Cultivating Corporate Entrepreneurs

By Herron, Lanny | Human Resource Planning, December 1992 | Go to article overview

Cultivating Corporate Entrepreneurs


Herron, Lanny, Human Resource Planning


Today's business environment is extremely exciting but highly frustrating. Business opportunities are more abundant than ever before, and they hold the potential of enormous payoffs. Indeed there are substantial indications that both the number and size of these opportunities are increasing with time (Naisbitt, 1982; Porter, 1990; Toffler, 1980). The downside of this phenomenon is that environmental turbulence appears to go hand in hand with these increasing opportunities (Birch, 1987; Naisbitt, 1982). This turbulence is both narrowing windows of entry and generating "noise" that tends to obscure the opportunities themselves. In short, with information and disinformation proliferating together, both risk and reward appear to be on the upswing. Further, this trend shows no promise of leveling off.

This set of circumstances is linked to a substantial worldwide increase in both the birth and death rates of new businesses. For existing businesses, it is leading to an increased awareness of the need for innovation and change. Executives responsible for organizational performance have an acute and growing need to identify managers who can spot new opportunities and who can implement the changes necessary to convert them into profits as well. What the latest research results have to say about how to identify, train, and motivate such innovative, entrepreneurial managers is the subject of this article.

The Essence of Entrepreneurship

"Entrepreneurs" are often thought of as persons who start new business ventures, yet most who study the concept come to view this definition as overly restrictive. Economists in particular have defined entrepreneurship in such diverse and general ways as: forming new combinations (Schumpeter, 1934); dealing with disequilibria (Schultz, 1975, 1980); and exercising opportunity awareness (Kirzner, 1985). A thorough study of the subject suggests that the essence of entrepreneurship resides in the reallocation or recombination of resources with intent to create value. The resources reconfigured may be of any type--people, capital, information, or organizations; and the reconfiguration itself may assume diverse forms such as temporal, spatial, informational, or combinations of these. The creation of value, however, involves both the recognition of an opportunity and the attendant reconfiguration of the resources necessary to achieve that value.

This view of entrepreneurship makes it abundantly clear that those who start new businesses and those who alter existing ones have much in common. Indeed, they are virtually identical in the broad classes of actions they must carry out to achieve their ends. Both must gather information, recognize opportunities, acquire a requisite level of control over resources, and formulate and implement methods for reconfiguring these resources. Such variants as whether they possess outright ownership of the resources, who in particular they must deal with and "bend to their will," and exactly what form their risks and rewards will take seem much less important than their commonalities. The term "corporate entrepreneurship" has been coined to distinguish those who practice entrepreneurship within the confines of a corporation from those who practice it independently. If emphasis is placed upon the behaviors attendant in each, though, the similarities are much stronger than the differences.

The Role of the Corporate Entrepreneur

Granted that both corporate and independent entrepreneurs are engaged in resource reallocation for the creation of economic benefit, it is nevertheless easier to recognize the behaviors of independent entrepreneurs. When someone starts a business, the creation of a new and separate organization is involved, and resources typically change hands. Both of these are very visible. Conversely, corporate entrepreneurship commonly involves neither (though it may involve both). Vesper (1984) has pointed out three dimensions of corporate entrepreneurship: (1) significant departures from corporate strategy, (2) initiative coming from below in an organization, and (3) autonomous operation.

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