Corporate Entrepreneurship and Open Innovation
- a comparison of success factors-
MASTER THESIS
School: University of Amsterdam/Faculty of Business and Economics Program: MSc in Business Administration
Track: Entrepreneurship & Innovation Name: Lucas Fasshauer
Student Number: 10827897 Supervisor: Dr. Roel van der Voort
Second Reader: Dr. Tsvi Vinig Date: 29.06.2015
Statement of originality
This document is written by Student Lucas Fasshauer who declares to take full
responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and
that no sources other than those mentioned in the text and its references have
been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision
of completion of the work not for the contents.
1. Introduction ... 5
2. Theoretical background ... 8
2.1. Corporate Entrepreneurship... 8
2.2. Open Innovation ... 9
2.3. Exploration & Exploitation ... 11
3. Resources ... 14
3.1. Resources as success a factor in Corporate Entrepreneurship ... 14
3.2. Resources as a success factor in Open Innovation ... 19
4. Organizational culture ... 21
4.1. Organizational culture as a success factor in Corporate Entrepreneurship ... 21
4.2. Organizational culture as a success factor in Open Innovation ... 25
5. Management support ... 28
5.1. Management support as a success factor in Corporate Entrepreneurship ... 28
5.2. Management support as a success factor in Open innovation ... 29
6. Organizational structure... 30
6.1. Organizational structure as success factor in Corporate Entrepreneurship ... 30
6.1.1. Reward system: ... 33
6.1.2. Knowledge system/information system ... 34
6.1.3. Evaluation system/process... 35
6.2. Organizational structure as success factor in open innovation projects ... 37
6.2.1. Reward system ... 38
6.2.2. Knowledge management/ Information systems ... 39
6.2.3. Evaluation system/process... 41
7. Strategy... 42
7.1. Strategy as a success factor in Corporate entrepreneurship... 42
7.2. Strategy as a success factor in Open Innovation ... 46
8. Hypotheses and Conceptual model ... 49
9. Research methodology ... 55
9.1. Independent variables ... 57
9.3. Control variables ... 60
10. Findings ... 61
10.1. Validity and reliability ... 61
10.2. Data presentation ... 62
11. Discussion and conclusion ... 71
11.1. Resources in C.E. and O.I. ... 71
11.2. Organizational Culture in C.E. and O.I. ... 73
11.3. Management support in C.E. and O.I. ... 74
11.4. Organizational structure in C.E. and O.I. ... 75
11.5. Strategy in C.E. and O.I... 78
12. Managerial implications ... 81
13. Future research ... 83
14. References ... 84
Abstract:
This thesis is concerned with a comparison of success factors of the two constructs Open Innovation and
Corporate Entrepreneurship. The overall goal is to answer the question if a successful implemented C.E. construct
will decrease the difficulty of implementing an O.I. concept. Resources, organizational culture, management
support, organizational structure, and strategy were derived from existing literature as categorical dimensions.
The similarities and distinct differences were used to design a questionnaire, linking theory to practice. With the
data obtained the difficulty of a subsequent implementation of an O.I. construct after the already successful
implementation of a C.E. concept is measured. 6 Hypothesis were derived and tested according to the 5 categories
and their aggregation into the variable successCE. All 6 hypotheses were supported with at least a moderate effect
measured. The findings suggest an eased up implementation of O.I. through a successful implemented C.E.. The
research should be seen as an impetus for further research in i.e. complementarity of both constructs.
Keywords: Corporate Entrepreneurship, Open Innovation, success factors, resources, organizational culture, management support, organizational structure, and strategy,…
1. Introduction
This research will shine light on distinct differences and similarities in the success factors of the two concepts: Open Innovation (O.I.) and Corporate entrepreneurship (C.E.).
It will deal with the question of a possible relationship between the two concepts. In more details it will answer the question if a successful implemented C.E. model will facilitate the ease of a successful implementation of an O.I. concept.
Both concepts received quite some attention in literature on their own but the combination of both has not been studied so far. Little to no research has been conducted on the complementarity of Corporate Entrepreneurship’s and open innovation’s success factors. Finding a significant impact in any of the researched relationships will give impetus for future research. A combination of both innovation strategies can broaden the scope of a company significantly.
The research will therefore be academic relevant as it will answer the question on how much the implemented C.E. will impact the ease of implementation of a successful Open Innovation concept.
This will be deducted from the congruency in success factors. The research bridges academic relevance to practical relevance as the researched success factors have direct implications for management practices (Panda & Gupta, 2014).
A corporate Entrepreneurship concept that will facilitate the implementation of an Open Innovation concept can be a big leap forwards for a company’s innovativeness and therefore its sustainable competitive advantage.
A strong impact will lead to the reasonable conclusion for a company to extend its innovation scope as it only has to invest incrementally compared to building and implementing the innovation approach from scratch (Shrivastava, 1987).
This research will therefore add value in form of an elaborated understanding on how the success factors impact the ones of O.I.. Furthermore it will allow conclusions on how those factors complement each other in their goal to integrate entrepreneurial dynamics into an
existing company, to achieve a higher degree of innovativeness. The research will therefore be practical relevant as it will facilitate the understanding of the decision situation in which an innovation strategy is implemented (Conceptual relevance). It will also guide towards a course of action if a Corporate Entrepreneurship model is in place (instrumental relevance). In addition it will legitimize the subsequent implementation of an O.I. concept (legitimative relevance). This highlights the practical relevance of the conducted research (Nicolai & Seidl, 2010).
The research focuses on from previous literature derived categories of success factors (resources, management support, organizational culture, organizational structure and strategy) (see AppendicesNo.2). These categories are contrasted for O.I. and C.E..The aim is to figure out
complementarities, similarities and differences in the categories to draw practical conclusions for the implementation of both concepts simultaneously.
This thesis will therefore start with a clarification and definition of the most relevant theoretical concepts. A literature review will contrast the derived categories of both concepts and examine the observed differences. This will be followed by the research section that explains the different variables and methodology used to prove from the literature review derived hypothesis. Following the empirical findings will be presented.
In the end the findings will be discussed with a concluding remark, implications for managerial practice and future research objectives.
2. Theoretical background
2.1. Corporate Entrepreneurship
Corporate Entrepreneurship is a field of research that is concerned with insights on how an established company can implement the dynamics of Entrepreneurship into its horizon. The recognition of opportunities and value appropriation to those opportunities are specifically important (Corbett, Covin, O'Connor, & Tucci, 2013). C.E. differs to regular Entrepreneurship as companies leverage their large networks and resources to recognize opportunities. Still, the risks faced in exploiting are similar to the ones in Entrepreneurship, as the outcome of innovation is uncertain and therefore hardly predictable (Phan, Wright, Ucbasaran, & Tan, 2009).One of the earliest and most recognized definitions for C.E. came from Guth and Ginsberg (1990). Their definition is two-dimensional. Corporate Entrepreneurship includes 1. The establishment of a new business within an existing organization (corporate venturing) and 2. a more exploitative approach of transformation that entails the renewal of core ideas within the company (Guth & Ginsberg, 1990).
Following Wolcott & Lippitz (2007) slightly more elaborated definition C.E. is characterized by projects teams that realize new opportunities and cultivate them. They launch and manage a new business that will leverage on the company’s resources i.e. its market position (Wolcott & Lippitz, 2007). Sharma and Chrisman (2007) propose that C.E. is a process undergone by an individual/group to create a new venture or start the process renewal/innovation within an existing company (Sharma & Chrisman, 2007).
The two- dimensional concept of Phan et al. (2009) contains 1. Corporate venturing (C.V.) and innovation activities 2. Strategic entrepreneurship. C.V. entails the integration of the new venture into the business portfolio of the parent company. It is divided it internal (venture remains within company structure) and external C.V. (semi-free ventures, i.e. spin offs), which mostly accounts for ventures that are not suitable to the core business (Phan et al., 2009). Strategic Entrepreneurship refers to leveraging of the dynamics of a new venture on the one side (opportunity recognition) and the leveraging of parent company’s capability of value appropriation on the other hand (Ireland, Hitt, & Sirmon, 2003) as found in (Phan et al., 2009).
2.2. Open Innovation
The concept of Open Innovation (O.I.) has been developed by Innovation practioners that were mainly employed in the high tech industry. Since then the interest in the concept has not decreased (Gassmann, Enkel, & Chesbrough, 2010).
The prevalent model of innovation in the 20th century was a closed approach. Deviating from this closed approach, Open innovation proposes a high permeability between a company and its environment. In house ideas are marketed on pathways outside of the company’s boundaries. Furthermore a company not only commercializes own, but also innovations of other companies (H. W. Chesbrough, 2006).
Open innovation is a concept that enables simultaneous external knowledge exploration and external knowledge exploitation as well as knowledge retention in regard to the innovation process of a company. Furthermore this also refers to the internal dimension of a company. It
is important to highlight that this is not a philantrophic approach. The value appropriation plays an important role in this concept (Lichtenthaler, 2011).
O.I. is categorized in three dimensions. The first one is inbound open innovation, which is an outside-in approach. It entails opening up of the innovation process to external knowledge exploration. An example is the integration of knowledge explored from customers or suppliers (Cheng & Huizingh, 2014; Lichtenthaler, 2011).
The second one is outbound open innovation, which is an inside out approach. This approach opens up the innovation process to external exploitation. Examples are the selling of knowledge or spin off of projects into new found innovative firms (Cheng & Huizingh, 2014; Lichtenthaler, 2011).
Thirdly there are coupled open innovation activities that are compound from outbound and inbound activities. Examples are co-creation with complementary partners and strategic alliances. These are based on a mutual exchange of knowledge (Cheng & Huizingh, 2014; Saebi & Foss, 2014).
The most preferred and recent definition of Open Innovation stems from the father of the concept Henry Chesbrough himself.
“Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. [This paradigm] assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology.” (H. Chesbrough, Vanhaverbeke, & West, 2006). The following figure is borrowed from
Chesbrough: “The era of Open Innovation”, (2006). It visually presents the differences in the mentioned Open and Closed innovation processes. The permeability of the company boundaries should be highlighted for the O.I. model. In regard to research and development (H. W. Chesbrough, 2006).
2.3. Exploration & Exploitation
ExplorationExploration is highly concerned with deepening the knowledge base that is already existent, it departures from a company’s core capabilites (Quintana-García & Benavides-Velasco, 2008). The depth of this knowledge base will be increased by tapping into external knowledge sources (Katila & Ahuja, 2002).
The means seen as most efficiently to achieve the gathering of external knowledge right now are i.e. strategic alliances and corporate ventures (Andriopoulos & Lewis, 2009; Ireland & Webb, 2007). These types of collaborations spread the risk that comes with the entrepreneurial approach of Innovation (Vassolo, Anand, & Folta, 2004).
Main differences occur in the degree of centralization of authority, standardization of procedures and formalization of processes. The first one is determining the degree to which Individuals can make decision about resource allocation autonomously. Standardization of procedures describes how much the procedures within the company rely on routines. Formalization of processes means the laid out written codified instructions on how to follow certain procedures within the company (Ireland & Webb, 2007).
Combining decentralized authority with a degree of formalization and standardization will help to reduce the risk of exploration (Benner & Tushman, 2003).
The important part here is not to cripple individual creativity by making all the processes formal and stiff. There is a need for a certain degree of freedom to enable innovativeness. Companies seek to get control over the exploration process with defined specifications for uncertainty like, risk and cost. (Ireland & Webb, 2007)
Exploitation
The degree of focus distinguishes both concepts. Where exploration seeks to increase the quantity of opportunities, exploitation is building on a stronger focus (Ireland & Webb, 2007). The innovations springing from an exploiting structure, culture and processes will rather be
incremental, compared to radical stemming from an exploration approaches (Voss, Sirdeshmukh, & Voss, 2008).
A company that is solely relying on an exploitation approach is relying on incrementally advancing its knowledge base (Andriopoulos & Lewis, 2009).
Another characteristic for the exploitation approach is that Innovation to market time is way shorter which explains why returns are generated faster through exploitation (Quintana-García & Benavides-Velasco, 2008).
The success of exploitation is based on the knowledge about a certain already successful innovation. This knowledge also accounts for the decrease in uncertainty (Ireland & Webb, 2007). Exploitation approaches focus on the finding of complementary partners for the exchange of knowledge and resources (Lavie & Rosenkopf, 2006).
A centralized structure provides the speed of action needed for this approach as well as clear authority (Benner & Tushman, 2003). Routines enable exploitation and facilitate in time decisions (Ancona, Goodman, Lawrence, & Tushman, 2001). Exploitation is characterized by higher degree of certainty, short term goal focus and leveraging on existing competencies that stem from the core business (Benner & Tushman, 2003).
Another difference is the time between milestones in the approaches. Exploitation, due to its incremental character needs to be faster in achieving the milestones and making progress as the resulting innovation is only going to be incremental (Ireland & Webb, 2007).
3. Resources
The Idea of this category follows the construct of the Resource based view (RBV) which explains a company as a bundle of valuable, rare, inimitable and non substitutable resources (Urbano & Turró, 2013). The company’s competitive advantage is therefore the result of the most effective use of those resources (Barney, 1991). These resources are the drivers for growth and high profits. The ability of a company to provide those resources that are needed for the internal formation of innovation is an important factor to the success of C.E. (Hornsby, Kuratko, Holt, & Wales, 2013).
3.1. Resources as success a factor in Corporate Entrepreneurship
Advancing from the idea of the RBV, knowledge can be considered a resource that is tied to human resources (Grant, 1996). One of the most salient components of this category is therefore the Human resource. The higher the quality of Human capital, the better is the opportunity recognition for entrepreneurial ideas. Not only the recognition of those opportunities, but also the effectiveness of the exploitation process itself, will increase. To achieve a certain quality of Human resources an appropriate education is needed (Urbano & Turró, 2013).
Alpakan states in his article (2010) that well educated and diverse teams have a significant impact on the quality of a company’s innovative output, next to management support which will be discussed later on (Alpkan, Bulut, Gunday, Ulusoy, & Kilic, 2010).
The diversity in age, gender and education, as well as gained competencies and skills is accepted as a relevant facilitator of innovation and creativity throughout the academic literature (Durst & Ståhle, 2013; Østergaard, Timmermans, & Kristinsson, 2011). With the quality of education of the individual following the entrepreneurial idea within the company, the chances of success rise. This may stem from an eased up development and implementation due to the educational background (Urbano & Turró, 2013).
The diversity in educational background was also identified to be beneficial to innovation performance (Østergaard et al., 2011).
Managers should furthermore look for individuals that are able to deal with ambiguous situations, are not afraid of unpredicted challenges and are able to work in a team to not only acquire but also integrate knowledge (Kelley, 2011).
Advancing even further from the RBV several other resources can be identified as classified in the theory of the dynamic capability view (DCV) (Teece, Pisano, & Shuen, 1997). Following this idea the capabilities are also bound to the Individual that posses them, as they are inseparable, capabilities are a dimension of the human resource.
Urbano and David (2013) classify the network that a person reatins, internal and external ties, as a capability. The network that a person builds is therefore source for information gathering, a broad knowledge base and other resources. All this will enhance the individuals’ opportunity recognition and their ability to exploit these opportunities, not only in personal life, but also intrapreneurial (Urbano & Turró, 2013). One could also refer to the network of
an individual as social capital, another dimension of the resource category (Adler & Kwon, 2000; Urbano & Turró, 2013).
Deducting from these ideas, the network is even going to increase in effectiveness the more ties of that individual are Entrepreneurs (Urbano & Turró, 2013). The more people are interconnected through these networks, meaning the more nodes those networks have, the more possible opportunities are going to be recognized (Ireland & Webb, 2007).
Advancing further from this theory the ability of an Individual to recognize opportunities is also classified a capability. The research in Entrepreneurship emphasized the opportunity recognition already as one of the most salient abilities of an entrepreneur (Urbano & Turró, 2013). Being able to attract and retain individuals/human resources that possess this ability is an outstandingly important success factor for C.E. projects. It can be a significant competitive advantage for a company.
To refer back to afore mentioned network ties, Shane claims that information asymmetries are a main reason for differences in opportunity recognition (Shane, 2000). It was researched that weak ties, which are characterized through less reciprocal relations, lower emotional attachment and less interaction than strong ties, have a stronger impact on the innovative output of teams (Hülsheger, Anderson, & Salgado, 2009). Overall individual differences account for the variance in opportunity recognition (Urbano & Turró, 2013). Another example from Shane (2000) is the idea that especially prior knowledge impacts the ability of recognizing opportunities (Shane, 2000). Throughout time and the process of exploration and
exploitation this prior knowledge is formed and deepened (Ireland, Covin, & Kuratko, 2009). The definition includes knowledge about the products the company sells, as well as the processes that are employed in the company. The bigger this source of knowledge gets, the more important and the more valuable becomes the Individual that holds this resource (Ireland & Webb, 2007).
To be able to tap into the whole innovation potential, the human resources should be grouped into new venture teams. These teams are especially effective if the Individuals come from different areas of expertise and therefore possess a diverse knowledgebase, as among other things it increases the amount of different viewpoints and therefore creativity (Taylor & Greve, 2006). The effectiveness of the teams is dependent on the willingness of team members to share information, intelligence, knowledge skills and creativity. Several factors can undermine the success of those teams (Bhardwaj, Sushil, & Momaya, 2011; Taylor & Greve, 2006). A poor intragroup communication is one. Besides that a lack of commitment will be detrimental and even more so a sloppy designed incentive systems (Bhardwaj et al., 2011).
The implementation of a C.E. concept is a long term goal. It is nothing that happens from today to tomorrow. Particularly the management of resources has to be planned with care and a long term focus. Otherwise projects might run into resources scarcity, which would kill the whole innovation process (Ireland & Webb, 2007; Kelley, 2011). Continuing from this long term focus, companies that focus on an exploitation approach in their strategy will rather look
capabilities and competitive advantages (Ireland & Webb, 2007). Hornsby and Kuratko established a 5 factor model of antecedents of managerial action to define what the important dimensions of C.E. are. One of them all is time availability (Hornsby et al., 2013; Kuratko, Hornsby, & Covin, 2014), which means resourceful division of time. This is very important as time is always scarce resource. Therefore it is even more important that enough time is dedicated to pursue innovation and that the jobs responsibilities are designed and aligned with the long and short term focus of the company (Hornsby et al., 2013).
Hornsby et al. (1993) pointed out that it is not only the availability of resources that is salient for the success of C.E. but also that the employees perceive this availability. Furthermore as described before, Hornsby et al. highlight that the organization has to take responsibility of organizing the workload and direct it towards the organizational short and long term goals. Most importantly the time constraints that are put on jobs should be considered carefully. Especially because time constraints restrict people from working with a long term problem solving focus (Hornsby, Naffziger, Kuratko, & Montagno, 1993). Moreover the process of the resource allocation needs to be flexible and constantly adaptable, to not lose the progress that was made through organizational learning over time. The people that are in charge of the resources allocation decisions should of course be capable, have a high credibility and strong organizational ties to oversee the decisions they make (Kelley, 2011).
A main problem is that the resource allocation is often based on the proof of technical feasibility of new project, which is paradox as this will most of the times require resources to be proven. The major problem that needs to be addressed in the management of resources is
the missing willingness of companies to allocate resources especially, human resources, to these new entrepreneurial projects that are quite uncertain in their outcome. A solution to this problem can be resource pool that is especially committed to the new entrepreneurial ideas. One could say there should be a pool of dedicated resources (Burgelman, 2012).
3.2. Resources as a success factor in Open Innovation
The issue of resource allocation is equally important for Open Innovation projects (Lichtenthaler & Ernst, 2007). The open innovation idea is a dual approach of exploiting internally and externally generated knowledge. As described before knowledge is considered a resource here as well. Hence it is important for the success to foster the diffusion, sharing and transfer of those resources. This can be done by implementing i.e. knowledge management systems. Another important part is the protection of the intellectual property that is created through the innovation process (Chiaroni, Chiesa, & Frattini, 2011).
Lichtenthaler and Ernst (2007), address the issue of reputation in their paper. They highlight the importance of reputation for the success of an Open innovation concept, which is classified as a resource within this paper (Lichtenthaler & Ernst, 2007). This reputation serves as a signaling mechanism within the networks and impedes opportunism (Ahuja, 2000). They point out that for a successful O.I. concept a company largely depends on how efficiently it can display reliability in their cooperation with external partners. Accordingly, building up a
and prominence to identify external knowledge commercialization opportunities (Lichtenthaler & Ernst, 2007).
To be able to internalize this external knowledge and ideas another important resource is the network of the company and its employees. It is not only needed to internalize external ideas, but also to market ideas and knowledge outside of the company that do not fit the core business (Durst & Ståhle, 2013). Therefore as in a C.E. concept, networks are considered a salient resource for the success of Open innovation projects (Ahuja, 2000). The network ties include i.e. universities, research institutions in general, users and suppliers.(Durst & Ståhle, 2013).
Not only gathering of external knowledge is important to the success but also the integration of it into the company (Saebi & Foss, 2014). The two afore mentioned purposes of a network confirm the necessity of different types of complementary networks for Open innovation, one for exploitation and one for exploration (Chiaroni et al., 2011; Saebi & Foss, 2014). Within those networks the reputation is once again important. This reputation also serves the facilitating of trust in knowledge exchange relationship. Trust as antecedent of reputation, is ergo identified as salient resource to the success of Open Innovation projects (Ahuja, 2000; Durst & Ståhle, 2013; Goh, 2002). The reputation of company will the better the more resources are dedicated to exclusively the purpose of leveraging external knowledge (Lichtenthaler & Ernst, 2007). The management of trust in those collaborative relationships is determined by ambiguity in the behavioral patterns of partners and managing this risk. Repetitive collaboration facilitates trust and in consequence reputation (Vangen & Huxham,
2003). Furthermore the company’s reputation for leveraging external knowledge will even increase if it strongly supports the knowledge transfer to the external partner. A good reputation will ease up the process of finding partners for knowledge and idea transfer (market pull effect) which is pertinent to the success of Open Innovation (Lichtenthaler & Ernst, 2007). The identification of adequate partners to exchange knowledge and ideas within the network is implicitly important for the success of an open innovation project. (Saebi & Foss, 2014)
Another important resource is intellectual property that springs from the novel ideas and innovation as well as the “old” knowledge of the company. To sustain a competitive advantage this resources has to be protected, to exclude others from the unauthorized use. Accordingly the intellectual property right can also be considered a resource that is imperative for the success of Open Innovation (Gassmann et al., 2010).
4. Organizational culture
4.1. Organizational culture as a success factor in Corporate Entrepreneurship
Organizational culture is described as a shared set of values, a specific vision of the company’s goals and a clear mission statement and is a well researched tool to facilitate innovativeness (Ahmed, 1998).The organizational culture is therefore a way to direct the company, especially the employees in the right direction.(Bhardwaj et al., 2011) Specific objectives and guidelines are important to indicate the direction. These guidelines shape
the way problems in the company are tackled (Ahmed, 1998). Furthermore it impacts the way the members of an organization deal with upcoming opportunities. Ireland et al. (2009) claim a general entrepreneurial orientation of top level management will influence the forming of corresponding norms that will build the basis for an entrepreneurial culture (Ireland et al., 2009).
The top management acts as role model to empower employees to act and think entrepreneurial. Obviously these “entrepreneurial norms” will have a major influence on the emergence of an entrepreneurial vision (Ireland et al., 2009). The role model function of the top level management facilitates the entrepreneurial outlook and attitude of their employees more than just a behavior (Ireland et al., 2009; Van Auken, Fry, & Stephens, 2006).
Visions that provide a meaning for employee’s work create a stronger cohesion within the company. Consequently this will increase the willingness to share knowledge in the company. The entrepreneurial vision has to contain the description of duties aligned with personal/individual and organizational goals (Bhardwaj et al., 2011). A reciprocal relationship between this favoring culture and the entrepreneurial cognition of the employees is empirically evident. The well established culture favors entrepreneurial cognition of employees and is therefore a salient factor to the success of efficient Corporate Entrepreneurship (Ireland et al., 2009).
Prerequisite for this positive effect of the entrepreneurial vision on the success of the company is that the employees understand and back this vision (Seshadri & Tripathy,
2006). To foster the entrepreneurial orientation of employees and the striving for innovation, the vision and objectives have to be explicit.
The example company Bhardwaj (2011) looks at promotes a culture of dedication and accountability that consists of actively screening employees, but also a development of their skills as well as promotions and recognition. Fairness, honesty and sincerity are values that the company tries to encourage (Bhardwaj et al., 2011).
Clifford and Cavangy two consultants of McKinsey identified the management of purposeful innovation, enforcing discipline and an entrepreneurial spirit and providing leadership that embraces entrepreneurship with all its challenges as weighty success factors in this construct.
These challenges can be addressed through a corresponding corporate culture. It is highlighted that the culture is the tool to provide the framework within which the employees are empowered to innovate (Ross, January 1987).
It has to be pointed out that having the right culture in place is not that easy to accomplish. A culture that supports Corporate Entrepreneurship is rather characterized through autonomy and discretion. Paradoxically a culture that ensures a well running core business puts more focus on stability and efficiency. Technically a company has to be two faced in terms of their implemented culture. On one hand exploitation of core business and on the other experimentation with new opportunities has to be supported (Hornsby, Kuratko, Shepherd, & Bott, 2009).
One of the most important traits of a culture that embraces Corporate Entrepreneurship is that it should enable employees to experiment (Seshadri & Tripathy, 2006). This includes the fact that employees should not be criticized for making mistakes during the process of innovating. The company has to establish a culture where the fear of making a mistake is minimized and rather perceived as an opportunity to learn (Hornsby et al., 1993). A culture therefore has to foster the trust between employees and organization and clearly show them that they are supported in their innovativeness. Employees have to be reassured that they are not bearing the risk of entrepreneurial projects solely on their own shoulders (Tiwari, 2014).
Strategic communication is an efficient tool to show the support regarding those issues and facilitate a collaborative culture (Invernizzi & Romenti, 2011). Consequently the culture should empower employees to take action. It should be made sure that employees know that the company’s success also depends on their individual innovativeness. A sense of ownership should be created (Tiwari, 2014).
Organizational learning is another process that should be facilitated through culture. It fosters values like trust, cooperation and openness that are essential for C.E., especially because those values reduce individual opportunism (Kim, Song, Sambamurthy, & Lee, 2012). A strong identification with those values fosters a commitment to the collective goal achievement (Adler & Chen, 2011).
All these essentials are not activating the positive effects that culture can have on the innovativeness, if the specific culture and its norms, values and vision (innovation culture)
are not communicated right and/or misunderstood (Invernizzi & Romenti, 2011). Therefore the Management has to make sure to communicate these in the right and appropriate way, ensure the right interpretation of values and vision and if there is a need to, clarify. This is important as the corporate culture has to be adapted throughout the development stages of the organization and will therefore face, even if only small ones, changes (Kelley, 2011).
Hence the internal communication of the cultural values, vision and mission is found to be indispensible for the success of C.E. (Invernizzi & Romenti, 2011). It is emphasized that this communication takes formal and informal ways. Both should be taken into account, although formal is the more important one (Zahra, 1991). Culture can therefore be referred to as a tool that supports the structural characteristics that need to be in place to enable corporate entrepreneurship (Ireland & Webb, 2007).
4.2. Organizational culture as a success factor in Open Innovation
Chesbrough (2004) already explained that an approach of closed innovation is not sustainable in today’s economy anymore. A company nowadays has to be willing to tap in to internal but also external sources of knowledge and skills (H. Chesbrough, 2004). Not only tapping into external sources of knowledge and expertise is part of the open innovation approach but also the provider side has to be taken into account in order to create a fruitful exchange (H. W. Chesbrough & Appleyard, 2007; Goh, 2002).
The success of such projects is also based on the diffusion of internal innovations, outside the company that do not necessarily match the core business. Following this argument companies also have to facilitate the sharing of knowledge as provider through their culture (Tranekjer & Knudsen, 2012).
Same as for Corporate Entrepreneurship projects, the diffusion of cultural norms, values and an according vision is crucial to the success of this approach. Management plays a salient role in communicating the culture internally and externally, enabling a free information flow (Hafkesbrink & Schroll, 2010).
Hence the culture needs to be accepted throughout the different hierachial levels of the organization. The congruence with employee’s values eases up the communication. A culture that reinforces the willingness to change and adapt, is very important for the success of Open Innovation projects, as it embraces the uncertainty that is implied by such an orientation (Chiaroni et al., 2011).
For Open Innovation the external communication part is further more important than it is for the Corporate Entrepreneurship. An adequate external communication of the corporate culture is a tool for the company to express its willingness to cooperate and find complementary partners for that collaboration (Gassmann et al., 2010; Kanter, 1982) A culture has to achieve the diffusion of an entrepreneurial mindset of the employees in order to foster the success of Open Innovation.
The company has to establish a culture that is not opposed towards ideas, knowledge and skills that are sourced from outside the boundaries of the company (Gassmann et al.,
2010). The difficult part here is to overcome a great barrier to innovation which is often labeled the “not invented here bias” (Huston & Sakkab, 2006). The not invented here bias is detrimental to innovation as it implies the fallacy of possessing all the necessary knowledge and skills to solve problems. This facilitates an opposing stand towards externally sourced solutions (Katz & Allen, 1982).
It is clearly not the only reason that employees are opposed towards the sourcing of external ideas and knowledge and as result also towards the sourcing of solutions to internal problems.
Another reason is that the acceptance of an external solution is often perceived as admitting failure in finding a solution on your own (Nakagaki, Aber, & Fetterhoff, 2012). Even more so the culture has to enable the organization and its employees to embrace uncertainty and create a safe environment to do so (Hafkesbrink & Schroll, 2010). The uncertainty comes with the entrepreneurial orientation, which explains why measurement errors in evaluating projects (false negatives/false positives) are not avoidable (H. Chesbrough, 2004). Durst and Strahle (2013), identified culture as one of their nine dimensions that facilitate the innovation process for a company (Durst & Ståhle, 2013). This culture can be reinforced by i.e. specially designed internal communication platforms or management information systems (Gassmann et al., 2010).
The basic Tenor of the culture should be to be completely agnostic towards where the used resources, knowledge or even complete solutions come from. As most companies do
not start off with an open innovation approach, they have to adapt the organizational mindset and at the same time the individual employee’s (Nakagaki et al., 2012).
5. Management support
5.1. Management support as a success factor in Corporate Entrepreneurship
The Management support refers to how willing the upper layer of hierarchy stands towards an entrepreneurial mindset and its diffusion throughout the company. It also includes the so called “championing” of new, innovative ideas (Hornsby et al., 2013). Championing induces a strong commitment of the manager responsible for the project. Through this strong commitment the champion influences employee’s positive attitude towards the project and therefore impacts employee’s commitment and has direct impact on the company’s innovativeness (Kuratko et al., 2014; Markham, Green, & Basu, 1991; Markham & Griffin, 1998). Furthermore it also takes into account the dedication of the right amount of resources towards those projects (Hornsby et al., 2013; Ireland et al., 2009; Kuratko et al., 2014).
A significant relationship was found between the support on a managerial level and the following number of innovative ideas that have been implemented. The higher the hierarchial position was, the support originated from, the more ideas were successfully implemented (Hornsby et al., 2009).
Management support for entrepreneurial projects is characterized by i.e. quick adoption of the innovation ideas, recognition for good ideas, support of experimentation as well as
provision of resources for the projects (Hornsby et al., 1993; Kuratko et al., 2014). The top level managers have to communicate and live the vision that is introduced to foster their employees’ commitment (Ireland et al., 2009).
Still the role of i.e. mid level management should not be underestimated. These managers are the binding link between idea generation (employees) and the implementation (higher management) (Bhardwaj et al., 2011; Nonaka, Toyama, & Konno, 2000). Managers are mostly responsible for the earlier describe championing role, they foster creativity and innovativeness through according structures like rewards systems (Bhardwaj et al., 2011).
5.2. Management support as a success factor in Open innovation
Management support is also identified as salient success factor for increasing innovativeness of a company through open innovation.
Cheng and Huizingh (2014) tested three different management approaches in their effectiveness to enhance innovativeness. The one with the most significant correlation to innovativeness is called entrepreneurial orientation. The entrepreneurial orientation of the management and company supports risk taking and proactiveness (Cheng & Huizingh, 2014; Kim et al., 2012).
The support of those open innovation concepts has to be assured throughout the whole company and all its hierarchial levels. Managers have to strongly support the entrepreneurial projects (Chiaroni et al., 2011), because they are the ones responsible for
passing down the ideas which are more easily exploitable at the subordinate level (Herskovits, Grijalbo, & Tafur, 2013).
Even more important is the commitment of top level management (Mortara & Minshall, 2011). They have to understand O.I. and convince employees that open innovation is the way to go (Slowinski & Sagal, 2010). Furthermore they are budgeting the projects and support the innovation teams, which will not work without a strong commitment and little persuasion (Mortara & Minshall, 2011).
Their strong commitment has to be proven in every interaction the executive is involved in. They can only convince their employees to believe in the value of O.I. if they clearly communicate their own commitment to it (Lindegaard, 2010). This refers to the earlier mentioned championing role of Managers.
Those champions are also responsible for the Integration of projects and the constant revision (H. Chesbrough & Crowther, 2006).
6. Organizational structure
6.1. Organizational structure as success factor in Corporate Entrepreneurship
Aligning the architecture of a company within the framework of success factors that is created to support C.E. is another necessary step to create an innovation driven company (Bhardwaj et al., 2011). This entails that the organizational structure has to be aligned with the company’s innovation goals and its entrepreneurial orientation (Kelley, 2011). Therefore it can be conceived as the infrastructure that has to be in place to enable the
strategy. It sets the framework through matching managerial systems that facilitate an entrepreneurial orientation of the whole organization. Hence it is an enforcing mechanism that translates the entrepreneurial norms and values into actual processes and behaviors within the company (Bhardwaj et al., 2011; Ireland & Webb, 2007; Peltola, 2012). The organizational architecture defines the authority, enables communication and regulates the work processes (Ireland & Webb, 2007).
Even more so a distinct division of labor facilitates expertise and commitment to the company’s/unit’s goals (Zahra, 1991).
A company’s structure or architecture is limited by two extremes either mechanistic or organic. An organic structure facilitates innovation better than a mechanistic one (Damanpour & Aravind, 2012). Organic structure in general is associated with decentralization of the decisions making (flat hierarchies). The processes and relationships in general tend to be less formal and more flexible. Power is based on expertise not on position within the company (Ireland & Webb, 2007).
Organizational structure has to provide a quick reacting organizational framework to be able to deal with the uncertainty that is implied by an entrepreneurial orientation. It is all about response time in the field of opportunity recognition and exploitation, which cannot be granted by a rather mechanistic design (Ireland et al., 2009). Another important characteristic is the enabling of free information flow through the provision of adequate networks (Ireland & Webb, 2007). This enables entrepreneurial behavior and individual opportunity recognition, unlike a centralized authority (Peltola, 2012). It is especially
important for the opportunity recognition, that organization’s boundaries are overcome. Standard operational processes and unmatched performance standards (Hornsby et al., 1993) as well as too limited freedom through restricted job responsibilities (need for a flexible job structure) (Kelley, 2011) are impeding this.
A practical entrepreneurial structure needs to be designed to avoid those trap doors (Hornsby et al., 1993). Still the company has to achieve a balance between formal structure and decentralization of authority (Garvin & Levesque, 2006). Too much decentralization might cause “powerlessness” which is undermining collaboration (Kanter, 1982).
For the reporting relationships it has to be decided case wise, if it should either follow the dotted or solid line principle. The dotted line principle facilitates a free information flow better than the solid line approach (Garvin & Levesque, 2006).
Uncertainty also induces that the structure has to be adaptable to changes. Continuous evaluation of the fit needs to be naturally understood and anticipated as an opportunity to advance, not as a failure of the system.
Structure needs to evolve (Kelley, 2011). Following this an organizational architecture that enables corporate entrepreneurship can be seen as the facilitator of entrepreneurial action through establishing a dynamic, fast reacting process environment that is aligned with the strategy as well as with the culture of the company (Ireland et al., 2009). As it is most likely that the company will follow an innovation strategy it has to implement a structure that ensures a smooth transition from entrepreneurial projects into the
organization’s authority, after these have outgrown the “project” stadium (Garvin & Levesque, 2006). This transition will mostly involve integration of the entrepreneurial endeavors into the core business of the company. The structure needs to provide clear authority for the process of selecting and assessing these projects. Furthermore the decision authority over resources allocation has to be clearly laid out. To ensure the process of organizational learning the structure has to enable the quick unproblematic transfer of Individuals that are vital to the entrepreneurial process (Kelley, 2011).
6.1.1. Reward system:
A reward system that facilitates Corporate Entrepreneurship needs to support and encourage especially risk taking (Ireland et al., 2009).
Some examples for rewards that stimulate entrepreneurial action are: equity, bonuses, salary increases, promotion or recognition in general (Bhardwaj et al., 2011). The nature of the reward system, formal or informal, has no impact on the fact that it has to be aligned with the culture and organizational goals (Ireland et al., 2009).
The degree of informality is positively related to empowerment of innovative action (Morris, Allen, Schindehutte, & Avila, 2006). A reward system reinforces the entrepreneurial behavior or action of employees (Bhardwaj et al., 2011; Ireland et al., 2009). It always goes hand in hand with a certain form of evaluation. Obviously these two have to be aligned as well (Ireland et al., 2009).
The evaluation criteria/goals should be set non-financially i.e. non financial project based milestones (Garvin & Levesque, 2006). An example of financial rewarding is the dual contingent reward. A certain percentage depends on the division’s competitiveness and the remaining percentage depends on other divisions’ competitiveness, which facilitates knowledge sharing and working together across the divisions (Bhardwaj et al., 2011). Inducing intrinsic motivation through the reward system is the most effective way of supporting the generation of innovation, i.e. the ownership over decision making or the degree of responsibility (Bhardwaj et al., 2011; Frey, Lüthje, & Haag, 2011; Hornsby et al., 1993; Peltola, 2012). Another form of recognition would be the opportunity to be part of an even bigger project, after one was completed successfully, facilitating the trust in the Individuals capabilities (Kanter, 1982).
6.1.2. Knowledge system/information system
The importance of knowledge integration for corporate entrepreneurship was highlighted in almost all parts of this thesis. Knowledge integration is built on three major columns: learning culture, knowledge management processes and an according information technology. Knowledge management processes are all about the creation, sharing, transfer and application of knowledge (Darroch, 2005; Kim et al., 2012).
Two major processes are distinguished: direction and routine. Whereas this might sound like the opposite of afore proposed flexibility, these routines rather refer to the interaction patterns between individuals. Direction in that case only means the provision of guidance by high
management, if the work environment is not completely structured (Kim et al., 2012). Knowledge management systems can hence be characterized as coordinating tools (Darroch, 2005).
IT systems are the logical extension of knowledge management systems in organizational practice. Those systems contain the knowledge and skills needed for the business’s processes, they transform knowledge into action. Furthermore this allows the fast and filtered access to crucial information within the company (Kim et al., 2012).
An example of such a system is the Bank of knowledge explained in Bhardwj (2011). It is an internal network that contains corporate information. Major content dimensions are quality system documentation, training modules and information about new technology. Each employee has specified desktop access to this data, which facilitates collaborative decision making (Bhardwaj et al., 2011).
6.1.3. Evaluation system/process
An evaluation of the new combinations of existing technologies, concepts, ideas and the reapplication of already built up competencies is salient to the opportunity recognition process (McFadzean, O'Loughlin, & Shaw, 2005; Shane & Venkataraman, 2000). The entrepreneurial process goes through the phases of discovery, evaluation ending in the exploitation of opportunities (Shane & Venkataraman, 2000). Even before external ideas or knowledge can be integrated it has to be evaluated. The assessment should be a continuous process as long as the project remains within the company (Belousova, Gailly, & Basso, 2009; Belousova &
Gailly, 2013; McFadzean et al., 2005). Different variables play a role in the evaluation process. Risk has to be evaluated, the expected demand, industry profits technology cycles and competition (Belousova et al., 2009).
Financial variables might not be suited best to evaluate entrepreneurial projects (Garvin & Levesque, 2006).
The evaluation process needs clarify if the targeted idea can be translated into a valuable, exploitable opportunity for the company. Idea and vision have to fit as well as the strategy and the capabilities of the company. By actively gathering technical, political and insider knowledge and market information the evaluation process advances (Belousova et al., 2009). Furthermore it is claimed that the evaluation should be conducted by insiders as the executives know the internal strategic process and implemented mechanisms.
This does not exclude the outsiders as source of advice to decrease the uncertainty (Zahra, 1996).
More so the created organizational framework is a significant influence on the process of evaluation. Once again it is important to balance the use of formal and informal controls so it the innovation process is not impaired (Zahra, 1991).
6.2. Organizational structure as success factor in open innovation projects
As open Innovation is quite a new phenomenon, the best practice advice is far from being reliable and universally applicable. That’s why in this domain also trial and error approach needs to be institutionalized(Gassmann et al., 2010).
The structure that needs to be in place for open innovation concepts has a strong focus on the access and integration of newly accessible made knowledge. The same accounts for opportunities to externally market, internally developed ideas (Chiaroni et al., 2011; Saebi & Foss, 2014).
Generally speaking the structure has to be adapted to the need of integrating external parties into internal processes (Saebi & Foss, 2014). The flexible and dynamic architecture of the organization is needed to deal with the various outside ties the company maintains in order to successfully use open innovation. Hence it has to be designed in a way that allows the ideas that are sparked outside of the company to reach the best possible employee to follow up on it, inside the organization (Herskovits et al., 2013). Structure wise the organization can vary widely from independent business units to task forces or specially designed teams (Cheng & Huizingh, 2014).
There is empirical support for the hypothesis that creating O.I. business units, dedicated cross functional teams and task forces are crucial for success of O.I. concepts in companies (Saebi & Foss, 2014). It is the top management’s objective to form those appropriately (Mortara & Minshall, 2011). A reward system that facilitates all the different types of innovation that are enabled by an open innovation concept needs to be built in a way that it fits the objectives,
culture and strategy of the organization (Cheng & Huizingh, 2014; Chiaroni et al., 2011). Overall the organizational architecture is responsible to actively shape the search behavior and enable the integration and utilization of knowledge. For the structure to be effective it has to support the absorptive capacity of the organization (Saebi & Foss, 2014).
The absorptive capacity equates organizational learning (Dodgson, Gann, & Salter, 2006). It is a three dimensional construct, containing: the identification of knowledge, adaption and the exploitation of knowledge (Lane, Koka, & Pathak, 2006). For the case of open innovation the last and most important step is the exploitation of the gained knowledge by integrating it properly into the organization. Strategy and structure of the organization are strongly connected, if strategy changes slightly like it is the case for different focuses within O.I. (i.e. market based innovation strategy, user based innovation strategy) the degree of openness in the architecture has to change as well. This means, permeability for knowledge transfers increases with the openness of the structure (Saebi & Foss, 2014).
6.2.1. Reward system
The reward system should be implemented in a way that it facilitates the principles of O.I. and is therefore just as well aligned with the objectives of a company as its strategy. Furthermore it has to fit within the overall structure of the organization (H. Chesbrough, 2004). The reward system should be laid out to facilitate knowledge sharing. The provided rewards should be clearly communicated (Goh, 2002).
Even more so a reward system has to incentivize the communication horizontally as well as vertically to reach maximum possible diffusion of knowledge and ideas.
The cross functional collaboration should be included in an incentive system. Overall it should be an encompassing system that rewards innovative action in general (Saebi & Foss, 2014). A reward system that facilitates the collaboration in O.I. networks is slightly different to the internal one. One example of external idea generation is the idea contest. Problem solvers are financially rewarded if their solution is chosen. Expertise based solutions are best rewarded with the winner takes all prices and example of a reward could be a percentage of the profit that the solution generates (Terwiesch & Xu, 2008). Another example is the approach of generating solution through online O.I. communities. The motivation and rewards are once again different. Motivations of participants are ranging from fun (interesting objective), a sense of self efficacy and community (friendships, social support) to gaining new viewpoints and synergies (personal learning and social capital) to name a few.
Rewards in general should facilitate those motivational factors and combine them with financial rewards (Antikainen, Mäkipää, & Ahonen, 2010). The collaboration with universities is once again another case.
6.2.2. Knowledge management/ Information systems
The main purpose of open innovation concepts is the exploitation of knowledge from within the company and outside of its boundaries. Therefore a system is needed, that addresses the
issues of diffusion of this knowledge within company. The system also needs to support a more elaborated knowledge transfer and knowledge sharing (Chiaroni et al., 2011). An elaborated communication flow that is integrated into the company’s culture strongly supports all three dimensions.
Communication technologies can be a way to tap into this socialization effect for an increased innovation potential (Žemaitis, 2014). The lack of information technologies was identified as the third major reason for hindering the success of O.I. (Van der Meer, 2007). Knowledge management systems include interaction processes with collaboration partners for accessing new sources of knowledge that is critical to the survival of the company in a competitive environment (Chaston, 2012).
These systems are needed to increase the absorptive capacity of the organization which is essential to the integration of new knowledge (Chaston, 2012). Especially the knowledge acquisition from international sources has a positive impact on the innovativeness of the organization and its R&D unit. This explains the need for participation in global knowledge transfer networks (Žemaitis, 2014).
Emphasis is also laid on the use of knowledge management in terms of IPR and information and communication tools. Especially intellectual property right protection is important to enable the transfer of knowledge out of the organization. For companies that operate in more than one country the ICT becomes even more important, to enable collaboration of cross functional teams (Chiaroni et al., 2011). ICT provides an infrastructure for the secure storage and quick access of data. Diverse software solutions aid collaboration under the aspect of
simultaneous cost reduction. Examples are: visualization, design, simulation and communication technology (Dodgson et al., 2006).
Returning to the issue of IPR it has to be mentioned that this is a decision of a trade off: Either competition or collaboration or in other words openness vs. control.
IPR is nevertheless important for O.I. concepts, but a company has to be aware of this trade off, which can slow down the innovation process and the forming of standards of which the company could benefit (Lim, Chesbrough, & Ruan, 2010; Simcoe, 2006).
It is not necessarily a neither or decision, as Chesbrough (2007) pointed out a hybrid approach can also lead to high profitability (H. W. Chesbrough & Appleyard, 2007). This concept of trade-off between value creation and value appropriation unifies the most research in this domain and still it is not fully understood (Lim et al., 2010).
6.2.3. Evaluation system/process
Due to the technical and market uncertainties that arise with the implementation of an O.I. construct, the evaluation process becomes more and more difficult with increased openness. It is clear that this uncertainties need to be addressed with a different kind of evaluation criteria (H. Chesbrough, 2004; Gassmann et al., 2010).
Quite some examples are given by Chesbrough (2004): to look at the time to market new products, rate of internally developed- externally licensed ideas but especially the managing of false negatives. This means the following up on projects that were internally terminated. It
outside the company
.
It is a salient process for the organizational learning to spot the occurrence of false negatives (H. Chesbrough, 2004). The evaluation process significantly varies in regard to the direction that open innovation takes, if it is outbound- in or inbound out innovation (Chiaroni et al., 2011; Saebi & Foss, 2014). For the latter one for example the option of spin out and out licensing must be considered from the beginning. When it comes to outbound in innovation the evaluation process should focus more on external sources of innovation and on how to integrate them (Chiaroni et al., 2011).7. Strategy
7.1. Strategy as a success factor in Corporate entrepreneurship
Strategy is found to be essential to the success of firm level entrepreneurship. Most definitions of those strategies focus on the organization’s internal dimensions. The question is whether you talk about a certain laid out strategy or the construct in general. Ireland et al. (2009) propose that an entrepreneurial orientation can be a distinct strategy to foster Entrepreneurship. It facilitates certain behaviors like risk taking, innovativeness, proactiveness, competitive aggressiveness and autonomy (Ireland et al., 2009).
This entrepreneurial strategy is concerned with the long term development of the organization. It focuses on creating a continuous stream of innovation to remain competitive. The exploration approach can therefore also be seen as the prerequisite for the future ability to exploit on the created opportunities (Ireland & Webb, 2007). This
strategy aligns current goals with the future perspective of the organization. It has to be pointed out that the implementation of such an approach is rather a process of development than a one day task (Kelley, 2011). A Corporate Entrepreneurship strategy like that builds on the three columns, an entrepreneurial vision, a pro entrepreneurship organizational structure and distinct entrepreneurial processes, behavior diffused through all hierarchial levels of the organization (Ireland et al., 2009). A strategy as the one described can even be a solution to the problem of ambiguity that is created between core business and entrepreneurial action within the company (Ireland et al., 2003; Ireland & Webb, 2007).
These efforts of simultaneously implementing exploitation and experimentation are labeled strategic entrepreneurship (Ireland & Webb, 2007; Kuratko & Audretsch, 2009). The Integration is necessary to achieve a sustainable competitive advantage through corporate entrepreneurship. The main problem here is again the transition from exploitation to exploration which are two strategically different concepts that might conflict with each other due to their distinct differences (Ireland & Webb, 2007; Kelley, 2011; Kuratko & Audretsch, 2009). The last one builds i.e. on established routines and processes whereas the other one embraces the uncertainty and flexible processes. It is clearly important for a company to be able to implement both approaches, as one serves the other (Ireland & Webb, 2007; Kuratko & Audretsch, 2009).
strategic concept is needed (Kuratko & Audretsch, 2009). This of course means that an according culture and organizational architecture have to be in place.
With the words of Garvin and Levesque (2006) the company has to walk a thin line to integrate the two differing approaches and support them by adopting strategy, operations and the organization as a whole (Garvin & Levesque, 2006). Especially because the out of box thinking that is so much needed for the innovating process, will easily be constrained by too much guidance, rules and restrictions (Kelley, 2011).
In fact deducting from the previous literature review, two different cultures and organizational architectures have to implemented within the company to facilitate both approaches. The hard part about implementing these opposing, even conflicting principles is that they still have to be matched into one and the same company.
It is important to highlight that there is a difference between uncertainty per se and ambiguity. The latter one refers to the fact that not all outcomes and alternatives are clear. Whereas uncertainty describes situations in which options are kind of clear and different outcomes with corresponding likelihoods can occur (Garvin & Levesque, 2006).
An entrepreneurial strategy, as it has to be developed under ambiguous circumstances, should therefore not be set in advance but rather be developed via trial and error. Once more in a different context, experimentation is necessary (Garvin & Levesque, 2006). The strategy development is therefore characterized by continuous learning, adapting and refining (Ireland & Webb, 2007; Kelley, 2011; Kuratko & Audretsch, 2009). This
