Intrapreneurship as a Means of Innovation - Essay Example

? Table of contents Introduction……………………………………………………………………..2 2. Enterpreneurs vs intrapreneurs………………………………………………….2 3. Literature review on intrapreneurship and entrepreneurship…………………...4 4. Practical reflection of intrapreneurship……………………………………….....5 5. The main obstacles of intrapreneurship…………………………………............8 6. Conclusion…………………………………………………………………….…9 7. Bibliography…………………………………………………………………….12 8. Appendix I Reflective Commentary…………………………………………….13 Entrepreneurship and innovation Introduction Human activity has reached its height in XXI century. Therefore, there is a need to develop and facilitate spheres of human activities. Business is a sphere of human activity, which requires constant development and dynamic change. Under conditions of overall globalization processes, business activities have to adopt constant changes in order to satisfy diverse needs of customers and producers. Thus, innovation in the business field is required. Entrepreneurship is an integral part of the modern business world. A need for innovation in this field is a sign of constant development of the business world and reflects a dynamic nature of all participants of the business world (Bessant & Tidd, 2009). This research paper discusses intrapreneurship as an innovative type of entrepreneurship. Intrapreneurship implies entrepreneurship activity of employees within a certain organization. This phenomenon has been often studied from theoretical and practical perspective, but there is a need to study positive and negative effects of intrapreneurship. Enterpreneurs vs intrapreneurs An entrepreneur differs from an intrapreneur in the following way: the former is responsible for risk taking being an owner and an active participant of a certain business. The latter is hired by a certain organization and he is responsible for financial success of the unit of his operation. Mutual capabilities for entrepreneurs and intrapreneurs are conviction, zeal and insight (Bolton and Thompson, 2003). An intrapreneur propagates and supports his ideas thus creating a gap between organizational goals and his own goals. The best scenario for an intrapreneur is to gain support from the organization where he works. In other cases, he has to quit from his job and set up his own business. A well-known example of intrapreneurship is separation and propagation of the ideas developed by the developers of Adobe, John Warnock and Charles Geschke (Literature Review, 1990). These engineers were hired by Xerox and their innovative ideas were not supported within the organization. Finally, they established their own business and currently annual turnover of Adobe rises up to $3 billion. Literature review on intrapreneurship and entrepreneurship At first glance it may seem that intrapreneurship is rather easy and uncomplicated process of business doing. Very often, one attempts to reveal characteristics of entrepreneurship in intrapreneurship: the former business doing implies innovation and creative thinking and things are considered from an innovative perspective. Enterpreneurship is able to take a risk and accept failure. An intrapreneur is focused on the search for new opportunities that will result in profits increase. Intrapreneurship is a perfect way for organizations to increase their profits and develop creative thinking of their employees. Intrapreneurship is a way for innovation, reinvention and improvement (Carrier, 1996). A creative potential of employees is the core rod of company’s innovative and successful development. Currently, studies on entrepreneurship and intrapreneurship are focused on comparative-contrasting analysis of these activities. More educated employees with a richer experience were not involved in intrapreneurship though 5% of the interviewers (total number is 32,000) made an attempt to start up their own business (Carrier, 1996). People launched their own companies when they were 30 or 40 years old. Younger people were afraid of a failure and thus companies may find this audience to make a perfect prospect for a company’s ideas development by means of adoption of innovative ideas of new employees (Chang, 2000). As it is concluded in the study by Chang (2000), “Entrepreneurship appeals to people who possess natural traits that find start ups arousing their interest. Intrapreneurs appear to be those who generally would not like to get entangled in startups but are tempted to do so for a number of reasons”. Thus, making good intrapreneurial choices is a benefit for the company to find new innovative ideas for their businesses. As far as it can be seen, intrapreneurship is a stimulus for companies’ abilities to introduce innovations in order to reach flexibility, competitiveness and a better reaction to operate in the international market. In the study conducted by Cunningham and Lischeron (1991) “an intrapreneurial school of entrepreneurship” was suggested. Still, there is a vague realization of what intrapreneurship really means and a constant search for similarities between entrepreneurship and intrapreneurship is being performed. In the study conducted by Gartner (1985), entrepreneurship was presented as "the creation of new organizations" (cited by Carrier, 1996). From this perspective, entrepreneurship doesn’t exist once the venture is finally created. Intrapreneurship as a remedy for modern business world was suggested by Stevenson and Jarillo (1990). On the background of ‘cruel’ and competitive market, a lot of large organizations are striving for flexibility, ‘painless’ growth and innovation. The most differential feature of intrapreneurship is the context in which business doing takes place. Innovation of entrepreneurs and intrapreneurs differs in the following way: “entrepreneurs innovate for themselves, while intrapreneurs innovate on behalf of an existing organization” (Chang, 2000). Thus, entrepreneurs are looking for innovations for their own purposes, while intrapreneurs must be chosen by an organization and share their ideas with the organizations. Some authors draw parallels between different concepts of ‘corporate entrepreneurship’. Zahra (1991, p. 260) considers that ‘intrapreneurship’, ‘corporate venture and ‘internal corporate venture’ are types of corporate entrepreneurship. The main objective of this activity is to create new business ideas within certain organization. The main goal of corporate entrepreneurship is to enhance company’s profitability and improve company’s competitive position in the business world. Intrapreneurship is usually studied in two main directions. The first trend refers to individuals as interpreneurs (Carrier, 1996). Thus, intrapreneurship is usually considered as a certain psychological peculiarities of an individual (the research paradigm of 80s). These authors draw parallels between entrepreneurs and intrapreneurs though context of their activities differ. The second group of researchers studies the functions intrapreneurs perform within an organization. Intrapreneurs are ‘change agents’ or ‘corporate entrepreneurs’. An atmosphere of intrapreneurship is often described as an atmosphere of freedom and autonomy leading to innovation. The studies of 90s are closer to this context. Another perspective is to consider intrapreneurship as a management strategy directed on increase of initiative among employees and develop entrepreneur behavior among employees. Intrapreneurship is usually considered in relation to innovation. This fact can’t be denied whatever paradigm of the study is chosen. Practical reflection of intrapreneurship As a rule, interpreneurship is considered in relation to a certain large organization. Still, a phenomenon of intrapreneurship should be considered in relation to a small organization. For example, Carrier (1996) underlined the importance of considering intrapreneurship in relation to small businesses evolving on the background of a severe competition, i. e. a perfect atmosphere for innovation. It is relevant to consider about determinant factors of intrapreneurship in small organizations. Intrapreneurship in this context is considered as “a significant innovation for the firm by one or more employees working within an established organization” (Kistruck and Beamish, 2010). A personalized approach with regard to potential intrapreneurs is propagated in small organizations. On the basis of interviews conducted in 200 of small business organizations from Quebec City intrapreneurs were chosen (Chang, 2000). Innovation introduced by intrapreneurs Innovations from the first perspective should be considered in the field of technology. Piatier (1984) claimed that “a misunderstanding of the concept of innovation, and suggested that restricting innovation to the field of technology was the equivalent of excluding half the problem by taking only a supply-oriented view” (cited by Carrier, 1996). Therefore, it is more appropriate to consider innovation in a broader context as alternative commercial, organizational, structural or other ideas. In the process of a conducted study it was found out that intrapreneurs can develop their strategies under guidance of an owner-manager or “the owner-manager's overall strategic profile based on Miles and Snow's (1978) typology, or on the type of strategic behavior adopted by the innovators intrapreneurs with the help of the Burgelman and Sayles (1987) model” (Chang, 2000). The major benefits of intrapreneurship in any organization are obvious. Cooperation between owner-manager and intrapreneurs should be directed on reaching mutual goals. Moreover, it is often said that small business is an “ideal potential incubator for intrapreneurs” (Cuhn, 1993). The owner-manager is “the main catalyst in the emergence of intrapreneurship in the firm” (Cuhn, 1993). All the factors of intrapreneurship importance for future of the organization may be metaphorically explained in the following way: any organism should understand interaction of “the organism-in-its-environment”. Owner-managers are on the way to development of intrapreneurship encouragement. The owner-manager propagates successful development of the organization. A challenge of innovation requires additional knowledge developed among intrapreneurs. The intrapreneurs require additional knowledge, because they should be aware of the issues, such as risk taking, more. The intrapreneurs are not subjected to financial risk, but there is the accompanying risk which implies “the potential loss of personal credibility if one of their projects does not produce the desired results” (Bolton and Thompson, 2003). As a rule, in the conducted studies the owner-managers encourage intrapreneurs not often. Therefore, there is a need to increase awareness of intrapreneurship among owner-managers as well. Innovations introduced by owner-managers will broaden the organization’s mission. A more clear vision about benefits of intrapreneurship in small organizations discards the tendency to growth propagated in large organizations. Intrapreneural innovations are strategies suggested by any employee (Lowe and Marriot, 2006). A development of special trainings directed on people with entrepreneurial skills would help these people to ‘donate’ their ideas and creative thinking to their organizations. Thus, intrapreneurship considered within an organization is often considered to be a form of entrepreneurship. On the example of one firm studied in the Quebec City, one employee has established his own firm within the incubator firm (Chang, 2000). Therefore, intrapreneurship in its pure form can’t be often beneficial for the organization. In this case, it is desirable to combine entrepreneurship and intrapreneurship. Therefore, intrapreneurship has specific characteristics in small firms. Implied approaches of intrapreneurship development are contingency-based and not deterministic. Thus, small companies may benefit from intrapreneurship in case this strategy is developed in dynamics (Burns, 2007). The main obstacles of intrapreneurship In spite of the fact that positive effects of intrapreneurship are widely acknowledged, managers of some organizations may consider this problem vaguely. Employees with innovative ideas do not often present them to the managers of organization. Managers’ attitude to innovative ideas is not always positive. That’s why innovators prefer to keep silence and preserve their innovative ideas for them (Carrier, 1996). Moreover, managers’ inflexibility prevents them from a proper consideration about innovative ideas. A group of inflexible intrapreneurs usually consists of older managers or managers with low risk-taking abilities. In such a way, the level of creativity is decreased in an organization. Employees who do not obtain support from managers have a few chances to reveal their intrapreneurial potential. On the other hand, managers are intimidated by the fact that intrapreneurs may ‘go better’ than managers of the organization. Creative potential of intrapreneurs may outbalance creative potential of managers. Another obstacle for development of intrapreneurship is a lack of desire among managers to give job authority to employees. Therefore, intrapreneurs are prevented from setting task priorities. Moreover, a lack of encouragement of intrapreneurs, as it is often outlined in the organization, “According to suggestion-system rules, no reward is offered for an innovative employee's born risk or his/her performance as an entrepreneurial team member” (Kuhn 1993, p. 23). The best motivation for intrapreneurs is to get rewards and acknowledgement of their ideas. This point has to be improved, because even a small reward may encourage a person to produce more creative ideas. Unfortunately, rewards are paid with great delays. Management is the way to realize their creative ideas. For development of creative ideas, intrapreneurs need extra time and convenient conditions for the ideas implementation. The case study of Raja Company, where behavior of intrapreneurs was studied, these employees were subjected to more oppressive time and workload because of their creative abilities. In the majority of cases, intrapreneurs were the most skilled employees of the organization. In order intrapreneurs could create their new ideas they should be able to work under more complicated conditions and time constraints. Consequently, intrapreneurs should be more psychologically stable employees able to develop and support their ideas. In the Raja Company special courses for development of intrapreneurial ideas and develop idea-making spirit, unfortunately this system didn’t exist for a long time. This kind of practices was neglected by employees themselves. Basically, even if developed, innovative ideas were not totally accepted by managers of the organization, the Raja Company. In the majority of cases managers didn’t approve innovative ideas suggested by intrapreneurs. There is a need to involve specialists able to distinguish innovative ideas. In case innovative ideas are not approved by managers at once, intrapreneurs stop developing their new ideas (Lumsdaine and Binks, 2007). There is a too complicated system of examining an innovative idea. Before the idea is approved by the company’s authority, there are too many steps to be made. As it is underlined by the managers of the Raja Company, “the process of studying suggestions is so slow that the presenter of the idea would give up his/her idea or else, if he/she knows about his/her manager's support, he/she would prefer to implement the idea through management” (Carrier, 1996). Conclusion In the result of the conducted study on innovations in business, the issue of intrapreneurship as a means of innovation was discussed. Positive effects of intrapreneurship are released in case managers of the organization have tolerant attitude to innovative ideas suggested by the employees. Internal updating of the organization directed on establishment of special courses directed on development of intrapreneurial abilities among employees is a favorable condition for the development of intrapreneurship in the organization. The most important role the intrapreneurship plays in the organization is a creation of innovative ideas and gaining benefits from creative potential of employees. Nevertheless, it is necessary to combine entrepreneurial and intrapreneurial skills of employees in order to obtain an effective integration of various abilities and professional skills. The main task of managers is to redirect innovative potential of ideas developed by intrapreneurs to the organizational needs. A protection of innovative ideas from rivalries is another crucial aspect of this study. Innovative ideas can appear suddenly, but they can also disappear very quickly as well. A guarantee of a successful functioning of innovative ideas in an organization is overall support of intrapreneurs. Works cited 1. Bessant, J & Tidd, J. Innovation and Entrepreneurship. Wiley, 2009. 2. Bolton, B and Thompson, J. The Entrepreneur in Focus: achieve your potential. Thomson, 2003. 3. Burns, P. Entrepreneurship and Small Business, 2nd ed. Palgrave, 2007. 4. Carrier, Camille. "Intrapreneurship in Small Businesses: An Exploratory Study." Entrepreneurship: Theory and Practice 21.1 (1996): 5+. 5. Chang, Jane. "Model of Corporate Entrepreneurship: Intrapreneurship and Exopreneurship." International Journal of Entrepreneurship (2000): 69+. 6. Kistruck, Geoffrey M., and Paul W. Beamish. "The Interplay of Form, Structure and Embeddedness in Social Intrapreneurship." Entrepreneurship: Theory and Practice 34.4 (2010): 735+. 7. Kuhn, Robert Lawrence, ed. Generating Creativity and Innovation in Large Bureaucracies. Westport, CT: Quorum Books, 1993. 8. Lowe, R and Marriot, S. Enterprise: Entrepreneurship and Innovation. Butterworth Heinemann, 2006. 9. Lumsdaine, E. and Binks, M. Entrepreneurship from Creativity to Innovation, Trafford Publishing, 2007. 10. Successful Industrial Product Innovation: An Integrative Literature Review. New York: Greenwood Press, 1990. Appendix I Reflective commentary Making the research on business and innovation is a good starting point for self-education and personal development of a future entrepreneur. It is often considered that entrepreneurs should be able to be involved in economic activity only. This point of view is rather vague and needs clarifications. In reality, entrepreneurs should be ambitious and creative persons, first of all. An innovative potential of an entrepreneur enables him to reflect in his activity changes in environment. The issue of innovation is the most appealing to me as to a future entrepreneur, who wants to establish a small organization. I made this choice, because small firms are more flexible in their activities and can better adopt external changes. Moreover, initial capital investments are lower than investments required for large organizations. My abilities to establish partnership with different people, to find an approach to anyone will benefit to my organization. ‘Find something new!’ is a motto I plan to use as a basic point in communicating my goals to employees and managers. A tolerant attitude to innovative ideas, a fair system of monetary or non-monetary instantaneous rewards will enable my employees to reveal their creative potential in a favorable atmosphere. As entrepreneur, I will have to make decisions basing on evident facts or in unpredictable situations. I am sure that my intuition and background knowledge would support my organization from ‘drowning’ and help my company to stay afloat. My personal inspiration to be a captain in everything and boss to everybody is a reflection of my high achievement potential. From the very childhood I was told by my parents that it is always necessary to be the best. Fortunately, these inspirations didn’t turn me into an arrogant person, but increased my self-esteem. In other words, at school or in the University I’ve always tried to do my best. I’m sure that as an entrepreneur the principle of being ‘the best’ will positively influence on my business. Good leadership skills are of primary concern for entrepreneurs and their organization building abilities. A successful leader is a perfect example for employees to follow. Fortunately, I have leadership skills, because I’ve been actively involved in social activities during all my life. No matter what I did, whether collected clothes for orphans or planted trees, I managed to organize co-thinkers in order to make my work more effective. In these situations I managed to develop my managerial skills, which are crucial in dealing with unpredictable situations or organizing people. My risk bearing capacity was developed throughout my whole life. I am not afraid of risk. I am not a risk avoider, I am a risk taker. For example, I can choose the most complicated issue for the discussion on seminar in order to take a risk. In this situation, I try to overcome my lack of knowledge in a certain sphere and as a rule I succeed. Risk bearing capacity is very important for a future entrepreneur, because he has to deal with unpredictable situations, under changeable conditions of the environment, customer needs etc. As I have already mentioned, my small organization will be open for creative and innovative ideas. Intrapreneurial skills development among employees and managers will be improved during special training courses and specialists’ engagement. In the process of performing research on business and innovation, I found out that intrapreneurship may be subjected to different complicated situations, such as CEO’s ban on innovative ideas, time constraints for intrapreneurial skills development and many other factors. I am sure that innovation is a pivot of an organization’s success. Intrapreneurship as a basis for innovative potential of the company may successfully develop under stable and favorable policy to intrapreneurship development in an organization. Consequently, it is relevant to provide employees with opportunities and fairly compensated extra time they spend on development of innovative ideas. Thus, making intrapreneurship an integral part of a small organization is a complicated strategy focused primarily on innovation as a motive force of organization’s success. Read More