Corporate Entrepreneurship: Top Managers and New Business Creation

Corporate Entrepreneurship: Top Managers and New Business Creation

Corporate Entrepreneurship: Top Managers and New Business Creation

Corporate Entrepreneurship: Top Managers and New Business Creation


Vijay Sathe examines how top managers--corporate executives, division general managers and the division's top management team members--influence corporate entrepreneurship, specifically new business creation in a corporate division. Corporate Entrepreneurship takes the reader into the real world of top managers to explore a relatively uncharted territory in a systematic and comprehensive way. The business realities, the management culture, the corporate philosophy, the organizational politics, the personalities, and the personal agendas of the people at the top are vividly portrayed in these pages. New business creation is innately difficult and it does not help that top managers are insufficiently educated and trained for it. This book offers both a theory of corporate entrepreneurship based on the real-world experience of top managers and practical advice on how to manage it for better results. Vijay Sathe is Professor of Management in The Peter F. Drucker Graduate School of Management at Claremont Graduate University in Claremont, California. He has published numerous journal articles and three other books: Controller Involvement in Management (Prentice Hall, 1982), Culture and Related Corporate Realities (Irwin, 1985), and a co-authored book, Organization (Third Edition, Irwin, 1992). Sathe has taught in MBA and executive education programs in the United States and Europe. He has also consulted with government agencies, not-for-profit organizations, and private and public companies around the globe.


Everybody knows that large enterprises do not innovate and do not create new businesses. And everybody also knows that the overwhelming majority of new businesses created in those two highly entrepreneurial decades, the 1980s and the 1990s, were built by individual entrepreneurs, starting on their own. AND EVERYBODY IS WRONG.

The great majority of new businesses during the last decades of the twentieth century (but equally in the decades before them, that is since World War II) were created and built by existing enterprises, and in large part by big or at least fair-sized ones. And when it comes to successful new businesses, the proportion initiated and built by existing enterprises is even larger. The casualty rate is, of course, high for all new businesses. But it is vastly lower for those started, developed and nurtured by existing enterprises and, in fact, within an existing business.

However, new business creation within the existing business, commonly called corporate entrepreneurship, requires leadership from the top. The successful "intrapreneur" who creates a new business at the bottom – and without senior-management support, if not without its knowledge – is largely pure fiction. Successful corporate entrepreneurship requires strong, active, determined leadership on the part of the company's CEO, on the part of its senior managers, on the part of the chief operating executives such as the division general manager in the large decentralized company. For successful new business creation faces very different challenges from those faced in running an established business with established products and established markets. It requires different policies, different measurements, different controls. Above all, it requires different human relationships within the senior-management group.

There is an abundance of books on that "folk hero," the lone entrepreneur who starts out in a woodshed, on the back burner in the kitchen, in the garage. But Vijay Sathe's book is, to the best of my knowledge, the first study of new business creation within the existing enterprise – that is on the American economy's central entrepreneurial challenge and its central opportunity.

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