Corporate Entrepreneurship and Innovation

Question: Discuss about theCorporate Entrepreneurship and Innovation. Answer: Introduction In larger organisations, creation of new business is a very challenging task. Subsequent to many years of cutting costs as well as downsizing, it has been realised by the corporations of today that it is not possible to shrink their path towards success. Besides this, they have also realised that their growth cannot be rapid if they tweak their present offerings, take over their competitors or move to the developing nations. Due to the old product portfolios along with outdated technologies, a new imperative comes out clearly. Companies need to not only create and develop but also sustain innovation in businesses. They have to maintain their focus on two directions at the same time, on one hand the focus needs to be on the old while on the other hand it needs to be on seeking the new (Garvin Levesque, 2006). In this essay, the following question will be discussed - What are some of the challenges that are posed before the organisations in order to sustain corporate entrepreneurship and what strategies can be used for meeting these challenges? Thus, the focus will be on the major challenges for sustaining corporate entrepreneurship and how they can be overcome. Challenges Faced for Sustaining Corporate Entrepreneurship in an Organisation Organisations that operate in a dynamic environment need to be more innovative in order to absorb different kinds of pressures. Strong entrepreneurial characteristics like hands-on management, efficient operations, orientation driven by the customers, systems with good planning, leadership are the triggers for corporate entrepreneurship (Huse et al., 2005). However, the proposition of corporate entrepreneurship is very risky and the levels of entrepreneurial behaviour that are always increasing (pro-activeness, risk-taking and innovation) can worsen the performance of the company (Tang et al., 2008). A number of barriers are faced by the new ventures that are set up by the companies which are existing , because of this reason many of them fail. Businesses that are emerging, often do not mesh in a smooth way with the cultures, processes and systems that are well established. However, a mixture of new as well as old organisational traits is needed to achieve success by means of balancing the various acts. The organisations need to maintain equilibrium between these opposing forces for the success of the emerging businesses (Garvin Levesque, 2006). The organisational models which are traditional and driven by hierarchy pose complexities in fostering corporate entrepreneurship as boundaries that are clearly-defined and are created by them which chokes communication and limits flexibility (Dess et al., 1999). Organisations also suffer from political issues usually arising due to varied structures and this blocks free flow of information. Structures which are bureaucratic in nature restrict entrepreneurial behaviour in a company (Sebora Theerapatvong, 2009). The hierarchical levels in case of the structures that are traditional and in which responsibility is assigned to managers for entrepreneurial activities without the delegation of authority in adequate amounts also pose challenges to behaviour of entrepreneurship (Morris et al., 2008). There are several other issues which the management of the companies face in order to undertake creation of new businesses and also to sustain this corporate entrepreneurship. A culture which is averse towards risk and is also process-driven discourages employees to act in an entrepreneurial way. If such culture is present, then the levels of entrepreneurship will be low. The corporations are generally designed in a manner that ensures that their established businesses become successful. Majority of the revenues are derived from the existing resources. The current technologies and customers are supported by organisational systems which are fine tuned. It is easy to predict the operating environments and the goals of the executives are mostly ensuring efficiency, stability and also to make the maximum incremental growth (Steffens et al., 2009). However, new businesses differ, as most of them originate on the periphery of the established divisions of the company and sometimes they migh t exist in between the spaces. The operating and financial models are also different from the existing businesses. Most of the models of new businesses are not defined completely at the start and they gain clarity as new strategies are attempted by the executives, new applications are developed by them and new customers are pursued. As there is uncertainty of high levels which is associated with ventures that are new, organisational environments that are adaptive are required for their success (Holt Daspit, 2015). Three challenges that are presented by the new businesses are : lack of hard data, need for innovation which in turn needs fresh ideas and poor fitment between old systems and new businesses particularly in case of human resource management and budgeting. In case of the budgeting systems which have almost no space for failure, they pose threats for taking risks as availability of funds is not there for experimental projects (Morris et al., 2008). Apart from the systems of budgeting, other challenges like procedures and policies, strategic direction, and structure become barriers for sustaining corporate entrepreneurship. Some other obstacles which impede the entrepreneurial behaviour in organisations consist of limited managerial autonomy, limited rewards, red-tapism, personnel restrictions, procedures and policies (Morris et al., 2008). If the senior managers of the organisation do not involve themselves in articulating and driving the vision and mission and also do not align them with the strategic direction it puts constraints on the organisations entrepreneurial capacity (Venter et al., 2008). Often the senior management shows reluctance to embrace innovative ideas and are hugely fixed on conventional type of thinking (Wakkee, 2010). Very good examples of such a phenomenon are the circumspection of Ford Motors to embrace the cars which were hybrid and the reluctance of Microsoft software that was open-source. Most of the times, senior management shows unwillingness to accept ideas that are new and innovative as they are often seen as digressions from the business practice that is carried out normally (Spinelli Adams, 2016). Strategies for Meeting the above Challenges A balancing act is vital. The either-or approaches in relation to corporate entrepreneurship should be avoided by the companies as they cause conflicts between the new and old cultures. A new approach is required which will be able to blend the two cultures and also avoid behaviour that is of the extreme type. Leaning too much in a single direction will result in the process drifting out of equilibrium. However, if the balance is right, corporate entrepreneurship will be able to flourish. A balancing act is needed in the areas of organisation, operations and strategy. Open minded opportunism needs to be combined with disciplined planning. New businesses usually operate in environments that are highly ambiguous. A complete range of outcomes and alternatives are not known in an ambiguous environment which results in several possible directions as well as evolutionary paths. Ambiguity in high levels signifies that corporate entrepreneurs might not be able to get it correct in the first time itself. As it is difficult to obtain hard numbers and also to identify strategic options, little guidance is provided by past practices. It is essential to experiment. Managers need to start with the hypotheses regarding what might work and what might not and then look for ways to validate or invalidate their preconceptions and recognise that over time there will be changes in the first cut strategies (Tidd Bessant, 2001).. For firm as well as continuous rejuvenation of an organisation, a corporate entrepreneurial strategy needs to be developed which is not only able to recognise but should also be able to exploit the entrepreneurial activities which its own employees have identified. Employees need to be provided with an environment that is safe and gives them freedom of experimenting with new ideas and without having the fear that they will be reprimanded by the senior management if their ideas fail to produce the expected outcomes. As creating and renewing businesses comprise absence or presence of innovation, it becomes corporate entrepreneurships main component. Thus, collaboration is vital in discovery of innovative ideas as it helps in the promotion of a free sharing of ideas culture which is a necessity for innovation to occur continuously across a network of multiple firms (Wang, 2008). Existing programmes and policies need to be reviewed by the organisations for supporting and facilitating innovative and entrepreneurial growth (Clark, 2010). The managers need to have the ability of making changes in both strategies as well as tactics in order to make sure that performance of the organisation is effective and the survival of the organisation is ensured despite the opportunities as well as the threats that the external environment poses. The managers need to maintain a proper balance between objectives comprising trade-offs of complex nature such as reliability and efficiency and the innovative adaptation requirements to the emerging opportunities and also threats (Yukl Mahsud, 2010). Behaviours in the organisation which are of opposite kinds and also the values that are competing have to be balanced by the managers as per the situation so that a culture can be created for innovation (Kaiser et al., 2007). Leadership by setting an example is necessary so that trust is invoked. Managers can also sustain corporate entrepreneurship by ensuring that innovative capability is developed in the employees. This can be done by considering innovative capability more than RD. Apart from this, every part of the organisation requires undergoing the process of restructuring and employees who come up with innovative ideas need to be provided encouragement as well as rewards. Innovation needs to be viewed as something that provides the organisations with a competitive advantage along with being a mechanism that facilitates creation of knowledge that is new. The reason for this is that innovation capability links the innovation stream with the mainstreams technologies as well as capabilities. Despite the fact that uncertainty is existing, the managers need to accommodate and also channelize innovation breakthroughs that are generated by means of certain behaviours which are chaotic as well as divergent (Razavi Attarnezhad, 2013). Conclusion Intensified competition globally, corporate downsizing along with technological progress taking place rapidly have increased the need for companies to be more entrepreneurial so that they not only prosper but also survive. Firms that involve themselves in entrepreneurial endeavours register increased levels of profitability and growth in comparison to them firms which do not do so (Agca et al., 2009). Thus, in a dynamic environment, entrepreneurial approach is needed for organisational performance wherein they have to be flexible towards the dynamics of the environment and identify the opportunities which are new. The source for corporate entrepreneurship can be provided by the environments where the companies operate and since this environment is volatile and complex, competitiveness in the long run needs that organisations have openness towards signals related to the present and future environmental conditions and use it for innovating and also sustaining this corporate entrepreneu rship. A number of benefits are provided to the organisation by corporate entrepreneurship and innovation and hence the responsibility of building a capability of innovation is dependent on the organisation as a whole and commitment in needed from all the corners of the company including the senior management. Management needs to make adjustments of the variables which they come across and also to the organisational processes as well as priorities. 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