ENTREPRENEURSHIP AND INNOVATION

Entrepreneurship and innovation

Intrapreneurship

Introduction

The purpose of intrapreneurship, as we understand it, is to harness the entrepreneurship spirit of the small organization and blend it into the culture, or set of shared assumptions, of the larger, more established firm. This paper will describe individual and organizational characteristics that facilitate innovation and foster a higher level of intrapreneurship within the firm. (Herbert, 1967)

In researching the literature on innovation two facts became apparent. First, a substantial literature was developed during the 1960s on such topics as “managing innovation,” “managing change,” and “technology transfer.” Except for differences in terminology, much of this material could have been called “entrepreneurship within the firm,” “the creative spirit within the organization,” or “intrapreneurship. Secondly, this pattern of research faded from the literature during the 1970s without finding its way into the conventional wisdom of practicing managers. (Shane, 2003)While the reasons for this lack of assimilation by managers can only be surmised, two come to mind. First, a “business as usual” attitude existed among American executives during the 1960s and early 1 970s because foreign competition had not yet become a major threat. Growth potential seemed to be limitless. This attitude no longer exists. Ten years of strong foreign competition and rapidly changing technologies, together with the emergence of energy and raw material shortages, fluctuating rates of inflation, and a sluggish economy, have altered these attitudes. (Stam, 2008)

Second, the results of research in the area of innovation were never really synthesized into managerially useful insights. After reviewing a substantial body of literature on innovation, we selected five references to develop a typology that would help put innovation into perspective. (Kersten, 2007)

The following section discusses the individual and organizational issues that affect innovation and places them in perspective. The final section discusses the implications of these findings for intrapreneurship management and offers four ideas for developing an intrapreneurship organization. (Hornsby et al, 2002)

Individual and Organizational Qualities in Innovation

While the definition of innovation varies from author to author, the following definition by Herbert A. Shepard (see reference in Exhibit 1) best fits the needs of business executives and the concept of intrapreneurship. Innovation occurs when a firm either “. . . learns to do something it did not know how to do before, and then proceeds to do it in a sustained way . . . Or . . . learns to not do something that it formerly did, and proceeds not to do it in a sustained way . . .“ Executives should think of innovation in the broadest context. Whether an idea was internal or external to the firm does not matter. (Gelderen, 2004)What matters is that the idea is new to the firm.

Although there is substantial literature on innovation, five sources taken together provide an excellent overall perspective of individual and organizational issues in innovation. The contribution of these sources is summarized in Exhibit 1. (Herbert, 1967)

Individual Qualities

The first individual variable, Belief in innovation, refers to a person who believes that innovation is ...