Throughout the pandemic and its cascading effects on the business world, companies have been prompted to adapt their operations to “the new normal.” The notion of returning to “business as usual” is officially behind us, and companies of all sizes are learning to be entrepreneurial as they move through these ongoing challenges.
Large corporations are not immune. Those that have prevailed have proved flexible, innovative, and agile—words that are usually reserved for startups. Well-established research demonstrates how entrepreneurship can manifest in a corporate environment, but these findings rarely reach the desks of corporate leaders. If they do, they are often tedious to analyze or difficult to grasp.
However, having an entrepreneurial mindset and enacting entrepreneurial practices can enable even the largest of businesses to thrive, and understanding the essential learnings from the academic world can help. Below, I’ve outlined some of the key terms and concepts from the leading research.
Intrapreneurship
Intrapreneurship is the concept of entrepreneurship presenting itself within an already established organization. In academia, the term often appears when referencing older and larger companies that embed entrepreneurial practices and ideals. These companies understand that the best way to innovate is to create cultures that support this paradigm.
Early on, Antoncic and Hisrich (2001) explained that intrapreneurial companies do four things:
- Pursue new businesses related to current products or markets. A great example of this was when Kellogg, the multinational food manufacturing company, purchased the entrepreneurial business of RxBar in 2017.
- Invest in research and development to create their own new products, services, and technologies. This type of expansion will always require an entrepreneurial mindset, regardless of size or maturity.
- Possess a “self-renewal” dimension. Internal strategies and goals must be reformulated and evolve as time goes on. Companies who marvel at their past successes and never question their “reason for being” will inevitably fall behind.
- Be proactive. Instead of simply responding to changes, businesses must pursue bold initiatives, risk-taking and competitive potency. Businesses who lead their industries into new territories will always win the day—or century. For example, LEGO, founded in 1949, won Time Magazine Best Inventions list in 2021 with their recyclable LEGO toys.
Corporate Entrepreneurship
While corporate entrepreneurship can sometimes be used interchangeably with intrapreneurship, there are some important potential distinctions.
Intrapreneurship often refers to a company’s culture and values, whereas corporate entrepreneurship applies to a company’s business practices. Early definitions of corporate entrepreneurship refer to the practice of creating new businesses within established firms (e.g. Zahra, 1991), and corporate “spin-off” companies have also been widely studied under this label.
A good example is when a company tasks a particular team to explore new and innovative products or services. Some companies who practice corporate entrepreneurship will develop internal accelerator programs. The idea is to provide institutional support to a new business concept, allowing them to scale quickly and efficiently. Famously, Microsoft started their accelerator program M12 in 2016. Since then, 22 of their portfolio companies have successfully exited, leading to additional profits and notoriety for Microsoft.
Entrepreneurial Orientation
This popular term is used to emphasize how entrepreneurial values are accounted for in top management decision making processes. Entrepreneurial orientation encompasses the dimensions of innovation, proactiveness and risk-taking in the mindset of a firm’s leaders.
A wealth of survey-based research exists on the topic of entrepreneurial orientation. Combined, these studies suggest that entrepreneurial orientation of a company is a mechanism that company leaders use to respond to opportunities and challenges in their business environment. Those who consistently deploy this managerial mindset see positive financial performance.
A critical component to understanding entrepreneurial orientation is that it doesn’t only apply to nascent founders or thinkers. This type of entrepreneurial thinking can, and should, take place within a large corporation’s leadership team. With institutional backing, these leaders can often find faster, more financially sound paths to market.
Entrepreneurial Leadership
To effectively drive innovation, people at every level of an organization must adopt an entrepreneurial mindset. Entrepreneurial leadership emphasizes the importance of ensuring organizational leaders adopt practices whereby they encourage all employees to act entrepreneurially in their roles.
Entrepreneurial leadership capitalizes on the idea that today’s modern workforce is motivated to make meaning through their work. By supporting entrepreneurial endeavors at every level, leaders can empower their employees to drive change, think creatively and progress in their careers.
Ultimately, entrepreneurship is not a concept reserved for young, small and nimble companies. The research tells us that entrepreneurship has its place in large and established corporations and nonprofits, often irrespective of past missteps or failures to adapt.
A great example of this is Abercrombie & Fitch. After years of being at the top, the brand came crashing down. It neglected its consumer’s concerns surrounding unhealthy body image standards, a lack of diversity and inclusivity, and inaccessibility. Today, it has made a historic comeback by successfully addressing these concerns and fostering a commitment to innovating the customer experience.
That large corporations can be entrepreneurial is good news for business leaders who want new ways to compete, additional revenue streams or more recognition. However, the degree to which this is true varies from country to country, based on culture and incentive structures. According to the Global Entrepreneurship Monitor studies, many of the Nordic countries have higher rates of entrepreneurial employee activity within corporate settings than the United States, even though the US is typically perceived as one of the most entrepreneurial countries in the world. Clearly, there is room for American corporations to achieve even higher levels of intrapreneurship by creating new incentives, opportunities and rewards for their employees.
Contributor Bio
Maija Renko is a professor and the Coleman Chair of Entrepreneurship at the Driehaus College of Business, where she teaches entrepreneurship and social entrepreneurship courses. Renko also serves as director of the Master of Science in Entrepreneurship Program.