadership characteristics
discussed so far, an organization wanting to establish a more
entrepreneurial firm must
implement a procedure for its creation. Although this can be
done internally, frequently it
is easier to use someone outside to facilitate the process. This is
particularly true when the
Em~p~"'""h;p, E;gh<h Edtt;oo I 61 -~----_. ---· --~- - --~ --- --·-
· --··-- ------··----- --- --~--- ---·---~-----·--·-···- ---·-·- -------- -
--- -·-----------·- ---- -~- -- ----·
top management
commitment Managers
in an organization
strongly supporting
corporate
entrepreneurship

organization's environment is very traditional and has a record
of little change and few new
products being introduced.
The first step in this process is to secure a commitment to
corporate entrepreneurship in
the organization by top, upper, and middle management levels.
Without top management
commitment, the organization will never be able to go through
all the cultural changes nec-
essary for implementation. Once the top management of the
organization has been com-
mitted to corporate entrepreneurship for a sufficient period of
time (at least three years), the
concept can be introduced throughout the organization. This is
accomplished most effec-
tively through seminars, where the aspects of corporate
entrepreneurship are introduced
and strategies are developed to transform the organizational
culture into an entrepreneurial
one. General guidelines need to be established for corporate
venture development. Once the
initial framework is established and the concept embraced,
corporate entrepreneurs need to
be identified, selected, and trained. This training needs to focus
on identifying viable op-
portunities and their markets and developing the appropriate
business plan.
Second, ideas and general areas that top management is
interested in supporting
should be identified, along with the amount of risk money that
is available to develop the
concept further. Overall program expectations and the target
results of each corporate venture

should be established. As much as possible, these should
specify the time frame, volume, and
profitability requirements for the new venture, as well as the
impact of the organization.
Along with entrepreneurial training, a mentor/sponsor system
needs to be established. With-
out sponsors or champions, there is little hope that the culture
of the organization can be
transformed into an entrepreneurial one.
Third, a company needs to use technology to make itself more
flexible. Technology has
been used successfully for the past decade by small companies
that behave like big ones. 23
How else could a small firm like Value Quest Ltd. compete
against very large money man-
agement firms, except through a state-of-the-art personal
computer and access to large data
banks? Similarly, large companies can use technology to make
themselves responsive and
flexible like smaller firms.
Fourth, the organization should be a group of interested
managers who will train em-
ployees as well as share their experiences. The training sessions
should be conducted one
day per month for a specified period of time. Informational
items about corporate entre-
preneurship in general-and about the specifics of the company's
activities in developing
ideas into marketable products or services that are the basis of
new business venture
units-should be well publicized. This will require the
entrepreneurial team to develop a
business plan, obtain customer reaction and some initial

intentions to buy, and learn how to
coexist within the organizational structure.
Fifth, the organization needs to develop ways to get closer to its
customers. This can be
done by tapping the database, hiring from smaller rivals, and
helping the retailer.
Sixth, an organization that wants to become more
entrepreneurial must learn to be more
productive with fewer resources. This has already occurred in
many companies that have
downsized. Top-heavy organizations are out of date in today's
hypercompetitive environ-
ment. To accommodate the large cutbacks in middle
management, much more control has
to be given to subordinates at all levels in the organization. Not
surprisingly, the span of
control may become as high as 30-to-1 in divisions of such
companies. The concept of
"lean and mean" needs to exist if corporate entrepreneurship is
to prevail.
Seventh, the organization needs to establish a strong support
structure for corporate en-
trepreneurship. This is particularly important since corporate
entrepreneurship is usually a
secondary activity in the organization. Since entrepreneurial
activities do not immediately
affect the bottom line, they can be easily overlooked and may
receive little funding and sup-
port. To be successful, these ventures require flexible,
innovative behavior, with the corporate

62 l Entrepreneurship
"""--c .. ..;....;-~.c.=--·~...:._..._.:,_;· --------·--·------------··-----
-----------------------·-----··----· -.---------- ----- ----·---------------
---- ------ ---------
entrepreneurs having total authority over expenditures and
access to sufficient funds. When
the corporate entrepreneur has to justify expenses on a daily
basis, it is really not a new in-
ternal venture but merely an operational extension of the
funding source.
Eighth, support also must involve tying the rewards to the
performance of the entrepre-
neurial unit. This encourages the team members to work harder
and compete more effec-
tively since they will benefit directly from their efforts.
Because the corporate venture is a
part of the larger organization and not a totally independent
unit, the equity portion of the
compensation is particularly difficult to handle.
Finally, the organization needs to implement an evaluation
system that allows successful
entrepreneurial units to expand and unsuccessful ones to be
eliminated. The organization
can establish constraints to ensure that this expansion does not
run contrary to the corpo-
rate mission statement. Similarly, corporate ventures that fail to
show sufficient viability
should not be allowed to exist just because of vested interests.
Problems and Successful Efforts

Corporate entrepreneurship is not without its problems. One
study found that new ventures
started within a corporation performed worse than those started
independently by entre-
preneurs.24 The reasons cited were the corporation's difficulty
in maintaining a long-term
commitment, a lack of freedom to make autonomous decisions,
and a constrained environ-
ment. Generally, independent, venture-capital-based start-ups
by entrepreneurs tend to out-
perform corporate start-ups significantly. On average, not only
did the independents become
profitable twice as fast, but they ended up twice as profitable.25
These findings should not deter organizations from starting the
process. There are
numerous examples of companies that, having understood the
environmental and entre-
preneurial characteristics necessary, have adopted their own
version of the implementa-
tion process to launch new ventures successfully. One of the
best known of these firms
is Minnesota Mining and Manufacturing (3M). Having had many
entrepreneurial suc-
cesses, 3M, in effect, allows employees to devote a percentage
of their time to inde-
pendent projects. This enables the divisions of the company to
meet an important goal:
to generate a significant percent of sales from new products
introduced within the last
five years. One of the most successful of these entrepreneurial
activities was the devel-
opment of Post-it Notes by entrepreneur Arthur Fry. This effort
developed out of Fry's
annoyance that pieces of paper marking his church hymnal
constantly fell out while he

was singing. As a 3M chemical engineer, Fry knew about the
discovery by a scientist,
Spencer Silver, of an adhesive with very low sticking power,
which to the company was
a poor product characteristic. However, this characteristic was
perfect for Fry's prob-
lem; a marker with a light-sticking adhesive that would be easy
to remove provided a
good solution. Obtaining approval to commercialize the idea
proved to be a monumen-
tal task until the samples distributed to secretaries within 3M,
as well as to other com-
panies, created such a demand that the company eventually
began selling the product
under the name Post-it.
Another firm committed to the concept of corporate
entrepreneurship is Hewlett-
Packard (HP). After failing to recognize the potential of Steven
Wozniak's proposal for a
personal computer (which was the basis for Apple Computer
Inc.), Hewlett-Packard has
taken steps to ensure that it will be recognized as a leader in
innovation and not miss future
opportunities. However, the entrepreneurial road at HP is not an
easy one. Such was the
case for Charles House, an engineer who went far beyond his
entrepreneurial duty when
he ignored an order from David Packard to stop working on a
high-quality video monitor.
The monitor, once developed, was used in NASA's manned
moon landings and in heart
IN REVIEW

S UMMARY
Eotr•P"''""h;p, E;ghth Ed;t;oo I 63
·-- . -- -- -·----· --- - -- --- - -·· ---·--- -· -- -- -~~-- - -
transplants. Although projected to achieve sales of no more than
30 units, these large-screen
displays have obtained good sales and profits.
IBM also decided that corporate entrepreneurship would help
spur corporate growth.
The company developed the independent business unit concept,
in which each unit is a sep-
arate organization with its own mini-board of directors and
autonomous decision-making
authority on many manufacturing and marketing issues. The
business units have developed
such products as the automatic teller machine for banks,
industrial robots, and the IBM per-
sonal computer. The latter business unit was given a blank
check with a mandate to get
IBM into the personal computer market. Corporate entrepreneur
Philip Estridge led his
group to develop and market the PCs, through both IBM's sales
force and the retail market,
breaking some of the most binding operational rules of IBM at
that time.
These and other success stories indicate that the problems of
corporate entrepreneurship
are not insurmountable and that implementing corporate
entrepreneurship can lead to new

products, growth, and the development of an entirely new
corporate environment and
culture.
Individuals become entrepreneurs because they intend to do so.
The stronger the inten-
tion to be an entrepreneur, the more likely it is that it will
happen. Intentions become
stronger as individuals perceive an entrepreneurial career as
feasible and desirable.
These perceptions of feasibility and desirability are influenced
by one's background
and characteristics, such as education, personal values, age and
work history, role mod-
els and support systems, and networks. Gender and race are also
characteristics of in-
dividuals that help us understand the entrepreneurial
phenomenon . Established firms
can create environmental conditions to motivate individuals
within their organizations
to act entrepreneurially, that is, conditions that allow
organizational members to per-
ceive entrepreneurial outcomes as feasible and desirable. Within
existing corporate
structures, this entrepreneurial spirit and effort is called
corporate entrepreneurship.
Corporate entrepreneurship requires an entrepreneurial
management approach. To
demonstrate this entrepreneurial approach, we contrasted
entrepreneurially managed
firms with traditionally managed firms on eight dimensions: (1)
strategic orientation,
(2) commitment to opportunity, (3) commitment of resources,
(4) control of resources,
(5) management structure, (6) reward philosophy, (7) growth

orientation, and (8) en-
trepreneurial culture. Fortunately, three leading Swedish
researchers developed a scale
that enables us to assess firms in terms of where they fall on the
scale between entre-
preneu rial and traditional management.
Organizations desiring an entrepreneurial culture need to
encourage new ideas and
experimental efforts, eliminate opportunity parameters, make
resources available, pro-
mote a teamwork approach and voluntary corporate
entrepreneurship, and enlist top
management's support. The corporate entrepreneur also must
have appropriate leader-
ship characteristics. In addition to being creative, flexible, and
visionary, the corporate
entrepreneur must be able to work within the corporate
structure. Corporate entrepre-
neurs need to encourage teamwork and work diplomatically
across established struc-
tures. Open discussion and strong support of team members are
also required. Finally,
the corporate entrepreneur must be persistent to overcome the
inevitable obstacles.
i
64 I Entrepreneurship -- ~----"------~-- -------- --- -
The process of establishing corporate entrepreneurship w ithin
an existing orga ni-
zation requires the commitment of management, particularly top

management. The
organization must carefully choose leaders, develop general
guidelines for venture
and delineate expectations before the entrepreneurial program
begins. Training ses-
sions are an important part of the process. As role models and
entrepreneurial ve n-
tures are introduced, the organization must establish a strong
organizational support
system, along with a syst em of incentives and rewards to
encourage team members. Fi-
nally, the organization should establish a system to expand
successful ventures and
eliminate unsuccessful ones.
RESEARCH TASKS
c 1. Speak to three entrepreneurs and find out what motivated
them to become entrepreneurs. Also find one person who, at one
time, conside red becoming an entrepreneur but did not do so.
Find out why.
2. Interview two women entrepreneurs and find out whether
they believe that the
tasks of being an entrepreneur are different for them than for
their male
counterparts. What are the advantages of being a female
entrepreneur? What
are the disadvantages of being a female entrepreneur? Are these
differences
substantial or minor?
3. Interview three individuals employed within the research and
development (R&D)
departments of large, well-established companies. From the
interview, gain an

understanding of what the company does to foster corporate
entrepreneurship,
what it does to inhibit corporate entrepreneurship, and what it
could be doing
better toward further enhancing entrepreneurship throughout the
whole
organization.
4. Search the Internet for four accounts of successful corporate
entrepreneurship.
What key factors for success are common across all these
accounts? Which are
unique? If one company can foster an entrepreneurial culture
within an existing
firm, what stops another company from copying its process and
taking away the
initial advantage?
5. Request the participation of managers from two companies
and then ask them to
fill out an "entrepreneurial management" scale (see Table 2.2).
Based on the scale,
which firm is more entrepreneurially managed? Does this
coincide with your "gut
feel" about the businesses?
CLASS DISCUSSION
,_tiff
1. We know that people with high IQ scores, or even high SAT
or high GMAT
scores, do not necessarily do any better than others in school.
How
predictive do you believe persona l ity tests are in predicting
success as an

entrepreneur? What are the dangers of classifying people using
personality
tests as "not very entrepreneurial" or "very entrepreneurial"?
What are the
potential benefits?
2. Why do role models have an impact on a person's decision to
become an
entrepreneur? Do you think that a person whose parent was an
entrepreneur
of a failed business is more or less likely to start his or her own
business than a
person whose parents were managers of large, established
companies?
I
--·---- -------- , ___ ·---- --·~-------~
3. To what extent do men and women differ as entrepreneurs in
terms of the
types of companies they create and manage, the industries in
which they
operate, the challenges they face, and their sources of
competitive advantage?
Are these differences greater or less than they were five years
ago? Are we
going to soon find that there are no differences between women
and men
entrepreneurs?

4. Isn't "corporate entrepreneurship" an oxymoron? Do the
characteristics of an
established organization, such as its routines and structure,
increase efficiency but
at the same time kill any entrepreneurial spirit? Is there any way
that a company
can have the best of both worlds?
5. Is increasing the entrepreneurial orientation of a firm always
a good thing? Or are
there circumstances or environments in which the further
pursuit of opportunities
can diminish firm performance?
SELECTED READINGS
Baron, Robert A.; and Gideon D. Markman. (2000). Beyond
Social Capital: How Social
Skills Can Enhance Entrepreneurs' Success. Academy of
Management Executive, vol. 14,
no. 1, pp. 106-16.
This article suggests that entrepreneurs' social skills-specific
competencies that
help them interact effectively with others-may play a role in
their success. A high
level of social capital, built on a favorable reputation, relevant
previous experience,
&~.wi direct ~'SOt'i'ci/1 cutrt'i!Cts; oftl!rr aS"S"ists
entrepreneurs Fn gaining access to ven-
ture capitalists, potential customers, and others.
Boden, Richard J.; and Brian Headd. (October 2002) . Race and
Gender Differences in
Business Ownership and Business Turnover. Business

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