Benefits of Corporate Entrepreneurship

A solution to grow and continuously develop large companies

In the late 1980’s many large corporations saw themselves being overtaken by much smaller firms due to their innovations and efficiency. This caused concern in all the quarters and forced management of large corporations to take some quick steps to keep their top positions in the market intact. This phenomenon could be especially seen in the technology industry where big and old companies like IBM, Siemens, and DEC etc. found it difficult to compete with smaller firms with lowers prices and new designs. Although this cannot be restricted to tech industry only, many financial and manufacturing firms faced the same dilemma. Some major banks in US bought out smaller banks in order to eliminate the competition and survive in a cut throat market. All these changes and effect of external factors forced these companies to restructure and become leaner with fewer management layers, inclination towards teams based structures and reliance on technology.

The words restructuring and downsizing could be heard in the halls of all the large corporations. One of the reasons is the competitive environment that is present today caused by a huge number of competitors tapping into each market because of globalization and customers demanding more from companies due to the increase in choices. It has been argued that companies in this highly competitive market environment, cannot just stand still, but needs to improve their ability to innovate and become more flexible in order to meet their customers’ needs. They have to create entrepreneurship culture in their organisation. Hence they need to implement an “entrepreneurial culture” in order to survive, and be competitive in this market as they cannot just rely on their past company behavior due to this ever changing market.

Large companies implementing entrepreneurial  culture can receive many benefits to help them tap into innovation and be competitive in this global market. If the company is encouraged to take risks, the employees are allowed to be creative and innovative, it becomes easier to generate new products for the market. It becomes clear from the convincing findings from academics and practitioners that there is a strong link between large organizations using corporate entrepreneurship and their growth and increased profitability due to it being a culture that increases pro-activeness within the organization.

Another benefit of corporate entrepreneurship is that it brings knowledge as everyone in the organization works towards the same goal. This creates valuable knowledge and understanding between all members. Thus the organization develops a continuous knowledge base of information that results in increased and better informed innovative behavior in decision making and risk taking. This increases the company’s competitiveness and ability to use this knowledge to outperform competition and to become the top player in the market.

The creation of new knowledge helps companies in three different ways. The first type is related to the currently existent products in the company. This helps in product refinement and product line extensions. The second knowledge is related to the integration of activities within a company. This is very important as it allows the company to use their resources in a unique manner which makes it hard for competitors to imitate. The third type is derived from the knowledge gained from the first two. The technical and integrated knowledge helps in the exploitation of future opportunities.

So what is corporate entrepreneurship and how it helps develop businesses further? To discuss this in detail, I invited Professor Paul Burns. You can watch the video of our discussion here.


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