Intrapreneurship

Lecture One
Peter V. Rajsingh
 Course Objectives
• Become familiar with conceptual frames through which intrapreneurship/corporate entrepreneurship is
articulated and operationalized

• How is intrapreneurship/corporate entrepreneurship distinct from and related to entrepreneurship?

• How does the intrapreneur create value within the firm?

• What fosters and stymies intrapreneurial business activity?

• Understand how to deploy start-up pitches, design thinking, ideation, etc., in the intrapreneurial
context
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• Develop skills to initiate and analyze intrapreneurial activity; managing oneself as an intrapreneur
within the corporation, navigating corporate structures, systems and constraints

• Work collaboratively on the group intrapreneurial project

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Agenda
The Nature of the Firm
Competitive Advantage
The RBV and DCT
Disruptive Innovation / The Innovator’s Dilemma
Intrapreneurship / Corporate Entrepreneurship
The Existential Problem of Work

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What’s the purpose of a Firm?
Stockholder Theory E = A-L; Management are agents of shareholder principals, whose
sole goal is to maximize shareholder equity (Milton Friedman (1970) et al.)
Ian Mitroff (1983), R. Edward Freeman (1983), Donaldson and Preston (1995),Mitchell,
Agle, and Wood (1997), et al., posit that the Firm is responsible for creating value for a
variety of stakeholders (employees, customers, suppliers, financiers, communities, etc.);
Stakeholder Theory links to CSR, ESG, SDGs, etc.

Firms have Transaction Costs imposed by markets E.g., time and money to acquire
customers, enforce contracts, etc. (Ronald Coase (1937)). Transaction costs must be <
market price for the good/service
Firms exist to acquire and sustain Competitive Advantage which is the goal of strategic
management (Furrer (2008); Hoskisson et al. (1999); Porter (1996))

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Agenda
The Nature of the Firm
Competitive Advantage
The RBV and DCT
Disruptive Innovation / The Innovator’s Dilemma
Intrapreneurship / Corporate Entrepreneurship
The Existential Problem of Work

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 Competitive Advantage
Comparative Competitive Advantage is when a firm
can produce something more efficiently than a
competitor.

Differential Competitive Advantage is when its

products, services, and brand are perceived as
superior, unique, higher quality, etc., relative to peers in
the market.

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 Sources of Competitive Advantage?
“The process of Creative Destruction is the essential fact about capitalism.”
(Capitalism, Socialism, and Democracy, Joseph Schumpeter (1942))

Theory of market cycles – long cycle value creation is caused by innovation

Innovation and technological change come from entrepreneurs,

or wild spirits (Unternehmergeist “entrepreneur-spirit”)

Large companies (not just small firms) also are agents that drive innovation
in the economy because they have capital to invest in R&D

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Agenda
The Nature of the Firm
Competitive Advantage
The RBV and DCT
Disruptive Innovation / The Innovator’s Dilemma
Intrapreneurship / Corporate Entrepreneurship
The Existential Problem of Work

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 The Resource-Based View (RBV) – (Jay Barney (1991))
• Focuses on the internal characteristics of the Firm (vs external environmental models examining
opportunities and threats, etc.)

• Resource heterogeneity differentiates firms

• A firm is “bundles of resources” that bear upon its competitive advantage (CA) (includes all
idiosyncratic factors – assets, capabilities, organizational processes, firm attributes, information,
knowledge, etc.)

• When resources are: “valuable, rare, inimitable, and non-substitutable” (so-called VRIN
attributes), firms have sustainable competitive advantage (SCA) for ongoing value creation.
SCA means that a firm’s value-creating strategy is not being implemented by any current or
potential competitors and other firms are unable to duplicate the strategy

• Barney terms the phenomenon “causal ambiguity” when the linkage between resources
controlled by a firm and SCA is not understood or understood only imperfectly.

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 Critiques of RBV (E.g., Richard L. Priem and John E. Butler (2001))

• RBV is tautological (E.g., the statement “I need a cold drink with ice.”) If a resource
is valuable and rare, then it is potentially a source of competitive advantage. This is
necessarily true by logic (i.e., a tautology) if “valuable” and “competitive advantage”
are defined in the same terms

• With a robust theory, a relationship between two variables predicts, with some level
of accuracy, a third variable

• The RBV lacks robustness as a causal explanatory theory in terms of “if x then y”

• RBV is falsifiable

• RBV is not empirically testable

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 The RBV -> Dynamic Capabilities Theory (David Teece, Gary
Pisano, & Amy Shuen (1997) – DCT proposed as non-tautological
• A firm’s dynamic capabilities are specific strategic and organizational processes E.g., product
development, alliancing, and strategic decision-making capacities, etc., that create value for the firm within
the uncertainties of dynamic markets by manipulating resources into new value-creating mechanisms
(Kathleen M. Eisenhardt & Jeffrey A. Martin (2000))

• RBV breaks down in high velocity markets – when the duration of a competitive advantage is
unpredictable, time is an essential aspect of strategy, and dynamic capabilities that drive competitive
advantage are unstable and a challenge to sustain

• Dynamic capabilities are antecedent organizational and strategic routines by which managers alter their
resource base, acquire and shed resources, integrate them together, and recombine them-to generate new
value-creating strategies. As Porter has observed, in a world of strategic choices and trade-offs, building
true dynamic capability that brings about SCA is unlikely, if not impossible
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 Critiques of Competitive Advantage as a Concept
(Lieberman (2021)) etc.
• Theory should entail claims that are unambiguous where interpretation of terms,
premises and conclusions does not vary from scholar to scholar. The strategy field is
clearly failing to meet that test with respect to “competitive advantage. (Postrel (2018))

• Lieberman asserts that the term is too ambiguous, has too many definitions E.g., the
highest profit in the industry; above-average profit in the industry; sustained positive
economic profit’;the low-cost position (in an undifferentiated product industry); a gap
between customer value and cost that is larger than the gap of competitors, etc. Argues
that the term is not intellectually sustainable.

• He holds that CA is “not a suitable topic for research or even for advanced courses,
although it can serve as a legitimate overarching theme in strategy.”

• But are the causes for winning every reducible and stable – consider CA in other
contexts?
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 Core Tension
Despite the clear relationship between innovation and
competitiveness…

….most management tends to be skewed away from expending resources

in unpredictable novel ways; the market places a premium on smooth
predictable earnings; effective innovation activity is a challenge
(=organizational inertia, bias against risk-taking, intra-firm innovation
wars, etc.)!

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Agenda
The Nature of the Firm
Competitive Advantage
The RBV and DCT
Disruptive Innovation / The Innovator’s Dilemma
Intrapreneurship / Corporate Entrepreneurship
The Existential Problem of Work

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 The Innovator’s Dilemma (Clayton M. Christensen (1997))
Three Types of Innovation to invest in for growth

• 1. Disruptive Innovation (DI) – three concentric circles; Inner circle = niche customers who are
early adopters. Overwhelmingly, DI creates net growth and jobs and needs capital

• 2. Sustaining Innovation (SI) – making good products better to ensure company can maintain
margins; most innovation is SI; SI typically does not create jobs nor net growth; Two forms of SI –
incremental and radical, which are expected or unexpected by customers

• 3. Efficiency Innovation (EI) – focused on making more with less (EI eliminates jobs but creates
free cash flow) (Christensen & Van Bever, 2014)

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 The Paradox
• The Innovator’s Dilemma – across the sweep of business history, large unassailable
companies suffer dramatic reversals – doing the right thing (listening to your customers)
will kill you!

• Case Study: Japan from 1990s consistently recycling cheap capital into EI and SI, but no
DI is evident

• Incumbent firms have a large customer base that drive use of resources; BUT DI products
are niche and away from that large customer base

• A DI product initially has a relatively small impact on the company’s large established
market; its future is uncertain and it often fails; strategy and the market privilege SI & EI

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The Innovation S-Curve

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Mitigating the “Innovator’s Dilemma”
• Engage in DI within start-up ecosystem autonomous business units

• Develop DI with the “right” customers not the broad customer base, focusing on small wins with
niche customers

• Fail fast to find appropriate tweaks for the DI to give it traction

• Give the DI business unit access to full company resources, but make it independent of company
processes and culture

• When DI success occurs evolve the company and shut down redundant existing business units
that have become obsolete

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Key Takeaway: the autonomous, agile, fully
resourced DI business unit that has the
potential eventually to transform the entire
business!

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Agenda
The Nature of the Firm
Competitive Advantage
The RBV and DCT
Disruptive Innovation / The Innovator’s Dilemma
Intrapreneurship / Corporate Entrepreneurship
The Existential Problem of Work

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Intrapreneurship/Corporate Entrepreneurship
The French economist Jean Baptiste Say (1767-1832) coined the term entrepreneur around
1800. He defined it as someone who “shifts economic resources out of an area of lower
and into an area of higher productivity and greater yield.” (He is also known for Say’s Law
that supply creates its own demand)

Intrapreneurship, from Gifford & Elizabeth Pinchot (1978), is understood as exploiting

innovative opportunities that are economically advantageous within an established firm

Intrapreneur = an agent of an enterprise tasked with innovating vis-à-vis a product, service,

process etc., deploying company resources and functioning within corporate parameters

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Agenda
The Nature of the Firm
Competitive Advantage
The RBV and DCT
Disruptive Innovation / The Innovator’s Dilemma
Intrapreneurship / Corporate Entrepreneurship
The Existential Problem of Work

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Work – a pointless and meaningless enterprise?
David Graeber: A bullshit job is one that even the
person doing it secretly believes need not, or should
not, exist. If the job, or even the whole industry, were to
vanish either it would make no difference to anyone, or
the world might even be a slightly better place.

About 40% of workers surveyed state their jobs make

no difference. The big takeaway is not just that people
feel this way but that these feelings are actually correct
– the jobs really are just as pointless as the people
doing them think they are.

Source: Economist Interview (June 2018)

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Work => part of the S in ESG
& #8 of the SDGs

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 People-centric Mission Statements!
• To refresh the world…To inspire moments of optimism and happiness…To create value and
make a difference.
• To be Earth's most customer-centric company where people can find and discover anything
they want to buy online.
• To inspire humanity — both in the air and on the ground. Coca-Cola
• To connect the world’s professionals to make them more productive and successful. Amazon
• To build the web’s most convenient, secure, cost-effective payment solution. Jetblue
• Bring inspiration and innovation to every athlete in the world. LinkedIn
• We ignite opportunity by setting the world in motion. Paypal
• To accelerate the world’s transition to sustainable energy. Nike
• To create a better everyday life for the many people. Uber
• To inspire and nurture the human spirit – one person, one cup and one neighborhood at a Tesla
time.
IKEA
Starbucks
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The Antidote: Work must Create and Sustain the
Intrapreneurial Spirit – Unternehmergeist

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Seeing Things Differently or in Multiple Dimensions: Young or Old?

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Thank You!

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