Chapter — Why Corporations fail in creating new businesses

Large businesses fail at creating new businesses as they are organizationally unwilling to stage the investment with stepping-stones and be ruthless about abandoning the project midstream.

Executives do not want to be associated with failure, in the interest of career progression, so always ask for full funding,

Can compartmentalize the venture with different organization and compensation structures, to incentivise risk taking. However, this may lead to resentment and hostility from the established business units.

Instead, large corporation outsource new product and service development to early-stage ventures. Acquiring new companies if the most effective way to engage in innovation. After acquirement, the corporation can mass produce and distribute widely the product more cheaply. This form a symbiotic relationship between small ventures and corporations.

Entrepreneurial freedom vs corporate bureaucracy, financial upside vs limited compensation in corporations, fear of failure vs safety in corporations, do-anything persistence vs fear of getting fired and long-term horizon vs pressure for quarterly results.

Innovation, creative destruction, opportunity, job creation etc are descriptions of the results of entrepreneurship and not…

Jeffrey G. Covin and Morgan P. Miles

Innovation underlies all forms of corporate entrepreneurship. However, corporate entrepreneurship is reserved for those who redefine their markets and competitive arenas.

No consensus on what it means for a firm to be entrepreneurial.

Corporate entrepreneurship — established organisation enters a new business (corporate venturing), individuals champion new product ideas (intrapreneurship) or an entrepreneurial philosophy exists (entrepreneurial management). Also, risk-taking behaviour, but overall, there is a difference in opinion.

Lumpkin and Dess identified five dimensions of entrepreneurial orientation — autonomy, innovativeness, risk taking, proactiveness and competitive aggressiveness.

This article believes corporate entrepreneurship requires the presence of the objective of sustaining high performance or improving competitive standing through actions that radically energize organisations.

In the case study ‘Avatech’ you encountered an entrepreneurial company that had to choose between four distinct commercialization strategies. By what general principles should companies choose between such strategic choices? How do strategic and financial choices interact?

Avatech have four different distinct commercialisation strategies including an intellectual property strategy, a…

The intellectual property for Zoona would require an investment in control whilst seeking to collaborate with competitors (Gans, Stern and Wu, 2016). This will be an inherently difficult strategy to implement for many reasons, firstly the idea will be difficult to protect using a patent. Patenting requires that the idea…

Gans, Stern and Wu represent four strategies, namely: intellectual property, architecture, value chain and disruption strategies. They are represented as quadrants on a compass which has two dimensions: competition/collaboration and control/execution.

The intellectual property (IP) strategy must involve collaboration with those in industry. This is because the IP strategy relies…

Danial Farooq

PhD student in Chemistry at UCL. MEng Grad from Oxford with specialisation in Chem Eng and Entrepreneurship and Innovation. Tennis player and Arabic student.

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