Critical Evaluation Of A Definition Of Corporate Entrepreneurship Commerce Essay

The first part deals with the literature review of understanding and features that define entrepreneurship and corporate entrepreneurship. This is followed by critically evaluating the meaning of the definition of corporate entrepreneurship with help of an entrepreneur orientation framework and utilizing the case of Apple Inc. and Steve Jobs. The result is a comprehensive understanding and evaluation of various aspects of the linkage between corporate entrepreneurship, entrepreneurs and entrepreneur orientation. This part is concluded with a conclusion section. The second part focuses on my own strengths and weaknesses by utilizing a swot analysis framework and a mind map. This part is concluded with an action plan to address my areas of concern and finishes off with a conclusion about how I feel about entrepreneurship. The words corporate entrepreneurship will be referred to as CE in the essay.

PART 1

Entrepreneurship:

The corporate entrepreneurship will be referred to as CE in the essay.

Before discussing the field of CE, let’s understand the meaning of the term “entrepreneurship”. The earliest known mention of entrepreneurship can be traced to Richard Cantillion a French economist. According to him, an entrepreneur was a person with long sighted vision of achievement combined with confidence to work in situations where the dangers may be known but results are unclear. Entrepreneurship has meant different things to different writers (Gartner. W. B. 1990; McMullan & Long, 1990). According to Sharma, P., & Chrisman, S. J. J. (1999), the earliest reference of the term has been traced to Richard Cantillon’s work (1734)”. According to Gartner. W. B. (1990) there is two distinctive schools of thought on the connotation of entrepreneurship. The first school of researchers focused on the characteristics and belief system of the entrepreneurs and entrepreneurship. The second school focused on the consequences of entrepreneurship. Scholars who subscribe to the notion that entrepreneurship should be defined by its individualistic qualities seem to be the largest group.

Present entrepreneurship study began in the work of economist Joseph Schumpeter (1883-1950). In his works, Schumpeter argued that the key representatives of economic growth are the entrepreneurs who create new products, new methods of production, and other innovations that fuel the economic activity (Schumpeter, J. A., 1952). Schumpeter described entrepreneurship as a process of ‘creative destruction,’ in which the entrepreneur frequently transfers or destroys existing products or methods of production with new ones. Schumpeter saw this process constructively, because innovations typically represent an improvement in terms of product or process utility and as a result create greater buyer interest and overall economic activity. Though Schumpeter’s writings concentrated mainly on the doings of the individual entrepreneur, in many situations entrepreneurship is questionably a corporation-level phenomenon (Covin, J. G., & Slevin, D. P. 1991; Stevenson, H. H., & Jarillo, J. C. 1990). The role of entrepreneurship in reforming a corporation’s strategy suggests that the entrepreneurial activities are the outcome of the interaction of individuals and groups at various levels within the corporation. The conclusion of these and similar observations has been the conceptualization of entrepreneurship as a corporate-level phenomenon. To address only one definition of entrepreneurship would not be justifiable to other uses of the term. Hence it can be said the process of entrepreneurism by the entrepreneur is called entrepreneurship (Bridge, S et al 2003).

Corporate Entrepreneurship:

Understanding CE literature characterises a perplexing task. Since being a very broad concept, it tends to be studied at different levels within organization, under different terms and from different perspectives regarding the outcome of the entrepreneurial process for the organization where it takes place (Thornberry, N., 2001).

As Sharma, P., & Chrisman, S. J. J. (1999) broadly described CE, “the process whereby an individual or a group of individuals, in association with an existing organization, create a new organization or instigate renewal or innovation within that organization.” This definition includes two aspects of CE, a new business creation within existing organizations and renewal of the current strategy of the corporation. The vital notion is that corporations must capitalize on the entrepreneurial thinking of the managers to chase future evolution under changing and uncertain environments (Dess, G. G et al. 2003). Overall, studies suggest that CE activities are composed of three areas: idea generation, selection, and implementation or retention (Burgelman. R. A 1983, 1991; Dutton et al. 2001; Floyd, S. W., P. J. Lane 2000). The three areas are repeated in other studies but with different connotations. The majority of the studies highlight autonomy as an integral and central part of CE. Under conditions of change and uncertainty, providing autonomy to enterprising managers and encouraging them to elaborate on their own experience and ideas is a more promising approach than formal strategy development that relies solely on top management (Burgelman. R. A 1994, Mintzberg, H., A. McHugh. 1985). It has been argued that although CE is partially due to individual characteristics of entrepreneurs who hold positions of middle and operational managers , CE is also a product of autonomy set up by such organizational dynamics as control and reward systems, top management support, resource availability, a supportive organizational structure, and a risk-taking culture (Shimizu, K. K. 2012). It is significant to recognise that autonomy here is linked to an incentive for risk averse entrepreneurial managers to take a risk of thinking and experimenting with new ideas i.e. “think outside the box”.

According to Goodale, J. C et. al (2011) , CE is the pursuit of entrepreneurial activities and ingenuities that alters the present organization through strategic rejuvenation processes , it may enable the extension of the corporation’s scope of operations into new realms. Similarly Phan, P. H et. al (2009) has defined CE as the practice of organizational regeneration and transmits two diverse but connected phenomena. First is innovation and corporate venturing actions. Corporate venturing refers to creation of new businesses, which could either be internal or external. Example Apple Inc. creation of Macintosh, which divided the company into two group inside the company- Macintosh and the rest in early 1980. Second, CE symbolizes regeneration actions that enrich a corporations’ capacity to participate and take risks, which may or may not involve the addition of new businesses to a corporation. Here the example of second comings of Steve Jobs at Apple, where the development of iPod mp3 player regenerated the company in early 2000. According to Belousova O., et. al (2010), CE is initiated at the top level of the corporation in order to create a companywide strategy and gain competitive advantage. Some scholars have labelled CE as Intrapreneurship. According to Thornberry, N. (2001). Intrapreneurship is derived from the knowledge of using entrepreneurial skills, innovation, and start-up business practices within an organization. As we will see from the case study of Apple Inc., Late Mr Steve Jobs belonged to this category.

To sum up, the key notion that underlies the concept of CE or Intrapreneurship is a behavioural phenomenon and all corporations fall along a theoretical continuum that ranges from highly traditional to highly entrepreneurial. Entrepreneurial corporations are risk-taking, innovative, and proactive in their strategies. Similarly, entrepreneur managers are calculated risk takers, out of the box thinkers, confident individuals, who see opportunity where there is chaos. The combination strategy of organizations and individuals in the organizations who bear entrepreneur values is what creates an aura of CE.

Case Study: Apple Inc. – Steve Jobs

The primary rational behind selecting Apple Inc. as the case study to critically evaluate the definition is that Apple Inc. has over the years showed incredible amount of CE / Intrapreneurship. It will become clear that Apple’s success can be without a doubt is credited to Late Steve Jobs and his entrepreneurial skills which reflected the way Apple developed their strategies and hence becoming a corporate Entrepreneur organization.

CE as defined by Sharma, P., & Chrisman, S. J. J. (1999) is “The process whereby an individual or a group of individuals, in association with an existing organisation create a new organisation or instigate renewal or innovation within that organisation”. The essay will critically evaluate the definition above by drawing upon appropriate linkages from the literature, some of which has been discussed earlier in the paper and a framework. The framework is entrepreneur orientation by Lumpkin, G. T., & Dess, G. G. (1996). They stated that “The dimensions of a firm’s strategy-making processes may be viewed as encompassing the entire range of organizational activities that involve planning, decision making, and strategic management”. The reason for selecting the framework is that the techniques, ideologies, and decision-making styles leaders use are what drive a company to CE culture. Lumpkin, G. T., & Dess, G. G. (1996) have used the “Five dimensions-autonomy, innovativeness, risk taking, proactiveness, and competitive aggressiveness- have been useful for characterizing and distinguishing key entrepreneurial processes, that is, a firm’s entrepreneurial orientation (EO)”. From the case of Apple Inc. and Steve Jobs, we will see that having an entrepreneur at the heart of a company creates an aura of CE which drives entrepreneurial orientation.

Figure 2: Entrepreneur Orientation Dimensions – Based on Lumpkin and Dess (1996)

An EO denotes to the methods, ideologies, and decision-making activities that lead to new creation or innovation or renewal or all of them in an organization. This is in direct relation to the three elements “create a new organisation or instigate renewal or innovation” in the definition by Sharma, P., & Chrisman, S. J. J. (1999). Thus, entrepreneur along with CE culture of the organization creates entrepreneur orientation. The dimensions are in sync with the attributes of an entrepreneur personality. Therefore, to understand CE requires understanding corporate orientation, which requires understand the entrepreneur or entrepreneurs in the organization.

Steve Jobs was an entrepreneur who turned into an intrapreneur due to demands of the environment he worked in. According to Thornberry, N. (2001), “The concept of corporate entrepreneur, initially called ‘Intrapreneuring’ (Pinchot, 1985) is essentially start-up entrepreneurship turned inward”. Apple was established on April 1st, 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne to sell the Apple I personal computer kit. The kits were hand-built by Wozniak. Steve Jobs was booted in 1985 and returned as CEO in 1997. By the time of his death in 2012 at the age of 56, he had transformed a company that was in such weak financial shape that it accepted a $150 million investment from Microsoft, into the most profitable technology company in the world. A consummate showman, Jobs was adept at explaining his vision to a mass audience and he built Apple into one of the world’s most powerful brands. The company’s annual revenues climbed to $108 billion (CNN most admired company 2012). Jobs and wozniak , both had a steady job but their entrepreneurial needs were unsatisfied and hence this gave rise to Apple Inc.

But by 1980, increased competition pooled with poor sales of the Apple III and its follow-up, the LISA, resulted in loss of its market share to IBM. Faced with bad sales, Steve Jobs introduced the Apple Macintosh in 1984. The first personal computer to feature a graphical-user interface controlled by a mouse, the Macintosh was a true breakthrough in terms of ease-of-use. This move by Apple demonstrated innovativeness and risk taking at the time of adverse conditions (Shimizu, K. K. 2012). This was partially because of Steve Jobs entrepreneur skills and partially of the entrepreneurial corporate strategies in place, this resulted in CE. Steve Jobs and his handpicked group of twenty Apple Computer engineers detached themselves from the other Apple employees to innovatively and intrapreneurially create the Mac. The MAC group, under Steve Jobs’ personal leadership, operated totally autonomously and without meddling from anyone at Apple. According to Burgelman. R. A. (1983), “the motor of CE resides in the autonomous strategic initiative of individuals at the operational levels in the organization”. This is an example of how Steve Jobs exercised autonomy and disengaged from the organizational boundaries to lead a new business creation inside the same Apple. This action links up with the points of “Autonomous” and “Innovativeness” of the framework. It also fits in well with the definition of CE in question, since it created a new innovative business venture inside the organization.

However due to creative difference between Steve Jobs and the board , Jobs quit Apple in 1985 . Here we see that Steve Jobs need for autonomy and power got in the way and eventually resulted in his leaving his beloved Apple Inc. Entrepreneur need to be autonomous and locus of power can sometimes result in unfavourable results (Shimizu, K. K. 2012 ; McMullan, W. E., & Long, W. A. 1983; Cope, J. 2005 ; Politis, D. 2005 ). This marked a turbulent time for the company. It can be said that Apple lost it’s in the words of Schumpeter, J. A. (1952) “Creative destruction” entrepreneur and hence entrepreneur orientation was lost and so was CE culture. However as entrepreneurs are “wild spirits” and always looking for new challenges, later that year, using a share of the money from the stock sale, Steve launched NeXT Computer Co. with the objective of developing an innovative computer that would revolutionize higher education. Here we see the “never say die” spirit of the entrepreneur that Steve Jobs was. He despite all odds and failures stood back on his feet and created a new business venture. He portrayed attributes of innovativeness and proactiveness. He took a big risk with his savings and it could be argued that it was a calculated risk but others see it as a move to show his doubters that he can create “anything from nothing”.

Introduced in 1988, the NeXT computer boasted a host of innovations, But at $9,950, the it was too expensive to create enough sales to keep the company afloat. Undeterred, Jobs switched the company’s focus from hardware to software. He also began paying more attention to his other business, Pixar Animation Studios, which he had purchased from George Lucas in 1986. Here we see that Steve created branched out from the primary product and created an alternative business inside a business by utilizing his entrepreneurial skill of learning from failures (Politis, D. 2005). This again comes in line with the definition of CE and also with the framework. Steve Jobs could be said was a serial entrepreneur. He created a new organization and when the organization business was not enough for his appetite of entrepreneur orientation, he created a created a new business inside a business to satisfy the hunger of “creative destruction”. Following on the success, soon Apple bought NeXT for $400 million and re-appointed Jobs to Apple’s board of directors as an advisor to Apple chairman and CEO Gilbert F. Amelio. It was an act of desperation on Apple’s part. The physician of ancient Greece, Hippocrates in his aphorisms stated “For extreme diseases, extreme methods of cure, as to restriction, are most suitable.” Because they had failed to develop a next-generation Macintosh operating system and incurred heavy financial loss, the firm’s share of the PC market had dropped to just 5.3% , and they hoped that Jobs could help turn the company around . One could argue that the move to buy NeXT and bring back Steve Jobs was risky and innovative in some sense and that was Apple’s entrepreneur orientation as its best for many years. On the other hand one could say that emotional embedded reasons were behind Steve Jobs accepting the offer to work for Apple Inc. (Biniari, M. G. 2012).

Once again, head of Apple and having gained back the “locus of power” and “autonomy” , Steve went to his old style of leadership by example but the past taught him lessons and he fully learned from those mistakes like any other good entrepreneur would (Minniti, M., & Bygrave, W. 2001) . Jobs struck a deal with Microsoft to help ensure Apple’s survival. Next, Jobs installed the G3 PowerPC microprocessor in all Apple computers, making them faster than competing Pentium PCs. He also spearheaded the development of the iMac, a new line of affordable home desktops, which debuted in August 1998 to rave reviews .Under Jobs’ leadership, Apple returned to success, and by the end of 1998, boasted sales of $5.9 billion. Jobs’ first major innovation was the introduction in 2001 of the original iPod and iTunes music store, which altered how digital music was purchased. In January 2007, after years of rumours, Jobs rocked consumer electronics with the introduction of the first iPhone, which has since undergone four successive renovations. The device was not the world’s first touchscreen handset, but its design and easy-to-use user interface became the standard for all smartphone aspirants. According to Zahra, S. A. (1991), “market development can occur by locating new markets for existing products “. However in Apple’s iPhone case, they created market or developed a new market by innovating and reinventing the existing product itself. Apple’s reconfiguring of the smartphone market caused old-fashioned players, from Microsoft, Nokia, and RIM, to reconsider and alter their own mobile strategies in the wake of the disruption caused by the iPhone. Apple Inc. under Steve Jobs adopted an unconventionality style to strategic design to identify opportunities in its external environment and to position the company to seize these opportunities. Profoundly, this involved the leader, in this case Jobs to think not only about needs of stakeholders but also how the Apple can reinvent or create new markets, products, customers, and services (Minniti, M., & Bygrave, W. 1999). This is the key to the definition in question for the essay.

Nevertheless, Jobs stressed that the company had a longer-term strategy past personal computers, and that he was waiting for the next big thing, which turned out to be iPod and iPhone. Apple’s corporate entrepreneur strategy was heavily influenced by Steve Jobs personal values of regular and steady entrepreneurial way of doing things. It is important that CE requires consistency in approach and regularity in behaviour (Ireland, R. D et. al 2009). Jobs succeeded at seizing opportunities because he was able to recognize and initiating trends by taking a calculated risk at the time. He perceived himself akin to Henry Ford who, when asked about the of the automobile stated, “If I’d have asked my customers what they wanted, they would have told me a faster horse”. Hence, it can be said that Steve Jobs had a “knack” of seizing opportunities because he was a risk taker and so did Apple Inc. as a company. Apple Inc. embraced “creative destruction” by altering the rules of the game in an IT industry. It also involves the aptitude to recognize industry dynamics and the key success factors that drive performance. Apple is known to be obsessed about the strategic action of its competitors and encourages his employees to do the same so that the company does not become complacent. They with the help of “aggressive marketing” are always looking to “compete intensively”, another dimension of the framework that is very relevant in Apple’s strategy. This is very clear from the mp3 devices market, where iPod’s monopoly has resulted in lack of competitors in the sector.

Conclusion:

The definition of CE by Sharma, P., & Chrisman, S. J. J. (1999) and the framework of entrepreneur orientation and five dimensions by Lumpkin, G. T., & Dess, G. G. (1996) are intertwined with each other and Apple Inc. case study presented an accurate illustration to evaluate the two. The definition in terms of Apple Inc. and Steve Jobs can be stated as “The process whereby an individual or a group of individuals ( Steve jobs , Steve Wozniak ), in association with an existing organisation ( Apple Inc. , NeXT ) create a new organisation or instigate renewal or innovation within that organisation ( Macintosh , iPod , Ipad , iPhone , Pixar ) ” . Hence, it can be said that Apple Inc. is a company where CE / intrapreneurship environment exists in the manner that it deploys its strategic policies internally and externally. The key ingredients of entrepreneur orientation of autonomous, proactiveness, risk taking, innovativeness and competing intensively from the case study evaluation above can be understood as the central belief system of Apple Inc. strategies. These dimensions are of course synonymous with late Steve Jobs entrepreneurial skills.

One of the issues identified in the beginning of the essay was of difficulty in explaining CE from one definition point of view. However, with the use of the framework, case study and literature review on entrepreneurship and CE, it is evident that the definition by Sharma, P., & Chrisman, S. J. J. (1999) can be utilized to explain some aspects of CE but not all aspects. But then considering the complexities and nature of CE. Correctly stated by Hornsby, J. S et. al (1993), the process of CE is multidimensional and depends on interaction of several activities. Entrepreneurship, CE , entrepreneur orientation are all linked with each other but at the centre of it is an individual or group of individuals who are drivers of enterprising behaviour exhibited by the corporation (Barringer, B. R., & Bluedorn, A. C. 1999) . Charles Darwin famous misattributed quote “It is not the strongest of the species that survives, nor the most intelligent, but rather the one most adaptable to change” it is applicable to corporations to survive in a competitive market. They need to evolve and adept to the external and internal changes by embracing CE and we can see from the case study in this essay.

Part 2:

The entrepreneurial learning process can be defined as the consequence of a sequence of selections among opposing principles or activities, whose comparative impact over an individual’s decisions increases or decreases over time as new experiences happen (Arthur, W. B. 1993; Bullard, J., & Duffy, J. 1999; Riechmann, T. 1999 . I will utilize a mind map to demonstrate my possessed skills and lack of skills. I will use SWOT analysis to create a list of my key strengths, weaknesses, opportunities and any threats derived from the mind map. Following on, an action plan will address the areas of concern.

Mind Map:

The green qualities are the skills which I possess already. The red ones denote the skills and abilities which I lack or have not had a chance to demonstrate. The numbers on the red boxes are either “1” or “2” – urgency level illustration. This is further explained in the SWOT analysis and how to address the red boxes is explained in the action plan section below.

Figure 3: Mind map

SWOT Analysis:

Based on the above mind map, following is a SWOT analysis of my entrepreneurship capabilities.

Strengths:

I’m very creative and innovative in thinking. I often impress others with a different angle on things.

I often communicate with a lot of passion and belief in what I am conveying to others.

I generally have the ability to ask key questions to find out correct and alternative perspectives on the issues.

I love taking new challenges, in which I can enjoy the satisfactions of “doing something new”.

I tend to stick to taking calculated risks often.

I always see both sides of an argument therefore my views on issues are neutral.

I enjoy working under pressure and thrive on the stressful situations.

I often learn a lot from failures and try not to repeat them.

Always looking to broaden my horizon and learn new things.

Weaknesses:

I sometimes finish things quickly and the quality of my work suffers as a result.

This same need to get things done also causes me some distress when I have too many tasks.

Sometimes others perceive my confidence as arrogance.

There have been times where I have not been as self-reliant as I would like to be.

I enjoy working hard but also playing hard, sometimes the distractions can be much to handle.

Many times my competitive nature as resulted in bad relations with others.

My marketing skills are not developed and I lack the “knack” for it.

I have not been greatly tested on my leadership skills but it is something which I have enjoyed when given opportunities.

I can sometimes judge people very fast, which prevent any future relationships.

I have at times questioned the validity of tasks given to me by my managers and as a result spoiled my relations with them.

My need for autonomy and power can sometimes end up creating problems for team.

My nature of directly confronting people is sometimes seen as rude.

I have lacked empathy in many situations where it was needed to show concerns.

Opportunities:

The MBA degree should give me the platform to address many of the key weaknesses by indulging in group work and also day to day interaction with high level professors and colleagues from different backgrounds.

The various subject areas like entrepreneurship , marketing , organizational behaviour , human resource management are helping me understand the areas for concern and get an theoretical angle to the practical issues that I have .

The various articles that I am reading to do academic assignments are helping me realize my behaviour and thinking.

Threats:

The current economic climate has resulted in slow growth for the business and as a result I am unsure of finding a job where I can test my entrepreneur skills since I do not have the confidence to start my own business at the moment.

I hope that the weaknesses are improvable and do not become permanent personality traits in future.

Action Plan:

The opportunity of studying an MBA is the perfect platform for me to test different solutions to the areas of concern / weaknesses. I can also learn from others and pick up skills that I lack by utilizing the resources that have been provided to me in the next few months. As it says in the mind map, I need to focus my energy to the areas labelled “1” first, as I believe these are the skills that I need to work on in order to go to “2”. My first action should be to improve social skills, to empathise with others more by listening to their issues before judging them. Also I would need to portray my viewpoint by having a more non direct method of addressing problems with individual and not straight forward way, which makes me look arrogant. However, there are situations where one needs to be straightforward and not diplomatic, so I need to work on understanding which to use when. I haven’t had much opportunity of testing my leadership skills, one way to address this is by taking all the chances I get where I can behave like a leader and also show managerial skills.

It is a gradual and multidimensional process of obtaining the skills and I should focus on quality and not quantity (Hornsby, J. S et. al 1993). I should not be worried about failure, as pointed out by Minniti, M., & Bygrave, W. (2001), that entrepreneurs learn from mistakes and failures. They create a stock of information which depending on the circumstances can be used or in some cases modified to adept the situation. I should also work on improving the skills I already have, as I believe there is always a room for improvement. At the end of the day, nobody is perfect and it is our flaws that make us appreciate capabilities of others. One should always surround him or herself with people from all walks of life, as I believe that diversity is the key to achieving social skills and appreciating of views of others. The most important thing about the action plan is that, it is a dynamic one. The plan is depended on present situation I am in and will definitely change after this present situation of studying MBA is over. Unknown things always happen and I believe that to adept to change is the best action plan to have.

Conclusion:

From my personal analysis in part 2 and the reading done for part 1, I believe not everyone has the potential to be an entrepreneur or even wants to be an entrepreneur. Even individuals who have the necessary abilities are not necessarily made happy by being entrepreneurs. Persons who have entrepreneurial characteristics are often happier working for someone else than self-employed for various non-entrepreneur reasons. However, one can utilize their entrepreneurial skills to advance their own careers without taking the risks associated with being an entrepreneur. I have recognized that I have some of the characteristics discussed above but do not feel drawn to becoming an entrepreneur at this stage in my career. I feel the need to find ways to further my career goals by putting my entrepreneurial abilities to work by working for a company. Entrepreneurial learning is not branded by the philosophies of steadiness, reliability, or obviousness. Rather, it has been established by the concepts of transformation, incoherence, changes and risks (Cope, J. 2005). Some people are born with it and some learn to be entrepreneurs. I am certainly not a born entrepreneur but already on the learning road.