Corporate Entrepreneurship (ANSWERED)

QUESTION

Individual Assignment Instructions (Corporate Entrepreneurship)

Firm BCD is a large automotive manufacturing firm specialising in medium priced automotive cars and parts. It has a strong engineering tradition and highly specialised workforce, particularly with electrical, mechanical, and more recently software engineer training. The firm has a large industry park hub region where various components of the cars are designed and manufactured. The firm has a traditional structure with hierarchy and projects are led by technical experts, with minimal management input. Due to the historic way of working, there is little engagement between specialisations during product development, particularly the newer software specialists. There has been slow loss of market share in sales and a growing sense that the products are not meeting customer expectations in terms of ease of use and integration into their modern, connected lifestyle. There is also growing pressure from shareholders to reduce their carbon footprint and develop a more sustainable way of working.

The board wants to create a new strategy and refresh their way of working, their products and how they position themselves in the market. The board is open to suggestions and willing to overhaul their way of working and management practices.

Your assignment is to write a document aimed at persuading the board to adopt corporate entrepreneurship practices in the firm to solve its current problems and to create competitive advantage. To be persuasive, you must support your arguments with management theory and provide practical examples to illustrate your points. You must, to the best of your ability, provide the board with specific options of actions they could carry out to make the firm more entrepreneurial in the short and long terms.

Word Count: 2500 Words

Assessment Criteria

To successfully pass this assessment, you need to have:

Identified important features of corporate enterprise. Describes how corporate features influence their entrepreneurial ability in a clear and concise manner. (Comprehension) (25%)

Presented reasonable arguments and evidence for the claims they are making about a new approach for the company to increase their corporate entrepreneurship, for example how this approach is increasing the entrepreneurial intensity of the company. Able to present a concluding synthesis across recommendations being suggested to the company. (Analysis) (30%)

Shows ability to evaluate company related information and link this to corporate entrepreneurial activity. This might include demonstrating insight into how a stated corporate structure or resource allocation might foster innovation or encourage appropriate risk taking. Demonstrates insight into scholarly literature and its application to the assignment. (Critical Evaluation) (30%)

Presents well-structured essay, including organisation of the text, appropriate grammar, sentences and spelling. Language is appropriate for formal nature of the text, for example, avoiding use of slang. (Academic writing)

ANSWER

Corporate Entrepreneurship

Technological advancement and globalization are changing how businesses are conducted. The world is experiencing a new economic development characterized by innovation and entrepreneurship. As new ventures, technology, and business products explode worldwide, businesses can either innovate or become innovation victims. Corporate entrepreneurship can help organizations innovate and retain a sustained competitive advantage (Kuratko et al., 2015). Given the dynamism of the business environment, the lack of organizational entrepreneurship can be a recipe for disaster. Therefore, business managers must pursue CE to sustain a competitive advantage in the marketplace. This paper recommends specific corporate entrepreneurship practices BCD can undertake to resolve its current problems and achieve a competitive advantage in the market.

The first pathway BCD can undertake to foster corporate entrepreneurship (CE) is redesigning its organizational structure. The company’s current structure emphasizes specialization, i.e., technical specialists are responsible for leading corporate projects. Unfortunately, this functional specialization often leads to fragmented focus and silo thinking (Schönwälder & Weber, 2022). Schönwälder and Weber (2022) state that a functional focus is restrictive and a strategic barrier to sustainable business innovations. This siloed approach could be why BCD’s products are not meeting customer expectations. Restructuring BCD’s organizational structure can help resolve these problems and lead to a sustained competitive advantage (Kuratko et al., 2015). By redesigning its organizational structure, BCD can create an environment conducive to corporate entrepreneurship.

Entrepreneurship thinking is not confined to a single functional area but spans the whole organization. It involves cross-functional collaboration, which can help break down silo-thinking by leveraging internal knowledge to support a firm’s innovation capacity (Schönwälder & Weber, 2022). BCD should have an organizational structure that supports corporate entrepreneurship. It can achieve by creating a business unit dedicated to business innovation and sustainability. Schönwälder and Weber (2022) refer to these units as corporate venture units; they claim they are essential prerequisites for sustainable CE projects. This business unit will be responsible for developing and launching new products, ventures, and procedures through radical innovations at BCD. Studies indicate that these units typically help firms innovate faster and have become valuable sources of business innovation (Schönwälder & Weber, 2022 & Tseng & Tseng, 2019). These studies imply that establishing a business unit dedicated to entrepreneurship will help BCD innovate and achieve a competitive advantage in the market.

BCD’s corporate venture unit will consist of a specialized cross-functional team. BCD’s cross-functional teams can consist of employees from different functional areas of a firm, e.g., software development, product development, R & D. This innovation team (I-team) will work with other employees to exploit the organization’s strengths and identify areas for potential growth. They are change agents and innovation promoters. They can endorse and refine entrepreneurial activities and identify, obtain, and deploy resources to pursue these initiatives. They must have the core competencies to recognize, refine, and convert entrepreneurial opportunities into one that best suits the organization. This team will also be responsible for endorsing entrepreneurial initiatives to the senior executives, ensuring that entrepreneurial activities emerging from lower levels of the firm are supported. They should also have the capacity or authority to redirect resources from existing operations to entrepreneurial initiatives with strategic value for BCD. Their primary responsibility is to cultivate and execute entrepreneurial ideas. According to Tseng and Tseng (2019), these I-teams have strong potential for generating innovative results. They can create new knowledge, advanced technologies, and innovations to improve a firm’s products and performance. (Tseng & Tseng, 2019). The team will help break down silo thinking, encourage knowledge sharing between specializations, and promote a more integrated innovation approach (Schönwälder & Weber, 2022). Establishing this cross-functional team might help BCD to develop products that meet customer expectations and enhance its performance.

Besides establishing a corporate venture unit and cross-functional team (I-team), BCD should ensure the team has diverse competencies. Schönwälder and Weber’s (2022) study found that although corporate venture units provide dynamic capabilities to a firm, they need expert advice on sustainability issues. Due to the existing sustainability challenges, the authors highlighted the need to include sustainability experts in the corporate venture unit (Schönwälder & Weber, 2022). Therefore, BCD should consider hiring a sustainability expert and including them in their corporate venture unit. This expert will identify new sustainable working methods that may reduce the company’s carbon footprint and adverse environmental impact.

Next, BCD should adopt a goal-setting approach. According to Schönwälder and Weber (2022), a company that aims to foster corporate entrepreneurship must have a clear long-term strategy. This paper recommends establishing sustainability-related targets for BCD’s corporate venture unit to increase sustainable CE activities. The first goal setting for CE projects is the ideation phase, which focuses on sustainability goals and corporate innovation. The second is idea-building and testing, and the third is success measurement using key performance indicators such as (carbon footprint reduction, social indicators, etc.). This recommendation aligns with empirical research highlighting the importance of simultaneously setting and validating innovation goals (e.g., value proposition, financial and technical feasibility, and sustainability) (Schönwälder & Weber, 2022).

Organizational Culture

The second pathway BCD can foster CE is embedding entrepreneurship thinking and behaviors in its corporate culture. Arabeche et al.’s (2022) study found that organizational culture mediates the positive relationship between entrepreneurial orientation and business performance. Corporate entrepreneurship is rooted in organizational culture and can help a firm gain a competitive advantage in the market (Arabeche et al., 2022 & Behram & Özdemirci, 2014). These benefits imply that BCD must adopt a culture that supports corporate entrepreneurship. According to Arabeche et al. (2022), an organizational culture supporting CE is characterized by innovative behaviors, employee participation & engagement, information-sharing, and risk propensity. Employees have the flexibility, freedom, and autonomy to create new working ways, think creatively, share ideas, and create new internal ventures (Arabeche et al., 2022). To this end, BCD must restructure its organizational practices to create a culture of innovation, risk-taking, and proactivity.

The first step toward this culture is changing employees’ behaviors, values, and beliefs of corporate entrepreneurship. According to Kuratko et al. (2015), corporate entrepreneurship cannot materialize without nurturing entrepreneurial behaviors in the organization. Kuratko et al. (2015) list five conceptual factors that can help companies to nurture and support entrepreneurial behaviors. These include top management support, reward and resource availability, organizational structure and boundaries, risk-taking, and time availability. BCD can invest in these conceptual factors to nurture entrepreneurial behaviors in the organization.

Managerial support is needed for entrepreneurial behaviors to materialize in an organization (Kuratko et al., 2015). The challenge here is to create an environment friendly to innovation and corporate entrepreneurship. Employees should be able to step up and innovate through their assigned jobs. Managers can nurture these behaviors through autonomous and induced approaches. The autonomous approach refers to entrepreneurial behaviors that emerge informally and are typically initiated by team members and individuals anywhere in the firm. Conversely, the induced approach involves a formal, top-down approach whereby the firm’s senior-most managers consciously establish organizational structures that encourage and incentivize flexibility, autonomy, and experimentation. Autonomous strategic behaviors can emanate from an organizational culture that celebrates adaptability and risk-taking, while induced entrepreneurial behaviors emanate from managerial support.

BCD must create a reward system for employees with outstanding performance. Tseng and Tseng (2019) indicate that rewarding systems are imperative because CE heavily depends on risk-takers. According to the author, rewarding is a positive reinforcement that can encourage entrepreneurial behaviors and contribute to firm success (Tseng & Tseng, 2019). These reward systems include intra-capital, i.e., capital set aside for advancing innovative ideas. Wolcott and Lippitz’s framework identified four ways corporate entrepreneurship is funded: enabler, opportunist, producer, or advocate.

In the enabler model, firms encourage entrepreneurial proactivity by providing economic support and leadership attention. In the advocate model, I-teams and venture experts campaign to win support and achieve funding. Opportunist models do not have dedicated corporate venture units, and projects are funded ad-hoc. Empirical studies show that the producer models are the most effective in evoking disruptive innovation (Schönwälder & Weber, 2022). In this model, the dedicated department is equipped with resources to drive CE initiatives. To this end, this paper advises BCD to provide the new business unit with resource authority to fully exploit the company’s financial and innovative capacities to create new ventures, products, and systems.

BCD should also replace its hierarchical structure with adhocracy to encourage entrepreneurship thinking at the organization. Various studies have demonstrated that adhocracy has a strong and positive effect on corporate entrepreneurship compared to hierarchical cultures (Behram & Özdemirci, 2014, & Zeb et al., 2021). According to Zeb et al. (2021), the hierarchical structure has many formalities, and decision-making is centralized and slow. These hierarchical factors impede innovation.

In contrast, adhocracy has the highest positive impact on business performance due to its emphasis on individuality, flexibility, and adaptability (Behram & Özdemirci, 2014). It originated from the word ad-hoc, implying something dynamic or temporary. Adhocracies can change quickly, adapting to new circumstances as they arise. According to Behram and Özdemirci (2014), the adhocracy culture is characterized by flexibility, creativity, and entrepreneurship. Therefore, BCD should adopt adhocracy as its operational culture instead of the hierarchical one.

BCD must de-emphasize formal authority and micro-management to have this adhocracy culture. According to Gurjar et al. (2022), micromanagement is the antithesis of innovation and creativity. These formal authorities create a culture of fear, impeding innovation and creativity. Therefore, instead of the formal hierarchical structure, BCD must adopt an informal structure characterized by a minimal formalization of work procedures, roles, and behavioral expectations. In an organic structure, approved procedures and long-term planning are insignificant because projects can be rerouted at any moment (Gurjar et al., 2022). Also, employees can solve problems as they see fit depending on the current situation.

Adhocracy is characterized by flexibility and participation, but these features are absent in BCD. The case study indicates that there is little engagement between specializations. Furthermore, technical experts lead projects, implying that the company lacks flexibility. To have an adhocracy culture, BCD must eliminate these work practices. The new organizational culture must eliminate rigid authority and standardized procedures (Gurjar et al., 2022). Technical and software specialists will not work alone but collaborate with other team members to lead projects and solve problems (Gurjar et al., 2022). The organization will adopt a shared leadership mindset, allowing employees from different specialties to work on a single project.

Every employee can work with the I-team and the corporate venture unit. BCD can assign employees from different departments, e.g., software development, product development, sales, marketing, and R & D, to work together on a single project. Whenever an innovative project is to be undertaken, a task force is formed and disbanded when the project ends. BCD can also organize hackathons where employees from different departments converge to generate new ideas and business solutions. Other avenues could involve encouraging cross-industry exchange, e.g., annual seminars to encourage external collaboration. According to Schönwälder and Weber (2022), these initiatives can foster entrepreneurship spirit and innovation in a company. These practices will encourage the exchange and sharing of best practices between individuals from different departments and specializations to work together, enhancing firm performance.

Tesla is one of the most successful automotive companies in the industry with an adhocracy culture. Five features characterize Tesla’s organizational culture: “Move fast, do the impossible, constantly innovate, reason from “first principles,” think like owners, and we are All In” (Gurjar et al., 2022, p.22). According to Gurjar et al. (2022), Tesla Inc’s employees are expected to respond rapidly to market trends and changes. For example, they typically create cutting-edge products that outmatch their competitors, giving Tesla the business resilience required to respond to the ever-changing market demands. Gurjar et al. (2022) also indicate that Tesla continuously emboldens and empowers its employees to be creative and seek solutions through training and managerial support. According to Gurjar et al. (2022), Tesla managers value accountability but avoid micro-managing. The company has adopted the belief that “there is no wrong answer when you do something that has never been done before.” This managerial support, coupled with the adhocracy culture, is responsible for Tesla’s consistent innovation and competitive edge.

Likewise, BCD’s managers must adopt this culture. They can use Lewin’s change model to guide the cultural change. The rationale for using this model is that innovations are always disruptive to existing operations (Kuratko et al., 2015). Schönwälder and Weber (2022) also report that firms must overcome institutional inertia to create radical innovations. According to Kurt Lewin, change is often accompanied by uncertainty, and employees may be naturally concerned about their competencies and ability to cope with the change (Hussain et al., 2018). These perceptions may influence them to resist change and their willingness to take calculated risks on the job. This willingness affects their risk propensity and tendency to act on entrepreneurial opportunities. As such, BCD must audit its internal climate and determine to what extent it supports or discourages entrepreneurial behavior.

BCD’s managers can use the Corporate Entrepreneurship Assessment Instrument (CEAI) tool to analyze the organizational climate for CE. The tool features 48 Likert-style questions that analyze the five antecedents of entrepreneurial behavior. These include management’s support ( willingness of the company’s top-most managers to facilitate and support entrepreneurial activities), work autonomy (management’s tolerance of failure, decision-making latitude, freedom from excessive oversight, etc.), rewards/reinforcement culture (systems put in place to support entrepreneurial behavior and the support of challenging work), and time availability ( evaluate workloads to ensure employees have the time required to pursue innovations and that their job designs and structures also supports the organization’s long-and short-term goals.

This audit will help BCD identify areas of improvement. BCD must create a strategic vision for entrepreneurship and strategies to improve the identified weaknesses. Employee participation in these processes is imperative. Hussain et al. (2018) state that employee involvement can lead to high-quality change and triumph over the implementation stage resistance. New ideas on how to restructure the organization may be produced by involving employees. The organizational leaders will educate, empower, and provide emotional and technical support to help employees abandon the status quo and change. The training might involve cultivating a risk-taking culture, promoting quick decision-making, and promoting cross-functional collaboration. BCD must rehire people whose skills, personalities, and abilities align with the new organizational culture. BCD must also incentivize adaptive behaviors, innovations, decisive actions, and successful experimentations. Managers must be willing to accept a reasonable level of risk as the firm innovates and adopts a new culture. Other incentives include work discretion, recognition, financial incentives, and managerial awards. BCD managers should know that the benefits of many innovations take time to materialize (Tseng & Tseng, 2019). Also, failure is inevitable, and they provide learning opportunities (Tseng & Tseng, 2019). Therefore, they should always remember to bet on people instead of data. They should always provide a supportive critique when analyzing individual work and projects (Tseng & Tseng, 2019). This supportive critique will encourage the internal entrepreneurs to realize their mistakes, conduct introspection, and improve their performance.

Conclusion

BCD must restructure and redesign its organizational structure to resolve its business challenges and achieve competitive advantage. The firm should create a corporate venture unit dedicated to developing and launching new products, ventures, and procedures through radical innovations. This business unit will consist of a specialized cross-functional team made up of employees from different functional areas. This innovation team (I-team) will work together with other employees to exploit the organization’s strengths and identify areas for potential growth. Whenever an innovative project is to be undertaken, a task force is formed and disbanded when the project ends. BCD must hire a new sustainability professional and establish sustainability-related targets for its I-team to effectively deal with the sustainability challenges. BCD should also replace its hierarchical structure with an adhocracy culture, nurture entrepreneurial behaviors, and provide managerial support to staff to encourage innovation, proactivity, and risk-taking.

References

Arabeche, Z., Soudani, A., Brahmi, M., Aldieri, L., Vinci, C. P., & Abdelli, M. E. A. (2022). Entrepreneurial orientation, organizational culture and business performance in smes: evidence from emerging economy. Sustainability, 14(9), 5160. https://doi.org/10.3390/su14095160

Behram, N. K., & Özdemirci, A. (2014). The empirical link between environmental conditions, organizational culture, corporate entrepreneurship and performance: the mediating role of corporate entrepreneurship. Semantic Scholar. https://www.semanticscholar.org/paper/The-Empirical-Link-between-Environmental-Culture%2C-Behram-%C3%96zdemirci/2332223cda34b35e538350213d0d54ea07fa468f

Gurjar, S., Kulkarni, N., & Halkarni, R. (2022). Automobile industry -“a comparative study of tesla motors and ford motors organizational cultures.” ResearchGate. https://www.researchgate.net/publication/362504287_A_STUDY_ON_IMPACT_OF_ADHOCRACY_CULTURE_IN_AUTOMOBILE_INDUSTRY_-A_COMPARATIVE_STUDY_OF_TESLA_MOTORS_AND_FORD_MOTORS_ORGANIZATIONAL_CULTURES

Hussain, S. T., Lei, S., Akram, T., Haider, M. J., Hussain, S. H., & Ali, M. (2018). Kurt Lewin’s change model: A critical review of the role of leadership and employee involvement in Organizational Change. Journal of Innovation & Knowledge, 3(3), 123–127. Science Direct. https://doi.org/10.1016/j.jik.2016.07.002

Kuratko, D. F., Morris, M. H., & Covin, J. G. (2015). Corporate entrepreneurship. Wiley Encyclopedia of Management, 1–5. https://doi.org/10.1002/9781118785317.weom030017

Schönwälder, J., & Weber, A. (2022). Maturity levels of sustainable corporate entrepreneurship: The role of collaboration between a firm’s corporate venture and corporate sustainability departments. Business Strategy and the Environment. https://doi.org/10.1002/bse.3085

Tseng, C., & Tseng, C.-C. (2019). Corporate entrepreneurship as a strategic approach for internal innovation performance. Asia Pacific Journal of Innovation and Entrepreneurship, 13(1), 108–120. https://doi.org/10.1108/apjie-08-2018-0047

Zeb, A., Akbar, F., Hussain, K., Safi, A., Rabnawaz, M., & Zeb, F. (2021). The competing value framework model of organizational culture, innovation and performance. Business Process Management Journal, 27(2), 658–683. Emerald. https://doi.org/10.1108/bpmj-11-2019-0464