CEMS BLOCK SEMINAR: Take‐home examination
Pauline GELDOF – CEMS Master 2
In today’s global economy, Corporate Entrepreneurship defined by Damanpour (1991) as the generation, development, and implementation of new ideas and behaviors by a company has become the only real source of competitive advantage for established organizations. Indeed, operating within an increasingly fast-moving environment, companies are forced to continually innovate and redefine the purpose and functioning of their organizations in order to survive. However, whereas most existing large firms recognize the importance of encouraging entrepreneurship and innovation within their organizations, individuals often face barriers in adopting entrepreneurial attitudes and behaviors. In this report, we will have a close look at these barriers by first identifying and describing them. Secondly, by emphasizing the most serious ones. And finally by making three suggestions about how to remove these barriers in organizations.
Identifying the key obstacles to Corporate Entrepreneurship in established organizations
According to the course book “Corporate Innovation & Entrepreneurship”1, there are hundreds of factors within a company that can constrain entrepreneurship. In order to capture them all, the authors suggest general categories into which they can be grouped. These categories are the following: systems, structure, strategic direction, policies, people and culture. They have been established based on an extensive review of the literature on corporate innovation and entrepreneurship, surveys of hundreds of medium-sized and large industrial organizations, and indepth assessments of three Fortune 500 companies. In the following paragraphs, the different categories of obstacles will be explained in more details. Examples will be provided for each of the categories. Systems The term Systems refers to the formal managerial systems that exist to provide stability, order and coordination to an increasingly complex internal corporate environment. The authors affirm that systems can be a strong obstacle to entrepreneurship. For instance, employee reward and measurement systems often encourage safe and conservative behaviors instead of innovative ones. Another example is planning: when the planning process is too rigid, organizations are not able to respond to new opportunities in a proactive way. Structures The structure of an organization can also represent an important barrier to corporate entrepreneurship. The authors suggest different aspects of the structure that can hinder entrepreneurship. For instance, the number of hierarchical levels: the more hierarchical levels there are inside an organization, the 1
Kuratko, D.F., Morris, M.H., Covin, J.G. 2011. “Corporate Innovation and Entrepreneurship”. South-Western Cengage
less the company is able to identify market opportunities, achieve management commitment, reallocate resources, take risks, or implement effective marketplace moves. Strategic Direction In this category, the authors underline the crucial role of top-management in achieving entrepreneurship throughout the company. Their role is particularly important given the fact that they act as role models for middle- and lower-level employees. In order to foster a culture of innovation and entrepreneurship, senior executives have to be strongly committed themselves to the principles of corporate entrepreneurship and be actively engaged in the entrepreneurial processes that take place throughout the company. Also, they should have a strong vision and they should clearly define specific goals to achieve innovation within the company as well as a strategy to achieve these goals. Policies And Procedures The...
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