Intrapreneurship and Entrepreneurship - Literature review Example

Running Head Different between Intrapreneurship and Entrepreneurship Different between Intrapreneurship and Entrepreneurship Table of Contents 1. Introduction 3 2. Definition of Entrepreneurship and Intrapreneurship 3 a. Entrepreneurship and Intrapreneurship Defined 3 b. Differences between Entrepreneurship and Intrapreneurship 4 c. The Role of Personality 5 3. Driven Forces of Entrepreneurship and Intrapreneurship 6 a. Innovation as a Driven Force 6 b. Change as a Tool of Entrepreneurship and Intrapreneurship 6 c. Risk-Related Factors 7 4. Opposing Ideas (Refutation) 8 5. Conclusion 9 6. References 10 Introduction There is different between intrapreneurship (Corporate Entrepreneurship) and entrepreneurship because of different resources available and individual contribution made by a single person and an organization to exporting, and risk factors. Both intrapreneurship and entrepreneurship rely on innovation and creativity but Intrapreneurship has greater possibilities collecting and utilizing collective ideas and innovations while entrepreneurship has limited potential in exporting. Market opportunities and marketing may be the two most important elements underpinning successful business creation, but scholarly attention to this interface has occurred only in recent years. In modern business environment, it is easier for intrapreneurship to create new products and approaches in exporting having access to global resources and human capital. Still, entrepreneurship is limited in resources (including financial resources) and has fewer possibilities to compete on the global scale. The paper will discuss differences of concepts, their piratical application, the main driven forces and risk related factors. Definition of Entrepreneurship and Intrapreneurship The study of new venture development and entrepreneurship as a process, and the study of the early stages of the business life cycle, belong as much or more to marketing than to any other business function. Indeed, some argue that the very term management may be somewhat in definitional conflict with the term entrepreneurship (Clark and Lee 2006). Further, the entrepreneurial spirit can be hypothesized that marketing is the organizational function most dominated by boundary agents; by open interactive systems; and by truly entrepreneurial activity. Market opportunity analysis, new product development, the diffusion of innovation, and marketing strategies to create growing firms are at the heart of both marketing and entrepreneurship. These also represent the most relevant, existing marketing literature bases. Entrepreneurship as defined by Burns (2001) focuses on opportunity and is therefore particularly relevant to the marketing interface; it is the process of creating value by combining resources to exploit an opportunity. Although entrepreneurship requires innovation, not all innovation is entrepreneurial. There is an extensive body of knowledge on creativity in science and the arts that does not involve "the commercial or industrial application of something new--a new product, process, or method of production; a new form of commercial, business, or financial organization" (Burns 2002, p. 54). Pinchot and Pellman (2000) explain that "intrapreneurs are linked to the speed and cost-effectiveness of technology transfer from research and development to the marketplace" (p. 45). The researchers claim that Intrapreneurship is often associated with inventions that come up with new products and new processes. There is also considerable research on innovation and the management of research and development that deals with an end product of ideas or objects whose ability to deliver economic value has yet to be tested. In the entrepreneurship literature, innovation is coupled with its ability to create economic value. Whether done by an individual or a team, there is general agreement that entrepreneurship involves an act by a motivated individual who innovates by creating value through recognizing (or developing) an opportunity and converting it into a viable product or service. That is, innovating in a way that produces net economic value. Although most scholars agree that innovation is a necessary condition for entrepreneurship, there are differences of opinion on the extent and type of innovation that makes an act entrepreneurial. In contrast, Burns (2001) states that entrepreneurship is dealing with innovative acts that create economic value for society and not just for the individual. Both entrepreneurship and intrapreneurship can occur in different economic, social, and political environments. These can be Western market-based economies, Eastern and Central European countries coming out from under central economic planning, or emerging and Third-World economies (Hung and Reuben 2005). These are the relative availability of resource slack; a strong business support infrastructure; reasonably predictable regulatory structures; and relatively stable, although evolving, product markets. Thus, the Western model of entrepreneurship is not totally applicable to developing economies where the problems faced by the entrepreneur and the solutions required for successful innovation can be considerably different (Burns 2001). Economic innovation can, and does, occur in all of these environments; the fundamental entrepreneurial process can be seen at work, but in different ways and in greater or lesser degrees. Our understanding of entrepreneurship must broaden to encompass these differences. Intrapreneurship deals with innovative processes that help companies to improve their business activities and innovate on the global arena (Kamalanabhan et al 2006). The main difference between intrapreneurship and entrepreneurship is the role of personality. Entrepreneurship is based on unique personality of a leader who define sand direct a small venture. In contrast, intrapreneurship does not depends upon a personality of a leader but innovative ideas and approaches as a product of project teams or research group. As stated earlier, many people consider creating value for the individual alone is sufficient to be considered entrepreneurial (Schaper and Volery 2007). Others, including the authors, believe that to be entrepreneurial, something that is of net economic value must be created for society as well. Individuals who add value to themselves by swindles or other socially distasteful acts are not helping society and, hence, are not entrepreneurs in our eyes. Even if an enterprise makes a profit by, for example, selling drugs to schoolchildren, it has not met the test of adding value to society (Nair and Pandey 2006). Driven Forces of Entrepreneurship and Intrapreneurship Both Entrepreneurship and Intrapreneurship are based on innovation and change as the main driven forces in business. Entrepreneurial behavior is a potential candidate to significantly influence marketing thought and practice because it deals directly with a key concept in marketing: bringing innovation successfully to market. Although the basic concept of bringing innovation to market and the concept of diffusion of innovation is not unknown within the discipline of marketing, it is an area of thought and practice that is relatively undeveloped in comparison to managing products in mature markets (Schaper and Volery 2007). It is not important to argue whether entrepreneurial behavior is part of management science, behavioral science, strategic planning or policy, or not even a part of any science or body of thought or literature. What is important is to recognize that, for a variety of reasons, innovation, which is the central value of entrepreneurial behavior as well as a key concept in marketing, is increasingly important. It is important because innovation is disruptive, the product life cycle continues to shorten, more products are in the early stage of the product life cycle, and many successful products, for all practical purposes, do not make it into traditional maturity before being replaced with newer innovation. Furthermore, much of the thrust of innovation comes not just from established, process-orientated, new product development (NPD) environments, but from entrepreneurs "outside the system," intrapreneurs, and entrepreneurial organizations.(Vyas, 2005). In intrapreneur activities, a careful review of ideas is combined with the quantity and quality of accumulated knowledge about markets created by innovation and the marketing of innovation, as well as other activity directly dependent on marketing, is relatively scarce and in comparison with other areas, deficient. The scarcity and deficiency of accumulated knowledge can not be attributed to a single cause. However, three causes may partially explain the situation as it exists today. The first is the strong marketing discipline preoccupation with managing in mature markets. It should be clearly noted, of course, that most product markets are mature (Pinchot and Pellman 2000). The largest revenue streams and profit lie in maturity. Consequently, most current marketing texts are, at least implicitly, primarily focused on issues centered in the environment of maturity and the strategies of market leaders and challengers. And similarly, much of the portfolio management literature, although recognizing the need for new products, offers virtually no perspective on innovation. Modern marketing management is often more "brand" orientated than "product" or innovation orientated. The focus on maturity, however, is not unique to either marketing managers or marketing academics-both are guilty. However, with the increasingly turbulent environment and the shorter product life cycle, this focus, of necessity, will have to change (Oden 1997). Ansoff ( 1984) contrasts entrepreneurial behavior of the organization with the more typical incremental behavior of the organization. He argues, "Rather than seek to preserve the past, the entrepreneurial organization strives for a continuing change in the status quo" (1984, 180 cited Lessem 1988, p. 72). He also observes that many of these organizations behave entrepreneurially continuously in a deliberate search for growth through change. Successful innovation meets a market need. Innovation is the adding of appropriate attributes to an existing idea or invention such that the product and/or service is consistent with the needs and perceptions and uses of a viable customer segment. In other words, innovation is successfully taking an idea or invention to market (Oden 1997). The key difference is that to be labeled an innovation, the idea or invention must meet the test of market success. Entrepreneurial behavior is vision-based. It is based on a vision of the particular innovation satisfying a market need in a more satisfactory or less costly manner than existing solutions. And behind this vision lies a strong action orientation and belief structure that seemingly impels the individual and/or organization to work and build and to become single minded until success has been achieved. Opposing Ideas In spite of the differences and factors mentions above, some researchers suppose that there is no great difference between intrapreneurship and entrepreneurship. Morris et al (2007) and Lessem (1988) claim that both processes are based on creativity and innovations and the main driven forces of business. Both processes require capital investments and human resources to deliver a new product and introduce change. Certainly common to both entrepreneurial behavior and marketing is the concept of strategic planning. Although strategic planning is a broad concept, that part dealing specifically with anticipating the growth of demand and competition is of critical importance to achieving sustained market success that originates with innovation. Although there are undoubtedly other concepts that could be included here, the exact specification is not as important as the realization that there are concepts that define the marketing/entrepreneurship interface. For these to be valid concepts, they must truly be consistent with entrepreneurial behavior in its role of taking innovation successfully to market as well as marketing thought and practice. Marketing's role in innovation, then, is to provide the concepts, tools, and infrastructure to close the "gap" between innovation and market positioning to achieve sustainable competitive advantage (Oden 1997). It is, furthermore, marketing's responsibility to recognize differences between marketing of products and services in maturity versus marketing for products in early stages of the product life cycle. Likewise, it is also incumbent on marketing to realize that in many cases, markets may not even exist for innovations. Opportunities arise for a variety of reasons. Some are primarily driven by an unfulfilled need, others are primarily driven by the discovery of a new or novel solution to an existing problem. From entrepreneurial behavior comes the propensity to challenge the "accepted" understanding of the currently available information, and then, to move toward closing the gap given a set of unique information. From marketing comes the concepts and tools to implement the strategies to successfully take innovation to market. But, although entrepreneurial behavior needs to learn to address the issues of the market, marketing needs to develop concepts that allow it to better understand the early stages of the life cycle where most entrepreneurial behavior takes place (Lessem 1988). Conclusion Analysis and evaluation of the research literature shows that there is a difference between intrapreneurship and entrepreneurship based on different resources available, individual contribution made by a single person and an organization to exporting and risk factors. The entrepreneurial spirit and behavior can be found in many, if not all, aspects of human involvement, not just in business. Entrepreneurial depends upon a personality and charisma of the leader while in intrapreneurship ideas and innovations are a product of collaboration between different experts. In spite of these differences, intrapreneurship and entrepreneurship make a great contribution to innovations and technological changes driven modern business. References 1. Burns, P. (2001). Entrepreneurship and Small Business. Palgrave. 2. Clark, R., Lee, Dwight R. (2006). Freedom, Entrepreneurship and Economic Progress, Journal of Entrepreneurship, Jan 15, pp. 1 - 17. 3. Hung, Humphry, Mondejar, Reuben. (2005). Corporate Directors and Entrepreneurial Innovation. An Empirical Study. Journal of Entrepreneurship 14 (2), pp. 117-129. 4. Kamalanabhan, T.J., Nair, K.R.G., Pandey, Anu. (2006). Evaluation of Entrepreneurial Risk-Taking using Magnitude of Loss Scale. Journal of Entrepreneurship, 15 (1), pp. 47-61 5. Lessem, R. (1988). Intrapreneurship: Developing the Individual in Business. Gower Publishing Ltd. 6. Morris, M., Kuratko, D. F., Covin, J. G. (2007). Corporate Entrepreneurship & Innovation. South-Western College Pub; 2 edition. 7. Nair K.R.G., Pandey, Anu. (2006). Characteristics of Entrepreneurs. Journal of Entrepreneurship, 15 (1), pp. 47-61. 8. Oden, H. W. (1997). Managing Corporate Culture, Innovation, and Intrapreneurship. Quorum Books. 9. Pinchot, G., Pellman, R. (2000). Intrapreneuring in Action: A Handbook for Business Innovation. Berrett-Koehler Publishers. 10. Schaper, M., Volery, Th. (2007). Entrepreneurship and Small Business Management. John Wiley & Sons Australia Ltd; 2Rev Ed edition. 11. Vyas, Vijay. (2005). Imitation, Incremental Innovation and Climb Down. A Strategy for Survival and Growth of New Ventures. Journal of Entrepreneurship, 14, (2), pp. 103-116. Read More