This document provides an overview of a session on entrepreneurship and transformation. It includes a presentation outline on transforming organizations, capturing value from technical innovation, and entrepreneurship in the open innovation era. It also discusses theories of entrepreneurship research, dynamic capabilities, learning routines, and examples of how organizations have transformed. The session will involve a quick test, introductory discussion on views of entrepreneurship, and examples of transforming organizations. Readings are also assigned on innovation systems and industrial clustering.

1. Session 4 Entrepreneurship and
Transformation
Instructor
Prof. Dr. Bernhard Katzy
Prof.katzy@cetim.org
2012
www.CeTIM.org
Prof. Dr. Bernhard R. Katzy

2. Innovation Management
Innovation
System
Organization of Innovation
innovation Governance
Innovation
Transformation
and
entrepreneurship
Basic innovation concepts Introduction based on life cases
Innovation Theory Innovation Practice
Dominant theory, Main issues High tech entrepreneurship…
and developments of innovation
research
www.CeTIM.org Prof. Dr. Bernhard Katzy 1

3. Session 4: An overview
PRESENTATION OUTLINE
• Quick Test
• Transforming Organizations
• Capturing value from technical innovation and
dynamic capabilities
• Entrepreneurship in open innovation era
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4. Session 4 Reading engagement
QUICK TEST
2 questions 10 minutes
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5. Introductory Discussion
What is entrepreneurship for you?
VIEWS ON ENTREPRENEURSHIP
“Entrepreneurship is a normal human capacity, it can be
cultivated and developed” (Ludwig von Mises – Human
Action)
“ The pursuit of opportunity beyond the resources you
currently control” (HBR)
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6. Examples of transforming organizations
How about these organizations?
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7. Theories for Entrepreneurship Research
Entrepreneurship Research
Various theories employed to
Themes
examine the entrepreneurship
phenomenon
-Agency theory -Opportunity
-Social capital theory -Entrepreneurs
-Resource-based view -Entrepreneurship Process
-Dynamic capability -Firm Creation
-Opportunity Recognition -Economic Dynamics
-Creation theory -…
-…
However, so far, a strong theory dedicated to
entrepreneurship research is till missing
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8. Capturing value from technical innovation and dynamic
capabilities
TRADITIONAL PRODUCT DEVELOPMENT FUNNEL
Screen 1 Screen 2
Development Product
Projects introduction
Pre-development
Investigation
Source: New product development funnel, Wheelwright and Clark
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9. Capturing value from technical innovation and dynamic
capabilities
CAPTURING TECHNICAL INNOVATION
Distribution
Competitive
Manufacturing
Core
Technological
Know-how
Service
In Innovation
Others
Complementary
Technology
Source: Capturing Value from Technological Innovation: Integration,
Strategic Partnering, and Licensing Decisions by David J.Teece 1988
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10. Capturing value from technical innovation and dynamic
capabilities
CAPTURING TECHNICAL INNOVATION
• The competitive potential embedded in new technology
is not always captured by the innovator
• Channel Selection Issues (Core Capabilities)
 Contractual Mode
 Integrative Mode
 Mixed Mode
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11. Dynamic Capabilities
DYNAMIC CAPABILITY
 Are what enable a firm to integrate, build, and reconfigure internal
and external competencies to address rapidly changing environments
(Teece et al., 1997)
 Are the firm’s processes that use resources to match and even create
market change.
Are the organisational and strategic routines to learn routines
(Einsenhardt et al. 2000)
Process Path
-Coordination/Integration Path dependency
-Learning -Current position is shaped by the
-Reconfiguration and path it travelled
transformation -Routines constrain its future
behavior
Position
-Technological assets
-Financial assets
-Structural assets
-……
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12. Dynamic capabilities in details
DYNAMIC CAPABILITIES VARY IN DIFFERENT CONTEXT
Dynamic capabilities integrate resources
 Product development routines for profitable product and
services
 Strategic decision making
 …
Dynamic capabilities on reconfiguration resources
 replication and brokering routines used to copy, transfer,
and recombine resources for new products
 Scarce Resource allocation routines
 Patching routines to changing market
 …
others
 Knowledge creating routines in industries where cutting-
edge knowledge is essential
 Alliance and acquisition routines which bring external
resources into the firm, like BIO-TECH firms, or CISCO
 Exit routines as market undergo changes
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13. Capturing value from technical innovation and dynamic
capabilities
ENTREPRENEURIAL DYNAMICS AND DYNAMIC CAPABILITIES
Foundational
technology, business Entrepreneur
idea
Initial resource Human Research institutes,
base resources high-tech companies
Venture capital,
Financial resources corporate venture
capital
Source: Strehle, Katzy, Davila, Learning Capabilities and
the Growth of Technology-based new ventures
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14. Growth is driven by learning, not “more of the same”
LEARNING, DYNAMIC CAPABILITIES AND
THE OPERATING CORECAPABILITIES, AND THE OPERATING CORE
LEARNING,
Dynamic capabilities Double-loop
learning
• Creation, integration, and
adaptation of routines
• Path dependency
Management control system Single-loop
learning
• Information-based
• Documented
• Tool-supported
Primary processes and operating routines
• Execution of known procedures (e.g. order Economic
Resources
processing) rents
• Assurance of current profit
Source: Zollo and Winter (2002), Lant and Mezias (1992), Fiol and Lyles (1985), Argyris and Schön (1978)
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15. KNOWLEDGE CODIFICATION IN MANANGEMENT SYSTEMS
Budgeting example
Learning increase
Loose bundle Archive of costs, Frequent Budgeting
of bank slips revenues, bank budgeting, self- with IT Tool
slips, and notes made on Excel e.g. “SAP”
No process Process
Evolution of routines
MCS1
MCS are suited to observe
organizational learning in new ventures
1MCS are ”formal, information-based routines and procedures used by managers to maintain or
alter patterns in organizational activities’’ (Simons, Strategic Management Journal, 1994)
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16. The study setting
Munich
Silicon Valley (44+2* STBNV)
(72 STBNV)
• Questionnaire and interview with 1 to 3 top
managers
• Participating companies must be:
– Technology-based
– In a range of 10 to 150 employees
– Founded 1992 or later
– Private and independent or publicly-owned
– Located in regions with high entrepreneurial
activity, here Silicon Valley and Munich
* 2 TBNV went bankrupt during the observation
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17. PATH DEPENDENCY OF GROWTH
3500
3000
Revenue (EUR
2500
'000)
2000
1500
1000
500
0
Year 0 Year 1 Year 2 Year 3 Year 4
Cluster 1 Cluster 2 Cluster 3
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18. Entrepreneurship in Open Innovation Era
OPEN INNOVATION
Research licensing Development
Other firms’
Market
New Market
Spin-off
Internal
Technology Base Current Market
External
Technology Base Technology
insourcing
Labor mobility/ Venture Capital/ Numerous Start-ups/ research
conducted at Universities/……
Source: The era of open innovation by Henry Chesbrough 2003
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19. Entrepreneurship in Open Innovation Era
Corporate investment objective THE CASE OF BELL LAB
Strategic Financial - Till the end of 1999, The NVG of Lucent had
Link to operational capability
invested in 19 ventures which are located in
Tight
Driving Emergent 4 areas in the left.
Advances strategy Exploration of poten
of current business -tial new business
- The objectives: uncover new vehicles for
increasing its growth; develop new
Loose
Enabling Passive mechanisms for leveraging its unparalled
Complements strate- Provides financial technology; increasing comercialisation rate
gy of current business returns only
of its technology.
- Focus on internal ideas
Source: Henry W.Chesbrough 2002
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20. Entrepreneurship in Open Innovation Era
LUCENT NVG'S OPERATING MODEL
Source: Henry W.Chesbrough and Stephen J.Socolof
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21. Readings for session 5: Innovation System
S5 Innovation System
 Article 1: Michael E. Porter. Clusters
and The New Economics of
Competition. Harvard Business Review,
November- December, 1998.
 Article 2: Anna L. Saxenian. Comment
on Kenney and von BURG,
"Technology, Entrepreneurship and
Path dependence: Industrial
Clustering in Silicon Valley and Route
128". Industrial and corporate change,
Volume8, Number1, 1999.
Available on Blackboard
www.CeTIM.org Prof. Dr. Bernhard Katzy 20