intrapreneurship: exploration and exploitation of internal
TRANSCRIPT
Intrapreneurship Exploration and Exploitation of
Internal Resources
BY KARINA SKOVVANG CHRISTENSEN
A dissertation submitted to
THE AARHUS SCHOOL OF BUSINESS
in partial fulfillment of the requirements for
the PhD degree
in Management
UNIVERSITY OF AARHUS
DENMARK
i
Preface
Changes in the driving forces of the global economy affect the competitive
environment of companies and require new management methods and
tools as well as new ways of organising activities By now it has become
quite clear that companiesrsquo innovativeness development of new
knowledge and exploitation of existing ideas are a top priority for both
politicians and managers
This in turn has driven research into such topics as entrepreneurship
innovation management intrapreneurship knowledge management and
corporate venturing Building on existing knowledge in various fields the
aim of this research is to contribute insights into how new ideas can not
only be fostered within large companies but also be commercialised by
means of the entrepreneurial forces within their formal structures
Corporate entrepreneurship corporate venturing and intrapreneurship are
some of the general terms for organising innovative activities in a way that
combines the advantages of established companies with the creativity and
recklessness of the individual entrepreneur Since these terms also cover
new techniques principles methods and organisational forms ndash and
sometimes well-known management ideas applied in new ways and often
in new combinations ndash they can be difficult to define precisely One
starting point of this research project has therefore been to disentangle the
concepts as they are used in the research literature
ii
This dissertation consists of several separate articles that together represent
my endeavours in the field of intrapreneurship and knowledge
management This is a field of both research and practice and the
dissertation is partly an account of current ideas in the area and partly an
insight into a variety of issues related to how entrepreneurial need is being
managed in different Danish companies
While therefore intrapreneurship is one perspective on companiesrsquo
management of innovative activities this dissertation has taken a starting
point in the management of knowledge to understand how innovativeness
is managed within companies Here knowledge-management activities are
seen neither as a technological solution nor as an isolated task for a specific
department but rather more in terms of inter-relating management domains
and creating space for innovative and entrepreneurial activities This space
could be found either within the existing organisational structures of the
company be supported by processes and activities that cross both
departmental and organisational borders or be established through the
formation of new companies
Reflecting upon the process which has led to the presentation of this
dissertation it seems that the life of a PhD student in many senses offers
experiences that can be summarised in the light of corporate
entrepreneurship This is at least the case if we accept that corporate
entrepreneurship as it will be argued in the dissertation can be seen as
consisting of four organisational perspectives corporate venturing internal
knowledge resources internationalisation and external networks
The current PhD project and dissertation is a corporate venture related to
but separate from the Aarhus School of Business Aarhus University and is
iii
based on existing competencies combined with the exploration of new
ones In the process the internal resources ie the research traditions and
perspectives that I brought with me together with the competencies and
skills from my previous education played a role in forming the research
questions and starting points of the project
Given the global nature of research internationalisation is an important
part of any PhD project This became clear to me in relation to my two
stays abroad which both contributed to my personal development and were
a source of new knowledge The external networks I built up during these
stays have been very helpful in discussing and commenting on previous
drafts of the papers
The process leading to the dissertation is not only manifested in a formal
plan consisting of seminars courses knowledge dissemination change of
academic environment and writing papers My work on the dissertation
can best be understood by dividing it into several stages as shown in figure
A The first period (May 2002 ndash April 2003) was spent participating in
doctoral courses and preparing the thesis proposal The overall theme for
the research project was determined by KNORI (KNowledge-Intensive
ORganisations and Intrapreneurship) a project which provided the funding
for the research but within this I was to find seed and nurture my own
corporate venture
The next phase began in May 2003 when I changed my academic
environment to spend a few weeks at Professor Georg von Kroghrsquos chair at
The University of St Gallen in Switzerland From October 2003 to April
2004 I also had the opportunity to experience daily life at Stanford
iv
University California This period involved the use of internal knowledge
resources and the development and use of external networks
The third phase of the project has been by far the longest most challenging
and most fruitful As regards time it was spread over more than three years
(from May 2004 to October 2007) However as shown in Figure A it was
divided into three periods since I gave birth to two children ndash in 2004 and
2006 ndash before finally finishing the dissertation in 2007
I would like to take the opportunity here to thank everyone who has been
involved in this process in one way or another Thanks are due to the
Ministry of Science Technology and Innovation for providing funding for
the research via the KNORI project I am also grateful for the generous
financial support from the Aarhus School of Business Aarhus University
and the Tuborg Foundation
I am especially grateful to my supervisors Professor John Parm Ulhoslashi and
Professor Anders Drejer without whose lively discussions I would never
have been so stubborn and my dissertation would not be what it is today I
am also grateful for the many inputs from colleagues at the Department of
Management at the Aarhus School of Business Aarhus University I am
especially thankful to Jakob Lauring for general support suggestions and
ideas for improvements to the dissertation I also want to thank my new
colleagues at the School of Management and Economics Aarhus
University for welcoming me and giving me time to finish my PhD
v
Figure A Timeline for the PhD process
The PhD process
Enrolled as a PhD student May 1st 2002
Personal
Publications
Article 1 Published December 2004 Submitted October 2004
Accepted November 2004
Article 2 Published October 2006
Submitted Nov 2005 Accepted July 2006
Article 5 Published June 2004
Submitted March 2004 Accepted April 2004
Article 3Published July 2005
Submitted September 2004 Accepted October 2004
Article 5 SubmittedSeptember
2007
Maternity Leave Magnus September 8th 2004 ndashNovember 7th 2005
Maternity Leave Tobias February 14th 2006 ndash
May 29th 2007
Thesis ProposalApril 11th 2003
PhD dissertation submitted
November 2007
Stanford UniverityOctober 1st 2003 ndash
April 5th 2004
Univerity of St Gallen May 5th ndash May 17th 2003 June 21st ndash June 28th 2003
PhD dissertationfinished
September 2007
vi
The project involved the participation of five companies and I would like
to thank the numerous people who took time to talk to me and helped me
with access in various ways In particular thanks to Allan Krogh Erlandsen
at Bang amp Olufsen Hanne Buje Jensen and Brian Larsen at Crisplant Niels
Gade at Danfoss Drives Morten V Jensen at End2End as well as Poul
Erik Dybdal and Erik Reinholt at Ericsson Telebit for giving me access to
their companies Without their hospitality and the time they and other
employees took to talk to me this dissertation would not have been written
I also want to thank Sine Nissen for being my co-pilot during the data
collection and Mette Line Chemnitz Mie Skovsgaard Nielsen and Lene
Thisgaard for assistance with the transcriptions I am also deeply grateful to
Anders Jacob Raj Andersen Mikkel Gadmar and Christian Nielsen for help
and inspiration I would also like to thank my co-authors in the individual
papers Anders Drejer John P Ulhoslashi Heine Kaasgaard Bang and Per
Nikolaj Bukh for inspiration and the opportunity to work together From
my visits abroad I want to thank Georg von Krogh and his research team at
St Gallen Switzerland for hospitality and for taking good care of me in
May and June 2003 Thanks also to SCANCOR Stanford University and
my colleagues there from October 2003 to April 2004
My family and friends who have supported me during the whole process
have been an infinite source of comfort to me Above all my parents and
my best friend Vibeke Reuter Lapiki were indispensable Finally I want
to thank my husband Per Nikolaj who has listened to my complaints ndash
especially in the most critical periods and when I felt I was being treated
unfairly You were always there to support me During the third part of the
PhD project my two sons Magnus and Tobias were there to make me
vii
focus on my work and cheer me up This more than made up for the many
months of morning sickness and general inaction
Karina Skovvang Christensen
Aarhus University
December 2007
viii
ix
Contents
Preface i
Contentsix
PART I 1
Introduction 1
CHAPTER 1 3
The Background 3 11 Innovativeness in Denmark5
12 The KNORI project 9
13 References11
CHAPTER 2 13
Research scope themes and structure 13
21 Corporate entrepreneurship15
22 The corporate entrepreneurship field 18
23 focus and structure of The dissertation 21
231 The structure of the dissertation 21
232 The research questions 22
233 The articles in the dissertation23
24 References27
CHAPTER 3 31
Methodology 31
31 From Paradigm to research approach32
32 Unit of Analysis 34
x
33 Selection of the case companies37
34 The case companies 40
35 The case study approach 40
351 Definition of a case study41
352 Action research or research in action 42
36 Validity of the methodology 44
361 The use of Multiple Sources of Evidence45
37 The research interviews 46
371 The transcription process49
38 References50
CHAPTER 4 57
A Classification of the Corporate Entrepreneurship Umbrella Labels and Perspectives 57
41 Introduction59
42 Theoretical roots entrepreneurship 61
43 The appropriate label 61
44 Defining corporate entrepreneurship 63
45 Perspectives on corporate entpreneurship64
451 Corporate venturing65
452 Internal (intangible) resources66
453 Internationalisation67
454 External networks and alliances 67
455 Towards a framework for corporate entrepreneurship 68
46 Conclusion 68
47 References70
CHAPTER 5 75
Postscript to article 175 51 Towards a framework for corporate entrepreneurship 76
52 Concluding remarks 78
53 References81
xi
PART II 83
Intrapreneurship from an Internal Resources Perspective 83
CHAPTER 6 87
Losing innovativeness the challenge of being acquired87
61 Introduction89
62 Innovation through acquisition the entrepreneurial challenge 90
621 The case for innovation through acquisitions91
622 Managing the post-acquisition process92
63 Method93
631 The interviews 93
632 The questionnaire 93
64 Innovativeness of Ericsson Telebit from spin-off to integration94
641 Incorporation into LM Ericsson 95
642 Ericsson Telebitrsquos products 96
643 The Market 96
644 From customers to sponsors 97
645 Organisational structure 97
646 Employees 98
65 Discussion of Ericsson Telebitrsquos innovativeness98
651 Creativity99
652 Innovation100
653 The innovation process102
66 Concluding discussion 103
661 Implications for practice104
662 Implications for research 105
67 References106
CHAPTER 7 111
Enabling Intrapreneurship The Case of a Knowledge-Intensive Industrial Company 111
71 Introduction113
72 Corporate entrepreneurship114
73 Methodology116
74 Danfoss Drives117
741 Strategy and the organisation 117
xii
75 Corporate entreprenership at Danfoss Drives 118
751 Rewards118
752 Management support 119
753 Resources 119
754 Organisational structure 120
755 Risk 122
76 Towards a more complete model 123
761 Communication 124
762 Culture125
763 Process127
77 Conclusion and implications127
78 References128
PART III 131
Managing Internal Knowledge Resources131
CHAPTER 8 139
Understanding Intrapreneurship by means of state-of-the-art knowledge management and
Organisational learning 139
81 On the developing need for intrapreneurship141
82 Innovation management and intrapreneurship 144
821 Innovation management the context of intrapreneurship 145
822 Contingent situations for innovation management 146
823 Intrapreneurs who makes the innovations 148
83 Knowledge in an innovation perspective 149
831 Knowledge management in a knowledge society149
832 Different types of knowledge 150
Level of articulation tacit to explicit 150
Depth of knowledge Dreyfuss and Dreyfuss 151
Location of knowledge 152
Diffusion of knowledge undiffused to diffused 152
Complixity of knowledge 153
84 Understanding intrapreneurship better153
841 The purpose exploitation and exploration 154
842 The content learning leading to innovation 154
843 A framework for intrapreneurship in light of knowledge155
85 References157
xiii
CHAPTER 9 159
Knowledge Management in Perspective(s) An Analysis of Project Management in Two Companies
159
91 Introduction162
92 Knowledge management in practice 163
921 Two perspectives of knowledge management 163
922 Knowledge Management and the perception of Knowledge 165
923 Strategies for knowledge management166
93 The Two Companies and the methodology 167
94 Knowledge Management in the two companies 168
941 Knowledge management at Bang amp Olufsen 168
942 Knowledge Management at Crisplant 170
943 Knowledge Management as Project Management172
95 Knowledge Management in Perspective(s)174
951 Artefact-Oriented Epistemology 174
952 Process-Oriented Epistemology 175
96 Concluding Remarks177
97 References180
PART IV 183
CHAPTER 10 185
Findings and Perspectives185
101 Elements of this dissertation 187
102 main points and contributions 189
103 Synthesising the contributions 191
104 Limitations of the study 196
105 References198
APPENDIX I 201
Case companies201
A1 Ericsson Telebit 204
A2 Danfoss Drives206
A3 Bang amp Olufsen 207
A4 Crisplant210
xiv
A5 End2End212
A6 References215
APPENDIX II 217
English Summary 217
APPENDIX III 221
Dansk resume221
1
PART I
Introduction
This dissertation which focuses on intrapreneurship from different
perspectives is divided into four parts and includes five articles that
constitute the main results of my research as PhD student The overall aim
of the articles which address different aspects of intrapreneurship is to
contribute as building blocks to the larger intrapreneurship mosaic which
is still under development in the research literature (Ireland et al 2005)
The first part which serves at the introduction to the dissertation consists
of five chapters Chapter 1 provides a short description of the Danish
Industry and a discussion of some of the main challenges in relation to
innovativeness adoption of new knowledge and intrapreneurship The
chapter also briefly describes the KNORI project (KNowledge intensive
ORganisations and Intrapreneurship) which this dissertation is related to
Chapter 2 presents the overall research field corporate entrepreneurship
and discusses the difference between corporate entrepreneurship and
intrapreneurship This chapter also describes how research interest in
corporate entrepreneurship has evolved over time The research themes
together with the structure of the rest of the dissertation are also presented
in more detail in this chapter Chapter 3 presents the methodology with an
2
emphasis on the selection of cases for the PhD project the validity of the
methodology and various issues regarding the research interviews
Chapter 4 which constitutes the first article in this dissertation develops a
framework for corporate entrepreneurship consisting of an internal
perspective (intrapreneurship) and an external perspective
(exopreneurship) The article further illustrates that intrapreneurship
consists of three organisational perspectives corporate venturing
internationalisation and internal resources This article was the first step in
the PhD project and thus also represents a tentative first insight into the
field Finally chapter 5 serves as a postscript to the article and includes
additional insights
The second part of the dissertation consists of two articles articles two and
three which in different ways address the extrinsic and intrinsic factors that
influence an organisationrsquos internal resources with respect to
intrapreneurship The third part of the dissertation consists of articles four
and five which concern the relations between intrapreneurship and
knowledge management and how knowledge management can support
intrapreneurial management Finally part four concludes the dissertation
REFERENCE
Ireland RD CR Reutzel amp JW Webb 2005 Entrepreneurship
Research in AMJ What Has Been Published and What Might the Future
Hold Academy of Management Journal Vol 48 No 4 pp 556-564
3
CHAPTER 1
The Background
New governments almost always mean new visions At least this was the
case in Denmark at the end of 2001 Although its industrial policy already
encouraged innovation and provided for the establishment and
administrative support of new companies etc the government wanted a
change of mindset in society in the direction of greater creativity and an
entrepreneurial culture
It was realised that growing internationalisation would drive more and
more Danish companies to offshore production or sourcing from low-cost
countries This led to growing anxiety about employment wealth ndashcreation
and the future of Danish society throughout the 1990s Since it was
becoming clear that more and more jobs would be moved to the new EU
countries or further east both Danish politicians and the Danish media
began to focus attention on innovation incubators entrepreneurship and
intrapreneurship
At the same time the Danish media seized on intrapreneurship via the
start-up of new companies based on the competencies of established
companies as the lsquosolutionrsquo to the creation of more jobs in Denmark
However intrapreneurship is more than just starting up new internal or
external ventures Even though the creation of new jobs and companies
might be to the benefit of society as a whole the management of existing
4
companies would no doubt think differently if their most creative and
innovative employees started establishing new companies based on
competencies acquired in their former jobs
Thus from an organisational or corporate perspective intrapreneurship is
more about a companyrsquos ability to sustain creativity innovativeness and the
entrepreneurial spirit among its own employees and channel this towards
the creation of new structures and initiatives that benefit both employees
and the company and probably also create wealth at societal level
Intrapreneurship can be enabled by giving employees time to work on their
own projects and to assist with development salesmarketing production
legal issues etc Furthermore as will be argued in chapter 4
intrapreneurship is part of a more comprehensive research and practice
field corporate entrepreneurship
There has been a tendency in the Danish press to more or less explicitly
equate intrapreneurship with corporate venturing and unlike in the
international literature the term intrapreneurship has been a much more
popular label in the Danish media1 In relation to media interest which to
some extent might also reflect the focus of Danish companies or
government agencies it is notable that even though corporate
entrepreneurship has been of academic interest for many years it was only
1 This can for example be seen from a full text search in the Danish database InfoMedia which covers
most newspapers and a number of popular magazines As of June 30 2007 the term lsquocorporate entrepreneurshiprsquo had appeared 11 times whereas lsquointrapreneurshiprsquo and lsquocorporate venturingrsquo had been used 91 and 81 times respectively According to InfoMedia the first time an article on lsquocorporate entrepreneurshiprsquo lsquointrapreneurshiprsquo and lsquocorporate venturingrsquo was published in a Danish newspaper was
in 2005 1996 and 1999 respectively
5
from 2003 that the Danish media started focusing on intrapreneurship
In one of the first comprehensive studies based on Danish data Evald
(2003) showed that small companies create many jobs by spinning off new
ventures Based on this finding she argues that initiatives should be
focused on the intrapreneurial abilities of small and medium-sized
companies (SMEs) However while the importance of spin-offs and job
creation in small companies should not be underestimated large companies
also have the possibility of supporting entrepreneurship in-house ndash whether
it is called intrapreneurship or corporate entrepreneurship These
companies have both much larger and greater access to different kinds of
resources and are better able than SMEs to take a limited risk by entering
different forms of intrapreneurship
11 INNOVATIVENESS IN DENMARK
Given that Danish industry is largely made up of small and medium-sized
companies Denmark is not likely to adopt the same innovation policy as a
country like the US with its many research institutions and large
technologically advanced companies On the contrary a characteristic of
the innovation process in SMEs is the indirect implementation of
technological breakthroughs unlike in large companies where there is close
contact between research development and production (Erhvervsfremme
Styrelsen 1999) The indirect nature of the innovation process involves a
time lag from technological breakthroughs to their adoption in products or
production processes which is also one of the findings of the so-called
DISCO project (Erhvervsfremme Styrelsen 1999) in its analysis of the
Danish innovation systemrsquos challenges strengths and bottlenecks
6
This is a very general statement of course and there are well-known large
Danish companies eg Novo Nordisk Novozymes Coloplast Danfoss and
Grundfos that are major players in their respective industries and also very
innovative Furthermore Abernathy amp Utterback (1978) among others
have argued that large companies in existing industries are most likely to
innovate incrementally while breakthrough innovations are more likely to
come from either small companies or large companies which apply their
technologies in innovative ways in other business areas
However for most Danish companies ndash especially SMEs ndash the needs of and
requirements for innovation support knowledge transfer and conditions for
intrapreneurship must be addressed from a policymaking perspective
Moreover as is also central to the topic of this dissertation the innovative
capabilities of large established companies are possibly even more
important
As a result of its comparative disadvantage ndash due to the size of the country
ndash the key challenge for Danish industry is sometimes seen as the adoption
of a broader and more interactive understanding of innovation (Nyholm amp
Langkilde 2003 Rosted 2003) Due to their technology-oriented approach
to innovation companies follow what Abernathy amp Utterback (1978) have
identified as product or process innovation cycles and not what Grant
(2002 p 373) with a broad term calls strategic innovation By adopting a
broader view of innovation Danish companies would be better placed to
exploit the potential of strategic innovations where new combinations of
technology customers and services can change the competitive structure of
the industry or even create a new industry as argued by proponents of the
so-called Blue Oceans strategies (Kim amp Mauborgne 2005)
7
Another important characteristic of strategic innovations is the interactive
process that leads to the innovation Within the technological paradigm of
innovation (Sundbo 1998) the development process is seen as linear while
strategic innovations follow an interactive process where ldquonew
combinationsrdquo can only survive if they meet a real market demand The
interactive process involves a closer interfirm relationship with a strong
focus on exploiting the innovative potential of new technologies The
willingness and ability to form these relationships has been found in Danish
industry both in high- and low-tech industries (Erhvervsfremme Styrelsen
1999)
In order for ideas to be commercialised in the shape of new companies or
new business areas for established companies there needs to be a well-
functioning market for venture capital The establishment of such a market
has therefore been a government priority In addition to this the largest
Danish companies have also helped fund new companies through newly
established venture funds often in co-operation with institutional or private
investors whose funding in many cases stems from selling previously
established companies
The development of such funds might be seen as the result of a broader
view of innovation where the strategic and interactive aspect has led to the
return of entrepreneurship as the nucleus of the innovation process Large
corporations now see the entrepreneur as an important part of striking the
right balance between technological development and market demand
Whether it is an intrapreneur (Pinchot 1985) who leads an internal venture
project or an external entrepreneur funded through venture funds or
8
corporate venture capital the importance of entrepreneurship in the pursuit
of innovation is now a fact
One indicator of the importance of entrepreneurial activities in the pursuit
of innovation is the total amount of capital flowing towards venture
investments as shown in Figure 11 According to data from
Vaeligkstfonden2 the total funds available in the venture capital market in
Denmark have risen dramatically from DKK 35 billion in 1998 to DKK
172 billion in 2002 after which it flattened out and actually fell slightly in
2003 when more investors withdrew from the venture market3 By August
31 2007 the total funds available in the venture capital market were
approximately DKK 22 billion
Until 2001 the prime interest of venture funds was in telecommunications
and computer technology but since then the focus has shifted to life
sciences This can be seen by the fact that the total amount of invested
venture capital in life sciences exceeds investments in ICT Furthermore
two new ventures focusing solely on life sciences have been established
while two ventures focusing on ICT have been terminated (Vaeligkstfonden
2002)
2 Data according to rdquoDet danske marked for venturekapital og private equityrdquo published annually by
Vaeligkstfonden Copenhagen
3 LMX Business Development TDC-Innovation Venture IT Velcap Danske Life Science TEMA
Kapital BUHL Randers and Udviklingsparken (continued in the context of Incuba AS)
9
219
201
175
161154
172
150
35
52
118
0
5
10
15
20
25
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
DK
K b
n
Figure 11 Funds available in the venture capital market (Based on
figures from Vaeligkstfonden 2001-2007)
That some of Denmarkrsquos largest corporations have helped create new
companies can be seen from the development of nine corporate venture
capital (CVC) funds in the period from 1998 to 2002 which resulted in a
total of 12 CVC companies in 2002 In comparison only 4 companies were
established in 2006 even though almost five times as much funding was
available than in 1998
12 THE KNORI PROJECT
The KNORI project (KNowledge intensive ORganisations and
Intrapreneurship) stemmed from both the need to create more jobs in small
and medium-sized Danish companies and the focus on technology-oriented
innovations at the beginning of the 1990s as discussed above Thus the
10
project was established4 as part of the Ministry of Science Technology and
Innovationrsquos initiatives to boost the ICT industry KNORI was set up to
study how established organisations in the ICT industry in northern Jutland
could be more dynamic as regards spinning off new ventures developing
new business areas and developing a sustainable ability to innovate Of
course these broad aims could also be approached from other perspectives
this PhD project has thus chosen to address the question from an
intrapreneurial perspective
The KNORI project started with a meeting between the researchers
involved and three key persons in the telecommunications industry in
Northern Jutland It became clear from this meeting that the companies
were just as much competitors as collaborators This meant that it would be
difficult to arrange explicit knowledge sharing between them through
seminars etc as originally envisaged Therefore the scope of the project
was broadened to also focus on companies in other parts of Denmark as
well as industries that were not as closely related but which had similar
challenges
The case companies for this PhD project were to be chosen from the
broadened KNORI base The methodological considerations are discussed
in more detail in chapter 3 but the result was that six companies agreed to
take part in the project and all were invited to an introductory meeting in
4 KNORI was a network project between Harry Boer and Bent Dalum University of Aalborg and Anders
Drejer (University of Aalborg at the project start) and John Parm Ulhoslashi Aarhus School of Business
Aarhus University
11
March 2003 where the framework for corporate entrepreneurship and
preliminary thoughts about intrapreneurial enablers were presented
A second meeting on factors which enable and hinder corporate
entrepreneurship was planned for June 2004 but was cancelled due to
unforeseen circumstances No new date was set for this meeting due both
to the summer holidays and my first maternity leave from the beginning of
September 2004 Since it also became clear that the research opportunities
were not so much related to the companies as a group as to individual
companies it was decided not to include the seminars in the PhD project
13 REFERENCES
Erhvervsfremme Styrelsen 1999 Det danske innovationssystem ndash DISCO-
projekt Rapport nr 9 Sammenfattende rapport Koslashbenhavn
Evald MR 2003 Corporate Venturing i Danmark En undersoslashgelse af
mindre virksomheds knopskudsaktiviteter Center for Smaringvirksomheds-
forskning Syddansk Universitet
Grant RM 2002 Contemporary strategy analysis Concepts techniques
applications (fourth edition) Oxford Blackwell Publishing
Kim WC amp R Mauborgne 2005 Blue Ocean Strategy How to Create
Uncontested Market Space and Make Competition Irrelevant Boston
Harvard Business School Press
Nyholm J amp L Langkilde 2003 Et benchmark studie af innovation og
innovationspolitik ndash hvad kan Danmark laeligre Oslashkonomi- og
12
Erhvervsministeriets enhed for erhvervsoslashkonomisk forskning og analyse
FORA Koslashbenhavn
Pinchot G 1985 Intrapreneuring Why You Donrsquot Have to Leave the
Corporation to Become an Entrepreneur New York Harper amp Row
Rosted J 2003 Tre former for innovation Oslashkonomi- og
Erhvervsministeriets enhed for erhvervsoslashkonomisk forskning og analyse
FORA Koslashbenhavn
Sundbo J 1998 The Theory of Innovation Entrepreneurs Technology
and Strategy Cheltenham Edvard Elgar Publishing
13
CHAPTER 2
Research scope themes and structure
Business structures are becoming global and the rules of competition are
changing constantly posing new challenges to companies Whether
companies define themselves as being in one or another market they seem
to be forced to adapt and innovate at a constantly increasing pace Change
comes about faster than we expect and the saying that the only constant
thing in the world is change seems truer than ever Furthermore the
boundaries of the firm are becoming more blurred as companies get
involved in different collaborations and tasks from research and
development to business support activities are increasingly outsourced
While the world appears to be constantly changing some companies tend
to stick to the ldquoold waysrdquo of doing business ie preserving the well-known
techniques and business concepts of co-operation while others reorganise
re-create themselves merge and split up become virtual enter new
markets or create unforeseen alliances Thus some companies seem to
ignore changing market conditions while others act on challenges to well-
established business routines and rules of competition
One major driving force for change has been the increasing importance of
knowledge both for everyday life where new innovations are shaping
family structures communication patterns and work-conditions for
business structures and for individual companies entering the so-called
14
knowledge society (Drucker 1993) New conditions for competitive
advantage have appeared where knowledge is the key resource and where
knowledge workers will dominate the workforce (Drucker 1993 2002) ndash
perhaps not in the number of employees but in terms of their influence on
global value creation
A society becoming increasingly dependent on knowledge will probably
introduce changes that we can hardly imagine now Organisations will face
new challenges both internally and externally These challenges are
affected by various factors eg the liberalization of markets markets for
new products new demands from various stakeholders new information
and communication technologies the decoupling of information flows from
the flow of goods and services and integration of product architecture and
technology (Teece 1998)
The responses of companies in the 1980s and to some extent the 1990s
have been characterised by reductions in the workforce downsizing
rightsizing budget cuts and depressed employee morale (Morris and
Kuratko 2002) While the focus has been on the short-term costs of
production no company can afford to rely on such an approach forever
The real challenge for a company wanting to remain a going concern is to
establish a competitive advantage and one way of doing this is continuous
innovation and the creation of new ideas According to Morris and Kuratko
(2002) companies must aspire to adaptability flexibility speed
aggressiveness and innovativeness which they boil down to one word ndash
entrepreneurship
15
21 CORPORATE ENTREPRENEURSHIP
Although intrapreneurship has been presented as the lsquosolutionrsquo to new jobs
and an improvement in companiesrsquo innovativeness it is worth
remembering that it may not be so very different from what we already
know There are countless examples in the management literature of
methods and techniques etc that are simply relaunched under new names
Therefore this dissertation also takes a broader perspective
If we follow the spread of research on corporate entrepreneurship from just
the use of the term in the literature it is remarkable how interest in topics
such as entrepreneurial management corporate entrepreneurship and
intrapreneurship has increased in the last couple of years This is illustrated
in figure 21 which shows the number of hits on intrapreneurship
corporate entrepreneurship and entrepreneurial management from a full-
text search in the database Business Source Premier In figure 22 the same
keywords are searched for in articles published by the Danish business
paper Boslashrsen5
5 Boslashrsen was also searched for the terms lsquointraprenoslashrskabrsquo lsquocorporate entreprenoslashrskabrsquo and
lsquoentreprenant ledelsersquo and the results added to the number of articles found using the English terms
The databases have also been searched for lsquointrapreneuringrsquo lsquointrapreneurialrsquo lsquocorporate venturersquo lsquocorporate venturingrsquo and lsquocorporate incubatorsrsquo There were only a few hits for intrapreneuring and intrapreneurial While interest in corporate venturingventuring (CV) has been increasing significantly it is not included in the figures since it is regarded as a perspective on corporate entrepreneurship and
intrapreneurship as will be argued in Chapter 4 Corporate incubators did not result in any hits
16
05
101520253035404550
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
Year
Nu
mb
er o
f ar
ticl
es
Intrapreneurship
Corporate Entrepreneurship
Entrepreneurial management
Total
Figure 21 Number of hits from a full-text search on the terms
ldquointrapreneurshiprdquo ldquocorporate entrepreneurshiprdquo and ldquoentrepreneurial
managementrdquo in the research database Business Source Premier
Figure 21 shows that following Pinchotrsquos introduction of intrapreneurship
in 1983 and his book Intrapreneuring in 1985 interest in the topic has
grown6 However figure 21 also shows that it is other terms that have been
dominant in each of the years covered It is of course difficult to draw
specific conclusions just by counting the number of times a word has been
used in articles in either journalistic or research articles Neither the context
nor the understanding of the concepts are necessarily the same and the
topic covered might even be discussed without ever explicitly mentioning
the term eg intrapreneurship
6 A similar search in the database Social Science Citation Index which contains research cited by others
shows that the number of articles on concepts that have been cited by others has been slightly increasing
since the mid-1980s with the increase being greater since the end of the 1990s
17
0
5
10
15
20
25
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Year
Nu
mb
er o
f ar
ticl
es
Intrapreneurship
Corporate Entrepreneurship
Entrepreneurial management
Total
Figure 22 Number of hits from a full-text search on the terms
ldquointrapreneurshiprdquo ldquocorporate entrepreneurshiprdquo and ldquoentrepreneurial
managementrdquo in the Danish newspaper Boslashrsen
Seen together the figures in Figure 21 and 22 probably also illustrate the
spread of the terms in research literature and practice New terms are often
claimed to be driven by practice and the more popular part of management
literature But as Abrahamson (1996) has argued scholars have often been
aware of and interested in the new phenomenon for some time before the
explosion of interest in the practitioner-oriented literature and the press
However there is seldom a steep increase in researchersrsquo interest before a
term has gained the interest of practitioners This is in line with figure 22
which shows how intrapreneurship gained the interest of newspapers at
about the same time as the number of research articles rocketed7
7 A similar search of the more popular management research database Emerald shows a similar
development as Boslashrsen It increases slightly from 1994 to 2003 and then gains momentum
18
More directly focusing on articles published in The Academy of
Management Journal (AMJ) from 1963 to 2005 and examining article
topics rather than just counting the number of times the word is used in the
text Ireland et al (2005) found 8 articles on corporate entrepreneurship
Furthermore these articles were distributed regularly over time with a
small increase since 1994 However a similar number of other topics eg
ldquonew venturesrdquo ldquocorporate entrepreneurshiprdquo etc were also published
and the distribution of these articles over time was more similar to the
pattern shown in figure 21 Overall therefore while interest in the topic
has increased it is still an emerging or relatively young field characterised
by a large number of labels (Christensen 2004) the lack of a unifying
definition (Sharma amp Chrisman 1999) and low paradigmatic development
(Ireland et al 2005 Low 2001)
22 THE CORPORATE ENTREPRENEURSHIP FIELD
According to Hornsby et al (1993) research on corporate entrepreneurship
and how corporate entrepreneurship can be enabled can be roughly divided
into two waves The first wave ending at the beginning of the 1990s
focused on the entrepreneur as a person while the second wave started at
the beginning of the 1990s and gained momentum towards the end of the
decade Basically the second wave takes a starting point in William
Gartnerrsquos (1988 1989) suggestion that the research focus should be
changed from the entrepreneur as a person to entrepreneurship as a process
In particular Gartner argued that entrepreneurship is a multidimensional
process of which the entrepreneur is only one element thus moving the
focus more towards organisations which employ entrepreneurs and create
the conditions for their achievements
19
Michael A Hitt Jeffrey S Hornsby R Duane Ireland Donald L Sexton
and Shake A Zahra have been the main trendsetters in this second wave of
development of the field which is characterised by the use of many
different labels eg entrepreneurial management (eg Stevenson amp Jarillo
1990) strategic entrepreneurship (eg Hitt et al 2001) corporate
entrepreneurship (eg Guth amp Ginsberg 1990 Hornsby et al 1993 2002)
internal corporate entrepreneurship (eg Lumpkin amp Dess 1996 and
Schollhammer 1981) intrapreneurship (eg Carrier 1994 and Pinchot
1985) corporate venturing (eg Burgelman 1983 and Chesbrough 2000)
These terms have been used interchangeably to explain almost the same
phenomenon as is discussed in more detail in article 1 (Chapter 4) in this
dissertation
Sharma and Chrisman (1999) illustrate the termual ambiguity by listing a
number of definitions of corporate entrepreneurship suggested in the
literature Based on an analysis of two definitions in three papers ndash
corporate venturing (Biggadike 1979 Ellis amp Taylor 1987) and corporate
entrepreneurship (Burgelman 1983) ndash Sharma and Chrisman (1999) argue
that Burgelmanrsquos (1983) definition of corporate entrepreneurship is a
subset of Biggadikersquos (1979) corporate venturing whereas Ellis and
Taylorrsquos (1987) definition of a corporate venture is a subset of Burgelmanrsquos
(1983) corporate entrepreneurship definition
As is often the case with a plethora of different labels the development of
loosely related methods and theories not only creates uncertainty but also
complicates the applicability and integration of experiences into the
development of the field (cf Sharma amp Chrisman 1999)
20
To some extent it is a general characteristic of management knowledge
that it is spread throughout educational systems and companies by business
schools and global consulting companies (see for example Sahlin-
Andersson amp Engwall 2002) but in the case of the corporate
entrepreneurship literature it might also be because the field is both in its
infancy and characterised by multidisciplinarity Corporate
entrepreneurship has drawn on organisational theories from economics
(Schumpeter 1934 Kirzner 1985) sociology (McClelland 1961)
psychology (Collins and Moore 1964 Brockhaus amp Horwitz 1986) and
strategic management (Hitt et al 2002) and has thus been used to explain
various organisational phenomena from strategy via management in
general to innovation
While lsquocorporate entrepreneurshiprsquo has attracted the most attention
internationally as shown in figure 22 it is lsquointrapreneurshiprsquo that has
gained most interest in Denmark Although this could be seen as a minor
detail as regards the labeling of an otherwise identical concept as will be
argued in chapter 4 it also relates to the boundaries of the firm and thus to
a question of focus On start-ups or on companies that make innovation
possible and where employeesrsquo creativity and entrepreneurial aims are
based
Managerial decisions on the scope and diversity of a companyrsquos activities
affect the horizontal boundaries of the firm which in turn influence the
organisational choices of how and where to innovate starting a corporate
venture exploring internal resources internationalising or forming
external networks Managerial decisions on organisational structure and
design on the other hand are closely linked to the vertical boundaries of
21
the firm and define the organisationrsquos position in the value chain As Grant
(1996) and others argue decisions concerning the boundaries of the firm
are important for the application and integration of (specialist) knowledge
and thus future activities
23 FOCUS AND STRUCTURE OF THE DISSERTATION
The overall topic of this dissertation is exploration and exploitation of
internal resources with respect to intrapreneurship and how this is
affected by the firmrsquos organisation management managerial initiatives and
employees The dissertation is comprised of five different articles that
address this topic from different perspectives
From an early stage it was decided to let the articles develop from the most
interesting data and observations from the case companies This has
resulted in articles on different subtopics within the overall topic drawing
on different theories and different methodologies Although all the articles
have in common that they add to the mosaic within the field of
intrapreneurship they are not connected by a step-by-step research strategy
that leads to a final conclusion
231 The structure of the dissertation
This dissertation is divided into four parts Part I contains chapters one to
five Chapter one has described the background of the dissertation while
chapter two has introduced the field of intrapreneurship and the research
questions The next chapter will present the methodological considerations
chapter four examines and outlines corporate entrepreneurship the scope of
the research is explained and the concept of intrapreneurship is defined
22
finally chapter five serves as a postscript to chapter 4 and includes further
understandings of the issues
Part II contains chapter six and seven and consists of two articles on issues
related to intrapreneurship from an internal resources perspective Part III
contains chapter eight and nine which correspond to article four and five
respectively These articles combine intrapreneurship and knowledge
management and focus on knowledge resources within the internal
resources perspective Together these two parts make up the main body of
the dissertation Finally part IV (chapter ten) comprises a summary of the
articles and the results of the study This chapter also presents conclusions
on how the articles contribute to the research questions
232 The research questions
Although the articles should not be seen as the outcome of a premeditated
research programme together they address the following research
questions
1 What is intrapreneurship and how can it be explored and explained
2 How do different extrinsic and intrinsic factors affect the internal
resource perspective
a Can innovativeness be acquired
b How can various factors influence intrapreneurship
3 How is intrapreneurship and knowledge related And how can the
knowledge resource be addressed within the internal resource
perspective
a How can intrapreneurship be understood in the light of
knowledge management
23
b How can the knowledge resource be managed
233 The articles in the dissertation
Basically the articles take three points of departure which also correspond
to the three main parts of this dissertation This first part presents the
background and includes the first article This article A classification of the
corporate entrepreneurship umbrella labels and perspectives (Chapter 4)
is theoretical and presents and reviews an important body of literature
related to corporate entrepreneurship and also defines intrapreneurship
The next two articles Losing innovativeness the challenge of being
acquired and Enabling intrapreneurship the case of a knowledge-
intensive industrial company (Chapter 6 and 7) in part II are primarily
empirical in nature They address some of the aspects that need to be taken
into account when an organisation exploits intrapreneurship from an
internal resource perspective
The last two articles Understanding intrapreneurship by means of state-of-
the-art knowledge management and organisational learning and
Knowledge management in practice An analysis of project management in
two Danish companies (Chapter 8 and 9) in part III concern the
management of knowledge and how intrapreneurship can be facilitated or
enabled Article 4 is theoretical and links intrapreneurship and knowledge
management while the last article is primarily empirical and presents two
perspectives of the knowledge resource and how to manage them
The five articles that make up the dissertation are shown in table A which
briefly describes the objectives methodology used and conclusions With
regard to the objectives the articles all have in common that they relate to
24
the field of intrapreneurship in that they examine the various managerial
issues that should be taken into account in different situations Article 2 3
and 5 are based on case studies whereas article 1 and 4 take a starting point
in literature reviews
With regard to research question 1 the first article takes a look at corporate
entrepreneurship and sets the scene for the rest of the dissertation The
article explains the difference between corporate entrepreneurship and
intrapreneurship and with it offers a definition of intrapreneurship It also
explains how intrapreneurship gives organisations a greater choice of
organisational perspectives
The second research question is divided into two sub-questions Question
2a is addressed in article 2 which examines what happens to an
entrepreneurial culture when it is incorporated into a mature organisation It
shows that the active use of both extrinsic and intrinsic efforts is needed to
overcome organisational inertia Questing 2b is explored in article 3 which
looks at the impact of managerial initiatives andor intrapreneurial enablers
The results indicate that to encourage intrapreneurship in knowledge-
intensive companies there is a need for intrinsic enablers since the more
extrinsic enabling factors common to industrial companies are seen as only
basic factors
The third research question also consists of two sub-questions the first of
which is addressed in article 4 which takes a starting point in knowledge
management theory and organisational learning theory as well as theories
of intrapreneurship and innovation management This article provides a
framework for understanding the relation between intrapreneurship and
knowledge and the knowledge issues that should be taken into account
25
Finally research question 3b is dealt with in article 5 which examines how
different perspectives affect the way an organisationrsquos knowledge resources
are managed with respect to innovative activities The article shows how
intrapreneurship can be enabled from a knowledge management
perspective by taking a starting point in processes
The focus on the topic of the dissertation narrows from article to article
Thus the first article covers the whole field of corporate intrapreneurship
the articles in part II focus on the internal resource perspective and the last
article focuses only on the knowledge resource
26
Title Objective Method Conclusions
PART I Introduction
Chapter four (article 1)
A classification of the Corporate Entrepreneurship Umbrella Labels and Perspectives
To get an overview of the literature within the area of corporate entrepreneurship and define corporate entrepreneurship and intrapreneurship
Academic research literature review
Corporate Entrepreneurship can be divided into intrapreneurship and exopreneurship which again can be categorised into four perspectives corporate ventures internal resources internationalisation and networks The difference between corporate entrepreneurship and intrapreneurship is a question of the boundaries of the firm
PART II Intrapreneurship the Internal Resource Perspective
Chapter six (article 2)
Losing Innovativeness The Challenge of being Acquired
To study what happens to the employees of an entrepreneurial company when it is taken over by another firm
A case study based on multiple methods interviews observations and a questionnaire
The driving forces (innovation creativity and innovative processes) of a company are likely to disappear when it is incorporated into a mature organisation
Chapter seven (article 3)
Enabling Intrapreneurship The case of a knowledge-intensive industrial company
To study intrapreneurial enablers in a ldquonaturalrdquo setting
An embedded case study based on interviews and observations
The factors enabling intrapreneurship are changing with changing ldquosocietiesrdquo
PART III Managing Internal Knowledge Resources
Chapter eight (article 4)
Understanding Intrapreneurship by Means of State-of-the-art Knowledge Management and Organisational Learning Theory
To enlighten theories of intrapreneurship and innovation by applying state-of-the-art knowledge management theory and organisational learning
Literature review A framework for intrapreneurship and innovation based on knowledge has been developed which defines the task of intrapreneurship as a combination of innovation management and the learning-related concepts of exploitation and exploration
Chapter nine (article 5)
Knowledge Management in Practice An Epistemological Analysis of Project Management in Two Danish Companies
To study how different perspectives influence the management of an organisationrsquos knowledge resources
Two embedded case studies based on interviews and observations
Managerial awareness of different approaches to managing knowledge resources gives a greater degree of freedom and helps foster mutual understanding within an organisation
Table A Summary of the six articles in the dissertation
27
24 REFERENCES
Abrahamson E 1996 Management Fashion Academy of Management Review
21(1)254-285
Biggadike R 1979 The risky business of diversification Harvard Business Review
Vol 57 No 3 pp 103-111
Brockhaus RH amp PS Horwitz 1986 The psychology of the entrepreneur In DL
Sexton amp RW Smilar (eds) The art and science of entrepreneurship Cambridge
MA Ballinger
Burgelman RA 1983 A process model of internal corporate venturing in the
diversified major firm Administrative Science Quarterly Vol 28 No 2 pp 223-
244
Carrier C 1994 Intrapreneurship in large firms and SMEs A comparative study
International Small Business Journal Vol 12 No 3 pp 54-61
Chesbrough HW 2000 Designing Corporate Ventures in the Shadow of Private
Venture Capital California Management Review Vol 42 No 3 pp 31-49
Christensen KS 2004 A classification of the corporate entrepreneurship umbressl
labels and perspectives International Journal of Management and Entreprise
Development Vol 1 No 4 pp 301-315
Collins NC amp DG Moore 1964 The Enterprising Man East Lansing MI
Michigan State University
Drucker PF 1993 Post-capitalist society Oxford Butterworth-Heinemann
Drucker PF 2002 Managing in the Next Society Oxford Butterworth-Heinemann
28
Ellis RJ amp NT Taylor 1987 Specifying entrepreneurship In NC Churchill JAn
Hornaday BA Kirchhoff OJ Krasner amp KH Vesper (Eds) Frontiers of
entrepreneurship research Wellesley MA Babson College pp 527-541
Gartner WB 1988 Who is an entrepreneur Is the wrong question American
Journal of Small Business Vol 12 pp 11-32
Gartner WB 1989 Some suggestions for research on entrepreneurial traits and
characteristics Entrepreneurship Theory amp Practice Vol 14 No 1 pp 27-38
Grant RM 1996 Toward a knowledge-based theory of the firm Strategic
Management Journal Vol 17 pp 109-122
Guth WD amp A Ginsberg 1990 Guest editorsrsquo introduction corporate
entrepreneurship Strategic Management Journal Vol 11 pp 5-15
Hitt MA RD Ireland SM Camp amp DL Sexton 2001 Guest Editorsrsquo
Introduction to the Special Issue Strategic Entrepreneurship Entrepreneurial
Straetgies for Wealth Creation Vol 22 pp 479-491
Hitt MA RD Ireland SM Camp amp DL Sexton 2002 Strategic
Entrepreneurship Integrating Entrepreneurial and Strategic Management
Perspectives In MA Hitt RD Ireland SM Camp amp DL Sexton (eds) Strategic
Entrepreneurship Creating a New Mindset Oxford Blackwell Publishers
Hornsby JS DW Naffziger DF Kuratko amp RV Montagno 1993 An Interactive
Model of the Corporate Entrepreneurship Process Entrepreneurship Theory amp
Practice Vol 17 No 2 pp 29-37
Hornsby JS DF Kuratko amp SA Zahra 2002 Middle managers perception of the
internal environment for corporate entrepreneurship assessing a measurement scale
Vol 17 No 3 pp 253-372
29
Ireland RD JW Webb amp JE Coombs 2005 Theory and methodology in
entrepreneurship research In D Ketchen amp DD Bergh (eds) Research
methodology in strategy and management Vol 2 pp 1-32
Kirzner IM 1985 Discovery and the capitalist process Chicago University of
Chicago Press
Low MB 2001 The adolescence of entrepreneurship research Specification of
purpose Entrepreneurship Theory and Practice Vol 26 No 4 pp 17-25
Lumpkin GT amp GG Dess 1996 Clarifying the entrepreneurial orientation
construct and linking it to performance Academy of Management Review Vol 21
pp 135-172
McClelland DC 1961 The Achieving Society New York Free Press
Morris MH amp DF Kuratko 2002 Corporate Entrepreneurship Orlando Florida
Harcourt College Publishers
Pinchot G 1985 Intrapreneuring Why You Donrsquot Have to Leave the Corporation to
Become an Entrepreneur New York Harper amp Row
Sahlin-Andersson K amp L Engwall (eds) 2002 The Expansion of Management
Knowledge Stanford Stanford University Press
Schollhammer H 1981 The efficacy of internal corporate entrepreneurship
strategies In KH Vesper (ed) Frontiers of Entrepreneurship Research Babson
College Wellesley MA
Schumpeter JA 1934 The theory of economic development Harvard University
Press Cambridge MA
30
Sharma P and Chrisman JJ 1999 Toward a reconciliation of the definitional issues
in the field of corporate entrepreneurship Entrepreneurship Theory amp Practice Vol
22 pp 43-68
Stevenson HH amp JC Jarillo 1990 A paradigm of Entrepreneurship
Entrepreneurial Management Strategic Management Journal Vol 11 pp 17-27
Teece DJ 1998 Capturing value from knowledge assets the new economy markets
for know-how and intangible assets California Management Review Vol 40 pp 55-
79
31
CHAPTER 3
Methodology
Since the research themes were initially broadly defined and the field of
intrapreneurship in its infancy it was considered prudent not to preclude any
interesting issues and empirical phenomena that might appear in the course of the
project etc by using a too narrow definition of the intrapreneurship concept (cf
Sharma amp Chrisman 1999) Furthermore as part of the KNORI project (see chapter
1) it was also given that 5-6 companies would participate in the project and form the
empirical basis for the research
The fact that the companies had to be selected early in the project and participate in
workshops organised within the framework of the KNORI ndashproject was a challenge
from the beginning At such an early stage it was not possible to design a detailed
research strategy and it would have been even harder to specify exactly how
activities in the companies could be the basis for empirical research Moreover it was
difficult to know whether comparative studies of the companies were feasible
In consequence it was decided that a qualitative case-based research approach would
be the most appropriate that different methods of collecting data could be used in
different companies and that the companies participating in the KNORI project could
form the basis for different papers that addressed different aspects of the overall
research issues
32
This chapter describes the way the five case companies were selected and provides
some background information on each of them Furthermore the chapter also
presents the overall considerations in relation to the chosen methodology More
details about the methods used in specific studies reported in the three empirical
articles (paper 2 3 and 5) are to be found in the respective articles
31 FROM PARADIGM TO RESEARCH APPROACH
A qualitative-oriented research project is not so much a question of method as one of
methodology ie the general approach to studying the research topics (Silverman
1993) Traditionally however methodology is intimately related to the positioning of
research within various research paradigms The methodological assumptions thus
become intertwined with both ontology and epistemology and become the primary
vehicle for directing the research and influencing its aim and purpose
When different research approaches are characterised within the social sciences a
distinction is often made between contrasting views like subjectivism versus
objectivism nominalism versus realism romanticism versus neopositivsm
constructivism versus non-constructivism constructivism versus positivism
interpretative versus functionalistic humanist versus structuralist etc (see for
example Burrell amp Morgan 1979 Guba amp Lincoln 1994) Such classifications are
widespread and two-by-two-ways classifications eg Burrell amp Morganrsquos (1979)
framework do have some intuitive appeal However as described by Lauring (2007)
the implications of paradigmatic positioning of research have also been criticised by
researchers (eg Deetz 1996 Alvesson 2003) who argue that the classifications do
not reflect contemporary research traditions adequately and that paradigmatic
positioning puts too much emphasis on incommensurability between research
paradigms (Deetz 1996)
33
As a crude distinction between research approaches we find that on the one hand
qualitative studies are most often inspired by some kind of romanticsm
constructivism or at least non-positivism ndash while on the other hand both
quantitative and qualitative studies are characterised either by functionalism
neopositivism or non-constructivism This is by no means a clear-cut distinction but
because non-positivist-inspired research most often aims at understanding
phenomena in practice it seems appropriate to contrast it with research paradigms
based on a functionalistic ontology inasmuch as functionalism is prescriptive and
non-positivism descriptive (see also Andersen amp Skaates 2004)
From this point of view the approach taken in this PhD project is best characterised
as a qualitative non-positivist study without strictly claiming constructivism or
similar concepts This influences the questions asked during an interview etc
because functionalistic questions are concerned with what is effective whereas for
example constructivist questions focus on how things work This is also reflected in
the purpose of this study where a clear functionalistic approach might have implied a
wish to improve effectiveness whereas the qualitative approach taken is mostly
oriented towards improving the understanding of intrapreneurship
A qualitative study requires close contact with the subject involved rather than
objective distance and any insights gained are limited to the particular companies
and issues studied and persons interviewed This does not as we will return to in
section 36 preclude generalisations however Rather the qualitative approach
involves an ongoing reflection on data and a positioning against different theories
such that the data can contribute to and further refine the research questions
34
32 UNIT OF ANALYSIS
In most research areas including intrapreneurship variables and concepts with the
same names are studied at different levels of analysis (Ireland et al 2005) and in
general it is not clear a priori whether the meaning of the variables etc at different
levels are identical As an example Klein et al (1994 p 206) mention Lawless amp
Pricersquos (1992) study of the roles that technology champions and users play during
innovation adoption While the term champion is clearly defined (Lawless amp Price
1992 p 342) the term user is not Are users independent individuals or homogenous
members of technology-adopting organisations and should the model consequently
be tested within a single organisation or across organisations
Ideally for valid and theory-consistent evidence to be provided the following must
be aligned The level of theory ie what is to be explained the level of measurement
ie what is the source of evidence and the unit of analysis ie what is treated as
observations (Klein et al 1994 Kozlowski amp Klein 2000) The empirically-oriented
literature on intrapreneurship entrepreneurship innovation and related areas differ on
what constitutes the level of the analysis (cf Ireland et al 2005 p 560) At the one
extreme is the innovativeness of a country or region often compared with other
countries or regions Even though a questionnaire approach and analysis of register
data is most often used in this connection a whole country could be considered a case
to be analysed
At the other extreme there is the most detailed level of analysis the individual level
where the focus is often on the individualrsquos characteristics (see for example
Brockhaus 1980 Davis 1999 Hisrich 1990) The second most detailed level is the
group level which mainly centres on the collective of individuals and competencies
and on how the different perspectives talents and ideas of different members of the
35
group or project influence for example knowledge-sharing (Cummings 2004) and
group-based rewards (Zenger amp Marshall 2000)
The third level is the organisational level (see for example Zahra et al 1999)
which focuses on how an organisation can create a context where individuals and
groups can be innovative (see for example Covin amp Slevin 1988 Nonaka amp
Takeushi 1995) and creative (Amabile et al 1996) Not surprisingly this level is
also the focal point for much organisational research eg how innovation is sustained
over time (Dougherty amp Hardy 1996) how the availability of resources promote
innovation (Nohria amp Gulati 1996) how corporate strategy influences innovation
(Hitt et al 1996) and how inter-unit co-operation regarding knowledge transfer and
learning contributes to their ability to innovate (see for example Kogut amp Zander
1992 Tsai 2001)
At the fourth level intrapreneurship or corporate entrepreneurship can also be seen as
a matter of inter-organisational co-operation or alliance (see for example Antoncic
2001 Foray 1991) One reason companies often collaborate is because they have
complementary competencies The inter-organisational level thus typically focuses on
the interplay between companies (see for example Smith et al 1995) in the same
way as the group level focuses on the interplay between individuals in a group which
means that the inter-organisational unit can be seen as ldquogrouprdquo However according
to Foray (1991) the difference between intra-company and inter-company co-
operation is that the former depends on the learning and flexibility capacities of
human resources while the latter depends on the capacity of human resources to
become specific Antoncic (2001) finds that communication trust and management
support are important characteristics in both intra- and inter-organisational co-
operation
36
The fifth level of analysis the regional or national level is appropriate for analysing
innovation systems (cf Lundvall 1992) or more broadly a countryrsquos innovative
capability as already attempted in McClelland (1961) where the practical
applications of the research could for example be related to regional policy (see for
example Lundvall 1992 Storper 1997) national policy (see for example Busenitz
et al 2005 Lundvall 1992 Nyholm amp Langkilde 2003) or national culture (see
for example Busenitz et al 2005 Steensma et al 2000)
This dissertation focuses on how organisations can be intrapreneurial and takes a
starting point in the third level of analysis the organisational level as described
above However since the case companies differ substantially in size some variation
in the interpretation of lsquoorganisationrsquo was allowed In this sense it might therefore
be more appropriate to talk about the level of analysis as being the organisational
object anchored in the individual organisation where new knowledge of importance
for the renewal of the organisation is created Irrespective of the level of analysis in a
qualitative study data is collected from individuals When theories are formulated at a
higher level eg the organisational level as in this dissertation it means that actions
must be taken to ensure that the level of measurement and the unit of analysis are
aligned with theory This implies that the interviews should aim at capturing
organisational rather than uniquely individual characteristics One way of ensuring
this is to select lsquorepresentativersquo employees for interviewing and another is to evaluate
responses from individuals relative to others In practice in the articles in this
dissertation (eg paper 3 and 5) we have often chosen to let respondentsrsquo views
represent their respective departments or company rather than themselves as
individuals
37
33 SELECTION OF THE CASE COMPANIES
The articles in the dissertation are based on five different case companies selected for
participation in the KNORI project Although the research project cannot for various
reasons be regarded as a comparative case study of the five companies they were
selected on the basis of methodological considerations similar to a comparative case
study approach
One approach to selecting cases for a comparative case study is Yin (2003) where he
emphasises that there are two ways to select cases for multiple-case studies The
cases should either ldquo(a) predict similar results (a literal replication) or (b) produce
contrasting results (a theoretical replication)rdquo (Yin 2003 p 47) However the aim
of the KNORI project was not to test a predetermined hypothesis or take a starting
point in specific propositions as is implicit in Yinrsquos approach Rather the project was
more oriented towards understanding the concept of intrapreneurship and identifying
challenges and possibilities for knowledge-intensive organisations
Consequently the cases were selected according to Gummessonrsquos (1991) theoretical
sampling ie based on the different ways they represent lsquorealityrsquo The approach taken
was based on the recognition that organisational renewal and innovation could have
different origins according to different understandings of the main production
processes in a company
As a rule a traditional production company is functionally organised where
production salesmarketing and research amp development take place in separate
organisational units (cf Sundbo 2001 p 104) and maybe even in separate physical
locations (as is the case with BampO see appendix 1) Although innovative activities
can potentially be initiated in any department the RampD department is traditionally
the driving force behind product innovations
38
At the other organisational extreme are companies that have no other product than
research and sometimes not even a separate customer-oriented department Here
research can be said to be in the form of production processes which are in
principle integrated with innovative activities These two ways of organising
innovative activities are shown on the right- and left-hand side of figure 31
respectively The arrows connecting the various processes that lead to innovation
production or development with the organisational focal point production process or
RampD department indicate that even if the unit of analysis is the single organisation
the expected locus for innovation is different
Figure 31 Production structure and organisation of innovative activities
The middle part of figure 31 shows project-oriented organisations where solutions or
products are developed either for customers or carried out together with them eg in
their own organisation Even though such companies can have both a separate RampD
department and a separate sales force production takes place in development
projects which are often customer-specific and also the source of innovations
Productionprocesses
Developmentproject
Developmentprocesses
Renewal occursin the production
processes
Renewal occurs in the development
projects
Renewal occursin the RD processes
Innovation profitability growth change of industry rules new business unit spin-offs etc
Organisational renewal
39
This typology is of course a very crude generalisation of how innovative activities
are formally organised In reality companies might have characteristics of all three
organisational forms and innovative activities are in no way restricted to specific
departments Furthermore figure 31 illustrates only the formal way of organising
innovation whereas innovations can ldquopop uprdquo in any part of the organisation and
sometimes even be systematic activities that take place despite an organisational
structure that otherwise inhibits them
It should also be noted that the framework in figure 31 is oriented towards
technological innovations whereas non-technical (social) innovations are most often
developed in departments other than RampD In addition with respect to service
companies the role of the lsquoInnovation Departmentrsquo may as observed by Sundbo
(1998 cf Sundbo 2001 p 105) be more of a boundary-spanning unit where new
ideas are collected and promoted among employees and managers
For this dissertation it was decided to approach potential case companies that as far
as possible represented the different organisational forms shown in figure 31 Some
flexibility was allowed in categorising the companies since as discussed above each
company had multiple ways of organising innovation Furthermore given the
explorative nature of the project the research possibilities in each company were
expected to be quite different therefore insights gained through the research process
would probably be more decisive for the specific focus than how the case companies
were originally selected
The original plan was to select the cases from among information and
telecommunications (ICT) companies in northern Jutland since the KNORI project
was based on precisely these types of companies However it became clear from very
early in the selection process that many of these companies were competitors and
that it could therefore be difficult to organise knowledge-sharing seminars if the
40
project only included these companies It was therefore decided to include other
technology-based companies as well as companies in other parts of Jutland
34 THE CASE COMPANIES
The initial contact was with two companies from the north Jutland ICT sector
End2End and Bang amp Olufsen since they were competing in quite different areas
Subsequently Ericsson Telebit Aarhus was also invited to participate in the project
as was FKI Logistics Crisplant also from Aarhus although Crisplant is not an ICT
company in a strict sense Finally on the suggestion of Bang amp Olufsen we
contacted Danfoss Drives in Graasten
In all therefore five companies have participated in the project and were interviewed
according to the same interview guide However Crisplant suffered a cut-back in
business activities shortly after the project started and lacked the resources to
participate fully in the project A sixth company took part in the project up to and
including the introductory meeting but due to a change of strategy in the parent
company it ended operations shortly after the project start
Contact with the companies during the project has varied according to how they
formed the empirical basis for the articles The specific methodological approach
chosen and a brief presentation of the individual companies is given in the articles
Appendix A includes a more detailed presentation of the five case companies
35 THE CASE STUDY APPROACH
The dissertation adopts a qualitative interpretative approach where the main part of
the empirical material for the study consists of research interviews observations from
visits to the companies written material collected from the companies and
41
observations at the meetings for the KNORI project However the most important
data source is the semi-structured research interview
The main strength of the case study approach is the ability to deal with a variety of
evidence documents questionnaires interviews and observations in a flexible
manner In particular this approach is suitable when exploring an emerging field
(Zahra 2007) or when unfamiliar practices are examined in specific companies As
stated by Laurila (1997 p 222-223) the feasibility of case studies is based on the
opportunities they create for observing and describing a complicated research
phenomenon in a way that allows for analytical generalisations (Dyer amp Wikins
1991 Eisenhardt 1989 Tsoukas 1989) of the observations
351 Definition of a case study
Yin (2003 p 13) defines a case study as ldquoan empirical inquiry that investigates a
contemporary phenomenon within a real-life context especially when the boundaries
between phenomenon and context are not clearly evidentrdquo In addition case studies
are usually based on a qualitative methodological point of origin which according
to Denzin and Lincoln (1994 p 4) includes methods that ldquoimply an emphasis on
processes and meanings that are not rigorously examined or measured (if measured at
all) in terms of quality amount intensity or frequencyrdquo
Although the case companies were difficult to compare in a strict sense the basis for
selecting them was that as far as possible they should face lsquosimilarrsquo challenges in
relation to intrapreneurship and as regards participation in KNORI they were also
potentially subject to a similar lsquointerventionrsquo Therefore the project can be said to be
partly based on an ldquoEmbedded Multiple Case Study Designrdquo (cf Yin 2003) the
results of which are potentially more compelling than the results from a single case
study
42
single-case designs multiple-case designs
holistic
(single-unit of analysis)
embedded
(multiple-unit of analysis)
CONTEXT
Case
CONTEXT
CaseEmbedded
Unit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
CONTEXT
Case
EmbeddedUnit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
EmbeddedUnit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
EmbeddedUnit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
EmbeddedUnit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
CONTEXT
Case
CONTEXT
Case
Christensen (2005) Chapter 7
Christensen (2006) Chapter 6
Christensen Bukh amp Bang (2007) Chapter 9
Figure 32 Basic types of case study designs (Yin 2003 p 40) including an outline
of the empirical articles in this dissertation
As shown in figure 32 case studies can involve either a single case (eg Christensen
2005 chapter 7 Christensen 2006 chapter 6) or multiple cases (eg Christensen et
al 2007 chapter 9) and they can be either holistic (eg Christensen 2006) or
embedded (eg Christensen 2005 Christensen et al 2007) ie where one or more
unit(s) of analysis is involved (Yin 2003)
352 Action research or research in action
It should be noted that both the study of the companies in the articles and the
summarising conclusions of these articles (see chapter 10) are likely to be influenced
by interaction with the companies during the KNORI project In general research
cannot be carried out independently of the researchersrsquo underlying assumptions about
the nature of knowledge and how it can be acquired (see for example Andersen and
43
Skaates 2004 Guba and Lincoln 1994) What is of more concern here however are
the factors influencing the research process and specifically the interviews carried
out during the KNORI project
One possibility after the companies were approached in Summer 2002 and the first
KNORI meeting in March 2003 was that they might initiate new intrapreneurship-
related projects and that as a result of interaction with the researcher and with each
other at the KNORI meetings their understanding of the intrapreneurship concepts
would be heavily influenced by this process
Thus both the project set-up and the nature of possible research questions suggested
an interventionist approach (cf Joumlnsson amp Lukka 2007) which makes active use of
participant observations Although there are numerous variations interventionist
research covers such methodologies as action research (Lewin 1948) action science
which promotes learning in the client organisation (Argyris et al 1985) and so-
called constructive research approaches (Kasanen et al 1993) The methodology
most often used by researchers is action research which according to Eden and
Huxham (1996 p 526) can be understood as research embodying ldquoresults from an
involvement by the researcher with members of an organisation over a matter which
is of real concern to them (and) in which there is intent by the organisation to take
action based on the interventionrdquo
However considering the limited interaction between the companies at the meetings
and the diverse analytic approaches chosen it was judged that the articles in the
dissertation can be considered as separate studies of related concepts rather than a
tightly integrated research project Furthermore the research carried out in the
companies and reported in the articles is only very slightly influenced by the project
set-up at least not in a manner where the project can be considered as action
research
44
36 VALIDITY OF THE METHODOLOGY
A study which focuses on a few and very different companies in specific business
contexts will always be limited as regards to statistical generalisations hypothesis-
testing etc As could be seen from the brief discussion in section 31 statistical
testing of theoretically-derived hypotheses is not an aim of research projects based on
the qualitative non-positivist approach However this does not diminish the need for
addressing quality criteria of the research
One of the major challenges of case studies based on research interviews is how to
assure some kind of lsquoverificationrsquo of the conclusions Traditionally this is a matter of
validity and reliability where the latter has entered social science research through
the use of research tools such as questionnaires (primarily used in (neo)positivistic
studies) and interview guides (used more broadly in qualitative studies)
In qualitative studies the reliability or consistency of the results interviews
transcription and analyses is ensured by taking special care to minimize errors and
biases eg by not asking leading questions By comparison according to Kvale
(1996 p 238) validity has to do with the conformity of the phenomenon studied and
the way it is studied As Ahrens amp Chapman (2007) point out the question of
reliability takes on a different significance in qualitative studies that are only partly
based on research instruments as is the case in this dissertation which initially used a
loosely structured thematic interview guide and where a questionnaire was used in
one of the companies (see article 2 chapter 6)
Social reality is fundamentally contextndashspecific and interviewees ldquocan and do strive
to undo their history and invent new concepts images and ways in which they want
them to infuse actionrdquo (Ahrens amp Chapman 2007 p 311) On the one hand
therefore there is no hard data eg questionnaire data that can be verified by means
of statistical tests and on the other we have a number of contextual factors
45
including the dialogue with the researcher the interview design and the researcherrsquos
interests which cannot be separated from the data As Ahrens amp Chapman (2007)
also stress this means that we ldquoshould not expect identical results when two
researchers study the same organisation from different points of viewrdquo (Becker 1970
p 20) but we should expect that ldquothe conclusions of one study do not implicitly or
explicitly contradict those of the otherrdquo (ibid) Thus the methodological
considerations in this dissertation will primarily emphasise validity while at the same
time paying due respect to the implications for generalisation and reliability
Returning to the question of generalisations the research interviews carried out in the
companies were inspired by Kvale (1997) who argues that besides reliability and
validity the verification of a case study relates to generalisation This can be obtained
in different ways Analytical generalisation ie taking a specific case out of context
by relating observations to existing theory and through analytic abstraction which
obtains new theoretical insights via an inductive method (Yin 2003 Kvale 1997)
Here the theoretical framework presented in article 1 (Chapter 4) becomes to some
extent the vehicle for analytic generalisation although generalisation per se is not a
major aim of the project The empirical part of the dissertation consists of articles
and as mentioned above the data are not analysed in such a way that consistent
conclusions can be drawn by comparing case studies across all the companies
participating in the KNORI project
361 The use of Multiple Sources of Evidence
One way of ensuring validity is to approach the research questions by means of
different methods using redundancy to lsquotriangulatersquo the data (see for example
Denzin 1989 Yin 20034) Since qualitative studies have often been criticised for
being unreliable one way of improving the rigour of qualitative research is to use
46
multiple sources of evidence so that the results converge to support one explanation
(see for example Andersen amp Skaates 2004 Yin 2003)
Although in a stricter sense triangulation (Denzin 1989 Jick 1979) implies that
different methods are used in combination to study the same phenomenon it is
common to use the term more broadly (see for example Andersen amp Skaates 2004
Patton 1987 Yin 2003) and consider different types of triangulation Data
triangulation investigator triangulation theory triangulation and methodological
triangulation However the use of this broader interpretation of triangulation has
more to do with finding additional evidence to support or question the relations
between the initial data and the argument than of capturing a more objective reality
Here the broad interpretation of triangulation is used the project being based partly
on data triangulation and partly on methodological triangulation including semi-
structured open-ended interviews review of organisational documents and
observation during visits to the companies and at the KNORI meetings On the other
hand intrapreneurship will be addressed from different theoretical angles and the
management of knowledge from different perspectives It should be noted however
that no attempt is made to formally analyse the various sources of information in
order to examine whether they lead to similar conclusions etc
37 THE RESEARCH INTERVIEWS
The primary source of data in the case studies is the research interview which
according to Kvale (1996) is a form of professional conversation for the purpose of
obtaining ldquodescriptions of the life world of the interviewee with respect to
interpreting the meaning of the described phenomenardquo (Kvale 1996 p 5-6) The key
phenomena of interest in this project are intrapreneurship innovativeness strategy
knowledge and the management of knowledge-based processes and an analysis of
47
their potential in specific companies implies an examination of the phenomena in
ldquothe real worldrdquo
The initial aim of the project was to describe analyse and interpret the central themes
or phenomena how they are experienced by the respondents and together with the
interviewee to develop an understanding of them As far as possible the aim of the
questions asked was to validate or invalidate the respondentrsquos statements and the
ambiguities that arose during the interview
In all five companies the interviews were based on more or less the same structure
ie a semi-structured interview guide (see figure 33) Several employees in each
company were interviewed with a focus on four main themes Background
information organisation of innovativeness and intrapreneurial activities innovation
and innovativeness and enablersbarriers The interviews were held in a
conversational style and the respondents were asked to tell the story of the company
how they perceive innovation why the company needs to be innovative where in the
organisation innovations are created how they are organised and which enablers
encourage and support them to be innovative and how The interviews which lasted
an average of one-and-a-half hours were taped and transcribed Field notes were
written at the end of each day
The interviewees were chosen from different positions in the case companies and
where possible from similar functional areas and areas of responsibility In order to
get a broader perspective on the same themes the formal interviews were supported
or validated by more informal conversations with other employees and through
observations In practice the interviews focussed on the areas which the respondents
felt most familiar with and where possible the focus was on intrapreneurial activities
48
Figure 33 Common interview guide for the basic data collection
A total of 19 persons (6 engineers 6 functional managers 5 project managers and 2
from HR departments) were interviewed based on the interview guide shown in
figure 33 As far as possible the interviews involved employees in different
positions within the individual company but in the same positions across the
A Background information
bull Name background education how long with the company role in the company
bull Important events during the history of the company ndash eg acquisitions spin-offs central employeescustomers and change strategy
bull The company as a place to work
B Organization of innovativeness and intrapreneurial activities
bull Is the company innovative What does this mean examples
bull What is central in relation to innovation what drives innovation
bull Organisation of the innovative activities
C Innovation and innovativeness
bull How do you perceive innovation ndash eg product process strategy or administrative
bull Events in relation to innovation ndash eg employees ldquoheroesrdquo etc
bull Why is it necessary to be innovative ndash eg market techonology knowledge-creation and history
bull The possibility to plan innovation ndash whywhy not
bull Special characteristics of working with innovation
bull Where in the company are innovations created the type of innovation
bull Innovation in collaboration with customers
D Enablers of and barriers to innovation
bull The culture ndash eg describe your daily work How is your job different from others
bull Do you use specific models How is your job different from others
bull Rewards ndash eg financial recognition and ldquofreedomrdquo
bull Does management support your ideas Can you work on them Do others support your ideas
bull Resources ndash eg time financial materials etc
bull The organizational structure
bull When do you announce your ideas Do you normally work on them in advance Are there rules for when an idea can become a project in the departmentat the company level Who decides whether something is a good idea or not What happens when a project turns out to be a failure
bull Communication ndash eg how does communication work Do you have problems with communicationmisunderstandings because of language Company-specific language Improvements
bull Other things
49
companies Three interviews per company were planned prior to each of the visits
but at some companies more interviews were arranged during the visit
In relation to article 5 (Christensen et al 2007) additional interviews were carried
out according to a semi-structured interview guide focussing on the management of
knowledge-based resources In total 10 interviews five in each company were
conducted with employees holding different positions but similar responsibilities
across the companies
371 The transcription process
All formal interviews were taped and transcribed Initially it was planned to analyse
the data systematically using a content analysis approach implying that the
transcription would be separated into different parts (clauses) which would be
classified into content categories (see for example Gerbner et al 1969 and Weber
1985) Even though content analysis is often presented as a technique for the analysis
of archival data in the form of documents (see for example Miles and Huberman
1994 p 54-55) according to Weber (1985) the method can also be used more
broadly to analyse any written text including transcriptions Since this method
provides a firm ground for assessing reliability and validity in a traditional sense it
was thought that this method could be used to increase reliability
There are different techniques for text analysis ranging from simple hand-coding to
advanced computer programs However as Weber (1985 p 69) emphasizes ldquothere is
no single ldquoright wayrdquo to do content analysisrdquo The coding in this project was based on
the classification of the intrapreneurship literature presented in article 1 and on a
study of the factors enabling intrapreneurship (see article 3) a coding structure was
subsequently developed and systematically applied in most of the interviews
50
Classical content analysis assumes that relevant theories have been specified the
themes or research questions to be investigated are substantive and that the main
coding categories have been theoretically justified ( see for example Stone et al
1966 Weber 1985) in a way that has already determined or described codes as a
starting point (cf Ryan amp Bernard 2000 p 785) Early in the research process it
was realised that on the one hand this was difficult to reconcile with the general
methodological approach in the dissertation and on the other that it was difficult to
control how the categorisation was determined beforehand and how it would affect
the reliability and validity of the data when they are reduced and classified into fewer
categories (cf Weber 1985) It was therefore decided not to use content analysis to
interpret the interview data Nonetheless familiarity with the data together with the
linking of specific interview data and for example the various enablers and barriers
to innovativeness still proved useful when the articles were written
38 REFERENCES
Ahrens T amp C S Chapman 2007 Doing qualitative Field Research in Management
Accounting Positioning data to contribute to theory In C S Chapman A G
Hopwood amp M D Shields (eds) Handbook of Management Accounting Research
Amsterdam Elsevier
Alvesson M 2003 Beyond neopositivists romantics and localists A reflexive
approach to interviews in organisational research Academy of Management Review
Vol 28 No1 pp 13-33
Amabile T M R Conti H Coon J Lazenby amp M Herron 1996 Assessing the
work environment for creativity Academy of Management Journal Vol 39 No 5
pp 1154-1184
51
Argyris C R Putnam amp S D McLain 1985 Action Science San Francisco
Jossey-Bass
Andersen P H amp M A Skaates 2004 Ensuring validity in qualitative international
business research In Welch C amp R Marschan-Piekkari (eds) Handbook of
Qualitative Research Methods for International Business Edward Elgar Publishers
Antoncic B 2001 Organizational processes in intrapreneurship a conceptual
integration Journal of Enterprise Culture Vol 9 No 2 pp 221-235
Becker H S 1970 Sociological Work Methods and Substance Chicago Aldine
Brockhaus R H 1980 Risk-Taking Propensity of Entrepreneurs Academy of
Management Journal Vol 23 No 3 pp 509-520
Burrell G amp G Morgan 1979 Sociological Paradigms and Organizational
Analysis Aldershot England Ashgate Publishing
Busenitz L W C Goacutemes amp J W Spencer 2000 Country institutional profiles
Unlocking entrepreneurial phenomena Academy of Management Journal Vol 43
No 5 pp 994-1003
Covin J G amp D Slevin 1988 The influence of organization structure on the utility
of an entrepreneurial top management style Journal of Management Studies Vol 25
No 3 pp 217-234
Cummings J N (2004) Work groups structural diversity and knowledge sharing in
a global organization Management Science Vol 50 No 3 pp 352-364
Davis K S 1999 Decision criteria in the evaluation of potential intrapreneurs
Journal of Engineering and Technology Managment Vol 16 pp 295-327
52
Deetz S 1996 Describing differences in approaches to organization science Re-
thinking Burell and Morgan and their legacy Organization Science Vol 7 No 2
pp 191-207
Denzin N K 1989 Strategies of Multiple Triangulation In N K Denzin The
Research Act (3rd edition) Englewood Cliff NJ Prentice Hall pp 235-247
Denzin NK amp YS Lincoln 1994 Handbook of qualitative research Thousand
Oaks CA Sage
Dougherty D amp C Hardy 1996 Sustained product innovation in large mature
organizations Overcoming innovation-to-organization problems Academy of
Management Journal Vol 39 No 5 pp 1120-1153
Dyer WG amp Wilkins AL 1991 Better stories not better constructs to generate a
better theory a rejoinder to Eisenhardt Academy of Management Review Vol 16
No 3 pp 613-619
Eden C amp C Huxham 1996 Action research for the study of organizations In
Handbook of Organization Studies Stewart R C Hardy amp W North (eds) London
Sage
Eisenhardt KM 1989 Building Theories from Case Study Research Academy of
Management Review Vol 14 No 4 pp 532-550
Foray D 1991 The secrets of industry are in the air Industrial cooperation and the
organizational dynamics of the innovative firm Research Policy Vol 20 No 5 pp
393-405
Gerbner G O R Holsti K Krippendorff W J Paisley P J Stone (eds) 1969
The Analysis of Communication Content New York John Willey amp Sons
53
Guba E G amp Y S Lincoln 1994 Competing paradigms in qualitative research In
N K Denzin og Y S Lincoln Handbook of qualitative research Thousand Oaks
CA Sage 105-117
Gummesson E 1991 Qualitative Methods in Management Research Newbury Park
California Sage
Hisrich RD 1990 EntrepreneurshipIntrapreneurship American Psychologist Vol
45 No 2 pp 209-222
Hitt M A R E Hoskisson R A Johnson amp D D Moesel 1996 The market for
corporate control and firm innovation Academy of Management Journal Vol 39
No 5 pp 1084-1119
Ireland R D C R Reutzel amp J W Webb 2005 Entrepreneurship research in AMJ
What has been published and what might the future hold Academy of Management
Journal Vol 48 No 4 pp 556-564
Jick T D 1979 Mixing Qualitative and Quantitative Methods Triangulation in
Action Administrative Science Quarterly Vol 24 No 4 pp 602-611
Joumlnsson S amp K Lukka 2007 There and Back Again Doing Interventionist
Research in Management Accounting In Handbook of Management Accounting
Research CS Chapman AG Hopwood amp MD Shields (eds) Amsterdam
Elsevier
Kasanen E K Lukka amp A Siitonen 1993 The constructive approach in
management accounting research Journal of Management Accounting Research
Vol 9 pp 241-264
Klein K J F Dansereau amp R J Hall 1994 Levels issues in theory development
data collection and analysis Academy of Management Review Vol 19 pp 195-229
54
Kogut B amp U Zander 1992 Knowledge of the firm combinative capacity and the
replication of technology Organization Science Vol 3 pp 383-397
Kozlowski S amp K Klein 2000 A level approach to theory and research in
organizations Contextual temporal and emergent processes In Multilevel Theory
Research and Methods in Organizations Foundations extensions and new
directions K J Klein (ed) San Francisco Jossey-Bass
Kvale S 1997 InterView En introduction til det kvalitative forskningsinterview
Koslashbenhavn Hans Reitzels Forlag
Laurila J 1997 The thin line between advanced and conventional new technology
A case study on paper industry management Journal of Management Studies Vol
34 No 2 pp 221-239
Lauring J 2005 Naringr organisationer bliver mangfoldige Om vidensdeling og
interaktion i etnisk mangfoldinge organsationer phd-afhandling Institut for Ledelse
Handelshoslashjskolen i Aringrhus
Lawless M W amp L L Price 1992 An agency perspective on new technology
champions Organizational Science Vol 3 pp 342-355
Lewin K 1946 Action research and minority problems In Resolving Social
Conflicts Selected papers on Group Dynamics by Kurt Lewin G W Lewin (ed)
New York Harper amp Brothers
Lundvall B Aring (ed) 1992 National Systems of Innovation London Pinter
McClelland D C 1961 The Achieving Society New York The Free Press
Miles M B amp A M Huberman 1994 An Expanded Sourcebook Qualitative Data
Analysis Second Edition Thousand Oaks CA SAGE Publications
55
Nohria N amp R Gulati 1996 Is slack good or bad for innovation Academy of
Management Journal Vol 39 No 5 pp 1245-1264
Nonaka I amp H Takeuchi 1995 The Knowledge-Creating Company Oxford
University Press
Nyholm J amp L Langkilde 2003 Et benchmark studie af innovation og
innovationspolitik ndash hvad kan Danmark laeligre Oslashkonomi- og Erhvervsministeriets
enhed for erhvervsoslashkonomisk forskning og analyse FORA Koslashbenhavn
Patton M Q 1987 How to use qualitative methods in evaluation Newbury Park
CA SAGE Publications
Ryan GW amp H R Bernard 2000 Data Management and Analysis Methods In
Handbook of Qualitative Research (second edition) NK Denzin amp Y S Lincoln
(eds) Thousand Oaks Sage Publications pp 769-802
Sharma P amp J J Chrisman 1999 Toward a reconciliation of the definitional issues
in the field of corporate entreprenruship Entrepreneurship Theory and Practice Vol
22 pp 43-68
Silverman D 1993 Interpreting qualitative data London Sage
Smith K G S J Carroll amp S J Ashford 1995 Intra- and interorganizational
cooperation Toward a research agenda Academy of Management Journal Vol 38
No 1 pp 7-23
Steensma H K L Marino K M Weaver amp P H Dickson 2000 The influence of
national culture on the formation of technology alliances by entrepreneurial firms
Academy of Management Journal Vol 43 No 5 pp 951-973
56
Stone R J D C Dunphy M S Smith amp D M Ogilvie (eds) 1966 The General
Inquirer A computer approach to content analysis Cambridge MIT Press
Storper M 1997 The regional world New York Guilford Press
Sundbo J 1998 The Organisation of Innovation in Services Copenhagen Roskilde
University Press
Sundbo J 2001The strategic management of innovation A sociological and
economic analysis Cheltenham Edvar Elgar
Tsai W 2001 Knowledge transfer in intraorganizational networks effects of
network position and absorptive capacity on business unit innovation and
performance Academy of Management Journal Vol 44 No 5 pp 996-1004
Tsoukas H 1989 The validity of idiographic research explanations Academy of
Management Review Vol 14 No 4 pp 551-61
Weber PR 1985 Basic Content Analysis Beverly Hills CA SAGE Publications
Yin R K 2003 (3rd edition) Case Study Research Design and Methods London
SAGE Publications
Zahra S A 2007 Contextualizing theory building in entrepreneurship research
Journal of Business Venturing Vol 22 pp 443-452
Zahra S A D F Jennings amp D F Kuratko 1999 The Antecedents and
Consequenses of Firm-Level Entrepreneurship The State of the Field
Entrepreneurship Theory amp Practice Vol 24 No 2 pp 45-65
Zenger T R amp C R Marshall 2000 Determinants of incentive intensity in group-
based rewards Academy of Management Journal Vol 43 No 2 pp 149-163
57
CHAPTER 4
A Classification of the Corporate Entrepreneurship Umbrella Labels and
Perspectives
Originally published in
Christensen Karina Skovvang 2004 A Classification of the Corporate
Entrepreneurship Umbrella Labels and Perspectives International Journal of
Management and Enterprise Development Vol 1 No 4 pp 301-315
The article was later improved and published in a Danish Journal
Christensen Karina Skovvang 2005 Corporate Entreprenoslashrskab Begreber og
Perspektiver Ledelse amp Erhvervsoslashkonomi Vol 61 No 1 13-26
Int J Management Enterprise Development Vol 1 No 4 2004 301
Copyright copy 2004 Inderscience Enterprises Ltd
A classification of the corporate entrepreneurship umbrella labels and perspectives
Karina Skovvang Christensen Department of Organisation and Management The Aarhus School of Business Haslegaardsvej 10 Aarhus V Denmark E-mail KaSCasbdk Corresponding author
Abstract The concept of corporate entrepreneurship has been confusingly used by researchers to explain various organisational phenomena such as ways of managing strategy and innovation The abundant use of labels and perspectives interchangeably has consequently led to lack of clarity This article reviews the literature in order to provide an overview and categorisation of corporate entrepreneurship The aim is to clarify the concept by identifying the key perspectives Since there is no unifying theoretical base for the entrepreneurship phenomena ndash due to for example its interdisciplinary grounding in economics sociology and psychology ndash a framework for corporate entrepreneurship is developed consisting of intrapreneurship and exopreneurship These are further broken down into four complementary perspectives corporate venturing internal resources internationalisation and external networks It is hoped that these four perspectives together will give the reader a clearer understanding of corporate entrepreneurship and thereby improve the basis for managerial decisions
Keywords corporate entrepreneurship strategic entrepreneurship intrapreneurship exopreneurship corporate venturing internal resources internationalisation networks framework
Reference to this paper should be made as follows Christensen KS (2004) lsquoA classification of the corporate entrepreneurship umbrella labels and perspectivesrsquo Int J Management Enterprise Development Vol 1 No 4 pp301ndash315
Biographical note Karina Skovvang Christensen is a PhD student MSc (Econ) at the Department of Organisation and Management Aarhus School of Business Denmark Her primary research area is intrapreneurship in knowledge-intensive companies with a focus on how knowledge resources can enable organisational and strategic renewal She is co-author of the book Knowledge Management ndash Establishing a Practice Field (in Danish) and has published articles on knowledge management and related subjects
1 Introduction
Technological and market changes seem to occur faster than we expect and Peter Druckerrsquos old saying that the only constant thing in business is change seems truer than
302 KS Christensen
ever Fast-changing business environments changing business structures and rules of competition are becoming part of the ordinary life of most companies as these are prerequisites for staying in business
Over the past two decades companies in the 1980s and to some extent the 1990s have been characterised by reductions in the workforce downsizing rightsizing budget cuts and the low morale of their workforce [1] While the main focus has been on short-term costs of operations no company can afford to rely on such an approach forever The real challenge for a company to remain a going concern is to establish a competitive advantage The only way to accomplish that is through differentiation and continuous innovation ndash whether it is related to the creation of new products and services production organisational processes or business models According to for example Morris and Kuratko [1] the answer to todayrsquos hyper-competitive environments is adaptability flexibility speed aggressiveness and innovativeness which they boil down to one word ndash entrepreneurship
Companies have been faced by increasing demands for both faster product development and more features in smaller products and higher and uniform quality stability and lower prices despite the inherent incompatibility of such demands The former relates to an entrepreneurial and flexible company while the latter require a well-structured and effective organisation However many large companies seem to find it very difficult to integrate the entrepreneurial spirit in a well-structured or bureaucratic organisation and must therefore think non-traditionally to cope with these increasing paradoxes Some companies tend to stick to the lsquoold waysrsquo of doing business ie preserving the well-known techniques business concepts and ways of cooperation while others reorganise re-create themselves merge and split up become virtual enter new markets and create unforeseen alliances Thus some firms apparently ignore changing market conditions while others act on challenges to the well-established business routines and rules of competition
Researchers and proactive companies have recently become particularly interested in topics such as entrepreneurial management corporate entrepreneurship strategic entrepreneurship and intrapreneurship This may in part be due to the lsquore-labellingrsquo [2] of existing concepts but it has also paved the way for the emergence of new practices and theories However Guth and Ginsberg [3 p 6] argue that lsquodespite the growing interest in corporate entrepreneurship there appears to be nothing near a consensus on what it isrsquo Consequently there are theoretical inconsistencies on how the concepts should be understood What all the proposed concepts seem to have in common however is that entrepreneurial activities can renew established organisations and that this can typically be achieved through innovation and venturing activities [3] that give the firm access to different skills capabilities and resources [4] The lack of consensus may be a symbol of the different labels or it may merely illustrate the opposite ie lsquolabelsrsquo do not solve the issue
This article proposes a categorisation of the concept of corporate entrepreneurship spanning both an internal perspective (intrapreneurship) and an external perspective (exopreneurship) The special case of spin-offs or new business creation (entrepreneurship) is seen as either a potential outcome of corporate entrepreneurship activities ndash not a perspective per se ndash or outside the scope of corporate entrepreneurship Section 2 discusses the theoretical roots of entrepreneurship in order to gain an understanding of the sources that have influenced entrepreneurship and thereby corporate
A classification of the corporate entrepreneurship umbrella 303
entrepreneurship The next section looks at the different labels for and perspectives on corporate entrepreneurship the aim of which is to clarify the topic and put it into perspective This is followed by a proposed framework consisting of four different approaches to strategic corporate entrepreneurship corporate venturing internal resources internationalisation and networks The article concludes with recommendations for using this framework in future research and practice
2 Theoretical roots entrepreneurship
The aim of this section is to help clarify the different approaches to entrepreneurship and thus to some extent explain the different perspectives on corporate entrepreneurship The theoretical roots of entrepreneurship builds on Stevenson and Jarillo [5] who argue that the management literature on entrepreneurship is often based on classical entrepreneurship literature which can be divided into three main categories the effects of entrepreneurship (what happens when entrepreneurs act) the causes of entrepreneurship (why entrepreneurs act) and entrepreneurial management (how entrepreneurs act) The main differences are due to the different theoretical backgrounds of the researchers Economists have dominated the effects of entrepreneurship such as the Chicago tradition [6ndash8] the German tradition [9] and the Austrian tradition [10ndash12] In contrast studies on the causes of entrepreneurship are dominated by psychologists [13ndash15] and sociologists [16] and studies on entrepreneurial management have mainly been considered from a practical point of view Despite the differences in perspectives however there are several similarities and overlaps ndash especially in the definitions of entrepreneurship which are dominated by the effect studies with their focus on what initiated entrepreneurship Nonetheless the different disciplines are based on different basic assumptions and thus emphasise different aspects of the phenomenon ndash again adding to the confusion related to entrepreneurship
This categorisation by Stevenson and Jarillo [5] is only one among several other approaches to understanding the concept of entrepreneurship [17] However Alvarez and Barney [18] argue that the theory of entrepreneurship continues to lack a unifying base from which to explain predict and empirically examine the phenomenon Instead they emphasise that researchers from other fields use entrepreneurship as a means for extending their own theoretical frameworks which means that the phenomenon is explored from several different perspectives Unfortunately the extension of the concept to cover corporate entrepreneurship makes it even fuzzier because corporate entrepreneurship is more complex since it also challenges organisational strategy structures and processes [1920] Compared with the causes and effects of entrepreneurship scholars paid little attention to the corporate management dimension until two or three decades ago when the management literature began to take a more serious look at entrepreneurship
3 The appropriate label
The concept of entrepreneurship within existing organisations has evolved over the last thirty years [21ndash24] especially over the last two decades and is known under many
304 KS Christensen
different lsquolabelsrsquo including corporate entrepreneurship [125ndash30] internal corporate entrepreneurship [31ndash34] intrapreneurship [35ndash40] entrepreneurial management [5] and strategic entrepreneurship [4142] Corporate entrepreneurship seems to have gained the most attention as a concept as is evident from special issues of journals eg Strategic Management Journal in 1990 (Corporate Entrepreneurship) 2001(Entrepreneurial Strategies for Wealth Creation) and Entrepreneurship Theory amp Practice 1999 (Corporate Entrepreneurship in a Global Economy)
As emphasised by Hornsby et al [30] the concepts are often used interchangeably although the various labels of the concept have different associations For instance the term lsquomanagementrsquo in lsquoentrepreneurial managementrsquo indicates that entrepreneurial behaviour or entrepreneurship is to some extent controllable However lsquothe causes of entrepreneurshiprsquo researchers [16] have proposed and sometimes emphasised that entrepreneurship should be seen as a function of human characteristics that not everyone possesses and that entrepreneurship is often related to processes that traditionally cannot be controlled or at least lose their efficiency effectiveness and uniqueness when controlled [16] It does not seem reasonable either that entrepreneurship is entirely controllable An organisation can encourage entrepreneurial activities by bringing together people possessing special and different skills and knowledge and applying their specialities to a common end product by the creation of new combinations [9]
Morris and Kuratko [1 p62] argue that by using lsquothe term corporate entrepreneurship [it] indicate[s] that the fundamentals do not change only the contextrsquo whereas they say that the fundamentals do change when the concept is changed to intrapreneurship A counterargument is that in lsquocorporate entrepreneurshiprsquo the term lsquocorporatersquo is often associated with large corporations [543] whereas entrepreneurial activities are also important in small and medium-sized organisations [13738] In this context lsquointrapreneurshiprsquo which does not indicate anything about the size of the company is shorthand for intracorporate entrepreneurship [35] which simply indicates entrepreneurship within an existing organisation
Based on the above intrapreneurship seems to be the most appropriate label for the concept of entrepreneurship within an existing company as long as the company is only dealing with internal resources in its own possession However there are also several opportunities to be entrepreneurial and innovative and develop new knowledge and competencies outside the boundaries of a company ndash which Chang [44] calls exopreneurship Chang [44 p187] points out that lsquoexopreneurship is the generation of innovation outside the boundary of organisation using external agents known as exopreneursrsquo which means that an organisation acquires innovation through external networks such as joint ventures external venture capital subcontracting and strategic alliances The differences are clear ndash entrepreneurs innovate for themselves intrapreneurs innovate on behalf of an existing organisation while exopreneurs are part of an external network The motivations for innovation are therefore different
The left-hand side of the Figure 1 shows that there may be a relation between an established company and a new independent venture as the latter may be a spin off of the former Pinchot [35] even argues that many entrepreneurs develop their skills and competencies within an established organisation before creating their own venture Intrapreneurship which can be defined as a companyrsquos legal possession of resources is shown in the middle of the figure The right-hand side of the figure goes beyond the
A classification of the corporate entrepreneurship umbrella 305
borders of the organisation and illustrates exopreneurship or entrepreneurial activities through external networks of which the company does not possess full ownership
Figure 1 Relationship between corporate entrepreneurship entrepreneurship intrapreneurship and exopreneurship
4 Defining corporate entrepreneurship
The three approaches to entrepreneurship and strategic management have resulted in many definitions of corporate entrepreneurship over the past 20ndash30 years Morris and Kuratko [1 p31] define corporate entrepreneurship as lsquoa term used to describe entrepreneurial behaviour inside established mid-sized and large organisationsrsquo Corporate entrepreneurship can also be seen as the process whereby an individual or a group creates a new venture within an existing organisation revitalises and renews an organisation or innovates [1945] Zahrarsquos [46 p262] definition of corporate entrepreneurship suggests lsquoa formal or informal activity aimed at creating new business in established firms through product and process innovations and market developmentsrsquo whereas Sathe [47] defined corporate entrepreneurship as a process of organisational renewal
Guth and Ginsberg [3] classify corporate entrepreneurship into two strategic managerial choices corporate venturing and the transformation of organisations through strategic renewal By corporate venturing is meant intraprising [35] or new business creation within existing organisations [25] that may or may not result in strategic renewal while the latter implies the creation of new wealth through new combinations of resources Corporate venturing is one way to achieve strategic renewal making acquisitions resulting in new combinations is another whereas actions like lsquorefocusing a business competitively making major changes in marketing or distribution redirecting product development and reshaping operationsrsquo [3 p6] are also examples of strategic renewal
Thornberry [48] breaks corporate entrepreneurship down even further identifying four strategic types corporate venturing intrapreneuring organisational transformation and industry rule breaking This is almost similar to Stopford and Baden-Fullerrsquos [28] categorisation which identifies three types of corporate entrepreneurship Intrapreneurship which they define as a part of corporate venturing transformation and
306 KS Christensen
renewal of existing organisations and changing the rules of competition for the industry as suggested by Schumpeter [9] Compared with Guth and Ginsbergrsquos [3] framework the differences are industry role breakingchanging the industry rules of competition which is considered beyond a companyrsquos direct influence because the company cannot plan it Since it is highly market-dependent it may be a result of corporate venturing and strategic renewal rather than a process Corporate entrepreneurship is therefore seen as corporate initiatives that enable entrepreneurship in relation to an existing company
5 Perspectives on corporate entrepreneurship
Many scholars seem to agree that corporate entrepreneurship is an overall term for all other lsquolabelsrsquo and perspectives Figure 2 illustrate the corporate entrepreneurship umbrella and divides it into four perspectives (1) corporate venturing (2) internal resources (3) internationalisation and (4) external networks These perspectives indicate four domains in which a company can make an effort to be more innovative However even though they are very different they are all rooted in organisational resources The classification takes into account both what is within and beyond the organisational boundaries and the dotted line in Figure 2 indicates what is beyond the organisational boundaries
Figure 2 Relationships between the perspectives on corporate entrepreneurship
Corporate venturing is a means of planning for organisational ambiguity in entrepreneurial action by separating one or a group of intrapreneurs from the organisational structure [25274549] By contrast internal resources operate within the overall organisational structure and from this perspective corporate entrepreneurship focuses on bringing together organisational resources in a way that generates innovations and competitive advantage [1850ndash52] Internationalisation as a perspective on corporate entrepreneurship relates to the relatively higher risk of entering foreign markets These often differ from the domestic market in terms of political economic legal and cultural
A classification of the corporate entrepreneurship umbrella 307
dimensions This means the company has to develop new knowledge and competencies [4253ndash55] which in turn reinforces the need for entrepreneurial abilities The last perspective on corporate entrepreneurship in this classification is external networks and alliances The main reason why companies enter an external network or alliance is to gain access to resources that they do not possess themselves [4256]
In the special issue of Strategic Management Journal in 2001 Michael Hitt R Duane Ireland S Michael Camp and Donald L Sexton also categorise corporate entrepreneurship into four organisational activities external networks resources and organisational learning innovation and internationalisation Ireland et al [42] expand the domains from the special issue with lsquotop management teams and governancersquo and lsquogrowthrsquo It is argued that top management teams and governance are essential as their influence on strategic goals are significant [5758] and lsquogrowthrsquo is the essence of entrepreneurship [59ndash61] However as suggested in this framework the perspectives are not the same because unlike Hitt et al [41] Ireland et al [42] and Hitt et al [62] this classification considers lsquotop management teams and governancersquo as an initiative that can enable outcomes like new processes products or services growth strategic renewal or the creation of new business As previously mentioned lsquogrowthrsquo is regarded as an outcome of combinations of a perspective and one or more enablers ndash such as top management teams and governance and reward systems
In the literature the concept of innovation is very broad and often confused with invention [63] Some researchers describe innovation as a process [63ndash66] while for others it is the result or commercialisation of a companyrsquos entrepreneurial activities [414267] Notwithstanding this multiple use of the term lsquoinnovationrsquo is here seen as the outcome In order to increase the understanding of the four perspectives on corporate entrepreneurship they are briefly described below
51 Corporate venturing
In 1985 Robert A Burgelman introduced the term New Venture Division to describe the small new businesses set up by one or a group of intrapreneurs and which formed the link between corporate entrepreneurship and the creation of new businesses A number of scholars [4968] have pointed out that the activities described by Burgelman [27] can actually be dated back to the 1960s where large companies like 3M and Dupont took their first step into venturing Today these activities are mainly described as Corporate Venturing but as argued by Sharma and Chrisman [45] the continuous development of new definitions has led to confusion
The main reason for creating corporate ventures is the isolation and nurturing of innovative ideas that cannot survive in the bureaucratic structures and formal procedures of a large company Dedicating resources to corporate venturing allows the company to follow different routes in the pursuit of innovations with the RampD department concentrating on radical technological inventions while the corporate ventures explore market opportunities for both radical and incremental innovations A number of scholars [4969] have argued that corporate venturing is one of the main roads to innovation in the future economy as markets become more and more saturated The ability to identify and exploit market opportunities is the core of entrepreneurship and forms a major part of the reason for investing in corporate ventures The type of innovation created by corporate venturing is often related to strategic innovations since the technology is invented as part
308 KS Christensen
of the corporationrsquos research and development programme but commercialisation in new markets is carried out through a corporate venture Intuitively the need for major investments in product innovation makes it less suitable for corporate venturing but due to the capital structures and knowledge networks in some industries investment in corporate venturing is seen as a promising business model in the pursuit of product innovation
52 Internal (intangible) resources
Another perspective on corporate entrepreneurship though one which might seem less evident is internal resources However the focus on internal resources can be dated back to 1959 where Edith Penrose stated that a companyrsquos return is largely based on the resources it possesses Since then however the balance of internal resources has change from tangible to intangible resources Today tangible resources are easily accessible or easy to imitate which mean that it is no longer a sufficient way to gain a competitive advantage Therefore intangible resources such as core competencies [70] and sustained competitive advantage [51] have been crucial since the beginning of the 1990s
The main reason for focusing on internal resources in relation to corporate entrepreneurship is that many companies possess a bundle of unexploited resources ndash mainly intangible knowledge resources held by employees The knowledge resources are a mixture of skills experience competencies and capabilities that cannot easily be articulated and therefore cannot be transferred at armrsquos length or imitated by others This makes the perspective of internal resources very important in relation to corporate entrepreneurship as emphasised by Peter Drucker lsquo[t]he basic economic resources hellip is and will be knowledgersquo [71 p7]
The strength of the company is to bring together employees possessing different specialised knowledge resources and to enable the creation of new knowledge resources or combination of existing ones to generate innovations and competitive advantage [51] Alvarez and Barney [18] argue that knowledge specialists often need an organisation to make sense out of their knowledge resources since they lack the ability to see how these can achieve an entrepreneurial profit or generate wealth They state that intrapreneurs possess a broader knowledge base than specialists which allows them to see how specialised knowledge resources can be applied to and integrated with the rest of the company and the market in order to achieve an entrepreneurial profit
Brush et al [52] point out that the ability to share knowledge resources influences efforts to develop the initial resource base necessary for long-term innovation A companyrsquos ability to bring together these heterogeneous knowledge resources is therefore crucial to enabling innovation within organisational boundaries It is therefore important for a company to be able to disseminate data and information to those parts of the organisation where it may be turned into useful knowledge
The internal resource perspective thus constitutes a big potential for corporate entrepreneurship Continuous knowledge creation sharing and dissemination and the identification and exploitation of new possibilities are a way of maintaining a sustained competitive advantage and keeping organisational competencies up-to-date
A classification of the corporate entrepreneurship umbrella 309
53 Internationalisation
The economic landscape has undergone substantial changes over the last few decades [7273] Internationalisation ie when a company extends its market scope beyond the domestic market [4254] has become an important driver of corporate entrepreneurship in many companies not only because of the innovative process of discovering and exploiting international opportunities for the purpose of achieving a competitive advantage [74] but also because of the significant potential returns when the market expands [75] Internationalisation can take different forms eg exporting and foreign direct investments but the main difference between internationalisation and external networks as described in the next paragraph is ownership Internationalisation is integrated within the borders of the same legal organisation even though people are geographically diversified However common ownership means that resources and information flow freely and the return whether it be new technology products processes services market opportunity etc is owned by a single company
The corporate entrepreneurship perspective on internationalisation should primarily be seen as an opportunity to expand the potential market scope Lu and Beamish [55] stress that internationalisation is an entrepreneurial activity since compared with domestic expansion entering a foreign market is risky in terms of the capital investment involved or in terms of distributor opportunism asset appropriation and devaluation with respect to exports in relation to direct foreign investment and exporting They find that when companies start exporting or make direct foreign investment profitability declines because it does not pay the rent of the extra costs Gradually however performance improves as new knowledge and capabilities are developed as competitiveness is enhanced and as market opportunities are captured by the companyrsquos investment activities in international markets and the return becomes positive
Being in more markets stimulates innovation and the development of a global mindset through the improvement or development of new knowledge resources capabilities and innovative skills and enhances the economies of scale and scope [75]
54 External networks and alliances
A consensus has emerged among both strategy and entrepreneurship scholars that networks play an important role for growth and innovation [76] Networks are patterned relationships between individuals and groups [77] and are critical for an organisationrsquos acquisition of resources [78] and with it the survival of the organisation In relation to corporate entrepreneurship the main purpose of entering a network is to gain access to the resources needed (but which the company does not possess) and to learn new competencies outside the companyrsquos core competences [5670] However alliances with selected customers or universities may also be related to the core of for example product development and technology development Organisational networks can take many forms eg RampD partnerships licensing marketing agreements subcontracting joint ventures and strategic alliances
From a corporate entrepreneurship point of view another purpose of entering networks or alliances may be flexibility ndash especially for the well-structured large organisation where everything has to be cross-checked before something new can be tried out in the market Networks or alliances with small partners make it possible to
310 KS Christensen
produce only a few units of a product and test it in the market before gearing the large-scale production plant to streamlined production In this way the organisation gets some of the flexibility and agility of a small company while maintaining the massive streamlined organisation that is crucial for stability
55 Towards a framework for corporate entrepreneurship
Figure 3 summarises the theoretical framework for corporate entrepreneurship developed in the previous sections The upper half of the figure shows the four perspectives or domains of research in the area ndash corporate venturing internal resources internationalisation and networks It has been argued that the concept of corporate entrepreneurship could be theorised and conceptualised from each of the four perspectives which can also be categorised into intrapreneurship and exopreneurship
The lower part of the framework accentuates the possible outcome of corporate entrepreneurship It is very difficult to predict this beforehand Some activities will hardly influence the organisation whereas other activities lead to organisational renewal and yet again some others transform the organisation to something lsquonewrsquo significantly different from what it was before But even though corporate entrepreneurship initiatives result in some form of organisational renewal only in a very few cases will it change the rules of competition
Figure 3 The proposed framework for corporate entrepreneurship
6 Conclusion
This study as a discussion and classification of labels and a clarification of the overall concept of corporate entrepreneurship contributes to the corporate entrepreneurship
A classification of the corporate entrepreneurship umbrella 311
literature by providing useful insights (for newcomers) The breadth of corporate entrepreneurship has been illustrated and a framework in clarification has been proposed Further research in each of the four perspectives is needed in order to understand the different ways in which corporate entrepreneurship is enabled and how entrepreneurial activities should be organised ndash especially within the internal resource perspective which is less developed than the others Future research should be structured according to the proposed framework in Figure 3 to make it possible to compare the enablers and the ways of organising across different perspectives on corporate entrepreneurship
The classification provides a nuanced multi-faceted view of corporate entrepreneurship by describing different bases for managerial decisions in relation to corporate entrepreneurship since this can mean different things depending on the perspective The four perspectives taken into account may contribute to a greater insight into the meaningful context-dependent relations in a company It is important to realise that the perspectives are not mutually exclusive ndash rather they should be seen as complementary However the merits of intrapreneurship or exopreneurship vary with market contexts and the resources under the firmrsquos control [79]
The four perspectives on corporate entrepreneurship all relate to managerial opportunities However enabling corporate entrepreneurship by for example creating a new organisational structure may not be sufficient Chesbrough and Rosenbloom [80] argue that companies also need to be open to new ways of commercialisation when new opportunities do not fit well into their current business model
Knowledge seems to be the only factor to play a crucial role in all perspectives even though it plays different roles across the perspectives in forming the basis for innovative activities corporate entrepreneurship and business models Knowledge resources as an integration mechanism supports Druckerrsquos [71] view of knowledge as the resource in the knowledge society It also points to the fact that a companyrsquos ability to generate knowledge resources [81] is crucial to its competitiveness [82] and innovativeness However knowledge resources are also a potential source of cognitive bias as a company is often biased by earlier success
In order to be innovative managing organisational knowledge is thus critical in relation to developing new combinations of knowledge resources etcIt adds a new dimension to the existing literature on corporate entrepreneurship that up to now has mainly described the different roles and characteristics of the entrepreneurintrapreneur A knowledge-based view of corporate entrepreneurship and knowledge resources as an integration mechanism are therefore very interesting topics for further research
Acknowledgements
The author would like to thank Anders Drejer Anders Jacob Raj Andersen Per Nikolaj Bukh Mikkel Gadmar Bengt Johannisson and John Parm Ulhoslashi for comments on previous drafts
312 KS Christensen
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A classification of the corporate entrepreneurship umbrella 313
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28 Stopford J and Baden-Fuller CF (1994) lsquoCreating corporate entrepreneurshiprsquo Strategic Management Journal Vol 15 No 7 pp521ndash536
29 Barrett H and Weinstein A (1999) lsquoThe effect of market orientation and organisational flexibility on corporate entrepreneurshiprsquo Entrepreneurship Theory and Practice Vol 23 No 1 pp57ndash73
30 Hornsby JS Kuratko DF and Zahra SA (2002) lsquoMiddle managers perception of the internal environment for corporate entrepreneurship assessing a measurement scalersquo Journal of Business Venturing Vol 17 No 3 pp253ndash273
31 Schollhammer H (1981) lsquoThe efficacy of internal corporate entrepreneurship strategiesrsquo in Vesper KH (Eds) Frontiers of Entrepreneurship Research Babson College Wellesley MA
32 Schollhammer H (1982) lsquoInternal corporate entrepreneurshiprsquo in Kent C Sexton D and Vesper K (Eds) Encyclopedia Entrepreneurship Prentice-Hall Inc Engelwood Cliffs NJ
33 Jones GR and JE Butler (1992) lsquoManaging internal corporate entrepreneurship an agency theory perspectiversquo Journal of Management Vol 18 No 4 pp733ndash749
34 Lumpkin GT and Dess GG (1996) lsquoClarifying the entrepreneurial orientation construct and linking it to performancersquo Academy of Management Review Vol 21 pp135ndash172
35 Pinchot G (1985) Intrapreneuring Why You Donrsquot Have to Leave the Corporation to Become an Entrepreneur Harper and Row New York
36 Nielsen RP Peters MP and Hisrich RD (1985) lsquoIntrapreneurship strategy for internal markets ndash corporate non-profit and government institution casesrsquo Strategic Management Journal Vol 6 pp181ndash189
37 Carrier C (1994) lsquoIntrapreneurship in large firms and SMEs a comparative studyrsquo International Small Business Journal Vol 12 No 3 pp54ndash61
38 Carrier C (1996) lsquoIntrapreneurship in small businesses an exploratory studyrsquo Entrepreneurship Theory and Practice Vol 21 No 1 pp5ndash20
39 Antoncic B and Hisrich RD (1999) lsquoIntrapreneurship construct refinement and cross-cultural validationrsquo Journal of Business Venturing Vol 16 pp495ndash527
40 Chinho L Hojung T and Chienming W (2003) lsquoFuzzy fitness model of intrapreneurship activities or Taiwanese high-tech firmsrsquo International Journal of Management and Enterprise Development Vol 1 No 1 pp45ndash54
41 Hitt MA Ireland RD Camp SM and Sexton DL (2001) lsquolsquoGuest editorsrsquo introduction to the special issue strategic entrepreneurship entrepreneurial strategies for wealth creationrsquo Strategic Management Journal Vol 22 pp479ndash491
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314 KS Christensen
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48 Thornberry N (2001) lsquoCorporate entrepreneurship antidote or oxymoronrsquo European Management Journal Vol 19 No 5 pp526ndash533
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Management Vol 17 pp99ndash120 52 Brush CG Greene PG and Hart MM (2001) lsquoFrom initial idea to unique advantage the
entrepreneurial challenge of constructing a resource basersquo Academy of Management Executive Vol 15 No 1 pp64ndash80
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55 Lu JW and Beamish PW (2001) lsquoThe internationalisation and performance of SMEsrsquo Strategic Management Journal Vol 22 pp565ndash586
56 Hitt MA Ireland RD and Lee H (2000) lsquoTechnological learning knowledge management firm growth and performancersquo Journal of Engineering and Technology Management Vol 17 pp231ndash246
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60 Covin JG and Slevin P (2002) lsquoThe entrepreneurial imperatives of strategic leadershiprsquo in Hitt MA Ireland RD Camp SM and Sexton DL (Eds) Strategic Entrepreneurship Creating a New Mindset Blackwell Publisher Oxford
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62 Hitt MA Ireland RD Camp SM and Sexton DL (Eds) (2002) Strategic Entrepreneurship Creating a New Mindset Blackwell Publisher Oxford
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A classification of the corporate entrepreneurship umbrella 315
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Management Vol 37 No 1 pp49ndash57 69 Mason H and Rohner T (2002) The Venture Imperative ndash A New Model for Corporate
Innovation Harward Business School Press Boston 70 Prahalad G and Hamel G (1990) lsquoThe core competence of the corporationrsquo Harvard
Business Review Vol 68 No 3 pp79ndash91 71 Drucker PF (1993) Post-capitalist society Butterworth-Heinemann Oxford p7 72 Ireland RD and Hitt MA (1999) lsquoAchieving and maintaining strategic competitiveness in
the 21st century the role of strategic leadershiprsquo Academy of Management Executive Vol 13 No 1 pp43ndash57
73 Zahra SA Ireland RD and Hitt MA (2000) lsquoInternational expansion by new venture firms international diversity mode of market entry technological learning and performancersquo Academy of Management Journal Vol 43 No 5 pp925ndash950
74 Zahra SA and George G (2002) lsquoInternational entrepreneurship the current status of the field and future research agendarsquo in Hitt MA Ireland RD Camp SM and Sexton DL (Eds) Strategic Entrepreneurship Creating a New Mindset Blackwell Publisher Oxford
75 Hitt MA Hoskisson RE and Kim H (1997) lsquoInternational diversification effects on innovation and firm performance in product-diversified firmsrsquo Academy of Management Journal Vol 40 No 4 pp767ndash798
76 Stuart TE Hoang H and Hybels RC (1999) lsquoInterorganisatinal endorsements and the performance of entrepreneurial venturesrsquo Administrative Science Quarterly Vol 44 pp315ndash349
77 Dubini P and Aldrich H (1991) lsquoPersonal and extended networks are central to the entreprenerushial processrsquo Journal of Business Venturing Vol 6 pp305ndash313
78 Gulati R (1998) lsquoAlliances and networksrsquo Strategic Management Journal Vol 19 pp293ndash317
79 Lee L and Gongming Q (2003) lsquoInternalisation or externalisation the option for small and medium-sezed technology-based enterprises in overseas marketsrsquo International Journal of Management and Enterprise Development Vol 1 No 1 pp55ndash70
80 Chesbrough H and Rosenbloom RS (2002) lsquoThe role of the business model in capturing value from innovations evidence from Xerox Corporationrsquos technology spin-off companiesrsquo Industrial and Corporate Change Vol 11 No 3 pp529ndash555
81 Spender JC (1996) lsquoMaking knowledge the basis of a dynamic theory of the firmrsquo Strategic Management Journal Vol 17 Winter Special Issue pp45ndash62
82 Grant RM (1996) lsquoTowards a knowledge-based theory of the firmrsquo Strategic Management Journal Vol 17 Winter Special Issue pp109ndash122
74
75
CHAPTER 5
Postscript to article 1
The article in Chapter 4 of the dissertation was published in International Journal of
Management and Enterprise Development The paper was later translated into
Danish revised and substantially improved in several areas Finally the article was
published in the Danish Journal Ledelse amp Erhvervsoslashkonomi (Christensen 2005a)
The main differences between the two articles are to be found in the introduction the
paragraph ldquoTowards a framework for corporate entrepreneurshiprdquo and the
concluding remarks which have been considerably improved In addition the Danish
article has adopted a Danish perspective of the Danish labour market situation the
writing has been improved and the figures have been revised to make the basic
message clearer
Corporate venturing Initiatives which lead to the establishment of a new organisation within the boundaries of an existing one
Internal resources Primarily concerns the internal knowledge resources (human resources processes technologies etc) of the parent company within national and cultural boundaries
Internationalisation Focuses on the resources available to the company from establishing departments abroad and in other cultures
External networks Relates to access to resources the company needs and which the company does not necessarily develop or possess itself
Table A Four ways to organise corporate entrepreneurship
76
Thus based on the Danish version of the article this postscript presents a more
detailed and well-developed discussion of the framework for corporate
entrepreneurship and the implications thereof in a Danish context Table A which is
translated from the Danish article provides an overview of the four perspectives on
corporate entrepreneurship presented in the article
51 TOWARDS A FRAMEWORK FOR CORPORATE ENTREPRENEURSHIP
Figure 43 (figure 3 in the original article submitted as part of this dissertation)
summarises the theoretical framework for corporate entrepreneurship The four
organisational perspectives on corporate entrepreneurship corporate venturing
internal resources internationalisation and networks are placed in the central part of
the figure to show that corporate entrepreneurship can be conceptualised from each
perspective
The lower middle part of figure 43 shows the possible results of the various
initiatives arising from corporate entrepreneurship activities While some initiatives
hardly affect the organisation at all or only imply minor changes others will change
the company through organisational or strategic renewal and may transform it into
something lsquonewrsquo or significantly different from what it was before Finally as shown
in the lowest part of figure 43 the results can transcend the boundaries of the
company and influence the competitive rules of the market
The model illustrates the organisational opportunities a company has to encourage
both innovation and entrepreneurship eg collaboration with other companies
(exopreneurship) or exploiting resources it already possesses There is no general
blueprint for the best way of organising It depends on the specific company its
strategy culture organisation etc and the type of innovation it finds most
appropriate
77
Both the original article and the revised version (Christensen 2005a) have presented
various perspectives from which these questions can be addressed However it is
important to note that the perspectives complement each other ie experiences
acquired from different approaches and from different traditions in the research
literature can shed light on how to manage the tensions between different ways of
organising innovativeness
While the perspectives in figure 43 lead to different ways of organising
innovativeness anything the company or management can do to enable corporate
entrepreneurship is important There is therefore a need for organisational initiatives
to enable corporate entrepreneurship which either build on specific perspectives or
span them in an integrated way
In a review of the literature Jeffrey Hornsby and Donald Kuratko and various co-
authors have suggested a number of factors which enable corporate entrepreneurship
In particular they point to five factors which have been discussed in the literature
since the end of the 1980s rewards management commitment access to resources
appropriate organisational structures and attitudes to risk (Hornsby et al 1993
Hornsby et al 2002 and Kuratko et al 1990) Empirically however they found
only management commitment organisational structure resources and rewards
significant (Kuratko et al 1990)
Based on an empirical study of innovative processes at Danfoss Drives regarding
factors that enable intrapreneurship (Christensen 2005b article 3 of this
dissertation) it was concluded that in relation to this specific case risk did not play a
major role in corporate entrepreneurship although communication culture and
processes were important factors If employees find the companyrsquos initiatives in these
areas insufficient then factors which are supposed to enable corporate
entrepreneurship become barriers to innovativeness and intrapreneurship instead
78
There is a need both as regards research and managerial implications to focus more
on which factors enable and hinder corporate entrepreneurship respectively and how
entrepreneurial activities are best organised This also has potential implications for
industrial policy If Danish companies cannot compete against companies operating
in low-wage countries then where possible they should opt for so-called knowledge-
intensive production instead
A typical characteristic of knowledge-intensive production is that companies should
focus not only on product and technological development but also be better at
developing new interpersonal ways of working (exopreneurship) This could include
better adoption of usersrsquo needs through user-driven innovation (see for example
Rosted 2005) Another aspect of the move towards more knowledge-intensive
production is a new way of managing (intrapreneurship) which makes companies
better able to implement new technologies faster and exploit them more effectively
52 CONCLUDING REMARKS
There has been an increasing shortage of labour in Denmark in recent years This has
changed the previous focus on the creation of more jobs to a new emphasis on the
creation of the right jobs in companies with a high potential for growth and value
creation This is often (see for example Hoffman et al 2007) associated with the
marketing of new products in new markets which makes far greater demands on
knowledge and managerial resources than merely starting up a new company
According to Hoffmann et al (2007) while Denmark has been good at helping
entrepreneurs on generic issues such as VAT business plans accounting marketing
etc entrepreneurial policy has had less success in nurturing innovative growth
Furthermore the conventional wisdom is that smaller companies have to lead the way
79
in creating new jobs ndash not only by entrepreneurs starting up new companies but also
by smaller companies supporting the start-up of new firms
Based on this assumption a study by Evald (2003) estimated that over a period of
five years 153 smaller so-called parent companies have spun off 459 new companies
resulting in 5508 new jobs This corresponds to on average of about 7 jobs a year
over the period ndash or 2-3 jobs per company In other words while the number of firms
has increased greatly the size and with it potential of newly established companies
has not grown substantially
Another investigation of the strategic development of smaller companies (Drejer et
al 1999) showed however that the total effect of the jobs created is more or less
zero since almost as many jobs are lost as created While there is undoubtedly a
potential for job creation in both small and large companies these studies alone say
nothing about which occupational structure best guarantees growth and job creation
in Denmark
However any initiative whether the result of government policy or companies
setting up new ventures needs to take a starting point in the existing business
structure which consists of both small and large companies Article 1 presented a
broader framework for corporate entrepreneurship in order to provide a starting point
for assessing which activities companies can best implement ndash and probably also
which initiatives can be enabled via political decision-making Although most Danish
firms are small and medium-sized Denmark also has a number of larger companies
with considerable potential supporting innovative entrepreneurs It is therefore
appropriate to focus on corporate entrepreneurship as a unifying concept for these
companiesrsquo innovative initiatives
When concepts like corporate entrepreneurship become popularised are written
about in the business press and are incorporated in policy proposals there is always a
80
risk of the basic ideas losing their grounding in well-documented evidence and
becoming mere managerial fads So is corporate entrepreneurship just another
managerial fad Or do we need to rethink how innovativeness is organised in more
loosely coupled structures than is possible in the traditional functionally organised
company where research is mainly done in the RampD department customer contact is
the province of the sales and marketing functions etc
A common assumption of innovation management is that even though firms might
originally be the result of a radical innovation when they mature they mostly rely on
incremental innovations based on existing resources The implication is that radical
innovations are often left to smaller companies although new business ideas will still
emerge in larger companies However the entire organisational structure including
the various layers of management can have difficulty in handling the entrepreneurial
needs of innovation This means that management will sometimes be faced by the
possibility for new strategies and related dilemmas ndash particularly if the new ventures
are far from the parent companyrsquos core competencies and market opportunities
This means that corporate entrepreneurship is not only a question of setting up the
appropriate structures outside the organisation but also as argued in article 1 an
issue for the organisation as a whole Since different organisational structures support
different organisational needs this is a good starting point for ensuring the ability of
larger companies to innovate
In other words larger companies should experiment with organisational structures
and forms which create innovation These include various types of network
organisations loosely coupled organisations and project organisations as a
supplement to the classical hierarchy In addition to organisational forms
management style must also change since renewal and innovation cannot be planned
81
and managed in the same way as operational activities (see for example
Christensen 2005b 2006)
53 REFERENCES
Christensen KS 2005a Corporate Entreprenoslashrskab Begreber og Perspektiver
Ledelse amp Erhvervsoslashkonomi Vol 61 No 1 13-26
Christsensen KS 2005b Enabling intrapreneurship the case of a knowledge-
intensive industrial company European Journal of Innovation Management Vol 8
No 3 pp 305-322
Christensen KS 2006 Losing Innovativeness The Challenge of being acquired
Management Decision Vol 44 No 9 pp 1161-1182
Drejer A LB Henriksen amp JB Christensen 1999 Smaring virksomheders strategiske
udviking Aalborg Oslashst Nordjysk Informatik og Virksomhedsudvikling
Evald MR 2003 Corporate Venturing i Danmark En undersoslashgelse af mindre
virksomheders knopskudsaktiviteter Center for Smaringvirksomhedsforskning Syddansk
Universitet
Hoffmann A NM Nielsen amp J Nyholm 2007 Fremtidens erhvervsservice og
ivaeligrksaeligtterpolitik ndash en guide til flere vaeligkstvirksomheder Marts 2007
Hornsby JS DF Kuratko amp SA Zahra 2002 Middle managers perception of the
internal environment for corporate entrepreneurship assessing a measurement scale
Journal of Business Venturing Vol 17 No 3 pp 253-373
Hornsby JS DW Naffziger DF Kuratko amp RV Montagno 1993 An interactive
model of the corporate entrepreneurship process Entrepreneurship Theory amp
Practice Vol 17 No 2 pp 29-37
82
Kuratko DF RV Montagno amp JS Hornsby 1990 Developing an intrapreneurial
assessment instrument for an effective corporate entrepreneurial environment
Strategic Management Journal Vol 11 No 1 pp 49-58
Rosted J 2005 Brugerdreven innovation Resultater og anbefalinger Oslashkonomi- og
Erhvervsministeriets enhed for erhvervsoslashkonomisk forskning og analyse
Koslashbenhavn FORA
83
PART II
Intrapreneurship from an Internal Resources Perspective
The internal resource perspective takes a starting point in established organisational
structures Based on this perspective the aim of intrapreneurship is to identify hidden
or suppressed organisational resources and bring them together in (new) ways to
facilitate innovation and generate new competitive advantages In some cases these
resources may be tangible but in most cases today they are intangible eg
knowledge resources which means that they will often be closely related to the
organisational members
The second part of the dissertation consists of two articles which in different ways
present issues related to intrapreneurship The articles show that getting the most out
of a firm or organisation requires new ways of working and thinking Managers ndash or
coaches as they may prefer to be called ndash in knowledge-intensive organisations face
new challenges since their employees have other needs and wants than employees in
traditional industrial companies
While acquisitions are an increasingly popular way for mature organisations to gain
access to new resources and skills it does not necessarily mean that they can
successfully integrate a new entrepreneurial subsidiary (eg as a CV) and its
innovativeness and creative ways of working The first article in Part II Losing
innovativeness the case of being acquired focuses on the personal mechanisms that
84
are affected when a small entrepreneurial company is taken over by a large
multinational company
The article discusses the practice of intrapreneurship and investigates
intrapreneurship in its natural setting It focuses on what happens to the
entrepreneurial spirit in a company when it is taken over by another (much larger)
company which has grown mainly through acquisition rather than internal
development The discussion centres on a study of the intrapreneurial spirit and
practices of Ericsson Telebit a Danish IT firm Its acquisition by a large mature
company is found to have a profound influence on the firmrsquos intrapreneurial spirit In
particular innovation creativity and the innovative process have been analysed in
relation to the entrepreneurial spirit The article concludes that the larger a company
becomes the more difficult it is to maintain a managerial commitment to innovation
since innovative initiatives and activities may be subdued by formal control systems
which almost by definition are necessary when an organisation becomes larger and
the range of operations more diversified The aim is therefore to identify those factors
that managers need to focus on and actively use in order to enable intrapreneurship
and give intrapreneurs room to grow within corporate boundaries
The second article Enabling intrapreneurship the case of a knowledge-intensive
industrial company discusses factors that management can influence to enable or
hinder intrapreneurship In order to provide a framework for evaluation a short
overview of the main factors from the literature is provided It should be noted
however that these are primarily based on studies of traditional industrial
companies
Based on a case study of Danfoss Drives the usability of the factors is analysed in a
specific knowledge-intensive setting The conclusion from the findings is that the
framework for industrial companies cannot be used for a knowledge-intensive
85
company and a more complete framework with three additional factors is therefore
developed The article shows that whereas in traditional industrial companies the
important enablers were more direct or extrinsic in knowledge-intensive companies
they are more indirect or intrinsic
86
87
CHAPTER 6
Losing innovativeness the challenge of being acquired
Originally published in
Christensen Karina Skovvang 2006 Losing Innovativeness the challenge of being
acquired Management Decision Vol 44 No 9 pp 1161-1182
88
Losing innovativenessthe challenge of being acquired
Karina Skovvang ChristensenDepartment of Management The Aarhus School of Business
Aarhus Denmark
Abstract
Purpose ndash The aim of the paper is to explore how innovativeness and creativity in a smalltechnology company changes after the company is acquired by a larger company
Designmethodologyapproach ndash The empirical part of the article is based on interview andquestionnaire data with a focus on employeesrsquo perception of innovativeness and creativity includingtheir own innovativeness in relation to the possibilities offered within the organisational structure
Findings ndash The results indicate that entrepreneurial spirit innovativeness and creativity in the casecompany were related to the lack of boundaries to and contact with customers These driving forcescould not be sustained when the organisation matured and was acquired by a larger company
Research limitationsimplications ndash More research regarding the integration phase ofacquisitions and how it affects employees and innovativeness is needed Case-based researchshould examine differences between companies that are repeatedly successful in integrating smalltechnology companies into their organisational structure and those that are not Employeesrsquomotivation as a key factor to innovativeness should be in focus and the research should also includeemployees that leave the acquired company as well as employees with the acquiring company
Practical implications ndash An acquisition strategy as a way for mature organisations to gain accessto innovativeness and new resources and skills can easily fail Even though the resources and skills ofthe two companies are complementary and the competencies of the acquired organisation are intactefforts are needed to make the energies of the two organisations act in tandem Thus the pre- andpost-integration phases of an acquisition seem to be of paramount importance
Originalityvalue ndash Very few papers have studied how employees in an acquired company perceiveincorporation into a large mature company This article adds to research by examining how employeesin a small entrepreneurial company perceive innovation creativity and the innovative process threeyears after being acquired by a large mature company
Keywords Acquisitions and mergers Entrepreneurialism Innovation
Paper type Case study
IntroductionOver the years entrepreneurs have shown that new ideas can form the basis for newcompanies and that these companies can sometimes grow rapidly and be highlyprofitable While some companies have been successful in maintaining innovativenesscreativity and an entrepreneurial spirit many organisations have great difficulty inmaintaining their initial recklessness to which established companies are oftenvulnerable The ability to continuously innovate also for well-established companies
The current issue and full text archive of this journal is available at
wwwemeraldinsightcom0025-1747htm
The author gratefully acknowledges the helpful comments made by Per Nikolaj BukhAnders Drejer and John Parm Ulhoslashi as well as two anonymous referees on an earlier version ofthis paper Special thanks goes to Telebitrsquos former HR manager Poul Joslashrgen Dybdal managerErik Reinholdt and all the other employees at Ericsson Telebit
Losinginnovativeness
1161
Received November 2005Revised July 2006
Accepted July 2006
Management DecisionVol 44 No 9 2006
pp 1161-1182q Emerald Group Publishing Limited
0025-1747DOI 10110800251740610707668
is thus becoming increasingly important not only for companiesrsquo competitiveadvantage but also for their survival
As an organisation grows and matures management concerns increasingly turnfrom exploration to exploitation (March 1991) of resources Often the managerialsystems and values of mature companies are better at exploiting areas aligned withexisting resources and skills than exploring areas far outside them This concern withalignment could explain why it is often difficult for mature organisations to exploreentirely new areas of resources However too much emphasis on the exploitation ofexisting resources can become a barrier to innovation and thus long-term performance(Leonard-Barton 1992 March 1991) since access to new resources is usually essentialto maintaining creativity and innovativeness
Over the last couple of decades acquisitions have been an increasingly popular wayfor mature organisations to gain access to new resources and skills Howeveracquiring resources through acquisition does not necessarily mean that the matureorganisation is able to handle a new entrepreneurial subsidiary and its innovativenessand creative ways of working Often the acquired company will slowly adapt to themature organisationrsquos existing and often stifling management systems This in turnwill lead to increasing inertia and with it frustration decreasing both employeesrsquomotivation and their liking for recklessness Being incorporated into a large maturecompany is certainly not easy for a small innovative and creative company
Little research has been carried out on how employees in an acquired companyactually perceive incorporation into a large mature company (eg Brockner et al 1993Hambrick and Cannella 1993 Reilly et al 1993) This article adds to research byexamining how employees in a small entrepreneurial company perceive innovationcreativity and the innovative process three years after being acquired by a largemature company Based on a case study of the Danish company Ericsson Telebit thearticle shows what happens to this specific organisational unit which while apparentlyenjoying success and an increase in the number of employees following its acquisitionby a large multi-national company only two years later experienced layoffs and radicalrestructurings for three consecutive years as a consequence of a change in strategy ofthe acquiring company
The article is organised as follows section 2 briefly presents the case for innovationthrough acquisitions and outlines the entrepreneurial challenge faced by the acquiredorganisation Section 3 describes the methodology used Section 4 presents the casecompany Ericsson Telebit and the interview results while section 5 presents ananalysis of the questionnaire results Finally section 6 concludes the article
Innovation through acquisition the entrepreneurial challengeMergers and acquisitions (MampA) are often motivated by a belief that the combinationof two or more companiesrsquo resources and skills can create more value than is possibleby the two companies separately or by engaging in other ways of co-operating egthrough alliances These synergistic benefits from resource combinations it has beenargued are more likely to be uniquely valuable when based on complementaritiesrather than similarities (Harrision et al 1991 2001) Thus acquisitions of companiespossessing complementary technological capabilities and entrepreneurial abilities maybe seen as a way for large more bureaucratic companies to increase theirinnovativeness
MD449
1162
However in a review of the literature Man and Duysters (2005) find that companiesengaging in MampA activities generally face a decline in innovation While muchresearch focuses on the innovative performance of the company especially on theoutput of innovations eg number of patents or input measures such as RampD expenses(see Man and Duysters 2005) after a merger or an acquisition only limited researchhas been carried out on how MampA affect creativity and the innovative performance ofthe individuals employed in the acquiring or acquired company
Exceptions include Kapoor and Lim (2005) who found that the number of patentsper inventor per year fell in US semiconductor companies that were acquired between1991 and 1998 and Ernst and Vitt (2000) who demonstrated similar results in ananalysis of 43 acquisitions Ernst and Vitt also showed further that to a large extentkey inventors leave their company after the acquisition Of course how employeesreact in an MampA situation can be influenced by a large number of factors butknowledge of what can happen when a small innovative company is acquired by alarger company and how this is perceived by employees can provide insight into whatfactors enable innovation and how these factors are affected by acquisitions
With respect to the overall performance of the acquiring company much researchhas documented that mergers and acquisitions often fail to deliver their intendedbenefits and actually destroy economic value in the process However in this area toothere has been much less focus on exploring the specific factors that influence thesuccess of the integrative process Thus King et al (2004 p 196) conclude from acomprehensive meta-analysis of the literature on post-acquisition performance thatldquoexisting empirical research has not clearly and repeatedly identified those variablesthat impact an acquiring companyrsquos performancerdquo
The case for innovation through acquisitionsIn principle companies can develop and grow either by exploiting or exploring theirresources (March 1991) The former focuses on increasing efficiency sales etc whilethe latter can be achieved through MampA or by internally-driven innovations (see alsoBurgelman 1986 Hitt et al 1990) Chaudhuri and Tabrizi (1999) argue thatdetermining the right mix of externally and internally generated innovation is aquestion of whether or not innovation can be done quickly enough internally whileaccording to Ghoshal (1987) the acquisition process may be necessary in order toobtain advantages of scale and scope in the global economy
Most organisations however are limited in their choice of innovative mode byresource constraints Consequently say Hitt et al (1990 p 29) ldquothe acquisition processand the resulting conditions after the acquisition is consummated affects managerialcommitment to innovationrdquo However committing significant financial resources toacquisitions leaves less for innovation which means that managers may give a lowerpriority to internal innovation (Hitt et al 1991) Thus since investments in acquisitionsand investments in other areas eg innovation may be perceived as trade-offs mostorganisations prioritise managerial commitment either to mergers and acquisitions orinternally to innovation
Acquisition is often suggested as a solution to stifling management systemsespecially as regards technology development (Warner 2003) and a growing body ofliterature has evolved to help organisations understand the value of technology andinnovation through acquisitions (eg Hitt et al 1990 Hitt et al 1996 James et al 1998)
Losinginnovativeness
1163
For example Karim and Mitchell (2000) find that acquisitions are a key to resourcereconfiguration either through deepening existing resources or extending the resourcemix This leads them to believe that companies that grow through acquisitions aremore robust and more likely to survive than those that do not Similarly Ahuja andKatila (2001) find that large companies can increase their innovativeness when theyacquire smaller companies and based on a study of MampA in Greece Papadakis (2005)suggests that the larger the acquirer compared with the acquired company the moresuccessful the acquisition
However other studies find that the performance of acquisitions is often belowexpectations (eg Chaudhuri and Tabrizi 1999 Hargedoorn and Duysters 2002) andin their review of the effect of mergers acquisitions and alliances Man and Duysters(2005) conclude that alliances should be favoured to mergers and acquisitions for thepurpose of innovative renewal
Collier (1983) argued that organisations often mature when they grow larger andthat this may be why larger organisations have increasingly pursued growth throughMampA compensating for their stifled systems and often ldquolackingrdquo innovation byacquiring entrepreneurial organisations However absorbing and integrating anentrepreneurial organisation into a larger one is a complex process that challengesmany of the pre-existing structures and processes in both organisations One of themajor challenges is to maintain creativity and innovativeness ndash at least in the acquiredorganisation ndash within the newly established corporate boundaries
Managing the post-acquisition processIt is often less clear from the available empirical literature how the post-acquisitionprocess influences the innovative performance of the acquired company Bresman et al(1999) suggest that it may be difficult to maintain innovativeness in the immediatepost-acquisition period because knowledge transfer becomes a one-way process fromthe acquirer to the acquired which can make employees in the acquired organisationfeel stressed angry disoriented frustrated confused and even frightened (Buono1997) leading to tension and uncertainty This potentially dampens employeesrsquocreativity and innovativess (Zhuang 1995)
Further information and knowledge are increasingly seen as key resources in theso-called knowledge-intensive companies However as emphasised by Von Krogh et al2000 knowledge is often related to processes which are basically not manageable in thetraditional sense or which lose their efficiency and impact if management is too tightKnowledge-sharing therefore presumes a motivation which does not comeautomatically
A knowledge-sharing culture involves the exchange of experiences together withthe ability to identify and cooperate with persons in the organisation withcomplementary competencies etc Thus companies need to develop aknowledge-sharing culture and a common identity since this helps to identify whatthe organisation must know and what capabilities should be developed (Bukh et al2005) Furthermore in acquired technology-based companies the most talentedindividuals embody the acquired companyrsquos institutional knowledge and these peopleare also the ones who have the best employment opportunities outside the company (cfBuono 1997)
MD449
1164
Changes in the organisation including MampA are likely to induce changes in theculture and thus also in the organisationrsquos ability to adopt and explore knowledgeThis is especially the case when new knowledge related to customers and otherinternal and external stakeholders must be integrated in the organisationOrganisational learning and organisational knowledge is not simply the sum ofemployeesrsquo learning and knowledge but is influenced by the social processes in thecompany as has been emphasised in the concept of the learning organisation and theknowledge-based company
MethodThis article addresses three fundamental issues ndash creativity innovation and theinnovative process ndash based on employeesrsquo perception of themselves and the innovativeactivities in the case company Ericsson Telebit The data collection was carried out inthe period August-October 2002 and was based on a combination of semi-structuredinterviews on-site observations and a questionnaire distributed to employees at thecompany The initial purpose of the interviews was to get an overview of relevantthemes regarding the role of innovation and creativity in order to develop thequestionnaire however the insights obtained also enabled a more thoroughinterpretation of the results The purpose of the questionnaire was to address abroader understanding of the concepts throughout the organisation while theobservations were used to validate and expand the interview statements
The two main data collection methods interviews and questionnaires were used ina mixed method research design in order to gain both insight into the development ofthe case company and the post-merger experiences of the employees (the interviews)and specifically examine the role and nature of creativity and innovation in thecompany (the questionnaire) Even though the methods are combined in a study of thesame phenomenon as is broadly done in triangulation (Denzin 1989 Jick 1979) wecannot claim the same kind of validity as when the same dimension of a researchproblem is examined using multiple methods However both the on-site observationsand the interviews add to the interpretation of the questionnaire results Below theinterviews and especially the questionnaire are described in more detail
The interviewsIn August 2002 three in-depth interviews were conducted at Ericsson Telebit one withan employee who had been with the company from the start one with a functionalmanager and one with an employee from the research department The author alsohad an informal introductory conversation with the HR manager as well as informalinterviews with several other employees The in-depth interviews were concentratedaround five themes background information incorporation into LM Ericssonchanging organisational structures motivation and customers They weretape-recorded and transcribed for subsequent coding and analysis
The questionnaireBased on prior knowledge interviews and written documents a questionnaire wasdeveloped to probe into employeesrsquo perception of the working environment how theconcept of innovation was interpreted and what is needed for employees to beinnovative The questionnaire adopts and extends Zhuangrsquos (1995) so-called attitude
Losinginnovativeness
1165
survey questionnaire which was originally designed to gain insight into the dynamicsof innovation with creativity as an input to the development of new ideas Thisquestionnaire adopts Heaprsquos (1989) notion of creativity as ldquothe synthesis of new ideasand concepts by the radical restructuring and re-association of existing onesrdquo thuscapturing the human factor as an input to the companyrsquos innovativeness
Some of Zhuangrsquos original questions were asked in reverse to control whetherrespondents paid attention to the questions The questionnaire used in this paperconsists of 35 questions (compared with Zhuangrsquos 28 questions) divided into threesections each preceded by a statement indicating the focus of the section At the end ofeach section respondents were given the opportunity to make comments andsuggestions
Section one of the questionnaire (see Appendix for the full questionnaire)containing seven questions was designed to collect personal data eg sex age etc Sixof these questions corresponded to Zhuangrsquos questions while the seventh is added toenable analysis of the data across the different departments at Ericsson Telebit
Section two containing 14 questions was designed to evaluate respondentsrsquocreativity (13 questions corresponded to 12 of Zhuangrsquos one of his questions rdquoDo youmistrust your own or other peoplersquos intuitionrdquo being divided into two) Zhuangexplains that he condensed Terry Farnsworthrsquos (1987) original creativity scale from 40to 12 questions by removing those explicitly aimed at managers The 13 questions aretherefore scored individually and the sum used as an indicator of creativity forcross-tabulation As in section one there was an additional question on whether thecompany created a context for improvements both personal and professional
The remaining 12 questions (nine of which corresponded to Zhuangrsquos) in sectionthree were designed to collect data on how the respondents perceive innovation Onequestion asked respondents to indicate factors of importance for realising their owninnovation potential while another asked them to identify the factors most emphasisedby the organisation The last ten questions in this section asked respondents to rankstatements about the companyrsquos present innovation strengths
At the end of October 2002 the questionnaire was accessible on Ericsson Telebitrsquosintranet for fourteen days The response rate was only 30 percent even though thequestionnaire was placed on the front page together with a reminder at the end of theperiod One of the managers suggested that the length of the questionnaire might haveput off some potential respondents The overall response is shown in Table I
Innovativeness of Ericsson Telebit from spin-off to integrationEricsson Telebit has its roots in the very first Danish IT company Regnecentralenwhich was founded in 1955 In 1989 after a number of years under different ownership50 per cent of the shares in Regnecentralen were acquired by Britainrsquos ICL(International Computers Ltd) the rest being acquired a few years later ndash after ICL
Number of employees 120Questionnaires received 37Overall response rate () 3083Usable number of responses 33Net response rate () 2750
Table IAnalysis of overallresponse
MD449
1166
had been bought by the Japanese company Fujitsu Ltd As part of the restructuring itwas decided to close down the part of Regnecentralen that developed and producednetwork routers and accessories These changes in ownership together with areorganisation and refocusing of business areas led to the establishing of Telebit ASin 1992
Together with 12 other people mostly from RegnecentralenICL the projectmanager of the routers and accessories department decided to start Telebit on the basisof a contract with their main customer a Dutch company Between 1992 and 1999Telebit increased its number of employees from 13 to 38 and in 1995 it became the firstcompany in the world to introduce a commercial router based on IPv6 (InternetProtocol version 6) technology[1] With the competencies and insights into internettechnologies that this generated within the organisation including the breakthrough ofIPv6 technology Telebit positioned itself as an innovative company possessingcompetencies at the cutting edge of new IP-related technologies
At the time therefore the companyrsquos innovativeness was mostly driven bytechnological insight and both internally and among its customers technology wasregarded as one of the main drivers of Telebitrsquos competitive advantage ConsequentlyTelebit focused its development efforts on IP technology its aim being to makeprototypes of new routers to demonstrate the possibilities of the technology rather thana specific product with a clear market position
Incorporation into LM EricssonTelebitrsquos acquisition by LM Ericsson (Ericsson) in 1999 led to major changes Thenumber of employees at the newly-named company Ericsson Telebit (TED theinternal Ericsson abbreviation) increased rapidly doubling within 12 months fromapproximately 70 to 140 This in turn influenced the way of working eg how newemployees were trained since mentoring was not possible to the same extent as beforeIncorporation into Ericsson also resulted in several organisational changes As a relicof the Telebit days TED started as a single development department where employeeswere allocated to projects for shorter or longer periods Soon after however TED wasreorganised into an ldquoad hoc matrix structurerdquo where employees were organised indepartments on the basis of work areas and competencies As one of the managersexplained the aim of this new structure was to bring management into focus
Before the development manager did all kinds of stuff and the employees were veryautonomous Experienced hands They did not need project management or hardly anymanagement at all
Like many other entrepreneurial companies (cf Churchill and Lewis 1983) the oldTelebit organisation had a very flexible and loosely-defined organisational structurewith informal and minimal management systems and activities appeared almostchaotic and disjointed (Kazanjian and Drazin 1990 Stevenson and Harmeling 1990)Furthermore Telebit could be said to be characterised by intuitive decision-makingbased on the foundersrsquo values goals and skills (eg Bird 1992)
After being taken over by Ericsson the number of small projects was reduced andthe focus directed towards few but large long-term projects This together withincreased collaboration with other Ericsson units in Sweden created the need forfull-time project managers at TED The company had to improve project management
Losinginnovativeness
1167
skills since single projects were now of greater importance At the same time ongoingprojects were given more emphasis in the organisational structure in order to increaseemployeesrsquo commitment to project-specific goals rather than the department
Ericsson Telebitrsquos productsWith the new focus on large projects TEDrsquos product portfolio consists basically of twoprojects that were also its ldquoproductsrdquo SoftWare for Internet Protocol for Ericsson(SWIPE ) and Terminal Internet Protocol (TIP) Product management was now placedat two different locations in Stockholm SWIPE represents the development of softwarefor the mobile internet while TIP focuses on the development of an IP stack for mobile(terminals) which together makes it possible to merge ldquothe internet worldrdquo with ldquothemobile worldrdquo
During the first years of Ericsson ownership TED had its own researchdepartment providing courses for the Ericsson University in Stockholm andfunctioning as a third business area together with the two large projects At thebeginning of 2002 however this research department was closed down as part of aworldwide cut-back in Ericssonrsquos activities and TED had to find new ways to keeptechnologically up to date The solution was to launch smaller research projects incooperation with the University of Aarhus and the University of Aalborg (two Danishuniversities) As one employee put it
the opportunity to aim at entirely new initiatives is gone unless the management believesthat the only way is to establish a group of people ndash corresponding to 10 out of 150 people ndashwith unlimited possibilities not total anarchy but a group with possibilities and today wedo not have that
This means that TED mostly focuses on the improvement of existing products orprocess improvement
The marketFor employees the takeover by Ericsson not only limited their opportunities forcreativity access to the market and possibilities for innovation at TED but thesituation in the mobile market also changed After having experienced a period of rapidgrowth the market began to stagnate mainly because many mobile telephoneoperators were unwilling to establish the new network for third-generationtechnologies (3G or UMTS) since as one employee explained ldquothere is no money initrdquo Given the poor shape of the world economy in general operators were unwilling tomake any further investments in 3G having already spent huge sums on Europeanauctions for UMTS licences a transitional technology between GSM and true 3G
The stagnation of the mobile phone market influenced TED via Ericsson The scopeof development projects was changed several times concurrently with the operatorsrsquopostponement of investments in UMTS networks Some parts of TEDrsquos projects wereclosed down a few just weeks before they were due to be finished Nevertheless thegeneral belief at Ericsson in 2002 was that future products should still be based on theInternet Protocol technology which meant that TED represented a key competence forEricsson
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From customers to sponsorsAs a result of its incorporation into Ericsson TED moved several steps down the valuechain since they no longer produced and marketed their own products to externalcustomers but only had internal customers at Ericsson called ldquosponsorsrdquo From beingan independent company supplying the market with leading-edge technology TEDwas now a local design centre within Ericsson Employees regarded this as a having amajor influence on their work They felt that they had lost the feeling for customersrsquoneeds because now they only got specifications from other parts of Ericsson One ofthe employees put it as follows
The products TED provides are based on a chain of demanded specifications [from otherparts of Ericsson] Because of this chain you are easily alienated towards the customers Andthis has also happened for TED We do not have direct contact with our customers which isboth good and bad but the understanding of the customers needs is an ability we do notpossess any more and that is a problem
The employees feel that the lack of feedback from customers or end users means thatthe quality of daily decisions and their commitment to product quality has sufferedNotwithstanding some of the original Telebit employees have maintained theircontacts with customers based on the hardware Telebit sold at the time Thisknowledge of customersrsquo needs is highly valued at TED and these employees are usedas a feedback group
TEDrsquos management is certainly not happy about the change in orientation awayfrom customers One of the managers explained
if we do not continue to have contacts then we lose the real contact with the end userstheir needs and how they use our products and then it will only be development in relation towritten requirements from the sponsors in Stockholm
Organisational structureInternationally Ericsson is divided into six business units each of which has directcontact with customers worldwide and responsibility for identifying customer needsand demands The business unit that includes TED is organised into three core unitscore network radio access network and application and services The core units focuson technological developments and are supported by so-called local design centreswhere actual technological development takes place
The financing of local design centre support follows the chain-of-command impliedby the organisational structure This means that funds flow from the business units viacore units to the local design centres The practical implication is that the core unitsfunction as coordinators managing the internal architecture including how thecomponents within the area are related One of the employees at TED explains this inthe following way ldquofor example when the purpose is to put IP technology on a routerit is the core unitrsquos responsibility to lsquosponsorrsquo a local design centrerdquo and sponsoringhere literally means supporting the local design centre with financial resources
While the clear separation of RampD departments from business units with customercontact has the advantage of directing research activities towards the commercialapplication of technologies it also has disadvantages since the organisationalstructure has a tendency to discourage more basic RampD activities and more long-termactivities without a specific market potential Without independent financing the local
Losinginnovativeness
1169
design centres are unable to follow new ideas that emerge during the projectsHowever they are allowed or even expected to be innovative within the project scopesas specified by Ericssonrsquos core units though since the sponsors are part of the board ofdirectors in the local design centres it limits the centresrsquo ability to act independently
EmployeesEven though sponsors have the formal powers to pass on assignments to the localdesign centre some TED employees feel that they sometimes have insufficienttechnological insight to choose the right projects While the sponsor organisations areclose to the end market and thus often have superior knowledge about customersrsquo andend usersrsquo immediate needs via the business units their knowledge of technologycomes from the design centres which means that they sometimes lack anunderstanding of its possibilities
Like many other RampD-oriented organisations TED regards knowledge as its mostimportant resource This also makes demands on employees since the companyrequires them to be able to work autonomously creatively take initiatives and askother people for help if needed Therefore TED primarily employs people with anappropriate educational background eg those with a university degree in computerscience engineers etc Notwithstanding some employees have obtained their maineducational qualifications from ongoing training not having had a formal degree insoftware engineering or other related areas before joining TED
Some employees have been with TED since it was established as an independentcompany in 1992 while others joined the company later Some had several yearsrsquoexperience from other companies while others were newly qualified One employeedescribed things as
We are 20 or 25 old guys while the rest are young They need more experience before theyrealise that teamwork is more important than putting oneself at the front line
This is also why TED makes an effort to attract and retain experienced employeesAnother employee said
We talk a lot and help each other There is a very good helping spirit and it is very naturalthat we help each other
This is also the impression gained from observations when visiting the organisationEmployees talk in the hallways in the offices and so on Most offices are shared bytwo or three persons and the offices of the project groups are located close together sothat distance is not a barrier to communication However it was also pointed out that adoor can be a small barrier to some employees even though management encouragesthem to talk to each other and seek help
Discussion of Ericsson Telebitrsquos innovativenessThis section draws on the questionnaire results in order to provide another angle onhow the acquisition and organisational turbulence has affected Telebitrsquos innovationand the perception of innovation among employees In addition when possible theresults are compared with findings from Zhuangrsquos (1995) study several questionsbeing similar (all results presented are based on average scores)
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1170
Based on Heaprsquos (1989) definition Zhuang defined creativity as a ldquosynthesis of newideas and concepts by the radical restructuring and reassociation of existing onesrdquo(Zhuang 1995 p 14) While Zhuang measured innovation on an organisation-by-organisation basis this study is based on only one company Furthermore innovation ismeasured based on employeesrsquo perceptions rather than as a predefined concept Inaddition to creativity and innovation a third element the innovative process concernshow creativity is turned into improved corporate performance
CreativityAs discussed in section 2 creativity was measured on a scale from 1 to 13 The averagescore of different groups of employees is shown in Table II As can be seen employeesrsquoperception of their creativity is very similar across age and position moreover thedispersion of responses (not reported here) is low with the highest score being 13 andthe lowest 8 Four employees all male scored 13 while only one scored 8 The biggestdifference in creativity albeit not significant was found between the sexes Howeverthis could be explained by their job function in the company Of the seven femaleemployees five were in services or administration and two were in operations whereasamong the twenty-six male employees one was in administration nineteen were inoperations and six were managers (either department or project managers) Thisdifference between the sexes is as shown in Table II in agreement with Zhuangrsquosfindings in the companies alpha and beta
At first glance it seems surprising that employees aged 50 thorn scored slightly higher(albeit not significantly) on creativity than the other age groups younger people beingcommonly believed to be more creative and innovative which is in line with Zhuangrsquos(1995) study Some research (eg Hambrick and Mason 1984) shows that oldermanagers generally dislike deviating from the status quo and show greater adherenceto the norms of the organisation unlike younger and less experienced managers whoare more likely to pursuer creative strategies Other studies (eg Mostafa 2005) find nodifference in creativity and the perception of creativity between age groups
TED Alpha Beta
Overall average 1033 794 834
By ageUnder 20 000 900 70021-30 1014 844 87531-40 1025 814 82641-50 1025 700 890Over 50 1080 760 820
By positionManagerial 1033 868 917Non-managerial 1033 747 796
By sexMale 1058 819 859Female 943 747 700
Table IIAnalysis of scores on
creativity scale
Losinginnovativeness
1171
Without giving too much weight to the results since the difference is insignificant oneexplanation could be that the organisational emphasis on creativity and innovationfrom the early days of Telebit has fostered a climate conducive to creativity As statedby Shearring (1992) the human brain stays plastic throughout life and givenopportunity and motivation adults can master new subjects acquire new skills andlearn to behave more creatively at any age Another explanation for the high creativityscore among the over-50s may be that most of them are the entrepreneurs who havebeen with TED since the beginning in 1992 They were originally employed because oftheir ability to apply their knowledge to problem-solving and product development
Even when the thirteen questions on creativity in the questionnaire were condensedto 12 and the reverse questions were corrected the overall average of 942 wasremarkably higher than the 794 in Alpha and 834 in Beta[2] In TED the averagescore on creativity was the same for both managerial and non-managerial employeeswhereas it was significantly higher for managerial than non-managerial employees inboth Alpha and Beta Managers are often found to be more creative thatnon-managerial employees (eg Mostafa 2005) but in a technology-based companylike TED it is probably not surprising that creativity is a widely dispersedcharacteristic
InnovationAs shown in Table III in addition to Zhuangrsquos ten statements regarding employeesrsquoperception of innovation the questionnaire also included three further statementsrelated to the transformation of ideas to ldquoproductsrdquo and meeting customersrsquo andsuppliersrsquo requirements respectively Based on a five-point Likert scale from 1(strongly disagree) to 5 (strongly agree) Table III shows how employees at TEDperceive innovation
The most significant statements which employees either agree or strongly agreewith are about generating new ideas and seeing something from a differentperspective One of the interviewees at TED explained the latter as follows
innovation is not necessarily to develop something entirely new it might as well apply tothe usability and application of an existing technology A good example is the IP technologywhich actually is an old technology and there are plenty of people in this world who knowmore about it than we do But we have focused on the IP technology in relation toimplementation and the small thing it is to put an IP stack on a mobile phone opens for a lotof new application and service opportunities and to me this is an example of creativity
Judging from the distribution of the innovation scores TED employees do not seem tohave a shared perception of what innovation is This is in agreement with for exampleRoos and von Krogh (1995) who argue that the perception of a concept depends onprior knowledge which means that it differs from person to person From thispoint-of-view the high score of the statement ldquoseeing something from a differentperspectiverdquo is thus a very interesting result and is in line with TED employeesrsquoassertion that innovation can be initiated throughout the organisation and from outsideit as showed in Table IV According to employees new ideas are often generated atnatural meeting places like canteens coffee machines mail rooms etc whichencourage and enable informal conversations (Christensen and Bang 2003Christensen 2005) Another perspective on innovation is customer-driveninnovation Customers can be involved in the innovative process in different ways
MD449
1172
Per
cen
tag
ed
istr
ibu
tion
ofth
ein
nov
atio
nsc
ores
atT
ED
Iny
our
opin
ion
in
nov
atio
nis
abou
tS
tron
gly
dis
agre
eD
isag
ree
Not
sure
Ag
ree
Str
ong
lyag
ree
TE
DA
lph
aB
eta
Inv
enti
ng
som
eth
ing
enti
rely
new
00
273
91
424
212
358
235
252
Gen
erat
ing
new
idea
s0
00
00
048
551
54
523
083
28Im
pro
vin
gso
met
hin
gth
atal
read
yex
ists
30
61
152
515
242
388
227
198
Fol
low
ing
the
mar
ket
lead
er27
351
512
19
10
02
033
533
98A
ttra
ctin
gin
nov
ativ
ep
eop
le6
115
212
133
333
33
732
592
98P
erfo
rmin
gan
exis
tin
gta
skin
an
eww
ay0
06
112
175
86
13
822
222
04S
pre
adin
gn
ewid
eas
61
00
212
515
212
382
222
217
Ad
opti
ng
som
eth
ing
that
has
bee
nsu
cces
sfu
lly
trie
del
sew
her
e3
033
327
327
39
13
063
162
76S
eein
gso
met
hin
gfr
oma
dif
fere
nt
per
spec
tiv
e0
00
06
163
630
34
242
411
91In
trod
uci
ng
chan
ges
00
182
212
485
121
355
224
230
Tra
nsf
orm
ing
idea
sto
ldquopro
du
ctsrdquo
30
91
152
485
242
382
NA
NA
Mee
tin
gcu
stom
ers
121
182
394
212
91
297
NA
NA
Mee
tin
gsu
pp
lier
s12
121
242
421
23
02
82N
AN
A
Notes
Th
en
um
ber
sin
this
tab
lear
eav
erag
esc
ores
ona
fiv
e-p
oin
tL
iker
tsc
ale
onin
nov
atio
nA
lph
aan
dB
eta
are
from
Zh
uan
grsquos
(199
5)st
ud
yan
dar
ein
clu
ded
inor
der
toco
mp
are
the
Tel
ebit
scor
esw
ith
two
oth
erco
mp
anie
s
Table IIIWhat is innovation about
(percentage distributionand average)
Losinginnovativeness
1173
eg work groups or ldquocamping outrdquo at customers (Christensen 2005) A third andrelated perspective on innovation is networks with research institutions which may beestablished to get access to basic research (Christensen 2005) or to new ideas viastudentsrsquo projects There are an infinite number of approaches to innovation the onlylimitation is within the individuals
It should also be noted that the more general perception of innovation at TED issignificantly different from that in the Alpha and Beta companies For instance asshowed in Table III TED employees think that going beyond traditional ways ofthinking namely ldquoseeing something from at different perspectiverdquo is very important toinnovation whereas in the more traditional industrial companies Alpha and Betaemployees think it more important for innovation to ldquofollow the market leaderrdquo Thedifference between the two very different statements partly reflects the fact that Alphaand Beta are traditional industrial companies whereas TED is knowledge intensiveand competes on innovativeness
Employees were also asked to give their opinion on nine statements regardingvaluation of innovation in their organisation As shown in Table V the strongestcommon belief was how significantly an innovation improves the organisationrsquosprofitability (score 415) How new technology is applied (394) and whether it iscomplementary to existing products (373) were also perceived to be importantCommon to these three statements is that none of the employees strongly disagreedalthough the lower the score the more uncertain people were
The innovation processWith a score of 424 against 366 for marketing and production employees engineersor operational employees appear to play the most important role in initiating theinnovative process Employees expressed mixed opinions about whether or not theboard of directors or sponsors were well placed to initiate an innovation As Table IVshows the distribution of employeesrsquo perception is scattered giving an average scoreof 312 This disagreement also clearly emerged from the interviews becauseemployees perceive the sponsors in different ways Those who think sponsors are wellplaced to initiate an innovation based their answer on the sponsorsrsquo power to controlthe supply of resources (financial support) whereas the main reason given for
Percentage distribution of the position toinitiate innovation scores at TED
Who do you think is in a favourableposition to initiate a product innovation
Stronglydisagree Disagree
Notsure Agree
Stronglyagree
TEDaverage
The board of directors 1 13 5 9 5 312Marketing people 1 3 5 20 3 366Production people 1 4 5 17 5 366Engineersoperational 0 1 1 20 11 424Accountants 2 16 7 8 0 264Purchasing people 1 9 12 10 0 297Nobody 23 5 5 0 0 145External experts (consultants) 1 4 12 14 2 336Receptionists 5 11 10 7 0 258
Table IVWho is in a position toinitiate a productinnovation
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1174
disagreeing with this statement is that the sponsors only provide TED with resourcesndash and not with ldquodriverdquo
Summing up creativity innovation and the innovative processes all played acritical role in entrepreneurship though there is still a need for someone to takeresponsibility for and drive the entrepreneurial process This person can either be anindependent entrepreneur or an entrepreneur working in an existing organisation(intrapreneur) but they may be motivated by different reasons
Concluding discussionAs one of the first contributions to understanding the implications of mergers andacquisitions for companiesrsquo innovativeness Hitt et al (1990) argued that managerialcommitment to innovation is based on organisational conditions More specificallythis means that up to a certain company size managerial commitment to innovationincreases but any subsequent increase in size tends to overburden both managementand employees with formal control systems creating difficulties in relation toinnovative activities in large mature companies
The changes in organisational boundaries as regards access to customers andrelated relevant information as well as the increase in control and reporting systemsexperienced by employees at TED are probably very typical for acquiredorganisations Almost by definition organisations pursuing acquisitions becomelarger and the range of their operations more diversified which affects the types ofcontrol systems needed following an acquisition (Hitt et al 1990)
Williamson (1975) has argued that large multinational companies are often not asefficient as smaller companies at developing innovations rather they are efficient inmanufacturing and distribution while smaller entrepreneurial organisations are moreefficient at developing innovations due to their greater flexibility This is illustrated byTED where innovation became difficult when the small entrepreneurial company wasincorporated into a large and complex multi-national company and it is also inaccordance with Damanpourrsquos (1992) conclusion that size matters to innovation
Percentage distribution of the valuation ofinnovation scores at TED
How is the value of an innovationjudged in an organisation like yours
Stronglydisagree Disagree
Notsure Agree
Stronglyagree TED
How novel it is 0 3 13 15 2 348How many people it involves 1 13 13 3 3 282How long it takes 1 9 9 9 5 324How much it costs 2 7 5 14 5 339How significantly it improves theorganisationrsquos profitability 0 0 4 20 9 415Whether new technology is applied 0 1 6 20 6 394The extent of change it entails 1 2 17 12 1 330Whether it involves a new business area 1 4 13 10 5 342Whether it is complementary to existingproducts 0 0 11 20 2 373
Table VValuation of innovation
Losinginnovativeness
1175
In relation to employeesrsquo perception of creativity and innovation and to their ownability to be creative and innovative most employees at TED emphasised their ownand colleaguesrsquo creativity and innovativeness However it was also realised thatcreativity itself was not enough for new ideas to materialise in actions in largeorganisations One of the TED employees expressed this very clearly
It is an illusion to believe that you can take a small creative and innovative company andintegrate it into a larger one ndash it is downhill most of the time
Implications for practiceThe working practices and processes that were developed when Telebit was a separatecompany gradually disappeared or were simply lost when the company wasincorporated into Ericsson even though most of the employees were still the same Theimportant lesson here is that although creativity and innovativeness have a stronghuman dimension innovation requires an organisational context that enablesknowledge creation (Von Krogh et al 2000) In the case of Telebit the former workingroutines and practices as well as contact to customers formed part of the tacitorganisational knowledge and as is well known from the literature on knowledgecreation (Von Krogh et al 2000) this is not easily transferable
This indicates that to maintain the opportunities and competencies of the acquiredorganisation some efforts are needed to make the energies of the two organisations acttogether in tandem Telebit probably lost its original innovativeness because thereorganisation of the company distorted the entrepreneurial drive created by directcustomer contact However it is impossible to say what might have happened ifEricsson had focused more on the integration process and on facilitating the transfer ofcapabilities to the consolidated company This is the strategy recommended by forexample Buono (1997) who studied a similar type of acquisition and demonstratedthat a process that incorporates work with organisational members on pre-acquisitionanxieties is beneficial
Papadakis (2005) found that the existence of a communication program was aparticularly significant factor explaining the success of MampA Similarly a survey byBert et al (2003) found under-communication to be the most important problemFurthermore Bert et al (2003) also emphasised that post-merger problems are to agreat extent due to a clash of cultures and different management styles very similar towhat was experienced by the employees at TED
One company well known for its ability to successfully acquire new technologythrough acquisitions is Cisco Systems which more than any other high-tech companyhas built up a dominant market position through acquisitions (Mayer and Kenney2004) Although comparing the acquisition of Telebit by Ericsson with the generalimpression of Ciscorsquos acquisition practice from the literature has its limitations a closerlook into this can still provide some key points for understanding what ndash or what not ndashhappened when Telebit was acquired
According to Pfeffer and Sutton (2006) Ciscorsquos success stems from the companyrsquossystematic examination of evidence about what went right and wrong in othercompaniesrsquo mergers as well as a merger integration process that ensures the peoplestay with the company feel at home and can use their knowledge to makecontributions to the new company We did not explicitly ask the employees at TED
MD449
1176
about the kind of post-integration procedures used at Ericsson or how Ericsson hadlearnt from this experience ndash however specific corporate-wide procedures forintegration or learning were not mentioned in the interviews either In their study ofCiscorsquos strategy Mayer and Kenney (2004 p 300) show that ldquoif employees leave ortheir practice is significantly disrupted then the acquisition is almost certain to failrdquoThus not only retention but also preserving the way of working seems to be of theutmost importance since it is both emphasised in the case of Cisco and apparent fromthis study
Implications for researchWhile MampA seem to be a recurring part of corporate life there is no substantialevidence about what really matters in the integration phase The case study reported inthe article pointed to specific factors that were important for the innovativenesscreativity and entrepreneurial spirit of the acquired company These elements mostimportantly the informality of the organisation and close contact to customers werenot preserved after the acquisition More generally a comparison with Cisco couldpoint to the importance of how the integration phase is managed
As regards creativity and innovativeness in general the literature identifies severalways in which management can influence a companyrsquos practices and processes Giventhe importance of the pre- and post-integration phases both qualitative andquantitative cross-company studies could shed more light on which factors areimportant and how the presence or absence of these factors influence the success of anacquisition
One way of strengthening the conclusions with respect to how creativity andinnovativeness can be maintained in acquired technology companies could be toexamine similar acquisitions not only at Ericsson and Cisco but also at othercompanies competing in the same business areas The focus here should be both on theactual experiences in the acquired companies the specific conditions related to theacquisitions and on the management of the post- and pre-integration phase Onelimitation of the present study is that it only focuses on employees who have stayedwith the acquired company Given the importance of the integration phase newinsights could be gained from following an acquisition more closely regardingattitudes both among those who stay and those who leave as well as among employeesat the acquiring company Furthermore it should be possible to conduct survey-basedstudies across a larger number of companies including in other sectors to examinehow management of the integration phase influences the motivation and creativity ofemployees in the acquired companies
Notes
1 The accelerating growth of the internet and its migration into new areas such as embeddeddevices together with the widespread use of IP in wireless consumer devices severely testedInternet Protocol version 4 (IPv4) which was designed in the early 1980s The new standardIPv6 was developed to extend the current IP infrastructure and improve scalability andsecurity of IP networks and also provides mechanisms for easier configuration of networksand attached devices
2 Not testable as Zhuangrsquos (1995) variance is not accessible
Losinginnovativeness
1177
References
Ahuja G and Katila R (2001) ldquoTechnological acquisitions and the innovation performance ofthe acquiring firms a longitudinal studyrdquo Strategic Management Journal Vol 22 No 3pp 197-220
Bert A MacDonals T and Herd T (2003) ldquoTwo merger integration imperatives urgency andexecutionrdquo Strategy amp Leadership Vol 31 No 3 pp 42-9
Bird B (1992) ldquoThe operation of intentions in timerdquo Entrepreneurship Theory and PracticeVol 17 No 1 pp 11-20
Bresman H Birkenshaw J and Nobel R (1999) ldquoKnowledge transfer in internationalacquisitionrdquo Journal of International Business Vol 30 No 3 pp 439-62
Brockner J Grover S OrsquoMalley MN Reed TF and Glynn MA (1993) ldquoThreads of futurelayoff self-esteem and survivorsrsquo reactions evidence from the laboratory and the fieldrdquoStrategic Management Journal Summer pp 153-66
Bukh PN Christensen KS and Mouritsen J (2005) Knowledge Management and IntellectualCapital Establishing a Field of Practice Palgrave Macmillan Houndsmill
Buono AF (1997) ldquoTechnology transfer through acquisitionrdquo Management Decision Vol 35No 3 pp 194-204
Burgelman RA (1986) ldquoManaging corporate entrepreneurship new structures forimplementing technological innovationrdquo in Horwith M (Ed) Technology in the ModernCorporation Pergamon Press New York NY pp 1-13
Chaudhuri S and Tabrizi B (1999) ldquoCapturing the real value in high-tech acquisitionsrdquoHarvard Business Review Vol 75 No 5 pp 123-30
Christensen KS (2005) ldquoEnabling intrapreneurship the case of a knowledge-intensiveindustrial companyrdquo European Journal of Innovation Management Vol 8 No 3pp 305-22
Christensen KS and Bang HK (2003) ldquoKnowledge management in a project orientedorganisation three perspectivesrdquo Journal of Knowledge Management Vol 7 No 3pp 116-28
Churchill N and Lewis V (1983) ldquoThe five states of business growthrdquo Harvard BusinessReview Vol 61 pp 44-51
Collier DW (1983) ldquoTechnology in diversified decentralised companiesrdquo Journal of BusinessStrategy Vol 3 pp 91-3
Damanpour F (1992) ldquoOrganisational size and innovationrdquo Organisation Studies Vol 13 No 3pp 375-402
Denzin NK (1989) The Research Act A Theoretical Introduction to Sociological Methods 3rd edPrentice-Hall Englewood Cliffs NJ
Ernst H and Vitt J (2000) ldquoThe influence of corporate acquisitions on the behaviour of keyinventorsrdquo RampD Management Vol 30 No 2 pp 105-19
Farnsworth T (1987) Test Your Executive Skills Ebury Press London
Ghoshal S (1987) ldquoGlobal strategy an organising frameworkrdquo Strategic Management JournalVol 8 No 5 pp 425-40
Hambrick DC and Cannella AA (1993) ldquoRelative standing a framework for understandingdepartures of acquired executivesrdquo Academy of Management Journal Vol 36 No 4pp 733-62
Hambrick D and Mason P (1984) ldquoUpper echelons the organisation as a reflection of its topmanagementrdquo Academy of Management Review Vol 9 No 2 pp 193-206
MD449
1178
Hargedoorn J and Duysters G (2002) ldquoThe effect of mergers and acquisitions on thetechnological performance of companies in a high-tech environmentrdquo Technology Analysisamp Strategic Management Vol 14 No 1 pp 67-85
Harrison JS Hitt MA Hoskinsson RE and Ireland RD (1991) ldquoSynergies andpost-acquisition performance differences versus similarities in resource allocationsrdquoJournal of Management Vol 17 pp 173-90
Harrison JS Hitt MA Hoskinsson RE and Ireland RD (2001) ldquoResource complementarityin business combinations extending the logic to organisational alliancesrdquo Journal ofManagement Vol 27 pp 679-90
Heap J (1989) The Management of Innovation and Design Cassell Educations Ltd London
Hitt MA Hoskisson RE and Ireland RD (1990) ldquoMergers and acquisitions and managerialcommitment to innovation in M-form companiesrdquo Strategic Management Journal Vol 11No 10 pp 29-47
Hitt MA Hoskisson RE Ireland RD and Harrison JS (1991) ldquoEffects of acquisitions onRampD inputs and outputsrdquo Academy of Management Journal Vol 34 No 3 pp 693-706
Hitt MA Hoskisson RE Johnson RA and Moesel DD (1996) ldquoThe market for corporatecontrol and firm innovationrdquo Academy of Management Journal Vol 39 No 5 pp 1084-119
James AD Georghiou L and Metcalfe JS (1998) ldquoIntegrating technology into merger andacquisition decision makingrdquo Technovation Vol 18 Nos 89 pp 563-73
Jick TD (1979) ldquoMixing qualitative and quantitative methods triangulation in actionrdquoAdministrative Science Quarterly Vol 24 No 4 pp 602-11
Kapoor R and Lim K (2005) ldquoThe impact of acquisitions on the innovation performance ofinventors at semiconductor companiesrdquo Academy of Management Best Conference Papers2005
Karim S and Mitchell W (2000) ldquoPath-dependent and path-breaking change reconfiguringbusiness resources following acquisitions in the US medical sector 1978-1995rdquo StrategicManagement Journal Vol 21 No 11 pp 1061-81
Kazanjian RK and Drazin R (1990) ldquoA stage contingent model of size and growth fortechnologically based venturesrdquo Journal of Business Venturing Vol 5 No 3 pp 137-50
King DR Dalton DR Daily CM and Covin JG (2004) ldquoMeta-analysis of post acquisitionperformance indicators of unidentified moderatorsrdquo Strategic Management JournalVol 25 No 2 pp 187-200
Leonard-Barton D (1992) ldquoCore capabilities and core rigidities a paradox in managing newproduct developmentrdquo Strategic Management Journal Vol 13 pp 111-25
Man AP and Duysters F (2005) ldquoCollaboration and innovation a review of the effect ofmergers acquisitions and alliances on innovationrdquo Technovation Vol 25 pp 1377-87
March JG (1991) ldquoExploration and exploitation in organisational learningrdquo OrganisationScience Vol 2 No 1 pp 71-87
Mayer D and Kenney M (2004) ldquoEconomic action does not take place in a vacuumunderstanding Ciscorsquos acquisition and development strategyrdquo Industry and InnovationVol 11 No 4 pp 299-326
Mostafa M (2005) ldquoFactors affecting organisational creativity and innovativeness in Egyptianbusiness organisations an empirical investigationrdquo The Journal of ManagementDevelopment Vol 24 No 1 pp 7-33
Papadakis VM (2005) ldquoThe role of broader context and the communication program in mergerand acquisition implementation successrdquo Management Decision Vol 43 No 2 pp 236-55
Losinginnovativeness
1179
Pfeffer J and Sutton RS (2006) Hard Facts Dangerous Half-Truths and Total NonsenseProfiting from Evidence-Based Management Harvard Business School Press Boston MA
Reilly AH Brett JM and Stroh LK (1993) ldquoThe impact of corporate turbulence on managersrsquoattitudesrdquo Strategic Management Journal Vol 14 pp 167-79
Roos J and von Krogh G (1995) ldquoWhat you see depends on who you are think aboutepistemologyrdquo IMD Perspectives for Managers No 7 pp 1-4
Shearring HA (1992) ldquoCreativity and older adultsrdquo Leadership amp Organization DevelopmentJournal Vol 13 No 2
Stevenson HH and Harmeling S (1990) ldquoEntrepreneurial managementrsquos need for a morelsquochaoticrsquo theoryrdquo Journal of Business Venturing Vol 5 No 1 pp 2-14
Von Krogh G Ichijo K and Nonaka I (2000) Enabling Knowledge Creation How to Unlock theMystery of Tacit Knowledge and Release the Power of Innovation Oxford University PressOxford
Warner AG (2003) ldquoBuying versus building competence acquisition patterns in theinformation and telecommunications industry 1995-2000rdquo International Journal ofInnovation Management Vol 7 No 4 pp 395-415
Williamson OE (1975) Markets and Hierarchies Analysis and Antitrust Implications FreePress New York NY
Zhuang L (1995) ldquoBridging the gap between technology and business strategy a pilot study onthe innovation processrdquo Management Decision Vol 33 No 8 pp 13-21
Appendix QuestionnaireThe first questions are about your background
(1) Sex male or female
(2) Your age
(3) Education (a) High school College (b) Bachelor degree (c) Engineer (d) MSc or MA (e)PhD (f) none and (g) Other please specify
(4) How many years have you been with the company
(5) In which department are you employed
(6) Which of the following categories best describe your current position (a) CEO and unitmanager (b) Department manager (c) Operational employees (d) Clericaladministration (e) Trainee (f) Services and (g) Other please specify
(7) How many years have you been in your current position
The next questions are about yourself in relation to your work environment
(8) Do you get bored when doing things the same way every time
(9) Are you afraid of making mistakes
(10) Are you satisfied when making improvements
(11) Does the company create a context in which you can make improvements (a) Personalandor (b) Professional
MD449
1180
(12) Are you discouraged from acting because of lack of resources
(13) Do you like solving problems in unconventional ways
(14) Do you feel that it is your job to be critical of established practices
(15) Do you trust your own intuition
(16) Do you trust other peoplersquos intuition
(17) Are you afraid of having your ideas ridiculed
(18) Do you find it hard to accept disorder and confusion
(19) Can you quickly point out why an idea will not work
(20) Do you welcome other peoplersquos ideas
(21) Do you prefer a quiet life to challenging one
The following questions are about the interpretation of different concepts (Questions 22-28 arebased on a five-point Likert scale)
(22) In your opinion innovation is about (a) inventing something entirely new (b)generating new ideas (c) improving something that already exists (d) following themarket leader (e) attracting innovative people (f) performing an existing task in a newway (g) spreading new ideas (h) adopting something that has been successfully triedelsewhere (i) seeing something from a different perspective (j) introducing changes (k)transforming ideas into ldquoproductsrdquo and (l) meetings with customers
(23) In your opinion an innovation can be (a) a product (b) a service (c) a technology (d) aproduction process (e) a management system (f) an administration procedure and (g)an organisational innovation
(24) How is the value of an innovation judged in an organisation like yours (a) How novelit is (b) how many people it involves (c) how long it takes (d) how much it costs (e)how significantly it improves the organisationrsquos profitability (f) whether newtechnology is applied (g) the extent of change it entails (h) whether it involves a newbusiness area and (i) whether it is complementary to existing products
(25) Who do you think is in a favourable position to initiate a product innovation (a) Theboard of directors (b) marketing people (c) production people (d) engineers (e)accountants (f) purchasing people (g) nobody (h) external experts (consultants) and(i) receptionists
(26) Why do companies embark on innovative activities (a) They want to increase profitmargin (b) their competitors (c) they want to do better than their competitors (d)pressure from customers (e) they have creative employees (f) in an attempt to cutdown their operational costs (g) they have the financial resources and (h) they try toavoid straight price competition
(27) The key to onersquos ability to innovate is to (a) be born with the right talent (b) be able tothink creatively (c) complete a higher education (d) have at least ten years of workexperience (e) possess good interpersonal skills (f) be good at putting theory into
Losinginnovativeness
1181
practice (g) realise the necessity (h) ask ldquostupidrdquo questions and (i) other pleasespecify
(28) Which of the following organisational factors are important to realising onersquosinnovation potential (a) Regular employee performance appraisals (b) freedom towork within areas of greatest interest (c) criticism from superiors or colleagues (d)recognition and appreciation (e) contact to stimulating colleagues (f) creativitytraining programmes (g) encouragement to take risks (h) monetary rewards (i)tolerance of non-conformity and (j) opportunity to work alone rather than in a team
(29) Which of the factors in question 28 do you feel get most emphasis in your company
On a scale from 1(creativity within specific scopes) to 5 (pursue ones ideas) and 10 (gives financialsupport to individuals or groups of employees who wish to start their own company on the basis ofan idea
(30) To which extent does the company make room for creativity and innovation
On a scale from 1(most important) to 10 (less important)
(31) Please rank the following statements in order of importance to the companyrsquos presentstrength of innovation (a) informal and relaxed management style (b) decentralisedmanagement structure (c) regular employee performance appraisal (d) generousbudget for research and development (e) strong emphasis on team effort (f) effectiveemployee suggestion scheme (g) encourage employees to work on their own initiative(h) prompt public recognition and appreciation (i) attractive monetary reward and (j)promotion
(32) Is there any point you wish to make concerning any aspect of your companyrsquosinnovation activities
(33) Other (comments and suggestions)
About the authorKarina Skovvang Christensen MSc (Econ) is a PhD student at the Department of ManagementAarhus School of Business Her primary research interests include management of innovationknowledge and strategy and her PhD project deals with management of intrapreneurship inknowledge-intensive organisations She has previously worked with intellectual capitalstatements and has published articles and books on knowledge management corporateentrepreneurship innovation and management accounting Karina Skovvang Christensen canbe contacted at KaSCasbdk
MD449
1182
To purchase reprints of this article please e-mail reprintsemeraldinsightcomOr visit our web site for further details wwwemeraldinsightcomreprints
111
CHAPTER 7
Enabling Intrapreneurship The Case of a Knowledge-Intensive Industrial Company
Originally Published in
Christensen Karina Skovvang 2005 Enabling Intrapreneurship The Case of a
Knowledge-Intensive Industrial Company European Journal of Innovation
Management Vol 8 No 3 pp 305-322
112
Enabling intrapreneurshipthe case of a knowledge-intensive
industrial companyKarina Skovvang Christensen
Department of Organisation and ManagementThe Aarhus School of Business Aarhus Denmark
Abstract
Purpose ndash The aim of the paper is to provide an understanding of the various factors that enableintrapreneurship in established firms The paper reports on a case study of intrapreneurship in a largeknowledge-intensive industrial firm
Designmethodologyapproach ndash Based on the existing literature it is suggested that the use ofdifferent factors can either enable or inhibit intrapreneurship and five enabling factors that areidentified Based on interviews on-site observations and documents and reports the five factors with apotential influence on intrapreneurship are examined and alternative factors considered
Findings ndash The five enabling factors that are identified in the literature are not sufficient to enableintrapreneurship in knowledge-intensive companies and it is concluded that three additional factorsenabling intrapreneurship in established firms should also be taken into account
Practical implications ndash The knowledge of what makes factors either enablers or inhibitors areincomplete and to enhance the intrapreneurial ability of an organisation managers must learn whichfactors to use in different situations
Originalityvalue ndash Only very few papers have studied intrapreneurship in specific organisationsThis paper contributes with a synthesis of the literature in the area and with a suggestion of a modelthat is used in the empirical analysis and augmented based on that The paper furthermore contributesto the body of literature on the factors enabling intrapreneurship in general
Keywords Communication Entrepreneurialism Culture
Paper type Case study
1 IntroductionJob creation has become a hot topic in most old industrialised countries whereproduction is increasingly moving to the newly industrialised countries Typically inmany European countries the underlying assumption in the public debate is that newjobs should mainly be created in small- and medium-sized firms (SMEs) Howeverstudies have shown that job creation in SMEs has almost come to a standstill and thatoverall these firms lose almost as many jobs as they create (see for example Hisrich1990 Sathe 2003)
Other authors eg Pinchot (1985) and Morris and Kuratko (2002) have suggestedthat there is a potential for job creation in both large and small companies though theysay little about the kind of industrial structure best suited to achieving this or about thebest way to ensure job creation and growth In any event we have to take a startingpoint in the existing structure with both large and small companies Much research has
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
wwwemeraldinsightcomresearchregister wwwemeraldinsightcom1460-1060htm
The author gratefully acknowledges the helpful comments made by Per Nikolaj Bukh AndersDrejer and John Parm Ulhoslashi on an earlier version of this paper
Enablingintrapreneurship
305
European Journal of InnovationManagement
Vol 8 No 3 2005pp 305-322
q Emerald Group Publishing Limited1460-1060
DOI 10110814601060510610171
been done within the field of entrepreneurship focusing on the entrepreneurrsquoscharacteristics and the process of starting up a new independent company (Gartner1988) although it is also necessary to improve innovation in large companies But iscorporate entrepreneurship the solution or is it just another passing fad
Corporate venturing has often been mentioned in relation to corporateentrepreneurship (eg Sathe 2003) and it has both good and bad points Sometimesmanagement faces new strategic dilemmas ndash especially if the new ventures are notclosely related to the mother companyrsquos core competencies and markets But as notedby Guth and Ginsberg (1990) and Sharma and Chrisman (1999) among otherscorporate entrepreneurship is more than corporate venturing and to be moreintrapreneurial companies therefore need to take the whole organisation into accountAs has often been pointed out in the literature on organisational design differentcorporate structures support different organisational needs (eg Hisrich 1990)Corporate structure is thus a good starting point as regards enabling intrapreneurship
In other words well-established and mature companies need to experiment withnew ways of organising and organisational structures that are known to enableinnovation to take place eg networks loosely coupled organisations and projectorganisations as a supplement to the classic hierarchy Notwithstanding managersalso need to recognise that innovation and renewal cannot be planned and managed inthe same way as operational activities
Another reason why innovation in large well-established companies is important isthat such companies possess more resources (both human financial and structural) thansmall companies and are therefore faced by less overall uncertainty Often they onlyexpose themselves to one kind of uncertainty at a time while entrepreneurs typicallyhave to cope with several simultaneously eg technology markets financial capital andbranding The transition to the knowledge society may thus be very difficult to achievethrough small companies alone which makes the focus on innovation in large companieseven more important This in turn implies directing more attention towards the keyfactors that enable and improve innovation within companies
In this paper I examine how companies can encourage intrapreneurship by meansof five different enablers derived from the literature rewards management supportresources organisational structure and risk Based on a case study of a largeknowledge-intensive industrial firm it is concluded that the factors are not of equalimportance and that in this specific organisation other important factors also enableintrapreneurship This leads to a proposed model consisting of eight enablers
This paper is organised as follows Section 2 which draws on the literature in thefield suggests a classification of corporate entrepreneurship based on fourorganisational perspectives each with different motivations for engaging inentrepreneurial activities Section 3 presents the methodology and discusses theadvantages and disadvantages of a single case study Section 4 briefly describes thecase company while section 5 presents a detailed analysis of the factors from a singlecase Section 6 discusses the findings and suggests how intrapreneurship can beenabled while section 7 presents the conclusion and implications
2 Corporate entrepreneurshipThe ideas behind corporate entrepreneurship can be traced back to the mid-1970s (egPeterson and Berger 1972 Hanan 1976) but it was not until Pinchotrsquos (1985) book on
EJIM83
306
intrapreneuring in the mid-1980s that it became a separate research topic However itstill seems to be a concept in search of a clear definition Various broader or narrowerdefinitions have been proposed by different authors some as observed by Sharma andChrisman (1999) using the same definition for different phenomena and others usingdifferent definitions for the same phenomenon A sufficiently broad definition ofcorporate entrepreneurship is thus crucial in order to avoid prematurely excludingimportant issues
One approach to the field is to regard corporate entrepreneurship as the overallconcept covering everything to do with entrepreneurship in a company (Christensen2004) such as intrapreneurship (Pinchot 1985) exopreneurship (Chang 1998) andcorporate venturing (Burgelman 1983) Common to these topics is that corporateentrepreneurship refers to ldquoa multidimensional process with many forces acting inconcert that lead to the implementation of an innovative ideardquo (Hornsby et al 1993p 30)
Jeffrey Hornsby and Donald Kuratko together with different co-authors havereviewed the literature from the late-1980s onward and have found five internalenablers of corporate entrepreneurship consistent with the main literature rewardsmanagement support resources (including time) organisational structure andrisk-taking (Kuratko et al 1990 Hornsby et al 2002) However based on an empiricalanalysis Kuratko et al (1990) only find management support organisational structureresources and rewards significant
In Hornsby et al (1993) the authors further develop their work from 1990 resultingin the following enablers management support autonomywork discretionrewardsreinforcement time availability and organisational boundaries However intheir paper from 2002 they return to the five enablers from 1990 but test those from1993 Hornsby et al (1993) also point out that individual characteristics such asrisk-taking propensity desire for autonomy need for achievement goal orientationand internal locus of control have a significant influence on corporateentrepreneurship
Other researchers have explored different enablers eg from the externalenvironment According to Antoncic and Hisrich (2004) both organisational factorssuch as organisational support formal controls and numbers of alliances andenvironmental conditions such as dynamism technological opportunities industrygrowth and demand for new products are important in relation to corporateentrepreneurship In an earlier study Zahra (1991) suggested that in addition tointernal organisational factors the intensity of corporate entrepreneurship is alsoinfluenced by corporate strategy and factors from the external environment such asdynamism hostility and heterogeneity
Covin and Slevin (1991) developed an integrative model including both externalfactors such as technological sophistication dynamism hostility and industry lifecycle stage together with such strategic variables as mission strategy and internalenablers such as top management values and philosophies organisational resourcesand competencies organisational culture and organisational structure Zahra (1993)further developed Covin and Slevinrsquos (1991) integrative model eliminatingtechnological sophistication on the ground that it is part of environmentaldynamism and adding munificence by which is meant the abundance ofopportunities for innovation in an industry Zahra also questions the inclusion of
Enablingintrapreneurship
307
industry life cycle stage because it relates to another level than dynamism hostilityand munificence Zahra (1993) also argues for a narrower classification of the internalenablers claiming that the suggested changes would make the model more complete
Although corporate entrepreneurship is influenced by a number of both internal andexternal factors this paper will focus only on those internal factors that the companyhas a possibility to influence directly
3 MethodologyA division of Danfoss a major Danish industrial company was chosen as a case studyto help determine which factors enable intrapreneurship Being one of Denmarkrsquoslargest industrial companies Danfoss might well have suffered from a lack ofintrapreneurship but despite its industrial roots the company is generally regarded asboth very knowledge-intensive and innovative Furthermore the companyrsquos CEO iswell-known in the public debate in Denmark for his promotion of entrepreneurship as apolicy agenda and innovativeness in Danish firms This managerial focus onintrapreneurship thus made Danfoss ideal for studying the enablers ofintrapreneurship at least in this particular firm
A major problem of large firmsrsquo innovative activities is how they can be fitted intoday-to-day routines without compromising efficiency As a starting point interviewswere carried out with employees on this issue The method chosen was the so-calledembedded case study design (see also Yin 2003 p 43) involving three levels ofanalysis
(1) The firm (its strategy and performance)
(2) Employees (their interaction)
(3) The use of factors (tracing different enablers)
It is generally argued that embedded case design provides richness and multipleperspectives in explaining behaviour
The intrapreneurial enablers ndash rewards top management support resourcesorganisational structures and risk ndash which were derived from the literature in advancehad already been found consistently throughout the literature by others The empiricalmaterial includes four interviews the aim of which was to identify the enablers(respondents were selected from three different organisational positions in order toobtain a broader perspective on the same issues a project manager two functionalmanagers and an engineer) two days of on-site observations (including two meetings)where various employees were informally questioned about their research themes anda wide range of documents and reports
Each interview was conducted in tandem (two researchers) one researcher beingprimarily responsible for the interview and the other for taking notes and filling ingaps in the questioning The interviewees were asked to tell the story of the companyhow they perceive innovation why the firm needs to be innovative where in theorganisation the innovations are created how they are organised and how and whichdifferent enablers encourage and support them to be innovative The interviews whichlasted for an average of about one-and-a-half hours they were recorded andtranscribed for later use At the end of each day field notes were written by eachresearcher individually reflected on and afterwards discussed by both researchers
EJIM83
308
The interviewees were chosen from different positions in order to get a broaderperspective on the same themes and the formal interviews were supported andvalidated or categorised as a single opinion by small-talking to a number of otheremployees and through observations General statements will be presented asldquoDanfoss Drives saysrdquo The interviewees provided several insights and a variety andbreadth of data which allowed the exploration of different settings and breakdowninto categories that were grounded more empirically in a knowledge-intensivecompany than would have been possible from solely using the five factors from theliterature
The analytical process was mainly concerned with coding the interviews andclassifying the text into categories for content analysis (see for example Weber 1985)based on predetermined categories which is the main difference from grounded theory(Glaser and Straus 1967) Several researchers (eg Glaser 1978 Miles and Huberman1994) have suggested that coding provides a basis for the interpretation of data Thecoded data from the interviews were triangulated with observations and writtendocuments
4 Danfoss DrivesDanfoss Group is an international engineering company with approximately 17000employees and a total turnover of almost DKK 15 billion of which the Motion ControlUnit share is approximately 3400 employees and almost DKK 35 billion respectivelywith customers all over the world Danfoss Drives is the largest division in the MotionControl Unit The Motion Control Unit was established ultimo 2000 and apart fromDanfoss Drives also includes three other divisions Gear motors Marine Systems andFlow The activities in Danfoss Drives can be dated back to 1968 which saw theintroduction of the first mass-produced frequency converter for speed control ofmotors The heating ventilation and air-condition applications (HVAC) wereintroduced in 1990 and since the acquisition of Bauer a gear motor producer in1999 Motion Controls has been marketed as a one-stop shop for the industry
Through acquisitions in the US and the founding of a company in GermanyDanfoss Drives now has two production sites in addition to its headquarter inGraasten Denmark and via Danfoss sales companies is able to serve a wide range ofcustomers in different industries throughout the world including chemicals andconsumer goods metals and mining pulp and paper and the refrigeration andautomotive industries
41 Strategy and the organisationDanfoss Drives pursues a dual strategy the aim of which is both to maintain itsleading global position in the food beverage HVAC and water industries throughvolume and growth and to retain its position as a component supplier providingready-to-install solutions for (niche) customers
The continuous introduction of new and improved products means that DanfossDrives attaches a lot of importance to technological innovation and its efforts to gain acompetitive advantage owe a lot to close cooperation with customers In 1998 thedevelopment process in Danfoss Drives was organised into a matrix structureinvolving technology centres serving the different projects project leaders andprojects organised into a ldquocore teamrdquo and a number of ldquosub-teamsrdquo The product leader
Enablingintrapreneurship
309
who is responsible for the development of new products and managing thedevelopment process is assisted by a ldquocore teamrdquo which consists of members fromeach key area marketing production finance and IT
Danfoss Drivesrsquo management acknowledges that the companyrsquos commercialsuccess depends on employeesrsquo competencies and that employees are therefore itsmost important resource Here we describe how Danfoss Drives enablesintrapreneurship by means of many different forces acting together
5 Corporate entrepreneurship at Danfoss DrivesWithout having any distinct corporate entrepreneurship strategy Danfoss Drives hasactively used the organisational structure to enable intrapreneurship in the form ofcorporate ventures internationalisation and formal networks and the internalorganisation has been organised to encourage innovation knowledge creation anddissemination But using the organisational structure is not the only way DanfossDrives encourages intrapreneurship This section describes how various means areapplied and perceived by the employees at Danfoss Drives
This paper examines how the above-mentioned five enablers in Kuratko et al (1990)influence intrapreneurship at Danfoss Drives
51 RewardsSome authors (eg Fry 1987 Morris and Kuratko 2002 Sathe 2003) stress thatentrepreneurial behaviour can be encouraged by effective reward systems that mustconsider clear goals feedback individual influence and rewards based on results(Kuratko et al 1990 Hornsby et al 1993 2002) or it could be related to theperformance of the team (Hisrich and Peters 1986) Designing a reward system thatreflects the behaviour the company wishes to encourage is therefore crucial Accordingto Sathe (2003) people are motivated by different things Entrepreneurs may seekrewards such as the pride that comes from starting their own business and theprospect of financial gains whereas intrapreneurs value other incentives which are notalways clear (Sathe 2003) Morris and Kuratko (2002 p 245) note that intrapreneursare motivated by controllable rewards such as ldquoregular pay bonuses profit shareequity or shares in the company expense accounts job security promotions expandedjob responsibilities autonomy public or private recognition free time to work on petprojects money for research or trips to conferencesrdquo Morris and Kuratko (2002) alsoargue that intrapreneurs should share some of the downside risk but this financial riskand incentive is exactly what Sathe (2003) identifies as the difference betweenentrepreneurs and intrapreneurs
In practice it can be more difficult to differentiate between entrepreneurial andintrapreneurial incentives as not all entrepreneurs or intrapreneurs are motivated inthe same way At Danfoss Drives the reward structure reflects the fact that they are aninternational player and incentives change across cultures and countries financialrewards (bonus) are highly motivating in the USA whereas ldquoin Denmark financialrewards are generally less appreciated than promotion prestige and recognition fromcolleagues as the Danish Internal Revenue Service (IRS) destroys all possibilities forfinancial rewardsrdquo It is not uncommon (Sathe 2003) and very Danish that if someemployees get a financial reward then it influences other employees negativelyFlexibility in relation to an assignment and working hours is highly appreciated by
EJIM83
310
Danes and this together with recognition from colleagues is the most commonreward Prestige related to the completion of an assignment is also valued
52 Management supportThe second factor is management support that in the literature is often synonymouswith top management support and governance (Hitt et al 2002 Hornsby et al 1993Kuratko et al 1990) It is crucial for management to support intrapreneurial activities(Hisrich and Peters 1986 Stevenson and Jarillo 1990) even if they do not fullyunderstand them (Hornsby et al 2002 Kuratko et al 1990) As pointed out by Kuratkoet al (1990) and Hornsby et al (1993) the basic idea of management support is toencourage employees to believe that innovation is embedded in the role of allemployees And this is precisely the case at Danfoss Drives everyone is encouraged tobe innovative and consequently innovation happens everywhere
Employees view a supportive management as one that does not work against newinitiatives from employees and acts as a sponsor for intrapreneurs which basicallymeans giving them access to resources This agrees with Fry (1987) One of theemployees put it as follows
What my manager does is provide me with resources that make it possible to explore newopportunities
Otherwise employees agree that support from other colleagues is more importantThey not only use each other to discuss and test new ideas but groups of employeescooperate to develop new products and new ideas Other employees eg clerks andtechnical assistants can also support a project group by from an engineerrsquospoint-of-view doing more mundane things such as office work getting the rightcomputer programs for the job etc As one of the managers said ldquoit is easy to getpeople together in workshops on new themes and problems even though they arebusyrdquo which indicates that generally support among employees is high Butsupporting (top) managers are important as ldquosponsorsrdquo
53 ResourcesIn addition to the support of top management projects also need financial resources toget off the ground (see for example Hisrich and Peters 1986 Hornsby et al 2002Sathe 2003 Stevenson and Jarillo 1990 Stopford and Baden-Fuller 1994) On the otherhand the speed and success of a project is not proportional with fundingencouragement inspiration and perspiration are also necessary (Fry 1987) Gettingaccess to the companyrsquos facilities and resources is not always sufficient ndash it isimportant to make employees feel confident and encouraged to experiment (Burgelmanand Sayles 1986) The well-known 3M case illustrates that this kind of support andfreedom automatically generates another important resource (time) Employees at 3Mare encouraged to spend 15 per cent of their time on their own projects Howeveraccording to Fry (1987) this 15 per cent is often spent after hours or at weekends Somescholars (eg Drucker 1993 Nonaka and Takeuchi 1995 Bukh et al 2005) haveargued that the most important resource in the knowledge society is knowledge itselfand knowledge is not just the fundamental driver of innovation but also an importantpart of the companyrsquos competitive advantage
Enablingintrapreneurship
311
The most important intrapreneurial resource at Danfoss Drives is human resourcesie the knowledge and skills of the employees However other resources are importanttoo especially time and financial support which to some extent the company sees as aprerequisite for employees to act in an intrapreneurial way Although as DanfossDrives says
time and money have to be earned which means you have to finish your assigned projectbefore you can playrdquo
And continues
we would explore different directions that are not directly related to the core of ourproduct simply to broaden the horizon and knowledge about what is going on Probablythere is something out there which in combination with other things could be veryinnovative eg in relation to regulation techniques something interesting could befound in relation to how the body regulates the absorption of medicine However theresources are limited and therefore we have to focus on the most important adjacentareas
The use of resources is a matter of priority and long-term innovation is vulnerablecompared with short-term business pressure (Hisrich 1990) Lack of resources andtime is thus also a barrier to long-term innovation at Danfoss Drives As the companypoints out even though daily or weekly slack time for innovation would be preferableemployees are ldquo in periods very tied up with projects and in other periods webreathe and have time to run innovative projects to broaden the horizon andknowledge of the employees and to motivate themrdquo
Being part of a large company also brings bureaucratic obstacles eg the engineersare employed on flextime terms which is highly popular but current thinking atDanfoss Group headquarters is whether all employees should be on ldquojob salaryrdquoinstead to which one of the employees retorts
that will be rubbish then I will only focus on my assigned projects and nothing more
On the other hand being part of a large company can also mean greater flexibility andmore choices As one of the managers says
10 per cent of 1 billion creates more financial flexibility than 10 per cent of 1 million andexploring ideas costs money
The availability of financial resources thus plays an important role in intrapreneurshipor the utilisation and implementation of ideas One of the employees explains that ldquoI tryto look at the companyrsquos purse as if it was my ownrdquo and if some employees believe sostrongly in an idea that they are willing to pay for its implementation themselves thenthe company always considers it again
54 Organisational structureOrganisational structure has been found very important for innovative activities inseveral ways (see for example Burgelman 1983 Guth and Ginsberg 1990Hornsby et al 1993 Sathe 2003) According to Davis and Lawrence (1991) externalpressure for dual focus pressures for high information-processing capacity andpressures for shared resources require a matrix organisation Sathe (2003) on theother hand argues that matrix and functional or ldquosilordquo organisations can inhibit
EJIM83
312
corporate entrepreneurship with respect to new business creation Instead herecommends collaboration and the pooling of competencies in cross-functionalbusiness units so that competencies in technology product developmentmarketing sales and other functions will be available for new business This isprecisely how Danfoss Drives pools different knowledge resources in each projectwithin a matrix structure
The reorganisation in 1998 into a matrix structure focused on a projectorganisation with strong project leaders was positively received by employees since itclarified the chain of command As one of the employees put it
Before you were more like a specialist and you could easily work on four different projectsand that was not always easy Because who did you refer to Who pushed you the most Andwhich project did you better like yourself
Basically the new organisational structure made it possible for employees to focuson the project and their jobs The importance of the project groups wasemphasised by a physical reorganisation where all project members are nowlocated together Previously employees were located with ldquosimilarrdquo people egmarketing people sat together with other marketing people in a marketingdepartment Both ways have advantages and disadvantages but at Danfoss Drivesgathering together employees with different backgrounds has become the preferredway of doing things
If Danfoss Drives believes strongly in new ideas a group of employees may get thechance to turn them into a new business unit One of the managers says that
Instead of imposing it [the new ideas] into the existing organisation we have started a smallgroup a small project outside the traditional rules of the established organisation
This is in essence what corporate ventures are all about (see for example Biggadike1979 Guth and Ginsberg 1990) Another manager reflected that
Our ventures have been started based on a specific idea or idea area and then it has beenisolated and nurtured This basically means that they [the ventures] have got some peace andresources to work on a new area
What this means in practice is that the ventures do not have to strictly follow standardoperating procedures which gives them a flexibility and agility that the existingorganisation does not possess (Ellis and Taylor 1987)
Internationalisation is the third strategy Danfoss Drives employs to encourageintrapreneurship (Lu and Beamish 2001) The company sees a clear distinctionbetween networks and internationalisation because
when we speak about internationalisation it is within the legal boundaries of theorganisation which means that you have colleagues all around the world with whom youhave to communicate They are an integrated part of the company and thereforeinformation can flow freely whereas within a network there are some restrictions on theinformation you can pass on
Furthermore Danfoss Drives thinks it is necessary to be present ie represented byplants sales offices ventures etc (see for example Hitt and Ireland 2000) in theirmain markets to ensure strong relations with customers and with it to learn from themand get access to their knowledge and sets of values
Enablingintrapreneurship
313
If intrapreneurship is expanded to corporate entrepreneurship there is a fourthway to enable entrepreneurial activities which is to deliberately make use of formalnetworks ie universities customers suppliers and ERFA groups (experienceexchanging groups) ndash by comparison the use of informal networks is difficult toplan and control Danfoss Drives creates networks to get access to knowledgeresources that the organisation needs but does not itself possess (see also Hitt et al2000) saying
The network to the universities is primarily to get access to basic research whereasrelationships to other companies or ERFA groups may be because they do somethingdifferent from which we can learn
Danfoss Drives also participates in ERFA groups to test new ideas on people who havenot yet adapted to the Danfoss way of thinking This says the company will ensurethat ldquotwo developers with the same background gradually become uniformrdquo Anotherway to test ideas is on customers Danfoss Drives not only visits their customers theyldquocamp outrdquo at particular customers for a month at a time because they believe in closecooperation and as they say
we follow them in everything they are doing which provides us with insight intoproblems that would be hard to get in other ways
55 RiskThe fifth and last factor that Kuratko et al (1990) found consistently throughout theliterature is risk Morris and Kuratko (2002) described how both too little risk and toomuch risk can be fatal for a company While too little risk becomes dangerous when acompany ignores changing market conditions by making little or no innovation atthe other extreme attempting to come up with a breakthrough innovation is highlyrisky Therefore focusing on lower-risk markets ie new varieties of productsservices etc makes risk management easier and creates more success Fry (1987)notes that making intrapreneurs experiment without penalising them when an ideafails will encourage an intrapreneurial spirit and the more experiments they carryout the better they will be at determining what works and what does not work(Morris and Kuratko 2002)
Danfoss Drives address risk management from a Darwinistic approach which asone of the managers said means ldquosurvival of the fittestrdquo The projects are veryautonomous so that if an idea is related to an ongoing project it is up to the projectleader and the core team to decide whether it will be implemented or not If the idearelates to a new product the employee has to make strong enough arguments toconvince the product planning group that it is worth implementing These interactionprocesses mean that employees feel relaxed about trying to implement new ideas Asone said
you have to keep your word and be honest then you can be flighty and take risks butyou have to be honest and acknowledge if you have overextended yourself acknowledge thatyou have to go back one step Then you can make a flop and no one complains because theyknow you did your best and in most cases you are likely to succeed
EJIM83
314
At Danfoss Drives most ideas are related to the planned projects since they areplanned four years ahead The aim of such a long planning horizon is both to giveemployees an opportunity to deconstruct the project and come up with ideas and togive them time to think differently and innovatively before the project starts One ofthe employees said
If the company did not give me this information then I would probably not be able to comeup with all these ideas
And when employees have time to think about coming projects says Danfoss Drivesthe risk is lower compared to short-time planning
6 Towards a more complete modelThe Danfoss Drives case is in line with Kuratko et alrsquos (1990) findings as regards thefactors that can help an organisation to enable intrapreneurship However the Danfosscase also makes it clear that a knowledge-intensive company is more complex thantraditional industrial companies The five factors identified by Kuratko et al (1990) arethus not sufficient in themselves to understand intrapreneurial behaviour in suchcompanies
The Danfoss case showed that basic factors such as (top) management support andfinancial resources are not sufficient for intrapreneurship to happen while risk onlyseems to matter to the extent that it is perceived by employees
The possibilities within the five factors can be divided into basic andintrapreneurial factors as showed in Table I By basic factors is meant thosewhich must be present for intrapreneurship to occur eg regular payment to theintrapreneur access to financial resources and other materials a management thatldquosponsorsrdquo the project (not rejecting an idea before development gets started) a basicorganisational structure and tolerance for risk (at least lower-risk projects)Intrapreneurial factors denote efforts that can encourage and enrich intrapreneurialactivities such as expanded job responsibility autonomy and recognition real (top)management commitment ndash not just assignment of resources different knowledgeresources different organisational structures that promote different aspects than thetraditional organisation and no penalisation of employees who try to developsomething new
The interviews small talk and observations at Danfoss Drives revealed that otherfactors at the company also enable intrapreneurship Common to all interviewees isthat they talked about the importance of communication company culture and
Factor Basic factors Intrapreneurial factors
Rewards Regular pay job security Promotion expanded job responsibilityautonomy recognition free time to work onpet projects bonuses
(Top) management support Sponsors CommitmentResources Finance and materials Knowledge resourcesOrganisational structure Hierarchy Corporate venturing cross-functional teams
internationalisation external networksRisk Tolerance of lower risks No penalisation
Table IFactors influencing
intrapreneurship
Enablingintrapreneurship
315
processes to help finish a project The following paragraphs will take a closer look atthese three factors which will be analysed based on the empirical data from DanfossDrives supported where relevant by the literature
61 CommunicationSince it creates a common framework of understanding language can be consideredthe most prominent communicative tool available to man (Christensen and Bang 2003)At Danfoss Drives communication is closely related to culture and geographicallocation One of the interviewees expressed this very clearly
Via your language you can articulate the country in which you have been raised its cultureand its values The whole set of values are embedded in your language that is whyEnglish and American Danish and Norwegian are different even though they are verysimilar
Language culture and geography are very closely related and together they articulateprecision and when you try to express yourself in another language then you lose theprecision
Language is thus a very central part of communication The official language at DanfossDrives is English and this therefore causes some difficulties All employees are expectedto use English at the level they master but employees find it very frustrating to have tospeak English to German customers (to whom they used to speak German) since it canbe a barrier to really understanding the details Danfoss Drives says
If we continued speaking German with the German customers then they would communicatein their native language and there would be only one translation Now all of us have to putsubstantial effort in expressing the right things and furthermore we may not understandwhat is said with the intention of the sender
In addition to the official language there are at least two other languages at DanfossDrives a company-specific and a technical language The language used internally inthe company is very specific with many abbreviations and terms and it can be veryconfusing As Danfoss Drives says
It takes new employees about a year to fully understand what is being said
And as Pinchot (1985) argued the innovation process is inhibited or distorted whenpeople do not speak a common language communication is slowed down
The technical language used by engineers is highly precise since all terms withinelectronics and software are the same in English American English and AustralianEnglish and Danish educational courses are based on English textbooks But not allemployees at Danfoss Drives are engineers and as one of the engineers said ldquowe [theengineers and the rest of the organisation] do not speak a common language however the tone is free and hard ndash but friendlyrdquo and they are not afraid to ask if thereis something they do not understand
General communication within Danfoss Drives is very informal which encouragesemployees to talk to everyone However employees at Danfoss Drives are scatteredaround Graasten which is a barrier to daily communication As Danfoss Drives explains
We have colleagues 200m from here and it feels like they are placed in Aarhus [almost200 km from Graasten] If you think you could gain from speaking with them then you haveto walk over there and then you are very likely to wait until tomorrow
EJIM83
316
However one of the managers says
Generally the information and communication within and between the departments supplychain core processes etc flow well ndash maybe too well as there are hardly any conflicts oftenwe are too polite it takes too much time to make a decision because we seek consensus andtoo many people are involved
The involvement of so many people is due to the complexity of the products andmakes it very hard to get an overview because a lot of important information has to betaken into account Conversely the consensus-seeking and meetings shortencommunication and make employees feel they have influence (Fry 1987) Tosupport communication Danfoss Drives is developing a common informationstructure for meetings reports etc which should make it easier for employees to findthe right information
Face-to-face communication is the preferred form of communication at DanfossDrives This can be illustrated by the mechanics group which meets physically every14 days to keep the amount of written information to a minimum The team leader ofthe mechanics group said
We can write a report but if people are going to read it some will read it in one way otherswill read it in another way and some will not read it at all In this way [by meeting every 14days] we get a resume and if something is not clear we can ask I have chosen thisinformation strategy in the group because everyone will be informed and afterwards you cango home and if you are interested you can easily ask for more information
Together with direct and open communication (see for example Leonard and Swap2002 Pinchot 1985) face-to-face communication physical proximity naturalldquowatering holesrdquo such as coffee pots and mail rooms meetings special placesroomsfor special occasions team building social events cross-level and cross-functionallocations (see for example Christensen and Bang 2003 Leonard and Swap 2002) allencourage improved communication at Danfoss Drives Decision reports and otherkinds of documentation are still written down in the mechanics group including a finalreport but all the unnecessary ldquosemirdquo reports are skipped Danfoss Drives shares ideasand knowledge in both formal and informal ways which for example Fry (1987) andChristensen and Bang (2003) have described to be preferable
However being a worldwide company face-to-face meetings are not always possibleor convenient because of distance so a lot of information is often sent by e-mail Thisoften leads to misunderstandings in their daily work however Danfoss Drives says
you try to make sure that you have expressed exactly what you want but when you get ane-mail back with 20 questions then there is nothing else to do than call or even better meetface-to-face otherwise the e-mails will continue going back and forth because a large partof the context disappears when you write down information
This is one of the reasons why employees at Danfoss Drives spend so much time inmeetings to inform and coordinate and as the company explains this need forcommunication may reflect Danish culture
62 CultureSince innovation is not restricted to the research and development department itldquopervadesrdquo the companyrsquos culture This is supported by small talk and observations
Enablingintrapreneurship
317
and it is clear that new ideas are generated across the whole company and incooperation with customers and suppliers and then further developed in an interplaybetween salesmarketing and customers production and supplies research anddevelopment and engineers Danfoss Drives believes that in this way they ensure ahigher degree of intrapreneurship ndash both in relation to product process and strategicinnovation ndash than if innovation were only carried out by the research and developmentdepartment which typically consists of techniciansengineers Thus ldquo theinnovation will be technology driven rather than market drivenrdquo according toDanfoss Drives
Company culture also plays a role in relation to for example decision-making Thedecision-making process at Danfoss Drives in Denmark has changed radically duringthe last decade because of changing product characteristics A decade ago the companyhad employees with a broad range of knowledge resources which meant that theycould make decisions about almost everything Today the industry has become muchmore complex more technologically oriented which makes it impossible to be ageneralist and all employees have now become specialists within a relatively smallarea Among other things this is one of the reasons why Danes at Danfoss Drives arevery consensus-seeking and many different types of employees are asked for advicebefore a decision is made Although it slows down the intrapreneurial process and istime- and resource-consuming Danfoss Drives thinks it enables them to make betterdecisions By involving many employees in the overall decisions managers try todecentralise as many lower-level decisions as possible Danfoss Drives believes that
because of the complexity there is no right answer What may be a good solution for onemay seem wrong to another even though the result may be the same What is mostimportant is that the employee who has to carry out the task feels that it is the right way to doit
Decentralised decisions create a very high degree of commitment and ensure thatemployees really make an effort to succeed This is contrary to Danish culture but asone of the managers explains
Especially in Germany the process of decision-making is different They do not have somany meetings The manager decides he takes the responsibility and he takes theconsequences and the employees implement in the United States it is also the managerwho makes the decisions but they [like the Danes] also have a lot of meetings before thedecision is made
Danfoss Drives believes that the delegation of decision-making creates more flexibilitywhich is one thing that Danes because of their very relaxed culture are better at thanforeign companies
The general experience at Danfoss Drives is that culture also plays a major role inrelation to the perception of time especially working hours In Denmark mostemployees are employed on flextime terms which means that they decide themselveswhen they come and leave thus controlling their own working hours In Germany onthe other hand employees have fixed working hours while in the US employeesusually come before the manager arrives and leave after he has left In these countriestherefore the manager decides working hours At its plants abroad Danfoss Drivesadapts to the norms of the country concerned
EJIM83
318
63 ProcessSince Danfoss Drives is ISO9000-certified it has to follow and document a number ofprocedures and processes In general the company believes that their processes arevery robust but they are continuously trying to improve organisational processesfurther One of the most visible process innovations concerns the development of anin-line printing house together with Xerox Basically this means that the manual isprinted in a specific language and number related to a specific order and every timethere is a change in the manual it is made online The main advantage of this is that itensures that the manual is always up to date and it saves the company resources inrelation to a printed manual ndash both paper and storage Danfoss Drives has alsoimproved inventory control by implementing an electronic kaizen system (Imai 1986)However when striving after effectiveness and efficiency environmental awarenessand high-quality products are also essential
All projects are managed in relation to a ldquokey-point planrdquo like Cooperrsquos (2001) stagegate model Although they can change the level of documentation in each project theyacknowledge that it is very difficult for them to run small projects One of themanagers also explains that managing ldquothe next generation of a product to a knownmarket developing a new product to an unknown market or developing a specificproduct to a specific market or a brand-labelling project with a supplier are verydifferent projectsrdquo and they think it is a weakness to use the same project model for allprojects
Danfoss Drives is aware of their strengths and weaknesses and small projects aredefinitely one of their weaknesses since the whole system is geared to large-scaleproduction Small companies are now bringing innovations to the market which issomething that Danfoss Drives used to do By recognising that Danfoss Drivestemporarily ldquochanged the focus from innovation and idea-creation to a focus on theprocess of production planning and technology planningrdquo as one of the managersexplains The focus not only changed from product to process innovation but also toknowledge-intensive production by means of relationship management and otherways of managing However the emphasis is now back on innovation again
7 Conclusion and implicationsActivities that benefit the strategic and financial position of a company are those mostlikely to be developed and implemented Given this the exploration and exploitation ofdifferent intrapreneurial enablers seems the logical choice since it can result insignificant corporate gains The research challenge is to understand whyintrapreneurial enablers have not attracted companiesrsquo attention to a greater extent
The Danfoss Drives case indicates that rewards top management supportresources organisational structure and tolerance of risk are not sufficient to encourageintrapreneurship in a knowledge-intensive company Not all factors directly encourageintrapreneurship although some are necessary in order to create an intrapreneurialclimate Fry (1987 p 5) argued that
[i]f managers arenrsquot innovative if they donrsquot provide the climate for creativity if they canrsquotset aside their carefully laid plans to take advantage of a new opportunity then intrapreneurshave little encouragement
Enablingintrapreneurship
319
This basically means that managers can be the biggest obstacle to intrapreneursinasmuch as a single decision can kill a project before it gets started
The Danfoss Drives case has shown that enabling intrapreneurship is easier whenthe (top) management communicates a clear vision and plan to employees for a longertime horizon (Sathe 2003) Consequently the framework should consist of eightintrapreneurial enablers instead of five communication culture process rewards (top)management support resources organisational structure and risk
Morris and Kuratko (2002 p 257) note that ldquoculture underlies all other componentsof a workplacerdquo ie all other factors This means that all factors are interrelated andinfluence each other in some way ndash at least with culture as a common denominatorWhile the Danfoss case shows that culture in itself is not sufficient to describe howmanagers can enable intrapreneurship the eight factors described above all contributein one way or another and are therefore too important to leave out Hisrich (1990)defines an intrapreneurial culture as follows ldquo[d]evelop visions goals and actionplans take action and be rewarded suggest try and experiment create and developregardless of the area and take responsibility and ownership This environment ofcourse supports individuals in their effort to create somethingrdquo Danfoss Drives comesclose to an intrapreneurial culture on several points but there is still room formanagerial improvements
Clearly there is a need for further research into factors that enable and encourageintrapreneurship in knowledge-intensive companies Studies related to the enablers areimportant Are there more than eight and which How are they related And how canmanagers exploit the synergies involved Up to now we only know that the eightenablers influence intrapreneurship not if and how they can be used to turn theintrapreneurial level up and down Breakthrough innovations that change the rules ofcompetition in a market are very rare and as Morris and Kuratko (2002) also arguefrequent experiments make intrapreneurs better able to determine what works andwhat does not work
References
Antoncic B and Hisrich RD (2004) ldquoCorporate entrepreneurship contingencies andorganizational wealth creationrdquo Journal of Management Development Vol 23 No 6pp 518-50
Biggadike R (1979) ldquoThe risky business of diversificationrdquo Harvard Business Review Vol 57No 3 pp 103-11
Bukh PN Christensen KS and Mouritsen J (2005) Knowledge Management and IntellectualCapital Establishing a Field of Practice Palgrave Macmillan Basingstoke
Burgelman RA (1983) ldquoA process model of internal corporate venturing in the diversified majorfirmrdquo Administrative Science Quarterly Vol 28 No 2 pp 39-55
Burgelman RA and Sayles LR (1986) Inside Corporate Innovation Strategy Structure andManagerial Skills Free Press New York NY
Chang J (1998) ldquoModel of corporate entrepreneurship intrapreneurship and exopreneurshiprdquoBorneo Review Vol 9 No 2 pp 187-213
Christensen KS (2004) ldquoA classification of the corporate entrepreneurship umbrella labels andperspectivesrdquo International Journal of Management and Enterprise Development Vol 1No 4 pp 301-15
EJIM83
320
Christensen KS and Bang HK (2003) ldquoKnowledge management in a project-orientedorganization three perspectivesrdquo Journal of Knowledge Management Vol 7 No 3pp 116-28
Cooper RG (2001) Winning at New Products Perseus Cambridge MA
Davis SM and Lawrence PR (1991) ldquoThe matrix organization ndash who needs itrdquo in Shafritz JMand Ott JS (Eds) Classics of Organization Theory 3rd ed Wadsworth PublishingCompany Belmont CA pp 234-54
Drucker PF (1993) Post-capitalist Society Butterworth-Heinemann Oxford
Ellis RJ and Taylor NT (1987) ldquoSpecifying entrepreneurshiprdquo in Chruchill NCHornaday JA Kirchhoff BA Krasner OJ and Vesper KH (Eds) Frontiers ofEntrepreneurship Research Babson College Wellesley MA pp 527-41
Fry A (1987) ldquoThe Post-It Note an intrapreneurial successrdquo SAM Advanced ManagementJournal Vol 52 No 3 pp 4-9
Gartner WB (1988) ldquoWho is an entrepreneur Is the wrong questionrdquo American Journal ofSmall Buiness Vol 10 pp 696-706
Glaser B (1978) Theoretical Sensitivity Advances in the Methodology of Grounded TheorySociology Press Mill Valley CA
Glaser BG and Straus AL (1967) The Discovery of Grounded Theory Strategies forQualitative Research Aldine Chicago IL
Guth WD and Ginsberg A (1990) ldquoGuest editorsrsquo introduction corporate entrepreneurshiprdquoStrategic Management Journal Vol 11 pp 5-15
Hanan M (1976) ldquoVenturing corporations think small to stay strongrdquo Harvard Business ReviewVol 54 pp 139-48
Hisrich RD (1990) ldquoEntrepreneurshipintrapreneurshiprdquo American Psychologist Vol 45 No 2pp 209-22
Hisrich RD and Peters MP (1986) ldquoEstablishing a new business venture unit within a firmrdquoJournal of Business Venturing Vol 1 pp 307-22
Hitt MA and Ireland RD (2000) ldquoThe intersection of entrepreneurship and strategicmanagement researchrdquo in Sexton DL and Landstrom HA (Eds) Handbook ofEntrepreneurship Blackwell Oxford pp 45-63
Hitt MA Ireland RD and Lee H (2000) ldquoTechnological learning knowledge managementfirm growth and performancerdquo Journal of engineering and Technology ManagmementVol 17 pp 231-46
Hitt MA Ireland RD Camp SM and Sexton DL (2002) Strategic EntrepreneurshipCreating a New Mindset Blackwell Oxford
Hornsby JS Kuratko DF and Zahra SA (2002) ldquoMiddle managers perception of the internalenvironment for corporate entrepreneurship assessing a measurement scalerdquo Journal ofBusiness Venturing Vol 17 No 3 pp 253-73
Hornsby JS Naffziger DW Kuratko DF and Montagno RV (1993) ldquoAn interactive model ofthe corporate entrepreneurship processrdquo Entrepreneurship Theory amp Practice Vol 17No 2 pp 29-37
Imai M (1986) Kaizen Random House New York NY
Kuratko DF Montagno RV and Hornsby JS (1990) ldquoDeveloping an intrapreneurialassessment instrument for an effective corporate entrepreneurial environmentrdquo StrategicManagement Journal Vol 11 No 1 pp 49-58
Enablingintrapreneurship
321
Leonard D and Swap W (2002) ldquoHow managers can spark creativityrdquo in Hesselbein F andJohnston R (Eds) On Creativity Innovation and Renewal A Leader to Leader GuideJossey-Bass San Francisco CA pp 55-65
Lu JW and Beamish PW (2001) ldquoThe internationalization and performance of SMEsrdquoStrategic Management Journal Vol 22 pp 565-86
Miles MB and Huberman AM (1994) Qualitative Data Analysis Sage Thousand Oaks CA
Morris MH and Kuratko DF (2002) Corporate Entrepreneurship Harcourt College PublishersOrlando FL
Nonaka I and Takeuchi H (1995) The Knowledge-Creating Company Oxford University PressOxford
Peterson R and Berger D (1972) ldquoEntrepreneurship in organizations evidence from the popularmusic industryrdquo Administrative Science Quarterly Vol 16 pp 97-106
Pinchot G (1985) Intrapreneuring Why You Donrsquot Have to Leave the Corporation to Become anEntrepreneur Harper amp Row New York NY
Sathe V (2003) Corporate Entrepreneurship Top Managers and New Business CreationCambridge University Press Cambridge
Sharma P and Chrisman JJ (1999) ldquoToward a reconciliation of the definitional issues in thefield of corporate entreprenrushiprdquo Entrepreneurship Theory amp Practice Vol 22 pp 43-68
Stevenson HH and Jarillo JC (1990) ldquoA paradigm of entrepreneurship entrepreneurialmanagementrdquo Strategic Management Journal Vol 11 pp 17-27 Special issue
Stopford J and Baden-Fuller CF (1994) ldquoCreating corporate entrepreneurshiprdquo StrategicManagement Journal Vol 15 No 7 pp 521-36
Weber PR (1985) Basic Content Analysis Sage Beverly Hills CA
Yin RK (2003) Case Study Research Design and Methods Sage London
EJIM83
322
131
PART III
Managing Internal Knowledge Resources
The third part of the dissertation consists of two articles which in different ways deal
with internal knowledge resources and how these can be managed in order to
encourage intrapreneurship Thus from addressing intrapreneurship from an lsquointernal
resourcersquo perspective (cf Chapter 4) we now move on to discuss knowledge
management and management in knowledge-intensive companies
As mentioned in Chapter 2 the PhD project is part of a larger research project
KNORI the aim of which was on the one hand to examine how knowledge-
intensive companies can be innovative and enable change in the face of changing
market conditions and on the other to explore and identify the challenges and
possibilities for companies and industrial policy Since knowledge and knowledge
intensiveness were key factors in the selection of case companies for the project the
internal resource perspective was found particularly appropriate since as described
in article 1 this is mainly based on companies exploiting intangible knowledge-
based resources
Intrapreneurs in knowledge-intensive organisations innovate on the basis of
knowledge Thus knowledge-based resources are not only a basic driver of
innovation but they are also an important part of the companyrsquos competitive
advantage The case companies that form the empirical basis for this dissertation are
132
all knowledgendashintensive companies It is therefore crucial to understand the
relationship between the main drivers of intrapreneurship in such companies
innovation management knowledge and knowledge management
THE KNOWLEDGE-MANAGEMENT PERSPECTIVE
In recent years there has been an overwhelming interest in the concepts of
knowledge and knowledge-based resources in the management literature This is not
only reflected in the importance of knowledge-intensive companies as discussed
above but also in an interest in how knowledge-based resources interact in the
creation of value and how knowledge can be managed This has influenced
management practice and research in many ways eg in terms of the characteristics
of knowledge the difference between information and knowledge and the
categorisation of knowledge (cf Baxter amp Chua 1999) However the literature
comprises many different research traditions and points of view
Some authors see knowledge as a resource that can be used as a basis for strategy
formulation (Sveiby 1997) whereas according to others it is integrated in a broader
strategy framework such as the balanced scorecard approach (Kaplan amp Norton
2004) Others again (eg Bukh et al 2001) perceive knowledge and intellectual
capital as two closely related terms For example Lennon amp Wollin (2001 p 411)
focus on knowledge in a learning perspective and Sher amp Lee (2003) relate it to
information technology Other strands of research could be identified all of which
have their own merits
Philosophical interest in the concept of knowledge and obtaining knowledge goes
back a long time However as emphasised by von Krogh amp Roos (1995) knowledge
was not directly included in management theories until the mid-1950s around the
time when some of the early thoughts on cybernetics and systems theory were being
133
presented (see for example Simon 1945 1960 Minsky 1956) The starting point
for these authors was often human intelligence as opposed to knowledge
incorporated in rule-based computer systems (cf Varela et al 1992)
Managers often discuss knowledge from different perspectives the differences
consisting in the way knowledge is perceived In other words the basic
epistemological perspectives differ Article five makes a distinction between two
different perspectives the first of which is the ldquoartefact-orientedrdquo perspective The
focus here is on information technology and the ways in which technology is be used
to codify knowledge for management decision-making It is assumed that everything
can be described and the more data a company collects the more knowledge it
possesses
The artefact-oriented perspective often relies on systems theory and information-
processing theories In practical applications it draws on information technology
Many authors have indicated that this has become insufficient for dealing with
management challenges created by the complexity of the knowledge society The
problem is not lack of documents data or access to information but rather the
quality content and organisation of the material
This has given rise to the second perspective which we term the process-oriented
perspective and is most clearly exemplified by Ikujiro Nonaka who regards
knowledge as a ldquodynamic human process of justifying personal beliefs as a part of an
aspiration for the lsquotruthrsquordquo (Nonaka 1994 p 15 cf Nonaka amp Takeuchi 1995)
Crucially the focus here is on the actual process by which knowledge is created not
on the document or rules which are based on the process This implies that
continuous and dynamic adaptation to lsquoreal lifersquo takes place Thus knowledge is a
continuous process which changes gradually as the individual framework of
understanding is developed
134
IMPORTANCE OF THE PERCEPTION OF KNOWLEDGE
Knowledge is a complex term which is often not easy to define precisely For
example Roos amp von Kroghrsquos (1995 p 1) statement ldquo[w]hat you see depends on
who you arerdquo implies that knowledge should be regarded as a subjective term From
this point of view knowledge can be expressed in many different ways since not
only knowledge but also knowledge about knowledge depends on the context It is
therefore essential to clarify the background for the various perceptions of
knowledge knowledge-management concepts etc
An understanding of the term knowledge or at least what it means to the individual
or organisation is important because it affects the importance which management
attaches to the term According to von Krogh amp Roos (1996 cf von Krog et al
1994) this implies that successful knowledge management requires that you relate to
lsquothe nature of knowledgersquo (von Krogh amp Roos 1996 p 224) Therefore knowledge
management also becomes a question of epistemological understanding
The more importance attached to epistemological views the greater the demands
made on the manager It is no longer sufficient lsquoonlyrsquo to act and make decisions
because reflection on onersquos own actions becomes part of the decision process which
must now also take account of other possible solutions The reflective manager must
therefore be familiar with different epistemologies because this gives a much larger
scope for action and it ensures a better understanding of the limitations of various
actions (see Venzin et al 1998 p 36)
More effective knowledge management may also result from adapting management
tools to the prevailing perception of knowledge This agrees with Marr et al (2003)
who suggest that knowledge management practices will be perceived as more
effective if they match personal epistemologies However knowledge management is
multi-faceted and our understanding of current practice has already been determined
135
by our choice of epistemology This illustrates the fact that the more an organisation
focuses on knowledge the more important it becomes to understand the
epistemological implications
An epistemology cannot be forced on individuals or an organisation Becoming
familiar with the way in which colleagues collaborators and others understand
lsquorealityrsquo will result in more possibilities and improved co-operation An
understanding of the alternative perspectives means that you can make an active
choice Since knowledge depends on both the starting point of the individual
employee and the organisational context (Lave amp Wenger 1991) ldquo[t]he conscious
choice of an epistemological mode is a critical success factor for research and
managementrdquo (Venzin et al 1998 p 37)
THE TWO ARTICLES IN THE SECTION
The first article in this section Understanding intrapreneurship by means of state-of-
the-art knowledge management and organisational learning theory presents a
theoretical perspective of innovation and knowledge and combines these in a
framework for knowledge-based intrapreneurship The framework consists of three
situations for innovation management exploitation sustainable change and
disruptive change and two tasks of intrapreneurship exploitation and exploration
The aim of the framework is to describe the content of intrapreneurship in six sub-
tasks based on the complexity of knowledge ndash tacitness demarcation and social
elements ndash that the intrapreneur needs to manipulate in each case together with the
corresponding type of learning involved The framework underlines the fact that the
complexity of knowledge has important implications for the way we think about
intrapreneurship and innovation
136
The second article Knowledge Management in Perspectives An Analysis of Project
Management in Two Companies touches on the challenges faced by knowledge-
intensive companies from another angle This article discusses the knowledge
resource and how to manage it in greater depth although the main focus is on an
understanding of the nature of knowledge-management activities ie how the
company can influence knowledge resources The article concludes that there are
different ways of managing knowledge resources and that not all of them encourage
intrapreneurship
The article presents two different ways of understanding knowledge ndash an artefact-
oriented perspective and a process-oriented perspective ndash and how knowledge
resources should be managed It is concluded that managerial awareness of the two
perspectives results partly in greater degrees of freedom and partly in enhanced
mutual understanding in the organisation Furthermore the article shows that the
perspectives are complementary and that the company needs to supplement the one
with the other A company that wants to create and maintain an intrapreneurial spirit
needs to supplement process-oriented initiatives with artefact-oriented initiatives A
company wanting to produce existing products more efficiently on the other hand
should supplement artefact-oriented initiatives with process-oriented initiatives
REFERENCES
Baxter J amp FW Chua 1999 Australian Accounting Review Vol 9 No 3 pp 3-14
Bukh PN J Mouritsen MR Johansen amp HT Larsen 2001 Videnregnskaber
Rapportering og styring af virksomhedens videnressourcer Copenhagen Boslashrsens
Forlag
Kaplan RS amp D P Norton 2004 Stratety maps converting intangible assets into
tangible outcomes Boston Harvard Business School Press
137
Lave J amp E Wenger 1991 Situated Learning Legitimate Peripheral Participation
Cambridge University Press
Lennon A amp A Wollin 2001 Learning organisations empirically investigating
metaphors Journal of Intellectual Capital Vol 2 No 4 pp 410-422
Marr B O Gupta S Pike amp G Ross 2003 Intellectual capital and Knowledge
management effectiveness Management Decision Vol 41 No 8 pp 711-781
Minsky M 1956 Some Universal elements for finite automat In Automata Studies
CE Shannon amp J McCarthy (eds) Princeton NJ Princeton University Press
Nonaka I 1994 A Dynamic Theory of Organizational Knowledge Creation
Organization Science Vol 5 No 1 pp 14-37
Nonaka I amp H Takeuchi 1995 The Knowledge-creating Company Oxford Oxford
University Press
Roos J amp G von Krogh 1995 What you see depends on who you are Think about
epistemology IMD Perspectives for Managers Vol 7 pp 1-4
Sher P J amp V C Lee 2003 Information technology as a facilitator for enhancing
dynamic capabilities through knowledge management Information amp Management
Vol 41 No 8 pp 933-945
Simon HA 1945 Administrative Behavior New York Free Press
Simon HA 1960 The New Science of Management Decisions New York Harper amp
Row Publisher
Sveiby KE 1997 The New Organizational Wealth Managing amp Measuring
Knowledge-based Assets San Francisco Berrett-Koehler Publishers
138
Varela FJ 1992 Whence Perceptual Meaning A Cartography of Current Ideas In
Understanding Origins Contemporary Views on the Origin of Life Mind and
Society F J Varela amp J P Dupuy (eds) Dordrecht Kluwer Academic Publisher
Venzin M G von Krogh amp J Roos 1998 Future Research into Knowledge
Management Knowing in firms Understanding Managing amp Measuring Knowledge
G von Krogh J Roos amp D Kleine (eds) London Sage
Von Krogh G G Roos amp K Slocum 1994 An essay on corporate epistemology
Strategic Management Journal Vol 15 No 5 pp 53-71
Von Krogh G amp J Roos 1995 Organizational epistemology Houndsmill
Macmillan
Von Krogh G amp J Roos 1996 Editorial and overview The Epistemological
Challenge Managing Knowledge and Intellectual Capital European Management
Journal Vol 14 No 4 pp 333-337
139
CHAPTER 8
Understanding Intrapreneurship by means of state-of-the-art knowledge management
and Organisational learning
Originally published in
Drejer Anders Karina Skovvang Christensen amp John Parm Ulhoslashi 2004
Understanding Intrapreneurship by means of state-of-the-art knowledge management
and Organisational learning Theory International Journal of Management and
Enterprise Development Vol 1 No 2 pp 102-119
140
102 Int J Management and Enterprise Development Vol 1 No 2 2004
Copyright copy 2004 Inderscience Enterprises Ltd
Understanding intrapreneurship by means of state-of-the-art knowledge management and organisational learning theory
Anders Drejer Karina S Christensen and John P Ulhoslashi Department of Organisation and Management Aarhus Business School Haslegaringrdsvej 10 DK-8210 Aarhus V Denmark E-mail adrasbdk
Abstract Ever since Peter Drucker stated that there are only two constant factors in business ndash innovation and marketing ndash the need for continuously reinventing and changing business organisations according to the present and future needs of the market place has been in existence in the management literature No less today external turbulence and dynamic market conditions have come to stay for good However the challenges are quite different today The emergence of knowledgendashbased organisations and increased importance of knowledge as the key to competitive advantage poses new and interesting challenges for managers and researchers alike In this paper we will attempt to enlighten theories of intrapreneurship and innovation by applying state-of-the-art knowledge management theory and organisational learning theory to them
Keywords intrapreneurship innovation management knowledge organisational learning
Reference to this paper should be made as follows Drejer A Christensen KS and Ulhoslashi JP (2004) lsquoUnderstanding intrapreneurship by means of state-of-the-art knowledge management and organisational learning theoryrsquo Int J Management and Enterprise Development Vol 1 No 2 pp102ndash119
Biographical notes Dr Anders Drejer is a Professor in Strategic Management and Business Development at Aarhus Business School and head of its group devoted to strategy
Karina S Christensen is a PhD student at Aarhus Business School specialising in knowledge management and intrapreneurship
Dr John Parm Ulhoi is Professor in Technology and Innovation Management at Aarhus Business School head of its group on innovation management and the supervisor of Karina S Christensen
1 On the developing need for intrapreneurship
We are slowly beginning to understand that innovation and learning are not the prerogative of start-ups and entrepreneurs any more Rather in the age of technological turbulence and hyper-competition even mature firms need to be innovative and agile This is why we are beginning to see a new strand of literature on intrapreneurship ie
Understanding intrapreneurship by means of state-of-the-art 103
innovators in mature organisations However as early as 1958 Peter Drucker remarked on management that
ldquohellipmanagement is first and foremost about the continuing development of the organisation and its employees The demands and needs of the environment is constantly evolving and management is about adjusting the company according to the needs and demands of the environmenthelliprdquo [1]
As a starting-point this paper rests on the following basic assumptions
bull the importance of innovation is increasing and will continue to grow in the years to come
bull external market-related turbulence for business organisations is not a passing phenomenon
bull the same observation goes for technological turbulence which further enhances the need for innovation and intrapreneurship
Space consideration does not allow us to go into any kind of detail regarding these assumptions Rather we will argue that environmental turbulence and knowledge in fusion should be regarded as an opportunity for innovative firms although recognise that market-related dynamics and technological turbulence can also pose serious risks for stagnant and complacent firms
But what are the implications of the more frequent technological changes increased market segmentation and global competition for organisations According to Kumpe and Bolwijn [2] the necessary organisational forms have undergone profound changes through the last decades This has increased the importance of innovation and underlined the need for renewal and extension of existing product portfolio For understanding this development Kumpe and Bolwijn [2] have produced a model which is shown in Figure 1
The external environment of business organisations has undergone radical changes since 1960s and successful companies have had to adjust to these changes in order to survive In the 1960s successful companies focused on effectiveness They were based on rationality and hierarchical structures that were bureaucratic Management was primarily focused on the efficiency of various important processes within organisation In the last decade the importance of product development and innovation however has increased considerably [34] Technological updates and design renewal are important today in order to sustain market share and remain competitive The challenge of the development function in organisations eg the RampD department has therefore increased considerably with limited resources and time changing the nature of development work The market place it can be said has short-term demands that often require long-term technology research and development which in turn pose great difficulties in prioritisation and management [5]
Therefore an important implication of the development discussed above is that innovative activities can no longer be assumed to be the domain of start-ups and entrepreneurs Now all firms need to pay attention to differentiating themselves by means of innovation and development [4] while at the same time maintaining operational effectiveness [6] In other words firms are caught between exploration and exploitation to use the firms of James March [7] and Leonard-Barton [8] This is a fourth assumption of the paper that we believe is justified by the above discussion ndash but what does it mean It means that firms and managers need to start paying attention to the creation of innovation by intrapreneurs and intrapreneurial activities
104 A Drejer KS Christensen and JP Ulhoslashi
Figure 1 The evolution of market demands and (required) competencies of firms
Source Adapted from [2]
Understanding intrapreneurship by means of state-of-the-art 105
The outlined developments have taken place in parallel with another important development ndash the shift from the industrial society to the knowledge society Today many organisations are becoming knowledge intensive organisations staffed with knowledge workers that will dominate the influence of global value creation [910] This has made a lot of people talk about knowledge management as a new managerial discipline for exactly the same reasons that others do talk about innovation management
Thus intrapreneurs in modern organisations manipulate knowledge instead of physical product and technologies in order to create the necessary innovations and technologies In that light it is paramount that we begin to understand the relationships between knowledge knowledge management and innovation management and intra-preneurship To provide a framework for such an understanding is the very purpose of this paper In order to propose a framework for knowledge and innovation management and intrapreneuship we will start by investigating intrapreneurship and its context ndash innovation management ndash before discussing what we today know about knowledge and knowledge management in firms Finally we will try to integrate the two managerial issues in a framework that outlines the task of intrapreneurship in modern organisations
2 Innovation management and intrapreneurship
Innovation and innovativeness are very much in the centre of the debate of how the business environment of firms has evolved over the years Even though a lot of incongruent definitions can be found in the literature (see the discussion by Carcia and Calantone [11] there seems to be general agreement that innovation (the process) is an iterative process initiated by the perception of a new market andor service opportunity for a technology-based invention which leads to development production and marketing tasks in order to bring about a commercial success of the invention (eg [41213]) On the other hand innovativeness (the quality of the outcome) is used as a measure of the lsquonewnessrsquo of an innovation where highly innovative products etc are seen as new to the world the industry or at least the firm [13]
Despite the necessity for innovation in many firms discussed in the introduction it is clear that no two firms should necessarily be innovative in the same manner Innovation can to be directed at products markets production competencies [1113] as well as administrative competencies as defined by Lowe [14] and Gaynor [15] This corresponds to the thinking behind Miles and Snowrsquos seminal strategy model [16] where strategic management is seen as a process of solving three independent problems the entrepreneurial problem (choices within the product-market domain) the engineering problem (choices related to operations) and the administrative problem (choices related to administration)
Miles and Snowrsquos model [16] of lsquoorganisational adaptationrsquo focuses on the integration between technology and organisation The model is also referred to as a model for lsquostrategic adaptationrsquo (eg [17]) The purpose of the model is to describe and diagnose existing organisational behaviors The model is based on the following three basic ideas
bull οrganisations can act to create (or choose) their environment
bull managementrsquos strategic choices shape the organisationrsquos structure and processes
bull on the other hand once chosen structure and process constrain strategy
106 A Drejer KS Christensen and JP Ulhoslashi
These basic ideas are in line with the work of authors such as Galbraith [18] and Mintzberg [19] The ideas describe a change in attitude towards strategy from the traditional perception of planning under stable external conditions to strategic management as a process of constantly developing and being innovative in order to keep up with turbulent and dynamic business conditions
21 Innovation management the context of intrapreneurship
The real issue however is how to create a constant stream of innovations in any kind of organisation It was Drucker [20] who first pointed out that innovation is not just an outcome innovation is a process In order to avoid confusion we will propose to call the set of managerial activities that together attempt to control the process of innovation for lsquoInnovation Managementrsquo We can therefore safely say that lsquoinnovationrsquo itself is reserved for the results of the process hopefully amply managed by innovation management A further note on innovations many have noted that innovation is more than just invention (eg [1213]) thereby emphasising that ideas need to be put into practice and inventions need to be commercialised in order to speak of innovation [21] In our fairly broad perception of innovation to cover more than just product innovation it is probably necessary to say that ideainventions need to be implemented in the products production or administrative competencies of the firm
Finally there is the issue of how new an innovation should be According to the strictest of definitions innovations should be new to the world (eg [22]) However this ignores the idea of parallel development of technologies in different industries ndash ie precursor to technology development [4] ndash not to mention the difficulties experienced by any firm struggling to implement something new to the firm itself (eg [23]) A suitable compromise between views seems to be to say that an innovation should be new to the firm and its industry
So what are the activities that constitute innovation management Notwithstanding the enormous differences between individual firms several authors have identified five important activities that together define innovation management in its proper context (eg [4]) The first three activities define innovation management per se whereas the last two define the context of innovation management The activities are
bull Technological integration This refers to the integration between technologies and the product-markets of the firm [24]) and emphasises the importance of satisfying the customer with the innovations of any firm In other words technology development (production and administration) needs to be integrated with product development [4] also at the strategic level
bull The process of innovation By this is meant the cross-functional (business) process of activities that create innovations across the departments of the firm Obviously no one department is responsible for innovation and it is thus necessary to see how departments together create innovations see Cooper [25] for one of the seminal accounts of this subject
bull Strategic technology planning This refers to the planning of technology andor competence projects with the aim of maintaining a balanced portfolio of technologies andor competencies see [26] or [27]
Understanding intrapreneurship by means of state-of-the-art 107
bull Organisational change Innovation is closely related to organisational change No matter how small or large the innovation it will effect the organisation with needs for new knowledge new markets new employees and so on Thus it is difficult to speak of innovation without considering organisational change
bull Business Development Of course innovation should be seen as a means for creating new and improved business for the company That is innovation can both drive and be driven by business development as the second very critical element of innovation management
In a systemic interplay we believe that these activities together constitute what we have defined as innovation management But innovation management is surely not the same phenomenon in all organisations
22 Contingent situations for innovation management
The recent emergence of quite complex products consisting of perhaps mechanical components electronics components and software not to mention interfaces to other IT products as well as a strong image part (of an expanded product concept) has given rise to many questions regarding the traditional idea of using the technological S-curve as a key to contingent use of the theory of innovation management
First of all many of the new products such as computers cellular phones and so on are in effect complex systems of many technologies each with individual life cycles And how are many individual life cycles added in to one life cycle for the entire product per se It seems as if the individual technologies and the complex products of which the technologies are a part need not develop according to the same logic But then what drives development of such complex products This is indeed very hard to say In the case of cellular phones it certainly seems as if it is not the end-users that drive development of new generations of cellular phones (eg [4]) But this does not have to mean that development is driven by technology push In conclusion we can say that it seems necessary to develop richer models for contingency of Innovation Management theory
Based on a firm empirical basis Christensen [28] discusses this in great detail He concludes that there must be two kinds of technology changes from one life cycle to the next (1) disruptive changes that create conditions like envisioned by Schumpeter as creative destruction and (2) sustainable changes that continue to support established firms and knowledge patterns in the industry [28] Whereas sustainable changes can be found to support established firms disruptive changes lead to the demise of established firms in favor of newcomer firms Christensen explains the difference between the two kinds of technological changes in terms of the S-curve Sustainable changes continue along the same basic pattern as measured by the same performance measure whereas disruptive changes start an entirely new S-curve (compared to earlier curves) that needs to be measured by another performance parameter
For instance disc drives for computers has changed dramatically on several occasions For instance in 1980 a new kind of technology was part of enabling the personal computer [28] However it was difficult for established firms to foresee that as their perception was driven by the old standard of performance (in that case capacity rather than size) Thus new firms became leading in the new market for personal computers The typical example of the computer-industry would be that of IBM versus
108 A Drejer KS Christensen and JP Ulhoslashi
Apple Computer Because Apple was driven by a value system that was about creating small computers for home use its managers could see the value of a disc drive that was smaller than the generation before albeit not performing quite as well On the other hand IBM was driven by a value system that favored making large computer for central computer departments in large firms and saw hence no value in a smaller disc drive Unfortunately ndash for IBM that is ndash the market favored the former option and an entirely new product was created Interestingly Christensen demonstrates that exactly the same forces are at play in an entirely different kind of industry ie that of machinery for the building industry Thus the phenomenon does not need to be new at all and certainly not limited to IT-based industries
We suggest that there must be at least three situations for innovation management We have the well-known situation of technology exploitation ie after the dominant design has been established This situation can of course be divided into a number of situations This has been amply demonstrated by the equally well-known AD Little approach to technology investment (eg [26]) that distinguishes between monitoringearly adoption selectively investingfollower developing key technology maintaining mature technology and divesting of obsolete technology as the life cycle nears another technology shift [26] Furthermore we argue that changes of technology between life cycles can be either sustaining or disruptive rather than the traditional idea of a discontinuous technological change leading to creative destruction
Based on the above discussions we can go beyond the popular distinction between creative destruction and technology exploitation and define three situations for innovation management
bull exploitation of existing technologies
bull stable technological change
bull disruptive technological change
Because these three situations are the key to a contingent framework for intrapreneurship related to knowledge and innovation they are important to understand in detail In order to do so it is necessary with research designed to yield this kind of detailed understanding A logical place to start would be to conduct case studies or action research in companies in order to present examples of the three situations and how they change over time Even though this article does not have space for a sufficient presentation of such case studies the authors will describe and illustrate the three situations in this Section This is based on a number of longitudinal case studies undertaken by one of the authors and presented in a recent book [4]
Exploitation of existing technologies This situation corresponds to the stable situation of the smooth part of the S-curve The task of Management of Technology (MoT) is to secure that the firm develops technologies faster than its competitors (or as a follower if that is desired) and exploit technologies in processes and secondarily products This is truly a race for technological development and a lead may not last forever This kind of competition can be compared with the metaphor of say 100 meter running Because of specialisation among athletes one will find that the same athletes compete (almost) every time Furthermore race tracks rules equipment etc will be the same every time ndash and the athletes probably train in similar fashion Thus it seems very difficult to maintain a leadership position in a competition of this kind ndash unless one is very competent in getting everything together The most obvious examples of such firms will be traditional industrial firms in many industries Car-manufacturing is a little atypical because of the
Understanding intrapreneurship by means of state-of-the-art 109
strong emphasis on the products still However research has shown that emphasis has changed from products to processes many years ago [29] and we also know it is a very difficult place to break in as a newcomer
Stable technological change Other firms go through a series of sustainable technological changes ndash usually at pretty high speed This is of course quite complex but we must remember that the technological changes happen within the boundaries of the same design concept and thus value system for the firm Therefore the task here is to configure ndash and sometimes develop ndash a set of technologies constituting a product within the time available Technological performance is often of less importance as long as the new product is on market in time We may compare this metaphorically with a group of athletes that agree to go from one distance to another sequentially from 100 meter to 200 meter to 400 and so on Every time the group changes there will be a change of advantages ndash albeit a small one However over time leadership may well change as the group moves from 100 to 800 meters for instance We see that there will be many similarities between each pair of distances and that the value system of athletes will only need to change slowly ndash relatively An obvious example of such firms can be found in mobile communications where a group of firms have followed each other through several generations of cellular phones The lead has changed over time and there has even been a few entries into the industry However many firms have followed along for very long time
Disruptive technological change Finally there are firms that have lived through creative destruction Here both market and technology change at the same time ie a new design concept as well as new components need to be designed ndash usually along with establishing a new firm to do so This means that everything must be designed simultaneously ndash product (concept and detailed construction) market processes administration and so on This by the way corresponds to inventing an entirely new game of sports ndash the rules equipment etc must be invented at the same time Examples of firms here rarely include established firms reinventing themselves ndash that is almost impossible because it requires changing the culture and value system of an established firm ndash and thus usually one-offs Apple Computer is a much researched example of a firm that invents an entire new industry by breaking the established rules and beliefs
23 Intrapreneurs who makes the innovations
Considering the past two decades the responses of the companies in the 1980s and to some extent the 1990s to the challenges outlined above have been characterised by reductions of work force downsizing rightsizing budget cuts and depressed morale in their workforce [30] The centre of attention has been a focus on short-term costs of production but no company can afford to rely on such an approach forever The real challenge of a company to remain a going concern is to establish a competitive advantage and the only way to accomplish that is continuous innovation and creation of new ideas According to Morris and Kuratko [30] the answer is adaptability flexibility speed aggressiveness and innovativeness which can be boiled down to one word ndash intrapreneurship (for going concern firms) and entrepreneurship (for start-ups)
In parallel with the downsizing wave (eg [31]) researcherrsquos interest in intra entrepreneurship seriously took off In particular interest in topics as entrepreneurial management corporate entrepreneurship and intrapreneurship in the last couple of years is remarkable This may in part be due to lsquore-labellingrsquo [3233] of existing concepts but it
110 A Drejer KS Christensen and JP Ulhoslashi
has paved the way to the emergence of new practices and theories From 1983 the interest for the topic has been on the increase which can be seen in relation to Pinchotrsquos introduction of the concept of intrapreneurship in 1983 and his book Intrapreneuring in 1985
New fads or concepts are often seen or claimed to be driven by practice [34] and the more popular part of the management literature which in the case of knowledge management was represented by Drucker [9] and Stewart [35] But as Abrahamson [36] has argued the researchers have often been aware of and interested in the new phenomenon for some time but the explosion seldom takes off before it has gained the interest from practitioners That is exactly what is happening at the moment for the overall concept of corporate entrepreneurship and the many different labels illustrate that even though the interest on the overall topic is growing there still is a lack of the consensus on what it really means andor should mean
It is again the purpose of this paper to help fill that void ndash what does intrapreneurship really mean
3 Knowledge in an innovation perspective
An important aspect about knowledge and knowledge management is that it is only within the last few years that the concepts of knowledge and knowledge management have risen to the top of the agenda of researchers and managers Even though we have discussed knowledge and learning in the educational realm for many years only recently have we begun to explore its ramifications in firms and for managers Therefore we will assert that there is a major contribution coming from discussing what is state-of-the-art about knowledge from an innovation perspective and try to integrate that into a framework for the task of the intrapreneur in modern organisations This is simply because this has not been done before and intrapreneurs in modern organisations ndash we have come to realise ndash manipulate knowledge rather than physical artifacts
31 Knowledge management in a knowledge society
Peter Drucker takes the development of the knowledge society [9] back to the Second World War and already in the 1960s he talks about lsquoknowledge workrsquo and lsquoknowledge workerrsquo However Thomas Stewartrsquos articles in Fortune magazine about lsquoBrainpowerrsquo [37] and lsquointellectual capitalrsquo [38] indicates the entry to the knowledge society for most scholars and practitioners which eg Nonaka and Takeuchi [39] and Baxter and Chua [34] have pointed out in different ways One of the clearest statements is Druckerrsquos [9] own prediction about lsquo[t]he basic economic resourcehellip is and will be knowledgersquo and the uniqueness about the knowledge society is that knowledge has become the resource rather than a resource [9 p 41] italics added by the authors)
Even though knowledge is introduced as the new crucial factor for the success of the organisations it is worth to remember that it may not be so new in the first place It is well known that old management concepts and techniques are re-launched under new labels to mobilise new interest and action [40] An example is knowledge in the sense of actor theory [32] where knowledge is related to linguistic and organisational actors and actants in the same way as Catasuacutes [33] did with environment and environmental management Whether this is due to a re-labelling or new practices and new theories
Understanding intrapreneurship by means of state-of-the-art 111
lsquonewrsquo concepts such as knowledge management knowledge worker and knowledge management strategy have gained a lot of attention recently As described by Bukh et al [40] the alertness of these concepts is among other things indicated by the centrality of the label lsquoknowledge managementrsquo in both organisations by consultants and scholars
A tendency to see knowledge and knowledge management from a wider ndash and often strategic ndash perspective rather than an exclusive artifact-oriented perspective [41] where the primary idea is to capture code and store data and information to make them available for an entire organisation has been promoted by many researchers [394142] Knowledge management however can be seen as an ongoing innovative process based on knowledge creation knowledge sharing and knowledge dissemination This process-oriented perspective [41] is rooted in Ikujiro Nonakarsquos article The Knowledge-Creating Company from 1991 which was the first summarised presentation of this perspective
Among others von Krogh et al [42] and Christensen and Bukh [41] argue that knowledge sharing is a combinantion between people and technology which means both social interaction and technological transactions This is supported by the fact that lsquogeneration of synthesisrsquo is important for knowledge creation The interplay between dichotomies such as tacit and explicit knowledge body and mind individual and organisation top-down and bottom-up bureaucracy and task force and relay and rugby [39] are core elements in the knowledge creation process The interaction between all these dichotomies is expressed in the knowledge spiral [39] A managerial purpose is to keep this spiral running to create dynamic knowledge which is crucial for the innovative activities in an organisation
32 Different types of knowledge
Typically knowledge is defined as lsquothat which is knownrsquo This is however only one way of looking at knowledge Another important way to look at knowledge is to look at lsquothe state of knowingrsquo The state of knowledge can be discussed along several dimensions most notably
bull The level of articulation ie to what extent is it possible to represent knowledge formally and explicitly and thereby share knowledge within the organisation Knowledge can be characterised on a continuum from tacit to explicit
bull Depth of knowledge ie how deep is the organisationrsquos understanding regarding a certain area of knowledge This can range from no knowledge (and inability to utilise that knowledge) to complete understanding and ability to utilise knowledge
bull Location of knowledge ie is the knowledge internal or external to the firm
bull Diffusion of knowledge ie to what extent is knowledge the possession of everybody in the organisation (so everyone can use the knowledge)
bull Complexity of knowledge ie a summary of the other factors of knowledge
Below we will discuss the level of articulation and complexity of knowledge only as these are the most important dimensions of knowledge within this context
321 Level of articulation tacit to explicit
Inspired by Michael Polyani it has only recently become accepted that not all knowledge in an organisation can be fully articulated [43] perhaps a recognition of the fact that not
112 A Drejer KS Christensen and JP Ulhoslashi
all knowledge of value is easily accessible via books the internet etc This is not surprising to us but merely another manifestation of the very thinking behind competence development and an internal focus in management of firms Typically a distinction is made between tacit and explicit knowledge (eg [394143]) Tacit knowledge is the kind of knowledge that cannot be articulated and codified whereas explicit knowledge is easy to codify Evidently different strategies for handling knowledge and for learning are needed for tacit and explicit knowledge respectively The two possible states of knowledge are to us merely end-points on a scale ndash in reality knowledge will be something in between It is thus important to note that tacitness of knowledge should not be seen as a form of mystification Tacit knowledge can be learned ndash just consider the craftsman education in Denmark ndash and it is a natural and important part of all domains of knowledge [44]
A number of factors can be said to contribute to the tacitness of knowledge Based on the references in this Section we have identified a number of continuums that expresse most importantly a factor contributing to tacitness of knowledge
bull Embodied or disembodied knowledge Examples of embodied knowledge are written procedures manuals or mechanical components that all seem to be physically part of the organisation Examples of disembodied knowledge are heuristics organisational values or culture [8]
bull Observable or non-observable in use Tacit knowledge will typically be difficult to observe in use Examples of non-observable knowledge therefore include knowledge related to craftmanship andor knowledge related to a large element of experience
bull Independent or part of a system Some kinds of knowledge are part of a larger system of knowledge and experience ndash eg craftmanship ndash whereas other kinds are independent It will be far more difficult to articulate knowledge of the former kind than of the latter kind
In summary tacit knowledge is disembodied non-observable in use and part of a system of knowledge whereas explicit knowledge is embodied observable in use and independent of other kinds of knowledge Many kinds of knowledge in a firm will be towards the tacit kind and hence more difficult to manage through formal systems and traditional forms of learning
322 Depth of knowledge Dreyfuss and Dreyfuss
An important point regarding knowledge relates to its lsquodepthrsquo by which we understand an expression of the organisationrsquos ability to utilise that knowledge Thus the greater the depth of knowledge the greater the ability to utilise that knowledge This assumption can be discussed ndash obviously some persons can understand quite a lot about an area and be unable to apply that knowledge However we assume that in relation to firms and this project this will not be the case However there is not necessarily any correlation between the depth of knowledge and its level of articulation ndash understanding and utilisation can be high even with tacit knowledge
There have been several contributions to this dimension of the state of knowing For instance Machlup [45] has identified 13 different lsquoelements of knowingrsquo and describes a number of levels in the development of knowledge For Machlup the central issue in his
Understanding intrapreneurship by means of state-of-the-art 113
lsquoelements of knowingrsquo is how well an individual or an organisation is able to perform utilising this knowledge He defines a number of stages ranging from lsquobeing acquainted withrsquo to lsquobeing able to performrsquo This corresponds to a continuum from having knowledge that exists (but being unable to do anything with it) to having thorough knowledge and being able to utilise that knowledge A somewhat similar typology has been proposed [46] with an eight-level typology of knowledge in relation to the description of processes
The most important contribution however is also the oldest one Dreyfuss and Dreyfuss [47] have proposed a model for the depth of knowledge that clearly can be said to contain the other newer contributions to the area The model describes the knowledge of a person as he becomes more and more competent in five levels ndash from novice to expert ndash and describes how true experts are highly dependent on tacit knowledge whereas others are dependent on explicit knowledge
323 Location of knowledge
Knowledge can reside in many different organisational contexts ranging from the individual person to networks of employees ndash and most notably in relation to modern organisations In networks consistent of internal and external persons to the firm the network of organisations being the ultimate form of that In this context two issues stand out as particularly important (1) the transfer of knowledge from one person to the entire organisation and (2) the transfer of knowledge external to the organisation to the inside of the organisation
In modern organisations knowledge will often be found in the tacit form and hence reside in the knowledge and experience of one person or just a few persons In order to enable the firm to utilise that knowledge to the largest possible extent ndash that is make more people capable of mastering the knowledge ndash the process of diffusing knowledge from one person to the entire organisation is critical There are several ways to do that It seems evident that the mechanism of codification making knowledge more explicit is vital to the process
In many firms other knowledge will often be found outside the organisation This is only natural for a relatively small firm with minor resources For instance suppliers often have knowledge critical for the customer firm on say processes customised process technology etc Therefore many firms engage in networking activities of different kinds for instance shared marketing RampD efforts etc with many different partners Thus the second important issue relating to location of knowledge is whether or not knowledge is internal to the organisation Learning processes for internalising knowledge are absolutely vital to modern organisations
324 Diffusion of knowledge undiffused to diffused
It is through the diffusion process that an organisation becomes capable of deriving value from the knowledge it has developed by eg RampD activities internalising networking etc [39] Evidently the diffusion of knowledge is very critical In order to be able utilise knowledge better more people need to have access to the knowledge and master the knowledge Thus the extent of diffusion in general is closely related to the dimension of depth of knowledge However not every part of the organisation will reach the same
114 A Drejer KS Christensen and JP Ulhoslashi
depth of knowledge at the same time ndash or be able to do so ndash so diffusion is a critical issue in its own right
Normally diffusion of knowledge is described along a continuum from undiffused (located with one person) to fully diffused (residing with every body) The latter end of the continuum suggests that diffusion of knowledge has a lot to do with the concept of corporate values and corporate culture As soon as something is fully diffused one can say that it has become part of the corporate culture Therefore learning processes need to be both formal and informal in order to diffuse knowledge
Of course diffusion is a relative construct in the sense that it should be measured on a lsquoneed to knowrsquo basis There is no point in diffusing knowledge to parts of the organisation where that knowledge is irrelevant Having noted that we would like to add that very often the need to know is greatly underestimated in organisations
325 Complexity of knowledge
The dimension of complexity of knowledge is seen as very important in relation to learningtransfer of knowledge [48] Complexity of knowledge is a function of
bull The tacitness of knowledge and thereby the way knowledge is being embedded and represented within the organisation Complex knowledge must be expected to have significant tacit elements [43]
bull The extent to which the knowledge can be demarcated from other areas of knowledge in the organisation Complex knowledge will typically be intertwined with other types of knowledge in the organisation and therefore be difficult to demarcate clearly [49]
bull The extent to which knowledge has social elements ie a large number of actors needed for the knowledge to exist [32] eg network knowledge Typically complex knowledge will be dependent on a number of actors and their ability to function together in a group or network
In other words the more complex the knowledge the more one or more of the three dimensions mentioned above will be present The more complex knowledge the more difficult will it be to model that knowledge and to acquire the same by formalised means
4 Understanding intrapreneurship better
Increasingly the need for innovation management is changing Innovation management these days is the domain of all modern organisations ndash not just start-ups Therefore it is crucial to consider the work of intrapreneurs in theory about innovation management Furthermore such modern intrapreneurs manipulate knowledge rather than physical artifacts Investigating state-of-the-art theory about knowledge we have concluded that complexity of knowledge is a construct that has large implications for the way we think about intrapreneurship and innovation In this Section we will link together complexity of knowledge and the work of the intrepreneur in a common framework In order to do that however we need to establish the context for the work of the intrapreneur We will do this by discussing the purpose of the intrapreneurrsquos work and its content
Understanding intrapreneurship by means of state-of-the-art 115
41 The purpose exploitation and exploration
Regarding the purpose of intrapreneurship we will assert that the intrapreneur is to fulfill the organisationrsquos need for renewal in light of its need for stability James March has formulated the idea that management is a balance between two forms of learning activities ndash exploration and exploitation ndash the finding of new resources and the use of existing ones [7] This is probably based on some of Marchrsquos early thinking on management since March from early on saw management as two fundamentally different activities that needed to be conducted quite differently (eg [50]) One has been labeled lsquothe technology of foolishnessrsquo [50] as a serious attempt to create a supplement to the analytical planning-oriented style of management that we know from operations management
The ideas of March have been inspiring for many others such as Dorothy Leonard-Barton [8] who has worked on experiments versus exploiting the knowledge assets and hence competencies of the company Leonard-Barton [8] too acknowledges that we are talking about two mentally different activities but does not discuss the managerial challenges of doing two fundamentally different mental activities Within the field of strategic management Hamel and Prahalad [51] have written a paper on lsquostrategy as stretch and leveragersquo in Harvard Business Review in almost similar terms while Michael Porter recently has written a thought-provoking article lsquoWhat is a strategyrsquo [6] in which he claims that strategy is about differentiation in the market place combined with operational effectiveness The latter to Porter is not even strategic in nature ndash but that is another point
42 The content learning leading to innovation
Regarding the content of intrapreneurship we will see this as learning Learning occurs under two conditions When there is a match or a mismatch between intentions and outcomes of intended actions in organisations If there is a mismatch the actions are corrected until there is a match between actions and intended outcomes [52] However several authors have discussed different levels of learning in organisations ie a radical change of behavior may not be the result of the same kind of learning as a minor adjustment of current behavior Argyris illustrates this with his model of single and double loop learning
Figure 2 Model of single- and double-loop learning
Source Adapted from [52]
116 A Drejer KS Christensen and JP Ulhoslashi
Single-loop learning can be compared to a thermostat A thermostat is programmed to detect if the surrounding temperature exceeds or is below the reference temperature and responds by simply turning the heat on or off If the thermostat asked itself why it was programmed as it was then it would be a double-loop learner since it was able to reconsider its own situation and thereby perhaps alter this situation In other words double-loop learning is mainly a matter of being able to question onersquos governing values ie self-assessment Single-loop learning is appropriate for routine and repetitive issues while double-loop learning seems more relevant for complex and non-programmable tasks [52]
Double-loop learning is not simple at all it often requires evaluation of your existing values and ways of doing things and how you influence your surroundings in both negative and positive ways Even if you are able to see and evaluate your own faults there is still a long way to go before an actual change occurs ndash if any occurs at all Double-loop learning means the unfreezing of paradigms prejudices and habits in order to be open-minded towards new and alternative ways of action [52] This furthermore involves a number of other psychological mechanisms that will not be discussed further within this context It is easy to relate to the problems dealing with double-loop learning Just think of the advice that you give other people but never use yourself Sometimes you even say to your self or to others lsquoYou shouldnrsquot be doing it the way I do but insteadrsquo You are often well aware of your own deficiencies but accept them as a solid implemented and non-changeable part of you If these lsquovaluesrsquo are changed it is often in connection with a major crisis or event that really shakes you out of balance
We will compare a personrsquos double-loop learning as a serious reconsideration of that personrsquos current situation often leading to radical changes with organisations and the way they learn when innovating In comparison with industrial organisations it is seen that double-loop learning and perhaps radical change often emerges as a result of a near fatal crisis ie major turn-around efforts crisis management and so on However if double-loop learning could be integrated into the formal and informal systems of organisations the organisations would have more time to reconsider their basic situation and prevailing values and from there develop serious alternative solutions Maybe organisations would even be able to develop entirely new ways of doing things ndash without the existence of a crisis
43 A framework for intrapreneurship in light of knowledge
The elements of a framework for intrapreneurship and innovation in light of a knowledge perspective are now in place The elements are
bull situations for innovation management ndash exploitation sustainable change and disruptive change
bull task of intrapreneurship ndash exploitation and exploration
bull complexity of knowledge bull tacitness bull demarcation bull social elements
bull type of learning involved
Combining these elements yields the following framework
Understanding intrapreneurship by means of state-of-the-art 117
The framework defines the task of intrapreneurship as a combination of the three situations for innovation management and the learning-related concepts of exploitation and exploration ndash the latter being closely related to single and double loop learning Furthermore the framework provides an attempt to describe the content of intrapreneurship in the six subtasks resulting from outlining the framework This is done by defining the complexity of the knowledge that the intrapreneur needs to manipulate in each instance and the corresponding type of learning involved In all this yields the framework proposed in Table 1
Table 1 Framework for intrapreneurship
Exploitation-task Exploration-task
Exploitation of the same technology
Priority 90 Purpose Reuse and add to
existing market and technology knowledge primarily internal
located
Complexity Low Explicit knowledge Clearly demarked
Few social elements
Learning Single loop learning
Priority 10 Purpose Experiment with
new technologies in order to test the basic assumptions of
the firm
Complexity High Tacit assumptions
Not demarked Totally social
Learning
Double loop learning
Sustainable technological change
Priority 50 Purpose Develop existing
knowledge on current markets or technologies
Complexity Medium
Explicit knowledge Often external and not demarked
Few social elements
Learning Single loop learning
Priority 50 Purpose Develop new
knowledge on new markets or technologies
Complexity Medium
Tacit knowledge Often outside of firm and
not demarked Few social elements (mostly
technology)
Learning Both forms of learning
Disruptive technological change
Priority 10 Purpose develop explicit knowledge organisational
procedures
Complexity High Tacit (should be explicit) Internal but not demarked
May social elements External located knowledge
Learning
Single loop learning
Priority 90 Purpose develop new and tacit knowledge on market
and technologies
Complexity High Tacit and new Not demarked
Many social elements
Learning Both forms of learning
118 A Drejer KS Christensen and JP Ulhoslashi
Obviously this framework is merely a first step The framework needs to be researched in greater detail both empirically and theoretically The boundaries of time and space prevent us from doing so in this paper but we look forward to contributing to the effort
References
1 Drucker PF (1958) The Practice of Management Harper and Row
2 Kumpe T and Bolwijn PT (1994) lsquoTowards the innovative firm ndash a challenge for RampD managementrsquo Reseach-Technology Management JanndashFeb Issue pp38ndash44
3 Tidd J Bessant J and Pavitt K (1997) Managing Innovation Wiley
4 Drejer A (2001) The Innovative Firm (In Danish) Boslashrsens Forlag
5 Rosenkopf L and Tushman ML (1994) lsquoThe co-evolution of technology and organisationrsquo in Joel et al (Eds) Evolutionary Dynamics of Organisations Oxford University Press pp403ndash424
6 Porter ME (1996) lsquoWhat is strategyrsquo Harvard Business Review Vol 17 NovemberndashDecember pp33ndash47
7 March J (1991) lsquoExploration and exploitation in organizational learningrsquo Organization Science Vol 2 No 1
8 Leonard-Barton D (1995) Wellsprings of Knowledge Harvard Business School Press
9 Drucker PF (1993) Post-capitalist Society Oxford Butterworth-Heinemann
10 Drucker PF (1994) lsquoThe theory of the businessrsquo Harvard Business Review SeptemberndashOctober
11 Drejer A (2002) Strategic Management and Core Competencies Quorum Books
12 Roberts EK (1981) Generating Effective Corporate Innovation The Free Press
13 Afuah A (1998) Innovation Management The Free Press
14 Lowe P (1995) The Management of Technology Prentice Hall
15 Gaynor GH (1991) Achieving the Competitive Edge Through Integrated Technology Management McGraw-Hill
16 Miles RE and Snow CC (1978) Organizational Strategy Structure and Process McGraw-Hill
17 Stacy R (1993) Strategic Management and Organizational Dynamics Prentice Hall
18 Galbraith J (1979) Organization Design The Free Press
19 Mintzberg H (1983) Structure In Five ndash Designing Effective Organizations Prentice-Hall
20 Drucker PF (1985) Innovation and Entrepreneurship Harper amp Row
21 Tushman L and Rosenkopf L (1986) lsquoOrganizational determinants of technological changersquo in Staw B and Cummings L (Eds) Research in Organizational Behaviour Vol 14 pp311ndash347
22 Tushman ML and Anderson P (1990) lsquoTechnological discontinuities and organisational environmentsrsquo Administrative Science Quarterly Vol 35 pp1ndash8
23 Voss CA (1988) lsquoImplementation a key issue in manufacturing technology the need for a field of studyrsquo Research Policy
24 Iansiti M (1998) Technology Integration ndash Making Critical Choices in a Dynamic World Harvard Business School Press
25 Cooper (1995) New Product Development The Free Press
26 Bhalla SK (1987) The Effective Management of Technology Batelle Press
27 Drejer A and Riis JO (2000) Competence-based Strategy (In Danish) Boslashrsens Forlag
Understanding intrapreneurship by means of state-of-the-art 119
28 Christensen JC (1998) Innovatorrsquos Dillema Harvard Business School Press
29 Abernathy WJ and Clark KB (1985) lsquoInnovation ndash mapping the winds of creative destructionrsquo Research Policy Vol 14 pp3ndash22
30 Eisenhardt H and Martin JE (2000) lsquoDynamic capabilities what are theyrsquo Strategic Management Journal Vol 21 pp1105ndash1121
31 Edvinsson L and Malone T (1997) Intellectual Capital HarperCollins
32 Latour B (1999) Pandorarsquos Hope Essays on the Reality of Science Studies Cambridge MA Harvard University Press
33 Catasuacutes B (2001) Borders of Management Five Studies of Accounting Organizing and the Environment Doctoral dissertation School of Business Stockholm University
34 Baxter J and Chua FW (1999) lsquoKnowledge management now and the futurersquo Australian Accounting Review Vol 9 No 3 pp3ndash14
35 Lei D Hitt MA and Bettis R (1996) lsquoDynamic core competences through meta-learning and strategic contextrsquo Journal of Management Vol 22 No 4 pp549ndash569
36 Spender JC (1996b) lsquoOrganizational knowledge learning and memoryrsquo Journal of Organizational Change Management No 9 pp63ndash79
37 Stewart TA (1991) lsquoBrainpower how intellectual capital is becoming Americarsquos most valuable assetrsquo Fortune June 3rd pp44ndash60
38 Stewart TA (1994) lsquoYour companyrsquos most valuable asset intellectual capitalrsquo Fortune October 3rd pp68ndash74
39 Nonaka I and Takeuchi H (1995) The Knowledge-creating Company Oxford Oxford University Press
40 Nonaka I (1991) lsquoThe Knowledge-Creating Companyrsquo Harvard Business Review NovemberndashDecember pp96ndash104
41 Christensen KS and Bukh PN (2003) lsquoVidenledelse ndash to perspektiver (trans knowledge management ndash two perspectives)rsquo in Bukh PN Christensen KS and Mouritsen J (Eds) Videnledelse ndash Et praksisfelt under Etablering (trans knowledge Management ndash Establishing a Field of practice) Koslashbenhavn DJOslashF pp65ndash85
42 Von Krogh G Roos J and Kleine D (1998) Knowing in Firms Understanding Managing and Measuring Knowledge London Sage
43 Winter S (1987) lsquoKnowledge and competence as strategic assetsrsquo in Teece DJ (Ed) The Competitive Challenge Ballinger pp159ndash184
44 Spender JC (1996) lsquoMaking knowledge the basis of a dynamic theory of the firmrsquo Strategic Management Journal Vol 17 Winter Issue pp45ndash62
45 Nevis EC DiBella AJ and Gould JM (1995) lsquoUnderstanding organizations as learning systemsrsquo Sloan Management Review Winter Issue pp73ndash85
46 Bukh PN Christensen KS and Mouritsen J (2003) Videnledelse ndash Et praksisfelt under Etablering (trans Knowledge Management ndash Establishing a Field of practice) Koslashbenhavn DJOslashF
47 Dreyfus H and Dreyfus S (1986) Mind over Machine The Power of Human Intuition and Expertise in the Era of the Computer Free Press
48 Duncan Rand Weiss A lsquoOrganisational learning implications for organisation designrsquo in Barry M Staw (Ed) Research in Organisational Behaviour JAI Press
49 Kolb D (1984) Experimental Learning Prentice Hall
50 March J (1994) Management in a Complex World Samfundsvidenskaberne
51 Von Krogh G and J Roos (1996) Managing Knowledge Perspectives on Cooperation and Competition London Sage
52 Argyris C and Schon DA (1998) Organisational Learning II Addison-Wesley
159
CHAPTER 9
Knowledge Management in Perspective(s) An Analysis of Project Management in Two
Companies
Christensen Karina Skovvang Per Nikolaj Bukh amp Heine Kaasgaard Bang 2007
Knowledge Management in Perspective(s) An Analysis of Project Management in
Danish Companies
160
161
August 2007
Knowledge Management in Perspectives An Analysis of Project Management in Two Companies
Assistant professor Karina Skovvang Christensen University of Aarhus Professor Per Nikolaj Bukh Aalborg University
Partner Heine Kaasgaard Bang Conmoto
Abstract
This article analyses project management activities in two companies from a knowledge management perspective It is shown how human competences it-systems and project management systems are integrated and how these knowledge resources reflect strategies for knowledge management The Knowledge Management activities are analysed from two perspectives an artefact oriented and a process oriented perspective From the first perspective project management seems to consist of similar components in the two firms whereas the process oriented perspective identify context dependent differences It is concluded how awareness of different perspectives opens up for more managerial options and better understanding in practice
Keywords Knowledge Management Strategy Project Management Case study Knowledge Management Practice Corresponding author Assistant professor Karina Skovvang Christensen University of Aarhus School of Economics and Management Building 1322 DK-8000 Aarhus C email kschristenseneconaudk The authors are grateful to Allan Krogh Erlandsen BampO and Hanne Buje Jensen FKI Logistex Crisplant for access to the companies and for comments to a previous version of the article
162
1 Introduction
Many different researchers have introduced the concept of knowledge in academic
discussions within varying fields Mouritsen et al (2001) focuses for instance on the
management of intellectual capital whereas Prahalad amp Hamel (1990) describe the
companyrsquos strategic work based on core competencies In other parts of the
management literature both Leonard (1995) and Nonaka (1994) are concerned with
knowledge in relation to innovation whereas Huber (1991) and Lyles amp Schwenk
(1992) focus on organising of information so that it can be collected stored and reused
in other connections A common characteristic of these theories is that knowledge is an
important factor which is structured in ways that ensure the applicability of knowledge
in accordance with the strategies of the company
In relation to projects and project organisations the attention to knowledge management
as well as the role that social processes practises and patterns have in effectively
managing project knowledge is relatively new as Bresnen et al (2003) have pointed out
Knowledge is however a vital resource in project based industries and well working
knowledge management is in project organisations for instance essential for improving
the utilisation of core capabilities and technological platforms and reduce development
time in project (Oshri et al 2005)
The purpose of this paper is to pay attention to how different perspectives on a subject ndash
in this case project management and knowledge management ndash can broaden ones view
and
This article is based on a study of knowledge management in two Danish project based
organisations The article presents knowledge management as a perspective of
management where knowledge and knowledge resources are brought into focus The
empirical part of the article is based on an analysis of knowledge management
initiatives in relation to project management in the development division of the Danish
company Bang amp Olufsen and in the Danish company FKI Logistex Crisplant It is in
the article demonstrated how different perspectives on knowledge and knowledge
management expressed through two different epistemologies the artefact-oriented and
163
the process-oriented epistemology implies different understandings of the nature and
the role of knowledge management
The remainder of the article is structured in the following way Section 2 discusses
briefly the meaning of knowledge management and the two perspectives are introduced
In the following section 3 a short introduction to the method applied as well as a short
description of the two companies are given In section 4 the companiesrsquo different
initiatives in relation to knowledge management will be presented and it is illustrated
how knowledge management may be an integrated part of project management In
section 5 knowledge management is analyzed from the two different perspectives and
finally section 6 discussed how the perspectives may help to show a more balanced
picture of knowledge management by focusing on different parts of knowledge
management
2 Knowledge management in practice
In recent years there has in the management literature been an overwhelming interest in
the concept of knowledge and knowledge based resources This is not only reflected in
the importance of knowledge-intensive companies but also in an interest in how
knowledge based resources interact in the creation of value in companies and how
knowledge can be managed
When managers discuss knowledge different perspectives are often taken The
difference consists in the way in which knowledge is perceived In other words the
basic epistemological perspectives differ In this article a distinction is made between
two different perspectives which will be outlined in more details below
21 The two perspective on knowledge management
The first perspective on knowledge and knowledge management will be termed the
artefact oriented perspective Focus is often on information technology and the ways in
which technology may be applied for the codification of knowledge It is more or less
explicitly assumed that everything can be described and the more data a company
164
collects the more knowledge it possesses Knowledge management is therefore mostly
based on collecting storing and distributing knowledge in the form of eg documents
and specific information (eg Huber 1991 Lyles amp Schwenk 1992) From the artefact-
oriented perspective knowledge management focus for instance on project memory (cf
Kaumlrreman et al 2004) and manuals for organisational processes (Malone et al 1993)
Many authors (eg Blackler 1995 Tsoukas 1996) have indicated that the artefact
oriented perspective has become insufficient when handling management challenges in
relation to the complexity of the knowledge society and has hence criticised the
restricted view of knowledge expressed by the artefact oriented perspective emphasising
instead that knowledge is situated in social and organisational practises as well as
relationships (Tsoukas amp Vladimirou 2001) The problem is not lack of documents
data or access to information The limitation can rather be found in the quality content
and organisation of the material This has given rise to the second perspective which
we term the process oriented perspective
The process oriented perspective is most clearly exemplified by Ikujiro Nonakarsquos
research where knowledge is perceived as a ldquodynamic human process of justifying
personal beliefs as a part of an aspiration for the lsquotruthrsquordquo (Nonaka 1994 p 15 Nonaka
amp Takeuchi 1995) An essential point is that focus is on the process in which knowledge
is created and not on the documents or the rules which are based on the process This
implies that continuous and dynamic adaptation to lsquoreal lifersquo takes place
From the process-oriented epistemology knowledge creation and sharing is considered
as a continuous process where knowledge is transformed between tacit and explicit
knowledge and between people and technology The point of departure is here the so-
called SECI-model (Nonaka amp Takeuchi 1995) which consists of four types of
processes which Nonaka amp Takeuchi (1995) identify as central in relation to
knowledge management Socialization Externalization Combination and
Internalization According to Nonaka amp Takeuchi (1995 pp 70-71) the development of
organizational knowledge are a continuous and dynamic interaction between tacit and
explicit knowledge
165
22 Knowledge Management and the perception of Knowledge
Knowledge is a complex term as it is often not easy to agree on an exact definition The
view of knowledge that pervades much research especially from the artefact oriented
perspective ndash but not limited to that ndash is positivist ie the Platonic view that knowledge
is lsquojustified true beliefrsquo However the more recent knowledge management researchers
eg Nonaka amp Takeuchi (1995) von Krogh amp Roos (1995) Mourisen et al (2001) and
others have initiated a move away from seeing the subject at standing in a static
cognitive relationship of certainty to propositions stating facts about the empirical world
(se also Jackson amp Klobas 2007)
Following this recent tradition we adopt an approach where knowledge neither as an
object to be managed nor as a research object is strictly defined on beforehand Rather
we as the basic idea of simultaneously working with different perspectives on
knowledge as presented above let the nature of knowledge be based on the individuals
set of beliefs or mental models used to interpret actions and events in the world This
opens up for different perceptions of knowledge and knowledge management in an
organisation much like Roos amp von Kroghrsquos (1995 p 1) reflect in their statement that
ldquo[w]hat you see depends on who you arerdquo which implies that knowledge should be
regarded as a subjective term Following this notion it is quite possible that knowledge
can be expressed in many different ways since not only knowledge but also knowledge
about knowledge depends on the context This implies that it is essential to clarify the
background for the various perceptions of knowledge knowledge management concepts
etc
The understanding of the term knowledge or at least what it means to the individual or
the organisation is important because it affects how knowledge enters the managerial
processes According to von Krogh amp Roos (1996) this implies that successful
knowledge management requires that you relate to lsquothe nature of knowledgersquo (von
Krogh amp Roos 1996 p 224) Therefore knowledge management also becomes a
question of epistemological understanding
More effective knowledge management may also result from adapting management
tools that fit the prevailing perception of knowledge This observation is in accordance
with Marr et al (2003) who suggest that knowledge management practises will be
166
perceived as more effective if they match the personal epistemology In relation to an
in-depth study of knowledge management in a project case study in an Australian
industrial engineering organisation Sense (2007 p 17-18) document similarly that the
project members favour knowledge sharing techniques that align with their cognitive
style type and further that they acknowledge the personal bias towards specific modes
of sharing knowledge
23 Strategies for knowledge management
Hansen et al (1999) have associated the understanding of knowledge management that
we have termed the artefact oriented perspective with a so-called codification strategy
which govern companies intend to collect existing knowledge and make it accessible to
the rest of the organization This form of strategy should be seen as an alternative or
more precisely a supplement to the personification strategy which focuses on the
aspects that are difficult to express in a way based on codification Thus the
personification strategy in more in line with the process oriented perspective on
knowledge management outlined above
While the codification strategy is a cornerstone in the bureaucratic organisation the
personification strategy has seen its strength in the knowledge intensive organisations
that rely on the competence of the individuals The two strategies seem according to
Hansen et al (1999) to dominate practice in general which among other things may be
due to the fact that they supplement each other instead of being mutually exclusive
Hansen et al (1999) point out that often one of the strategies normally will have a more
prevailing position in the organizationrsquos consciousness However knowledge
management is multi-faceted and our understanding of current practise has already been
set by our epistemology This illustrates that the more an organisation focuses on
knowledge the more important it becomes to understand the epistemological
implications
167
3 The Two Companies and the methodology
This article is anchored in a case study of how knowledge management takes place in
practice in two organisations The distinct strength of case studies is the ability to deal
with a variety of evidence documents questionnaires interviews and observations in a
flexible manner In particular when exploring the two companiesrsquo practises that are not
on beforehand perceived as knowledge management initiatives in the companies a case
study approach seems appropriate A case study approach offers in this context an
opportunity for observing and describing a complicated research phenomenon in a way
that allows analytical generalisations (Eisenhardt 1989 Tsoukas 1989) of the
observations
The empirical data includes 5 semi-structured interviews in each of the two companies
where the respondents were asked to tell about the companyrsquos history how knowledge
management affects their daily work how knowledge is created and shared as well as
how they work with different tools (eg project models and IT-systems) The interviews
took approx 1frac12 hour on average and they were taped and transcribed for later use The
interviews at BampO were carried through in the period 28-29 August 2003 whereas the
interviews at Crisplant were collected almost two years earlier ie in the period 29
October to 12 December 2001 Moreover data in the form of documents reports and
observations were collected General attitudes are expressed by the company name
whereas the respondentrsquos function is emphasized where it is of importance in
connection with a statement
Bang amp Olufsen (BampO) is known for its distinguished design and quality products
within audio and video which are the companyrsquos core business areas Development of
new products is a decisive competitive parameter to BampO and is ascribed much
attention Development costs thus represent more than 9 per cent of the companyrsquos
turnover This article only addresses knowledge management in the product
development division of BampO
FKI Logistex Crisplant AS (Crisplant) develops produces and installs solutions within
the so-called automatic high-speed transport and sorting systems (ATS) area which
forms a substantial part of operations at airports postal centres libraries mail order
168
businesses distribution centres etc all over the world These systems are developed and
implemented in a close cooperation not only with the customer but with a number of
other companies which supply other parts of the installation of which the sorting system
must be an integrated part
4 Knowledge Management in the two companies
The two organisations were chosen because they represent two different types of project
based organisations both focussing on product development BampO has organised
product development in a department separated from production with products being
manufactured at assembly plants and sold to customers all over the world Crisplant
develops customer specific solutions in projects more like a construction company with
development and installation at the customer site being separate phases of the same
project
Product development as it is undertaken in both companies is often generically
described a knowledge intensive activity (Meyer amp Utterback 1993) where managers
engineers and technicians apply the knowledge they have developed through formal
training and over time form experience while at the same time enhancing their skills and
capabilities through the project Such knowledge-intensive companies are dependent on
their employee based knowledge resources However neither BampO nor Crisplant have a
separate strategy for knowledge management Instead the analysis stresses the
importance of knowledge management being an integrated part of the companiesrsquo
processes and management activities trying to create an organizational culture which
encourages development sharing and anchoring of knowledge to support the main
strategic goal they each have
41 Knowledge management in Bang amp Olufsen
Knowledge management in BampO focus on interactions where employees meet across
departments and enter into a dialogue where creative ideas are being conceived new
knowledge generated and existing knowledge disseminated in the organization BampO is
169
dependent on tacit knowledge or unique competencies such as employees that have ldquoa
pair of good earsrdquo as it was expressed by a project manager which are able to hear
precisely when a loudspeaker or an amplifier sounds correct Such knowledge is very
difficult to transfer as explicit knowledge Instead BampO is committed to the fact that
knowledge transfer takes place through close cooperation where competences are
disseminated in the organization
The development processes are built around key personsrsquo unique knowledge resources
in a way that makes it difficult for competitors to imitate BampOrsquos products To
disseminate the specialist knowledge it is in the interviews stressed that it is important
that it is communicated to the organization that these lsquoknowledge keepersrsquo are available
It must be known who possess specific types of knowledge so that instead of being a
hidden resource the individual key persons become an available resource to be relied on
all over the organization A manager at BampO explains
hellip we have a culture in the development division where everybody walks around and talks to everybody about the problems they encounter hellip when an employee is designing something the person knows that he needs to go and talk to a specific colleague because the colleague knows something special about this And then he does so and they have a chat about it So we sense that in most cases there is free and open access to all the knowledge available via you could say personal contact
In this situation the sharing of knowledge is enabled by the autonomy that employees
are granted by management similarly to what Oshri et al (2005 p 16) found in a case
study of knowledge transfer in a multiple-project environment Further key employeesrsquo
expert knowledge is made available to the organisation by holding a large number of
internal courses at BampO where the employees teach each other
However explicit knowledge is also decisive to BampO because aside from the tacit
knowledge which is being applied in the development processes explicit and codifiable
knowledge is also applied to a great extent in all development projects It may both be
knowledge which is unique to BampO and at the same time it may be knowledge which
in principle is available on the world market To capture knowledge BampO uses the
TOP-model an adopted version of Cooperrsquos (2001) stage gate model in all
170
development projects In practice it means that when the first phases of a development
project (physical proximity and face-to-face contact) is completed only a few people
the quality people are responsible for making sure that knowledge is shared both in the
individual project and across projects
In addition to this BampO has strict documentation requirements during the development
projects due to the companyrsquos ISO-certification the internal strategies for knowledge
sharing and to make it possible to reuse earlier developed elements in future products
similar to what Tsai (2001) demonstrated in a study where transferring knowledge from
one base project to other projects enhances organisational innovation and performance
BampO thus appear to be very conscious about the importance of documentation and it is
attempted to extend the documentation activities further so that the company may reuse
more knowledge and thus reuse more solutions by building up modular products
42 Knowledge Management in Crisplant
All project activities in Crisplant are from development over production to
implementation project-organized and are run according to Crisplantrsquos project
management tool Crisplant Project Management Model (CPMM) which is an adopted
version of a state gate model (cf Cooper 2001) Due to the nature of the customer
specific solutions the context is somewhat similar to the construction industry where
eg Bresnan et al (2003) emphasise that organisations face substantial obstacles to be
overcome in ldquocapturing knowledge and in re-cycling of project based learning that
steam form the relatively self-contained idiosyncratic and finite nature of project tasksrdquo
(ibid p 158)
Crisplant develops solutions with a high degree of customization the individual projects
are very different and the composition of project teams takes place more on the basis of
employeesrsquo competencies than on the basis of specific technical components which
must be included in the project Thus knowledge management has to focus specifically
on employees and as a consequence the development sharing and anchoring of the
accumulated knowledge is an integrated part of the companyrsquos way of working
171
Crisplant says ldquoIt is natural for us to live by having knowledge and trying to give our
customers value through a continuous development and creative use of our knowledgerdquo
Thereby knowledge management becomes an integrated part of the management
activities influencing the organizational culture and supporting the overall main
strategic goals A manager at Crisplant furthermore says ldquoKnowledge management is
about presenting favourable conditions for the creative process of the individual in
cooperation with others and hence set the knowledge resources of the company at playrdquo
But Crisplant also uses a range of IT-tools for supporting the creation and transfer of
knowledge Like many other companies Crisplant has an extensive intranet which may
potentially play a role in codifying explicit knowledge and in lsquostoring and distributingrsquo
knowledge But the intranet is mainly used for the distribution of news creating a
possibility for the employees to be updated with the companyrsquos activities and as such it
does not constitute an essential part of Crisplantrsquos knowledge management
Standardized and codified knowledge is however of importance in relation to
documenting the experience from the separate development phases By codifying and
collecting knowledge in progress reports drawn up by the project leaders each month
Crisplant is however of the opinion that it is the employeesrsquo tacit knowledge which is
essential for the companyrsquos progress and growth Accordingly the Managing Director
explains that the work with eg the companyrsquos intranet is more expressing a wish for a
general IT-competence development among the staff to be able to respond to future
technological requirements from co-operators than it is due to a direct knowledge
management strategy
Crisplant is convinced that the informal knowledge sharing taking place daily as ldquoface-
to-facerdquo contact is by far of greatest strategic importance Crisplantrsquos management thus
attempts to make the frames for knowledge sharing and knowledge creation available by
focusing on teamwork in the project organization and by integrating a dialogue-based
company culture that cultivates trust norms and shared values where projects take the
character of communities of practice (Brown amp Duguid 1991 2001)
The manager responsible for organisational development explains that the day-to-day
knowledge sharing and knowledge creation to a wide extent is expressed through the
work with CPMM as well as a continuous focus on creativity in all processes To
172
improve creativity Crisplant works intensely with a model named internally as the
lsquoCreative Working Modelrsquo (CWM) This model facilitates the process at all levels from
structuring a project over the way a certain meeting is structured to how the individual
employees structure their working day
The CWM consists of five phases A seeing phase which focus on dialogue about
expectations with regard to the final goal and thus which objectives must be obtained to
reach the overall goals for the task or project Following this comes the idea phase
where it is established how the objectives and goal should be obtained The third phase
is the planning phase which is carried through in interaction with Crisplantrsquos Project
Management Model When the planning is done the project participants begin carrying
out the things as the fourth phase and subsequently the project group goes into a seeing
again phase where the course of events is evaluated and the project team learns from its
experiences
43 Knowledge Management as Project Management
BampOrsquos product development division as well as Crisplant are organized as project
organizations Competent efficient and reliable projects implementation is decisive for
business success in BampO as well as Crisplant For several years both companies have
applied a project management model inspired by Cooperrsquos so-called lsquostage gate modelrsquo
(Cooper 2001) The adoption of the model is denoted the Crisplant Project Management
Model and the TOP-model at BampO
At Crisplant the purpose of working with the Stage-Gate model is to establish ldquoa
common set of rules for project control management and execution internally as well as
in cooperation with customers suppliers and other partnersrdquo (Crisplant 1999 p 4) In
the product development division at BampO the Stage-Gate model has a more direct role
as knowledge management tool as it is continuously adjusted according to the
experiences from different product development projects At BampO the Stage-Gate
model thus functions as a dynamic model where knowledge is accumulated and later
disseminated through the application in the individual projects
173
Each phase of the Stage-Gate models ends with a lsquogatersquo In this connection the project
managers of both companies prepare a gate report on the status of the project both with
regard to progress and budget At the same time often major replacement among
employees takes place in between the individual phases and therefore a gate also
represents a critical point in relation to knowledge management as knowledge needs to
be transferred from one team to another
With respect to knowledge creation Crisplant focuses on how knowledge is collected
stored and passed on in each phase of the project through extensive documentation
requirements BampO works with similarly high documentation requirements in its
projects At the same time at BampO the awareness of the value of face-to-face
knowledge transfer along the way are very present the method manager in BampO
expresses it in the following way
hellip it is not such an lsquoover the wallrsquo-transfer taking place at each individual gate It is not the documentation that ensures knowledge transfer in the projects hellip it is only because people talk together and that we agree on how things should look that it works hellip it is not due to our documentation
Furthermore Crisplant emphasizes the metaphorical importance of a gate symbolizing a
door which closes at the completion of a phase while a new one opens to the next phase
and the future However like BampO Crisplant is aware of that not all types of
knowledge can be passed on in written-down documentation
Both companies apply pre-determined checklists which the project manager goes
through and on that basis he prepares a phase report after each individual phase of the
Stage-Gate model These phase reports are saved and used eg when the project
management tool is being updated At the end of a project a project evaluation meeting
is held at both Crisplant and BampO where the projectrsquos experiences good as well as bad
are collected in a final report
174
5 Knowledge Management in Perspective(s)
In the following two subsections project management of the two companies are
analyzed according to the two epistemological perspectives on knowledge management
the artefact oriented and the process oriented Hereby it is illustrated how the
presentation and the perception of knowledge management depend on the
epistemological starting point
51 Artefact-Oriented Epistemology
As a part of BampOrsquos codification strategy artefacts in the form of process
documentation product specifications development documentation etc are pointed out
as an essential element of the knowledge management activities At Crisplant such
documents also form an important part of the knowledge collecting process which the
then Managing Director expressed in this way
hellipAs we work out a concept proposal and a solution to our customer we document the thoughts and ideas we have concerning the solution to a specific project Thus the knowledge stays in the company so to say ndash because it has been taken down in writing
From this perspective knowledge is in both companies about writing and documenting
in order that the company may be capable of leaning on previous project descriptions
etc when new quotations are given and on the whole when working on the projects
Thus the project management systems function as a repository for routine solutions
where explicit knowledge can be reused (cf Markus 2001 p59)
If knowledge management is illustrated based on an artefact-oriented epistemology the
essential elements of the knowledge of both companies would be all the documents and
reports written down concerning the companyrsquos procedures and processes the project
management models and quality control systems in both companies IT-tools used in the
company such as intranet budget control systems databases administrative systems
etc support the collection storage and distribution of the formalized knowledge which
is the focal point of the artefact-oriented epistemology
175
Within the artefact-oriented epistemology knowledge management is thus focused on
the types of knowledge which may be explicated formalized and ultimately codified
Project management in the two companies appear to consist of more or less the same
components From a pure artefact oriented perspective knowledge management is
ensured by having these suitable systems The artefact oriented knowledge management
is about consistent documentation of development activities via Stage-Gate-models
quality management and data collection at both BampO and Crisplant In the artefact
oriented perspective there is much less focus on the context in which the knowledge
was created as the underlying assumption is that the knowledge can be re-used even
though the context in which it was created is less explicit
52 Process Oriented Epistemology
Knowledge management seen through a process-oriented epistemology (with emphasis
on the SECI model) is apparent in both BampO and Crisplant It may be illustrated by the
fact that the companies besides anchoring knowledge through process reports Stage-
Gate models and quality control systems are focusing on the personal relations
Crisplant uses the CWM to support the transfer of knowledge between project phases in
the stage gate model and BampO works with mentor arrangements and works hard on
creating a dialogue-based culture By sharing knowledge across the organizations the
companies attempt to internalize knowledge into more persons
At Crisplant the process-oriented epistemology is predominant in the work with the
CWM which structures the processes and becomes instrumental for creating sharing
and internalizing knowledge At both BampO and Crisplant the socialization phase is also
stressed by attaching importance to project teams meeting physically because this is the
way to share opinions values and knowledge and to obtain a common framework of
understanding
The externalization phase should be understood as the process where the employees
express their ideas Here Nonaka et al (2000) stresses that the use of images
metaphors analogies etc may help the employees to express a point without really
being able to explain it This is what happens in the idea phase of the CWM at
176
Crisplant When all thoughts and ideas have been aired and placed on the boards it is
important that they are combined and reduced in order to make a realistic plan for the
development of the project Therefore the ideas from Crisplantrsquos idea phase and BampOrsquos
development department are both incorporated in the companiesrsquo Stage-Gate models
which structure the development of the projects This is the equivalent of what takes
place in Nonakarsquos combination phase in the SECI-model
The internalization phase is the last phase of the SECI-model where the objective is to
embody common guidelines goals and objectives corresponding to Crisplantrsquos
executing phase in their CWM and the phases in the companiesrsquo Stage-Gate models
where the products are actually developed and installed at the customers site At this
stage experiences are gained from the project in hand and as far as possible these
experiences will also be incorporated in the stage gate model in order to be available for
later project
As knowledge sharing in Crisplant builds mainly on the Creative Working Model the
personification strategy is predominant in Crisplantrsquos knowledge management activities
Although documentation was emphasised by the managing director because knowledge
stays in the organisation when it is written down (see above) this from a process
oriented perspective does not mean that it is the capacity to document and codify that is
the essential feature Rather the project management systems in combination with the
CWM facility interaction
BampOrsquos knowledge management strategy is not as clear as it involves more elements
from both the codification strategy and the personification strategy In the same way as
Crisplant BampO acknowledges the importance of face-to-face communication but in
BampO it is more a question of making the structures and frameworks available to the
organisation thus leaving it to the initiatives of the employees to communicate when
needed Thus the experiences from BampO is in line with Keegan amp Turner (2001) who
in an study of learning across project found that the informal networks within
companies are the most important conduit for transferring knowledge between projects
(cf Sense 2007)
Damodaran amp Olphert (2000) as well as Edwards et al (2005) have argued that in
general a push-strategy ie when information and knowledge are lsquopushedrsquo through to
177
the potential users is less effective than a pull-strategy which is based on creating a
basic organizational culture and context which encourage organizational learning ndash and
where the employees have access to knowledge when needed From this point of view
Crisplant uses a form of push-strategy while similarly BampO uses a pull-strategy to
implement knowledge sharing through physical meetings However it is another form
for push than in Damodaran amp Olphertsrsquo terms when a process oriented epistemology is
adopted as it is the organizational structures and frames that are lsquopushedrsquo to the
employees
The ideal context of knowledge creation and sharing depends on the type of knowledge
For instance both BampO and Crisplant find it important that a project team meets
physically in the initial phases where the objective is to express thoughts and ideas
concerning the project At BampO the product development begins in Idea Land where a
group of designers are seated closely together Later in the construction phases physical
proximity is not imperative to the same degree
Following the process oriented epistemology both tacit and explicit knowledge and not
least the interplay between the two knowledge types are in focus From a process
oriented perspective it is the first two phases of the SECI model (Socialization and
Externalization) which differs the most between the two companies whereas the last
two phases (Combination and Internationalization) are more similar in the two
companies In the Combination phase knowledge management is primarily centred on
working with the Stage-Gate models and in the Internalization phase the specific
development work is conducted Contrary to BampO Crisplant still give priority to
physical proximity in the last phase as Crisplant focuses on a common internalization
phase for the group in preference to the individual
6 Concluding Remarks
Authors like Roos and von Krogh (1995 p1) have argued that the way we understand
knowledge depends on the existing knowledge and the basic assumptions we bring
along This means that whether we are researchers observing knowledge management in
action or practitioners involved in the management of knowledge our understanding of
178
knowledge and knowledge management will be in subjective term This understanding
or at least what knowledge management means to the individual the group or
organization is important because it as argued be von Krogh and Roos (1996) implies
that successful knowledge management requires that you relate to lsquothe nature of
knowledgersquo (von Krogh amp Roos 1996 p 234)
Therefore knowledge management becomes a question of epistemological
understanding By giving a multi-faceted view of knowledge management based on the
two different epistemologies this article illustrates how different epistemological points
of departure are essential to the way we lsquoseersquo and thereby think and act Generally it is
a way of illustrating how we are all more or less limited by our own existing
knowledge We are subconsciously controlled by our framework of reference and
understanding but the more conscious we become of this and the more we acknowledge
it the more we will be able to overcome these limitations and thus achieve a more
nuanced view of existing management activities
The analysis illustrated how the content of knowledge management differs depending
on the underlying epistemology It makes demands on the manager as conscious
reflection in relation to initiatives as the possibility that another departure implies
another decision becomes part of the decision process However in practice an
understanding of different perspectives will give a company a more nuanced picture of
the organization knowledge and management thereby expanding the optics which is
used for identification of potentials or any problems in relation to the management of
knowledge
In the analysis of the knowledge management activities in Crisplant the process oriented
epistemology was clearest The sharing of knowledge is encouraged by initiatives
where the employees physically are seated in relation to the projects to enable lsquoroomrsquo
for communication In addition to this other knowledge management initiatives become
visible eg in relation to collection of data and experiences from the projects when the
departure is the artefact oriented epistemology All this support the personification
strategy (cf Hansen et al 1999) where tacit and human interaction plays a crucial role
Knowledge management in BampOrsquos is also most obvious if departing in the process
oriented epistemology but the concrete initiatives are mainly based on methods which
179
are best understood from the artefact oriented epistemology For instance this is
expressed by the higher priority continuous documenting and updating of the models
are given in BampO compared to Crisplant In practice both tacit and explicit knowledge
are of more or less equal significance in BampO which mean that the company tries to
combine the personification and codification strategy
BampO finds the tacit knowledge which exists in the organization of great strategic
importance and therefore they try to distribute it in the organization through eg
mentoring close relations across departments and dialogue-based culture At the same
time codifiable knowledge is paid considerable attention at BampO which is best
expressed through the work on currently updating the dynamic stage-gate model
It can not generally be stated when a given strategy should be used as it is very
company specific When a companyrsquos competitive advantage are mainly to be found in
reuse of existing solutions which for example are put together in a new way or the
possibility for lsquomass productionrsquo of a new product The more standardized solutions a
company offers the more it points in the direction of the codification strategy and
thereby a knowledge management strategy departuring in the artefact oriented
epistemology or the process oriented epistemology supported by the artefact oriented
Otherwise when a company provides more customized solutions it points in the
direction of the process oriented epistemology and primarily knowledge management
initiatives based on this epistemology and thereby the personification strategy An
important thing is to notice that the epistemologies are supportive and not exclusive
If significant importance is attached to epistemological assumptions heavier demands
are to a certain extent placed on the manager It is no longer sufficient lsquoonlyrsquo to act and
make decisions because conscious reflection in relation to own acts and the opportunity
to take another point of departure involving another decision becomes part of the
decision process The reflective manager must be familiar with different epistemologies
as mentioned by Venzin et al (1998 p 36) as it provides a much larger managing
scope and ensures a better understanding of the limitations to the various sets of
actions More effective knowledge management may result from adapting management
tools that fit the prevailing perception of knowledge The more the organization focuses
180
on knowledge the more important it becomes to understand the epistemological
implications
7 References
Blackler F (1995) Knowledge knowledge work and organizations An overview and
interpretation Organisation Studies 16(6) 1021-1041
Bresnen M Edelman L Newell S Scarbrough H and Swan J (2003) Social practices
and the management of knowledge in project environments International Journal of
Project Management 21(3) 157-166
Brown JS and Duguid P (1991) Organizational learning and communities-of-practice
Towards a unified view of working learning and innovation Organization Science
2(1) 40-55
Brown JS and Duguid P (2001) Knowledge and organisation a social practice
perspective Organization Science 12 198-213
Cooper RG (2001) Winning at new products Perseus Cambridge MA
Crisplant (1999) Crisplant Project Management Model (In Danish Faseplan for
projektgennemfoslashrelse paring Crisplant)
Damodaran L and Olphert W (2000) Barriers and facilitators to the use of knowledge
management systems Behaviour and Information Technology 19(6) 405-413
Edwards JS Shaw D and Collier PM (2005) Knowledge management systems finding
a way with technology Journal of Knowledge Management 9(1) 113-125
Eisenhardt K (1989) Building theories from case study research Academy of
Management Review 14(4) 532-550
Hansen MT Nohria N and Tierney T (1999) Whatrsquos your strategy for managing
knowledge Harvard Business Review 77(2) 106-116
Huber G (1991) Organizational learning the contributing process and the literature
Organization Science 2(1) 88-116
181
Jackon P and Klobas J (2007) Building knowledge in projects A practical application
of social constructivism to information systems development International Journal of
Project Management (fortcoming)
Keegan A and Turner JR (2001) Quantity versus quality in project based learning
practises Management Learning 32(1) 77-98
Kaumlrreman D Alvesson M and M Blom (2004) Knowledge Management and
raquoOrganisational Memorylaquo ndash Remembrance and Recollection In a Management
Consultancy Company In Knowledge management establishing a field of practice
(Bukh PN Christensen KS and Mouritsen J eds) pp 124-148 Palgrave Macmillan
Houndsmill
Leonard D (1995) Wellsprings of Knowledge Building amp Sustaining the Sources of
Innovation Harvard Business School Press Boston MA
Lyles M and Schwenk C (1992) Top management strategy and organizational
knowledge structures Journal of Management Studies 29(2) 155-74
Malone TW Crowston K Lee J and Pentland B (1993) Tools for inventing
organizations toward a handbook of organizational processes In Proceedings of the
2nd IEEE Workshop on Enabling Technologies Infrastructure for Collaborative
Enterprises Morgantown WV
Markus L M 2001 Towards a theory of knowledge reuse Types of knowledge reuse
and factors n reuse success Journal of Management Information Systems Vol 18
No 1 pp 57-93
Marr B Gupta O Pike S and Ross G (2003) Intellectual capital and Knowledge
management effectiveness Management Decision 41(8) 711-781
Meyer MH and Utterback JM (1993) The product family and the dynamic of core
capabilities Sloan Management Review 34(3) 29-38
Mouritsen J Larsen HT and Bukh PN (2001) Intellectual Capital and the Capable
Firm Narrating Visualising and Numbering for Managing Knowledge Accounting
Organisations and Society 26(7) 735-762
Nonaka I (1994) A Dynamic Theory of Organizational Knowledge Creation
Organization Science 5(1) 14-37
182
Nonaka I and Takeuchi H (1995) The Knowledge-creating Company Oxford University
Press Oxford
Nonaka I Toyama R and Konno N (2000) SECI Ba and Leadership a Unified Model
of Dynamic Knowledge Creation Long Range Planning 33 5-34
Oshri I Pan SL and Newell S (2005) Trade-offs between knowledge exploitation and
exploration activities Knowledge Management Research amp Practice 3 10-23
Prahalad CK and Hamel G (1990) The Core Competence of the Corporation Harvard
Business Review 68(3) 79-88
Roos J and von Krogh G (1995) What you see depends on who you are Think about
epistemology IMD Perspectives for Managers 7 1-4
Sense AJ (2007) Stimulating situated learning within projects personalizing the flow of
knowledge Knowledge Management Research amp Practice 5 13-21
Tsai W (2001) Knowledge transfer in intraorganizational networks Effects of network
position and absorptive capacity on business unit innovation and performance
Academy of Management Journal 44(5) 996-1004
Tsoukas H (1989) The validity of idiographic research explanations Academy of
Management Review 14(4) 551-61
Tsoukas H (1996) The firm as a distributed knowledge system A constructionist
approach Strategic Management Journal 17 11-25
Tsoukas H and Vladimirou E (2001) What is organizational knowledge Journal of
Management Studies 38 973-993
Venzin M von Krogh G and Roos J (1998) Future research into knowledge
management In Knowing in Firms Understanding managing and measuring
knowledge (von Krogh G Roos J and Klein D eds) Sage London
Von Krogh G and Roos J (1995) Organizational Epistemology Macmillan London
Von Krogh G and Roos J (1996) Managing Knowledge Perspectives on Cooperation
and Competition Sage London
183
PART IV
184
185
CHAPTER 10
Findings and Perspectives
It has been argued in both the media and various reports that intrapreneurship might
be the key to making established organisations more innovative The emphasis on
intrapreneurs and particularly intrapreneurship is a challenge because on the one
hand intrapreneurship is a liberating force that allows individuals to master their
ideas and on the other it is part of a lsquoproduction functionrsquo in corporate life where
individuals are subordinated to the requirements of organisational interests The
practice of intrapreneurship is therefore somewhat paradoxical because in a sense it
requires individuals to subordinate themselves to organisational concerns that they
will have to master reflexively
As this dissertation has shown the concept and tools of intrapreneurship can be used
under a variety of circumstances in the area of management Intrapreneurship can be
applied to the organisation with a focus on corporate ventures internal resources and
internationalisation (Chapter 4) In relation to mergers or acquisitions the conversion
of entrepreneurship to intrapreneurship can be of central concern (Chapter 6)
Intrapreneurship can also be approached from a managerial perspective relating to
how various intrapreneurial mechanisms can be screwed up and down (Chapter 7)
These enablers have been shown to be differ between traditional industrial companies
and knowledge-intensive companies so understanding intrapreneurship from a
knowledge (management) perspective is crucial since it is the knowledge resource
that has been lsquomanipulatedrsquo in modern companies not physical products (Chapter 8)
186
If we look at the activities covered by intrapreneurship in more detail (eg as outlined
in Chapter 4) we can see that intrapreneurship not only provides a set of new
management tools and techniques but also the application of well-known
management techniques in new combinations often facilitated by the use of
innovation management and knowledge-management tools (as illustrated in Chapter
8 and 9)
The focus of this dissertation has been on the entrepreneurial aspects of the
organisation as well as activities processes and projects within organisations rather
than on the individual entrepreneur starting a new firm In this respect the
dissertation has followed Gartnerrsquos (1988 1989) suggestion of a change in focus
from the intrapreneur as a person to intrapreneurship as a process When
intrapreneurship is seen as a process it does not require the implementation or
exploitation of one particular technology or technical instrument Rather it
encourages more elements to work in concert But if intrapreneurship is a process
located within and between people processes and technologies how does
management know that lsquosomethingrsquo is worth exploring and how can it intervene to
enable and support intrapreneurship
However while may be of vital concern to many companies this dissertation has not
tried to answer the question of how management knows when lsquosomethingrsquo is worth
exploring The strategic entrepreneurship literature has touched on this by integrating
company initiatives that research shows to be relevant to the creation of wealth Thus
according to Hitt et al (2002 p 13) ldquostrategic entrepreneurship facilitates firmsrsquo
efforts to identify the best opportunities (matched to their resources and with the
highest potential returns) and to exploit them with the discipline of a strategic
business planrdquo This is definitely an area for further research
187
101 ELEMENTS OF THIS DISSERTATION
The chapters of this dissertation contribute to the mosaic of intrapreneurship as a
developing field The study has explored intrapreneurship from an internal resources
perspective (see Chapter 4) From this point of view the aim of intrapreneurship is to
identify previously undiscovered resources in the organisation or combine existing
resources in new ways that make them valuable innovations and thereby create new
organisational wealth (see for example Ireland et al 2001 Alvarez amp Barney
2002)
The aim of this section is to discuss the results of the five articles in relation to the
research question and their contribution to the intrapreneurial debate The overall
research question is the exploration and exploitation of internal resources with
respect to intrapreneurship while the overall aim of the dissertation is to study the
intrapreneurial potential in its natural settings
The five articles in this dissertation are related in the sense that they study
intrapreneurship intrapreneurial enablers and intrapreneurial management Figure
101 illustrates how the five articles are related to the intrapreneurial framework
developed in the first article (chapter 4)
188
Figure 101 Relation of the articles to intrapreneurship
In the first article intrapreneurship was placed within the wider scope of corporate
entrepreneurship Based on this intrapreneurship has been defined and a framework
for discussing intrapreneurship has been developed The second part of the
dissertation which took a starting point in the internal resource perspective
attempted to identify the mechanisms behind intrapreneurial opportunities in a
company based on its existing resources
The study of intrapreneurship in terms of innovation and enabling factors has been
based on case studies The second article discussed the change from entrepreneurship
to intrapreneurship and how this has influenced innovativeness and related issues in
a specific company The third article examined various factors which can enable
Corporate Entrepreneurship
Intrapreneurship ExopreneurshipEntrepreneurship
CorporateVenture
InternalResources
Internationa-lization
Enablers
1
2
3
Innovation
4
5
Knowledgeresources
189
intrapreneurship across the different organisational perspectives Article four and five
focused on one specific resource the knowledge resource and how it can be
managed with respect to intrapreneurship
102 MAIN POINTS AND CONTRIBUTIONS
This section will discuss the findings and contributions of the dissertation The aim of
the dissertation has been to contribute to the field of intrapreneurship and provide
managers in knowledge-intensive companies with managerial tools to influence the
level of intrapreneurship
The first contribution was the framework for discussing corporate entrepreneurship
presented in article 1 This shows how organisations utilizing corporate
entrepreneurship have to choose between different organisational opportunities
Based on the framework in article 1 the second contribution is that a clear distinction
between corporate entrepreneurship and intrapreneurship has been made These
concepts have been used interchangeably in the literature and still are Although the
basic ideas underlying the two concepts are similar both focusing on innovativeness
in established companies intrapreneurship takes place within the boundaries of the
firm whereas corporate entrepreneurship also takes place across organisational
boundaries This demonstrates the importance of the boundaries of the firm
The third contribution of the dissertation is that it demonstrates how an acquisition
strategy as a way for mature organisations to gain access to innovativeness and new
knowledge resources can easily fail Article 2 shows that the success of an acquisition
not only depends on retaining key employees Even though the competencies of the
acquired organisation are formally intact efforts are also needed to make the energies
of the two organisations act together and create a new intrapreneurial part of the
company Unless managers actively take part in facilitating an intrapreneurial spirit
190
then the acquired entrepreneurial part of the organisation will slowly stifle The
fourth contribution as demonstrated in articles 2 and 3 is that access to end
customers is an important driving force both in relation to innovativeness and to
preserving the entrepreneurial spirit
The fifth contribution in article 3 is an increase in the number of factors ndash from five
to eight ndash that need to be taken into account when enabling intrapreneurship The five
factors most often mentioned in the literature ndash rewards top management support
resources organisational structure and tolerance of risk ndash are not always sufficient to
encourage intrapreneurship in a knowledge-intensive company Employees in
traditional industrial companies and knowledge-intensive companies are likely to be
motivated in different ways This means that the enabling factors are different and
what may be an enabling factor in a traditional industrial company may only be
perceived as a basic or sustaining factor in a knowledge-intensive company
Thus article 3 has argued that communication ie the creation of a common
language culture in a broad sense and processes that support innovativeness should
be added to the original five factors enabling intrapreneurship With respect to
enabling factors a sixth contribution of the dissertation is a distinction between basic
and influencing factors since not all factors directly encourage intrapreneurship
although some are necessary in order to create an intrapreneurial climate
The seventh contribution is the framework for intrapreneurship presented in article 4
The framework defines the task of intrapreneurship as a combination of three
situations involving innovation management ndash exploitation sustainable change and
disruptive change ndash and the learning-related concepts of exploitation and exploration
Six sub-tasks the solution to which are based on the complexity of knowledge and
learning are derived from the framework
191
The eighth contribution of the dissertation appears in article 5 where an analysis of
knowledge management in two companies from the point of view of
intrapreneurship shows different aspects of how activities are practiced It is shown
how the different epistemological starting points of departure are essential to the way
we lsquoseersquo and thereby also how we think and act By applying these perspectives it is
emphasized how intrapreneurship can be enabled from a knowledge-management
perspective The ninth contribution of the dissertation is the indication that a
company should also take epistemological aspects into consideration when designing
organisational structures aimed at enabling intrapreneurship If the aim is to facilitate
intrapreneurship and an intrapreneurial spirit the company should base its activities
on process-oriented initiatives while these should be supplemented by artefact-
oriented initiatives if the aim is to streamline production and explore existing
resources
103 SYNTHESISING THE CONTRIBUTIONS
The dissertation presents two frameworks An overall framework for exploring and
discussing intrapreneurship (article 1) and a framework for exploring
intrapreneurship and innovation in light of knowledge and learning (article 4) Based
on the classification in the overall framework it was decided that the rest of the
dissertation would take a starting point in the internal resource perspective This
section attempts to provide a synthesis of the articles and their contributions to the
literature as described in the previous section This synthesis takes a starting point
especially in the framework developed in article 4
As the case studies showed the classification outlined in the framework was not only
theoretical but was also applicable in practice For instance Danfoss Drives had
actively used the organisational structure to enable intrapreneurship in the form of
corporate ventures internationalisation and formal networks (article 3) Other case
192
companies eg Bang amp Olufsen and Ericsson Telebit also had a similar
organisational structure albeit not as explicit Article 3 also found that the internal
organisation in Danfoss Drives had been organised to encourage innovation and the
creation and dissemination of knowledge which is characteristic of the internal
resource perspective as described in article 1 and which was the focus of article 4
and 5
The classification is applicable in both traditional industrial companies and
knowledge-intensive companies although this dissertation has focused on the latter
As described in chapter 4 the main difference between intrapreneurs in the two types
of companies is that in knowledge organisations they manipulate knowledge rather
than physical products and technologies
These two types of employees are different in nature which means that their
motivation might stem from different factors Managers in knowledge-intensive
companies therefore need other mechanisms to fine-tune the level of intrapreneurship
compared with managers in traditional companies Article 3 examined various
enabling factors with a potential to influence the level of intrapreneurship and found
that although not all factors directly encourage intrapreneurship some are necessary
in order to create an intrapreneurial climate The five enablers ndash rewards top-
management support resources organisational structures and risk ndash which seem to
be significant in traditional industrial companies (Hornsby et al 1993 Kuratko et
al 1990) are found insufficient to fine-tune the level of intrapreneurship in
knowledge-intensive companies
Metaphorically speaking the basic factors can be seen as a thermostat (see article 4)
which is programmed to detect whether the surrounding temperature is above or
below the reference temperature and which responds by simply turning the heat up
or down This means for example that if wages are below minimumaverage wages
193
they can be regulated accordingly Or if insufficient resources are assigned to a
project more resources can be allocated The basic factors can thus be related to
single-loop learning (Argyris and Schoumln 1996) inasmuch as this is mainly a question
of detecting a mismatch and regulating the factors involved until the intrapreneurial
activities are back on track
The intrapreneurial factors found in article 3 are more complex since they require an
active effort and to some extent challenge existing values with regard to innovation
Following the thermostat metaphor and the requirements for entering into a double-
loop learning mode as was also discussed in article 4 the three intrapreneurial
factors take on a new significance For example communication can be seen as an
intrapreneurial factor which encourages the questioning of existing values
Communication can lead to innovation-stimulating discussions and the sharing of
ideas and knowledge resources and can potentially result in a challenge to the
existing values of the organisation which may otherwise be an obstacle to
innovation
Following Argyris and Schoumln (1996) it was further argued in article 4 that single-
loop learning is appropriate for routine and repetitive issues while double-loop
learning seems more relevant for complex and non-programmable tasks This
supports the findings from article 3 that there is a need for other enabling factors in
knowledge-intensive companies than those in industrial companies It also indicates
that basic enablers are easier for managers to use because they can influence them
directly Conversely intrapreneurial enablers can only be influenced indirectly
An insight into these intrapreneurship-enabling factors might be of help to the
managers of an acquiring company eg the acquisition example examined in article
2 While it is often argued that top management should be actively involved in
acquisition processes the factors identified in article 3 show more specifically what it
194
takes to avoid stifling the entrepreneurial spirit in the acquired company One of the
employees from the case company Ericsson Telebit expressed this clearly with
respect to the acquisition of innovativeness ldquoIt is an illusion to believe that you can
take a small creative and innovative company and integrate it into a larger one ndash it is
uphill most of the timerdquo (article 2) It was also shown in article 2 that managers can
be the biggest obstacle to intrapreneurs since a single wrong decision can kill a
project before it gets started Furthermore the interviews reported in article 2 also
indicated that managers can be the worst enemy of ongoing projects too
New ideas and innovative activities will at some point normally acquire the nature
of a project Thus the management of projects and the sharing of knowledge through
the various phases of a project is just as crucial to intrapreneurship as it is to project
management Projects thus often serve as a ldquoframerdquo for innovative activities which
makes project management an important issue in intrapreneurship Article 5 showed
how knowledge management can be a significant managerial tool in project
management It also showed how the use of additional perspectives can enable
knowledge management to advance mutual understanding in the organisation and
make it easier to create and share knowledge Article 5 thus also shows how
intrapreneurship is best enabled in the specific situation
However in the light of the framework in article 4 it also depends on the complexity
of knowledge that intrapreneurs need to manipulate Again this is supported by the
findings in article 3 which showed that enabling factors in industrial companies are
insufficient to encourage intrapreneurship in a knowledge-intensive company
Finally returning to the research questions outlined in section 232 as explained
above article 1 addressed the first research question by clarifying the difference
between corporate entrepreneurship and intrapreneurship and by defining
intrapreneurship as entrepreneurship within the boundaries of the firm The
195
classification offers three organisational perspectives through which intrapreneurship
can be explored starting up a corporate venture using existing internal resources
and internationalisation This theoretical classification is supported by the
organisational structure in Danfoss Drives which is outlined in Chapter 7
The second research question is concerned with how intrapreneurship is influenced
by various factors and crucially if and how it can be influenced by management and
the rest of the organisation Question 2a was discussed in article 2 which showed that
acquiring innovativeness requires the active effort of management both to maintain
innovativeness and to overcome organisational inertia which are often characteristic
of mature organisations The active use of both extrinsic and intrinsic factors is
needed if an entrepreneurial spirit is to be converted into an intrapreneurial spirit
Research question 2b which was addressed in article 3 deals with factors that are
likely to influence intrapreneurship It was suggested that factors known to be
influential in traditional industrial companies ie rewards management support
resources organisational structure and risk are perceived as basic factors only in
knowledge-intensive companies whereas communication culture and processes are
perceived as intrapreneurial factors In general therefore in knowledge-intensive
companies extrinsic factors can be said to be basic factors while intrinsic factors are
more intrapreneurial Article 2 and 3 have offered two different views of how internal
resources can be influence by different extrinsic and intrinsic factors
The third research question is concerned with the relation between intrapreneurship
and the knowledge resources (article 4) Question 3a looked at how intrapreneurship
can be understood in light of knowledge management and article 4 developed a
framework for understanding the relation between intrapreneurship and knowledge
and the knowledge issues that should be taken into account ndash level of articulation and
the depth location and diffusion of knowledge ndash which together define the
complexity of knowledge Question 3b deals with the way in which the knowledge
196
resource can be managed with respect to intrapreneurship Article 5 demonstrated
how intrapreneurship can be enabled by taking a starting point in the process-oriented
knowledge-management perspective Together article 4 and 5 have showed that the
knowledge resource is of importance for intrapreneurship in knowledge-intensive
companies and that it should be addressed and managed based on its complexity
104 LIMITATIONS OF THE STUDY
The overall aim of the five articles has been to provide some answers to both the
overall research question ie exploration and exploitation of internal resources with
respect to intrapreneurship and how this has been influenced by the specific
organisation management managerial initiatives and employees of the organisation
the sub- questions in the three parts of the dissertation and the main question in each
article However due to the methodological choices made and the specific focus of
each article a number of limitations have to be taken into account if the synthesis
presented in the previous section is to be regarded as an overall conclusion
The obvious question is whether it is at all possible to say anything in general about
organisations management managerial initiatives and employees based on
literature reviews and a few case studies The immediate answer is probably not
However intrapreneurship is still a relatively young and unexplored field and the
purpose of this dissertation is just as much to identify areas that need further research
Of course the literature review only includes literature published before the article
was published in 2004 The body of knowledge is rapidly increasing with many new
studies being carried out and more articles and books being published This material
has not been taken into consideration when developing the framework in article 1
Furthermore the case-based articles are of course limited in the sense that they only
consider some of the relevant actors Only a few employees and managers have been
197
interviewed the interviews have not been carried out at multiple sites within the
organisation and the studies are snapshots in time Nor have customers or other
stakeholders been interviewed Doing so might have altered the conclusions in ways
that would not have been possible to control for in these articles and would have
necessitated another research setup
Specifically article 2 is subject to the limitation that it only focuses on employees
who have stayed with the acquired company Given the importance of the integration
phase new insights could be gained from following an acquisition more closely
regarding the attitudes both of those who stay and those who leave as well as of
employees at the acquiring company
Similarly article 3 only investigates one division of Danfoss The significance of the
factors that enable intrapreneurship could therefore gain from extending the study ndash
both to the whole company and to more companies both within the same industry
and in other industries In addition an expansion of the study in article 5 would
definitely increase generalisability
Besides these specific limitations of the articles a more general limitation is that it
was realised early in the research process that there were limited possibilities for
studying cross-sectional longitudinal phenomena since the companies included in
the KNORI project were so different and because changes within the companies also
meant changes in the research opportunities In retrospect more interviews over a
longer period might have given a more balanced view since it would have given
more room for longitudinal aspects of the research themes However it can only be
speculated what such interviews might have added In principle more comprehensive
data could have strengthened the conclusions by improving reliability On the other
hand more factors could be changing over time thus weakening the conclusions
198
With respect to possible generalisations the results would still be based on the same
number of observations represented by the companies in the KNORI project Thus I
have tried to make the most of the available possibilities given the context of the
project and my own absence due to two stays abroad and two maternal leaves I have
therefore framed the research issues in the specific articles without any attempt at
overall generalisation
105 REFERENCES
Alvarez SA amp JB Barney 2002 Resource-Based Theory and the Entrepreneurial
Firm In MA Hitt RD Ireland SM Camp and DL Sexton (eds) Strategic
Entrepreneurship Creating a New Mindset Oxford Blackwell Publishings pp 89-
105
Argyris C amp DA Schoumln 1996 Organisational Learning II Theory Method and
Practice Addison-Wesley Publishing Company
Gartner WB (1988) Who is an entrepreneur Is the wrong question American
Journal of Small Business Vol 12 pp 11-32
Gartner WB (1989) Some suggestions for research on entrepreneurial traits and
characteristics Entrepreneurship Theory amp Practice Vol 14 No 1 pp 27-38
Hitt MA RD Ireland SM Camp amp DL Sexton 2002 Strategic
Entrepreneurship Integrating Entrepreneurial and Strategic Management
Perspectives In MA Hitt RD Ireland SM Camp and DL Sexton (eds)
Strategic Entrepreneurship Creating a New Mindset Oxford Blackwell
Publishings pp 1-16
199
Hornsby JS DW Naffziger DF Kuratko amp RV Montagno 1993 An interactive
model of the corporate entrepreneurship process Entrepreneurship Theory amp
Practice Vol 17 No 2 pp 29-37
Ireland DR MA Hitt CM Camp amp DL Sexton 2001 Integrating
entrepreneurship and strategic management thinking to create firm wealth Academy
of Management Executive Vol 15 No 1 pp 49-63
Kuratko DF RV Montagno amp JS Hornsby 1990 Developing an intrapreneurial
assessment instrument for an effective corporate entrepreneurial environment
Strategic Management Journal Vol 11 No 1 pp 49-58
200
201
APPENDIX I
Case companies
In this appendix the case companies are described as they appeared at the time of
data collection ie in 2003 Since then some of the companies have gone through
major changes including reorganisations and different ownership and key employees
have left etc The companies would therefore look somewhat different today and
from a practical point of view access to them would also be different now In view of
this it was decided that a 2007-description of the companies would not be relevant to
this study
Below each of the companies is given a brief historic and financial description
followed by a short presentation of the different business models used One of the
main selection criteria for the study was to include a number of heterogeneous
companies Thus the first company is a subsidiary of a major electronics firm which
specialises in specific development projects while the second is a division of a large
industrial corporation The third company develops produces and sells electronic
goods while the fourth is a producer of large-scale sorting solutions for airports
postal services and industry The fifth is a network intermediator which specialises in
wireless solutions for the Internet Before going on to describe companies
individually a framework characterising five cases will be briefly presented
The cases for the study were selected on the basis of figure 31 (page 40) according
to which the companies obtain and improve knowledge internally and where renewal
was predicted to occur as described in the figure Another way used to categorise the
202
companies was Greinerrsquos (1972) life cycle model which was chosen for its wide
application especially in studies of company structures and strategies in a non-static
world A simplification of the model is shown in figure A1
Size of organi-zation
Large
Small
Age of organization
PHASE 1 PHASE 2 PHASE 3 PHASE 4 PHASE 5
Evolution stages
Revolution stages
1 Crisis of LEADERSHIP
5 Crisis of
2 Crisis of AUTONOMY
3 Crisis of CONTROL
4 Crisis of RED TAPE
1 Growth through CREATIVITY
2 Growth through DIRECTION
3 Growth through DELEGATION
4 Growth through COORDINATION
5 Growth through COLLABORATION
Young Mature
Figure A1 The five phases of growth (Greiner 1972 p 41)
Greinerrsquos life cycle characteristics were used as an overall framework to help
understand the different organisational challenges facing the companies in the study
This follows the hypothesis that age and history have a number of implications for
the innovation process The big difference in age and history ndash the youngest firm
having existed for only three years and the oldest for 88 years ndash was thus an
important factor in the study of innovation activities in the five companies
Since a company can be characterised by the products it makes theories about product
life cycles formed another important part of understanding a companyrsquos innovative
activities Tushman amp Nadler (1996) argue that the product life cycle has implications
for the type of innovation activities that dominates in certain periods This is illustrated
in figure A2
203
Emergence
Dominant Design
Growth
Mature
Major product Minor process
Major process Minor product
Minor product Minor process
Major product Minor process
Low High
Dominant Innovation Types
High HighLearning Requirement
ProductProcess Substitution
Figure A2 Types of innovation over product life cycle
(Tushman amp Nadler 1996 p 139)
Based on the position of their products in the life cycle therefore an analysis of the
companiesrsquo innovative activities was able to conclude whether they focused on product
or process innovation (Abernathy amp Utterback 1978) Grant (2002) argues that the
type of innovation can also be seen as an indicator of the rate of innovation as
illustrated in figure A3
Based on figure A3 product innovation is characterised by the highest rate of
innovation and process innovation the lowest Grant (2002 p 373) introduces a third
type of innovation strategic innovation which involves new combinations of markets
and products According to Grant this type of innovation can be seen as a medium
rate of innovation Figure A3 illustrates the importance of evolution over time where
strategic innovations form an important part of future innovations because of market
saturation and the lack of possible product innovations
204
Figure A3 Innovation over the life cycle from technological to strategic innovation
(Grant 2002 p 373)
A1 ERICSSON TELEBIT
Telebit was established in 1992 and employed 13 people In 1999 the firm merged
with the Swedish corporation LM Ericsson (Ericsson) when it acquired its current
name Ericsson Telebit (TED is the internal abbreviation for Ericsson Telebit) In the
process the number of employees grew from approximately 70 to 140 within twelve
months In 2003 TED was a local design centre mainly concentrating on software
development for Ericssonrsquos mobile and fixed Internet products
In 1995 TED became the first company to introduce a commercial router for Internet
Protocol version 6 (IPv6) and was a leading provider of software based on IPv6
technology working continuously to improve the application and development of this
IP-platform After joining Ericsson the company became a separate design centre for
long-term projects for different product units in the Ericsson organisation whereas
Rat
e o
f in
no
vati
on
Time
Productinnovation
Processinnovation
Strategicinnovation
205
previously it had developed customer products directly Since the company only had
one overall customer Ericsson the various product units became known as sponsors
The longer duration of projects and the move down the value chain had a number of
implications for organisational structure and put a strain on the companyrsquos
entrepreneurial culture Work was structured around two major projects instead of a
large number of smaller projects of short duration One project called SoftWare for
Internet Protocol for Ericsson (SWIPE) focused on software development for
routers while the other focused on IP solutions for mobile terminals and was named
Terminal Internet Protocol (TIP) Ericsson Telebit is represented by the middle arrow
in figure 31 which shows that an organisation based on a number of large projects
often acquires new knowledge through these projects even though the end product is
produced in another (production) process
The age and size of the organisation together with the focus on building an
appropriate structure for the running of the two large projects led to the conclusion
that Ericsson Telebit had reached the Coordination phase Since its owner was its
only customer Ericsson Telebit was forced to run an efficient and cost-minimising
organisation as well as nurturing creativity and opportunity The crisis which
followed the need to control costs in a creative environment had led to a new
structure where employees were more closely connected with specific projects
replacing the more organic structure there before the company joined Ericsson
Since all products were to be used in the mobile terminals and Internet of tomorrow
the rate of innovation was as high as it could be in the twenty-first century This is
illustrated by the fact that all the applications developed by Ericsson Telebit up to
now had not yet reached the market
206
A2 DANFOSS DRIVES
Danfoss Drives is the largest division of the Motion Control segment of Danfoss
Group one of Denmarkrsquos largest industrial corporations The Motion Controls
segment was established ultimo 2000 and apart from Danfoss Drives it also
includes two other divisions Gearmotors and Marine Systems In 2001 the turnover
of the Motion Control Segment was almost DKK 3 billion with customers all over
the world
Activities at Danfoss Drives can be dated back to 1968 with the introduction of the
first mass-produced frequency converter Heating Ventilation and Air-Condition
applications (HVAC) were introduced in 1990 and after the acquisition of Bauer a
gear motor manufacturer in 1999 the Motion Controls Segment was marketed as a
one-stop shop for the industry Apart from its headquarters in Graasten Denmark
Danfoss Drives had three production sites established via acquisitions in America
and the founding of a company in Germany In 2003 the company served a wide
range of customers across different industries eg chemicals and consumer goods
metals and mining pulp and paper refrigeration and the automotive industry
With its emphasis on the continuous introduction of new and improved products
Danfoss Drives has attached a lot of importance to technological innovation The
development of new products for the Drives division was the responsibility of a
Product Development manager has responsibility for The development process was
organised in a matrix structure with technology centres serving the different projects
which again were organised in a ldquocore teamrdquo and a number of ldquosub-teamsrdquo In
managing the development process the Product Development manager was assisted
by the Strategic Product Development Unit The Danfoss Group had a number of
cross-unit project groups which were set up to co-ordinate and assist in different areas
such as sales amp marketing production and ITfinance As with Ericsson Telebit
207
Danfoss Drives is represented by the middle arrow in figure 31 Although the general
organisational structure of Danfoss Drives was very different from Ericsson Telebit
the two companies were similar with regard to the organisation of the development
projects where projects were the main source of innovation and adoption of new
knowledge
With nearly 40 yearsrsquo experience of developing high-tech products for a broad range
of industries Danfoss Drives remains committed to continuous innovation Given its
size and number of markets and it was argued based on its actions and
organisational structure they had reached the collaboration stage The company had
formed a matrix structure to enable it to combine technological inventions with
market demands and the use of headquarter staff also followed the characteristics of
the collaboration stage inasmuch as they worked in interdisciplinary teams which
consult with rather than manage field units
It is difficult to precisely describe Danfoss Driversquos rate of innovation since they
focus on both product and strategic innovations And this was made even more
complicated by the fact that the companyrsquos products also provided process
innovations to its customers However based on the companyrsquos historical product
development the first mass-produced frequency converter developed in 1968 and the
HVAC technology developed in 1990 represent the main radical innovations All
subsequent innovations were incremental Danfoss Drivesrsquo future rate of innovation
was thus characterised as medium-high implying that they would continue to be at
the cutting edge of their technological platforms
A3 BANG amp OLUFSEN
Bang amp Olufsen (BampO) the best-known Danish company in the niche market for
electronic consumer goods was established in 1925 as a producer of radios By 2003
208
it had become a globally recognised niche producer of audio television and telephone
products at the high end of the market with a turnover in the financial year
20012002 of DKK 42 billion and after-tax profits of DKK 147 million The
company employs 2800 people and its main activities are located in Struer
Product development costs of DKK 333 million reflect the fact that innovation
through new product launches are an important part of the companyrsquos strategy as a
high-end producer BampO has divided its activities in two main groups branded and
non-branded businesses The branded businesses include activities in the audiovisual
and telephone markets while the non-branded businesses covered a number of
diversified activities
Branded businesses are by far the largest part of BampO accounting for more than 90
percent of turnover BampO Telecom is operated as a separate division and sells its
products through both BampO shops and telecom companies As a leading producer of
high-end audio products BampO is forced to continuously introduce new products
which in 2003 led to the presentation of ldquoa major acoustic productrdquo The telecom
division was established in 1986 in collaboration with the former Jysk Telefon Its
main product in 2003 was wireless telephones which account for more than 75
percent of turnover
BampO Medical AS is the largest of the non-branded businesses with an annual
turnover of DKK 250-300 million and 290 employees Products are developed in
collaboration with leading companies in the medical industry including Novo
Nordisk Another example was the partnership with 3M which led to the
development of the worldrsquos first digital stethoscope
BampO ICEpower AS was established by BampO and the inventor of a new technology
for digital amplifiers While initially experiencing significant growth in turnover
recent major investments in technology and product development had led to a loss of
209
more than 50 percent of turnover BampO has high hopes for the future potential of the
technology since it can be implemented in a large number of products
Under the name New Businesses 35 employees were involved in testing the potential
of developing and launching new products in new or existing markets Up to now the
company had identified opportunities in the market for car audio systems including
the further development of loudspeakers to be sold through existing distribution
channels
Apart from the divisions set up to develop and sell products BampO had also
established BampO Operations a division focusing on process-optimising the
production of products developed in the other divisions As part of this optimisation
BampO Operations had decided to outsource part of the production of telephones
BampOrsquos innovative activities were concentrated in a separate department with around
300 employees Apart from the joint activities with the medical industry in BampO
Medical all product innovation was carried out in this department BampO is thus an
example of a company that tries to benefit from ideas and knowledge generated in the
RampD department This was represented by the right-hand side of figure 31
As a more than 75-year-old company employing 2800 people in a complex
organisational structure BampO had reached the red-tape crisis because of the need to
move from the Coordination phase to the Collaboration stage To address this the
company began a process of reconfiguring those business activities where there was a
need for a more spontaneous way of working The lsquonewrsquo structure of the RampD
department can be seen in this perspective In 2003 BampO started on a restructuring
of the organisation from being ldquoproduct-project-orientedrdquo to combining all activities
in one central RampD department Prior to this BampO had RampD departments in all
product lines (except medical)
210
Even though innovation activities in the branded businesses were focused on product
development the rate of innovation was low because it involved a minor degree of
traditional product innovation This conclusion was based on the fact that from a
generic point of view all the products were late in their life cycle and the innovations
were mostly focused on design attributes and the addition of some new
functionalities BampO Medical and the New businessesrsquo focus on strategic innovation
was based on identifying new markets for launching products made using BampOrsquos
core competencies which is the main reason for the conclusion that BampOrsquos
innovation activities mainly involved a low rate of innovation
A4 CRISPLANT
Crisplant founded in 1951 by a Danish entrepreneur had had a number of different
owners since the beginning of the 1970rsquos In 2003 after a short period as an
independent company on the Danish stock exchange Crisplant AS became part of
the British engineering company FKI Group which had more than 17000 employees
and a total turnover of euro 2790 million Organisationally Crisplant AS was part of
FKI Logistex a division specialising in automated material flow solutions and
employed more than 900 employees with an annual turnover of approximately euro 160
million
As a project-oriented company Crisplant AS made customised sorting systems for
airport baggage-handling parcel carriers retailers mail-order companies internet
trading and manufacturersrsquo distribution In 2003 Crisplant had built more than 600
sorting systems around the world and was continuously looking for new markets
Software development was crucial to Crisplantrsquos product innovation and in 2001 it
therefore acquired Dator one of its main suppliers of operating systems at the same
time changing its name to Dator-Crisplant One of the reasons for acquiring Dator
was that the companyrsquos financial problems made its future uncertain Since this could
211
have interrupted Crisplantsrsquo supply of operating systems it seemed strategically
sound to secure the existence of one of its main suppliers by buying it In 2003 all
software development was carried out in Dator-Crisplant and this resulted in a
number of competitive advantages since Crisplant could now offer its customers a
more integrated software solution One example of this was the fully automated mini
post office Parcel Matetrade which enabled easy access to postal services either as a
single product or as an integrated solution
Project management was a cornerstone of Crisplantrsquos business model and the
company had therefore developed its own project management model based on the
identification of eight phases each characterised by a set of specific targets Before
moving to the next phase a ldquogaterdquo needed to be crossed which included a number of
evaluations and the preparation of plans and budgets for the next phase The use of a
common project model ensured that agreements time schedules and budgets were
kept and also made it easier to accumulate experience and knowledge for future
projects The model is illustrated in figure A4
Figure A4 Crisplantrsquos project management model
Although Crisplant was mainly structured around its three main business units the
company also had an RampD department which carried out basic research in relation to
Automatic High-Speed Transport and Sorting Systems which formed a substantial
part of operations In Crisplant therefore innovative activities were basically
represented by the lsquoright arrowrsquo in figure 31 similar to BampO ndash at least as regards the
more radical innovations The customer-oriented projects which had the character of
212
production processes also needed to be innovative although the innovations which
took place here were more incremental in nature All in all therefore major parts of
the companyrsquos knowledge generation took place in the projects as reflected by the
middle part of figure 31
A5 END2END
End2End was founded in 1999 by a group of executives from mobile network
operators with venture capital from Deutsche Bank Capital Venture Partners
Hewlett-Packard and Cisco Systems After the latest round of financing in August
2002 the total amount of invested capital including debt and equity was euro 654
million The company which was situated in both Denmark and the United Kingdom
had about 40 employees with the Headquarters and Network Operating Centre
(NOP) in Aalborg and the so-called Data Centre in Copenhagen
All management of the data centre was controlled electronically from Aalborg and
the company had no official address in Copenhagen As the first international Point-
of-Presence (POP) the company had a sales office in Bracknell UK and depending
on demand planned to open POPs in a number of locations around the world (See
figure A5)
213
Figure A5 Diagram of End2Endrsquos operations
The company was a managed service provider and contentapplication aggregator for
mobile data services and was a leader in its field in Europe End2End offered its
customers lower up-front investments and increased data speed enabling mobile
operators to take up opportunities as they arose End2End provided these benefits to
customers in the form of turnkey services via its infrastructure in Denmark and the
UK The actual software solutions were delivered in a partnership with third-party
software developers the solutions being based on open standards that complement
mobile operatorsrsquo existing offerings and capabilities End2End service delivery
infrastructure manages the complex network between end customer mobile operator
and software developer Apart from managing mobile data services End2End consults
its customers on opportunities tests and evaluations of profitable mobile data
services
Customers include mobile operators Internet portals providers of mobile service
applications network providers and brand owners looking for a quick flexible and
low-cost access to mobile infrastructure
214
With a management team of seven End2End mobile had reached the delegation
phase where all major areas had their own manager Tage Rasmussen who was CEO
in 2003 was responsible for the transition of the company from a technically led
company to a more commercially focused organisation while founder and president
Peter Langkilde was responsible for funding and overall business development
Apart from these two executives who also served on the board of directors End2End
had appointed five managers responsible for Sales Marketing Network Operations
Customer Operations and Finance With only 40 employees the company was not
expected to have reached the crisis of co-ordination but management seemed to be
concerned about the transition to a more commercially and effective organisation that
was focused on developing products and services to meet real market needs
The role of intermediator involved strategic innovation since End2End was creating
new combinations of services in the value chain which again created process
innovations for its customers Advising and consulting customers in the building and
outsourcing of digital infrastructures was part of its offerings and this clearly
underlined the importance of strategic considerations Because of the relatively new
and undeveloped market for the outsourcing of IT infrastructures the rate of
innovation was considered to be high This is based on the impact of strategic
innovations on the value chains of the future and in this respect the fact that
End2Endrsquos products and services created process innovation for its customers could
be seen as a valuable by-product
Based on the framework in figure 31 End2End can be seen as an example of a
company where innovation takes place in the production processes (software
development) Thus production was the main way of acquiring new knowledge and
ideas which is represented by the left-hand side of figure 31
215
A6 REFERENCES
Grant RM 2002 Contemporary Strategy Analysis Concepts Techniques
Applications Oxford Blackwell Publishing
Greiner LE 1972 Evolution and revolution as organizations grow Harvard
Business Rerview July-August pp 37-46
Tushman M amp D Nadler 1996 Organizing for innovation In Ken Starkey (ed)
How Organizations Learn A Critical Reader pp 135-155
216
217
APPENDIX II
English Summary
Intrapreneurship is a developing field which it is the purpose of this dissertation to
contribute to The study is primarily concerned with intrapreneurship from an internal
resources perspective The aim of intrapreneurship from this perspective is to identify
previously undiscovered organisational resources with respect to innovation or
combine existing resources in ways that enable these to become valuable innovations
The dissertation is comprised of five articles all of which are related to the overall
research theme exploration and exploitation of internal resources with respect to
intrapreneurship The overall agenda of the dissertation is to study the intrapreneurial
potential in its natural settings Based on data from the five case companies it was
decided to let the articles develop from the most interesting data and observations
This means that the articles are not part of a step-by-step research strategy leading to
a final conclusion but are discussions of different subtopics within the overall topic
drawing on different theories and different methodologies
The first article introduces the concept of corporate entrepreneurship This has been
used to explain various organisational phenomena ranging from strategy through
management in general to innovation and the abundant use of labels and
perspectives has consequently led to a lack of clarity Based on a literature review a
framework for corporate entrepreneurship has developed including intrapreneurship
exopreneurship and four organisational perspectives corporate venturing internal
resources internationalisation and external networks
218
The aim of the second article is to explore how innovativeness and creativity in a
small high-tech company changes after the company is acquired by a larger company
The empirical part of the article is based on interview and questionnaire data with a
focus on employeesrsquo perception of innovativeness and creativity including their own
innovativeness in relation to the possibilities offered within the organisational
structure The results indicate that entrepreneurial spirit innovativeness and
creativity in the case company were related to the lack of boundaries to and contact
with customers These driving forces could not be sustained when the organisation
matured and was acquired by a larger company
The aim of the third article is to provide an understanding of the various factors that
enable intrapreneurship in established companies The article reports on a case study
of intrapreneurship in a large knowledge-intensive industrial company Based on the
existing literature it is suggested that the use of different factors can either enable or
inhibit intrapreneurship and five enabling factors are identified Based on interviews
on-site observations and documents and reports the five factors are examined and
alternative factors considered The five enabling factors that are identified in the
literature are not sufficient to enable intrapreneurship in knowledge-intensive
companies and it is concluded that three additional factors ndash communication culture
and processes ndash should also be taken into account
The emergence of knowledge-based organisations and the increased importance of
knowledge as the key to competitive advantage poses new challenges for managers
and researchers alike The fourth article attempts to enlighten theories of
intrapreneurship and innovation by means of state-of-the-art knowledge management
theory and organisational learning theory
The fifth article analyses project management activities in two companies from a
knowledge management perspective It is shown how human competencies it-
219
systems and project management systems are analysed from two perspectives an
artefact-oriented and a process-oriented perspective From the first perspective
project management seems to consist of similar components in the two companies
whereas the process-oriented perspective identifies context-dependent differences It
is concluded that awareness of different perspectives opens up the possibilities for
more managerial options and better understanding in practice
220
221
APPENDIX III
Dansk resume
Intraprenoslashrskab er et felt under udvikling hvor mange brikker mangler at falde paring
plads for at opnaring en forstaringelse for hvorledes fornyelse og skabelse af nye
virksomheder kan ske inden for rammerne af etablerede virksomheder Formaringlet med
afhandlingen er at bidrage til dette puslespil Afhandling omhandler primaeligrt
intraprenoslashrskab fra et internt ressource perspektiv hvilket betyder at intraprenoslashrskab
belyses ved at fokusere paring udnyttelsen af interne organisatoriske ressourcer eller ved
at kombinere virksomhedens eksisterende ressourcer paring nye maringder som kan goslashre
dem vaeligrdifulde med henblik paring innovation
Afhandlingen bestaringr af fem artikler som alle er relateret til det overordnede emne
udvikling og udnyttelse af interne ressourcer med henblik paring intraprenoslashrskab
Afhandlingen studerer det intraprenante potentiale i dets naturlige omgivelser og
artiklerne er baseret paring de mest interessante data og observationer fra de fem case
virksomheder der har medvirket i projektet Det betyder at artiklerne ikke foslashlger en
skridtvis forskningsstrategi frem mod eacuten samlet konklusion men fremstaringr som
forskellige artikler der indenfor den overordnede problemstilling traeligkker paring
forskellige teorier og baseres paring forskellige metoder
Den foslashrste artikel introducerer begrebet corporate entreprenoslashrskab som er blevet
anvendt til at forklare forskellige organisatoriske faelignomener Fra strategi over ledelse
i al almindelighed til innovation Dette har medfoslashrt en mangfoldighed af begreber og
perspektiver som har skabt stor uklarhed omkring corporate entreprenoslashrskab Med
222
henblik paring at etablere et fundamentet for de foslashlgende artikler redegoslashres der i den
foslashrste artikel for corporate entreprenoslashrskabsbegrebet ud fra forskellige perspektiver
Der praeligsenteres i artiklen endvidere et overblik ved hjaeliglp af en model der
indeholder intraprenoslashrskab og exoprenoslashrskab samt fire organisatoriske perspektiver
corporate venturing interne ressourcer internationalisering og eksterne netvaeligrk
Den anden artikel belyser hvordan innovation og kreativitet i en lille virksomhed
aeligndrer sig naringr virksomheden opkoslashbes af en stoslashrre virksomhed Den empiriske del af
artiklen er baseret paring interviews og sposlashrgeskemadata med fokus paring medarbejdernes
opfattelse af innovation og kreativitet inklusiv deres egen innovationsevne i relation
til de muligheder der findes inden for organisationen Resultaterne indikerer at den
entreprenante aringnd innovationsevne og kreativitet i case-virksomheden isaeligr var
relateret til den uformelle organisationsstruktur og taeligtte kundekontakt Disse
drivkraeligfter kunne ikke fastholdes da organisationen blev opkoslashbt af en stoslashrre og mere
etableret virksomhed
Den tredje artikel har til formaringl at skabe en forstaringelse for de forskellige faktorer der
kan fremme intraprenoslashrskab i etablerede virksomheder Med udgangspunkt i et
litteraturstudie identificeres fem faktorer der enten kan fremme eller haeligmme
intraprenoslashrskab Betydningen af de fem faktorer undersoslashges i et casestudie i en stor
videnintensiv industrivirksomhed De fem faktorer findes ikke tilstraeligkkelige til at
fremme intraprenoslashrskab og alternative faktorer foreslarings Det resulterer i at yderligere
tre faktorer ndash kommunikation kultur og processer ndash foreslarings som intraprenante
faktorer i videnintensive virksomheder
Den oslashgede forskningsmaeligssige og erhvervspolitiske interesse for videnintensive
virksomheder og stigende betydning af viden som noslashglen til konkurrencemaeligssige
fordele stiller ledere og forskere overfor nye udfordringer Derfor belyser den fjerde
artikel intraprenoslashrskabs- og innovationsteori ved hjaeliglp af videnledelsesteori og
223
organisatorisk laeligringsteori Paring baggrund af et litteraturstudie udvikles en model der
belyser intraprenoslashrskab ud fra tre forskellige situationer for innovationsledelse Den
teknologiudnyttende situation den stabilt forandrende situation og den omvaeligltende
forandringssituation og to laeligringsrelaterede koncepter udnyttelse og udvikling
Modellen beskriver hvorledes intraprenoslashrskab vil fremstaring i hver af de seks
undergrupper
Den femte artikel analyserer projektledelsesaktiviteter i to virksomheder fra et
videnledelsesperspektiv Det vises hvordan menneskelige kompetencer it-systemer
og projektledelsessystemer kan analyseres ud fra to perspektiver et artefaktorienteret
og et procesorienteret perspektiv Med udgangspunkt i det foslashrste perspektiv fremstaringr
projektledelsen i de to virksomheder nogenlunde ens mens det procesorienterede
perspektiv identificerer kontekstafhaeligngige forskelle Det konkluderes at bevidsthed
om forskellige perspektiver giver flere ledelsesmaeligssige muligheder og en bedre
forstaringelse i praksis og af praksis
Det konkluderes at denne afhandling primaeligrt har bidraget med brikker til den del af
intraprenoslashrskabspuslespillet som vedroslashrer virksomheders eksisterende
organisatoriske ressourcer Den foslashrste artikel viste hvordan intraprenoslashrskab kan
gribes an fra forskellige perspektiver Mens artikel to og tre praeligsenterede to
forskellige syn paring hvordan interne ressourcer kan paringvirkes af forskellige indre og
ydre faktorer Artikel fire og fem pegede paring at videnressourcer er af afgoslashrende
betydning for intraprenoslashrskab i videnintensive virksomheder og at de derfor boslashr
adresseres og ledelses med udgangspunkt i deres kompleksitet
i
Preface
Changes in the driving forces of the global economy affect the competitive
environment of companies and require new management methods and
tools as well as new ways of organising activities By now it has become
quite clear that companiesrsquo innovativeness development of new
knowledge and exploitation of existing ideas are a top priority for both
politicians and managers
This in turn has driven research into such topics as entrepreneurship
innovation management intrapreneurship knowledge management and
corporate venturing Building on existing knowledge in various fields the
aim of this research is to contribute insights into how new ideas can not
only be fostered within large companies but also be commercialised by
means of the entrepreneurial forces within their formal structures
Corporate entrepreneurship corporate venturing and intrapreneurship are
some of the general terms for organising innovative activities in a way that
combines the advantages of established companies with the creativity and
recklessness of the individual entrepreneur Since these terms also cover
new techniques principles methods and organisational forms ndash and
sometimes well-known management ideas applied in new ways and often
in new combinations ndash they can be difficult to define precisely One
starting point of this research project has therefore been to disentangle the
concepts as they are used in the research literature
ii
This dissertation consists of several separate articles that together represent
my endeavours in the field of intrapreneurship and knowledge
management This is a field of both research and practice and the
dissertation is partly an account of current ideas in the area and partly an
insight into a variety of issues related to how entrepreneurial need is being
managed in different Danish companies
While therefore intrapreneurship is one perspective on companiesrsquo
management of innovative activities this dissertation has taken a starting
point in the management of knowledge to understand how innovativeness
is managed within companies Here knowledge-management activities are
seen neither as a technological solution nor as an isolated task for a specific
department but rather more in terms of inter-relating management domains
and creating space for innovative and entrepreneurial activities This space
could be found either within the existing organisational structures of the
company be supported by processes and activities that cross both
departmental and organisational borders or be established through the
formation of new companies
Reflecting upon the process which has led to the presentation of this
dissertation it seems that the life of a PhD student in many senses offers
experiences that can be summarised in the light of corporate
entrepreneurship This is at least the case if we accept that corporate
entrepreneurship as it will be argued in the dissertation can be seen as
consisting of four organisational perspectives corporate venturing internal
knowledge resources internationalisation and external networks
The current PhD project and dissertation is a corporate venture related to
but separate from the Aarhus School of Business Aarhus University and is
iii
based on existing competencies combined with the exploration of new
ones In the process the internal resources ie the research traditions and
perspectives that I brought with me together with the competencies and
skills from my previous education played a role in forming the research
questions and starting points of the project
Given the global nature of research internationalisation is an important
part of any PhD project This became clear to me in relation to my two
stays abroad which both contributed to my personal development and were
a source of new knowledge The external networks I built up during these
stays have been very helpful in discussing and commenting on previous
drafts of the papers
The process leading to the dissertation is not only manifested in a formal
plan consisting of seminars courses knowledge dissemination change of
academic environment and writing papers My work on the dissertation
can best be understood by dividing it into several stages as shown in figure
A The first period (May 2002 ndash April 2003) was spent participating in
doctoral courses and preparing the thesis proposal The overall theme for
the research project was determined by KNORI (KNowledge-Intensive
ORganisations and Intrapreneurship) a project which provided the funding
for the research but within this I was to find seed and nurture my own
corporate venture
The next phase began in May 2003 when I changed my academic
environment to spend a few weeks at Professor Georg von Kroghrsquos chair at
The University of St Gallen in Switzerland From October 2003 to April
2004 I also had the opportunity to experience daily life at Stanford
iv
University California This period involved the use of internal knowledge
resources and the development and use of external networks
The third phase of the project has been by far the longest most challenging
and most fruitful As regards time it was spread over more than three years
(from May 2004 to October 2007) However as shown in Figure A it was
divided into three periods since I gave birth to two children ndash in 2004 and
2006 ndash before finally finishing the dissertation in 2007
I would like to take the opportunity here to thank everyone who has been
involved in this process in one way or another Thanks are due to the
Ministry of Science Technology and Innovation for providing funding for
the research via the KNORI project I am also grateful for the generous
financial support from the Aarhus School of Business Aarhus University
and the Tuborg Foundation
I am especially grateful to my supervisors Professor John Parm Ulhoslashi and
Professor Anders Drejer without whose lively discussions I would never
have been so stubborn and my dissertation would not be what it is today I
am also grateful for the many inputs from colleagues at the Department of
Management at the Aarhus School of Business Aarhus University I am
especially thankful to Jakob Lauring for general support suggestions and
ideas for improvements to the dissertation I also want to thank my new
colleagues at the School of Management and Economics Aarhus
University for welcoming me and giving me time to finish my PhD
v
Figure A Timeline for the PhD process
The PhD process
Enrolled as a PhD student May 1st 2002
Personal
Publications
Article 1 Published December 2004 Submitted October 2004
Accepted November 2004
Article 2 Published October 2006
Submitted Nov 2005 Accepted July 2006
Article 5 Published June 2004
Submitted March 2004 Accepted April 2004
Article 3Published July 2005
Submitted September 2004 Accepted October 2004
Article 5 SubmittedSeptember
2007
Maternity Leave Magnus September 8th 2004 ndashNovember 7th 2005
Maternity Leave Tobias February 14th 2006 ndash
May 29th 2007
Thesis ProposalApril 11th 2003
PhD dissertation submitted
November 2007
Stanford UniverityOctober 1st 2003 ndash
April 5th 2004
Univerity of St Gallen May 5th ndash May 17th 2003 June 21st ndash June 28th 2003
PhD dissertationfinished
September 2007
vi
The project involved the participation of five companies and I would like
to thank the numerous people who took time to talk to me and helped me
with access in various ways In particular thanks to Allan Krogh Erlandsen
at Bang amp Olufsen Hanne Buje Jensen and Brian Larsen at Crisplant Niels
Gade at Danfoss Drives Morten V Jensen at End2End as well as Poul
Erik Dybdal and Erik Reinholt at Ericsson Telebit for giving me access to
their companies Without their hospitality and the time they and other
employees took to talk to me this dissertation would not have been written
I also want to thank Sine Nissen for being my co-pilot during the data
collection and Mette Line Chemnitz Mie Skovsgaard Nielsen and Lene
Thisgaard for assistance with the transcriptions I am also deeply grateful to
Anders Jacob Raj Andersen Mikkel Gadmar and Christian Nielsen for help
and inspiration I would also like to thank my co-authors in the individual
papers Anders Drejer John P Ulhoslashi Heine Kaasgaard Bang and Per
Nikolaj Bukh for inspiration and the opportunity to work together From
my visits abroad I want to thank Georg von Krogh and his research team at
St Gallen Switzerland for hospitality and for taking good care of me in
May and June 2003 Thanks also to SCANCOR Stanford University and
my colleagues there from October 2003 to April 2004
My family and friends who have supported me during the whole process
have been an infinite source of comfort to me Above all my parents and
my best friend Vibeke Reuter Lapiki were indispensable Finally I want
to thank my husband Per Nikolaj who has listened to my complaints ndash
especially in the most critical periods and when I felt I was being treated
unfairly You were always there to support me During the third part of the
PhD project my two sons Magnus and Tobias were there to make me
vii
focus on my work and cheer me up This more than made up for the many
months of morning sickness and general inaction
Karina Skovvang Christensen
Aarhus University
December 2007
viii
ix
Contents
Preface i
Contentsix
PART I 1
Introduction 1
CHAPTER 1 3
The Background 3 11 Innovativeness in Denmark5
12 The KNORI project 9
13 References11
CHAPTER 2 13
Research scope themes and structure 13
21 Corporate entrepreneurship15
22 The corporate entrepreneurship field 18
23 focus and structure of The dissertation 21
231 The structure of the dissertation 21
232 The research questions 22
233 The articles in the dissertation23
24 References27
CHAPTER 3 31
Methodology 31
31 From Paradigm to research approach32
32 Unit of Analysis 34
x
33 Selection of the case companies37
34 The case companies 40
35 The case study approach 40
351 Definition of a case study41
352 Action research or research in action 42
36 Validity of the methodology 44
361 The use of Multiple Sources of Evidence45
37 The research interviews 46
371 The transcription process49
38 References50
CHAPTER 4 57
A Classification of the Corporate Entrepreneurship Umbrella Labels and Perspectives 57
41 Introduction59
42 Theoretical roots entrepreneurship 61
43 The appropriate label 61
44 Defining corporate entrepreneurship 63
45 Perspectives on corporate entpreneurship64
451 Corporate venturing65
452 Internal (intangible) resources66
453 Internationalisation67
454 External networks and alliances 67
455 Towards a framework for corporate entrepreneurship 68
46 Conclusion 68
47 References70
CHAPTER 5 75
Postscript to article 175 51 Towards a framework for corporate entrepreneurship 76
52 Concluding remarks 78
53 References81
xi
PART II 83
Intrapreneurship from an Internal Resources Perspective 83
CHAPTER 6 87
Losing innovativeness the challenge of being acquired87
61 Introduction89
62 Innovation through acquisition the entrepreneurial challenge 90
621 The case for innovation through acquisitions91
622 Managing the post-acquisition process92
63 Method93
631 The interviews 93
632 The questionnaire 93
64 Innovativeness of Ericsson Telebit from spin-off to integration94
641 Incorporation into LM Ericsson 95
642 Ericsson Telebitrsquos products 96
643 The Market 96
644 From customers to sponsors 97
645 Organisational structure 97
646 Employees 98
65 Discussion of Ericsson Telebitrsquos innovativeness98
651 Creativity99
652 Innovation100
653 The innovation process102
66 Concluding discussion 103
661 Implications for practice104
662 Implications for research 105
67 References106
CHAPTER 7 111
Enabling Intrapreneurship The Case of a Knowledge-Intensive Industrial Company 111
71 Introduction113
72 Corporate entrepreneurship114
73 Methodology116
74 Danfoss Drives117
741 Strategy and the organisation 117
xii
75 Corporate entreprenership at Danfoss Drives 118
751 Rewards118
752 Management support 119
753 Resources 119
754 Organisational structure 120
755 Risk 122
76 Towards a more complete model 123
761 Communication 124
762 Culture125
763 Process127
77 Conclusion and implications127
78 References128
PART III 131
Managing Internal Knowledge Resources131
CHAPTER 8 139
Understanding Intrapreneurship by means of state-of-the-art knowledge management and
Organisational learning 139
81 On the developing need for intrapreneurship141
82 Innovation management and intrapreneurship 144
821 Innovation management the context of intrapreneurship 145
822 Contingent situations for innovation management 146
823 Intrapreneurs who makes the innovations 148
83 Knowledge in an innovation perspective 149
831 Knowledge management in a knowledge society149
832 Different types of knowledge 150
Level of articulation tacit to explicit 150
Depth of knowledge Dreyfuss and Dreyfuss 151
Location of knowledge 152
Diffusion of knowledge undiffused to diffused 152
Complixity of knowledge 153
84 Understanding intrapreneurship better153
841 The purpose exploitation and exploration 154
842 The content learning leading to innovation 154
843 A framework for intrapreneurship in light of knowledge155
85 References157
xiii
CHAPTER 9 159
Knowledge Management in Perspective(s) An Analysis of Project Management in Two Companies
159
91 Introduction162
92 Knowledge management in practice 163
921 Two perspectives of knowledge management 163
922 Knowledge Management and the perception of Knowledge 165
923 Strategies for knowledge management166
93 The Two Companies and the methodology 167
94 Knowledge Management in the two companies 168
941 Knowledge management at Bang amp Olufsen 168
942 Knowledge Management at Crisplant 170
943 Knowledge Management as Project Management172
95 Knowledge Management in Perspective(s)174
951 Artefact-Oriented Epistemology 174
952 Process-Oriented Epistemology 175
96 Concluding Remarks177
97 References180
PART IV 183
CHAPTER 10 185
Findings and Perspectives185
101 Elements of this dissertation 187
102 main points and contributions 189
103 Synthesising the contributions 191
104 Limitations of the study 196
105 References198
APPENDIX I 201
Case companies201
A1 Ericsson Telebit 204
A2 Danfoss Drives206
A3 Bang amp Olufsen 207
A4 Crisplant210
xiv
A5 End2End212
A6 References215
APPENDIX II 217
English Summary 217
APPENDIX III 221
Dansk resume221
1
PART I
Introduction
This dissertation which focuses on intrapreneurship from different
perspectives is divided into four parts and includes five articles that
constitute the main results of my research as PhD student The overall aim
of the articles which address different aspects of intrapreneurship is to
contribute as building blocks to the larger intrapreneurship mosaic which
is still under development in the research literature (Ireland et al 2005)
The first part which serves at the introduction to the dissertation consists
of five chapters Chapter 1 provides a short description of the Danish
Industry and a discussion of some of the main challenges in relation to
innovativeness adoption of new knowledge and intrapreneurship The
chapter also briefly describes the KNORI project (KNowledge intensive
ORganisations and Intrapreneurship) which this dissertation is related to
Chapter 2 presents the overall research field corporate entrepreneurship
and discusses the difference between corporate entrepreneurship and
intrapreneurship This chapter also describes how research interest in
corporate entrepreneurship has evolved over time The research themes
together with the structure of the rest of the dissertation are also presented
in more detail in this chapter Chapter 3 presents the methodology with an
2
emphasis on the selection of cases for the PhD project the validity of the
methodology and various issues regarding the research interviews
Chapter 4 which constitutes the first article in this dissertation develops a
framework for corporate entrepreneurship consisting of an internal
perspective (intrapreneurship) and an external perspective
(exopreneurship) The article further illustrates that intrapreneurship
consists of three organisational perspectives corporate venturing
internationalisation and internal resources This article was the first step in
the PhD project and thus also represents a tentative first insight into the
field Finally chapter 5 serves as a postscript to the article and includes
additional insights
The second part of the dissertation consists of two articles articles two and
three which in different ways address the extrinsic and intrinsic factors that
influence an organisationrsquos internal resources with respect to
intrapreneurship The third part of the dissertation consists of articles four
and five which concern the relations between intrapreneurship and
knowledge management and how knowledge management can support
intrapreneurial management Finally part four concludes the dissertation
REFERENCE
Ireland RD CR Reutzel amp JW Webb 2005 Entrepreneurship
Research in AMJ What Has Been Published and What Might the Future
Hold Academy of Management Journal Vol 48 No 4 pp 556-564
3
CHAPTER 1
The Background
New governments almost always mean new visions At least this was the
case in Denmark at the end of 2001 Although its industrial policy already
encouraged innovation and provided for the establishment and
administrative support of new companies etc the government wanted a
change of mindset in society in the direction of greater creativity and an
entrepreneurial culture
It was realised that growing internationalisation would drive more and
more Danish companies to offshore production or sourcing from low-cost
countries This led to growing anxiety about employment wealth ndashcreation
and the future of Danish society throughout the 1990s Since it was
becoming clear that more and more jobs would be moved to the new EU
countries or further east both Danish politicians and the Danish media
began to focus attention on innovation incubators entrepreneurship and
intrapreneurship
At the same time the Danish media seized on intrapreneurship via the
start-up of new companies based on the competencies of established
companies as the lsquosolutionrsquo to the creation of more jobs in Denmark
However intrapreneurship is more than just starting up new internal or
external ventures Even though the creation of new jobs and companies
might be to the benefit of society as a whole the management of existing
4
companies would no doubt think differently if their most creative and
innovative employees started establishing new companies based on
competencies acquired in their former jobs
Thus from an organisational or corporate perspective intrapreneurship is
more about a companyrsquos ability to sustain creativity innovativeness and the
entrepreneurial spirit among its own employees and channel this towards
the creation of new structures and initiatives that benefit both employees
and the company and probably also create wealth at societal level
Intrapreneurship can be enabled by giving employees time to work on their
own projects and to assist with development salesmarketing production
legal issues etc Furthermore as will be argued in chapter 4
intrapreneurship is part of a more comprehensive research and practice
field corporate entrepreneurship
There has been a tendency in the Danish press to more or less explicitly
equate intrapreneurship with corporate venturing and unlike in the
international literature the term intrapreneurship has been a much more
popular label in the Danish media1 In relation to media interest which to
some extent might also reflect the focus of Danish companies or
government agencies it is notable that even though corporate
entrepreneurship has been of academic interest for many years it was only
1 This can for example be seen from a full text search in the Danish database InfoMedia which covers
most newspapers and a number of popular magazines As of June 30 2007 the term lsquocorporate entrepreneurshiprsquo had appeared 11 times whereas lsquointrapreneurshiprsquo and lsquocorporate venturingrsquo had been used 91 and 81 times respectively According to InfoMedia the first time an article on lsquocorporate entrepreneurshiprsquo lsquointrapreneurshiprsquo and lsquocorporate venturingrsquo was published in a Danish newspaper was
in 2005 1996 and 1999 respectively
5
from 2003 that the Danish media started focusing on intrapreneurship
In one of the first comprehensive studies based on Danish data Evald
(2003) showed that small companies create many jobs by spinning off new
ventures Based on this finding she argues that initiatives should be
focused on the intrapreneurial abilities of small and medium-sized
companies (SMEs) However while the importance of spin-offs and job
creation in small companies should not be underestimated large companies
also have the possibility of supporting entrepreneurship in-house ndash whether
it is called intrapreneurship or corporate entrepreneurship These
companies have both much larger and greater access to different kinds of
resources and are better able than SMEs to take a limited risk by entering
different forms of intrapreneurship
11 INNOVATIVENESS IN DENMARK
Given that Danish industry is largely made up of small and medium-sized
companies Denmark is not likely to adopt the same innovation policy as a
country like the US with its many research institutions and large
technologically advanced companies On the contrary a characteristic of
the innovation process in SMEs is the indirect implementation of
technological breakthroughs unlike in large companies where there is close
contact between research development and production (Erhvervsfremme
Styrelsen 1999) The indirect nature of the innovation process involves a
time lag from technological breakthroughs to their adoption in products or
production processes which is also one of the findings of the so-called
DISCO project (Erhvervsfremme Styrelsen 1999) in its analysis of the
Danish innovation systemrsquos challenges strengths and bottlenecks
6
This is a very general statement of course and there are well-known large
Danish companies eg Novo Nordisk Novozymes Coloplast Danfoss and
Grundfos that are major players in their respective industries and also very
innovative Furthermore Abernathy amp Utterback (1978) among others
have argued that large companies in existing industries are most likely to
innovate incrementally while breakthrough innovations are more likely to
come from either small companies or large companies which apply their
technologies in innovative ways in other business areas
However for most Danish companies ndash especially SMEs ndash the needs of and
requirements for innovation support knowledge transfer and conditions for
intrapreneurship must be addressed from a policymaking perspective
Moreover as is also central to the topic of this dissertation the innovative
capabilities of large established companies are possibly even more
important
As a result of its comparative disadvantage ndash due to the size of the country
ndash the key challenge for Danish industry is sometimes seen as the adoption
of a broader and more interactive understanding of innovation (Nyholm amp
Langkilde 2003 Rosted 2003) Due to their technology-oriented approach
to innovation companies follow what Abernathy amp Utterback (1978) have
identified as product or process innovation cycles and not what Grant
(2002 p 373) with a broad term calls strategic innovation By adopting a
broader view of innovation Danish companies would be better placed to
exploit the potential of strategic innovations where new combinations of
technology customers and services can change the competitive structure of
the industry or even create a new industry as argued by proponents of the
so-called Blue Oceans strategies (Kim amp Mauborgne 2005)
7
Another important characteristic of strategic innovations is the interactive
process that leads to the innovation Within the technological paradigm of
innovation (Sundbo 1998) the development process is seen as linear while
strategic innovations follow an interactive process where ldquonew
combinationsrdquo can only survive if they meet a real market demand The
interactive process involves a closer interfirm relationship with a strong
focus on exploiting the innovative potential of new technologies The
willingness and ability to form these relationships has been found in Danish
industry both in high- and low-tech industries (Erhvervsfremme Styrelsen
1999)
In order for ideas to be commercialised in the shape of new companies or
new business areas for established companies there needs to be a well-
functioning market for venture capital The establishment of such a market
has therefore been a government priority In addition to this the largest
Danish companies have also helped fund new companies through newly
established venture funds often in co-operation with institutional or private
investors whose funding in many cases stems from selling previously
established companies
The development of such funds might be seen as the result of a broader
view of innovation where the strategic and interactive aspect has led to the
return of entrepreneurship as the nucleus of the innovation process Large
corporations now see the entrepreneur as an important part of striking the
right balance between technological development and market demand
Whether it is an intrapreneur (Pinchot 1985) who leads an internal venture
project or an external entrepreneur funded through venture funds or
8
corporate venture capital the importance of entrepreneurship in the pursuit
of innovation is now a fact
One indicator of the importance of entrepreneurial activities in the pursuit
of innovation is the total amount of capital flowing towards venture
investments as shown in Figure 11 According to data from
Vaeligkstfonden2 the total funds available in the venture capital market in
Denmark have risen dramatically from DKK 35 billion in 1998 to DKK
172 billion in 2002 after which it flattened out and actually fell slightly in
2003 when more investors withdrew from the venture market3 By August
31 2007 the total funds available in the venture capital market were
approximately DKK 22 billion
Until 2001 the prime interest of venture funds was in telecommunications
and computer technology but since then the focus has shifted to life
sciences This can be seen by the fact that the total amount of invested
venture capital in life sciences exceeds investments in ICT Furthermore
two new ventures focusing solely on life sciences have been established
while two ventures focusing on ICT have been terminated (Vaeligkstfonden
2002)
2 Data according to rdquoDet danske marked for venturekapital og private equityrdquo published annually by
Vaeligkstfonden Copenhagen
3 LMX Business Development TDC-Innovation Venture IT Velcap Danske Life Science TEMA
Kapital BUHL Randers and Udviklingsparken (continued in the context of Incuba AS)
9
219
201
175
161154
172
150
35
52
118
0
5
10
15
20
25
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
DK
K b
n
Figure 11 Funds available in the venture capital market (Based on
figures from Vaeligkstfonden 2001-2007)
That some of Denmarkrsquos largest corporations have helped create new
companies can be seen from the development of nine corporate venture
capital (CVC) funds in the period from 1998 to 2002 which resulted in a
total of 12 CVC companies in 2002 In comparison only 4 companies were
established in 2006 even though almost five times as much funding was
available than in 1998
12 THE KNORI PROJECT
The KNORI project (KNowledge intensive ORganisations and
Intrapreneurship) stemmed from both the need to create more jobs in small
and medium-sized Danish companies and the focus on technology-oriented
innovations at the beginning of the 1990s as discussed above Thus the
10
project was established4 as part of the Ministry of Science Technology and
Innovationrsquos initiatives to boost the ICT industry KNORI was set up to
study how established organisations in the ICT industry in northern Jutland
could be more dynamic as regards spinning off new ventures developing
new business areas and developing a sustainable ability to innovate Of
course these broad aims could also be approached from other perspectives
this PhD project has thus chosen to address the question from an
intrapreneurial perspective
The KNORI project started with a meeting between the researchers
involved and three key persons in the telecommunications industry in
Northern Jutland It became clear from this meeting that the companies
were just as much competitors as collaborators This meant that it would be
difficult to arrange explicit knowledge sharing between them through
seminars etc as originally envisaged Therefore the scope of the project
was broadened to also focus on companies in other parts of Denmark as
well as industries that were not as closely related but which had similar
challenges
The case companies for this PhD project were to be chosen from the
broadened KNORI base The methodological considerations are discussed
in more detail in chapter 3 but the result was that six companies agreed to
take part in the project and all were invited to an introductory meeting in
4 KNORI was a network project between Harry Boer and Bent Dalum University of Aalborg and Anders
Drejer (University of Aalborg at the project start) and John Parm Ulhoslashi Aarhus School of Business
Aarhus University
11
March 2003 where the framework for corporate entrepreneurship and
preliminary thoughts about intrapreneurial enablers were presented
A second meeting on factors which enable and hinder corporate
entrepreneurship was planned for June 2004 but was cancelled due to
unforeseen circumstances No new date was set for this meeting due both
to the summer holidays and my first maternity leave from the beginning of
September 2004 Since it also became clear that the research opportunities
were not so much related to the companies as a group as to individual
companies it was decided not to include the seminars in the PhD project
13 REFERENCES
Erhvervsfremme Styrelsen 1999 Det danske innovationssystem ndash DISCO-
projekt Rapport nr 9 Sammenfattende rapport Koslashbenhavn
Evald MR 2003 Corporate Venturing i Danmark En undersoslashgelse af
mindre virksomheds knopskudsaktiviteter Center for Smaringvirksomheds-
forskning Syddansk Universitet
Grant RM 2002 Contemporary strategy analysis Concepts techniques
applications (fourth edition) Oxford Blackwell Publishing
Kim WC amp R Mauborgne 2005 Blue Ocean Strategy How to Create
Uncontested Market Space and Make Competition Irrelevant Boston
Harvard Business School Press
Nyholm J amp L Langkilde 2003 Et benchmark studie af innovation og
innovationspolitik ndash hvad kan Danmark laeligre Oslashkonomi- og
12
Erhvervsministeriets enhed for erhvervsoslashkonomisk forskning og analyse
FORA Koslashbenhavn
Pinchot G 1985 Intrapreneuring Why You Donrsquot Have to Leave the
Corporation to Become an Entrepreneur New York Harper amp Row
Rosted J 2003 Tre former for innovation Oslashkonomi- og
Erhvervsministeriets enhed for erhvervsoslashkonomisk forskning og analyse
FORA Koslashbenhavn
Sundbo J 1998 The Theory of Innovation Entrepreneurs Technology
and Strategy Cheltenham Edvard Elgar Publishing
13
CHAPTER 2
Research scope themes and structure
Business structures are becoming global and the rules of competition are
changing constantly posing new challenges to companies Whether
companies define themselves as being in one or another market they seem
to be forced to adapt and innovate at a constantly increasing pace Change
comes about faster than we expect and the saying that the only constant
thing in the world is change seems truer than ever Furthermore the
boundaries of the firm are becoming more blurred as companies get
involved in different collaborations and tasks from research and
development to business support activities are increasingly outsourced
While the world appears to be constantly changing some companies tend
to stick to the ldquoold waysrdquo of doing business ie preserving the well-known
techniques and business concepts of co-operation while others reorganise
re-create themselves merge and split up become virtual enter new
markets or create unforeseen alliances Thus some companies seem to
ignore changing market conditions while others act on challenges to well-
established business routines and rules of competition
One major driving force for change has been the increasing importance of
knowledge both for everyday life where new innovations are shaping
family structures communication patterns and work-conditions for
business structures and for individual companies entering the so-called
14
knowledge society (Drucker 1993) New conditions for competitive
advantage have appeared where knowledge is the key resource and where
knowledge workers will dominate the workforce (Drucker 1993 2002) ndash
perhaps not in the number of employees but in terms of their influence on
global value creation
A society becoming increasingly dependent on knowledge will probably
introduce changes that we can hardly imagine now Organisations will face
new challenges both internally and externally These challenges are
affected by various factors eg the liberalization of markets markets for
new products new demands from various stakeholders new information
and communication technologies the decoupling of information flows from
the flow of goods and services and integration of product architecture and
technology (Teece 1998)
The responses of companies in the 1980s and to some extent the 1990s
have been characterised by reductions in the workforce downsizing
rightsizing budget cuts and depressed employee morale (Morris and
Kuratko 2002) While the focus has been on the short-term costs of
production no company can afford to rely on such an approach forever
The real challenge for a company wanting to remain a going concern is to
establish a competitive advantage and one way of doing this is continuous
innovation and the creation of new ideas According to Morris and Kuratko
(2002) companies must aspire to adaptability flexibility speed
aggressiveness and innovativeness which they boil down to one word ndash
entrepreneurship
15
21 CORPORATE ENTREPRENEURSHIP
Although intrapreneurship has been presented as the lsquosolutionrsquo to new jobs
and an improvement in companiesrsquo innovativeness it is worth
remembering that it may not be so very different from what we already
know There are countless examples in the management literature of
methods and techniques etc that are simply relaunched under new names
Therefore this dissertation also takes a broader perspective
If we follow the spread of research on corporate entrepreneurship from just
the use of the term in the literature it is remarkable how interest in topics
such as entrepreneurial management corporate entrepreneurship and
intrapreneurship has increased in the last couple of years This is illustrated
in figure 21 which shows the number of hits on intrapreneurship
corporate entrepreneurship and entrepreneurial management from a full-
text search in the database Business Source Premier In figure 22 the same
keywords are searched for in articles published by the Danish business
paper Boslashrsen5
5 Boslashrsen was also searched for the terms lsquointraprenoslashrskabrsquo lsquocorporate entreprenoslashrskabrsquo and
lsquoentreprenant ledelsersquo and the results added to the number of articles found using the English terms
The databases have also been searched for lsquointrapreneuringrsquo lsquointrapreneurialrsquo lsquocorporate venturersquo lsquocorporate venturingrsquo and lsquocorporate incubatorsrsquo There were only a few hits for intrapreneuring and intrapreneurial While interest in corporate venturingventuring (CV) has been increasing significantly it is not included in the figures since it is regarded as a perspective on corporate entrepreneurship and
intrapreneurship as will be argued in Chapter 4 Corporate incubators did not result in any hits
16
05
101520253035404550
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
Year
Nu
mb
er o
f ar
ticl
es
Intrapreneurship
Corporate Entrepreneurship
Entrepreneurial management
Total
Figure 21 Number of hits from a full-text search on the terms
ldquointrapreneurshiprdquo ldquocorporate entrepreneurshiprdquo and ldquoentrepreneurial
managementrdquo in the research database Business Source Premier
Figure 21 shows that following Pinchotrsquos introduction of intrapreneurship
in 1983 and his book Intrapreneuring in 1985 interest in the topic has
grown6 However figure 21 also shows that it is other terms that have been
dominant in each of the years covered It is of course difficult to draw
specific conclusions just by counting the number of times a word has been
used in articles in either journalistic or research articles Neither the context
nor the understanding of the concepts are necessarily the same and the
topic covered might even be discussed without ever explicitly mentioning
the term eg intrapreneurship
6 A similar search in the database Social Science Citation Index which contains research cited by others
shows that the number of articles on concepts that have been cited by others has been slightly increasing
since the mid-1980s with the increase being greater since the end of the 1990s
17
0
5
10
15
20
25
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Year
Nu
mb
er o
f ar
ticl
es
Intrapreneurship
Corporate Entrepreneurship
Entrepreneurial management
Total
Figure 22 Number of hits from a full-text search on the terms
ldquointrapreneurshiprdquo ldquocorporate entrepreneurshiprdquo and ldquoentrepreneurial
managementrdquo in the Danish newspaper Boslashrsen
Seen together the figures in Figure 21 and 22 probably also illustrate the
spread of the terms in research literature and practice New terms are often
claimed to be driven by practice and the more popular part of management
literature But as Abrahamson (1996) has argued scholars have often been
aware of and interested in the new phenomenon for some time before the
explosion of interest in the practitioner-oriented literature and the press
However there is seldom a steep increase in researchersrsquo interest before a
term has gained the interest of practitioners This is in line with figure 22
which shows how intrapreneurship gained the interest of newspapers at
about the same time as the number of research articles rocketed7
7 A similar search of the more popular management research database Emerald shows a similar
development as Boslashrsen It increases slightly from 1994 to 2003 and then gains momentum
18
More directly focusing on articles published in The Academy of
Management Journal (AMJ) from 1963 to 2005 and examining article
topics rather than just counting the number of times the word is used in the
text Ireland et al (2005) found 8 articles on corporate entrepreneurship
Furthermore these articles were distributed regularly over time with a
small increase since 1994 However a similar number of other topics eg
ldquonew venturesrdquo ldquocorporate entrepreneurshiprdquo etc were also published
and the distribution of these articles over time was more similar to the
pattern shown in figure 21 Overall therefore while interest in the topic
has increased it is still an emerging or relatively young field characterised
by a large number of labels (Christensen 2004) the lack of a unifying
definition (Sharma amp Chrisman 1999) and low paradigmatic development
(Ireland et al 2005 Low 2001)
22 THE CORPORATE ENTREPRENEURSHIP FIELD
According to Hornsby et al (1993) research on corporate entrepreneurship
and how corporate entrepreneurship can be enabled can be roughly divided
into two waves The first wave ending at the beginning of the 1990s
focused on the entrepreneur as a person while the second wave started at
the beginning of the 1990s and gained momentum towards the end of the
decade Basically the second wave takes a starting point in William
Gartnerrsquos (1988 1989) suggestion that the research focus should be
changed from the entrepreneur as a person to entrepreneurship as a process
In particular Gartner argued that entrepreneurship is a multidimensional
process of which the entrepreneur is only one element thus moving the
focus more towards organisations which employ entrepreneurs and create
the conditions for their achievements
19
Michael A Hitt Jeffrey S Hornsby R Duane Ireland Donald L Sexton
and Shake A Zahra have been the main trendsetters in this second wave of
development of the field which is characterised by the use of many
different labels eg entrepreneurial management (eg Stevenson amp Jarillo
1990) strategic entrepreneurship (eg Hitt et al 2001) corporate
entrepreneurship (eg Guth amp Ginsberg 1990 Hornsby et al 1993 2002)
internal corporate entrepreneurship (eg Lumpkin amp Dess 1996 and
Schollhammer 1981) intrapreneurship (eg Carrier 1994 and Pinchot
1985) corporate venturing (eg Burgelman 1983 and Chesbrough 2000)
These terms have been used interchangeably to explain almost the same
phenomenon as is discussed in more detail in article 1 (Chapter 4) in this
dissertation
Sharma and Chrisman (1999) illustrate the termual ambiguity by listing a
number of definitions of corporate entrepreneurship suggested in the
literature Based on an analysis of two definitions in three papers ndash
corporate venturing (Biggadike 1979 Ellis amp Taylor 1987) and corporate
entrepreneurship (Burgelman 1983) ndash Sharma and Chrisman (1999) argue
that Burgelmanrsquos (1983) definition of corporate entrepreneurship is a
subset of Biggadikersquos (1979) corporate venturing whereas Ellis and
Taylorrsquos (1987) definition of a corporate venture is a subset of Burgelmanrsquos
(1983) corporate entrepreneurship definition
As is often the case with a plethora of different labels the development of
loosely related methods and theories not only creates uncertainty but also
complicates the applicability and integration of experiences into the
development of the field (cf Sharma amp Chrisman 1999)
20
To some extent it is a general characteristic of management knowledge
that it is spread throughout educational systems and companies by business
schools and global consulting companies (see for example Sahlin-
Andersson amp Engwall 2002) but in the case of the corporate
entrepreneurship literature it might also be because the field is both in its
infancy and characterised by multidisciplinarity Corporate
entrepreneurship has drawn on organisational theories from economics
(Schumpeter 1934 Kirzner 1985) sociology (McClelland 1961)
psychology (Collins and Moore 1964 Brockhaus amp Horwitz 1986) and
strategic management (Hitt et al 2002) and has thus been used to explain
various organisational phenomena from strategy via management in
general to innovation
While lsquocorporate entrepreneurshiprsquo has attracted the most attention
internationally as shown in figure 22 it is lsquointrapreneurshiprsquo that has
gained most interest in Denmark Although this could be seen as a minor
detail as regards the labeling of an otherwise identical concept as will be
argued in chapter 4 it also relates to the boundaries of the firm and thus to
a question of focus On start-ups or on companies that make innovation
possible and where employeesrsquo creativity and entrepreneurial aims are
based
Managerial decisions on the scope and diversity of a companyrsquos activities
affect the horizontal boundaries of the firm which in turn influence the
organisational choices of how and where to innovate starting a corporate
venture exploring internal resources internationalising or forming
external networks Managerial decisions on organisational structure and
design on the other hand are closely linked to the vertical boundaries of
21
the firm and define the organisationrsquos position in the value chain As Grant
(1996) and others argue decisions concerning the boundaries of the firm
are important for the application and integration of (specialist) knowledge
and thus future activities
23 FOCUS AND STRUCTURE OF THE DISSERTATION
The overall topic of this dissertation is exploration and exploitation of
internal resources with respect to intrapreneurship and how this is
affected by the firmrsquos organisation management managerial initiatives and
employees The dissertation is comprised of five different articles that
address this topic from different perspectives
From an early stage it was decided to let the articles develop from the most
interesting data and observations from the case companies This has
resulted in articles on different subtopics within the overall topic drawing
on different theories and different methodologies Although all the articles
have in common that they add to the mosaic within the field of
intrapreneurship they are not connected by a step-by-step research strategy
that leads to a final conclusion
231 The structure of the dissertation
This dissertation is divided into four parts Part I contains chapters one to
five Chapter one has described the background of the dissertation while
chapter two has introduced the field of intrapreneurship and the research
questions The next chapter will present the methodological considerations
chapter four examines and outlines corporate entrepreneurship the scope of
the research is explained and the concept of intrapreneurship is defined
22
finally chapter five serves as a postscript to chapter 4 and includes further
understandings of the issues
Part II contains chapter six and seven and consists of two articles on issues
related to intrapreneurship from an internal resources perspective Part III
contains chapter eight and nine which correspond to article four and five
respectively These articles combine intrapreneurship and knowledge
management and focus on knowledge resources within the internal
resources perspective Together these two parts make up the main body of
the dissertation Finally part IV (chapter ten) comprises a summary of the
articles and the results of the study This chapter also presents conclusions
on how the articles contribute to the research questions
232 The research questions
Although the articles should not be seen as the outcome of a premeditated
research programme together they address the following research
questions
1 What is intrapreneurship and how can it be explored and explained
2 How do different extrinsic and intrinsic factors affect the internal
resource perspective
a Can innovativeness be acquired
b How can various factors influence intrapreneurship
3 How is intrapreneurship and knowledge related And how can the
knowledge resource be addressed within the internal resource
perspective
a How can intrapreneurship be understood in the light of
knowledge management
23
b How can the knowledge resource be managed
233 The articles in the dissertation
Basically the articles take three points of departure which also correspond
to the three main parts of this dissertation This first part presents the
background and includes the first article This article A classification of the
corporate entrepreneurship umbrella labels and perspectives (Chapter 4)
is theoretical and presents and reviews an important body of literature
related to corporate entrepreneurship and also defines intrapreneurship
The next two articles Losing innovativeness the challenge of being
acquired and Enabling intrapreneurship the case of a knowledge-
intensive industrial company (Chapter 6 and 7) in part II are primarily
empirical in nature They address some of the aspects that need to be taken
into account when an organisation exploits intrapreneurship from an
internal resource perspective
The last two articles Understanding intrapreneurship by means of state-of-
the-art knowledge management and organisational learning and
Knowledge management in practice An analysis of project management in
two Danish companies (Chapter 8 and 9) in part III concern the
management of knowledge and how intrapreneurship can be facilitated or
enabled Article 4 is theoretical and links intrapreneurship and knowledge
management while the last article is primarily empirical and presents two
perspectives of the knowledge resource and how to manage them
The five articles that make up the dissertation are shown in table A which
briefly describes the objectives methodology used and conclusions With
regard to the objectives the articles all have in common that they relate to
24
the field of intrapreneurship in that they examine the various managerial
issues that should be taken into account in different situations Article 2 3
and 5 are based on case studies whereas article 1 and 4 take a starting point
in literature reviews
With regard to research question 1 the first article takes a look at corporate
entrepreneurship and sets the scene for the rest of the dissertation The
article explains the difference between corporate entrepreneurship and
intrapreneurship and with it offers a definition of intrapreneurship It also
explains how intrapreneurship gives organisations a greater choice of
organisational perspectives
The second research question is divided into two sub-questions Question
2a is addressed in article 2 which examines what happens to an
entrepreneurial culture when it is incorporated into a mature organisation It
shows that the active use of both extrinsic and intrinsic efforts is needed to
overcome organisational inertia Questing 2b is explored in article 3 which
looks at the impact of managerial initiatives andor intrapreneurial enablers
The results indicate that to encourage intrapreneurship in knowledge-
intensive companies there is a need for intrinsic enablers since the more
extrinsic enabling factors common to industrial companies are seen as only
basic factors
The third research question also consists of two sub-questions the first of
which is addressed in article 4 which takes a starting point in knowledge
management theory and organisational learning theory as well as theories
of intrapreneurship and innovation management This article provides a
framework for understanding the relation between intrapreneurship and
knowledge and the knowledge issues that should be taken into account
25
Finally research question 3b is dealt with in article 5 which examines how
different perspectives affect the way an organisationrsquos knowledge resources
are managed with respect to innovative activities The article shows how
intrapreneurship can be enabled from a knowledge management
perspective by taking a starting point in processes
The focus on the topic of the dissertation narrows from article to article
Thus the first article covers the whole field of corporate intrapreneurship
the articles in part II focus on the internal resource perspective and the last
article focuses only on the knowledge resource
26
Title Objective Method Conclusions
PART I Introduction
Chapter four (article 1)
A classification of the Corporate Entrepreneurship Umbrella Labels and Perspectives
To get an overview of the literature within the area of corporate entrepreneurship and define corporate entrepreneurship and intrapreneurship
Academic research literature review
Corporate Entrepreneurship can be divided into intrapreneurship and exopreneurship which again can be categorised into four perspectives corporate ventures internal resources internationalisation and networks The difference between corporate entrepreneurship and intrapreneurship is a question of the boundaries of the firm
PART II Intrapreneurship the Internal Resource Perspective
Chapter six (article 2)
Losing Innovativeness The Challenge of being Acquired
To study what happens to the employees of an entrepreneurial company when it is taken over by another firm
A case study based on multiple methods interviews observations and a questionnaire
The driving forces (innovation creativity and innovative processes) of a company are likely to disappear when it is incorporated into a mature organisation
Chapter seven (article 3)
Enabling Intrapreneurship The case of a knowledge-intensive industrial company
To study intrapreneurial enablers in a ldquonaturalrdquo setting
An embedded case study based on interviews and observations
The factors enabling intrapreneurship are changing with changing ldquosocietiesrdquo
PART III Managing Internal Knowledge Resources
Chapter eight (article 4)
Understanding Intrapreneurship by Means of State-of-the-art Knowledge Management and Organisational Learning Theory
To enlighten theories of intrapreneurship and innovation by applying state-of-the-art knowledge management theory and organisational learning
Literature review A framework for intrapreneurship and innovation based on knowledge has been developed which defines the task of intrapreneurship as a combination of innovation management and the learning-related concepts of exploitation and exploration
Chapter nine (article 5)
Knowledge Management in Practice An Epistemological Analysis of Project Management in Two Danish Companies
To study how different perspectives influence the management of an organisationrsquos knowledge resources
Two embedded case studies based on interviews and observations
Managerial awareness of different approaches to managing knowledge resources gives a greater degree of freedom and helps foster mutual understanding within an organisation
Table A Summary of the six articles in the dissertation
27
24 REFERENCES
Abrahamson E 1996 Management Fashion Academy of Management Review
21(1)254-285
Biggadike R 1979 The risky business of diversification Harvard Business Review
Vol 57 No 3 pp 103-111
Brockhaus RH amp PS Horwitz 1986 The psychology of the entrepreneur In DL
Sexton amp RW Smilar (eds) The art and science of entrepreneurship Cambridge
MA Ballinger
Burgelman RA 1983 A process model of internal corporate venturing in the
diversified major firm Administrative Science Quarterly Vol 28 No 2 pp 223-
244
Carrier C 1994 Intrapreneurship in large firms and SMEs A comparative study
International Small Business Journal Vol 12 No 3 pp 54-61
Chesbrough HW 2000 Designing Corporate Ventures in the Shadow of Private
Venture Capital California Management Review Vol 42 No 3 pp 31-49
Christensen KS 2004 A classification of the corporate entrepreneurship umbressl
labels and perspectives International Journal of Management and Entreprise
Development Vol 1 No 4 pp 301-315
Collins NC amp DG Moore 1964 The Enterprising Man East Lansing MI
Michigan State University
Drucker PF 1993 Post-capitalist society Oxford Butterworth-Heinemann
Drucker PF 2002 Managing in the Next Society Oxford Butterworth-Heinemann
28
Ellis RJ amp NT Taylor 1987 Specifying entrepreneurship In NC Churchill JAn
Hornaday BA Kirchhoff OJ Krasner amp KH Vesper (Eds) Frontiers of
entrepreneurship research Wellesley MA Babson College pp 527-541
Gartner WB 1988 Who is an entrepreneur Is the wrong question American
Journal of Small Business Vol 12 pp 11-32
Gartner WB 1989 Some suggestions for research on entrepreneurial traits and
characteristics Entrepreneurship Theory amp Practice Vol 14 No 1 pp 27-38
Grant RM 1996 Toward a knowledge-based theory of the firm Strategic
Management Journal Vol 17 pp 109-122
Guth WD amp A Ginsberg 1990 Guest editorsrsquo introduction corporate
entrepreneurship Strategic Management Journal Vol 11 pp 5-15
Hitt MA RD Ireland SM Camp amp DL Sexton 2001 Guest Editorsrsquo
Introduction to the Special Issue Strategic Entrepreneurship Entrepreneurial
Straetgies for Wealth Creation Vol 22 pp 479-491
Hitt MA RD Ireland SM Camp amp DL Sexton 2002 Strategic
Entrepreneurship Integrating Entrepreneurial and Strategic Management
Perspectives In MA Hitt RD Ireland SM Camp amp DL Sexton (eds) Strategic
Entrepreneurship Creating a New Mindset Oxford Blackwell Publishers
Hornsby JS DW Naffziger DF Kuratko amp RV Montagno 1993 An Interactive
Model of the Corporate Entrepreneurship Process Entrepreneurship Theory amp
Practice Vol 17 No 2 pp 29-37
Hornsby JS DF Kuratko amp SA Zahra 2002 Middle managers perception of the
internal environment for corporate entrepreneurship assessing a measurement scale
Vol 17 No 3 pp 253-372
29
Ireland RD JW Webb amp JE Coombs 2005 Theory and methodology in
entrepreneurship research In D Ketchen amp DD Bergh (eds) Research
methodology in strategy and management Vol 2 pp 1-32
Kirzner IM 1985 Discovery and the capitalist process Chicago University of
Chicago Press
Low MB 2001 The adolescence of entrepreneurship research Specification of
purpose Entrepreneurship Theory and Practice Vol 26 No 4 pp 17-25
Lumpkin GT amp GG Dess 1996 Clarifying the entrepreneurial orientation
construct and linking it to performance Academy of Management Review Vol 21
pp 135-172
McClelland DC 1961 The Achieving Society New York Free Press
Morris MH amp DF Kuratko 2002 Corporate Entrepreneurship Orlando Florida
Harcourt College Publishers
Pinchot G 1985 Intrapreneuring Why You Donrsquot Have to Leave the Corporation to
Become an Entrepreneur New York Harper amp Row
Sahlin-Andersson K amp L Engwall (eds) 2002 The Expansion of Management
Knowledge Stanford Stanford University Press
Schollhammer H 1981 The efficacy of internal corporate entrepreneurship
strategies In KH Vesper (ed) Frontiers of Entrepreneurship Research Babson
College Wellesley MA
Schumpeter JA 1934 The theory of economic development Harvard University
Press Cambridge MA
30
Sharma P and Chrisman JJ 1999 Toward a reconciliation of the definitional issues
in the field of corporate entrepreneurship Entrepreneurship Theory amp Practice Vol
22 pp 43-68
Stevenson HH amp JC Jarillo 1990 A paradigm of Entrepreneurship
Entrepreneurial Management Strategic Management Journal Vol 11 pp 17-27
Teece DJ 1998 Capturing value from knowledge assets the new economy markets
for know-how and intangible assets California Management Review Vol 40 pp 55-
79
31
CHAPTER 3
Methodology
Since the research themes were initially broadly defined and the field of
intrapreneurship in its infancy it was considered prudent not to preclude any
interesting issues and empirical phenomena that might appear in the course of the
project etc by using a too narrow definition of the intrapreneurship concept (cf
Sharma amp Chrisman 1999) Furthermore as part of the KNORI project (see chapter
1) it was also given that 5-6 companies would participate in the project and form the
empirical basis for the research
The fact that the companies had to be selected early in the project and participate in
workshops organised within the framework of the KNORI ndashproject was a challenge
from the beginning At such an early stage it was not possible to design a detailed
research strategy and it would have been even harder to specify exactly how
activities in the companies could be the basis for empirical research Moreover it was
difficult to know whether comparative studies of the companies were feasible
In consequence it was decided that a qualitative case-based research approach would
be the most appropriate that different methods of collecting data could be used in
different companies and that the companies participating in the KNORI project could
form the basis for different papers that addressed different aspects of the overall
research issues
32
This chapter describes the way the five case companies were selected and provides
some background information on each of them Furthermore the chapter also
presents the overall considerations in relation to the chosen methodology More
details about the methods used in specific studies reported in the three empirical
articles (paper 2 3 and 5) are to be found in the respective articles
31 FROM PARADIGM TO RESEARCH APPROACH
A qualitative-oriented research project is not so much a question of method as one of
methodology ie the general approach to studying the research topics (Silverman
1993) Traditionally however methodology is intimately related to the positioning of
research within various research paradigms The methodological assumptions thus
become intertwined with both ontology and epistemology and become the primary
vehicle for directing the research and influencing its aim and purpose
When different research approaches are characterised within the social sciences a
distinction is often made between contrasting views like subjectivism versus
objectivism nominalism versus realism romanticism versus neopositivsm
constructivism versus non-constructivism constructivism versus positivism
interpretative versus functionalistic humanist versus structuralist etc (see for
example Burrell amp Morgan 1979 Guba amp Lincoln 1994) Such classifications are
widespread and two-by-two-ways classifications eg Burrell amp Morganrsquos (1979)
framework do have some intuitive appeal However as described by Lauring (2007)
the implications of paradigmatic positioning of research have also been criticised by
researchers (eg Deetz 1996 Alvesson 2003) who argue that the classifications do
not reflect contemporary research traditions adequately and that paradigmatic
positioning puts too much emphasis on incommensurability between research
paradigms (Deetz 1996)
33
As a crude distinction between research approaches we find that on the one hand
qualitative studies are most often inspired by some kind of romanticsm
constructivism or at least non-positivism ndash while on the other hand both
quantitative and qualitative studies are characterised either by functionalism
neopositivism or non-constructivism This is by no means a clear-cut distinction but
because non-positivist-inspired research most often aims at understanding
phenomena in practice it seems appropriate to contrast it with research paradigms
based on a functionalistic ontology inasmuch as functionalism is prescriptive and
non-positivism descriptive (see also Andersen amp Skaates 2004)
From this point of view the approach taken in this PhD project is best characterised
as a qualitative non-positivist study without strictly claiming constructivism or
similar concepts This influences the questions asked during an interview etc
because functionalistic questions are concerned with what is effective whereas for
example constructivist questions focus on how things work This is also reflected in
the purpose of this study where a clear functionalistic approach might have implied a
wish to improve effectiveness whereas the qualitative approach taken is mostly
oriented towards improving the understanding of intrapreneurship
A qualitative study requires close contact with the subject involved rather than
objective distance and any insights gained are limited to the particular companies
and issues studied and persons interviewed This does not as we will return to in
section 36 preclude generalisations however Rather the qualitative approach
involves an ongoing reflection on data and a positioning against different theories
such that the data can contribute to and further refine the research questions
34
32 UNIT OF ANALYSIS
In most research areas including intrapreneurship variables and concepts with the
same names are studied at different levels of analysis (Ireland et al 2005) and in
general it is not clear a priori whether the meaning of the variables etc at different
levels are identical As an example Klein et al (1994 p 206) mention Lawless amp
Pricersquos (1992) study of the roles that technology champions and users play during
innovation adoption While the term champion is clearly defined (Lawless amp Price
1992 p 342) the term user is not Are users independent individuals or homogenous
members of technology-adopting organisations and should the model consequently
be tested within a single organisation or across organisations
Ideally for valid and theory-consistent evidence to be provided the following must
be aligned The level of theory ie what is to be explained the level of measurement
ie what is the source of evidence and the unit of analysis ie what is treated as
observations (Klein et al 1994 Kozlowski amp Klein 2000) The empirically-oriented
literature on intrapreneurship entrepreneurship innovation and related areas differ on
what constitutes the level of the analysis (cf Ireland et al 2005 p 560) At the one
extreme is the innovativeness of a country or region often compared with other
countries or regions Even though a questionnaire approach and analysis of register
data is most often used in this connection a whole country could be considered a case
to be analysed
At the other extreme there is the most detailed level of analysis the individual level
where the focus is often on the individualrsquos characteristics (see for example
Brockhaus 1980 Davis 1999 Hisrich 1990) The second most detailed level is the
group level which mainly centres on the collective of individuals and competencies
and on how the different perspectives talents and ideas of different members of the
35
group or project influence for example knowledge-sharing (Cummings 2004) and
group-based rewards (Zenger amp Marshall 2000)
The third level is the organisational level (see for example Zahra et al 1999)
which focuses on how an organisation can create a context where individuals and
groups can be innovative (see for example Covin amp Slevin 1988 Nonaka amp
Takeushi 1995) and creative (Amabile et al 1996) Not surprisingly this level is
also the focal point for much organisational research eg how innovation is sustained
over time (Dougherty amp Hardy 1996) how the availability of resources promote
innovation (Nohria amp Gulati 1996) how corporate strategy influences innovation
(Hitt et al 1996) and how inter-unit co-operation regarding knowledge transfer and
learning contributes to their ability to innovate (see for example Kogut amp Zander
1992 Tsai 2001)
At the fourth level intrapreneurship or corporate entrepreneurship can also be seen as
a matter of inter-organisational co-operation or alliance (see for example Antoncic
2001 Foray 1991) One reason companies often collaborate is because they have
complementary competencies The inter-organisational level thus typically focuses on
the interplay between companies (see for example Smith et al 1995) in the same
way as the group level focuses on the interplay between individuals in a group which
means that the inter-organisational unit can be seen as ldquogrouprdquo However according
to Foray (1991) the difference between intra-company and inter-company co-
operation is that the former depends on the learning and flexibility capacities of
human resources while the latter depends on the capacity of human resources to
become specific Antoncic (2001) finds that communication trust and management
support are important characteristics in both intra- and inter-organisational co-
operation
36
The fifth level of analysis the regional or national level is appropriate for analysing
innovation systems (cf Lundvall 1992) or more broadly a countryrsquos innovative
capability as already attempted in McClelland (1961) where the practical
applications of the research could for example be related to regional policy (see for
example Lundvall 1992 Storper 1997) national policy (see for example Busenitz
et al 2005 Lundvall 1992 Nyholm amp Langkilde 2003) or national culture (see
for example Busenitz et al 2005 Steensma et al 2000)
This dissertation focuses on how organisations can be intrapreneurial and takes a
starting point in the third level of analysis the organisational level as described
above However since the case companies differ substantially in size some variation
in the interpretation of lsquoorganisationrsquo was allowed In this sense it might therefore
be more appropriate to talk about the level of analysis as being the organisational
object anchored in the individual organisation where new knowledge of importance
for the renewal of the organisation is created Irrespective of the level of analysis in a
qualitative study data is collected from individuals When theories are formulated at a
higher level eg the organisational level as in this dissertation it means that actions
must be taken to ensure that the level of measurement and the unit of analysis are
aligned with theory This implies that the interviews should aim at capturing
organisational rather than uniquely individual characteristics One way of ensuring
this is to select lsquorepresentativersquo employees for interviewing and another is to evaluate
responses from individuals relative to others In practice in the articles in this
dissertation (eg paper 3 and 5) we have often chosen to let respondentsrsquo views
represent their respective departments or company rather than themselves as
individuals
37
33 SELECTION OF THE CASE COMPANIES
The articles in the dissertation are based on five different case companies selected for
participation in the KNORI project Although the research project cannot for various
reasons be regarded as a comparative case study of the five companies they were
selected on the basis of methodological considerations similar to a comparative case
study approach
One approach to selecting cases for a comparative case study is Yin (2003) where he
emphasises that there are two ways to select cases for multiple-case studies The
cases should either ldquo(a) predict similar results (a literal replication) or (b) produce
contrasting results (a theoretical replication)rdquo (Yin 2003 p 47) However the aim
of the KNORI project was not to test a predetermined hypothesis or take a starting
point in specific propositions as is implicit in Yinrsquos approach Rather the project was
more oriented towards understanding the concept of intrapreneurship and identifying
challenges and possibilities for knowledge-intensive organisations
Consequently the cases were selected according to Gummessonrsquos (1991) theoretical
sampling ie based on the different ways they represent lsquorealityrsquo The approach taken
was based on the recognition that organisational renewal and innovation could have
different origins according to different understandings of the main production
processes in a company
As a rule a traditional production company is functionally organised where
production salesmarketing and research amp development take place in separate
organisational units (cf Sundbo 2001 p 104) and maybe even in separate physical
locations (as is the case with BampO see appendix 1) Although innovative activities
can potentially be initiated in any department the RampD department is traditionally
the driving force behind product innovations
38
At the other organisational extreme are companies that have no other product than
research and sometimes not even a separate customer-oriented department Here
research can be said to be in the form of production processes which are in
principle integrated with innovative activities These two ways of organising
innovative activities are shown on the right- and left-hand side of figure 31
respectively The arrows connecting the various processes that lead to innovation
production or development with the organisational focal point production process or
RampD department indicate that even if the unit of analysis is the single organisation
the expected locus for innovation is different
Figure 31 Production structure and organisation of innovative activities
The middle part of figure 31 shows project-oriented organisations where solutions or
products are developed either for customers or carried out together with them eg in
their own organisation Even though such companies can have both a separate RampD
department and a separate sales force production takes place in development
projects which are often customer-specific and also the source of innovations
Productionprocesses
Developmentproject
Developmentprocesses
Renewal occursin the production
processes
Renewal occurs in the development
projects
Renewal occursin the RD processes
Innovation profitability growth change of industry rules new business unit spin-offs etc
Organisational renewal
39
This typology is of course a very crude generalisation of how innovative activities
are formally organised In reality companies might have characteristics of all three
organisational forms and innovative activities are in no way restricted to specific
departments Furthermore figure 31 illustrates only the formal way of organising
innovation whereas innovations can ldquopop uprdquo in any part of the organisation and
sometimes even be systematic activities that take place despite an organisational
structure that otherwise inhibits them
It should also be noted that the framework in figure 31 is oriented towards
technological innovations whereas non-technical (social) innovations are most often
developed in departments other than RampD In addition with respect to service
companies the role of the lsquoInnovation Departmentrsquo may as observed by Sundbo
(1998 cf Sundbo 2001 p 105) be more of a boundary-spanning unit where new
ideas are collected and promoted among employees and managers
For this dissertation it was decided to approach potential case companies that as far
as possible represented the different organisational forms shown in figure 31 Some
flexibility was allowed in categorising the companies since as discussed above each
company had multiple ways of organising innovation Furthermore given the
explorative nature of the project the research possibilities in each company were
expected to be quite different therefore insights gained through the research process
would probably be more decisive for the specific focus than how the case companies
were originally selected
The original plan was to select the cases from among information and
telecommunications (ICT) companies in northern Jutland since the KNORI project
was based on precisely these types of companies However it became clear from very
early in the selection process that many of these companies were competitors and
that it could therefore be difficult to organise knowledge-sharing seminars if the
40
project only included these companies It was therefore decided to include other
technology-based companies as well as companies in other parts of Jutland
34 THE CASE COMPANIES
The initial contact was with two companies from the north Jutland ICT sector
End2End and Bang amp Olufsen since they were competing in quite different areas
Subsequently Ericsson Telebit Aarhus was also invited to participate in the project
as was FKI Logistics Crisplant also from Aarhus although Crisplant is not an ICT
company in a strict sense Finally on the suggestion of Bang amp Olufsen we
contacted Danfoss Drives in Graasten
In all therefore five companies have participated in the project and were interviewed
according to the same interview guide However Crisplant suffered a cut-back in
business activities shortly after the project started and lacked the resources to
participate fully in the project A sixth company took part in the project up to and
including the introductory meeting but due to a change of strategy in the parent
company it ended operations shortly after the project start
Contact with the companies during the project has varied according to how they
formed the empirical basis for the articles The specific methodological approach
chosen and a brief presentation of the individual companies is given in the articles
Appendix A includes a more detailed presentation of the five case companies
35 THE CASE STUDY APPROACH
The dissertation adopts a qualitative interpretative approach where the main part of
the empirical material for the study consists of research interviews observations from
visits to the companies written material collected from the companies and
41
observations at the meetings for the KNORI project However the most important
data source is the semi-structured research interview
The main strength of the case study approach is the ability to deal with a variety of
evidence documents questionnaires interviews and observations in a flexible
manner In particular this approach is suitable when exploring an emerging field
(Zahra 2007) or when unfamiliar practices are examined in specific companies As
stated by Laurila (1997 p 222-223) the feasibility of case studies is based on the
opportunities they create for observing and describing a complicated research
phenomenon in a way that allows for analytical generalisations (Dyer amp Wikins
1991 Eisenhardt 1989 Tsoukas 1989) of the observations
351 Definition of a case study
Yin (2003 p 13) defines a case study as ldquoan empirical inquiry that investigates a
contemporary phenomenon within a real-life context especially when the boundaries
between phenomenon and context are not clearly evidentrdquo In addition case studies
are usually based on a qualitative methodological point of origin which according
to Denzin and Lincoln (1994 p 4) includes methods that ldquoimply an emphasis on
processes and meanings that are not rigorously examined or measured (if measured at
all) in terms of quality amount intensity or frequencyrdquo
Although the case companies were difficult to compare in a strict sense the basis for
selecting them was that as far as possible they should face lsquosimilarrsquo challenges in
relation to intrapreneurship and as regards participation in KNORI they were also
potentially subject to a similar lsquointerventionrsquo Therefore the project can be said to be
partly based on an ldquoEmbedded Multiple Case Study Designrdquo (cf Yin 2003) the
results of which are potentially more compelling than the results from a single case
study
42
single-case designs multiple-case designs
holistic
(single-unit of analysis)
embedded
(multiple-unit of analysis)
CONTEXT
Case
CONTEXT
CaseEmbedded
Unit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
CONTEXT
Case
EmbeddedUnit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
EmbeddedUnit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
EmbeddedUnit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
EmbeddedUnit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
CONTEXT
Case
CONTEXT
Case
Christensen (2005) Chapter 7
Christensen (2006) Chapter 6
Christensen Bukh amp Bang (2007) Chapter 9
Figure 32 Basic types of case study designs (Yin 2003 p 40) including an outline
of the empirical articles in this dissertation
As shown in figure 32 case studies can involve either a single case (eg Christensen
2005 chapter 7 Christensen 2006 chapter 6) or multiple cases (eg Christensen et
al 2007 chapter 9) and they can be either holistic (eg Christensen 2006) or
embedded (eg Christensen 2005 Christensen et al 2007) ie where one or more
unit(s) of analysis is involved (Yin 2003)
352 Action research or research in action
It should be noted that both the study of the companies in the articles and the
summarising conclusions of these articles (see chapter 10) are likely to be influenced
by interaction with the companies during the KNORI project In general research
cannot be carried out independently of the researchersrsquo underlying assumptions about
the nature of knowledge and how it can be acquired (see for example Andersen and
43
Skaates 2004 Guba and Lincoln 1994) What is of more concern here however are
the factors influencing the research process and specifically the interviews carried
out during the KNORI project
One possibility after the companies were approached in Summer 2002 and the first
KNORI meeting in March 2003 was that they might initiate new intrapreneurship-
related projects and that as a result of interaction with the researcher and with each
other at the KNORI meetings their understanding of the intrapreneurship concepts
would be heavily influenced by this process
Thus both the project set-up and the nature of possible research questions suggested
an interventionist approach (cf Joumlnsson amp Lukka 2007) which makes active use of
participant observations Although there are numerous variations interventionist
research covers such methodologies as action research (Lewin 1948) action science
which promotes learning in the client organisation (Argyris et al 1985) and so-
called constructive research approaches (Kasanen et al 1993) The methodology
most often used by researchers is action research which according to Eden and
Huxham (1996 p 526) can be understood as research embodying ldquoresults from an
involvement by the researcher with members of an organisation over a matter which
is of real concern to them (and) in which there is intent by the organisation to take
action based on the interventionrdquo
However considering the limited interaction between the companies at the meetings
and the diverse analytic approaches chosen it was judged that the articles in the
dissertation can be considered as separate studies of related concepts rather than a
tightly integrated research project Furthermore the research carried out in the
companies and reported in the articles is only very slightly influenced by the project
set-up at least not in a manner where the project can be considered as action
research
44
36 VALIDITY OF THE METHODOLOGY
A study which focuses on a few and very different companies in specific business
contexts will always be limited as regards to statistical generalisations hypothesis-
testing etc As could be seen from the brief discussion in section 31 statistical
testing of theoretically-derived hypotheses is not an aim of research projects based on
the qualitative non-positivist approach However this does not diminish the need for
addressing quality criteria of the research
One of the major challenges of case studies based on research interviews is how to
assure some kind of lsquoverificationrsquo of the conclusions Traditionally this is a matter of
validity and reliability where the latter has entered social science research through
the use of research tools such as questionnaires (primarily used in (neo)positivistic
studies) and interview guides (used more broadly in qualitative studies)
In qualitative studies the reliability or consistency of the results interviews
transcription and analyses is ensured by taking special care to minimize errors and
biases eg by not asking leading questions By comparison according to Kvale
(1996 p 238) validity has to do with the conformity of the phenomenon studied and
the way it is studied As Ahrens amp Chapman (2007) point out the question of
reliability takes on a different significance in qualitative studies that are only partly
based on research instruments as is the case in this dissertation which initially used a
loosely structured thematic interview guide and where a questionnaire was used in
one of the companies (see article 2 chapter 6)
Social reality is fundamentally contextndashspecific and interviewees ldquocan and do strive
to undo their history and invent new concepts images and ways in which they want
them to infuse actionrdquo (Ahrens amp Chapman 2007 p 311) On the one hand
therefore there is no hard data eg questionnaire data that can be verified by means
of statistical tests and on the other we have a number of contextual factors
45
including the dialogue with the researcher the interview design and the researcherrsquos
interests which cannot be separated from the data As Ahrens amp Chapman (2007)
also stress this means that we ldquoshould not expect identical results when two
researchers study the same organisation from different points of viewrdquo (Becker 1970
p 20) but we should expect that ldquothe conclusions of one study do not implicitly or
explicitly contradict those of the otherrdquo (ibid) Thus the methodological
considerations in this dissertation will primarily emphasise validity while at the same
time paying due respect to the implications for generalisation and reliability
Returning to the question of generalisations the research interviews carried out in the
companies were inspired by Kvale (1997) who argues that besides reliability and
validity the verification of a case study relates to generalisation This can be obtained
in different ways Analytical generalisation ie taking a specific case out of context
by relating observations to existing theory and through analytic abstraction which
obtains new theoretical insights via an inductive method (Yin 2003 Kvale 1997)
Here the theoretical framework presented in article 1 (Chapter 4) becomes to some
extent the vehicle for analytic generalisation although generalisation per se is not a
major aim of the project The empirical part of the dissertation consists of articles
and as mentioned above the data are not analysed in such a way that consistent
conclusions can be drawn by comparing case studies across all the companies
participating in the KNORI project
361 The use of Multiple Sources of Evidence
One way of ensuring validity is to approach the research questions by means of
different methods using redundancy to lsquotriangulatersquo the data (see for example
Denzin 1989 Yin 20034) Since qualitative studies have often been criticised for
being unreliable one way of improving the rigour of qualitative research is to use
46
multiple sources of evidence so that the results converge to support one explanation
(see for example Andersen amp Skaates 2004 Yin 2003)
Although in a stricter sense triangulation (Denzin 1989 Jick 1979) implies that
different methods are used in combination to study the same phenomenon it is
common to use the term more broadly (see for example Andersen amp Skaates 2004
Patton 1987 Yin 2003) and consider different types of triangulation Data
triangulation investigator triangulation theory triangulation and methodological
triangulation However the use of this broader interpretation of triangulation has
more to do with finding additional evidence to support or question the relations
between the initial data and the argument than of capturing a more objective reality
Here the broad interpretation of triangulation is used the project being based partly
on data triangulation and partly on methodological triangulation including semi-
structured open-ended interviews review of organisational documents and
observation during visits to the companies and at the KNORI meetings On the other
hand intrapreneurship will be addressed from different theoretical angles and the
management of knowledge from different perspectives It should be noted however
that no attempt is made to formally analyse the various sources of information in
order to examine whether they lead to similar conclusions etc
37 THE RESEARCH INTERVIEWS
The primary source of data in the case studies is the research interview which
according to Kvale (1996) is a form of professional conversation for the purpose of
obtaining ldquodescriptions of the life world of the interviewee with respect to
interpreting the meaning of the described phenomenardquo (Kvale 1996 p 5-6) The key
phenomena of interest in this project are intrapreneurship innovativeness strategy
knowledge and the management of knowledge-based processes and an analysis of
47
their potential in specific companies implies an examination of the phenomena in
ldquothe real worldrdquo
The initial aim of the project was to describe analyse and interpret the central themes
or phenomena how they are experienced by the respondents and together with the
interviewee to develop an understanding of them As far as possible the aim of the
questions asked was to validate or invalidate the respondentrsquos statements and the
ambiguities that arose during the interview
In all five companies the interviews were based on more or less the same structure
ie a semi-structured interview guide (see figure 33) Several employees in each
company were interviewed with a focus on four main themes Background
information organisation of innovativeness and intrapreneurial activities innovation
and innovativeness and enablersbarriers The interviews were held in a
conversational style and the respondents were asked to tell the story of the company
how they perceive innovation why the company needs to be innovative where in the
organisation innovations are created how they are organised and which enablers
encourage and support them to be innovative and how The interviews which lasted
an average of one-and-a-half hours were taped and transcribed Field notes were
written at the end of each day
The interviewees were chosen from different positions in the case companies and
where possible from similar functional areas and areas of responsibility In order to
get a broader perspective on the same themes the formal interviews were supported
or validated by more informal conversations with other employees and through
observations In practice the interviews focussed on the areas which the respondents
felt most familiar with and where possible the focus was on intrapreneurial activities
48
Figure 33 Common interview guide for the basic data collection
A total of 19 persons (6 engineers 6 functional managers 5 project managers and 2
from HR departments) were interviewed based on the interview guide shown in
figure 33 As far as possible the interviews involved employees in different
positions within the individual company but in the same positions across the
A Background information
bull Name background education how long with the company role in the company
bull Important events during the history of the company ndash eg acquisitions spin-offs central employeescustomers and change strategy
bull The company as a place to work
B Organization of innovativeness and intrapreneurial activities
bull Is the company innovative What does this mean examples
bull What is central in relation to innovation what drives innovation
bull Organisation of the innovative activities
C Innovation and innovativeness
bull How do you perceive innovation ndash eg product process strategy or administrative
bull Events in relation to innovation ndash eg employees ldquoheroesrdquo etc
bull Why is it necessary to be innovative ndash eg market techonology knowledge-creation and history
bull The possibility to plan innovation ndash whywhy not
bull Special characteristics of working with innovation
bull Where in the company are innovations created the type of innovation
bull Innovation in collaboration with customers
D Enablers of and barriers to innovation
bull The culture ndash eg describe your daily work How is your job different from others
bull Do you use specific models How is your job different from others
bull Rewards ndash eg financial recognition and ldquofreedomrdquo
bull Does management support your ideas Can you work on them Do others support your ideas
bull Resources ndash eg time financial materials etc
bull The organizational structure
bull When do you announce your ideas Do you normally work on them in advance Are there rules for when an idea can become a project in the departmentat the company level Who decides whether something is a good idea or not What happens when a project turns out to be a failure
bull Communication ndash eg how does communication work Do you have problems with communicationmisunderstandings because of language Company-specific language Improvements
bull Other things
49
companies Three interviews per company were planned prior to each of the visits
but at some companies more interviews were arranged during the visit
In relation to article 5 (Christensen et al 2007) additional interviews were carried
out according to a semi-structured interview guide focussing on the management of
knowledge-based resources In total 10 interviews five in each company were
conducted with employees holding different positions but similar responsibilities
across the companies
371 The transcription process
All formal interviews were taped and transcribed Initially it was planned to analyse
the data systematically using a content analysis approach implying that the
transcription would be separated into different parts (clauses) which would be
classified into content categories (see for example Gerbner et al 1969 and Weber
1985) Even though content analysis is often presented as a technique for the analysis
of archival data in the form of documents (see for example Miles and Huberman
1994 p 54-55) according to Weber (1985) the method can also be used more
broadly to analyse any written text including transcriptions Since this method
provides a firm ground for assessing reliability and validity in a traditional sense it
was thought that this method could be used to increase reliability
There are different techniques for text analysis ranging from simple hand-coding to
advanced computer programs However as Weber (1985 p 69) emphasizes ldquothere is
no single ldquoright wayrdquo to do content analysisrdquo The coding in this project was based on
the classification of the intrapreneurship literature presented in article 1 and on a
study of the factors enabling intrapreneurship (see article 3) a coding structure was
subsequently developed and systematically applied in most of the interviews
50
Classical content analysis assumes that relevant theories have been specified the
themes or research questions to be investigated are substantive and that the main
coding categories have been theoretically justified ( see for example Stone et al
1966 Weber 1985) in a way that has already determined or described codes as a
starting point (cf Ryan amp Bernard 2000 p 785) Early in the research process it
was realised that on the one hand this was difficult to reconcile with the general
methodological approach in the dissertation and on the other that it was difficult to
control how the categorisation was determined beforehand and how it would affect
the reliability and validity of the data when they are reduced and classified into fewer
categories (cf Weber 1985) It was therefore decided not to use content analysis to
interpret the interview data Nonetheless familiarity with the data together with the
linking of specific interview data and for example the various enablers and barriers
to innovativeness still proved useful when the articles were written
38 REFERENCES
Ahrens T amp C S Chapman 2007 Doing qualitative Field Research in Management
Accounting Positioning data to contribute to theory In C S Chapman A G
Hopwood amp M D Shields (eds) Handbook of Management Accounting Research
Amsterdam Elsevier
Alvesson M 2003 Beyond neopositivists romantics and localists A reflexive
approach to interviews in organisational research Academy of Management Review
Vol 28 No1 pp 13-33
Amabile T M R Conti H Coon J Lazenby amp M Herron 1996 Assessing the
work environment for creativity Academy of Management Journal Vol 39 No 5
pp 1154-1184
51
Argyris C R Putnam amp S D McLain 1985 Action Science San Francisco
Jossey-Bass
Andersen P H amp M A Skaates 2004 Ensuring validity in qualitative international
business research In Welch C amp R Marschan-Piekkari (eds) Handbook of
Qualitative Research Methods for International Business Edward Elgar Publishers
Antoncic B 2001 Organizational processes in intrapreneurship a conceptual
integration Journal of Enterprise Culture Vol 9 No 2 pp 221-235
Becker H S 1970 Sociological Work Methods and Substance Chicago Aldine
Brockhaus R H 1980 Risk-Taking Propensity of Entrepreneurs Academy of
Management Journal Vol 23 No 3 pp 509-520
Burrell G amp G Morgan 1979 Sociological Paradigms and Organizational
Analysis Aldershot England Ashgate Publishing
Busenitz L W C Goacutemes amp J W Spencer 2000 Country institutional profiles
Unlocking entrepreneurial phenomena Academy of Management Journal Vol 43
No 5 pp 994-1003
Covin J G amp D Slevin 1988 The influence of organization structure on the utility
of an entrepreneurial top management style Journal of Management Studies Vol 25
No 3 pp 217-234
Cummings J N (2004) Work groups structural diversity and knowledge sharing in
a global organization Management Science Vol 50 No 3 pp 352-364
Davis K S 1999 Decision criteria in the evaluation of potential intrapreneurs
Journal of Engineering and Technology Managment Vol 16 pp 295-327
52
Deetz S 1996 Describing differences in approaches to organization science Re-
thinking Burell and Morgan and their legacy Organization Science Vol 7 No 2
pp 191-207
Denzin N K 1989 Strategies of Multiple Triangulation In N K Denzin The
Research Act (3rd edition) Englewood Cliff NJ Prentice Hall pp 235-247
Denzin NK amp YS Lincoln 1994 Handbook of qualitative research Thousand
Oaks CA Sage
Dougherty D amp C Hardy 1996 Sustained product innovation in large mature
organizations Overcoming innovation-to-organization problems Academy of
Management Journal Vol 39 No 5 pp 1120-1153
Dyer WG amp Wilkins AL 1991 Better stories not better constructs to generate a
better theory a rejoinder to Eisenhardt Academy of Management Review Vol 16
No 3 pp 613-619
Eden C amp C Huxham 1996 Action research for the study of organizations In
Handbook of Organization Studies Stewart R C Hardy amp W North (eds) London
Sage
Eisenhardt KM 1989 Building Theories from Case Study Research Academy of
Management Review Vol 14 No 4 pp 532-550
Foray D 1991 The secrets of industry are in the air Industrial cooperation and the
organizational dynamics of the innovative firm Research Policy Vol 20 No 5 pp
393-405
Gerbner G O R Holsti K Krippendorff W J Paisley P J Stone (eds) 1969
The Analysis of Communication Content New York John Willey amp Sons
53
Guba E G amp Y S Lincoln 1994 Competing paradigms in qualitative research In
N K Denzin og Y S Lincoln Handbook of qualitative research Thousand Oaks
CA Sage 105-117
Gummesson E 1991 Qualitative Methods in Management Research Newbury Park
California Sage
Hisrich RD 1990 EntrepreneurshipIntrapreneurship American Psychologist Vol
45 No 2 pp 209-222
Hitt M A R E Hoskisson R A Johnson amp D D Moesel 1996 The market for
corporate control and firm innovation Academy of Management Journal Vol 39
No 5 pp 1084-1119
Ireland R D C R Reutzel amp J W Webb 2005 Entrepreneurship research in AMJ
What has been published and what might the future hold Academy of Management
Journal Vol 48 No 4 pp 556-564
Jick T D 1979 Mixing Qualitative and Quantitative Methods Triangulation in
Action Administrative Science Quarterly Vol 24 No 4 pp 602-611
Joumlnsson S amp K Lukka 2007 There and Back Again Doing Interventionist
Research in Management Accounting In Handbook of Management Accounting
Research CS Chapman AG Hopwood amp MD Shields (eds) Amsterdam
Elsevier
Kasanen E K Lukka amp A Siitonen 1993 The constructive approach in
management accounting research Journal of Management Accounting Research
Vol 9 pp 241-264
Klein K J F Dansereau amp R J Hall 1994 Levels issues in theory development
data collection and analysis Academy of Management Review Vol 19 pp 195-229
54
Kogut B amp U Zander 1992 Knowledge of the firm combinative capacity and the
replication of technology Organization Science Vol 3 pp 383-397
Kozlowski S amp K Klein 2000 A level approach to theory and research in
organizations Contextual temporal and emergent processes In Multilevel Theory
Research and Methods in Organizations Foundations extensions and new
directions K J Klein (ed) San Francisco Jossey-Bass
Kvale S 1997 InterView En introduction til det kvalitative forskningsinterview
Koslashbenhavn Hans Reitzels Forlag
Laurila J 1997 The thin line between advanced and conventional new technology
A case study on paper industry management Journal of Management Studies Vol
34 No 2 pp 221-239
Lauring J 2005 Naringr organisationer bliver mangfoldige Om vidensdeling og
interaktion i etnisk mangfoldinge organsationer phd-afhandling Institut for Ledelse
Handelshoslashjskolen i Aringrhus
Lawless M W amp L L Price 1992 An agency perspective on new technology
champions Organizational Science Vol 3 pp 342-355
Lewin K 1946 Action research and minority problems In Resolving Social
Conflicts Selected papers on Group Dynamics by Kurt Lewin G W Lewin (ed)
New York Harper amp Brothers
Lundvall B Aring (ed) 1992 National Systems of Innovation London Pinter
McClelland D C 1961 The Achieving Society New York The Free Press
Miles M B amp A M Huberman 1994 An Expanded Sourcebook Qualitative Data
Analysis Second Edition Thousand Oaks CA SAGE Publications
55
Nohria N amp R Gulati 1996 Is slack good or bad for innovation Academy of
Management Journal Vol 39 No 5 pp 1245-1264
Nonaka I amp H Takeuchi 1995 The Knowledge-Creating Company Oxford
University Press
Nyholm J amp L Langkilde 2003 Et benchmark studie af innovation og
innovationspolitik ndash hvad kan Danmark laeligre Oslashkonomi- og Erhvervsministeriets
enhed for erhvervsoslashkonomisk forskning og analyse FORA Koslashbenhavn
Patton M Q 1987 How to use qualitative methods in evaluation Newbury Park
CA SAGE Publications
Ryan GW amp H R Bernard 2000 Data Management and Analysis Methods In
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Academy of Management Journal Vol 43 No 5 pp 951-973
56
Stone R J D C Dunphy M S Smith amp D M Ogilvie (eds) 1966 The General
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Zahra S A D F Jennings amp D F Kuratko 1999 The Antecedents and
Consequenses of Firm-Level Entrepreneurship The State of the Field
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based rewards Academy of Management Journal Vol 43 No 2 pp 149-163
57
CHAPTER 4
A Classification of the Corporate Entrepreneurship Umbrella Labels and
Perspectives
Originally published in
Christensen Karina Skovvang 2004 A Classification of the Corporate
Entrepreneurship Umbrella Labels and Perspectives International Journal of
Management and Enterprise Development Vol 1 No 4 pp 301-315
The article was later improved and published in a Danish Journal
Christensen Karina Skovvang 2005 Corporate Entreprenoslashrskab Begreber og
Perspektiver Ledelse amp Erhvervsoslashkonomi Vol 61 No 1 13-26
Int J Management Enterprise Development Vol 1 No 4 2004 301
Copyright copy 2004 Inderscience Enterprises Ltd
A classification of the corporate entrepreneurship umbrella labels and perspectives
Karina Skovvang Christensen Department of Organisation and Management The Aarhus School of Business Haslegaardsvej 10 Aarhus V Denmark E-mail KaSCasbdk Corresponding author
Abstract The concept of corporate entrepreneurship has been confusingly used by researchers to explain various organisational phenomena such as ways of managing strategy and innovation The abundant use of labels and perspectives interchangeably has consequently led to lack of clarity This article reviews the literature in order to provide an overview and categorisation of corporate entrepreneurship The aim is to clarify the concept by identifying the key perspectives Since there is no unifying theoretical base for the entrepreneurship phenomena ndash due to for example its interdisciplinary grounding in economics sociology and psychology ndash a framework for corporate entrepreneurship is developed consisting of intrapreneurship and exopreneurship These are further broken down into four complementary perspectives corporate venturing internal resources internationalisation and external networks It is hoped that these four perspectives together will give the reader a clearer understanding of corporate entrepreneurship and thereby improve the basis for managerial decisions
Keywords corporate entrepreneurship strategic entrepreneurship intrapreneurship exopreneurship corporate venturing internal resources internationalisation networks framework
Reference to this paper should be made as follows Christensen KS (2004) lsquoA classification of the corporate entrepreneurship umbrella labels and perspectivesrsquo Int J Management Enterprise Development Vol 1 No 4 pp301ndash315
Biographical note Karina Skovvang Christensen is a PhD student MSc (Econ) at the Department of Organisation and Management Aarhus School of Business Denmark Her primary research area is intrapreneurship in knowledge-intensive companies with a focus on how knowledge resources can enable organisational and strategic renewal She is co-author of the book Knowledge Management ndash Establishing a Practice Field (in Danish) and has published articles on knowledge management and related subjects
1 Introduction
Technological and market changes seem to occur faster than we expect and Peter Druckerrsquos old saying that the only constant thing in business is change seems truer than
302 KS Christensen
ever Fast-changing business environments changing business structures and rules of competition are becoming part of the ordinary life of most companies as these are prerequisites for staying in business
Over the past two decades companies in the 1980s and to some extent the 1990s have been characterised by reductions in the workforce downsizing rightsizing budget cuts and the low morale of their workforce [1] While the main focus has been on short-term costs of operations no company can afford to rely on such an approach forever The real challenge for a company to remain a going concern is to establish a competitive advantage The only way to accomplish that is through differentiation and continuous innovation ndash whether it is related to the creation of new products and services production organisational processes or business models According to for example Morris and Kuratko [1] the answer to todayrsquos hyper-competitive environments is adaptability flexibility speed aggressiveness and innovativeness which they boil down to one word ndash entrepreneurship
Companies have been faced by increasing demands for both faster product development and more features in smaller products and higher and uniform quality stability and lower prices despite the inherent incompatibility of such demands The former relates to an entrepreneurial and flexible company while the latter require a well-structured and effective organisation However many large companies seem to find it very difficult to integrate the entrepreneurial spirit in a well-structured or bureaucratic organisation and must therefore think non-traditionally to cope with these increasing paradoxes Some companies tend to stick to the lsquoold waysrsquo of doing business ie preserving the well-known techniques business concepts and ways of cooperation while others reorganise re-create themselves merge and split up become virtual enter new markets and create unforeseen alliances Thus some firms apparently ignore changing market conditions while others act on challenges to the well-established business routines and rules of competition
Researchers and proactive companies have recently become particularly interested in topics such as entrepreneurial management corporate entrepreneurship strategic entrepreneurship and intrapreneurship This may in part be due to the lsquore-labellingrsquo [2] of existing concepts but it has also paved the way for the emergence of new practices and theories However Guth and Ginsberg [3 p 6] argue that lsquodespite the growing interest in corporate entrepreneurship there appears to be nothing near a consensus on what it isrsquo Consequently there are theoretical inconsistencies on how the concepts should be understood What all the proposed concepts seem to have in common however is that entrepreneurial activities can renew established organisations and that this can typically be achieved through innovation and venturing activities [3] that give the firm access to different skills capabilities and resources [4] The lack of consensus may be a symbol of the different labels or it may merely illustrate the opposite ie lsquolabelsrsquo do not solve the issue
This article proposes a categorisation of the concept of corporate entrepreneurship spanning both an internal perspective (intrapreneurship) and an external perspective (exopreneurship) The special case of spin-offs or new business creation (entrepreneurship) is seen as either a potential outcome of corporate entrepreneurship activities ndash not a perspective per se ndash or outside the scope of corporate entrepreneurship Section 2 discusses the theoretical roots of entrepreneurship in order to gain an understanding of the sources that have influenced entrepreneurship and thereby corporate
A classification of the corporate entrepreneurship umbrella 303
entrepreneurship The next section looks at the different labels for and perspectives on corporate entrepreneurship the aim of which is to clarify the topic and put it into perspective This is followed by a proposed framework consisting of four different approaches to strategic corporate entrepreneurship corporate venturing internal resources internationalisation and networks The article concludes with recommendations for using this framework in future research and practice
2 Theoretical roots entrepreneurship
The aim of this section is to help clarify the different approaches to entrepreneurship and thus to some extent explain the different perspectives on corporate entrepreneurship The theoretical roots of entrepreneurship builds on Stevenson and Jarillo [5] who argue that the management literature on entrepreneurship is often based on classical entrepreneurship literature which can be divided into three main categories the effects of entrepreneurship (what happens when entrepreneurs act) the causes of entrepreneurship (why entrepreneurs act) and entrepreneurial management (how entrepreneurs act) The main differences are due to the different theoretical backgrounds of the researchers Economists have dominated the effects of entrepreneurship such as the Chicago tradition [6ndash8] the German tradition [9] and the Austrian tradition [10ndash12] In contrast studies on the causes of entrepreneurship are dominated by psychologists [13ndash15] and sociologists [16] and studies on entrepreneurial management have mainly been considered from a practical point of view Despite the differences in perspectives however there are several similarities and overlaps ndash especially in the definitions of entrepreneurship which are dominated by the effect studies with their focus on what initiated entrepreneurship Nonetheless the different disciplines are based on different basic assumptions and thus emphasise different aspects of the phenomenon ndash again adding to the confusion related to entrepreneurship
This categorisation by Stevenson and Jarillo [5] is only one among several other approaches to understanding the concept of entrepreneurship [17] However Alvarez and Barney [18] argue that the theory of entrepreneurship continues to lack a unifying base from which to explain predict and empirically examine the phenomenon Instead they emphasise that researchers from other fields use entrepreneurship as a means for extending their own theoretical frameworks which means that the phenomenon is explored from several different perspectives Unfortunately the extension of the concept to cover corporate entrepreneurship makes it even fuzzier because corporate entrepreneurship is more complex since it also challenges organisational strategy structures and processes [1920] Compared with the causes and effects of entrepreneurship scholars paid little attention to the corporate management dimension until two or three decades ago when the management literature began to take a more serious look at entrepreneurship
3 The appropriate label
The concept of entrepreneurship within existing organisations has evolved over the last thirty years [21ndash24] especially over the last two decades and is known under many
304 KS Christensen
different lsquolabelsrsquo including corporate entrepreneurship [125ndash30] internal corporate entrepreneurship [31ndash34] intrapreneurship [35ndash40] entrepreneurial management [5] and strategic entrepreneurship [4142] Corporate entrepreneurship seems to have gained the most attention as a concept as is evident from special issues of journals eg Strategic Management Journal in 1990 (Corporate Entrepreneurship) 2001(Entrepreneurial Strategies for Wealth Creation) and Entrepreneurship Theory amp Practice 1999 (Corporate Entrepreneurship in a Global Economy)
As emphasised by Hornsby et al [30] the concepts are often used interchangeably although the various labels of the concept have different associations For instance the term lsquomanagementrsquo in lsquoentrepreneurial managementrsquo indicates that entrepreneurial behaviour or entrepreneurship is to some extent controllable However lsquothe causes of entrepreneurshiprsquo researchers [16] have proposed and sometimes emphasised that entrepreneurship should be seen as a function of human characteristics that not everyone possesses and that entrepreneurship is often related to processes that traditionally cannot be controlled or at least lose their efficiency effectiveness and uniqueness when controlled [16] It does not seem reasonable either that entrepreneurship is entirely controllable An organisation can encourage entrepreneurial activities by bringing together people possessing special and different skills and knowledge and applying their specialities to a common end product by the creation of new combinations [9]
Morris and Kuratko [1 p62] argue that by using lsquothe term corporate entrepreneurship [it] indicate[s] that the fundamentals do not change only the contextrsquo whereas they say that the fundamentals do change when the concept is changed to intrapreneurship A counterargument is that in lsquocorporate entrepreneurshiprsquo the term lsquocorporatersquo is often associated with large corporations [543] whereas entrepreneurial activities are also important in small and medium-sized organisations [13738] In this context lsquointrapreneurshiprsquo which does not indicate anything about the size of the company is shorthand for intracorporate entrepreneurship [35] which simply indicates entrepreneurship within an existing organisation
Based on the above intrapreneurship seems to be the most appropriate label for the concept of entrepreneurship within an existing company as long as the company is only dealing with internal resources in its own possession However there are also several opportunities to be entrepreneurial and innovative and develop new knowledge and competencies outside the boundaries of a company ndash which Chang [44] calls exopreneurship Chang [44 p187] points out that lsquoexopreneurship is the generation of innovation outside the boundary of organisation using external agents known as exopreneursrsquo which means that an organisation acquires innovation through external networks such as joint ventures external venture capital subcontracting and strategic alliances The differences are clear ndash entrepreneurs innovate for themselves intrapreneurs innovate on behalf of an existing organisation while exopreneurs are part of an external network The motivations for innovation are therefore different
The left-hand side of the Figure 1 shows that there may be a relation between an established company and a new independent venture as the latter may be a spin off of the former Pinchot [35] even argues that many entrepreneurs develop their skills and competencies within an established organisation before creating their own venture Intrapreneurship which can be defined as a companyrsquos legal possession of resources is shown in the middle of the figure The right-hand side of the figure goes beyond the
A classification of the corporate entrepreneurship umbrella 305
borders of the organisation and illustrates exopreneurship or entrepreneurial activities through external networks of which the company does not possess full ownership
Figure 1 Relationship between corporate entrepreneurship entrepreneurship intrapreneurship and exopreneurship
4 Defining corporate entrepreneurship
The three approaches to entrepreneurship and strategic management have resulted in many definitions of corporate entrepreneurship over the past 20ndash30 years Morris and Kuratko [1 p31] define corporate entrepreneurship as lsquoa term used to describe entrepreneurial behaviour inside established mid-sized and large organisationsrsquo Corporate entrepreneurship can also be seen as the process whereby an individual or a group creates a new venture within an existing organisation revitalises and renews an organisation or innovates [1945] Zahrarsquos [46 p262] definition of corporate entrepreneurship suggests lsquoa formal or informal activity aimed at creating new business in established firms through product and process innovations and market developmentsrsquo whereas Sathe [47] defined corporate entrepreneurship as a process of organisational renewal
Guth and Ginsberg [3] classify corporate entrepreneurship into two strategic managerial choices corporate venturing and the transformation of organisations through strategic renewal By corporate venturing is meant intraprising [35] or new business creation within existing organisations [25] that may or may not result in strategic renewal while the latter implies the creation of new wealth through new combinations of resources Corporate venturing is one way to achieve strategic renewal making acquisitions resulting in new combinations is another whereas actions like lsquorefocusing a business competitively making major changes in marketing or distribution redirecting product development and reshaping operationsrsquo [3 p6] are also examples of strategic renewal
Thornberry [48] breaks corporate entrepreneurship down even further identifying four strategic types corporate venturing intrapreneuring organisational transformation and industry rule breaking This is almost similar to Stopford and Baden-Fullerrsquos [28] categorisation which identifies three types of corporate entrepreneurship Intrapreneurship which they define as a part of corporate venturing transformation and
306 KS Christensen
renewal of existing organisations and changing the rules of competition for the industry as suggested by Schumpeter [9] Compared with Guth and Ginsbergrsquos [3] framework the differences are industry role breakingchanging the industry rules of competition which is considered beyond a companyrsquos direct influence because the company cannot plan it Since it is highly market-dependent it may be a result of corporate venturing and strategic renewal rather than a process Corporate entrepreneurship is therefore seen as corporate initiatives that enable entrepreneurship in relation to an existing company
5 Perspectives on corporate entrepreneurship
Many scholars seem to agree that corporate entrepreneurship is an overall term for all other lsquolabelsrsquo and perspectives Figure 2 illustrate the corporate entrepreneurship umbrella and divides it into four perspectives (1) corporate venturing (2) internal resources (3) internationalisation and (4) external networks These perspectives indicate four domains in which a company can make an effort to be more innovative However even though they are very different they are all rooted in organisational resources The classification takes into account both what is within and beyond the organisational boundaries and the dotted line in Figure 2 indicates what is beyond the organisational boundaries
Figure 2 Relationships between the perspectives on corporate entrepreneurship
Corporate venturing is a means of planning for organisational ambiguity in entrepreneurial action by separating one or a group of intrapreneurs from the organisational structure [25274549] By contrast internal resources operate within the overall organisational structure and from this perspective corporate entrepreneurship focuses on bringing together organisational resources in a way that generates innovations and competitive advantage [1850ndash52] Internationalisation as a perspective on corporate entrepreneurship relates to the relatively higher risk of entering foreign markets These often differ from the domestic market in terms of political economic legal and cultural
A classification of the corporate entrepreneurship umbrella 307
dimensions This means the company has to develop new knowledge and competencies [4253ndash55] which in turn reinforces the need for entrepreneurial abilities The last perspective on corporate entrepreneurship in this classification is external networks and alliances The main reason why companies enter an external network or alliance is to gain access to resources that they do not possess themselves [4256]
In the special issue of Strategic Management Journal in 2001 Michael Hitt R Duane Ireland S Michael Camp and Donald L Sexton also categorise corporate entrepreneurship into four organisational activities external networks resources and organisational learning innovation and internationalisation Ireland et al [42] expand the domains from the special issue with lsquotop management teams and governancersquo and lsquogrowthrsquo It is argued that top management teams and governance are essential as their influence on strategic goals are significant [5758] and lsquogrowthrsquo is the essence of entrepreneurship [59ndash61] However as suggested in this framework the perspectives are not the same because unlike Hitt et al [41] Ireland et al [42] and Hitt et al [62] this classification considers lsquotop management teams and governancersquo as an initiative that can enable outcomes like new processes products or services growth strategic renewal or the creation of new business As previously mentioned lsquogrowthrsquo is regarded as an outcome of combinations of a perspective and one or more enablers ndash such as top management teams and governance and reward systems
In the literature the concept of innovation is very broad and often confused with invention [63] Some researchers describe innovation as a process [63ndash66] while for others it is the result or commercialisation of a companyrsquos entrepreneurial activities [414267] Notwithstanding this multiple use of the term lsquoinnovationrsquo is here seen as the outcome In order to increase the understanding of the four perspectives on corporate entrepreneurship they are briefly described below
51 Corporate venturing
In 1985 Robert A Burgelman introduced the term New Venture Division to describe the small new businesses set up by one or a group of intrapreneurs and which formed the link between corporate entrepreneurship and the creation of new businesses A number of scholars [4968] have pointed out that the activities described by Burgelman [27] can actually be dated back to the 1960s where large companies like 3M and Dupont took their first step into venturing Today these activities are mainly described as Corporate Venturing but as argued by Sharma and Chrisman [45] the continuous development of new definitions has led to confusion
The main reason for creating corporate ventures is the isolation and nurturing of innovative ideas that cannot survive in the bureaucratic structures and formal procedures of a large company Dedicating resources to corporate venturing allows the company to follow different routes in the pursuit of innovations with the RampD department concentrating on radical technological inventions while the corporate ventures explore market opportunities for both radical and incremental innovations A number of scholars [4969] have argued that corporate venturing is one of the main roads to innovation in the future economy as markets become more and more saturated The ability to identify and exploit market opportunities is the core of entrepreneurship and forms a major part of the reason for investing in corporate ventures The type of innovation created by corporate venturing is often related to strategic innovations since the technology is invented as part
308 KS Christensen
of the corporationrsquos research and development programme but commercialisation in new markets is carried out through a corporate venture Intuitively the need for major investments in product innovation makes it less suitable for corporate venturing but due to the capital structures and knowledge networks in some industries investment in corporate venturing is seen as a promising business model in the pursuit of product innovation
52 Internal (intangible) resources
Another perspective on corporate entrepreneurship though one which might seem less evident is internal resources However the focus on internal resources can be dated back to 1959 where Edith Penrose stated that a companyrsquos return is largely based on the resources it possesses Since then however the balance of internal resources has change from tangible to intangible resources Today tangible resources are easily accessible or easy to imitate which mean that it is no longer a sufficient way to gain a competitive advantage Therefore intangible resources such as core competencies [70] and sustained competitive advantage [51] have been crucial since the beginning of the 1990s
The main reason for focusing on internal resources in relation to corporate entrepreneurship is that many companies possess a bundle of unexploited resources ndash mainly intangible knowledge resources held by employees The knowledge resources are a mixture of skills experience competencies and capabilities that cannot easily be articulated and therefore cannot be transferred at armrsquos length or imitated by others This makes the perspective of internal resources very important in relation to corporate entrepreneurship as emphasised by Peter Drucker lsquo[t]he basic economic resources hellip is and will be knowledgersquo [71 p7]
The strength of the company is to bring together employees possessing different specialised knowledge resources and to enable the creation of new knowledge resources or combination of existing ones to generate innovations and competitive advantage [51] Alvarez and Barney [18] argue that knowledge specialists often need an organisation to make sense out of their knowledge resources since they lack the ability to see how these can achieve an entrepreneurial profit or generate wealth They state that intrapreneurs possess a broader knowledge base than specialists which allows them to see how specialised knowledge resources can be applied to and integrated with the rest of the company and the market in order to achieve an entrepreneurial profit
Brush et al [52] point out that the ability to share knowledge resources influences efforts to develop the initial resource base necessary for long-term innovation A companyrsquos ability to bring together these heterogeneous knowledge resources is therefore crucial to enabling innovation within organisational boundaries It is therefore important for a company to be able to disseminate data and information to those parts of the organisation where it may be turned into useful knowledge
The internal resource perspective thus constitutes a big potential for corporate entrepreneurship Continuous knowledge creation sharing and dissemination and the identification and exploitation of new possibilities are a way of maintaining a sustained competitive advantage and keeping organisational competencies up-to-date
A classification of the corporate entrepreneurship umbrella 309
53 Internationalisation
The economic landscape has undergone substantial changes over the last few decades [7273] Internationalisation ie when a company extends its market scope beyond the domestic market [4254] has become an important driver of corporate entrepreneurship in many companies not only because of the innovative process of discovering and exploiting international opportunities for the purpose of achieving a competitive advantage [74] but also because of the significant potential returns when the market expands [75] Internationalisation can take different forms eg exporting and foreign direct investments but the main difference between internationalisation and external networks as described in the next paragraph is ownership Internationalisation is integrated within the borders of the same legal organisation even though people are geographically diversified However common ownership means that resources and information flow freely and the return whether it be new technology products processes services market opportunity etc is owned by a single company
The corporate entrepreneurship perspective on internationalisation should primarily be seen as an opportunity to expand the potential market scope Lu and Beamish [55] stress that internationalisation is an entrepreneurial activity since compared with domestic expansion entering a foreign market is risky in terms of the capital investment involved or in terms of distributor opportunism asset appropriation and devaluation with respect to exports in relation to direct foreign investment and exporting They find that when companies start exporting or make direct foreign investment profitability declines because it does not pay the rent of the extra costs Gradually however performance improves as new knowledge and capabilities are developed as competitiveness is enhanced and as market opportunities are captured by the companyrsquos investment activities in international markets and the return becomes positive
Being in more markets stimulates innovation and the development of a global mindset through the improvement or development of new knowledge resources capabilities and innovative skills and enhances the economies of scale and scope [75]
54 External networks and alliances
A consensus has emerged among both strategy and entrepreneurship scholars that networks play an important role for growth and innovation [76] Networks are patterned relationships between individuals and groups [77] and are critical for an organisationrsquos acquisition of resources [78] and with it the survival of the organisation In relation to corporate entrepreneurship the main purpose of entering a network is to gain access to the resources needed (but which the company does not possess) and to learn new competencies outside the companyrsquos core competences [5670] However alliances with selected customers or universities may also be related to the core of for example product development and technology development Organisational networks can take many forms eg RampD partnerships licensing marketing agreements subcontracting joint ventures and strategic alliances
From a corporate entrepreneurship point of view another purpose of entering networks or alliances may be flexibility ndash especially for the well-structured large organisation where everything has to be cross-checked before something new can be tried out in the market Networks or alliances with small partners make it possible to
310 KS Christensen
produce only a few units of a product and test it in the market before gearing the large-scale production plant to streamlined production In this way the organisation gets some of the flexibility and agility of a small company while maintaining the massive streamlined organisation that is crucial for stability
55 Towards a framework for corporate entrepreneurship
Figure 3 summarises the theoretical framework for corporate entrepreneurship developed in the previous sections The upper half of the figure shows the four perspectives or domains of research in the area ndash corporate venturing internal resources internationalisation and networks It has been argued that the concept of corporate entrepreneurship could be theorised and conceptualised from each of the four perspectives which can also be categorised into intrapreneurship and exopreneurship
The lower part of the framework accentuates the possible outcome of corporate entrepreneurship It is very difficult to predict this beforehand Some activities will hardly influence the organisation whereas other activities lead to organisational renewal and yet again some others transform the organisation to something lsquonewrsquo significantly different from what it was before But even though corporate entrepreneurship initiatives result in some form of organisational renewal only in a very few cases will it change the rules of competition
Figure 3 The proposed framework for corporate entrepreneurship
6 Conclusion
This study as a discussion and classification of labels and a clarification of the overall concept of corporate entrepreneurship contributes to the corporate entrepreneurship
A classification of the corporate entrepreneurship umbrella 311
literature by providing useful insights (for newcomers) The breadth of corporate entrepreneurship has been illustrated and a framework in clarification has been proposed Further research in each of the four perspectives is needed in order to understand the different ways in which corporate entrepreneurship is enabled and how entrepreneurial activities should be organised ndash especially within the internal resource perspective which is less developed than the others Future research should be structured according to the proposed framework in Figure 3 to make it possible to compare the enablers and the ways of organising across different perspectives on corporate entrepreneurship
The classification provides a nuanced multi-faceted view of corporate entrepreneurship by describing different bases for managerial decisions in relation to corporate entrepreneurship since this can mean different things depending on the perspective The four perspectives taken into account may contribute to a greater insight into the meaningful context-dependent relations in a company It is important to realise that the perspectives are not mutually exclusive ndash rather they should be seen as complementary However the merits of intrapreneurship or exopreneurship vary with market contexts and the resources under the firmrsquos control [79]
The four perspectives on corporate entrepreneurship all relate to managerial opportunities However enabling corporate entrepreneurship by for example creating a new organisational structure may not be sufficient Chesbrough and Rosenbloom [80] argue that companies also need to be open to new ways of commercialisation when new opportunities do not fit well into their current business model
Knowledge seems to be the only factor to play a crucial role in all perspectives even though it plays different roles across the perspectives in forming the basis for innovative activities corporate entrepreneurship and business models Knowledge resources as an integration mechanism supports Druckerrsquos [71] view of knowledge as the resource in the knowledge society It also points to the fact that a companyrsquos ability to generate knowledge resources [81] is crucial to its competitiveness [82] and innovativeness However knowledge resources are also a potential source of cognitive bias as a company is often biased by earlier success
In order to be innovative managing organisational knowledge is thus critical in relation to developing new combinations of knowledge resources etcIt adds a new dimension to the existing literature on corporate entrepreneurship that up to now has mainly described the different roles and characteristics of the entrepreneurintrapreneur A knowledge-based view of corporate entrepreneurship and knowledge resources as an integration mechanism are therefore very interesting topics for further research
Acknowledgements
The author would like to thank Anders Drejer Anders Jacob Raj Andersen Per Nikolaj Bukh Mikkel Gadmar Bengt Johannisson and John Parm Ulhoslashi for comments on previous drafts
312 KS Christensen
References 1 Morris MH and Kuratko DF (2002) Corporate Entrepreneurship Harcourt College
Publishers Orlando Florida 2 Latour B (1999) Pandorarsquos Hope Essays on the Reality of Science Studies Harvard
University Press Cambridge MA 3 Guth WD and Ginsberg A (1990) lsquoGuest editors introduction corporate
entrepreneurshiprsquo Strategic Management Journal Vol 11 pp5ndash15 4 McGrath RG MacMillan IC and Venkatraman S (1995) lsquoGlobal dimensions of new
competenciesrsquo in Birley S and MacMillan IC (Eds) International Entrepreneurship Routledge New York
5 Stevenson HH and Jarillo JC (1990) lsquoA paradigm of entrepreneurship entrepreneurial managementrsquo Strategic Management Journal Vol 11 special issue pp17ndash27
6 Knight F (1964 [1921]) Risk Uncertainty and Profit Augustus M Kelley New York 7 Schultz TW (1975) lsquoThe value of the ability to deal with disequilibriarsquo Journal of
Economic Literature Vol 13 No 3 pp827ndash846 8 Schultz TW (1980) lsquoInvestment in entrepreneurial abilityrsquo Scandinavian Journal of
Economics Vol 82 pp437ndash448 9 Schumpeter JA (1934) The Theory of Economic Development Harvard University Press
Cambridge AS 10 Mises LV (1949) Human Action A Treatise on Economics William Hodge and Company
Limited London 11 Kirzner IM (1985) Discovery and the Capitalist Process University of Chicago Press
Chicago 12 Kirzner IM (1997) lsquoEntrepreneurial discovery and the competitive market process an
austrian approachrsquo Journal of Economic Literature Vol XXXV March pp60ndash85 13 Collins NC and Moore DG (1964) The Enterprising Man East Lansing MI Michigan
State University 14 Brockhaus RH (1980) lsquoRisk-taking propensity of entrepreneursrsquo Academy of Management
Journal Vol 23 pp509ndash520 15 Brockhaus RH and Horwitz PS (1986) lsquoThe psychology of the entrepreneurrsquo in Sexton
DL and Smilar RW (Eds) The Art and Science of Entrepreneurship Cambridge Ballinger MA
16 McClelland DC (1961) The Achieving Society The Free Press New York 17 Sundbo J (1998) The Theory of Innovation Entrepreneurs Technology and Strategy
Edvard Elgar Publishing 18 Alvarez SA and Barney JB (2002) lsquoResource-based theory and the entrepreneurial firmrsquo
in Hitt MA Ireland RD Camp MS and Sexton DL (Eds) Strategic Entrepreneurship Creation a New Mindset Blackwell Publisher Oxford
19 Dess GD Lumpkin GT and McGee JE (1999) lsquoLinking corporate entrepreneurship to strategy structure and process suggested research directionsrsquo Entrepreneurship Theory and Practice Vol 23 No 3 pp85ndash102
20 Morris MH and Kuratko DF (2002) Corporate Entrepreneurship Harcourt College Publishers Orlando Florida
21 Peterson R and Berger D (1972) lsquoEntrepreneurship in organisationsrsquo Administrative Science Quarterly Vol 16 pp97ndash106
22 Hill RM and Hlavacek JD (1972) lsquoThe venture team a new concept in marketing organisationsrsquo Journal of Marketing Vol 36 pp44ndash50
23 Hanan M (1976) lsquoVenturing corporations think small to stay strongrsquo Harvard Business Review Vol 54 pp139ndash148
A classification of the corporate entrepreneurship umbrella 313
24 Quinn JB (1979) lsquoTechnological innovation entrepreneurship and strategyrsquo Sloan Management Review Vol 20 pp19ndash30
25 Burgelman RA (1983) lsquoA process model of internal corporate venturing in the diversified major firmrsquo Administrative Science Quarterly Vol 28 No 2 pp223ndash241
26 Burgelman RA (1984) lsquoDesigns for corporate entrepreneurship in established firmsrsquo California Management Review Vol 26 No 3 pp154ndash166
27 Burgelman RA (1985) lsquoManaging the new venture division research findings and implications for strategic managementrsquo Strategic Management Journal Vol 6 No 1 pp39ndash55
28 Stopford J and Baden-Fuller CF (1994) lsquoCreating corporate entrepreneurshiprsquo Strategic Management Journal Vol 15 No 7 pp521ndash536
29 Barrett H and Weinstein A (1999) lsquoThe effect of market orientation and organisational flexibility on corporate entrepreneurshiprsquo Entrepreneurship Theory and Practice Vol 23 No 1 pp57ndash73
30 Hornsby JS Kuratko DF and Zahra SA (2002) lsquoMiddle managers perception of the internal environment for corporate entrepreneurship assessing a measurement scalersquo Journal of Business Venturing Vol 17 No 3 pp253ndash273
31 Schollhammer H (1981) lsquoThe efficacy of internal corporate entrepreneurship strategiesrsquo in Vesper KH (Eds) Frontiers of Entrepreneurship Research Babson College Wellesley MA
32 Schollhammer H (1982) lsquoInternal corporate entrepreneurshiprsquo in Kent C Sexton D and Vesper K (Eds) Encyclopedia Entrepreneurship Prentice-Hall Inc Engelwood Cliffs NJ
33 Jones GR and JE Butler (1992) lsquoManaging internal corporate entrepreneurship an agency theory perspectiversquo Journal of Management Vol 18 No 4 pp733ndash749
34 Lumpkin GT and Dess GG (1996) lsquoClarifying the entrepreneurial orientation construct and linking it to performancersquo Academy of Management Review Vol 21 pp135ndash172
35 Pinchot G (1985) Intrapreneuring Why You Donrsquot Have to Leave the Corporation to Become an Entrepreneur Harper and Row New York
36 Nielsen RP Peters MP and Hisrich RD (1985) lsquoIntrapreneurship strategy for internal markets ndash corporate non-profit and government institution casesrsquo Strategic Management Journal Vol 6 pp181ndash189
37 Carrier C (1994) lsquoIntrapreneurship in large firms and SMEs a comparative studyrsquo International Small Business Journal Vol 12 No 3 pp54ndash61
38 Carrier C (1996) lsquoIntrapreneurship in small businesses an exploratory studyrsquo Entrepreneurship Theory and Practice Vol 21 No 1 pp5ndash20
39 Antoncic B and Hisrich RD (1999) lsquoIntrapreneurship construct refinement and cross-cultural validationrsquo Journal of Business Venturing Vol 16 pp495ndash527
40 Chinho L Hojung T and Chienming W (2003) lsquoFuzzy fitness model of intrapreneurship activities or Taiwanese high-tech firmsrsquo International Journal of Management and Enterprise Development Vol 1 No 1 pp45ndash54
41 Hitt MA Ireland RD Camp SM and Sexton DL (2001) lsquolsquoGuest editorsrsquo introduction to the special issue strategic entrepreneurship entrepreneurial strategies for wealth creationrsquo Strategic Management Journal Vol 22 pp479ndash491
42 Ireland RD Hitt MA Camp SM and Sexton DL (2001) lsquoIntegrating entrepreneurship actions and strategic management actions to create firm wealthrsquo Academy of Management Executive Vol 15 No 1 pp49ndash63
43 Shane S and Venkataraman S (2000) lsquoNote the promise of entrepreneurship as a field of researchrsquo Academy of Management Review Vol 25 No 1 pp217ndash226
44 Chang J (1998) lsquoModel of corporate entrepreneurship intrapreneurship and exopreneurshiprsquo Borneo Review Vol 9 No 2 pp187ndash213
314 KS Christensen
45 Sharma P and Chrisman JJ (1999) lsquoToward a reconciliation of the definitional issues in the field of corporate entreprenrushiprsquo Entrepreneurship Theory and Practice Vol 22 pp43ndash68
46 Zahra SA (1991) lsquoPredictors and financial outcomes of corporate entrepreneurship an exploratory studyrsquo Journal of Business Venturing Vol 6 pp259ndash285
47 Sathe V (1989) lsquoFostering entrepreneurship in a large diversified firmrsquo Organisational Dyn Vol 18 pp20ndash32
48 Thornberry N (2001) lsquoCorporate entrepreneurship antidote or oxymoronrsquo European Management Journal Vol 19 No 5 pp526ndash533
49 Chesbrough HW (2000) lsquoDesigning corporate ventures in the shadow of private venture capitalrsquo California Management Review Vol 42 No 3 pp31ndash49
50 Penrose ET (1959) The Theory of the Growth of the Firm Wiley New York 51 Barney JB (1991) lsquoFirm resources and sustained competitive advantagersquo Journal of
Management Vol 17 pp99ndash120 52 Brush CG Greene PG and Hart MM (2001) lsquoFrom initial idea to unique advantage the
entrepreneurial challenge of constructing a resource basersquo Academy of Management Executive Vol 15 No 1 pp64ndash80
53 Zahra SA and Garvis DM (2000) lsquoInternational corporate entrepreneurship and firm performance the moderating effect of international environment hostilityrsquo Journal of Business Venturing Vol 15 pp469ndash492
54 Hitt MA and Ireland RD (2000) lsquoThe intersection of entrepreneurship and strategic management researchrsquo in Sexton DL and Landstroumlm HA (Eds) Handbook of Entrepreneurship Blackwell Oxford 45ndash63
55 Lu JW and Beamish PW (2001) lsquoThe internationalisation and performance of SMEsrsquo Strategic Management Journal Vol 22 pp565ndash586
56 Hitt MA Ireland RD and Lee H (2000) lsquoTechnological learning knowledge management firm growth and performancersquo Journal of Engineering and Technology Management Vol 17 pp231ndash246
57 West III GP and Meyer GD (1998) lsquoTo agree or not to agree Consensus and performance in new venturesrsquo Journal of Business Venturing Vol 13 pp395ndash422
58 Beekun RI Stedham Y and Young GJ (1998) lsquoBoard characteristics managerial controls and corporate strategy a study of US hospitalsrsquo Journal of Management Vol 24 pp3ndash19
59 Hitt MA Hoskisson RE Johnson RA and Moesel DD (1996) lsquoThe market for corporate control and firm innovationrsquo Academy of Management Journal Vol 39 pp1084ndash1119
60 Covin JG and Slevin P (2002) lsquoThe entrepreneurial imperatives of strategic leadershiprsquo in Hitt MA Ireland RD Camp SM and Sexton DL (Eds) Strategic Entrepreneurship Creating a New Mindset Blackwell Publisher Oxford
61 Davidsson P Delmar F and Wiklund J (2002) lsquoEntrepreneurship as growth growth as entrepreneurshiprsquo in Hitt MA Ireland RD Camp SM and Sexton DL (Eds) Strategic Entrepreneurship Creating a New Mindset Blackwell Publishers Oxford
62 Hitt MA Ireland RD Camp SM and Sexton DL (Eds) (2002) Strategic Entrepreneurship Creating a New Mindset Blackwell Publisher Oxford
63 Tidd J Bessant J and Pavitt K (1997) Managing Innovation Integrating Technological Market and Organisational Change West Sussex England John Wiley and Sons
64 Freeman C (1982) The Economics of Industrial Innovation (2nd Edition) Frances Pinter London
65 Drucker PF (1985) Innovatoin and Entrepreneurship Practice and Principles Harper and Row New York
66 Porter M (1990) The Competitive Advantage of Nations Macmillan London
A classification of the corporate entrepreneurship umbrella 315
67 Hamel G (2000) Leading the Revolution Harvard Business School Press Boston 68 Gee RE (1994) lsquoFinding and commercialising new businessesrsquo Research Technology
Management Vol 37 No 1 pp49ndash57 69 Mason H and Rohner T (2002) The Venture Imperative ndash A New Model for Corporate
Innovation Harward Business School Press Boston 70 Prahalad G and Hamel G (1990) lsquoThe core competence of the corporationrsquo Harvard
Business Review Vol 68 No 3 pp79ndash91 71 Drucker PF (1993) Post-capitalist society Butterworth-Heinemann Oxford p7 72 Ireland RD and Hitt MA (1999) lsquoAchieving and maintaining strategic competitiveness in
the 21st century the role of strategic leadershiprsquo Academy of Management Executive Vol 13 No 1 pp43ndash57
73 Zahra SA Ireland RD and Hitt MA (2000) lsquoInternational expansion by new venture firms international diversity mode of market entry technological learning and performancersquo Academy of Management Journal Vol 43 No 5 pp925ndash950
74 Zahra SA and George G (2002) lsquoInternational entrepreneurship the current status of the field and future research agendarsquo in Hitt MA Ireland RD Camp SM and Sexton DL (Eds) Strategic Entrepreneurship Creating a New Mindset Blackwell Publisher Oxford
75 Hitt MA Hoskisson RE and Kim H (1997) lsquoInternational diversification effects on innovation and firm performance in product-diversified firmsrsquo Academy of Management Journal Vol 40 No 4 pp767ndash798
76 Stuart TE Hoang H and Hybels RC (1999) lsquoInterorganisatinal endorsements and the performance of entrepreneurial venturesrsquo Administrative Science Quarterly Vol 44 pp315ndash349
77 Dubini P and Aldrich H (1991) lsquoPersonal and extended networks are central to the entreprenerushial processrsquo Journal of Business Venturing Vol 6 pp305ndash313
78 Gulati R (1998) lsquoAlliances and networksrsquo Strategic Management Journal Vol 19 pp293ndash317
79 Lee L and Gongming Q (2003) lsquoInternalisation or externalisation the option for small and medium-sezed technology-based enterprises in overseas marketsrsquo International Journal of Management and Enterprise Development Vol 1 No 1 pp55ndash70
80 Chesbrough H and Rosenbloom RS (2002) lsquoThe role of the business model in capturing value from innovations evidence from Xerox Corporationrsquos technology spin-off companiesrsquo Industrial and Corporate Change Vol 11 No 3 pp529ndash555
81 Spender JC (1996) lsquoMaking knowledge the basis of a dynamic theory of the firmrsquo Strategic Management Journal Vol 17 Winter Special Issue pp45ndash62
82 Grant RM (1996) lsquoTowards a knowledge-based theory of the firmrsquo Strategic Management Journal Vol 17 Winter Special Issue pp109ndash122
74
75
CHAPTER 5
Postscript to article 1
The article in Chapter 4 of the dissertation was published in International Journal of
Management and Enterprise Development The paper was later translated into
Danish revised and substantially improved in several areas Finally the article was
published in the Danish Journal Ledelse amp Erhvervsoslashkonomi (Christensen 2005a)
The main differences between the two articles are to be found in the introduction the
paragraph ldquoTowards a framework for corporate entrepreneurshiprdquo and the
concluding remarks which have been considerably improved In addition the Danish
article has adopted a Danish perspective of the Danish labour market situation the
writing has been improved and the figures have been revised to make the basic
message clearer
Corporate venturing Initiatives which lead to the establishment of a new organisation within the boundaries of an existing one
Internal resources Primarily concerns the internal knowledge resources (human resources processes technologies etc) of the parent company within national and cultural boundaries
Internationalisation Focuses on the resources available to the company from establishing departments abroad and in other cultures
External networks Relates to access to resources the company needs and which the company does not necessarily develop or possess itself
Table A Four ways to organise corporate entrepreneurship
76
Thus based on the Danish version of the article this postscript presents a more
detailed and well-developed discussion of the framework for corporate
entrepreneurship and the implications thereof in a Danish context Table A which is
translated from the Danish article provides an overview of the four perspectives on
corporate entrepreneurship presented in the article
51 TOWARDS A FRAMEWORK FOR CORPORATE ENTREPRENEURSHIP
Figure 43 (figure 3 in the original article submitted as part of this dissertation)
summarises the theoretical framework for corporate entrepreneurship The four
organisational perspectives on corporate entrepreneurship corporate venturing
internal resources internationalisation and networks are placed in the central part of
the figure to show that corporate entrepreneurship can be conceptualised from each
perspective
The lower middle part of figure 43 shows the possible results of the various
initiatives arising from corporate entrepreneurship activities While some initiatives
hardly affect the organisation at all or only imply minor changes others will change
the company through organisational or strategic renewal and may transform it into
something lsquonewrsquo or significantly different from what it was before Finally as shown
in the lowest part of figure 43 the results can transcend the boundaries of the
company and influence the competitive rules of the market
The model illustrates the organisational opportunities a company has to encourage
both innovation and entrepreneurship eg collaboration with other companies
(exopreneurship) or exploiting resources it already possesses There is no general
blueprint for the best way of organising It depends on the specific company its
strategy culture organisation etc and the type of innovation it finds most
appropriate
77
Both the original article and the revised version (Christensen 2005a) have presented
various perspectives from which these questions can be addressed However it is
important to note that the perspectives complement each other ie experiences
acquired from different approaches and from different traditions in the research
literature can shed light on how to manage the tensions between different ways of
organising innovativeness
While the perspectives in figure 43 lead to different ways of organising
innovativeness anything the company or management can do to enable corporate
entrepreneurship is important There is therefore a need for organisational initiatives
to enable corporate entrepreneurship which either build on specific perspectives or
span them in an integrated way
In a review of the literature Jeffrey Hornsby and Donald Kuratko and various co-
authors have suggested a number of factors which enable corporate entrepreneurship
In particular they point to five factors which have been discussed in the literature
since the end of the 1980s rewards management commitment access to resources
appropriate organisational structures and attitudes to risk (Hornsby et al 1993
Hornsby et al 2002 and Kuratko et al 1990) Empirically however they found
only management commitment organisational structure resources and rewards
significant (Kuratko et al 1990)
Based on an empirical study of innovative processes at Danfoss Drives regarding
factors that enable intrapreneurship (Christensen 2005b article 3 of this
dissertation) it was concluded that in relation to this specific case risk did not play a
major role in corporate entrepreneurship although communication culture and
processes were important factors If employees find the companyrsquos initiatives in these
areas insufficient then factors which are supposed to enable corporate
entrepreneurship become barriers to innovativeness and intrapreneurship instead
78
There is a need both as regards research and managerial implications to focus more
on which factors enable and hinder corporate entrepreneurship respectively and how
entrepreneurial activities are best organised This also has potential implications for
industrial policy If Danish companies cannot compete against companies operating
in low-wage countries then where possible they should opt for so-called knowledge-
intensive production instead
A typical characteristic of knowledge-intensive production is that companies should
focus not only on product and technological development but also be better at
developing new interpersonal ways of working (exopreneurship) This could include
better adoption of usersrsquo needs through user-driven innovation (see for example
Rosted 2005) Another aspect of the move towards more knowledge-intensive
production is a new way of managing (intrapreneurship) which makes companies
better able to implement new technologies faster and exploit them more effectively
52 CONCLUDING REMARKS
There has been an increasing shortage of labour in Denmark in recent years This has
changed the previous focus on the creation of more jobs to a new emphasis on the
creation of the right jobs in companies with a high potential for growth and value
creation This is often (see for example Hoffman et al 2007) associated with the
marketing of new products in new markets which makes far greater demands on
knowledge and managerial resources than merely starting up a new company
According to Hoffmann et al (2007) while Denmark has been good at helping
entrepreneurs on generic issues such as VAT business plans accounting marketing
etc entrepreneurial policy has had less success in nurturing innovative growth
Furthermore the conventional wisdom is that smaller companies have to lead the way
79
in creating new jobs ndash not only by entrepreneurs starting up new companies but also
by smaller companies supporting the start-up of new firms
Based on this assumption a study by Evald (2003) estimated that over a period of
five years 153 smaller so-called parent companies have spun off 459 new companies
resulting in 5508 new jobs This corresponds to on average of about 7 jobs a year
over the period ndash or 2-3 jobs per company In other words while the number of firms
has increased greatly the size and with it potential of newly established companies
has not grown substantially
Another investigation of the strategic development of smaller companies (Drejer et
al 1999) showed however that the total effect of the jobs created is more or less
zero since almost as many jobs are lost as created While there is undoubtedly a
potential for job creation in both small and large companies these studies alone say
nothing about which occupational structure best guarantees growth and job creation
in Denmark
However any initiative whether the result of government policy or companies
setting up new ventures needs to take a starting point in the existing business
structure which consists of both small and large companies Article 1 presented a
broader framework for corporate entrepreneurship in order to provide a starting point
for assessing which activities companies can best implement ndash and probably also
which initiatives can be enabled via political decision-making Although most Danish
firms are small and medium-sized Denmark also has a number of larger companies
with considerable potential supporting innovative entrepreneurs It is therefore
appropriate to focus on corporate entrepreneurship as a unifying concept for these
companiesrsquo innovative initiatives
When concepts like corporate entrepreneurship become popularised are written
about in the business press and are incorporated in policy proposals there is always a
80
risk of the basic ideas losing their grounding in well-documented evidence and
becoming mere managerial fads So is corporate entrepreneurship just another
managerial fad Or do we need to rethink how innovativeness is organised in more
loosely coupled structures than is possible in the traditional functionally organised
company where research is mainly done in the RampD department customer contact is
the province of the sales and marketing functions etc
A common assumption of innovation management is that even though firms might
originally be the result of a radical innovation when they mature they mostly rely on
incremental innovations based on existing resources The implication is that radical
innovations are often left to smaller companies although new business ideas will still
emerge in larger companies However the entire organisational structure including
the various layers of management can have difficulty in handling the entrepreneurial
needs of innovation This means that management will sometimes be faced by the
possibility for new strategies and related dilemmas ndash particularly if the new ventures
are far from the parent companyrsquos core competencies and market opportunities
This means that corporate entrepreneurship is not only a question of setting up the
appropriate structures outside the organisation but also as argued in article 1 an
issue for the organisation as a whole Since different organisational structures support
different organisational needs this is a good starting point for ensuring the ability of
larger companies to innovate
In other words larger companies should experiment with organisational structures
and forms which create innovation These include various types of network
organisations loosely coupled organisations and project organisations as a
supplement to the classical hierarchy In addition to organisational forms
management style must also change since renewal and innovation cannot be planned
81
and managed in the same way as operational activities (see for example
Christensen 2005b 2006)
53 REFERENCES
Christensen KS 2005a Corporate Entreprenoslashrskab Begreber og Perspektiver
Ledelse amp Erhvervsoslashkonomi Vol 61 No 1 13-26
Christsensen KS 2005b Enabling intrapreneurship the case of a knowledge-
intensive industrial company European Journal of Innovation Management Vol 8
No 3 pp 305-322
Christensen KS 2006 Losing Innovativeness The Challenge of being acquired
Management Decision Vol 44 No 9 pp 1161-1182
Drejer A LB Henriksen amp JB Christensen 1999 Smaring virksomheders strategiske
udviking Aalborg Oslashst Nordjysk Informatik og Virksomhedsudvikling
Evald MR 2003 Corporate Venturing i Danmark En undersoslashgelse af mindre
virksomheders knopskudsaktiviteter Center for Smaringvirksomhedsforskning Syddansk
Universitet
Hoffmann A NM Nielsen amp J Nyholm 2007 Fremtidens erhvervsservice og
ivaeligrksaeligtterpolitik ndash en guide til flere vaeligkstvirksomheder Marts 2007
Hornsby JS DF Kuratko amp SA Zahra 2002 Middle managers perception of the
internal environment for corporate entrepreneurship assessing a measurement scale
Journal of Business Venturing Vol 17 No 3 pp 253-373
Hornsby JS DW Naffziger DF Kuratko amp RV Montagno 1993 An interactive
model of the corporate entrepreneurship process Entrepreneurship Theory amp
Practice Vol 17 No 2 pp 29-37
82
Kuratko DF RV Montagno amp JS Hornsby 1990 Developing an intrapreneurial
assessment instrument for an effective corporate entrepreneurial environment
Strategic Management Journal Vol 11 No 1 pp 49-58
Rosted J 2005 Brugerdreven innovation Resultater og anbefalinger Oslashkonomi- og
Erhvervsministeriets enhed for erhvervsoslashkonomisk forskning og analyse
Koslashbenhavn FORA
83
PART II
Intrapreneurship from an Internal Resources Perspective
The internal resource perspective takes a starting point in established organisational
structures Based on this perspective the aim of intrapreneurship is to identify hidden
or suppressed organisational resources and bring them together in (new) ways to
facilitate innovation and generate new competitive advantages In some cases these
resources may be tangible but in most cases today they are intangible eg
knowledge resources which means that they will often be closely related to the
organisational members
The second part of the dissertation consists of two articles which in different ways
present issues related to intrapreneurship The articles show that getting the most out
of a firm or organisation requires new ways of working and thinking Managers ndash or
coaches as they may prefer to be called ndash in knowledge-intensive organisations face
new challenges since their employees have other needs and wants than employees in
traditional industrial companies
While acquisitions are an increasingly popular way for mature organisations to gain
access to new resources and skills it does not necessarily mean that they can
successfully integrate a new entrepreneurial subsidiary (eg as a CV) and its
innovativeness and creative ways of working The first article in Part II Losing
innovativeness the case of being acquired focuses on the personal mechanisms that
84
are affected when a small entrepreneurial company is taken over by a large
multinational company
The article discusses the practice of intrapreneurship and investigates
intrapreneurship in its natural setting It focuses on what happens to the
entrepreneurial spirit in a company when it is taken over by another (much larger)
company which has grown mainly through acquisition rather than internal
development The discussion centres on a study of the intrapreneurial spirit and
practices of Ericsson Telebit a Danish IT firm Its acquisition by a large mature
company is found to have a profound influence on the firmrsquos intrapreneurial spirit In
particular innovation creativity and the innovative process have been analysed in
relation to the entrepreneurial spirit The article concludes that the larger a company
becomes the more difficult it is to maintain a managerial commitment to innovation
since innovative initiatives and activities may be subdued by formal control systems
which almost by definition are necessary when an organisation becomes larger and
the range of operations more diversified The aim is therefore to identify those factors
that managers need to focus on and actively use in order to enable intrapreneurship
and give intrapreneurs room to grow within corporate boundaries
The second article Enabling intrapreneurship the case of a knowledge-intensive
industrial company discusses factors that management can influence to enable or
hinder intrapreneurship In order to provide a framework for evaluation a short
overview of the main factors from the literature is provided It should be noted
however that these are primarily based on studies of traditional industrial
companies
Based on a case study of Danfoss Drives the usability of the factors is analysed in a
specific knowledge-intensive setting The conclusion from the findings is that the
framework for industrial companies cannot be used for a knowledge-intensive
85
company and a more complete framework with three additional factors is therefore
developed The article shows that whereas in traditional industrial companies the
important enablers were more direct or extrinsic in knowledge-intensive companies
they are more indirect or intrinsic
86
87
CHAPTER 6
Losing innovativeness the challenge of being acquired
Originally published in
Christensen Karina Skovvang 2006 Losing Innovativeness the challenge of being
acquired Management Decision Vol 44 No 9 pp 1161-1182
88
Losing innovativenessthe challenge of being acquired
Karina Skovvang ChristensenDepartment of Management The Aarhus School of Business
Aarhus Denmark
Abstract
Purpose ndash The aim of the paper is to explore how innovativeness and creativity in a smalltechnology company changes after the company is acquired by a larger company
Designmethodologyapproach ndash The empirical part of the article is based on interview andquestionnaire data with a focus on employeesrsquo perception of innovativeness and creativity includingtheir own innovativeness in relation to the possibilities offered within the organisational structure
Findings ndash The results indicate that entrepreneurial spirit innovativeness and creativity in the casecompany were related to the lack of boundaries to and contact with customers These driving forcescould not be sustained when the organisation matured and was acquired by a larger company
Research limitationsimplications ndash More research regarding the integration phase ofacquisitions and how it affects employees and innovativeness is needed Case-based researchshould examine differences between companies that are repeatedly successful in integrating smalltechnology companies into their organisational structure and those that are not Employeesrsquomotivation as a key factor to innovativeness should be in focus and the research should also includeemployees that leave the acquired company as well as employees with the acquiring company
Practical implications ndash An acquisition strategy as a way for mature organisations to gain accessto innovativeness and new resources and skills can easily fail Even though the resources and skills ofthe two companies are complementary and the competencies of the acquired organisation are intactefforts are needed to make the energies of the two organisations act in tandem Thus the pre- andpost-integration phases of an acquisition seem to be of paramount importance
Originalityvalue ndash Very few papers have studied how employees in an acquired company perceiveincorporation into a large mature company This article adds to research by examining how employeesin a small entrepreneurial company perceive innovation creativity and the innovative process threeyears after being acquired by a large mature company
Keywords Acquisitions and mergers Entrepreneurialism Innovation
Paper type Case study
IntroductionOver the years entrepreneurs have shown that new ideas can form the basis for newcompanies and that these companies can sometimes grow rapidly and be highlyprofitable While some companies have been successful in maintaining innovativenesscreativity and an entrepreneurial spirit many organisations have great difficulty inmaintaining their initial recklessness to which established companies are oftenvulnerable The ability to continuously innovate also for well-established companies
The current issue and full text archive of this journal is available at
wwwemeraldinsightcom0025-1747htm
The author gratefully acknowledges the helpful comments made by Per Nikolaj BukhAnders Drejer and John Parm Ulhoslashi as well as two anonymous referees on an earlier version ofthis paper Special thanks goes to Telebitrsquos former HR manager Poul Joslashrgen Dybdal managerErik Reinholdt and all the other employees at Ericsson Telebit
Losinginnovativeness
1161
Received November 2005Revised July 2006
Accepted July 2006
Management DecisionVol 44 No 9 2006
pp 1161-1182q Emerald Group Publishing Limited
0025-1747DOI 10110800251740610707668
is thus becoming increasingly important not only for companiesrsquo competitiveadvantage but also for their survival
As an organisation grows and matures management concerns increasingly turnfrom exploration to exploitation (March 1991) of resources Often the managerialsystems and values of mature companies are better at exploiting areas aligned withexisting resources and skills than exploring areas far outside them This concern withalignment could explain why it is often difficult for mature organisations to exploreentirely new areas of resources However too much emphasis on the exploitation ofexisting resources can become a barrier to innovation and thus long-term performance(Leonard-Barton 1992 March 1991) since access to new resources is usually essentialto maintaining creativity and innovativeness
Over the last couple of decades acquisitions have been an increasingly popular wayfor mature organisations to gain access to new resources and skills Howeveracquiring resources through acquisition does not necessarily mean that the matureorganisation is able to handle a new entrepreneurial subsidiary and its innovativenessand creative ways of working Often the acquired company will slowly adapt to themature organisationrsquos existing and often stifling management systems This in turnwill lead to increasing inertia and with it frustration decreasing both employeesrsquomotivation and their liking for recklessness Being incorporated into a large maturecompany is certainly not easy for a small innovative and creative company
Little research has been carried out on how employees in an acquired companyactually perceive incorporation into a large mature company (eg Brockner et al 1993Hambrick and Cannella 1993 Reilly et al 1993) This article adds to research byexamining how employees in a small entrepreneurial company perceive innovationcreativity and the innovative process three years after being acquired by a largemature company Based on a case study of the Danish company Ericsson Telebit thearticle shows what happens to this specific organisational unit which while apparentlyenjoying success and an increase in the number of employees following its acquisitionby a large multi-national company only two years later experienced layoffs and radicalrestructurings for three consecutive years as a consequence of a change in strategy ofthe acquiring company
The article is organised as follows section 2 briefly presents the case for innovationthrough acquisitions and outlines the entrepreneurial challenge faced by the acquiredorganisation Section 3 describes the methodology used Section 4 presents the casecompany Ericsson Telebit and the interview results while section 5 presents ananalysis of the questionnaire results Finally section 6 concludes the article
Innovation through acquisition the entrepreneurial challengeMergers and acquisitions (MampA) are often motivated by a belief that the combinationof two or more companiesrsquo resources and skills can create more value than is possibleby the two companies separately or by engaging in other ways of co-operating egthrough alliances These synergistic benefits from resource combinations it has beenargued are more likely to be uniquely valuable when based on complementaritiesrather than similarities (Harrision et al 1991 2001) Thus acquisitions of companiespossessing complementary technological capabilities and entrepreneurial abilities maybe seen as a way for large more bureaucratic companies to increase theirinnovativeness
MD449
1162
However in a review of the literature Man and Duysters (2005) find that companiesengaging in MampA activities generally face a decline in innovation While muchresearch focuses on the innovative performance of the company especially on theoutput of innovations eg number of patents or input measures such as RampD expenses(see Man and Duysters 2005) after a merger or an acquisition only limited researchhas been carried out on how MampA affect creativity and the innovative performance ofthe individuals employed in the acquiring or acquired company
Exceptions include Kapoor and Lim (2005) who found that the number of patentsper inventor per year fell in US semiconductor companies that were acquired between1991 and 1998 and Ernst and Vitt (2000) who demonstrated similar results in ananalysis of 43 acquisitions Ernst and Vitt also showed further that to a large extentkey inventors leave their company after the acquisition Of course how employeesreact in an MampA situation can be influenced by a large number of factors butknowledge of what can happen when a small innovative company is acquired by alarger company and how this is perceived by employees can provide insight into whatfactors enable innovation and how these factors are affected by acquisitions
With respect to the overall performance of the acquiring company much researchhas documented that mergers and acquisitions often fail to deliver their intendedbenefits and actually destroy economic value in the process However in this area toothere has been much less focus on exploring the specific factors that influence thesuccess of the integrative process Thus King et al (2004 p 196) conclude from acomprehensive meta-analysis of the literature on post-acquisition performance thatldquoexisting empirical research has not clearly and repeatedly identified those variablesthat impact an acquiring companyrsquos performancerdquo
The case for innovation through acquisitionsIn principle companies can develop and grow either by exploiting or exploring theirresources (March 1991) The former focuses on increasing efficiency sales etc whilethe latter can be achieved through MampA or by internally-driven innovations (see alsoBurgelman 1986 Hitt et al 1990) Chaudhuri and Tabrizi (1999) argue thatdetermining the right mix of externally and internally generated innovation is aquestion of whether or not innovation can be done quickly enough internally whileaccording to Ghoshal (1987) the acquisition process may be necessary in order toobtain advantages of scale and scope in the global economy
Most organisations however are limited in their choice of innovative mode byresource constraints Consequently say Hitt et al (1990 p 29) ldquothe acquisition processand the resulting conditions after the acquisition is consummated affects managerialcommitment to innovationrdquo However committing significant financial resources toacquisitions leaves less for innovation which means that managers may give a lowerpriority to internal innovation (Hitt et al 1991) Thus since investments in acquisitionsand investments in other areas eg innovation may be perceived as trade-offs mostorganisations prioritise managerial commitment either to mergers and acquisitions orinternally to innovation
Acquisition is often suggested as a solution to stifling management systemsespecially as regards technology development (Warner 2003) and a growing body ofliterature has evolved to help organisations understand the value of technology andinnovation through acquisitions (eg Hitt et al 1990 Hitt et al 1996 James et al 1998)
Losinginnovativeness
1163
For example Karim and Mitchell (2000) find that acquisitions are a key to resourcereconfiguration either through deepening existing resources or extending the resourcemix This leads them to believe that companies that grow through acquisitions aremore robust and more likely to survive than those that do not Similarly Ahuja andKatila (2001) find that large companies can increase their innovativeness when theyacquire smaller companies and based on a study of MampA in Greece Papadakis (2005)suggests that the larger the acquirer compared with the acquired company the moresuccessful the acquisition
However other studies find that the performance of acquisitions is often belowexpectations (eg Chaudhuri and Tabrizi 1999 Hargedoorn and Duysters 2002) andin their review of the effect of mergers acquisitions and alliances Man and Duysters(2005) conclude that alliances should be favoured to mergers and acquisitions for thepurpose of innovative renewal
Collier (1983) argued that organisations often mature when they grow larger andthat this may be why larger organisations have increasingly pursued growth throughMampA compensating for their stifled systems and often ldquolackingrdquo innovation byacquiring entrepreneurial organisations However absorbing and integrating anentrepreneurial organisation into a larger one is a complex process that challengesmany of the pre-existing structures and processes in both organisations One of themajor challenges is to maintain creativity and innovativeness ndash at least in the acquiredorganisation ndash within the newly established corporate boundaries
Managing the post-acquisition processIt is often less clear from the available empirical literature how the post-acquisitionprocess influences the innovative performance of the acquired company Bresman et al(1999) suggest that it may be difficult to maintain innovativeness in the immediatepost-acquisition period because knowledge transfer becomes a one-way process fromthe acquirer to the acquired which can make employees in the acquired organisationfeel stressed angry disoriented frustrated confused and even frightened (Buono1997) leading to tension and uncertainty This potentially dampens employeesrsquocreativity and innovativess (Zhuang 1995)
Further information and knowledge are increasingly seen as key resources in theso-called knowledge-intensive companies However as emphasised by Von Krogh et al2000 knowledge is often related to processes which are basically not manageable in thetraditional sense or which lose their efficiency and impact if management is too tightKnowledge-sharing therefore presumes a motivation which does not comeautomatically
A knowledge-sharing culture involves the exchange of experiences together withthe ability to identify and cooperate with persons in the organisation withcomplementary competencies etc Thus companies need to develop aknowledge-sharing culture and a common identity since this helps to identify whatthe organisation must know and what capabilities should be developed (Bukh et al2005) Furthermore in acquired technology-based companies the most talentedindividuals embody the acquired companyrsquos institutional knowledge and these peopleare also the ones who have the best employment opportunities outside the company (cfBuono 1997)
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Changes in the organisation including MampA are likely to induce changes in theculture and thus also in the organisationrsquos ability to adopt and explore knowledgeThis is especially the case when new knowledge related to customers and otherinternal and external stakeholders must be integrated in the organisationOrganisational learning and organisational knowledge is not simply the sum ofemployeesrsquo learning and knowledge but is influenced by the social processes in thecompany as has been emphasised in the concept of the learning organisation and theknowledge-based company
MethodThis article addresses three fundamental issues ndash creativity innovation and theinnovative process ndash based on employeesrsquo perception of themselves and the innovativeactivities in the case company Ericsson Telebit The data collection was carried out inthe period August-October 2002 and was based on a combination of semi-structuredinterviews on-site observations and a questionnaire distributed to employees at thecompany The initial purpose of the interviews was to get an overview of relevantthemes regarding the role of innovation and creativity in order to develop thequestionnaire however the insights obtained also enabled a more thoroughinterpretation of the results The purpose of the questionnaire was to address abroader understanding of the concepts throughout the organisation while theobservations were used to validate and expand the interview statements
The two main data collection methods interviews and questionnaires were used ina mixed method research design in order to gain both insight into the development ofthe case company and the post-merger experiences of the employees (the interviews)and specifically examine the role and nature of creativity and innovation in thecompany (the questionnaire) Even though the methods are combined in a study of thesame phenomenon as is broadly done in triangulation (Denzin 1989 Jick 1979) wecannot claim the same kind of validity as when the same dimension of a researchproblem is examined using multiple methods However both the on-site observationsand the interviews add to the interpretation of the questionnaire results Below theinterviews and especially the questionnaire are described in more detail
The interviewsIn August 2002 three in-depth interviews were conducted at Ericsson Telebit one withan employee who had been with the company from the start one with a functionalmanager and one with an employee from the research department The author alsohad an informal introductory conversation with the HR manager as well as informalinterviews with several other employees The in-depth interviews were concentratedaround five themes background information incorporation into LM Ericssonchanging organisational structures motivation and customers They weretape-recorded and transcribed for subsequent coding and analysis
The questionnaireBased on prior knowledge interviews and written documents a questionnaire wasdeveloped to probe into employeesrsquo perception of the working environment how theconcept of innovation was interpreted and what is needed for employees to beinnovative The questionnaire adopts and extends Zhuangrsquos (1995) so-called attitude
Losinginnovativeness
1165
survey questionnaire which was originally designed to gain insight into the dynamicsof innovation with creativity as an input to the development of new ideas Thisquestionnaire adopts Heaprsquos (1989) notion of creativity as ldquothe synthesis of new ideasand concepts by the radical restructuring and re-association of existing onesrdquo thuscapturing the human factor as an input to the companyrsquos innovativeness
Some of Zhuangrsquos original questions were asked in reverse to control whetherrespondents paid attention to the questions The questionnaire used in this paperconsists of 35 questions (compared with Zhuangrsquos 28 questions) divided into threesections each preceded by a statement indicating the focus of the section At the end ofeach section respondents were given the opportunity to make comments andsuggestions
Section one of the questionnaire (see Appendix for the full questionnaire)containing seven questions was designed to collect personal data eg sex age etc Sixof these questions corresponded to Zhuangrsquos questions while the seventh is added toenable analysis of the data across the different departments at Ericsson Telebit
Section two containing 14 questions was designed to evaluate respondentsrsquocreativity (13 questions corresponded to 12 of Zhuangrsquos one of his questions rdquoDo youmistrust your own or other peoplersquos intuitionrdquo being divided into two) Zhuangexplains that he condensed Terry Farnsworthrsquos (1987) original creativity scale from 40to 12 questions by removing those explicitly aimed at managers The 13 questions aretherefore scored individually and the sum used as an indicator of creativity forcross-tabulation As in section one there was an additional question on whether thecompany created a context for improvements both personal and professional
The remaining 12 questions (nine of which corresponded to Zhuangrsquos) in sectionthree were designed to collect data on how the respondents perceive innovation Onequestion asked respondents to indicate factors of importance for realising their owninnovation potential while another asked them to identify the factors most emphasisedby the organisation The last ten questions in this section asked respondents to rankstatements about the companyrsquos present innovation strengths
At the end of October 2002 the questionnaire was accessible on Ericsson Telebitrsquosintranet for fourteen days The response rate was only 30 percent even though thequestionnaire was placed on the front page together with a reminder at the end of theperiod One of the managers suggested that the length of the questionnaire might haveput off some potential respondents The overall response is shown in Table I
Innovativeness of Ericsson Telebit from spin-off to integrationEricsson Telebit has its roots in the very first Danish IT company Regnecentralenwhich was founded in 1955 In 1989 after a number of years under different ownership50 per cent of the shares in Regnecentralen were acquired by Britainrsquos ICL(International Computers Ltd) the rest being acquired a few years later ndash after ICL
Number of employees 120Questionnaires received 37Overall response rate () 3083Usable number of responses 33Net response rate () 2750
Table IAnalysis of overallresponse
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had been bought by the Japanese company Fujitsu Ltd As part of the restructuring itwas decided to close down the part of Regnecentralen that developed and producednetwork routers and accessories These changes in ownership together with areorganisation and refocusing of business areas led to the establishing of Telebit ASin 1992
Together with 12 other people mostly from RegnecentralenICL the projectmanager of the routers and accessories department decided to start Telebit on the basisof a contract with their main customer a Dutch company Between 1992 and 1999Telebit increased its number of employees from 13 to 38 and in 1995 it became the firstcompany in the world to introduce a commercial router based on IPv6 (InternetProtocol version 6) technology[1] With the competencies and insights into internettechnologies that this generated within the organisation including the breakthrough ofIPv6 technology Telebit positioned itself as an innovative company possessingcompetencies at the cutting edge of new IP-related technologies
At the time therefore the companyrsquos innovativeness was mostly driven bytechnological insight and both internally and among its customers technology wasregarded as one of the main drivers of Telebitrsquos competitive advantage ConsequentlyTelebit focused its development efforts on IP technology its aim being to makeprototypes of new routers to demonstrate the possibilities of the technology rather thana specific product with a clear market position
Incorporation into LM EricssonTelebitrsquos acquisition by LM Ericsson (Ericsson) in 1999 led to major changes Thenumber of employees at the newly-named company Ericsson Telebit (TED theinternal Ericsson abbreviation) increased rapidly doubling within 12 months fromapproximately 70 to 140 This in turn influenced the way of working eg how newemployees were trained since mentoring was not possible to the same extent as beforeIncorporation into Ericsson also resulted in several organisational changes As a relicof the Telebit days TED started as a single development department where employeeswere allocated to projects for shorter or longer periods Soon after however TED wasreorganised into an ldquoad hoc matrix structurerdquo where employees were organised indepartments on the basis of work areas and competencies As one of the managersexplained the aim of this new structure was to bring management into focus
Before the development manager did all kinds of stuff and the employees were veryautonomous Experienced hands They did not need project management or hardly anymanagement at all
Like many other entrepreneurial companies (cf Churchill and Lewis 1983) the oldTelebit organisation had a very flexible and loosely-defined organisational structurewith informal and minimal management systems and activities appeared almostchaotic and disjointed (Kazanjian and Drazin 1990 Stevenson and Harmeling 1990)Furthermore Telebit could be said to be characterised by intuitive decision-makingbased on the foundersrsquo values goals and skills (eg Bird 1992)
After being taken over by Ericsson the number of small projects was reduced andthe focus directed towards few but large long-term projects This together withincreased collaboration with other Ericsson units in Sweden created the need forfull-time project managers at TED The company had to improve project management
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1167
skills since single projects were now of greater importance At the same time ongoingprojects were given more emphasis in the organisational structure in order to increaseemployeesrsquo commitment to project-specific goals rather than the department
Ericsson Telebitrsquos productsWith the new focus on large projects TEDrsquos product portfolio consists basically of twoprojects that were also its ldquoproductsrdquo SoftWare for Internet Protocol for Ericsson(SWIPE ) and Terminal Internet Protocol (TIP) Product management was now placedat two different locations in Stockholm SWIPE represents the development of softwarefor the mobile internet while TIP focuses on the development of an IP stack for mobile(terminals) which together makes it possible to merge ldquothe internet worldrdquo with ldquothemobile worldrdquo
During the first years of Ericsson ownership TED had its own researchdepartment providing courses for the Ericsson University in Stockholm andfunctioning as a third business area together with the two large projects At thebeginning of 2002 however this research department was closed down as part of aworldwide cut-back in Ericssonrsquos activities and TED had to find new ways to keeptechnologically up to date The solution was to launch smaller research projects incooperation with the University of Aarhus and the University of Aalborg (two Danishuniversities) As one employee put it
the opportunity to aim at entirely new initiatives is gone unless the management believesthat the only way is to establish a group of people ndash corresponding to 10 out of 150 people ndashwith unlimited possibilities not total anarchy but a group with possibilities and today wedo not have that
This means that TED mostly focuses on the improvement of existing products orprocess improvement
The marketFor employees the takeover by Ericsson not only limited their opportunities forcreativity access to the market and possibilities for innovation at TED but thesituation in the mobile market also changed After having experienced a period of rapidgrowth the market began to stagnate mainly because many mobile telephoneoperators were unwilling to establish the new network for third-generationtechnologies (3G or UMTS) since as one employee explained ldquothere is no money initrdquo Given the poor shape of the world economy in general operators were unwilling tomake any further investments in 3G having already spent huge sums on Europeanauctions for UMTS licences a transitional technology between GSM and true 3G
The stagnation of the mobile phone market influenced TED via Ericsson The scopeof development projects was changed several times concurrently with the operatorsrsquopostponement of investments in UMTS networks Some parts of TEDrsquos projects wereclosed down a few just weeks before they were due to be finished Nevertheless thegeneral belief at Ericsson in 2002 was that future products should still be based on theInternet Protocol technology which meant that TED represented a key competence forEricsson
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1168
From customers to sponsorsAs a result of its incorporation into Ericsson TED moved several steps down the valuechain since they no longer produced and marketed their own products to externalcustomers but only had internal customers at Ericsson called ldquosponsorsrdquo From beingan independent company supplying the market with leading-edge technology TEDwas now a local design centre within Ericsson Employees regarded this as a having amajor influence on their work They felt that they had lost the feeling for customersrsquoneeds because now they only got specifications from other parts of Ericsson One ofthe employees put it as follows
The products TED provides are based on a chain of demanded specifications [from otherparts of Ericsson] Because of this chain you are easily alienated towards the customers Andthis has also happened for TED We do not have direct contact with our customers which isboth good and bad but the understanding of the customers needs is an ability we do notpossess any more and that is a problem
The employees feel that the lack of feedback from customers or end users means thatthe quality of daily decisions and their commitment to product quality has sufferedNotwithstanding some of the original Telebit employees have maintained theircontacts with customers based on the hardware Telebit sold at the time Thisknowledge of customersrsquo needs is highly valued at TED and these employees are usedas a feedback group
TEDrsquos management is certainly not happy about the change in orientation awayfrom customers One of the managers explained
if we do not continue to have contacts then we lose the real contact with the end userstheir needs and how they use our products and then it will only be development in relation towritten requirements from the sponsors in Stockholm
Organisational structureInternationally Ericsson is divided into six business units each of which has directcontact with customers worldwide and responsibility for identifying customer needsand demands The business unit that includes TED is organised into three core unitscore network radio access network and application and services The core units focuson technological developments and are supported by so-called local design centreswhere actual technological development takes place
The financing of local design centre support follows the chain-of-command impliedby the organisational structure This means that funds flow from the business units viacore units to the local design centres The practical implication is that the core unitsfunction as coordinators managing the internal architecture including how thecomponents within the area are related One of the employees at TED explains this inthe following way ldquofor example when the purpose is to put IP technology on a routerit is the core unitrsquos responsibility to lsquosponsorrsquo a local design centrerdquo and sponsoringhere literally means supporting the local design centre with financial resources
While the clear separation of RampD departments from business units with customercontact has the advantage of directing research activities towards the commercialapplication of technologies it also has disadvantages since the organisationalstructure has a tendency to discourage more basic RampD activities and more long-termactivities without a specific market potential Without independent financing the local
Losinginnovativeness
1169
design centres are unable to follow new ideas that emerge during the projectsHowever they are allowed or even expected to be innovative within the project scopesas specified by Ericssonrsquos core units though since the sponsors are part of the board ofdirectors in the local design centres it limits the centresrsquo ability to act independently
EmployeesEven though sponsors have the formal powers to pass on assignments to the localdesign centre some TED employees feel that they sometimes have insufficienttechnological insight to choose the right projects While the sponsor organisations areclose to the end market and thus often have superior knowledge about customersrsquo andend usersrsquo immediate needs via the business units their knowledge of technologycomes from the design centres which means that they sometimes lack anunderstanding of its possibilities
Like many other RampD-oriented organisations TED regards knowledge as its mostimportant resource This also makes demands on employees since the companyrequires them to be able to work autonomously creatively take initiatives and askother people for help if needed Therefore TED primarily employs people with anappropriate educational background eg those with a university degree in computerscience engineers etc Notwithstanding some employees have obtained their maineducational qualifications from ongoing training not having had a formal degree insoftware engineering or other related areas before joining TED
Some employees have been with TED since it was established as an independentcompany in 1992 while others joined the company later Some had several yearsrsquoexperience from other companies while others were newly qualified One employeedescribed things as
We are 20 or 25 old guys while the rest are young They need more experience before theyrealise that teamwork is more important than putting oneself at the front line
This is also why TED makes an effort to attract and retain experienced employeesAnother employee said
We talk a lot and help each other There is a very good helping spirit and it is very naturalthat we help each other
This is also the impression gained from observations when visiting the organisationEmployees talk in the hallways in the offices and so on Most offices are shared bytwo or three persons and the offices of the project groups are located close together sothat distance is not a barrier to communication However it was also pointed out that adoor can be a small barrier to some employees even though management encouragesthem to talk to each other and seek help
Discussion of Ericsson Telebitrsquos innovativenessThis section draws on the questionnaire results in order to provide another angle onhow the acquisition and organisational turbulence has affected Telebitrsquos innovationand the perception of innovation among employees In addition when possible theresults are compared with findings from Zhuangrsquos (1995) study several questionsbeing similar (all results presented are based on average scores)
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Based on Heaprsquos (1989) definition Zhuang defined creativity as a ldquosynthesis of newideas and concepts by the radical restructuring and reassociation of existing onesrdquo(Zhuang 1995 p 14) While Zhuang measured innovation on an organisation-by-organisation basis this study is based on only one company Furthermore innovation ismeasured based on employeesrsquo perceptions rather than as a predefined concept Inaddition to creativity and innovation a third element the innovative process concernshow creativity is turned into improved corporate performance
CreativityAs discussed in section 2 creativity was measured on a scale from 1 to 13 The averagescore of different groups of employees is shown in Table II As can be seen employeesrsquoperception of their creativity is very similar across age and position moreover thedispersion of responses (not reported here) is low with the highest score being 13 andthe lowest 8 Four employees all male scored 13 while only one scored 8 The biggestdifference in creativity albeit not significant was found between the sexes Howeverthis could be explained by their job function in the company Of the seven femaleemployees five were in services or administration and two were in operations whereasamong the twenty-six male employees one was in administration nineteen were inoperations and six were managers (either department or project managers) Thisdifference between the sexes is as shown in Table II in agreement with Zhuangrsquosfindings in the companies alpha and beta
At first glance it seems surprising that employees aged 50 thorn scored slightly higher(albeit not significantly) on creativity than the other age groups younger people beingcommonly believed to be more creative and innovative which is in line with Zhuangrsquos(1995) study Some research (eg Hambrick and Mason 1984) shows that oldermanagers generally dislike deviating from the status quo and show greater adherenceto the norms of the organisation unlike younger and less experienced managers whoare more likely to pursuer creative strategies Other studies (eg Mostafa 2005) find nodifference in creativity and the perception of creativity between age groups
TED Alpha Beta
Overall average 1033 794 834
By ageUnder 20 000 900 70021-30 1014 844 87531-40 1025 814 82641-50 1025 700 890Over 50 1080 760 820
By positionManagerial 1033 868 917Non-managerial 1033 747 796
By sexMale 1058 819 859Female 943 747 700
Table IIAnalysis of scores on
creativity scale
Losinginnovativeness
1171
Without giving too much weight to the results since the difference is insignificant oneexplanation could be that the organisational emphasis on creativity and innovationfrom the early days of Telebit has fostered a climate conducive to creativity As statedby Shearring (1992) the human brain stays plastic throughout life and givenopportunity and motivation adults can master new subjects acquire new skills andlearn to behave more creatively at any age Another explanation for the high creativityscore among the over-50s may be that most of them are the entrepreneurs who havebeen with TED since the beginning in 1992 They were originally employed because oftheir ability to apply their knowledge to problem-solving and product development
Even when the thirteen questions on creativity in the questionnaire were condensedto 12 and the reverse questions were corrected the overall average of 942 wasremarkably higher than the 794 in Alpha and 834 in Beta[2] In TED the averagescore on creativity was the same for both managerial and non-managerial employeeswhereas it was significantly higher for managerial than non-managerial employees inboth Alpha and Beta Managers are often found to be more creative thatnon-managerial employees (eg Mostafa 2005) but in a technology-based companylike TED it is probably not surprising that creativity is a widely dispersedcharacteristic
InnovationAs shown in Table III in addition to Zhuangrsquos ten statements regarding employeesrsquoperception of innovation the questionnaire also included three further statementsrelated to the transformation of ideas to ldquoproductsrdquo and meeting customersrsquo andsuppliersrsquo requirements respectively Based on a five-point Likert scale from 1(strongly disagree) to 5 (strongly agree) Table III shows how employees at TEDperceive innovation
The most significant statements which employees either agree or strongly agreewith are about generating new ideas and seeing something from a differentperspective One of the interviewees at TED explained the latter as follows
innovation is not necessarily to develop something entirely new it might as well apply tothe usability and application of an existing technology A good example is the IP technologywhich actually is an old technology and there are plenty of people in this world who knowmore about it than we do But we have focused on the IP technology in relation toimplementation and the small thing it is to put an IP stack on a mobile phone opens for a lotof new application and service opportunities and to me this is an example of creativity
Judging from the distribution of the innovation scores TED employees do not seem tohave a shared perception of what innovation is This is in agreement with for exampleRoos and von Krogh (1995) who argue that the perception of a concept depends onprior knowledge which means that it differs from person to person From thispoint-of-view the high score of the statement ldquoseeing something from a differentperspectiverdquo is thus a very interesting result and is in line with TED employeesrsquoassertion that innovation can be initiated throughout the organisation and from outsideit as showed in Table IV According to employees new ideas are often generated atnatural meeting places like canteens coffee machines mail rooms etc whichencourage and enable informal conversations (Christensen and Bang 2003Christensen 2005) Another perspective on innovation is customer-driveninnovation Customers can be involved in the innovative process in different ways
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Per
cen
tag
ed
istr
ibu
tion
ofth
ein
nov
atio
nsc
ores
atT
ED
Iny
our
opin
ion
in
nov
atio
nis
abou
tS
tron
gly
dis
agre
eD
isag
ree
Not
sure
Ag
ree
Str
ong
lyag
ree
TE
DA
lph
aB
eta
Inv
enti
ng
som
eth
ing
enti
rely
new
00
273
91
424
212
358
235
252
Gen
erat
ing
new
idea
s0
00
00
048
551
54
523
083
28Im
pro
vin
gso
met
hin
gth
atal
read
yex
ists
30
61
152
515
242
388
227
198
Fol
low
ing
the
mar
ket
lead
er27
351
512
19
10
02
033
533
98A
ttra
ctin
gin
nov
ativ
ep
eop
le6
115
212
133
333
33
732
592
98P
erfo
rmin
gan
exis
tin
gta
skin
an
eww
ay0
06
112
175
86
13
822
222
04S
pre
adin
gn
ewid
eas
61
00
212
515
212
382
222
217
Ad
opti
ng
som
eth
ing
that
has
bee
nsu
cces
sfu
lly
trie
del
sew
her
e3
033
327
327
39
13
063
162
76S
eein
gso
met
hin
gfr
oma
dif
fere
nt
per
spec
tiv
e0
00
06
163
630
34
242
411
91In
trod
uci
ng
chan
ges
00
182
212
485
121
355
224
230
Tra
nsf
orm
ing
idea
sto
ldquopro
du
ctsrdquo
30
91
152
485
242
382
NA
NA
Mee
tin
gcu
stom
ers
121
182
394
212
91
297
NA
NA
Mee
tin
gsu
pp
lier
s12
121
242
421
23
02
82N
AN
A
Notes
Th
en
um
ber
sin
this
tab
lear
eav
erag
esc
ores
ona
fiv
e-p
oin
tL
iker
tsc
ale
onin
nov
atio
nA
lph
aan
dB
eta
are
from
Zh
uan
grsquos
(199
5)st
ud
yan
dar
ein
clu
ded
inor
der
toco
mp
are
the
Tel
ebit
scor
esw
ith
two
oth
erco
mp
anie
s
Table IIIWhat is innovation about
(percentage distributionand average)
Losinginnovativeness
1173
eg work groups or ldquocamping outrdquo at customers (Christensen 2005) A third andrelated perspective on innovation is networks with research institutions which may beestablished to get access to basic research (Christensen 2005) or to new ideas viastudentsrsquo projects There are an infinite number of approaches to innovation the onlylimitation is within the individuals
It should also be noted that the more general perception of innovation at TED issignificantly different from that in the Alpha and Beta companies For instance asshowed in Table III TED employees think that going beyond traditional ways ofthinking namely ldquoseeing something from at different perspectiverdquo is very important toinnovation whereas in the more traditional industrial companies Alpha and Betaemployees think it more important for innovation to ldquofollow the market leaderrdquo Thedifference between the two very different statements partly reflects the fact that Alphaand Beta are traditional industrial companies whereas TED is knowledge intensiveand competes on innovativeness
Employees were also asked to give their opinion on nine statements regardingvaluation of innovation in their organisation As shown in Table V the strongestcommon belief was how significantly an innovation improves the organisationrsquosprofitability (score 415) How new technology is applied (394) and whether it iscomplementary to existing products (373) were also perceived to be importantCommon to these three statements is that none of the employees strongly disagreedalthough the lower the score the more uncertain people were
The innovation processWith a score of 424 against 366 for marketing and production employees engineersor operational employees appear to play the most important role in initiating theinnovative process Employees expressed mixed opinions about whether or not theboard of directors or sponsors were well placed to initiate an innovation As Table IVshows the distribution of employeesrsquo perception is scattered giving an average scoreof 312 This disagreement also clearly emerged from the interviews becauseemployees perceive the sponsors in different ways Those who think sponsors are wellplaced to initiate an innovation based their answer on the sponsorsrsquo power to controlthe supply of resources (financial support) whereas the main reason given for
Percentage distribution of the position toinitiate innovation scores at TED
Who do you think is in a favourableposition to initiate a product innovation
Stronglydisagree Disagree
Notsure Agree
Stronglyagree
TEDaverage
The board of directors 1 13 5 9 5 312Marketing people 1 3 5 20 3 366Production people 1 4 5 17 5 366Engineersoperational 0 1 1 20 11 424Accountants 2 16 7 8 0 264Purchasing people 1 9 12 10 0 297Nobody 23 5 5 0 0 145External experts (consultants) 1 4 12 14 2 336Receptionists 5 11 10 7 0 258
Table IVWho is in a position toinitiate a productinnovation
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disagreeing with this statement is that the sponsors only provide TED with resourcesndash and not with ldquodriverdquo
Summing up creativity innovation and the innovative processes all played acritical role in entrepreneurship though there is still a need for someone to takeresponsibility for and drive the entrepreneurial process This person can either be anindependent entrepreneur or an entrepreneur working in an existing organisation(intrapreneur) but they may be motivated by different reasons
Concluding discussionAs one of the first contributions to understanding the implications of mergers andacquisitions for companiesrsquo innovativeness Hitt et al (1990) argued that managerialcommitment to innovation is based on organisational conditions More specificallythis means that up to a certain company size managerial commitment to innovationincreases but any subsequent increase in size tends to overburden both managementand employees with formal control systems creating difficulties in relation toinnovative activities in large mature companies
The changes in organisational boundaries as regards access to customers andrelated relevant information as well as the increase in control and reporting systemsexperienced by employees at TED are probably very typical for acquiredorganisations Almost by definition organisations pursuing acquisitions becomelarger and the range of their operations more diversified which affects the types ofcontrol systems needed following an acquisition (Hitt et al 1990)
Williamson (1975) has argued that large multinational companies are often not asefficient as smaller companies at developing innovations rather they are efficient inmanufacturing and distribution while smaller entrepreneurial organisations are moreefficient at developing innovations due to their greater flexibility This is illustrated byTED where innovation became difficult when the small entrepreneurial company wasincorporated into a large and complex multi-national company and it is also inaccordance with Damanpourrsquos (1992) conclusion that size matters to innovation
Percentage distribution of the valuation ofinnovation scores at TED
How is the value of an innovationjudged in an organisation like yours
Stronglydisagree Disagree
Notsure Agree
Stronglyagree TED
How novel it is 0 3 13 15 2 348How many people it involves 1 13 13 3 3 282How long it takes 1 9 9 9 5 324How much it costs 2 7 5 14 5 339How significantly it improves theorganisationrsquos profitability 0 0 4 20 9 415Whether new technology is applied 0 1 6 20 6 394The extent of change it entails 1 2 17 12 1 330Whether it involves a new business area 1 4 13 10 5 342Whether it is complementary to existingproducts 0 0 11 20 2 373
Table VValuation of innovation
Losinginnovativeness
1175
In relation to employeesrsquo perception of creativity and innovation and to their ownability to be creative and innovative most employees at TED emphasised their ownand colleaguesrsquo creativity and innovativeness However it was also realised thatcreativity itself was not enough for new ideas to materialise in actions in largeorganisations One of the TED employees expressed this very clearly
It is an illusion to believe that you can take a small creative and innovative company andintegrate it into a larger one ndash it is downhill most of the time
Implications for practiceThe working practices and processes that were developed when Telebit was a separatecompany gradually disappeared or were simply lost when the company wasincorporated into Ericsson even though most of the employees were still the same Theimportant lesson here is that although creativity and innovativeness have a stronghuman dimension innovation requires an organisational context that enablesknowledge creation (Von Krogh et al 2000) In the case of Telebit the former workingroutines and practices as well as contact to customers formed part of the tacitorganisational knowledge and as is well known from the literature on knowledgecreation (Von Krogh et al 2000) this is not easily transferable
This indicates that to maintain the opportunities and competencies of the acquiredorganisation some efforts are needed to make the energies of the two organisations acttogether in tandem Telebit probably lost its original innovativeness because thereorganisation of the company distorted the entrepreneurial drive created by directcustomer contact However it is impossible to say what might have happened ifEricsson had focused more on the integration process and on facilitating the transfer ofcapabilities to the consolidated company This is the strategy recommended by forexample Buono (1997) who studied a similar type of acquisition and demonstratedthat a process that incorporates work with organisational members on pre-acquisitionanxieties is beneficial
Papadakis (2005) found that the existence of a communication program was aparticularly significant factor explaining the success of MampA Similarly a survey byBert et al (2003) found under-communication to be the most important problemFurthermore Bert et al (2003) also emphasised that post-merger problems are to agreat extent due to a clash of cultures and different management styles very similar towhat was experienced by the employees at TED
One company well known for its ability to successfully acquire new technologythrough acquisitions is Cisco Systems which more than any other high-tech companyhas built up a dominant market position through acquisitions (Mayer and Kenney2004) Although comparing the acquisition of Telebit by Ericsson with the generalimpression of Ciscorsquos acquisition practice from the literature has its limitations a closerlook into this can still provide some key points for understanding what ndash or what not ndashhappened when Telebit was acquired
According to Pfeffer and Sutton (2006) Ciscorsquos success stems from the companyrsquossystematic examination of evidence about what went right and wrong in othercompaniesrsquo mergers as well as a merger integration process that ensures the peoplestay with the company feel at home and can use their knowledge to makecontributions to the new company We did not explicitly ask the employees at TED
MD449
1176
about the kind of post-integration procedures used at Ericsson or how Ericsson hadlearnt from this experience ndash however specific corporate-wide procedures forintegration or learning were not mentioned in the interviews either In their study ofCiscorsquos strategy Mayer and Kenney (2004 p 300) show that ldquoif employees leave ortheir practice is significantly disrupted then the acquisition is almost certain to failrdquoThus not only retention but also preserving the way of working seems to be of theutmost importance since it is both emphasised in the case of Cisco and apparent fromthis study
Implications for researchWhile MampA seem to be a recurring part of corporate life there is no substantialevidence about what really matters in the integration phase The case study reported inthe article pointed to specific factors that were important for the innovativenesscreativity and entrepreneurial spirit of the acquired company These elements mostimportantly the informality of the organisation and close contact to customers werenot preserved after the acquisition More generally a comparison with Cisco couldpoint to the importance of how the integration phase is managed
As regards creativity and innovativeness in general the literature identifies severalways in which management can influence a companyrsquos practices and processes Giventhe importance of the pre- and post-integration phases both qualitative andquantitative cross-company studies could shed more light on which factors areimportant and how the presence or absence of these factors influence the success of anacquisition
One way of strengthening the conclusions with respect to how creativity andinnovativeness can be maintained in acquired technology companies could be toexamine similar acquisitions not only at Ericsson and Cisco but also at othercompanies competing in the same business areas The focus here should be both on theactual experiences in the acquired companies the specific conditions related to theacquisitions and on the management of the post- and pre-integration phase Onelimitation of the present study is that it only focuses on employees who have stayedwith the acquired company Given the importance of the integration phase newinsights could be gained from following an acquisition more closely regardingattitudes both among those who stay and those who leave as well as among employeesat the acquiring company Furthermore it should be possible to conduct survey-basedstudies across a larger number of companies including in other sectors to examinehow management of the integration phase influences the motivation and creativity ofemployees in the acquired companies
Notes
1 The accelerating growth of the internet and its migration into new areas such as embeddeddevices together with the widespread use of IP in wireless consumer devices severely testedInternet Protocol version 4 (IPv4) which was designed in the early 1980s The new standardIPv6 was developed to extend the current IP infrastructure and improve scalability andsecurity of IP networks and also provides mechanisms for easier configuration of networksand attached devices
2 Not testable as Zhuangrsquos (1995) variance is not accessible
Losinginnovativeness
1177
References
Ahuja G and Katila R (2001) ldquoTechnological acquisitions and the innovation performance ofthe acquiring firms a longitudinal studyrdquo Strategic Management Journal Vol 22 No 3pp 197-220
Bert A MacDonals T and Herd T (2003) ldquoTwo merger integration imperatives urgency andexecutionrdquo Strategy amp Leadership Vol 31 No 3 pp 42-9
Bird B (1992) ldquoThe operation of intentions in timerdquo Entrepreneurship Theory and PracticeVol 17 No 1 pp 11-20
Bresman H Birkenshaw J and Nobel R (1999) ldquoKnowledge transfer in internationalacquisitionrdquo Journal of International Business Vol 30 No 3 pp 439-62
Brockner J Grover S OrsquoMalley MN Reed TF and Glynn MA (1993) ldquoThreads of futurelayoff self-esteem and survivorsrsquo reactions evidence from the laboratory and the fieldrdquoStrategic Management Journal Summer pp 153-66
Bukh PN Christensen KS and Mouritsen J (2005) Knowledge Management and IntellectualCapital Establishing a Field of Practice Palgrave Macmillan Houndsmill
Buono AF (1997) ldquoTechnology transfer through acquisitionrdquo Management Decision Vol 35No 3 pp 194-204
Burgelman RA (1986) ldquoManaging corporate entrepreneurship new structures forimplementing technological innovationrdquo in Horwith M (Ed) Technology in the ModernCorporation Pergamon Press New York NY pp 1-13
Chaudhuri S and Tabrizi B (1999) ldquoCapturing the real value in high-tech acquisitionsrdquoHarvard Business Review Vol 75 No 5 pp 123-30
Christensen KS (2005) ldquoEnabling intrapreneurship the case of a knowledge-intensiveindustrial companyrdquo European Journal of Innovation Management Vol 8 No 3pp 305-22
Christensen KS and Bang HK (2003) ldquoKnowledge management in a project orientedorganisation three perspectivesrdquo Journal of Knowledge Management Vol 7 No 3pp 116-28
Churchill N and Lewis V (1983) ldquoThe five states of business growthrdquo Harvard BusinessReview Vol 61 pp 44-51
Collier DW (1983) ldquoTechnology in diversified decentralised companiesrdquo Journal of BusinessStrategy Vol 3 pp 91-3
Damanpour F (1992) ldquoOrganisational size and innovationrdquo Organisation Studies Vol 13 No 3pp 375-402
Denzin NK (1989) The Research Act A Theoretical Introduction to Sociological Methods 3rd edPrentice-Hall Englewood Cliffs NJ
Ernst H and Vitt J (2000) ldquoThe influence of corporate acquisitions on the behaviour of keyinventorsrdquo RampD Management Vol 30 No 2 pp 105-19
Farnsworth T (1987) Test Your Executive Skills Ebury Press London
Ghoshal S (1987) ldquoGlobal strategy an organising frameworkrdquo Strategic Management JournalVol 8 No 5 pp 425-40
Hambrick DC and Cannella AA (1993) ldquoRelative standing a framework for understandingdepartures of acquired executivesrdquo Academy of Management Journal Vol 36 No 4pp 733-62
Hambrick D and Mason P (1984) ldquoUpper echelons the organisation as a reflection of its topmanagementrdquo Academy of Management Review Vol 9 No 2 pp 193-206
MD449
1178
Hargedoorn J and Duysters G (2002) ldquoThe effect of mergers and acquisitions on thetechnological performance of companies in a high-tech environmentrdquo Technology Analysisamp Strategic Management Vol 14 No 1 pp 67-85
Harrison JS Hitt MA Hoskinsson RE and Ireland RD (1991) ldquoSynergies andpost-acquisition performance differences versus similarities in resource allocationsrdquoJournal of Management Vol 17 pp 173-90
Harrison JS Hitt MA Hoskinsson RE and Ireland RD (2001) ldquoResource complementarityin business combinations extending the logic to organisational alliancesrdquo Journal ofManagement Vol 27 pp 679-90
Heap J (1989) The Management of Innovation and Design Cassell Educations Ltd London
Hitt MA Hoskisson RE and Ireland RD (1990) ldquoMergers and acquisitions and managerialcommitment to innovation in M-form companiesrdquo Strategic Management Journal Vol 11No 10 pp 29-47
Hitt MA Hoskisson RE Ireland RD and Harrison JS (1991) ldquoEffects of acquisitions onRampD inputs and outputsrdquo Academy of Management Journal Vol 34 No 3 pp 693-706
Hitt MA Hoskisson RE Johnson RA and Moesel DD (1996) ldquoThe market for corporatecontrol and firm innovationrdquo Academy of Management Journal Vol 39 No 5 pp 1084-119
James AD Georghiou L and Metcalfe JS (1998) ldquoIntegrating technology into merger andacquisition decision makingrdquo Technovation Vol 18 Nos 89 pp 563-73
Jick TD (1979) ldquoMixing qualitative and quantitative methods triangulation in actionrdquoAdministrative Science Quarterly Vol 24 No 4 pp 602-11
Kapoor R and Lim K (2005) ldquoThe impact of acquisitions on the innovation performance ofinventors at semiconductor companiesrdquo Academy of Management Best Conference Papers2005
Karim S and Mitchell W (2000) ldquoPath-dependent and path-breaking change reconfiguringbusiness resources following acquisitions in the US medical sector 1978-1995rdquo StrategicManagement Journal Vol 21 No 11 pp 1061-81
Kazanjian RK and Drazin R (1990) ldquoA stage contingent model of size and growth fortechnologically based venturesrdquo Journal of Business Venturing Vol 5 No 3 pp 137-50
King DR Dalton DR Daily CM and Covin JG (2004) ldquoMeta-analysis of post acquisitionperformance indicators of unidentified moderatorsrdquo Strategic Management JournalVol 25 No 2 pp 187-200
Leonard-Barton D (1992) ldquoCore capabilities and core rigidities a paradox in managing newproduct developmentrdquo Strategic Management Journal Vol 13 pp 111-25
Man AP and Duysters F (2005) ldquoCollaboration and innovation a review of the effect ofmergers acquisitions and alliances on innovationrdquo Technovation Vol 25 pp 1377-87
March JG (1991) ldquoExploration and exploitation in organisational learningrdquo OrganisationScience Vol 2 No 1 pp 71-87
Mayer D and Kenney M (2004) ldquoEconomic action does not take place in a vacuumunderstanding Ciscorsquos acquisition and development strategyrdquo Industry and InnovationVol 11 No 4 pp 299-326
Mostafa M (2005) ldquoFactors affecting organisational creativity and innovativeness in Egyptianbusiness organisations an empirical investigationrdquo The Journal of ManagementDevelopment Vol 24 No 1 pp 7-33
Papadakis VM (2005) ldquoThe role of broader context and the communication program in mergerand acquisition implementation successrdquo Management Decision Vol 43 No 2 pp 236-55
Losinginnovativeness
1179
Pfeffer J and Sutton RS (2006) Hard Facts Dangerous Half-Truths and Total NonsenseProfiting from Evidence-Based Management Harvard Business School Press Boston MA
Reilly AH Brett JM and Stroh LK (1993) ldquoThe impact of corporate turbulence on managersrsquoattitudesrdquo Strategic Management Journal Vol 14 pp 167-79
Roos J and von Krogh G (1995) ldquoWhat you see depends on who you are think aboutepistemologyrdquo IMD Perspectives for Managers No 7 pp 1-4
Shearring HA (1992) ldquoCreativity and older adultsrdquo Leadership amp Organization DevelopmentJournal Vol 13 No 2
Stevenson HH and Harmeling S (1990) ldquoEntrepreneurial managementrsquos need for a morelsquochaoticrsquo theoryrdquo Journal of Business Venturing Vol 5 No 1 pp 2-14
Von Krogh G Ichijo K and Nonaka I (2000) Enabling Knowledge Creation How to Unlock theMystery of Tacit Knowledge and Release the Power of Innovation Oxford University PressOxford
Warner AG (2003) ldquoBuying versus building competence acquisition patterns in theinformation and telecommunications industry 1995-2000rdquo International Journal ofInnovation Management Vol 7 No 4 pp 395-415
Williamson OE (1975) Markets and Hierarchies Analysis and Antitrust Implications FreePress New York NY
Zhuang L (1995) ldquoBridging the gap between technology and business strategy a pilot study onthe innovation processrdquo Management Decision Vol 33 No 8 pp 13-21
Appendix QuestionnaireThe first questions are about your background
(1) Sex male or female
(2) Your age
(3) Education (a) High school College (b) Bachelor degree (c) Engineer (d) MSc or MA (e)PhD (f) none and (g) Other please specify
(4) How many years have you been with the company
(5) In which department are you employed
(6) Which of the following categories best describe your current position (a) CEO and unitmanager (b) Department manager (c) Operational employees (d) Clericaladministration (e) Trainee (f) Services and (g) Other please specify
(7) How many years have you been in your current position
The next questions are about yourself in relation to your work environment
(8) Do you get bored when doing things the same way every time
(9) Are you afraid of making mistakes
(10) Are you satisfied when making improvements
(11) Does the company create a context in which you can make improvements (a) Personalandor (b) Professional
MD449
1180
(12) Are you discouraged from acting because of lack of resources
(13) Do you like solving problems in unconventional ways
(14) Do you feel that it is your job to be critical of established practices
(15) Do you trust your own intuition
(16) Do you trust other peoplersquos intuition
(17) Are you afraid of having your ideas ridiculed
(18) Do you find it hard to accept disorder and confusion
(19) Can you quickly point out why an idea will not work
(20) Do you welcome other peoplersquos ideas
(21) Do you prefer a quiet life to challenging one
The following questions are about the interpretation of different concepts (Questions 22-28 arebased on a five-point Likert scale)
(22) In your opinion innovation is about (a) inventing something entirely new (b)generating new ideas (c) improving something that already exists (d) following themarket leader (e) attracting innovative people (f) performing an existing task in a newway (g) spreading new ideas (h) adopting something that has been successfully triedelsewhere (i) seeing something from a different perspective (j) introducing changes (k)transforming ideas into ldquoproductsrdquo and (l) meetings with customers
(23) In your opinion an innovation can be (a) a product (b) a service (c) a technology (d) aproduction process (e) a management system (f) an administration procedure and (g)an organisational innovation
(24) How is the value of an innovation judged in an organisation like yours (a) How novelit is (b) how many people it involves (c) how long it takes (d) how much it costs (e)how significantly it improves the organisationrsquos profitability (f) whether newtechnology is applied (g) the extent of change it entails (h) whether it involves a newbusiness area and (i) whether it is complementary to existing products
(25) Who do you think is in a favourable position to initiate a product innovation (a) Theboard of directors (b) marketing people (c) production people (d) engineers (e)accountants (f) purchasing people (g) nobody (h) external experts (consultants) and(i) receptionists
(26) Why do companies embark on innovative activities (a) They want to increase profitmargin (b) their competitors (c) they want to do better than their competitors (d)pressure from customers (e) they have creative employees (f) in an attempt to cutdown their operational costs (g) they have the financial resources and (h) they try toavoid straight price competition
(27) The key to onersquos ability to innovate is to (a) be born with the right talent (b) be able tothink creatively (c) complete a higher education (d) have at least ten years of workexperience (e) possess good interpersonal skills (f) be good at putting theory into
Losinginnovativeness
1181
practice (g) realise the necessity (h) ask ldquostupidrdquo questions and (i) other pleasespecify
(28) Which of the following organisational factors are important to realising onersquosinnovation potential (a) Regular employee performance appraisals (b) freedom towork within areas of greatest interest (c) criticism from superiors or colleagues (d)recognition and appreciation (e) contact to stimulating colleagues (f) creativitytraining programmes (g) encouragement to take risks (h) monetary rewards (i)tolerance of non-conformity and (j) opportunity to work alone rather than in a team
(29) Which of the factors in question 28 do you feel get most emphasis in your company
On a scale from 1(creativity within specific scopes) to 5 (pursue ones ideas) and 10 (gives financialsupport to individuals or groups of employees who wish to start their own company on the basis ofan idea
(30) To which extent does the company make room for creativity and innovation
On a scale from 1(most important) to 10 (less important)
(31) Please rank the following statements in order of importance to the companyrsquos presentstrength of innovation (a) informal and relaxed management style (b) decentralisedmanagement structure (c) regular employee performance appraisal (d) generousbudget for research and development (e) strong emphasis on team effort (f) effectiveemployee suggestion scheme (g) encourage employees to work on their own initiative(h) prompt public recognition and appreciation (i) attractive monetary reward and (j)promotion
(32) Is there any point you wish to make concerning any aspect of your companyrsquosinnovation activities
(33) Other (comments and suggestions)
About the authorKarina Skovvang Christensen MSc (Econ) is a PhD student at the Department of ManagementAarhus School of Business Her primary research interests include management of innovationknowledge and strategy and her PhD project deals with management of intrapreneurship inknowledge-intensive organisations She has previously worked with intellectual capitalstatements and has published articles and books on knowledge management corporateentrepreneurship innovation and management accounting Karina Skovvang Christensen canbe contacted at KaSCasbdk
MD449
1182
To purchase reprints of this article please e-mail reprintsemeraldinsightcomOr visit our web site for further details wwwemeraldinsightcomreprints
111
CHAPTER 7
Enabling Intrapreneurship The Case of a Knowledge-Intensive Industrial Company
Originally Published in
Christensen Karina Skovvang 2005 Enabling Intrapreneurship The Case of a
Knowledge-Intensive Industrial Company European Journal of Innovation
Management Vol 8 No 3 pp 305-322
112
Enabling intrapreneurshipthe case of a knowledge-intensive
industrial companyKarina Skovvang Christensen
Department of Organisation and ManagementThe Aarhus School of Business Aarhus Denmark
Abstract
Purpose ndash The aim of the paper is to provide an understanding of the various factors that enableintrapreneurship in established firms The paper reports on a case study of intrapreneurship in a largeknowledge-intensive industrial firm
Designmethodologyapproach ndash Based on the existing literature it is suggested that the use ofdifferent factors can either enable or inhibit intrapreneurship and five enabling factors that areidentified Based on interviews on-site observations and documents and reports the five factors with apotential influence on intrapreneurship are examined and alternative factors considered
Findings ndash The five enabling factors that are identified in the literature are not sufficient to enableintrapreneurship in knowledge-intensive companies and it is concluded that three additional factorsenabling intrapreneurship in established firms should also be taken into account
Practical implications ndash The knowledge of what makes factors either enablers or inhibitors areincomplete and to enhance the intrapreneurial ability of an organisation managers must learn whichfactors to use in different situations
Originalityvalue ndash Only very few papers have studied intrapreneurship in specific organisationsThis paper contributes with a synthesis of the literature in the area and with a suggestion of a modelthat is used in the empirical analysis and augmented based on that The paper furthermore contributesto the body of literature on the factors enabling intrapreneurship in general
Keywords Communication Entrepreneurialism Culture
Paper type Case study
1 IntroductionJob creation has become a hot topic in most old industrialised countries whereproduction is increasingly moving to the newly industrialised countries Typically inmany European countries the underlying assumption in the public debate is that newjobs should mainly be created in small- and medium-sized firms (SMEs) Howeverstudies have shown that job creation in SMEs has almost come to a standstill and thatoverall these firms lose almost as many jobs as they create (see for example Hisrich1990 Sathe 2003)
Other authors eg Pinchot (1985) and Morris and Kuratko (2002) have suggestedthat there is a potential for job creation in both large and small companies though theysay little about the kind of industrial structure best suited to achieving this or about thebest way to ensure job creation and growth In any event we have to take a startingpoint in the existing structure with both large and small companies Much research has
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
wwwemeraldinsightcomresearchregister wwwemeraldinsightcom1460-1060htm
The author gratefully acknowledges the helpful comments made by Per Nikolaj Bukh AndersDrejer and John Parm Ulhoslashi on an earlier version of this paper
Enablingintrapreneurship
305
European Journal of InnovationManagement
Vol 8 No 3 2005pp 305-322
q Emerald Group Publishing Limited1460-1060
DOI 10110814601060510610171
been done within the field of entrepreneurship focusing on the entrepreneurrsquoscharacteristics and the process of starting up a new independent company (Gartner1988) although it is also necessary to improve innovation in large companies But iscorporate entrepreneurship the solution or is it just another passing fad
Corporate venturing has often been mentioned in relation to corporateentrepreneurship (eg Sathe 2003) and it has both good and bad points Sometimesmanagement faces new strategic dilemmas ndash especially if the new ventures are notclosely related to the mother companyrsquos core competencies and markets But as notedby Guth and Ginsberg (1990) and Sharma and Chrisman (1999) among otherscorporate entrepreneurship is more than corporate venturing and to be moreintrapreneurial companies therefore need to take the whole organisation into accountAs has often been pointed out in the literature on organisational design differentcorporate structures support different organisational needs (eg Hisrich 1990)Corporate structure is thus a good starting point as regards enabling intrapreneurship
In other words well-established and mature companies need to experiment withnew ways of organising and organisational structures that are known to enableinnovation to take place eg networks loosely coupled organisations and projectorganisations as a supplement to the classic hierarchy Notwithstanding managersalso need to recognise that innovation and renewal cannot be planned and managed inthe same way as operational activities
Another reason why innovation in large well-established companies is important isthat such companies possess more resources (both human financial and structural) thansmall companies and are therefore faced by less overall uncertainty Often they onlyexpose themselves to one kind of uncertainty at a time while entrepreneurs typicallyhave to cope with several simultaneously eg technology markets financial capital andbranding The transition to the knowledge society may thus be very difficult to achievethrough small companies alone which makes the focus on innovation in large companieseven more important This in turn implies directing more attention towards the keyfactors that enable and improve innovation within companies
In this paper I examine how companies can encourage intrapreneurship by meansof five different enablers derived from the literature rewards management supportresources organisational structure and risk Based on a case study of a largeknowledge-intensive industrial firm it is concluded that the factors are not of equalimportance and that in this specific organisation other important factors also enableintrapreneurship This leads to a proposed model consisting of eight enablers
This paper is organised as follows Section 2 which draws on the literature in thefield suggests a classification of corporate entrepreneurship based on fourorganisational perspectives each with different motivations for engaging inentrepreneurial activities Section 3 presents the methodology and discusses theadvantages and disadvantages of a single case study Section 4 briefly describes thecase company while section 5 presents a detailed analysis of the factors from a singlecase Section 6 discusses the findings and suggests how intrapreneurship can beenabled while section 7 presents the conclusion and implications
2 Corporate entrepreneurshipThe ideas behind corporate entrepreneurship can be traced back to the mid-1970s (egPeterson and Berger 1972 Hanan 1976) but it was not until Pinchotrsquos (1985) book on
EJIM83
306
intrapreneuring in the mid-1980s that it became a separate research topic However itstill seems to be a concept in search of a clear definition Various broader or narrowerdefinitions have been proposed by different authors some as observed by Sharma andChrisman (1999) using the same definition for different phenomena and others usingdifferent definitions for the same phenomenon A sufficiently broad definition ofcorporate entrepreneurship is thus crucial in order to avoid prematurely excludingimportant issues
One approach to the field is to regard corporate entrepreneurship as the overallconcept covering everything to do with entrepreneurship in a company (Christensen2004) such as intrapreneurship (Pinchot 1985) exopreneurship (Chang 1998) andcorporate venturing (Burgelman 1983) Common to these topics is that corporateentrepreneurship refers to ldquoa multidimensional process with many forces acting inconcert that lead to the implementation of an innovative ideardquo (Hornsby et al 1993p 30)
Jeffrey Hornsby and Donald Kuratko together with different co-authors havereviewed the literature from the late-1980s onward and have found five internalenablers of corporate entrepreneurship consistent with the main literature rewardsmanagement support resources (including time) organisational structure andrisk-taking (Kuratko et al 1990 Hornsby et al 2002) However based on an empiricalanalysis Kuratko et al (1990) only find management support organisational structureresources and rewards significant
In Hornsby et al (1993) the authors further develop their work from 1990 resultingin the following enablers management support autonomywork discretionrewardsreinforcement time availability and organisational boundaries However intheir paper from 2002 they return to the five enablers from 1990 but test those from1993 Hornsby et al (1993) also point out that individual characteristics such asrisk-taking propensity desire for autonomy need for achievement goal orientationand internal locus of control have a significant influence on corporateentrepreneurship
Other researchers have explored different enablers eg from the externalenvironment According to Antoncic and Hisrich (2004) both organisational factorssuch as organisational support formal controls and numbers of alliances andenvironmental conditions such as dynamism technological opportunities industrygrowth and demand for new products are important in relation to corporateentrepreneurship In an earlier study Zahra (1991) suggested that in addition tointernal organisational factors the intensity of corporate entrepreneurship is alsoinfluenced by corporate strategy and factors from the external environment such asdynamism hostility and heterogeneity
Covin and Slevin (1991) developed an integrative model including both externalfactors such as technological sophistication dynamism hostility and industry lifecycle stage together with such strategic variables as mission strategy and internalenablers such as top management values and philosophies organisational resourcesand competencies organisational culture and organisational structure Zahra (1993)further developed Covin and Slevinrsquos (1991) integrative model eliminatingtechnological sophistication on the ground that it is part of environmentaldynamism and adding munificence by which is meant the abundance ofopportunities for innovation in an industry Zahra also questions the inclusion of
Enablingintrapreneurship
307
industry life cycle stage because it relates to another level than dynamism hostilityand munificence Zahra (1993) also argues for a narrower classification of the internalenablers claiming that the suggested changes would make the model more complete
Although corporate entrepreneurship is influenced by a number of both internal andexternal factors this paper will focus only on those internal factors that the companyhas a possibility to influence directly
3 MethodologyA division of Danfoss a major Danish industrial company was chosen as a case studyto help determine which factors enable intrapreneurship Being one of Denmarkrsquoslargest industrial companies Danfoss might well have suffered from a lack ofintrapreneurship but despite its industrial roots the company is generally regarded asboth very knowledge-intensive and innovative Furthermore the companyrsquos CEO iswell-known in the public debate in Denmark for his promotion of entrepreneurship as apolicy agenda and innovativeness in Danish firms This managerial focus onintrapreneurship thus made Danfoss ideal for studying the enablers ofintrapreneurship at least in this particular firm
A major problem of large firmsrsquo innovative activities is how they can be fitted intoday-to-day routines without compromising efficiency As a starting point interviewswere carried out with employees on this issue The method chosen was the so-calledembedded case study design (see also Yin 2003 p 43) involving three levels ofanalysis
(1) The firm (its strategy and performance)
(2) Employees (their interaction)
(3) The use of factors (tracing different enablers)
It is generally argued that embedded case design provides richness and multipleperspectives in explaining behaviour
The intrapreneurial enablers ndash rewards top management support resourcesorganisational structures and risk ndash which were derived from the literature in advancehad already been found consistently throughout the literature by others The empiricalmaterial includes four interviews the aim of which was to identify the enablers(respondents were selected from three different organisational positions in order toobtain a broader perspective on the same issues a project manager two functionalmanagers and an engineer) two days of on-site observations (including two meetings)where various employees were informally questioned about their research themes anda wide range of documents and reports
Each interview was conducted in tandem (two researchers) one researcher beingprimarily responsible for the interview and the other for taking notes and filling ingaps in the questioning The interviewees were asked to tell the story of the companyhow they perceive innovation why the firm needs to be innovative where in theorganisation the innovations are created how they are organised and how and whichdifferent enablers encourage and support them to be innovative The interviews whichlasted for an average of about one-and-a-half hours they were recorded andtranscribed for later use At the end of each day field notes were written by eachresearcher individually reflected on and afterwards discussed by both researchers
EJIM83
308
The interviewees were chosen from different positions in order to get a broaderperspective on the same themes and the formal interviews were supported andvalidated or categorised as a single opinion by small-talking to a number of otheremployees and through observations General statements will be presented asldquoDanfoss Drives saysrdquo The interviewees provided several insights and a variety andbreadth of data which allowed the exploration of different settings and breakdowninto categories that were grounded more empirically in a knowledge-intensivecompany than would have been possible from solely using the five factors from theliterature
The analytical process was mainly concerned with coding the interviews andclassifying the text into categories for content analysis (see for example Weber 1985)based on predetermined categories which is the main difference from grounded theory(Glaser and Straus 1967) Several researchers (eg Glaser 1978 Miles and Huberman1994) have suggested that coding provides a basis for the interpretation of data Thecoded data from the interviews were triangulated with observations and writtendocuments
4 Danfoss DrivesDanfoss Group is an international engineering company with approximately 17000employees and a total turnover of almost DKK 15 billion of which the Motion ControlUnit share is approximately 3400 employees and almost DKK 35 billion respectivelywith customers all over the world Danfoss Drives is the largest division in the MotionControl Unit The Motion Control Unit was established ultimo 2000 and apart fromDanfoss Drives also includes three other divisions Gear motors Marine Systems andFlow The activities in Danfoss Drives can be dated back to 1968 which saw theintroduction of the first mass-produced frequency converter for speed control ofmotors The heating ventilation and air-condition applications (HVAC) wereintroduced in 1990 and since the acquisition of Bauer a gear motor producer in1999 Motion Controls has been marketed as a one-stop shop for the industry
Through acquisitions in the US and the founding of a company in GermanyDanfoss Drives now has two production sites in addition to its headquarter inGraasten Denmark and via Danfoss sales companies is able to serve a wide range ofcustomers in different industries throughout the world including chemicals andconsumer goods metals and mining pulp and paper and the refrigeration andautomotive industries
41 Strategy and the organisationDanfoss Drives pursues a dual strategy the aim of which is both to maintain itsleading global position in the food beverage HVAC and water industries throughvolume and growth and to retain its position as a component supplier providingready-to-install solutions for (niche) customers
The continuous introduction of new and improved products means that DanfossDrives attaches a lot of importance to technological innovation and its efforts to gain acompetitive advantage owe a lot to close cooperation with customers In 1998 thedevelopment process in Danfoss Drives was organised into a matrix structureinvolving technology centres serving the different projects project leaders andprojects organised into a ldquocore teamrdquo and a number of ldquosub-teamsrdquo The product leader
Enablingintrapreneurship
309
who is responsible for the development of new products and managing thedevelopment process is assisted by a ldquocore teamrdquo which consists of members fromeach key area marketing production finance and IT
Danfoss Drivesrsquo management acknowledges that the companyrsquos commercialsuccess depends on employeesrsquo competencies and that employees are therefore itsmost important resource Here we describe how Danfoss Drives enablesintrapreneurship by means of many different forces acting together
5 Corporate entrepreneurship at Danfoss DrivesWithout having any distinct corporate entrepreneurship strategy Danfoss Drives hasactively used the organisational structure to enable intrapreneurship in the form ofcorporate ventures internationalisation and formal networks and the internalorganisation has been organised to encourage innovation knowledge creation anddissemination But using the organisational structure is not the only way DanfossDrives encourages intrapreneurship This section describes how various means areapplied and perceived by the employees at Danfoss Drives
This paper examines how the above-mentioned five enablers in Kuratko et al (1990)influence intrapreneurship at Danfoss Drives
51 RewardsSome authors (eg Fry 1987 Morris and Kuratko 2002 Sathe 2003) stress thatentrepreneurial behaviour can be encouraged by effective reward systems that mustconsider clear goals feedback individual influence and rewards based on results(Kuratko et al 1990 Hornsby et al 1993 2002) or it could be related to theperformance of the team (Hisrich and Peters 1986) Designing a reward system thatreflects the behaviour the company wishes to encourage is therefore crucial Accordingto Sathe (2003) people are motivated by different things Entrepreneurs may seekrewards such as the pride that comes from starting their own business and theprospect of financial gains whereas intrapreneurs value other incentives which are notalways clear (Sathe 2003) Morris and Kuratko (2002 p 245) note that intrapreneursare motivated by controllable rewards such as ldquoregular pay bonuses profit shareequity or shares in the company expense accounts job security promotions expandedjob responsibilities autonomy public or private recognition free time to work on petprojects money for research or trips to conferencesrdquo Morris and Kuratko (2002) alsoargue that intrapreneurs should share some of the downside risk but this financial riskand incentive is exactly what Sathe (2003) identifies as the difference betweenentrepreneurs and intrapreneurs
In practice it can be more difficult to differentiate between entrepreneurial andintrapreneurial incentives as not all entrepreneurs or intrapreneurs are motivated inthe same way At Danfoss Drives the reward structure reflects the fact that they are aninternational player and incentives change across cultures and countries financialrewards (bonus) are highly motivating in the USA whereas ldquoin Denmark financialrewards are generally less appreciated than promotion prestige and recognition fromcolleagues as the Danish Internal Revenue Service (IRS) destroys all possibilities forfinancial rewardsrdquo It is not uncommon (Sathe 2003) and very Danish that if someemployees get a financial reward then it influences other employees negativelyFlexibility in relation to an assignment and working hours is highly appreciated by
EJIM83
310
Danes and this together with recognition from colleagues is the most commonreward Prestige related to the completion of an assignment is also valued
52 Management supportThe second factor is management support that in the literature is often synonymouswith top management support and governance (Hitt et al 2002 Hornsby et al 1993Kuratko et al 1990) It is crucial for management to support intrapreneurial activities(Hisrich and Peters 1986 Stevenson and Jarillo 1990) even if they do not fullyunderstand them (Hornsby et al 2002 Kuratko et al 1990) As pointed out by Kuratkoet al (1990) and Hornsby et al (1993) the basic idea of management support is toencourage employees to believe that innovation is embedded in the role of allemployees And this is precisely the case at Danfoss Drives everyone is encouraged tobe innovative and consequently innovation happens everywhere
Employees view a supportive management as one that does not work against newinitiatives from employees and acts as a sponsor for intrapreneurs which basicallymeans giving them access to resources This agrees with Fry (1987) One of theemployees put it as follows
What my manager does is provide me with resources that make it possible to explore newopportunities
Otherwise employees agree that support from other colleagues is more importantThey not only use each other to discuss and test new ideas but groups of employeescooperate to develop new products and new ideas Other employees eg clerks andtechnical assistants can also support a project group by from an engineerrsquospoint-of-view doing more mundane things such as office work getting the rightcomputer programs for the job etc As one of the managers said ldquoit is easy to getpeople together in workshops on new themes and problems even though they arebusyrdquo which indicates that generally support among employees is high Butsupporting (top) managers are important as ldquosponsorsrdquo
53 ResourcesIn addition to the support of top management projects also need financial resources toget off the ground (see for example Hisrich and Peters 1986 Hornsby et al 2002Sathe 2003 Stevenson and Jarillo 1990 Stopford and Baden-Fuller 1994) On the otherhand the speed and success of a project is not proportional with fundingencouragement inspiration and perspiration are also necessary (Fry 1987) Gettingaccess to the companyrsquos facilities and resources is not always sufficient ndash it isimportant to make employees feel confident and encouraged to experiment (Burgelmanand Sayles 1986) The well-known 3M case illustrates that this kind of support andfreedom automatically generates another important resource (time) Employees at 3Mare encouraged to spend 15 per cent of their time on their own projects Howeveraccording to Fry (1987) this 15 per cent is often spent after hours or at weekends Somescholars (eg Drucker 1993 Nonaka and Takeuchi 1995 Bukh et al 2005) haveargued that the most important resource in the knowledge society is knowledge itselfand knowledge is not just the fundamental driver of innovation but also an importantpart of the companyrsquos competitive advantage
Enablingintrapreneurship
311
The most important intrapreneurial resource at Danfoss Drives is human resourcesie the knowledge and skills of the employees However other resources are importanttoo especially time and financial support which to some extent the company sees as aprerequisite for employees to act in an intrapreneurial way Although as DanfossDrives says
time and money have to be earned which means you have to finish your assigned projectbefore you can playrdquo
And continues
we would explore different directions that are not directly related to the core of ourproduct simply to broaden the horizon and knowledge about what is going on Probablythere is something out there which in combination with other things could be veryinnovative eg in relation to regulation techniques something interesting could befound in relation to how the body regulates the absorption of medicine However theresources are limited and therefore we have to focus on the most important adjacentareas
The use of resources is a matter of priority and long-term innovation is vulnerablecompared with short-term business pressure (Hisrich 1990) Lack of resources andtime is thus also a barrier to long-term innovation at Danfoss Drives As the companypoints out even though daily or weekly slack time for innovation would be preferableemployees are ldquo in periods very tied up with projects and in other periods webreathe and have time to run innovative projects to broaden the horizon andknowledge of the employees and to motivate themrdquo
Being part of a large company also brings bureaucratic obstacles eg the engineersare employed on flextime terms which is highly popular but current thinking atDanfoss Group headquarters is whether all employees should be on ldquojob salaryrdquoinstead to which one of the employees retorts
that will be rubbish then I will only focus on my assigned projects and nothing more
On the other hand being part of a large company can also mean greater flexibility andmore choices As one of the managers says
10 per cent of 1 billion creates more financial flexibility than 10 per cent of 1 million andexploring ideas costs money
The availability of financial resources thus plays an important role in intrapreneurshipor the utilisation and implementation of ideas One of the employees explains that ldquoI tryto look at the companyrsquos purse as if it was my ownrdquo and if some employees believe sostrongly in an idea that they are willing to pay for its implementation themselves thenthe company always considers it again
54 Organisational structureOrganisational structure has been found very important for innovative activities inseveral ways (see for example Burgelman 1983 Guth and Ginsberg 1990Hornsby et al 1993 Sathe 2003) According to Davis and Lawrence (1991) externalpressure for dual focus pressures for high information-processing capacity andpressures for shared resources require a matrix organisation Sathe (2003) on theother hand argues that matrix and functional or ldquosilordquo organisations can inhibit
EJIM83
312
corporate entrepreneurship with respect to new business creation Instead herecommends collaboration and the pooling of competencies in cross-functionalbusiness units so that competencies in technology product developmentmarketing sales and other functions will be available for new business This isprecisely how Danfoss Drives pools different knowledge resources in each projectwithin a matrix structure
The reorganisation in 1998 into a matrix structure focused on a projectorganisation with strong project leaders was positively received by employees since itclarified the chain of command As one of the employees put it
Before you were more like a specialist and you could easily work on four different projectsand that was not always easy Because who did you refer to Who pushed you the most Andwhich project did you better like yourself
Basically the new organisational structure made it possible for employees to focuson the project and their jobs The importance of the project groups wasemphasised by a physical reorganisation where all project members are nowlocated together Previously employees were located with ldquosimilarrdquo people egmarketing people sat together with other marketing people in a marketingdepartment Both ways have advantages and disadvantages but at Danfoss Drivesgathering together employees with different backgrounds has become the preferredway of doing things
If Danfoss Drives believes strongly in new ideas a group of employees may get thechance to turn them into a new business unit One of the managers says that
Instead of imposing it [the new ideas] into the existing organisation we have started a smallgroup a small project outside the traditional rules of the established organisation
This is in essence what corporate ventures are all about (see for example Biggadike1979 Guth and Ginsberg 1990) Another manager reflected that
Our ventures have been started based on a specific idea or idea area and then it has beenisolated and nurtured This basically means that they [the ventures] have got some peace andresources to work on a new area
What this means in practice is that the ventures do not have to strictly follow standardoperating procedures which gives them a flexibility and agility that the existingorganisation does not possess (Ellis and Taylor 1987)
Internationalisation is the third strategy Danfoss Drives employs to encourageintrapreneurship (Lu and Beamish 2001) The company sees a clear distinctionbetween networks and internationalisation because
when we speak about internationalisation it is within the legal boundaries of theorganisation which means that you have colleagues all around the world with whom youhave to communicate They are an integrated part of the company and thereforeinformation can flow freely whereas within a network there are some restrictions on theinformation you can pass on
Furthermore Danfoss Drives thinks it is necessary to be present ie represented byplants sales offices ventures etc (see for example Hitt and Ireland 2000) in theirmain markets to ensure strong relations with customers and with it to learn from themand get access to their knowledge and sets of values
Enablingintrapreneurship
313
If intrapreneurship is expanded to corporate entrepreneurship there is a fourthway to enable entrepreneurial activities which is to deliberately make use of formalnetworks ie universities customers suppliers and ERFA groups (experienceexchanging groups) ndash by comparison the use of informal networks is difficult toplan and control Danfoss Drives creates networks to get access to knowledgeresources that the organisation needs but does not itself possess (see also Hitt et al2000) saying
The network to the universities is primarily to get access to basic research whereasrelationships to other companies or ERFA groups may be because they do somethingdifferent from which we can learn
Danfoss Drives also participates in ERFA groups to test new ideas on people who havenot yet adapted to the Danfoss way of thinking This says the company will ensurethat ldquotwo developers with the same background gradually become uniformrdquo Anotherway to test ideas is on customers Danfoss Drives not only visits their customers theyldquocamp outrdquo at particular customers for a month at a time because they believe in closecooperation and as they say
we follow them in everything they are doing which provides us with insight intoproblems that would be hard to get in other ways
55 RiskThe fifth and last factor that Kuratko et al (1990) found consistently throughout theliterature is risk Morris and Kuratko (2002) described how both too little risk and toomuch risk can be fatal for a company While too little risk becomes dangerous when acompany ignores changing market conditions by making little or no innovation atthe other extreme attempting to come up with a breakthrough innovation is highlyrisky Therefore focusing on lower-risk markets ie new varieties of productsservices etc makes risk management easier and creates more success Fry (1987)notes that making intrapreneurs experiment without penalising them when an ideafails will encourage an intrapreneurial spirit and the more experiments they carryout the better they will be at determining what works and what does not work(Morris and Kuratko 2002)
Danfoss Drives address risk management from a Darwinistic approach which asone of the managers said means ldquosurvival of the fittestrdquo The projects are veryautonomous so that if an idea is related to an ongoing project it is up to the projectleader and the core team to decide whether it will be implemented or not If the idearelates to a new product the employee has to make strong enough arguments toconvince the product planning group that it is worth implementing These interactionprocesses mean that employees feel relaxed about trying to implement new ideas Asone said
you have to keep your word and be honest then you can be flighty and take risks butyou have to be honest and acknowledge if you have overextended yourself acknowledge thatyou have to go back one step Then you can make a flop and no one complains because theyknow you did your best and in most cases you are likely to succeed
EJIM83
314
At Danfoss Drives most ideas are related to the planned projects since they areplanned four years ahead The aim of such a long planning horizon is both to giveemployees an opportunity to deconstruct the project and come up with ideas and togive them time to think differently and innovatively before the project starts One ofthe employees said
If the company did not give me this information then I would probably not be able to comeup with all these ideas
And when employees have time to think about coming projects says Danfoss Drivesthe risk is lower compared to short-time planning
6 Towards a more complete modelThe Danfoss Drives case is in line with Kuratko et alrsquos (1990) findings as regards thefactors that can help an organisation to enable intrapreneurship However the Danfosscase also makes it clear that a knowledge-intensive company is more complex thantraditional industrial companies The five factors identified by Kuratko et al (1990) arethus not sufficient in themselves to understand intrapreneurial behaviour in suchcompanies
The Danfoss case showed that basic factors such as (top) management support andfinancial resources are not sufficient for intrapreneurship to happen while risk onlyseems to matter to the extent that it is perceived by employees
The possibilities within the five factors can be divided into basic andintrapreneurial factors as showed in Table I By basic factors is meant thosewhich must be present for intrapreneurship to occur eg regular payment to theintrapreneur access to financial resources and other materials a management thatldquosponsorsrdquo the project (not rejecting an idea before development gets started) a basicorganisational structure and tolerance for risk (at least lower-risk projects)Intrapreneurial factors denote efforts that can encourage and enrich intrapreneurialactivities such as expanded job responsibility autonomy and recognition real (top)management commitment ndash not just assignment of resources different knowledgeresources different organisational structures that promote different aspects than thetraditional organisation and no penalisation of employees who try to developsomething new
The interviews small talk and observations at Danfoss Drives revealed that otherfactors at the company also enable intrapreneurship Common to all interviewees isthat they talked about the importance of communication company culture and
Factor Basic factors Intrapreneurial factors
Rewards Regular pay job security Promotion expanded job responsibilityautonomy recognition free time to work onpet projects bonuses
(Top) management support Sponsors CommitmentResources Finance and materials Knowledge resourcesOrganisational structure Hierarchy Corporate venturing cross-functional teams
internationalisation external networksRisk Tolerance of lower risks No penalisation
Table IFactors influencing
intrapreneurship
Enablingintrapreneurship
315
processes to help finish a project The following paragraphs will take a closer look atthese three factors which will be analysed based on the empirical data from DanfossDrives supported where relevant by the literature
61 CommunicationSince it creates a common framework of understanding language can be consideredthe most prominent communicative tool available to man (Christensen and Bang 2003)At Danfoss Drives communication is closely related to culture and geographicallocation One of the interviewees expressed this very clearly
Via your language you can articulate the country in which you have been raised its cultureand its values The whole set of values are embedded in your language that is whyEnglish and American Danish and Norwegian are different even though they are verysimilar
Language culture and geography are very closely related and together they articulateprecision and when you try to express yourself in another language then you lose theprecision
Language is thus a very central part of communication The official language at DanfossDrives is English and this therefore causes some difficulties All employees are expectedto use English at the level they master but employees find it very frustrating to have tospeak English to German customers (to whom they used to speak German) since it canbe a barrier to really understanding the details Danfoss Drives says
If we continued speaking German with the German customers then they would communicatein their native language and there would be only one translation Now all of us have to putsubstantial effort in expressing the right things and furthermore we may not understandwhat is said with the intention of the sender
In addition to the official language there are at least two other languages at DanfossDrives a company-specific and a technical language The language used internally inthe company is very specific with many abbreviations and terms and it can be veryconfusing As Danfoss Drives says
It takes new employees about a year to fully understand what is being said
And as Pinchot (1985) argued the innovation process is inhibited or distorted whenpeople do not speak a common language communication is slowed down
The technical language used by engineers is highly precise since all terms withinelectronics and software are the same in English American English and AustralianEnglish and Danish educational courses are based on English textbooks But not allemployees at Danfoss Drives are engineers and as one of the engineers said ldquowe [theengineers and the rest of the organisation] do not speak a common language however the tone is free and hard ndash but friendlyrdquo and they are not afraid to ask if thereis something they do not understand
General communication within Danfoss Drives is very informal which encouragesemployees to talk to everyone However employees at Danfoss Drives are scatteredaround Graasten which is a barrier to daily communication As Danfoss Drives explains
We have colleagues 200m from here and it feels like they are placed in Aarhus [almost200 km from Graasten] If you think you could gain from speaking with them then you haveto walk over there and then you are very likely to wait until tomorrow
EJIM83
316
However one of the managers says
Generally the information and communication within and between the departments supplychain core processes etc flow well ndash maybe too well as there are hardly any conflicts oftenwe are too polite it takes too much time to make a decision because we seek consensus andtoo many people are involved
The involvement of so many people is due to the complexity of the products andmakes it very hard to get an overview because a lot of important information has to betaken into account Conversely the consensus-seeking and meetings shortencommunication and make employees feel they have influence (Fry 1987) Tosupport communication Danfoss Drives is developing a common informationstructure for meetings reports etc which should make it easier for employees to findthe right information
Face-to-face communication is the preferred form of communication at DanfossDrives This can be illustrated by the mechanics group which meets physically every14 days to keep the amount of written information to a minimum The team leader ofthe mechanics group said
We can write a report but if people are going to read it some will read it in one way otherswill read it in another way and some will not read it at all In this way [by meeting every 14days] we get a resume and if something is not clear we can ask I have chosen thisinformation strategy in the group because everyone will be informed and afterwards you cango home and if you are interested you can easily ask for more information
Together with direct and open communication (see for example Leonard and Swap2002 Pinchot 1985) face-to-face communication physical proximity naturalldquowatering holesrdquo such as coffee pots and mail rooms meetings special placesroomsfor special occasions team building social events cross-level and cross-functionallocations (see for example Christensen and Bang 2003 Leonard and Swap 2002) allencourage improved communication at Danfoss Drives Decision reports and otherkinds of documentation are still written down in the mechanics group including a finalreport but all the unnecessary ldquosemirdquo reports are skipped Danfoss Drives shares ideasand knowledge in both formal and informal ways which for example Fry (1987) andChristensen and Bang (2003) have described to be preferable
However being a worldwide company face-to-face meetings are not always possibleor convenient because of distance so a lot of information is often sent by e-mail Thisoften leads to misunderstandings in their daily work however Danfoss Drives says
you try to make sure that you have expressed exactly what you want but when you get ane-mail back with 20 questions then there is nothing else to do than call or even better meetface-to-face otherwise the e-mails will continue going back and forth because a large partof the context disappears when you write down information
This is one of the reasons why employees at Danfoss Drives spend so much time inmeetings to inform and coordinate and as the company explains this need forcommunication may reflect Danish culture
62 CultureSince innovation is not restricted to the research and development department itldquopervadesrdquo the companyrsquos culture This is supported by small talk and observations
Enablingintrapreneurship
317
and it is clear that new ideas are generated across the whole company and incooperation with customers and suppliers and then further developed in an interplaybetween salesmarketing and customers production and supplies research anddevelopment and engineers Danfoss Drives believes that in this way they ensure ahigher degree of intrapreneurship ndash both in relation to product process and strategicinnovation ndash than if innovation were only carried out by the research and developmentdepartment which typically consists of techniciansengineers Thus ldquo theinnovation will be technology driven rather than market drivenrdquo according toDanfoss Drives
Company culture also plays a role in relation to for example decision-making Thedecision-making process at Danfoss Drives in Denmark has changed radically duringthe last decade because of changing product characteristics A decade ago the companyhad employees with a broad range of knowledge resources which meant that theycould make decisions about almost everything Today the industry has become muchmore complex more technologically oriented which makes it impossible to be ageneralist and all employees have now become specialists within a relatively smallarea Among other things this is one of the reasons why Danes at Danfoss Drives arevery consensus-seeking and many different types of employees are asked for advicebefore a decision is made Although it slows down the intrapreneurial process and istime- and resource-consuming Danfoss Drives thinks it enables them to make betterdecisions By involving many employees in the overall decisions managers try todecentralise as many lower-level decisions as possible Danfoss Drives believes that
because of the complexity there is no right answer What may be a good solution for onemay seem wrong to another even though the result may be the same What is mostimportant is that the employee who has to carry out the task feels that it is the right way to doit
Decentralised decisions create a very high degree of commitment and ensure thatemployees really make an effort to succeed This is contrary to Danish culture but asone of the managers explains
Especially in Germany the process of decision-making is different They do not have somany meetings The manager decides he takes the responsibility and he takes theconsequences and the employees implement in the United States it is also the managerwho makes the decisions but they [like the Danes] also have a lot of meetings before thedecision is made
Danfoss Drives believes that the delegation of decision-making creates more flexibilitywhich is one thing that Danes because of their very relaxed culture are better at thanforeign companies
The general experience at Danfoss Drives is that culture also plays a major role inrelation to the perception of time especially working hours In Denmark mostemployees are employed on flextime terms which means that they decide themselveswhen they come and leave thus controlling their own working hours In Germany onthe other hand employees have fixed working hours while in the US employeesusually come before the manager arrives and leave after he has left In these countriestherefore the manager decides working hours At its plants abroad Danfoss Drivesadapts to the norms of the country concerned
EJIM83
318
63 ProcessSince Danfoss Drives is ISO9000-certified it has to follow and document a number ofprocedures and processes In general the company believes that their processes arevery robust but they are continuously trying to improve organisational processesfurther One of the most visible process innovations concerns the development of anin-line printing house together with Xerox Basically this means that the manual isprinted in a specific language and number related to a specific order and every timethere is a change in the manual it is made online The main advantage of this is that itensures that the manual is always up to date and it saves the company resources inrelation to a printed manual ndash both paper and storage Danfoss Drives has alsoimproved inventory control by implementing an electronic kaizen system (Imai 1986)However when striving after effectiveness and efficiency environmental awarenessand high-quality products are also essential
All projects are managed in relation to a ldquokey-point planrdquo like Cooperrsquos (2001) stagegate model Although they can change the level of documentation in each project theyacknowledge that it is very difficult for them to run small projects One of themanagers also explains that managing ldquothe next generation of a product to a knownmarket developing a new product to an unknown market or developing a specificproduct to a specific market or a brand-labelling project with a supplier are verydifferent projectsrdquo and they think it is a weakness to use the same project model for allprojects
Danfoss Drives is aware of their strengths and weaknesses and small projects aredefinitely one of their weaknesses since the whole system is geared to large-scaleproduction Small companies are now bringing innovations to the market which issomething that Danfoss Drives used to do By recognising that Danfoss Drivestemporarily ldquochanged the focus from innovation and idea-creation to a focus on theprocess of production planning and technology planningrdquo as one of the managersexplains The focus not only changed from product to process innovation but also toknowledge-intensive production by means of relationship management and otherways of managing However the emphasis is now back on innovation again
7 Conclusion and implicationsActivities that benefit the strategic and financial position of a company are those mostlikely to be developed and implemented Given this the exploration and exploitation ofdifferent intrapreneurial enablers seems the logical choice since it can result insignificant corporate gains The research challenge is to understand whyintrapreneurial enablers have not attracted companiesrsquo attention to a greater extent
The Danfoss Drives case indicates that rewards top management supportresources organisational structure and tolerance of risk are not sufficient to encourageintrapreneurship in a knowledge-intensive company Not all factors directly encourageintrapreneurship although some are necessary in order to create an intrapreneurialclimate Fry (1987 p 5) argued that
[i]f managers arenrsquot innovative if they donrsquot provide the climate for creativity if they canrsquotset aside their carefully laid plans to take advantage of a new opportunity then intrapreneurshave little encouragement
Enablingintrapreneurship
319
This basically means that managers can be the biggest obstacle to intrapreneursinasmuch as a single decision can kill a project before it gets started
The Danfoss Drives case has shown that enabling intrapreneurship is easier whenthe (top) management communicates a clear vision and plan to employees for a longertime horizon (Sathe 2003) Consequently the framework should consist of eightintrapreneurial enablers instead of five communication culture process rewards (top)management support resources organisational structure and risk
Morris and Kuratko (2002 p 257) note that ldquoculture underlies all other componentsof a workplacerdquo ie all other factors This means that all factors are interrelated andinfluence each other in some way ndash at least with culture as a common denominatorWhile the Danfoss case shows that culture in itself is not sufficient to describe howmanagers can enable intrapreneurship the eight factors described above all contributein one way or another and are therefore too important to leave out Hisrich (1990)defines an intrapreneurial culture as follows ldquo[d]evelop visions goals and actionplans take action and be rewarded suggest try and experiment create and developregardless of the area and take responsibility and ownership This environment ofcourse supports individuals in their effort to create somethingrdquo Danfoss Drives comesclose to an intrapreneurial culture on several points but there is still room formanagerial improvements
Clearly there is a need for further research into factors that enable and encourageintrapreneurship in knowledge-intensive companies Studies related to the enablers areimportant Are there more than eight and which How are they related And how canmanagers exploit the synergies involved Up to now we only know that the eightenablers influence intrapreneurship not if and how they can be used to turn theintrapreneurial level up and down Breakthrough innovations that change the rules ofcompetition in a market are very rare and as Morris and Kuratko (2002) also arguefrequent experiments make intrapreneurs better able to determine what works andwhat does not work
References
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Biggadike R (1979) ldquoThe risky business of diversificationrdquo Harvard Business Review Vol 57No 3 pp 103-11
Bukh PN Christensen KS and Mouritsen J (2005) Knowledge Management and IntellectualCapital Establishing a Field of Practice Palgrave Macmillan Basingstoke
Burgelman RA (1983) ldquoA process model of internal corporate venturing in the diversified majorfirmrdquo Administrative Science Quarterly Vol 28 No 2 pp 39-55
Burgelman RA and Sayles LR (1986) Inside Corporate Innovation Strategy Structure andManagerial Skills Free Press New York NY
Chang J (1998) ldquoModel of corporate entrepreneurship intrapreneurship and exopreneurshiprdquoBorneo Review Vol 9 No 2 pp 187-213
Christensen KS (2004) ldquoA classification of the corporate entrepreneurship umbrella labels andperspectivesrdquo International Journal of Management and Enterprise Development Vol 1No 4 pp 301-15
EJIM83
320
Christensen KS and Bang HK (2003) ldquoKnowledge management in a project-orientedorganization three perspectivesrdquo Journal of Knowledge Management Vol 7 No 3pp 116-28
Cooper RG (2001) Winning at New Products Perseus Cambridge MA
Davis SM and Lawrence PR (1991) ldquoThe matrix organization ndash who needs itrdquo in Shafritz JMand Ott JS (Eds) Classics of Organization Theory 3rd ed Wadsworth PublishingCompany Belmont CA pp 234-54
Drucker PF (1993) Post-capitalist Society Butterworth-Heinemann Oxford
Ellis RJ and Taylor NT (1987) ldquoSpecifying entrepreneurshiprdquo in Chruchill NCHornaday JA Kirchhoff BA Krasner OJ and Vesper KH (Eds) Frontiers ofEntrepreneurship Research Babson College Wellesley MA pp 527-41
Fry A (1987) ldquoThe Post-It Note an intrapreneurial successrdquo SAM Advanced ManagementJournal Vol 52 No 3 pp 4-9
Gartner WB (1988) ldquoWho is an entrepreneur Is the wrong questionrdquo American Journal ofSmall Buiness Vol 10 pp 696-706
Glaser B (1978) Theoretical Sensitivity Advances in the Methodology of Grounded TheorySociology Press Mill Valley CA
Glaser BG and Straus AL (1967) The Discovery of Grounded Theory Strategies forQualitative Research Aldine Chicago IL
Guth WD and Ginsberg A (1990) ldquoGuest editorsrsquo introduction corporate entrepreneurshiprdquoStrategic Management Journal Vol 11 pp 5-15
Hanan M (1976) ldquoVenturing corporations think small to stay strongrdquo Harvard Business ReviewVol 54 pp 139-48
Hisrich RD (1990) ldquoEntrepreneurshipintrapreneurshiprdquo American Psychologist Vol 45 No 2pp 209-22
Hisrich RD and Peters MP (1986) ldquoEstablishing a new business venture unit within a firmrdquoJournal of Business Venturing Vol 1 pp 307-22
Hitt MA and Ireland RD (2000) ldquoThe intersection of entrepreneurship and strategicmanagement researchrdquo in Sexton DL and Landstrom HA (Eds) Handbook ofEntrepreneurship Blackwell Oxford pp 45-63
Hitt MA Ireland RD and Lee H (2000) ldquoTechnological learning knowledge managementfirm growth and performancerdquo Journal of engineering and Technology ManagmementVol 17 pp 231-46
Hitt MA Ireland RD Camp SM and Sexton DL (2002) Strategic EntrepreneurshipCreating a New Mindset Blackwell Oxford
Hornsby JS Kuratko DF and Zahra SA (2002) ldquoMiddle managers perception of the internalenvironment for corporate entrepreneurship assessing a measurement scalerdquo Journal ofBusiness Venturing Vol 17 No 3 pp 253-73
Hornsby JS Naffziger DW Kuratko DF and Montagno RV (1993) ldquoAn interactive model ofthe corporate entrepreneurship processrdquo Entrepreneurship Theory amp Practice Vol 17No 2 pp 29-37
Imai M (1986) Kaizen Random House New York NY
Kuratko DF Montagno RV and Hornsby JS (1990) ldquoDeveloping an intrapreneurialassessment instrument for an effective corporate entrepreneurial environmentrdquo StrategicManagement Journal Vol 11 No 1 pp 49-58
Enablingintrapreneurship
321
Leonard D and Swap W (2002) ldquoHow managers can spark creativityrdquo in Hesselbein F andJohnston R (Eds) On Creativity Innovation and Renewal A Leader to Leader GuideJossey-Bass San Francisco CA pp 55-65
Lu JW and Beamish PW (2001) ldquoThe internationalization and performance of SMEsrdquoStrategic Management Journal Vol 22 pp 565-86
Miles MB and Huberman AM (1994) Qualitative Data Analysis Sage Thousand Oaks CA
Morris MH and Kuratko DF (2002) Corporate Entrepreneurship Harcourt College PublishersOrlando FL
Nonaka I and Takeuchi H (1995) The Knowledge-Creating Company Oxford University PressOxford
Peterson R and Berger D (1972) ldquoEntrepreneurship in organizations evidence from the popularmusic industryrdquo Administrative Science Quarterly Vol 16 pp 97-106
Pinchot G (1985) Intrapreneuring Why You Donrsquot Have to Leave the Corporation to Become anEntrepreneur Harper amp Row New York NY
Sathe V (2003) Corporate Entrepreneurship Top Managers and New Business CreationCambridge University Press Cambridge
Sharma P and Chrisman JJ (1999) ldquoToward a reconciliation of the definitional issues in thefield of corporate entreprenrushiprdquo Entrepreneurship Theory amp Practice Vol 22 pp 43-68
Stevenson HH and Jarillo JC (1990) ldquoA paradigm of entrepreneurship entrepreneurialmanagementrdquo Strategic Management Journal Vol 11 pp 17-27 Special issue
Stopford J and Baden-Fuller CF (1994) ldquoCreating corporate entrepreneurshiprdquo StrategicManagement Journal Vol 15 No 7 pp 521-36
Weber PR (1985) Basic Content Analysis Sage Beverly Hills CA
Yin RK (2003) Case Study Research Design and Methods Sage London
EJIM83
322
131
PART III
Managing Internal Knowledge Resources
The third part of the dissertation consists of two articles which in different ways deal
with internal knowledge resources and how these can be managed in order to
encourage intrapreneurship Thus from addressing intrapreneurship from an lsquointernal
resourcersquo perspective (cf Chapter 4) we now move on to discuss knowledge
management and management in knowledge-intensive companies
As mentioned in Chapter 2 the PhD project is part of a larger research project
KNORI the aim of which was on the one hand to examine how knowledge-
intensive companies can be innovative and enable change in the face of changing
market conditions and on the other to explore and identify the challenges and
possibilities for companies and industrial policy Since knowledge and knowledge
intensiveness were key factors in the selection of case companies for the project the
internal resource perspective was found particularly appropriate since as described
in article 1 this is mainly based on companies exploiting intangible knowledge-
based resources
Intrapreneurs in knowledge-intensive organisations innovate on the basis of
knowledge Thus knowledge-based resources are not only a basic driver of
innovation but they are also an important part of the companyrsquos competitive
advantage The case companies that form the empirical basis for this dissertation are
132
all knowledgendashintensive companies It is therefore crucial to understand the
relationship between the main drivers of intrapreneurship in such companies
innovation management knowledge and knowledge management
THE KNOWLEDGE-MANAGEMENT PERSPECTIVE
In recent years there has been an overwhelming interest in the concepts of
knowledge and knowledge-based resources in the management literature This is not
only reflected in the importance of knowledge-intensive companies as discussed
above but also in an interest in how knowledge-based resources interact in the
creation of value and how knowledge can be managed This has influenced
management practice and research in many ways eg in terms of the characteristics
of knowledge the difference between information and knowledge and the
categorisation of knowledge (cf Baxter amp Chua 1999) However the literature
comprises many different research traditions and points of view
Some authors see knowledge as a resource that can be used as a basis for strategy
formulation (Sveiby 1997) whereas according to others it is integrated in a broader
strategy framework such as the balanced scorecard approach (Kaplan amp Norton
2004) Others again (eg Bukh et al 2001) perceive knowledge and intellectual
capital as two closely related terms For example Lennon amp Wollin (2001 p 411)
focus on knowledge in a learning perspective and Sher amp Lee (2003) relate it to
information technology Other strands of research could be identified all of which
have their own merits
Philosophical interest in the concept of knowledge and obtaining knowledge goes
back a long time However as emphasised by von Krogh amp Roos (1995) knowledge
was not directly included in management theories until the mid-1950s around the
time when some of the early thoughts on cybernetics and systems theory were being
133
presented (see for example Simon 1945 1960 Minsky 1956) The starting point
for these authors was often human intelligence as opposed to knowledge
incorporated in rule-based computer systems (cf Varela et al 1992)
Managers often discuss knowledge from different perspectives the differences
consisting in the way knowledge is perceived In other words the basic
epistemological perspectives differ Article five makes a distinction between two
different perspectives the first of which is the ldquoartefact-orientedrdquo perspective The
focus here is on information technology and the ways in which technology is be used
to codify knowledge for management decision-making It is assumed that everything
can be described and the more data a company collects the more knowledge it
possesses
The artefact-oriented perspective often relies on systems theory and information-
processing theories In practical applications it draws on information technology
Many authors have indicated that this has become insufficient for dealing with
management challenges created by the complexity of the knowledge society The
problem is not lack of documents data or access to information but rather the
quality content and organisation of the material
This has given rise to the second perspective which we term the process-oriented
perspective and is most clearly exemplified by Ikujiro Nonaka who regards
knowledge as a ldquodynamic human process of justifying personal beliefs as a part of an
aspiration for the lsquotruthrsquordquo (Nonaka 1994 p 15 cf Nonaka amp Takeuchi 1995)
Crucially the focus here is on the actual process by which knowledge is created not
on the document or rules which are based on the process This implies that
continuous and dynamic adaptation to lsquoreal lifersquo takes place Thus knowledge is a
continuous process which changes gradually as the individual framework of
understanding is developed
134
IMPORTANCE OF THE PERCEPTION OF KNOWLEDGE
Knowledge is a complex term which is often not easy to define precisely For
example Roos amp von Kroghrsquos (1995 p 1) statement ldquo[w]hat you see depends on
who you arerdquo implies that knowledge should be regarded as a subjective term From
this point of view knowledge can be expressed in many different ways since not
only knowledge but also knowledge about knowledge depends on the context It is
therefore essential to clarify the background for the various perceptions of
knowledge knowledge-management concepts etc
An understanding of the term knowledge or at least what it means to the individual
or organisation is important because it affects the importance which management
attaches to the term According to von Krogh amp Roos (1996 cf von Krog et al
1994) this implies that successful knowledge management requires that you relate to
lsquothe nature of knowledgersquo (von Krogh amp Roos 1996 p 224) Therefore knowledge
management also becomes a question of epistemological understanding
The more importance attached to epistemological views the greater the demands
made on the manager It is no longer sufficient lsquoonlyrsquo to act and make decisions
because reflection on onersquos own actions becomes part of the decision process which
must now also take account of other possible solutions The reflective manager must
therefore be familiar with different epistemologies because this gives a much larger
scope for action and it ensures a better understanding of the limitations of various
actions (see Venzin et al 1998 p 36)
More effective knowledge management may also result from adapting management
tools to the prevailing perception of knowledge This agrees with Marr et al (2003)
who suggest that knowledge management practices will be perceived as more
effective if they match personal epistemologies However knowledge management is
multi-faceted and our understanding of current practice has already been determined
135
by our choice of epistemology This illustrates the fact that the more an organisation
focuses on knowledge the more important it becomes to understand the
epistemological implications
An epistemology cannot be forced on individuals or an organisation Becoming
familiar with the way in which colleagues collaborators and others understand
lsquorealityrsquo will result in more possibilities and improved co-operation An
understanding of the alternative perspectives means that you can make an active
choice Since knowledge depends on both the starting point of the individual
employee and the organisational context (Lave amp Wenger 1991) ldquo[t]he conscious
choice of an epistemological mode is a critical success factor for research and
managementrdquo (Venzin et al 1998 p 37)
THE TWO ARTICLES IN THE SECTION
The first article in this section Understanding intrapreneurship by means of state-of-
the-art knowledge management and organisational learning theory presents a
theoretical perspective of innovation and knowledge and combines these in a
framework for knowledge-based intrapreneurship The framework consists of three
situations for innovation management exploitation sustainable change and
disruptive change and two tasks of intrapreneurship exploitation and exploration
The aim of the framework is to describe the content of intrapreneurship in six sub-
tasks based on the complexity of knowledge ndash tacitness demarcation and social
elements ndash that the intrapreneur needs to manipulate in each case together with the
corresponding type of learning involved The framework underlines the fact that the
complexity of knowledge has important implications for the way we think about
intrapreneurship and innovation
136
The second article Knowledge Management in Perspectives An Analysis of Project
Management in Two Companies touches on the challenges faced by knowledge-
intensive companies from another angle This article discusses the knowledge
resource and how to manage it in greater depth although the main focus is on an
understanding of the nature of knowledge-management activities ie how the
company can influence knowledge resources The article concludes that there are
different ways of managing knowledge resources and that not all of them encourage
intrapreneurship
The article presents two different ways of understanding knowledge ndash an artefact-
oriented perspective and a process-oriented perspective ndash and how knowledge
resources should be managed It is concluded that managerial awareness of the two
perspectives results partly in greater degrees of freedom and partly in enhanced
mutual understanding in the organisation Furthermore the article shows that the
perspectives are complementary and that the company needs to supplement the one
with the other A company that wants to create and maintain an intrapreneurial spirit
needs to supplement process-oriented initiatives with artefact-oriented initiatives A
company wanting to produce existing products more efficiently on the other hand
should supplement artefact-oriented initiatives with process-oriented initiatives
REFERENCES
Baxter J amp FW Chua 1999 Australian Accounting Review Vol 9 No 3 pp 3-14
Bukh PN J Mouritsen MR Johansen amp HT Larsen 2001 Videnregnskaber
Rapportering og styring af virksomhedens videnressourcer Copenhagen Boslashrsens
Forlag
Kaplan RS amp D P Norton 2004 Stratety maps converting intangible assets into
tangible outcomes Boston Harvard Business School Press
137
Lave J amp E Wenger 1991 Situated Learning Legitimate Peripheral Participation
Cambridge University Press
Lennon A amp A Wollin 2001 Learning organisations empirically investigating
metaphors Journal of Intellectual Capital Vol 2 No 4 pp 410-422
Marr B O Gupta S Pike amp G Ross 2003 Intellectual capital and Knowledge
management effectiveness Management Decision Vol 41 No 8 pp 711-781
Minsky M 1956 Some Universal elements for finite automat In Automata Studies
CE Shannon amp J McCarthy (eds) Princeton NJ Princeton University Press
Nonaka I 1994 A Dynamic Theory of Organizational Knowledge Creation
Organization Science Vol 5 No 1 pp 14-37
Nonaka I amp H Takeuchi 1995 The Knowledge-creating Company Oxford Oxford
University Press
Roos J amp G von Krogh 1995 What you see depends on who you are Think about
epistemology IMD Perspectives for Managers Vol 7 pp 1-4
Sher P J amp V C Lee 2003 Information technology as a facilitator for enhancing
dynamic capabilities through knowledge management Information amp Management
Vol 41 No 8 pp 933-945
Simon HA 1945 Administrative Behavior New York Free Press
Simon HA 1960 The New Science of Management Decisions New York Harper amp
Row Publisher
Sveiby KE 1997 The New Organizational Wealth Managing amp Measuring
Knowledge-based Assets San Francisco Berrett-Koehler Publishers
138
Varela FJ 1992 Whence Perceptual Meaning A Cartography of Current Ideas In
Understanding Origins Contemporary Views on the Origin of Life Mind and
Society F J Varela amp J P Dupuy (eds) Dordrecht Kluwer Academic Publisher
Venzin M G von Krogh amp J Roos 1998 Future Research into Knowledge
Management Knowing in firms Understanding Managing amp Measuring Knowledge
G von Krogh J Roos amp D Kleine (eds) London Sage
Von Krogh G G Roos amp K Slocum 1994 An essay on corporate epistemology
Strategic Management Journal Vol 15 No 5 pp 53-71
Von Krogh G amp J Roos 1995 Organizational epistemology Houndsmill
Macmillan
Von Krogh G amp J Roos 1996 Editorial and overview The Epistemological
Challenge Managing Knowledge and Intellectual Capital European Management
Journal Vol 14 No 4 pp 333-337
139
CHAPTER 8
Understanding Intrapreneurship by means of state-of-the-art knowledge management
and Organisational learning
Originally published in
Drejer Anders Karina Skovvang Christensen amp John Parm Ulhoslashi 2004
Understanding Intrapreneurship by means of state-of-the-art knowledge management
and Organisational learning Theory International Journal of Management and
Enterprise Development Vol 1 No 2 pp 102-119
140
102 Int J Management and Enterprise Development Vol 1 No 2 2004
Copyright copy 2004 Inderscience Enterprises Ltd
Understanding intrapreneurship by means of state-of-the-art knowledge management and organisational learning theory
Anders Drejer Karina S Christensen and John P Ulhoslashi Department of Organisation and Management Aarhus Business School Haslegaringrdsvej 10 DK-8210 Aarhus V Denmark E-mail adrasbdk
Abstract Ever since Peter Drucker stated that there are only two constant factors in business ndash innovation and marketing ndash the need for continuously reinventing and changing business organisations according to the present and future needs of the market place has been in existence in the management literature No less today external turbulence and dynamic market conditions have come to stay for good However the challenges are quite different today The emergence of knowledgendashbased organisations and increased importance of knowledge as the key to competitive advantage poses new and interesting challenges for managers and researchers alike In this paper we will attempt to enlighten theories of intrapreneurship and innovation by applying state-of-the-art knowledge management theory and organisational learning theory to them
Keywords intrapreneurship innovation management knowledge organisational learning
Reference to this paper should be made as follows Drejer A Christensen KS and Ulhoslashi JP (2004) lsquoUnderstanding intrapreneurship by means of state-of-the-art knowledge management and organisational learning theoryrsquo Int J Management and Enterprise Development Vol 1 No 2 pp102ndash119
Biographical notes Dr Anders Drejer is a Professor in Strategic Management and Business Development at Aarhus Business School and head of its group devoted to strategy
Karina S Christensen is a PhD student at Aarhus Business School specialising in knowledge management and intrapreneurship
Dr John Parm Ulhoi is Professor in Technology and Innovation Management at Aarhus Business School head of its group on innovation management and the supervisor of Karina S Christensen
1 On the developing need for intrapreneurship
We are slowly beginning to understand that innovation and learning are not the prerogative of start-ups and entrepreneurs any more Rather in the age of technological turbulence and hyper-competition even mature firms need to be innovative and agile This is why we are beginning to see a new strand of literature on intrapreneurship ie
Understanding intrapreneurship by means of state-of-the-art 103
innovators in mature organisations However as early as 1958 Peter Drucker remarked on management that
ldquohellipmanagement is first and foremost about the continuing development of the organisation and its employees The demands and needs of the environment is constantly evolving and management is about adjusting the company according to the needs and demands of the environmenthelliprdquo [1]
As a starting-point this paper rests on the following basic assumptions
bull the importance of innovation is increasing and will continue to grow in the years to come
bull external market-related turbulence for business organisations is not a passing phenomenon
bull the same observation goes for technological turbulence which further enhances the need for innovation and intrapreneurship
Space consideration does not allow us to go into any kind of detail regarding these assumptions Rather we will argue that environmental turbulence and knowledge in fusion should be regarded as an opportunity for innovative firms although recognise that market-related dynamics and technological turbulence can also pose serious risks for stagnant and complacent firms
But what are the implications of the more frequent technological changes increased market segmentation and global competition for organisations According to Kumpe and Bolwijn [2] the necessary organisational forms have undergone profound changes through the last decades This has increased the importance of innovation and underlined the need for renewal and extension of existing product portfolio For understanding this development Kumpe and Bolwijn [2] have produced a model which is shown in Figure 1
The external environment of business organisations has undergone radical changes since 1960s and successful companies have had to adjust to these changes in order to survive In the 1960s successful companies focused on effectiveness They were based on rationality and hierarchical structures that were bureaucratic Management was primarily focused on the efficiency of various important processes within organisation In the last decade the importance of product development and innovation however has increased considerably [34] Technological updates and design renewal are important today in order to sustain market share and remain competitive The challenge of the development function in organisations eg the RampD department has therefore increased considerably with limited resources and time changing the nature of development work The market place it can be said has short-term demands that often require long-term technology research and development which in turn pose great difficulties in prioritisation and management [5]
Therefore an important implication of the development discussed above is that innovative activities can no longer be assumed to be the domain of start-ups and entrepreneurs Now all firms need to pay attention to differentiating themselves by means of innovation and development [4] while at the same time maintaining operational effectiveness [6] In other words firms are caught between exploration and exploitation to use the firms of James March [7] and Leonard-Barton [8] This is a fourth assumption of the paper that we believe is justified by the above discussion ndash but what does it mean It means that firms and managers need to start paying attention to the creation of innovation by intrapreneurs and intrapreneurial activities
104 A Drejer KS Christensen and JP Ulhoslashi
Figure 1 The evolution of market demands and (required) competencies of firms
Source Adapted from [2]
Understanding intrapreneurship by means of state-of-the-art 105
The outlined developments have taken place in parallel with another important development ndash the shift from the industrial society to the knowledge society Today many organisations are becoming knowledge intensive organisations staffed with knowledge workers that will dominate the influence of global value creation [910] This has made a lot of people talk about knowledge management as a new managerial discipline for exactly the same reasons that others do talk about innovation management
Thus intrapreneurs in modern organisations manipulate knowledge instead of physical product and technologies in order to create the necessary innovations and technologies In that light it is paramount that we begin to understand the relationships between knowledge knowledge management and innovation management and intra-preneurship To provide a framework for such an understanding is the very purpose of this paper In order to propose a framework for knowledge and innovation management and intrapreneuship we will start by investigating intrapreneurship and its context ndash innovation management ndash before discussing what we today know about knowledge and knowledge management in firms Finally we will try to integrate the two managerial issues in a framework that outlines the task of intrapreneurship in modern organisations
2 Innovation management and intrapreneurship
Innovation and innovativeness are very much in the centre of the debate of how the business environment of firms has evolved over the years Even though a lot of incongruent definitions can be found in the literature (see the discussion by Carcia and Calantone [11] there seems to be general agreement that innovation (the process) is an iterative process initiated by the perception of a new market andor service opportunity for a technology-based invention which leads to development production and marketing tasks in order to bring about a commercial success of the invention (eg [41213]) On the other hand innovativeness (the quality of the outcome) is used as a measure of the lsquonewnessrsquo of an innovation where highly innovative products etc are seen as new to the world the industry or at least the firm [13]
Despite the necessity for innovation in many firms discussed in the introduction it is clear that no two firms should necessarily be innovative in the same manner Innovation can to be directed at products markets production competencies [1113] as well as administrative competencies as defined by Lowe [14] and Gaynor [15] This corresponds to the thinking behind Miles and Snowrsquos seminal strategy model [16] where strategic management is seen as a process of solving three independent problems the entrepreneurial problem (choices within the product-market domain) the engineering problem (choices related to operations) and the administrative problem (choices related to administration)
Miles and Snowrsquos model [16] of lsquoorganisational adaptationrsquo focuses on the integration between technology and organisation The model is also referred to as a model for lsquostrategic adaptationrsquo (eg [17]) The purpose of the model is to describe and diagnose existing organisational behaviors The model is based on the following three basic ideas
bull οrganisations can act to create (or choose) their environment
bull managementrsquos strategic choices shape the organisationrsquos structure and processes
bull on the other hand once chosen structure and process constrain strategy
106 A Drejer KS Christensen and JP Ulhoslashi
These basic ideas are in line with the work of authors such as Galbraith [18] and Mintzberg [19] The ideas describe a change in attitude towards strategy from the traditional perception of planning under stable external conditions to strategic management as a process of constantly developing and being innovative in order to keep up with turbulent and dynamic business conditions
21 Innovation management the context of intrapreneurship
The real issue however is how to create a constant stream of innovations in any kind of organisation It was Drucker [20] who first pointed out that innovation is not just an outcome innovation is a process In order to avoid confusion we will propose to call the set of managerial activities that together attempt to control the process of innovation for lsquoInnovation Managementrsquo We can therefore safely say that lsquoinnovationrsquo itself is reserved for the results of the process hopefully amply managed by innovation management A further note on innovations many have noted that innovation is more than just invention (eg [1213]) thereby emphasising that ideas need to be put into practice and inventions need to be commercialised in order to speak of innovation [21] In our fairly broad perception of innovation to cover more than just product innovation it is probably necessary to say that ideainventions need to be implemented in the products production or administrative competencies of the firm
Finally there is the issue of how new an innovation should be According to the strictest of definitions innovations should be new to the world (eg [22]) However this ignores the idea of parallel development of technologies in different industries ndash ie precursor to technology development [4] ndash not to mention the difficulties experienced by any firm struggling to implement something new to the firm itself (eg [23]) A suitable compromise between views seems to be to say that an innovation should be new to the firm and its industry
So what are the activities that constitute innovation management Notwithstanding the enormous differences between individual firms several authors have identified five important activities that together define innovation management in its proper context (eg [4]) The first three activities define innovation management per se whereas the last two define the context of innovation management The activities are
bull Technological integration This refers to the integration between technologies and the product-markets of the firm [24]) and emphasises the importance of satisfying the customer with the innovations of any firm In other words technology development (production and administration) needs to be integrated with product development [4] also at the strategic level
bull The process of innovation By this is meant the cross-functional (business) process of activities that create innovations across the departments of the firm Obviously no one department is responsible for innovation and it is thus necessary to see how departments together create innovations see Cooper [25] for one of the seminal accounts of this subject
bull Strategic technology planning This refers to the planning of technology andor competence projects with the aim of maintaining a balanced portfolio of technologies andor competencies see [26] or [27]
Understanding intrapreneurship by means of state-of-the-art 107
bull Organisational change Innovation is closely related to organisational change No matter how small or large the innovation it will effect the organisation with needs for new knowledge new markets new employees and so on Thus it is difficult to speak of innovation without considering organisational change
bull Business Development Of course innovation should be seen as a means for creating new and improved business for the company That is innovation can both drive and be driven by business development as the second very critical element of innovation management
In a systemic interplay we believe that these activities together constitute what we have defined as innovation management But innovation management is surely not the same phenomenon in all organisations
22 Contingent situations for innovation management
The recent emergence of quite complex products consisting of perhaps mechanical components electronics components and software not to mention interfaces to other IT products as well as a strong image part (of an expanded product concept) has given rise to many questions regarding the traditional idea of using the technological S-curve as a key to contingent use of the theory of innovation management
First of all many of the new products such as computers cellular phones and so on are in effect complex systems of many technologies each with individual life cycles And how are many individual life cycles added in to one life cycle for the entire product per se It seems as if the individual technologies and the complex products of which the technologies are a part need not develop according to the same logic But then what drives development of such complex products This is indeed very hard to say In the case of cellular phones it certainly seems as if it is not the end-users that drive development of new generations of cellular phones (eg [4]) But this does not have to mean that development is driven by technology push In conclusion we can say that it seems necessary to develop richer models for contingency of Innovation Management theory
Based on a firm empirical basis Christensen [28] discusses this in great detail He concludes that there must be two kinds of technology changes from one life cycle to the next (1) disruptive changes that create conditions like envisioned by Schumpeter as creative destruction and (2) sustainable changes that continue to support established firms and knowledge patterns in the industry [28] Whereas sustainable changes can be found to support established firms disruptive changes lead to the demise of established firms in favor of newcomer firms Christensen explains the difference between the two kinds of technological changes in terms of the S-curve Sustainable changes continue along the same basic pattern as measured by the same performance measure whereas disruptive changes start an entirely new S-curve (compared to earlier curves) that needs to be measured by another performance parameter
For instance disc drives for computers has changed dramatically on several occasions For instance in 1980 a new kind of technology was part of enabling the personal computer [28] However it was difficult for established firms to foresee that as their perception was driven by the old standard of performance (in that case capacity rather than size) Thus new firms became leading in the new market for personal computers The typical example of the computer-industry would be that of IBM versus
108 A Drejer KS Christensen and JP Ulhoslashi
Apple Computer Because Apple was driven by a value system that was about creating small computers for home use its managers could see the value of a disc drive that was smaller than the generation before albeit not performing quite as well On the other hand IBM was driven by a value system that favored making large computer for central computer departments in large firms and saw hence no value in a smaller disc drive Unfortunately ndash for IBM that is ndash the market favored the former option and an entirely new product was created Interestingly Christensen demonstrates that exactly the same forces are at play in an entirely different kind of industry ie that of machinery for the building industry Thus the phenomenon does not need to be new at all and certainly not limited to IT-based industries
We suggest that there must be at least three situations for innovation management We have the well-known situation of technology exploitation ie after the dominant design has been established This situation can of course be divided into a number of situations This has been amply demonstrated by the equally well-known AD Little approach to technology investment (eg [26]) that distinguishes between monitoringearly adoption selectively investingfollower developing key technology maintaining mature technology and divesting of obsolete technology as the life cycle nears another technology shift [26] Furthermore we argue that changes of technology between life cycles can be either sustaining or disruptive rather than the traditional idea of a discontinuous technological change leading to creative destruction
Based on the above discussions we can go beyond the popular distinction between creative destruction and technology exploitation and define three situations for innovation management
bull exploitation of existing technologies
bull stable technological change
bull disruptive technological change
Because these three situations are the key to a contingent framework for intrapreneurship related to knowledge and innovation they are important to understand in detail In order to do so it is necessary with research designed to yield this kind of detailed understanding A logical place to start would be to conduct case studies or action research in companies in order to present examples of the three situations and how they change over time Even though this article does not have space for a sufficient presentation of such case studies the authors will describe and illustrate the three situations in this Section This is based on a number of longitudinal case studies undertaken by one of the authors and presented in a recent book [4]
Exploitation of existing technologies This situation corresponds to the stable situation of the smooth part of the S-curve The task of Management of Technology (MoT) is to secure that the firm develops technologies faster than its competitors (or as a follower if that is desired) and exploit technologies in processes and secondarily products This is truly a race for technological development and a lead may not last forever This kind of competition can be compared with the metaphor of say 100 meter running Because of specialisation among athletes one will find that the same athletes compete (almost) every time Furthermore race tracks rules equipment etc will be the same every time ndash and the athletes probably train in similar fashion Thus it seems very difficult to maintain a leadership position in a competition of this kind ndash unless one is very competent in getting everything together The most obvious examples of such firms will be traditional industrial firms in many industries Car-manufacturing is a little atypical because of the
Understanding intrapreneurship by means of state-of-the-art 109
strong emphasis on the products still However research has shown that emphasis has changed from products to processes many years ago [29] and we also know it is a very difficult place to break in as a newcomer
Stable technological change Other firms go through a series of sustainable technological changes ndash usually at pretty high speed This is of course quite complex but we must remember that the technological changes happen within the boundaries of the same design concept and thus value system for the firm Therefore the task here is to configure ndash and sometimes develop ndash a set of technologies constituting a product within the time available Technological performance is often of less importance as long as the new product is on market in time We may compare this metaphorically with a group of athletes that agree to go from one distance to another sequentially from 100 meter to 200 meter to 400 and so on Every time the group changes there will be a change of advantages ndash albeit a small one However over time leadership may well change as the group moves from 100 to 800 meters for instance We see that there will be many similarities between each pair of distances and that the value system of athletes will only need to change slowly ndash relatively An obvious example of such firms can be found in mobile communications where a group of firms have followed each other through several generations of cellular phones The lead has changed over time and there has even been a few entries into the industry However many firms have followed along for very long time
Disruptive technological change Finally there are firms that have lived through creative destruction Here both market and technology change at the same time ie a new design concept as well as new components need to be designed ndash usually along with establishing a new firm to do so This means that everything must be designed simultaneously ndash product (concept and detailed construction) market processes administration and so on This by the way corresponds to inventing an entirely new game of sports ndash the rules equipment etc must be invented at the same time Examples of firms here rarely include established firms reinventing themselves ndash that is almost impossible because it requires changing the culture and value system of an established firm ndash and thus usually one-offs Apple Computer is a much researched example of a firm that invents an entire new industry by breaking the established rules and beliefs
23 Intrapreneurs who makes the innovations
Considering the past two decades the responses of the companies in the 1980s and to some extent the 1990s to the challenges outlined above have been characterised by reductions of work force downsizing rightsizing budget cuts and depressed morale in their workforce [30] The centre of attention has been a focus on short-term costs of production but no company can afford to rely on such an approach forever The real challenge of a company to remain a going concern is to establish a competitive advantage and the only way to accomplish that is continuous innovation and creation of new ideas According to Morris and Kuratko [30] the answer is adaptability flexibility speed aggressiveness and innovativeness which can be boiled down to one word ndash intrapreneurship (for going concern firms) and entrepreneurship (for start-ups)
In parallel with the downsizing wave (eg [31]) researcherrsquos interest in intra entrepreneurship seriously took off In particular interest in topics as entrepreneurial management corporate entrepreneurship and intrapreneurship in the last couple of years is remarkable This may in part be due to lsquore-labellingrsquo [3233] of existing concepts but it
110 A Drejer KS Christensen and JP Ulhoslashi
has paved the way to the emergence of new practices and theories From 1983 the interest for the topic has been on the increase which can be seen in relation to Pinchotrsquos introduction of the concept of intrapreneurship in 1983 and his book Intrapreneuring in 1985
New fads or concepts are often seen or claimed to be driven by practice [34] and the more popular part of the management literature which in the case of knowledge management was represented by Drucker [9] and Stewart [35] But as Abrahamson [36] has argued the researchers have often been aware of and interested in the new phenomenon for some time but the explosion seldom takes off before it has gained the interest from practitioners That is exactly what is happening at the moment for the overall concept of corporate entrepreneurship and the many different labels illustrate that even though the interest on the overall topic is growing there still is a lack of the consensus on what it really means andor should mean
It is again the purpose of this paper to help fill that void ndash what does intrapreneurship really mean
3 Knowledge in an innovation perspective
An important aspect about knowledge and knowledge management is that it is only within the last few years that the concepts of knowledge and knowledge management have risen to the top of the agenda of researchers and managers Even though we have discussed knowledge and learning in the educational realm for many years only recently have we begun to explore its ramifications in firms and for managers Therefore we will assert that there is a major contribution coming from discussing what is state-of-the-art about knowledge from an innovation perspective and try to integrate that into a framework for the task of the intrapreneur in modern organisations This is simply because this has not been done before and intrapreneurs in modern organisations ndash we have come to realise ndash manipulate knowledge rather than physical artifacts
31 Knowledge management in a knowledge society
Peter Drucker takes the development of the knowledge society [9] back to the Second World War and already in the 1960s he talks about lsquoknowledge workrsquo and lsquoknowledge workerrsquo However Thomas Stewartrsquos articles in Fortune magazine about lsquoBrainpowerrsquo [37] and lsquointellectual capitalrsquo [38] indicates the entry to the knowledge society for most scholars and practitioners which eg Nonaka and Takeuchi [39] and Baxter and Chua [34] have pointed out in different ways One of the clearest statements is Druckerrsquos [9] own prediction about lsquo[t]he basic economic resourcehellip is and will be knowledgersquo and the uniqueness about the knowledge society is that knowledge has become the resource rather than a resource [9 p 41] italics added by the authors)
Even though knowledge is introduced as the new crucial factor for the success of the organisations it is worth to remember that it may not be so new in the first place It is well known that old management concepts and techniques are re-launched under new labels to mobilise new interest and action [40] An example is knowledge in the sense of actor theory [32] where knowledge is related to linguistic and organisational actors and actants in the same way as Catasuacutes [33] did with environment and environmental management Whether this is due to a re-labelling or new practices and new theories
Understanding intrapreneurship by means of state-of-the-art 111
lsquonewrsquo concepts such as knowledge management knowledge worker and knowledge management strategy have gained a lot of attention recently As described by Bukh et al [40] the alertness of these concepts is among other things indicated by the centrality of the label lsquoknowledge managementrsquo in both organisations by consultants and scholars
A tendency to see knowledge and knowledge management from a wider ndash and often strategic ndash perspective rather than an exclusive artifact-oriented perspective [41] where the primary idea is to capture code and store data and information to make them available for an entire organisation has been promoted by many researchers [394142] Knowledge management however can be seen as an ongoing innovative process based on knowledge creation knowledge sharing and knowledge dissemination This process-oriented perspective [41] is rooted in Ikujiro Nonakarsquos article The Knowledge-Creating Company from 1991 which was the first summarised presentation of this perspective
Among others von Krogh et al [42] and Christensen and Bukh [41] argue that knowledge sharing is a combinantion between people and technology which means both social interaction and technological transactions This is supported by the fact that lsquogeneration of synthesisrsquo is important for knowledge creation The interplay between dichotomies such as tacit and explicit knowledge body and mind individual and organisation top-down and bottom-up bureaucracy and task force and relay and rugby [39] are core elements in the knowledge creation process The interaction between all these dichotomies is expressed in the knowledge spiral [39] A managerial purpose is to keep this spiral running to create dynamic knowledge which is crucial for the innovative activities in an organisation
32 Different types of knowledge
Typically knowledge is defined as lsquothat which is knownrsquo This is however only one way of looking at knowledge Another important way to look at knowledge is to look at lsquothe state of knowingrsquo The state of knowledge can be discussed along several dimensions most notably
bull The level of articulation ie to what extent is it possible to represent knowledge formally and explicitly and thereby share knowledge within the organisation Knowledge can be characterised on a continuum from tacit to explicit
bull Depth of knowledge ie how deep is the organisationrsquos understanding regarding a certain area of knowledge This can range from no knowledge (and inability to utilise that knowledge) to complete understanding and ability to utilise knowledge
bull Location of knowledge ie is the knowledge internal or external to the firm
bull Diffusion of knowledge ie to what extent is knowledge the possession of everybody in the organisation (so everyone can use the knowledge)
bull Complexity of knowledge ie a summary of the other factors of knowledge
Below we will discuss the level of articulation and complexity of knowledge only as these are the most important dimensions of knowledge within this context
321 Level of articulation tacit to explicit
Inspired by Michael Polyani it has only recently become accepted that not all knowledge in an organisation can be fully articulated [43] perhaps a recognition of the fact that not
112 A Drejer KS Christensen and JP Ulhoslashi
all knowledge of value is easily accessible via books the internet etc This is not surprising to us but merely another manifestation of the very thinking behind competence development and an internal focus in management of firms Typically a distinction is made between tacit and explicit knowledge (eg [394143]) Tacit knowledge is the kind of knowledge that cannot be articulated and codified whereas explicit knowledge is easy to codify Evidently different strategies for handling knowledge and for learning are needed for tacit and explicit knowledge respectively The two possible states of knowledge are to us merely end-points on a scale ndash in reality knowledge will be something in between It is thus important to note that tacitness of knowledge should not be seen as a form of mystification Tacit knowledge can be learned ndash just consider the craftsman education in Denmark ndash and it is a natural and important part of all domains of knowledge [44]
A number of factors can be said to contribute to the tacitness of knowledge Based on the references in this Section we have identified a number of continuums that expresse most importantly a factor contributing to tacitness of knowledge
bull Embodied or disembodied knowledge Examples of embodied knowledge are written procedures manuals or mechanical components that all seem to be physically part of the organisation Examples of disembodied knowledge are heuristics organisational values or culture [8]
bull Observable or non-observable in use Tacit knowledge will typically be difficult to observe in use Examples of non-observable knowledge therefore include knowledge related to craftmanship andor knowledge related to a large element of experience
bull Independent or part of a system Some kinds of knowledge are part of a larger system of knowledge and experience ndash eg craftmanship ndash whereas other kinds are independent It will be far more difficult to articulate knowledge of the former kind than of the latter kind
In summary tacit knowledge is disembodied non-observable in use and part of a system of knowledge whereas explicit knowledge is embodied observable in use and independent of other kinds of knowledge Many kinds of knowledge in a firm will be towards the tacit kind and hence more difficult to manage through formal systems and traditional forms of learning
322 Depth of knowledge Dreyfuss and Dreyfuss
An important point regarding knowledge relates to its lsquodepthrsquo by which we understand an expression of the organisationrsquos ability to utilise that knowledge Thus the greater the depth of knowledge the greater the ability to utilise that knowledge This assumption can be discussed ndash obviously some persons can understand quite a lot about an area and be unable to apply that knowledge However we assume that in relation to firms and this project this will not be the case However there is not necessarily any correlation between the depth of knowledge and its level of articulation ndash understanding and utilisation can be high even with tacit knowledge
There have been several contributions to this dimension of the state of knowing For instance Machlup [45] has identified 13 different lsquoelements of knowingrsquo and describes a number of levels in the development of knowledge For Machlup the central issue in his
Understanding intrapreneurship by means of state-of-the-art 113
lsquoelements of knowingrsquo is how well an individual or an organisation is able to perform utilising this knowledge He defines a number of stages ranging from lsquobeing acquainted withrsquo to lsquobeing able to performrsquo This corresponds to a continuum from having knowledge that exists (but being unable to do anything with it) to having thorough knowledge and being able to utilise that knowledge A somewhat similar typology has been proposed [46] with an eight-level typology of knowledge in relation to the description of processes
The most important contribution however is also the oldest one Dreyfuss and Dreyfuss [47] have proposed a model for the depth of knowledge that clearly can be said to contain the other newer contributions to the area The model describes the knowledge of a person as he becomes more and more competent in five levels ndash from novice to expert ndash and describes how true experts are highly dependent on tacit knowledge whereas others are dependent on explicit knowledge
323 Location of knowledge
Knowledge can reside in many different organisational contexts ranging from the individual person to networks of employees ndash and most notably in relation to modern organisations In networks consistent of internal and external persons to the firm the network of organisations being the ultimate form of that In this context two issues stand out as particularly important (1) the transfer of knowledge from one person to the entire organisation and (2) the transfer of knowledge external to the organisation to the inside of the organisation
In modern organisations knowledge will often be found in the tacit form and hence reside in the knowledge and experience of one person or just a few persons In order to enable the firm to utilise that knowledge to the largest possible extent ndash that is make more people capable of mastering the knowledge ndash the process of diffusing knowledge from one person to the entire organisation is critical There are several ways to do that It seems evident that the mechanism of codification making knowledge more explicit is vital to the process
In many firms other knowledge will often be found outside the organisation This is only natural for a relatively small firm with minor resources For instance suppliers often have knowledge critical for the customer firm on say processes customised process technology etc Therefore many firms engage in networking activities of different kinds for instance shared marketing RampD efforts etc with many different partners Thus the second important issue relating to location of knowledge is whether or not knowledge is internal to the organisation Learning processes for internalising knowledge are absolutely vital to modern organisations
324 Diffusion of knowledge undiffused to diffused
It is through the diffusion process that an organisation becomes capable of deriving value from the knowledge it has developed by eg RampD activities internalising networking etc [39] Evidently the diffusion of knowledge is very critical In order to be able utilise knowledge better more people need to have access to the knowledge and master the knowledge Thus the extent of diffusion in general is closely related to the dimension of depth of knowledge However not every part of the organisation will reach the same
114 A Drejer KS Christensen and JP Ulhoslashi
depth of knowledge at the same time ndash or be able to do so ndash so diffusion is a critical issue in its own right
Normally diffusion of knowledge is described along a continuum from undiffused (located with one person) to fully diffused (residing with every body) The latter end of the continuum suggests that diffusion of knowledge has a lot to do with the concept of corporate values and corporate culture As soon as something is fully diffused one can say that it has become part of the corporate culture Therefore learning processes need to be both formal and informal in order to diffuse knowledge
Of course diffusion is a relative construct in the sense that it should be measured on a lsquoneed to knowrsquo basis There is no point in diffusing knowledge to parts of the organisation where that knowledge is irrelevant Having noted that we would like to add that very often the need to know is greatly underestimated in organisations
325 Complexity of knowledge
The dimension of complexity of knowledge is seen as very important in relation to learningtransfer of knowledge [48] Complexity of knowledge is a function of
bull The tacitness of knowledge and thereby the way knowledge is being embedded and represented within the organisation Complex knowledge must be expected to have significant tacit elements [43]
bull The extent to which the knowledge can be demarcated from other areas of knowledge in the organisation Complex knowledge will typically be intertwined with other types of knowledge in the organisation and therefore be difficult to demarcate clearly [49]
bull The extent to which knowledge has social elements ie a large number of actors needed for the knowledge to exist [32] eg network knowledge Typically complex knowledge will be dependent on a number of actors and their ability to function together in a group or network
In other words the more complex the knowledge the more one or more of the three dimensions mentioned above will be present The more complex knowledge the more difficult will it be to model that knowledge and to acquire the same by formalised means
4 Understanding intrapreneurship better
Increasingly the need for innovation management is changing Innovation management these days is the domain of all modern organisations ndash not just start-ups Therefore it is crucial to consider the work of intrapreneurs in theory about innovation management Furthermore such modern intrapreneurs manipulate knowledge rather than physical artifacts Investigating state-of-the-art theory about knowledge we have concluded that complexity of knowledge is a construct that has large implications for the way we think about intrapreneurship and innovation In this Section we will link together complexity of knowledge and the work of the intrepreneur in a common framework In order to do that however we need to establish the context for the work of the intrapreneur We will do this by discussing the purpose of the intrapreneurrsquos work and its content
Understanding intrapreneurship by means of state-of-the-art 115
41 The purpose exploitation and exploration
Regarding the purpose of intrapreneurship we will assert that the intrapreneur is to fulfill the organisationrsquos need for renewal in light of its need for stability James March has formulated the idea that management is a balance between two forms of learning activities ndash exploration and exploitation ndash the finding of new resources and the use of existing ones [7] This is probably based on some of Marchrsquos early thinking on management since March from early on saw management as two fundamentally different activities that needed to be conducted quite differently (eg [50]) One has been labeled lsquothe technology of foolishnessrsquo [50] as a serious attempt to create a supplement to the analytical planning-oriented style of management that we know from operations management
The ideas of March have been inspiring for many others such as Dorothy Leonard-Barton [8] who has worked on experiments versus exploiting the knowledge assets and hence competencies of the company Leonard-Barton [8] too acknowledges that we are talking about two mentally different activities but does not discuss the managerial challenges of doing two fundamentally different mental activities Within the field of strategic management Hamel and Prahalad [51] have written a paper on lsquostrategy as stretch and leveragersquo in Harvard Business Review in almost similar terms while Michael Porter recently has written a thought-provoking article lsquoWhat is a strategyrsquo [6] in which he claims that strategy is about differentiation in the market place combined with operational effectiveness The latter to Porter is not even strategic in nature ndash but that is another point
42 The content learning leading to innovation
Regarding the content of intrapreneurship we will see this as learning Learning occurs under two conditions When there is a match or a mismatch between intentions and outcomes of intended actions in organisations If there is a mismatch the actions are corrected until there is a match between actions and intended outcomes [52] However several authors have discussed different levels of learning in organisations ie a radical change of behavior may not be the result of the same kind of learning as a minor adjustment of current behavior Argyris illustrates this with his model of single and double loop learning
Figure 2 Model of single- and double-loop learning
Source Adapted from [52]
116 A Drejer KS Christensen and JP Ulhoslashi
Single-loop learning can be compared to a thermostat A thermostat is programmed to detect if the surrounding temperature exceeds or is below the reference temperature and responds by simply turning the heat on or off If the thermostat asked itself why it was programmed as it was then it would be a double-loop learner since it was able to reconsider its own situation and thereby perhaps alter this situation In other words double-loop learning is mainly a matter of being able to question onersquos governing values ie self-assessment Single-loop learning is appropriate for routine and repetitive issues while double-loop learning seems more relevant for complex and non-programmable tasks [52]
Double-loop learning is not simple at all it often requires evaluation of your existing values and ways of doing things and how you influence your surroundings in both negative and positive ways Even if you are able to see and evaluate your own faults there is still a long way to go before an actual change occurs ndash if any occurs at all Double-loop learning means the unfreezing of paradigms prejudices and habits in order to be open-minded towards new and alternative ways of action [52] This furthermore involves a number of other psychological mechanisms that will not be discussed further within this context It is easy to relate to the problems dealing with double-loop learning Just think of the advice that you give other people but never use yourself Sometimes you even say to your self or to others lsquoYou shouldnrsquot be doing it the way I do but insteadrsquo You are often well aware of your own deficiencies but accept them as a solid implemented and non-changeable part of you If these lsquovaluesrsquo are changed it is often in connection with a major crisis or event that really shakes you out of balance
We will compare a personrsquos double-loop learning as a serious reconsideration of that personrsquos current situation often leading to radical changes with organisations and the way they learn when innovating In comparison with industrial organisations it is seen that double-loop learning and perhaps radical change often emerges as a result of a near fatal crisis ie major turn-around efforts crisis management and so on However if double-loop learning could be integrated into the formal and informal systems of organisations the organisations would have more time to reconsider their basic situation and prevailing values and from there develop serious alternative solutions Maybe organisations would even be able to develop entirely new ways of doing things ndash without the existence of a crisis
43 A framework for intrapreneurship in light of knowledge
The elements of a framework for intrapreneurship and innovation in light of a knowledge perspective are now in place The elements are
bull situations for innovation management ndash exploitation sustainable change and disruptive change
bull task of intrapreneurship ndash exploitation and exploration
bull complexity of knowledge bull tacitness bull demarcation bull social elements
bull type of learning involved
Combining these elements yields the following framework
Understanding intrapreneurship by means of state-of-the-art 117
The framework defines the task of intrapreneurship as a combination of the three situations for innovation management and the learning-related concepts of exploitation and exploration ndash the latter being closely related to single and double loop learning Furthermore the framework provides an attempt to describe the content of intrapreneurship in the six subtasks resulting from outlining the framework This is done by defining the complexity of the knowledge that the intrapreneur needs to manipulate in each instance and the corresponding type of learning involved In all this yields the framework proposed in Table 1
Table 1 Framework for intrapreneurship
Exploitation-task Exploration-task
Exploitation of the same technology
Priority 90 Purpose Reuse and add to
existing market and technology knowledge primarily internal
located
Complexity Low Explicit knowledge Clearly demarked
Few social elements
Learning Single loop learning
Priority 10 Purpose Experiment with
new technologies in order to test the basic assumptions of
the firm
Complexity High Tacit assumptions
Not demarked Totally social
Learning
Double loop learning
Sustainable technological change
Priority 50 Purpose Develop existing
knowledge on current markets or technologies
Complexity Medium
Explicit knowledge Often external and not demarked
Few social elements
Learning Single loop learning
Priority 50 Purpose Develop new
knowledge on new markets or technologies
Complexity Medium
Tacit knowledge Often outside of firm and
not demarked Few social elements (mostly
technology)
Learning Both forms of learning
Disruptive technological change
Priority 10 Purpose develop explicit knowledge organisational
procedures
Complexity High Tacit (should be explicit) Internal but not demarked
May social elements External located knowledge
Learning
Single loop learning
Priority 90 Purpose develop new and tacit knowledge on market
and technologies
Complexity High Tacit and new Not demarked
Many social elements
Learning Both forms of learning
118 A Drejer KS Christensen and JP Ulhoslashi
Obviously this framework is merely a first step The framework needs to be researched in greater detail both empirically and theoretically The boundaries of time and space prevent us from doing so in this paper but we look forward to contributing to the effort
References
1 Drucker PF (1958) The Practice of Management Harper and Row
2 Kumpe T and Bolwijn PT (1994) lsquoTowards the innovative firm ndash a challenge for RampD managementrsquo Reseach-Technology Management JanndashFeb Issue pp38ndash44
3 Tidd J Bessant J and Pavitt K (1997) Managing Innovation Wiley
4 Drejer A (2001) The Innovative Firm (In Danish) Boslashrsens Forlag
5 Rosenkopf L and Tushman ML (1994) lsquoThe co-evolution of technology and organisationrsquo in Joel et al (Eds) Evolutionary Dynamics of Organisations Oxford University Press pp403ndash424
6 Porter ME (1996) lsquoWhat is strategyrsquo Harvard Business Review Vol 17 NovemberndashDecember pp33ndash47
7 March J (1991) lsquoExploration and exploitation in organizational learningrsquo Organization Science Vol 2 No 1
8 Leonard-Barton D (1995) Wellsprings of Knowledge Harvard Business School Press
9 Drucker PF (1993) Post-capitalist Society Oxford Butterworth-Heinemann
10 Drucker PF (1994) lsquoThe theory of the businessrsquo Harvard Business Review SeptemberndashOctober
11 Drejer A (2002) Strategic Management and Core Competencies Quorum Books
12 Roberts EK (1981) Generating Effective Corporate Innovation The Free Press
13 Afuah A (1998) Innovation Management The Free Press
14 Lowe P (1995) The Management of Technology Prentice Hall
15 Gaynor GH (1991) Achieving the Competitive Edge Through Integrated Technology Management McGraw-Hill
16 Miles RE and Snow CC (1978) Organizational Strategy Structure and Process McGraw-Hill
17 Stacy R (1993) Strategic Management and Organizational Dynamics Prentice Hall
18 Galbraith J (1979) Organization Design The Free Press
19 Mintzberg H (1983) Structure In Five ndash Designing Effective Organizations Prentice-Hall
20 Drucker PF (1985) Innovation and Entrepreneurship Harper amp Row
21 Tushman L and Rosenkopf L (1986) lsquoOrganizational determinants of technological changersquo in Staw B and Cummings L (Eds) Research in Organizational Behaviour Vol 14 pp311ndash347
22 Tushman ML and Anderson P (1990) lsquoTechnological discontinuities and organisational environmentsrsquo Administrative Science Quarterly Vol 35 pp1ndash8
23 Voss CA (1988) lsquoImplementation a key issue in manufacturing technology the need for a field of studyrsquo Research Policy
24 Iansiti M (1998) Technology Integration ndash Making Critical Choices in a Dynamic World Harvard Business School Press
25 Cooper (1995) New Product Development The Free Press
26 Bhalla SK (1987) The Effective Management of Technology Batelle Press
27 Drejer A and Riis JO (2000) Competence-based Strategy (In Danish) Boslashrsens Forlag
Understanding intrapreneurship by means of state-of-the-art 119
28 Christensen JC (1998) Innovatorrsquos Dillema Harvard Business School Press
29 Abernathy WJ and Clark KB (1985) lsquoInnovation ndash mapping the winds of creative destructionrsquo Research Policy Vol 14 pp3ndash22
30 Eisenhardt H and Martin JE (2000) lsquoDynamic capabilities what are theyrsquo Strategic Management Journal Vol 21 pp1105ndash1121
31 Edvinsson L and Malone T (1997) Intellectual Capital HarperCollins
32 Latour B (1999) Pandorarsquos Hope Essays on the Reality of Science Studies Cambridge MA Harvard University Press
33 Catasuacutes B (2001) Borders of Management Five Studies of Accounting Organizing and the Environment Doctoral dissertation School of Business Stockholm University
34 Baxter J and Chua FW (1999) lsquoKnowledge management now and the futurersquo Australian Accounting Review Vol 9 No 3 pp3ndash14
35 Lei D Hitt MA and Bettis R (1996) lsquoDynamic core competences through meta-learning and strategic contextrsquo Journal of Management Vol 22 No 4 pp549ndash569
36 Spender JC (1996b) lsquoOrganizational knowledge learning and memoryrsquo Journal of Organizational Change Management No 9 pp63ndash79
37 Stewart TA (1991) lsquoBrainpower how intellectual capital is becoming Americarsquos most valuable assetrsquo Fortune June 3rd pp44ndash60
38 Stewart TA (1994) lsquoYour companyrsquos most valuable asset intellectual capitalrsquo Fortune October 3rd pp68ndash74
39 Nonaka I and Takeuchi H (1995) The Knowledge-creating Company Oxford Oxford University Press
40 Nonaka I (1991) lsquoThe Knowledge-Creating Companyrsquo Harvard Business Review NovemberndashDecember pp96ndash104
41 Christensen KS and Bukh PN (2003) lsquoVidenledelse ndash to perspektiver (trans knowledge management ndash two perspectives)rsquo in Bukh PN Christensen KS and Mouritsen J (Eds) Videnledelse ndash Et praksisfelt under Etablering (trans knowledge Management ndash Establishing a Field of practice) Koslashbenhavn DJOslashF pp65ndash85
42 Von Krogh G Roos J and Kleine D (1998) Knowing in Firms Understanding Managing and Measuring Knowledge London Sage
43 Winter S (1987) lsquoKnowledge and competence as strategic assetsrsquo in Teece DJ (Ed) The Competitive Challenge Ballinger pp159ndash184
44 Spender JC (1996) lsquoMaking knowledge the basis of a dynamic theory of the firmrsquo Strategic Management Journal Vol 17 Winter Issue pp45ndash62
45 Nevis EC DiBella AJ and Gould JM (1995) lsquoUnderstanding organizations as learning systemsrsquo Sloan Management Review Winter Issue pp73ndash85
46 Bukh PN Christensen KS and Mouritsen J (2003) Videnledelse ndash Et praksisfelt under Etablering (trans Knowledge Management ndash Establishing a Field of practice) Koslashbenhavn DJOslashF
47 Dreyfus H and Dreyfus S (1986) Mind over Machine The Power of Human Intuition and Expertise in the Era of the Computer Free Press
48 Duncan Rand Weiss A lsquoOrganisational learning implications for organisation designrsquo in Barry M Staw (Ed) Research in Organisational Behaviour JAI Press
49 Kolb D (1984) Experimental Learning Prentice Hall
50 March J (1994) Management in a Complex World Samfundsvidenskaberne
51 Von Krogh G and J Roos (1996) Managing Knowledge Perspectives on Cooperation and Competition London Sage
52 Argyris C and Schon DA (1998) Organisational Learning II Addison-Wesley
159
CHAPTER 9
Knowledge Management in Perspective(s) An Analysis of Project Management in Two
Companies
Christensen Karina Skovvang Per Nikolaj Bukh amp Heine Kaasgaard Bang 2007
Knowledge Management in Perspective(s) An Analysis of Project Management in
Danish Companies
160
161
August 2007
Knowledge Management in Perspectives An Analysis of Project Management in Two Companies
Assistant professor Karina Skovvang Christensen University of Aarhus Professor Per Nikolaj Bukh Aalborg University
Partner Heine Kaasgaard Bang Conmoto
Abstract
This article analyses project management activities in two companies from a knowledge management perspective It is shown how human competences it-systems and project management systems are integrated and how these knowledge resources reflect strategies for knowledge management The Knowledge Management activities are analysed from two perspectives an artefact oriented and a process oriented perspective From the first perspective project management seems to consist of similar components in the two firms whereas the process oriented perspective identify context dependent differences It is concluded how awareness of different perspectives opens up for more managerial options and better understanding in practice
Keywords Knowledge Management Strategy Project Management Case study Knowledge Management Practice Corresponding author Assistant professor Karina Skovvang Christensen University of Aarhus School of Economics and Management Building 1322 DK-8000 Aarhus C email kschristenseneconaudk The authors are grateful to Allan Krogh Erlandsen BampO and Hanne Buje Jensen FKI Logistex Crisplant for access to the companies and for comments to a previous version of the article
162
1 Introduction
Many different researchers have introduced the concept of knowledge in academic
discussions within varying fields Mouritsen et al (2001) focuses for instance on the
management of intellectual capital whereas Prahalad amp Hamel (1990) describe the
companyrsquos strategic work based on core competencies In other parts of the
management literature both Leonard (1995) and Nonaka (1994) are concerned with
knowledge in relation to innovation whereas Huber (1991) and Lyles amp Schwenk
(1992) focus on organising of information so that it can be collected stored and reused
in other connections A common characteristic of these theories is that knowledge is an
important factor which is structured in ways that ensure the applicability of knowledge
in accordance with the strategies of the company
In relation to projects and project organisations the attention to knowledge management
as well as the role that social processes practises and patterns have in effectively
managing project knowledge is relatively new as Bresnen et al (2003) have pointed out
Knowledge is however a vital resource in project based industries and well working
knowledge management is in project organisations for instance essential for improving
the utilisation of core capabilities and technological platforms and reduce development
time in project (Oshri et al 2005)
The purpose of this paper is to pay attention to how different perspectives on a subject ndash
in this case project management and knowledge management ndash can broaden ones view
and
This article is based on a study of knowledge management in two Danish project based
organisations The article presents knowledge management as a perspective of
management where knowledge and knowledge resources are brought into focus The
empirical part of the article is based on an analysis of knowledge management
initiatives in relation to project management in the development division of the Danish
company Bang amp Olufsen and in the Danish company FKI Logistex Crisplant It is in
the article demonstrated how different perspectives on knowledge and knowledge
management expressed through two different epistemologies the artefact-oriented and
163
the process-oriented epistemology implies different understandings of the nature and
the role of knowledge management
The remainder of the article is structured in the following way Section 2 discusses
briefly the meaning of knowledge management and the two perspectives are introduced
In the following section 3 a short introduction to the method applied as well as a short
description of the two companies are given In section 4 the companiesrsquo different
initiatives in relation to knowledge management will be presented and it is illustrated
how knowledge management may be an integrated part of project management In
section 5 knowledge management is analyzed from the two different perspectives and
finally section 6 discussed how the perspectives may help to show a more balanced
picture of knowledge management by focusing on different parts of knowledge
management
2 Knowledge management in practice
In recent years there has in the management literature been an overwhelming interest in
the concept of knowledge and knowledge based resources This is not only reflected in
the importance of knowledge-intensive companies but also in an interest in how
knowledge based resources interact in the creation of value in companies and how
knowledge can be managed
When managers discuss knowledge different perspectives are often taken The
difference consists in the way in which knowledge is perceived In other words the
basic epistemological perspectives differ In this article a distinction is made between
two different perspectives which will be outlined in more details below
21 The two perspective on knowledge management
The first perspective on knowledge and knowledge management will be termed the
artefact oriented perspective Focus is often on information technology and the ways in
which technology may be applied for the codification of knowledge It is more or less
explicitly assumed that everything can be described and the more data a company
164
collects the more knowledge it possesses Knowledge management is therefore mostly
based on collecting storing and distributing knowledge in the form of eg documents
and specific information (eg Huber 1991 Lyles amp Schwenk 1992) From the artefact-
oriented perspective knowledge management focus for instance on project memory (cf
Kaumlrreman et al 2004) and manuals for organisational processes (Malone et al 1993)
Many authors (eg Blackler 1995 Tsoukas 1996) have indicated that the artefact
oriented perspective has become insufficient when handling management challenges in
relation to the complexity of the knowledge society and has hence criticised the
restricted view of knowledge expressed by the artefact oriented perspective emphasising
instead that knowledge is situated in social and organisational practises as well as
relationships (Tsoukas amp Vladimirou 2001) The problem is not lack of documents
data or access to information The limitation can rather be found in the quality content
and organisation of the material This has given rise to the second perspective which
we term the process oriented perspective
The process oriented perspective is most clearly exemplified by Ikujiro Nonakarsquos
research where knowledge is perceived as a ldquodynamic human process of justifying
personal beliefs as a part of an aspiration for the lsquotruthrsquordquo (Nonaka 1994 p 15 Nonaka
amp Takeuchi 1995) An essential point is that focus is on the process in which knowledge
is created and not on the documents or the rules which are based on the process This
implies that continuous and dynamic adaptation to lsquoreal lifersquo takes place
From the process-oriented epistemology knowledge creation and sharing is considered
as a continuous process where knowledge is transformed between tacit and explicit
knowledge and between people and technology The point of departure is here the so-
called SECI-model (Nonaka amp Takeuchi 1995) which consists of four types of
processes which Nonaka amp Takeuchi (1995) identify as central in relation to
knowledge management Socialization Externalization Combination and
Internalization According to Nonaka amp Takeuchi (1995 pp 70-71) the development of
organizational knowledge are a continuous and dynamic interaction between tacit and
explicit knowledge
165
22 Knowledge Management and the perception of Knowledge
Knowledge is a complex term as it is often not easy to agree on an exact definition The
view of knowledge that pervades much research especially from the artefact oriented
perspective ndash but not limited to that ndash is positivist ie the Platonic view that knowledge
is lsquojustified true beliefrsquo However the more recent knowledge management researchers
eg Nonaka amp Takeuchi (1995) von Krogh amp Roos (1995) Mourisen et al (2001) and
others have initiated a move away from seeing the subject at standing in a static
cognitive relationship of certainty to propositions stating facts about the empirical world
(se also Jackson amp Klobas 2007)
Following this recent tradition we adopt an approach where knowledge neither as an
object to be managed nor as a research object is strictly defined on beforehand Rather
we as the basic idea of simultaneously working with different perspectives on
knowledge as presented above let the nature of knowledge be based on the individuals
set of beliefs or mental models used to interpret actions and events in the world This
opens up for different perceptions of knowledge and knowledge management in an
organisation much like Roos amp von Kroghrsquos (1995 p 1) reflect in their statement that
ldquo[w]hat you see depends on who you arerdquo which implies that knowledge should be
regarded as a subjective term Following this notion it is quite possible that knowledge
can be expressed in many different ways since not only knowledge but also knowledge
about knowledge depends on the context This implies that it is essential to clarify the
background for the various perceptions of knowledge knowledge management concepts
etc
The understanding of the term knowledge or at least what it means to the individual or
the organisation is important because it affects how knowledge enters the managerial
processes According to von Krogh amp Roos (1996) this implies that successful
knowledge management requires that you relate to lsquothe nature of knowledgersquo (von
Krogh amp Roos 1996 p 224) Therefore knowledge management also becomes a
question of epistemological understanding
More effective knowledge management may also result from adapting management
tools that fit the prevailing perception of knowledge This observation is in accordance
with Marr et al (2003) who suggest that knowledge management practises will be
166
perceived as more effective if they match the personal epistemology In relation to an
in-depth study of knowledge management in a project case study in an Australian
industrial engineering organisation Sense (2007 p 17-18) document similarly that the
project members favour knowledge sharing techniques that align with their cognitive
style type and further that they acknowledge the personal bias towards specific modes
of sharing knowledge
23 Strategies for knowledge management
Hansen et al (1999) have associated the understanding of knowledge management that
we have termed the artefact oriented perspective with a so-called codification strategy
which govern companies intend to collect existing knowledge and make it accessible to
the rest of the organization This form of strategy should be seen as an alternative or
more precisely a supplement to the personification strategy which focuses on the
aspects that are difficult to express in a way based on codification Thus the
personification strategy in more in line with the process oriented perspective on
knowledge management outlined above
While the codification strategy is a cornerstone in the bureaucratic organisation the
personification strategy has seen its strength in the knowledge intensive organisations
that rely on the competence of the individuals The two strategies seem according to
Hansen et al (1999) to dominate practice in general which among other things may be
due to the fact that they supplement each other instead of being mutually exclusive
Hansen et al (1999) point out that often one of the strategies normally will have a more
prevailing position in the organizationrsquos consciousness However knowledge
management is multi-faceted and our understanding of current practise has already been
set by our epistemology This illustrates that the more an organisation focuses on
knowledge the more important it becomes to understand the epistemological
implications
167
3 The Two Companies and the methodology
This article is anchored in a case study of how knowledge management takes place in
practice in two organisations The distinct strength of case studies is the ability to deal
with a variety of evidence documents questionnaires interviews and observations in a
flexible manner In particular when exploring the two companiesrsquo practises that are not
on beforehand perceived as knowledge management initiatives in the companies a case
study approach seems appropriate A case study approach offers in this context an
opportunity for observing and describing a complicated research phenomenon in a way
that allows analytical generalisations (Eisenhardt 1989 Tsoukas 1989) of the
observations
The empirical data includes 5 semi-structured interviews in each of the two companies
where the respondents were asked to tell about the companyrsquos history how knowledge
management affects their daily work how knowledge is created and shared as well as
how they work with different tools (eg project models and IT-systems) The interviews
took approx 1frac12 hour on average and they were taped and transcribed for later use The
interviews at BampO were carried through in the period 28-29 August 2003 whereas the
interviews at Crisplant were collected almost two years earlier ie in the period 29
October to 12 December 2001 Moreover data in the form of documents reports and
observations were collected General attitudes are expressed by the company name
whereas the respondentrsquos function is emphasized where it is of importance in
connection with a statement
Bang amp Olufsen (BampO) is known for its distinguished design and quality products
within audio and video which are the companyrsquos core business areas Development of
new products is a decisive competitive parameter to BampO and is ascribed much
attention Development costs thus represent more than 9 per cent of the companyrsquos
turnover This article only addresses knowledge management in the product
development division of BampO
FKI Logistex Crisplant AS (Crisplant) develops produces and installs solutions within
the so-called automatic high-speed transport and sorting systems (ATS) area which
forms a substantial part of operations at airports postal centres libraries mail order
168
businesses distribution centres etc all over the world These systems are developed and
implemented in a close cooperation not only with the customer but with a number of
other companies which supply other parts of the installation of which the sorting system
must be an integrated part
4 Knowledge Management in the two companies
The two organisations were chosen because they represent two different types of project
based organisations both focussing on product development BampO has organised
product development in a department separated from production with products being
manufactured at assembly plants and sold to customers all over the world Crisplant
develops customer specific solutions in projects more like a construction company with
development and installation at the customer site being separate phases of the same
project
Product development as it is undertaken in both companies is often generically
described a knowledge intensive activity (Meyer amp Utterback 1993) where managers
engineers and technicians apply the knowledge they have developed through formal
training and over time form experience while at the same time enhancing their skills and
capabilities through the project Such knowledge-intensive companies are dependent on
their employee based knowledge resources However neither BampO nor Crisplant have a
separate strategy for knowledge management Instead the analysis stresses the
importance of knowledge management being an integrated part of the companiesrsquo
processes and management activities trying to create an organizational culture which
encourages development sharing and anchoring of knowledge to support the main
strategic goal they each have
41 Knowledge management in Bang amp Olufsen
Knowledge management in BampO focus on interactions where employees meet across
departments and enter into a dialogue where creative ideas are being conceived new
knowledge generated and existing knowledge disseminated in the organization BampO is
169
dependent on tacit knowledge or unique competencies such as employees that have ldquoa
pair of good earsrdquo as it was expressed by a project manager which are able to hear
precisely when a loudspeaker or an amplifier sounds correct Such knowledge is very
difficult to transfer as explicit knowledge Instead BampO is committed to the fact that
knowledge transfer takes place through close cooperation where competences are
disseminated in the organization
The development processes are built around key personsrsquo unique knowledge resources
in a way that makes it difficult for competitors to imitate BampOrsquos products To
disseminate the specialist knowledge it is in the interviews stressed that it is important
that it is communicated to the organization that these lsquoknowledge keepersrsquo are available
It must be known who possess specific types of knowledge so that instead of being a
hidden resource the individual key persons become an available resource to be relied on
all over the organization A manager at BampO explains
hellip we have a culture in the development division where everybody walks around and talks to everybody about the problems they encounter hellip when an employee is designing something the person knows that he needs to go and talk to a specific colleague because the colleague knows something special about this And then he does so and they have a chat about it So we sense that in most cases there is free and open access to all the knowledge available via you could say personal contact
In this situation the sharing of knowledge is enabled by the autonomy that employees
are granted by management similarly to what Oshri et al (2005 p 16) found in a case
study of knowledge transfer in a multiple-project environment Further key employeesrsquo
expert knowledge is made available to the organisation by holding a large number of
internal courses at BampO where the employees teach each other
However explicit knowledge is also decisive to BampO because aside from the tacit
knowledge which is being applied in the development processes explicit and codifiable
knowledge is also applied to a great extent in all development projects It may both be
knowledge which is unique to BampO and at the same time it may be knowledge which
in principle is available on the world market To capture knowledge BampO uses the
TOP-model an adopted version of Cooperrsquos (2001) stage gate model in all
170
development projects In practice it means that when the first phases of a development
project (physical proximity and face-to-face contact) is completed only a few people
the quality people are responsible for making sure that knowledge is shared both in the
individual project and across projects
In addition to this BampO has strict documentation requirements during the development
projects due to the companyrsquos ISO-certification the internal strategies for knowledge
sharing and to make it possible to reuse earlier developed elements in future products
similar to what Tsai (2001) demonstrated in a study where transferring knowledge from
one base project to other projects enhances organisational innovation and performance
BampO thus appear to be very conscious about the importance of documentation and it is
attempted to extend the documentation activities further so that the company may reuse
more knowledge and thus reuse more solutions by building up modular products
42 Knowledge Management in Crisplant
All project activities in Crisplant are from development over production to
implementation project-organized and are run according to Crisplantrsquos project
management tool Crisplant Project Management Model (CPMM) which is an adopted
version of a state gate model (cf Cooper 2001) Due to the nature of the customer
specific solutions the context is somewhat similar to the construction industry where
eg Bresnan et al (2003) emphasise that organisations face substantial obstacles to be
overcome in ldquocapturing knowledge and in re-cycling of project based learning that
steam form the relatively self-contained idiosyncratic and finite nature of project tasksrdquo
(ibid p 158)
Crisplant develops solutions with a high degree of customization the individual projects
are very different and the composition of project teams takes place more on the basis of
employeesrsquo competencies than on the basis of specific technical components which
must be included in the project Thus knowledge management has to focus specifically
on employees and as a consequence the development sharing and anchoring of the
accumulated knowledge is an integrated part of the companyrsquos way of working
171
Crisplant says ldquoIt is natural for us to live by having knowledge and trying to give our
customers value through a continuous development and creative use of our knowledgerdquo
Thereby knowledge management becomes an integrated part of the management
activities influencing the organizational culture and supporting the overall main
strategic goals A manager at Crisplant furthermore says ldquoKnowledge management is
about presenting favourable conditions for the creative process of the individual in
cooperation with others and hence set the knowledge resources of the company at playrdquo
But Crisplant also uses a range of IT-tools for supporting the creation and transfer of
knowledge Like many other companies Crisplant has an extensive intranet which may
potentially play a role in codifying explicit knowledge and in lsquostoring and distributingrsquo
knowledge But the intranet is mainly used for the distribution of news creating a
possibility for the employees to be updated with the companyrsquos activities and as such it
does not constitute an essential part of Crisplantrsquos knowledge management
Standardized and codified knowledge is however of importance in relation to
documenting the experience from the separate development phases By codifying and
collecting knowledge in progress reports drawn up by the project leaders each month
Crisplant is however of the opinion that it is the employeesrsquo tacit knowledge which is
essential for the companyrsquos progress and growth Accordingly the Managing Director
explains that the work with eg the companyrsquos intranet is more expressing a wish for a
general IT-competence development among the staff to be able to respond to future
technological requirements from co-operators than it is due to a direct knowledge
management strategy
Crisplant is convinced that the informal knowledge sharing taking place daily as ldquoface-
to-facerdquo contact is by far of greatest strategic importance Crisplantrsquos management thus
attempts to make the frames for knowledge sharing and knowledge creation available by
focusing on teamwork in the project organization and by integrating a dialogue-based
company culture that cultivates trust norms and shared values where projects take the
character of communities of practice (Brown amp Duguid 1991 2001)
The manager responsible for organisational development explains that the day-to-day
knowledge sharing and knowledge creation to a wide extent is expressed through the
work with CPMM as well as a continuous focus on creativity in all processes To
172
improve creativity Crisplant works intensely with a model named internally as the
lsquoCreative Working Modelrsquo (CWM) This model facilitates the process at all levels from
structuring a project over the way a certain meeting is structured to how the individual
employees structure their working day
The CWM consists of five phases A seeing phase which focus on dialogue about
expectations with regard to the final goal and thus which objectives must be obtained to
reach the overall goals for the task or project Following this comes the idea phase
where it is established how the objectives and goal should be obtained The third phase
is the planning phase which is carried through in interaction with Crisplantrsquos Project
Management Model When the planning is done the project participants begin carrying
out the things as the fourth phase and subsequently the project group goes into a seeing
again phase where the course of events is evaluated and the project team learns from its
experiences
43 Knowledge Management as Project Management
BampOrsquos product development division as well as Crisplant are organized as project
organizations Competent efficient and reliable projects implementation is decisive for
business success in BampO as well as Crisplant For several years both companies have
applied a project management model inspired by Cooperrsquos so-called lsquostage gate modelrsquo
(Cooper 2001) The adoption of the model is denoted the Crisplant Project Management
Model and the TOP-model at BampO
At Crisplant the purpose of working with the Stage-Gate model is to establish ldquoa
common set of rules for project control management and execution internally as well as
in cooperation with customers suppliers and other partnersrdquo (Crisplant 1999 p 4) In
the product development division at BampO the Stage-Gate model has a more direct role
as knowledge management tool as it is continuously adjusted according to the
experiences from different product development projects At BampO the Stage-Gate
model thus functions as a dynamic model where knowledge is accumulated and later
disseminated through the application in the individual projects
173
Each phase of the Stage-Gate models ends with a lsquogatersquo In this connection the project
managers of both companies prepare a gate report on the status of the project both with
regard to progress and budget At the same time often major replacement among
employees takes place in between the individual phases and therefore a gate also
represents a critical point in relation to knowledge management as knowledge needs to
be transferred from one team to another
With respect to knowledge creation Crisplant focuses on how knowledge is collected
stored and passed on in each phase of the project through extensive documentation
requirements BampO works with similarly high documentation requirements in its
projects At the same time at BampO the awareness of the value of face-to-face
knowledge transfer along the way are very present the method manager in BampO
expresses it in the following way
hellip it is not such an lsquoover the wallrsquo-transfer taking place at each individual gate It is not the documentation that ensures knowledge transfer in the projects hellip it is only because people talk together and that we agree on how things should look that it works hellip it is not due to our documentation
Furthermore Crisplant emphasizes the metaphorical importance of a gate symbolizing a
door which closes at the completion of a phase while a new one opens to the next phase
and the future However like BampO Crisplant is aware of that not all types of
knowledge can be passed on in written-down documentation
Both companies apply pre-determined checklists which the project manager goes
through and on that basis he prepares a phase report after each individual phase of the
Stage-Gate model These phase reports are saved and used eg when the project
management tool is being updated At the end of a project a project evaluation meeting
is held at both Crisplant and BampO where the projectrsquos experiences good as well as bad
are collected in a final report
174
5 Knowledge Management in Perspective(s)
In the following two subsections project management of the two companies are
analyzed according to the two epistemological perspectives on knowledge management
the artefact oriented and the process oriented Hereby it is illustrated how the
presentation and the perception of knowledge management depend on the
epistemological starting point
51 Artefact-Oriented Epistemology
As a part of BampOrsquos codification strategy artefacts in the form of process
documentation product specifications development documentation etc are pointed out
as an essential element of the knowledge management activities At Crisplant such
documents also form an important part of the knowledge collecting process which the
then Managing Director expressed in this way
hellipAs we work out a concept proposal and a solution to our customer we document the thoughts and ideas we have concerning the solution to a specific project Thus the knowledge stays in the company so to say ndash because it has been taken down in writing
From this perspective knowledge is in both companies about writing and documenting
in order that the company may be capable of leaning on previous project descriptions
etc when new quotations are given and on the whole when working on the projects
Thus the project management systems function as a repository for routine solutions
where explicit knowledge can be reused (cf Markus 2001 p59)
If knowledge management is illustrated based on an artefact-oriented epistemology the
essential elements of the knowledge of both companies would be all the documents and
reports written down concerning the companyrsquos procedures and processes the project
management models and quality control systems in both companies IT-tools used in the
company such as intranet budget control systems databases administrative systems
etc support the collection storage and distribution of the formalized knowledge which
is the focal point of the artefact-oriented epistemology
175
Within the artefact-oriented epistemology knowledge management is thus focused on
the types of knowledge which may be explicated formalized and ultimately codified
Project management in the two companies appear to consist of more or less the same
components From a pure artefact oriented perspective knowledge management is
ensured by having these suitable systems The artefact oriented knowledge management
is about consistent documentation of development activities via Stage-Gate-models
quality management and data collection at both BampO and Crisplant In the artefact
oriented perspective there is much less focus on the context in which the knowledge
was created as the underlying assumption is that the knowledge can be re-used even
though the context in which it was created is less explicit
52 Process Oriented Epistemology
Knowledge management seen through a process-oriented epistemology (with emphasis
on the SECI model) is apparent in both BampO and Crisplant It may be illustrated by the
fact that the companies besides anchoring knowledge through process reports Stage-
Gate models and quality control systems are focusing on the personal relations
Crisplant uses the CWM to support the transfer of knowledge between project phases in
the stage gate model and BampO works with mentor arrangements and works hard on
creating a dialogue-based culture By sharing knowledge across the organizations the
companies attempt to internalize knowledge into more persons
At Crisplant the process-oriented epistemology is predominant in the work with the
CWM which structures the processes and becomes instrumental for creating sharing
and internalizing knowledge At both BampO and Crisplant the socialization phase is also
stressed by attaching importance to project teams meeting physically because this is the
way to share opinions values and knowledge and to obtain a common framework of
understanding
The externalization phase should be understood as the process where the employees
express their ideas Here Nonaka et al (2000) stresses that the use of images
metaphors analogies etc may help the employees to express a point without really
being able to explain it This is what happens in the idea phase of the CWM at
176
Crisplant When all thoughts and ideas have been aired and placed on the boards it is
important that they are combined and reduced in order to make a realistic plan for the
development of the project Therefore the ideas from Crisplantrsquos idea phase and BampOrsquos
development department are both incorporated in the companiesrsquo Stage-Gate models
which structure the development of the projects This is the equivalent of what takes
place in Nonakarsquos combination phase in the SECI-model
The internalization phase is the last phase of the SECI-model where the objective is to
embody common guidelines goals and objectives corresponding to Crisplantrsquos
executing phase in their CWM and the phases in the companiesrsquo Stage-Gate models
where the products are actually developed and installed at the customers site At this
stage experiences are gained from the project in hand and as far as possible these
experiences will also be incorporated in the stage gate model in order to be available for
later project
As knowledge sharing in Crisplant builds mainly on the Creative Working Model the
personification strategy is predominant in Crisplantrsquos knowledge management activities
Although documentation was emphasised by the managing director because knowledge
stays in the organisation when it is written down (see above) this from a process
oriented perspective does not mean that it is the capacity to document and codify that is
the essential feature Rather the project management systems in combination with the
CWM facility interaction
BampOrsquos knowledge management strategy is not as clear as it involves more elements
from both the codification strategy and the personification strategy In the same way as
Crisplant BampO acknowledges the importance of face-to-face communication but in
BampO it is more a question of making the structures and frameworks available to the
organisation thus leaving it to the initiatives of the employees to communicate when
needed Thus the experiences from BampO is in line with Keegan amp Turner (2001) who
in an study of learning across project found that the informal networks within
companies are the most important conduit for transferring knowledge between projects
(cf Sense 2007)
Damodaran amp Olphert (2000) as well as Edwards et al (2005) have argued that in
general a push-strategy ie when information and knowledge are lsquopushedrsquo through to
177
the potential users is less effective than a pull-strategy which is based on creating a
basic organizational culture and context which encourage organizational learning ndash and
where the employees have access to knowledge when needed From this point of view
Crisplant uses a form of push-strategy while similarly BampO uses a pull-strategy to
implement knowledge sharing through physical meetings However it is another form
for push than in Damodaran amp Olphertsrsquo terms when a process oriented epistemology is
adopted as it is the organizational structures and frames that are lsquopushedrsquo to the
employees
The ideal context of knowledge creation and sharing depends on the type of knowledge
For instance both BampO and Crisplant find it important that a project team meets
physically in the initial phases where the objective is to express thoughts and ideas
concerning the project At BampO the product development begins in Idea Land where a
group of designers are seated closely together Later in the construction phases physical
proximity is not imperative to the same degree
Following the process oriented epistemology both tacit and explicit knowledge and not
least the interplay between the two knowledge types are in focus From a process
oriented perspective it is the first two phases of the SECI model (Socialization and
Externalization) which differs the most between the two companies whereas the last
two phases (Combination and Internationalization) are more similar in the two
companies In the Combination phase knowledge management is primarily centred on
working with the Stage-Gate models and in the Internalization phase the specific
development work is conducted Contrary to BampO Crisplant still give priority to
physical proximity in the last phase as Crisplant focuses on a common internalization
phase for the group in preference to the individual
6 Concluding Remarks
Authors like Roos and von Krogh (1995 p1) have argued that the way we understand
knowledge depends on the existing knowledge and the basic assumptions we bring
along This means that whether we are researchers observing knowledge management in
action or practitioners involved in the management of knowledge our understanding of
178
knowledge and knowledge management will be in subjective term This understanding
or at least what knowledge management means to the individual the group or
organization is important because it as argued be von Krogh and Roos (1996) implies
that successful knowledge management requires that you relate to lsquothe nature of
knowledgersquo (von Krogh amp Roos 1996 p 234)
Therefore knowledge management becomes a question of epistemological
understanding By giving a multi-faceted view of knowledge management based on the
two different epistemologies this article illustrates how different epistemological points
of departure are essential to the way we lsquoseersquo and thereby think and act Generally it is
a way of illustrating how we are all more or less limited by our own existing
knowledge We are subconsciously controlled by our framework of reference and
understanding but the more conscious we become of this and the more we acknowledge
it the more we will be able to overcome these limitations and thus achieve a more
nuanced view of existing management activities
The analysis illustrated how the content of knowledge management differs depending
on the underlying epistemology It makes demands on the manager as conscious
reflection in relation to initiatives as the possibility that another departure implies
another decision becomes part of the decision process However in practice an
understanding of different perspectives will give a company a more nuanced picture of
the organization knowledge and management thereby expanding the optics which is
used for identification of potentials or any problems in relation to the management of
knowledge
In the analysis of the knowledge management activities in Crisplant the process oriented
epistemology was clearest The sharing of knowledge is encouraged by initiatives
where the employees physically are seated in relation to the projects to enable lsquoroomrsquo
for communication In addition to this other knowledge management initiatives become
visible eg in relation to collection of data and experiences from the projects when the
departure is the artefact oriented epistemology All this support the personification
strategy (cf Hansen et al 1999) where tacit and human interaction plays a crucial role
Knowledge management in BampOrsquos is also most obvious if departing in the process
oriented epistemology but the concrete initiatives are mainly based on methods which
179
are best understood from the artefact oriented epistemology For instance this is
expressed by the higher priority continuous documenting and updating of the models
are given in BampO compared to Crisplant In practice both tacit and explicit knowledge
are of more or less equal significance in BampO which mean that the company tries to
combine the personification and codification strategy
BampO finds the tacit knowledge which exists in the organization of great strategic
importance and therefore they try to distribute it in the organization through eg
mentoring close relations across departments and dialogue-based culture At the same
time codifiable knowledge is paid considerable attention at BampO which is best
expressed through the work on currently updating the dynamic stage-gate model
It can not generally be stated when a given strategy should be used as it is very
company specific When a companyrsquos competitive advantage are mainly to be found in
reuse of existing solutions which for example are put together in a new way or the
possibility for lsquomass productionrsquo of a new product The more standardized solutions a
company offers the more it points in the direction of the codification strategy and
thereby a knowledge management strategy departuring in the artefact oriented
epistemology or the process oriented epistemology supported by the artefact oriented
Otherwise when a company provides more customized solutions it points in the
direction of the process oriented epistemology and primarily knowledge management
initiatives based on this epistemology and thereby the personification strategy An
important thing is to notice that the epistemologies are supportive and not exclusive
If significant importance is attached to epistemological assumptions heavier demands
are to a certain extent placed on the manager It is no longer sufficient lsquoonlyrsquo to act and
make decisions because conscious reflection in relation to own acts and the opportunity
to take another point of departure involving another decision becomes part of the
decision process The reflective manager must be familiar with different epistemologies
as mentioned by Venzin et al (1998 p 36) as it provides a much larger managing
scope and ensures a better understanding of the limitations to the various sets of
actions More effective knowledge management may result from adapting management
tools that fit the prevailing perception of knowledge The more the organization focuses
180
on knowledge the more important it becomes to understand the epistemological
implications
7 References
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interpretation Organisation Studies 16(6) 1021-1041
Bresnen M Edelman L Newell S Scarbrough H and Swan J (2003) Social practices
and the management of knowledge in project environments International Journal of
Project Management 21(3) 157-166
Brown JS and Duguid P (1991) Organizational learning and communities-of-practice
Towards a unified view of working learning and innovation Organization Science
2(1) 40-55
Brown JS and Duguid P (2001) Knowledge and organisation a social practice
perspective Organization Science 12 198-213
Cooper RG (2001) Winning at new products Perseus Cambridge MA
Crisplant (1999) Crisplant Project Management Model (In Danish Faseplan for
projektgennemfoslashrelse paring Crisplant)
Damodaran L and Olphert W (2000) Barriers and facilitators to the use of knowledge
management systems Behaviour and Information Technology 19(6) 405-413
Edwards JS Shaw D and Collier PM (2005) Knowledge management systems finding
a way with technology Journal of Knowledge Management 9(1) 113-125
Eisenhardt K (1989) Building theories from case study research Academy of
Management Review 14(4) 532-550
Hansen MT Nohria N and Tierney T (1999) Whatrsquos your strategy for managing
knowledge Harvard Business Review 77(2) 106-116
Huber G (1991) Organizational learning the contributing process and the literature
Organization Science 2(1) 88-116
181
Jackon P and Klobas J (2007) Building knowledge in projects A practical application
of social constructivism to information systems development International Journal of
Project Management (fortcoming)
Keegan A and Turner JR (2001) Quantity versus quality in project based learning
practises Management Learning 32(1) 77-98
Kaumlrreman D Alvesson M and M Blom (2004) Knowledge Management and
raquoOrganisational Memorylaquo ndash Remembrance and Recollection In a Management
Consultancy Company In Knowledge management establishing a field of practice
(Bukh PN Christensen KS and Mouritsen J eds) pp 124-148 Palgrave Macmillan
Houndsmill
Leonard D (1995) Wellsprings of Knowledge Building amp Sustaining the Sources of
Innovation Harvard Business School Press Boston MA
Lyles M and Schwenk C (1992) Top management strategy and organizational
knowledge structures Journal of Management Studies 29(2) 155-74
Malone TW Crowston K Lee J and Pentland B (1993) Tools for inventing
organizations toward a handbook of organizational processes In Proceedings of the
2nd IEEE Workshop on Enabling Technologies Infrastructure for Collaborative
Enterprises Morgantown WV
Markus L M 2001 Towards a theory of knowledge reuse Types of knowledge reuse
and factors n reuse success Journal of Management Information Systems Vol 18
No 1 pp 57-93
Marr B Gupta O Pike S and Ross G (2003) Intellectual capital and Knowledge
management effectiveness Management Decision 41(8) 711-781
Meyer MH and Utterback JM (1993) The product family and the dynamic of core
capabilities Sloan Management Review 34(3) 29-38
Mouritsen J Larsen HT and Bukh PN (2001) Intellectual Capital and the Capable
Firm Narrating Visualising and Numbering for Managing Knowledge Accounting
Organisations and Society 26(7) 735-762
Nonaka I (1994) A Dynamic Theory of Organizational Knowledge Creation
Organization Science 5(1) 14-37
182
Nonaka I and Takeuchi H (1995) The Knowledge-creating Company Oxford University
Press Oxford
Nonaka I Toyama R and Konno N (2000) SECI Ba and Leadership a Unified Model
of Dynamic Knowledge Creation Long Range Planning 33 5-34
Oshri I Pan SL and Newell S (2005) Trade-offs between knowledge exploitation and
exploration activities Knowledge Management Research amp Practice 3 10-23
Prahalad CK and Hamel G (1990) The Core Competence of the Corporation Harvard
Business Review 68(3) 79-88
Roos J and von Krogh G (1995) What you see depends on who you are Think about
epistemology IMD Perspectives for Managers 7 1-4
Sense AJ (2007) Stimulating situated learning within projects personalizing the flow of
knowledge Knowledge Management Research amp Practice 5 13-21
Tsai W (2001) Knowledge transfer in intraorganizational networks Effects of network
position and absorptive capacity on business unit innovation and performance
Academy of Management Journal 44(5) 996-1004
Tsoukas H (1989) The validity of idiographic research explanations Academy of
Management Review 14(4) 551-61
Tsoukas H (1996) The firm as a distributed knowledge system A constructionist
approach Strategic Management Journal 17 11-25
Tsoukas H and Vladimirou E (2001) What is organizational knowledge Journal of
Management Studies 38 973-993
Venzin M von Krogh G and Roos J (1998) Future research into knowledge
management In Knowing in Firms Understanding managing and measuring
knowledge (von Krogh G Roos J and Klein D eds) Sage London
Von Krogh G and Roos J (1995) Organizational Epistemology Macmillan London
Von Krogh G and Roos J (1996) Managing Knowledge Perspectives on Cooperation
and Competition Sage London
183
PART IV
184
185
CHAPTER 10
Findings and Perspectives
It has been argued in both the media and various reports that intrapreneurship might
be the key to making established organisations more innovative The emphasis on
intrapreneurs and particularly intrapreneurship is a challenge because on the one
hand intrapreneurship is a liberating force that allows individuals to master their
ideas and on the other it is part of a lsquoproduction functionrsquo in corporate life where
individuals are subordinated to the requirements of organisational interests The
practice of intrapreneurship is therefore somewhat paradoxical because in a sense it
requires individuals to subordinate themselves to organisational concerns that they
will have to master reflexively
As this dissertation has shown the concept and tools of intrapreneurship can be used
under a variety of circumstances in the area of management Intrapreneurship can be
applied to the organisation with a focus on corporate ventures internal resources and
internationalisation (Chapter 4) In relation to mergers or acquisitions the conversion
of entrepreneurship to intrapreneurship can be of central concern (Chapter 6)
Intrapreneurship can also be approached from a managerial perspective relating to
how various intrapreneurial mechanisms can be screwed up and down (Chapter 7)
These enablers have been shown to be differ between traditional industrial companies
and knowledge-intensive companies so understanding intrapreneurship from a
knowledge (management) perspective is crucial since it is the knowledge resource
that has been lsquomanipulatedrsquo in modern companies not physical products (Chapter 8)
186
If we look at the activities covered by intrapreneurship in more detail (eg as outlined
in Chapter 4) we can see that intrapreneurship not only provides a set of new
management tools and techniques but also the application of well-known
management techniques in new combinations often facilitated by the use of
innovation management and knowledge-management tools (as illustrated in Chapter
8 and 9)
The focus of this dissertation has been on the entrepreneurial aspects of the
organisation as well as activities processes and projects within organisations rather
than on the individual entrepreneur starting a new firm In this respect the
dissertation has followed Gartnerrsquos (1988 1989) suggestion of a change in focus
from the intrapreneur as a person to intrapreneurship as a process When
intrapreneurship is seen as a process it does not require the implementation or
exploitation of one particular technology or technical instrument Rather it
encourages more elements to work in concert But if intrapreneurship is a process
located within and between people processes and technologies how does
management know that lsquosomethingrsquo is worth exploring and how can it intervene to
enable and support intrapreneurship
However while may be of vital concern to many companies this dissertation has not
tried to answer the question of how management knows when lsquosomethingrsquo is worth
exploring The strategic entrepreneurship literature has touched on this by integrating
company initiatives that research shows to be relevant to the creation of wealth Thus
according to Hitt et al (2002 p 13) ldquostrategic entrepreneurship facilitates firmsrsquo
efforts to identify the best opportunities (matched to their resources and with the
highest potential returns) and to exploit them with the discipline of a strategic
business planrdquo This is definitely an area for further research
187
101 ELEMENTS OF THIS DISSERTATION
The chapters of this dissertation contribute to the mosaic of intrapreneurship as a
developing field The study has explored intrapreneurship from an internal resources
perspective (see Chapter 4) From this point of view the aim of intrapreneurship is to
identify previously undiscovered resources in the organisation or combine existing
resources in new ways that make them valuable innovations and thereby create new
organisational wealth (see for example Ireland et al 2001 Alvarez amp Barney
2002)
The aim of this section is to discuss the results of the five articles in relation to the
research question and their contribution to the intrapreneurial debate The overall
research question is the exploration and exploitation of internal resources with
respect to intrapreneurship while the overall aim of the dissertation is to study the
intrapreneurial potential in its natural settings
The five articles in this dissertation are related in the sense that they study
intrapreneurship intrapreneurial enablers and intrapreneurial management Figure
101 illustrates how the five articles are related to the intrapreneurial framework
developed in the first article (chapter 4)
188
Figure 101 Relation of the articles to intrapreneurship
In the first article intrapreneurship was placed within the wider scope of corporate
entrepreneurship Based on this intrapreneurship has been defined and a framework
for discussing intrapreneurship has been developed The second part of the
dissertation which took a starting point in the internal resource perspective
attempted to identify the mechanisms behind intrapreneurial opportunities in a
company based on its existing resources
The study of intrapreneurship in terms of innovation and enabling factors has been
based on case studies The second article discussed the change from entrepreneurship
to intrapreneurship and how this has influenced innovativeness and related issues in
a specific company The third article examined various factors which can enable
Corporate Entrepreneurship
Intrapreneurship ExopreneurshipEntrepreneurship
CorporateVenture
InternalResources
Internationa-lization
Enablers
1
2
3
Innovation
4
5
Knowledgeresources
189
intrapreneurship across the different organisational perspectives Article four and five
focused on one specific resource the knowledge resource and how it can be
managed with respect to intrapreneurship
102 MAIN POINTS AND CONTRIBUTIONS
This section will discuss the findings and contributions of the dissertation The aim of
the dissertation has been to contribute to the field of intrapreneurship and provide
managers in knowledge-intensive companies with managerial tools to influence the
level of intrapreneurship
The first contribution was the framework for discussing corporate entrepreneurship
presented in article 1 This shows how organisations utilizing corporate
entrepreneurship have to choose between different organisational opportunities
Based on the framework in article 1 the second contribution is that a clear distinction
between corporate entrepreneurship and intrapreneurship has been made These
concepts have been used interchangeably in the literature and still are Although the
basic ideas underlying the two concepts are similar both focusing on innovativeness
in established companies intrapreneurship takes place within the boundaries of the
firm whereas corporate entrepreneurship also takes place across organisational
boundaries This demonstrates the importance of the boundaries of the firm
The third contribution of the dissertation is that it demonstrates how an acquisition
strategy as a way for mature organisations to gain access to innovativeness and new
knowledge resources can easily fail Article 2 shows that the success of an acquisition
not only depends on retaining key employees Even though the competencies of the
acquired organisation are formally intact efforts are also needed to make the energies
of the two organisations act together and create a new intrapreneurial part of the
company Unless managers actively take part in facilitating an intrapreneurial spirit
190
then the acquired entrepreneurial part of the organisation will slowly stifle The
fourth contribution as demonstrated in articles 2 and 3 is that access to end
customers is an important driving force both in relation to innovativeness and to
preserving the entrepreneurial spirit
The fifth contribution in article 3 is an increase in the number of factors ndash from five
to eight ndash that need to be taken into account when enabling intrapreneurship The five
factors most often mentioned in the literature ndash rewards top management support
resources organisational structure and tolerance of risk ndash are not always sufficient to
encourage intrapreneurship in a knowledge-intensive company Employees in
traditional industrial companies and knowledge-intensive companies are likely to be
motivated in different ways This means that the enabling factors are different and
what may be an enabling factor in a traditional industrial company may only be
perceived as a basic or sustaining factor in a knowledge-intensive company
Thus article 3 has argued that communication ie the creation of a common
language culture in a broad sense and processes that support innovativeness should
be added to the original five factors enabling intrapreneurship With respect to
enabling factors a sixth contribution of the dissertation is a distinction between basic
and influencing factors since not all factors directly encourage intrapreneurship
although some are necessary in order to create an intrapreneurial climate
The seventh contribution is the framework for intrapreneurship presented in article 4
The framework defines the task of intrapreneurship as a combination of three
situations involving innovation management ndash exploitation sustainable change and
disruptive change ndash and the learning-related concepts of exploitation and exploration
Six sub-tasks the solution to which are based on the complexity of knowledge and
learning are derived from the framework
191
The eighth contribution of the dissertation appears in article 5 where an analysis of
knowledge management in two companies from the point of view of
intrapreneurship shows different aspects of how activities are practiced It is shown
how the different epistemological starting points of departure are essential to the way
we lsquoseersquo and thereby also how we think and act By applying these perspectives it is
emphasized how intrapreneurship can be enabled from a knowledge-management
perspective The ninth contribution of the dissertation is the indication that a
company should also take epistemological aspects into consideration when designing
organisational structures aimed at enabling intrapreneurship If the aim is to facilitate
intrapreneurship and an intrapreneurial spirit the company should base its activities
on process-oriented initiatives while these should be supplemented by artefact-
oriented initiatives if the aim is to streamline production and explore existing
resources
103 SYNTHESISING THE CONTRIBUTIONS
The dissertation presents two frameworks An overall framework for exploring and
discussing intrapreneurship (article 1) and a framework for exploring
intrapreneurship and innovation in light of knowledge and learning (article 4) Based
on the classification in the overall framework it was decided that the rest of the
dissertation would take a starting point in the internal resource perspective This
section attempts to provide a synthesis of the articles and their contributions to the
literature as described in the previous section This synthesis takes a starting point
especially in the framework developed in article 4
As the case studies showed the classification outlined in the framework was not only
theoretical but was also applicable in practice For instance Danfoss Drives had
actively used the organisational structure to enable intrapreneurship in the form of
corporate ventures internationalisation and formal networks (article 3) Other case
192
companies eg Bang amp Olufsen and Ericsson Telebit also had a similar
organisational structure albeit not as explicit Article 3 also found that the internal
organisation in Danfoss Drives had been organised to encourage innovation and the
creation and dissemination of knowledge which is characteristic of the internal
resource perspective as described in article 1 and which was the focus of article 4
and 5
The classification is applicable in both traditional industrial companies and
knowledge-intensive companies although this dissertation has focused on the latter
As described in chapter 4 the main difference between intrapreneurs in the two types
of companies is that in knowledge organisations they manipulate knowledge rather
than physical products and technologies
These two types of employees are different in nature which means that their
motivation might stem from different factors Managers in knowledge-intensive
companies therefore need other mechanisms to fine-tune the level of intrapreneurship
compared with managers in traditional companies Article 3 examined various
enabling factors with a potential to influence the level of intrapreneurship and found
that although not all factors directly encourage intrapreneurship some are necessary
in order to create an intrapreneurial climate The five enablers ndash rewards top-
management support resources organisational structures and risk ndash which seem to
be significant in traditional industrial companies (Hornsby et al 1993 Kuratko et
al 1990) are found insufficient to fine-tune the level of intrapreneurship in
knowledge-intensive companies
Metaphorically speaking the basic factors can be seen as a thermostat (see article 4)
which is programmed to detect whether the surrounding temperature is above or
below the reference temperature and which responds by simply turning the heat up
or down This means for example that if wages are below minimumaverage wages
193
they can be regulated accordingly Or if insufficient resources are assigned to a
project more resources can be allocated The basic factors can thus be related to
single-loop learning (Argyris and Schoumln 1996) inasmuch as this is mainly a question
of detecting a mismatch and regulating the factors involved until the intrapreneurial
activities are back on track
The intrapreneurial factors found in article 3 are more complex since they require an
active effort and to some extent challenge existing values with regard to innovation
Following the thermostat metaphor and the requirements for entering into a double-
loop learning mode as was also discussed in article 4 the three intrapreneurial
factors take on a new significance For example communication can be seen as an
intrapreneurial factor which encourages the questioning of existing values
Communication can lead to innovation-stimulating discussions and the sharing of
ideas and knowledge resources and can potentially result in a challenge to the
existing values of the organisation which may otherwise be an obstacle to
innovation
Following Argyris and Schoumln (1996) it was further argued in article 4 that single-
loop learning is appropriate for routine and repetitive issues while double-loop
learning seems more relevant for complex and non-programmable tasks This
supports the findings from article 3 that there is a need for other enabling factors in
knowledge-intensive companies than those in industrial companies It also indicates
that basic enablers are easier for managers to use because they can influence them
directly Conversely intrapreneurial enablers can only be influenced indirectly
An insight into these intrapreneurship-enabling factors might be of help to the
managers of an acquiring company eg the acquisition example examined in article
2 While it is often argued that top management should be actively involved in
acquisition processes the factors identified in article 3 show more specifically what it
194
takes to avoid stifling the entrepreneurial spirit in the acquired company One of the
employees from the case company Ericsson Telebit expressed this clearly with
respect to the acquisition of innovativeness ldquoIt is an illusion to believe that you can
take a small creative and innovative company and integrate it into a larger one ndash it is
uphill most of the timerdquo (article 2) It was also shown in article 2 that managers can
be the biggest obstacle to intrapreneurs since a single wrong decision can kill a
project before it gets started Furthermore the interviews reported in article 2 also
indicated that managers can be the worst enemy of ongoing projects too
New ideas and innovative activities will at some point normally acquire the nature
of a project Thus the management of projects and the sharing of knowledge through
the various phases of a project is just as crucial to intrapreneurship as it is to project
management Projects thus often serve as a ldquoframerdquo for innovative activities which
makes project management an important issue in intrapreneurship Article 5 showed
how knowledge management can be a significant managerial tool in project
management It also showed how the use of additional perspectives can enable
knowledge management to advance mutual understanding in the organisation and
make it easier to create and share knowledge Article 5 thus also shows how
intrapreneurship is best enabled in the specific situation
However in the light of the framework in article 4 it also depends on the complexity
of knowledge that intrapreneurs need to manipulate Again this is supported by the
findings in article 3 which showed that enabling factors in industrial companies are
insufficient to encourage intrapreneurship in a knowledge-intensive company
Finally returning to the research questions outlined in section 232 as explained
above article 1 addressed the first research question by clarifying the difference
between corporate entrepreneurship and intrapreneurship and by defining
intrapreneurship as entrepreneurship within the boundaries of the firm The
195
classification offers three organisational perspectives through which intrapreneurship
can be explored starting up a corporate venture using existing internal resources
and internationalisation This theoretical classification is supported by the
organisational structure in Danfoss Drives which is outlined in Chapter 7
The second research question is concerned with how intrapreneurship is influenced
by various factors and crucially if and how it can be influenced by management and
the rest of the organisation Question 2a was discussed in article 2 which showed that
acquiring innovativeness requires the active effort of management both to maintain
innovativeness and to overcome organisational inertia which are often characteristic
of mature organisations The active use of both extrinsic and intrinsic factors is
needed if an entrepreneurial spirit is to be converted into an intrapreneurial spirit
Research question 2b which was addressed in article 3 deals with factors that are
likely to influence intrapreneurship It was suggested that factors known to be
influential in traditional industrial companies ie rewards management support
resources organisational structure and risk are perceived as basic factors only in
knowledge-intensive companies whereas communication culture and processes are
perceived as intrapreneurial factors In general therefore in knowledge-intensive
companies extrinsic factors can be said to be basic factors while intrinsic factors are
more intrapreneurial Article 2 and 3 have offered two different views of how internal
resources can be influence by different extrinsic and intrinsic factors
The third research question is concerned with the relation between intrapreneurship
and the knowledge resources (article 4) Question 3a looked at how intrapreneurship
can be understood in light of knowledge management and article 4 developed a
framework for understanding the relation between intrapreneurship and knowledge
and the knowledge issues that should be taken into account ndash level of articulation and
the depth location and diffusion of knowledge ndash which together define the
complexity of knowledge Question 3b deals with the way in which the knowledge
196
resource can be managed with respect to intrapreneurship Article 5 demonstrated
how intrapreneurship can be enabled by taking a starting point in the process-oriented
knowledge-management perspective Together article 4 and 5 have showed that the
knowledge resource is of importance for intrapreneurship in knowledge-intensive
companies and that it should be addressed and managed based on its complexity
104 LIMITATIONS OF THE STUDY
The overall aim of the five articles has been to provide some answers to both the
overall research question ie exploration and exploitation of internal resources with
respect to intrapreneurship and how this has been influenced by the specific
organisation management managerial initiatives and employees of the organisation
the sub- questions in the three parts of the dissertation and the main question in each
article However due to the methodological choices made and the specific focus of
each article a number of limitations have to be taken into account if the synthesis
presented in the previous section is to be regarded as an overall conclusion
The obvious question is whether it is at all possible to say anything in general about
organisations management managerial initiatives and employees based on
literature reviews and a few case studies The immediate answer is probably not
However intrapreneurship is still a relatively young and unexplored field and the
purpose of this dissertation is just as much to identify areas that need further research
Of course the literature review only includes literature published before the article
was published in 2004 The body of knowledge is rapidly increasing with many new
studies being carried out and more articles and books being published This material
has not been taken into consideration when developing the framework in article 1
Furthermore the case-based articles are of course limited in the sense that they only
consider some of the relevant actors Only a few employees and managers have been
197
interviewed the interviews have not been carried out at multiple sites within the
organisation and the studies are snapshots in time Nor have customers or other
stakeholders been interviewed Doing so might have altered the conclusions in ways
that would not have been possible to control for in these articles and would have
necessitated another research setup
Specifically article 2 is subject to the limitation that it only focuses on employees
who have stayed with the acquired company Given the importance of the integration
phase new insights could be gained from following an acquisition more closely
regarding the attitudes both of those who stay and those who leave as well as of
employees at the acquiring company
Similarly article 3 only investigates one division of Danfoss The significance of the
factors that enable intrapreneurship could therefore gain from extending the study ndash
both to the whole company and to more companies both within the same industry
and in other industries In addition an expansion of the study in article 5 would
definitely increase generalisability
Besides these specific limitations of the articles a more general limitation is that it
was realised early in the research process that there were limited possibilities for
studying cross-sectional longitudinal phenomena since the companies included in
the KNORI project were so different and because changes within the companies also
meant changes in the research opportunities In retrospect more interviews over a
longer period might have given a more balanced view since it would have given
more room for longitudinal aspects of the research themes However it can only be
speculated what such interviews might have added In principle more comprehensive
data could have strengthened the conclusions by improving reliability On the other
hand more factors could be changing over time thus weakening the conclusions
198
With respect to possible generalisations the results would still be based on the same
number of observations represented by the companies in the KNORI project Thus I
have tried to make the most of the available possibilities given the context of the
project and my own absence due to two stays abroad and two maternal leaves I have
therefore framed the research issues in the specific articles without any attempt at
overall generalisation
105 REFERENCES
Alvarez SA amp JB Barney 2002 Resource-Based Theory and the Entrepreneurial
Firm In MA Hitt RD Ireland SM Camp and DL Sexton (eds) Strategic
Entrepreneurship Creating a New Mindset Oxford Blackwell Publishings pp 89-
105
Argyris C amp DA Schoumln 1996 Organisational Learning II Theory Method and
Practice Addison-Wesley Publishing Company
Gartner WB (1988) Who is an entrepreneur Is the wrong question American
Journal of Small Business Vol 12 pp 11-32
Gartner WB (1989) Some suggestions for research on entrepreneurial traits and
characteristics Entrepreneurship Theory amp Practice Vol 14 No 1 pp 27-38
Hitt MA RD Ireland SM Camp amp DL Sexton 2002 Strategic
Entrepreneurship Integrating Entrepreneurial and Strategic Management
Perspectives In MA Hitt RD Ireland SM Camp and DL Sexton (eds)
Strategic Entrepreneurship Creating a New Mindset Oxford Blackwell
Publishings pp 1-16
199
Hornsby JS DW Naffziger DF Kuratko amp RV Montagno 1993 An interactive
model of the corporate entrepreneurship process Entrepreneurship Theory amp
Practice Vol 17 No 2 pp 29-37
Ireland DR MA Hitt CM Camp amp DL Sexton 2001 Integrating
entrepreneurship and strategic management thinking to create firm wealth Academy
of Management Executive Vol 15 No 1 pp 49-63
Kuratko DF RV Montagno amp JS Hornsby 1990 Developing an intrapreneurial
assessment instrument for an effective corporate entrepreneurial environment
Strategic Management Journal Vol 11 No 1 pp 49-58
200
201
APPENDIX I
Case companies
In this appendix the case companies are described as they appeared at the time of
data collection ie in 2003 Since then some of the companies have gone through
major changes including reorganisations and different ownership and key employees
have left etc The companies would therefore look somewhat different today and
from a practical point of view access to them would also be different now In view of
this it was decided that a 2007-description of the companies would not be relevant to
this study
Below each of the companies is given a brief historic and financial description
followed by a short presentation of the different business models used One of the
main selection criteria for the study was to include a number of heterogeneous
companies Thus the first company is a subsidiary of a major electronics firm which
specialises in specific development projects while the second is a division of a large
industrial corporation The third company develops produces and sells electronic
goods while the fourth is a producer of large-scale sorting solutions for airports
postal services and industry The fifth is a network intermediator which specialises in
wireless solutions for the Internet Before going on to describe companies
individually a framework characterising five cases will be briefly presented
The cases for the study were selected on the basis of figure 31 (page 40) according
to which the companies obtain and improve knowledge internally and where renewal
was predicted to occur as described in the figure Another way used to categorise the
202
companies was Greinerrsquos (1972) life cycle model which was chosen for its wide
application especially in studies of company structures and strategies in a non-static
world A simplification of the model is shown in figure A1
Size of organi-zation
Large
Small
Age of organization
PHASE 1 PHASE 2 PHASE 3 PHASE 4 PHASE 5
Evolution stages
Revolution stages
1 Crisis of LEADERSHIP
5 Crisis of
2 Crisis of AUTONOMY
3 Crisis of CONTROL
4 Crisis of RED TAPE
1 Growth through CREATIVITY
2 Growth through DIRECTION
3 Growth through DELEGATION
4 Growth through COORDINATION
5 Growth through COLLABORATION
Young Mature
Figure A1 The five phases of growth (Greiner 1972 p 41)
Greinerrsquos life cycle characteristics were used as an overall framework to help
understand the different organisational challenges facing the companies in the study
This follows the hypothesis that age and history have a number of implications for
the innovation process The big difference in age and history ndash the youngest firm
having existed for only three years and the oldest for 88 years ndash was thus an
important factor in the study of innovation activities in the five companies
Since a company can be characterised by the products it makes theories about product
life cycles formed another important part of understanding a companyrsquos innovative
activities Tushman amp Nadler (1996) argue that the product life cycle has implications
for the type of innovation activities that dominates in certain periods This is illustrated
in figure A2
203
Emergence
Dominant Design
Growth
Mature
Major product Minor process
Major process Minor product
Minor product Minor process
Major product Minor process
Low High
Dominant Innovation Types
High HighLearning Requirement
ProductProcess Substitution
Figure A2 Types of innovation over product life cycle
(Tushman amp Nadler 1996 p 139)
Based on the position of their products in the life cycle therefore an analysis of the
companiesrsquo innovative activities was able to conclude whether they focused on product
or process innovation (Abernathy amp Utterback 1978) Grant (2002) argues that the
type of innovation can also be seen as an indicator of the rate of innovation as
illustrated in figure A3
Based on figure A3 product innovation is characterised by the highest rate of
innovation and process innovation the lowest Grant (2002 p 373) introduces a third
type of innovation strategic innovation which involves new combinations of markets
and products According to Grant this type of innovation can be seen as a medium
rate of innovation Figure A3 illustrates the importance of evolution over time where
strategic innovations form an important part of future innovations because of market
saturation and the lack of possible product innovations
204
Figure A3 Innovation over the life cycle from technological to strategic innovation
(Grant 2002 p 373)
A1 ERICSSON TELEBIT
Telebit was established in 1992 and employed 13 people In 1999 the firm merged
with the Swedish corporation LM Ericsson (Ericsson) when it acquired its current
name Ericsson Telebit (TED is the internal abbreviation for Ericsson Telebit) In the
process the number of employees grew from approximately 70 to 140 within twelve
months In 2003 TED was a local design centre mainly concentrating on software
development for Ericssonrsquos mobile and fixed Internet products
In 1995 TED became the first company to introduce a commercial router for Internet
Protocol version 6 (IPv6) and was a leading provider of software based on IPv6
technology working continuously to improve the application and development of this
IP-platform After joining Ericsson the company became a separate design centre for
long-term projects for different product units in the Ericsson organisation whereas
Rat
e o
f in
no
vati
on
Time
Productinnovation
Processinnovation
Strategicinnovation
205
previously it had developed customer products directly Since the company only had
one overall customer Ericsson the various product units became known as sponsors
The longer duration of projects and the move down the value chain had a number of
implications for organisational structure and put a strain on the companyrsquos
entrepreneurial culture Work was structured around two major projects instead of a
large number of smaller projects of short duration One project called SoftWare for
Internet Protocol for Ericsson (SWIPE) focused on software development for
routers while the other focused on IP solutions for mobile terminals and was named
Terminal Internet Protocol (TIP) Ericsson Telebit is represented by the middle arrow
in figure 31 which shows that an organisation based on a number of large projects
often acquires new knowledge through these projects even though the end product is
produced in another (production) process
The age and size of the organisation together with the focus on building an
appropriate structure for the running of the two large projects led to the conclusion
that Ericsson Telebit had reached the Coordination phase Since its owner was its
only customer Ericsson Telebit was forced to run an efficient and cost-minimising
organisation as well as nurturing creativity and opportunity The crisis which
followed the need to control costs in a creative environment had led to a new
structure where employees were more closely connected with specific projects
replacing the more organic structure there before the company joined Ericsson
Since all products were to be used in the mobile terminals and Internet of tomorrow
the rate of innovation was as high as it could be in the twenty-first century This is
illustrated by the fact that all the applications developed by Ericsson Telebit up to
now had not yet reached the market
206
A2 DANFOSS DRIVES
Danfoss Drives is the largest division of the Motion Control segment of Danfoss
Group one of Denmarkrsquos largest industrial corporations The Motion Controls
segment was established ultimo 2000 and apart from Danfoss Drives it also
includes two other divisions Gearmotors and Marine Systems In 2001 the turnover
of the Motion Control Segment was almost DKK 3 billion with customers all over
the world
Activities at Danfoss Drives can be dated back to 1968 with the introduction of the
first mass-produced frequency converter Heating Ventilation and Air-Condition
applications (HVAC) were introduced in 1990 and after the acquisition of Bauer a
gear motor manufacturer in 1999 the Motion Controls Segment was marketed as a
one-stop shop for the industry Apart from its headquarters in Graasten Denmark
Danfoss Drives had three production sites established via acquisitions in America
and the founding of a company in Germany In 2003 the company served a wide
range of customers across different industries eg chemicals and consumer goods
metals and mining pulp and paper refrigeration and the automotive industry
With its emphasis on the continuous introduction of new and improved products
Danfoss Drives has attached a lot of importance to technological innovation The
development of new products for the Drives division was the responsibility of a
Product Development manager has responsibility for The development process was
organised in a matrix structure with technology centres serving the different projects
which again were organised in a ldquocore teamrdquo and a number of ldquosub-teamsrdquo In
managing the development process the Product Development manager was assisted
by the Strategic Product Development Unit The Danfoss Group had a number of
cross-unit project groups which were set up to co-ordinate and assist in different areas
such as sales amp marketing production and ITfinance As with Ericsson Telebit
207
Danfoss Drives is represented by the middle arrow in figure 31 Although the general
organisational structure of Danfoss Drives was very different from Ericsson Telebit
the two companies were similar with regard to the organisation of the development
projects where projects were the main source of innovation and adoption of new
knowledge
With nearly 40 yearsrsquo experience of developing high-tech products for a broad range
of industries Danfoss Drives remains committed to continuous innovation Given its
size and number of markets and it was argued based on its actions and
organisational structure they had reached the collaboration stage The company had
formed a matrix structure to enable it to combine technological inventions with
market demands and the use of headquarter staff also followed the characteristics of
the collaboration stage inasmuch as they worked in interdisciplinary teams which
consult with rather than manage field units
It is difficult to precisely describe Danfoss Driversquos rate of innovation since they
focus on both product and strategic innovations And this was made even more
complicated by the fact that the companyrsquos products also provided process
innovations to its customers However based on the companyrsquos historical product
development the first mass-produced frequency converter developed in 1968 and the
HVAC technology developed in 1990 represent the main radical innovations All
subsequent innovations were incremental Danfoss Drivesrsquo future rate of innovation
was thus characterised as medium-high implying that they would continue to be at
the cutting edge of their technological platforms
A3 BANG amp OLUFSEN
Bang amp Olufsen (BampO) the best-known Danish company in the niche market for
electronic consumer goods was established in 1925 as a producer of radios By 2003
208
it had become a globally recognised niche producer of audio television and telephone
products at the high end of the market with a turnover in the financial year
20012002 of DKK 42 billion and after-tax profits of DKK 147 million The
company employs 2800 people and its main activities are located in Struer
Product development costs of DKK 333 million reflect the fact that innovation
through new product launches are an important part of the companyrsquos strategy as a
high-end producer BampO has divided its activities in two main groups branded and
non-branded businesses The branded businesses include activities in the audiovisual
and telephone markets while the non-branded businesses covered a number of
diversified activities
Branded businesses are by far the largest part of BampO accounting for more than 90
percent of turnover BampO Telecom is operated as a separate division and sells its
products through both BampO shops and telecom companies As a leading producer of
high-end audio products BampO is forced to continuously introduce new products
which in 2003 led to the presentation of ldquoa major acoustic productrdquo The telecom
division was established in 1986 in collaboration with the former Jysk Telefon Its
main product in 2003 was wireless telephones which account for more than 75
percent of turnover
BampO Medical AS is the largest of the non-branded businesses with an annual
turnover of DKK 250-300 million and 290 employees Products are developed in
collaboration with leading companies in the medical industry including Novo
Nordisk Another example was the partnership with 3M which led to the
development of the worldrsquos first digital stethoscope
BampO ICEpower AS was established by BampO and the inventor of a new technology
for digital amplifiers While initially experiencing significant growth in turnover
recent major investments in technology and product development had led to a loss of
209
more than 50 percent of turnover BampO has high hopes for the future potential of the
technology since it can be implemented in a large number of products
Under the name New Businesses 35 employees were involved in testing the potential
of developing and launching new products in new or existing markets Up to now the
company had identified opportunities in the market for car audio systems including
the further development of loudspeakers to be sold through existing distribution
channels
Apart from the divisions set up to develop and sell products BampO had also
established BampO Operations a division focusing on process-optimising the
production of products developed in the other divisions As part of this optimisation
BampO Operations had decided to outsource part of the production of telephones
BampOrsquos innovative activities were concentrated in a separate department with around
300 employees Apart from the joint activities with the medical industry in BampO
Medical all product innovation was carried out in this department BampO is thus an
example of a company that tries to benefit from ideas and knowledge generated in the
RampD department This was represented by the right-hand side of figure 31
As a more than 75-year-old company employing 2800 people in a complex
organisational structure BampO had reached the red-tape crisis because of the need to
move from the Coordination phase to the Collaboration stage To address this the
company began a process of reconfiguring those business activities where there was a
need for a more spontaneous way of working The lsquonewrsquo structure of the RampD
department can be seen in this perspective In 2003 BampO started on a restructuring
of the organisation from being ldquoproduct-project-orientedrdquo to combining all activities
in one central RampD department Prior to this BampO had RampD departments in all
product lines (except medical)
210
Even though innovation activities in the branded businesses were focused on product
development the rate of innovation was low because it involved a minor degree of
traditional product innovation This conclusion was based on the fact that from a
generic point of view all the products were late in their life cycle and the innovations
were mostly focused on design attributes and the addition of some new
functionalities BampO Medical and the New businessesrsquo focus on strategic innovation
was based on identifying new markets for launching products made using BampOrsquos
core competencies which is the main reason for the conclusion that BampOrsquos
innovation activities mainly involved a low rate of innovation
A4 CRISPLANT
Crisplant founded in 1951 by a Danish entrepreneur had had a number of different
owners since the beginning of the 1970rsquos In 2003 after a short period as an
independent company on the Danish stock exchange Crisplant AS became part of
the British engineering company FKI Group which had more than 17000 employees
and a total turnover of euro 2790 million Organisationally Crisplant AS was part of
FKI Logistex a division specialising in automated material flow solutions and
employed more than 900 employees with an annual turnover of approximately euro 160
million
As a project-oriented company Crisplant AS made customised sorting systems for
airport baggage-handling parcel carriers retailers mail-order companies internet
trading and manufacturersrsquo distribution In 2003 Crisplant had built more than 600
sorting systems around the world and was continuously looking for new markets
Software development was crucial to Crisplantrsquos product innovation and in 2001 it
therefore acquired Dator one of its main suppliers of operating systems at the same
time changing its name to Dator-Crisplant One of the reasons for acquiring Dator
was that the companyrsquos financial problems made its future uncertain Since this could
211
have interrupted Crisplantsrsquo supply of operating systems it seemed strategically
sound to secure the existence of one of its main suppliers by buying it In 2003 all
software development was carried out in Dator-Crisplant and this resulted in a
number of competitive advantages since Crisplant could now offer its customers a
more integrated software solution One example of this was the fully automated mini
post office Parcel Matetrade which enabled easy access to postal services either as a
single product or as an integrated solution
Project management was a cornerstone of Crisplantrsquos business model and the
company had therefore developed its own project management model based on the
identification of eight phases each characterised by a set of specific targets Before
moving to the next phase a ldquogaterdquo needed to be crossed which included a number of
evaluations and the preparation of plans and budgets for the next phase The use of a
common project model ensured that agreements time schedules and budgets were
kept and also made it easier to accumulate experience and knowledge for future
projects The model is illustrated in figure A4
Figure A4 Crisplantrsquos project management model
Although Crisplant was mainly structured around its three main business units the
company also had an RampD department which carried out basic research in relation to
Automatic High-Speed Transport and Sorting Systems which formed a substantial
part of operations In Crisplant therefore innovative activities were basically
represented by the lsquoright arrowrsquo in figure 31 similar to BampO ndash at least as regards the
more radical innovations The customer-oriented projects which had the character of
212
production processes also needed to be innovative although the innovations which
took place here were more incremental in nature All in all therefore major parts of
the companyrsquos knowledge generation took place in the projects as reflected by the
middle part of figure 31
A5 END2END
End2End was founded in 1999 by a group of executives from mobile network
operators with venture capital from Deutsche Bank Capital Venture Partners
Hewlett-Packard and Cisco Systems After the latest round of financing in August
2002 the total amount of invested capital including debt and equity was euro 654
million The company which was situated in both Denmark and the United Kingdom
had about 40 employees with the Headquarters and Network Operating Centre
(NOP) in Aalborg and the so-called Data Centre in Copenhagen
All management of the data centre was controlled electronically from Aalborg and
the company had no official address in Copenhagen As the first international Point-
of-Presence (POP) the company had a sales office in Bracknell UK and depending
on demand planned to open POPs in a number of locations around the world (See
figure A5)
213
Figure A5 Diagram of End2Endrsquos operations
The company was a managed service provider and contentapplication aggregator for
mobile data services and was a leader in its field in Europe End2End offered its
customers lower up-front investments and increased data speed enabling mobile
operators to take up opportunities as they arose End2End provided these benefits to
customers in the form of turnkey services via its infrastructure in Denmark and the
UK The actual software solutions were delivered in a partnership with third-party
software developers the solutions being based on open standards that complement
mobile operatorsrsquo existing offerings and capabilities End2End service delivery
infrastructure manages the complex network between end customer mobile operator
and software developer Apart from managing mobile data services End2End consults
its customers on opportunities tests and evaluations of profitable mobile data
services
Customers include mobile operators Internet portals providers of mobile service
applications network providers and brand owners looking for a quick flexible and
low-cost access to mobile infrastructure
214
With a management team of seven End2End mobile had reached the delegation
phase where all major areas had their own manager Tage Rasmussen who was CEO
in 2003 was responsible for the transition of the company from a technically led
company to a more commercially focused organisation while founder and president
Peter Langkilde was responsible for funding and overall business development
Apart from these two executives who also served on the board of directors End2End
had appointed five managers responsible for Sales Marketing Network Operations
Customer Operations and Finance With only 40 employees the company was not
expected to have reached the crisis of co-ordination but management seemed to be
concerned about the transition to a more commercially and effective organisation that
was focused on developing products and services to meet real market needs
The role of intermediator involved strategic innovation since End2End was creating
new combinations of services in the value chain which again created process
innovations for its customers Advising and consulting customers in the building and
outsourcing of digital infrastructures was part of its offerings and this clearly
underlined the importance of strategic considerations Because of the relatively new
and undeveloped market for the outsourcing of IT infrastructures the rate of
innovation was considered to be high This is based on the impact of strategic
innovations on the value chains of the future and in this respect the fact that
End2Endrsquos products and services created process innovation for its customers could
be seen as a valuable by-product
Based on the framework in figure 31 End2End can be seen as an example of a
company where innovation takes place in the production processes (software
development) Thus production was the main way of acquiring new knowledge and
ideas which is represented by the left-hand side of figure 31
215
A6 REFERENCES
Grant RM 2002 Contemporary Strategy Analysis Concepts Techniques
Applications Oxford Blackwell Publishing
Greiner LE 1972 Evolution and revolution as organizations grow Harvard
Business Rerview July-August pp 37-46
Tushman M amp D Nadler 1996 Organizing for innovation In Ken Starkey (ed)
How Organizations Learn A Critical Reader pp 135-155
216
217
APPENDIX II
English Summary
Intrapreneurship is a developing field which it is the purpose of this dissertation to
contribute to The study is primarily concerned with intrapreneurship from an internal
resources perspective The aim of intrapreneurship from this perspective is to identify
previously undiscovered organisational resources with respect to innovation or
combine existing resources in ways that enable these to become valuable innovations
The dissertation is comprised of five articles all of which are related to the overall
research theme exploration and exploitation of internal resources with respect to
intrapreneurship The overall agenda of the dissertation is to study the intrapreneurial
potential in its natural settings Based on data from the five case companies it was
decided to let the articles develop from the most interesting data and observations
This means that the articles are not part of a step-by-step research strategy leading to
a final conclusion but are discussions of different subtopics within the overall topic
drawing on different theories and different methodologies
The first article introduces the concept of corporate entrepreneurship This has been
used to explain various organisational phenomena ranging from strategy through
management in general to innovation and the abundant use of labels and
perspectives has consequently led to a lack of clarity Based on a literature review a
framework for corporate entrepreneurship has developed including intrapreneurship
exopreneurship and four organisational perspectives corporate venturing internal
resources internationalisation and external networks
218
The aim of the second article is to explore how innovativeness and creativity in a
small high-tech company changes after the company is acquired by a larger company
The empirical part of the article is based on interview and questionnaire data with a
focus on employeesrsquo perception of innovativeness and creativity including their own
innovativeness in relation to the possibilities offered within the organisational
structure The results indicate that entrepreneurial spirit innovativeness and
creativity in the case company were related to the lack of boundaries to and contact
with customers These driving forces could not be sustained when the organisation
matured and was acquired by a larger company
The aim of the third article is to provide an understanding of the various factors that
enable intrapreneurship in established companies The article reports on a case study
of intrapreneurship in a large knowledge-intensive industrial company Based on the
existing literature it is suggested that the use of different factors can either enable or
inhibit intrapreneurship and five enabling factors are identified Based on interviews
on-site observations and documents and reports the five factors are examined and
alternative factors considered The five enabling factors that are identified in the
literature are not sufficient to enable intrapreneurship in knowledge-intensive
companies and it is concluded that three additional factors ndash communication culture
and processes ndash should also be taken into account
The emergence of knowledge-based organisations and the increased importance of
knowledge as the key to competitive advantage poses new challenges for managers
and researchers alike The fourth article attempts to enlighten theories of
intrapreneurship and innovation by means of state-of-the-art knowledge management
theory and organisational learning theory
The fifth article analyses project management activities in two companies from a
knowledge management perspective It is shown how human competencies it-
219
systems and project management systems are analysed from two perspectives an
artefact-oriented and a process-oriented perspective From the first perspective
project management seems to consist of similar components in the two companies
whereas the process-oriented perspective identifies context-dependent differences It
is concluded that awareness of different perspectives opens up the possibilities for
more managerial options and better understanding in practice
220
221
APPENDIX III
Dansk resume
Intraprenoslashrskab er et felt under udvikling hvor mange brikker mangler at falde paring
plads for at opnaring en forstaringelse for hvorledes fornyelse og skabelse af nye
virksomheder kan ske inden for rammerne af etablerede virksomheder Formaringlet med
afhandlingen er at bidrage til dette puslespil Afhandling omhandler primaeligrt
intraprenoslashrskab fra et internt ressource perspektiv hvilket betyder at intraprenoslashrskab
belyses ved at fokusere paring udnyttelsen af interne organisatoriske ressourcer eller ved
at kombinere virksomhedens eksisterende ressourcer paring nye maringder som kan goslashre
dem vaeligrdifulde med henblik paring innovation
Afhandlingen bestaringr af fem artikler som alle er relateret til det overordnede emne
udvikling og udnyttelse af interne ressourcer med henblik paring intraprenoslashrskab
Afhandlingen studerer det intraprenante potentiale i dets naturlige omgivelser og
artiklerne er baseret paring de mest interessante data og observationer fra de fem case
virksomheder der har medvirket i projektet Det betyder at artiklerne ikke foslashlger en
skridtvis forskningsstrategi frem mod eacuten samlet konklusion men fremstaringr som
forskellige artikler der indenfor den overordnede problemstilling traeligkker paring
forskellige teorier og baseres paring forskellige metoder
Den foslashrste artikel introducerer begrebet corporate entreprenoslashrskab som er blevet
anvendt til at forklare forskellige organisatoriske faelignomener Fra strategi over ledelse
i al almindelighed til innovation Dette har medfoslashrt en mangfoldighed af begreber og
perspektiver som har skabt stor uklarhed omkring corporate entreprenoslashrskab Med
222
henblik paring at etablere et fundamentet for de foslashlgende artikler redegoslashres der i den
foslashrste artikel for corporate entreprenoslashrskabsbegrebet ud fra forskellige perspektiver
Der praeligsenteres i artiklen endvidere et overblik ved hjaeliglp af en model der
indeholder intraprenoslashrskab og exoprenoslashrskab samt fire organisatoriske perspektiver
corporate venturing interne ressourcer internationalisering og eksterne netvaeligrk
Den anden artikel belyser hvordan innovation og kreativitet i en lille virksomhed
aeligndrer sig naringr virksomheden opkoslashbes af en stoslashrre virksomhed Den empiriske del af
artiklen er baseret paring interviews og sposlashrgeskemadata med fokus paring medarbejdernes
opfattelse af innovation og kreativitet inklusiv deres egen innovationsevne i relation
til de muligheder der findes inden for organisationen Resultaterne indikerer at den
entreprenante aringnd innovationsevne og kreativitet i case-virksomheden isaeligr var
relateret til den uformelle organisationsstruktur og taeligtte kundekontakt Disse
drivkraeligfter kunne ikke fastholdes da organisationen blev opkoslashbt af en stoslashrre og mere
etableret virksomhed
Den tredje artikel har til formaringl at skabe en forstaringelse for de forskellige faktorer der
kan fremme intraprenoslashrskab i etablerede virksomheder Med udgangspunkt i et
litteraturstudie identificeres fem faktorer der enten kan fremme eller haeligmme
intraprenoslashrskab Betydningen af de fem faktorer undersoslashges i et casestudie i en stor
videnintensiv industrivirksomhed De fem faktorer findes ikke tilstraeligkkelige til at
fremme intraprenoslashrskab og alternative faktorer foreslarings Det resulterer i at yderligere
tre faktorer ndash kommunikation kultur og processer ndash foreslarings som intraprenante
faktorer i videnintensive virksomheder
Den oslashgede forskningsmaeligssige og erhvervspolitiske interesse for videnintensive
virksomheder og stigende betydning af viden som noslashglen til konkurrencemaeligssige
fordele stiller ledere og forskere overfor nye udfordringer Derfor belyser den fjerde
artikel intraprenoslashrskabs- og innovationsteori ved hjaeliglp af videnledelsesteori og
223
organisatorisk laeligringsteori Paring baggrund af et litteraturstudie udvikles en model der
belyser intraprenoslashrskab ud fra tre forskellige situationer for innovationsledelse Den
teknologiudnyttende situation den stabilt forandrende situation og den omvaeligltende
forandringssituation og to laeligringsrelaterede koncepter udnyttelse og udvikling
Modellen beskriver hvorledes intraprenoslashrskab vil fremstaring i hver af de seks
undergrupper
Den femte artikel analyserer projektledelsesaktiviteter i to virksomheder fra et
videnledelsesperspektiv Det vises hvordan menneskelige kompetencer it-systemer
og projektledelsessystemer kan analyseres ud fra to perspektiver et artefaktorienteret
og et procesorienteret perspektiv Med udgangspunkt i det foslashrste perspektiv fremstaringr
projektledelsen i de to virksomheder nogenlunde ens mens det procesorienterede
perspektiv identificerer kontekstafhaeligngige forskelle Det konkluderes at bevidsthed
om forskellige perspektiver giver flere ledelsesmaeligssige muligheder og en bedre
forstaringelse i praksis og af praksis
Det konkluderes at denne afhandling primaeligrt har bidraget med brikker til den del af
intraprenoslashrskabspuslespillet som vedroslashrer virksomheders eksisterende
organisatoriske ressourcer Den foslashrste artikel viste hvordan intraprenoslashrskab kan
gribes an fra forskellige perspektiver Mens artikel to og tre praeligsenterede to
forskellige syn paring hvordan interne ressourcer kan paringvirkes af forskellige indre og
ydre faktorer Artikel fire og fem pegede paring at videnressourcer er af afgoslashrende
betydning for intraprenoslashrskab i videnintensive virksomheder og at de derfor boslashr
adresseres og ledelses med udgangspunkt i deres kompleksitet
ii
This dissertation consists of several separate articles that together represent
my endeavours in the field of intrapreneurship and knowledge
management This is a field of both research and practice and the
dissertation is partly an account of current ideas in the area and partly an
insight into a variety of issues related to how entrepreneurial need is being
managed in different Danish companies
While therefore intrapreneurship is one perspective on companiesrsquo
management of innovative activities this dissertation has taken a starting
point in the management of knowledge to understand how innovativeness
is managed within companies Here knowledge-management activities are
seen neither as a technological solution nor as an isolated task for a specific
department but rather more in terms of inter-relating management domains
and creating space for innovative and entrepreneurial activities This space
could be found either within the existing organisational structures of the
company be supported by processes and activities that cross both
departmental and organisational borders or be established through the
formation of new companies
Reflecting upon the process which has led to the presentation of this
dissertation it seems that the life of a PhD student in many senses offers
experiences that can be summarised in the light of corporate
entrepreneurship This is at least the case if we accept that corporate
entrepreneurship as it will be argued in the dissertation can be seen as
consisting of four organisational perspectives corporate venturing internal
knowledge resources internationalisation and external networks
The current PhD project and dissertation is a corporate venture related to
but separate from the Aarhus School of Business Aarhus University and is
iii
based on existing competencies combined with the exploration of new
ones In the process the internal resources ie the research traditions and
perspectives that I brought with me together with the competencies and
skills from my previous education played a role in forming the research
questions and starting points of the project
Given the global nature of research internationalisation is an important
part of any PhD project This became clear to me in relation to my two
stays abroad which both contributed to my personal development and were
a source of new knowledge The external networks I built up during these
stays have been very helpful in discussing and commenting on previous
drafts of the papers
The process leading to the dissertation is not only manifested in a formal
plan consisting of seminars courses knowledge dissemination change of
academic environment and writing papers My work on the dissertation
can best be understood by dividing it into several stages as shown in figure
A The first period (May 2002 ndash April 2003) was spent participating in
doctoral courses and preparing the thesis proposal The overall theme for
the research project was determined by KNORI (KNowledge-Intensive
ORganisations and Intrapreneurship) a project which provided the funding
for the research but within this I was to find seed and nurture my own
corporate venture
The next phase began in May 2003 when I changed my academic
environment to spend a few weeks at Professor Georg von Kroghrsquos chair at
The University of St Gallen in Switzerland From October 2003 to April
2004 I also had the opportunity to experience daily life at Stanford
iv
University California This period involved the use of internal knowledge
resources and the development and use of external networks
The third phase of the project has been by far the longest most challenging
and most fruitful As regards time it was spread over more than three years
(from May 2004 to October 2007) However as shown in Figure A it was
divided into three periods since I gave birth to two children ndash in 2004 and
2006 ndash before finally finishing the dissertation in 2007
I would like to take the opportunity here to thank everyone who has been
involved in this process in one way or another Thanks are due to the
Ministry of Science Technology and Innovation for providing funding for
the research via the KNORI project I am also grateful for the generous
financial support from the Aarhus School of Business Aarhus University
and the Tuborg Foundation
I am especially grateful to my supervisors Professor John Parm Ulhoslashi and
Professor Anders Drejer without whose lively discussions I would never
have been so stubborn and my dissertation would not be what it is today I
am also grateful for the many inputs from colleagues at the Department of
Management at the Aarhus School of Business Aarhus University I am
especially thankful to Jakob Lauring for general support suggestions and
ideas for improvements to the dissertation I also want to thank my new
colleagues at the School of Management and Economics Aarhus
University for welcoming me and giving me time to finish my PhD
v
Figure A Timeline for the PhD process
The PhD process
Enrolled as a PhD student May 1st 2002
Personal
Publications
Article 1 Published December 2004 Submitted October 2004
Accepted November 2004
Article 2 Published October 2006
Submitted Nov 2005 Accepted July 2006
Article 5 Published June 2004
Submitted March 2004 Accepted April 2004
Article 3Published July 2005
Submitted September 2004 Accepted October 2004
Article 5 SubmittedSeptember
2007
Maternity Leave Magnus September 8th 2004 ndashNovember 7th 2005
Maternity Leave Tobias February 14th 2006 ndash
May 29th 2007
Thesis ProposalApril 11th 2003
PhD dissertation submitted
November 2007
Stanford UniverityOctober 1st 2003 ndash
April 5th 2004
Univerity of St Gallen May 5th ndash May 17th 2003 June 21st ndash June 28th 2003
PhD dissertationfinished
September 2007
vi
The project involved the participation of five companies and I would like
to thank the numerous people who took time to talk to me and helped me
with access in various ways In particular thanks to Allan Krogh Erlandsen
at Bang amp Olufsen Hanne Buje Jensen and Brian Larsen at Crisplant Niels
Gade at Danfoss Drives Morten V Jensen at End2End as well as Poul
Erik Dybdal and Erik Reinholt at Ericsson Telebit for giving me access to
their companies Without their hospitality and the time they and other
employees took to talk to me this dissertation would not have been written
I also want to thank Sine Nissen for being my co-pilot during the data
collection and Mette Line Chemnitz Mie Skovsgaard Nielsen and Lene
Thisgaard for assistance with the transcriptions I am also deeply grateful to
Anders Jacob Raj Andersen Mikkel Gadmar and Christian Nielsen for help
and inspiration I would also like to thank my co-authors in the individual
papers Anders Drejer John P Ulhoslashi Heine Kaasgaard Bang and Per
Nikolaj Bukh for inspiration and the opportunity to work together From
my visits abroad I want to thank Georg von Krogh and his research team at
St Gallen Switzerland for hospitality and for taking good care of me in
May and June 2003 Thanks also to SCANCOR Stanford University and
my colleagues there from October 2003 to April 2004
My family and friends who have supported me during the whole process
have been an infinite source of comfort to me Above all my parents and
my best friend Vibeke Reuter Lapiki were indispensable Finally I want
to thank my husband Per Nikolaj who has listened to my complaints ndash
especially in the most critical periods and when I felt I was being treated
unfairly You were always there to support me During the third part of the
PhD project my two sons Magnus and Tobias were there to make me
vii
focus on my work and cheer me up This more than made up for the many
months of morning sickness and general inaction
Karina Skovvang Christensen
Aarhus University
December 2007
viii
ix
Contents
Preface i
Contentsix
PART I 1
Introduction 1
CHAPTER 1 3
The Background 3 11 Innovativeness in Denmark5
12 The KNORI project 9
13 References11
CHAPTER 2 13
Research scope themes and structure 13
21 Corporate entrepreneurship15
22 The corporate entrepreneurship field 18
23 focus and structure of The dissertation 21
231 The structure of the dissertation 21
232 The research questions 22
233 The articles in the dissertation23
24 References27
CHAPTER 3 31
Methodology 31
31 From Paradigm to research approach32
32 Unit of Analysis 34
x
33 Selection of the case companies37
34 The case companies 40
35 The case study approach 40
351 Definition of a case study41
352 Action research or research in action 42
36 Validity of the methodology 44
361 The use of Multiple Sources of Evidence45
37 The research interviews 46
371 The transcription process49
38 References50
CHAPTER 4 57
A Classification of the Corporate Entrepreneurship Umbrella Labels and Perspectives 57
41 Introduction59
42 Theoretical roots entrepreneurship 61
43 The appropriate label 61
44 Defining corporate entrepreneurship 63
45 Perspectives on corporate entpreneurship64
451 Corporate venturing65
452 Internal (intangible) resources66
453 Internationalisation67
454 External networks and alliances 67
455 Towards a framework for corporate entrepreneurship 68
46 Conclusion 68
47 References70
CHAPTER 5 75
Postscript to article 175 51 Towards a framework for corporate entrepreneurship 76
52 Concluding remarks 78
53 References81
xi
PART II 83
Intrapreneurship from an Internal Resources Perspective 83
CHAPTER 6 87
Losing innovativeness the challenge of being acquired87
61 Introduction89
62 Innovation through acquisition the entrepreneurial challenge 90
621 The case for innovation through acquisitions91
622 Managing the post-acquisition process92
63 Method93
631 The interviews 93
632 The questionnaire 93
64 Innovativeness of Ericsson Telebit from spin-off to integration94
641 Incorporation into LM Ericsson 95
642 Ericsson Telebitrsquos products 96
643 The Market 96
644 From customers to sponsors 97
645 Organisational structure 97
646 Employees 98
65 Discussion of Ericsson Telebitrsquos innovativeness98
651 Creativity99
652 Innovation100
653 The innovation process102
66 Concluding discussion 103
661 Implications for practice104
662 Implications for research 105
67 References106
CHAPTER 7 111
Enabling Intrapreneurship The Case of a Knowledge-Intensive Industrial Company 111
71 Introduction113
72 Corporate entrepreneurship114
73 Methodology116
74 Danfoss Drives117
741 Strategy and the organisation 117
xii
75 Corporate entreprenership at Danfoss Drives 118
751 Rewards118
752 Management support 119
753 Resources 119
754 Organisational structure 120
755 Risk 122
76 Towards a more complete model 123
761 Communication 124
762 Culture125
763 Process127
77 Conclusion and implications127
78 References128
PART III 131
Managing Internal Knowledge Resources131
CHAPTER 8 139
Understanding Intrapreneurship by means of state-of-the-art knowledge management and
Organisational learning 139
81 On the developing need for intrapreneurship141
82 Innovation management and intrapreneurship 144
821 Innovation management the context of intrapreneurship 145
822 Contingent situations for innovation management 146
823 Intrapreneurs who makes the innovations 148
83 Knowledge in an innovation perspective 149
831 Knowledge management in a knowledge society149
832 Different types of knowledge 150
Level of articulation tacit to explicit 150
Depth of knowledge Dreyfuss and Dreyfuss 151
Location of knowledge 152
Diffusion of knowledge undiffused to diffused 152
Complixity of knowledge 153
84 Understanding intrapreneurship better153
841 The purpose exploitation and exploration 154
842 The content learning leading to innovation 154
843 A framework for intrapreneurship in light of knowledge155
85 References157
xiii
CHAPTER 9 159
Knowledge Management in Perspective(s) An Analysis of Project Management in Two Companies
159
91 Introduction162
92 Knowledge management in practice 163
921 Two perspectives of knowledge management 163
922 Knowledge Management and the perception of Knowledge 165
923 Strategies for knowledge management166
93 The Two Companies and the methodology 167
94 Knowledge Management in the two companies 168
941 Knowledge management at Bang amp Olufsen 168
942 Knowledge Management at Crisplant 170
943 Knowledge Management as Project Management172
95 Knowledge Management in Perspective(s)174
951 Artefact-Oriented Epistemology 174
952 Process-Oriented Epistemology 175
96 Concluding Remarks177
97 References180
PART IV 183
CHAPTER 10 185
Findings and Perspectives185
101 Elements of this dissertation 187
102 main points and contributions 189
103 Synthesising the contributions 191
104 Limitations of the study 196
105 References198
APPENDIX I 201
Case companies201
A1 Ericsson Telebit 204
A2 Danfoss Drives206
A3 Bang amp Olufsen 207
A4 Crisplant210
xiv
A5 End2End212
A6 References215
APPENDIX II 217
English Summary 217
APPENDIX III 221
Dansk resume221
1
PART I
Introduction
This dissertation which focuses on intrapreneurship from different
perspectives is divided into four parts and includes five articles that
constitute the main results of my research as PhD student The overall aim
of the articles which address different aspects of intrapreneurship is to
contribute as building blocks to the larger intrapreneurship mosaic which
is still under development in the research literature (Ireland et al 2005)
The first part which serves at the introduction to the dissertation consists
of five chapters Chapter 1 provides a short description of the Danish
Industry and a discussion of some of the main challenges in relation to
innovativeness adoption of new knowledge and intrapreneurship The
chapter also briefly describes the KNORI project (KNowledge intensive
ORganisations and Intrapreneurship) which this dissertation is related to
Chapter 2 presents the overall research field corporate entrepreneurship
and discusses the difference between corporate entrepreneurship and
intrapreneurship This chapter also describes how research interest in
corporate entrepreneurship has evolved over time The research themes
together with the structure of the rest of the dissertation are also presented
in more detail in this chapter Chapter 3 presents the methodology with an
2
emphasis on the selection of cases for the PhD project the validity of the
methodology and various issues regarding the research interviews
Chapter 4 which constitutes the first article in this dissertation develops a
framework for corporate entrepreneurship consisting of an internal
perspective (intrapreneurship) and an external perspective
(exopreneurship) The article further illustrates that intrapreneurship
consists of three organisational perspectives corporate venturing
internationalisation and internal resources This article was the first step in
the PhD project and thus also represents a tentative first insight into the
field Finally chapter 5 serves as a postscript to the article and includes
additional insights
The second part of the dissertation consists of two articles articles two and
three which in different ways address the extrinsic and intrinsic factors that
influence an organisationrsquos internal resources with respect to
intrapreneurship The third part of the dissertation consists of articles four
and five which concern the relations between intrapreneurship and
knowledge management and how knowledge management can support
intrapreneurial management Finally part four concludes the dissertation
REFERENCE
Ireland RD CR Reutzel amp JW Webb 2005 Entrepreneurship
Research in AMJ What Has Been Published and What Might the Future
Hold Academy of Management Journal Vol 48 No 4 pp 556-564
3
CHAPTER 1
The Background
New governments almost always mean new visions At least this was the
case in Denmark at the end of 2001 Although its industrial policy already
encouraged innovation and provided for the establishment and
administrative support of new companies etc the government wanted a
change of mindset in society in the direction of greater creativity and an
entrepreneurial culture
It was realised that growing internationalisation would drive more and
more Danish companies to offshore production or sourcing from low-cost
countries This led to growing anxiety about employment wealth ndashcreation
and the future of Danish society throughout the 1990s Since it was
becoming clear that more and more jobs would be moved to the new EU
countries or further east both Danish politicians and the Danish media
began to focus attention on innovation incubators entrepreneurship and
intrapreneurship
At the same time the Danish media seized on intrapreneurship via the
start-up of new companies based on the competencies of established
companies as the lsquosolutionrsquo to the creation of more jobs in Denmark
However intrapreneurship is more than just starting up new internal or
external ventures Even though the creation of new jobs and companies
might be to the benefit of society as a whole the management of existing
4
companies would no doubt think differently if their most creative and
innovative employees started establishing new companies based on
competencies acquired in their former jobs
Thus from an organisational or corporate perspective intrapreneurship is
more about a companyrsquos ability to sustain creativity innovativeness and the
entrepreneurial spirit among its own employees and channel this towards
the creation of new structures and initiatives that benefit both employees
and the company and probably also create wealth at societal level
Intrapreneurship can be enabled by giving employees time to work on their
own projects and to assist with development salesmarketing production
legal issues etc Furthermore as will be argued in chapter 4
intrapreneurship is part of a more comprehensive research and practice
field corporate entrepreneurship
There has been a tendency in the Danish press to more or less explicitly
equate intrapreneurship with corporate venturing and unlike in the
international literature the term intrapreneurship has been a much more
popular label in the Danish media1 In relation to media interest which to
some extent might also reflect the focus of Danish companies or
government agencies it is notable that even though corporate
entrepreneurship has been of academic interest for many years it was only
1 This can for example be seen from a full text search in the Danish database InfoMedia which covers
most newspapers and a number of popular magazines As of June 30 2007 the term lsquocorporate entrepreneurshiprsquo had appeared 11 times whereas lsquointrapreneurshiprsquo and lsquocorporate venturingrsquo had been used 91 and 81 times respectively According to InfoMedia the first time an article on lsquocorporate entrepreneurshiprsquo lsquointrapreneurshiprsquo and lsquocorporate venturingrsquo was published in a Danish newspaper was
in 2005 1996 and 1999 respectively
5
from 2003 that the Danish media started focusing on intrapreneurship
In one of the first comprehensive studies based on Danish data Evald
(2003) showed that small companies create many jobs by spinning off new
ventures Based on this finding she argues that initiatives should be
focused on the intrapreneurial abilities of small and medium-sized
companies (SMEs) However while the importance of spin-offs and job
creation in small companies should not be underestimated large companies
also have the possibility of supporting entrepreneurship in-house ndash whether
it is called intrapreneurship or corporate entrepreneurship These
companies have both much larger and greater access to different kinds of
resources and are better able than SMEs to take a limited risk by entering
different forms of intrapreneurship
11 INNOVATIVENESS IN DENMARK
Given that Danish industry is largely made up of small and medium-sized
companies Denmark is not likely to adopt the same innovation policy as a
country like the US with its many research institutions and large
technologically advanced companies On the contrary a characteristic of
the innovation process in SMEs is the indirect implementation of
technological breakthroughs unlike in large companies where there is close
contact between research development and production (Erhvervsfremme
Styrelsen 1999) The indirect nature of the innovation process involves a
time lag from technological breakthroughs to their adoption in products or
production processes which is also one of the findings of the so-called
DISCO project (Erhvervsfremme Styrelsen 1999) in its analysis of the
Danish innovation systemrsquos challenges strengths and bottlenecks
6
This is a very general statement of course and there are well-known large
Danish companies eg Novo Nordisk Novozymes Coloplast Danfoss and
Grundfos that are major players in their respective industries and also very
innovative Furthermore Abernathy amp Utterback (1978) among others
have argued that large companies in existing industries are most likely to
innovate incrementally while breakthrough innovations are more likely to
come from either small companies or large companies which apply their
technologies in innovative ways in other business areas
However for most Danish companies ndash especially SMEs ndash the needs of and
requirements for innovation support knowledge transfer and conditions for
intrapreneurship must be addressed from a policymaking perspective
Moreover as is also central to the topic of this dissertation the innovative
capabilities of large established companies are possibly even more
important
As a result of its comparative disadvantage ndash due to the size of the country
ndash the key challenge for Danish industry is sometimes seen as the adoption
of a broader and more interactive understanding of innovation (Nyholm amp
Langkilde 2003 Rosted 2003) Due to their technology-oriented approach
to innovation companies follow what Abernathy amp Utterback (1978) have
identified as product or process innovation cycles and not what Grant
(2002 p 373) with a broad term calls strategic innovation By adopting a
broader view of innovation Danish companies would be better placed to
exploit the potential of strategic innovations where new combinations of
technology customers and services can change the competitive structure of
the industry or even create a new industry as argued by proponents of the
so-called Blue Oceans strategies (Kim amp Mauborgne 2005)
7
Another important characteristic of strategic innovations is the interactive
process that leads to the innovation Within the technological paradigm of
innovation (Sundbo 1998) the development process is seen as linear while
strategic innovations follow an interactive process where ldquonew
combinationsrdquo can only survive if they meet a real market demand The
interactive process involves a closer interfirm relationship with a strong
focus on exploiting the innovative potential of new technologies The
willingness and ability to form these relationships has been found in Danish
industry both in high- and low-tech industries (Erhvervsfremme Styrelsen
1999)
In order for ideas to be commercialised in the shape of new companies or
new business areas for established companies there needs to be a well-
functioning market for venture capital The establishment of such a market
has therefore been a government priority In addition to this the largest
Danish companies have also helped fund new companies through newly
established venture funds often in co-operation with institutional or private
investors whose funding in many cases stems from selling previously
established companies
The development of such funds might be seen as the result of a broader
view of innovation where the strategic and interactive aspect has led to the
return of entrepreneurship as the nucleus of the innovation process Large
corporations now see the entrepreneur as an important part of striking the
right balance between technological development and market demand
Whether it is an intrapreneur (Pinchot 1985) who leads an internal venture
project or an external entrepreneur funded through venture funds or
8
corporate venture capital the importance of entrepreneurship in the pursuit
of innovation is now a fact
One indicator of the importance of entrepreneurial activities in the pursuit
of innovation is the total amount of capital flowing towards venture
investments as shown in Figure 11 According to data from
Vaeligkstfonden2 the total funds available in the venture capital market in
Denmark have risen dramatically from DKK 35 billion in 1998 to DKK
172 billion in 2002 after which it flattened out and actually fell slightly in
2003 when more investors withdrew from the venture market3 By August
31 2007 the total funds available in the venture capital market were
approximately DKK 22 billion
Until 2001 the prime interest of venture funds was in telecommunications
and computer technology but since then the focus has shifted to life
sciences This can be seen by the fact that the total amount of invested
venture capital in life sciences exceeds investments in ICT Furthermore
two new ventures focusing solely on life sciences have been established
while two ventures focusing on ICT have been terminated (Vaeligkstfonden
2002)
2 Data according to rdquoDet danske marked for venturekapital og private equityrdquo published annually by
Vaeligkstfonden Copenhagen
3 LMX Business Development TDC-Innovation Venture IT Velcap Danske Life Science TEMA
Kapital BUHL Randers and Udviklingsparken (continued in the context of Incuba AS)
9
219
201
175
161154
172
150
35
52
118
0
5
10
15
20
25
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
DK
K b
n
Figure 11 Funds available in the venture capital market (Based on
figures from Vaeligkstfonden 2001-2007)
That some of Denmarkrsquos largest corporations have helped create new
companies can be seen from the development of nine corporate venture
capital (CVC) funds in the period from 1998 to 2002 which resulted in a
total of 12 CVC companies in 2002 In comparison only 4 companies were
established in 2006 even though almost five times as much funding was
available than in 1998
12 THE KNORI PROJECT
The KNORI project (KNowledge intensive ORganisations and
Intrapreneurship) stemmed from both the need to create more jobs in small
and medium-sized Danish companies and the focus on technology-oriented
innovations at the beginning of the 1990s as discussed above Thus the
10
project was established4 as part of the Ministry of Science Technology and
Innovationrsquos initiatives to boost the ICT industry KNORI was set up to
study how established organisations in the ICT industry in northern Jutland
could be more dynamic as regards spinning off new ventures developing
new business areas and developing a sustainable ability to innovate Of
course these broad aims could also be approached from other perspectives
this PhD project has thus chosen to address the question from an
intrapreneurial perspective
The KNORI project started with a meeting between the researchers
involved and three key persons in the telecommunications industry in
Northern Jutland It became clear from this meeting that the companies
were just as much competitors as collaborators This meant that it would be
difficult to arrange explicit knowledge sharing between them through
seminars etc as originally envisaged Therefore the scope of the project
was broadened to also focus on companies in other parts of Denmark as
well as industries that were not as closely related but which had similar
challenges
The case companies for this PhD project were to be chosen from the
broadened KNORI base The methodological considerations are discussed
in more detail in chapter 3 but the result was that six companies agreed to
take part in the project and all were invited to an introductory meeting in
4 KNORI was a network project between Harry Boer and Bent Dalum University of Aalborg and Anders
Drejer (University of Aalborg at the project start) and John Parm Ulhoslashi Aarhus School of Business
Aarhus University
11
March 2003 where the framework for corporate entrepreneurship and
preliminary thoughts about intrapreneurial enablers were presented
A second meeting on factors which enable and hinder corporate
entrepreneurship was planned for June 2004 but was cancelled due to
unforeseen circumstances No new date was set for this meeting due both
to the summer holidays and my first maternity leave from the beginning of
September 2004 Since it also became clear that the research opportunities
were not so much related to the companies as a group as to individual
companies it was decided not to include the seminars in the PhD project
13 REFERENCES
Erhvervsfremme Styrelsen 1999 Det danske innovationssystem ndash DISCO-
projekt Rapport nr 9 Sammenfattende rapport Koslashbenhavn
Evald MR 2003 Corporate Venturing i Danmark En undersoslashgelse af
mindre virksomheds knopskudsaktiviteter Center for Smaringvirksomheds-
forskning Syddansk Universitet
Grant RM 2002 Contemporary strategy analysis Concepts techniques
applications (fourth edition) Oxford Blackwell Publishing
Kim WC amp R Mauborgne 2005 Blue Ocean Strategy How to Create
Uncontested Market Space and Make Competition Irrelevant Boston
Harvard Business School Press
Nyholm J amp L Langkilde 2003 Et benchmark studie af innovation og
innovationspolitik ndash hvad kan Danmark laeligre Oslashkonomi- og
12
Erhvervsministeriets enhed for erhvervsoslashkonomisk forskning og analyse
FORA Koslashbenhavn
Pinchot G 1985 Intrapreneuring Why You Donrsquot Have to Leave the
Corporation to Become an Entrepreneur New York Harper amp Row
Rosted J 2003 Tre former for innovation Oslashkonomi- og
Erhvervsministeriets enhed for erhvervsoslashkonomisk forskning og analyse
FORA Koslashbenhavn
Sundbo J 1998 The Theory of Innovation Entrepreneurs Technology
and Strategy Cheltenham Edvard Elgar Publishing
13
CHAPTER 2
Research scope themes and structure
Business structures are becoming global and the rules of competition are
changing constantly posing new challenges to companies Whether
companies define themselves as being in one or another market they seem
to be forced to adapt and innovate at a constantly increasing pace Change
comes about faster than we expect and the saying that the only constant
thing in the world is change seems truer than ever Furthermore the
boundaries of the firm are becoming more blurred as companies get
involved in different collaborations and tasks from research and
development to business support activities are increasingly outsourced
While the world appears to be constantly changing some companies tend
to stick to the ldquoold waysrdquo of doing business ie preserving the well-known
techniques and business concepts of co-operation while others reorganise
re-create themselves merge and split up become virtual enter new
markets or create unforeseen alliances Thus some companies seem to
ignore changing market conditions while others act on challenges to well-
established business routines and rules of competition
One major driving force for change has been the increasing importance of
knowledge both for everyday life where new innovations are shaping
family structures communication patterns and work-conditions for
business structures and for individual companies entering the so-called
14
knowledge society (Drucker 1993) New conditions for competitive
advantage have appeared where knowledge is the key resource and where
knowledge workers will dominate the workforce (Drucker 1993 2002) ndash
perhaps not in the number of employees but in terms of their influence on
global value creation
A society becoming increasingly dependent on knowledge will probably
introduce changes that we can hardly imagine now Organisations will face
new challenges both internally and externally These challenges are
affected by various factors eg the liberalization of markets markets for
new products new demands from various stakeholders new information
and communication technologies the decoupling of information flows from
the flow of goods and services and integration of product architecture and
technology (Teece 1998)
The responses of companies in the 1980s and to some extent the 1990s
have been characterised by reductions in the workforce downsizing
rightsizing budget cuts and depressed employee morale (Morris and
Kuratko 2002) While the focus has been on the short-term costs of
production no company can afford to rely on such an approach forever
The real challenge for a company wanting to remain a going concern is to
establish a competitive advantage and one way of doing this is continuous
innovation and the creation of new ideas According to Morris and Kuratko
(2002) companies must aspire to adaptability flexibility speed
aggressiveness and innovativeness which they boil down to one word ndash
entrepreneurship
15
21 CORPORATE ENTREPRENEURSHIP
Although intrapreneurship has been presented as the lsquosolutionrsquo to new jobs
and an improvement in companiesrsquo innovativeness it is worth
remembering that it may not be so very different from what we already
know There are countless examples in the management literature of
methods and techniques etc that are simply relaunched under new names
Therefore this dissertation also takes a broader perspective
If we follow the spread of research on corporate entrepreneurship from just
the use of the term in the literature it is remarkable how interest in topics
such as entrepreneurial management corporate entrepreneurship and
intrapreneurship has increased in the last couple of years This is illustrated
in figure 21 which shows the number of hits on intrapreneurship
corporate entrepreneurship and entrepreneurial management from a full-
text search in the database Business Source Premier In figure 22 the same
keywords are searched for in articles published by the Danish business
paper Boslashrsen5
5 Boslashrsen was also searched for the terms lsquointraprenoslashrskabrsquo lsquocorporate entreprenoslashrskabrsquo and
lsquoentreprenant ledelsersquo and the results added to the number of articles found using the English terms
The databases have also been searched for lsquointrapreneuringrsquo lsquointrapreneurialrsquo lsquocorporate venturersquo lsquocorporate venturingrsquo and lsquocorporate incubatorsrsquo There were only a few hits for intrapreneuring and intrapreneurial While interest in corporate venturingventuring (CV) has been increasing significantly it is not included in the figures since it is regarded as a perspective on corporate entrepreneurship and
intrapreneurship as will be argued in Chapter 4 Corporate incubators did not result in any hits
16
05
101520253035404550
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
Year
Nu
mb
er o
f ar
ticl
es
Intrapreneurship
Corporate Entrepreneurship
Entrepreneurial management
Total
Figure 21 Number of hits from a full-text search on the terms
ldquointrapreneurshiprdquo ldquocorporate entrepreneurshiprdquo and ldquoentrepreneurial
managementrdquo in the research database Business Source Premier
Figure 21 shows that following Pinchotrsquos introduction of intrapreneurship
in 1983 and his book Intrapreneuring in 1985 interest in the topic has
grown6 However figure 21 also shows that it is other terms that have been
dominant in each of the years covered It is of course difficult to draw
specific conclusions just by counting the number of times a word has been
used in articles in either journalistic or research articles Neither the context
nor the understanding of the concepts are necessarily the same and the
topic covered might even be discussed without ever explicitly mentioning
the term eg intrapreneurship
6 A similar search in the database Social Science Citation Index which contains research cited by others
shows that the number of articles on concepts that have been cited by others has been slightly increasing
since the mid-1980s with the increase being greater since the end of the 1990s
17
0
5
10
15
20
25
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Year
Nu
mb
er o
f ar
ticl
es
Intrapreneurship
Corporate Entrepreneurship
Entrepreneurial management
Total
Figure 22 Number of hits from a full-text search on the terms
ldquointrapreneurshiprdquo ldquocorporate entrepreneurshiprdquo and ldquoentrepreneurial
managementrdquo in the Danish newspaper Boslashrsen
Seen together the figures in Figure 21 and 22 probably also illustrate the
spread of the terms in research literature and practice New terms are often
claimed to be driven by practice and the more popular part of management
literature But as Abrahamson (1996) has argued scholars have often been
aware of and interested in the new phenomenon for some time before the
explosion of interest in the practitioner-oriented literature and the press
However there is seldom a steep increase in researchersrsquo interest before a
term has gained the interest of practitioners This is in line with figure 22
which shows how intrapreneurship gained the interest of newspapers at
about the same time as the number of research articles rocketed7
7 A similar search of the more popular management research database Emerald shows a similar
development as Boslashrsen It increases slightly from 1994 to 2003 and then gains momentum
18
More directly focusing on articles published in The Academy of
Management Journal (AMJ) from 1963 to 2005 and examining article
topics rather than just counting the number of times the word is used in the
text Ireland et al (2005) found 8 articles on corporate entrepreneurship
Furthermore these articles were distributed regularly over time with a
small increase since 1994 However a similar number of other topics eg
ldquonew venturesrdquo ldquocorporate entrepreneurshiprdquo etc were also published
and the distribution of these articles over time was more similar to the
pattern shown in figure 21 Overall therefore while interest in the topic
has increased it is still an emerging or relatively young field characterised
by a large number of labels (Christensen 2004) the lack of a unifying
definition (Sharma amp Chrisman 1999) and low paradigmatic development
(Ireland et al 2005 Low 2001)
22 THE CORPORATE ENTREPRENEURSHIP FIELD
According to Hornsby et al (1993) research on corporate entrepreneurship
and how corporate entrepreneurship can be enabled can be roughly divided
into two waves The first wave ending at the beginning of the 1990s
focused on the entrepreneur as a person while the second wave started at
the beginning of the 1990s and gained momentum towards the end of the
decade Basically the second wave takes a starting point in William
Gartnerrsquos (1988 1989) suggestion that the research focus should be
changed from the entrepreneur as a person to entrepreneurship as a process
In particular Gartner argued that entrepreneurship is a multidimensional
process of which the entrepreneur is only one element thus moving the
focus more towards organisations which employ entrepreneurs and create
the conditions for their achievements
19
Michael A Hitt Jeffrey S Hornsby R Duane Ireland Donald L Sexton
and Shake A Zahra have been the main trendsetters in this second wave of
development of the field which is characterised by the use of many
different labels eg entrepreneurial management (eg Stevenson amp Jarillo
1990) strategic entrepreneurship (eg Hitt et al 2001) corporate
entrepreneurship (eg Guth amp Ginsberg 1990 Hornsby et al 1993 2002)
internal corporate entrepreneurship (eg Lumpkin amp Dess 1996 and
Schollhammer 1981) intrapreneurship (eg Carrier 1994 and Pinchot
1985) corporate venturing (eg Burgelman 1983 and Chesbrough 2000)
These terms have been used interchangeably to explain almost the same
phenomenon as is discussed in more detail in article 1 (Chapter 4) in this
dissertation
Sharma and Chrisman (1999) illustrate the termual ambiguity by listing a
number of definitions of corporate entrepreneurship suggested in the
literature Based on an analysis of two definitions in three papers ndash
corporate venturing (Biggadike 1979 Ellis amp Taylor 1987) and corporate
entrepreneurship (Burgelman 1983) ndash Sharma and Chrisman (1999) argue
that Burgelmanrsquos (1983) definition of corporate entrepreneurship is a
subset of Biggadikersquos (1979) corporate venturing whereas Ellis and
Taylorrsquos (1987) definition of a corporate venture is a subset of Burgelmanrsquos
(1983) corporate entrepreneurship definition
As is often the case with a plethora of different labels the development of
loosely related methods and theories not only creates uncertainty but also
complicates the applicability and integration of experiences into the
development of the field (cf Sharma amp Chrisman 1999)
20
To some extent it is a general characteristic of management knowledge
that it is spread throughout educational systems and companies by business
schools and global consulting companies (see for example Sahlin-
Andersson amp Engwall 2002) but in the case of the corporate
entrepreneurship literature it might also be because the field is both in its
infancy and characterised by multidisciplinarity Corporate
entrepreneurship has drawn on organisational theories from economics
(Schumpeter 1934 Kirzner 1985) sociology (McClelland 1961)
psychology (Collins and Moore 1964 Brockhaus amp Horwitz 1986) and
strategic management (Hitt et al 2002) and has thus been used to explain
various organisational phenomena from strategy via management in
general to innovation
While lsquocorporate entrepreneurshiprsquo has attracted the most attention
internationally as shown in figure 22 it is lsquointrapreneurshiprsquo that has
gained most interest in Denmark Although this could be seen as a minor
detail as regards the labeling of an otherwise identical concept as will be
argued in chapter 4 it also relates to the boundaries of the firm and thus to
a question of focus On start-ups or on companies that make innovation
possible and where employeesrsquo creativity and entrepreneurial aims are
based
Managerial decisions on the scope and diversity of a companyrsquos activities
affect the horizontal boundaries of the firm which in turn influence the
organisational choices of how and where to innovate starting a corporate
venture exploring internal resources internationalising or forming
external networks Managerial decisions on organisational structure and
design on the other hand are closely linked to the vertical boundaries of
21
the firm and define the organisationrsquos position in the value chain As Grant
(1996) and others argue decisions concerning the boundaries of the firm
are important for the application and integration of (specialist) knowledge
and thus future activities
23 FOCUS AND STRUCTURE OF THE DISSERTATION
The overall topic of this dissertation is exploration and exploitation of
internal resources with respect to intrapreneurship and how this is
affected by the firmrsquos organisation management managerial initiatives and
employees The dissertation is comprised of five different articles that
address this topic from different perspectives
From an early stage it was decided to let the articles develop from the most
interesting data and observations from the case companies This has
resulted in articles on different subtopics within the overall topic drawing
on different theories and different methodologies Although all the articles
have in common that they add to the mosaic within the field of
intrapreneurship they are not connected by a step-by-step research strategy
that leads to a final conclusion
231 The structure of the dissertation
This dissertation is divided into four parts Part I contains chapters one to
five Chapter one has described the background of the dissertation while
chapter two has introduced the field of intrapreneurship and the research
questions The next chapter will present the methodological considerations
chapter four examines and outlines corporate entrepreneurship the scope of
the research is explained and the concept of intrapreneurship is defined
22
finally chapter five serves as a postscript to chapter 4 and includes further
understandings of the issues
Part II contains chapter six and seven and consists of two articles on issues
related to intrapreneurship from an internal resources perspective Part III
contains chapter eight and nine which correspond to article four and five
respectively These articles combine intrapreneurship and knowledge
management and focus on knowledge resources within the internal
resources perspective Together these two parts make up the main body of
the dissertation Finally part IV (chapter ten) comprises a summary of the
articles and the results of the study This chapter also presents conclusions
on how the articles contribute to the research questions
232 The research questions
Although the articles should not be seen as the outcome of a premeditated
research programme together they address the following research
questions
1 What is intrapreneurship and how can it be explored and explained
2 How do different extrinsic and intrinsic factors affect the internal
resource perspective
a Can innovativeness be acquired
b How can various factors influence intrapreneurship
3 How is intrapreneurship and knowledge related And how can the
knowledge resource be addressed within the internal resource
perspective
a How can intrapreneurship be understood in the light of
knowledge management
23
b How can the knowledge resource be managed
233 The articles in the dissertation
Basically the articles take three points of departure which also correspond
to the three main parts of this dissertation This first part presents the
background and includes the first article This article A classification of the
corporate entrepreneurship umbrella labels and perspectives (Chapter 4)
is theoretical and presents and reviews an important body of literature
related to corporate entrepreneurship and also defines intrapreneurship
The next two articles Losing innovativeness the challenge of being
acquired and Enabling intrapreneurship the case of a knowledge-
intensive industrial company (Chapter 6 and 7) in part II are primarily
empirical in nature They address some of the aspects that need to be taken
into account when an organisation exploits intrapreneurship from an
internal resource perspective
The last two articles Understanding intrapreneurship by means of state-of-
the-art knowledge management and organisational learning and
Knowledge management in practice An analysis of project management in
two Danish companies (Chapter 8 and 9) in part III concern the
management of knowledge and how intrapreneurship can be facilitated or
enabled Article 4 is theoretical and links intrapreneurship and knowledge
management while the last article is primarily empirical and presents two
perspectives of the knowledge resource and how to manage them
The five articles that make up the dissertation are shown in table A which
briefly describes the objectives methodology used and conclusions With
regard to the objectives the articles all have in common that they relate to
24
the field of intrapreneurship in that they examine the various managerial
issues that should be taken into account in different situations Article 2 3
and 5 are based on case studies whereas article 1 and 4 take a starting point
in literature reviews
With regard to research question 1 the first article takes a look at corporate
entrepreneurship and sets the scene for the rest of the dissertation The
article explains the difference between corporate entrepreneurship and
intrapreneurship and with it offers a definition of intrapreneurship It also
explains how intrapreneurship gives organisations a greater choice of
organisational perspectives
The second research question is divided into two sub-questions Question
2a is addressed in article 2 which examines what happens to an
entrepreneurial culture when it is incorporated into a mature organisation It
shows that the active use of both extrinsic and intrinsic efforts is needed to
overcome organisational inertia Questing 2b is explored in article 3 which
looks at the impact of managerial initiatives andor intrapreneurial enablers
The results indicate that to encourage intrapreneurship in knowledge-
intensive companies there is a need for intrinsic enablers since the more
extrinsic enabling factors common to industrial companies are seen as only
basic factors
The third research question also consists of two sub-questions the first of
which is addressed in article 4 which takes a starting point in knowledge
management theory and organisational learning theory as well as theories
of intrapreneurship and innovation management This article provides a
framework for understanding the relation between intrapreneurship and
knowledge and the knowledge issues that should be taken into account
25
Finally research question 3b is dealt with in article 5 which examines how
different perspectives affect the way an organisationrsquos knowledge resources
are managed with respect to innovative activities The article shows how
intrapreneurship can be enabled from a knowledge management
perspective by taking a starting point in processes
The focus on the topic of the dissertation narrows from article to article
Thus the first article covers the whole field of corporate intrapreneurship
the articles in part II focus on the internal resource perspective and the last
article focuses only on the knowledge resource
26
Title Objective Method Conclusions
PART I Introduction
Chapter four (article 1)
A classification of the Corporate Entrepreneurship Umbrella Labels and Perspectives
To get an overview of the literature within the area of corporate entrepreneurship and define corporate entrepreneurship and intrapreneurship
Academic research literature review
Corporate Entrepreneurship can be divided into intrapreneurship and exopreneurship which again can be categorised into four perspectives corporate ventures internal resources internationalisation and networks The difference between corporate entrepreneurship and intrapreneurship is a question of the boundaries of the firm
PART II Intrapreneurship the Internal Resource Perspective
Chapter six (article 2)
Losing Innovativeness The Challenge of being Acquired
To study what happens to the employees of an entrepreneurial company when it is taken over by another firm
A case study based on multiple methods interviews observations and a questionnaire
The driving forces (innovation creativity and innovative processes) of a company are likely to disappear when it is incorporated into a mature organisation
Chapter seven (article 3)
Enabling Intrapreneurship The case of a knowledge-intensive industrial company
To study intrapreneurial enablers in a ldquonaturalrdquo setting
An embedded case study based on interviews and observations
The factors enabling intrapreneurship are changing with changing ldquosocietiesrdquo
PART III Managing Internal Knowledge Resources
Chapter eight (article 4)
Understanding Intrapreneurship by Means of State-of-the-art Knowledge Management and Organisational Learning Theory
To enlighten theories of intrapreneurship and innovation by applying state-of-the-art knowledge management theory and organisational learning
Literature review A framework for intrapreneurship and innovation based on knowledge has been developed which defines the task of intrapreneurship as a combination of innovation management and the learning-related concepts of exploitation and exploration
Chapter nine (article 5)
Knowledge Management in Practice An Epistemological Analysis of Project Management in Two Danish Companies
To study how different perspectives influence the management of an organisationrsquos knowledge resources
Two embedded case studies based on interviews and observations
Managerial awareness of different approaches to managing knowledge resources gives a greater degree of freedom and helps foster mutual understanding within an organisation
Table A Summary of the six articles in the dissertation
27
24 REFERENCES
Abrahamson E 1996 Management Fashion Academy of Management Review
21(1)254-285
Biggadike R 1979 The risky business of diversification Harvard Business Review
Vol 57 No 3 pp 103-111
Brockhaus RH amp PS Horwitz 1986 The psychology of the entrepreneur In DL
Sexton amp RW Smilar (eds) The art and science of entrepreneurship Cambridge
MA Ballinger
Burgelman RA 1983 A process model of internal corporate venturing in the
diversified major firm Administrative Science Quarterly Vol 28 No 2 pp 223-
244
Carrier C 1994 Intrapreneurship in large firms and SMEs A comparative study
International Small Business Journal Vol 12 No 3 pp 54-61
Chesbrough HW 2000 Designing Corporate Ventures in the Shadow of Private
Venture Capital California Management Review Vol 42 No 3 pp 31-49
Christensen KS 2004 A classification of the corporate entrepreneurship umbressl
labels and perspectives International Journal of Management and Entreprise
Development Vol 1 No 4 pp 301-315
Collins NC amp DG Moore 1964 The Enterprising Man East Lansing MI
Michigan State University
Drucker PF 1993 Post-capitalist society Oxford Butterworth-Heinemann
Drucker PF 2002 Managing in the Next Society Oxford Butterworth-Heinemann
28
Ellis RJ amp NT Taylor 1987 Specifying entrepreneurship In NC Churchill JAn
Hornaday BA Kirchhoff OJ Krasner amp KH Vesper (Eds) Frontiers of
entrepreneurship research Wellesley MA Babson College pp 527-541
Gartner WB 1988 Who is an entrepreneur Is the wrong question American
Journal of Small Business Vol 12 pp 11-32
Gartner WB 1989 Some suggestions for research on entrepreneurial traits and
characteristics Entrepreneurship Theory amp Practice Vol 14 No 1 pp 27-38
Grant RM 1996 Toward a knowledge-based theory of the firm Strategic
Management Journal Vol 17 pp 109-122
Guth WD amp A Ginsberg 1990 Guest editorsrsquo introduction corporate
entrepreneurship Strategic Management Journal Vol 11 pp 5-15
Hitt MA RD Ireland SM Camp amp DL Sexton 2001 Guest Editorsrsquo
Introduction to the Special Issue Strategic Entrepreneurship Entrepreneurial
Straetgies for Wealth Creation Vol 22 pp 479-491
Hitt MA RD Ireland SM Camp amp DL Sexton 2002 Strategic
Entrepreneurship Integrating Entrepreneurial and Strategic Management
Perspectives In MA Hitt RD Ireland SM Camp amp DL Sexton (eds) Strategic
Entrepreneurship Creating a New Mindset Oxford Blackwell Publishers
Hornsby JS DW Naffziger DF Kuratko amp RV Montagno 1993 An Interactive
Model of the Corporate Entrepreneurship Process Entrepreneurship Theory amp
Practice Vol 17 No 2 pp 29-37
Hornsby JS DF Kuratko amp SA Zahra 2002 Middle managers perception of the
internal environment for corporate entrepreneurship assessing a measurement scale
Vol 17 No 3 pp 253-372
29
Ireland RD JW Webb amp JE Coombs 2005 Theory and methodology in
entrepreneurship research In D Ketchen amp DD Bergh (eds) Research
methodology in strategy and management Vol 2 pp 1-32
Kirzner IM 1985 Discovery and the capitalist process Chicago University of
Chicago Press
Low MB 2001 The adolescence of entrepreneurship research Specification of
purpose Entrepreneurship Theory and Practice Vol 26 No 4 pp 17-25
Lumpkin GT amp GG Dess 1996 Clarifying the entrepreneurial orientation
construct and linking it to performance Academy of Management Review Vol 21
pp 135-172
McClelland DC 1961 The Achieving Society New York Free Press
Morris MH amp DF Kuratko 2002 Corporate Entrepreneurship Orlando Florida
Harcourt College Publishers
Pinchot G 1985 Intrapreneuring Why You Donrsquot Have to Leave the Corporation to
Become an Entrepreneur New York Harper amp Row
Sahlin-Andersson K amp L Engwall (eds) 2002 The Expansion of Management
Knowledge Stanford Stanford University Press
Schollhammer H 1981 The efficacy of internal corporate entrepreneurship
strategies In KH Vesper (ed) Frontiers of Entrepreneurship Research Babson
College Wellesley MA
Schumpeter JA 1934 The theory of economic development Harvard University
Press Cambridge MA
30
Sharma P and Chrisman JJ 1999 Toward a reconciliation of the definitional issues
in the field of corporate entrepreneurship Entrepreneurship Theory amp Practice Vol
22 pp 43-68
Stevenson HH amp JC Jarillo 1990 A paradigm of Entrepreneurship
Entrepreneurial Management Strategic Management Journal Vol 11 pp 17-27
Teece DJ 1998 Capturing value from knowledge assets the new economy markets
for know-how and intangible assets California Management Review Vol 40 pp 55-
79
31
CHAPTER 3
Methodology
Since the research themes were initially broadly defined and the field of
intrapreneurship in its infancy it was considered prudent not to preclude any
interesting issues and empirical phenomena that might appear in the course of the
project etc by using a too narrow definition of the intrapreneurship concept (cf
Sharma amp Chrisman 1999) Furthermore as part of the KNORI project (see chapter
1) it was also given that 5-6 companies would participate in the project and form the
empirical basis for the research
The fact that the companies had to be selected early in the project and participate in
workshops organised within the framework of the KNORI ndashproject was a challenge
from the beginning At such an early stage it was not possible to design a detailed
research strategy and it would have been even harder to specify exactly how
activities in the companies could be the basis for empirical research Moreover it was
difficult to know whether comparative studies of the companies were feasible
In consequence it was decided that a qualitative case-based research approach would
be the most appropriate that different methods of collecting data could be used in
different companies and that the companies participating in the KNORI project could
form the basis for different papers that addressed different aspects of the overall
research issues
32
This chapter describes the way the five case companies were selected and provides
some background information on each of them Furthermore the chapter also
presents the overall considerations in relation to the chosen methodology More
details about the methods used in specific studies reported in the three empirical
articles (paper 2 3 and 5) are to be found in the respective articles
31 FROM PARADIGM TO RESEARCH APPROACH
A qualitative-oriented research project is not so much a question of method as one of
methodology ie the general approach to studying the research topics (Silverman
1993) Traditionally however methodology is intimately related to the positioning of
research within various research paradigms The methodological assumptions thus
become intertwined with both ontology and epistemology and become the primary
vehicle for directing the research and influencing its aim and purpose
When different research approaches are characterised within the social sciences a
distinction is often made between contrasting views like subjectivism versus
objectivism nominalism versus realism romanticism versus neopositivsm
constructivism versus non-constructivism constructivism versus positivism
interpretative versus functionalistic humanist versus structuralist etc (see for
example Burrell amp Morgan 1979 Guba amp Lincoln 1994) Such classifications are
widespread and two-by-two-ways classifications eg Burrell amp Morganrsquos (1979)
framework do have some intuitive appeal However as described by Lauring (2007)
the implications of paradigmatic positioning of research have also been criticised by
researchers (eg Deetz 1996 Alvesson 2003) who argue that the classifications do
not reflect contemporary research traditions adequately and that paradigmatic
positioning puts too much emphasis on incommensurability between research
paradigms (Deetz 1996)
33
As a crude distinction between research approaches we find that on the one hand
qualitative studies are most often inspired by some kind of romanticsm
constructivism or at least non-positivism ndash while on the other hand both
quantitative and qualitative studies are characterised either by functionalism
neopositivism or non-constructivism This is by no means a clear-cut distinction but
because non-positivist-inspired research most often aims at understanding
phenomena in practice it seems appropriate to contrast it with research paradigms
based on a functionalistic ontology inasmuch as functionalism is prescriptive and
non-positivism descriptive (see also Andersen amp Skaates 2004)
From this point of view the approach taken in this PhD project is best characterised
as a qualitative non-positivist study without strictly claiming constructivism or
similar concepts This influences the questions asked during an interview etc
because functionalistic questions are concerned with what is effective whereas for
example constructivist questions focus on how things work This is also reflected in
the purpose of this study where a clear functionalistic approach might have implied a
wish to improve effectiveness whereas the qualitative approach taken is mostly
oriented towards improving the understanding of intrapreneurship
A qualitative study requires close contact with the subject involved rather than
objective distance and any insights gained are limited to the particular companies
and issues studied and persons interviewed This does not as we will return to in
section 36 preclude generalisations however Rather the qualitative approach
involves an ongoing reflection on data and a positioning against different theories
such that the data can contribute to and further refine the research questions
34
32 UNIT OF ANALYSIS
In most research areas including intrapreneurship variables and concepts with the
same names are studied at different levels of analysis (Ireland et al 2005) and in
general it is not clear a priori whether the meaning of the variables etc at different
levels are identical As an example Klein et al (1994 p 206) mention Lawless amp
Pricersquos (1992) study of the roles that technology champions and users play during
innovation adoption While the term champion is clearly defined (Lawless amp Price
1992 p 342) the term user is not Are users independent individuals or homogenous
members of technology-adopting organisations and should the model consequently
be tested within a single organisation or across organisations
Ideally for valid and theory-consistent evidence to be provided the following must
be aligned The level of theory ie what is to be explained the level of measurement
ie what is the source of evidence and the unit of analysis ie what is treated as
observations (Klein et al 1994 Kozlowski amp Klein 2000) The empirically-oriented
literature on intrapreneurship entrepreneurship innovation and related areas differ on
what constitutes the level of the analysis (cf Ireland et al 2005 p 560) At the one
extreme is the innovativeness of a country or region often compared with other
countries or regions Even though a questionnaire approach and analysis of register
data is most often used in this connection a whole country could be considered a case
to be analysed
At the other extreme there is the most detailed level of analysis the individual level
where the focus is often on the individualrsquos characteristics (see for example
Brockhaus 1980 Davis 1999 Hisrich 1990) The second most detailed level is the
group level which mainly centres on the collective of individuals and competencies
and on how the different perspectives talents and ideas of different members of the
35
group or project influence for example knowledge-sharing (Cummings 2004) and
group-based rewards (Zenger amp Marshall 2000)
The third level is the organisational level (see for example Zahra et al 1999)
which focuses on how an organisation can create a context where individuals and
groups can be innovative (see for example Covin amp Slevin 1988 Nonaka amp
Takeushi 1995) and creative (Amabile et al 1996) Not surprisingly this level is
also the focal point for much organisational research eg how innovation is sustained
over time (Dougherty amp Hardy 1996) how the availability of resources promote
innovation (Nohria amp Gulati 1996) how corporate strategy influences innovation
(Hitt et al 1996) and how inter-unit co-operation regarding knowledge transfer and
learning contributes to their ability to innovate (see for example Kogut amp Zander
1992 Tsai 2001)
At the fourth level intrapreneurship or corporate entrepreneurship can also be seen as
a matter of inter-organisational co-operation or alliance (see for example Antoncic
2001 Foray 1991) One reason companies often collaborate is because they have
complementary competencies The inter-organisational level thus typically focuses on
the interplay between companies (see for example Smith et al 1995) in the same
way as the group level focuses on the interplay between individuals in a group which
means that the inter-organisational unit can be seen as ldquogrouprdquo However according
to Foray (1991) the difference between intra-company and inter-company co-
operation is that the former depends on the learning and flexibility capacities of
human resources while the latter depends on the capacity of human resources to
become specific Antoncic (2001) finds that communication trust and management
support are important characteristics in both intra- and inter-organisational co-
operation
36
The fifth level of analysis the regional or national level is appropriate for analysing
innovation systems (cf Lundvall 1992) or more broadly a countryrsquos innovative
capability as already attempted in McClelland (1961) where the practical
applications of the research could for example be related to regional policy (see for
example Lundvall 1992 Storper 1997) national policy (see for example Busenitz
et al 2005 Lundvall 1992 Nyholm amp Langkilde 2003) or national culture (see
for example Busenitz et al 2005 Steensma et al 2000)
This dissertation focuses on how organisations can be intrapreneurial and takes a
starting point in the third level of analysis the organisational level as described
above However since the case companies differ substantially in size some variation
in the interpretation of lsquoorganisationrsquo was allowed In this sense it might therefore
be more appropriate to talk about the level of analysis as being the organisational
object anchored in the individual organisation where new knowledge of importance
for the renewal of the organisation is created Irrespective of the level of analysis in a
qualitative study data is collected from individuals When theories are formulated at a
higher level eg the organisational level as in this dissertation it means that actions
must be taken to ensure that the level of measurement and the unit of analysis are
aligned with theory This implies that the interviews should aim at capturing
organisational rather than uniquely individual characteristics One way of ensuring
this is to select lsquorepresentativersquo employees for interviewing and another is to evaluate
responses from individuals relative to others In practice in the articles in this
dissertation (eg paper 3 and 5) we have often chosen to let respondentsrsquo views
represent their respective departments or company rather than themselves as
individuals
37
33 SELECTION OF THE CASE COMPANIES
The articles in the dissertation are based on five different case companies selected for
participation in the KNORI project Although the research project cannot for various
reasons be regarded as a comparative case study of the five companies they were
selected on the basis of methodological considerations similar to a comparative case
study approach
One approach to selecting cases for a comparative case study is Yin (2003) where he
emphasises that there are two ways to select cases for multiple-case studies The
cases should either ldquo(a) predict similar results (a literal replication) or (b) produce
contrasting results (a theoretical replication)rdquo (Yin 2003 p 47) However the aim
of the KNORI project was not to test a predetermined hypothesis or take a starting
point in specific propositions as is implicit in Yinrsquos approach Rather the project was
more oriented towards understanding the concept of intrapreneurship and identifying
challenges and possibilities for knowledge-intensive organisations
Consequently the cases were selected according to Gummessonrsquos (1991) theoretical
sampling ie based on the different ways they represent lsquorealityrsquo The approach taken
was based on the recognition that organisational renewal and innovation could have
different origins according to different understandings of the main production
processes in a company
As a rule a traditional production company is functionally organised where
production salesmarketing and research amp development take place in separate
organisational units (cf Sundbo 2001 p 104) and maybe even in separate physical
locations (as is the case with BampO see appendix 1) Although innovative activities
can potentially be initiated in any department the RampD department is traditionally
the driving force behind product innovations
38
At the other organisational extreme are companies that have no other product than
research and sometimes not even a separate customer-oriented department Here
research can be said to be in the form of production processes which are in
principle integrated with innovative activities These two ways of organising
innovative activities are shown on the right- and left-hand side of figure 31
respectively The arrows connecting the various processes that lead to innovation
production or development with the organisational focal point production process or
RampD department indicate that even if the unit of analysis is the single organisation
the expected locus for innovation is different
Figure 31 Production structure and organisation of innovative activities
The middle part of figure 31 shows project-oriented organisations where solutions or
products are developed either for customers or carried out together with them eg in
their own organisation Even though such companies can have both a separate RampD
department and a separate sales force production takes place in development
projects which are often customer-specific and also the source of innovations
Productionprocesses
Developmentproject
Developmentprocesses
Renewal occursin the production
processes
Renewal occurs in the development
projects
Renewal occursin the RD processes
Innovation profitability growth change of industry rules new business unit spin-offs etc
Organisational renewal
39
This typology is of course a very crude generalisation of how innovative activities
are formally organised In reality companies might have characteristics of all three
organisational forms and innovative activities are in no way restricted to specific
departments Furthermore figure 31 illustrates only the formal way of organising
innovation whereas innovations can ldquopop uprdquo in any part of the organisation and
sometimes even be systematic activities that take place despite an organisational
structure that otherwise inhibits them
It should also be noted that the framework in figure 31 is oriented towards
technological innovations whereas non-technical (social) innovations are most often
developed in departments other than RampD In addition with respect to service
companies the role of the lsquoInnovation Departmentrsquo may as observed by Sundbo
(1998 cf Sundbo 2001 p 105) be more of a boundary-spanning unit where new
ideas are collected and promoted among employees and managers
For this dissertation it was decided to approach potential case companies that as far
as possible represented the different organisational forms shown in figure 31 Some
flexibility was allowed in categorising the companies since as discussed above each
company had multiple ways of organising innovation Furthermore given the
explorative nature of the project the research possibilities in each company were
expected to be quite different therefore insights gained through the research process
would probably be more decisive for the specific focus than how the case companies
were originally selected
The original plan was to select the cases from among information and
telecommunications (ICT) companies in northern Jutland since the KNORI project
was based on precisely these types of companies However it became clear from very
early in the selection process that many of these companies were competitors and
that it could therefore be difficult to organise knowledge-sharing seminars if the
40
project only included these companies It was therefore decided to include other
technology-based companies as well as companies in other parts of Jutland
34 THE CASE COMPANIES
The initial contact was with two companies from the north Jutland ICT sector
End2End and Bang amp Olufsen since they were competing in quite different areas
Subsequently Ericsson Telebit Aarhus was also invited to participate in the project
as was FKI Logistics Crisplant also from Aarhus although Crisplant is not an ICT
company in a strict sense Finally on the suggestion of Bang amp Olufsen we
contacted Danfoss Drives in Graasten
In all therefore five companies have participated in the project and were interviewed
according to the same interview guide However Crisplant suffered a cut-back in
business activities shortly after the project started and lacked the resources to
participate fully in the project A sixth company took part in the project up to and
including the introductory meeting but due to a change of strategy in the parent
company it ended operations shortly after the project start
Contact with the companies during the project has varied according to how they
formed the empirical basis for the articles The specific methodological approach
chosen and a brief presentation of the individual companies is given in the articles
Appendix A includes a more detailed presentation of the five case companies
35 THE CASE STUDY APPROACH
The dissertation adopts a qualitative interpretative approach where the main part of
the empirical material for the study consists of research interviews observations from
visits to the companies written material collected from the companies and
41
observations at the meetings for the KNORI project However the most important
data source is the semi-structured research interview
The main strength of the case study approach is the ability to deal with a variety of
evidence documents questionnaires interviews and observations in a flexible
manner In particular this approach is suitable when exploring an emerging field
(Zahra 2007) or when unfamiliar practices are examined in specific companies As
stated by Laurila (1997 p 222-223) the feasibility of case studies is based on the
opportunities they create for observing and describing a complicated research
phenomenon in a way that allows for analytical generalisations (Dyer amp Wikins
1991 Eisenhardt 1989 Tsoukas 1989) of the observations
351 Definition of a case study
Yin (2003 p 13) defines a case study as ldquoan empirical inquiry that investigates a
contemporary phenomenon within a real-life context especially when the boundaries
between phenomenon and context are not clearly evidentrdquo In addition case studies
are usually based on a qualitative methodological point of origin which according
to Denzin and Lincoln (1994 p 4) includes methods that ldquoimply an emphasis on
processes and meanings that are not rigorously examined or measured (if measured at
all) in terms of quality amount intensity or frequencyrdquo
Although the case companies were difficult to compare in a strict sense the basis for
selecting them was that as far as possible they should face lsquosimilarrsquo challenges in
relation to intrapreneurship and as regards participation in KNORI they were also
potentially subject to a similar lsquointerventionrsquo Therefore the project can be said to be
partly based on an ldquoEmbedded Multiple Case Study Designrdquo (cf Yin 2003) the
results of which are potentially more compelling than the results from a single case
study
42
single-case designs multiple-case designs
holistic
(single-unit of analysis)
embedded
(multiple-unit of analysis)
CONTEXT
Case
CONTEXT
CaseEmbedded
Unit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
CONTEXT
Case
EmbeddedUnit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
EmbeddedUnit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
EmbeddedUnit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
EmbeddedUnit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
CONTEXT
Case
CONTEXT
Case
Christensen (2005) Chapter 7
Christensen (2006) Chapter 6
Christensen Bukh amp Bang (2007) Chapter 9
Figure 32 Basic types of case study designs (Yin 2003 p 40) including an outline
of the empirical articles in this dissertation
As shown in figure 32 case studies can involve either a single case (eg Christensen
2005 chapter 7 Christensen 2006 chapter 6) or multiple cases (eg Christensen et
al 2007 chapter 9) and they can be either holistic (eg Christensen 2006) or
embedded (eg Christensen 2005 Christensen et al 2007) ie where one or more
unit(s) of analysis is involved (Yin 2003)
352 Action research or research in action
It should be noted that both the study of the companies in the articles and the
summarising conclusions of these articles (see chapter 10) are likely to be influenced
by interaction with the companies during the KNORI project In general research
cannot be carried out independently of the researchersrsquo underlying assumptions about
the nature of knowledge and how it can be acquired (see for example Andersen and
43
Skaates 2004 Guba and Lincoln 1994) What is of more concern here however are
the factors influencing the research process and specifically the interviews carried
out during the KNORI project
One possibility after the companies were approached in Summer 2002 and the first
KNORI meeting in March 2003 was that they might initiate new intrapreneurship-
related projects and that as a result of interaction with the researcher and with each
other at the KNORI meetings their understanding of the intrapreneurship concepts
would be heavily influenced by this process
Thus both the project set-up and the nature of possible research questions suggested
an interventionist approach (cf Joumlnsson amp Lukka 2007) which makes active use of
participant observations Although there are numerous variations interventionist
research covers such methodologies as action research (Lewin 1948) action science
which promotes learning in the client organisation (Argyris et al 1985) and so-
called constructive research approaches (Kasanen et al 1993) The methodology
most often used by researchers is action research which according to Eden and
Huxham (1996 p 526) can be understood as research embodying ldquoresults from an
involvement by the researcher with members of an organisation over a matter which
is of real concern to them (and) in which there is intent by the organisation to take
action based on the interventionrdquo
However considering the limited interaction between the companies at the meetings
and the diverse analytic approaches chosen it was judged that the articles in the
dissertation can be considered as separate studies of related concepts rather than a
tightly integrated research project Furthermore the research carried out in the
companies and reported in the articles is only very slightly influenced by the project
set-up at least not in a manner where the project can be considered as action
research
44
36 VALIDITY OF THE METHODOLOGY
A study which focuses on a few and very different companies in specific business
contexts will always be limited as regards to statistical generalisations hypothesis-
testing etc As could be seen from the brief discussion in section 31 statistical
testing of theoretically-derived hypotheses is not an aim of research projects based on
the qualitative non-positivist approach However this does not diminish the need for
addressing quality criteria of the research
One of the major challenges of case studies based on research interviews is how to
assure some kind of lsquoverificationrsquo of the conclusions Traditionally this is a matter of
validity and reliability where the latter has entered social science research through
the use of research tools such as questionnaires (primarily used in (neo)positivistic
studies) and interview guides (used more broadly in qualitative studies)
In qualitative studies the reliability or consistency of the results interviews
transcription and analyses is ensured by taking special care to minimize errors and
biases eg by not asking leading questions By comparison according to Kvale
(1996 p 238) validity has to do with the conformity of the phenomenon studied and
the way it is studied As Ahrens amp Chapman (2007) point out the question of
reliability takes on a different significance in qualitative studies that are only partly
based on research instruments as is the case in this dissertation which initially used a
loosely structured thematic interview guide and where a questionnaire was used in
one of the companies (see article 2 chapter 6)
Social reality is fundamentally contextndashspecific and interviewees ldquocan and do strive
to undo their history and invent new concepts images and ways in which they want
them to infuse actionrdquo (Ahrens amp Chapman 2007 p 311) On the one hand
therefore there is no hard data eg questionnaire data that can be verified by means
of statistical tests and on the other we have a number of contextual factors
45
including the dialogue with the researcher the interview design and the researcherrsquos
interests which cannot be separated from the data As Ahrens amp Chapman (2007)
also stress this means that we ldquoshould not expect identical results when two
researchers study the same organisation from different points of viewrdquo (Becker 1970
p 20) but we should expect that ldquothe conclusions of one study do not implicitly or
explicitly contradict those of the otherrdquo (ibid) Thus the methodological
considerations in this dissertation will primarily emphasise validity while at the same
time paying due respect to the implications for generalisation and reliability
Returning to the question of generalisations the research interviews carried out in the
companies were inspired by Kvale (1997) who argues that besides reliability and
validity the verification of a case study relates to generalisation This can be obtained
in different ways Analytical generalisation ie taking a specific case out of context
by relating observations to existing theory and through analytic abstraction which
obtains new theoretical insights via an inductive method (Yin 2003 Kvale 1997)
Here the theoretical framework presented in article 1 (Chapter 4) becomes to some
extent the vehicle for analytic generalisation although generalisation per se is not a
major aim of the project The empirical part of the dissertation consists of articles
and as mentioned above the data are not analysed in such a way that consistent
conclusions can be drawn by comparing case studies across all the companies
participating in the KNORI project
361 The use of Multiple Sources of Evidence
One way of ensuring validity is to approach the research questions by means of
different methods using redundancy to lsquotriangulatersquo the data (see for example
Denzin 1989 Yin 20034) Since qualitative studies have often been criticised for
being unreliable one way of improving the rigour of qualitative research is to use
46
multiple sources of evidence so that the results converge to support one explanation
(see for example Andersen amp Skaates 2004 Yin 2003)
Although in a stricter sense triangulation (Denzin 1989 Jick 1979) implies that
different methods are used in combination to study the same phenomenon it is
common to use the term more broadly (see for example Andersen amp Skaates 2004
Patton 1987 Yin 2003) and consider different types of triangulation Data
triangulation investigator triangulation theory triangulation and methodological
triangulation However the use of this broader interpretation of triangulation has
more to do with finding additional evidence to support or question the relations
between the initial data and the argument than of capturing a more objective reality
Here the broad interpretation of triangulation is used the project being based partly
on data triangulation and partly on methodological triangulation including semi-
structured open-ended interviews review of organisational documents and
observation during visits to the companies and at the KNORI meetings On the other
hand intrapreneurship will be addressed from different theoretical angles and the
management of knowledge from different perspectives It should be noted however
that no attempt is made to formally analyse the various sources of information in
order to examine whether they lead to similar conclusions etc
37 THE RESEARCH INTERVIEWS
The primary source of data in the case studies is the research interview which
according to Kvale (1996) is a form of professional conversation for the purpose of
obtaining ldquodescriptions of the life world of the interviewee with respect to
interpreting the meaning of the described phenomenardquo (Kvale 1996 p 5-6) The key
phenomena of interest in this project are intrapreneurship innovativeness strategy
knowledge and the management of knowledge-based processes and an analysis of
47
their potential in specific companies implies an examination of the phenomena in
ldquothe real worldrdquo
The initial aim of the project was to describe analyse and interpret the central themes
or phenomena how they are experienced by the respondents and together with the
interviewee to develop an understanding of them As far as possible the aim of the
questions asked was to validate or invalidate the respondentrsquos statements and the
ambiguities that arose during the interview
In all five companies the interviews were based on more or less the same structure
ie a semi-structured interview guide (see figure 33) Several employees in each
company were interviewed with a focus on four main themes Background
information organisation of innovativeness and intrapreneurial activities innovation
and innovativeness and enablersbarriers The interviews were held in a
conversational style and the respondents were asked to tell the story of the company
how they perceive innovation why the company needs to be innovative where in the
organisation innovations are created how they are organised and which enablers
encourage and support them to be innovative and how The interviews which lasted
an average of one-and-a-half hours were taped and transcribed Field notes were
written at the end of each day
The interviewees were chosen from different positions in the case companies and
where possible from similar functional areas and areas of responsibility In order to
get a broader perspective on the same themes the formal interviews were supported
or validated by more informal conversations with other employees and through
observations In practice the interviews focussed on the areas which the respondents
felt most familiar with and where possible the focus was on intrapreneurial activities
48
Figure 33 Common interview guide for the basic data collection
A total of 19 persons (6 engineers 6 functional managers 5 project managers and 2
from HR departments) were interviewed based on the interview guide shown in
figure 33 As far as possible the interviews involved employees in different
positions within the individual company but in the same positions across the
A Background information
bull Name background education how long with the company role in the company
bull Important events during the history of the company ndash eg acquisitions spin-offs central employeescustomers and change strategy
bull The company as a place to work
B Organization of innovativeness and intrapreneurial activities
bull Is the company innovative What does this mean examples
bull What is central in relation to innovation what drives innovation
bull Organisation of the innovative activities
C Innovation and innovativeness
bull How do you perceive innovation ndash eg product process strategy or administrative
bull Events in relation to innovation ndash eg employees ldquoheroesrdquo etc
bull Why is it necessary to be innovative ndash eg market techonology knowledge-creation and history
bull The possibility to plan innovation ndash whywhy not
bull Special characteristics of working with innovation
bull Where in the company are innovations created the type of innovation
bull Innovation in collaboration with customers
D Enablers of and barriers to innovation
bull The culture ndash eg describe your daily work How is your job different from others
bull Do you use specific models How is your job different from others
bull Rewards ndash eg financial recognition and ldquofreedomrdquo
bull Does management support your ideas Can you work on them Do others support your ideas
bull Resources ndash eg time financial materials etc
bull The organizational structure
bull When do you announce your ideas Do you normally work on them in advance Are there rules for when an idea can become a project in the departmentat the company level Who decides whether something is a good idea or not What happens when a project turns out to be a failure
bull Communication ndash eg how does communication work Do you have problems with communicationmisunderstandings because of language Company-specific language Improvements
bull Other things
49
companies Three interviews per company were planned prior to each of the visits
but at some companies more interviews were arranged during the visit
In relation to article 5 (Christensen et al 2007) additional interviews were carried
out according to a semi-structured interview guide focussing on the management of
knowledge-based resources In total 10 interviews five in each company were
conducted with employees holding different positions but similar responsibilities
across the companies
371 The transcription process
All formal interviews were taped and transcribed Initially it was planned to analyse
the data systematically using a content analysis approach implying that the
transcription would be separated into different parts (clauses) which would be
classified into content categories (see for example Gerbner et al 1969 and Weber
1985) Even though content analysis is often presented as a technique for the analysis
of archival data in the form of documents (see for example Miles and Huberman
1994 p 54-55) according to Weber (1985) the method can also be used more
broadly to analyse any written text including transcriptions Since this method
provides a firm ground for assessing reliability and validity in a traditional sense it
was thought that this method could be used to increase reliability
There are different techniques for text analysis ranging from simple hand-coding to
advanced computer programs However as Weber (1985 p 69) emphasizes ldquothere is
no single ldquoright wayrdquo to do content analysisrdquo The coding in this project was based on
the classification of the intrapreneurship literature presented in article 1 and on a
study of the factors enabling intrapreneurship (see article 3) a coding structure was
subsequently developed and systematically applied in most of the interviews
50
Classical content analysis assumes that relevant theories have been specified the
themes or research questions to be investigated are substantive and that the main
coding categories have been theoretically justified ( see for example Stone et al
1966 Weber 1985) in a way that has already determined or described codes as a
starting point (cf Ryan amp Bernard 2000 p 785) Early in the research process it
was realised that on the one hand this was difficult to reconcile with the general
methodological approach in the dissertation and on the other that it was difficult to
control how the categorisation was determined beforehand and how it would affect
the reliability and validity of the data when they are reduced and classified into fewer
categories (cf Weber 1985) It was therefore decided not to use content analysis to
interpret the interview data Nonetheless familiarity with the data together with the
linking of specific interview data and for example the various enablers and barriers
to innovativeness still proved useful when the articles were written
38 REFERENCES
Ahrens T amp C S Chapman 2007 Doing qualitative Field Research in Management
Accounting Positioning data to contribute to theory In C S Chapman A G
Hopwood amp M D Shields (eds) Handbook of Management Accounting Research
Amsterdam Elsevier
Alvesson M 2003 Beyond neopositivists romantics and localists A reflexive
approach to interviews in organisational research Academy of Management Review
Vol 28 No1 pp 13-33
Amabile T M R Conti H Coon J Lazenby amp M Herron 1996 Assessing the
work environment for creativity Academy of Management Journal Vol 39 No 5
pp 1154-1184
51
Argyris C R Putnam amp S D McLain 1985 Action Science San Francisco
Jossey-Bass
Andersen P H amp M A Skaates 2004 Ensuring validity in qualitative international
business research In Welch C amp R Marschan-Piekkari (eds) Handbook of
Qualitative Research Methods for International Business Edward Elgar Publishers
Antoncic B 2001 Organizational processes in intrapreneurship a conceptual
integration Journal of Enterprise Culture Vol 9 No 2 pp 221-235
Becker H S 1970 Sociological Work Methods and Substance Chicago Aldine
Brockhaus R H 1980 Risk-Taking Propensity of Entrepreneurs Academy of
Management Journal Vol 23 No 3 pp 509-520
Burrell G amp G Morgan 1979 Sociological Paradigms and Organizational
Analysis Aldershot England Ashgate Publishing
Busenitz L W C Goacutemes amp J W Spencer 2000 Country institutional profiles
Unlocking entrepreneurial phenomena Academy of Management Journal Vol 43
No 5 pp 994-1003
Covin J G amp D Slevin 1988 The influence of organization structure on the utility
of an entrepreneurial top management style Journal of Management Studies Vol 25
No 3 pp 217-234
Cummings J N (2004) Work groups structural diversity and knowledge sharing in
a global organization Management Science Vol 50 No 3 pp 352-364
Davis K S 1999 Decision criteria in the evaluation of potential intrapreneurs
Journal of Engineering and Technology Managment Vol 16 pp 295-327
52
Deetz S 1996 Describing differences in approaches to organization science Re-
thinking Burell and Morgan and their legacy Organization Science Vol 7 No 2
pp 191-207
Denzin N K 1989 Strategies of Multiple Triangulation In N K Denzin The
Research Act (3rd edition) Englewood Cliff NJ Prentice Hall pp 235-247
Denzin NK amp YS Lincoln 1994 Handbook of qualitative research Thousand
Oaks CA Sage
Dougherty D amp C Hardy 1996 Sustained product innovation in large mature
organizations Overcoming innovation-to-organization problems Academy of
Management Journal Vol 39 No 5 pp 1120-1153
Dyer WG amp Wilkins AL 1991 Better stories not better constructs to generate a
better theory a rejoinder to Eisenhardt Academy of Management Review Vol 16
No 3 pp 613-619
Eden C amp C Huxham 1996 Action research for the study of organizations In
Handbook of Organization Studies Stewart R C Hardy amp W North (eds) London
Sage
Eisenhardt KM 1989 Building Theories from Case Study Research Academy of
Management Review Vol 14 No 4 pp 532-550
Foray D 1991 The secrets of industry are in the air Industrial cooperation and the
organizational dynamics of the innovative firm Research Policy Vol 20 No 5 pp
393-405
Gerbner G O R Holsti K Krippendorff W J Paisley P J Stone (eds) 1969
The Analysis of Communication Content New York John Willey amp Sons
53
Guba E G amp Y S Lincoln 1994 Competing paradigms in qualitative research In
N K Denzin og Y S Lincoln Handbook of qualitative research Thousand Oaks
CA Sage 105-117
Gummesson E 1991 Qualitative Methods in Management Research Newbury Park
California Sage
Hisrich RD 1990 EntrepreneurshipIntrapreneurship American Psychologist Vol
45 No 2 pp 209-222
Hitt M A R E Hoskisson R A Johnson amp D D Moesel 1996 The market for
corporate control and firm innovation Academy of Management Journal Vol 39
No 5 pp 1084-1119
Ireland R D C R Reutzel amp J W Webb 2005 Entrepreneurship research in AMJ
What has been published and what might the future hold Academy of Management
Journal Vol 48 No 4 pp 556-564
Jick T D 1979 Mixing Qualitative and Quantitative Methods Triangulation in
Action Administrative Science Quarterly Vol 24 No 4 pp 602-611
Joumlnsson S amp K Lukka 2007 There and Back Again Doing Interventionist
Research in Management Accounting In Handbook of Management Accounting
Research CS Chapman AG Hopwood amp MD Shields (eds) Amsterdam
Elsevier
Kasanen E K Lukka amp A Siitonen 1993 The constructive approach in
management accounting research Journal of Management Accounting Research
Vol 9 pp 241-264
Klein K J F Dansereau amp R J Hall 1994 Levels issues in theory development
data collection and analysis Academy of Management Review Vol 19 pp 195-229
54
Kogut B amp U Zander 1992 Knowledge of the firm combinative capacity and the
replication of technology Organization Science Vol 3 pp 383-397
Kozlowski S amp K Klein 2000 A level approach to theory and research in
organizations Contextual temporal and emergent processes In Multilevel Theory
Research and Methods in Organizations Foundations extensions and new
directions K J Klein (ed) San Francisco Jossey-Bass
Kvale S 1997 InterView En introduction til det kvalitative forskningsinterview
Koslashbenhavn Hans Reitzels Forlag
Laurila J 1997 The thin line between advanced and conventional new technology
A case study on paper industry management Journal of Management Studies Vol
34 No 2 pp 221-239
Lauring J 2005 Naringr organisationer bliver mangfoldige Om vidensdeling og
interaktion i etnisk mangfoldinge organsationer phd-afhandling Institut for Ledelse
Handelshoslashjskolen i Aringrhus
Lawless M W amp L L Price 1992 An agency perspective on new technology
champions Organizational Science Vol 3 pp 342-355
Lewin K 1946 Action research and minority problems In Resolving Social
Conflicts Selected papers on Group Dynamics by Kurt Lewin G W Lewin (ed)
New York Harper amp Brothers
Lundvall B Aring (ed) 1992 National Systems of Innovation London Pinter
McClelland D C 1961 The Achieving Society New York The Free Press
Miles M B amp A M Huberman 1994 An Expanded Sourcebook Qualitative Data
Analysis Second Edition Thousand Oaks CA SAGE Publications
55
Nohria N amp R Gulati 1996 Is slack good or bad for innovation Academy of
Management Journal Vol 39 No 5 pp 1245-1264
Nonaka I amp H Takeuchi 1995 The Knowledge-Creating Company Oxford
University Press
Nyholm J amp L Langkilde 2003 Et benchmark studie af innovation og
innovationspolitik ndash hvad kan Danmark laeligre Oslashkonomi- og Erhvervsministeriets
enhed for erhvervsoslashkonomisk forskning og analyse FORA Koslashbenhavn
Patton M Q 1987 How to use qualitative methods in evaluation Newbury Park
CA SAGE Publications
Ryan GW amp H R Bernard 2000 Data Management and Analysis Methods In
Handbook of Qualitative Research (second edition) NK Denzin amp Y S Lincoln
(eds) Thousand Oaks Sage Publications pp 769-802
Sharma P amp J J Chrisman 1999 Toward a reconciliation of the definitional issues
in the field of corporate entreprenruship Entrepreneurship Theory and Practice Vol
22 pp 43-68
Silverman D 1993 Interpreting qualitative data London Sage
Smith K G S J Carroll amp S J Ashford 1995 Intra- and interorganizational
cooperation Toward a research agenda Academy of Management Journal Vol 38
No 1 pp 7-23
Steensma H K L Marino K M Weaver amp P H Dickson 2000 The influence of
national culture on the formation of technology alliances by entrepreneurial firms
Academy of Management Journal Vol 43 No 5 pp 951-973
56
Stone R J D C Dunphy M S Smith amp D M Ogilvie (eds) 1966 The General
Inquirer A computer approach to content analysis Cambridge MIT Press
Storper M 1997 The regional world New York Guilford Press
Sundbo J 1998 The Organisation of Innovation in Services Copenhagen Roskilde
University Press
Sundbo J 2001The strategic management of innovation A sociological and
economic analysis Cheltenham Edvar Elgar
Tsai W 2001 Knowledge transfer in intraorganizational networks effects of
network position and absorptive capacity on business unit innovation and
performance Academy of Management Journal Vol 44 No 5 pp 996-1004
Tsoukas H 1989 The validity of idiographic research explanations Academy of
Management Review Vol 14 No 4 pp 551-61
Weber PR 1985 Basic Content Analysis Beverly Hills CA SAGE Publications
Yin R K 2003 (3rd edition) Case Study Research Design and Methods London
SAGE Publications
Zahra S A 2007 Contextualizing theory building in entrepreneurship research
Journal of Business Venturing Vol 22 pp 443-452
Zahra S A D F Jennings amp D F Kuratko 1999 The Antecedents and
Consequenses of Firm-Level Entrepreneurship The State of the Field
Entrepreneurship Theory amp Practice Vol 24 No 2 pp 45-65
Zenger T R amp C R Marshall 2000 Determinants of incentive intensity in group-
based rewards Academy of Management Journal Vol 43 No 2 pp 149-163
57
CHAPTER 4
A Classification of the Corporate Entrepreneurship Umbrella Labels and
Perspectives
Originally published in
Christensen Karina Skovvang 2004 A Classification of the Corporate
Entrepreneurship Umbrella Labels and Perspectives International Journal of
Management and Enterprise Development Vol 1 No 4 pp 301-315
The article was later improved and published in a Danish Journal
Christensen Karina Skovvang 2005 Corporate Entreprenoslashrskab Begreber og
Perspektiver Ledelse amp Erhvervsoslashkonomi Vol 61 No 1 13-26
Int J Management Enterprise Development Vol 1 No 4 2004 301
Copyright copy 2004 Inderscience Enterprises Ltd
A classification of the corporate entrepreneurship umbrella labels and perspectives
Karina Skovvang Christensen Department of Organisation and Management The Aarhus School of Business Haslegaardsvej 10 Aarhus V Denmark E-mail KaSCasbdk Corresponding author
Abstract The concept of corporate entrepreneurship has been confusingly used by researchers to explain various organisational phenomena such as ways of managing strategy and innovation The abundant use of labels and perspectives interchangeably has consequently led to lack of clarity This article reviews the literature in order to provide an overview and categorisation of corporate entrepreneurship The aim is to clarify the concept by identifying the key perspectives Since there is no unifying theoretical base for the entrepreneurship phenomena ndash due to for example its interdisciplinary grounding in economics sociology and psychology ndash a framework for corporate entrepreneurship is developed consisting of intrapreneurship and exopreneurship These are further broken down into four complementary perspectives corporate venturing internal resources internationalisation and external networks It is hoped that these four perspectives together will give the reader a clearer understanding of corporate entrepreneurship and thereby improve the basis for managerial decisions
Keywords corporate entrepreneurship strategic entrepreneurship intrapreneurship exopreneurship corporate venturing internal resources internationalisation networks framework
Reference to this paper should be made as follows Christensen KS (2004) lsquoA classification of the corporate entrepreneurship umbrella labels and perspectivesrsquo Int J Management Enterprise Development Vol 1 No 4 pp301ndash315
Biographical note Karina Skovvang Christensen is a PhD student MSc (Econ) at the Department of Organisation and Management Aarhus School of Business Denmark Her primary research area is intrapreneurship in knowledge-intensive companies with a focus on how knowledge resources can enable organisational and strategic renewal She is co-author of the book Knowledge Management ndash Establishing a Practice Field (in Danish) and has published articles on knowledge management and related subjects
1 Introduction
Technological and market changes seem to occur faster than we expect and Peter Druckerrsquos old saying that the only constant thing in business is change seems truer than
302 KS Christensen
ever Fast-changing business environments changing business structures and rules of competition are becoming part of the ordinary life of most companies as these are prerequisites for staying in business
Over the past two decades companies in the 1980s and to some extent the 1990s have been characterised by reductions in the workforce downsizing rightsizing budget cuts and the low morale of their workforce [1] While the main focus has been on short-term costs of operations no company can afford to rely on such an approach forever The real challenge for a company to remain a going concern is to establish a competitive advantage The only way to accomplish that is through differentiation and continuous innovation ndash whether it is related to the creation of new products and services production organisational processes or business models According to for example Morris and Kuratko [1] the answer to todayrsquos hyper-competitive environments is adaptability flexibility speed aggressiveness and innovativeness which they boil down to one word ndash entrepreneurship
Companies have been faced by increasing demands for both faster product development and more features in smaller products and higher and uniform quality stability and lower prices despite the inherent incompatibility of such demands The former relates to an entrepreneurial and flexible company while the latter require a well-structured and effective organisation However many large companies seem to find it very difficult to integrate the entrepreneurial spirit in a well-structured or bureaucratic organisation and must therefore think non-traditionally to cope with these increasing paradoxes Some companies tend to stick to the lsquoold waysrsquo of doing business ie preserving the well-known techniques business concepts and ways of cooperation while others reorganise re-create themselves merge and split up become virtual enter new markets and create unforeseen alliances Thus some firms apparently ignore changing market conditions while others act on challenges to the well-established business routines and rules of competition
Researchers and proactive companies have recently become particularly interested in topics such as entrepreneurial management corporate entrepreneurship strategic entrepreneurship and intrapreneurship This may in part be due to the lsquore-labellingrsquo [2] of existing concepts but it has also paved the way for the emergence of new practices and theories However Guth and Ginsberg [3 p 6] argue that lsquodespite the growing interest in corporate entrepreneurship there appears to be nothing near a consensus on what it isrsquo Consequently there are theoretical inconsistencies on how the concepts should be understood What all the proposed concepts seem to have in common however is that entrepreneurial activities can renew established organisations and that this can typically be achieved through innovation and venturing activities [3] that give the firm access to different skills capabilities and resources [4] The lack of consensus may be a symbol of the different labels or it may merely illustrate the opposite ie lsquolabelsrsquo do not solve the issue
This article proposes a categorisation of the concept of corporate entrepreneurship spanning both an internal perspective (intrapreneurship) and an external perspective (exopreneurship) The special case of spin-offs or new business creation (entrepreneurship) is seen as either a potential outcome of corporate entrepreneurship activities ndash not a perspective per se ndash or outside the scope of corporate entrepreneurship Section 2 discusses the theoretical roots of entrepreneurship in order to gain an understanding of the sources that have influenced entrepreneurship and thereby corporate
A classification of the corporate entrepreneurship umbrella 303
entrepreneurship The next section looks at the different labels for and perspectives on corporate entrepreneurship the aim of which is to clarify the topic and put it into perspective This is followed by a proposed framework consisting of four different approaches to strategic corporate entrepreneurship corporate venturing internal resources internationalisation and networks The article concludes with recommendations for using this framework in future research and practice
2 Theoretical roots entrepreneurship
The aim of this section is to help clarify the different approaches to entrepreneurship and thus to some extent explain the different perspectives on corporate entrepreneurship The theoretical roots of entrepreneurship builds on Stevenson and Jarillo [5] who argue that the management literature on entrepreneurship is often based on classical entrepreneurship literature which can be divided into three main categories the effects of entrepreneurship (what happens when entrepreneurs act) the causes of entrepreneurship (why entrepreneurs act) and entrepreneurial management (how entrepreneurs act) The main differences are due to the different theoretical backgrounds of the researchers Economists have dominated the effects of entrepreneurship such as the Chicago tradition [6ndash8] the German tradition [9] and the Austrian tradition [10ndash12] In contrast studies on the causes of entrepreneurship are dominated by psychologists [13ndash15] and sociologists [16] and studies on entrepreneurial management have mainly been considered from a practical point of view Despite the differences in perspectives however there are several similarities and overlaps ndash especially in the definitions of entrepreneurship which are dominated by the effect studies with their focus on what initiated entrepreneurship Nonetheless the different disciplines are based on different basic assumptions and thus emphasise different aspects of the phenomenon ndash again adding to the confusion related to entrepreneurship
This categorisation by Stevenson and Jarillo [5] is only one among several other approaches to understanding the concept of entrepreneurship [17] However Alvarez and Barney [18] argue that the theory of entrepreneurship continues to lack a unifying base from which to explain predict and empirically examine the phenomenon Instead they emphasise that researchers from other fields use entrepreneurship as a means for extending their own theoretical frameworks which means that the phenomenon is explored from several different perspectives Unfortunately the extension of the concept to cover corporate entrepreneurship makes it even fuzzier because corporate entrepreneurship is more complex since it also challenges organisational strategy structures and processes [1920] Compared with the causes and effects of entrepreneurship scholars paid little attention to the corporate management dimension until two or three decades ago when the management literature began to take a more serious look at entrepreneurship
3 The appropriate label
The concept of entrepreneurship within existing organisations has evolved over the last thirty years [21ndash24] especially over the last two decades and is known under many
304 KS Christensen
different lsquolabelsrsquo including corporate entrepreneurship [125ndash30] internal corporate entrepreneurship [31ndash34] intrapreneurship [35ndash40] entrepreneurial management [5] and strategic entrepreneurship [4142] Corporate entrepreneurship seems to have gained the most attention as a concept as is evident from special issues of journals eg Strategic Management Journal in 1990 (Corporate Entrepreneurship) 2001(Entrepreneurial Strategies for Wealth Creation) and Entrepreneurship Theory amp Practice 1999 (Corporate Entrepreneurship in a Global Economy)
As emphasised by Hornsby et al [30] the concepts are often used interchangeably although the various labels of the concept have different associations For instance the term lsquomanagementrsquo in lsquoentrepreneurial managementrsquo indicates that entrepreneurial behaviour or entrepreneurship is to some extent controllable However lsquothe causes of entrepreneurshiprsquo researchers [16] have proposed and sometimes emphasised that entrepreneurship should be seen as a function of human characteristics that not everyone possesses and that entrepreneurship is often related to processes that traditionally cannot be controlled or at least lose their efficiency effectiveness and uniqueness when controlled [16] It does not seem reasonable either that entrepreneurship is entirely controllable An organisation can encourage entrepreneurial activities by bringing together people possessing special and different skills and knowledge and applying their specialities to a common end product by the creation of new combinations [9]
Morris and Kuratko [1 p62] argue that by using lsquothe term corporate entrepreneurship [it] indicate[s] that the fundamentals do not change only the contextrsquo whereas they say that the fundamentals do change when the concept is changed to intrapreneurship A counterargument is that in lsquocorporate entrepreneurshiprsquo the term lsquocorporatersquo is often associated with large corporations [543] whereas entrepreneurial activities are also important in small and medium-sized organisations [13738] In this context lsquointrapreneurshiprsquo which does not indicate anything about the size of the company is shorthand for intracorporate entrepreneurship [35] which simply indicates entrepreneurship within an existing organisation
Based on the above intrapreneurship seems to be the most appropriate label for the concept of entrepreneurship within an existing company as long as the company is only dealing with internal resources in its own possession However there are also several opportunities to be entrepreneurial and innovative and develop new knowledge and competencies outside the boundaries of a company ndash which Chang [44] calls exopreneurship Chang [44 p187] points out that lsquoexopreneurship is the generation of innovation outside the boundary of organisation using external agents known as exopreneursrsquo which means that an organisation acquires innovation through external networks such as joint ventures external venture capital subcontracting and strategic alliances The differences are clear ndash entrepreneurs innovate for themselves intrapreneurs innovate on behalf of an existing organisation while exopreneurs are part of an external network The motivations for innovation are therefore different
The left-hand side of the Figure 1 shows that there may be a relation between an established company and a new independent venture as the latter may be a spin off of the former Pinchot [35] even argues that many entrepreneurs develop their skills and competencies within an established organisation before creating their own venture Intrapreneurship which can be defined as a companyrsquos legal possession of resources is shown in the middle of the figure The right-hand side of the figure goes beyond the
A classification of the corporate entrepreneurship umbrella 305
borders of the organisation and illustrates exopreneurship or entrepreneurial activities through external networks of which the company does not possess full ownership
Figure 1 Relationship between corporate entrepreneurship entrepreneurship intrapreneurship and exopreneurship
4 Defining corporate entrepreneurship
The three approaches to entrepreneurship and strategic management have resulted in many definitions of corporate entrepreneurship over the past 20ndash30 years Morris and Kuratko [1 p31] define corporate entrepreneurship as lsquoa term used to describe entrepreneurial behaviour inside established mid-sized and large organisationsrsquo Corporate entrepreneurship can also be seen as the process whereby an individual or a group creates a new venture within an existing organisation revitalises and renews an organisation or innovates [1945] Zahrarsquos [46 p262] definition of corporate entrepreneurship suggests lsquoa formal or informal activity aimed at creating new business in established firms through product and process innovations and market developmentsrsquo whereas Sathe [47] defined corporate entrepreneurship as a process of organisational renewal
Guth and Ginsberg [3] classify corporate entrepreneurship into two strategic managerial choices corporate venturing and the transformation of organisations through strategic renewal By corporate venturing is meant intraprising [35] or new business creation within existing organisations [25] that may or may not result in strategic renewal while the latter implies the creation of new wealth through new combinations of resources Corporate venturing is one way to achieve strategic renewal making acquisitions resulting in new combinations is another whereas actions like lsquorefocusing a business competitively making major changes in marketing or distribution redirecting product development and reshaping operationsrsquo [3 p6] are also examples of strategic renewal
Thornberry [48] breaks corporate entrepreneurship down even further identifying four strategic types corporate venturing intrapreneuring organisational transformation and industry rule breaking This is almost similar to Stopford and Baden-Fullerrsquos [28] categorisation which identifies three types of corporate entrepreneurship Intrapreneurship which they define as a part of corporate venturing transformation and
306 KS Christensen
renewal of existing organisations and changing the rules of competition for the industry as suggested by Schumpeter [9] Compared with Guth and Ginsbergrsquos [3] framework the differences are industry role breakingchanging the industry rules of competition which is considered beyond a companyrsquos direct influence because the company cannot plan it Since it is highly market-dependent it may be a result of corporate venturing and strategic renewal rather than a process Corporate entrepreneurship is therefore seen as corporate initiatives that enable entrepreneurship in relation to an existing company
5 Perspectives on corporate entrepreneurship
Many scholars seem to agree that corporate entrepreneurship is an overall term for all other lsquolabelsrsquo and perspectives Figure 2 illustrate the corporate entrepreneurship umbrella and divides it into four perspectives (1) corporate venturing (2) internal resources (3) internationalisation and (4) external networks These perspectives indicate four domains in which a company can make an effort to be more innovative However even though they are very different they are all rooted in organisational resources The classification takes into account both what is within and beyond the organisational boundaries and the dotted line in Figure 2 indicates what is beyond the organisational boundaries
Figure 2 Relationships between the perspectives on corporate entrepreneurship
Corporate venturing is a means of planning for organisational ambiguity in entrepreneurial action by separating one or a group of intrapreneurs from the organisational structure [25274549] By contrast internal resources operate within the overall organisational structure and from this perspective corporate entrepreneurship focuses on bringing together organisational resources in a way that generates innovations and competitive advantage [1850ndash52] Internationalisation as a perspective on corporate entrepreneurship relates to the relatively higher risk of entering foreign markets These often differ from the domestic market in terms of political economic legal and cultural
A classification of the corporate entrepreneurship umbrella 307
dimensions This means the company has to develop new knowledge and competencies [4253ndash55] which in turn reinforces the need for entrepreneurial abilities The last perspective on corporate entrepreneurship in this classification is external networks and alliances The main reason why companies enter an external network or alliance is to gain access to resources that they do not possess themselves [4256]
In the special issue of Strategic Management Journal in 2001 Michael Hitt R Duane Ireland S Michael Camp and Donald L Sexton also categorise corporate entrepreneurship into four organisational activities external networks resources and organisational learning innovation and internationalisation Ireland et al [42] expand the domains from the special issue with lsquotop management teams and governancersquo and lsquogrowthrsquo It is argued that top management teams and governance are essential as their influence on strategic goals are significant [5758] and lsquogrowthrsquo is the essence of entrepreneurship [59ndash61] However as suggested in this framework the perspectives are not the same because unlike Hitt et al [41] Ireland et al [42] and Hitt et al [62] this classification considers lsquotop management teams and governancersquo as an initiative that can enable outcomes like new processes products or services growth strategic renewal or the creation of new business As previously mentioned lsquogrowthrsquo is regarded as an outcome of combinations of a perspective and one or more enablers ndash such as top management teams and governance and reward systems
In the literature the concept of innovation is very broad and often confused with invention [63] Some researchers describe innovation as a process [63ndash66] while for others it is the result or commercialisation of a companyrsquos entrepreneurial activities [414267] Notwithstanding this multiple use of the term lsquoinnovationrsquo is here seen as the outcome In order to increase the understanding of the four perspectives on corporate entrepreneurship they are briefly described below
51 Corporate venturing
In 1985 Robert A Burgelman introduced the term New Venture Division to describe the small new businesses set up by one or a group of intrapreneurs and which formed the link between corporate entrepreneurship and the creation of new businesses A number of scholars [4968] have pointed out that the activities described by Burgelman [27] can actually be dated back to the 1960s where large companies like 3M and Dupont took their first step into venturing Today these activities are mainly described as Corporate Venturing but as argued by Sharma and Chrisman [45] the continuous development of new definitions has led to confusion
The main reason for creating corporate ventures is the isolation and nurturing of innovative ideas that cannot survive in the bureaucratic structures and formal procedures of a large company Dedicating resources to corporate venturing allows the company to follow different routes in the pursuit of innovations with the RampD department concentrating on radical technological inventions while the corporate ventures explore market opportunities for both radical and incremental innovations A number of scholars [4969] have argued that corporate venturing is one of the main roads to innovation in the future economy as markets become more and more saturated The ability to identify and exploit market opportunities is the core of entrepreneurship and forms a major part of the reason for investing in corporate ventures The type of innovation created by corporate venturing is often related to strategic innovations since the technology is invented as part
308 KS Christensen
of the corporationrsquos research and development programme but commercialisation in new markets is carried out through a corporate venture Intuitively the need for major investments in product innovation makes it less suitable for corporate venturing but due to the capital structures and knowledge networks in some industries investment in corporate venturing is seen as a promising business model in the pursuit of product innovation
52 Internal (intangible) resources
Another perspective on corporate entrepreneurship though one which might seem less evident is internal resources However the focus on internal resources can be dated back to 1959 where Edith Penrose stated that a companyrsquos return is largely based on the resources it possesses Since then however the balance of internal resources has change from tangible to intangible resources Today tangible resources are easily accessible or easy to imitate which mean that it is no longer a sufficient way to gain a competitive advantage Therefore intangible resources such as core competencies [70] and sustained competitive advantage [51] have been crucial since the beginning of the 1990s
The main reason for focusing on internal resources in relation to corporate entrepreneurship is that many companies possess a bundle of unexploited resources ndash mainly intangible knowledge resources held by employees The knowledge resources are a mixture of skills experience competencies and capabilities that cannot easily be articulated and therefore cannot be transferred at armrsquos length or imitated by others This makes the perspective of internal resources very important in relation to corporate entrepreneurship as emphasised by Peter Drucker lsquo[t]he basic economic resources hellip is and will be knowledgersquo [71 p7]
The strength of the company is to bring together employees possessing different specialised knowledge resources and to enable the creation of new knowledge resources or combination of existing ones to generate innovations and competitive advantage [51] Alvarez and Barney [18] argue that knowledge specialists often need an organisation to make sense out of their knowledge resources since they lack the ability to see how these can achieve an entrepreneurial profit or generate wealth They state that intrapreneurs possess a broader knowledge base than specialists which allows them to see how specialised knowledge resources can be applied to and integrated with the rest of the company and the market in order to achieve an entrepreneurial profit
Brush et al [52] point out that the ability to share knowledge resources influences efforts to develop the initial resource base necessary for long-term innovation A companyrsquos ability to bring together these heterogeneous knowledge resources is therefore crucial to enabling innovation within organisational boundaries It is therefore important for a company to be able to disseminate data and information to those parts of the organisation where it may be turned into useful knowledge
The internal resource perspective thus constitutes a big potential for corporate entrepreneurship Continuous knowledge creation sharing and dissemination and the identification and exploitation of new possibilities are a way of maintaining a sustained competitive advantage and keeping organisational competencies up-to-date
A classification of the corporate entrepreneurship umbrella 309
53 Internationalisation
The economic landscape has undergone substantial changes over the last few decades [7273] Internationalisation ie when a company extends its market scope beyond the domestic market [4254] has become an important driver of corporate entrepreneurship in many companies not only because of the innovative process of discovering and exploiting international opportunities for the purpose of achieving a competitive advantage [74] but also because of the significant potential returns when the market expands [75] Internationalisation can take different forms eg exporting and foreign direct investments but the main difference between internationalisation and external networks as described in the next paragraph is ownership Internationalisation is integrated within the borders of the same legal organisation even though people are geographically diversified However common ownership means that resources and information flow freely and the return whether it be new technology products processes services market opportunity etc is owned by a single company
The corporate entrepreneurship perspective on internationalisation should primarily be seen as an opportunity to expand the potential market scope Lu and Beamish [55] stress that internationalisation is an entrepreneurial activity since compared with domestic expansion entering a foreign market is risky in terms of the capital investment involved or in terms of distributor opportunism asset appropriation and devaluation with respect to exports in relation to direct foreign investment and exporting They find that when companies start exporting or make direct foreign investment profitability declines because it does not pay the rent of the extra costs Gradually however performance improves as new knowledge and capabilities are developed as competitiveness is enhanced and as market opportunities are captured by the companyrsquos investment activities in international markets and the return becomes positive
Being in more markets stimulates innovation and the development of a global mindset through the improvement or development of new knowledge resources capabilities and innovative skills and enhances the economies of scale and scope [75]
54 External networks and alliances
A consensus has emerged among both strategy and entrepreneurship scholars that networks play an important role for growth and innovation [76] Networks are patterned relationships between individuals and groups [77] and are critical for an organisationrsquos acquisition of resources [78] and with it the survival of the organisation In relation to corporate entrepreneurship the main purpose of entering a network is to gain access to the resources needed (but which the company does not possess) and to learn new competencies outside the companyrsquos core competences [5670] However alliances with selected customers or universities may also be related to the core of for example product development and technology development Organisational networks can take many forms eg RampD partnerships licensing marketing agreements subcontracting joint ventures and strategic alliances
From a corporate entrepreneurship point of view another purpose of entering networks or alliances may be flexibility ndash especially for the well-structured large organisation where everything has to be cross-checked before something new can be tried out in the market Networks or alliances with small partners make it possible to
310 KS Christensen
produce only a few units of a product and test it in the market before gearing the large-scale production plant to streamlined production In this way the organisation gets some of the flexibility and agility of a small company while maintaining the massive streamlined organisation that is crucial for stability
55 Towards a framework for corporate entrepreneurship
Figure 3 summarises the theoretical framework for corporate entrepreneurship developed in the previous sections The upper half of the figure shows the four perspectives or domains of research in the area ndash corporate venturing internal resources internationalisation and networks It has been argued that the concept of corporate entrepreneurship could be theorised and conceptualised from each of the four perspectives which can also be categorised into intrapreneurship and exopreneurship
The lower part of the framework accentuates the possible outcome of corporate entrepreneurship It is very difficult to predict this beforehand Some activities will hardly influence the organisation whereas other activities lead to organisational renewal and yet again some others transform the organisation to something lsquonewrsquo significantly different from what it was before But even though corporate entrepreneurship initiatives result in some form of organisational renewal only in a very few cases will it change the rules of competition
Figure 3 The proposed framework for corporate entrepreneurship
6 Conclusion
This study as a discussion and classification of labels and a clarification of the overall concept of corporate entrepreneurship contributes to the corporate entrepreneurship
A classification of the corporate entrepreneurship umbrella 311
literature by providing useful insights (for newcomers) The breadth of corporate entrepreneurship has been illustrated and a framework in clarification has been proposed Further research in each of the four perspectives is needed in order to understand the different ways in which corporate entrepreneurship is enabled and how entrepreneurial activities should be organised ndash especially within the internal resource perspective which is less developed than the others Future research should be structured according to the proposed framework in Figure 3 to make it possible to compare the enablers and the ways of organising across different perspectives on corporate entrepreneurship
The classification provides a nuanced multi-faceted view of corporate entrepreneurship by describing different bases for managerial decisions in relation to corporate entrepreneurship since this can mean different things depending on the perspective The four perspectives taken into account may contribute to a greater insight into the meaningful context-dependent relations in a company It is important to realise that the perspectives are not mutually exclusive ndash rather they should be seen as complementary However the merits of intrapreneurship or exopreneurship vary with market contexts and the resources under the firmrsquos control [79]
The four perspectives on corporate entrepreneurship all relate to managerial opportunities However enabling corporate entrepreneurship by for example creating a new organisational structure may not be sufficient Chesbrough and Rosenbloom [80] argue that companies also need to be open to new ways of commercialisation when new opportunities do not fit well into their current business model
Knowledge seems to be the only factor to play a crucial role in all perspectives even though it plays different roles across the perspectives in forming the basis for innovative activities corporate entrepreneurship and business models Knowledge resources as an integration mechanism supports Druckerrsquos [71] view of knowledge as the resource in the knowledge society It also points to the fact that a companyrsquos ability to generate knowledge resources [81] is crucial to its competitiveness [82] and innovativeness However knowledge resources are also a potential source of cognitive bias as a company is often biased by earlier success
In order to be innovative managing organisational knowledge is thus critical in relation to developing new combinations of knowledge resources etcIt adds a new dimension to the existing literature on corporate entrepreneurship that up to now has mainly described the different roles and characteristics of the entrepreneurintrapreneur A knowledge-based view of corporate entrepreneurship and knowledge resources as an integration mechanism are therefore very interesting topics for further research
Acknowledgements
The author would like to thank Anders Drejer Anders Jacob Raj Andersen Per Nikolaj Bukh Mikkel Gadmar Bengt Johannisson and John Parm Ulhoslashi for comments on previous drafts
312 KS Christensen
References 1 Morris MH and Kuratko DF (2002) Corporate Entrepreneurship Harcourt College
Publishers Orlando Florida 2 Latour B (1999) Pandorarsquos Hope Essays on the Reality of Science Studies Harvard
University Press Cambridge MA 3 Guth WD and Ginsberg A (1990) lsquoGuest editors introduction corporate
entrepreneurshiprsquo Strategic Management Journal Vol 11 pp5ndash15 4 McGrath RG MacMillan IC and Venkatraman S (1995) lsquoGlobal dimensions of new
competenciesrsquo in Birley S and MacMillan IC (Eds) International Entrepreneurship Routledge New York
5 Stevenson HH and Jarillo JC (1990) lsquoA paradigm of entrepreneurship entrepreneurial managementrsquo Strategic Management Journal Vol 11 special issue pp17ndash27
6 Knight F (1964 [1921]) Risk Uncertainty and Profit Augustus M Kelley New York 7 Schultz TW (1975) lsquoThe value of the ability to deal with disequilibriarsquo Journal of
Economic Literature Vol 13 No 3 pp827ndash846 8 Schultz TW (1980) lsquoInvestment in entrepreneurial abilityrsquo Scandinavian Journal of
Economics Vol 82 pp437ndash448 9 Schumpeter JA (1934) The Theory of Economic Development Harvard University Press
Cambridge AS 10 Mises LV (1949) Human Action A Treatise on Economics William Hodge and Company
Limited London 11 Kirzner IM (1985) Discovery and the Capitalist Process University of Chicago Press
Chicago 12 Kirzner IM (1997) lsquoEntrepreneurial discovery and the competitive market process an
austrian approachrsquo Journal of Economic Literature Vol XXXV March pp60ndash85 13 Collins NC and Moore DG (1964) The Enterprising Man East Lansing MI Michigan
State University 14 Brockhaus RH (1980) lsquoRisk-taking propensity of entrepreneursrsquo Academy of Management
Journal Vol 23 pp509ndash520 15 Brockhaus RH and Horwitz PS (1986) lsquoThe psychology of the entrepreneurrsquo in Sexton
DL and Smilar RW (Eds) The Art and Science of Entrepreneurship Cambridge Ballinger MA
16 McClelland DC (1961) The Achieving Society The Free Press New York 17 Sundbo J (1998) The Theory of Innovation Entrepreneurs Technology and Strategy
Edvard Elgar Publishing 18 Alvarez SA and Barney JB (2002) lsquoResource-based theory and the entrepreneurial firmrsquo
in Hitt MA Ireland RD Camp MS and Sexton DL (Eds) Strategic Entrepreneurship Creation a New Mindset Blackwell Publisher Oxford
19 Dess GD Lumpkin GT and McGee JE (1999) lsquoLinking corporate entrepreneurship to strategy structure and process suggested research directionsrsquo Entrepreneurship Theory and Practice Vol 23 No 3 pp85ndash102
20 Morris MH and Kuratko DF (2002) Corporate Entrepreneurship Harcourt College Publishers Orlando Florida
21 Peterson R and Berger D (1972) lsquoEntrepreneurship in organisationsrsquo Administrative Science Quarterly Vol 16 pp97ndash106
22 Hill RM and Hlavacek JD (1972) lsquoThe venture team a new concept in marketing organisationsrsquo Journal of Marketing Vol 36 pp44ndash50
23 Hanan M (1976) lsquoVenturing corporations think small to stay strongrsquo Harvard Business Review Vol 54 pp139ndash148
A classification of the corporate entrepreneurship umbrella 313
24 Quinn JB (1979) lsquoTechnological innovation entrepreneurship and strategyrsquo Sloan Management Review Vol 20 pp19ndash30
25 Burgelman RA (1983) lsquoA process model of internal corporate venturing in the diversified major firmrsquo Administrative Science Quarterly Vol 28 No 2 pp223ndash241
26 Burgelman RA (1984) lsquoDesigns for corporate entrepreneurship in established firmsrsquo California Management Review Vol 26 No 3 pp154ndash166
27 Burgelman RA (1985) lsquoManaging the new venture division research findings and implications for strategic managementrsquo Strategic Management Journal Vol 6 No 1 pp39ndash55
28 Stopford J and Baden-Fuller CF (1994) lsquoCreating corporate entrepreneurshiprsquo Strategic Management Journal Vol 15 No 7 pp521ndash536
29 Barrett H and Weinstein A (1999) lsquoThe effect of market orientation and organisational flexibility on corporate entrepreneurshiprsquo Entrepreneurship Theory and Practice Vol 23 No 1 pp57ndash73
30 Hornsby JS Kuratko DF and Zahra SA (2002) lsquoMiddle managers perception of the internal environment for corporate entrepreneurship assessing a measurement scalersquo Journal of Business Venturing Vol 17 No 3 pp253ndash273
31 Schollhammer H (1981) lsquoThe efficacy of internal corporate entrepreneurship strategiesrsquo in Vesper KH (Eds) Frontiers of Entrepreneurship Research Babson College Wellesley MA
32 Schollhammer H (1982) lsquoInternal corporate entrepreneurshiprsquo in Kent C Sexton D and Vesper K (Eds) Encyclopedia Entrepreneurship Prentice-Hall Inc Engelwood Cliffs NJ
33 Jones GR and JE Butler (1992) lsquoManaging internal corporate entrepreneurship an agency theory perspectiversquo Journal of Management Vol 18 No 4 pp733ndash749
34 Lumpkin GT and Dess GG (1996) lsquoClarifying the entrepreneurial orientation construct and linking it to performancersquo Academy of Management Review Vol 21 pp135ndash172
35 Pinchot G (1985) Intrapreneuring Why You Donrsquot Have to Leave the Corporation to Become an Entrepreneur Harper and Row New York
36 Nielsen RP Peters MP and Hisrich RD (1985) lsquoIntrapreneurship strategy for internal markets ndash corporate non-profit and government institution casesrsquo Strategic Management Journal Vol 6 pp181ndash189
37 Carrier C (1994) lsquoIntrapreneurship in large firms and SMEs a comparative studyrsquo International Small Business Journal Vol 12 No 3 pp54ndash61
38 Carrier C (1996) lsquoIntrapreneurship in small businesses an exploratory studyrsquo Entrepreneurship Theory and Practice Vol 21 No 1 pp5ndash20
39 Antoncic B and Hisrich RD (1999) lsquoIntrapreneurship construct refinement and cross-cultural validationrsquo Journal of Business Venturing Vol 16 pp495ndash527
40 Chinho L Hojung T and Chienming W (2003) lsquoFuzzy fitness model of intrapreneurship activities or Taiwanese high-tech firmsrsquo International Journal of Management and Enterprise Development Vol 1 No 1 pp45ndash54
41 Hitt MA Ireland RD Camp SM and Sexton DL (2001) lsquolsquoGuest editorsrsquo introduction to the special issue strategic entrepreneurship entrepreneurial strategies for wealth creationrsquo Strategic Management Journal Vol 22 pp479ndash491
42 Ireland RD Hitt MA Camp SM and Sexton DL (2001) lsquoIntegrating entrepreneurship actions and strategic management actions to create firm wealthrsquo Academy of Management Executive Vol 15 No 1 pp49ndash63
43 Shane S and Venkataraman S (2000) lsquoNote the promise of entrepreneurship as a field of researchrsquo Academy of Management Review Vol 25 No 1 pp217ndash226
44 Chang J (1998) lsquoModel of corporate entrepreneurship intrapreneurship and exopreneurshiprsquo Borneo Review Vol 9 No 2 pp187ndash213
314 KS Christensen
45 Sharma P and Chrisman JJ (1999) lsquoToward a reconciliation of the definitional issues in the field of corporate entreprenrushiprsquo Entrepreneurship Theory and Practice Vol 22 pp43ndash68
46 Zahra SA (1991) lsquoPredictors and financial outcomes of corporate entrepreneurship an exploratory studyrsquo Journal of Business Venturing Vol 6 pp259ndash285
47 Sathe V (1989) lsquoFostering entrepreneurship in a large diversified firmrsquo Organisational Dyn Vol 18 pp20ndash32
48 Thornberry N (2001) lsquoCorporate entrepreneurship antidote or oxymoronrsquo European Management Journal Vol 19 No 5 pp526ndash533
49 Chesbrough HW (2000) lsquoDesigning corporate ventures in the shadow of private venture capitalrsquo California Management Review Vol 42 No 3 pp31ndash49
50 Penrose ET (1959) The Theory of the Growth of the Firm Wiley New York 51 Barney JB (1991) lsquoFirm resources and sustained competitive advantagersquo Journal of
Management Vol 17 pp99ndash120 52 Brush CG Greene PG and Hart MM (2001) lsquoFrom initial idea to unique advantage the
entrepreneurial challenge of constructing a resource basersquo Academy of Management Executive Vol 15 No 1 pp64ndash80
53 Zahra SA and Garvis DM (2000) lsquoInternational corporate entrepreneurship and firm performance the moderating effect of international environment hostilityrsquo Journal of Business Venturing Vol 15 pp469ndash492
54 Hitt MA and Ireland RD (2000) lsquoThe intersection of entrepreneurship and strategic management researchrsquo in Sexton DL and Landstroumlm HA (Eds) Handbook of Entrepreneurship Blackwell Oxford 45ndash63
55 Lu JW and Beamish PW (2001) lsquoThe internationalisation and performance of SMEsrsquo Strategic Management Journal Vol 22 pp565ndash586
56 Hitt MA Ireland RD and Lee H (2000) lsquoTechnological learning knowledge management firm growth and performancersquo Journal of Engineering and Technology Management Vol 17 pp231ndash246
57 West III GP and Meyer GD (1998) lsquoTo agree or not to agree Consensus and performance in new venturesrsquo Journal of Business Venturing Vol 13 pp395ndash422
58 Beekun RI Stedham Y and Young GJ (1998) lsquoBoard characteristics managerial controls and corporate strategy a study of US hospitalsrsquo Journal of Management Vol 24 pp3ndash19
59 Hitt MA Hoskisson RE Johnson RA and Moesel DD (1996) lsquoThe market for corporate control and firm innovationrsquo Academy of Management Journal Vol 39 pp1084ndash1119
60 Covin JG and Slevin P (2002) lsquoThe entrepreneurial imperatives of strategic leadershiprsquo in Hitt MA Ireland RD Camp SM and Sexton DL (Eds) Strategic Entrepreneurship Creating a New Mindset Blackwell Publisher Oxford
61 Davidsson P Delmar F and Wiklund J (2002) lsquoEntrepreneurship as growth growth as entrepreneurshiprsquo in Hitt MA Ireland RD Camp SM and Sexton DL (Eds) Strategic Entrepreneurship Creating a New Mindset Blackwell Publishers Oxford
62 Hitt MA Ireland RD Camp SM and Sexton DL (Eds) (2002) Strategic Entrepreneurship Creating a New Mindset Blackwell Publisher Oxford
63 Tidd J Bessant J and Pavitt K (1997) Managing Innovation Integrating Technological Market and Organisational Change West Sussex England John Wiley and Sons
64 Freeman C (1982) The Economics of Industrial Innovation (2nd Edition) Frances Pinter London
65 Drucker PF (1985) Innovatoin and Entrepreneurship Practice and Principles Harper and Row New York
66 Porter M (1990) The Competitive Advantage of Nations Macmillan London
A classification of the corporate entrepreneurship umbrella 315
67 Hamel G (2000) Leading the Revolution Harvard Business School Press Boston 68 Gee RE (1994) lsquoFinding and commercialising new businessesrsquo Research Technology
Management Vol 37 No 1 pp49ndash57 69 Mason H and Rohner T (2002) The Venture Imperative ndash A New Model for Corporate
Innovation Harward Business School Press Boston 70 Prahalad G and Hamel G (1990) lsquoThe core competence of the corporationrsquo Harvard
Business Review Vol 68 No 3 pp79ndash91 71 Drucker PF (1993) Post-capitalist society Butterworth-Heinemann Oxford p7 72 Ireland RD and Hitt MA (1999) lsquoAchieving and maintaining strategic competitiveness in
the 21st century the role of strategic leadershiprsquo Academy of Management Executive Vol 13 No 1 pp43ndash57
73 Zahra SA Ireland RD and Hitt MA (2000) lsquoInternational expansion by new venture firms international diversity mode of market entry technological learning and performancersquo Academy of Management Journal Vol 43 No 5 pp925ndash950
74 Zahra SA and George G (2002) lsquoInternational entrepreneurship the current status of the field and future research agendarsquo in Hitt MA Ireland RD Camp SM and Sexton DL (Eds) Strategic Entrepreneurship Creating a New Mindset Blackwell Publisher Oxford
75 Hitt MA Hoskisson RE and Kim H (1997) lsquoInternational diversification effects on innovation and firm performance in product-diversified firmsrsquo Academy of Management Journal Vol 40 No 4 pp767ndash798
76 Stuart TE Hoang H and Hybels RC (1999) lsquoInterorganisatinal endorsements and the performance of entrepreneurial venturesrsquo Administrative Science Quarterly Vol 44 pp315ndash349
77 Dubini P and Aldrich H (1991) lsquoPersonal and extended networks are central to the entreprenerushial processrsquo Journal of Business Venturing Vol 6 pp305ndash313
78 Gulati R (1998) lsquoAlliances and networksrsquo Strategic Management Journal Vol 19 pp293ndash317
79 Lee L and Gongming Q (2003) lsquoInternalisation or externalisation the option for small and medium-sezed technology-based enterprises in overseas marketsrsquo International Journal of Management and Enterprise Development Vol 1 No 1 pp55ndash70
80 Chesbrough H and Rosenbloom RS (2002) lsquoThe role of the business model in capturing value from innovations evidence from Xerox Corporationrsquos technology spin-off companiesrsquo Industrial and Corporate Change Vol 11 No 3 pp529ndash555
81 Spender JC (1996) lsquoMaking knowledge the basis of a dynamic theory of the firmrsquo Strategic Management Journal Vol 17 Winter Special Issue pp45ndash62
82 Grant RM (1996) lsquoTowards a knowledge-based theory of the firmrsquo Strategic Management Journal Vol 17 Winter Special Issue pp109ndash122
74
75
CHAPTER 5
Postscript to article 1
The article in Chapter 4 of the dissertation was published in International Journal of
Management and Enterprise Development The paper was later translated into
Danish revised and substantially improved in several areas Finally the article was
published in the Danish Journal Ledelse amp Erhvervsoslashkonomi (Christensen 2005a)
The main differences between the two articles are to be found in the introduction the
paragraph ldquoTowards a framework for corporate entrepreneurshiprdquo and the
concluding remarks which have been considerably improved In addition the Danish
article has adopted a Danish perspective of the Danish labour market situation the
writing has been improved and the figures have been revised to make the basic
message clearer
Corporate venturing Initiatives which lead to the establishment of a new organisation within the boundaries of an existing one
Internal resources Primarily concerns the internal knowledge resources (human resources processes technologies etc) of the parent company within national and cultural boundaries
Internationalisation Focuses on the resources available to the company from establishing departments abroad and in other cultures
External networks Relates to access to resources the company needs and which the company does not necessarily develop or possess itself
Table A Four ways to organise corporate entrepreneurship
76
Thus based on the Danish version of the article this postscript presents a more
detailed and well-developed discussion of the framework for corporate
entrepreneurship and the implications thereof in a Danish context Table A which is
translated from the Danish article provides an overview of the four perspectives on
corporate entrepreneurship presented in the article
51 TOWARDS A FRAMEWORK FOR CORPORATE ENTREPRENEURSHIP
Figure 43 (figure 3 in the original article submitted as part of this dissertation)
summarises the theoretical framework for corporate entrepreneurship The four
organisational perspectives on corporate entrepreneurship corporate venturing
internal resources internationalisation and networks are placed in the central part of
the figure to show that corporate entrepreneurship can be conceptualised from each
perspective
The lower middle part of figure 43 shows the possible results of the various
initiatives arising from corporate entrepreneurship activities While some initiatives
hardly affect the organisation at all or only imply minor changes others will change
the company through organisational or strategic renewal and may transform it into
something lsquonewrsquo or significantly different from what it was before Finally as shown
in the lowest part of figure 43 the results can transcend the boundaries of the
company and influence the competitive rules of the market
The model illustrates the organisational opportunities a company has to encourage
both innovation and entrepreneurship eg collaboration with other companies
(exopreneurship) or exploiting resources it already possesses There is no general
blueprint for the best way of organising It depends on the specific company its
strategy culture organisation etc and the type of innovation it finds most
appropriate
77
Both the original article and the revised version (Christensen 2005a) have presented
various perspectives from which these questions can be addressed However it is
important to note that the perspectives complement each other ie experiences
acquired from different approaches and from different traditions in the research
literature can shed light on how to manage the tensions between different ways of
organising innovativeness
While the perspectives in figure 43 lead to different ways of organising
innovativeness anything the company or management can do to enable corporate
entrepreneurship is important There is therefore a need for organisational initiatives
to enable corporate entrepreneurship which either build on specific perspectives or
span them in an integrated way
In a review of the literature Jeffrey Hornsby and Donald Kuratko and various co-
authors have suggested a number of factors which enable corporate entrepreneurship
In particular they point to five factors which have been discussed in the literature
since the end of the 1980s rewards management commitment access to resources
appropriate organisational structures and attitudes to risk (Hornsby et al 1993
Hornsby et al 2002 and Kuratko et al 1990) Empirically however they found
only management commitment organisational structure resources and rewards
significant (Kuratko et al 1990)
Based on an empirical study of innovative processes at Danfoss Drives regarding
factors that enable intrapreneurship (Christensen 2005b article 3 of this
dissertation) it was concluded that in relation to this specific case risk did not play a
major role in corporate entrepreneurship although communication culture and
processes were important factors If employees find the companyrsquos initiatives in these
areas insufficient then factors which are supposed to enable corporate
entrepreneurship become barriers to innovativeness and intrapreneurship instead
78
There is a need both as regards research and managerial implications to focus more
on which factors enable and hinder corporate entrepreneurship respectively and how
entrepreneurial activities are best organised This also has potential implications for
industrial policy If Danish companies cannot compete against companies operating
in low-wage countries then where possible they should opt for so-called knowledge-
intensive production instead
A typical characteristic of knowledge-intensive production is that companies should
focus not only on product and technological development but also be better at
developing new interpersonal ways of working (exopreneurship) This could include
better adoption of usersrsquo needs through user-driven innovation (see for example
Rosted 2005) Another aspect of the move towards more knowledge-intensive
production is a new way of managing (intrapreneurship) which makes companies
better able to implement new technologies faster and exploit them more effectively
52 CONCLUDING REMARKS
There has been an increasing shortage of labour in Denmark in recent years This has
changed the previous focus on the creation of more jobs to a new emphasis on the
creation of the right jobs in companies with a high potential for growth and value
creation This is often (see for example Hoffman et al 2007) associated with the
marketing of new products in new markets which makes far greater demands on
knowledge and managerial resources than merely starting up a new company
According to Hoffmann et al (2007) while Denmark has been good at helping
entrepreneurs on generic issues such as VAT business plans accounting marketing
etc entrepreneurial policy has had less success in nurturing innovative growth
Furthermore the conventional wisdom is that smaller companies have to lead the way
79
in creating new jobs ndash not only by entrepreneurs starting up new companies but also
by smaller companies supporting the start-up of new firms
Based on this assumption a study by Evald (2003) estimated that over a period of
five years 153 smaller so-called parent companies have spun off 459 new companies
resulting in 5508 new jobs This corresponds to on average of about 7 jobs a year
over the period ndash or 2-3 jobs per company In other words while the number of firms
has increased greatly the size and with it potential of newly established companies
has not grown substantially
Another investigation of the strategic development of smaller companies (Drejer et
al 1999) showed however that the total effect of the jobs created is more or less
zero since almost as many jobs are lost as created While there is undoubtedly a
potential for job creation in both small and large companies these studies alone say
nothing about which occupational structure best guarantees growth and job creation
in Denmark
However any initiative whether the result of government policy or companies
setting up new ventures needs to take a starting point in the existing business
structure which consists of both small and large companies Article 1 presented a
broader framework for corporate entrepreneurship in order to provide a starting point
for assessing which activities companies can best implement ndash and probably also
which initiatives can be enabled via political decision-making Although most Danish
firms are small and medium-sized Denmark also has a number of larger companies
with considerable potential supporting innovative entrepreneurs It is therefore
appropriate to focus on corporate entrepreneurship as a unifying concept for these
companiesrsquo innovative initiatives
When concepts like corporate entrepreneurship become popularised are written
about in the business press and are incorporated in policy proposals there is always a
80
risk of the basic ideas losing their grounding in well-documented evidence and
becoming mere managerial fads So is corporate entrepreneurship just another
managerial fad Or do we need to rethink how innovativeness is organised in more
loosely coupled structures than is possible in the traditional functionally organised
company where research is mainly done in the RampD department customer contact is
the province of the sales and marketing functions etc
A common assumption of innovation management is that even though firms might
originally be the result of a radical innovation when they mature they mostly rely on
incremental innovations based on existing resources The implication is that radical
innovations are often left to smaller companies although new business ideas will still
emerge in larger companies However the entire organisational structure including
the various layers of management can have difficulty in handling the entrepreneurial
needs of innovation This means that management will sometimes be faced by the
possibility for new strategies and related dilemmas ndash particularly if the new ventures
are far from the parent companyrsquos core competencies and market opportunities
This means that corporate entrepreneurship is not only a question of setting up the
appropriate structures outside the organisation but also as argued in article 1 an
issue for the organisation as a whole Since different organisational structures support
different organisational needs this is a good starting point for ensuring the ability of
larger companies to innovate
In other words larger companies should experiment with organisational structures
and forms which create innovation These include various types of network
organisations loosely coupled organisations and project organisations as a
supplement to the classical hierarchy In addition to organisational forms
management style must also change since renewal and innovation cannot be planned
81
and managed in the same way as operational activities (see for example
Christensen 2005b 2006)
53 REFERENCES
Christensen KS 2005a Corporate Entreprenoslashrskab Begreber og Perspektiver
Ledelse amp Erhvervsoslashkonomi Vol 61 No 1 13-26
Christsensen KS 2005b Enabling intrapreneurship the case of a knowledge-
intensive industrial company European Journal of Innovation Management Vol 8
No 3 pp 305-322
Christensen KS 2006 Losing Innovativeness The Challenge of being acquired
Management Decision Vol 44 No 9 pp 1161-1182
Drejer A LB Henriksen amp JB Christensen 1999 Smaring virksomheders strategiske
udviking Aalborg Oslashst Nordjysk Informatik og Virksomhedsudvikling
Evald MR 2003 Corporate Venturing i Danmark En undersoslashgelse af mindre
virksomheders knopskudsaktiviteter Center for Smaringvirksomhedsforskning Syddansk
Universitet
Hoffmann A NM Nielsen amp J Nyholm 2007 Fremtidens erhvervsservice og
ivaeligrksaeligtterpolitik ndash en guide til flere vaeligkstvirksomheder Marts 2007
Hornsby JS DF Kuratko amp SA Zahra 2002 Middle managers perception of the
internal environment for corporate entrepreneurship assessing a measurement scale
Journal of Business Venturing Vol 17 No 3 pp 253-373
Hornsby JS DW Naffziger DF Kuratko amp RV Montagno 1993 An interactive
model of the corporate entrepreneurship process Entrepreneurship Theory amp
Practice Vol 17 No 2 pp 29-37
82
Kuratko DF RV Montagno amp JS Hornsby 1990 Developing an intrapreneurial
assessment instrument for an effective corporate entrepreneurial environment
Strategic Management Journal Vol 11 No 1 pp 49-58
Rosted J 2005 Brugerdreven innovation Resultater og anbefalinger Oslashkonomi- og
Erhvervsministeriets enhed for erhvervsoslashkonomisk forskning og analyse
Koslashbenhavn FORA
83
PART II
Intrapreneurship from an Internal Resources Perspective
The internal resource perspective takes a starting point in established organisational
structures Based on this perspective the aim of intrapreneurship is to identify hidden
or suppressed organisational resources and bring them together in (new) ways to
facilitate innovation and generate new competitive advantages In some cases these
resources may be tangible but in most cases today they are intangible eg
knowledge resources which means that they will often be closely related to the
organisational members
The second part of the dissertation consists of two articles which in different ways
present issues related to intrapreneurship The articles show that getting the most out
of a firm or organisation requires new ways of working and thinking Managers ndash or
coaches as they may prefer to be called ndash in knowledge-intensive organisations face
new challenges since their employees have other needs and wants than employees in
traditional industrial companies
While acquisitions are an increasingly popular way for mature organisations to gain
access to new resources and skills it does not necessarily mean that they can
successfully integrate a new entrepreneurial subsidiary (eg as a CV) and its
innovativeness and creative ways of working The first article in Part II Losing
innovativeness the case of being acquired focuses on the personal mechanisms that
84
are affected when a small entrepreneurial company is taken over by a large
multinational company
The article discusses the practice of intrapreneurship and investigates
intrapreneurship in its natural setting It focuses on what happens to the
entrepreneurial spirit in a company when it is taken over by another (much larger)
company which has grown mainly through acquisition rather than internal
development The discussion centres on a study of the intrapreneurial spirit and
practices of Ericsson Telebit a Danish IT firm Its acquisition by a large mature
company is found to have a profound influence on the firmrsquos intrapreneurial spirit In
particular innovation creativity and the innovative process have been analysed in
relation to the entrepreneurial spirit The article concludes that the larger a company
becomes the more difficult it is to maintain a managerial commitment to innovation
since innovative initiatives and activities may be subdued by formal control systems
which almost by definition are necessary when an organisation becomes larger and
the range of operations more diversified The aim is therefore to identify those factors
that managers need to focus on and actively use in order to enable intrapreneurship
and give intrapreneurs room to grow within corporate boundaries
The second article Enabling intrapreneurship the case of a knowledge-intensive
industrial company discusses factors that management can influence to enable or
hinder intrapreneurship In order to provide a framework for evaluation a short
overview of the main factors from the literature is provided It should be noted
however that these are primarily based on studies of traditional industrial
companies
Based on a case study of Danfoss Drives the usability of the factors is analysed in a
specific knowledge-intensive setting The conclusion from the findings is that the
framework for industrial companies cannot be used for a knowledge-intensive
85
company and a more complete framework with three additional factors is therefore
developed The article shows that whereas in traditional industrial companies the
important enablers were more direct or extrinsic in knowledge-intensive companies
they are more indirect or intrinsic
86
87
CHAPTER 6
Losing innovativeness the challenge of being acquired
Originally published in
Christensen Karina Skovvang 2006 Losing Innovativeness the challenge of being
acquired Management Decision Vol 44 No 9 pp 1161-1182
88
Losing innovativenessthe challenge of being acquired
Karina Skovvang ChristensenDepartment of Management The Aarhus School of Business
Aarhus Denmark
Abstract
Purpose ndash The aim of the paper is to explore how innovativeness and creativity in a smalltechnology company changes after the company is acquired by a larger company
Designmethodologyapproach ndash The empirical part of the article is based on interview andquestionnaire data with a focus on employeesrsquo perception of innovativeness and creativity includingtheir own innovativeness in relation to the possibilities offered within the organisational structure
Findings ndash The results indicate that entrepreneurial spirit innovativeness and creativity in the casecompany were related to the lack of boundaries to and contact with customers These driving forcescould not be sustained when the organisation matured and was acquired by a larger company
Research limitationsimplications ndash More research regarding the integration phase ofacquisitions and how it affects employees and innovativeness is needed Case-based researchshould examine differences between companies that are repeatedly successful in integrating smalltechnology companies into their organisational structure and those that are not Employeesrsquomotivation as a key factor to innovativeness should be in focus and the research should also includeemployees that leave the acquired company as well as employees with the acquiring company
Practical implications ndash An acquisition strategy as a way for mature organisations to gain accessto innovativeness and new resources and skills can easily fail Even though the resources and skills ofthe two companies are complementary and the competencies of the acquired organisation are intactefforts are needed to make the energies of the two organisations act in tandem Thus the pre- andpost-integration phases of an acquisition seem to be of paramount importance
Originalityvalue ndash Very few papers have studied how employees in an acquired company perceiveincorporation into a large mature company This article adds to research by examining how employeesin a small entrepreneurial company perceive innovation creativity and the innovative process threeyears after being acquired by a large mature company
Keywords Acquisitions and mergers Entrepreneurialism Innovation
Paper type Case study
IntroductionOver the years entrepreneurs have shown that new ideas can form the basis for newcompanies and that these companies can sometimes grow rapidly and be highlyprofitable While some companies have been successful in maintaining innovativenesscreativity and an entrepreneurial spirit many organisations have great difficulty inmaintaining their initial recklessness to which established companies are oftenvulnerable The ability to continuously innovate also for well-established companies
The current issue and full text archive of this journal is available at
wwwemeraldinsightcom0025-1747htm
The author gratefully acknowledges the helpful comments made by Per Nikolaj BukhAnders Drejer and John Parm Ulhoslashi as well as two anonymous referees on an earlier version ofthis paper Special thanks goes to Telebitrsquos former HR manager Poul Joslashrgen Dybdal managerErik Reinholdt and all the other employees at Ericsson Telebit
Losinginnovativeness
1161
Received November 2005Revised July 2006
Accepted July 2006
Management DecisionVol 44 No 9 2006
pp 1161-1182q Emerald Group Publishing Limited
0025-1747DOI 10110800251740610707668
is thus becoming increasingly important not only for companiesrsquo competitiveadvantage but also for their survival
As an organisation grows and matures management concerns increasingly turnfrom exploration to exploitation (March 1991) of resources Often the managerialsystems and values of mature companies are better at exploiting areas aligned withexisting resources and skills than exploring areas far outside them This concern withalignment could explain why it is often difficult for mature organisations to exploreentirely new areas of resources However too much emphasis on the exploitation ofexisting resources can become a barrier to innovation and thus long-term performance(Leonard-Barton 1992 March 1991) since access to new resources is usually essentialto maintaining creativity and innovativeness
Over the last couple of decades acquisitions have been an increasingly popular wayfor mature organisations to gain access to new resources and skills Howeveracquiring resources through acquisition does not necessarily mean that the matureorganisation is able to handle a new entrepreneurial subsidiary and its innovativenessand creative ways of working Often the acquired company will slowly adapt to themature organisationrsquos existing and often stifling management systems This in turnwill lead to increasing inertia and with it frustration decreasing both employeesrsquomotivation and their liking for recklessness Being incorporated into a large maturecompany is certainly not easy for a small innovative and creative company
Little research has been carried out on how employees in an acquired companyactually perceive incorporation into a large mature company (eg Brockner et al 1993Hambrick and Cannella 1993 Reilly et al 1993) This article adds to research byexamining how employees in a small entrepreneurial company perceive innovationcreativity and the innovative process three years after being acquired by a largemature company Based on a case study of the Danish company Ericsson Telebit thearticle shows what happens to this specific organisational unit which while apparentlyenjoying success and an increase in the number of employees following its acquisitionby a large multi-national company only two years later experienced layoffs and radicalrestructurings for three consecutive years as a consequence of a change in strategy ofthe acquiring company
The article is organised as follows section 2 briefly presents the case for innovationthrough acquisitions and outlines the entrepreneurial challenge faced by the acquiredorganisation Section 3 describes the methodology used Section 4 presents the casecompany Ericsson Telebit and the interview results while section 5 presents ananalysis of the questionnaire results Finally section 6 concludes the article
Innovation through acquisition the entrepreneurial challengeMergers and acquisitions (MampA) are often motivated by a belief that the combinationof two or more companiesrsquo resources and skills can create more value than is possibleby the two companies separately or by engaging in other ways of co-operating egthrough alliances These synergistic benefits from resource combinations it has beenargued are more likely to be uniquely valuable when based on complementaritiesrather than similarities (Harrision et al 1991 2001) Thus acquisitions of companiespossessing complementary technological capabilities and entrepreneurial abilities maybe seen as a way for large more bureaucratic companies to increase theirinnovativeness
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1162
However in a review of the literature Man and Duysters (2005) find that companiesengaging in MampA activities generally face a decline in innovation While muchresearch focuses on the innovative performance of the company especially on theoutput of innovations eg number of patents or input measures such as RampD expenses(see Man and Duysters 2005) after a merger or an acquisition only limited researchhas been carried out on how MampA affect creativity and the innovative performance ofthe individuals employed in the acquiring or acquired company
Exceptions include Kapoor and Lim (2005) who found that the number of patentsper inventor per year fell in US semiconductor companies that were acquired between1991 and 1998 and Ernst and Vitt (2000) who demonstrated similar results in ananalysis of 43 acquisitions Ernst and Vitt also showed further that to a large extentkey inventors leave their company after the acquisition Of course how employeesreact in an MampA situation can be influenced by a large number of factors butknowledge of what can happen when a small innovative company is acquired by alarger company and how this is perceived by employees can provide insight into whatfactors enable innovation and how these factors are affected by acquisitions
With respect to the overall performance of the acquiring company much researchhas documented that mergers and acquisitions often fail to deliver their intendedbenefits and actually destroy economic value in the process However in this area toothere has been much less focus on exploring the specific factors that influence thesuccess of the integrative process Thus King et al (2004 p 196) conclude from acomprehensive meta-analysis of the literature on post-acquisition performance thatldquoexisting empirical research has not clearly and repeatedly identified those variablesthat impact an acquiring companyrsquos performancerdquo
The case for innovation through acquisitionsIn principle companies can develop and grow either by exploiting or exploring theirresources (March 1991) The former focuses on increasing efficiency sales etc whilethe latter can be achieved through MampA or by internally-driven innovations (see alsoBurgelman 1986 Hitt et al 1990) Chaudhuri and Tabrizi (1999) argue thatdetermining the right mix of externally and internally generated innovation is aquestion of whether or not innovation can be done quickly enough internally whileaccording to Ghoshal (1987) the acquisition process may be necessary in order toobtain advantages of scale and scope in the global economy
Most organisations however are limited in their choice of innovative mode byresource constraints Consequently say Hitt et al (1990 p 29) ldquothe acquisition processand the resulting conditions after the acquisition is consummated affects managerialcommitment to innovationrdquo However committing significant financial resources toacquisitions leaves less for innovation which means that managers may give a lowerpriority to internal innovation (Hitt et al 1991) Thus since investments in acquisitionsand investments in other areas eg innovation may be perceived as trade-offs mostorganisations prioritise managerial commitment either to mergers and acquisitions orinternally to innovation
Acquisition is often suggested as a solution to stifling management systemsespecially as regards technology development (Warner 2003) and a growing body ofliterature has evolved to help organisations understand the value of technology andinnovation through acquisitions (eg Hitt et al 1990 Hitt et al 1996 James et al 1998)
Losinginnovativeness
1163
For example Karim and Mitchell (2000) find that acquisitions are a key to resourcereconfiguration either through deepening existing resources or extending the resourcemix This leads them to believe that companies that grow through acquisitions aremore robust and more likely to survive than those that do not Similarly Ahuja andKatila (2001) find that large companies can increase their innovativeness when theyacquire smaller companies and based on a study of MampA in Greece Papadakis (2005)suggests that the larger the acquirer compared with the acquired company the moresuccessful the acquisition
However other studies find that the performance of acquisitions is often belowexpectations (eg Chaudhuri and Tabrizi 1999 Hargedoorn and Duysters 2002) andin their review of the effect of mergers acquisitions and alliances Man and Duysters(2005) conclude that alliances should be favoured to mergers and acquisitions for thepurpose of innovative renewal
Collier (1983) argued that organisations often mature when they grow larger andthat this may be why larger organisations have increasingly pursued growth throughMampA compensating for their stifled systems and often ldquolackingrdquo innovation byacquiring entrepreneurial organisations However absorbing and integrating anentrepreneurial organisation into a larger one is a complex process that challengesmany of the pre-existing structures and processes in both organisations One of themajor challenges is to maintain creativity and innovativeness ndash at least in the acquiredorganisation ndash within the newly established corporate boundaries
Managing the post-acquisition processIt is often less clear from the available empirical literature how the post-acquisitionprocess influences the innovative performance of the acquired company Bresman et al(1999) suggest that it may be difficult to maintain innovativeness in the immediatepost-acquisition period because knowledge transfer becomes a one-way process fromthe acquirer to the acquired which can make employees in the acquired organisationfeel stressed angry disoriented frustrated confused and even frightened (Buono1997) leading to tension and uncertainty This potentially dampens employeesrsquocreativity and innovativess (Zhuang 1995)
Further information and knowledge are increasingly seen as key resources in theso-called knowledge-intensive companies However as emphasised by Von Krogh et al2000 knowledge is often related to processes which are basically not manageable in thetraditional sense or which lose their efficiency and impact if management is too tightKnowledge-sharing therefore presumes a motivation which does not comeautomatically
A knowledge-sharing culture involves the exchange of experiences together withthe ability to identify and cooperate with persons in the organisation withcomplementary competencies etc Thus companies need to develop aknowledge-sharing culture and a common identity since this helps to identify whatthe organisation must know and what capabilities should be developed (Bukh et al2005) Furthermore in acquired technology-based companies the most talentedindividuals embody the acquired companyrsquos institutional knowledge and these peopleare also the ones who have the best employment opportunities outside the company (cfBuono 1997)
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1164
Changes in the organisation including MampA are likely to induce changes in theculture and thus also in the organisationrsquos ability to adopt and explore knowledgeThis is especially the case when new knowledge related to customers and otherinternal and external stakeholders must be integrated in the organisationOrganisational learning and organisational knowledge is not simply the sum ofemployeesrsquo learning and knowledge but is influenced by the social processes in thecompany as has been emphasised in the concept of the learning organisation and theknowledge-based company
MethodThis article addresses three fundamental issues ndash creativity innovation and theinnovative process ndash based on employeesrsquo perception of themselves and the innovativeactivities in the case company Ericsson Telebit The data collection was carried out inthe period August-October 2002 and was based on a combination of semi-structuredinterviews on-site observations and a questionnaire distributed to employees at thecompany The initial purpose of the interviews was to get an overview of relevantthemes regarding the role of innovation and creativity in order to develop thequestionnaire however the insights obtained also enabled a more thoroughinterpretation of the results The purpose of the questionnaire was to address abroader understanding of the concepts throughout the organisation while theobservations were used to validate and expand the interview statements
The two main data collection methods interviews and questionnaires were used ina mixed method research design in order to gain both insight into the development ofthe case company and the post-merger experiences of the employees (the interviews)and specifically examine the role and nature of creativity and innovation in thecompany (the questionnaire) Even though the methods are combined in a study of thesame phenomenon as is broadly done in triangulation (Denzin 1989 Jick 1979) wecannot claim the same kind of validity as when the same dimension of a researchproblem is examined using multiple methods However both the on-site observationsand the interviews add to the interpretation of the questionnaire results Below theinterviews and especially the questionnaire are described in more detail
The interviewsIn August 2002 three in-depth interviews were conducted at Ericsson Telebit one withan employee who had been with the company from the start one with a functionalmanager and one with an employee from the research department The author alsohad an informal introductory conversation with the HR manager as well as informalinterviews with several other employees The in-depth interviews were concentratedaround five themes background information incorporation into LM Ericssonchanging organisational structures motivation and customers They weretape-recorded and transcribed for subsequent coding and analysis
The questionnaireBased on prior knowledge interviews and written documents a questionnaire wasdeveloped to probe into employeesrsquo perception of the working environment how theconcept of innovation was interpreted and what is needed for employees to beinnovative The questionnaire adopts and extends Zhuangrsquos (1995) so-called attitude
Losinginnovativeness
1165
survey questionnaire which was originally designed to gain insight into the dynamicsof innovation with creativity as an input to the development of new ideas Thisquestionnaire adopts Heaprsquos (1989) notion of creativity as ldquothe synthesis of new ideasand concepts by the radical restructuring and re-association of existing onesrdquo thuscapturing the human factor as an input to the companyrsquos innovativeness
Some of Zhuangrsquos original questions were asked in reverse to control whetherrespondents paid attention to the questions The questionnaire used in this paperconsists of 35 questions (compared with Zhuangrsquos 28 questions) divided into threesections each preceded by a statement indicating the focus of the section At the end ofeach section respondents were given the opportunity to make comments andsuggestions
Section one of the questionnaire (see Appendix for the full questionnaire)containing seven questions was designed to collect personal data eg sex age etc Sixof these questions corresponded to Zhuangrsquos questions while the seventh is added toenable analysis of the data across the different departments at Ericsson Telebit
Section two containing 14 questions was designed to evaluate respondentsrsquocreativity (13 questions corresponded to 12 of Zhuangrsquos one of his questions rdquoDo youmistrust your own or other peoplersquos intuitionrdquo being divided into two) Zhuangexplains that he condensed Terry Farnsworthrsquos (1987) original creativity scale from 40to 12 questions by removing those explicitly aimed at managers The 13 questions aretherefore scored individually and the sum used as an indicator of creativity forcross-tabulation As in section one there was an additional question on whether thecompany created a context for improvements both personal and professional
The remaining 12 questions (nine of which corresponded to Zhuangrsquos) in sectionthree were designed to collect data on how the respondents perceive innovation Onequestion asked respondents to indicate factors of importance for realising their owninnovation potential while another asked them to identify the factors most emphasisedby the organisation The last ten questions in this section asked respondents to rankstatements about the companyrsquos present innovation strengths
At the end of October 2002 the questionnaire was accessible on Ericsson Telebitrsquosintranet for fourteen days The response rate was only 30 percent even though thequestionnaire was placed on the front page together with a reminder at the end of theperiod One of the managers suggested that the length of the questionnaire might haveput off some potential respondents The overall response is shown in Table I
Innovativeness of Ericsson Telebit from spin-off to integrationEricsson Telebit has its roots in the very first Danish IT company Regnecentralenwhich was founded in 1955 In 1989 after a number of years under different ownership50 per cent of the shares in Regnecentralen were acquired by Britainrsquos ICL(International Computers Ltd) the rest being acquired a few years later ndash after ICL
Number of employees 120Questionnaires received 37Overall response rate () 3083Usable number of responses 33Net response rate () 2750
Table IAnalysis of overallresponse
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had been bought by the Japanese company Fujitsu Ltd As part of the restructuring itwas decided to close down the part of Regnecentralen that developed and producednetwork routers and accessories These changes in ownership together with areorganisation and refocusing of business areas led to the establishing of Telebit ASin 1992
Together with 12 other people mostly from RegnecentralenICL the projectmanager of the routers and accessories department decided to start Telebit on the basisof a contract with their main customer a Dutch company Between 1992 and 1999Telebit increased its number of employees from 13 to 38 and in 1995 it became the firstcompany in the world to introduce a commercial router based on IPv6 (InternetProtocol version 6) technology[1] With the competencies and insights into internettechnologies that this generated within the organisation including the breakthrough ofIPv6 technology Telebit positioned itself as an innovative company possessingcompetencies at the cutting edge of new IP-related technologies
At the time therefore the companyrsquos innovativeness was mostly driven bytechnological insight and both internally and among its customers technology wasregarded as one of the main drivers of Telebitrsquos competitive advantage ConsequentlyTelebit focused its development efforts on IP technology its aim being to makeprototypes of new routers to demonstrate the possibilities of the technology rather thana specific product with a clear market position
Incorporation into LM EricssonTelebitrsquos acquisition by LM Ericsson (Ericsson) in 1999 led to major changes Thenumber of employees at the newly-named company Ericsson Telebit (TED theinternal Ericsson abbreviation) increased rapidly doubling within 12 months fromapproximately 70 to 140 This in turn influenced the way of working eg how newemployees were trained since mentoring was not possible to the same extent as beforeIncorporation into Ericsson also resulted in several organisational changes As a relicof the Telebit days TED started as a single development department where employeeswere allocated to projects for shorter or longer periods Soon after however TED wasreorganised into an ldquoad hoc matrix structurerdquo where employees were organised indepartments on the basis of work areas and competencies As one of the managersexplained the aim of this new structure was to bring management into focus
Before the development manager did all kinds of stuff and the employees were veryautonomous Experienced hands They did not need project management or hardly anymanagement at all
Like many other entrepreneurial companies (cf Churchill and Lewis 1983) the oldTelebit organisation had a very flexible and loosely-defined organisational structurewith informal and minimal management systems and activities appeared almostchaotic and disjointed (Kazanjian and Drazin 1990 Stevenson and Harmeling 1990)Furthermore Telebit could be said to be characterised by intuitive decision-makingbased on the foundersrsquo values goals and skills (eg Bird 1992)
After being taken over by Ericsson the number of small projects was reduced andthe focus directed towards few but large long-term projects This together withincreased collaboration with other Ericsson units in Sweden created the need forfull-time project managers at TED The company had to improve project management
Losinginnovativeness
1167
skills since single projects were now of greater importance At the same time ongoingprojects were given more emphasis in the organisational structure in order to increaseemployeesrsquo commitment to project-specific goals rather than the department
Ericsson Telebitrsquos productsWith the new focus on large projects TEDrsquos product portfolio consists basically of twoprojects that were also its ldquoproductsrdquo SoftWare for Internet Protocol for Ericsson(SWIPE ) and Terminal Internet Protocol (TIP) Product management was now placedat two different locations in Stockholm SWIPE represents the development of softwarefor the mobile internet while TIP focuses on the development of an IP stack for mobile(terminals) which together makes it possible to merge ldquothe internet worldrdquo with ldquothemobile worldrdquo
During the first years of Ericsson ownership TED had its own researchdepartment providing courses for the Ericsson University in Stockholm andfunctioning as a third business area together with the two large projects At thebeginning of 2002 however this research department was closed down as part of aworldwide cut-back in Ericssonrsquos activities and TED had to find new ways to keeptechnologically up to date The solution was to launch smaller research projects incooperation with the University of Aarhus and the University of Aalborg (two Danishuniversities) As one employee put it
the opportunity to aim at entirely new initiatives is gone unless the management believesthat the only way is to establish a group of people ndash corresponding to 10 out of 150 people ndashwith unlimited possibilities not total anarchy but a group with possibilities and today wedo not have that
This means that TED mostly focuses on the improvement of existing products orprocess improvement
The marketFor employees the takeover by Ericsson not only limited their opportunities forcreativity access to the market and possibilities for innovation at TED but thesituation in the mobile market also changed After having experienced a period of rapidgrowth the market began to stagnate mainly because many mobile telephoneoperators were unwilling to establish the new network for third-generationtechnologies (3G or UMTS) since as one employee explained ldquothere is no money initrdquo Given the poor shape of the world economy in general operators were unwilling tomake any further investments in 3G having already spent huge sums on Europeanauctions for UMTS licences a transitional technology between GSM and true 3G
The stagnation of the mobile phone market influenced TED via Ericsson The scopeof development projects was changed several times concurrently with the operatorsrsquopostponement of investments in UMTS networks Some parts of TEDrsquos projects wereclosed down a few just weeks before they were due to be finished Nevertheless thegeneral belief at Ericsson in 2002 was that future products should still be based on theInternet Protocol technology which meant that TED represented a key competence forEricsson
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1168
From customers to sponsorsAs a result of its incorporation into Ericsson TED moved several steps down the valuechain since they no longer produced and marketed their own products to externalcustomers but only had internal customers at Ericsson called ldquosponsorsrdquo From beingan independent company supplying the market with leading-edge technology TEDwas now a local design centre within Ericsson Employees regarded this as a having amajor influence on their work They felt that they had lost the feeling for customersrsquoneeds because now they only got specifications from other parts of Ericsson One ofthe employees put it as follows
The products TED provides are based on a chain of demanded specifications [from otherparts of Ericsson] Because of this chain you are easily alienated towards the customers Andthis has also happened for TED We do not have direct contact with our customers which isboth good and bad but the understanding of the customers needs is an ability we do notpossess any more and that is a problem
The employees feel that the lack of feedback from customers or end users means thatthe quality of daily decisions and their commitment to product quality has sufferedNotwithstanding some of the original Telebit employees have maintained theircontacts with customers based on the hardware Telebit sold at the time Thisknowledge of customersrsquo needs is highly valued at TED and these employees are usedas a feedback group
TEDrsquos management is certainly not happy about the change in orientation awayfrom customers One of the managers explained
if we do not continue to have contacts then we lose the real contact with the end userstheir needs and how they use our products and then it will only be development in relation towritten requirements from the sponsors in Stockholm
Organisational structureInternationally Ericsson is divided into six business units each of which has directcontact with customers worldwide and responsibility for identifying customer needsand demands The business unit that includes TED is organised into three core unitscore network radio access network and application and services The core units focuson technological developments and are supported by so-called local design centreswhere actual technological development takes place
The financing of local design centre support follows the chain-of-command impliedby the organisational structure This means that funds flow from the business units viacore units to the local design centres The practical implication is that the core unitsfunction as coordinators managing the internal architecture including how thecomponents within the area are related One of the employees at TED explains this inthe following way ldquofor example when the purpose is to put IP technology on a routerit is the core unitrsquos responsibility to lsquosponsorrsquo a local design centrerdquo and sponsoringhere literally means supporting the local design centre with financial resources
While the clear separation of RampD departments from business units with customercontact has the advantage of directing research activities towards the commercialapplication of technologies it also has disadvantages since the organisationalstructure has a tendency to discourage more basic RampD activities and more long-termactivities without a specific market potential Without independent financing the local
Losinginnovativeness
1169
design centres are unable to follow new ideas that emerge during the projectsHowever they are allowed or even expected to be innovative within the project scopesas specified by Ericssonrsquos core units though since the sponsors are part of the board ofdirectors in the local design centres it limits the centresrsquo ability to act independently
EmployeesEven though sponsors have the formal powers to pass on assignments to the localdesign centre some TED employees feel that they sometimes have insufficienttechnological insight to choose the right projects While the sponsor organisations areclose to the end market and thus often have superior knowledge about customersrsquo andend usersrsquo immediate needs via the business units their knowledge of technologycomes from the design centres which means that they sometimes lack anunderstanding of its possibilities
Like many other RampD-oriented organisations TED regards knowledge as its mostimportant resource This also makes demands on employees since the companyrequires them to be able to work autonomously creatively take initiatives and askother people for help if needed Therefore TED primarily employs people with anappropriate educational background eg those with a university degree in computerscience engineers etc Notwithstanding some employees have obtained their maineducational qualifications from ongoing training not having had a formal degree insoftware engineering or other related areas before joining TED
Some employees have been with TED since it was established as an independentcompany in 1992 while others joined the company later Some had several yearsrsquoexperience from other companies while others were newly qualified One employeedescribed things as
We are 20 or 25 old guys while the rest are young They need more experience before theyrealise that teamwork is more important than putting oneself at the front line
This is also why TED makes an effort to attract and retain experienced employeesAnother employee said
We talk a lot and help each other There is a very good helping spirit and it is very naturalthat we help each other
This is also the impression gained from observations when visiting the organisationEmployees talk in the hallways in the offices and so on Most offices are shared bytwo or three persons and the offices of the project groups are located close together sothat distance is not a barrier to communication However it was also pointed out that adoor can be a small barrier to some employees even though management encouragesthem to talk to each other and seek help
Discussion of Ericsson Telebitrsquos innovativenessThis section draws on the questionnaire results in order to provide another angle onhow the acquisition and organisational turbulence has affected Telebitrsquos innovationand the perception of innovation among employees In addition when possible theresults are compared with findings from Zhuangrsquos (1995) study several questionsbeing similar (all results presented are based on average scores)
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Based on Heaprsquos (1989) definition Zhuang defined creativity as a ldquosynthesis of newideas and concepts by the radical restructuring and reassociation of existing onesrdquo(Zhuang 1995 p 14) While Zhuang measured innovation on an organisation-by-organisation basis this study is based on only one company Furthermore innovation ismeasured based on employeesrsquo perceptions rather than as a predefined concept Inaddition to creativity and innovation a third element the innovative process concernshow creativity is turned into improved corporate performance
CreativityAs discussed in section 2 creativity was measured on a scale from 1 to 13 The averagescore of different groups of employees is shown in Table II As can be seen employeesrsquoperception of their creativity is very similar across age and position moreover thedispersion of responses (not reported here) is low with the highest score being 13 andthe lowest 8 Four employees all male scored 13 while only one scored 8 The biggestdifference in creativity albeit not significant was found between the sexes Howeverthis could be explained by their job function in the company Of the seven femaleemployees five were in services or administration and two were in operations whereasamong the twenty-six male employees one was in administration nineteen were inoperations and six were managers (either department or project managers) Thisdifference between the sexes is as shown in Table II in agreement with Zhuangrsquosfindings in the companies alpha and beta
At first glance it seems surprising that employees aged 50 thorn scored slightly higher(albeit not significantly) on creativity than the other age groups younger people beingcommonly believed to be more creative and innovative which is in line with Zhuangrsquos(1995) study Some research (eg Hambrick and Mason 1984) shows that oldermanagers generally dislike deviating from the status quo and show greater adherenceto the norms of the organisation unlike younger and less experienced managers whoare more likely to pursuer creative strategies Other studies (eg Mostafa 2005) find nodifference in creativity and the perception of creativity between age groups
TED Alpha Beta
Overall average 1033 794 834
By ageUnder 20 000 900 70021-30 1014 844 87531-40 1025 814 82641-50 1025 700 890Over 50 1080 760 820
By positionManagerial 1033 868 917Non-managerial 1033 747 796
By sexMale 1058 819 859Female 943 747 700
Table IIAnalysis of scores on
creativity scale
Losinginnovativeness
1171
Without giving too much weight to the results since the difference is insignificant oneexplanation could be that the organisational emphasis on creativity and innovationfrom the early days of Telebit has fostered a climate conducive to creativity As statedby Shearring (1992) the human brain stays plastic throughout life and givenopportunity and motivation adults can master new subjects acquire new skills andlearn to behave more creatively at any age Another explanation for the high creativityscore among the over-50s may be that most of them are the entrepreneurs who havebeen with TED since the beginning in 1992 They were originally employed because oftheir ability to apply their knowledge to problem-solving and product development
Even when the thirteen questions on creativity in the questionnaire were condensedto 12 and the reverse questions were corrected the overall average of 942 wasremarkably higher than the 794 in Alpha and 834 in Beta[2] In TED the averagescore on creativity was the same for both managerial and non-managerial employeeswhereas it was significantly higher for managerial than non-managerial employees inboth Alpha and Beta Managers are often found to be more creative thatnon-managerial employees (eg Mostafa 2005) but in a technology-based companylike TED it is probably not surprising that creativity is a widely dispersedcharacteristic
InnovationAs shown in Table III in addition to Zhuangrsquos ten statements regarding employeesrsquoperception of innovation the questionnaire also included three further statementsrelated to the transformation of ideas to ldquoproductsrdquo and meeting customersrsquo andsuppliersrsquo requirements respectively Based on a five-point Likert scale from 1(strongly disagree) to 5 (strongly agree) Table III shows how employees at TEDperceive innovation
The most significant statements which employees either agree or strongly agreewith are about generating new ideas and seeing something from a differentperspective One of the interviewees at TED explained the latter as follows
innovation is not necessarily to develop something entirely new it might as well apply tothe usability and application of an existing technology A good example is the IP technologywhich actually is an old technology and there are plenty of people in this world who knowmore about it than we do But we have focused on the IP technology in relation toimplementation and the small thing it is to put an IP stack on a mobile phone opens for a lotof new application and service opportunities and to me this is an example of creativity
Judging from the distribution of the innovation scores TED employees do not seem tohave a shared perception of what innovation is This is in agreement with for exampleRoos and von Krogh (1995) who argue that the perception of a concept depends onprior knowledge which means that it differs from person to person From thispoint-of-view the high score of the statement ldquoseeing something from a differentperspectiverdquo is thus a very interesting result and is in line with TED employeesrsquoassertion that innovation can be initiated throughout the organisation and from outsideit as showed in Table IV According to employees new ideas are often generated atnatural meeting places like canteens coffee machines mail rooms etc whichencourage and enable informal conversations (Christensen and Bang 2003Christensen 2005) Another perspective on innovation is customer-driveninnovation Customers can be involved in the innovative process in different ways
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1172
Per
cen
tag
ed
istr
ibu
tion
ofth
ein
nov
atio
nsc
ores
atT
ED
Iny
our
opin
ion
in
nov
atio
nis
abou
tS
tron
gly
dis
agre
eD
isag
ree
Not
sure
Ag
ree
Str
ong
lyag
ree
TE
DA
lph
aB
eta
Inv
enti
ng
som
eth
ing
enti
rely
new
00
273
91
424
212
358
235
252
Gen
erat
ing
new
idea
s0
00
00
048
551
54
523
083
28Im
pro
vin
gso
met
hin
gth
atal
read
yex
ists
30
61
152
515
242
388
227
198
Fol
low
ing
the
mar
ket
lead
er27
351
512
19
10
02
033
533
98A
ttra
ctin
gin
nov
ativ
ep
eop
le6
115
212
133
333
33
732
592
98P
erfo
rmin
gan
exis
tin
gta
skin
an
eww
ay0
06
112
175
86
13
822
222
04S
pre
adin
gn
ewid
eas
61
00
212
515
212
382
222
217
Ad
opti
ng
som
eth
ing
that
has
bee
nsu
cces
sfu
lly
trie
del
sew
her
e3
033
327
327
39
13
063
162
76S
eein
gso
met
hin
gfr
oma
dif
fere
nt
per
spec
tiv
e0
00
06
163
630
34
242
411
91In
trod
uci
ng
chan
ges
00
182
212
485
121
355
224
230
Tra
nsf
orm
ing
idea
sto
ldquopro
du
ctsrdquo
30
91
152
485
242
382
NA
NA
Mee
tin
gcu
stom
ers
121
182
394
212
91
297
NA
NA
Mee
tin
gsu
pp
lier
s12
121
242
421
23
02
82N
AN
A
Notes
Th
en
um
ber
sin
this
tab
lear
eav
erag
esc
ores
ona
fiv
e-p
oin
tL
iker
tsc
ale
onin
nov
atio
nA
lph
aan
dB
eta
are
from
Zh
uan
grsquos
(199
5)st
ud
yan
dar
ein
clu
ded
inor
der
toco
mp
are
the
Tel
ebit
scor
esw
ith
two
oth
erco
mp
anie
s
Table IIIWhat is innovation about
(percentage distributionand average)
Losinginnovativeness
1173
eg work groups or ldquocamping outrdquo at customers (Christensen 2005) A third andrelated perspective on innovation is networks with research institutions which may beestablished to get access to basic research (Christensen 2005) or to new ideas viastudentsrsquo projects There are an infinite number of approaches to innovation the onlylimitation is within the individuals
It should also be noted that the more general perception of innovation at TED issignificantly different from that in the Alpha and Beta companies For instance asshowed in Table III TED employees think that going beyond traditional ways ofthinking namely ldquoseeing something from at different perspectiverdquo is very important toinnovation whereas in the more traditional industrial companies Alpha and Betaemployees think it more important for innovation to ldquofollow the market leaderrdquo Thedifference between the two very different statements partly reflects the fact that Alphaand Beta are traditional industrial companies whereas TED is knowledge intensiveand competes on innovativeness
Employees were also asked to give their opinion on nine statements regardingvaluation of innovation in their organisation As shown in Table V the strongestcommon belief was how significantly an innovation improves the organisationrsquosprofitability (score 415) How new technology is applied (394) and whether it iscomplementary to existing products (373) were also perceived to be importantCommon to these three statements is that none of the employees strongly disagreedalthough the lower the score the more uncertain people were
The innovation processWith a score of 424 against 366 for marketing and production employees engineersor operational employees appear to play the most important role in initiating theinnovative process Employees expressed mixed opinions about whether or not theboard of directors or sponsors were well placed to initiate an innovation As Table IVshows the distribution of employeesrsquo perception is scattered giving an average scoreof 312 This disagreement also clearly emerged from the interviews becauseemployees perceive the sponsors in different ways Those who think sponsors are wellplaced to initiate an innovation based their answer on the sponsorsrsquo power to controlthe supply of resources (financial support) whereas the main reason given for
Percentage distribution of the position toinitiate innovation scores at TED
Who do you think is in a favourableposition to initiate a product innovation
Stronglydisagree Disagree
Notsure Agree
Stronglyagree
TEDaverage
The board of directors 1 13 5 9 5 312Marketing people 1 3 5 20 3 366Production people 1 4 5 17 5 366Engineersoperational 0 1 1 20 11 424Accountants 2 16 7 8 0 264Purchasing people 1 9 12 10 0 297Nobody 23 5 5 0 0 145External experts (consultants) 1 4 12 14 2 336Receptionists 5 11 10 7 0 258
Table IVWho is in a position toinitiate a productinnovation
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1174
disagreeing with this statement is that the sponsors only provide TED with resourcesndash and not with ldquodriverdquo
Summing up creativity innovation and the innovative processes all played acritical role in entrepreneurship though there is still a need for someone to takeresponsibility for and drive the entrepreneurial process This person can either be anindependent entrepreneur or an entrepreneur working in an existing organisation(intrapreneur) but they may be motivated by different reasons
Concluding discussionAs one of the first contributions to understanding the implications of mergers andacquisitions for companiesrsquo innovativeness Hitt et al (1990) argued that managerialcommitment to innovation is based on organisational conditions More specificallythis means that up to a certain company size managerial commitment to innovationincreases but any subsequent increase in size tends to overburden both managementand employees with formal control systems creating difficulties in relation toinnovative activities in large mature companies
The changes in organisational boundaries as regards access to customers andrelated relevant information as well as the increase in control and reporting systemsexperienced by employees at TED are probably very typical for acquiredorganisations Almost by definition organisations pursuing acquisitions becomelarger and the range of their operations more diversified which affects the types ofcontrol systems needed following an acquisition (Hitt et al 1990)
Williamson (1975) has argued that large multinational companies are often not asefficient as smaller companies at developing innovations rather they are efficient inmanufacturing and distribution while smaller entrepreneurial organisations are moreefficient at developing innovations due to their greater flexibility This is illustrated byTED where innovation became difficult when the small entrepreneurial company wasincorporated into a large and complex multi-national company and it is also inaccordance with Damanpourrsquos (1992) conclusion that size matters to innovation
Percentage distribution of the valuation ofinnovation scores at TED
How is the value of an innovationjudged in an organisation like yours
Stronglydisagree Disagree
Notsure Agree
Stronglyagree TED
How novel it is 0 3 13 15 2 348How many people it involves 1 13 13 3 3 282How long it takes 1 9 9 9 5 324How much it costs 2 7 5 14 5 339How significantly it improves theorganisationrsquos profitability 0 0 4 20 9 415Whether new technology is applied 0 1 6 20 6 394The extent of change it entails 1 2 17 12 1 330Whether it involves a new business area 1 4 13 10 5 342Whether it is complementary to existingproducts 0 0 11 20 2 373
Table VValuation of innovation
Losinginnovativeness
1175
In relation to employeesrsquo perception of creativity and innovation and to their ownability to be creative and innovative most employees at TED emphasised their ownand colleaguesrsquo creativity and innovativeness However it was also realised thatcreativity itself was not enough for new ideas to materialise in actions in largeorganisations One of the TED employees expressed this very clearly
It is an illusion to believe that you can take a small creative and innovative company andintegrate it into a larger one ndash it is downhill most of the time
Implications for practiceThe working practices and processes that were developed when Telebit was a separatecompany gradually disappeared or were simply lost when the company wasincorporated into Ericsson even though most of the employees were still the same Theimportant lesson here is that although creativity and innovativeness have a stronghuman dimension innovation requires an organisational context that enablesknowledge creation (Von Krogh et al 2000) In the case of Telebit the former workingroutines and practices as well as contact to customers formed part of the tacitorganisational knowledge and as is well known from the literature on knowledgecreation (Von Krogh et al 2000) this is not easily transferable
This indicates that to maintain the opportunities and competencies of the acquiredorganisation some efforts are needed to make the energies of the two organisations acttogether in tandem Telebit probably lost its original innovativeness because thereorganisation of the company distorted the entrepreneurial drive created by directcustomer contact However it is impossible to say what might have happened ifEricsson had focused more on the integration process and on facilitating the transfer ofcapabilities to the consolidated company This is the strategy recommended by forexample Buono (1997) who studied a similar type of acquisition and demonstratedthat a process that incorporates work with organisational members on pre-acquisitionanxieties is beneficial
Papadakis (2005) found that the existence of a communication program was aparticularly significant factor explaining the success of MampA Similarly a survey byBert et al (2003) found under-communication to be the most important problemFurthermore Bert et al (2003) also emphasised that post-merger problems are to agreat extent due to a clash of cultures and different management styles very similar towhat was experienced by the employees at TED
One company well known for its ability to successfully acquire new technologythrough acquisitions is Cisco Systems which more than any other high-tech companyhas built up a dominant market position through acquisitions (Mayer and Kenney2004) Although comparing the acquisition of Telebit by Ericsson with the generalimpression of Ciscorsquos acquisition practice from the literature has its limitations a closerlook into this can still provide some key points for understanding what ndash or what not ndashhappened when Telebit was acquired
According to Pfeffer and Sutton (2006) Ciscorsquos success stems from the companyrsquossystematic examination of evidence about what went right and wrong in othercompaniesrsquo mergers as well as a merger integration process that ensures the peoplestay with the company feel at home and can use their knowledge to makecontributions to the new company We did not explicitly ask the employees at TED
MD449
1176
about the kind of post-integration procedures used at Ericsson or how Ericsson hadlearnt from this experience ndash however specific corporate-wide procedures forintegration or learning were not mentioned in the interviews either In their study ofCiscorsquos strategy Mayer and Kenney (2004 p 300) show that ldquoif employees leave ortheir practice is significantly disrupted then the acquisition is almost certain to failrdquoThus not only retention but also preserving the way of working seems to be of theutmost importance since it is both emphasised in the case of Cisco and apparent fromthis study
Implications for researchWhile MampA seem to be a recurring part of corporate life there is no substantialevidence about what really matters in the integration phase The case study reported inthe article pointed to specific factors that were important for the innovativenesscreativity and entrepreneurial spirit of the acquired company These elements mostimportantly the informality of the organisation and close contact to customers werenot preserved after the acquisition More generally a comparison with Cisco couldpoint to the importance of how the integration phase is managed
As regards creativity and innovativeness in general the literature identifies severalways in which management can influence a companyrsquos practices and processes Giventhe importance of the pre- and post-integration phases both qualitative andquantitative cross-company studies could shed more light on which factors areimportant and how the presence or absence of these factors influence the success of anacquisition
One way of strengthening the conclusions with respect to how creativity andinnovativeness can be maintained in acquired technology companies could be toexamine similar acquisitions not only at Ericsson and Cisco but also at othercompanies competing in the same business areas The focus here should be both on theactual experiences in the acquired companies the specific conditions related to theacquisitions and on the management of the post- and pre-integration phase Onelimitation of the present study is that it only focuses on employees who have stayedwith the acquired company Given the importance of the integration phase newinsights could be gained from following an acquisition more closely regardingattitudes both among those who stay and those who leave as well as among employeesat the acquiring company Furthermore it should be possible to conduct survey-basedstudies across a larger number of companies including in other sectors to examinehow management of the integration phase influences the motivation and creativity ofemployees in the acquired companies
Notes
1 The accelerating growth of the internet and its migration into new areas such as embeddeddevices together with the widespread use of IP in wireless consumer devices severely testedInternet Protocol version 4 (IPv4) which was designed in the early 1980s The new standardIPv6 was developed to extend the current IP infrastructure and improve scalability andsecurity of IP networks and also provides mechanisms for easier configuration of networksand attached devices
2 Not testable as Zhuangrsquos (1995) variance is not accessible
Losinginnovativeness
1177
References
Ahuja G and Katila R (2001) ldquoTechnological acquisitions and the innovation performance ofthe acquiring firms a longitudinal studyrdquo Strategic Management Journal Vol 22 No 3pp 197-220
Bert A MacDonals T and Herd T (2003) ldquoTwo merger integration imperatives urgency andexecutionrdquo Strategy amp Leadership Vol 31 No 3 pp 42-9
Bird B (1992) ldquoThe operation of intentions in timerdquo Entrepreneurship Theory and PracticeVol 17 No 1 pp 11-20
Bresman H Birkenshaw J and Nobel R (1999) ldquoKnowledge transfer in internationalacquisitionrdquo Journal of International Business Vol 30 No 3 pp 439-62
Brockner J Grover S OrsquoMalley MN Reed TF and Glynn MA (1993) ldquoThreads of futurelayoff self-esteem and survivorsrsquo reactions evidence from the laboratory and the fieldrdquoStrategic Management Journal Summer pp 153-66
Bukh PN Christensen KS and Mouritsen J (2005) Knowledge Management and IntellectualCapital Establishing a Field of Practice Palgrave Macmillan Houndsmill
Buono AF (1997) ldquoTechnology transfer through acquisitionrdquo Management Decision Vol 35No 3 pp 194-204
Burgelman RA (1986) ldquoManaging corporate entrepreneurship new structures forimplementing technological innovationrdquo in Horwith M (Ed) Technology in the ModernCorporation Pergamon Press New York NY pp 1-13
Chaudhuri S and Tabrizi B (1999) ldquoCapturing the real value in high-tech acquisitionsrdquoHarvard Business Review Vol 75 No 5 pp 123-30
Christensen KS (2005) ldquoEnabling intrapreneurship the case of a knowledge-intensiveindustrial companyrdquo European Journal of Innovation Management Vol 8 No 3pp 305-22
Christensen KS and Bang HK (2003) ldquoKnowledge management in a project orientedorganisation three perspectivesrdquo Journal of Knowledge Management Vol 7 No 3pp 116-28
Churchill N and Lewis V (1983) ldquoThe five states of business growthrdquo Harvard BusinessReview Vol 61 pp 44-51
Collier DW (1983) ldquoTechnology in diversified decentralised companiesrdquo Journal of BusinessStrategy Vol 3 pp 91-3
Damanpour F (1992) ldquoOrganisational size and innovationrdquo Organisation Studies Vol 13 No 3pp 375-402
Denzin NK (1989) The Research Act A Theoretical Introduction to Sociological Methods 3rd edPrentice-Hall Englewood Cliffs NJ
Ernst H and Vitt J (2000) ldquoThe influence of corporate acquisitions on the behaviour of keyinventorsrdquo RampD Management Vol 30 No 2 pp 105-19
Farnsworth T (1987) Test Your Executive Skills Ebury Press London
Ghoshal S (1987) ldquoGlobal strategy an organising frameworkrdquo Strategic Management JournalVol 8 No 5 pp 425-40
Hambrick DC and Cannella AA (1993) ldquoRelative standing a framework for understandingdepartures of acquired executivesrdquo Academy of Management Journal Vol 36 No 4pp 733-62
Hambrick D and Mason P (1984) ldquoUpper echelons the organisation as a reflection of its topmanagementrdquo Academy of Management Review Vol 9 No 2 pp 193-206
MD449
1178
Hargedoorn J and Duysters G (2002) ldquoThe effect of mergers and acquisitions on thetechnological performance of companies in a high-tech environmentrdquo Technology Analysisamp Strategic Management Vol 14 No 1 pp 67-85
Harrison JS Hitt MA Hoskinsson RE and Ireland RD (1991) ldquoSynergies andpost-acquisition performance differences versus similarities in resource allocationsrdquoJournal of Management Vol 17 pp 173-90
Harrison JS Hitt MA Hoskinsson RE and Ireland RD (2001) ldquoResource complementarityin business combinations extending the logic to organisational alliancesrdquo Journal ofManagement Vol 27 pp 679-90
Heap J (1989) The Management of Innovation and Design Cassell Educations Ltd London
Hitt MA Hoskisson RE and Ireland RD (1990) ldquoMergers and acquisitions and managerialcommitment to innovation in M-form companiesrdquo Strategic Management Journal Vol 11No 10 pp 29-47
Hitt MA Hoskisson RE Ireland RD and Harrison JS (1991) ldquoEffects of acquisitions onRampD inputs and outputsrdquo Academy of Management Journal Vol 34 No 3 pp 693-706
Hitt MA Hoskisson RE Johnson RA and Moesel DD (1996) ldquoThe market for corporatecontrol and firm innovationrdquo Academy of Management Journal Vol 39 No 5 pp 1084-119
James AD Georghiou L and Metcalfe JS (1998) ldquoIntegrating technology into merger andacquisition decision makingrdquo Technovation Vol 18 Nos 89 pp 563-73
Jick TD (1979) ldquoMixing qualitative and quantitative methods triangulation in actionrdquoAdministrative Science Quarterly Vol 24 No 4 pp 602-11
Kapoor R and Lim K (2005) ldquoThe impact of acquisitions on the innovation performance ofinventors at semiconductor companiesrdquo Academy of Management Best Conference Papers2005
Karim S and Mitchell W (2000) ldquoPath-dependent and path-breaking change reconfiguringbusiness resources following acquisitions in the US medical sector 1978-1995rdquo StrategicManagement Journal Vol 21 No 11 pp 1061-81
Kazanjian RK and Drazin R (1990) ldquoA stage contingent model of size and growth fortechnologically based venturesrdquo Journal of Business Venturing Vol 5 No 3 pp 137-50
King DR Dalton DR Daily CM and Covin JG (2004) ldquoMeta-analysis of post acquisitionperformance indicators of unidentified moderatorsrdquo Strategic Management JournalVol 25 No 2 pp 187-200
Leonard-Barton D (1992) ldquoCore capabilities and core rigidities a paradox in managing newproduct developmentrdquo Strategic Management Journal Vol 13 pp 111-25
Man AP and Duysters F (2005) ldquoCollaboration and innovation a review of the effect ofmergers acquisitions and alliances on innovationrdquo Technovation Vol 25 pp 1377-87
March JG (1991) ldquoExploration and exploitation in organisational learningrdquo OrganisationScience Vol 2 No 1 pp 71-87
Mayer D and Kenney M (2004) ldquoEconomic action does not take place in a vacuumunderstanding Ciscorsquos acquisition and development strategyrdquo Industry and InnovationVol 11 No 4 pp 299-326
Mostafa M (2005) ldquoFactors affecting organisational creativity and innovativeness in Egyptianbusiness organisations an empirical investigationrdquo The Journal of ManagementDevelopment Vol 24 No 1 pp 7-33
Papadakis VM (2005) ldquoThe role of broader context and the communication program in mergerand acquisition implementation successrdquo Management Decision Vol 43 No 2 pp 236-55
Losinginnovativeness
1179
Pfeffer J and Sutton RS (2006) Hard Facts Dangerous Half-Truths and Total NonsenseProfiting from Evidence-Based Management Harvard Business School Press Boston MA
Reilly AH Brett JM and Stroh LK (1993) ldquoThe impact of corporate turbulence on managersrsquoattitudesrdquo Strategic Management Journal Vol 14 pp 167-79
Roos J and von Krogh G (1995) ldquoWhat you see depends on who you are think aboutepistemologyrdquo IMD Perspectives for Managers No 7 pp 1-4
Shearring HA (1992) ldquoCreativity and older adultsrdquo Leadership amp Organization DevelopmentJournal Vol 13 No 2
Stevenson HH and Harmeling S (1990) ldquoEntrepreneurial managementrsquos need for a morelsquochaoticrsquo theoryrdquo Journal of Business Venturing Vol 5 No 1 pp 2-14
Von Krogh G Ichijo K and Nonaka I (2000) Enabling Knowledge Creation How to Unlock theMystery of Tacit Knowledge and Release the Power of Innovation Oxford University PressOxford
Warner AG (2003) ldquoBuying versus building competence acquisition patterns in theinformation and telecommunications industry 1995-2000rdquo International Journal ofInnovation Management Vol 7 No 4 pp 395-415
Williamson OE (1975) Markets and Hierarchies Analysis and Antitrust Implications FreePress New York NY
Zhuang L (1995) ldquoBridging the gap between technology and business strategy a pilot study onthe innovation processrdquo Management Decision Vol 33 No 8 pp 13-21
Appendix QuestionnaireThe first questions are about your background
(1) Sex male or female
(2) Your age
(3) Education (a) High school College (b) Bachelor degree (c) Engineer (d) MSc or MA (e)PhD (f) none and (g) Other please specify
(4) How many years have you been with the company
(5) In which department are you employed
(6) Which of the following categories best describe your current position (a) CEO and unitmanager (b) Department manager (c) Operational employees (d) Clericaladministration (e) Trainee (f) Services and (g) Other please specify
(7) How many years have you been in your current position
The next questions are about yourself in relation to your work environment
(8) Do you get bored when doing things the same way every time
(9) Are you afraid of making mistakes
(10) Are you satisfied when making improvements
(11) Does the company create a context in which you can make improvements (a) Personalandor (b) Professional
MD449
1180
(12) Are you discouraged from acting because of lack of resources
(13) Do you like solving problems in unconventional ways
(14) Do you feel that it is your job to be critical of established practices
(15) Do you trust your own intuition
(16) Do you trust other peoplersquos intuition
(17) Are you afraid of having your ideas ridiculed
(18) Do you find it hard to accept disorder and confusion
(19) Can you quickly point out why an idea will not work
(20) Do you welcome other peoplersquos ideas
(21) Do you prefer a quiet life to challenging one
The following questions are about the interpretation of different concepts (Questions 22-28 arebased on a five-point Likert scale)
(22) In your opinion innovation is about (a) inventing something entirely new (b)generating new ideas (c) improving something that already exists (d) following themarket leader (e) attracting innovative people (f) performing an existing task in a newway (g) spreading new ideas (h) adopting something that has been successfully triedelsewhere (i) seeing something from a different perspective (j) introducing changes (k)transforming ideas into ldquoproductsrdquo and (l) meetings with customers
(23) In your opinion an innovation can be (a) a product (b) a service (c) a technology (d) aproduction process (e) a management system (f) an administration procedure and (g)an organisational innovation
(24) How is the value of an innovation judged in an organisation like yours (a) How novelit is (b) how many people it involves (c) how long it takes (d) how much it costs (e)how significantly it improves the organisationrsquos profitability (f) whether newtechnology is applied (g) the extent of change it entails (h) whether it involves a newbusiness area and (i) whether it is complementary to existing products
(25) Who do you think is in a favourable position to initiate a product innovation (a) Theboard of directors (b) marketing people (c) production people (d) engineers (e)accountants (f) purchasing people (g) nobody (h) external experts (consultants) and(i) receptionists
(26) Why do companies embark on innovative activities (a) They want to increase profitmargin (b) their competitors (c) they want to do better than their competitors (d)pressure from customers (e) they have creative employees (f) in an attempt to cutdown their operational costs (g) they have the financial resources and (h) they try toavoid straight price competition
(27) The key to onersquos ability to innovate is to (a) be born with the right talent (b) be able tothink creatively (c) complete a higher education (d) have at least ten years of workexperience (e) possess good interpersonal skills (f) be good at putting theory into
Losinginnovativeness
1181
practice (g) realise the necessity (h) ask ldquostupidrdquo questions and (i) other pleasespecify
(28) Which of the following organisational factors are important to realising onersquosinnovation potential (a) Regular employee performance appraisals (b) freedom towork within areas of greatest interest (c) criticism from superiors or colleagues (d)recognition and appreciation (e) contact to stimulating colleagues (f) creativitytraining programmes (g) encouragement to take risks (h) monetary rewards (i)tolerance of non-conformity and (j) opportunity to work alone rather than in a team
(29) Which of the factors in question 28 do you feel get most emphasis in your company
On a scale from 1(creativity within specific scopes) to 5 (pursue ones ideas) and 10 (gives financialsupport to individuals or groups of employees who wish to start their own company on the basis ofan idea
(30) To which extent does the company make room for creativity and innovation
On a scale from 1(most important) to 10 (less important)
(31) Please rank the following statements in order of importance to the companyrsquos presentstrength of innovation (a) informal and relaxed management style (b) decentralisedmanagement structure (c) regular employee performance appraisal (d) generousbudget for research and development (e) strong emphasis on team effort (f) effectiveemployee suggestion scheme (g) encourage employees to work on their own initiative(h) prompt public recognition and appreciation (i) attractive monetary reward and (j)promotion
(32) Is there any point you wish to make concerning any aspect of your companyrsquosinnovation activities
(33) Other (comments and suggestions)
About the authorKarina Skovvang Christensen MSc (Econ) is a PhD student at the Department of ManagementAarhus School of Business Her primary research interests include management of innovationknowledge and strategy and her PhD project deals with management of intrapreneurship inknowledge-intensive organisations She has previously worked with intellectual capitalstatements and has published articles and books on knowledge management corporateentrepreneurship innovation and management accounting Karina Skovvang Christensen canbe contacted at KaSCasbdk
MD449
1182
To purchase reprints of this article please e-mail reprintsemeraldinsightcomOr visit our web site for further details wwwemeraldinsightcomreprints
111
CHAPTER 7
Enabling Intrapreneurship The Case of a Knowledge-Intensive Industrial Company
Originally Published in
Christensen Karina Skovvang 2005 Enabling Intrapreneurship The Case of a
Knowledge-Intensive Industrial Company European Journal of Innovation
Management Vol 8 No 3 pp 305-322
112
Enabling intrapreneurshipthe case of a knowledge-intensive
industrial companyKarina Skovvang Christensen
Department of Organisation and ManagementThe Aarhus School of Business Aarhus Denmark
Abstract
Purpose ndash The aim of the paper is to provide an understanding of the various factors that enableintrapreneurship in established firms The paper reports on a case study of intrapreneurship in a largeknowledge-intensive industrial firm
Designmethodologyapproach ndash Based on the existing literature it is suggested that the use ofdifferent factors can either enable or inhibit intrapreneurship and five enabling factors that areidentified Based on interviews on-site observations and documents and reports the five factors with apotential influence on intrapreneurship are examined and alternative factors considered
Findings ndash The five enabling factors that are identified in the literature are not sufficient to enableintrapreneurship in knowledge-intensive companies and it is concluded that three additional factorsenabling intrapreneurship in established firms should also be taken into account
Practical implications ndash The knowledge of what makes factors either enablers or inhibitors areincomplete and to enhance the intrapreneurial ability of an organisation managers must learn whichfactors to use in different situations
Originalityvalue ndash Only very few papers have studied intrapreneurship in specific organisationsThis paper contributes with a synthesis of the literature in the area and with a suggestion of a modelthat is used in the empirical analysis and augmented based on that The paper furthermore contributesto the body of literature on the factors enabling intrapreneurship in general
Keywords Communication Entrepreneurialism Culture
Paper type Case study
1 IntroductionJob creation has become a hot topic in most old industrialised countries whereproduction is increasingly moving to the newly industrialised countries Typically inmany European countries the underlying assumption in the public debate is that newjobs should mainly be created in small- and medium-sized firms (SMEs) Howeverstudies have shown that job creation in SMEs has almost come to a standstill and thatoverall these firms lose almost as many jobs as they create (see for example Hisrich1990 Sathe 2003)
Other authors eg Pinchot (1985) and Morris and Kuratko (2002) have suggestedthat there is a potential for job creation in both large and small companies though theysay little about the kind of industrial structure best suited to achieving this or about thebest way to ensure job creation and growth In any event we have to take a startingpoint in the existing structure with both large and small companies Much research has
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
wwwemeraldinsightcomresearchregister wwwemeraldinsightcom1460-1060htm
The author gratefully acknowledges the helpful comments made by Per Nikolaj Bukh AndersDrejer and John Parm Ulhoslashi on an earlier version of this paper
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European Journal of InnovationManagement
Vol 8 No 3 2005pp 305-322
q Emerald Group Publishing Limited1460-1060
DOI 10110814601060510610171
been done within the field of entrepreneurship focusing on the entrepreneurrsquoscharacteristics and the process of starting up a new independent company (Gartner1988) although it is also necessary to improve innovation in large companies But iscorporate entrepreneurship the solution or is it just another passing fad
Corporate venturing has often been mentioned in relation to corporateentrepreneurship (eg Sathe 2003) and it has both good and bad points Sometimesmanagement faces new strategic dilemmas ndash especially if the new ventures are notclosely related to the mother companyrsquos core competencies and markets But as notedby Guth and Ginsberg (1990) and Sharma and Chrisman (1999) among otherscorporate entrepreneurship is more than corporate venturing and to be moreintrapreneurial companies therefore need to take the whole organisation into accountAs has often been pointed out in the literature on organisational design differentcorporate structures support different organisational needs (eg Hisrich 1990)Corporate structure is thus a good starting point as regards enabling intrapreneurship
In other words well-established and mature companies need to experiment withnew ways of organising and organisational structures that are known to enableinnovation to take place eg networks loosely coupled organisations and projectorganisations as a supplement to the classic hierarchy Notwithstanding managersalso need to recognise that innovation and renewal cannot be planned and managed inthe same way as operational activities
Another reason why innovation in large well-established companies is important isthat such companies possess more resources (both human financial and structural) thansmall companies and are therefore faced by less overall uncertainty Often they onlyexpose themselves to one kind of uncertainty at a time while entrepreneurs typicallyhave to cope with several simultaneously eg technology markets financial capital andbranding The transition to the knowledge society may thus be very difficult to achievethrough small companies alone which makes the focus on innovation in large companieseven more important This in turn implies directing more attention towards the keyfactors that enable and improve innovation within companies
In this paper I examine how companies can encourage intrapreneurship by meansof five different enablers derived from the literature rewards management supportresources organisational structure and risk Based on a case study of a largeknowledge-intensive industrial firm it is concluded that the factors are not of equalimportance and that in this specific organisation other important factors also enableintrapreneurship This leads to a proposed model consisting of eight enablers
This paper is organised as follows Section 2 which draws on the literature in thefield suggests a classification of corporate entrepreneurship based on fourorganisational perspectives each with different motivations for engaging inentrepreneurial activities Section 3 presents the methodology and discusses theadvantages and disadvantages of a single case study Section 4 briefly describes thecase company while section 5 presents a detailed analysis of the factors from a singlecase Section 6 discusses the findings and suggests how intrapreneurship can beenabled while section 7 presents the conclusion and implications
2 Corporate entrepreneurshipThe ideas behind corporate entrepreneurship can be traced back to the mid-1970s (egPeterson and Berger 1972 Hanan 1976) but it was not until Pinchotrsquos (1985) book on
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intrapreneuring in the mid-1980s that it became a separate research topic However itstill seems to be a concept in search of a clear definition Various broader or narrowerdefinitions have been proposed by different authors some as observed by Sharma andChrisman (1999) using the same definition for different phenomena and others usingdifferent definitions for the same phenomenon A sufficiently broad definition ofcorporate entrepreneurship is thus crucial in order to avoid prematurely excludingimportant issues
One approach to the field is to regard corporate entrepreneurship as the overallconcept covering everything to do with entrepreneurship in a company (Christensen2004) such as intrapreneurship (Pinchot 1985) exopreneurship (Chang 1998) andcorporate venturing (Burgelman 1983) Common to these topics is that corporateentrepreneurship refers to ldquoa multidimensional process with many forces acting inconcert that lead to the implementation of an innovative ideardquo (Hornsby et al 1993p 30)
Jeffrey Hornsby and Donald Kuratko together with different co-authors havereviewed the literature from the late-1980s onward and have found five internalenablers of corporate entrepreneurship consistent with the main literature rewardsmanagement support resources (including time) organisational structure andrisk-taking (Kuratko et al 1990 Hornsby et al 2002) However based on an empiricalanalysis Kuratko et al (1990) only find management support organisational structureresources and rewards significant
In Hornsby et al (1993) the authors further develop their work from 1990 resultingin the following enablers management support autonomywork discretionrewardsreinforcement time availability and organisational boundaries However intheir paper from 2002 they return to the five enablers from 1990 but test those from1993 Hornsby et al (1993) also point out that individual characteristics such asrisk-taking propensity desire for autonomy need for achievement goal orientationand internal locus of control have a significant influence on corporateentrepreneurship
Other researchers have explored different enablers eg from the externalenvironment According to Antoncic and Hisrich (2004) both organisational factorssuch as organisational support formal controls and numbers of alliances andenvironmental conditions such as dynamism technological opportunities industrygrowth and demand for new products are important in relation to corporateentrepreneurship In an earlier study Zahra (1991) suggested that in addition tointernal organisational factors the intensity of corporate entrepreneurship is alsoinfluenced by corporate strategy and factors from the external environment such asdynamism hostility and heterogeneity
Covin and Slevin (1991) developed an integrative model including both externalfactors such as technological sophistication dynamism hostility and industry lifecycle stage together with such strategic variables as mission strategy and internalenablers such as top management values and philosophies organisational resourcesand competencies organisational culture and organisational structure Zahra (1993)further developed Covin and Slevinrsquos (1991) integrative model eliminatingtechnological sophistication on the ground that it is part of environmentaldynamism and adding munificence by which is meant the abundance ofopportunities for innovation in an industry Zahra also questions the inclusion of
Enablingintrapreneurship
307
industry life cycle stage because it relates to another level than dynamism hostilityand munificence Zahra (1993) also argues for a narrower classification of the internalenablers claiming that the suggested changes would make the model more complete
Although corporate entrepreneurship is influenced by a number of both internal andexternal factors this paper will focus only on those internal factors that the companyhas a possibility to influence directly
3 MethodologyA division of Danfoss a major Danish industrial company was chosen as a case studyto help determine which factors enable intrapreneurship Being one of Denmarkrsquoslargest industrial companies Danfoss might well have suffered from a lack ofintrapreneurship but despite its industrial roots the company is generally regarded asboth very knowledge-intensive and innovative Furthermore the companyrsquos CEO iswell-known in the public debate in Denmark for his promotion of entrepreneurship as apolicy agenda and innovativeness in Danish firms This managerial focus onintrapreneurship thus made Danfoss ideal for studying the enablers ofintrapreneurship at least in this particular firm
A major problem of large firmsrsquo innovative activities is how they can be fitted intoday-to-day routines without compromising efficiency As a starting point interviewswere carried out with employees on this issue The method chosen was the so-calledembedded case study design (see also Yin 2003 p 43) involving three levels ofanalysis
(1) The firm (its strategy and performance)
(2) Employees (their interaction)
(3) The use of factors (tracing different enablers)
It is generally argued that embedded case design provides richness and multipleperspectives in explaining behaviour
The intrapreneurial enablers ndash rewards top management support resourcesorganisational structures and risk ndash which were derived from the literature in advancehad already been found consistently throughout the literature by others The empiricalmaterial includes four interviews the aim of which was to identify the enablers(respondents were selected from three different organisational positions in order toobtain a broader perspective on the same issues a project manager two functionalmanagers and an engineer) two days of on-site observations (including two meetings)where various employees were informally questioned about their research themes anda wide range of documents and reports
Each interview was conducted in tandem (two researchers) one researcher beingprimarily responsible for the interview and the other for taking notes and filling ingaps in the questioning The interviewees were asked to tell the story of the companyhow they perceive innovation why the firm needs to be innovative where in theorganisation the innovations are created how they are organised and how and whichdifferent enablers encourage and support them to be innovative The interviews whichlasted for an average of about one-and-a-half hours they were recorded andtranscribed for later use At the end of each day field notes were written by eachresearcher individually reflected on and afterwards discussed by both researchers
EJIM83
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The interviewees were chosen from different positions in order to get a broaderperspective on the same themes and the formal interviews were supported andvalidated or categorised as a single opinion by small-talking to a number of otheremployees and through observations General statements will be presented asldquoDanfoss Drives saysrdquo The interviewees provided several insights and a variety andbreadth of data which allowed the exploration of different settings and breakdowninto categories that were grounded more empirically in a knowledge-intensivecompany than would have been possible from solely using the five factors from theliterature
The analytical process was mainly concerned with coding the interviews andclassifying the text into categories for content analysis (see for example Weber 1985)based on predetermined categories which is the main difference from grounded theory(Glaser and Straus 1967) Several researchers (eg Glaser 1978 Miles and Huberman1994) have suggested that coding provides a basis for the interpretation of data Thecoded data from the interviews were triangulated with observations and writtendocuments
4 Danfoss DrivesDanfoss Group is an international engineering company with approximately 17000employees and a total turnover of almost DKK 15 billion of which the Motion ControlUnit share is approximately 3400 employees and almost DKK 35 billion respectivelywith customers all over the world Danfoss Drives is the largest division in the MotionControl Unit The Motion Control Unit was established ultimo 2000 and apart fromDanfoss Drives also includes three other divisions Gear motors Marine Systems andFlow The activities in Danfoss Drives can be dated back to 1968 which saw theintroduction of the first mass-produced frequency converter for speed control ofmotors The heating ventilation and air-condition applications (HVAC) wereintroduced in 1990 and since the acquisition of Bauer a gear motor producer in1999 Motion Controls has been marketed as a one-stop shop for the industry
Through acquisitions in the US and the founding of a company in GermanyDanfoss Drives now has two production sites in addition to its headquarter inGraasten Denmark and via Danfoss sales companies is able to serve a wide range ofcustomers in different industries throughout the world including chemicals andconsumer goods metals and mining pulp and paper and the refrigeration andautomotive industries
41 Strategy and the organisationDanfoss Drives pursues a dual strategy the aim of which is both to maintain itsleading global position in the food beverage HVAC and water industries throughvolume and growth and to retain its position as a component supplier providingready-to-install solutions for (niche) customers
The continuous introduction of new and improved products means that DanfossDrives attaches a lot of importance to technological innovation and its efforts to gain acompetitive advantage owe a lot to close cooperation with customers In 1998 thedevelopment process in Danfoss Drives was organised into a matrix structureinvolving technology centres serving the different projects project leaders andprojects organised into a ldquocore teamrdquo and a number of ldquosub-teamsrdquo The product leader
Enablingintrapreneurship
309
who is responsible for the development of new products and managing thedevelopment process is assisted by a ldquocore teamrdquo which consists of members fromeach key area marketing production finance and IT
Danfoss Drivesrsquo management acknowledges that the companyrsquos commercialsuccess depends on employeesrsquo competencies and that employees are therefore itsmost important resource Here we describe how Danfoss Drives enablesintrapreneurship by means of many different forces acting together
5 Corporate entrepreneurship at Danfoss DrivesWithout having any distinct corporate entrepreneurship strategy Danfoss Drives hasactively used the organisational structure to enable intrapreneurship in the form ofcorporate ventures internationalisation and formal networks and the internalorganisation has been organised to encourage innovation knowledge creation anddissemination But using the organisational structure is not the only way DanfossDrives encourages intrapreneurship This section describes how various means areapplied and perceived by the employees at Danfoss Drives
This paper examines how the above-mentioned five enablers in Kuratko et al (1990)influence intrapreneurship at Danfoss Drives
51 RewardsSome authors (eg Fry 1987 Morris and Kuratko 2002 Sathe 2003) stress thatentrepreneurial behaviour can be encouraged by effective reward systems that mustconsider clear goals feedback individual influence and rewards based on results(Kuratko et al 1990 Hornsby et al 1993 2002) or it could be related to theperformance of the team (Hisrich and Peters 1986) Designing a reward system thatreflects the behaviour the company wishes to encourage is therefore crucial Accordingto Sathe (2003) people are motivated by different things Entrepreneurs may seekrewards such as the pride that comes from starting their own business and theprospect of financial gains whereas intrapreneurs value other incentives which are notalways clear (Sathe 2003) Morris and Kuratko (2002 p 245) note that intrapreneursare motivated by controllable rewards such as ldquoregular pay bonuses profit shareequity or shares in the company expense accounts job security promotions expandedjob responsibilities autonomy public or private recognition free time to work on petprojects money for research or trips to conferencesrdquo Morris and Kuratko (2002) alsoargue that intrapreneurs should share some of the downside risk but this financial riskand incentive is exactly what Sathe (2003) identifies as the difference betweenentrepreneurs and intrapreneurs
In practice it can be more difficult to differentiate between entrepreneurial andintrapreneurial incentives as not all entrepreneurs or intrapreneurs are motivated inthe same way At Danfoss Drives the reward structure reflects the fact that they are aninternational player and incentives change across cultures and countries financialrewards (bonus) are highly motivating in the USA whereas ldquoin Denmark financialrewards are generally less appreciated than promotion prestige and recognition fromcolleagues as the Danish Internal Revenue Service (IRS) destroys all possibilities forfinancial rewardsrdquo It is not uncommon (Sathe 2003) and very Danish that if someemployees get a financial reward then it influences other employees negativelyFlexibility in relation to an assignment and working hours is highly appreciated by
EJIM83
310
Danes and this together with recognition from colleagues is the most commonreward Prestige related to the completion of an assignment is also valued
52 Management supportThe second factor is management support that in the literature is often synonymouswith top management support and governance (Hitt et al 2002 Hornsby et al 1993Kuratko et al 1990) It is crucial for management to support intrapreneurial activities(Hisrich and Peters 1986 Stevenson and Jarillo 1990) even if they do not fullyunderstand them (Hornsby et al 2002 Kuratko et al 1990) As pointed out by Kuratkoet al (1990) and Hornsby et al (1993) the basic idea of management support is toencourage employees to believe that innovation is embedded in the role of allemployees And this is precisely the case at Danfoss Drives everyone is encouraged tobe innovative and consequently innovation happens everywhere
Employees view a supportive management as one that does not work against newinitiatives from employees and acts as a sponsor for intrapreneurs which basicallymeans giving them access to resources This agrees with Fry (1987) One of theemployees put it as follows
What my manager does is provide me with resources that make it possible to explore newopportunities
Otherwise employees agree that support from other colleagues is more importantThey not only use each other to discuss and test new ideas but groups of employeescooperate to develop new products and new ideas Other employees eg clerks andtechnical assistants can also support a project group by from an engineerrsquospoint-of-view doing more mundane things such as office work getting the rightcomputer programs for the job etc As one of the managers said ldquoit is easy to getpeople together in workshops on new themes and problems even though they arebusyrdquo which indicates that generally support among employees is high Butsupporting (top) managers are important as ldquosponsorsrdquo
53 ResourcesIn addition to the support of top management projects also need financial resources toget off the ground (see for example Hisrich and Peters 1986 Hornsby et al 2002Sathe 2003 Stevenson and Jarillo 1990 Stopford and Baden-Fuller 1994) On the otherhand the speed and success of a project is not proportional with fundingencouragement inspiration and perspiration are also necessary (Fry 1987) Gettingaccess to the companyrsquos facilities and resources is not always sufficient ndash it isimportant to make employees feel confident and encouraged to experiment (Burgelmanand Sayles 1986) The well-known 3M case illustrates that this kind of support andfreedom automatically generates another important resource (time) Employees at 3Mare encouraged to spend 15 per cent of their time on their own projects Howeveraccording to Fry (1987) this 15 per cent is often spent after hours or at weekends Somescholars (eg Drucker 1993 Nonaka and Takeuchi 1995 Bukh et al 2005) haveargued that the most important resource in the knowledge society is knowledge itselfand knowledge is not just the fundamental driver of innovation but also an importantpart of the companyrsquos competitive advantage
Enablingintrapreneurship
311
The most important intrapreneurial resource at Danfoss Drives is human resourcesie the knowledge and skills of the employees However other resources are importanttoo especially time and financial support which to some extent the company sees as aprerequisite for employees to act in an intrapreneurial way Although as DanfossDrives says
time and money have to be earned which means you have to finish your assigned projectbefore you can playrdquo
And continues
we would explore different directions that are not directly related to the core of ourproduct simply to broaden the horizon and knowledge about what is going on Probablythere is something out there which in combination with other things could be veryinnovative eg in relation to regulation techniques something interesting could befound in relation to how the body regulates the absorption of medicine However theresources are limited and therefore we have to focus on the most important adjacentareas
The use of resources is a matter of priority and long-term innovation is vulnerablecompared with short-term business pressure (Hisrich 1990) Lack of resources andtime is thus also a barrier to long-term innovation at Danfoss Drives As the companypoints out even though daily or weekly slack time for innovation would be preferableemployees are ldquo in periods very tied up with projects and in other periods webreathe and have time to run innovative projects to broaden the horizon andknowledge of the employees and to motivate themrdquo
Being part of a large company also brings bureaucratic obstacles eg the engineersare employed on flextime terms which is highly popular but current thinking atDanfoss Group headquarters is whether all employees should be on ldquojob salaryrdquoinstead to which one of the employees retorts
that will be rubbish then I will only focus on my assigned projects and nothing more
On the other hand being part of a large company can also mean greater flexibility andmore choices As one of the managers says
10 per cent of 1 billion creates more financial flexibility than 10 per cent of 1 million andexploring ideas costs money
The availability of financial resources thus plays an important role in intrapreneurshipor the utilisation and implementation of ideas One of the employees explains that ldquoI tryto look at the companyrsquos purse as if it was my ownrdquo and if some employees believe sostrongly in an idea that they are willing to pay for its implementation themselves thenthe company always considers it again
54 Organisational structureOrganisational structure has been found very important for innovative activities inseveral ways (see for example Burgelman 1983 Guth and Ginsberg 1990Hornsby et al 1993 Sathe 2003) According to Davis and Lawrence (1991) externalpressure for dual focus pressures for high information-processing capacity andpressures for shared resources require a matrix organisation Sathe (2003) on theother hand argues that matrix and functional or ldquosilordquo organisations can inhibit
EJIM83
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corporate entrepreneurship with respect to new business creation Instead herecommends collaboration and the pooling of competencies in cross-functionalbusiness units so that competencies in technology product developmentmarketing sales and other functions will be available for new business This isprecisely how Danfoss Drives pools different knowledge resources in each projectwithin a matrix structure
The reorganisation in 1998 into a matrix structure focused on a projectorganisation with strong project leaders was positively received by employees since itclarified the chain of command As one of the employees put it
Before you were more like a specialist and you could easily work on four different projectsand that was not always easy Because who did you refer to Who pushed you the most Andwhich project did you better like yourself
Basically the new organisational structure made it possible for employees to focuson the project and their jobs The importance of the project groups wasemphasised by a physical reorganisation where all project members are nowlocated together Previously employees were located with ldquosimilarrdquo people egmarketing people sat together with other marketing people in a marketingdepartment Both ways have advantages and disadvantages but at Danfoss Drivesgathering together employees with different backgrounds has become the preferredway of doing things
If Danfoss Drives believes strongly in new ideas a group of employees may get thechance to turn them into a new business unit One of the managers says that
Instead of imposing it [the new ideas] into the existing organisation we have started a smallgroup a small project outside the traditional rules of the established organisation
This is in essence what corporate ventures are all about (see for example Biggadike1979 Guth and Ginsberg 1990) Another manager reflected that
Our ventures have been started based on a specific idea or idea area and then it has beenisolated and nurtured This basically means that they [the ventures] have got some peace andresources to work on a new area
What this means in practice is that the ventures do not have to strictly follow standardoperating procedures which gives them a flexibility and agility that the existingorganisation does not possess (Ellis and Taylor 1987)
Internationalisation is the third strategy Danfoss Drives employs to encourageintrapreneurship (Lu and Beamish 2001) The company sees a clear distinctionbetween networks and internationalisation because
when we speak about internationalisation it is within the legal boundaries of theorganisation which means that you have colleagues all around the world with whom youhave to communicate They are an integrated part of the company and thereforeinformation can flow freely whereas within a network there are some restrictions on theinformation you can pass on
Furthermore Danfoss Drives thinks it is necessary to be present ie represented byplants sales offices ventures etc (see for example Hitt and Ireland 2000) in theirmain markets to ensure strong relations with customers and with it to learn from themand get access to their knowledge and sets of values
Enablingintrapreneurship
313
If intrapreneurship is expanded to corporate entrepreneurship there is a fourthway to enable entrepreneurial activities which is to deliberately make use of formalnetworks ie universities customers suppliers and ERFA groups (experienceexchanging groups) ndash by comparison the use of informal networks is difficult toplan and control Danfoss Drives creates networks to get access to knowledgeresources that the organisation needs but does not itself possess (see also Hitt et al2000) saying
The network to the universities is primarily to get access to basic research whereasrelationships to other companies or ERFA groups may be because they do somethingdifferent from which we can learn
Danfoss Drives also participates in ERFA groups to test new ideas on people who havenot yet adapted to the Danfoss way of thinking This says the company will ensurethat ldquotwo developers with the same background gradually become uniformrdquo Anotherway to test ideas is on customers Danfoss Drives not only visits their customers theyldquocamp outrdquo at particular customers for a month at a time because they believe in closecooperation and as they say
we follow them in everything they are doing which provides us with insight intoproblems that would be hard to get in other ways
55 RiskThe fifth and last factor that Kuratko et al (1990) found consistently throughout theliterature is risk Morris and Kuratko (2002) described how both too little risk and toomuch risk can be fatal for a company While too little risk becomes dangerous when acompany ignores changing market conditions by making little or no innovation atthe other extreme attempting to come up with a breakthrough innovation is highlyrisky Therefore focusing on lower-risk markets ie new varieties of productsservices etc makes risk management easier and creates more success Fry (1987)notes that making intrapreneurs experiment without penalising them when an ideafails will encourage an intrapreneurial spirit and the more experiments they carryout the better they will be at determining what works and what does not work(Morris and Kuratko 2002)
Danfoss Drives address risk management from a Darwinistic approach which asone of the managers said means ldquosurvival of the fittestrdquo The projects are veryautonomous so that if an idea is related to an ongoing project it is up to the projectleader and the core team to decide whether it will be implemented or not If the idearelates to a new product the employee has to make strong enough arguments toconvince the product planning group that it is worth implementing These interactionprocesses mean that employees feel relaxed about trying to implement new ideas Asone said
you have to keep your word and be honest then you can be flighty and take risks butyou have to be honest and acknowledge if you have overextended yourself acknowledge thatyou have to go back one step Then you can make a flop and no one complains because theyknow you did your best and in most cases you are likely to succeed
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At Danfoss Drives most ideas are related to the planned projects since they areplanned four years ahead The aim of such a long planning horizon is both to giveemployees an opportunity to deconstruct the project and come up with ideas and togive them time to think differently and innovatively before the project starts One ofthe employees said
If the company did not give me this information then I would probably not be able to comeup with all these ideas
And when employees have time to think about coming projects says Danfoss Drivesthe risk is lower compared to short-time planning
6 Towards a more complete modelThe Danfoss Drives case is in line with Kuratko et alrsquos (1990) findings as regards thefactors that can help an organisation to enable intrapreneurship However the Danfosscase also makes it clear that a knowledge-intensive company is more complex thantraditional industrial companies The five factors identified by Kuratko et al (1990) arethus not sufficient in themselves to understand intrapreneurial behaviour in suchcompanies
The Danfoss case showed that basic factors such as (top) management support andfinancial resources are not sufficient for intrapreneurship to happen while risk onlyseems to matter to the extent that it is perceived by employees
The possibilities within the five factors can be divided into basic andintrapreneurial factors as showed in Table I By basic factors is meant thosewhich must be present for intrapreneurship to occur eg regular payment to theintrapreneur access to financial resources and other materials a management thatldquosponsorsrdquo the project (not rejecting an idea before development gets started) a basicorganisational structure and tolerance for risk (at least lower-risk projects)Intrapreneurial factors denote efforts that can encourage and enrich intrapreneurialactivities such as expanded job responsibility autonomy and recognition real (top)management commitment ndash not just assignment of resources different knowledgeresources different organisational structures that promote different aspects than thetraditional organisation and no penalisation of employees who try to developsomething new
The interviews small talk and observations at Danfoss Drives revealed that otherfactors at the company also enable intrapreneurship Common to all interviewees isthat they talked about the importance of communication company culture and
Factor Basic factors Intrapreneurial factors
Rewards Regular pay job security Promotion expanded job responsibilityautonomy recognition free time to work onpet projects bonuses
(Top) management support Sponsors CommitmentResources Finance and materials Knowledge resourcesOrganisational structure Hierarchy Corporate venturing cross-functional teams
internationalisation external networksRisk Tolerance of lower risks No penalisation
Table IFactors influencing
intrapreneurship
Enablingintrapreneurship
315
processes to help finish a project The following paragraphs will take a closer look atthese three factors which will be analysed based on the empirical data from DanfossDrives supported where relevant by the literature
61 CommunicationSince it creates a common framework of understanding language can be consideredthe most prominent communicative tool available to man (Christensen and Bang 2003)At Danfoss Drives communication is closely related to culture and geographicallocation One of the interviewees expressed this very clearly
Via your language you can articulate the country in which you have been raised its cultureand its values The whole set of values are embedded in your language that is whyEnglish and American Danish and Norwegian are different even though they are verysimilar
Language culture and geography are very closely related and together they articulateprecision and when you try to express yourself in another language then you lose theprecision
Language is thus a very central part of communication The official language at DanfossDrives is English and this therefore causes some difficulties All employees are expectedto use English at the level they master but employees find it very frustrating to have tospeak English to German customers (to whom they used to speak German) since it canbe a barrier to really understanding the details Danfoss Drives says
If we continued speaking German with the German customers then they would communicatein their native language and there would be only one translation Now all of us have to putsubstantial effort in expressing the right things and furthermore we may not understandwhat is said with the intention of the sender
In addition to the official language there are at least two other languages at DanfossDrives a company-specific and a technical language The language used internally inthe company is very specific with many abbreviations and terms and it can be veryconfusing As Danfoss Drives says
It takes new employees about a year to fully understand what is being said
And as Pinchot (1985) argued the innovation process is inhibited or distorted whenpeople do not speak a common language communication is slowed down
The technical language used by engineers is highly precise since all terms withinelectronics and software are the same in English American English and AustralianEnglish and Danish educational courses are based on English textbooks But not allemployees at Danfoss Drives are engineers and as one of the engineers said ldquowe [theengineers and the rest of the organisation] do not speak a common language however the tone is free and hard ndash but friendlyrdquo and they are not afraid to ask if thereis something they do not understand
General communication within Danfoss Drives is very informal which encouragesemployees to talk to everyone However employees at Danfoss Drives are scatteredaround Graasten which is a barrier to daily communication As Danfoss Drives explains
We have colleagues 200m from here and it feels like they are placed in Aarhus [almost200 km from Graasten] If you think you could gain from speaking with them then you haveto walk over there and then you are very likely to wait until tomorrow
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316
However one of the managers says
Generally the information and communication within and between the departments supplychain core processes etc flow well ndash maybe too well as there are hardly any conflicts oftenwe are too polite it takes too much time to make a decision because we seek consensus andtoo many people are involved
The involvement of so many people is due to the complexity of the products andmakes it very hard to get an overview because a lot of important information has to betaken into account Conversely the consensus-seeking and meetings shortencommunication and make employees feel they have influence (Fry 1987) Tosupport communication Danfoss Drives is developing a common informationstructure for meetings reports etc which should make it easier for employees to findthe right information
Face-to-face communication is the preferred form of communication at DanfossDrives This can be illustrated by the mechanics group which meets physically every14 days to keep the amount of written information to a minimum The team leader ofthe mechanics group said
We can write a report but if people are going to read it some will read it in one way otherswill read it in another way and some will not read it at all In this way [by meeting every 14days] we get a resume and if something is not clear we can ask I have chosen thisinformation strategy in the group because everyone will be informed and afterwards you cango home and if you are interested you can easily ask for more information
Together with direct and open communication (see for example Leonard and Swap2002 Pinchot 1985) face-to-face communication physical proximity naturalldquowatering holesrdquo such as coffee pots and mail rooms meetings special placesroomsfor special occasions team building social events cross-level and cross-functionallocations (see for example Christensen and Bang 2003 Leonard and Swap 2002) allencourage improved communication at Danfoss Drives Decision reports and otherkinds of documentation are still written down in the mechanics group including a finalreport but all the unnecessary ldquosemirdquo reports are skipped Danfoss Drives shares ideasand knowledge in both formal and informal ways which for example Fry (1987) andChristensen and Bang (2003) have described to be preferable
However being a worldwide company face-to-face meetings are not always possibleor convenient because of distance so a lot of information is often sent by e-mail Thisoften leads to misunderstandings in their daily work however Danfoss Drives says
you try to make sure that you have expressed exactly what you want but when you get ane-mail back with 20 questions then there is nothing else to do than call or even better meetface-to-face otherwise the e-mails will continue going back and forth because a large partof the context disappears when you write down information
This is one of the reasons why employees at Danfoss Drives spend so much time inmeetings to inform and coordinate and as the company explains this need forcommunication may reflect Danish culture
62 CultureSince innovation is not restricted to the research and development department itldquopervadesrdquo the companyrsquos culture This is supported by small talk and observations
Enablingintrapreneurship
317
and it is clear that new ideas are generated across the whole company and incooperation with customers and suppliers and then further developed in an interplaybetween salesmarketing and customers production and supplies research anddevelopment and engineers Danfoss Drives believes that in this way they ensure ahigher degree of intrapreneurship ndash both in relation to product process and strategicinnovation ndash than if innovation were only carried out by the research and developmentdepartment which typically consists of techniciansengineers Thus ldquo theinnovation will be technology driven rather than market drivenrdquo according toDanfoss Drives
Company culture also plays a role in relation to for example decision-making Thedecision-making process at Danfoss Drives in Denmark has changed radically duringthe last decade because of changing product characteristics A decade ago the companyhad employees with a broad range of knowledge resources which meant that theycould make decisions about almost everything Today the industry has become muchmore complex more technologically oriented which makes it impossible to be ageneralist and all employees have now become specialists within a relatively smallarea Among other things this is one of the reasons why Danes at Danfoss Drives arevery consensus-seeking and many different types of employees are asked for advicebefore a decision is made Although it slows down the intrapreneurial process and istime- and resource-consuming Danfoss Drives thinks it enables them to make betterdecisions By involving many employees in the overall decisions managers try todecentralise as many lower-level decisions as possible Danfoss Drives believes that
because of the complexity there is no right answer What may be a good solution for onemay seem wrong to another even though the result may be the same What is mostimportant is that the employee who has to carry out the task feels that it is the right way to doit
Decentralised decisions create a very high degree of commitment and ensure thatemployees really make an effort to succeed This is contrary to Danish culture but asone of the managers explains
Especially in Germany the process of decision-making is different They do not have somany meetings The manager decides he takes the responsibility and he takes theconsequences and the employees implement in the United States it is also the managerwho makes the decisions but they [like the Danes] also have a lot of meetings before thedecision is made
Danfoss Drives believes that the delegation of decision-making creates more flexibilitywhich is one thing that Danes because of their very relaxed culture are better at thanforeign companies
The general experience at Danfoss Drives is that culture also plays a major role inrelation to the perception of time especially working hours In Denmark mostemployees are employed on flextime terms which means that they decide themselveswhen they come and leave thus controlling their own working hours In Germany onthe other hand employees have fixed working hours while in the US employeesusually come before the manager arrives and leave after he has left In these countriestherefore the manager decides working hours At its plants abroad Danfoss Drivesadapts to the norms of the country concerned
EJIM83
318
63 ProcessSince Danfoss Drives is ISO9000-certified it has to follow and document a number ofprocedures and processes In general the company believes that their processes arevery robust but they are continuously trying to improve organisational processesfurther One of the most visible process innovations concerns the development of anin-line printing house together with Xerox Basically this means that the manual isprinted in a specific language and number related to a specific order and every timethere is a change in the manual it is made online The main advantage of this is that itensures that the manual is always up to date and it saves the company resources inrelation to a printed manual ndash both paper and storage Danfoss Drives has alsoimproved inventory control by implementing an electronic kaizen system (Imai 1986)However when striving after effectiveness and efficiency environmental awarenessand high-quality products are also essential
All projects are managed in relation to a ldquokey-point planrdquo like Cooperrsquos (2001) stagegate model Although they can change the level of documentation in each project theyacknowledge that it is very difficult for them to run small projects One of themanagers also explains that managing ldquothe next generation of a product to a knownmarket developing a new product to an unknown market or developing a specificproduct to a specific market or a brand-labelling project with a supplier are verydifferent projectsrdquo and they think it is a weakness to use the same project model for allprojects
Danfoss Drives is aware of their strengths and weaknesses and small projects aredefinitely one of their weaknesses since the whole system is geared to large-scaleproduction Small companies are now bringing innovations to the market which issomething that Danfoss Drives used to do By recognising that Danfoss Drivestemporarily ldquochanged the focus from innovation and idea-creation to a focus on theprocess of production planning and technology planningrdquo as one of the managersexplains The focus not only changed from product to process innovation but also toknowledge-intensive production by means of relationship management and otherways of managing However the emphasis is now back on innovation again
7 Conclusion and implicationsActivities that benefit the strategic and financial position of a company are those mostlikely to be developed and implemented Given this the exploration and exploitation ofdifferent intrapreneurial enablers seems the logical choice since it can result insignificant corporate gains The research challenge is to understand whyintrapreneurial enablers have not attracted companiesrsquo attention to a greater extent
The Danfoss Drives case indicates that rewards top management supportresources organisational structure and tolerance of risk are not sufficient to encourageintrapreneurship in a knowledge-intensive company Not all factors directly encourageintrapreneurship although some are necessary in order to create an intrapreneurialclimate Fry (1987 p 5) argued that
[i]f managers arenrsquot innovative if they donrsquot provide the climate for creativity if they canrsquotset aside their carefully laid plans to take advantage of a new opportunity then intrapreneurshave little encouragement
Enablingintrapreneurship
319
This basically means that managers can be the biggest obstacle to intrapreneursinasmuch as a single decision can kill a project before it gets started
The Danfoss Drives case has shown that enabling intrapreneurship is easier whenthe (top) management communicates a clear vision and plan to employees for a longertime horizon (Sathe 2003) Consequently the framework should consist of eightintrapreneurial enablers instead of five communication culture process rewards (top)management support resources organisational structure and risk
Morris and Kuratko (2002 p 257) note that ldquoculture underlies all other componentsof a workplacerdquo ie all other factors This means that all factors are interrelated andinfluence each other in some way ndash at least with culture as a common denominatorWhile the Danfoss case shows that culture in itself is not sufficient to describe howmanagers can enable intrapreneurship the eight factors described above all contributein one way or another and are therefore too important to leave out Hisrich (1990)defines an intrapreneurial culture as follows ldquo[d]evelop visions goals and actionplans take action and be rewarded suggest try and experiment create and developregardless of the area and take responsibility and ownership This environment ofcourse supports individuals in their effort to create somethingrdquo Danfoss Drives comesclose to an intrapreneurial culture on several points but there is still room formanagerial improvements
Clearly there is a need for further research into factors that enable and encourageintrapreneurship in knowledge-intensive companies Studies related to the enablers areimportant Are there more than eight and which How are they related And how canmanagers exploit the synergies involved Up to now we only know that the eightenablers influence intrapreneurship not if and how they can be used to turn theintrapreneurial level up and down Breakthrough innovations that change the rules ofcompetition in a market are very rare and as Morris and Kuratko (2002) also arguefrequent experiments make intrapreneurs better able to determine what works andwhat does not work
References
Antoncic B and Hisrich RD (2004) ldquoCorporate entrepreneurship contingencies andorganizational wealth creationrdquo Journal of Management Development Vol 23 No 6pp 518-50
Biggadike R (1979) ldquoThe risky business of diversificationrdquo Harvard Business Review Vol 57No 3 pp 103-11
Bukh PN Christensen KS and Mouritsen J (2005) Knowledge Management and IntellectualCapital Establishing a Field of Practice Palgrave Macmillan Basingstoke
Burgelman RA (1983) ldquoA process model of internal corporate venturing in the diversified majorfirmrdquo Administrative Science Quarterly Vol 28 No 2 pp 39-55
Burgelman RA and Sayles LR (1986) Inside Corporate Innovation Strategy Structure andManagerial Skills Free Press New York NY
Chang J (1998) ldquoModel of corporate entrepreneurship intrapreneurship and exopreneurshiprdquoBorneo Review Vol 9 No 2 pp 187-213
Christensen KS (2004) ldquoA classification of the corporate entrepreneurship umbrella labels andperspectivesrdquo International Journal of Management and Enterprise Development Vol 1No 4 pp 301-15
EJIM83
320
Christensen KS and Bang HK (2003) ldquoKnowledge management in a project-orientedorganization three perspectivesrdquo Journal of Knowledge Management Vol 7 No 3pp 116-28
Cooper RG (2001) Winning at New Products Perseus Cambridge MA
Davis SM and Lawrence PR (1991) ldquoThe matrix organization ndash who needs itrdquo in Shafritz JMand Ott JS (Eds) Classics of Organization Theory 3rd ed Wadsworth PublishingCompany Belmont CA pp 234-54
Drucker PF (1993) Post-capitalist Society Butterworth-Heinemann Oxford
Ellis RJ and Taylor NT (1987) ldquoSpecifying entrepreneurshiprdquo in Chruchill NCHornaday JA Kirchhoff BA Krasner OJ and Vesper KH (Eds) Frontiers ofEntrepreneurship Research Babson College Wellesley MA pp 527-41
Fry A (1987) ldquoThe Post-It Note an intrapreneurial successrdquo SAM Advanced ManagementJournal Vol 52 No 3 pp 4-9
Gartner WB (1988) ldquoWho is an entrepreneur Is the wrong questionrdquo American Journal ofSmall Buiness Vol 10 pp 696-706
Glaser B (1978) Theoretical Sensitivity Advances in the Methodology of Grounded TheorySociology Press Mill Valley CA
Glaser BG and Straus AL (1967) The Discovery of Grounded Theory Strategies forQualitative Research Aldine Chicago IL
Guth WD and Ginsberg A (1990) ldquoGuest editorsrsquo introduction corporate entrepreneurshiprdquoStrategic Management Journal Vol 11 pp 5-15
Hanan M (1976) ldquoVenturing corporations think small to stay strongrdquo Harvard Business ReviewVol 54 pp 139-48
Hisrich RD (1990) ldquoEntrepreneurshipintrapreneurshiprdquo American Psychologist Vol 45 No 2pp 209-22
Hisrich RD and Peters MP (1986) ldquoEstablishing a new business venture unit within a firmrdquoJournal of Business Venturing Vol 1 pp 307-22
Hitt MA and Ireland RD (2000) ldquoThe intersection of entrepreneurship and strategicmanagement researchrdquo in Sexton DL and Landstrom HA (Eds) Handbook ofEntrepreneurship Blackwell Oxford pp 45-63
Hitt MA Ireland RD and Lee H (2000) ldquoTechnological learning knowledge managementfirm growth and performancerdquo Journal of engineering and Technology ManagmementVol 17 pp 231-46
Hitt MA Ireland RD Camp SM and Sexton DL (2002) Strategic EntrepreneurshipCreating a New Mindset Blackwell Oxford
Hornsby JS Kuratko DF and Zahra SA (2002) ldquoMiddle managers perception of the internalenvironment for corporate entrepreneurship assessing a measurement scalerdquo Journal ofBusiness Venturing Vol 17 No 3 pp 253-73
Hornsby JS Naffziger DW Kuratko DF and Montagno RV (1993) ldquoAn interactive model ofthe corporate entrepreneurship processrdquo Entrepreneurship Theory amp Practice Vol 17No 2 pp 29-37
Imai M (1986) Kaizen Random House New York NY
Kuratko DF Montagno RV and Hornsby JS (1990) ldquoDeveloping an intrapreneurialassessment instrument for an effective corporate entrepreneurial environmentrdquo StrategicManagement Journal Vol 11 No 1 pp 49-58
Enablingintrapreneurship
321
Leonard D and Swap W (2002) ldquoHow managers can spark creativityrdquo in Hesselbein F andJohnston R (Eds) On Creativity Innovation and Renewal A Leader to Leader GuideJossey-Bass San Francisco CA pp 55-65
Lu JW and Beamish PW (2001) ldquoThe internationalization and performance of SMEsrdquoStrategic Management Journal Vol 22 pp 565-86
Miles MB and Huberman AM (1994) Qualitative Data Analysis Sage Thousand Oaks CA
Morris MH and Kuratko DF (2002) Corporate Entrepreneurship Harcourt College PublishersOrlando FL
Nonaka I and Takeuchi H (1995) The Knowledge-Creating Company Oxford University PressOxford
Peterson R and Berger D (1972) ldquoEntrepreneurship in organizations evidence from the popularmusic industryrdquo Administrative Science Quarterly Vol 16 pp 97-106
Pinchot G (1985) Intrapreneuring Why You Donrsquot Have to Leave the Corporation to Become anEntrepreneur Harper amp Row New York NY
Sathe V (2003) Corporate Entrepreneurship Top Managers and New Business CreationCambridge University Press Cambridge
Sharma P and Chrisman JJ (1999) ldquoToward a reconciliation of the definitional issues in thefield of corporate entreprenrushiprdquo Entrepreneurship Theory amp Practice Vol 22 pp 43-68
Stevenson HH and Jarillo JC (1990) ldquoA paradigm of entrepreneurship entrepreneurialmanagementrdquo Strategic Management Journal Vol 11 pp 17-27 Special issue
Stopford J and Baden-Fuller CF (1994) ldquoCreating corporate entrepreneurshiprdquo StrategicManagement Journal Vol 15 No 7 pp 521-36
Weber PR (1985) Basic Content Analysis Sage Beverly Hills CA
Yin RK (2003) Case Study Research Design and Methods Sage London
EJIM83
322
131
PART III
Managing Internal Knowledge Resources
The third part of the dissertation consists of two articles which in different ways deal
with internal knowledge resources and how these can be managed in order to
encourage intrapreneurship Thus from addressing intrapreneurship from an lsquointernal
resourcersquo perspective (cf Chapter 4) we now move on to discuss knowledge
management and management in knowledge-intensive companies
As mentioned in Chapter 2 the PhD project is part of a larger research project
KNORI the aim of which was on the one hand to examine how knowledge-
intensive companies can be innovative and enable change in the face of changing
market conditions and on the other to explore and identify the challenges and
possibilities for companies and industrial policy Since knowledge and knowledge
intensiveness were key factors in the selection of case companies for the project the
internal resource perspective was found particularly appropriate since as described
in article 1 this is mainly based on companies exploiting intangible knowledge-
based resources
Intrapreneurs in knowledge-intensive organisations innovate on the basis of
knowledge Thus knowledge-based resources are not only a basic driver of
innovation but they are also an important part of the companyrsquos competitive
advantage The case companies that form the empirical basis for this dissertation are
132
all knowledgendashintensive companies It is therefore crucial to understand the
relationship between the main drivers of intrapreneurship in such companies
innovation management knowledge and knowledge management
THE KNOWLEDGE-MANAGEMENT PERSPECTIVE
In recent years there has been an overwhelming interest in the concepts of
knowledge and knowledge-based resources in the management literature This is not
only reflected in the importance of knowledge-intensive companies as discussed
above but also in an interest in how knowledge-based resources interact in the
creation of value and how knowledge can be managed This has influenced
management practice and research in many ways eg in terms of the characteristics
of knowledge the difference between information and knowledge and the
categorisation of knowledge (cf Baxter amp Chua 1999) However the literature
comprises many different research traditions and points of view
Some authors see knowledge as a resource that can be used as a basis for strategy
formulation (Sveiby 1997) whereas according to others it is integrated in a broader
strategy framework such as the balanced scorecard approach (Kaplan amp Norton
2004) Others again (eg Bukh et al 2001) perceive knowledge and intellectual
capital as two closely related terms For example Lennon amp Wollin (2001 p 411)
focus on knowledge in a learning perspective and Sher amp Lee (2003) relate it to
information technology Other strands of research could be identified all of which
have their own merits
Philosophical interest in the concept of knowledge and obtaining knowledge goes
back a long time However as emphasised by von Krogh amp Roos (1995) knowledge
was not directly included in management theories until the mid-1950s around the
time when some of the early thoughts on cybernetics and systems theory were being
133
presented (see for example Simon 1945 1960 Minsky 1956) The starting point
for these authors was often human intelligence as opposed to knowledge
incorporated in rule-based computer systems (cf Varela et al 1992)
Managers often discuss knowledge from different perspectives the differences
consisting in the way knowledge is perceived In other words the basic
epistemological perspectives differ Article five makes a distinction between two
different perspectives the first of which is the ldquoartefact-orientedrdquo perspective The
focus here is on information technology and the ways in which technology is be used
to codify knowledge for management decision-making It is assumed that everything
can be described and the more data a company collects the more knowledge it
possesses
The artefact-oriented perspective often relies on systems theory and information-
processing theories In practical applications it draws on information technology
Many authors have indicated that this has become insufficient for dealing with
management challenges created by the complexity of the knowledge society The
problem is not lack of documents data or access to information but rather the
quality content and organisation of the material
This has given rise to the second perspective which we term the process-oriented
perspective and is most clearly exemplified by Ikujiro Nonaka who regards
knowledge as a ldquodynamic human process of justifying personal beliefs as a part of an
aspiration for the lsquotruthrsquordquo (Nonaka 1994 p 15 cf Nonaka amp Takeuchi 1995)
Crucially the focus here is on the actual process by which knowledge is created not
on the document or rules which are based on the process This implies that
continuous and dynamic adaptation to lsquoreal lifersquo takes place Thus knowledge is a
continuous process which changes gradually as the individual framework of
understanding is developed
134
IMPORTANCE OF THE PERCEPTION OF KNOWLEDGE
Knowledge is a complex term which is often not easy to define precisely For
example Roos amp von Kroghrsquos (1995 p 1) statement ldquo[w]hat you see depends on
who you arerdquo implies that knowledge should be regarded as a subjective term From
this point of view knowledge can be expressed in many different ways since not
only knowledge but also knowledge about knowledge depends on the context It is
therefore essential to clarify the background for the various perceptions of
knowledge knowledge-management concepts etc
An understanding of the term knowledge or at least what it means to the individual
or organisation is important because it affects the importance which management
attaches to the term According to von Krogh amp Roos (1996 cf von Krog et al
1994) this implies that successful knowledge management requires that you relate to
lsquothe nature of knowledgersquo (von Krogh amp Roos 1996 p 224) Therefore knowledge
management also becomes a question of epistemological understanding
The more importance attached to epistemological views the greater the demands
made on the manager It is no longer sufficient lsquoonlyrsquo to act and make decisions
because reflection on onersquos own actions becomes part of the decision process which
must now also take account of other possible solutions The reflective manager must
therefore be familiar with different epistemologies because this gives a much larger
scope for action and it ensures a better understanding of the limitations of various
actions (see Venzin et al 1998 p 36)
More effective knowledge management may also result from adapting management
tools to the prevailing perception of knowledge This agrees with Marr et al (2003)
who suggest that knowledge management practices will be perceived as more
effective if they match personal epistemologies However knowledge management is
multi-faceted and our understanding of current practice has already been determined
135
by our choice of epistemology This illustrates the fact that the more an organisation
focuses on knowledge the more important it becomes to understand the
epistemological implications
An epistemology cannot be forced on individuals or an organisation Becoming
familiar with the way in which colleagues collaborators and others understand
lsquorealityrsquo will result in more possibilities and improved co-operation An
understanding of the alternative perspectives means that you can make an active
choice Since knowledge depends on both the starting point of the individual
employee and the organisational context (Lave amp Wenger 1991) ldquo[t]he conscious
choice of an epistemological mode is a critical success factor for research and
managementrdquo (Venzin et al 1998 p 37)
THE TWO ARTICLES IN THE SECTION
The first article in this section Understanding intrapreneurship by means of state-of-
the-art knowledge management and organisational learning theory presents a
theoretical perspective of innovation and knowledge and combines these in a
framework for knowledge-based intrapreneurship The framework consists of three
situations for innovation management exploitation sustainable change and
disruptive change and two tasks of intrapreneurship exploitation and exploration
The aim of the framework is to describe the content of intrapreneurship in six sub-
tasks based on the complexity of knowledge ndash tacitness demarcation and social
elements ndash that the intrapreneur needs to manipulate in each case together with the
corresponding type of learning involved The framework underlines the fact that the
complexity of knowledge has important implications for the way we think about
intrapreneurship and innovation
136
The second article Knowledge Management in Perspectives An Analysis of Project
Management in Two Companies touches on the challenges faced by knowledge-
intensive companies from another angle This article discusses the knowledge
resource and how to manage it in greater depth although the main focus is on an
understanding of the nature of knowledge-management activities ie how the
company can influence knowledge resources The article concludes that there are
different ways of managing knowledge resources and that not all of them encourage
intrapreneurship
The article presents two different ways of understanding knowledge ndash an artefact-
oriented perspective and a process-oriented perspective ndash and how knowledge
resources should be managed It is concluded that managerial awareness of the two
perspectives results partly in greater degrees of freedom and partly in enhanced
mutual understanding in the organisation Furthermore the article shows that the
perspectives are complementary and that the company needs to supplement the one
with the other A company that wants to create and maintain an intrapreneurial spirit
needs to supplement process-oriented initiatives with artefact-oriented initiatives A
company wanting to produce existing products more efficiently on the other hand
should supplement artefact-oriented initiatives with process-oriented initiatives
REFERENCES
Baxter J amp FW Chua 1999 Australian Accounting Review Vol 9 No 3 pp 3-14
Bukh PN J Mouritsen MR Johansen amp HT Larsen 2001 Videnregnskaber
Rapportering og styring af virksomhedens videnressourcer Copenhagen Boslashrsens
Forlag
Kaplan RS amp D P Norton 2004 Stratety maps converting intangible assets into
tangible outcomes Boston Harvard Business School Press
137
Lave J amp E Wenger 1991 Situated Learning Legitimate Peripheral Participation
Cambridge University Press
Lennon A amp A Wollin 2001 Learning organisations empirically investigating
metaphors Journal of Intellectual Capital Vol 2 No 4 pp 410-422
Marr B O Gupta S Pike amp G Ross 2003 Intellectual capital and Knowledge
management effectiveness Management Decision Vol 41 No 8 pp 711-781
Minsky M 1956 Some Universal elements for finite automat In Automata Studies
CE Shannon amp J McCarthy (eds) Princeton NJ Princeton University Press
Nonaka I 1994 A Dynamic Theory of Organizational Knowledge Creation
Organization Science Vol 5 No 1 pp 14-37
Nonaka I amp H Takeuchi 1995 The Knowledge-creating Company Oxford Oxford
University Press
Roos J amp G von Krogh 1995 What you see depends on who you are Think about
epistemology IMD Perspectives for Managers Vol 7 pp 1-4
Sher P J amp V C Lee 2003 Information technology as a facilitator for enhancing
dynamic capabilities through knowledge management Information amp Management
Vol 41 No 8 pp 933-945
Simon HA 1945 Administrative Behavior New York Free Press
Simon HA 1960 The New Science of Management Decisions New York Harper amp
Row Publisher
Sveiby KE 1997 The New Organizational Wealth Managing amp Measuring
Knowledge-based Assets San Francisco Berrett-Koehler Publishers
138
Varela FJ 1992 Whence Perceptual Meaning A Cartography of Current Ideas In
Understanding Origins Contemporary Views on the Origin of Life Mind and
Society F J Varela amp J P Dupuy (eds) Dordrecht Kluwer Academic Publisher
Venzin M G von Krogh amp J Roos 1998 Future Research into Knowledge
Management Knowing in firms Understanding Managing amp Measuring Knowledge
G von Krogh J Roos amp D Kleine (eds) London Sage
Von Krogh G G Roos amp K Slocum 1994 An essay on corporate epistemology
Strategic Management Journal Vol 15 No 5 pp 53-71
Von Krogh G amp J Roos 1995 Organizational epistemology Houndsmill
Macmillan
Von Krogh G amp J Roos 1996 Editorial and overview The Epistemological
Challenge Managing Knowledge and Intellectual Capital European Management
Journal Vol 14 No 4 pp 333-337
139
CHAPTER 8
Understanding Intrapreneurship by means of state-of-the-art knowledge management
and Organisational learning
Originally published in
Drejer Anders Karina Skovvang Christensen amp John Parm Ulhoslashi 2004
Understanding Intrapreneurship by means of state-of-the-art knowledge management
and Organisational learning Theory International Journal of Management and
Enterprise Development Vol 1 No 2 pp 102-119
140
102 Int J Management and Enterprise Development Vol 1 No 2 2004
Copyright copy 2004 Inderscience Enterprises Ltd
Understanding intrapreneurship by means of state-of-the-art knowledge management and organisational learning theory
Anders Drejer Karina S Christensen and John P Ulhoslashi Department of Organisation and Management Aarhus Business School Haslegaringrdsvej 10 DK-8210 Aarhus V Denmark E-mail adrasbdk
Abstract Ever since Peter Drucker stated that there are only two constant factors in business ndash innovation and marketing ndash the need for continuously reinventing and changing business organisations according to the present and future needs of the market place has been in existence in the management literature No less today external turbulence and dynamic market conditions have come to stay for good However the challenges are quite different today The emergence of knowledgendashbased organisations and increased importance of knowledge as the key to competitive advantage poses new and interesting challenges for managers and researchers alike In this paper we will attempt to enlighten theories of intrapreneurship and innovation by applying state-of-the-art knowledge management theory and organisational learning theory to them
Keywords intrapreneurship innovation management knowledge organisational learning
Reference to this paper should be made as follows Drejer A Christensen KS and Ulhoslashi JP (2004) lsquoUnderstanding intrapreneurship by means of state-of-the-art knowledge management and organisational learning theoryrsquo Int J Management and Enterprise Development Vol 1 No 2 pp102ndash119
Biographical notes Dr Anders Drejer is a Professor in Strategic Management and Business Development at Aarhus Business School and head of its group devoted to strategy
Karina S Christensen is a PhD student at Aarhus Business School specialising in knowledge management and intrapreneurship
Dr John Parm Ulhoi is Professor in Technology and Innovation Management at Aarhus Business School head of its group on innovation management and the supervisor of Karina S Christensen
1 On the developing need for intrapreneurship
We are slowly beginning to understand that innovation and learning are not the prerogative of start-ups and entrepreneurs any more Rather in the age of technological turbulence and hyper-competition even mature firms need to be innovative and agile This is why we are beginning to see a new strand of literature on intrapreneurship ie
Understanding intrapreneurship by means of state-of-the-art 103
innovators in mature organisations However as early as 1958 Peter Drucker remarked on management that
ldquohellipmanagement is first and foremost about the continuing development of the organisation and its employees The demands and needs of the environment is constantly evolving and management is about adjusting the company according to the needs and demands of the environmenthelliprdquo [1]
As a starting-point this paper rests on the following basic assumptions
bull the importance of innovation is increasing and will continue to grow in the years to come
bull external market-related turbulence for business organisations is not a passing phenomenon
bull the same observation goes for technological turbulence which further enhances the need for innovation and intrapreneurship
Space consideration does not allow us to go into any kind of detail regarding these assumptions Rather we will argue that environmental turbulence and knowledge in fusion should be regarded as an opportunity for innovative firms although recognise that market-related dynamics and technological turbulence can also pose serious risks for stagnant and complacent firms
But what are the implications of the more frequent technological changes increased market segmentation and global competition for organisations According to Kumpe and Bolwijn [2] the necessary organisational forms have undergone profound changes through the last decades This has increased the importance of innovation and underlined the need for renewal and extension of existing product portfolio For understanding this development Kumpe and Bolwijn [2] have produced a model which is shown in Figure 1
The external environment of business organisations has undergone radical changes since 1960s and successful companies have had to adjust to these changes in order to survive In the 1960s successful companies focused on effectiveness They were based on rationality and hierarchical structures that were bureaucratic Management was primarily focused on the efficiency of various important processes within organisation In the last decade the importance of product development and innovation however has increased considerably [34] Technological updates and design renewal are important today in order to sustain market share and remain competitive The challenge of the development function in organisations eg the RampD department has therefore increased considerably with limited resources and time changing the nature of development work The market place it can be said has short-term demands that often require long-term technology research and development which in turn pose great difficulties in prioritisation and management [5]
Therefore an important implication of the development discussed above is that innovative activities can no longer be assumed to be the domain of start-ups and entrepreneurs Now all firms need to pay attention to differentiating themselves by means of innovation and development [4] while at the same time maintaining operational effectiveness [6] In other words firms are caught between exploration and exploitation to use the firms of James March [7] and Leonard-Barton [8] This is a fourth assumption of the paper that we believe is justified by the above discussion ndash but what does it mean It means that firms and managers need to start paying attention to the creation of innovation by intrapreneurs and intrapreneurial activities
104 A Drejer KS Christensen and JP Ulhoslashi
Figure 1 The evolution of market demands and (required) competencies of firms
Source Adapted from [2]
Understanding intrapreneurship by means of state-of-the-art 105
The outlined developments have taken place in parallel with another important development ndash the shift from the industrial society to the knowledge society Today many organisations are becoming knowledge intensive organisations staffed with knowledge workers that will dominate the influence of global value creation [910] This has made a lot of people talk about knowledge management as a new managerial discipline for exactly the same reasons that others do talk about innovation management
Thus intrapreneurs in modern organisations manipulate knowledge instead of physical product and technologies in order to create the necessary innovations and technologies In that light it is paramount that we begin to understand the relationships between knowledge knowledge management and innovation management and intra-preneurship To provide a framework for such an understanding is the very purpose of this paper In order to propose a framework for knowledge and innovation management and intrapreneuship we will start by investigating intrapreneurship and its context ndash innovation management ndash before discussing what we today know about knowledge and knowledge management in firms Finally we will try to integrate the two managerial issues in a framework that outlines the task of intrapreneurship in modern organisations
2 Innovation management and intrapreneurship
Innovation and innovativeness are very much in the centre of the debate of how the business environment of firms has evolved over the years Even though a lot of incongruent definitions can be found in the literature (see the discussion by Carcia and Calantone [11] there seems to be general agreement that innovation (the process) is an iterative process initiated by the perception of a new market andor service opportunity for a technology-based invention which leads to development production and marketing tasks in order to bring about a commercial success of the invention (eg [41213]) On the other hand innovativeness (the quality of the outcome) is used as a measure of the lsquonewnessrsquo of an innovation where highly innovative products etc are seen as new to the world the industry or at least the firm [13]
Despite the necessity for innovation in many firms discussed in the introduction it is clear that no two firms should necessarily be innovative in the same manner Innovation can to be directed at products markets production competencies [1113] as well as administrative competencies as defined by Lowe [14] and Gaynor [15] This corresponds to the thinking behind Miles and Snowrsquos seminal strategy model [16] where strategic management is seen as a process of solving three independent problems the entrepreneurial problem (choices within the product-market domain) the engineering problem (choices related to operations) and the administrative problem (choices related to administration)
Miles and Snowrsquos model [16] of lsquoorganisational adaptationrsquo focuses on the integration between technology and organisation The model is also referred to as a model for lsquostrategic adaptationrsquo (eg [17]) The purpose of the model is to describe and diagnose existing organisational behaviors The model is based on the following three basic ideas
bull οrganisations can act to create (or choose) their environment
bull managementrsquos strategic choices shape the organisationrsquos structure and processes
bull on the other hand once chosen structure and process constrain strategy
106 A Drejer KS Christensen and JP Ulhoslashi
These basic ideas are in line with the work of authors such as Galbraith [18] and Mintzberg [19] The ideas describe a change in attitude towards strategy from the traditional perception of planning under stable external conditions to strategic management as a process of constantly developing and being innovative in order to keep up with turbulent and dynamic business conditions
21 Innovation management the context of intrapreneurship
The real issue however is how to create a constant stream of innovations in any kind of organisation It was Drucker [20] who first pointed out that innovation is not just an outcome innovation is a process In order to avoid confusion we will propose to call the set of managerial activities that together attempt to control the process of innovation for lsquoInnovation Managementrsquo We can therefore safely say that lsquoinnovationrsquo itself is reserved for the results of the process hopefully amply managed by innovation management A further note on innovations many have noted that innovation is more than just invention (eg [1213]) thereby emphasising that ideas need to be put into practice and inventions need to be commercialised in order to speak of innovation [21] In our fairly broad perception of innovation to cover more than just product innovation it is probably necessary to say that ideainventions need to be implemented in the products production or administrative competencies of the firm
Finally there is the issue of how new an innovation should be According to the strictest of definitions innovations should be new to the world (eg [22]) However this ignores the idea of parallel development of technologies in different industries ndash ie precursor to technology development [4] ndash not to mention the difficulties experienced by any firm struggling to implement something new to the firm itself (eg [23]) A suitable compromise between views seems to be to say that an innovation should be new to the firm and its industry
So what are the activities that constitute innovation management Notwithstanding the enormous differences between individual firms several authors have identified five important activities that together define innovation management in its proper context (eg [4]) The first three activities define innovation management per se whereas the last two define the context of innovation management The activities are
bull Technological integration This refers to the integration between technologies and the product-markets of the firm [24]) and emphasises the importance of satisfying the customer with the innovations of any firm In other words technology development (production and administration) needs to be integrated with product development [4] also at the strategic level
bull The process of innovation By this is meant the cross-functional (business) process of activities that create innovations across the departments of the firm Obviously no one department is responsible for innovation and it is thus necessary to see how departments together create innovations see Cooper [25] for one of the seminal accounts of this subject
bull Strategic technology planning This refers to the planning of technology andor competence projects with the aim of maintaining a balanced portfolio of technologies andor competencies see [26] or [27]
Understanding intrapreneurship by means of state-of-the-art 107
bull Organisational change Innovation is closely related to organisational change No matter how small or large the innovation it will effect the organisation with needs for new knowledge new markets new employees and so on Thus it is difficult to speak of innovation without considering organisational change
bull Business Development Of course innovation should be seen as a means for creating new and improved business for the company That is innovation can both drive and be driven by business development as the second very critical element of innovation management
In a systemic interplay we believe that these activities together constitute what we have defined as innovation management But innovation management is surely not the same phenomenon in all organisations
22 Contingent situations for innovation management
The recent emergence of quite complex products consisting of perhaps mechanical components electronics components and software not to mention interfaces to other IT products as well as a strong image part (of an expanded product concept) has given rise to many questions regarding the traditional idea of using the technological S-curve as a key to contingent use of the theory of innovation management
First of all many of the new products such as computers cellular phones and so on are in effect complex systems of many technologies each with individual life cycles And how are many individual life cycles added in to one life cycle for the entire product per se It seems as if the individual technologies and the complex products of which the technologies are a part need not develop according to the same logic But then what drives development of such complex products This is indeed very hard to say In the case of cellular phones it certainly seems as if it is not the end-users that drive development of new generations of cellular phones (eg [4]) But this does not have to mean that development is driven by technology push In conclusion we can say that it seems necessary to develop richer models for contingency of Innovation Management theory
Based on a firm empirical basis Christensen [28] discusses this in great detail He concludes that there must be two kinds of technology changes from one life cycle to the next (1) disruptive changes that create conditions like envisioned by Schumpeter as creative destruction and (2) sustainable changes that continue to support established firms and knowledge patterns in the industry [28] Whereas sustainable changes can be found to support established firms disruptive changes lead to the demise of established firms in favor of newcomer firms Christensen explains the difference between the two kinds of technological changes in terms of the S-curve Sustainable changes continue along the same basic pattern as measured by the same performance measure whereas disruptive changes start an entirely new S-curve (compared to earlier curves) that needs to be measured by another performance parameter
For instance disc drives for computers has changed dramatically on several occasions For instance in 1980 a new kind of technology was part of enabling the personal computer [28] However it was difficult for established firms to foresee that as their perception was driven by the old standard of performance (in that case capacity rather than size) Thus new firms became leading in the new market for personal computers The typical example of the computer-industry would be that of IBM versus
108 A Drejer KS Christensen and JP Ulhoslashi
Apple Computer Because Apple was driven by a value system that was about creating small computers for home use its managers could see the value of a disc drive that was smaller than the generation before albeit not performing quite as well On the other hand IBM was driven by a value system that favored making large computer for central computer departments in large firms and saw hence no value in a smaller disc drive Unfortunately ndash for IBM that is ndash the market favored the former option and an entirely new product was created Interestingly Christensen demonstrates that exactly the same forces are at play in an entirely different kind of industry ie that of machinery for the building industry Thus the phenomenon does not need to be new at all and certainly not limited to IT-based industries
We suggest that there must be at least three situations for innovation management We have the well-known situation of technology exploitation ie after the dominant design has been established This situation can of course be divided into a number of situations This has been amply demonstrated by the equally well-known AD Little approach to technology investment (eg [26]) that distinguishes between monitoringearly adoption selectively investingfollower developing key technology maintaining mature technology and divesting of obsolete technology as the life cycle nears another technology shift [26] Furthermore we argue that changes of technology between life cycles can be either sustaining or disruptive rather than the traditional idea of a discontinuous technological change leading to creative destruction
Based on the above discussions we can go beyond the popular distinction between creative destruction and technology exploitation and define three situations for innovation management
bull exploitation of existing technologies
bull stable technological change
bull disruptive technological change
Because these three situations are the key to a contingent framework for intrapreneurship related to knowledge and innovation they are important to understand in detail In order to do so it is necessary with research designed to yield this kind of detailed understanding A logical place to start would be to conduct case studies or action research in companies in order to present examples of the three situations and how they change over time Even though this article does not have space for a sufficient presentation of such case studies the authors will describe and illustrate the three situations in this Section This is based on a number of longitudinal case studies undertaken by one of the authors and presented in a recent book [4]
Exploitation of existing technologies This situation corresponds to the stable situation of the smooth part of the S-curve The task of Management of Technology (MoT) is to secure that the firm develops technologies faster than its competitors (or as a follower if that is desired) and exploit technologies in processes and secondarily products This is truly a race for technological development and a lead may not last forever This kind of competition can be compared with the metaphor of say 100 meter running Because of specialisation among athletes one will find that the same athletes compete (almost) every time Furthermore race tracks rules equipment etc will be the same every time ndash and the athletes probably train in similar fashion Thus it seems very difficult to maintain a leadership position in a competition of this kind ndash unless one is very competent in getting everything together The most obvious examples of such firms will be traditional industrial firms in many industries Car-manufacturing is a little atypical because of the
Understanding intrapreneurship by means of state-of-the-art 109
strong emphasis on the products still However research has shown that emphasis has changed from products to processes many years ago [29] and we also know it is a very difficult place to break in as a newcomer
Stable technological change Other firms go through a series of sustainable technological changes ndash usually at pretty high speed This is of course quite complex but we must remember that the technological changes happen within the boundaries of the same design concept and thus value system for the firm Therefore the task here is to configure ndash and sometimes develop ndash a set of technologies constituting a product within the time available Technological performance is often of less importance as long as the new product is on market in time We may compare this metaphorically with a group of athletes that agree to go from one distance to another sequentially from 100 meter to 200 meter to 400 and so on Every time the group changes there will be a change of advantages ndash albeit a small one However over time leadership may well change as the group moves from 100 to 800 meters for instance We see that there will be many similarities between each pair of distances and that the value system of athletes will only need to change slowly ndash relatively An obvious example of such firms can be found in mobile communications where a group of firms have followed each other through several generations of cellular phones The lead has changed over time and there has even been a few entries into the industry However many firms have followed along for very long time
Disruptive technological change Finally there are firms that have lived through creative destruction Here both market and technology change at the same time ie a new design concept as well as new components need to be designed ndash usually along with establishing a new firm to do so This means that everything must be designed simultaneously ndash product (concept and detailed construction) market processes administration and so on This by the way corresponds to inventing an entirely new game of sports ndash the rules equipment etc must be invented at the same time Examples of firms here rarely include established firms reinventing themselves ndash that is almost impossible because it requires changing the culture and value system of an established firm ndash and thus usually one-offs Apple Computer is a much researched example of a firm that invents an entire new industry by breaking the established rules and beliefs
23 Intrapreneurs who makes the innovations
Considering the past two decades the responses of the companies in the 1980s and to some extent the 1990s to the challenges outlined above have been characterised by reductions of work force downsizing rightsizing budget cuts and depressed morale in their workforce [30] The centre of attention has been a focus on short-term costs of production but no company can afford to rely on such an approach forever The real challenge of a company to remain a going concern is to establish a competitive advantage and the only way to accomplish that is continuous innovation and creation of new ideas According to Morris and Kuratko [30] the answer is adaptability flexibility speed aggressiveness and innovativeness which can be boiled down to one word ndash intrapreneurship (for going concern firms) and entrepreneurship (for start-ups)
In parallel with the downsizing wave (eg [31]) researcherrsquos interest in intra entrepreneurship seriously took off In particular interest in topics as entrepreneurial management corporate entrepreneurship and intrapreneurship in the last couple of years is remarkable This may in part be due to lsquore-labellingrsquo [3233] of existing concepts but it
110 A Drejer KS Christensen and JP Ulhoslashi
has paved the way to the emergence of new practices and theories From 1983 the interest for the topic has been on the increase which can be seen in relation to Pinchotrsquos introduction of the concept of intrapreneurship in 1983 and his book Intrapreneuring in 1985
New fads or concepts are often seen or claimed to be driven by practice [34] and the more popular part of the management literature which in the case of knowledge management was represented by Drucker [9] and Stewart [35] But as Abrahamson [36] has argued the researchers have often been aware of and interested in the new phenomenon for some time but the explosion seldom takes off before it has gained the interest from practitioners That is exactly what is happening at the moment for the overall concept of corporate entrepreneurship and the many different labels illustrate that even though the interest on the overall topic is growing there still is a lack of the consensus on what it really means andor should mean
It is again the purpose of this paper to help fill that void ndash what does intrapreneurship really mean
3 Knowledge in an innovation perspective
An important aspect about knowledge and knowledge management is that it is only within the last few years that the concepts of knowledge and knowledge management have risen to the top of the agenda of researchers and managers Even though we have discussed knowledge and learning in the educational realm for many years only recently have we begun to explore its ramifications in firms and for managers Therefore we will assert that there is a major contribution coming from discussing what is state-of-the-art about knowledge from an innovation perspective and try to integrate that into a framework for the task of the intrapreneur in modern organisations This is simply because this has not been done before and intrapreneurs in modern organisations ndash we have come to realise ndash manipulate knowledge rather than physical artifacts
31 Knowledge management in a knowledge society
Peter Drucker takes the development of the knowledge society [9] back to the Second World War and already in the 1960s he talks about lsquoknowledge workrsquo and lsquoknowledge workerrsquo However Thomas Stewartrsquos articles in Fortune magazine about lsquoBrainpowerrsquo [37] and lsquointellectual capitalrsquo [38] indicates the entry to the knowledge society for most scholars and practitioners which eg Nonaka and Takeuchi [39] and Baxter and Chua [34] have pointed out in different ways One of the clearest statements is Druckerrsquos [9] own prediction about lsquo[t]he basic economic resourcehellip is and will be knowledgersquo and the uniqueness about the knowledge society is that knowledge has become the resource rather than a resource [9 p 41] italics added by the authors)
Even though knowledge is introduced as the new crucial factor for the success of the organisations it is worth to remember that it may not be so new in the first place It is well known that old management concepts and techniques are re-launched under new labels to mobilise new interest and action [40] An example is knowledge in the sense of actor theory [32] where knowledge is related to linguistic and organisational actors and actants in the same way as Catasuacutes [33] did with environment and environmental management Whether this is due to a re-labelling or new practices and new theories
Understanding intrapreneurship by means of state-of-the-art 111
lsquonewrsquo concepts such as knowledge management knowledge worker and knowledge management strategy have gained a lot of attention recently As described by Bukh et al [40] the alertness of these concepts is among other things indicated by the centrality of the label lsquoknowledge managementrsquo in both organisations by consultants and scholars
A tendency to see knowledge and knowledge management from a wider ndash and often strategic ndash perspective rather than an exclusive artifact-oriented perspective [41] where the primary idea is to capture code and store data and information to make them available for an entire organisation has been promoted by many researchers [394142] Knowledge management however can be seen as an ongoing innovative process based on knowledge creation knowledge sharing and knowledge dissemination This process-oriented perspective [41] is rooted in Ikujiro Nonakarsquos article The Knowledge-Creating Company from 1991 which was the first summarised presentation of this perspective
Among others von Krogh et al [42] and Christensen and Bukh [41] argue that knowledge sharing is a combinantion between people and technology which means both social interaction and technological transactions This is supported by the fact that lsquogeneration of synthesisrsquo is important for knowledge creation The interplay between dichotomies such as tacit and explicit knowledge body and mind individual and organisation top-down and bottom-up bureaucracy and task force and relay and rugby [39] are core elements in the knowledge creation process The interaction between all these dichotomies is expressed in the knowledge spiral [39] A managerial purpose is to keep this spiral running to create dynamic knowledge which is crucial for the innovative activities in an organisation
32 Different types of knowledge
Typically knowledge is defined as lsquothat which is knownrsquo This is however only one way of looking at knowledge Another important way to look at knowledge is to look at lsquothe state of knowingrsquo The state of knowledge can be discussed along several dimensions most notably
bull The level of articulation ie to what extent is it possible to represent knowledge formally and explicitly and thereby share knowledge within the organisation Knowledge can be characterised on a continuum from tacit to explicit
bull Depth of knowledge ie how deep is the organisationrsquos understanding regarding a certain area of knowledge This can range from no knowledge (and inability to utilise that knowledge) to complete understanding and ability to utilise knowledge
bull Location of knowledge ie is the knowledge internal or external to the firm
bull Diffusion of knowledge ie to what extent is knowledge the possession of everybody in the organisation (so everyone can use the knowledge)
bull Complexity of knowledge ie a summary of the other factors of knowledge
Below we will discuss the level of articulation and complexity of knowledge only as these are the most important dimensions of knowledge within this context
321 Level of articulation tacit to explicit
Inspired by Michael Polyani it has only recently become accepted that not all knowledge in an organisation can be fully articulated [43] perhaps a recognition of the fact that not
112 A Drejer KS Christensen and JP Ulhoslashi
all knowledge of value is easily accessible via books the internet etc This is not surprising to us but merely another manifestation of the very thinking behind competence development and an internal focus in management of firms Typically a distinction is made between tacit and explicit knowledge (eg [394143]) Tacit knowledge is the kind of knowledge that cannot be articulated and codified whereas explicit knowledge is easy to codify Evidently different strategies for handling knowledge and for learning are needed for tacit and explicit knowledge respectively The two possible states of knowledge are to us merely end-points on a scale ndash in reality knowledge will be something in between It is thus important to note that tacitness of knowledge should not be seen as a form of mystification Tacit knowledge can be learned ndash just consider the craftsman education in Denmark ndash and it is a natural and important part of all domains of knowledge [44]
A number of factors can be said to contribute to the tacitness of knowledge Based on the references in this Section we have identified a number of continuums that expresse most importantly a factor contributing to tacitness of knowledge
bull Embodied or disembodied knowledge Examples of embodied knowledge are written procedures manuals or mechanical components that all seem to be physically part of the organisation Examples of disembodied knowledge are heuristics organisational values or culture [8]
bull Observable or non-observable in use Tacit knowledge will typically be difficult to observe in use Examples of non-observable knowledge therefore include knowledge related to craftmanship andor knowledge related to a large element of experience
bull Independent or part of a system Some kinds of knowledge are part of a larger system of knowledge and experience ndash eg craftmanship ndash whereas other kinds are independent It will be far more difficult to articulate knowledge of the former kind than of the latter kind
In summary tacit knowledge is disembodied non-observable in use and part of a system of knowledge whereas explicit knowledge is embodied observable in use and independent of other kinds of knowledge Many kinds of knowledge in a firm will be towards the tacit kind and hence more difficult to manage through formal systems and traditional forms of learning
322 Depth of knowledge Dreyfuss and Dreyfuss
An important point regarding knowledge relates to its lsquodepthrsquo by which we understand an expression of the organisationrsquos ability to utilise that knowledge Thus the greater the depth of knowledge the greater the ability to utilise that knowledge This assumption can be discussed ndash obviously some persons can understand quite a lot about an area and be unable to apply that knowledge However we assume that in relation to firms and this project this will not be the case However there is not necessarily any correlation between the depth of knowledge and its level of articulation ndash understanding and utilisation can be high even with tacit knowledge
There have been several contributions to this dimension of the state of knowing For instance Machlup [45] has identified 13 different lsquoelements of knowingrsquo and describes a number of levels in the development of knowledge For Machlup the central issue in his
Understanding intrapreneurship by means of state-of-the-art 113
lsquoelements of knowingrsquo is how well an individual or an organisation is able to perform utilising this knowledge He defines a number of stages ranging from lsquobeing acquainted withrsquo to lsquobeing able to performrsquo This corresponds to a continuum from having knowledge that exists (but being unable to do anything with it) to having thorough knowledge and being able to utilise that knowledge A somewhat similar typology has been proposed [46] with an eight-level typology of knowledge in relation to the description of processes
The most important contribution however is also the oldest one Dreyfuss and Dreyfuss [47] have proposed a model for the depth of knowledge that clearly can be said to contain the other newer contributions to the area The model describes the knowledge of a person as he becomes more and more competent in five levels ndash from novice to expert ndash and describes how true experts are highly dependent on tacit knowledge whereas others are dependent on explicit knowledge
323 Location of knowledge
Knowledge can reside in many different organisational contexts ranging from the individual person to networks of employees ndash and most notably in relation to modern organisations In networks consistent of internal and external persons to the firm the network of organisations being the ultimate form of that In this context two issues stand out as particularly important (1) the transfer of knowledge from one person to the entire organisation and (2) the transfer of knowledge external to the organisation to the inside of the organisation
In modern organisations knowledge will often be found in the tacit form and hence reside in the knowledge and experience of one person or just a few persons In order to enable the firm to utilise that knowledge to the largest possible extent ndash that is make more people capable of mastering the knowledge ndash the process of diffusing knowledge from one person to the entire organisation is critical There are several ways to do that It seems evident that the mechanism of codification making knowledge more explicit is vital to the process
In many firms other knowledge will often be found outside the organisation This is only natural for a relatively small firm with minor resources For instance suppliers often have knowledge critical for the customer firm on say processes customised process technology etc Therefore many firms engage in networking activities of different kinds for instance shared marketing RampD efforts etc with many different partners Thus the second important issue relating to location of knowledge is whether or not knowledge is internal to the organisation Learning processes for internalising knowledge are absolutely vital to modern organisations
324 Diffusion of knowledge undiffused to diffused
It is through the diffusion process that an organisation becomes capable of deriving value from the knowledge it has developed by eg RampD activities internalising networking etc [39] Evidently the diffusion of knowledge is very critical In order to be able utilise knowledge better more people need to have access to the knowledge and master the knowledge Thus the extent of diffusion in general is closely related to the dimension of depth of knowledge However not every part of the organisation will reach the same
114 A Drejer KS Christensen and JP Ulhoslashi
depth of knowledge at the same time ndash or be able to do so ndash so diffusion is a critical issue in its own right
Normally diffusion of knowledge is described along a continuum from undiffused (located with one person) to fully diffused (residing with every body) The latter end of the continuum suggests that diffusion of knowledge has a lot to do with the concept of corporate values and corporate culture As soon as something is fully diffused one can say that it has become part of the corporate culture Therefore learning processes need to be both formal and informal in order to diffuse knowledge
Of course diffusion is a relative construct in the sense that it should be measured on a lsquoneed to knowrsquo basis There is no point in diffusing knowledge to parts of the organisation where that knowledge is irrelevant Having noted that we would like to add that very often the need to know is greatly underestimated in organisations
325 Complexity of knowledge
The dimension of complexity of knowledge is seen as very important in relation to learningtransfer of knowledge [48] Complexity of knowledge is a function of
bull The tacitness of knowledge and thereby the way knowledge is being embedded and represented within the organisation Complex knowledge must be expected to have significant tacit elements [43]
bull The extent to which the knowledge can be demarcated from other areas of knowledge in the organisation Complex knowledge will typically be intertwined with other types of knowledge in the organisation and therefore be difficult to demarcate clearly [49]
bull The extent to which knowledge has social elements ie a large number of actors needed for the knowledge to exist [32] eg network knowledge Typically complex knowledge will be dependent on a number of actors and their ability to function together in a group or network
In other words the more complex the knowledge the more one or more of the three dimensions mentioned above will be present The more complex knowledge the more difficult will it be to model that knowledge and to acquire the same by formalised means
4 Understanding intrapreneurship better
Increasingly the need for innovation management is changing Innovation management these days is the domain of all modern organisations ndash not just start-ups Therefore it is crucial to consider the work of intrapreneurs in theory about innovation management Furthermore such modern intrapreneurs manipulate knowledge rather than physical artifacts Investigating state-of-the-art theory about knowledge we have concluded that complexity of knowledge is a construct that has large implications for the way we think about intrapreneurship and innovation In this Section we will link together complexity of knowledge and the work of the intrepreneur in a common framework In order to do that however we need to establish the context for the work of the intrapreneur We will do this by discussing the purpose of the intrapreneurrsquos work and its content
Understanding intrapreneurship by means of state-of-the-art 115
41 The purpose exploitation and exploration
Regarding the purpose of intrapreneurship we will assert that the intrapreneur is to fulfill the organisationrsquos need for renewal in light of its need for stability James March has formulated the idea that management is a balance between two forms of learning activities ndash exploration and exploitation ndash the finding of new resources and the use of existing ones [7] This is probably based on some of Marchrsquos early thinking on management since March from early on saw management as two fundamentally different activities that needed to be conducted quite differently (eg [50]) One has been labeled lsquothe technology of foolishnessrsquo [50] as a serious attempt to create a supplement to the analytical planning-oriented style of management that we know from operations management
The ideas of March have been inspiring for many others such as Dorothy Leonard-Barton [8] who has worked on experiments versus exploiting the knowledge assets and hence competencies of the company Leonard-Barton [8] too acknowledges that we are talking about two mentally different activities but does not discuss the managerial challenges of doing two fundamentally different mental activities Within the field of strategic management Hamel and Prahalad [51] have written a paper on lsquostrategy as stretch and leveragersquo in Harvard Business Review in almost similar terms while Michael Porter recently has written a thought-provoking article lsquoWhat is a strategyrsquo [6] in which he claims that strategy is about differentiation in the market place combined with operational effectiveness The latter to Porter is not even strategic in nature ndash but that is another point
42 The content learning leading to innovation
Regarding the content of intrapreneurship we will see this as learning Learning occurs under two conditions When there is a match or a mismatch between intentions and outcomes of intended actions in organisations If there is a mismatch the actions are corrected until there is a match between actions and intended outcomes [52] However several authors have discussed different levels of learning in organisations ie a radical change of behavior may not be the result of the same kind of learning as a minor adjustment of current behavior Argyris illustrates this with his model of single and double loop learning
Figure 2 Model of single- and double-loop learning
Source Adapted from [52]
116 A Drejer KS Christensen and JP Ulhoslashi
Single-loop learning can be compared to a thermostat A thermostat is programmed to detect if the surrounding temperature exceeds or is below the reference temperature and responds by simply turning the heat on or off If the thermostat asked itself why it was programmed as it was then it would be a double-loop learner since it was able to reconsider its own situation and thereby perhaps alter this situation In other words double-loop learning is mainly a matter of being able to question onersquos governing values ie self-assessment Single-loop learning is appropriate for routine and repetitive issues while double-loop learning seems more relevant for complex and non-programmable tasks [52]
Double-loop learning is not simple at all it often requires evaluation of your existing values and ways of doing things and how you influence your surroundings in both negative and positive ways Even if you are able to see and evaluate your own faults there is still a long way to go before an actual change occurs ndash if any occurs at all Double-loop learning means the unfreezing of paradigms prejudices and habits in order to be open-minded towards new and alternative ways of action [52] This furthermore involves a number of other psychological mechanisms that will not be discussed further within this context It is easy to relate to the problems dealing with double-loop learning Just think of the advice that you give other people but never use yourself Sometimes you even say to your self or to others lsquoYou shouldnrsquot be doing it the way I do but insteadrsquo You are often well aware of your own deficiencies but accept them as a solid implemented and non-changeable part of you If these lsquovaluesrsquo are changed it is often in connection with a major crisis or event that really shakes you out of balance
We will compare a personrsquos double-loop learning as a serious reconsideration of that personrsquos current situation often leading to radical changes with organisations and the way they learn when innovating In comparison with industrial organisations it is seen that double-loop learning and perhaps radical change often emerges as a result of a near fatal crisis ie major turn-around efforts crisis management and so on However if double-loop learning could be integrated into the formal and informal systems of organisations the organisations would have more time to reconsider their basic situation and prevailing values and from there develop serious alternative solutions Maybe organisations would even be able to develop entirely new ways of doing things ndash without the existence of a crisis
43 A framework for intrapreneurship in light of knowledge
The elements of a framework for intrapreneurship and innovation in light of a knowledge perspective are now in place The elements are
bull situations for innovation management ndash exploitation sustainable change and disruptive change
bull task of intrapreneurship ndash exploitation and exploration
bull complexity of knowledge bull tacitness bull demarcation bull social elements
bull type of learning involved
Combining these elements yields the following framework
Understanding intrapreneurship by means of state-of-the-art 117
The framework defines the task of intrapreneurship as a combination of the three situations for innovation management and the learning-related concepts of exploitation and exploration ndash the latter being closely related to single and double loop learning Furthermore the framework provides an attempt to describe the content of intrapreneurship in the six subtasks resulting from outlining the framework This is done by defining the complexity of the knowledge that the intrapreneur needs to manipulate in each instance and the corresponding type of learning involved In all this yields the framework proposed in Table 1
Table 1 Framework for intrapreneurship
Exploitation-task Exploration-task
Exploitation of the same technology
Priority 90 Purpose Reuse and add to
existing market and technology knowledge primarily internal
located
Complexity Low Explicit knowledge Clearly demarked
Few social elements
Learning Single loop learning
Priority 10 Purpose Experiment with
new technologies in order to test the basic assumptions of
the firm
Complexity High Tacit assumptions
Not demarked Totally social
Learning
Double loop learning
Sustainable technological change
Priority 50 Purpose Develop existing
knowledge on current markets or technologies
Complexity Medium
Explicit knowledge Often external and not demarked
Few social elements
Learning Single loop learning
Priority 50 Purpose Develop new
knowledge on new markets or technologies
Complexity Medium
Tacit knowledge Often outside of firm and
not demarked Few social elements (mostly
technology)
Learning Both forms of learning
Disruptive technological change
Priority 10 Purpose develop explicit knowledge organisational
procedures
Complexity High Tacit (should be explicit) Internal but not demarked
May social elements External located knowledge
Learning
Single loop learning
Priority 90 Purpose develop new and tacit knowledge on market
and technologies
Complexity High Tacit and new Not demarked
Many social elements
Learning Both forms of learning
118 A Drejer KS Christensen and JP Ulhoslashi
Obviously this framework is merely a first step The framework needs to be researched in greater detail both empirically and theoretically The boundaries of time and space prevent us from doing so in this paper but we look forward to contributing to the effort
References
1 Drucker PF (1958) The Practice of Management Harper and Row
2 Kumpe T and Bolwijn PT (1994) lsquoTowards the innovative firm ndash a challenge for RampD managementrsquo Reseach-Technology Management JanndashFeb Issue pp38ndash44
3 Tidd J Bessant J and Pavitt K (1997) Managing Innovation Wiley
4 Drejer A (2001) The Innovative Firm (In Danish) Boslashrsens Forlag
5 Rosenkopf L and Tushman ML (1994) lsquoThe co-evolution of technology and organisationrsquo in Joel et al (Eds) Evolutionary Dynamics of Organisations Oxford University Press pp403ndash424
6 Porter ME (1996) lsquoWhat is strategyrsquo Harvard Business Review Vol 17 NovemberndashDecember pp33ndash47
7 March J (1991) lsquoExploration and exploitation in organizational learningrsquo Organization Science Vol 2 No 1
8 Leonard-Barton D (1995) Wellsprings of Knowledge Harvard Business School Press
9 Drucker PF (1993) Post-capitalist Society Oxford Butterworth-Heinemann
10 Drucker PF (1994) lsquoThe theory of the businessrsquo Harvard Business Review SeptemberndashOctober
11 Drejer A (2002) Strategic Management and Core Competencies Quorum Books
12 Roberts EK (1981) Generating Effective Corporate Innovation The Free Press
13 Afuah A (1998) Innovation Management The Free Press
14 Lowe P (1995) The Management of Technology Prentice Hall
15 Gaynor GH (1991) Achieving the Competitive Edge Through Integrated Technology Management McGraw-Hill
16 Miles RE and Snow CC (1978) Organizational Strategy Structure and Process McGraw-Hill
17 Stacy R (1993) Strategic Management and Organizational Dynamics Prentice Hall
18 Galbraith J (1979) Organization Design The Free Press
19 Mintzberg H (1983) Structure In Five ndash Designing Effective Organizations Prentice-Hall
20 Drucker PF (1985) Innovation and Entrepreneurship Harper amp Row
21 Tushman L and Rosenkopf L (1986) lsquoOrganizational determinants of technological changersquo in Staw B and Cummings L (Eds) Research in Organizational Behaviour Vol 14 pp311ndash347
22 Tushman ML and Anderson P (1990) lsquoTechnological discontinuities and organisational environmentsrsquo Administrative Science Quarterly Vol 35 pp1ndash8
23 Voss CA (1988) lsquoImplementation a key issue in manufacturing technology the need for a field of studyrsquo Research Policy
24 Iansiti M (1998) Technology Integration ndash Making Critical Choices in a Dynamic World Harvard Business School Press
25 Cooper (1995) New Product Development The Free Press
26 Bhalla SK (1987) The Effective Management of Technology Batelle Press
27 Drejer A and Riis JO (2000) Competence-based Strategy (In Danish) Boslashrsens Forlag
Understanding intrapreneurship by means of state-of-the-art 119
28 Christensen JC (1998) Innovatorrsquos Dillema Harvard Business School Press
29 Abernathy WJ and Clark KB (1985) lsquoInnovation ndash mapping the winds of creative destructionrsquo Research Policy Vol 14 pp3ndash22
30 Eisenhardt H and Martin JE (2000) lsquoDynamic capabilities what are theyrsquo Strategic Management Journal Vol 21 pp1105ndash1121
31 Edvinsson L and Malone T (1997) Intellectual Capital HarperCollins
32 Latour B (1999) Pandorarsquos Hope Essays on the Reality of Science Studies Cambridge MA Harvard University Press
33 Catasuacutes B (2001) Borders of Management Five Studies of Accounting Organizing and the Environment Doctoral dissertation School of Business Stockholm University
34 Baxter J and Chua FW (1999) lsquoKnowledge management now and the futurersquo Australian Accounting Review Vol 9 No 3 pp3ndash14
35 Lei D Hitt MA and Bettis R (1996) lsquoDynamic core competences through meta-learning and strategic contextrsquo Journal of Management Vol 22 No 4 pp549ndash569
36 Spender JC (1996b) lsquoOrganizational knowledge learning and memoryrsquo Journal of Organizational Change Management No 9 pp63ndash79
37 Stewart TA (1991) lsquoBrainpower how intellectual capital is becoming Americarsquos most valuable assetrsquo Fortune June 3rd pp44ndash60
38 Stewart TA (1994) lsquoYour companyrsquos most valuable asset intellectual capitalrsquo Fortune October 3rd pp68ndash74
39 Nonaka I and Takeuchi H (1995) The Knowledge-creating Company Oxford Oxford University Press
40 Nonaka I (1991) lsquoThe Knowledge-Creating Companyrsquo Harvard Business Review NovemberndashDecember pp96ndash104
41 Christensen KS and Bukh PN (2003) lsquoVidenledelse ndash to perspektiver (trans knowledge management ndash two perspectives)rsquo in Bukh PN Christensen KS and Mouritsen J (Eds) Videnledelse ndash Et praksisfelt under Etablering (trans knowledge Management ndash Establishing a Field of practice) Koslashbenhavn DJOslashF pp65ndash85
42 Von Krogh G Roos J and Kleine D (1998) Knowing in Firms Understanding Managing and Measuring Knowledge London Sage
43 Winter S (1987) lsquoKnowledge and competence as strategic assetsrsquo in Teece DJ (Ed) The Competitive Challenge Ballinger pp159ndash184
44 Spender JC (1996) lsquoMaking knowledge the basis of a dynamic theory of the firmrsquo Strategic Management Journal Vol 17 Winter Issue pp45ndash62
45 Nevis EC DiBella AJ and Gould JM (1995) lsquoUnderstanding organizations as learning systemsrsquo Sloan Management Review Winter Issue pp73ndash85
46 Bukh PN Christensen KS and Mouritsen J (2003) Videnledelse ndash Et praksisfelt under Etablering (trans Knowledge Management ndash Establishing a Field of practice) Koslashbenhavn DJOslashF
47 Dreyfus H and Dreyfus S (1986) Mind over Machine The Power of Human Intuition and Expertise in the Era of the Computer Free Press
48 Duncan Rand Weiss A lsquoOrganisational learning implications for organisation designrsquo in Barry M Staw (Ed) Research in Organisational Behaviour JAI Press
49 Kolb D (1984) Experimental Learning Prentice Hall
50 March J (1994) Management in a Complex World Samfundsvidenskaberne
51 Von Krogh G and J Roos (1996) Managing Knowledge Perspectives on Cooperation and Competition London Sage
52 Argyris C and Schon DA (1998) Organisational Learning II Addison-Wesley
159
CHAPTER 9
Knowledge Management in Perspective(s) An Analysis of Project Management in Two
Companies
Christensen Karina Skovvang Per Nikolaj Bukh amp Heine Kaasgaard Bang 2007
Knowledge Management in Perspective(s) An Analysis of Project Management in
Danish Companies
160
161
August 2007
Knowledge Management in Perspectives An Analysis of Project Management in Two Companies
Assistant professor Karina Skovvang Christensen University of Aarhus Professor Per Nikolaj Bukh Aalborg University
Partner Heine Kaasgaard Bang Conmoto
Abstract
This article analyses project management activities in two companies from a knowledge management perspective It is shown how human competences it-systems and project management systems are integrated and how these knowledge resources reflect strategies for knowledge management The Knowledge Management activities are analysed from two perspectives an artefact oriented and a process oriented perspective From the first perspective project management seems to consist of similar components in the two firms whereas the process oriented perspective identify context dependent differences It is concluded how awareness of different perspectives opens up for more managerial options and better understanding in practice
Keywords Knowledge Management Strategy Project Management Case study Knowledge Management Practice Corresponding author Assistant professor Karina Skovvang Christensen University of Aarhus School of Economics and Management Building 1322 DK-8000 Aarhus C email kschristenseneconaudk The authors are grateful to Allan Krogh Erlandsen BampO and Hanne Buje Jensen FKI Logistex Crisplant for access to the companies and for comments to a previous version of the article
162
1 Introduction
Many different researchers have introduced the concept of knowledge in academic
discussions within varying fields Mouritsen et al (2001) focuses for instance on the
management of intellectual capital whereas Prahalad amp Hamel (1990) describe the
companyrsquos strategic work based on core competencies In other parts of the
management literature both Leonard (1995) and Nonaka (1994) are concerned with
knowledge in relation to innovation whereas Huber (1991) and Lyles amp Schwenk
(1992) focus on organising of information so that it can be collected stored and reused
in other connections A common characteristic of these theories is that knowledge is an
important factor which is structured in ways that ensure the applicability of knowledge
in accordance with the strategies of the company
In relation to projects and project organisations the attention to knowledge management
as well as the role that social processes practises and patterns have in effectively
managing project knowledge is relatively new as Bresnen et al (2003) have pointed out
Knowledge is however a vital resource in project based industries and well working
knowledge management is in project organisations for instance essential for improving
the utilisation of core capabilities and technological platforms and reduce development
time in project (Oshri et al 2005)
The purpose of this paper is to pay attention to how different perspectives on a subject ndash
in this case project management and knowledge management ndash can broaden ones view
and
This article is based on a study of knowledge management in two Danish project based
organisations The article presents knowledge management as a perspective of
management where knowledge and knowledge resources are brought into focus The
empirical part of the article is based on an analysis of knowledge management
initiatives in relation to project management in the development division of the Danish
company Bang amp Olufsen and in the Danish company FKI Logistex Crisplant It is in
the article demonstrated how different perspectives on knowledge and knowledge
management expressed through two different epistemologies the artefact-oriented and
163
the process-oriented epistemology implies different understandings of the nature and
the role of knowledge management
The remainder of the article is structured in the following way Section 2 discusses
briefly the meaning of knowledge management and the two perspectives are introduced
In the following section 3 a short introduction to the method applied as well as a short
description of the two companies are given In section 4 the companiesrsquo different
initiatives in relation to knowledge management will be presented and it is illustrated
how knowledge management may be an integrated part of project management In
section 5 knowledge management is analyzed from the two different perspectives and
finally section 6 discussed how the perspectives may help to show a more balanced
picture of knowledge management by focusing on different parts of knowledge
management
2 Knowledge management in practice
In recent years there has in the management literature been an overwhelming interest in
the concept of knowledge and knowledge based resources This is not only reflected in
the importance of knowledge-intensive companies but also in an interest in how
knowledge based resources interact in the creation of value in companies and how
knowledge can be managed
When managers discuss knowledge different perspectives are often taken The
difference consists in the way in which knowledge is perceived In other words the
basic epistemological perspectives differ In this article a distinction is made between
two different perspectives which will be outlined in more details below
21 The two perspective on knowledge management
The first perspective on knowledge and knowledge management will be termed the
artefact oriented perspective Focus is often on information technology and the ways in
which technology may be applied for the codification of knowledge It is more or less
explicitly assumed that everything can be described and the more data a company
164
collects the more knowledge it possesses Knowledge management is therefore mostly
based on collecting storing and distributing knowledge in the form of eg documents
and specific information (eg Huber 1991 Lyles amp Schwenk 1992) From the artefact-
oriented perspective knowledge management focus for instance on project memory (cf
Kaumlrreman et al 2004) and manuals for organisational processes (Malone et al 1993)
Many authors (eg Blackler 1995 Tsoukas 1996) have indicated that the artefact
oriented perspective has become insufficient when handling management challenges in
relation to the complexity of the knowledge society and has hence criticised the
restricted view of knowledge expressed by the artefact oriented perspective emphasising
instead that knowledge is situated in social and organisational practises as well as
relationships (Tsoukas amp Vladimirou 2001) The problem is not lack of documents
data or access to information The limitation can rather be found in the quality content
and organisation of the material This has given rise to the second perspective which
we term the process oriented perspective
The process oriented perspective is most clearly exemplified by Ikujiro Nonakarsquos
research where knowledge is perceived as a ldquodynamic human process of justifying
personal beliefs as a part of an aspiration for the lsquotruthrsquordquo (Nonaka 1994 p 15 Nonaka
amp Takeuchi 1995) An essential point is that focus is on the process in which knowledge
is created and not on the documents or the rules which are based on the process This
implies that continuous and dynamic adaptation to lsquoreal lifersquo takes place
From the process-oriented epistemology knowledge creation and sharing is considered
as a continuous process where knowledge is transformed between tacit and explicit
knowledge and between people and technology The point of departure is here the so-
called SECI-model (Nonaka amp Takeuchi 1995) which consists of four types of
processes which Nonaka amp Takeuchi (1995) identify as central in relation to
knowledge management Socialization Externalization Combination and
Internalization According to Nonaka amp Takeuchi (1995 pp 70-71) the development of
organizational knowledge are a continuous and dynamic interaction between tacit and
explicit knowledge
165
22 Knowledge Management and the perception of Knowledge
Knowledge is a complex term as it is often not easy to agree on an exact definition The
view of knowledge that pervades much research especially from the artefact oriented
perspective ndash but not limited to that ndash is positivist ie the Platonic view that knowledge
is lsquojustified true beliefrsquo However the more recent knowledge management researchers
eg Nonaka amp Takeuchi (1995) von Krogh amp Roos (1995) Mourisen et al (2001) and
others have initiated a move away from seeing the subject at standing in a static
cognitive relationship of certainty to propositions stating facts about the empirical world
(se also Jackson amp Klobas 2007)
Following this recent tradition we adopt an approach where knowledge neither as an
object to be managed nor as a research object is strictly defined on beforehand Rather
we as the basic idea of simultaneously working with different perspectives on
knowledge as presented above let the nature of knowledge be based on the individuals
set of beliefs or mental models used to interpret actions and events in the world This
opens up for different perceptions of knowledge and knowledge management in an
organisation much like Roos amp von Kroghrsquos (1995 p 1) reflect in their statement that
ldquo[w]hat you see depends on who you arerdquo which implies that knowledge should be
regarded as a subjective term Following this notion it is quite possible that knowledge
can be expressed in many different ways since not only knowledge but also knowledge
about knowledge depends on the context This implies that it is essential to clarify the
background for the various perceptions of knowledge knowledge management concepts
etc
The understanding of the term knowledge or at least what it means to the individual or
the organisation is important because it affects how knowledge enters the managerial
processes According to von Krogh amp Roos (1996) this implies that successful
knowledge management requires that you relate to lsquothe nature of knowledgersquo (von
Krogh amp Roos 1996 p 224) Therefore knowledge management also becomes a
question of epistemological understanding
More effective knowledge management may also result from adapting management
tools that fit the prevailing perception of knowledge This observation is in accordance
with Marr et al (2003) who suggest that knowledge management practises will be
166
perceived as more effective if they match the personal epistemology In relation to an
in-depth study of knowledge management in a project case study in an Australian
industrial engineering organisation Sense (2007 p 17-18) document similarly that the
project members favour knowledge sharing techniques that align with their cognitive
style type and further that they acknowledge the personal bias towards specific modes
of sharing knowledge
23 Strategies for knowledge management
Hansen et al (1999) have associated the understanding of knowledge management that
we have termed the artefact oriented perspective with a so-called codification strategy
which govern companies intend to collect existing knowledge and make it accessible to
the rest of the organization This form of strategy should be seen as an alternative or
more precisely a supplement to the personification strategy which focuses on the
aspects that are difficult to express in a way based on codification Thus the
personification strategy in more in line with the process oriented perspective on
knowledge management outlined above
While the codification strategy is a cornerstone in the bureaucratic organisation the
personification strategy has seen its strength in the knowledge intensive organisations
that rely on the competence of the individuals The two strategies seem according to
Hansen et al (1999) to dominate practice in general which among other things may be
due to the fact that they supplement each other instead of being mutually exclusive
Hansen et al (1999) point out that often one of the strategies normally will have a more
prevailing position in the organizationrsquos consciousness However knowledge
management is multi-faceted and our understanding of current practise has already been
set by our epistemology This illustrates that the more an organisation focuses on
knowledge the more important it becomes to understand the epistemological
implications
167
3 The Two Companies and the methodology
This article is anchored in a case study of how knowledge management takes place in
practice in two organisations The distinct strength of case studies is the ability to deal
with a variety of evidence documents questionnaires interviews and observations in a
flexible manner In particular when exploring the two companiesrsquo practises that are not
on beforehand perceived as knowledge management initiatives in the companies a case
study approach seems appropriate A case study approach offers in this context an
opportunity for observing and describing a complicated research phenomenon in a way
that allows analytical generalisations (Eisenhardt 1989 Tsoukas 1989) of the
observations
The empirical data includes 5 semi-structured interviews in each of the two companies
where the respondents were asked to tell about the companyrsquos history how knowledge
management affects their daily work how knowledge is created and shared as well as
how they work with different tools (eg project models and IT-systems) The interviews
took approx 1frac12 hour on average and they were taped and transcribed for later use The
interviews at BampO were carried through in the period 28-29 August 2003 whereas the
interviews at Crisplant were collected almost two years earlier ie in the period 29
October to 12 December 2001 Moreover data in the form of documents reports and
observations were collected General attitudes are expressed by the company name
whereas the respondentrsquos function is emphasized where it is of importance in
connection with a statement
Bang amp Olufsen (BampO) is known for its distinguished design and quality products
within audio and video which are the companyrsquos core business areas Development of
new products is a decisive competitive parameter to BampO and is ascribed much
attention Development costs thus represent more than 9 per cent of the companyrsquos
turnover This article only addresses knowledge management in the product
development division of BampO
FKI Logistex Crisplant AS (Crisplant) develops produces and installs solutions within
the so-called automatic high-speed transport and sorting systems (ATS) area which
forms a substantial part of operations at airports postal centres libraries mail order
168
businesses distribution centres etc all over the world These systems are developed and
implemented in a close cooperation not only with the customer but with a number of
other companies which supply other parts of the installation of which the sorting system
must be an integrated part
4 Knowledge Management in the two companies
The two organisations were chosen because they represent two different types of project
based organisations both focussing on product development BampO has organised
product development in a department separated from production with products being
manufactured at assembly plants and sold to customers all over the world Crisplant
develops customer specific solutions in projects more like a construction company with
development and installation at the customer site being separate phases of the same
project
Product development as it is undertaken in both companies is often generically
described a knowledge intensive activity (Meyer amp Utterback 1993) where managers
engineers and technicians apply the knowledge they have developed through formal
training and over time form experience while at the same time enhancing their skills and
capabilities through the project Such knowledge-intensive companies are dependent on
their employee based knowledge resources However neither BampO nor Crisplant have a
separate strategy for knowledge management Instead the analysis stresses the
importance of knowledge management being an integrated part of the companiesrsquo
processes and management activities trying to create an organizational culture which
encourages development sharing and anchoring of knowledge to support the main
strategic goal they each have
41 Knowledge management in Bang amp Olufsen
Knowledge management in BampO focus on interactions where employees meet across
departments and enter into a dialogue where creative ideas are being conceived new
knowledge generated and existing knowledge disseminated in the organization BampO is
169
dependent on tacit knowledge or unique competencies such as employees that have ldquoa
pair of good earsrdquo as it was expressed by a project manager which are able to hear
precisely when a loudspeaker or an amplifier sounds correct Such knowledge is very
difficult to transfer as explicit knowledge Instead BampO is committed to the fact that
knowledge transfer takes place through close cooperation where competences are
disseminated in the organization
The development processes are built around key personsrsquo unique knowledge resources
in a way that makes it difficult for competitors to imitate BampOrsquos products To
disseminate the specialist knowledge it is in the interviews stressed that it is important
that it is communicated to the organization that these lsquoknowledge keepersrsquo are available
It must be known who possess specific types of knowledge so that instead of being a
hidden resource the individual key persons become an available resource to be relied on
all over the organization A manager at BampO explains
hellip we have a culture in the development division where everybody walks around and talks to everybody about the problems they encounter hellip when an employee is designing something the person knows that he needs to go and talk to a specific colleague because the colleague knows something special about this And then he does so and they have a chat about it So we sense that in most cases there is free and open access to all the knowledge available via you could say personal contact
In this situation the sharing of knowledge is enabled by the autonomy that employees
are granted by management similarly to what Oshri et al (2005 p 16) found in a case
study of knowledge transfer in a multiple-project environment Further key employeesrsquo
expert knowledge is made available to the organisation by holding a large number of
internal courses at BampO where the employees teach each other
However explicit knowledge is also decisive to BampO because aside from the tacit
knowledge which is being applied in the development processes explicit and codifiable
knowledge is also applied to a great extent in all development projects It may both be
knowledge which is unique to BampO and at the same time it may be knowledge which
in principle is available on the world market To capture knowledge BampO uses the
TOP-model an adopted version of Cooperrsquos (2001) stage gate model in all
170
development projects In practice it means that when the first phases of a development
project (physical proximity and face-to-face contact) is completed only a few people
the quality people are responsible for making sure that knowledge is shared both in the
individual project and across projects
In addition to this BampO has strict documentation requirements during the development
projects due to the companyrsquos ISO-certification the internal strategies for knowledge
sharing and to make it possible to reuse earlier developed elements in future products
similar to what Tsai (2001) demonstrated in a study where transferring knowledge from
one base project to other projects enhances organisational innovation and performance
BampO thus appear to be very conscious about the importance of documentation and it is
attempted to extend the documentation activities further so that the company may reuse
more knowledge and thus reuse more solutions by building up modular products
42 Knowledge Management in Crisplant
All project activities in Crisplant are from development over production to
implementation project-organized and are run according to Crisplantrsquos project
management tool Crisplant Project Management Model (CPMM) which is an adopted
version of a state gate model (cf Cooper 2001) Due to the nature of the customer
specific solutions the context is somewhat similar to the construction industry where
eg Bresnan et al (2003) emphasise that organisations face substantial obstacles to be
overcome in ldquocapturing knowledge and in re-cycling of project based learning that
steam form the relatively self-contained idiosyncratic and finite nature of project tasksrdquo
(ibid p 158)
Crisplant develops solutions with a high degree of customization the individual projects
are very different and the composition of project teams takes place more on the basis of
employeesrsquo competencies than on the basis of specific technical components which
must be included in the project Thus knowledge management has to focus specifically
on employees and as a consequence the development sharing and anchoring of the
accumulated knowledge is an integrated part of the companyrsquos way of working
171
Crisplant says ldquoIt is natural for us to live by having knowledge and trying to give our
customers value through a continuous development and creative use of our knowledgerdquo
Thereby knowledge management becomes an integrated part of the management
activities influencing the organizational culture and supporting the overall main
strategic goals A manager at Crisplant furthermore says ldquoKnowledge management is
about presenting favourable conditions for the creative process of the individual in
cooperation with others and hence set the knowledge resources of the company at playrdquo
But Crisplant also uses a range of IT-tools for supporting the creation and transfer of
knowledge Like many other companies Crisplant has an extensive intranet which may
potentially play a role in codifying explicit knowledge and in lsquostoring and distributingrsquo
knowledge But the intranet is mainly used for the distribution of news creating a
possibility for the employees to be updated with the companyrsquos activities and as such it
does not constitute an essential part of Crisplantrsquos knowledge management
Standardized and codified knowledge is however of importance in relation to
documenting the experience from the separate development phases By codifying and
collecting knowledge in progress reports drawn up by the project leaders each month
Crisplant is however of the opinion that it is the employeesrsquo tacit knowledge which is
essential for the companyrsquos progress and growth Accordingly the Managing Director
explains that the work with eg the companyrsquos intranet is more expressing a wish for a
general IT-competence development among the staff to be able to respond to future
technological requirements from co-operators than it is due to a direct knowledge
management strategy
Crisplant is convinced that the informal knowledge sharing taking place daily as ldquoface-
to-facerdquo contact is by far of greatest strategic importance Crisplantrsquos management thus
attempts to make the frames for knowledge sharing and knowledge creation available by
focusing on teamwork in the project organization and by integrating a dialogue-based
company culture that cultivates trust norms and shared values where projects take the
character of communities of practice (Brown amp Duguid 1991 2001)
The manager responsible for organisational development explains that the day-to-day
knowledge sharing and knowledge creation to a wide extent is expressed through the
work with CPMM as well as a continuous focus on creativity in all processes To
172
improve creativity Crisplant works intensely with a model named internally as the
lsquoCreative Working Modelrsquo (CWM) This model facilitates the process at all levels from
structuring a project over the way a certain meeting is structured to how the individual
employees structure their working day
The CWM consists of five phases A seeing phase which focus on dialogue about
expectations with regard to the final goal and thus which objectives must be obtained to
reach the overall goals for the task or project Following this comes the idea phase
where it is established how the objectives and goal should be obtained The third phase
is the planning phase which is carried through in interaction with Crisplantrsquos Project
Management Model When the planning is done the project participants begin carrying
out the things as the fourth phase and subsequently the project group goes into a seeing
again phase where the course of events is evaluated and the project team learns from its
experiences
43 Knowledge Management as Project Management
BampOrsquos product development division as well as Crisplant are organized as project
organizations Competent efficient and reliable projects implementation is decisive for
business success in BampO as well as Crisplant For several years both companies have
applied a project management model inspired by Cooperrsquos so-called lsquostage gate modelrsquo
(Cooper 2001) The adoption of the model is denoted the Crisplant Project Management
Model and the TOP-model at BampO
At Crisplant the purpose of working with the Stage-Gate model is to establish ldquoa
common set of rules for project control management and execution internally as well as
in cooperation with customers suppliers and other partnersrdquo (Crisplant 1999 p 4) In
the product development division at BampO the Stage-Gate model has a more direct role
as knowledge management tool as it is continuously adjusted according to the
experiences from different product development projects At BampO the Stage-Gate
model thus functions as a dynamic model where knowledge is accumulated and later
disseminated through the application in the individual projects
173
Each phase of the Stage-Gate models ends with a lsquogatersquo In this connection the project
managers of both companies prepare a gate report on the status of the project both with
regard to progress and budget At the same time often major replacement among
employees takes place in between the individual phases and therefore a gate also
represents a critical point in relation to knowledge management as knowledge needs to
be transferred from one team to another
With respect to knowledge creation Crisplant focuses on how knowledge is collected
stored and passed on in each phase of the project through extensive documentation
requirements BampO works with similarly high documentation requirements in its
projects At the same time at BampO the awareness of the value of face-to-face
knowledge transfer along the way are very present the method manager in BampO
expresses it in the following way
hellip it is not such an lsquoover the wallrsquo-transfer taking place at each individual gate It is not the documentation that ensures knowledge transfer in the projects hellip it is only because people talk together and that we agree on how things should look that it works hellip it is not due to our documentation
Furthermore Crisplant emphasizes the metaphorical importance of a gate symbolizing a
door which closes at the completion of a phase while a new one opens to the next phase
and the future However like BampO Crisplant is aware of that not all types of
knowledge can be passed on in written-down documentation
Both companies apply pre-determined checklists which the project manager goes
through and on that basis he prepares a phase report after each individual phase of the
Stage-Gate model These phase reports are saved and used eg when the project
management tool is being updated At the end of a project a project evaluation meeting
is held at both Crisplant and BampO where the projectrsquos experiences good as well as bad
are collected in a final report
174
5 Knowledge Management in Perspective(s)
In the following two subsections project management of the two companies are
analyzed according to the two epistemological perspectives on knowledge management
the artefact oriented and the process oriented Hereby it is illustrated how the
presentation and the perception of knowledge management depend on the
epistemological starting point
51 Artefact-Oriented Epistemology
As a part of BampOrsquos codification strategy artefacts in the form of process
documentation product specifications development documentation etc are pointed out
as an essential element of the knowledge management activities At Crisplant such
documents also form an important part of the knowledge collecting process which the
then Managing Director expressed in this way
hellipAs we work out a concept proposal and a solution to our customer we document the thoughts and ideas we have concerning the solution to a specific project Thus the knowledge stays in the company so to say ndash because it has been taken down in writing
From this perspective knowledge is in both companies about writing and documenting
in order that the company may be capable of leaning on previous project descriptions
etc when new quotations are given and on the whole when working on the projects
Thus the project management systems function as a repository for routine solutions
where explicit knowledge can be reused (cf Markus 2001 p59)
If knowledge management is illustrated based on an artefact-oriented epistemology the
essential elements of the knowledge of both companies would be all the documents and
reports written down concerning the companyrsquos procedures and processes the project
management models and quality control systems in both companies IT-tools used in the
company such as intranet budget control systems databases administrative systems
etc support the collection storage and distribution of the formalized knowledge which
is the focal point of the artefact-oriented epistemology
175
Within the artefact-oriented epistemology knowledge management is thus focused on
the types of knowledge which may be explicated formalized and ultimately codified
Project management in the two companies appear to consist of more or less the same
components From a pure artefact oriented perspective knowledge management is
ensured by having these suitable systems The artefact oriented knowledge management
is about consistent documentation of development activities via Stage-Gate-models
quality management and data collection at both BampO and Crisplant In the artefact
oriented perspective there is much less focus on the context in which the knowledge
was created as the underlying assumption is that the knowledge can be re-used even
though the context in which it was created is less explicit
52 Process Oriented Epistemology
Knowledge management seen through a process-oriented epistemology (with emphasis
on the SECI model) is apparent in both BampO and Crisplant It may be illustrated by the
fact that the companies besides anchoring knowledge through process reports Stage-
Gate models and quality control systems are focusing on the personal relations
Crisplant uses the CWM to support the transfer of knowledge between project phases in
the stage gate model and BampO works with mentor arrangements and works hard on
creating a dialogue-based culture By sharing knowledge across the organizations the
companies attempt to internalize knowledge into more persons
At Crisplant the process-oriented epistemology is predominant in the work with the
CWM which structures the processes and becomes instrumental for creating sharing
and internalizing knowledge At both BampO and Crisplant the socialization phase is also
stressed by attaching importance to project teams meeting physically because this is the
way to share opinions values and knowledge and to obtain a common framework of
understanding
The externalization phase should be understood as the process where the employees
express their ideas Here Nonaka et al (2000) stresses that the use of images
metaphors analogies etc may help the employees to express a point without really
being able to explain it This is what happens in the idea phase of the CWM at
176
Crisplant When all thoughts and ideas have been aired and placed on the boards it is
important that they are combined and reduced in order to make a realistic plan for the
development of the project Therefore the ideas from Crisplantrsquos idea phase and BampOrsquos
development department are both incorporated in the companiesrsquo Stage-Gate models
which structure the development of the projects This is the equivalent of what takes
place in Nonakarsquos combination phase in the SECI-model
The internalization phase is the last phase of the SECI-model where the objective is to
embody common guidelines goals and objectives corresponding to Crisplantrsquos
executing phase in their CWM and the phases in the companiesrsquo Stage-Gate models
where the products are actually developed and installed at the customers site At this
stage experiences are gained from the project in hand and as far as possible these
experiences will also be incorporated in the stage gate model in order to be available for
later project
As knowledge sharing in Crisplant builds mainly on the Creative Working Model the
personification strategy is predominant in Crisplantrsquos knowledge management activities
Although documentation was emphasised by the managing director because knowledge
stays in the organisation when it is written down (see above) this from a process
oriented perspective does not mean that it is the capacity to document and codify that is
the essential feature Rather the project management systems in combination with the
CWM facility interaction
BampOrsquos knowledge management strategy is not as clear as it involves more elements
from both the codification strategy and the personification strategy In the same way as
Crisplant BampO acknowledges the importance of face-to-face communication but in
BampO it is more a question of making the structures and frameworks available to the
organisation thus leaving it to the initiatives of the employees to communicate when
needed Thus the experiences from BampO is in line with Keegan amp Turner (2001) who
in an study of learning across project found that the informal networks within
companies are the most important conduit for transferring knowledge between projects
(cf Sense 2007)
Damodaran amp Olphert (2000) as well as Edwards et al (2005) have argued that in
general a push-strategy ie when information and knowledge are lsquopushedrsquo through to
177
the potential users is less effective than a pull-strategy which is based on creating a
basic organizational culture and context which encourage organizational learning ndash and
where the employees have access to knowledge when needed From this point of view
Crisplant uses a form of push-strategy while similarly BampO uses a pull-strategy to
implement knowledge sharing through physical meetings However it is another form
for push than in Damodaran amp Olphertsrsquo terms when a process oriented epistemology is
adopted as it is the organizational structures and frames that are lsquopushedrsquo to the
employees
The ideal context of knowledge creation and sharing depends on the type of knowledge
For instance both BampO and Crisplant find it important that a project team meets
physically in the initial phases where the objective is to express thoughts and ideas
concerning the project At BampO the product development begins in Idea Land where a
group of designers are seated closely together Later in the construction phases physical
proximity is not imperative to the same degree
Following the process oriented epistemology both tacit and explicit knowledge and not
least the interplay between the two knowledge types are in focus From a process
oriented perspective it is the first two phases of the SECI model (Socialization and
Externalization) which differs the most between the two companies whereas the last
two phases (Combination and Internationalization) are more similar in the two
companies In the Combination phase knowledge management is primarily centred on
working with the Stage-Gate models and in the Internalization phase the specific
development work is conducted Contrary to BampO Crisplant still give priority to
physical proximity in the last phase as Crisplant focuses on a common internalization
phase for the group in preference to the individual
6 Concluding Remarks
Authors like Roos and von Krogh (1995 p1) have argued that the way we understand
knowledge depends on the existing knowledge and the basic assumptions we bring
along This means that whether we are researchers observing knowledge management in
action or practitioners involved in the management of knowledge our understanding of
178
knowledge and knowledge management will be in subjective term This understanding
or at least what knowledge management means to the individual the group or
organization is important because it as argued be von Krogh and Roos (1996) implies
that successful knowledge management requires that you relate to lsquothe nature of
knowledgersquo (von Krogh amp Roos 1996 p 234)
Therefore knowledge management becomes a question of epistemological
understanding By giving a multi-faceted view of knowledge management based on the
two different epistemologies this article illustrates how different epistemological points
of departure are essential to the way we lsquoseersquo and thereby think and act Generally it is
a way of illustrating how we are all more or less limited by our own existing
knowledge We are subconsciously controlled by our framework of reference and
understanding but the more conscious we become of this and the more we acknowledge
it the more we will be able to overcome these limitations and thus achieve a more
nuanced view of existing management activities
The analysis illustrated how the content of knowledge management differs depending
on the underlying epistemology It makes demands on the manager as conscious
reflection in relation to initiatives as the possibility that another departure implies
another decision becomes part of the decision process However in practice an
understanding of different perspectives will give a company a more nuanced picture of
the organization knowledge and management thereby expanding the optics which is
used for identification of potentials or any problems in relation to the management of
knowledge
In the analysis of the knowledge management activities in Crisplant the process oriented
epistemology was clearest The sharing of knowledge is encouraged by initiatives
where the employees physically are seated in relation to the projects to enable lsquoroomrsquo
for communication In addition to this other knowledge management initiatives become
visible eg in relation to collection of data and experiences from the projects when the
departure is the artefact oriented epistemology All this support the personification
strategy (cf Hansen et al 1999) where tacit and human interaction plays a crucial role
Knowledge management in BampOrsquos is also most obvious if departing in the process
oriented epistemology but the concrete initiatives are mainly based on methods which
179
are best understood from the artefact oriented epistemology For instance this is
expressed by the higher priority continuous documenting and updating of the models
are given in BampO compared to Crisplant In practice both tacit and explicit knowledge
are of more or less equal significance in BampO which mean that the company tries to
combine the personification and codification strategy
BampO finds the tacit knowledge which exists in the organization of great strategic
importance and therefore they try to distribute it in the organization through eg
mentoring close relations across departments and dialogue-based culture At the same
time codifiable knowledge is paid considerable attention at BampO which is best
expressed through the work on currently updating the dynamic stage-gate model
It can not generally be stated when a given strategy should be used as it is very
company specific When a companyrsquos competitive advantage are mainly to be found in
reuse of existing solutions which for example are put together in a new way or the
possibility for lsquomass productionrsquo of a new product The more standardized solutions a
company offers the more it points in the direction of the codification strategy and
thereby a knowledge management strategy departuring in the artefact oriented
epistemology or the process oriented epistemology supported by the artefact oriented
Otherwise when a company provides more customized solutions it points in the
direction of the process oriented epistemology and primarily knowledge management
initiatives based on this epistemology and thereby the personification strategy An
important thing is to notice that the epistemologies are supportive and not exclusive
If significant importance is attached to epistemological assumptions heavier demands
are to a certain extent placed on the manager It is no longer sufficient lsquoonlyrsquo to act and
make decisions because conscious reflection in relation to own acts and the opportunity
to take another point of departure involving another decision becomes part of the
decision process The reflective manager must be familiar with different epistemologies
as mentioned by Venzin et al (1998 p 36) as it provides a much larger managing
scope and ensures a better understanding of the limitations to the various sets of
actions More effective knowledge management may result from adapting management
tools that fit the prevailing perception of knowledge The more the organization focuses
180
on knowledge the more important it becomes to understand the epistemological
implications
7 References
Blackler F (1995) Knowledge knowledge work and organizations An overview and
interpretation Organisation Studies 16(6) 1021-1041
Bresnen M Edelman L Newell S Scarbrough H and Swan J (2003) Social practices
and the management of knowledge in project environments International Journal of
Project Management 21(3) 157-166
Brown JS and Duguid P (1991) Organizational learning and communities-of-practice
Towards a unified view of working learning and innovation Organization Science
2(1) 40-55
Brown JS and Duguid P (2001) Knowledge and organisation a social practice
perspective Organization Science 12 198-213
Cooper RG (2001) Winning at new products Perseus Cambridge MA
Crisplant (1999) Crisplant Project Management Model (In Danish Faseplan for
projektgennemfoslashrelse paring Crisplant)
Damodaran L and Olphert W (2000) Barriers and facilitators to the use of knowledge
management systems Behaviour and Information Technology 19(6) 405-413
Edwards JS Shaw D and Collier PM (2005) Knowledge management systems finding
a way with technology Journal of Knowledge Management 9(1) 113-125
Eisenhardt K (1989) Building theories from case study research Academy of
Management Review 14(4) 532-550
Hansen MT Nohria N and Tierney T (1999) Whatrsquos your strategy for managing
knowledge Harvard Business Review 77(2) 106-116
Huber G (1991) Organizational learning the contributing process and the literature
Organization Science 2(1) 88-116
181
Jackon P and Klobas J (2007) Building knowledge in projects A practical application
of social constructivism to information systems development International Journal of
Project Management (fortcoming)
Keegan A and Turner JR (2001) Quantity versus quality in project based learning
practises Management Learning 32(1) 77-98
Kaumlrreman D Alvesson M and M Blom (2004) Knowledge Management and
raquoOrganisational Memorylaquo ndash Remembrance and Recollection In a Management
Consultancy Company In Knowledge management establishing a field of practice
(Bukh PN Christensen KS and Mouritsen J eds) pp 124-148 Palgrave Macmillan
Houndsmill
Leonard D (1995) Wellsprings of Knowledge Building amp Sustaining the Sources of
Innovation Harvard Business School Press Boston MA
Lyles M and Schwenk C (1992) Top management strategy and organizational
knowledge structures Journal of Management Studies 29(2) 155-74
Malone TW Crowston K Lee J and Pentland B (1993) Tools for inventing
organizations toward a handbook of organizational processes In Proceedings of the
2nd IEEE Workshop on Enabling Technologies Infrastructure for Collaborative
Enterprises Morgantown WV
Markus L M 2001 Towards a theory of knowledge reuse Types of knowledge reuse
and factors n reuse success Journal of Management Information Systems Vol 18
No 1 pp 57-93
Marr B Gupta O Pike S and Ross G (2003) Intellectual capital and Knowledge
management effectiveness Management Decision 41(8) 711-781
Meyer MH and Utterback JM (1993) The product family and the dynamic of core
capabilities Sloan Management Review 34(3) 29-38
Mouritsen J Larsen HT and Bukh PN (2001) Intellectual Capital and the Capable
Firm Narrating Visualising and Numbering for Managing Knowledge Accounting
Organisations and Society 26(7) 735-762
Nonaka I (1994) A Dynamic Theory of Organizational Knowledge Creation
Organization Science 5(1) 14-37
182
Nonaka I and Takeuchi H (1995) The Knowledge-creating Company Oxford University
Press Oxford
Nonaka I Toyama R and Konno N (2000) SECI Ba and Leadership a Unified Model
of Dynamic Knowledge Creation Long Range Planning 33 5-34
Oshri I Pan SL and Newell S (2005) Trade-offs between knowledge exploitation and
exploration activities Knowledge Management Research amp Practice 3 10-23
Prahalad CK and Hamel G (1990) The Core Competence of the Corporation Harvard
Business Review 68(3) 79-88
Roos J and von Krogh G (1995) What you see depends on who you are Think about
epistemology IMD Perspectives for Managers 7 1-4
Sense AJ (2007) Stimulating situated learning within projects personalizing the flow of
knowledge Knowledge Management Research amp Practice 5 13-21
Tsai W (2001) Knowledge transfer in intraorganizational networks Effects of network
position and absorptive capacity on business unit innovation and performance
Academy of Management Journal 44(5) 996-1004
Tsoukas H (1989) The validity of idiographic research explanations Academy of
Management Review 14(4) 551-61
Tsoukas H (1996) The firm as a distributed knowledge system A constructionist
approach Strategic Management Journal 17 11-25
Tsoukas H and Vladimirou E (2001) What is organizational knowledge Journal of
Management Studies 38 973-993
Venzin M von Krogh G and Roos J (1998) Future research into knowledge
management In Knowing in Firms Understanding managing and measuring
knowledge (von Krogh G Roos J and Klein D eds) Sage London
Von Krogh G and Roos J (1995) Organizational Epistemology Macmillan London
Von Krogh G and Roos J (1996) Managing Knowledge Perspectives on Cooperation
and Competition Sage London
183
PART IV
184
185
CHAPTER 10
Findings and Perspectives
It has been argued in both the media and various reports that intrapreneurship might
be the key to making established organisations more innovative The emphasis on
intrapreneurs and particularly intrapreneurship is a challenge because on the one
hand intrapreneurship is a liberating force that allows individuals to master their
ideas and on the other it is part of a lsquoproduction functionrsquo in corporate life where
individuals are subordinated to the requirements of organisational interests The
practice of intrapreneurship is therefore somewhat paradoxical because in a sense it
requires individuals to subordinate themselves to organisational concerns that they
will have to master reflexively
As this dissertation has shown the concept and tools of intrapreneurship can be used
under a variety of circumstances in the area of management Intrapreneurship can be
applied to the organisation with a focus on corporate ventures internal resources and
internationalisation (Chapter 4) In relation to mergers or acquisitions the conversion
of entrepreneurship to intrapreneurship can be of central concern (Chapter 6)
Intrapreneurship can also be approached from a managerial perspective relating to
how various intrapreneurial mechanisms can be screwed up and down (Chapter 7)
These enablers have been shown to be differ between traditional industrial companies
and knowledge-intensive companies so understanding intrapreneurship from a
knowledge (management) perspective is crucial since it is the knowledge resource
that has been lsquomanipulatedrsquo in modern companies not physical products (Chapter 8)
186
If we look at the activities covered by intrapreneurship in more detail (eg as outlined
in Chapter 4) we can see that intrapreneurship not only provides a set of new
management tools and techniques but also the application of well-known
management techniques in new combinations often facilitated by the use of
innovation management and knowledge-management tools (as illustrated in Chapter
8 and 9)
The focus of this dissertation has been on the entrepreneurial aspects of the
organisation as well as activities processes and projects within organisations rather
than on the individual entrepreneur starting a new firm In this respect the
dissertation has followed Gartnerrsquos (1988 1989) suggestion of a change in focus
from the intrapreneur as a person to intrapreneurship as a process When
intrapreneurship is seen as a process it does not require the implementation or
exploitation of one particular technology or technical instrument Rather it
encourages more elements to work in concert But if intrapreneurship is a process
located within and between people processes and technologies how does
management know that lsquosomethingrsquo is worth exploring and how can it intervene to
enable and support intrapreneurship
However while may be of vital concern to many companies this dissertation has not
tried to answer the question of how management knows when lsquosomethingrsquo is worth
exploring The strategic entrepreneurship literature has touched on this by integrating
company initiatives that research shows to be relevant to the creation of wealth Thus
according to Hitt et al (2002 p 13) ldquostrategic entrepreneurship facilitates firmsrsquo
efforts to identify the best opportunities (matched to their resources and with the
highest potential returns) and to exploit them with the discipline of a strategic
business planrdquo This is definitely an area for further research
187
101 ELEMENTS OF THIS DISSERTATION
The chapters of this dissertation contribute to the mosaic of intrapreneurship as a
developing field The study has explored intrapreneurship from an internal resources
perspective (see Chapter 4) From this point of view the aim of intrapreneurship is to
identify previously undiscovered resources in the organisation or combine existing
resources in new ways that make them valuable innovations and thereby create new
organisational wealth (see for example Ireland et al 2001 Alvarez amp Barney
2002)
The aim of this section is to discuss the results of the five articles in relation to the
research question and their contribution to the intrapreneurial debate The overall
research question is the exploration and exploitation of internal resources with
respect to intrapreneurship while the overall aim of the dissertation is to study the
intrapreneurial potential in its natural settings
The five articles in this dissertation are related in the sense that they study
intrapreneurship intrapreneurial enablers and intrapreneurial management Figure
101 illustrates how the five articles are related to the intrapreneurial framework
developed in the first article (chapter 4)
188
Figure 101 Relation of the articles to intrapreneurship
In the first article intrapreneurship was placed within the wider scope of corporate
entrepreneurship Based on this intrapreneurship has been defined and a framework
for discussing intrapreneurship has been developed The second part of the
dissertation which took a starting point in the internal resource perspective
attempted to identify the mechanisms behind intrapreneurial opportunities in a
company based on its existing resources
The study of intrapreneurship in terms of innovation and enabling factors has been
based on case studies The second article discussed the change from entrepreneurship
to intrapreneurship and how this has influenced innovativeness and related issues in
a specific company The third article examined various factors which can enable
Corporate Entrepreneurship
Intrapreneurship ExopreneurshipEntrepreneurship
CorporateVenture
InternalResources
Internationa-lization
Enablers
1
2
3
Innovation
4
5
Knowledgeresources
189
intrapreneurship across the different organisational perspectives Article four and five
focused on one specific resource the knowledge resource and how it can be
managed with respect to intrapreneurship
102 MAIN POINTS AND CONTRIBUTIONS
This section will discuss the findings and contributions of the dissertation The aim of
the dissertation has been to contribute to the field of intrapreneurship and provide
managers in knowledge-intensive companies with managerial tools to influence the
level of intrapreneurship
The first contribution was the framework for discussing corporate entrepreneurship
presented in article 1 This shows how organisations utilizing corporate
entrepreneurship have to choose between different organisational opportunities
Based on the framework in article 1 the second contribution is that a clear distinction
between corporate entrepreneurship and intrapreneurship has been made These
concepts have been used interchangeably in the literature and still are Although the
basic ideas underlying the two concepts are similar both focusing on innovativeness
in established companies intrapreneurship takes place within the boundaries of the
firm whereas corporate entrepreneurship also takes place across organisational
boundaries This demonstrates the importance of the boundaries of the firm
The third contribution of the dissertation is that it demonstrates how an acquisition
strategy as a way for mature organisations to gain access to innovativeness and new
knowledge resources can easily fail Article 2 shows that the success of an acquisition
not only depends on retaining key employees Even though the competencies of the
acquired organisation are formally intact efforts are also needed to make the energies
of the two organisations act together and create a new intrapreneurial part of the
company Unless managers actively take part in facilitating an intrapreneurial spirit
190
then the acquired entrepreneurial part of the organisation will slowly stifle The
fourth contribution as demonstrated in articles 2 and 3 is that access to end
customers is an important driving force both in relation to innovativeness and to
preserving the entrepreneurial spirit
The fifth contribution in article 3 is an increase in the number of factors ndash from five
to eight ndash that need to be taken into account when enabling intrapreneurship The five
factors most often mentioned in the literature ndash rewards top management support
resources organisational structure and tolerance of risk ndash are not always sufficient to
encourage intrapreneurship in a knowledge-intensive company Employees in
traditional industrial companies and knowledge-intensive companies are likely to be
motivated in different ways This means that the enabling factors are different and
what may be an enabling factor in a traditional industrial company may only be
perceived as a basic or sustaining factor in a knowledge-intensive company
Thus article 3 has argued that communication ie the creation of a common
language culture in a broad sense and processes that support innovativeness should
be added to the original five factors enabling intrapreneurship With respect to
enabling factors a sixth contribution of the dissertation is a distinction between basic
and influencing factors since not all factors directly encourage intrapreneurship
although some are necessary in order to create an intrapreneurial climate
The seventh contribution is the framework for intrapreneurship presented in article 4
The framework defines the task of intrapreneurship as a combination of three
situations involving innovation management ndash exploitation sustainable change and
disruptive change ndash and the learning-related concepts of exploitation and exploration
Six sub-tasks the solution to which are based on the complexity of knowledge and
learning are derived from the framework
191
The eighth contribution of the dissertation appears in article 5 where an analysis of
knowledge management in two companies from the point of view of
intrapreneurship shows different aspects of how activities are practiced It is shown
how the different epistemological starting points of departure are essential to the way
we lsquoseersquo and thereby also how we think and act By applying these perspectives it is
emphasized how intrapreneurship can be enabled from a knowledge-management
perspective The ninth contribution of the dissertation is the indication that a
company should also take epistemological aspects into consideration when designing
organisational structures aimed at enabling intrapreneurship If the aim is to facilitate
intrapreneurship and an intrapreneurial spirit the company should base its activities
on process-oriented initiatives while these should be supplemented by artefact-
oriented initiatives if the aim is to streamline production and explore existing
resources
103 SYNTHESISING THE CONTRIBUTIONS
The dissertation presents two frameworks An overall framework for exploring and
discussing intrapreneurship (article 1) and a framework for exploring
intrapreneurship and innovation in light of knowledge and learning (article 4) Based
on the classification in the overall framework it was decided that the rest of the
dissertation would take a starting point in the internal resource perspective This
section attempts to provide a synthesis of the articles and their contributions to the
literature as described in the previous section This synthesis takes a starting point
especially in the framework developed in article 4
As the case studies showed the classification outlined in the framework was not only
theoretical but was also applicable in practice For instance Danfoss Drives had
actively used the organisational structure to enable intrapreneurship in the form of
corporate ventures internationalisation and formal networks (article 3) Other case
192
companies eg Bang amp Olufsen and Ericsson Telebit also had a similar
organisational structure albeit not as explicit Article 3 also found that the internal
organisation in Danfoss Drives had been organised to encourage innovation and the
creation and dissemination of knowledge which is characteristic of the internal
resource perspective as described in article 1 and which was the focus of article 4
and 5
The classification is applicable in both traditional industrial companies and
knowledge-intensive companies although this dissertation has focused on the latter
As described in chapter 4 the main difference between intrapreneurs in the two types
of companies is that in knowledge organisations they manipulate knowledge rather
than physical products and technologies
These two types of employees are different in nature which means that their
motivation might stem from different factors Managers in knowledge-intensive
companies therefore need other mechanisms to fine-tune the level of intrapreneurship
compared with managers in traditional companies Article 3 examined various
enabling factors with a potential to influence the level of intrapreneurship and found
that although not all factors directly encourage intrapreneurship some are necessary
in order to create an intrapreneurial climate The five enablers ndash rewards top-
management support resources organisational structures and risk ndash which seem to
be significant in traditional industrial companies (Hornsby et al 1993 Kuratko et
al 1990) are found insufficient to fine-tune the level of intrapreneurship in
knowledge-intensive companies
Metaphorically speaking the basic factors can be seen as a thermostat (see article 4)
which is programmed to detect whether the surrounding temperature is above or
below the reference temperature and which responds by simply turning the heat up
or down This means for example that if wages are below minimumaverage wages
193
they can be regulated accordingly Or if insufficient resources are assigned to a
project more resources can be allocated The basic factors can thus be related to
single-loop learning (Argyris and Schoumln 1996) inasmuch as this is mainly a question
of detecting a mismatch and regulating the factors involved until the intrapreneurial
activities are back on track
The intrapreneurial factors found in article 3 are more complex since they require an
active effort and to some extent challenge existing values with regard to innovation
Following the thermostat metaphor and the requirements for entering into a double-
loop learning mode as was also discussed in article 4 the three intrapreneurial
factors take on a new significance For example communication can be seen as an
intrapreneurial factor which encourages the questioning of existing values
Communication can lead to innovation-stimulating discussions and the sharing of
ideas and knowledge resources and can potentially result in a challenge to the
existing values of the organisation which may otherwise be an obstacle to
innovation
Following Argyris and Schoumln (1996) it was further argued in article 4 that single-
loop learning is appropriate for routine and repetitive issues while double-loop
learning seems more relevant for complex and non-programmable tasks This
supports the findings from article 3 that there is a need for other enabling factors in
knowledge-intensive companies than those in industrial companies It also indicates
that basic enablers are easier for managers to use because they can influence them
directly Conversely intrapreneurial enablers can only be influenced indirectly
An insight into these intrapreneurship-enabling factors might be of help to the
managers of an acquiring company eg the acquisition example examined in article
2 While it is often argued that top management should be actively involved in
acquisition processes the factors identified in article 3 show more specifically what it
194
takes to avoid stifling the entrepreneurial spirit in the acquired company One of the
employees from the case company Ericsson Telebit expressed this clearly with
respect to the acquisition of innovativeness ldquoIt is an illusion to believe that you can
take a small creative and innovative company and integrate it into a larger one ndash it is
uphill most of the timerdquo (article 2) It was also shown in article 2 that managers can
be the biggest obstacle to intrapreneurs since a single wrong decision can kill a
project before it gets started Furthermore the interviews reported in article 2 also
indicated that managers can be the worst enemy of ongoing projects too
New ideas and innovative activities will at some point normally acquire the nature
of a project Thus the management of projects and the sharing of knowledge through
the various phases of a project is just as crucial to intrapreneurship as it is to project
management Projects thus often serve as a ldquoframerdquo for innovative activities which
makes project management an important issue in intrapreneurship Article 5 showed
how knowledge management can be a significant managerial tool in project
management It also showed how the use of additional perspectives can enable
knowledge management to advance mutual understanding in the organisation and
make it easier to create and share knowledge Article 5 thus also shows how
intrapreneurship is best enabled in the specific situation
However in the light of the framework in article 4 it also depends on the complexity
of knowledge that intrapreneurs need to manipulate Again this is supported by the
findings in article 3 which showed that enabling factors in industrial companies are
insufficient to encourage intrapreneurship in a knowledge-intensive company
Finally returning to the research questions outlined in section 232 as explained
above article 1 addressed the first research question by clarifying the difference
between corporate entrepreneurship and intrapreneurship and by defining
intrapreneurship as entrepreneurship within the boundaries of the firm The
195
classification offers three organisational perspectives through which intrapreneurship
can be explored starting up a corporate venture using existing internal resources
and internationalisation This theoretical classification is supported by the
organisational structure in Danfoss Drives which is outlined in Chapter 7
The second research question is concerned with how intrapreneurship is influenced
by various factors and crucially if and how it can be influenced by management and
the rest of the organisation Question 2a was discussed in article 2 which showed that
acquiring innovativeness requires the active effort of management both to maintain
innovativeness and to overcome organisational inertia which are often characteristic
of mature organisations The active use of both extrinsic and intrinsic factors is
needed if an entrepreneurial spirit is to be converted into an intrapreneurial spirit
Research question 2b which was addressed in article 3 deals with factors that are
likely to influence intrapreneurship It was suggested that factors known to be
influential in traditional industrial companies ie rewards management support
resources organisational structure and risk are perceived as basic factors only in
knowledge-intensive companies whereas communication culture and processes are
perceived as intrapreneurial factors In general therefore in knowledge-intensive
companies extrinsic factors can be said to be basic factors while intrinsic factors are
more intrapreneurial Article 2 and 3 have offered two different views of how internal
resources can be influence by different extrinsic and intrinsic factors
The third research question is concerned with the relation between intrapreneurship
and the knowledge resources (article 4) Question 3a looked at how intrapreneurship
can be understood in light of knowledge management and article 4 developed a
framework for understanding the relation between intrapreneurship and knowledge
and the knowledge issues that should be taken into account ndash level of articulation and
the depth location and diffusion of knowledge ndash which together define the
complexity of knowledge Question 3b deals with the way in which the knowledge
196
resource can be managed with respect to intrapreneurship Article 5 demonstrated
how intrapreneurship can be enabled by taking a starting point in the process-oriented
knowledge-management perspective Together article 4 and 5 have showed that the
knowledge resource is of importance for intrapreneurship in knowledge-intensive
companies and that it should be addressed and managed based on its complexity
104 LIMITATIONS OF THE STUDY
The overall aim of the five articles has been to provide some answers to both the
overall research question ie exploration and exploitation of internal resources with
respect to intrapreneurship and how this has been influenced by the specific
organisation management managerial initiatives and employees of the organisation
the sub- questions in the three parts of the dissertation and the main question in each
article However due to the methodological choices made and the specific focus of
each article a number of limitations have to be taken into account if the synthesis
presented in the previous section is to be regarded as an overall conclusion
The obvious question is whether it is at all possible to say anything in general about
organisations management managerial initiatives and employees based on
literature reviews and a few case studies The immediate answer is probably not
However intrapreneurship is still a relatively young and unexplored field and the
purpose of this dissertation is just as much to identify areas that need further research
Of course the literature review only includes literature published before the article
was published in 2004 The body of knowledge is rapidly increasing with many new
studies being carried out and more articles and books being published This material
has not been taken into consideration when developing the framework in article 1
Furthermore the case-based articles are of course limited in the sense that they only
consider some of the relevant actors Only a few employees and managers have been
197
interviewed the interviews have not been carried out at multiple sites within the
organisation and the studies are snapshots in time Nor have customers or other
stakeholders been interviewed Doing so might have altered the conclusions in ways
that would not have been possible to control for in these articles and would have
necessitated another research setup
Specifically article 2 is subject to the limitation that it only focuses on employees
who have stayed with the acquired company Given the importance of the integration
phase new insights could be gained from following an acquisition more closely
regarding the attitudes both of those who stay and those who leave as well as of
employees at the acquiring company
Similarly article 3 only investigates one division of Danfoss The significance of the
factors that enable intrapreneurship could therefore gain from extending the study ndash
both to the whole company and to more companies both within the same industry
and in other industries In addition an expansion of the study in article 5 would
definitely increase generalisability
Besides these specific limitations of the articles a more general limitation is that it
was realised early in the research process that there were limited possibilities for
studying cross-sectional longitudinal phenomena since the companies included in
the KNORI project were so different and because changes within the companies also
meant changes in the research opportunities In retrospect more interviews over a
longer period might have given a more balanced view since it would have given
more room for longitudinal aspects of the research themes However it can only be
speculated what such interviews might have added In principle more comprehensive
data could have strengthened the conclusions by improving reliability On the other
hand more factors could be changing over time thus weakening the conclusions
198
With respect to possible generalisations the results would still be based on the same
number of observations represented by the companies in the KNORI project Thus I
have tried to make the most of the available possibilities given the context of the
project and my own absence due to two stays abroad and two maternal leaves I have
therefore framed the research issues in the specific articles without any attempt at
overall generalisation
105 REFERENCES
Alvarez SA amp JB Barney 2002 Resource-Based Theory and the Entrepreneurial
Firm In MA Hitt RD Ireland SM Camp and DL Sexton (eds) Strategic
Entrepreneurship Creating a New Mindset Oxford Blackwell Publishings pp 89-
105
Argyris C amp DA Schoumln 1996 Organisational Learning II Theory Method and
Practice Addison-Wesley Publishing Company
Gartner WB (1988) Who is an entrepreneur Is the wrong question American
Journal of Small Business Vol 12 pp 11-32
Gartner WB (1989) Some suggestions for research on entrepreneurial traits and
characteristics Entrepreneurship Theory amp Practice Vol 14 No 1 pp 27-38
Hitt MA RD Ireland SM Camp amp DL Sexton 2002 Strategic
Entrepreneurship Integrating Entrepreneurial and Strategic Management
Perspectives In MA Hitt RD Ireland SM Camp and DL Sexton (eds)
Strategic Entrepreneurship Creating a New Mindset Oxford Blackwell
Publishings pp 1-16
199
Hornsby JS DW Naffziger DF Kuratko amp RV Montagno 1993 An interactive
model of the corporate entrepreneurship process Entrepreneurship Theory amp
Practice Vol 17 No 2 pp 29-37
Ireland DR MA Hitt CM Camp amp DL Sexton 2001 Integrating
entrepreneurship and strategic management thinking to create firm wealth Academy
of Management Executive Vol 15 No 1 pp 49-63
Kuratko DF RV Montagno amp JS Hornsby 1990 Developing an intrapreneurial
assessment instrument for an effective corporate entrepreneurial environment
Strategic Management Journal Vol 11 No 1 pp 49-58
200
201
APPENDIX I
Case companies
In this appendix the case companies are described as they appeared at the time of
data collection ie in 2003 Since then some of the companies have gone through
major changes including reorganisations and different ownership and key employees
have left etc The companies would therefore look somewhat different today and
from a practical point of view access to them would also be different now In view of
this it was decided that a 2007-description of the companies would not be relevant to
this study
Below each of the companies is given a brief historic and financial description
followed by a short presentation of the different business models used One of the
main selection criteria for the study was to include a number of heterogeneous
companies Thus the first company is a subsidiary of a major electronics firm which
specialises in specific development projects while the second is a division of a large
industrial corporation The third company develops produces and sells electronic
goods while the fourth is a producer of large-scale sorting solutions for airports
postal services and industry The fifth is a network intermediator which specialises in
wireless solutions for the Internet Before going on to describe companies
individually a framework characterising five cases will be briefly presented
The cases for the study were selected on the basis of figure 31 (page 40) according
to which the companies obtain and improve knowledge internally and where renewal
was predicted to occur as described in the figure Another way used to categorise the
202
companies was Greinerrsquos (1972) life cycle model which was chosen for its wide
application especially in studies of company structures and strategies in a non-static
world A simplification of the model is shown in figure A1
Size of organi-zation
Large
Small
Age of organization
PHASE 1 PHASE 2 PHASE 3 PHASE 4 PHASE 5
Evolution stages
Revolution stages
1 Crisis of LEADERSHIP
5 Crisis of
2 Crisis of AUTONOMY
3 Crisis of CONTROL
4 Crisis of RED TAPE
1 Growth through CREATIVITY
2 Growth through DIRECTION
3 Growth through DELEGATION
4 Growth through COORDINATION
5 Growth through COLLABORATION
Young Mature
Figure A1 The five phases of growth (Greiner 1972 p 41)
Greinerrsquos life cycle characteristics were used as an overall framework to help
understand the different organisational challenges facing the companies in the study
This follows the hypothesis that age and history have a number of implications for
the innovation process The big difference in age and history ndash the youngest firm
having existed for only three years and the oldest for 88 years ndash was thus an
important factor in the study of innovation activities in the five companies
Since a company can be characterised by the products it makes theories about product
life cycles formed another important part of understanding a companyrsquos innovative
activities Tushman amp Nadler (1996) argue that the product life cycle has implications
for the type of innovation activities that dominates in certain periods This is illustrated
in figure A2
203
Emergence
Dominant Design
Growth
Mature
Major product Minor process
Major process Minor product
Minor product Minor process
Major product Minor process
Low High
Dominant Innovation Types
High HighLearning Requirement
ProductProcess Substitution
Figure A2 Types of innovation over product life cycle
(Tushman amp Nadler 1996 p 139)
Based on the position of their products in the life cycle therefore an analysis of the
companiesrsquo innovative activities was able to conclude whether they focused on product
or process innovation (Abernathy amp Utterback 1978) Grant (2002) argues that the
type of innovation can also be seen as an indicator of the rate of innovation as
illustrated in figure A3
Based on figure A3 product innovation is characterised by the highest rate of
innovation and process innovation the lowest Grant (2002 p 373) introduces a third
type of innovation strategic innovation which involves new combinations of markets
and products According to Grant this type of innovation can be seen as a medium
rate of innovation Figure A3 illustrates the importance of evolution over time where
strategic innovations form an important part of future innovations because of market
saturation and the lack of possible product innovations
204
Figure A3 Innovation over the life cycle from technological to strategic innovation
(Grant 2002 p 373)
A1 ERICSSON TELEBIT
Telebit was established in 1992 and employed 13 people In 1999 the firm merged
with the Swedish corporation LM Ericsson (Ericsson) when it acquired its current
name Ericsson Telebit (TED is the internal abbreviation for Ericsson Telebit) In the
process the number of employees grew from approximately 70 to 140 within twelve
months In 2003 TED was a local design centre mainly concentrating on software
development for Ericssonrsquos mobile and fixed Internet products
In 1995 TED became the first company to introduce a commercial router for Internet
Protocol version 6 (IPv6) and was a leading provider of software based on IPv6
technology working continuously to improve the application and development of this
IP-platform After joining Ericsson the company became a separate design centre for
long-term projects for different product units in the Ericsson organisation whereas
Rat
e o
f in
no
vati
on
Time
Productinnovation
Processinnovation
Strategicinnovation
205
previously it had developed customer products directly Since the company only had
one overall customer Ericsson the various product units became known as sponsors
The longer duration of projects and the move down the value chain had a number of
implications for organisational structure and put a strain on the companyrsquos
entrepreneurial culture Work was structured around two major projects instead of a
large number of smaller projects of short duration One project called SoftWare for
Internet Protocol for Ericsson (SWIPE) focused on software development for
routers while the other focused on IP solutions for mobile terminals and was named
Terminal Internet Protocol (TIP) Ericsson Telebit is represented by the middle arrow
in figure 31 which shows that an organisation based on a number of large projects
often acquires new knowledge through these projects even though the end product is
produced in another (production) process
The age and size of the organisation together with the focus on building an
appropriate structure for the running of the two large projects led to the conclusion
that Ericsson Telebit had reached the Coordination phase Since its owner was its
only customer Ericsson Telebit was forced to run an efficient and cost-minimising
organisation as well as nurturing creativity and opportunity The crisis which
followed the need to control costs in a creative environment had led to a new
structure where employees were more closely connected with specific projects
replacing the more organic structure there before the company joined Ericsson
Since all products were to be used in the mobile terminals and Internet of tomorrow
the rate of innovation was as high as it could be in the twenty-first century This is
illustrated by the fact that all the applications developed by Ericsson Telebit up to
now had not yet reached the market
206
A2 DANFOSS DRIVES
Danfoss Drives is the largest division of the Motion Control segment of Danfoss
Group one of Denmarkrsquos largest industrial corporations The Motion Controls
segment was established ultimo 2000 and apart from Danfoss Drives it also
includes two other divisions Gearmotors and Marine Systems In 2001 the turnover
of the Motion Control Segment was almost DKK 3 billion with customers all over
the world
Activities at Danfoss Drives can be dated back to 1968 with the introduction of the
first mass-produced frequency converter Heating Ventilation and Air-Condition
applications (HVAC) were introduced in 1990 and after the acquisition of Bauer a
gear motor manufacturer in 1999 the Motion Controls Segment was marketed as a
one-stop shop for the industry Apart from its headquarters in Graasten Denmark
Danfoss Drives had three production sites established via acquisitions in America
and the founding of a company in Germany In 2003 the company served a wide
range of customers across different industries eg chemicals and consumer goods
metals and mining pulp and paper refrigeration and the automotive industry
With its emphasis on the continuous introduction of new and improved products
Danfoss Drives has attached a lot of importance to technological innovation The
development of new products for the Drives division was the responsibility of a
Product Development manager has responsibility for The development process was
organised in a matrix structure with technology centres serving the different projects
which again were organised in a ldquocore teamrdquo and a number of ldquosub-teamsrdquo In
managing the development process the Product Development manager was assisted
by the Strategic Product Development Unit The Danfoss Group had a number of
cross-unit project groups which were set up to co-ordinate and assist in different areas
such as sales amp marketing production and ITfinance As with Ericsson Telebit
207
Danfoss Drives is represented by the middle arrow in figure 31 Although the general
organisational structure of Danfoss Drives was very different from Ericsson Telebit
the two companies were similar with regard to the organisation of the development
projects where projects were the main source of innovation and adoption of new
knowledge
With nearly 40 yearsrsquo experience of developing high-tech products for a broad range
of industries Danfoss Drives remains committed to continuous innovation Given its
size and number of markets and it was argued based on its actions and
organisational structure they had reached the collaboration stage The company had
formed a matrix structure to enable it to combine technological inventions with
market demands and the use of headquarter staff also followed the characteristics of
the collaboration stage inasmuch as they worked in interdisciplinary teams which
consult with rather than manage field units
It is difficult to precisely describe Danfoss Driversquos rate of innovation since they
focus on both product and strategic innovations And this was made even more
complicated by the fact that the companyrsquos products also provided process
innovations to its customers However based on the companyrsquos historical product
development the first mass-produced frequency converter developed in 1968 and the
HVAC technology developed in 1990 represent the main radical innovations All
subsequent innovations were incremental Danfoss Drivesrsquo future rate of innovation
was thus characterised as medium-high implying that they would continue to be at
the cutting edge of their technological platforms
A3 BANG amp OLUFSEN
Bang amp Olufsen (BampO) the best-known Danish company in the niche market for
electronic consumer goods was established in 1925 as a producer of radios By 2003
208
it had become a globally recognised niche producer of audio television and telephone
products at the high end of the market with a turnover in the financial year
20012002 of DKK 42 billion and after-tax profits of DKK 147 million The
company employs 2800 people and its main activities are located in Struer
Product development costs of DKK 333 million reflect the fact that innovation
through new product launches are an important part of the companyrsquos strategy as a
high-end producer BampO has divided its activities in two main groups branded and
non-branded businesses The branded businesses include activities in the audiovisual
and telephone markets while the non-branded businesses covered a number of
diversified activities
Branded businesses are by far the largest part of BampO accounting for more than 90
percent of turnover BampO Telecom is operated as a separate division and sells its
products through both BampO shops and telecom companies As a leading producer of
high-end audio products BampO is forced to continuously introduce new products
which in 2003 led to the presentation of ldquoa major acoustic productrdquo The telecom
division was established in 1986 in collaboration with the former Jysk Telefon Its
main product in 2003 was wireless telephones which account for more than 75
percent of turnover
BampO Medical AS is the largest of the non-branded businesses with an annual
turnover of DKK 250-300 million and 290 employees Products are developed in
collaboration with leading companies in the medical industry including Novo
Nordisk Another example was the partnership with 3M which led to the
development of the worldrsquos first digital stethoscope
BampO ICEpower AS was established by BampO and the inventor of a new technology
for digital amplifiers While initially experiencing significant growth in turnover
recent major investments in technology and product development had led to a loss of
209
more than 50 percent of turnover BampO has high hopes for the future potential of the
technology since it can be implemented in a large number of products
Under the name New Businesses 35 employees were involved in testing the potential
of developing and launching new products in new or existing markets Up to now the
company had identified opportunities in the market for car audio systems including
the further development of loudspeakers to be sold through existing distribution
channels
Apart from the divisions set up to develop and sell products BampO had also
established BampO Operations a division focusing on process-optimising the
production of products developed in the other divisions As part of this optimisation
BampO Operations had decided to outsource part of the production of telephones
BampOrsquos innovative activities were concentrated in a separate department with around
300 employees Apart from the joint activities with the medical industry in BampO
Medical all product innovation was carried out in this department BampO is thus an
example of a company that tries to benefit from ideas and knowledge generated in the
RampD department This was represented by the right-hand side of figure 31
As a more than 75-year-old company employing 2800 people in a complex
organisational structure BampO had reached the red-tape crisis because of the need to
move from the Coordination phase to the Collaboration stage To address this the
company began a process of reconfiguring those business activities where there was a
need for a more spontaneous way of working The lsquonewrsquo structure of the RampD
department can be seen in this perspective In 2003 BampO started on a restructuring
of the organisation from being ldquoproduct-project-orientedrdquo to combining all activities
in one central RampD department Prior to this BampO had RampD departments in all
product lines (except medical)
210
Even though innovation activities in the branded businesses were focused on product
development the rate of innovation was low because it involved a minor degree of
traditional product innovation This conclusion was based on the fact that from a
generic point of view all the products were late in their life cycle and the innovations
were mostly focused on design attributes and the addition of some new
functionalities BampO Medical and the New businessesrsquo focus on strategic innovation
was based on identifying new markets for launching products made using BampOrsquos
core competencies which is the main reason for the conclusion that BampOrsquos
innovation activities mainly involved a low rate of innovation
A4 CRISPLANT
Crisplant founded in 1951 by a Danish entrepreneur had had a number of different
owners since the beginning of the 1970rsquos In 2003 after a short period as an
independent company on the Danish stock exchange Crisplant AS became part of
the British engineering company FKI Group which had more than 17000 employees
and a total turnover of euro 2790 million Organisationally Crisplant AS was part of
FKI Logistex a division specialising in automated material flow solutions and
employed more than 900 employees with an annual turnover of approximately euro 160
million
As a project-oriented company Crisplant AS made customised sorting systems for
airport baggage-handling parcel carriers retailers mail-order companies internet
trading and manufacturersrsquo distribution In 2003 Crisplant had built more than 600
sorting systems around the world and was continuously looking for new markets
Software development was crucial to Crisplantrsquos product innovation and in 2001 it
therefore acquired Dator one of its main suppliers of operating systems at the same
time changing its name to Dator-Crisplant One of the reasons for acquiring Dator
was that the companyrsquos financial problems made its future uncertain Since this could
211
have interrupted Crisplantsrsquo supply of operating systems it seemed strategically
sound to secure the existence of one of its main suppliers by buying it In 2003 all
software development was carried out in Dator-Crisplant and this resulted in a
number of competitive advantages since Crisplant could now offer its customers a
more integrated software solution One example of this was the fully automated mini
post office Parcel Matetrade which enabled easy access to postal services either as a
single product or as an integrated solution
Project management was a cornerstone of Crisplantrsquos business model and the
company had therefore developed its own project management model based on the
identification of eight phases each characterised by a set of specific targets Before
moving to the next phase a ldquogaterdquo needed to be crossed which included a number of
evaluations and the preparation of plans and budgets for the next phase The use of a
common project model ensured that agreements time schedules and budgets were
kept and also made it easier to accumulate experience and knowledge for future
projects The model is illustrated in figure A4
Figure A4 Crisplantrsquos project management model
Although Crisplant was mainly structured around its three main business units the
company also had an RampD department which carried out basic research in relation to
Automatic High-Speed Transport and Sorting Systems which formed a substantial
part of operations In Crisplant therefore innovative activities were basically
represented by the lsquoright arrowrsquo in figure 31 similar to BampO ndash at least as regards the
more radical innovations The customer-oriented projects which had the character of
212
production processes also needed to be innovative although the innovations which
took place here were more incremental in nature All in all therefore major parts of
the companyrsquos knowledge generation took place in the projects as reflected by the
middle part of figure 31
A5 END2END
End2End was founded in 1999 by a group of executives from mobile network
operators with venture capital from Deutsche Bank Capital Venture Partners
Hewlett-Packard and Cisco Systems After the latest round of financing in August
2002 the total amount of invested capital including debt and equity was euro 654
million The company which was situated in both Denmark and the United Kingdom
had about 40 employees with the Headquarters and Network Operating Centre
(NOP) in Aalborg and the so-called Data Centre in Copenhagen
All management of the data centre was controlled electronically from Aalborg and
the company had no official address in Copenhagen As the first international Point-
of-Presence (POP) the company had a sales office in Bracknell UK and depending
on demand planned to open POPs in a number of locations around the world (See
figure A5)
213
Figure A5 Diagram of End2Endrsquos operations
The company was a managed service provider and contentapplication aggregator for
mobile data services and was a leader in its field in Europe End2End offered its
customers lower up-front investments and increased data speed enabling mobile
operators to take up opportunities as they arose End2End provided these benefits to
customers in the form of turnkey services via its infrastructure in Denmark and the
UK The actual software solutions were delivered in a partnership with third-party
software developers the solutions being based on open standards that complement
mobile operatorsrsquo existing offerings and capabilities End2End service delivery
infrastructure manages the complex network between end customer mobile operator
and software developer Apart from managing mobile data services End2End consults
its customers on opportunities tests and evaluations of profitable mobile data
services
Customers include mobile operators Internet portals providers of mobile service
applications network providers and brand owners looking for a quick flexible and
low-cost access to mobile infrastructure
214
With a management team of seven End2End mobile had reached the delegation
phase where all major areas had their own manager Tage Rasmussen who was CEO
in 2003 was responsible for the transition of the company from a technically led
company to a more commercially focused organisation while founder and president
Peter Langkilde was responsible for funding and overall business development
Apart from these two executives who also served on the board of directors End2End
had appointed five managers responsible for Sales Marketing Network Operations
Customer Operations and Finance With only 40 employees the company was not
expected to have reached the crisis of co-ordination but management seemed to be
concerned about the transition to a more commercially and effective organisation that
was focused on developing products and services to meet real market needs
The role of intermediator involved strategic innovation since End2End was creating
new combinations of services in the value chain which again created process
innovations for its customers Advising and consulting customers in the building and
outsourcing of digital infrastructures was part of its offerings and this clearly
underlined the importance of strategic considerations Because of the relatively new
and undeveloped market for the outsourcing of IT infrastructures the rate of
innovation was considered to be high This is based on the impact of strategic
innovations on the value chains of the future and in this respect the fact that
End2Endrsquos products and services created process innovation for its customers could
be seen as a valuable by-product
Based on the framework in figure 31 End2End can be seen as an example of a
company where innovation takes place in the production processes (software
development) Thus production was the main way of acquiring new knowledge and
ideas which is represented by the left-hand side of figure 31
215
A6 REFERENCES
Grant RM 2002 Contemporary Strategy Analysis Concepts Techniques
Applications Oxford Blackwell Publishing
Greiner LE 1972 Evolution and revolution as organizations grow Harvard
Business Rerview July-August pp 37-46
Tushman M amp D Nadler 1996 Organizing for innovation In Ken Starkey (ed)
How Organizations Learn A Critical Reader pp 135-155
216
217
APPENDIX II
English Summary
Intrapreneurship is a developing field which it is the purpose of this dissertation to
contribute to The study is primarily concerned with intrapreneurship from an internal
resources perspective The aim of intrapreneurship from this perspective is to identify
previously undiscovered organisational resources with respect to innovation or
combine existing resources in ways that enable these to become valuable innovations
The dissertation is comprised of five articles all of which are related to the overall
research theme exploration and exploitation of internal resources with respect to
intrapreneurship The overall agenda of the dissertation is to study the intrapreneurial
potential in its natural settings Based on data from the five case companies it was
decided to let the articles develop from the most interesting data and observations
This means that the articles are not part of a step-by-step research strategy leading to
a final conclusion but are discussions of different subtopics within the overall topic
drawing on different theories and different methodologies
The first article introduces the concept of corporate entrepreneurship This has been
used to explain various organisational phenomena ranging from strategy through
management in general to innovation and the abundant use of labels and
perspectives has consequently led to a lack of clarity Based on a literature review a
framework for corporate entrepreneurship has developed including intrapreneurship
exopreneurship and four organisational perspectives corporate venturing internal
resources internationalisation and external networks
218
The aim of the second article is to explore how innovativeness and creativity in a
small high-tech company changes after the company is acquired by a larger company
The empirical part of the article is based on interview and questionnaire data with a
focus on employeesrsquo perception of innovativeness and creativity including their own
innovativeness in relation to the possibilities offered within the organisational
structure The results indicate that entrepreneurial spirit innovativeness and
creativity in the case company were related to the lack of boundaries to and contact
with customers These driving forces could not be sustained when the organisation
matured and was acquired by a larger company
The aim of the third article is to provide an understanding of the various factors that
enable intrapreneurship in established companies The article reports on a case study
of intrapreneurship in a large knowledge-intensive industrial company Based on the
existing literature it is suggested that the use of different factors can either enable or
inhibit intrapreneurship and five enabling factors are identified Based on interviews
on-site observations and documents and reports the five factors are examined and
alternative factors considered The five enabling factors that are identified in the
literature are not sufficient to enable intrapreneurship in knowledge-intensive
companies and it is concluded that three additional factors ndash communication culture
and processes ndash should also be taken into account
The emergence of knowledge-based organisations and the increased importance of
knowledge as the key to competitive advantage poses new challenges for managers
and researchers alike The fourth article attempts to enlighten theories of
intrapreneurship and innovation by means of state-of-the-art knowledge management
theory and organisational learning theory
The fifth article analyses project management activities in two companies from a
knowledge management perspective It is shown how human competencies it-
219
systems and project management systems are analysed from two perspectives an
artefact-oriented and a process-oriented perspective From the first perspective
project management seems to consist of similar components in the two companies
whereas the process-oriented perspective identifies context-dependent differences It
is concluded that awareness of different perspectives opens up the possibilities for
more managerial options and better understanding in practice
220
221
APPENDIX III
Dansk resume
Intraprenoslashrskab er et felt under udvikling hvor mange brikker mangler at falde paring
plads for at opnaring en forstaringelse for hvorledes fornyelse og skabelse af nye
virksomheder kan ske inden for rammerne af etablerede virksomheder Formaringlet med
afhandlingen er at bidrage til dette puslespil Afhandling omhandler primaeligrt
intraprenoslashrskab fra et internt ressource perspektiv hvilket betyder at intraprenoslashrskab
belyses ved at fokusere paring udnyttelsen af interne organisatoriske ressourcer eller ved
at kombinere virksomhedens eksisterende ressourcer paring nye maringder som kan goslashre
dem vaeligrdifulde med henblik paring innovation
Afhandlingen bestaringr af fem artikler som alle er relateret til det overordnede emne
udvikling og udnyttelse af interne ressourcer med henblik paring intraprenoslashrskab
Afhandlingen studerer det intraprenante potentiale i dets naturlige omgivelser og
artiklerne er baseret paring de mest interessante data og observationer fra de fem case
virksomheder der har medvirket i projektet Det betyder at artiklerne ikke foslashlger en
skridtvis forskningsstrategi frem mod eacuten samlet konklusion men fremstaringr som
forskellige artikler der indenfor den overordnede problemstilling traeligkker paring
forskellige teorier og baseres paring forskellige metoder
Den foslashrste artikel introducerer begrebet corporate entreprenoslashrskab som er blevet
anvendt til at forklare forskellige organisatoriske faelignomener Fra strategi over ledelse
i al almindelighed til innovation Dette har medfoslashrt en mangfoldighed af begreber og
perspektiver som har skabt stor uklarhed omkring corporate entreprenoslashrskab Med
222
henblik paring at etablere et fundamentet for de foslashlgende artikler redegoslashres der i den
foslashrste artikel for corporate entreprenoslashrskabsbegrebet ud fra forskellige perspektiver
Der praeligsenteres i artiklen endvidere et overblik ved hjaeliglp af en model der
indeholder intraprenoslashrskab og exoprenoslashrskab samt fire organisatoriske perspektiver
corporate venturing interne ressourcer internationalisering og eksterne netvaeligrk
Den anden artikel belyser hvordan innovation og kreativitet i en lille virksomhed
aeligndrer sig naringr virksomheden opkoslashbes af en stoslashrre virksomhed Den empiriske del af
artiklen er baseret paring interviews og sposlashrgeskemadata med fokus paring medarbejdernes
opfattelse af innovation og kreativitet inklusiv deres egen innovationsevne i relation
til de muligheder der findes inden for organisationen Resultaterne indikerer at den
entreprenante aringnd innovationsevne og kreativitet i case-virksomheden isaeligr var
relateret til den uformelle organisationsstruktur og taeligtte kundekontakt Disse
drivkraeligfter kunne ikke fastholdes da organisationen blev opkoslashbt af en stoslashrre og mere
etableret virksomhed
Den tredje artikel har til formaringl at skabe en forstaringelse for de forskellige faktorer der
kan fremme intraprenoslashrskab i etablerede virksomheder Med udgangspunkt i et
litteraturstudie identificeres fem faktorer der enten kan fremme eller haeligmme
intraprenoslashrskab Betydningen af de fem faktorer undersoslashges i et casestudie i en stor
videnintensiv industrivirksomhed De fem faktorer findes ikke tilstraeligkkelige til at
fremme intraprenoslashrskab og alternative faktorer foreslarings Det resulterer i at yderligere
tre faktorer ndash kommunikation kultur og processer ndash foreslarings som intraprenante
faktorer i videnintensive virksomheder
Den oslashgede forskningsmaeligssige og erhvervspolitiske interesse for videnintensive
virksomheder og stigende betydning af viden som noslashglen til konkurrencemaeligssige
fordele stiller ledere og forskere overfor nye udfordringer Derfor belyser den fjerde
artikel intraprenoslashrskabs- og innovationsteori ved hjaeliglp af videnledelsesteori og
223
organisatorisk laeligringsteori Paring baggrund af et litteraturstudie udvikles en model der
belyser intraprenoslashrskab ud fra tre forskellige situationer for innovationsledelse Den
teknologiudnyttende situation den stabilt forandrende situation og den omvaeligltende
forandringssituation og to laeligringsrelaterede koncepter udnyttelse og udvikling
Modellen beskriver hvorledes intraprenoslashrskab vil fremstaring i hver af de seks
undergrupper
Den femte artikel analyserer projektledelsesaktiviteter i to virksomheder fra et
videnledelsesperspektiv Det vises hvordan menneskelige kompetencer it-systemer
og projektledelsessystemer kan analyseres ud fra to perspektiver et artefaktorienteret
og et procesorienteret perspektiv Med udgangspunkt i det foslashrste perspektiv fremstaringr
projektledelsen i de to virksomheder nogenlunde ens mens det procesorienterede
perspektiv identificerer kontekstafhaeligngige forskelle Det konkluderes at bevidsthed
om forskellige perspektiver giver flere ledelsesmaeligssige muligheder og en bedre
forstaringelse i praksis og af praksis
Det konkluderes at denne afhandling primaeligrt har bidraget med brikker til den del af
intraprenoslashrskabspuslespillet som vedroslashrer virksomheders eksisterende
organisatoriske ressourcer Den foslashrste artikel viste hvordan intraprenoslashrskab kan
gribes an fra forskellige perspektiver Mens artikel to og tre praeligsenterede to
forskellige syn paring hvordan interne ressourcer kan paringvirkes af forskellige indre og
ydre faktorer Artikel fire og fem pegede paring at videnressourcer er af afgoslashrende
betydning for intraprenoslashrskab i videnintensive virksomheder og at de derfor boslashr
adresseres og ledelses med udgangspunkt i deres kompleksitet
iii
based on existing competencies combined with the exploration of new
ones In the process the internal resources ie the research traditions and
perspectives that I brought with me together with the competencies and
skills from my previous education played a role in forming the research
questions and starting points of the project
Given the global nature of research internationalisation is an important
part of any PhD project This became clear to me in relation to my two
stays abroad which both contributed to my personal development and were
a source of new knowledge The external networks I built up during these
stays have been very helpful in discussing and commenting on previous
drafts of the papers
The process leading to the dissertation is not only manifested in a formal
plan consisting of seminars courses knowledge dissemination change of
academic environment and writing papers My work on the dissertation
can best be understood by dividing it into several stages as shown in figure
A The first period (May 2002 ndash April 2003) was spent participating in
doctoral courses and preparing the thesis proposal The overall theme for
the research project was determined by KNORI (KNowledge-Intensive
ORganisations and Intrapreneurship) a project which provided the funding
for the research but within this I was to find seed and nurture my own
corporate venture
The next phase began in May 2003 when I changed my academic
environment to spend a few weeks at Professor Georg von Kroghrsquos chair at
The University of St Gallen in Switzerland From October 2003 to April
2004 I also had the opportunity to experience daily life at Stanford
iv
University California This period involved the use of internal knowledge
resources and the development and use of external networks
The third phase of the project has been by far the longest most challenging
and most fruitful As regards time it was spread over more than three years
(from May 2004 to October 2007) However as shown in Figure A it was
divided into three periods since I gave birth to two children ndash in 2004 and
2006 ndash before finally finishing the dissertation in 2007
I would like to take the opportunity here to thank everyone who has been
involved in this process in one way or another Thanks are due to the
Ministry of Science Technology and Innovation for providing funding for
the research via the KNORI project I am also grateful for the generous
financial support from the Aarhus School of Business Aarhus University
and the Tuborg Foundation
I am especially grateful to my supervisors Professor John Parm Ulhoslashi and
Professor Anders Drejer without whose lively discussions I would never
have been so stubborn and my dissertation would not be what it is today I
am also grateful for the many inputs from colleagues at the Department of
Management at the Aarhus School of Business Aarhus University I am
especially thankful to Jakob Lauring for general support suggestions and
ideas for improvements to the dissertation I also want to thank my new
colleagues at the School of Management and Economics Aarhus
University for welcoming me and giving me time to finish my PhD
v
Figure A Timeline for the PhD process
The PhD process
Enrolled as a PhD student May 1st 2002
Personal
Publications
Article 1 Published December 2004 Submitted October 2004
Accepted November 2004
Article 2 Published October 2006
Submitted Nov 2005 Accepted July 2006
Article 5 Published June 2004
Submitted March 2004 Accepted April 2004
Article 3Published July 2005
Submitted September 2004 Accepted October 2004
Article 5 SubmittedSeptember
2007
Maternity Leave Magnus September 8th 2004 ndashNovember 7th 2005
Maternity Leave Tobias February 14th 2006 ndash
May 29th 2007
Thesis ProposalApril 11th 2003
PhD dissertation submitted
November 2007
Stanford UniverityOctober 1st 2003 ndash
April 5th 2004
Univerity of St Gallen May 5th ndash May 17th 2003 June 21st ndash June 28th 2003
PhD dissertationfinished
September 2007
vi
The project involved the participation of five companies and I would like
to thank the numerous people who took time to talk to me and helped me
with access in various ways In particular thanks to Allan Krogh Erlandsen
at Bang amp Olufsen Hanne Buje Jensen and Brian Larsen at Crisplant Niels
Gade at Danfoss Drives Morten V Jensen at End2End as well as Poul
Erik Dybdal and Erik Reinholt at Ericsson Telebit for giving me access to
their companies Without their hospitality and the time they and other
employees took to talk to me this dissertation would not have been written
I also want to thank Sine Nissen for being my co-pilot during the data
collection and Mette Line Chemnitz Mie Skovsgaard Nielsen and Lene
Thisgaard for assistance with the transcriptions I am also deeply grateful to
Anders Jacob Raj Andersen Mikkel Gadmar and Christian Nielsen for help
and inspiration I would also like to thank my co-authors in the individual
papers Anders Drejer John P Ulhoslashi Heine Kaasgaard Bang and Per
Nikolaj Bukh for inspiration and the opportunity to work together From
my visits abroad I want to thank Georg von Krogh and his research team at
St Gallen Switzerland for hospitality and for taking good care of me in
May and June 2003 Thanks also to SCANCOR Stanford University and
my colleagues there from October 2003 to April 2004
My family and friends who have supported me during the whole process
have been an infinite source of comfort to me Above all my parents and
my best friend Vibeke Reuter Lapiki were indispensable Finally I want
to thank my husband Per Nikolaj who has listened to my complaints ndash
especially in the most critical periods and when I felt I was being treated
unfairly You were always there to support me During the third part of the
PhD project my two sons Magnus and Tobias were there to make me
vii
focus on my work and cheer me up This more than made up for the many
months of morning sickness and general inaction
Karina Skovvang Christensen
Aarhus University
December 2007
viii
ix
Contents
Preface i
Contentsix
PART I 1
Introduction 1
CHAPTER 1 3
The Background 3 11 Innovativeness in Denmark5
12 The KNORI project 9
13 References11
CHAPTER 2 13
Research scope themes and structure 13
21 Corporate entrepreneurship15
22 The corporate entrepreneurship field 18
23 focus and structure of The dissertation 21
231 The structure of the dissertation 21
232 The research questions 22
233 The articles in the dissertation23
24 References27
CHAPTER 3 31
Methodology 31
31 From Paradigm to research approach32
32 Unit of Analysis 34
x
33 Selection of the case companies37
34 The case companies 40
35 The case study approach 40
351 Definition of a case study41
352 Action research or research in action 42
36 Validity of the methodology 44
361 The use of Multiple Sources of Evidence45
37 The research interviews 46
371 The transcription process49
38 References50
CHAPTER 4 57
A Classification of the Corporate Entrepreneurship Umbrella Labels and Perspectives 57
41 Introduction59
42 Theoretical roots entrepreneurship 61
43 The appropriate label 61
44 Defining corporate entrepreneurship 63
45 Perspectives on corporate entpreneurship64
451 Corporate venturing65
452 Internal (intangible) resources66
453 Internationalisation67
454 External networks and alliances 67
455 Towards a framework for corporate entrepreneurship 68
46 Conclusion 68
47 References70
CHAPTER 5 75
Postscript to article 175 51 Towards a framework for corporate entrepreneurship 76
52 Concluding remarks 78
53 References81
xi
PART II 83
Intrapreneurship from an Internal Resources Perspective 83
CHAPTER 6 87
Losing innovativeness the challenge of being acquired87
61 Introduction89
62 Innovation through acquisition the entrepreneurial challenge 90
621 The case for innovation through acquisitions91
622 Managing the post-acquisition process92
63 Method93
631 The interviews 93
632 The questionnaire 93
64 Innovativeness of Ericsson Telebit from spin-off to integration94
641 Incorporation into LM Ericsson 95
642 Ericsson Telebitrsquos products 96
643 The Market 96
644 From customers to sponsors 97
645 Organisational structure 97
646 Employees 98
65 Discussion of Ericsson Telebitrsquos innovativeness98
651 Creativity99
652 Innovation100
653 The innovation process102
66 Concluding discussion 103
661 Implications for practice104
662 Implications for research 105
67 References106
CHAPTER 7 111
Enabling Intrapreneurship The Case of a Knowledge-Intensive Industrial Company 111
71 Introduction113
72 Corporate entrepreneurship114
73 Methodology116
74 Danfoss Drives117
741 Strategy and the organisation 117
xii
75 Corporate entreprenership at Danfoss Drives 118
751 Rewards118
752 Management support 119
753 Resources 119
754 Organisational structure 120
755 Risk 122
76 Towards a more complete model 123
761 Communication 124
762 Culture125
763 Process127
77 Conclusion and implications127
78 References128
PART III 131
Managing Internal Knowledge Resources131
CHAPTER 8 139
Understanding Intrapreneurship by means of state-of-the-art knowledge management and
Organisational learning 139
81 On the developing need for intrapreneurship141
82 Innovation management and intrapreneurship 144
821 Innovation management the context of intrapreneurship 145
822 Contingent situations for innovation management 146
823 Intrapreneurs who makes the innovations 148
83 Knowledge in an innovation perspective 149
831 Knowledge management in a knowledge society149
832 Different types of knowledge 150
Level of articulation tacit to explicit 150
Depth of knowledge Dreyfuss and Dreyfuss 151
Location of knowledge 152
Diffusion of knowledge undiffused to diffused 152
Complixity of knowledge 153
84 Understanding intrapreneurship better153
841 The purpose exploitation and exploration 154
842 The content learning leading to innovation 154
843 A framework for intrapreneurship in light of knowledge155
85 References157
xiii
CHAPTER 9 159
Knowledge Management in Perspective(s) An Analysis of Project Management in Two Companies
159
91 Introduction162
92 Knowledge management in practice 163
921 Two perspectives of knowledge management 163
922 Knowledge Management and the perception of Knowledge 165
923 Strategies for knowledge management166
93 The Two Companies and the methodology 167
94 Knowledge Management in the two companies 168
941 Knowledge management at Bang amp Olufsen 168
942 Knowledge Management at Crisplant 170
943 Knowledge Management as Project Management172
95 Knowledge Management in Perspective(s)174
951 Artefact-Oriented Epistemology 174
952 Process-Oriented Epistemology 175
96 Concluding Remarks177
97 References180
PART IV 183
CHAPTER 10 185
Findings and Perspectives185
101 Elements of this dissertation 187
102 main points and contributions 189
103 Synthesising the contributions 191
104 Limitations of the study 196
105 References198
APPENDIX I 201
Case companies201
A1 Ericsson Telebit 204
A2 Danfoss Drives206
A3 Bang amp Olufsen 207
A4 Crisplant210
xiv
A5 End2End212
A6 References215
APPENDIX II 217
English Summary 217
APPENDIX III 221
Dansk resume221
1
PART I
Introduction
This dissertation which focuses on intrapreneurship from different
perspectives is divided into four parts and includes five articles that
constitute the main results of my research as PhD student The overall aim
of the articles which address different aspects of intrapreneurship is to
contribute as building blocks to the larger intrapreneurship mosaic which
is still under development in the research literature (Ireland et al 2005)
The first part which serves at the introduction to the dissertation consists
of five chapters Chapter 1 provides a short description of the Danish
Industry and a discussion of some of the main challenges in relation to
innovativeness adoption of new knowledge and intrapreneurship The
chapter also briefly describes the KNORI project (KNowledge intensive
ORganisations and Intrapreneurship) which this dissertation is related to
Chapter 2 presents the overall research field corporate entrepreneurship
and discusses the difference between corporate entrepreneurship and
intrapreneurship This chapter also describes how research interest in
corporate entrepreneurship has evolved over time The research themes
together with the structure of the rest of the dissertation are also presented
in more detail in this chapter Chapter 3 presents the methodology with an
2
emphasis on the selection of cases for the PhD project the validity of the
methodology and various issues regarding the research interviews
Chapter 4 which constitutes the first article in this dissertation develops a
framework for corporate entrepreneurship consisting of an internal
perspective (intrapreneurship) and an external perspective
(exopreneurship) The article further illustrates that intrapreneurship
consists of three organisational perspectives corporate venturing
internationalisation and internal resources This article was the first step in
the PhD project and thus also represents a tentative first insight into the
field Finally chapter 5 serves as a postscript to the article and includes
additional insights
The second part of the dissertation consists of two articles articles two and
three which in different ways address the extrinsic and intrinsic factors that
influence an organisationrsquos internal resources with respect to
intrapreneurship The third part of the dissertation consists of articles four
and five which concern the relations between intrapreneurship and
knowledge management and how knowledge management can support
intrapreneurial management Finally part four concludes the dissertation
REFERENCE
Ireland RD CR Reutzel amp JW Webb 2005 Entrepreneurship
Research in AMJ What Has Been Published and What Might the Future
Hold Academy of Management Journal Vol 48 No 4 pp 556-564
3
CHAPTER 1
The Background
New governments almost always mean new visions At least this was the
case in Denmark at the end of 2001 Although its industrial policy already
encouraged innovation and provided for the establishment and
administrative support of new companies etc the government wanted a
change of mindset in society in the direction of greater creativity and an
entrepreneurial culture
It was realised that growing internationalisation would drive more and
more Danish companies to offshore production or sourcing from low-cost
countries This led to growing anxiety about employment wealth ndashcreation
and the future of Danish society throughout the 1990s Since it was
becoming clear that more and more jobs would be moved to the new EU
countries or further east both Danish politicians and the Danish media
began to focus attention on innovation incubators entrepreneurship and
intrapreneurship
At the same time the Danish media seized on intrapreneurship via the
start-up of new companies based on the competencies of established
companies as the lsquosolutionrsquo to the creation of more jobs in Denmark
However intrapreneurship is more than just starting up new internal or
external ventures Even though the creation of new jobs and companies
might be to the benefit of society as a whole the management of existing
4
companies would no doubt think differently if their most creative and
innovative employees started establishing new companies based on
competencies acquired in their former jobs
Thus from an organisational or corporate perspective intrapreneurship is
more about a companyrsquos ability to sustain creativity innovativeness and the
entrepreneurial spirit among its own employees and channel this towards
the creation of new structures and initiatives that benefit both employees
and the company and probably also create wealth at societal level
Intrapreneurship can be enabled by giving employees time to work on their
own projects and to assist with development salesmarketing production
legal issues etc Furthermore as will be argued in chapter 4
intrapreneurship is part of a more comprehensive research and practice
field corporate entrepreneurship
There has been a tendency in the Danish press to more or less explicitly
equate intrapreneurship with corporate venturing and unlike in the
international literature the term intrapreneurship has been a much more
popular label in the Danish media1 In relation to media interest which to
some extent might also reflect the focus of Danish companies or
government agencies it is notable that even though corporate
entrepreneurship has been of academic interest for many years it was only
1 This can for example be seen from a full text search in the Danish database InfoMedia which covers
most newspapers and a number of popular magazines As of June 30 2007 the term lsquocorporate entrepreneurshiprsquo had appeared 11 times whereas lsquointrapreneurshiprsquo and lsquocorporate venturingrsquo had been used 91 and 81 times respectively According to InfoMedia the first time an article on lsquocorporate entrepreneurshiprsquo lsquointrapreneurshiprsquo and lsquocorporate venturingrsquo was published in a Danish newspaper was
in 2005 1996 and 1999 respectively
5
from 2003 that the Danish media started focusing on intrapreneurship
In one of the first comprehensive studies based on Danish data Evald
(2003) showed that small companies create many jobs by spinning off new
ventures Based on this finding she argues that initiatives should be
focused on the intrapreneurial abilities of small and medium-sized
companies (SMEs) However while the importance of spin-offs and job
creation in small companies should not be underestimated large companies
also have the possibility of supporting entrepreneurship in-house ndash whether
it is called intrapreneurship or corporate entrepreneurship These
companies have both much larger and greater access to different kinds of
resources and are better able than SMEs to take a limited risk by entering
different forms of intrapreneurship
11 INNOVATIVENESS IN DENMARK
Given that Danish industry is largely made up of small and medium-sized
companies Denmark is not likely to adopt the same innovation policy as a
country like the US with its many research institutions and large
technologically advanced companies On the contrary a characteristic of
the innovation process in SMEs is the indirect implementation of
technological breakthroughs unlike in large companies where there is close
contact between research development and production (Erhvervsfremme
Styrelsen 1999) The indirect nature of the innovation process involves a
time lag from technological breakthroughs to their adoption in products or
production processes which is also one of the findings of the so-called
DISCO project (Erhvervsfremme Styrelsen 1999) in its analysis of the
Danish innovation systemrsquos challenges strengths and bottlenecks
6
This is a very general statement of course and there are well-known large
Danish companies eg Novo Nordisk Novozymes Coloplast Danfoss and
Grundfos that are major players in their respective industries and also very
innovative Furthermore Abernathy amp Utterback (1978) among others
have argued that large companies in existing industries are most likely to
innovate incrementally while breakthrough innovations are more likely to
come from either small companies or large companies which apply their
technologies in innovative ways in other business areas
However for most Danish companies ndash especially SMEs ndash the needs of and
requirements for innovation support knowledge transfer and conditions for
intrapreneurship must be addressed from a policymaking perspective
Moreover as is also central to the topic of this dissertation the innovative
capabilities of large established companies are possibly even more
important
As a result of its comparative disadvantage ndash due to the size of the country
ndash the key challenge for Danish industry is sometimes seen as the adoption
of a broader and more interactive understanding of innovation (Nyholm amp
Langkilde 2003 Rosted 2003) Due to their technology-oriented approach
to innovation companies follow what Abernathy amp Utterback (1978) have
identified as product or process innovation cycles and not what Grant
(2002 p 373) with a broad term calls strategic innovation By adopting a
broader view of innovation Danish companies would be better placed to
exploit the potential of strategic innovations where new combinations of
technology customers and services can change the competitive structure of
the industry or even create a new industry as argued by proponents of the
so-called Blue Oceans strategies (Kim amp Mauborgne 2005)
7
Another important characteristic of strategic innovations is the interactive
process that leads to the innovation Within the technological paradigm of
innovation (Sundbo 1998) the development process is seen as linear while
strategic innovations follow an interactive process where ldquonew
combinationsrdquo can only survive if they meet a real market demand The
interactive process involves a closer interfirm relationship with a strong
focus on exploiting the innovative potential of new technologies The
willingness and ability to form these relationships has been found in Danish
industry both in high- and low-tech industries (Erhvervsfremme Styrelsen
1999)
In order for ideas to be commercialised in the shape of new companies or
new business areas for established companies there needs to be a well-
functioning market for venture capital The establishment of such a market
has therefore been a government priority In addition to this the largest
Danish companies have also helped fund new companies through newly
established venture funds often in co-operation with institutional or private
investors whose funding in many cases stems from selling previously
established companies
The development of such funds might be seen as the result of a broader
view of innovation where the strategic and interactive aspect has led to the
return of entrepreneurship as the nucleus of the innovation process Large
corporations now see the entrepreneur as an important part of striking the
right balance between technological development and market demand
Whether it is an intrapreneur (Pinchot 1985) who leads an internal venture
project or an external entrepreneur funded through venture funds or
8
corporate venture capital the importance of entrepreneurship in the pursuit
of innovation is now a fact
One indicator of the importance of entrepreneurial activities in the pursuit
of innovation is the total amount of capital flowing towards venture
investments as shown in Figure 11 According to data from
Vaeligkstfonden2 the total funds available in the venture capital market in
Denmark have risen dramatically from DKK 35 billion in 1998 to DKK
172 billion in 2002 after which it flattened out and actually fell slightly in
2003 when more investors withdrew from the venture market3 By August
31 2007 the total funds available in the venture capital market were
approximately DKK 22 billion
Until 2001 the prime interest of venture funds was in telecommunications
and computer technology but since then the focus has shifted to life
sciences This can be seen by the fact that the total amount of invested
venture capital in life sciences exceeds investments in ICT Furthermore
two new ventures focusing solely on life sciences have been established
while two ventures focusing on ICT have been terminated (Vaeligkstfonden
2002)
2 Data according to rdquoDet danske marked for venturekapital og private equityrdquo published annually by
Vaeligkstfonden Copenhagen
3 LMX Business Development TDC-Innovation Venture IT Velcap Danske Life Science TEMA
Kapital BUHL Randers and Udviklingsparken (continued in the context of Incuba AS)
9
219
201
175
161154
172
150
35
52
118
0
5
10
15
20
25
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
DK
K b
n
Figure 11 Funds available in the venture capital market (Based on
figures from Vaeligkstfonden 2001-2007)
That some of Denmarkrsquos largest corporations have helped create new
companies can be seen from the development of nine corporate venture
capital (CVC) funds in the period from 1998 to 2002 which resulted in a
total of 12 CVC companies in 2002 In comparison only 4 companies were
established in 2006 even though almost five times as much funding was
available than in 1998
12 THE KNORI PROJECT
The KNORI project (KNowledge intensive ORganisations and
Intrapreneurship) stemmed from both the need to create more jobs in small
and medium-sized Danish companies and the focus on technology-oriented
innovations at the beginning of the 1990s as discussed above Thus the
10
project was established4 as part of the Ministry of Science Technology and
Innovationrsquos initiatives to boost the ICT industry KNORI was set up to
study how established organisations in the ICT industry in northern Jutland
could be more dynamic as regards spinning off new ventures developing
new business areas and developing a sustainable ability to innovate Of
course these broad aims could also be approached from other perspectives
this PhD project has thus chosen to address the question from an
intrapreneurial perspective
The KNORI project started with a meeting between the researchers
involved and three key persons in the telecommunications industry in
Northern Jutland It became clear from this meeting that the companies
were just as much competitors as collaborators This meant that it would be
difficult to arrange explicit knowledge sharing between them through
seminars etc as originally envisaged Therefore the scope of the project
was broadened to also focus on companies in other parts of Denmark as
well as industries that were not as closely related but which had similar
challenges
The case companies for this PhD project were to be chosen from the
broadened KNORI base The methodological considerations are discussed
in more detail in chapter 3 but the result was that six companies agreed to
take part in the project and all were invited to an introductory meeting in
4 KNORI was a network project between Harry Boer and Bent Dalum University of Aalborg and Anders
Drejer (University of Aalborg at the project start) and John Parm Ulhoslashi Aarhus School of Business
Aarhus University
11
March 2003 where the framework for corporate entrepreneurship and
preliminary thoughts about intrapreneurial enablers were presented
A second meeting on factors which enable and hinder corporate
entrepreneurship was planned for June 2004 but was cancelled due to
unforeseen circumstances No new date was set for this meeting due both
to the summer holidays and my first maternity leave from the beginning of
September 2004 Since it also became clear that the research opportunities
were not so much related to the companies as a group as to individual
companies it was decided not to include the seminars in the PhD project
13 REFERENCES
Erhvervsfremme Styrelsen 1999 Det danske innovationssystem ndash DISCO-
projekt Rapport nr 9 Sammenfattende rapport Koslashbenhavn
Evald MR 2003 Corporate Venturing i Danmark En undersoslashgelse af
mindre virksomheds knopskudsaktiviteter Center for Smaringvirksomheds-
forskning Syddansk Universitet
Grant RM 2002 Contemporary strategy analysis Concepts techniques
applications (fourth edition) Oxford Blackwell Publishing
Kim WC amp R Mauborgne 2005 Blue Ocean Strategy How to Create
Uncontested Market Space and Make Competition Irrelevant Boston
Harvard Business School Press
Nyholm J amp L Langkilde 2003 Et benchmark studie af innovation og
innovationspolitik ndash hvad kan Danmark laeligre Oslashkonomi- og
12
Erhvervsministeriets enhed for erhvervsoslashkonomisk forskning og analyse
FORA Koslashbenhavn
Pinchot G 1985 Intrapreneuring Why You Donrsquot Have to Leave the
Corporation to Become an Entrepreneur New York Harper amp Row
Rosted J 2003 Tre former for innovation Oslashkonomi- og
Erhvervsministeriets enhed for erhvervsoslashkonomisk forskning og analyse
FORA Koslashbenhavn
Sundbo J 1998 The Theory of Innovation Entrepreneurs Technology
and Strategy Cheltenham Edvard Elgar Publishing
13
CHAPTER 2
Research scope themes and structure
Business structures are becoming global and the rules of competition are
changing constantly posing new challenges to companies Whether
companies define themselves as being in one or another market they seem
to be forced to adapt and innovate at a constantly increasing pace Change
comes about faster than we expect and the saying that the only constant
thing in the world is change seems truer than ever Furthermore the
boundaries of the firm are becoming more blurred as companies get
involved in different collaborations and tasks from research and
development to business support activities are increasingly outsourced
While the world appears to be constantly changing some companies tend
to stick to the ldquoold waysrdquo of doing business ie preserving the well-known
techniques and business concepts of co-operation while others reorganise
re-create themselves merge and split up become virtual enter new
markets or create unforeseen alliances Thus some companies seem to
ignore changing market conditions while others act on challenges to well-
established business routines and rules of competition
One major driving force for change has been the increasing importance of
knowledge both for everyday life where new innovations are shaping
family structures communication patterns and work-conditions for
business structures and for individual companies entering the so-called
14
knowledge society (Drucker 1993) New conditions for competitive
advantage have appeared where knowledge is the key resource and where
knowledge workers will dominate the workforce (Drucker 1993 2002) ndash
perhaps not in the number of employees but in terms of their influence on
global value creation
A society becoming increasingly dependent on knowledge will probably
introduce changes that we can hardly imagine now Organisations will face
new challenges both internally and externally These challenges are
affected by various factors eg the liberalization of markets markets for
new products new demands from various stakeholders new information
and communication technologies the decoupling of information flows from
the flow of goods and services and integration of product architecture and
technology (Teece 1998)
The responses of companies in the 1980s and to some extent the 1990s
have been characterised by reductions in the workforce downsizing
rightsizing budget cuts and depressed employee morale (Morris and
Kuratko 2002) While the focus has been on the short-term costs of
production no company can afford to rely on such an approach forever
The real challenge for a company wanting to remain a going concern is to
establish a competitive advantage and one way of doing this is continuous
innovation and the creation of new ideas According to Morris and Kuratko
(2002) companies must aspire to adaptability flexibility speed
aggressiveness and innovativeness which they boil down to one word ndash
entrepreneurship
15
21 CORPORATE ENTREPRENEURSHIP
Although intrapreneurship has been presented as the lsquosolutionrsquo to new jobs
and an improvement in companiesrsquo innovativeness it is worth
remembering that it may not be so very different from what we already
know There are countless examples in the management literature of
methods and techniques etc that are simply relaunched under new names
Therefore this dissertation also takes a broader perspective
If we follow the spread of research on corporate entrepreneurship from just
the use of the term in the literature it is remarkable how interest in topics
such as entrepreneurial management corporate entrepreneurship and
intrapreneurship has increased in the last couple of years This is illustrated
in figure 21 which shows the number of hits on intrapreneurship
corporate entrepreneurship and entrepreneurial management from a full-
text search in the database Business Source Premier In figure 22 the same
keywords are searched for in articles published by the Danish business
paper Boslashrsen5
5 Boslashrsen was also searched for the terms lsquointraprenoslashrskabrsquo lsquocorporate entreprenoslashrskabrsquo and
lsquoentreprenant ledelsersquo and the results added to the number of articles found using the English terms
The databases have also been searched for lsquointrapreneuringrsquo lsquointrapreneurialrsquo lsquocorporate venturersquo lsquocorporate venturingrsquo and lsquocorporate incubatorsrsquo There were only a few hits for intrapreneuring and intrapreneurial While interest in corporate venturingventuring (CV) has been increasing significantly it is not included in the figures since it is regarded as a perspective on corporate entrepreneurship and
intrapreneurship as will be argued in Chapter 4 Corporate incubators did not result in any hits
16
05
101520253035404550
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
Year
Nu
mb
er o
f ar
ticl
es
Intrapreneurship
Corporate Entrepreneurship
Entrepreneurial management
Total
Figure 21 Number of hits from a full-text search on the terms
ldquointrapreneurshiprdquo ldquocorporate entrepreneurshiprdquo and ldquoentrepreneurial
managementrdquo in the research database Business Source Premier
Figure 21 shows that following Pinchotrsquos introduction of intrapreneurship
in 1983 and his book Intrapreneuring in 1985 interest in the topic has
grown6 However figure 21 also shows that it is other terms that have been
dominant in each of the years covered It is of course difficult to draw
specific conclusions just by counting the number of times a word has been
used in articles in either journalistic or research articles Neither the context
nor the understanding of the concepts are necessarily the same and the
topic covered might even be discussed without ever explicitly mentioning
the term eg intrapreneurship
6 A similar search in the database Social Science Citation Index which contains research cited by others
shows that the number of articles on concepts that have been cited by others has been slightly increasing
since the mid-1980s with the increase being greater since the end of the 1990s
17
0
5
10
15
20
25
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Year
Nu
mb
er o
f ar
ticl
es
Intrapreneurship
Corporate Entrepreneurship
Entrepreneurial management
Total
Figure 22 Number of hits from a full-text search on the terms
ldquointrapreneurshiprdquo ldquocorporate entrepreneurshiprdquo and ldquoentrepreneurial
managementrdquo in the Danish newspaper Boslashrsen
Seen together the figures in Figure 21 and 22 probably also illustrate the
spread of the terms in research literature and practice New terms are often
claimed to be driven by practice and the more popular part of management
literature But as Abrahamson (1996) has argued scholars have often been
aware of and interested in the new phenomenon for some time before the
explosion of interest in the practitioner-oriented literature and the press
However there is seldom a steep increase in researchersrsquo interest before a
term has gained the interest of practitioners This is in line with figure 22
which shows how intrapreneurship gained the interest of newspapers at
about the same time as the number of research articles rocketed7
7 A similar search of the more popular management research database Emerald shows a similar
development as Boslashrsen It increases slightly from 1994 to 2003 and then gains momentum
18
More directly focusing on articles published in The Academy of
Management Journal (AMJ) from 1963 to 2005 and examining article
topics rather than just counting the number of times the word is used in the
text Ireland et al (2005) found 8 articles on corporate entrepreneurship
Furthermore these articles were distributed regularly over time with a
small increase since 1994 However a similar number of other topics eg
ldquonew venturesrdquo ldquocorporate entrepreneurshiprdquo etc were also published
and the distribution of these articles over time was more similar to the
pattern shown in figure 21 Overall therefore while interest in the topic
has increased it is still an emerging or relatively young field characterised
by a large number of labels (Christensen 2004) the lack of a unifying
definition (Sharma amp Chrisman 1999) and low paradigmatic development
(Ireland et al 2005 Low 2001)
22 THE CORPORATE ENTREPRENEURSHIP FIELD
According to Hornsby et al (1993) research on corporate entrepreneurship
and how corporate entrepreneurship can be enabled can be roughly divided
into two waves The first wave ending at the beginning of the 1990s
focused on the entrepreneur as a person while the second wave started at
the beginning of the 1990s and gained momentum towards the end of the
decade Basically the second wave takes a starting point in William
Gartnerrsquos (1988 1989) suggestion that the research focus should be
changed from the entrepreneur as a person to entrepreneurship as a process
In particular Gartner argued that entrepreneurship is a multidimensional
process of which the entrepreneur is only one element thus moving the
focus more towards organisations which employ entrepreneurs and create
the conditions for their achievements
19
Michael A Hitt Jeffrey S Hornsby R Duane Ireland Donald L Sexton
and Shake A Zahra have been the main trendsetters in this second wave of
development of the field which is characterised by the use of many
different labels eg entrepreneurial management (eg Stevenson amp Jarillo
1990) strategic entrepreneurship (eg Hitt et al 2001) corporate
entrepreneurship (eg Guth amp Ginsberg 1990 Hornsby et al 1993 2002)
internal corporate entrepreneurship (eg Lumpkin amp Dess 1996 and
Schollhammer 1981) intrapreneurship (eg Carrier 1994 and Pinchot
1985) corporate venturing (eg Burgelman 1983 and Chesbrough 2000)
These terms have been used interchangeably to explain almost the same
phenomenon as is discussed in more detail in article 1 (Chapter 4) in this
dissertation
Sharma and Chrisman (1999) illustrate the termual ambiguity by listing a
number of definitions of corporate entrepreneurship suggested in the
literature Based on an analysis of two definitions in three papers ndash
corporate venturing (Biggadike 1979 Ellis amp Taylor 1987) and corporate
entrepreneurship (Burgelman 1983) ndash Sharma and Chrisman (1999) argue
that Burgelmanrsquos (1983) definition of corporate entrepreneurship is a
subset of Biggadikersquos (1979) corporate venturing whereas Ellis and
Taylorrsquos (1987) definition of a corporate venture is a subset of Burgelmanrsquos
(1983) corporate entrepreneurship definition
As is often the case with a plethora of different labels the development of
loosely related methods and theories not only creates uncertainty but also
complicates the applicability and integration of experiences into the
development of the field (cf Sharma amp Chrisman 1999)
20
To some extent it is a general characteristic of management knowledge
that it is spread throughout educational systems and companies by business
schools and global consulting companies (see for example Sahlin-
Andersson amp Engwall 2002) but in the case of the corporate
entrepreneurship literature it might also be because the field is both in its
infancy and characterised by multidisciplinarity Corporate
entrepreneurship has drawn on organisational theories from economics
(Schumpeter 1934 Kirzner 1985) sociology (McClelland 1961)
psychology (Collins and Moore 1964 Brockhaus amp Horwitz 1986) and
strategic management (Hitt et al 2002) and has thus been used to explain
various organisational phenomena from strategy via management in
general to innovation
While lsquocorporate entrepreneurshiprsquo has attracted the most attention
internationally as shown in figure 22 it is lsquointrapreneurshiprsquo that has
gained most interest in Denmark Although this could be seen as a minor
detail as regards the labeling of an otherwise identical concept as will be
argued in chapter 4 it also relates to the boundaries of the firm and thus to
a question of focus On start-ups or on companies that make innovation
possible and where employeesrsquo creativity and entrepreneurial aims are
based
Managerial decisions on the scope and diversity of a companyrsquos activities
affect the horizontal boundaries of the firm which in turn influence the
organisational choices of how and where to innovate starting a corporate
venture exploring internal resources internationalising or forming
external networks Managerial decisions on organisational structure and
design on the other hand are closely linked to the vertical boundaries of
21
the firm and define the organisationrsquos position in the value chain As Grant
(1996) and others argue decisions concerning the boundaries of the firm
are important for the application and integration of (specialist) knowledge
and thus future activities
23 FOCUS AND STRUCTURE OF THE DISSERTATION
The overall topic of this dissertation is exploration and exploitation of
internal resources with respect to intrapreneurship and how this is
affected by the firmrsquos organisation management managerial initiatives and
employees The dissertation is comprised of five different articles that
address this topic from different perspectives
From an early stage it was decided to let the articles develop from the most
interesting data and observations from the case companies This has
resulted in articles on different subtopics within the overall topic drawing
on different theories and different methodologies Although all the articles
have in common that they add to the mosaic within the field of
intrapreneurship they are not connected by a step-by-step research strategy
that leads to a final conclusion
231 The structure of the dissertation
This dissertation is divided into four parts Part I contains chapters one to
five Chapter one has described the background of the dissertation while
chapter two has introduced the field of intrapreneurship and the research
questions The next chapter will present the methodological considerations
chapter four examines and outlines corporate entrepreneurship the scope of
the research is explained and the concept of intrapreneurship is defined
22
finally chapter five serves as a postscript to chapter 4 and includes further
understandings of the issues
Part II contains chapter six and seven and consists of two articles on issues
related to intrapreneurship from an internal resources perspective Part III
contains chapter eight and nine which correspond to article four and five
respectively These articles combine intrapreneurship and knowledge
management and focus on knowledge resources within the internal
resources perspective Together these two parts make up the main body of
the dissertation Finally part IV (chapter ten) comprises a summary of the
articles and the results of the study This chapter also presents conclusions
on how the articles contribute to the research questions
232 The research questions
Although the articles should not be seen as the outcome of a premeditated
research programme together they address the following research
questions
1 What is intrapreneurship and how can it be explored and explained
2 How do different extrinsic and intrinsic factors affect the internal
resource perspective
a Can innovativeness be acquired
b How can various factors influence intrapreneurship
3 How is intrapreneurship and knowledge related And how can the
knowledge resource be addressed within the internal resource
perspective
a How can intrapreneurship be understood in the light of
knowledge management
23
b How can the knowledge resource be managed
233 The articles in the dissertation
Basically the articles take three points of departure which also correspond
to the three main parts of this dissertation This first part presents the
background and includes the first article This article A classification of the
corporate entrepreneurship umbrella labels and perspectives (Chapter 4)
is theoretical and presents and reviews an important body of literature
related to corporate entrepreneurship and also defines intrapreneurship
The next two articles Losing innovativeness the challenge of being
acquired and Enabling intrapreneurship the case of a knowledge-
intensive industrial company (Chapter 6 and 7) in part II are primarily
empirical in nature They address some of the aspects that need to be taken
into account when an organisation exploits intrapreneurship from an
internal resource perspective
The last two articles Understanding intrapreneurship by means of state-of-
the-art knowledge management and organisational learning and
Knowledge management in practice An analysis of project management in
two Danish companies (Chapter 8 and 9) in part III concern the
management of knowledge and how intrapreneurship can be facilitated or
enabled Article 4 is theoretical and links intrapreneurship and knowledge
management while the last article is primarily empirical and presents two
perspectives of the knowledge resource and how to manage them
The five articles that make up the dissertation are shown in table A which
briefly describes the objectives methodology used and conclusions With
regard to the objectives the articles all have in common that they relate to
24
the field of intrapreneurship in that they examine the various managerial
issues that should be taken into account in different situations Article 2 3
and 5 are based on case studies whereas article 1 and 4 take a starting point
in literature reviews
With regard to research question 1 the first article takes a look at corporate
entrepreneurship and sets the scene for the rest of the dissertation The
article explains the difference between corporate entrepreneurship and
intrapreneurship and with it offers a definition of intrapreneurship It also
explains how intrapreneurship gives organisations a greater choice of
organisational perspectives
The second research question is divided into two sub-questions Question
2a is addressed in article 2 which examines what happens to an
entrepreneurial culture when it is incorporated into a mature organisation It
shows that the active use of both extrinsic and intrinsic efforts is needed to
overcome organisational inertia Questing 2b is explored in article 3 which
looks at the impact of managerial initiatives andor intrapreneurial enablers
The results indicate that to encourage intrapreneurship in knowledge-
intensive companies there is a need for intrinsic enablers since the more
extrinsic enabling factors common to industrial companies are seen as only
basic factors
The third research question also consists of two sub-questions the first of
which is addressed in article 4 which takes a starting point in knowledge
management theory and organisational learning theory as well as theories
of intrapreneurship and innovation management This article provides a
framework for understanding the relation between intrapreneurship and
knowledge and the knowledge issues that should be taken into account
25
Finally research question 3b is dealt with in article 5 which examines how
different perspectives affect the way an organisationrsquos knowledge resources
are managed with respect to innovative activities The article shows how
intrapreneurship can be enabled from a knowledge management
perspective by taking a starting point in processes
The focus on the topic of the dissertation narrows from article to article
Thus the first article covers the whole field of corporate intrapreneurship
the articles in part II focus on the internal resource perspective and the last
article focuses only on the knowledge resource
26
Title Objective Method Conclusions
PART I Introduction
Chapter four (article 1)
A classification of the Corporate Entrepreneurship Umbrella Labels and Perspectives
To get an overview of the literature within the area of corporate entrepreneurship and define corporate entrepreneurship and intrapreneurship
Academic research literature review
Corporate Entrepreneurship can be divided into intrapreneurship and exopreneurship which again can be categorised into four perspectives corporate ventures internal resources internationalisation and networks The difference between corporate entrepreneurship and intrapreneurship is a question of the boundaries of the firm
PART II Intrapreneurship the Internal Resource Perspective
Chapter six (article 2)
Losing Innovativeness The Challenge of being Acquired
To study what happens to the employees of an entrepreneurial company when it is taken over by another firm
A case study based on multiple methods interviews observations and a questionnaire
The driving forces (innovation creativity and innovative processes) of a company are likely to disappear when it is incorporated into a mature organisation
Chapter seven (article 3)
Enabling Intrapreneurship The case of a knowledge-intensive industrial company
To study intrapreneurial enablers in a ldquonaturalrdquo setting
An embedded case study based on interviews and observations
The factors enabling intrapreneurship are changing with changing ldquosocietiesrdquo
PART III Managing Internal Knowledge Resources
Chapter eight (article 4)
Understanding Intrapreneurship by Means of State-of-the-art Knowledge Management and Organisational Learning Theory
To enlighten theories of intrapreneurship and innovation by applying state-of-the-art knowledge management theory and organisational learning
Literature review A framework for intrapreneurship and innovation based on knowledge has been developed which defines the task of intrapreneurship as a combination of innovation management and the learning-related concepts of exploitation and exploration
Chapter nine (article 5)
Knowledge Management in Practice An Epistemological Analysis of Project Management in Two Danish Companies
To study how different perspectives influence the management of an organisationrsquos knowledge resources
Two embedded case studies based on interviews and observations
Managerial awareness of different approaches to managing knowledge resources gives a greater degree of freedom and helps foster mutual understanding within an organisation
Table A Summary of the six articles in the dissertation
27
24 REFERENCES
Abrahamson E 1996 Management Fashion Academy of Management Review
21(1)254-285
Biggadike R 1979 The risky business of diversification Harvard Business Review
Vol 57 No 3 pp 103-111
Brockhaus RH amp PS Horwitz 1986 The psychology of the entrepreneur In DL
Sexton amp RW Smilar (eds) The art and science of entrepreneurship Cambridge
MA Ballinger
Burgelman RA 1983 A process model of internal corporate venturing in the
diversified major firm Administrative Science Quarterly Vol 28 No 2 pp 223-
244
Carrier C 1994 Intrapreneurship in large firms and SMEs A comparative study
International Small Business Journal Vol 12 No 3 pp 54-61
Chesbrough HW 2000 Designing Corporate Ventures in the Shadow of Private
Venture Capital California Management Review Vol 42 No 3 pp 31-49
Christensen KS 2004 A classification of the corporate entrepreneurship umbressl
labels and perspectives International Journal of Management and Entreprise
Development Vol 1 No 4 pp 301-315
Collins NC amp DG Moore 1964 The Enterprising Man East Lansing MI
Michigan State University
Drucker PF 1993 Post-capitalist society Oxford Butterworth-Heinemann
Drucker PF 2002 Managing in the Next Society Oxford Butterworth-Heinemann
28
Ellis RJ amp NT Taylor 1987 Specifying entrepreneurship In NC Churchill JAn
Hornaday BA Kirchhoff OJ Krasner amp KH Vesper (Eds) Frontiers of
entrepreneurship research Wellesley MA Babson College pp 527-541
Gartner WB 1988 Who is an entrepreneur Is the wrong question American
Journal of Small Business Vol 12 pp 11-32
Gartner WB 1989 Some suggestions for research on entrepreneurial traits and
characteristics Entrepreneurship Theory amp Practice Vol 14 No 1 pp 27-38
Grant RM 1996 Toward a knowledge-based theory of the firm Strategic
Management Journal Vol 17 pp 109-122
Guth WD amp A Ginsberg 1990 Guest editorsrsquo introduction corporate
entrepreneurship Strategic Management Journal Vol 11 pp 5-15
Hitt MA RD Ireland SM Camp amp DL Sexton 2001 Guest Editorsrsquo
Introduction to the Special Issue Strategic Entrepreneurship Entrepreneurial
Straetgies for Wealth Creation Vol 22 pp 479-491
Hitt MA RD Ireland SM Camp amp DL Sexton 2002 Strategic
Entrepreneurship Integrating Entrepreneurial and Strategic Management
Perspectives In MA Hitt RD Ireland SM Camp amp DL Sexton (eds) Strategic
Entrepreneurship Creating a New Mindset Oxford Blackwell Publishers
Hornsby JS DW Naffziger DF Kuratko amp RV Montagno 1993 An Interactive
Model of the Corporate Entrepreneurship Process Entrepreneurship Theory amp
Practice Vol 17 No 2 pp 29-37
Hornsby JS DF Kuratko amp SA Zahra 2002 Middle managers perception of the
internal environment for corporate entrepreneurship assessing a measurement scale
Vol 17 No 3 pp 253-372
29
Ireland RD JW Webb amp JE Coombs 2005 Theory and methodology in
entrepreneurship research In D Ketchen amp DD Bergh (eds) Research
methodology in strategy and management Vol 2 pp 1-32
Kirzner IM 1985 Discovery and the capitalist process Chicago University of
Chicago Press
Low MB 2001 The adolescence of entrepreneurship research Specification of
purpose Entrepreneurship Theory and Practice Vol 26 No 4 pp 17-25
Lumpkin GT amp GG Dess 1996 Clarifying the entrepreneurial orientation
construct and linking it to performance Academy of Management Review Vol 21
pp 135-172
McClelland DC 1961 The Achieving Society New York Free Press
Morris MH amp DF Kuratko 2002 Corporate Entrepreneurship Orlando Florida
Harcourt College Publishers
Pinchot G 1985 Intrapreneuring Why You Donrsquot Have to Leave the Corporation to
Become an Entrepreneur New York Harper amp Row
Sahlin-Andersson K amp L Engwall (eds) 2002 The Expansion of Management
Knowledge Stanford Stanford University Press
Schollhammer H 1981 The efficacy of internal corporate entrepreneurship
strategies In KH Vesper (ed) Frontiers of Entrepreneurship Research Babson
College Wellesley MA
Schumpeter JA 1934 The theory of economic development Harvard University
Press Cambridge MA
30
Sharma P and Chrisman JJ 1999 Toward a reconciliation of the definitional issues
in the field of corporate entrepreneurship Entrepreneurship Theory amp Practice Vol
22 pp 43-68
Stevenson HH amp JC Jarillo 1990 A paradigm of Entrepreneurship
Entrepreneurial Management Strategic Management Journal Vol 11 pp 17-27
Teece DJ 1998 Capturing value from knowledge assets the new economy markets
for know-how and intangible assets California Management Review Vol 40 pp 55-
79
31
CHAPTER 3
Methodology
Since the research themes were initially broadly defined and the field of
intrapreneurship in its infancy it was considered prudent not to preclude any
interesting issues and empirical phenomena that might appear in the course of the
project etc by using a too narrow definition of the intrapreneurship concept (cf
Sharma amp Chrisman 1999) Furthermore as part of the KNORI project (see chapter
1) it was also given that 5-6 companies would participate in the project and form the
empirical basis for the research
The fact that the companies had to be selected early in the project and participate in
workshops organised within the framework of the KNORI ndashproject was a challenge
from the beginning At such an early stage it was not possible to design a detailed
research strategy and it would have been even harder to specify exactly how
activities in the companies could be the basis for empirical research Moreover it was
difficult to know whether comparative studies of the companies were feasible
In consequence it was decided that a qualitative case-based research approach would
be the most appropriate that different methods of collecting data could be used in
different companies and that the companies participating in the KNORI project could
form the basis for different papers that addressed different aspects of the overall
research issues
32
This chapter describes the way the five case companies were selected and provides
some background information on each of them Furthermore the chapter also
presents the overall considerations in relation to the chosen methodology More
details about the methods used in specific studies reported in the three empirical
articles (paper 2 3 and 5) are to be found in the respective articles
31 FROM PARADIGM TO RESEARCH APPROACH
A qualitative-oriented research project is not so much a question of method as one of
methodology ie the general approach to studying the research topics (Silverman
1993) Traditionally however methodology is intimately related to the positioning of
research within various research paradigms The methodological assumptions thus
become intertwined with both ontology and epistemology and become the primary
vehicle for directing the research and influencing its aim and purpose
When different research approaches are characterised within the social sciences a
distinction is often made between contrasting views like subjectivism versus
objectivism nominalism versus realism romanticism versus neopositivsm
constructivism versus non-constructivism constructivism versus positivism
interpretative versus functionalistic humanist versus structuralist etc (see for
example Burrell amp Morgan 1979 Guba amp Lincoln 1994) Such classifications are
widespread and two-by-two-ways classifications eg Burrell amp Morganrsquos (1979)
framework do have some intuitive appeal However as described by Lauring (2007)
the implications of paradigmatic positioning of research have also been criticised by
researchers (eg Deetz 1996 Alvesson 2003) who argue that the classifications do
not reflect contemporary research traditions adequately and that paradigmatic
positioning puts too much emphasis on incommensurability between research
paradigms (Deetz 1996)
33
As a crude distinction between research approaches we find that on the one hand
qualitative studies are most often inspired by some kind of romanticsm
constructivism or at least non-positivism ndash while on the other hand both
quantitative and qualitative studies are characterised either by functionalism
neopositivism or non-constructivism This is by no means a clear-cut distinction but
because non-positivist-inspired research most often aims at understanding
phenomena in practice it seems appropriate to contrast it with research paradigms
based on a functionalistic ontology inasmuch as functionalism is prescriptive and
non-positivism descriptive (see also Andersen amp Skaates 2004)
From this point of view the approach taken in this PhD project is best characterised
as a qualitative non-positivist study without strictly claiming constructivism or
similar concepts This influences the questions asked during an interview etc
because functionalistic questions are concerned with what is effective whereas for
example constructivist questions focus on how things work This is also reflected in
the purpose of this study where a clear functionalistic approach might have implied a
wish to improve effectiveness whereas the qualitative approach taken is mostly
oriented towards improving the understanding of intrapreneurship
A qualitative study requires close contact with the subject involved rather than
objective distance and any insights gained are limited to the particular companies
and issues studied and persons interviewed This does not as we will return to in
section 36 preclude generalisations however Rather the qualitative approach
involves an ongoing reflection on data and a positioning against different theories
such that the data can contribute to and further refine the research questions
34
32 UNIT OF ANALYSIS
In most research areas including intrapreneurship variables and concepts with the
same names are studied at different levels of analysis (Ireland et al 2005) and in
general it is not clear a priori whether the meaning of the variables etc at different
levels are identical As an example Klein et al (1994 p 206) mention Lawless amp
Pricersquos (1992) study of the roles that technology champions and users play during
innovation adoption While the term champion is clearly defined (Lawless amp Price
1992 p 342) the term user is not Are users independent individuals or homogenous
members of technology-adopting organisations and should the model consequently
be tested within a single organisation or across organisations
Ideally for valid and theory-consistent evidence to be provided the following must
be aligned The level of theory ie what is to be explained the level of measurement
ie what is the source of evidence and the unit of analysis ie what is treated as
observations (Klein et al 1994 Kozlowski amp Klein 2000) The empirically-oriented
literature on intrapreneurship entrepreneurship innovation and related areas differ on
what constitutes the level of the analysis (cf Ireland et al 2005 p 560) At the one
extreme is the innovativeness of a country or region often compared with other
countries or regions Even though a questionnaire approach and analysis of register
data is most often used in this connection a whole country could be considered a case
to be analysed
At the other extreme there is the most detailed level of analysis the individual level
where the focus is often on the individualrsquos characteristics (see for example
Brockhaus 1980 Davis 1999 Hisrich 1990) The second most detailed level is the
group level which mainly centres on the collective of individuals and competencies
and on how the different perspectives talents and ideas of different members of the
35
group or project influence for example knowledge-sharing (Cummings 2004) and
group-based rewards (Zenger amp Marshall 2000)
The third level is the organisational level (see for example Zahra et al 1999)
which focuses on how an organisation can create a context where individuals and
groups can be innovative (see for example Covin amp Slevin 1988 Nonaka amp
Takeushi 1995) and creative (Amabile et al 1996) Not surprisingly this level is
also the focal point for much organisational research eg how innovation is sustained
over time (Dougherty amp Hardy 1996) how the availability of resources promote
innovation (Nohria amp Gulati 1996) how corporate strategy influences innovation
(Hitt et al 1996) and how inter-unit co-operation regarding knowledge transfer and
learning contributes to their ability to innovate (see for example Kogut amp Zander
1992 Tsai 2001)
At the fourth level intrapreneurship or corporate entrepreneurship can also be seen as
a matter of inter-organisational co-operation or alliance (see for example Antoncic
2001 Foray 1991) One reason companies often collaborate is because they have
complementary competencies The inter-organisational level thus typically focuses on
the interplay between companies (see for example Smith et al 1995) in the same
way as the group level focuses on the interplay between individuals in a group which
means that the inter-organisational unit can be seen as ldquogrouprdquo However according
to Foray (1991) the difference between intra-company and inter-company co-
operation is that the former depends on the learning and flexibility capacities of
human resources while the latter depends on the capacity of human resources to
become specific Antoncic (2001) finds that communication trust and management
support are important characteristics in both intra- and inter-organisational co-
operation
36
The fifth level of analysis the regional or national level is appropriate for analysing
innovation systems (cf Lundvall 1992) or more broadly a countryrsquos innovative
capability as already attempted in McClelland (1961) where the practical
applications of the research could for example be related to regional policy (see for
example Lundvall 1992 Storper 1997) national policy (see for example Busenitz
et al 2005 Lundvall 1992 Nyholm amp Langkilde 2003) or national culture (see
for example Busenitz et al 2005 Steensma et al 2000)
This dissertation focuses on how organisations can be intrapreneurial and takes a
starting point in the third level of analysis the organisational level as described
above However since the case companies differ substantially in size some variation
in the interpretation of lsquoorganisationrsquo was allowed In this sense it might therefore
be more appropriate to talk about the level of analysis as being the organisational
object anchored in the individual organisation where new knowledge of importance
for the renewal of the organisation is created Irrespective of the level of analysis in a
qualitative study data is collected from individuals When theories are formulated at a
higher level eg the organisational level as in this dissertation it means that actions
must be taken to ensure that the level of measurement and the unit of analysis are
aligned with theory This implies that the interviews should aim at capturing
organisational rather than uniquely individual characteristics One way of ensuring
this is to select lsquorepresentativersquo employees for interviewing and another is to evaluate
responses from individuals relative to others In practice in the articles in this
dissertation (eg paper 3 and 5) we have often chosen to let respondentsrsquo views
represent their respective departments or company rather than themselves as
individuals
37
33 SELECTION OF THE CASE COMPANIES
The articles in the dissertation are based on five different case companies selected for
participation in the KNORI project Although the research project cannot for various
reasons be regarded as a comparative case study of the five companies they were
selected on the basis of methodological considerations similar to a comparative case
study approach
One approach to selecting cases for a comparative case study is Yin (2003) where he
emphasises that there are two ways to select cases for multiple-case studies The
cases should either ldquo(a) predict similar results (a literal replication) or (b) produce
contrasting results (a theoretical replication)rdquo (Yin 2003 p 47) However the aim
of the KNORI project was not to test a predetermined hypothesis or take a starting
point in specific propositions as is implicit in Yinrsquos approach Rather the project was
more oriented towards understanding the concept of intrapreneurship and identifying
challenges and possibilities for knowledge-intensive organisations
Consequently the cases were selected according to Gummessonrsquos (1991) theoretical
sampling ie based on the different ways they represent lsquorealityrsquo The approach taken
was based on the recognition that organisational renewal and innovation could have
different origins according to different understandings of the main production
processes in a company
As a rule a traditional production company is functionally organised where
production salesmarketing and research amp development take place in separate
organisational units (cf Sundbo 2001 p 104) and maybe even in separate physical
locations (as is the case with BampO see appendix 1) Although innovative activities
can potentially be initiated in any department the RampD department is traditionally
the driving force behind product innovations
38
At the other organisational extreme are companies that have no other product than
research and sometimes not even a separate customer-oriented department Here
research can be said to be in the form of production processes which are in
principle integrated with innovative activities These two ways of organising
innovative activities are shown on the right- and left-hand side of figure 31
respectively The arrows connecting the various processes that lead to innovation
production or development with the organisational focal point production process or
RampD department indicate that even if the unit of analysis is the single organisation
the expected locus for innovation is different
Figure 31 Production structure and organisation of innovative activities
The middle part of figure 31 shows project-oriented organisations where solutions or
products are developed either for customers or carried out together with them eg in
their own organisation Even though such companies can have both a separate RampD
department and a separate sales force production takes place in development
projects which are often customer-specific and also the source of innovations
Productionprocesses
Developmentproject
Developmentprocesses
Renewal occursin the production
processes
Renewal occurs in the development
projects
Renewal occursin the RD processes
Innovation profitability growth change of industry rules new business unit spin-offs etc
Organisational renewal
39
This typology is of course a very crude generalisation of how innovative activities
are formally organised In reality companies might have characteristics of all three
organisational forms and innovative activities are in no way restricted to specific
departments Furthermore figure 31 illustrates only the formal way of organising
innovation whereas innovations can ldquopop uprdquo in any part of the organisation and
sometimes even be systematic activities that take place despite an organisational
structure that otherwise inhibits them
It should also be noted that the framework in figure 31 is oriented towards
technological innovations whereas non-technical (social) innovations are most often
developed in departments other than RampD In addition with respect to service
companies the role of the lsquoInnovation Departmentrsquo may as observed by Sundbo
(1998 cf Sundbo 2001 p 105) be more of a boundary-spanning unit where new
ideas are collected and promoted among employees and managers
For this dissertation it was decided to approach potential case companies that as far
as possible represented the different organisational forms shown in figure 31 Some
flexibility was allowed in categorising the companies since as discussed above each
company had multiple ways of organising innovation Furthermore given the
explorative nature of the project the research possibilities in each company were
expected to be quite different therefore insights gained through the research process
would probably be more decisive for the specific focus than how the case companies
were originally selected
The original plan was to select the cases from among information and
telecommunications (ICT) companies in northern Jutland since the KNORI project
was based on precisely these types of companies However it became clear from very
early in the selection process that many of these companies were competitors and
that it could therefore be difficult to organise knowledge-sharing seminars if the
40
project only included these companies It was therefore decided to include other
technology-based companies as well as companies in other parts of Jutland
34 THE CASE COMPANIES
The initial contact was with two companies from the north Jutland ICT sector
End2End and Bang amp Olufsen since they were competing in quite different areas
Subsequently Ericsson Telebit Aarhus was also invited to participate in the project
as was FKI Logistics Crisplant also from Aarhus although Crisplant is not an ICT
company in a strict sense Finally on the suggestion of Bang amp Olufsen we
contacted Danfoss Drives in Graasten
In all therefore five companies have participated in the project and were interviewed
according to the same interview guide However Crisplant suffered a cut-back in
business activities shortly after the project started and lacked the resources to
participate fully in the project A sixth company took part in the project up to and
including the introductory meeting but due to a change of strategy in the parent
company it ended operations shortly after the project start
Contact with the companies during the project has varied according to how they
formed the empirical basis for the articles The specific methodological approach
chosen and a brief presentation of the individual companies is given in the articles
Appendix A includes a more detailed presentation of the five case companies
35 THE CASE STUDY APPROACH
The dissertation adopts a qualitative interpretative approach where the main part of
the empirical material for the study consists of research interviews observations from
visits to the companies written material collected from the companies and
41
observations at the meetings for the KNORI project However the most important
data source is the semi-structured research interview
The main strength of the case study approach is the ability to deal with a variety of
evidence documents questionnaires interviews and observations in a flexible
manner In particular this approach is suitable when exploring an emerging field
(Zahra 2007) or when unfamiliar practices are examined in specific companies As
stated by Laurila (1997 p 222-223) the feasibility of case studies is based on the
opportunities they create for observing and describing a complicated research
phenomenon in a way that allows for analytical generalisations (Dyer amp Wikins
1991 Eisenhardt 1989 Tsoukas 1989) of the observations
351 Definition of a case study
Yin (2003 p 13) defines a case study as ldquoan empirical inquiry that investigates a
contemporary phenomenon within a real-life context especially when the boundaries
between phenomenon and context are not clearly evidentrdquo In addition case studies
are usually based on a qualitative methodological point of origin which according
to Denzin and Lincoln (1994 p 4) includes methods that ldquoimply an emphasis on
processes and meanings that are not rigorously examined or measured (if measured at
all) in terms of quality amount intensity or frequencyrdquo
Although the case companies were difficult to compare in a strict sense the basis for
selecting them was that as far as possible they should face lsquosimilarrsquo challenges in
relation to intrapreneurship and as regards participation in KNORI they were also
potentially subject to a similar lsquointerventionrsquo Therefore the project can be said to be
partly based on an ldquoEmbedded Multiple Case Study Designrdquo (cf Yin 2003) the
results of which are potentially more compelling than the results from a single case
study
42
single-case designs multiple-case designs
holistic
(single-unit of analysis)
embedded
(multiple-unit of analysis)
CONTEXT
Case
CONTEXT
CaseEmbedded
Unit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
CONTEXT
Case
EmbeddedUnit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
EmbeddedUnit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
EmbeddedUnit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
EmbeddedUnit of analysis 1
EmbeddedUnit of analysis 2
CONTEXT
Case
CONTEXT
Case
CONTEXT
Case
Christensen (2005) Chapter 7
Christensen (2006) Chapter 6
Christensen Bukh amp Bang (2007) Chapter 9
Figure 32 Basic types of case study designs (Yin 2003 p 40) including an outline
of the empirical articles in this dissertation
As shown in figure 32 case studies can involve either a single case (eg Christensen
2005 chapter 7 Christensen 2006 chapter 6) or multiple cases (eg Christensen et
al 2007 chapter 9) and they can be either holistic (eg Christensen 2006) or
embedded (eg Christensen 2005 Christensen et al 2007) ie where one or more
unit(s) of analysis is involved (Yin 2003)
352 Action research or research in action
It should be noted that both the study of the companies in the articles and the
summarising conclusions of these articles (see chapter 10) are likely to be influenced
by interaction with the companies during the KNORI project In general research
cannot be carried out independently of the researchersrsquo underlying assumptions about
the nature of knowledge and how it can be acquired (see for example Andersen and
43
Skaates 2004 Guba and Lincoln 1994) What is of more concern here however are
the factors influencing the research process and specifically the interviews carried
out during the KNORI project
One possibility after the companies were approached in Summer 2002 and the first
KNORI meeting in March 2003 was that they might initiate new intrapreneurship-
related projects and that as a result of interaction with the researcher and with each
other at the KNORI meetings their understanding of the intrapreneurship concepts
would be heavily influenced by this process
Thus both the project set-up and the nature of possible research questions suggested
an interventionist approach (cf Joumlnsson amp Lukka 2007) which makes active use of
participant observations Although there are numerous variations interventionist
research covers such methodologies as action research (Lewin 1948) action science
which promotes learning in the client organisation (Argyris et al 1985) and so-
called constructive research approaches (Kasanen et al 1993) The methodology
most often used by researchers is action research which according to Eden and
Huxham (1996 p 526) can be understood as research embodying ldquoresults from an
involvement by the researcher with members of an organisation over a matter which
is of real concern to them (and) in which there is intent by the organisation to take
action based on the interventionrdquo
However considering the limited interaction between the companies at the meetings
and the diverse analytic approaches chosen it was judged that the articles in the
dissertation can be considered as separate studies of related concepts rather than a
tightly integrated research project Furthermore the research carried out in the
companies and reported in the articles is only very slightly influenced by the project
set-up at least not in a manner where the project can be considered as action
research
44
36 VALIDITY OF THE METHODOLOGY
A study which focuses on a few and very different companies in specific business
contexts will always be limited as regards to statistical generalisations hypothesis-
testing etc As could be seen from the brief discussion in section 31 statistical
testing of theoretically-derived hypotheses is not an aim of research projects based on
the qualitative non-positivist approach However this does not diminish the need for
addressing quality criteria of the research
One of the major challenges of case studies based on research interviews is how to
assure some kind of lsquoverificationrsquo of the conclusions Traditionally this is a matter of
validity and reliability where the latter has entered social science research through
the use of research tools such as questionnaires (primarily used in (neo)positivistic
studies) and interview guides (used more broadly in qualitative studies)
In qualitative studies the reliability or consistency of the results interviews
transcription and analyses is ensured by taking special care to minimize errors and
biases eg by not asking leading questions By comparison according to Kvale
(1996 p 238) validity has to do with the conformity of the phenomenon studied and
the way it is studied As Ahrens amp Chapman (2007) point out the question of
reliability takes on a different significance in qualitative studies that are only partly
based on research instruments as is the case in this dissertation which initially used a
loosely structured thematic interview guide and where a questionnaire was used in
one of the companies (see article 2 chapter 6)
Social reality is fundamentally contextndashspecific and interviewees ldquocan and do strive
to undo their history and invent new concepts images and ways in which they want
them to infuse actionrdquo (Ahrens amp Chapman 2007 p 311) On the one hand
therefore there is no hard data eg questionnaire data that can be verified by means
of statistical tests and on the other we have a number of contextual factors
45
including the dialogue with the researcher the interview design and the researcherrsquos
interests which cannot be separated from the data As Ahrens amp Chapman (2007)
also stress this means that we ldquoshould not expect identical results when two
researchers study the same organisation from different points of viewrdquo (Becker 1970
p 20) but we should expect that ldquothe conclusions of one study do not implicitly or
explicitly contradict those of the otherrdquo (ibid) Thus the methodological
considerations in this dissertation will primarily emphasise validity while at the same
time paying due respect to the implications for generalisation and reliability
Returning to the question of generalisations the research interviews carried out in the
companies were inspired by Kvale (1997) who argues that besides reliability and
validity the verification of a case study relates to generalisation This can be obtained
in different ways Analytical generalisation ie taking a specific case out of context
by relating observations to existing theory and through analytic abstraction which
obtains new theoretical insights via an inductive method (Yin 2003 Kvale 1997)
Here the theoretical framework presented in article 1 (Chapter 4) becomes to some
extent the vehicle for analytic generalisation although generalisation per se is not a
major aim of the project The empirical part of the dissertation consists of articles
and as mentioned above the data are not analysed in such a way that consistent
conclusions can be drawn by comparing case studies across all the companies
participating in the KNORI project
361 The use of Multiple Sources of Evidence
One way of ensuring validity is to approach the research questions by means of
different methods using redundancy to lsquotriangulatersquo the data (see for example
Denzin 1989 Yin 20034) Since qualitative studies have often been criticised for
being unreliable one way of improving the rigour of qualitative research is to use
46
multiple sources of evidence so that the results converge to support one explanation
(see for example Andersen amp Skaates 2004 Yin 2003)
Although in a stricter sense triangulation (Denzin 1989 Jick 1979) implies that
different methods are used in combination to study the same phenomenon it is
common to use the term more broadly (see for example Andersen amp Skaates 2004
Patton 1987 Yin 2003) and consider different types of triangulation Data
triangulation investigator triangulation theory triangulation and methodological
triangulation However the use of this broader interpretation of triangulation has
more to do with finding additional evidence to support or question the relations
between the initial data and the argument than of capturing a more objective reality
Here the broad interpretation of triangulation is used the project being based partly
on data triangulation and partly on methodological triangulation including semi-
structured open-ended interviews review of organisational documents and
observation during visits to the companies and at the KNORI meetings On the other
hand intrapreneurship will be addressed from different theoretical angles and the
management of knowledge from different perspectives It should be noted however
that no attempt is made to formally analyse the various sources of information in
order to examine whether they lead to similar conclusions etc
37 THE RESEARCH INTERVIEWS
The primary source of data in the case studies is the research interview which
according to Kvale (1996) is a form of professional conversation for the purpose of
obtaining ldquodescriptions of the life world of the interviewee with respect to
interpreting the meaning of the described phenomenardquo (Kvale 1996 p 5-6) The key
phenomena of interest in this project are intrapreneurship innovativeness strategy
knowledge and the management of knowledge-based processes and an analysis of
47
their potential in specific companies implies an examination of the phenomena in
ldquothe real worldrdquo
The initial aim of the project was to describe analyse and interpret the central themes
or phenomena how they are experienced by the respondents and together with the
interviewee to develop an understanding of them As far as possible the aim of the
questions asked was to validate or invalidate the respondentrsquos statements and the
ambiguities that arose during the interview
In all five companies the interviews were based on more or less the same structure
ie a semi-structured interview guide (see figure 33) Several employees in each
company were interviewed with a focus on four main themes Background
information organisation of innovativeness and intrapreneurial activities innovation
and innovativeness and enablersbarriers The interviews were held in a
conversational style and the respondents were asked to tell the story of the company
how they perceive innovation why the company needs to be innovative where in the
organisation innovations are created how they are organised and which enablers
encourage and support them to be innovative and how The interviews which lasted
an average of one-and-a-half hours were taped and transcribed Field notes were
written at the end of each day
The interviewees were chosen from different positions in the case companies and
where possible from similar functional areas and areas of responsibility In order to
get a broader perspective on the same themes the formal interviews were supported
or validated by more informal conversations with other employees and through
observations In practice the interviews focussed on the areas which the respondents
felt most familiar with and where possible the focus was on intrapreneurial activities
48
Figure 33 Common interview guide for the basic data collection
A total of 19 persons (6 engineers 6 functional managers 5 project managers and 2
from HR departments) were interviewed based on the interview guide shown in
figure 33 As far as possible the interviews involved employees in different
positions within the individual company but in the same positions across the
A Background information
bull Name background education how long with the company role in the company
bull Important events during the history of the company ndash eg acquisitions spin-offs central employeescustomers and change strategy
bull The company as a place to work
B Organization of innovativeness and intrapreneurial activities
bull Is the company innovative What does this mean examples
bull What is central in relation to innovation what drives innovation
bull Organisation of the innovative activities
C Innovation and innovativeness
bull How do you perceive innovation ndash eg product process strategy or administrative
bull Events in relation to innovation ndash eg employees ldquoheroesrdquo etc
bull Why is it necessary to be innovative ndash eg market techonology knowledge-creation and history
bull The possibility to plan innovation ndash whywhy not
bull Special characteristics of working with innovation
bull Where in the company are innovations created the type of innovation
bull Innovation in collaboration with customers
D Enablers of and barriers to innovation
bull The culture ndash eg describe your daily work How is your job different from others
bull Do you use specific models How is your job different from others
bull Rewards ndash eg financial recognition and ldquofreedomrdquo
bull Does management support your ideas Can you work on them Do others support your ideas
bull Resources ndash eg time financial materials etc
bull The organizational structure
bull When do you announce your ideas Do you normally work on them in advance Are there rules for when an idea can become a project in the departmentat the company level Who decides whether something is a good idea or not What happens when a project turns out to be a failure
bull Communication ndash eg how does communication work Do you have problems with communicationmisunderstandings because of language Company-specific language Improvements
bull Other things
49
companies Three interviews per company were planned prior to each of the visits
but at some companies more interviews were arranged during the visit
In relation to article 5 (Christensen et al 2007) additional interviews were carried
out according to a semi-structured interview guide focussing on the management of
knowledge-based resources In total 10 interviews five in each company were
conducted with employees holding different positions but similar responsibilities
across the companies
371 The transcription process
All formal interviews were taped and transcribed Initially it was planned to analyse
the data systematically using a content analysis approach implying that the
transcription would be separated into different parts (clauses) which would be
classified into content categories (see for example Gerbner et al 1969 and Weber
1985) Even though content analysis is often presented as a technique for the analysis
of archival data in the form of documents (see for example Miles and Huberman
1994 p 54-55) according to Weber (1985) the method can also be used more
broadly to analyse any written text including transcriptions Since this method
provides a firm ground for assessing reliability and validity in a traditional sense it
was thought that this method could be used to increase reliability
There are different techniques for text analysis ranging from simple hand-coding to
advanced computer programs However as Weber (1985 p 69) emphasizes ldquothere is
no single ldquoright wayrdquo to do content analysisrdquo The coding in this project was based on
the classification of the intrapreneurship literature presented in article 1 and on a
study of the factors enabling intrapreneurship (see article 3) a coding structure was
subsequently developed and systematically applied in most of the interviews
50
Classical content analysis assumes that relevant theories have been specified the
themes or research questions to be investigated are substantive and that the main
coding categories have been theoretically justified ( see for example Stone et al
1966 Weber 1985) in a way that has already determined or described codes as a
starting point (cf Ryan amp Bernard 2000 p 785) Early in the research process it
was realised that on the one hand this was difficult to reconcile with the general
methodological approach in the dissertation and on the other that it was difficult to
control how the categorisation was determined beforehand and how it would affect
the reliability and validity of the data when they are reduced and classified into fewer
categories (cf Weber 1985) It was therefore decided not to use content analysis to
interpret the interview data Nonetheless familiarity with the data together with the
linking of specific interview data and for example the various enablers and barriers
to innovativeness still proved useful when the articles were written
38 REFERENCES
Ahrens T amp C S Chapman 2007 Doing qualitative Field Research in Management
Accounting Positioning data to contribute to theory In C S Chapman A G
Hopwood amp M D Shields (eds) Handbook of Management Accounting Research
Amsterdam Elsevier
Alvesson M 2003 Beyond neopositivists romantics and localists A reflexive
approach to interviews in organisational research Academy of Management Review
Vol 28 No1 pp 13-33
Amabile T M R Conti H Coon J Lazenby amp M Herron 1996 Assessing the
work environment for creativity Academy of Management Journal Vol 39 No 5
pp 1154-1184
51
Argyris C R Putnam amp S D McLain 1985 Action Science San Francisco
Jossey-Bass
Andersen P H amp M A Skaates 2004 Ensuring validity in qualitative international
business research In Welch C amp R Marschan-Piekkari (eds) Handbook of
Qualitative Research Methods for International Business Edward Elgar Publishers
Antoncic B 2001 Organizational processes in intrapreneurship a conceptual
integration Journal of Enterprise Culture Vol 9 No 2 pp 221-235
Becker H S 1970 Sociological Work Methods and Substance Chicago Aldine
Brockhaus R H 1980 Risk-Taking Propensity of Entrepreneurs Academy of
Management Journal Vol 23 No 3 pp 509-520
Burrell G amp G Morgan 1979 Sociological Paradigms and Organizational
Analysis Aldershot England Ashgate Publishing
Busenitz L W C Goacutemes amp J W Spencer 2000 Country institutional profiles
Unlocking entrepreneurial phenomena Academy of Management Journal Vol 43
No 5 pp 994-1003
Covin J G amp D Slevin 1988 The influence of organization structure on the utility
of an entrepreneurial top management style Journal of Management Studies Vol 25
No 3 pp 217-234
Cummings J N (2004) Work groups structural diversity and knowledge sharing in
a global organization Management Science Vol 50 No 3 pp 352-364
Davis K S 1999 Decision criteria in the evaluation of potential intrapreneurs
Journal of Engineering and Technology Managment Vol 16 pp 295-327
52
Deetz S 1996 Describing differences in approaches to organization science Re-
thinking Burell and Morgan and their legacy Organization Science Vol 7 No 2
pp 191-207
Denzin N K 1989 Strategies of Multiple Triangulation In N K Denzin The
Research Act (3rd edition) Englewood Cliff NJ Prentice Hall pp 235-247
Denzin NK amp YS Lincoln 1994 Handbook of qualitative research Thousand
Oaks CA Sage
Dougherty D amp C Hardy 1996 Sustained product innovation in large mature
organizations Overcoming innovation-to-organization problems Academy of
Management Journal Vol 39 No 5 pp 1120-1153
Dyer WG amp Wilkins AL 1991 Better stories not better constructs to generate a
better theory a rejoinder to Eisenhardt Academy of Management Review Vol 16
No 3 pp 613-619
Eden C amp C Huxham 1996 Action research for the study of organizations In
Handbook of Organization Studies Stewart R C Hardy amp W North (eds) London
Sage
Eisenhardt KM 1989 Building Theories from Case Study Research Academy of
Management Review Vol 14 No 4 pp 532-550
Foray D 1991 The secrets of industry are in the air Industrial cooperation and the
organizational dynamics of the innovative firm Research Policy Vol 20 No 5 pp
393-405
Gerbner G O R Holsti K Krippendorff W J Paisley P J Stone (eds) 1969
The Analysis of Communication Content New York John Willey amp Sons
53
Guba E G amp Y S Lincoln 1994 Competing paradigms in qualitative research In
N K Denzin og Y S Lincoln Handbook of qualitative research Thousand Oaks
CA Sage 105-117
Gummesson E 1991 Qualitative Methods in Management Research Newbury Park
California Sage
Hisrich RD 1990 EntrepreneurshipIntrapreneurship American Psychologist Vol
45 No 2 pp 209-222
Hitt M A R E Hoskisson R A Johnson amp D D Moesel 1996 The market for
corporate control and firm innovation Academy of Management Journal Vol 39
No 5 pp 1084-1119
Ireland R D C R Reutzel amp J W Webb 2005 Entrepreneurship research in AMJ
What has been published and what might the future hold Academy of Management
Journal Vol 48 No 4 pp 556-564
Jick T D 1979 Mixing Qualitative and Quantitative Methods Triangulation in
Action Administrative Science Quarterly Vol 24 No 4 pp 602-611
Joumlnsson S amp K Lukka 2007 There and Back Again Doing Interventionist
Research in Management Accounting In Handbook of Management Accounting
Research CS Chapman AG Hopwood amp MD Shields (eds) Amsterdam
Elsevier
Kasanen E K Lukka amp A Siitonen 1993 The constructive approach in
management accounting research Journal of Management Accounting Research
Vol 9 pp 241-264
Klein K J F Dansereau amp R J Hall 1994 Levels issues in theory development
data collection and analysis Academy of Management Review Vol 19 pp 195-229
54
Kogut B amp U Zander 1992 Knowledge of the firm combinative capacity and the
replication of technology Organization Science Vol 3 pp 383-397
Kozlowski S amp K Klein 2000 A level approach to theory and research in
organizations Contextual temporal and emergent processes In Multilevel Theory
Research and Methods in Organizations Foundations extensions and new
directions K J Klein (ed) San Francisco Jossey-Bass
Kvale S 1997 InterView En introduction til det kvalitative forskningsinterview
Koslashbenhavn Hans Reitzels Forlag
Laurila J 1997 The thin line between advanced and conventional new technology
A case study on paper industry management Journal of Management Studies Vol
34 No 2 pp 221-239
Lauring J 2005 Naringr organisationer bliver mangfoldige Om vidensdeling og
interaktion i etnisk mangfoldinge organsationer phd-afhandling Institut for Ledelse
Handelshoslashjskolen i Aringrhus
Lawless M W amp L L Price 1992 An agency perspective on new technology
champions Organizational Science Vol 3 pp 342-355
Lewin K 1946 Action research and minority problems In Resolving Social
Conflicts Selected papers on Group Dynamics by Kurt Lewin G W Lewin (ed)
New York Harper amp Brothers
Lundvall B Aring (ed) 1992 National Systems of Innovation London Pinter
McClelland D C 1961 The Achieving Society New York The Free Press
Miles M B amp A M Huberman 1994 An Expanded Sourcebook Qualitative Data
Analysis Second Edition Thousand Oaks CA SAGE Publications
55
Nohria N amp R Gulati 1996 Is slack good or bad for innovation Academy of
Management Journal Vol 39 No 5 pp 1245-1264
Nonaka I amp H Takeuchi 1995 The Knowledge-Creating Company Oxford
University Press
Nyholm J amp L Langkilde 2003 Et benchmark studie af innovation og
innovationspolitik ndash hvad kan Danmark laeligre Oslashkonomi- og Erhvervsministeriets
enhed for erhvervsoslashkonomisk forskning og analyse FORA Koslashbenhavn
Patton M Q 1987 How to use qualitative methods in evaluation Newbury Park
CA SAGE Publications
Ryan GW amp H R Bernard 2000 Data Management and Analysis Methods In
Handbook of Qualitative Research (second edition) NK Denzin amp Y S Lincoln
(eds) Thousand Oaks Sage Publications pp 769-802
Sharma P amp J J Chrisman 1999 Toward a reconciliation of the definitional issues
in the field of corporate entreprenruship Entrepreneurship Theory and Practice Vol
22 pp 43-68
Silverman D 1993 Interpreting qualitative data London Sage
Smith K G S J Carroll amp S J Ashford 1995 Intra- and interorganizational
cooperation Toward a research agenda Academy of Management Journal Vol 38
No 1 pp 7-23
Steensma H K L Marino K M Weaver amp P H Dickson 2000 The influence of
national culture on the formation of technology alliances by entrepreneurial firms
Academy of Management Journal Vol 43 No 5 pp 951-973
56
Stone R J D C Dunphy M S Smith amp D M Ogilvie (eds) 1966 The General
Inquirer A computer approach to content analysis Cambridge MIT Press
Storper M 1997 The regional world New York Guilford Press
Sundbo J 1998 The Organisation of Innovation in Services Copenhagen Roskilde
University Press
Sundbo J 2001The strategic management of innovation A sociological and
economic analysis Cheltenham Edvar Elgar
Tsai W 2001 Knowledge transfer in intraorganizational networks effects of
network position and absorptive capacity on business unit innovation and
performance Academy of Management Journal Vol 44 No 5 pp 996-1004
Tsoukas H 1989 The validity of idiographic research explanations Academy of
Management Review Vol 14 No 4 pp 551-61
Weber PR 1985 Basic Content Analysis Beverly Hills CA SAGE Publications
Yin R K 2003 (3rd edition) Case Study Research Design and Methods London
SAGE Publications
Zahra S A 2007 Contextualizing theory building in entrepreneurship research
Journal of Business Venturing Vol 22 pp 443-452
Zahra S A D F Jennings amp D F Kuratko 1999 The Antecedents and
Consequenses of Firm-Level Entrepreneurship The State of the Field
Entrepreneurship Theory amp Practice Vol 24 No 2 pp 45-65
Zenger T R amp C R Marshall 2000 Determinants of incentive intensity in group-
based rewards Academy of Management Journal Vol 43 No 2 pp 149-163
57
CHAPTER 4
A Classification of the Corporate Entrepreneurship Umbrella Labels and
Perspectives
Originally published in
Christensen Karina Skovvang 2004 A Classification of the Corporate
Entrepreneurship Umbrella Labels and Perspectives International Journal of
Management and Enterprise Development Vol 1 No 4 pp 301-315
The article was later improved and published in a Danish Journal
Christensen Karina Skovvang 2005 Corporate Entreprenoslashrskab Begreber og
Perspektiver Ledelse amp Erhvervsoslashkonomi Vol 61 No 1 13-26
Int J Management Enterprise Development Vol 1 No 4 2004 301
Copyright copy 2004 Inderscience Enterprises Ltd
A classification of the corporate entrepreneurship umbrella labels and perspectives
Karina Skovvang Christensen Department of Organisation and Management The Aarhus School of Business Haslegaardsvej 10 Aarhus V Denmark E-mail KaSCasbdk Corresponding author
Abstract The concept of corporate entrepreneurship has been confusingly used by researchers to explain various organisational phenomena such as ways of managing strategy and innovation The abundant use of labels and perspectives interchangeably has consequently led to lack of clarity This article reviews the literature in order to provide an overview and categorisation of corporate entrepreneurship The aim is to clarify the concept by identifying the key perspectives Since there is no unifying theoretical base for the entrepreneurship phenomena ndash due to for example its interdisciplinary grounding in economics sociology and psychology ndash a framework for corporate entrepreneurship is developed consisting of intrapreneurship and exopreneurship These are further broken down into four complementary perspectives corporate venturing internal resources internationalisation and external networks It is hoped that these four perspectives together will give the reader a clearer understanding of corporate entrepreneurship and thereby improve the basis for managerial decisions
Keywords corporate entrepreneurship strategic entrepreneurship intrapreneurship exopreneurship corporate venturing internal resources internationalisation networks framework
Reference to this paper should be made as follows Christensen KS (2004) lsquoA classification of the corporate entrepreneurship umbrella labels and perspectivesrsquo Int J Management Enterprise Development Vol 1 No 4 pp301ndash315
Biographical note Karina Skovvang Christensen is a PhD student MSc (Econ) at the Department of Organisation and Management Aarhus School of Business Denmark Her primary research area is intrapreneurship in knowledge-intensive companies with a focus on how knowledge resources can enable organisational and strategic renewal She is co-author of the book Knowledge Management ndash Establishing a Practice Field (in Danish) and has published articles on knowledge management and related subjects
1 Introduction
Technological and market changes seem to occur faster than we expect and Peter Druckerrsquos old saying that the only constant thing in business is change seems truer than
302 KS Christensen
ever Fast-changing business environments changing business structures and rules of competition are becoming part of the ordinary life of most companies as these are prerequisites for staying in business
Over the past two decades companies in the 1980s and to some extent the 1990s have been characterised by reductions in the workforce downsizing rightsizing budget cuts and the low morale of their workforce [1] While the main focus has been on short-term costs of operations no company can afford to rely on such an approach forever The real challenge for a company to remain a going concern is to establish a competitive advantage The only way to accomplish that is through differentiation and continuous innovation ndash whether it is related to the creation of new products and services production organisational processes or business models According to for example Morris and Kuratko [1] the answer to todayrsquos hyper-competitive environments is adaptability flexibility speed aggressiveness and innovativeness which they boil down to one word ndash entrepreneurship
Companies have been faced by increasing demands for both faster product development and more features in smaller products and higher and uniform quality stability and lower prices despite the inherent incompatibility of such demands The former relates to an entrepreneurial and flexible company while the latter require a well-structured and effective organisation However many large companies seem to find it very difficult to integrate the entrepreneurial spirit in a well-structured or bureaucratic organisation and must therefore think non-traditionally to cope with these increasing paradoxes Some companies tend to stick to the lsquoold waysrsquo of doing business ie preserving the well-known techniques business concepts and ways of cooperation while others reorganise re-create themselves merge and split up become virtual enter new markets and create unforeseen alliances Thus some firms apparently ignore changing market conditions while others act on challenges to the well-established business routines and rules of competition
Researchers and proactive companies have recently become particularly interested in topics such as entrepreneurial management corporate entrepreneurship strategic entrepreneurship and intrapreneurship This may in part be due to the lsquore-labellingrsquo [2] of existing concepts but it has also paved the way for the emergence of new practices and theories However Guth and Ginsberg [3 p 6] argue that lsquodespite the growing interest in corporate entrepreneurship there appears to be nothing near a consensus on what it isrsquo Consequently there are theoretical inconsistencies on how the concepts should be understood What all the proposed concepts seem to have in common however is that entrepreneurial activities can renew established organisations and that this can typically be achieved through innovation and venturing activities [3] that give the firm access to different skills capabilities and resources [4] The lack of consensus may be a symbol of the different labels or it may merely illustrate the opposite ie lsquolabelsrsquo do not solve the issue
This article proposes a categorisation of the concept of corporate entrepreneurship spanning both an internal perspective (intrapreneurship) and an external perspective (exopreneurship) The special case of spin-offs or new business creation (entrepreneurship) is seen as either a potential outcome of corporate entrepreneurship activities ndash not a perspective per se ndash or outside the scope of corporate entrepreneurship Section 2 discusses the theoretical roots of entrepreneurship in order to gain an understanding of the sources that have influenced entrepreneurship and thereby corporate
A classification of the corporate entrepreneurship umbrella 303
entrepreneurship The next section looks at the different labels for and perspectives on corporate entrepreneurship the aim of which is to clarify the topic and put it into perspective This is followed by a proposed framework consisting of four different approaches to strategic corporate entrepreneurship corporate venturing internal resources internationalisation and networks The article concludes with recommendations for using this framework in future research and practice
2 Theoretical roots entrepreneurship
The aim of this section is to help clarify the different approaches to entrepreneurship and thus to some extent explain the different perspectives on corporate entrepreneurship The theoretical roots of entrepreneurship builds on Stevenson and Jarillo [5] who argue that the management literature on entrepreneurship is often based on classical entrepreneurship literature which can be divided into three main categories the effects of entrepreneurship (what happens when entrepreneurs act) the causes of entrepreneurship (why entrepreneurs act) and entrepreneurial management (how entrepreneurs act) The main differences are due to the different theoretical backgrounds of the researchers Economists have dominated the effects of entrepreneurship such as the Chicago tradition [6ndash8] the German tradition [9] and the Austrian tradition [10ndash12] In contrast studies on the causes of entrepreneurship are dominated by psychologists [13ndash15] and sociologists [16] and studies on entrepreneurial management have mainly been considered from a practical point of view Despite the differences in perspectives however there are several similarities and overlaps ndash especially in the definitions of entrepreneurship which are dominated by the effect studies with their focus on what initiated entrepreneurship Nonetheless the different disciplines are based on different basic assumptions and thus emphasise different aspects of the phenomenon ndash again adding to the confusion related to entrepreneurship
This categorisation by Stevenson and Jarillo [5] is only one among several other approaches to understanding the concept of entrepreneurship [17] However Alvarez and Barney [18] argue that the theory of entrepreneurship continues to lack a unifying base from which to explain predict and empirically examine the phenomenon Instead they emphasise that researchers from other fields use entrepreneurship as a means for extending their own theoretical frameworks which means that the phenomenon is explored from several different perspectives Unfortunately the extension of the concept to cover corporate entrepreneurship makes it even fuzzier because corporate entrepreneurship is more complex since it also challenges organisational strategy structures and processes [1920] Compared with the causes and effects of entrepreneurship scholars paid little attention to the corporate management dimension until two or three decades ago when the management literature began to take a more serious look at entrepreneurship
3 The appropriate label
The concept of entrepreneurship within existing organisations has evolved over the last thirty years [21ndash24] especially over the last two decades and is known under many
304 KS Christensen
different lsquolabelsrsquo including corporate entrepreneurship [125ndash30] internal corporate entrepreneurship [31ndash34] intrapreneurship [35ndash40] entrepreneurial management [5] and strategic entrepreneurship [4142] Corporate entrepreneurship seems to have gained the most attention as a concept as is evident from special issues of journals eg Strategic Management Journal in 1990 (Corporate Entrepreneurship) 2001(Entrepreneurial Strategies for Wealth Creation) and Entrepreneurship Theory amp Practice 1999 (Corporate Entrepreneurship in a Global Economy)
As emphasised by Hornsby et al [30] the concepts are often used interchangeably although the various labels of the concept have different associations For instance the term lsquomanagementrsquo in lsquoentrepreneurial managementrsquo indicates that entrepreneurial behaviour or entrepreneurship is to some extent controllable However lsquothe causes of entrepreneurshiprsquo researchers [16] have proposed and sometimes emphasised that entrepreneurship should be seen as a function of human characteristics that not everyone possesses and that entrepreneurship is often related to processes that traditionally cannot be controlled or at least lose their efficiency effectiveness and uniqueness when controlled [16] It does not seem reasonable either that entrepreneurship is entirely controllable An organisation can encourage entrepreneurial activities by bringing together people possessing special and different skills and knowledge and applying their specialities to a common end product by the creation of new combinations [9]
Morris and Kuratko [1 p62] argue that by using lsquothe term corporate entrepreneurship [it] indicate[s] that the fundamentals do not change only the contextrsquo whereas they say that the fundamentals do change when the concept is changed to intrapreneurship A counterargument is that in lsquocorporate entrepreneurshiprsquo the term lsquocorporatersquo is often associated with large corporations [543] whereas entrepreneurial activities are also important in small and medium-sized organisations [13738] In this context lsquointrapreneurshiprsquo which does not indicate anything about the size of the company is shorthand for intracorporate entrepreneurship [35] which simply indicates entrepreneurship within an existing organisation
Based on the above intrapreneurship seems to be the most appropriate label for the concept of entrepreneurship within an existing company as long as the company is only dealing with internal resources in its own possession However there are also several opportunities to be entrepreneurial and innovative and develop new knowledge and competencies outside the boundaries of a company ndash which Chang [44] calls exopreneurship Chang [44 p187] points out that lsquoexopreneurship is the generation of innovation outside the boundary of organisation using external agents known as exopreneursrsquo which means that an organisation acquires innovation through external networks such as joint ventures external venture capital subcontracting and strategic alliances The differences are clear ndash entrepreneurs innovate for themselves intrapreneurs innovate on behalf of an existing organisation while exopreneurs are part of an external network The motivations for innovation are therefore different
The left-hand side of the Figure 1 shows that there may be a relation between an established company and a new independent venture as the latter may be a spin off of the former Pinchot [35] even argues that many entrepreneurs develop their skills and competencies within an established organisation before creating their own venture Intrapreneurship which can be defined as a companyrsquos legal possession of resources is shown in the middle of the figure The right-hand side of the figure goes beyond the
A classification of the corporate entrepreneurship umbrella 305
borders of the organisation and illustrates exopreneurship or entrepreneurial activities through external networks of which the company does not possess full ownership
Figure 1 Relationship between corporate entrepreneurship entrepreneurship intrapreneurship and exopreneurship
4 Defining corporate entrepreneurship
The three approaches to entrepreneurship and strategic management have resulted in many definitions of corporate entrepreneurship over the past 20ndash30 years Morris and Kuratko [1 p31] define corporate entrepreneurship as lsquoa term used to describe entrepreneurial behaviour inside established mid-sized and large organisationsrsquo Corporate entrepreneurship can also be seen as the process whereby an individual or a group creates a new venture within an existing organisation revitalises and renews an organisation or innovates [1945] Zahrarsquos [46 p262] definition of corporate entrepreneurship suggests lsquoa formal or informal activity aimed at creating new business in established firms through product and process innovations and market developmentsrsquo whereas Sathe [47] defined corporate entrepreneurship as a process of organisational renewal
Guth and Ginsberg [3] classify corporate entrepreneurship into two strategic managerial choices corporate venturing and the transformation of organisations through strategic renewal By corporate venturing is meant intraprising [35] or new business creation within existing organisations [25] that may or may not result in strategic renewal while the latter implies the creation of new wealth through new combinations of resources Corporate venturing is one way to achieve strategic renewal making acquisitions resulting in new combinations is another whereas actions like lsquorefocusing a business competitively making major changes in marketing or distribution redirecting product development and reshaping operationsrsquo [3 p6] are also examples of strategic renewal
Thornberry [48] breaks corporate entrepreneurship down even further identifying four strategic types corporate venturing intrapreneuring organisational transformation and industry rule breaking This is almost similar to Stopford and Baden-Fullerrsquos [28] categorisation which identifies three types of corporate entrepreneurship Intrapreneurship which they define as a part of corporate venturing transformation and
306 KS Christensen
renewal of existing organisations and changing the rules of competition for the industry as suggested by Schumpeter [9] Compared with Guth and Ginsbergrsquos [3] framework the differences are industry role breakingchanging the industry rules of competition which is considered beyond a companyrsquos direct influence because the company cannot plan it Since it is highly market-dependent it may be a result of corporate venturing and strategic renewal rather than a process Corporate entrepreneurship is therefore seen as corporate initiatives that enable entrepreneurship in relation to an existing company
5 Perspectives on corporate entrepreneurship
Many scholars seem to agree that corporate entrepreneurship is an overall term for all other lsquolabelsrsquo and perspectives Figure 2 illustrate the corporate entrepreneurship umbrella and divides it into four perspectives (1) corporate venturing (2) internal resources (3) internationalisation and (4) external networks These perspectives indicate four domains in which a company can make an effort to be more innovative However even though they are very different they are all rooted in organisational resources The classification takes into account both what is within and beyond the organisational boundaries and the dotted line in Figure 2 indicates what is beyond the organisational boundaries
Figure 2 Relationships between the perspectives on corporate entrepreneurship
Corporate venturing is a means of planning for organisational ambiguity in entrepreneurial action by separating one or a group of intrapreneurs from the organisational structure [25274549] By contrast internal resources operate within the overall organisational structure and from this perspective corporate entrepreneurship focuses on bringing together organisational resources in a way that generates innovations and competitive advantage [1850ndash52] Internationalisation as a perspective on corporate entrepreneurship relates to the relatively higher risk of entering foreign markets These often differ from the domestic market in terms of political economic legal and cultural
A classification of the corporate entrepreneurship umbrella 307
dimensions This means the company has to develop new knowledge and competencies [4253ndash55] which in turn reinforces the need for entrepreneurial abilities The last perspective on corporate entrepreneurship in this classification is external networks and alliances The main reason why companies enter an external network or alliance is to gain access to resources that they do not possess themselves [4256]
In the special issue of Strategic Management Journal in 2001 Michael Hitt R Duane Ireland S Michael Camp and Donald L Sexton also categorise corporate entrepreneurship into four organisational activities external networks resources and organisational learning innovation and internationalisation Ireland et al [42] expand the domains from the special issue with lsquotop management teams and governancersquo and lsquogrowthrsquo It is argued that top management teams and governance are essential as their influence on strategic goals are significant [5758] and lsquogrowthrsquo is the essence of entrepreneurship [59ndash61] However as suggested in this framework the perspectives are not the same because unlike Hitt et al [41] Ireland et al [42] and Hitt et al [62] this classification considers lsquotop management teams and governancersquo as an initiative that can enable outcomes like new processes products or services growth strategic renewal or the creation of new business As previously mentioned lsquogrowthrsquo is regarded as an outcome of combinations of a perspective and one or more enablers ndash such as top management teams and governance and reward systems
In the literature the concept of innovation is very broad and often confused with invention [63] Some researchers describe innovation as a process [63ndash66] while for others it is the result or commercialisation of a companyrsquos entrepreneurial activities [414267] Notwithstanding this multiple use of the term lsquoinnovationrsquo is here seen as the outcome In order to increase the understanding of the four perspectives on corporate entrepreneurship they are briefly described below
51 Corporate venturing
In 1985 Robert A Burgelman introduced the term New Venture Division to describe the small new businesses set up by one or a group of intrapreneurs and which formed the link between corporate entrepreneurship and the creation of new businesses A number of scholars [4968] have pointed out that the activities described by Burgelman [27] can actually be dated back to the 1960s where large companies like 3M and Dupont took their first step into venturing Today these activities are mainly described as Corporate Venturing but as argued by Sharma and Chrisman [45] the continuous development of new definitions has led to confusion
The main reason for creating corporate ventures is the isolation and nurturing of innovative ideas that cannot survive in the bureaucratic structures and formal procedures of a large company Dedicating resources to corporate venturing allows the company to follow different routes in the pursuit of innovations with the RampD department concentrating on radical technological inventions while the corporate ventures explore market opportunities for both radical and incremental innovations A number of scholars [4969] have argued that corporate venturing is one of the main roads to innovation in the future economy as markets become more and more saturated The ability to identify and exploit market opportunities is the core of entrepreneurship and forms a major part of the reason for investing in corporate ventures The type of innovation created by corporate venturing is often related to strategic innovations since the technology is invented as part
308 KS Christensen
of the corporationrsquos research and development programme but commercialisation in new markets is carried out through a corporate venture Intuitively the need for major investments in product innovation makes it less suitable for corporate venturing but due to the capital structures and knowledge networks in some industries investment in corporate venturing is seen as a promising business model in the pursuit of product innovation
52 Internal (intangible) resources
Another perspective on corporate entrepreneurship though one which might seem less evident is internal resources However the focus on internal resources can be dated back to 1959 where Edith Penrose stated that a companyrsquos return is largely based on the resources it possesses Since then however the balance of internal resources has change from tangible to intangible resources Today tangible resources are easily accessible or easy to imitate which mean that it is no longer a sufficient way to gain a competitive advantage Therefore intangible resources such as core competencies [70] and sustained competitive advantage [51] have been crucial since the beginning of the 1990s
The main reason for focusing on internal resources in relation to corporate entrepreneurship is that many companies possess a bundle of unexploited resources ndash mainly intangible knowledge resources held by employees The knowledge resources are a mixture of skills experience competencies and capabilities that cannot easily be articulated and therefore cannot be transferred at armrsquos length or imitated by others This makes the perspective of internal resources very important in relation to corporate entrepreneurship as emphasised by Peter Drucker lsquo[t]he basic economic resources hellip is and will be knowledgersquo [71 p7]
The strength of the company is to bring together employees possessing different specialised knowledge resources and to enable the creation of new knowledge resources or combination of existing ones to generate innovations and competitive advantage [51] Alvarez and Barney [18] argue that knowledge specialists often need an organisation to make sense out of their knowledge resources since they lack the ability to see how these can achieve an entrepreneurial profit or generate wealth They state that intrapreneurs possess a broader knowledge base than specialists which allows them to see how specialised knowledge resources can be applied to and integrated with the rest of the company and the market in order to achieve an entrepreneurial profit
Brush et al [52] point out that the ability to share knowledge resources influences efforts to develop the initial resource base necessary for long-term innovation A companyrsquos ability to bring together these heterogeneous knowledge resources is therefore crucial to enabling innovation within organisational boundaries It is therefore important for a company to be able to disseminate data and information to those parts of the organisation where it may be turned into useful knowledge
The internal resource perspective thus constitutes a big potential for corporate entrepreneurship Continuous knowledge creation sharing and dissemination and the identification and exploitation of new possibilities are a way of maintaining a sustained competitive advantage and keeping organisational competencies up-to-date
A classification of the corporate entrepreneurship umbrella 309
53 Internationalisation
The economic landscape has undergone substantial changes over the last few decades [7273] Internationalisation ie when a company extends its market scope beyond the domestic market [4254] has become an important driver of corporate entrepreneurship in many companies not only because of the innovative process of discovering and exploiting international opportunities for the purpose of achieving a competitive advantage [74] but also because of the significant potential returns when the market expands [75] Internationalisation can take different forms eg exporting and foreign direct investments but the main difference between internationalisation and external networks as described in the next paragraph is ownership Internationalisation is integrated within the borders of the same legal organisation even though people are geographically diversified However common ownership means that resources and information flow freely and the return whether it be new technology products processes services market opportunity etc is owned by a single company
The corporate entrepreneurship perspective on internationalisation should primarily be seen as an opportunity to expand the potential market scope Lu and Beamish [55] stress that internationalisation is an entrepreneurial activity since compared with domestic expansion entering a foreign market is risky in terms of the capital investment involved or in terms of distributor opportunism asset appropriation and devaluation with respect to exports in relation to direct foreign investment and exporting They find that when companies start exporting or make direct foreign investment profitability declines because it does not pay the rent of the extra costs Gradually however performance improves as new knowledge and capabilities are developed as competitiveness is enhanced and as market opportunities are captured by the companyrsquos investment activities in international markets and the return becomes positive
Being in more markets stimulates innovation and the development of a global mindset through the improvement or development of new knowledge resources capabilities and innovative skills and enhances the economies of scale and scope [75]
54 External networks and alliances
A consensus has emerged among both strategy and entrepreneurship scholars that networks play an important role for growth and innovation [76] Networks are patterned relationships between individuals and groups [77] and are critical for an organisationrsquos acquisition of resources [78] and with it the survival of the organisation In relation to corporate entrepreneurship the main purpose of entering a network is to gain access to the resources needed (but which the company does not possess) and to learn new competencies outside the companyrsquos core competences [5670] However alliances with selected customers or universities may also be related to the core of for example product development and technology development Organisational networks can take many forms eg RampD partnerships licensing marketing agreements subcontracting joint ventures and strategic alliances
From a corporate entrepreneurship point of view another purpose of entering networks or alliances may be flexibility ndash especially for the well-structured large organisation where everything has to be cross-checked before something new can be tried out in the market Networks or alliances with small partners make it possible to
310 KS Christensen
produce only a few units of a product and test it in the market before gearing the large-scale production plant to streamlined production In this way the organisation gets some of the flexibility and agility of a small company while maintaining the massive streamlined organisation that is crucial for stability
55 Towards a framework for corporate entrepreneurship
Figure 3 summarises the theoretical framework for corporate entrepreneurship developed in the previous sections The upper half of the figure shows the four perspectives or domains of research in the area ndash corporate venturing internal resources internationalisation and networks It has been argued that the concept of corporate entrepreneurship could be theorised and conceptualised from each of the four perspectives which can also be categorised into intrapreneurship and exopreneurship
The lower part of the framework accentuates the possible outcome of corporate entrepreneurship It is very difficult to predict this beforehand Some activities will hardly influence the organisation whereas other activities lead to organisational renewal and yet again some others transform the organisation to something lsquonewrsquo significantly different from what it was before But even though corporate entrepreneurship initiatives result in some form of organisational renewal only in a very few cases will it change the rules of competition
Figure 3 The proposed framework for corporate entrepreneurship
6 Conclusion
This study as a discussion and classification of labels and a clarification of the overall concept of corporate entrepreneurship contributes to the corporate entrepreneurship
A classification of the corporate entrepreneurship umbrella 311
literature by providing useful insights (for newcomers) The breadth of corporate entrepreneurship has been illustrated and a framework in clarification has been proposed Further research in each of the four perspectives is needed in order to understand the different ways in which corporate entrepreneurship is enabled and how entrepreneurial activities should be organised ndash especially within the internal resource perspective which is less developed than the others Future research should be structured according to the proposed framework in Figure 3 to make it possible to compare the enablers and the ways of organising across different perspectives on corporate entrepreneurship
The classification provides a nuanced multi-faceted view of corporate entrepreneurship by describing different bases for managerial decisions in relation to corporate entrepreneurship since this can mean different things depending on the perspective The four perspectives taken into account may contribute to a greater insight into the meaningful context-dependent relations in a company It is important to realise that the perspectives are not mutually exclusive ndash rather they should be seen as complementary However the merits of intrapreneurship or exopreneurship vary with market contexts and the resources under the firmrsquos control [79]
The four perspectives on corporate entrepreneurship all relate to managerial opportunities However enabling corporate entrepreneurship by for example creating a new organisational structure may not be sufficient Chesbrough and Rosenbloom [80] argue that companies also need to be open to new ways of commercialisation when new opportunities do not fit well into their current business model
Knowledge seems to be the only factor to play a crucial role in all perspectives even though it plays different roles across the perspectives in forming the basis for innovative activities corporate entrepreneurship and business models Knowledge resources as an integration mechanism supports Druckerrsquos [71] view of knowledge as the resource in the knowledge society It also points to the fact that a companyrsquos ability to generate knowledge resources [81] is crucial to its competitiveness [82] and innovativeness However knowledge resources are also a potential source of cognitive bias as a company is often biased by earlier success
In order to be innovative managing organisational knowledge is thus critical in relation to developing new combinations of knowledge resources etcIt adds a new dimension to the existing literature on corporate entrepreneurship that up to now has mainly described the different roles and characteristics of the entrepreneurintrapreneur A knowledge-based view of corporate entrepreneurship and knowledge resources as an integration mechanism are therefore very interesting topics for further research
Acknowledgements
The author would like to thank Anders Drejer Anders Jacob Raj Andersen Per Nikolaj Bukh Mikkel Gadmar Bengt Johannisson and John Parm Ulhoslashi for comments on previous drafts
312 KS Christensen
References 1 Morris MH and Kuratko DF (2002) Corporate Entrepreneurship Harcourt College
Publishers Orlando Florida 2 Latour B (1999) Pandorarsquos Hope Essays on the Reality of Science Studies Harvard
University Press Cambridge MA 3 Guth WD and Ginsberg A (1990) lsquoGuest editors introduction corporate
entrepreneurshiprsquo Strategic Management Journal Vol 11 pp5ndash15 4 McGrath RG MacMillan IC and Venkatraman S (1995) lsquoGlobal dimensions of new
competenciesrsquo in Birley S and MacMillan IC (Eds) International Entrepreneurship Routledge New York
5 Stevenson HH and Jarillo JC (1990) lsquoA paradigm of entrepreneurship entrepreneurial managementrsquo Strategic Management Journal Vol 11 special issue pp17ndash27
6 Knight F (1964 [1921]) Risk Uncertainty and Profit Augustus M Kelley New York 7 Schultz TW (1975) lsquoThe value of the ability to deal with disequilibriarsquo Journal of
Economic Literature Vol 13 No 3 pp827ndash846 8 Schultz TW (1980) lsquoInvestment in entrepreneurial abilityrsquo Scandinavian Journal of
Economics Vol 82 pp437ndash448 9 Schumpeter JA (1934) The Theory of Economic Development Harvard University Press
Cambridge AS 10 Mises LV (1949) Human Action A Treatise on Economics William Hodge and Company
Limited London 11 Kirzner IM (1985) Discovery and the Capitalist Process University of Chicago Press
Chicago 12 Kirzner IM (1997) lsquoEntrepreneurial discovery and the competitive market process an
austrian approachrsquo Journal of Economic Literature Vol XXXV March pp60ndash85 13 Collins NC and Moore DG (1964) The Enterprising Man East Lansing MI Michigan
State University 14 Brockhaus RH (1980) lsquoRisk-taking propensity of entrepreneursrsquo Academy of Management
Journal Vol 23 pp509ndash520 15 Brockhaus RH and Horwitz PS (1986) lsquoThe psychology of the entrepreneurrsquo in Sexton
DL and Smilar RW (Eds) The Art and Science of Entrepreneurship Cambridge Ballinger MA
16 McClelland DC (1961) The Achieving Society The Free Press New York 17 Sundbo J (1998) The Theory of Innovation Entrepreneurs Technology and Strategy
Edvard Elgar Publishing 18 Alvarez SA and Barney JB (2002) lsquoResource-based theory and the entrepreneurial firmrsquo
in Hitt MA Ireland RD Camp MS and Sexton DL (Eds) Strategic Entrepreneurship Creation a New Mindset Blackwell Publisher Oxford
19 Dess GD Lumpkin GT and McGee JE (1999) lsquoLinking corporate entrepreneurship to strategy structure and process suggested research directionsrsquo Entrepreneurship Theory and Practice Vol 23 No 3 pp85ndash102
20 Morris MH and Kuratko DF (2002) Corporate Entrepreneurship Harcourt College Publishers Orlando Florida
21 Peterson R and Berger D (1972) lsquoEntrepreneurship in organisationsrsquo Administrative Science Quarterly Vol 16 pp97ndash106
22 Hill RM and Hlavacek JD (1972) lsquoThe venture team a new concept in marketing organisationsrsquo Journal of Marketing Vol 36 pp44ndash50
23 Hanan M (1976) lsquoVenturing corporations think small to stay strongrsquo Harvard Business Review Vol 54 pp139ndash148
A classification of the corporate entrepreneurship umbrella 313
24 Quinn JB (1979) lsquoTechnological innovation entrepreneurship and strategyrsquo Sloan Management Review Vol 20 pp19ndash30
25 Burgelman RA (1983) lsquoA process model of internal corporate venturing in the diversified major firmrsquo Administrative Science Quarterly Vol 28 No 2 pp223ndash241
26 Burgelman RA (1984) lsquoDesigns for corporate entrepreneurship in established firmsrsquo California Management Review Vol 26 No 3 pp154ndash166
27 Burgelman RA (1985) lsquoManaging the new venture division research findings and implications for strategic managementrsquo Strategic Management Journal Vol 6 No 1 pp39ndash55
28 Stopford J and Baden-Fuller CF (1994) lsquoCreating corporate entrepreneurshiprsquo Strategic Management Journal Vol 15 No 7 pp521ndash536
29 Barrett H and Weinstein A (1999) lsquoThe effect of market orientation and organisational flexibility on corporate entrepreneurshiprsquo Entrepreneurship Theory and Practice Vol 23 No 1 pp57ndash73
30 Hornsby JS Kuratko DF and Zahra SA (2002) lsquoMiddle managers perception of the internal environment for corporate entrepreneurship assessing a measurement scalersquo Journal of Business Venturing Vol 17 No 3 pp253ndash273
31 Schollhammer H (1981) lsquoThe efficacy of internal corporate entrepreneurship strategiesrsquo in Vesper KH (Eds) Frontiers of Entrepreneurship Research Babson College Wellesley MA
32 Schollhammer H (1982) lsquoInternal corporate entrepreneurshiprsquo in Kent C Sexton D and Vesper K (Eds) Encyclopedia Entrepreneurship Prentice-Hall Inc Engelwood Cliffs NJ
33 Jones GR and JE Butler (1992) lsquoManaging internal corporate entrepreneurship an agency theory perspectiversquo Journal of Management Vol 18 No 4 pp733ndash749
34 Lumpkin GT and Dess GG (1996) lsquoClarifying the entrepreneurial orientation construct and linking it to performancersquo Academy of Management Review Vol 21 pp135ndash172
35 Pinchot G (1985) Intrapreneuring Why You Donrsquot Have to Leave the Corporation to Become an Entrepreneur Harper and Row New York
36 Nielsen RP Peters MP and Hisrich RD (1985) lsquoIntrapreneurship strategy for internal markets ndash corporate non-profit and government institution casesrsquo Strategic Management Journal Vol 6 pp181ndash189
37 Carrier C (1994) lsquoIntrapreneurship in large firms and SMEs a comparative studyrsquo International Small Business Journal Vol 12 No 3 pp54ndash61
38 Carrier C (1996) lsquoIntrapreneurship in small businesses an exploratory studyrsquo Entrepreneurship Theory and Practice Vol 21 No 1 pp5ndash20
39 Antoncic B and Hisrich RD (1999) lsquoIntrapreneurship construct refinement and cross-cultural validationrsquo Journal of Business Venturing Vol 16 pp495ndash527
40 Chinho L Hojung T and Chienming W (2003) lsquoFuzzy fitness model of intrapreneurship activities or Taiwanese high-tech firmsrsquo International Journal of Management and Enterprise Development Vol 1 No 1 pp45ndash54
41 Hitt MA Ireland RD Camp SM and Sexton DL (2001) lsquolsquoGuest editorsrsquo introduction to the special issue strategic entrepreneurship entrepreneurial strategies for wealth creationrsquo Strategic Management Journal Vol 22 pp479ndash491
42 Ireland RD Hitt MA Camp SM and Sexton DL (2001) lsquoIntegrating entrepreneurship actions and strategic management actions to create firm wealthrsquo Academy of Management Executive Vol 15 No 1 pp49ndash63
43 Shane S and Venkataraman S (2000) lsquoNote the promise of entrepreneurship as a field of researchrsquo Academy of Management Review Vol 25 No 1 pp217ndash226
44 Chang J (1998) lsquoModel of corporate entrepreneurship intrapreneurship and exopreneurshiprsquo Borneo Review Vol 9 No 2 pp187ndash213
314 KS Christensen
45 Sharma P and Chrisman JJ (1999) lsquoToward a reconciliation of the definitional issues in the field of corporate entreprenrushiprsquo Entrepreneurship Theory and Practice Vol 22 pp43ndash68
46 Zahra SA (1991) lsquoPredictors and financial outcomes of corporate entrepreneurship an exploratory studyrsquo Journal of Business Venturing Vol 6 pp259ndash285
47 Sathe V (1989) lsquoFostering entrepreneurship in a large diversified firmrsquo Organisational Dyn Vol 18 pp20ndash32
48 Thornberry N (2001) lsquoCorporate entrepreneurship antidote or oxymoronrsquo European Management Journal Vol 19 No 5 pp526ndash533
49 Chesbrough HW (2000) lsquoDesigning corporate ventures in the shadow of private venture capitalrsquo California Management Review Vol 42 No 3 pp31ndash49
50 Penrose ET (1959) The Theory of the Growth of the Firm Wiley New York 51 Barney JB (1991) lsquoFirm resources and sustained competitive advantagersquo Journal of
Management Vol 17 pp99ndash120 52 Brush CG Greene PG and Hart MM (2001) lsquoFrom initial idea to unique advantage the
entrepreneurial challenge of constructing a resource basersquo Academy of Management Executive Vol 15 No 1 pp64ndash80
53 Zahra SA and Garvis DM (2000) lsquoInternational corporate entrepreneurship and firm performance the moderating effect of international environment hostilityrsquo Journal of Business Venturing Vol 15 pp469ndash492
54 Hitt MA and Ireland RD (2000) lsquoThe intersection of entrepreneurship and strategic management researchrsquo in Sexton DL and Landstroumlm HA (Eds) Handbook of Entrepreneurship Blackwell Oxford 45ndash63
55 Lu JW and Beamish PW (2001) lsquoThe internationalisation and performance of SMEsrsquo Strategic Management Journal Vol 22 pp565ndash586
56 Hitt MA Ireland RD and Lee H (2000) lsquoTechnological learning knowledge management firm growth and performancersquo Journal of Engineering and Technology Management Vol 17 pp231ndash246
57 West III GP and Meyer GD (1998) lsquoTo agree or not to agree Consensus and performance in new venturesrsquo Journal of Business Venturing Vol 13 pp395ndash422
58 Beekun RI Stedham Y and Young GJ (1998) lsquoBoard characteristics managerial controls and corporate strategy a study of US hospitalsrsquo Journal of Management Vol 24 pp3ndash19
59 Hitt MA Hoskisson RE Johnson RA and Moesel DD (1996) lsquoThe market for corporate control and firm innovationrsquo Academy of Management Journal Vol 39 pp1084ndash1119
60 Covin JG and Slevin P (2002) lsquoThe entrepreneurial imperatives of strategic leadershiprsquo in Hitt MA Ireland RD Camp SM and Sexton DL (Eds) Strategic Entrepreneurship Creating a New Mindset Blackwell Publisher Oxford
61 Davidsson P Delmar F and Wiklund J (2002) lsquoEntrepreneurship as growth growth as entrepreneurshiprsquo in Hitt MA Ireland RD Camp SM and Sexton DL (Eds) Strategic Entrepreneurship Creating a New Mindset Blackwell Publishers Oxford
62 Hitt MA Ireland RD Camp SM and Sexton DL (Eds) (2002) Strategic Entrepreneurship Creating a New Mindset Blackwell Publisher Oxford
63 Tidd J Bessant J and Pavitt K (1997) Managing Innovation Integrating Technological Market and Organisational Change West Sussex England John Wiley and Sons
64 Freeman C (1982) The Economics of Industrial Innovation (2nd Edition) Frances Pinter London
65 Drucker PF (1985) Innovatoin and Entrepreneurship Practice and Principles Harper and Row New York
66 Porter M (1990) The Competitive Advantage of Nations Macmillan London
A classification of the corporate entrepreneurship umbrella 315
67 Hamel G (2000) Leading the Revolution Harvard Business School Press Boston 68 Gee RE (1994) lsquoFinding and commercialising new businessesrsquo Research Technology
Management Vol 37 No 1 pp49ndash57 69 Mason H and Rohner T (2002) The Venture Imperative ndash A New Model for Corporate
Innovation Harward Business School Press Boston 70 Prahalad G and Hamel G (1990) lsquoThe core competence of the corporationrsquo Harvard
Business Review Vol 68 No 3 pp79ndash91 71 Drucker PF (1993) Post-capitalist society Butterworth-Heinemann Oxford p7 72 Ireland RD and Hitt MA (1999) lsquoAchieving and maintaining strategic competitiveness in
the 21st century the role of strategic leadershiprsquo Academy of Management Executive Vol 13 No 1 pp43ndash57
73 Zahra SA Ireland RD and Hitt MA (2000) lsquoInternational expansion by new venture firms international diversity mode of market entry technological learning and performancersquo Academy of Management Journal Vol 43 No 5 pp925ndash950
74 Zahra SA and George G (2002) lsquoInternational entrepreneurship the current status of the field and future research agendarsquo in Hitt MA Ireland RD Camp SM and Sexton DL (Eds) Strategic Entrepreneurship Creating a New Mindset Blackwell Publisher Oxford
75 Hitt MA Hoskisson RE and Kim H (1997) lsquoInternational diversification effects on innovation and firm performance in product-diversified firmsrsquo Academy of Management Journal Vol 40 No 4 pp767ndash798
76 Stuart TE Hoang H and Hybels RC (1999) lsquoInterorganisatinal endorsements and the performance of entrepreneurial venturesrsquo Administrative Science Quarterly Vol 44 pp315ndash349
77 Dubini P and Aldrich H (1991) lsquoPersonal and extended networks are central to the entreprenerushial processrsquo Journal of Business Venturing Vol 6 pp305ndash313
78 Gulati R (1998) lsquoAlliances and networksrsquo Strategic Management Journal Vol 19 pp293ndash317
79 Lee L and Gongming Q (2003) lsquoInternalisation or externalisation the option for small and medium-sezed technology-based enterprises in overseas marketsrsquo International Journal of Management and Enterprise Development Vol 1 No 1 pp55ndash70
80 Chesbrough H and Rosenbloom RS (2002) lsquoThe role of the business model in capturing value from innovations evidence from Xerox Corporationrsquos technology spin-off companiesrsquo Industrial and Corporate Change Vol 11 No 3 pp529ndash555
81 Spender JC (1996) lsquoMaking knowledge the basis of a dynamic theory of the firmrsquo Strategic Management Journal Vol 17 Winter Special Issue pp45ndash62
82 Grant RM (1996) lsquoTowards a knowledge-based theory of the firmrsquo Strategic Management Journal Vol 17 Winter Special Issue pp109ndash122
74
75
CHAPTER 5
Postscript to article 1
The article in Chapter 4 of the dissertation was published in International Journal of
Management and Enterprise Development The paper was later translated into
Danish revised and substantially improved in several areas Finally the article was
published in the Danish Journal Ledelse amp Erhvervsoslashkonomi (Christensen 2005a)
The main differences between the two articles are to be found in the introduction the
paragraph ldquoTowards a framework for corporate entrepreneurshiprdquo and the
concluding remarks which have been considerably improved In addition the Danish
article has adopted a Danish perspective of the Danish labour market situation the
writing has been improved and the figures have been revised to make the basic
message clearer
Corporate venturing Initiatives which lead to the establishment of a new organisation within the boundaries of an existing one
Internal resources Primarily concerns the internal knowledge resources (human resources processes technologies etc) of the parent company within national and cultural boundaries
Internationalisation Focuses on the resources available to the company from establishing departments abroad and in other cultures
External networks Relates to access to resources the company needs and which the company does not necessarily develop or possess itself
Table A Four ways to organise corporate entrepreneurship
76
Thus based on the Danish version of the article this postscript presents a more
detailed and well-developed discussion of the framework for corporate
entrepreneurship and the implications thereof in a Danish context Table A which is
translated from the Danish article provides an overview of the four perspectives on
corporate entrepreneurship presented in the article
51 TOWARDS A FRAMEWORK FOR CORPORATE ENTREPRENEURSHIP
Figure 43 (figure 3 in the original article submitted as part of this dissertation)
summarises the theoretical framework for corporate entrepreneurship The four
organisational perspectives on corporate entrepreneurship corporate venturing
internal resources internationalisation and networks are placed in the central part of
the figure to show that corporate entrepreneurship can be conceptualised from each
perspective
The lower middle part of figure 43 shows the possible results of the various
initiatives arising from corporate entrepreneurship activities While some initiatives
hardly affect the organisation at all or only imply minor changes others will change
the company through organisational or strategic renewal and may transform it into
something lsquonewrsquo or significantly different from what it was before Finally as shown
in the lowest part of figure 43 the results can transcend the boundaries of the
company and influence the competitive rules of the market
The model illustrates the organisational opportunities a company has to encourage
both innovation and entrepreneurship eg collaboration with other companies
(exopreneurship) or exploiting resources it already possesses There is no general
blueprint for the best way of organising It depends on the specific company its
strategy culture organisation etc and the type of innovation it finds most
appropriate
77
Both the original article and the revised version (Christensen 2005a) have presented
various perspectives from which these questions can be addressed However it is
important to note that the perspectives complement each other ie experiences
acquired from different approaches and from different traditions in the research
literature can shed light on how to manage the tensions between different ways of
organising innovativeness
While the perspectives in figure 43 lead to different ways of organising
innovativeness anything the company or management can do to enable corporate
entrepreneurship is important There is therefore a need for organisational initiatives
to enable corporate entrepreneurship which either build on specific perspectives or
span them in an integrated way
In a review of the literature Jeffrey Hornsby and Donald Kuratko and various co-
authors have suggested a number of factors which enable corporate entrepreneurship
In particular they point to five factors which have been discussed in the literature
since the end of the 1980s rewards management commitment access to resources
appropriate organisational structures and attitudes to risk (Hornsby et al 1993
Hornsby et al 2002 and Kuratko et al 1990) Empirically however they found
only management commitment organisational structure resources and rewards
significant (Kuratko et al 1990)
Based on an empirical study of innovative processes at Danfoss Drives regarding
factors that enable intrapreneurship (Christensen 2005b article 3 of this
dissertation) it was concluded that in relation to this specific case risk did not play a
major role in corporate entrepreneurship although communication culture and
processes were important factors If employees find the companyrsquos initiatives in these
areas insufficient then factors which are supposed to enable corporate
entrepreneurship become barriers to innovativeness and intrapreneurship instead
78
There is a need both as regards research and managerial implications to focus more
on which factors enable and hinder corporate entrepreneurship respectively and how
entrepreneurial activities are best organised This also has potential implications for
industrial policy If Danish companies cannot compete against companies operating
in low-wage countries then where possible they should opt for so-called knowledge-
intensive production instead
A typical characteristic of knowledge-intensive production is that companies should
focus not only on product and technological development but also be better at
developing new interpersonal ways of working (exopreneurship) This could include
better adoption of usersrsquo needs through user-driven innovation (see for example
Rosted 2005) Another aspect of the move towards more knowledge-intensive
production is a new way of managing (intrapreneurship) which makes companies
better able to implement new technologies faster and exploit them more effectively
52 CONCLUDING REMARKS
There has been an increasing shortage of labour in Denmark in recent years This has
changed the previous focus on the creation of more jobs to a new emphasis on the
creation of the right jobs in companies with a high potential for growth and value
creation This is often (see for example Hoffman et al 2007) associated with the
marketing of new products in new markets which makes far greater demands on
knowledge and managerial resources than merely starting up a new company
According to Hoffmann et al (2007) while Denmark has been good at helping
entrepreneurs on generic issues such as VAT business plans accounting marketing
etc entrepreneurial policy has had less success in nurturing innovative growth
Furthermore the conventional wisdom is that smaller companies have to lead the way
79
in creating new jobs ndash not only by entrepreneurs starting up new companies but also
by smaller companies supporting the start-up of new firms
Based on this assumption a study by Evald (2003) estimated that over a period of
five years 153 smaller so-called parent companies have spun off 459 new companies
resulting in 5508 new jobs This corresponds to on average of about 7 jobs a year
over the period ndash or 2-3 jobs per company In other words while the number of firms
has increased greatly the size and with it potential of newly established companies
has not grown substantially
Another investigation of the strategic development of smaller companies (Drejer et
al 1999) showed however that the total effect of the jobs created is more or less
zero since almost as many jobs are lost as created While there is undoubtedly a
potential for job creation in both small and large companies these studies alone say
nothing about which occupational structure best guarantees growth and job creation
in Denmark
However any initiative whether the result of government policy or companies
setting up new ventures needs to take a starting point in the existing business
structure which consists of both small and large companies Article 1 presented a
broader framework for corporate entrepreneurship in order to provide a starting point
for assessing which activities companies can best implement ndash and probably also
which initiatives can be enabled via political decision-making Although most Danish
firms are small and medium-sized Denmark also has a number of larger companies
with considerable potential supporting innovative entrepreneurs It is therefore
appropriate to focus on corporate entrepreneurship as a unifying concept for these
companiesrsquo innovative initiatives
When concepts like corporate entrepreneurship become popularised are written
about in the business press and are incorporated in policy proposals there is always a
80
risk of the basic ideas losing their grounding in well-documented evidence and
becoming mere managerial fads So is corporate entrepreneurship just another
managerial fad Or do we need to rethink how innovativeness is organised in more
loosely coupled structures than is possible in the traditional functionally organised
company where research is mainly done in the RampD department customer contact is
the province of the sales and marketing functions etc
A common assumption of innovation management is that even though firms might
originally be the result of a radical innovation when they mature they mostly rely on
incremental innovations based on existing resources The implication is that radical
innovations are often left to smaller companies although new business ideas will still
emerge in larger companies However the entire organisational structure including
the various layers of management can have difficulty in handling the entrepreneurial
needs of innovation This means that management will sometimes be faced by the
possibility for new strategies and related dilemmas ndash particularly if the new ventures
are far from the parent companyrsquos core competencies and market opportunities
This means that corporate entrepreneurship is not only a question of setting up the
appropriate structures outside the organisation but also as argued in article 1 an
issue for the organisation as a whole Since different organisational structures support
different organisational needs this is a good starting point for ensuring the ability of
larger companies to innovate
In other words larger companies should experiment with organisational structures
and forms which create innovation These include various types of network
organisations loosely coupled organisations and project organisations as a
supplement to the classical hierarchy In addition to organisational forms
management style must also change since renewal and innovation cannot be planned
81
and managed in the same way as operational activities (see for example
Christensen 2005b 2006)
53 REFERENCES
Christensen KS 2005a Corporate Entreprenoslashrskab Begreber og Perspektiver
Ledelse amp Erhvervsoslashkonomi Vol 61 No 1 13-26
Christsensen KS 2005b Enabling intrapreneurship the case of a knowledge-
intensive industrial company European Journal of Innovation Management Vol 8
No 3 pp 305-322
Christensen KS 2006 Losing Innovativeness The Challenge of being acquired
Management Decision Vol 44 No 9 pp 1161-1182
Drejer A LB Henriksen amp JB Christensen 1999 Smaring virksomheders strategiske
udviking Aalborg Oslashst Nordjysk Informatik og Virksomhedsudvikling
Evald MR 2003 Corporate Venturing i Danmark En undersoslashgelse af mindre
virksomheders knopskudsaktiviteter Center for Smaringvirksomhedsforskning Syddansk
Universitet
Hoffmann A NM Nielsen amp J Nyholm 2007 Fremtidens erhvervsservice og
ivaeligrksaeligtterpolitik ndash en guide til flere vaeligkstvirksomheder Marts 2007
Hornsby JS DF Kuratko amp SA Zahra 2002 Middle managers perception of the
internal environment for corporate entrepreneurship assessing a measurement scale
Journal of Business Venturing Vol 17 No 3 pp 253-373
Hornsby JS DW Naffziger DF Kuratko amp RV Montagno 1993 An interactive
model of the corporate entrepreneurship process Entrepreneurship Theory amp
Practice Vol 17 No 2 pp 29-37
82
Kuratko DF RV Montagno amp JS Hornsby 1990 Developing an intrapreneurial
assessment instrument for an effective corporate entrepreneurial environment
Strategic Management Journal Vol 11 No 1 pp 49-58
Rosted J 2005 Brugerdreven innovation Resultater og anbefalinger Oslashkonomi- og
Erhvervsministeriets enhed for erhvervsoslashkonomisk forskning og analyse
Koslashbenhavn FORA
83
PART II
Intrapreneurship from an Internal Resources Perspective
The internal resource perspective takes a starting point in established organisational
structures Based on this perspective the aim of intrapreneurship is to identify hidden
or suppressed organisational resources and bring them together in (new) ways to
facilitate innovation and generate new competitive advantages In some cases these
resources may be tangible but in most cases today they are intangible eg
knowledge resources which means that they will often be closely related to the
organisational members
The second part of the dissertation consists of two articles which in different ways
present issues related to intrapreneurship The articles show that getting the most out
of a firm or organisation requires new ways of working and thinking Managers ndash or
coaches as they may prefer to be called ndash in knowledge-intensive organisations face
new challenges since their employees have other needs and wants than employees in
traditional industrial companies
While acquisitions are an increasingly popular way for mature organisations to gain
access to new resources and skills it does not necessarily mean that they can
successfully integrate a new entrepreneurial subsidiary (eg as a CV) and its
innovativeness and creative ways of working The first article in Part II Losing
innovativeness the case of being acquired focuses on the personal mechanisms that
84
are affected when a small entrepreneurial company is taken over by a large
multinational company
The article discusses the practice of intrapreneurship and investigates
intrapreneurship in its natural setting It focuses on what happens to the
entrepreneurial spirit in a company when it is taken over by another (much larger)
company which has grown mainly through acquisition rather than internal
development The discussion centres on a study of the intrapreneurial spirit and
practices of Ericsson Telebit a Danish IT firm Its acquisition by a large mature
company is found to have a profound influence on the firmrsquos intrapreneurial spirit In
particular innovation creativity and the innovative process have been analysed in
relation to the entrepreneurial spirit The article concludes that the larger a company
becomes the more difficult it is to maintain a managerial commitment to innovation
since innovative initiatives and activities may be subdued by formal control systems
which almost by definition are necessary when an organisation becomes larger and
the range of operations more diversified The aim is therefore to identify those factors
that managers need to focus on and actively use in order to enable intrapreneurship
and give intrapreneurs room to grow within corporate boundaries
The second article Enabling intrapreneurship the case of a knowledge-intensive
industrial company discusses factors that management can influence to enable or
hinder intrapreneurship In order to provide a framework for evaluation a short
overview of the main factors from the literature is provided It should be noted
however that these are primarily based on studies of traditional industrial
companies
Based on a case study of Danfoss Drives the usability of the factors is analysed in a
specific knowledge-intensive setting The conclusion from the findings is that the
framework for industrial companies cannot be used for a knowledge-intensive
85
company and a more complete framework with three additional factors is therefore
developed The article shows that whereas in traditional industrial companies the
important enablers were more direct or extrinsic in knowledge-intensive companies
they are more indirect or intrinsic
86
87
CHAPTER 6
Losing innovativeness the challenge of being acquired
Originally published in
Christensen Karina Skovvang 2006 Losing Innovativeness the challenge of being
acquired Management Decision Vol 44 No 9 pp 1161-1182
88
Losing innovativenessthe challenge of being acquired
Karina Skovvang ChristensenDepartment of Management The Aarhus School of Business
Aarhus Denmark
Abstract
Purpose ndash The aim of the paper is to explore how innovativeness and creativity in a smalltechnology company changes after the company is acquired by a larger company
Designmethodologyapproach ndash The empirical part of the article is based on interview andquestionnaire data with a focus on employeesrsquo perception of innovativeness and creativity includingtheir own innovativeness in relation to the possibilities offered within the organisational structure
Findings ndash The results indicate that entrepreneurial spirit innovativeness and creativity in the casecompany were related to the lack of boundaries to and contact with customers These driving forcescould not be sustained when the organisation matured and was acquired by a larger company
Research limitationsimplications ndash More research regarding the integration phase ofacquisitions and how it affects employees and innovativeness is needed Case-based researchshould examine differences between companies that are repeatedly successful in integrating smalltechnology companies into their organisational structure and those that are not Employeesrsquomotivation as a key factor to innovativeness should be in focus and the research should also includeemployees that leave the acquired company as well as employees with the acquiring company
Practical implications ndash An acquisition strategy as a way for mature organisations to gain accessto innovativeness and new resources and skills can easily fail Even though the resources and skills ofthe two companies are complementary and the competencies of the acquired organisation are intactefforts are needed to make the energies of the two organisations act in tandem Thus the pre- andpost-integration phases of an acquisition seem to be of paramount importance
Originalityvalue ndash Very few papers have studied how employees in an acquired company perceiveincorporation into a large mature company This article adds to research by examining how employeesin a small entrepreneurial company perceive innovation creativity and the innovative process threeyears after being acquired by a large mature company
Keywords Acquisitions and mergers Entrepreneurialism Innovation
Paper type Case study
IntroductionOver the years entrepreneurs have shown that new ideas can form the basis for newcompanies and that these companies can sometimes grow rapidly and be highlyprofitable While some companies have been successful in maintaining innovativenesscreativity and an entrepreneurial spirit many organisations have great difficulty inmaintaining their initial recklessness to which established companies are oftenvulnerable The ability to continuously innovate also for well-established companies
The current issue and full text archive of this journal is available at
wwwemeraldinsightcom0025-1747htm
The author gratefully acknowledges the helpful comments made by Per Nikolaj BukhAnders Drejer and John Parm Ulhoslashi as well as two anonymous referees on an earlier version ofthis paper Special thanks goes to Telebitrsquos former HR manager Poul Joslashrgen Dybdal managerErik Reinholdt and all the other employees at Ericsson Telebit
Losinginnovativeness
1161
Received November 2005Revised July 2006
Accepted July 2006
Management DecisionVol 44 No 9 2006
pp 1161-1182q Emerald Group Publishing Limited
0025-1747DOI 10110800251740610707668
is thus becoming increasingly important not only for companiesrsquo competitiveadvantage but also for their survival
As an organisation grows and matures management concerns increasingly turnfrom exploration to exploitation (March 1991) of resources Often the managerialsystems and values of mature companies are better at exploiting areas aligned withexisting resources and skills than exploring areas far outside them This concern withalignment could explain why it is often difficult for mature organisations to exploreentirely new areas of resources However too much emphasis on the exploitation ofexisting resources can become a barrier to innovation and thus long-term performance(Leonard-Barton 1992 March 1991) since access to new resources is usually essentialto maintaining creativity and innovativeness
Over the last couple of decades acquisitions have been an increasingly popular wayfor mature organisations to gain access to new resources and skills Howeveracquiring resources through acquisition does not necessarily mean that the matureorganisation is able to handle a new entrepreneurial subsidiary and its innovativenessand creative ways of working Often the acquired company will slowly adapt to themature organisationrsquos existing and often stifling management systems This in turnwill lead to increasing inertia and with it frustration decreasing both employeesrsquomotivation and their liking for recklessness Being incorporated into a large maturecompany is certainly not easy for a small innovative and creative company
Little research has been carried out on how employees in an acquired companyactually perceive incorporation into a large mature company (eg Brockner et al 1993Hambrick and Cannella 1993 Reilly et al 1993) This article adds to research byexamining how employees in a small entrepreneurial company perceive innovationcreativity and the innovative process three years after being acquired by a largemature company Based on a case study of the Danish company Ericsson Telebit thearticle shows what happens to this specific organisational unit which while apparentlyenjoying success and an increase in the number of employees following its acquisitionby a large multi-national company only two years later experienced layoffs and radicalrestructurings for three consecutive years as a consequence of a change in strategy ofthe acquiring company
The article is organised as follows section 2 briefly presents the case for innovationthrough acquisitions and outlines the entrepreneurial challenge faced by the acquiredorganisation Section 3 describes the methodology used Section 4 presents the casecompany Ericsson Telebit and the interview results while section 5 presents ananalysis of the questionnaire results Finally section 6 concludes the article
Innovation through acquisition the entrepreneurial challengeMergers and acquisitions (MampA) are often motivated by a belief that the combinationof two or more companiesrsquo resources and skills can create more value than is possibleby the two companies separately or by engaging in other ways of co-operating egthrough alliances These synergistic benefits from resource combinations it has beenargued are more likely to be uniquely valuable when based on complementaritiesrather than similarities (Harrision et al 1991 2001) Thus acquisitions of companiespossessing complementary technological capabilities and entrepreneurial abilities maybe seen as a way for large more bureaucratic companies to increase theirinnovativeness
MD449
1162
However in a review of the literature Man and Duysters (2005) find that companiesengaging in MampA activities generally face a decline in innovation While muchresearch focuses on the innovative performance of the company especially on theoutput of innovations eg number of patents or input measures such as RampD expenses(see Man and Duysters 2005) after a merger or an acquisition only limited researchhas been carried out on how MampA affect creativity and the innovative performance ofthe individuals employed in the acquiring or acquired company
Exceptions include Kapoor and Lim (2005) who found that the number of patentsper inventor per year fell in US semiconductor companies that were acquired between1991 and 1998 and Ernst and Vitt (2000) who demonstrated similar results in ananalysis of 43 acquisitions Ernst and Vitt also showed further that to a large extentkey inventors leave their company after the acquisition Of course how employeesreact in an MampA situation can be influenced by a large number of factors butknowledge of what can happen when a small innovative company is acquired by alarger company and how this is perceived by employees can provide insight into whatfactors enable innovation and how these factors are affected by acquisitions
With respect to the overall performance of the acquiring company much researchhas documented that mergers and acquisitions often fail to deliver their intendedbenefits and actually destroy economic value in the process However in this area toothere has been much less focus on exploring the specific factors that influence thesuccess of the integrative process Thus King et al (2004 p 196) conclude from acomprehensive meta-analysis of the literature on post-acquisition performance thatldquoexisting empirical research has not clearly and repeatedly identified those variablesthat impact an acquiring companyrsquos performancerdquo
The case for innovation through acquisitionsIn principle companies can develop and grow either by exploiting or exploring theirresources (March 1991) The former focuses on increasing efficiency sales etc whilethe latter can be achieved through MampA or by internally-driven innovations (see alsoBurgelman 1986 Hitt et al 1990) Chaudhuri and Tabrizi (1999) argue thatdetermining the right mix of externally and internally generated innovation is aquestion of whether or not innovation can be done quickly enough internally whileaccording to Ghoshal (1987) the acquisition process may be necessary in order toobtain advantages of scale and scope in the global economy
Most organisations however are limited in their choice of innovative mode byresource constraints Consequently say Hitt et al (1990 p 29) ldquothe acquisition processand the resulting conditions after the acquisition is consummated affects managerialcommitment to innovationrdquo However committing significant financial resources toacquisitions leaves less for innovation which means that managers may give a lowerpriority to internal innovation (Hitt et al 1991) Thus since investments in acquisitionsand investments in other areas eg innovation may be perceived as trade-offs mostorganisations prioritise managerial commitment either to mergers and acquisitions orinternally to innovation
Acquisition is often suggested as a solution to stifling management systemsespecially as regards technology development (Warner 2003) and a growing body ofliterature has evolved to help organisations understand the value of technology andinnovation through acquisitions (eg Hitt et al 1990 Hitt et al 1996 James et al 1998)
Losinginnovativeness
1163
For example Karim and Mitchell (2000) find that acquisitions are a key to resourcereconfiguration either through deepening existing resources or extending the resourcemix This leads them to believe that companies that grow through acquisitions aremore robust and more likely to survive than those that do not Similarly Ahuja andKatila (2001) find that large companies can increase their innovativeness when theyacquire smaller companies and based on a study of MampA in Greece Papadakis (2005)suggests that the larger the acquirer compared with the acquired company the moresuccessful the acquisition
However other studies find that the performance of acquisitions is often belowexpectations (eg Chaudhuri and Tabrizi 1999 Hargedoorn and Duysters 2002) andin their review of the effect of mergers acquisitions and alliances Man and Duysters(2005) conclude that alliances should be favoured to mergers and acquisitions for thepurpose of innovative renewal
Collier (1983) argued that organisations often mature when they grow larger andthat this may be why larger organisations have increasingly pursued growth throughMampA compensating for their stifled systems and often ldquolackingrdquo innovation byacquiring entrepreneurial organisations However absorbing and integrating anentrepreneurial organisation into a larger one is a complex process that challengesmany of the pre-existing structures and processes in both organisations One of themajor challenges is to maintain creativity and innovativeness ndash at least in the acquiredorganisation ndash within the newly established corporate boundaries
Managing the post-acquisition processIt is often less clear from the available empirical literature how the post-acquisitionprocess influences the innovative performance of the acquired company Bresman et al(1999) suggest that it may be difficult to maintain innovativeness in the immediatepost-acquisition period because knowledge transfer becomes a one-way process fromthe acquirer to the acquired which can make employees in the acquired organisationfeel stressed angry disoriented frustrated confused and even frightened (Buono1997) leading to tension and uncertainty This potentially dampens employeesrsquocreativity and innovativess (Zhuang 1995)
Further information and knowledge are increasingly seen as key resources in theso-called knowledge-intensive companies However as emphasised by Von Krogh et al2000 knowledge is often related to processes which are basically not manageable in thetraditional sense or which lose their efficiency and impact if management is too tightKnowledge-sharing therefore presumes a motivation which does not comeautomatically
A knowledge-sharing culture involves the exchange of experiences together withthe ability to identify and cooperate with persons in the organisation withcomplementary competencies etc Thus companies need to develop aknowledge-sharing culture and a common identity since this helps to identify whatthe organisation must know and what capabilities should be developed (Bukh et al2005) Furthermore in acquired technology-based companies the most talentedindividuals embody the acquired companyrsquos institutional knowledge and these peopleare also the ones who have the best employment opportunities outside the company (cfBuono 1997)
MD449
1164
Changes in the organisation including MampA are likely to induce changes in theculture and thus also in the organisationrsquos ability to adopt and explore knowledgeThis is especially the case when new knowledge related to customers and otherinternal and external stakeholders must be integrated in the organisationOrganisational learning and organisational knowledge is not simply the sum ofemployeesrsquo learning and knowledge but is influenced by the social processes in thecompany as has been emphasised in the concept of the learning organisation and theknowledge-based company
MethodThis article addresses three fundamental issues ndash creativity innovation and theinnovative process ndash based on employeesrsquo perception of themselves and the innovativeactivities in the case company Ericsson Telebit The data collection was carried out inthe period August-October 2002 and was based on a combination of semi-structuredinterviews on-site observations and a questionnaire distributed to employees at thecompany The initial purpose of the interviews was to get an overview of relevantthemes regarding the role of innovation and creativity in order to develop thequestionnaire however the insights obtained also enabled a more thoroughinterpretation of the results The purpose of the questionnaire was to address abroader understanding of the concepts throughout the organisation while theobservations were used to validate and expand the interview statements
The two main data collection methods interviews and questionnaires were used ina mixed method research design in order to gain both insight into the development ofthe case company and the post-merger experiences of the employees (the interviews)and specifically examine the role and nature of creativity and innovation in thecompany (the questionnaire) Even though the methods are combined in a study of thesame phenomenon as is broadly done in triangulation (Denzin 1989 Jick 1979) wecannot claim the same kind of validity as when the same dimension of a researchproblem is examined using multiple methods However both the on-site observationsand the interviews add to the interpretation of the questionnaire results Below theinterviews and especially the questionnaire are described in more detail
The interviewsIn August 2002 three in-depth interviews were conducted at Ericsson Telebit one withan employee who had been with the company from the start one with a functionalmanager and one with an employee from the research department The author alsohad an informal introductory conversation with the HR manager as well as informalinterviews with several other employees The in-depth interviews were concentratedaround five themes background information incorporation into LM Ericssonchanging organisational structures motivation and customers They weretape-recorded and transcribed for subsequent coding and analysis
The questionnaireBased on prior knowledge interviews and written documents a questionnaire wasdeveloped to probe into employeesrsquo perception of the working environment how theconcept of innovation was interpreted and what is needed for employees to beinnovative The questionnaire adopts and extends Zhuangrsquos (1995) so-called attitude
Losinginnovativeness
1165
survey questionnaire which was originally designed to gain insight into the dynamicsof innovation with creativity as an input to the development of new ideas Thisquestionnaire adopts Heaprsquos (1989) notion of creativity as ldquothe synthesis of new ideasand concepts by the radical restructuring and re-association of existing onesrdquo thuscapturing the human factor as an input to the companyrsquos innovativeness
Some of Zhuangrsquos original questions were asked in reverse to control whetherrespondents paid attention to the questions The questionnaire used in this paperconsists of 35 questions (compared with Zhuangrsquos 28 questions) divided into threesections each preceded by a statement indicating the focus of the section At the end ofeach section respondents were given the opportunity to make comments andsuggestions
Section one of the questionnaire (see Appendix for the full questionnaire)containing seven questions was designed to collect personal data eg sex age etc Sixof these questions corresponded to Zhuangrsquos questions while the seventh is added toenable analysis of the data across the different departments at Ericsson Telebit
Section two containing 14 questions was designed to evaluate respondentsrsquocreativity (13 questions corresponded to 12 of Zhuangrsquos one of his questions rdquoDo youmistrust your own or other peoplersquos intuitionrdquo being divided into two) Zhuangexplains that he condensed Terry Farnsworthrsquos (1987) original creativity scale from 40to 12 questions by removing those explicitly aimed at managers The 13 questions aretherefore scored individually and the sum used as an indicator of creativity forcross-tabulation As in section one there was an additional question on whether thecompany created a context for improvements both personal and professional
The remaining 12 questions (nine of which corresponded to Zhuangrsquos) in sectionthree were designed to collect data on how the respondents perceive innovation Onequestion asked respondents to indicate factors of importance for realising their owninnovation potential while another asked them to identify the factors most emphasisedby the organisation The last ten questions in this section asked respondents to rankstatements about the companyrsquos present innovation strengths
At the end of October 2002 the questionnaire was accessible on Ericsson Telebitrsquosintranet for fourteen days The response rate was only 30 percent even though thequestionnaire was placed on the front page together with a reminder at the end of theperiod One of the managers suggested that the length of the questionnaire might haveput off some potential respondents The overall response is shown in Table I
Innovativeness of Ericsson Telebit from spin-off to integrationEricsson Telebit has its roots in the very first Danish IT company Regnecentralenwhich was founded in 1955 In 1989 after a number of years under different ownership50 per cent of the shares in Regnecentralen were acquired by Britainrsquos ICL(International Computers Ltd) the rest being acquired a few years later ndash after ICL
Number of employees 120Questionnaires received 37Overall response rate () 3083Usable number of responses 33Net response rate () 2750
Table IAnalysis of overallresponse
MD449
1166
had been bought by the Japanese company Fujitsu Ltd As part of the restructuring itwas decided to close down the part of Regnecentralen that developed and producednetwork routers and accessories These changes in ownership together with areorganisation and refocusing of business areas led to the establishing of Telebit ASin 1992
Together with 12 other people mostly from RegnecentralenICL the projectmanager of the routers and accessories department decided to start Telebit on the basisof a contract with their main customer a Dutch company Between 1992 and 1999Telebit increased its number of employees from 13 to 38 and in 1995 it became the firstcompany in the world to introduce a commercial router based on IPv6 (InternetProtocol version 6) technology[1] With the competencies and insights into internettechnologies that this generated within the organisation including the breakthrough ofIPv6 technology Telebit positioned itself as an innovative company possessingcompetencies at the cutting edge of new IP-related technologies
At the time therefore the companyrsquos innovativeness was mostly driven bytechnological insight and both internally and among its customers technology wasregarded as one of the main drivers of Telebitrsquos competitive advantage ConsequentlyTelebit focused its development efforts on IP technology its aim being to makeprototypes of new routers to demonstrate the possibilities of the technology rather thana specific product with a clear market position
Incorporation into LM EricssonTelebitrsquos acquisition by LM Ericsson (Ericsson) in 1999 led to major changes Thenumber of employees at the newly-named company Ericsson Telebit (TED theinternal Ericsson abbreviation) increased rapidly doubling within 12 months fromapproximately 70 to 140 This in turn influenced the way of working eg how newemployees were trained since mentoring was not possible to the same extent as beforeIncorporation into Ericsson also resulted in several organisational changes As a relicof the Telebit days TED started as a single development department where employeeswere allocated to projects for shorter or longer periods Soon after however TED wasreorganised into an ldquoad hoc matrix structurerdquo where employees were organised indepartments on the basis of work areas and competencies As one of the managersexplained the aim of this new structure was to bring management into focus
Before the development manager did all kinds of stuff and the employees were veryautonomous Experienced hands They did not need project management or hardly anymanagement at all
Like many other entrepreneurial companies (cf Churchill and Lewis 1983) the oldTelebit organisation had a very flexible and loosely-defined organisational structurewith informal and minimal management systems and activities appeared almostchaotic and disjointed (Kazanjian and Drazin 1990 Stevenson and Harmeling 1990)Furthermore Telebit could be said to be characterised by intuitive decision-makingbased on the foundersrsquo values goals and skills (eg Bird 1992)
After being taken over by Ericsson the number of small projects was reduced andthe focus directed towards few but large long-term projects This together withincreased collaboration with other Ericsson units in Sweden created the need forfull-time project managers at TED The company had to improve project management
Losinginnovativeness
1167
skills since single projects were now of greater importance At the same time ongoingprojects were given more emphasis in the organisational structure in order to increaseemployeesrsquo commitment to project-specific goals rather than the department
Ericsson Telebitrsquos productsWith the new focus on large projects TEDrsquos product portfolio consists basically of twoprojects that were also its ldquoproductsrdquo SoftWare for Internet Protocol for Ericsson(SWIPE ) and Terminal Internet Protocol (TIP) Product management was now placedat two different locations in Stockholm SWIPE represents the development of softwarefor the mobile internet while TIP focuses on the development of an IP stack for mobile(terminals) which together makes it possible to merge ldquothe internet worldrdquo with ldquothemobile worldrdquo
During the first years of Ericsson ownership TED had its own researchdepartment providing courses for the Ericsson University in Stockholm andfunctioning as a third business area together with the two large projects At thebeginning of 2002 however this research department was closed down as part of aworldwide cut-back in Ericssonrsquos activities and TED had to find new ways to keeptechnologically up to date The solution was to launch smaller research projects incooperation with the University of Aarhus and the University of Aalborg (two Danishuniversities) As one employee put it
the opportunity to aim at entirely new initiatives is gone unless the management believesthat the only way is to establish a group of people ndash corresponding to 10 out of 150 people ndashwith unlimited possibilities not total anarchy but a group with possibilities and today wedo not have that
This means that TED mostly focuses on the improvement of existing products orprocess improvement
The marketFor employees the takeover by Ericsson not only limited their opportunities forcreativity access to the market and possibilities for innovation at TED but thesituation in the mobile market also changed After having experienced a period of rapidgrowth the market began to stagnate mainly because many mobile telephoneoperators were unwilling to establish the new network for third-generationtechnologies (3G or UMTS) since as one employee explained ldquothere is no money initrdquo Given the poor shape of the world economy in general operators were unwilling tomake any further investments in 3G having already spent huge sums on Europeanauctions for UMTS licences a transitional technology between GSM and true 3G
The stagnation of the mobile phone market influenced TED via Ericsson The scopeof development projects was changed several times concurrently with the operatorsrsquopostponement of investments in UMTS networks Some parts of TEDrsquos projects wereclosed down a few just weeks before they were due to be finished Nevertheless thegeneral belief at Ericsson in 2002 was that future products should still be based on theInternet Protocol technology which meant that TED represented a key competence forEricsson
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1168
From customers to sponsorsAs a result of its incorporation into Ericsson TED moved several steps down the valuechain since they no longer produced and marketed their own products to externalcustomers but only had internal customers at Ericsson called ldquosponsorsrdquo From beingan independent company supplying the market with leading-edge technology TEDwas now a local design centre within Ericsson Employees regarded this as a having amajor influence on their work They felt that they had lost the feeling for customersrsquoneeds because now they only got specifications from other parts of Ericsson One ofthe employees put it as follows
The products TED provides are based on a chain of demanded specifications [from otherparts of Ericsson] Because of this chain you are easily alienated towards the customers Andthis has also happened for TED We do not have direct contact with our customers which isboth good and bad but the understanding of the customers needs is an ability we do notpossess any more and that is a problem
The employees feel that the lack of feedback from customers or end users means thatthe quality of daily decisions and their commitment to product quality has sufferedNotwithstanding some of the original Telebit employees have maintained theircontacts with customers based on the hardware Telebit sold at the time Thisknowledge of customersrsquo needs is highly valued at TED and these employees are usedas a feedback group
TEDrsquos management is certainly not happy about the change in orientation awayfrom customers One of the managers explained
if we do not continue to have contacts then we lose the real contact with the end userstheir needs and how they use our products and then it will only be development in relation towritten requirements from the sponsors in Stockholm
Organisational structureInternationally Ericsson is divided into six business units each of which has directcontact with customers worldwide and responsibility for identifying customer needsand demands The business unit that includes TED is organised into three core unitscore network radio access network and application and services The core units focuson technological developments and are supported by so-called local design centreswhere actual technological development takes place
The financing of local design centre support follows the chain-of-command impliedby the organisational structure This means that funds flow from the business units viacore units to the local design centres The practical implication is that the core unitsfunction as coordinators managing the internal architecture including how thecomponents within the area are related One of the employees at TED explains this inthe following way ldquofor example when the purpose is to put IP technology on a routerit is the core unitrsquos responsibility to lsquosponsorrsquo a local design centrerdquo and sponsoringhere literally means supporting the local design centre with financial resources
While the clear separation of RampD departments from business units with customercontact has the advantage of directing research activities towards the commercialapplication of technologies it also has disadvantages since the organisationalstructure has a tendency to discourage more basic RampD activities and more long-termactivities without a specific market potential Without independent financing the local
Losinginnovativeness
1169
design centres are unable to follow new ideas that emerge during the projectsHowever they are allowed or even expected to be innovative within the project scopesas specified by Ericssonrsquos core units though since the sponsors are part of the board ofdirectors in the local design centres it limits the centresrsquo ability to act independently
EmployeesEven though sponsors have the formal powers to pass on assignments to the localdesign centre some TED employees feel that they sometimes have insufficienttechnological insight to choose the right projects While the sponsor organisations areclose to the end market and thus often have superior knowledge about customersrsquo andend usersrsquo immediate needs via the business units their knowledge of technologycomes from the design centres which means that they sometimes lack anunderstanding of its possibilities
Like many other RampD-oriented organisations TED regards knowledge as its mostimportant resource This also makes demands on employees since the companyrequires them to be able to work autonomously creatively take initiatives and askother people for help if needed Therefore TED primarily employs people with anappropriate educational background eg those with a university degree in computerscience engineers etc Notwithstanding some employees have obtained their maineducational qualifications from ongoing training not having had a formal degree insoftware engineering or other related areas before joining TED
Some employees have been with TED since it was established as an independentcompany in 1992 while others joined the company later Some had several yearsrsquoexperience from other companies while others were newly qualified One employeedescribed things as
We are 20 or 25 old guys while the rest are young They need more experience before theyrealise that teamwork is more important than putting oneself at the front line
This is also why TED makes an effort to attract and retain experienced employeesAnother employee said
We talk a lot and help each other There is a very good helping spirit and it is very naturalthat we help each other
This is also the impression gained from observations when visiting the organisationEmployees talk in the hallways in the offices and so on Most offices are shared bytwo or three persons and the offices of the project groups are located close together sothat distance is not a barrier to communication However it was also pointed out that adoor can be a small barrier to some employees even though management encouragesthem to talk to each other and seek help
Discussion of Ericsson Telebitrsquos innovativenessThis section draws on the questionnaire results in order to provide another angle onhow the acquisition and organisational turbulence has affected Telebitrsquos innovationand the perception of innovation among employees In addition when possible theresults are compared with findings from Zhuangrsquos (1995) study several questionsbeing similar (all results presented are based on average scores)
MD449
1170
Based on Heaprsquos (1989) definition Zhuang defined creativity as a ldquosynthesis of newideas and concepts by the radical restructuring and reassociation of existing onesrdquo(Zhuang 1995 p 14) While Zhuang measured innovation on an organisation-by-organisation basis this study is based on only one company Furthermore innovation ismeasured based on employeesrsquo perceptions rather than as a predefined concept Inaddition to creativity and innovation a third element the innovative process concernshow creativity is turned into improved corporate performance
CreativityAs discussed in section 2 creativity was measured on a scale from 1 to 13 The averagescore of different groups of employees is shown in Table II As can be seen employeesrsquoperception of their creativity is very similar across age and position moreover thedispersion of responses (not reported here) is low with the highest score being 13 andthe lowest 8 Four employees all male scored 13 while only one scored 8 The biggestdifference in creativity albeit not significant was found between the sexes Howeverthis could be explained by their job function in the company Of the seven femaleemployees five were in services or administration and two were in operations whereasamong the twenty-six male employees one was in administration nineteen were inoperations and six were managers (either department or project managers) Thisdifference between the sexes is as shown in Table II in agreement with Zhuangrsquosfindings in the companies alpha and beta
At first glance it seems surprising that employees aged 50 thorn scored slightly higher(albeit not significantly) on creativity than the other age groups younger people beingcommonly believed to be more creative and innovative which is in line with Zhuangrsquos(1995) study Some research (eg Hambrick and Mason 1984) shows that oldermanagers generally dislike deviating from the status quo and show greater adherenceto the norms of the organisation unlike younger and less experienced managers whoare more likely to pursuer creative strategies Other studies (eg Mostafa 2005) find nodifference in creativity and the perception of creativity between age groups
TED Alpha Beta
Overall average 1033 794 834
By ageUnder 20 000 900 70021-30 1014 844 87531-40 1025 814 82641-50 1025 700 890Over 50 1080 760 820
By positionManagerial 1033 868 917Non-managerial 1033 747 796
By sexMale 1058 819 859Female 943 747 700
Table IIAnalysis of scores on
creativity scale
Losinginnovativeness
1171
Without giving too much weight to the results since the difference is insignificant oneexplanation could be that the organisational emphasis on creativity and innovationfrom the early days of Telebit has fostered a climate conducive to creativity As statedby Shearring (1992) the human brain stays plastic throughout life and givenopportunity and motivation adults can master new subjects acquire new skills andlearn to behave more creatively at any age Another explanation for the high creativityscore among the over-50s may be that most of them are the entrepreneurs who havebeen with TED since the beginning in 1992 They were originally employed because oftheir ability to apply their knowledge to problem-solving and product development
Even when the thirteen questions on creativity in the questionnaire were condensedto 12 and the reverse questions were corrected the overall average of 942 wasremarkably higher than the 794 in Alpha and 834 in Beta[2] In TED the averagescore on creativity was the same for both managerial and non-managerial employeeswhereas it was significantly higher for managerial than non-managerial employees inboth Alpha and Beta Managers are often found to be more creative thatnon-managerial employees (eg Mostafa 2005) but in a technology-based companylike TED it is probably not surprising that creativity is a widely dispersedcharacteristic
InnovationAs shown in Table III in addition to Zhuangrsquos ten statements regarding employeesrsquoperception of innovation the questionnaire also included three further statementsrelated to the transformation of ideas to ldquoproductsrdquo and meeting customersrsquo andsuppliersrsquo requirements respectively Based on a five-point Likert scale from 1(strongly disagree) to 5 (strongly agree) Table III shows how employees at TEDperceive innovation
The most significant statements which employees either agree or strongly agreewith are about generating new ideas and seeing something from a differentperspective One of the interviewees at TED explained the latter as follows
innovation is not necessarily to develop something entirely new it might as well apply tothe usability and application of an existing technology A good example is the IP technologywhich actually is an old technology and there are plenty of people in this world who knowmore about it than we do But we have focused on the IP technology in relation toimplementation and the small thing it is to put an IP stack on a mobile phone opens for a lotof new application and service opportunities and to me this is an example of creativity
Judging from the distribution of the innovation scores TED employees do not seem tohave a shared perception of what innovation is This is in agreement with for exampleRoos and von Krogh (1995) who argue that the perception of a concept depends onprior knowledge which means that it differs from person to person From thispoint-of-view the high score of the statement ldquoseeing something from a differentperspectiverdquo is thus a very interesting result and is in line with TED employeesrsquoassertion that innovation can be initiated throughout the organisation and from outsideit as showed in Table IV According to employees new ideas are often generated atnatural meeting places like canteens coffee machines mail rooms etc whichencourage and enable informal conversations (Christensen and Bang 2003Christensen 2005) Another perspective on innovation is customer-driveninnovation Customers can be involved in the innovative process in different ways
MD449
1172
Per
cen
tag
ed
istr
ibu
tion
ofth
ein
nov
atio
nsc
ores
atT
ED
Iny
our
opin
ion
in
nov
atio
nis
abou
tS
tron
gly
dis
agre
eD
isag
ree
Not
sure
Ag
ree
Str
ong
lyag
ree
TE
DA
lph
aB
eta
Inv
enti
ng
som
eth
ing
enti
rely
new
00
273
91
424
212
358
235
252
Gen
erat
ing
new
idea
s0
00
00
048
551
54
523
083
28Im
pro
vin
gso
met
hin
gth
atal
read
yex
ists
30
61
152
515
242
388
227
198
Fol
low
ing
the
mar
ket
lead
er27
351
512
19
10
02
033
533
98A
ttra
ctin
gin
nov
ativ
ep
eop
le6
115
212
133
333
33
732
592
98P
erfo
rmin
gan
exis
tin
gta
skin
an
eww
ay0
06
112
175
86
13
822
222
04S
pre
adin
gn
ewid
eas
61
00
212
515
212
382
222
217
Ad
opti
ng
som
eth
ing
that
has
bee
nsu
cces
sfu
lly
trie
del
sew
her
e3
033
327
327
39
13
063
162
76S
eein
gso
met
hin
gfr
oma
dif
fere
nt
per
spec
tiv
e0
00
06
163
630
34
242
411
91In
trod
uci
ng
chan
ges
00
182
212
485
121
355
224
230
Tra
nsf
orm
ing
idea
sto
ldquopro
du
ctsrdquo
30
91
152
485
242
382
NA
NA
Mee
tin
gcu
stom
ers
121
182
394
212
91
297
NA
NA
Mee
tin
gsu
pp
lier
s12
121
242
421
23
02
82N
AN
A
Notes
Th
en
um
ber
sin
this
tab
lear
eav
erag
esc
ores
ona
fiv
e-p
oin
tL
iker
tsc
ale
onin
nov
atio
nA
lph
aan
dB
eta
are
from
Zh
uan
grsquos
(199
5)st
ud
yan
dar
ein
clu
ded
inor
der
toco
mp
are
the
Tel
ebit
scor
esw
ith
two
oth
erco
mp
anie
s
Table IIIWhat is innovation about
(percentage distributionand average)
Losinginnovativeness
1173
eg work groups or ldquocamping outrdquo at customers (Christensen 2005) A third andrelated perspective on innovation is networks with research institutions which may beestablished to get access to basic research (Christensen 2005) or to new ideas viastudentsrsquo projects There are an infinite number of approaches to innovation the onlylimitation is within the individuals
It should also be noted that the more general perception of innovation at TED issignificantly different from that in the Alpha and Beta companies For instance asshowed in Table III TED employees think that going beyond traditional ways ofthinking namely ldquoseeing something from at different perspectiverdquo is very important toinnovation whereas in the more traditional industrial companies Alpha and Betaemployees think it more important for innovation to ldquofollow the market leaderrdquo Thedifference between the two very different statements partly reflects the fact that Alphaand Beta are traditional industrial companies whereas TED is knowledge intensiveand competes on innovativeness
Employees were also asked to give their opinion on nine statements regardingvaluation of innovation in their organisation As shown in Table V the strongestcommon belief was how significantly an innovation improves the organisationrsquosprofitability (score 415) How new technology is applied (394) and whether it iscomplementary to existing products (373) were also perceived to be importantCommon to these three statements is that none of the employees strongly disagreedalthough the lower the score the more uncertain people were
The innovation processWith a score of 424 against 366 for marketing and production employees engineersor operational employees appear to play the most important role in initiating theinnovative process Employees expressed mixed opinions about whether or not theboard of directors or sponsors were well placed to initiate an innovation As Table IVshows the distribution of employeesrsquo perception is scattered giving an average scoreof 312 This disagreement also clearly emerged from the interviews becauseemployees perceive the sponsors in different ways Those who think sponsors are wellplaced to initiate an innovation based their answer on the sponsorsrsquo power to controlthe supply of resources (financial support) whereas the main reason given for
Percentage distribution of the position toinitiate innovation scores at TED
Who do you think is in a favourableposition to initiate a product innovation
Stronglydisagree Disagree
Notsure Agree
Stronglyagree
TEDaverage
The board of directors 1 13 5 9 5 312Marketing people 1 3 5 20 3 366Production people 1 4 5 17 5 366Engineersoperational 0 1 1 20 11 424Accountants 2 16 7 8 0 264Purchasing people 1 9 12 10 0 297Nobody 23 5 5 0 0 145External experts (consultants) 1 4 12 14 2 336Receptionists 5 11 10 7 0 258
Table IVWho is in a position toinitiate a productinnovation
MD449
1174
disagreeing with this statement is that the sponsors only provide TED with resourcesndash and not with ldquodriverdquo
Summing up creativity innovation and the innovative processes all played acritical role in entrepreneurship though there is still a need for someone to takeresponsibility for and drive the entrepreneurial process This person can either be anindependent entrepreneur or an entrepreneur working in an existing organisation(intrapreneur) but they may be motivated by different reasons
Concluding discussionAs one of the first contributions to understanding the implications of mergers andacquisitions for companiesrsquo innovativeness Hitt et al (1990) argued that managerialcommitment to innovation is based on organisational conditions More specificallythis means that up to a certain company size managerial commitment to innovationincreases but any subsequent increase in size tends to overburden both managementand employees with formal control systems creating difficulties in relation toinnovative activities in large mature companies
The changes in organisational boundaries as regards access to customers andrelated relevant information as well as the increase in control and reporting systemsexperienced by employees at TED are probably very typical for acquiredorganisations Almost by definition organisations pursuing acquisitions becomelarger and the range of their operations more diversified which affects the types ofcontrol systems needed following an acquisition (Hitt et al 1990)
Williamson (1975) has argued that large multinational companies are often not asefficient as smaller companies at developing innovations rather they are efficient inmanufacturing and distribution while smaller entrepreneurial organisations are moreefficient at developing innovations due to their greater flexibility This is illustrated byTED where innovation became difficult when the small entrepreneurial company wasincorporated into a large and complex multi-national company and it is also inaccordance with Damanpourrsquos (1992) conclusion that size matters to innovation
Percentage distribution of the valuation ofinnovation scores at TED
How is the value of an innovationjudged in an organisation like yours
Stronglydisagree Disagree
Notsure Agree
Stronglyagree TED
How novel it is 0 3 13 15 2 348How many people it involves 1 13 13 3 3 282How long it takes 1 9 9 9 5 324How much it costs 2 7 5 14 5 339How significantly it improves theorganisationrsquos profitability 0 0 4 20 9 415Whether new technology is applied 0 1 6 20 6 394The extent of change it entails 1 2 17 12 1 330Whether it involves a new business area 1 4 13 10 5 342Whether it is complementary to existingproducts 0 0 11 20 2 373
Table VValuation of innovation
Losinginnovativeness
1175
In relation to employeesrsquo perception of creativity and innovation and to their ownability to be creative and innovative most employees at TED emphasised their ownand colleaguesrsquo creativity and innovativeness However it was also realised thatcreativity itself was not enough for new ideas to materialise in actions in largeorganisations One of the TED employees expressed this very clearly
It is an illusion to believe that you can take a small creative and innovative company andintegrate it into a larger one ndash it is downhill most of the time
Implications for practiceThe working practices and processes that were developed when Telebit was a separatecompany gradually disappeared or were simply lost when the company wasincorporated into Ericsson even though most of the employees were still the same Theimportant lesson here is that although creativity and innovativeness have a stronghuman dimension innovation requires an organisational context that enablesknowledge creation (Von Krogh et al 2000) In the case of Telebit the former workingroutines and practices as well as contact to customers formed part of the tacitorganisational knowledge and as is well known from the literature on knowledgecreation (Von Krogh et al 2000) this is not easily transferable
This indicates that to maintain the opportunities and competencies of the acquiredorganisation some efforts are needed to make the energies of the two organisations acttogether in tandem Telebit probably lost its original innovativeness because thereorganisation of the company distorted the entrepreneurial drive created by directcustomer contact However it is impossible to say what might have happened ifEricsson had focused more on the integration process and on facilitating the transfer ofcapabilities to the consolidated company This is the strategy recommended by forexample Buono (1997) who studied a similar type of acquisition and demonstratedthat a process that incorporates work with organisational members on pre-acquisitionanxieties is beneficial
Papadakis (2005) found that the existence of a communication program was aparticularly significant factor explaining the success of MampA Similarly a survey byBert et al (2003) found under-communication to be the most important problemFurthermore Bert et al (2003) also emphasised that post-merger problems are to agreat extent due to a clash of cultures and different management styles very similar towhat was experienced by the employees at TED
One company well known for its ability to successfully acquire new technologythrough acquisitions is Cisco Systems which more than any other high-tech companyhas built up a dominant market position through acquisitions (Mayer and Kenney2004) Although comparing the acquisition of Telebit by Ericsson with the generalimpression of Ciscorsquos acquisition practice from the literature has its limitations a closerlook into this can still provide some key points for understanding what ndash or what not ndashhappened when Telebit was acquired
According to Pfeffer and Sutton (2006) Ciscorsquos success stems from the companyrsquossystematic examination of evidence about what went right and wrong in othercompaniesrsquo mergers as well as a merger integration process that ensures the peoplestay with the company feel at home and can use their knowledge to makecontributions to the new company We did not explicitly ask the employees at TED
MD449
1176
about the kind of post-integration procedures used at Ericsson or how Ericsson hadlearnt from this experience ndash however specific corporate-wide procedures forintegration or learning were not mentioned in the interviews either In their study ofCiscorsquos strategy Mayer and Kenney (2004 p 300) show that ldquoif employees leave ortheir practice is significantly disrupted then the acquisition is almost certain to failrdquoThus not only retention but also preserving the way of working seems to be of theutmost importance since it is both emphasised in the case of Cisco and apparent fromthis study
Implications for researchWhile MampA seem to be a recurring part of corporate life there is no substantialevidence about what really matters in the integration phase The case study reported inthe article pointed to specific factors that were important for the innovativenesscreativity and entrepreneurial spirit of the acquired company These elements mostimportantly the informality of the organisation and close contact to customers werenot preserved after the acquisition More generally a comparison with Cisco couldpoint to the importance of how the integration phase is managed
As regards creativity and innovativeness in general the literature identifies severalways in which management can influence a companyrsquos practices and processes Giventhe importance of the pre- and post-integration phases both qualitative andquantitative cross-company studies could shed more light on which factors areimportant and how the presence or absence of these factors influence the success of anacquisition
One way of strengthening the conclusions with respect to how creativity andinnovativeness can be maintained in acquired technology companies could be toexamine similar acquisitions not only at Ericsson and Cisco but also at othercompanies competing in the same business areas The focus here should be both on theactual experiences in the acquired companies the specific conditions related to theacquisitions and on the management of the post- and pre-integration phase Onelimitation of the present study is that it only focuses on employees who have stayedwith the acquired company Given the importance of the integration phase newinsights could be gained from following an acquisition more closely regardingattitudes both among those who stay and those who leave as well as among employeesat the acquiring company Furthermore it should be possible to conduct survey-basedstudies across a larger number of companies including in other sectors to examinehow management of the integration phase influences the motivation and creativity ofemployees in the acquired companies
Notes
1 The accelerating growth of the internet and its migration into new areas such as embeddeddevices together with the widespread use of IP in wireless consumer devices severely testedInternet Protocol version 4 (IPv4) which was designed in the early 1980s The new standardIPv6 was developed to extend the current IP infrastructure and improve scalability andsecurity of IP networks and also provides mechanisms for easier configuration of networksand attached devices
2 Not testable as Zhuangrsquos (1995) variance is not accessible
Losinginnovativeness
1177
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Bert A MacDonals T and Herd T (2003) ldquoTwo merger integration imperatives urgency andexecutionrdquo Strategy amp Leadership Vol 31 No 3 pp 42-9
Bird B (1992) ldquoThe operation of intentions in timerdquo Entrepreneurship Theory and PracticeVol 17 No 1 pp 11-20
Bresman H Birkenshaw J and Nobel R (1999) ldquoKnowledge transfer in internationalacquisitionrdquo Journal of International Business Vol 30 No 3 pp 439-62
Brockner J Grover S OrsquoMalley MN Reed TF and Glynn MA (1993) ldquoThreads of futurelayoff self-esteem and survivorsrsquo reactions evidence from the laboratory and the fieldrdquoStrategic Management Journal Summer pp 153-66
Bukh PN Christensen KS and Mouritsen J (2005) Knowledge Management and IntellectualCapital Establishing a Field of Practice Palgrave Macmillan Houndsmill
Buono AF (1997) ldquoTechnology transfer through acquisitionrdquo Management Decision Vol 35No 3 pp 194-204
Burgelman RA (1986) ldquoManaging corporate entrepreneurship new structures forimplementing technological innovationrdquo in Horwith M (Ed) Technology in the ModernCorporation Pergamon Press New York NY pp 1-13
Chaudhuri S and Tabrizi B (1999) ldquoCapturing the real value in high-tech acquisitionsrdquoHarvard Business Review Vol 75 No 5 pp 123-30
Christensen KS (2005) ldquoEnabling intrapreneurship the case of a knowledge-intensiveindustrial companyrdquo European Journal of Innovation Management Vol 8 No 3pp 305-22
Christensen KS and Bang HK (2003) ldquoKnowledge management in a project orientedorganisation three perspectivesrdquo Journal of Knowledge Management Vol 7 No 3pp 116-28
Churchill N and Lewis V (1983) ldquoThe five states of business growthrdquo Harvard BusinessReview Vol 61 pp 44-51
Collier DW (1983) ldquoTechnology in diversified decentralised companiesrdquo Journal of BusinessStrategy Vol 3 pp 91-3
Damanpour F (1992) ldquoOrganisational size and innovationrdquo Organisation Studies Vol 13 No 3pp 375-402
Denzin NK (1989) The Research Act A Theoretical Introduction to Sociological Methods 3rd edPrentice-Hall Englewood Cliffs NJ
Ernst H and Vitt J (2000) ldquoThe influence of corporate acquisitions on the behaviour of keyinventorsrdquo RampD Management Vol 30 No 2 pp 105-19
Farnsworth T (1987) Test Your Executive Skills Ebury Press London
Ghoshal S (1987) ldquoGlobal strategy an organising frameworkrdquo Strategic Management JournalVol 8 No 5 pp 425-40
Hambrick DC and Cannella AA (1993) ldquoRelative standing a framework for understandingdepartures of acquired executivesrdquo Academy of Management Journal Vol 36 No 4pp 733-62
Hambrick D and Mason P (1984) ldquoUpper echelons the organisation as a reflection of its topmanagementrdquo Academy of Management Review Vol 9 No 2 pp 193-206
MD449
1178
Hargedoorn J and Duysters G (2002) ldquoThe effect of mergers and acquisitions on thetechnological performance of companies in a high-tech environmentrdquo Technology Analysisamp Strategic Management Vol 14 No 1 pp 67-85
Harrison JS Hitt MA Hoskinsson RE and Ireland RD (1991) ldquoSynergies andpost-acquisition performance differences versus similarities in resource allocationsrdquoJournal of Management Vol 17 pp 173-90
Harrison JS Hitt MA Hoskinsson RE and Ireland RD (2001) ldquoResource complementarityin business combinations extending the logic to organisational alliancesrdquo Journal ofManagement Vol 27 pp 679-90
Heap J (1989) The Management of Innovation and Design Cassell Educations Ltd London
Hitt MA Hoskisson RE and Ireland RD (1990) ldquoMergers and acquisitions and managerialcommitment to innovation in M-form companiesrdquo Strategic Management Journal Vol 11No 10 pp 29-47
Hitt MA Hoskisson RE Ireland RD and Harrison JS (1991) ldquoEffects of acquisitions onRampD inputs and outputsrdquo Academy of Management Journal Vol 34 No 3 pp 693-706
Hitt MA Hoskisson RE Johnson RA and Moesel DD (1996) ldquoThe market for corporatecontrol and firm innovationrdquo Academy of Management Journal Vol 39 No 5 pp 1084-119
James AD Georghiou L and Metcalfe JS (1998) ldquoIntegrating technology into merger andacquisition decision makingrdquo Technovation Vol 18 Nos 89 pp 563-73
Jick TD (1979) ldquoMixing qualitative and quantitative methods triangulation in actionrdquoAdministrative Science Quarterly Vol 24 No 4 pp 602-11
Kapoor R and Lim K (2005) ldquoThe impact of acquisitions on the innovation performance ofinventors at semiconductor companiesrdquo Academy of Management Best Conference Papers2005
Karim S and Mitchell W (2000) ldquoPath-dependent and path-breaking change reconfiguringbusiness resources following acquisitions in the US medical sector 1978-1995rdquo StrategicManagement Journal Vol 21 No 11 pp 1061-81
Kazanjian RK and Drazin R (1990) ldquoA stage contingent model of size and growth fortechnologically based venturesrdquo Journal of Business Venturing Vol 5 No 3 pp 137-50
King DR Dalton DR Daily CM and Covin JG (2004) ldquoMeta-analysis of post acquisitionperformance indicators of unidentified moderatorsrdquo Strategic Management JournalVol 25 No 2 pp 187-200
Leonard-Barton D (1992) ldquoCore capabilities and core rigidities a paradox in managing newproduct developmentrdquo Strategic Management Journal Vol 13 pp 111-25
Man AP and Duysters F (2005) ldquoCollaboration and innovation a review of the effect ofmergers acquisitions and alliances on innovationrdquo Technovation Vol 25 pp 1377-87
March JG (1991) ldquoExploration and exploitation in organisational learningrdquo OrganisationScience Vol 2 No 1 pp 71-87
Mayer D and Kenney M (2004) ldquoEconomic action does not take place in a vacuumunderstanding Ciscorsquos acquisition and development strategyrdquo Industry and InnovationVol 11 No 4 pp 299-326
Mostafa M (2005) ldquoFactors affecting organisational creativity and innovativeness in Egyptianbusiness organisations an empirical investigationrdquo The Journal of ManagementDevelopment Vol 24 No 1 pp 7-33
Papadakis VM (2005) ldquoThe role of broader context and the communication program in mergerand acquisition implementation successrdquo Management Decision Vol 43 No 2 pp 236-55
Losinginnovativeness
1179
Pfeffer J and Sutton RS (2006) Hard Facts Dangerous Half-Truths and Total NonsenseProfiting from Evidence-Based Management Harvard Business School Press Boston MA
Reilly AH Brett JM and Stroh LK (1993) ldquoThe impact of corporate turbulence on managersrsquoattitudesrdquo Strategic Management Journal Vol 14 pp 167-79
Roos J and von Krogh G (1995) ldquoWhat you see depends on who you are think aboutepistemologyrdquo IMD Perspectives for Managers No 7 pp 1-4
Shearring HA (1992) ldquoCreativity and older adultsrdquo Leadership amp Organization DevelopmentJournal Vol 13 No 2
Stevenson HH and Harmeling S (1990) ldquoEntrepreneurial managementrsquos need for a morelsquochaoticrsquo theoryrdquo Journal of Business Venturing Vol 5 No 1 pp 2-14
Von Krogh G Ichijo K and Nonaka I (2000) Enabling Knowledge Creation How to Unlock theMystery of Tacit Knowledge and Release the Power of Innovation Oxford University PressOxford
Warner AG (2003) ldquoBuying versus building competence acquisition patterns in theinformation and telecommunications industry 1995-2000rdquo International Journal ofInnovation Management Vol 7 No 4 pp 395-415
Williamson OE (1975) Markets and Hierarchies Analysis and Antitrust Implications FreePress New York NY
Zhuang L (1995) ldquoBridging the gap between technology and business strategy a pilot study onthe innovation processrdquo Management Decision Vol 33 No 8 pp 13-21
Appendix QuestionnaireThe first questions are about your background
(1) Sex male or female
(2) Your age
(3) Education (a) High school College (b) Bachelor degree (c) Engineer (d) MSc or MA (e)PhD (f) none and (g) Other please specify
(4) How many years have you been with the company
(5) In which department are you employed
(6) Which of the following categories best describe your current position (a) CEO and unitmanager (b) Department manager (c) Operational employees (d) Clericaladministration (e) Trainee (f) Services and (g) Other please specify
(7) How many years have you been in your current position
The next questions are about yourself in relation to your work environment
(8) Do you get bored when doing things the same way every time
(9) Are you afraid of making mistakes
(10) Are you satisfied when making improvements
(11) Does the company create a context in which you can make improvements (a) Personalandor (b) Professional
MD449
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(12) Are you discouraged from acting because of lack of resources
(13) Do you like solving problems in unconventional ways
(14) Do you feel that it is your job to be critical of established practices
(15) Do you trust your own intuition
(16) Do you trust other peoplersquos intuition
(17) Are you afraid of having your ideas ridiculed
(18) Do you find it hard to accept disorder and confusion
(19) Can you quickly point out why an idea will not work
(20) Do you welcome other peoplersquos ideas
(21) Do you prefer a quiet life to challenging one
The following questions are about the interpretation of different concepts (Questions 22-28 arebased on a five-point Likert scale)
(22) In your opinion innovation is about (a) inventing something entirely new (b)generating new ideas (c) improving something that already exists (d) following themarket leader (e) attracting innovative people (f) performing an existing task in a newway (g) spreading new ideas (h) adopting something that has been successfully triedelsewhere (i) seeing something from a different perspective (j) introducing changes (k)transforming ideas into ldquoproductsrdquo and (l) meetings with customers
(23) In your opinion an innovation can be (a) a product (b) a service (c) a technology (d) aproduction process (e) a management system (f) an administration procedure and (g)an organisational innovation
(24) How is the value of an innovation judged in an organisation like yours (a) How novelit is (b) how many people it involves (c) how long it takes (d) how much it costs (e)how significantly it improves the organisationrsquos profitability (f) whether newtechnology is applied (g) the extent of change it entails (h) whether it involves a newbusiness area and (i) whether it is complementary to existing products
(25) Who do you think is in a favourable position to initiate a product innovation (a) Theboard of directors (b) marketing people (c) production people (d) engineers (e)accountants (f) purchasing people (g) nobody (h) external experts (consultants) and(i) receptionists
(26) Why do companies embark on innovative activities (a) They want to increase profitmargin (b) their competitors (c) they want to do better than their competitors (d)pressure from customers (e) they have creative employees (f) in an attempt to cutdown their operational costs (g) they have the financial resources and (h) they try toavoid straight price competition
(27) The key to onersquos ability to innovate is to (a) be born with the right talent (b) be able tothink creatively (c) complete a higher education (d) have at least ten years of workexperience (e) possess good interpersonal skills (f) be good at putting theory into
Losinginnovativeness
1181
practice (g) realise the necessity (h) ask ldquostupidrdquo questions and (i) other pleasespecify
(28) Which of the following organisational factors are important to realising onersquosinnovation potential (a) Regular employee performance appraisals (b) freedom towork within areas of greatest interest (c) criticism from superiors or colleagues (d)recognition and appreciation (e) contact to stimulating colleagues (f) creativitytraining programmes (g) encouragement to take risks (h) monetary rewards (i)tolerance of non-conformity and (j) opportunity to work alone rather than in a team
(29) Which of the factors in question 28 do you feel get most emphasis in your company
On a scale from 1(creativity within specific scopes) to 5 (pursue ones ideas) and 10 (gives financialsupport to individuals or groups of employees who wish to start their own company on the basis ofan idea
(30) To which extent does the company make room for creativity and innovation
On a scale from 1(most important) to 10 (less important)
(31) Please rank the following statements in order of importance to the companyrsquos presentstrength of innovation (a) informal and relaxed management style (b) decentralisedmanagement structure (c) regular employee performance appraisal (d) generousbudget for research and development (e) strong emphasis on team effort (f) effectiveemployee suggestion scheme (g) encourage employees to work on their own initiative(h) prompt public recognition and appreciation (i) attractive monetary reward and (j)promotion
(32) Is there any point you wish to make concerning any aspect of your companyrsquosinnovation activities
(33) Other (comments and suggestions)
About the authorKarina Skovvang Christensen MSc (Econ) is a PhD student at the Department of ManagementAarhus School of Business Her primary research interests include management of innovationknowledge and strategy and her PhD project deals with management of intrapreneurship inknowledge-intensive organisations She has previously worked with intellectual capitalstatements and has published articles and books on knowledge management corporateentrepreneurship innovation and management accounting Karina Skovvang Christensen canbe contacted at KaSCasbdk
MD449
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To purchase reprints of this article please e-mail reprintsemeraldinsightcomOr visit our web site for further details wwwemeraldinsightcomreprints
111
CHAPTER 7
Enabling Intrapreneurship The Case of a Knowledge-Intensive Industrial Company
Originally Published in
Christensen Karina Skovvang 2005 Enabling Intrapreneurship The Case of a
Knowledge-Intensive Industrial Company European Journal of Innovation
Management Vol 8 No 3 pp 305-322
112
Enabling intrapreneurshipthe case of a knowledge-intensive
industrial companyKarina Skovvang Christensen
Department of Organisation and ManagementThe Aarhus School of Business Aarhus Denmark
Abstract
Purpose ndash The aim of the paper is to provide an understanding of the various factors that enableintrapreneurship in established firms The paper reports on a case study of intrapreneurship in a largeknowledge-intensive industrial firm
Designmethodologyapproach ndash Based on the existing literature it is suggested that the use ofdifferent factors can either enable or inhibit intrapreneurship and five enabling factors that areidentified Based on interviews on-site observations and documents and reports the five factors with apotential influence on intrapreneurship are examined and alternative factors considered
Findings ndash The five enabling factors that are identified in the literature are not sufficient to enableintrapreneurship in knowledge-intensive companies and it is concluded that three additional factorsenabling intrapreneurship in established firms should also be taken into account
Practical implications ndash The knowledge of what makes factors either enablers or inhibitors areincomplete and to enhance the intrapreneurial ability of an organisation managers must learn whichfactors to use in different situations
Originalityvalue ndash Only very few papers have studied intrapreneurship in specific organisationsThis paper contributes with a synthesis of the literature in the area and with a suggestion of a modelthat is used in the empirical analysis and augmented based on that The paper furthermore contributesto the body of literature on the factors enabling intrapreneurship in general
Keywords Communication Entrepreneurialism Culture
Paper type Case study
1 IntroductionJob creation has become a hot topic in most old industrialised countries whereproduction is increasingly moving to the newly industrialised countries Typically inmany European countries the underlying assumption in the public debate is that newjobs should mainly be created in small- and medium-sized firms (SMEs) Howeverstudies have shown that job creation in SMEs has almost come to a standstill and thatoverall these firms lose almost as many jobs as they create (see for example Hisrich1990 Sathe 2003)
Other authors eg Pinchot (1985) and Morris and Kuratko (2002) have suggestedthat there is a potential for job creation in both large and small companies though theysay little about the kind of industrial structure best suited to achieving this or about thebest way to ensure job creation and growth In any event we have to take a startingpoint in the existing structure with both large and small companies Much research has
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
wwwemeraldinsightcomresearchregister wwwemeraldinsightcom1460-1060htm
The author gratefully acknowledges the helpful comments made by Per Nikolaj Bukh AndersDrejer and John Parm Ulhoslashi on an earlier version of this paper
Enablingintrapreneurship
305
European Journal of InnovationManagement
Vol 8 No 3 2005pp 305-322
q Emerald Group Publishing Limited1460-1060
DOI 10110814601060510610171
been done within the field of entrepreneurship focusing on the entrepreneurrsquoscharacteristics and the process of starting up a new independent company (Gartner1988) although it is also necessary to improve innovation in large companies But iscorporate entrepreneurship the solution or is it just another passing fad
Corporate venturing has often been mentioned in relation to corporateentrepreneurship (eg Sathe 2003) and it has both good and bad points Sometimesmanagement faces new strategic dilemmas ndash especially if the new ventures are notclosely related to the mother companyrsquos core competencies and markets But as notedby Guth and Ginsberg (1990) and Sharma and Chrisman (1999) among otherscorporate entrepreneurship is more than corporate venturing and to be moreintrapreneurial companies therefore need to take the whole organisation into accountAs has often been pointed out in the literature on organisational design differentcorporate structures support different organisational needs (eg Hisrich 1990)Corporate structure is thus a good starting point as regards enabling intrapreneurship
In other words well-established and mature companies need to experiment withnew ways of organising and organisational structures that are known to enableinnovation to take place eg networks loosely coupled organisations and projectorganisations as a supplement to the classic hierarchy Notwithstanding managersalso need to recognise that innovation and renewal cannot be planned and managed inthe same way as operational activities
Another reason why innovation in large well-established companies is important isthat such companies possess more resources (both human financial and structural) thansmall companies and are therefore faced by less overall uncertainty Often they onlyexpose themselves to one kind of uncertainty at a time while entrepreneurs typicallyhave to cope with several simultaneously eg technology markets financial capital andbranding The transition to the knowledge society may thus be very difficult to achievethrough small companies alone which makes the focus on innovation in large companieseven more important This in turn implies directing more attention towards the keyfactors that enable and improve innovation within companies
In this paper I examine how companies can encourage intrapreneurship by meansof five different enablers derived from the literature rewards management supportresources organisational structure and risk Based on a case study of a largeknowledge-intensive industrial firm it is concluded that the factors are not of equalimportance and that in this specific organisation other important factors also enableintrapreneurship This leads to a proposed model consisting of eight enablers
This paper is organised as follows Section 2 which draws on the literature in thefield suggests a classification of corporate entrepreneurship based on fourorganisational perspectives each with different motivations for engaging inentrepreneurial activities Section 3 presents the methodology and discusses theadvantages and disadvantages of a single case study Section 4 briefly describes thecase company while section 5 presents a detailed analysis of the factors from a singlecase Section 6 discusses the findings and suggests how intrapreneurship can beenabled while section 7 presents the conclusion and implications
2 Corporate entrepreneurshipThe ideas behind corporate entrepreneurship can be traced back to the mid-1970s (egPeterson and Berger 1972 Hanan 1976) but it was not until Pinchotrsquos (1985) book on
EJIM83
306
intrapreneuring in the mid-1980s that it became a separate research topic However itstill seems to be a concept in search of a clear definition Various broader or narrowerdefinitions have been proposed by different authors some as observed by Sharma andChrisman (1999) using the same definition for different phenomena and others usingdifferent definitions for the same phenomenon A sufficiently broad definition ofcorporate entrepreneurship is thus crucial in order to avoid prematurely excludingimportant issues
One approach to the field is to regard corporate entrepreneurship as the overallconcept covering everything to do with entrepreneurship in a company (Christensen2004) such as intrapreneurship (Pinchot 1985) exopreneurship (Chang 1998) andcorporate venturing (Burgelman 1983) Common to these topics is that corporateentrepreneurship refers to ldquoa multidimensional process with many forces acting inconcert that lead to the implementation of an innovative ideardquo (Hornsby et al 1993p 30)
Jeffrey Hornsby and Donald Kuratko together with different co-authors havereviewed the literature from the late-1980s onward and have found five internalenablers of corporate entrepreneurship consistent with the main literature rewardsmanagement support resources (including time) organisational structure andrisk-taking (Kuratko et al 1990 Hornsby et al 2002) However based on an empiricalanalysis Kuratko et al (1990) only find management support organisational structureresources and rewards significant
In Hornsby et al (1993) the authors further develop their work from 1990 resultingin the following enablers management support autonomywork discretionrewardsreinforcement time availability and organisational boundaries However intheir paper from 2002 they return to the five enablers from 1990 but test those from1993 Hornsby et al (1993) also point out that individual characteristics such asrisk-taking propensity desire for autonomy need for achievement goal orientationand internal locus of control have a significant influence on corporateentrepreneurship
Other researchers have explored different enablers eg from the externalenvironment According to Antoncic and Hisrich (2004) both organisational factorssuch as organisational support formal controls and numbers of alliances andenvironmental conditions such as dynamism technological opportunities industrygrowth and demand for new products are important in relation to corporateentrepreneurship In an earlier study Zahra (1991) suggested that in addition tointernal organisational factors the intensity of corporate entrepreneurship is alsoinfluenced by corporate strategy and factors from the external environment such asdynamism hostility and heterogeneity
Covin and Slevin (1991) developed an integrative model including both externalfactors such as technological sophistication dynamism hostility and industry lifecycle stage together with such strategic variables as mission strategy and internalenablers such as top management values and philosophies organisational resourcesand competencies organisational culture and organisational structure Zahra (1993)further developed Covin and Slevinrsquos (1991) integrative model eliminatingtechnological sophistication on the ground that it is part of environmentaldynamism and adding munificence by which is meant the abundance ofopportunities for innovation in an industry Zahra also questions the inclusion of
Enablingintrapreneurship
307
industry life cycle stage because it relates to another level than dynamism hostilityand munificence Zahra (1993) also argues for a narrower classification of the internalenablers claiming that the suggested changes would make the model more complete
Although corporate entrepreneurship is influenced by a number of both internal andexternal factors this paper will focus only on those internal factors that the companyhas a possibility to influence directly
3 MethodologyA division of Danfoss a major Danish industrial company was chosen as a case studyto help determine which factors enable intrapreneurship Being one of Denmarkrsquoslargest industrial companies Danfoss might well have suffered from a lack ofintrapreneurship but despite its industrial roots the company is generally regarded asboth very knowledge-intensive and innovative Furthermore the companyrsquos CEO iswell-known in the public debate in Denmark for his promotion of entrepreneurship as apolicy agenda and innovativeness in Danish firms This managerial focus onintrapreneurship thus made Danfoss ideal for studying the enablers ofintrapreneurship at least in this particular firm
A major problem of large firmsrsquo innovative activities is how they can be fitted intoday-to-day routines without compromising efficiency As a starting point interviewswere carried out with employees on this issue The method chosen was the so-calledembedded case study design (see also Yin 2003 p 43) involving three levels ofanalysis
(1) The firm (its strategy and performance)
(2) Employees (their interaction)
(3) The use of factors (tracing different enablers)
It is generally argued that embedded case design provides richness and multipleperspectives in explaining behaviour
The intrapreneurial enablers ndash rewards top management support resourcesorganisational structures and risk ndash which were derived from the literature in advancehad already been found consistently throughout the literature by others The empiricalmaterial includes four interviews the aim of which was to identify the enablers(respondents were selected from three different organisational positions in order toobtain a broader perspective on the same issues a project manager two functionalmanagers and an engineer) two days of on-site observations (including two meetings)where various employees were informally questioned about their research themes anda wide range of documents and reports
Each interview was conducted in tandem (two researchers) one researcher beingprimarily responsible for the interview and the other for taking notes and filling ingaps in the questioning The interviewees were asked to tell the story of the companyhow they perceive innovation why the firm needs to be innovative where in theorganisation the innovations are created how they are organised and how and whichdifferent enablers encourage and support them to be innovative The interviews whichlasted for an average of about one-and-a-half hours they were recorded andtranscribed for later use At the end of each day field notes were written by eachresearcher individually reflected on and afterwards discussed by both researchers
EJIM83
308
The interviewees were chosen from different positions in order to get a broaderperspective on the same themes and the formal interviews were supported andvalidated or categorised as a single opinion by small-talking to a number of otheremployees and through observations General statements will be presented asldquoDanfoss Drives saysrdquo The interviewees provided several insights and a variety andbreadth of data which allowed the exploration of different settings and breakdowninto categories that were grounded more empirically in a knowledge-intensivecompany than would have been possible from solely using the five factors from theliterature
The analytical process was mainly concerned with coding the interviews andclassifying the text into categories for content analysis (see for example Weber 1985)based on predetermined categories which is the main difference from grounded theory(Glaser and Straus 1967) Several researchers (eg Glaser 1978 Miles and Huberman1994) have suggested that coding provides a basis for the interpretation of data Thecoded data from the interviews were triangulated with observations and writtendocuments
4 Danfoss DrivesDanfoss Group is an international engineering company with approximately 17000employees and a total turnover of almost DKK 15 billion of which the Motion ControlUnit share is approximately 3400 employees and almost DKK 35 billion respectivelywith customers all over the world Danfoss Drives is the largest division in the MotionControl Unit The Motion Control Unit was established ultimo 2000 and apart fromDanfoss Drives also includes three other divisions Gear motors Marine Systems andFlow The activities in Danfoss Drives can be dated back to 1968 which saw theintroduction of the first mass-produced frequency converter for speed control ofmotors The heating ventilation and air-condition applications (HVAC) wereintroduced in 1990 and since the acquisition of Bauer a gear motor producer in1999 Motion Controls has been marketed as a one-stop shop for the industry
Through acquisitions in the US and the founding of a company in GermanyDanfoss Drives now has two production sites in addition to its headquarter inGraasten Denmark and via Danfoss sales companies is able to serve a wide range ofcustomers in different industries throughout the world including chemicals andconsumer goods metals and mining pulp and paper and the refrigeration andautomotive industries
41 Strategy and the organisationDanfoss Drives pursues a dual strategy the aim of which is both to maintain itsleading global position in the food beverage HVAC and water industries throughvolume and growth and to retain its position as a component supplier providingready-to-install solutions for (niche) customers
The continuous introduction of new and improved products means that DanfossDrives attaches a lot of importance to technological innovation and its efforts to gain acompetitive advantage owe a lot to close cooperation with customers In 1998 thedevelopment process in Danfoss Drives was organised into a matrix structureinvolving technology centres serving the different projects project leaders andprojects organised into a ldquocore teamrdquo and a number of ldquosub-teamsrdquo The product leader
Enablingintrapreneurship
309
who is responsible for the development of new products and managing thedevelopment process is assisted by a ldquocore teamrdquo which consists of members fromeach key area marketing production finance and IT
Danfoss Drivesrsquo management acknowledges that the companyrsquos commercialsuccess depends on employeesrsquo competencies and that employees are therefore itsmost important resource Here we describe how Danfoss Drives enablesintrapreneurship by means of many different forces acting together
5 Corporate entrepreneurship at Danfoss DrivesWithout having any distinct corporate entrepreneurship strategy Danfoss Drives hasactively used the organisational structure to enable intrapreneurship in the form ofcorporate ventures internationalisation and formal networks and the internalorganisation has been organised to encourage innovation knowledge creation anddissemination But using the organisational structure is not the only way DanfossDrives encourages intrapreneurship This section describes how various means areapplied and perceived by the employees at Danfoss Drives
This paper examines how the above-mentioned five enablers in Kuratko et al (1990)influence intrapreneurship at Danfoss Drives
51 RewardsSome authors (eg Fry 1987 Morris and Kuratko 2002 Sathe 2003) stress thatentrepreneurial behaviour can be encouraged by effective reward systems that mustconsider clear goals feedback individual influence and rewards based on results(Kuratko et al 1990 Hornsby et al 1993 2002) or it could be related to theperformance of the team (Hisrich and Peters 1986) Designing a reward system thatreflects the behaviour the company wishes to encourage is therefore crucial Accordingto Sathe (2003) people are motivated by different things Entrepreneurs may seekrewards such as the pride that comes from starting their own business and theprospect of financial gains whereas intrapreneurs value other incentives which are notalways clear (Sathe 2003) Morris and Kuratko (2002 p 245) note that intrapreneursare motivated by controllable rewards such as ldquoregular pay bonuses profit shareequity or shares in the company expense accounts job security promotions expandedjob responsibilities autonomy public or private recognition free time to work on petprojects money for research or trips to conferencesrdquo Morris and Kuratko (2002) alsoargue that intrapreneurs should share some of the downside risk but this financial riskand incentive is exactly what Sathe (2003) identifies as the difference betweenentrepreneurs and intrapreneurs
In practice it can be more difficult to differentiate between entrepreneurial andintrapreneurial incentives as not all entrepreneurs or intrapreneurs are motivated inthe same way At Danfoss Drives the reward structure reflects the fact that they are aninternational player and incentives change across cultures and countries financialrewards (bonus) are highly motivating in the USA whereas ldquoin Denmark financialrewards are generally less appreciated than promotion prestige and recognition fromcolleagues as the Danish Internal Revenue Service (IRS) destroys all possibilities forfinancial rewardsrdquo It is not uncommon (Sathe 2003) and very Danish that if someemployees get a financial reward then it influences other employees negativelyFlexibility in relation to an assignment and working hours is highly appreciated by
EJIM83
310
Danes and this together with recognition from colleagues is the most commonreward Prestige related to the completion of an assignment is also valued
52 Management supportThe second factor is management support that in the literature is often synonymouswith top management support and governance (Hitt et al 2002 Hornsby et al 1993Kuratko et al 1990) It is crucial for management to support intrapreneurial activities(Hisrich and Peters 1986 Stevenson and Jarillo 1990) even if they do not fullyunderstand them (Hornsby et al 2002 Kuratko et al 1990) As pointed out by Kuratkoet al (1990) and Hornsby et al (1993) the basic idea of management support is toencourage employees to believe that innovation is embedded in the role of allemployees And this is precisely the case at Danfoss Drives everyone is encouraged tobe innovative and consequently innovation happens everywhere
Employees view a supportive management as one that does not work against newinitiatives from employees and acts as a sponsor for intrapreneurs which basicallymeans giving them access to resources This agrees with Fry (1987) One of theemployees put it as follows
What my manager does is provide me with resources that make it possible to explore newopportunities
Otherwise employees agree that support from other colleagues is more importantThey not only use each other to discuss and test new ideas but groups of employeescooperate to develop new products and new ideas Other employees eg clerks andtechnical assistants can also support a project group by from an engineerrsquospoint-of-view doing more mundane things such as office work getting the rightcomputer programs for the job etc As one of the managers said ldquoit is easy to getpeople together in workshops on new themes and problems even though they arebusyrdquo which indicates that generally support among employees is high Butsupporting (top) managers are important as ldquosponsorsrdquo
53 ResourcesIn addition to the support of top management projects also need financial resources toget off the ground (see for example Hisrich and Peters 1986 Hornsby et al 2002Sathe 2003 Stevenson and Jarillo 1990 Stopford and Baden-Fuller 1994) On the otherhand the speed and success of a project is not proportional with fundingencouragement inspiration and perspiration are also necessary (Fry 1987) Gettingaccess to the companyrsquos facilities and resources is not always sufficient ndash it isimportant to make employees feel confident and encouraged to experiment (Burgelmanand Sayles 1986) The well-known 3M case illustrates that this kind of support andfreedom automatically generates another important resource (time) Employees at 3Mare encouraged to spend 15 per cent of their time on their own projects Howeveraccording to Fry (1987) this 15 per cent is often spent after hours or at weekends Somescholars (eg Drucker 1993 Nonaka and Takeuchi 1995 Bukh et al 2005) haveargued that the most important resource in the knowledge society is knowledge itselfand knowledge is not just the fundamental driver of innovation but also an importantpart of the companyrsquos competitive advantage
Enablingintrapreneurship
311
The most important intrapreneurial resource at Danfoss Drives is human resourcesie the knowledge and skills of the employees However other resources are importanttoo especially time and financial support which to some extent the company sees as aprerequisite for employees to act in an intrapreneurial way Although as DanfossDrives says
time and money have to be earned which means you have to finish your assigned projectbefore you can playrdquo
And continues
we would explore different directions that are not directly related to the core of ourproduct simply to broaden the horizon and knowledge about what is going on Probablythere is something out there which in combination with other things could be veryinnovative eg in relation to regulation techniques something interesting could befound in relation to how the body regulates the absorption of medicine However theresources are limited and therefore we have to focus on the most important adjacentareas
The use of resources is a matter of priority and long-term innovation is vulnerablecompared with short-term business pressure (Hisrich 1990) Lack of resources andtime is thus also a barrier to long-term innovation at Danfoss Drives As the companypoints out even though daily or weekly slack time for innovation would be preferableemployees are ldquo in periods very tied up with projects and in other periods webreathe and have time to run innovative projects to broaden the horizon andknowledge of the employees and to motivate themrdquo
Being part of a large company also brings bureaucratic obstacles eg the engineersare employed on flextime terms which is highly popular but current thinking atDanfoss Group headquarters is whether all employees should be on ldquojob salaryrdquoinstead to which one of the employees retorts
that will be rubbish then I will only focus on my assigned projects and nothing more
On the other hand being part of a large company can also mean greater flexibility andmore choices As one of the managers says
10 per cent of 1 billion creates more financial flexibility than 10 per cent of 1 million andexploring ideas costs money
The availability of financial resources thus plays an important role in intrapreneurshipor the utilisation and implementation of ideas One of the employees explains that ldquoI tryto look at the companyrsquos purse as if it was my ownrdquo and if some employees believe sostrongly in an idea that they are willing to pay for its implementation themselves thenthe company always considers it again
54 Organisational structureOrganisational structure has been found very important for innovative activities inseveral ways (see for example Burgelman 1983 Guth and Ginsberg 1990Hornsby et al 1993 Sathe 2003) According to Davis and Lawrence (1991) externalpressure for dual focus pressures for high information-processing capacity andpressures for shared resources require a matrix organisation Sathe (2003) on theother hand argues that matrix and functional or ldquosilordquo organisations can inhibit
EJIM83
312
corporate entrepreneurship with respect to new business creation Instead herecommends collaboration and the pooling of competencies in cross-functionalbusiness units so that competencies in technology product developmentmarketing sales and other functions will be available for new business This isprecisely how Danfoss Drives pools different knowledge resources in each projectwithin a matrix structure
The reorganisation in 1998 into a matrix structure focused on a projectorganisation with strong project leaders was positively received by employees since itclarified the chain of command As one of the employees put it
Before you were more like a specialist and you could easily work on four different projectsand that was not always easy Because who did you refer to Who pushed you the most Andwhich project did you better like yourself
Basically the new organisational structure made it possible for employees to focuson the project and their jobs The importance of the project groups wasemphasised by a physical reorganisation where all project members are nowlocated together Previously employees were located with ldquosimilarrdquo people egmarketing people sat together with other marketing people in a marketingdepartment Both ways have advantages and disadvantages but at Danfoss Drivesgathering together employees with different backgrounds has become the preferredway of doing things
If Danfoss Drives believes strongly in new ideas a group of employees may get thechance to turn them into a new business unit One of the managers says that
Instead of imposing it [the new ideas] into the existing organisation we have started a smallgroup a small project outside the traditional rules of the established organisation
This is in essence what corporate ventures are all about (see for example Biggadike1979 Guth and Ginsberg 1990) Another manager reflected that
Our ventures have been started based on a specific idea or idea area and then it has beenisolated and nurtured This basically means that they [the ventures] have got some peace andresources to work on a new area
What this means in practice is that the ventures do not have to strictly follow standardoperating procedures which gives them a flexibility and agility that the existingorganisation does not possess (Ellis and Taylor 1987)
Internationalisation is the third strategy Danfoss Drives employs to encourageintrapreneurship (Lu and Beamish 2001) The company sees a clear distinctionbetween networks and internationalisation because
when we speak about internationalisation it is within the legal boundaries of theorganisation which means that you have colleagues all around the world with whom youhave to communicate They are an integrated part of the company and thereforeinformation can flow freely whereas within a network there are some restrictions on theinformation you can pass on
Furthermore Danfoss Drives thinks it is necessary to be present ie represented byplants sales offices ventures etc (see for example Hitt and Ireland 2000) in theirmain markets to ensure strong relations with customers and with it to learn from themand get access to their knowledge and sets of values
Enablingintrapreneurship
313
If intrapreneurship is expanded to corporate entrepreneurship there is a fourthway to enable entrepreneurial activities which is to deliberately make use of formalnetworks ie universities customers suppliers and ERFA groups (experienceexchanging groups) ndash by comparison the use of informal networks is difficult toplan and control Danfoss Drives creates networks to get access to knowledgeresources that the organisation needs but does not itself possess (see also Hitt et al2000) saying
The network to the universities is primarily to get access to basic research whereasrelationships to other companies or ERFA groups may be because they do somethingdifferent from which we can learn
Danfoss Drives also participates in ERFA groups to test new ideas on people who havenot yet adapted to the Danfoss way of thinking This says the company will ensurethat ldquotwo developers with the same background gradually become uniformrdquo Anotherway to test ideas is on customers Danfoss Drives not only visits their customers theyldquocamp outrdquo at particular customers for a month at a time because they believe in closecooperation and as they say
we follow them in everything they are doing which provides us with insight intoproblems that would be hard to get in other ways
55 RiskThe fifth and last factor that Kuratko et al (1990) found consistently throughout theliterature is risk Morris and Kuratko (2002) described how both too little risk and toomuch risk can be fatal for a company While too little risk becomes dangerous when acompany ignores changing market conditions by making little or no innovation atthe other extreme attempting to come up with a breakthrough innovation is highlyrisky Therefore focusing on lower-risk markets ie new varieties of productsservices etc makes risk management easier and creates more success Fry (1987)notes that making intrapreneurs experiment without penalising them when an ideafails will encourage an intrapreneurial spirit and the more experiments they carryout the better they will be at determining what works and what does not work(Morris and Kuratko 2002)
Danfoss Drives address risk management from a Darwinistic approach which asone of the managers said means ldquosurvival of the fittestrdquo The projects are veryautonomous so that if an idea is related to an ongoing project it is up to the projectleader and the core team to decide whether it will be implemented or not If the idearelates to a new product the employee has to make strong enough arguments toconvince the product planning group that it is worth implementing These interactionprocesses mean that employees feel relaxed about trying to implement new ideas Asone said
you have to keep your word and be honest then you can be flighty and take risks butyou have to be honest and acknowledge if you have overextended yourself acknowledge thatyou have to go back one step Then you can make a flop and no one complains because theyknow you did your best and in most cases you are likely to succeed
EJIM83
314
At Danfoss Drives most ideas are related to the planned projects since they areplanned four years ahead The aim of such a long planning horizon is both to giveemployees an opportunity to deconstruct the project and come up with ideas and togive them time to think differently and innovatively before the project starts One ofthe employees said
If the company did not give me this information then I would probably not be able to comeup with all these ideas
And when employees have time to think about coming projects says Danfoss Drivesthe risk is lower compared to short-time planning
6 Towards a more complete modelThe Danfoss Drives case is in line with Kuratko et alrsquos (1990) findings as regards thefactors that can help an organisation to enable intrapreneurship However the Danfosscase also makes it clear that a knowledge-intensive company is more complex thantraditional industrial companies The five factors identified by Kuratko et al (1990) arethus not sufficient in themselves to understand intrapreneurial behaviour in suchcompanies
The Danfoss case showed that basic factors such as (top) management support andfinancial resources are not sufficient for intrapreneurship to happen while risk onlyseems to matter to the extent that it is perceived by employees
The possibilities within the five factors can be divided into basic andintrapreneurial factors as showed in Table I By basic factors is meant thosewhich must be present for intrapreneurship to occur eg regular payment to theintrapreneur access to financial resources and other materials a management thatldquosponsorsrdquo the project (not rejecting an idea before development gets started) a basicorganisational structure and tolerance for risk (at least lower-risk projects)Intrapreneurial factors denote efforts that can encourage and enrich intrapreneurialactivities such as expanded job responsibility autonomy and recognition real (top)management commitment ndash not just assignment of resources different knowledgeresources different organisational structures that promote different aspects than thetraditional organisation and no penalisation of employees who try to developsomething new
The interviews small talk and observations at Danfoss Drives revealed that otherfactors at the company also enable intrapreneurship Common to all interviewees isthat they talked about the importance of communication company culture and
Factor Basic factors Intrapreneurial factors
Rewards Regular pay job security Promotion expanded job responsibilityautonomy recognition free time to work onpet projects bonuses
(Top) management support Sponsors CommitmentResources Finance and materials Knowledge resourcesOrganisational structure Hierarchy Corporate venturing cross-functional teams
internationalisation external networksRisk Tolerance of lower risks No penalisation
Table IFactors influencing
intrapreneurship
Enablingintrapreneurship
315
processes to help finish a project The following paragraphs will take a closer look atthese three factors which will be analysed based on the empirical data from DanfossDrives supported where relevant by the literature
61 CommunicationSince it creates a common framework of understanding language can be consideredthe most prominent communicative tool available to man (Christensen and Bang 2003)At Danfoss Drives communication is closely related to culture and geographicallocation One of the interviewees expressed this very clearly
Via your language you can articulate the country in which you have been raised its cultureand its values The whole set of values are embedded in your language that is whyEnglish and American Danish and Norwegian are different even though they are verysimilar
Language culture and geography are very closely related and together they articulateprecision and when you try to express yourself in another language then you lose theprecision
Language is thus a very central part of communication The official language at DanfossDrives is English and this therefore causes some difficulties All employees are expectedto use English at the level they master but employees find it very frustrating to have tospeak English to German customers (to whom they used to speak German) since it canbe a barrier to really understanding the details Danfoss Drives says
If we continued speaking German with the German customers then they would communicatein their native language and there would be only one translation Now all of us have to putsubstantial effort in expressing the right things and furthermore we may not understandwhat is said with the intention of the sender
In addition to the official language there are at least two other languages at DanfossDrives a company-specific and a technical language The language used internally inthe company is very specific with many abbreviations and terms and it can be veryconfusing As Danfoss Drives says
It takes new employees about a year to fully understand what is being said
And as Pinchot (1985) argued the innovation process is inhibited or distorted whenpeople do not speak a common language communication is slowed down
The technical language used by engineers is highly precise since all terms withinelectronics and software are the same in English American English and AustralianEnglish and Danish educational courses are based on English textbooks But not allemployees at Danfoss Drives are engineers and as one of the engineers said ldquowe [theengineers and the rest of the organisation] do not speak a common language however the tone is free and hard ndash but friendlyrdquo and they are not afraid to ask if thereis something they do not understand
General communication within Danfoss Drives is very informal which encouragesemployees to talk to everyone However employees at Danfoss Drives are scatteredaround Graasten which is a barrier to daily communication As Danfoss Drives explains
We have colleagues 200m from here and it feels like they are placed in Aarhus [almost200 km from Graasten] If you think you could gain from speaking with them then you haveto walk over there and then you are very likely to wait until tomorrow
EJIM83
316
However one of the managers says
Generally the information and communication within and between the departments supplychain core processes etc flow well ndash maybe too well as there are hardly any conflicts oftenwe are too polite it takes too much time to make a decision because we seek consensus andtoo many people are involved
The involvement of so many people is due to the complexity of the products andmakes it very hard to get an overview because a lot of important information has to betaken into account Conversely the consensus-seeking and meetings shortencommunication and make employees feel they have influence (Fry 1987) Tosupport communication Danfoss Drives is developing a common informationstructure for meetings reports etc which should make it easier for employees to findthe right information
Face-to-face communication is the preferred form of communication at DanfossDrives This can be illustrated by the mechanics group which meets physically every14 days to keep the amount of written information to a minimum The team leader ofthe mechanics group said
We can write a report but if people are going to read it some will read it in one way otherswill read it in another way and some will not read it at all In this way [by meeting every 14days] we get a resume and if something is not clear we can ask I have chosen thisinformation strategy in the group because everyone will be informed and afterwards you cango home and if you are interested you can easily ask for more information
Together with direct and open communication (see for example Leonard and Swap2002 Pinchot 1985) face-to-face communication physical proximity naturalldquowatering holesrdquo such as coffee pots and mail rooms meetings special placesroomsfor special occasions team building social events cross-level and cross-functionallocations (see for example Christensen and Bang 2003 Leonard and Swap 2002) allencourage improved communication at Danfoss Drives Decision reports and otherkinds of documentation are still written down in the mechanics group including a finalreport but all the unnecessary ldquosemirdquo reports are skipped Danfoss Drives shares ideasand knowledge in both formal and informal ways which for example Fry (1987) andChristensen and Bang (2003) have described to be preferable
However being a worldwide company face-to-face meetings are not always possibleor convenient because of distance so a lot of information is often sent by e-mail Thisoften leads to misunderstandings in their daily work however Danfoss Drives says
you try to make sure that you have expressed exactly what you want but when you get ane-mail back with 20 questions then there is nothing else to do than call or even better meetface-to-face otherwise the e-mails will continue going back and forth because a large partof the context disappears when you write down information
This is one of the reasons why employees at Danfoss Drives spend so much time inmeetings to inform and coordinate and as the company explains this need forcommunication may reflect Danish culture
62 CultureSince innovation is not restricted to the research and development department itldquopervadesrdquo the companyrsquos culture This is supported by small talk and observations
Enablingintrapreneurship
317
and it is clear that new ideas are generated across the whole company and incooperation with customers and suppliers and then further developed in an interplaybetween salesmarketing and customers production and supplies research anddevelopment and engineers Danfoss Drives believes that in this way they ensure ahigher degree of intrapreneurship ndash both in relation to product process and strategicinnovation ndash than if innovation were only carried out by the research and developmentdepartment which typically consists of techniciansengineers Thus ldquo theinnovation will be technology driven rather than market drivenrdquo according toDanfoss Drives
Company culture also plays a role in relation to for example decision-making Thedecision-making process at Danfoss Drives in Denmark has changed radically duringthe last decade because of changing product characteristics A decade ago the companyhad employees with a broad range of knowledge resources which meant that theycould make decisions about almost everything Today the industry has become muchmore complex more technologically oriented which makes it impossible to be ageneralist and all employees have now become specialists within a relatively smallarea Among other things this is one of the reasons why Danes at Danfoss Drives arevery consensus-seeking and many different types of employees are asked for advicebefore a decision is made Although it slows down the intrapreneurial process and istime- and resource-consuming Danfoss Drives thinks it enables them to make betterdecisions By involving many employees in the overall decisions managers try todecentralise as many lower-level decisions as possible Danfoss Drives believes that
because of the complexity there is no right answer What may be a good solution for onemay seem wrong to another even though the result may be the same What is mostimportant is that the employee who has to carry out the task feels that it is the right way to doit
Decentralised decisions create a very high degree of commitment and ensure thatemployees really make an effort to succeed This is contrary to Danish culture but asone of the managers explains
Especially in Germany the process of decision-making is different They do not have somany meetings The manager decides he takes the responsibility and he takes theconsequences and the employees implement in the United States it is also the managerwho makes the decisions but they [like the Danes] also have a lot of meetings before thedecision is made
Danfoss Drives believes that the delegation of decision-making creates more flexibilitywhich is one thing that Danes because of their very relaxed culture are better at thanforeign companies
The general experience at Danfoss Drives is that culture also plays a major role inrelation to the perception of time especially working hours In Denmark mostemployees are employed on flextime terms which means that they decide themselveswhen they come and leave thus controlling their own working hours In Germany onthe other hand employees have fixed working hours while in the US employeesusually come before the manager arrives and leave after he has left In these countriestherefore the manager decides working hours At its plants abroad Danfoss Drivesadapts to the norms of the country concerned
EJIM83
318
63 ProcessSince Danfoss Drives is ISO9000-certified it has to follow and document a number ofprocedures and processes In general the company believes that their processes arevery robust but they are continuously trying to improve organisational processesfurther One of the most visible process innovations concerns the development of anin-line printing house together with Xerox Basically this means that the manual isprinted in a specific language and number related to a specific order and every timethere is a change in the manual it is made online The main advantage of this is that itensures that the manual is always up to date and it saves the company resources inrelation to a printed manual ndash both paper and storage Danfoss Drives has alsoimproved inventory control by implementing an electronic kaizen system (Imai 1986)However when striving after effectiveness and efficiency environmental awarenessand high-quality products are also essential
All projects are managed in relation to a ldquokey-point planrdquo like Cooperrsquos (2001) stagegate model Although they can change the level of documentation in each project theyacknowledge that it is very difficult for them to run small projects One of themanagers also explains that managing ldquothe next generation of a product to a knownmarket developing a new product to an unknown market or developing a specificproduct to a specific market or a brand-labelling project with a supplier are verydifferent projectsrdquo and they think it is a weakness to use the same project model for allprojects
Danfoss Drives is aware of their strengths and weaknesses and small projects aredefinitely one of their weaknesses since the whole system is geared to large-scaleproduction Small companies are now bringing innovations to the market which issomething that Danfoss Drives used to do By recognising that Danfoss Drivestemporarily ldquochanged the focus from innovation and idea-creation to a focus on theprocess of production planning and technology planningrdquo as one of the managersexplains The focus not only changed from product to process innovation but also toknowledge-intensive production by means of relationship management and otherways of managing However the emphasis is now back on innovation again
7 Conclusion and implicationsActivities that benefit the strategic and financial position of a company are those mostlikely to be developed and implemented Given this the exploration and exploitation ofdifferent intrapreneurial enablers seems the logical choice since it can result insignificant corporate gains The research challenge is to understand whyintrapreneurial enablers have not attracted companiesrsquo attention to a greater extent
The Danfoss Drives case indicates that rewards top management supportresources organisational structure and tolerance of risk are not sufficient to encourageintrapreneurship in a knowledge-intensive company Not all factors directly encourageintrapreneurship although some are necessary in order to create an intrapreneurialclimate Fry (1987 p 5) argued that
[i]f managers arenrsquot innovative if they donrsquot provide the climate for creativity if they canrsquotset aside their carefully laid plans to take advantage of a new opportunity then intrapreneurshave little encouragement
Enablingintrapreneurship
319
This basically means that managers can be the biggest obstacle to intrapreneursinasmuch as a single decision can kill a project before it gets started
The Danfoss Drives case has shown that enabling intrapreneurship is easier whenthe (top) management communicates a clear vision and plan to employees for a longertime horizon (Sathe 2003) Consequently the framework should consist of eightintrapreneurial enablers instead of five communication culture process rewards (top)management support resources organisational structure and risk
Morris and Kuratko (2002 p 257) note that ldquoculture underlies all other componentsof a workplacerdquo ie all other factors This means that all factors are interrelated andinfluence each other in some way ndash at least with culture as a common denominatorWhile the Danfoss case shows that culture in itself is not sufficient to describe howmanagers can enable intrapreneurship the eight factors described above all contributein one way or another and are therefore too important to leave out Hisrich (1990)defines an intrapreneurial culture as follows ldquo[d]evelop visions goals and actionplans take action and be rewarded suggest try and experiment create and developregardless of the area and take responsibility and ownership This environment ofcourse supports individuals in their effort to create somethingrdquo Danfoss Drives comesclose to an intrapreneurial culture on several points but there is still room formanagerial improvements
Clearly there is a need for further research into factors that enable and encourageintrapreneurship in knowledge-intensive companies Studies related to the enablers areimportant Are there more than eight and which How are they related And how canmanagers exploit the synergies involved Up to now we only know that the eightenablers influence intrapreneurship not if and how they can be used to turn theintrapreneurial level up and down Breakthrough innovations that change the rules ofcompetition in a market are very rare and as Morris and Kuratko (2002) also arguefrequent experiments make intrapreneurs better able to determine what works andwhat does not work
References
Antoncic B and Hisrich RD (2004) ldquoCorporate entrepreneurship contingencies andorganizational wealth creationrdquo Journal of Management Development Vol 23 No 6pp 518-50
Biggadike R (1979) ldquoThe risky business of diversificationrdquo Harvard Business Review Vol 57No 3 pp 103-11
Bukh PN Christensen KS and Mouritsen J (2005) Knowledge Management and IntellectualCapital Establishing a Field of Practice Palgrave Macmillan Basingstoke
Burgelman RA (1983) ldquoA process model of internal corporate venturing in the diversified majorfirmrdquo Administrative Science Quarterly Vol 28 No 2 pp 39-55
Burgelman RA and Sayles LR (1986) Inside Corporate Innovation Strategy Structure andManagerial Skills Free Press New York NY
Chang J (1998) ldquoModel of corporate entrepreneurship intrapreneurship and exopreneurshiprdquoBorneo Review Vol 9 No 2 pp 187-213
Christensen KS (2004) ldquoA classification of the corporate entrepreneurship umbrella labels andperspectivesrdquo International Journal of Management and Enterprise Development Vol 1No 4 pp 301-15
EJIM83
320
Christensen KS and Bang HK (2003) ldquoKnowledge management in a project-orientedorganization three perspectivesrdquo Journal of Knowledge Management Vol 7 No 3pp 116-28
Cooper RG (2001) Winning at New Products Perseus Cambridge MA
Davis SM and Lawrence PR (1991) ldquoThe matrix organization ndash who needs itrdquo in Shafritz JMand Ott JS (Eds) Classics of Organization Theory 3rd ed Wadsworth PublishingCompany Belmont CA pp 234-54
Drucker PF (1993) Post-capitalist Society Butterworth-Heinemann Oxford
Ellis RJ and Taylor NT (1987) ldquoSpecifying entrepreneurshiprdquo in Chruchill NCHornaday JA Kirchhoff BA Krasner OJ and Vesper KH (Eds) Frontiers ofEntrepreneurship Research Babson College Wellesley MA pp 527-41
Fry A (1987) ldquoThe Post-It Note an intrapreneurial successrdquo SAM Advanced ManagementJournal Vol 52 No 3 pp 4-9
Gartner WB (1988) ldquoWho is an entrepreneur Is the wrong questionrdquo American Journal ofSmall Buiness Vol 10 pp 696-706
Glaser B (1978) Theoretical Sensitivity Advances in the Methodology of Grounded TheorySociology Press Mill Valley CA
Glaser BG and Straus AL (1967) The Discovery of Grounded Theory Strategies forQualitative Research Aldine Chicago IL
Guth WD and Ginsberg A (1990) ldquoGuest editorsrsquo introduction corporate entrepreneurshiprdquoStrategic Management Journal Vol 11 pp 5-15
Hanan M (1976) ldquoVenturing corporations think small to stay strongrdquo Harvard Business ReviewVol 54 pp 139-48
Hisrich RD (1990) ldquoEntrepreneurshipintrapreneurshiprdquo American Psychologist Vol 45 No 2pp 209-22
Hisrich RD and Peters MP (1986) ldquoEstablishing a new business venture unit within a firmrdquoJournal of Business Venturing Vol 1 pp 307-22
Hitt MA and Ireland RD (2000) ldquoThe intersection of entrepreneurship and strategicmanagement researchrdquo in Sexton DL and Landstrom HA (Eds) Handbook ofEntrepreneurship Blackwell Oxford pp 45-63
Hitt MA Ireland RD and Lee H (2000) ldquoTechnological learning knowledge managementfirm growth and performancerdquo Journal of engineering and Technology ManagmementVol 17 pp 231-46
Hitt MA Ireland RD Camp SM and Sexton DL (2002) Strategic EntrepreneurshipCreating a New Mindset Blackwell Oxford
Hornsby JS Kuratko DF and Zahra SA (2002) ldquoMiddle managers perception of the internalenvironment for corporate entrepreneurship assessing a measurement scalerdquo Journal ofBusiness Venturing Vol 17 No 3 pp 253-73
Hornsby JS Naffziger DW Kuratko DF and Montagno RV (1993) ldquoAn interactive model ofthe corporate entrepreneurship processrdquo Entrepreneurship Theory amp Practice Vol 17No 2 pp 29-37
Imai M (1986) Kaizen Random House New York NY
Kuratko DF Montagno RV and Hornsby JS (1990) ldquoDeveloping an intrapreneurialassessment instrument for an effective corporate entrepreneurial environmentrdquo StrategicManagement Journal Vol 11 No 1 pp 49-58
Enablingintrapreneurship
321
Leonard D and Swap W (2002) ldquoHow managers can spark creativityrdquo in Hesselbein F andJohnston R (Eds) On Creativity Innovation and Renewal A Leader to Leader GuideJossey-Bass San Francisco CA pp 55-65
Lu JW and Beamish PW (2001) ldquoThe internationalization and performance of SMEsrdquoStrategic Management Journal Vol 22 pp 565-86
Miles MB and Huberman AM (1994) Qualitative Data Analysis Sage Thousand Oaks CA
Morris MH and Kuratko DF (2002) Corporate Entrepreneurship Harcourt College PublishersOrlando FL
Nonaka I and Takeuchi H (1995) The Knowledge-Creating Company Oxford University PressOxford
Peterson R and Berger D (1972) ldquoEntrepreneurship in organizations evidence from the popularmusic industryrdquo Administrative Science Quarterly Vol 16 pp 97-106
Pinchot G (1985) Intrapreneuring Why You Donrsquot Have to Leave the Corporation to Become anEntrepreneur Harper amp Row New York NY
Sathe V (2003) Corporate Entrepreneurship Top Managers and New Business CreationCambridge University Press Cambridge
Sharma P and Chrisman JJ (1999) ldquoToward a reconciliation of the definitional issues in thefield of corporate entreprenrushiprdquo Entrepreneurship Theory amp Practice Vol 22 pp 43-68
Stevenson HH and Jarillo JC (1990) ldquoA paradigm of entrepreneurship entrepreneurialmanagementrdquo Strategic Management Journal Vol 11 pp 17-27 Special issue
Stopford J and Baden-Fuller CF (1994) ldquoCreating corporate entrepreneurshiprdquo StrategicManagement Journal Vol 15 No 7 pp 521-36
Weber PR (1985) Basic Content Analysis Sage Beverly Hills CA
Yin RK (2003) Case Study Research Design and Methods Sage London
EJIM83
322
131
PART III
Managing Internal Knowledge Resources
The third part of the dissertation consists of two articles which in different ways deal
with internal knowledge resources and how these can be managed in order to
encourage intrapreneurship Thus from addressing intrapreneurship from an lsquointernal
resourcersquo perspective (cf Chapter 4) we now move on to discuss knowledge
management and management in knowledge-intensive companies
As mentioned in Chapter 2 the PhD project is part of a larger research project
KNORI the aim of which was on the one hand to examine how knowledge-
intensive companies can be innovative and enable change in the face of changing
market conditions and on the other to explore and identify the challenges and
possibilities for companies and industrial policy Since knowledge and knowledge
intensiveness were key factors in the selection of case companies for the project the
internal resource perspective was found particularly appropriate since as described
in article 1 this is mainly based on companies exploiting intangible knowledge-
based resources
Intrapreneurs in knowledge-intensive organisations innovate on the basis of
knowledge Thus knowledge-based resources are not only a basic driver of
innovation but they are also an important part of the companyrsquos competitive
advantage The case companies that form the empirical basis for this dissertation are
132
all knowledgendashintensive companies It is therefore crucial to understand the
relationship between the main drivers of intrapreneurship in such companies
innovation management knowledge and knowledge management
THE KNOWLEDGE-MANAGEMENT PERSPECTIVE
In recent years there has been an overwhelming interest in the concepts of
knowledge and knowledge-based resources in the management literature This is not
only reflected in the importance of knowledge-intensive companies as discussed
above but also in an interest in how knowledge-based resources interact in the
creation of value and how knowledge can be managed This has influenced
management practice and research in many ways eg in terms of the characteristics
of knowledge the difference between information and knowledge and the
categorisation of knowledge (cf Baxter amp Chua 1999) However the literature
comprises many different research traditions and points of view
Some authors see knowledge as a resource that can be used as a basis for strategy
formulation (Sveiby 1997) whereas according to others it is integrated in a broader
strategy framework such as the balanced scorecard approach (Kaplan amp Norton
2004) Others again (eg Bukh et al 2001) perceive knowledge and intellectual
capital as two closely related terms For example Lennon amp Wollin (2001 p 411)
focus on knowledge in a learning perspective and Sher amp Lee (2003) relate it to
information technology Other strands of research could be identified all of which
have their own merits
Philosophical interest in the concept of knowledge and obtaining knowledge goes
back a long time However as emphasised by von Krogh amp Roos (1995) knowledge
was not directly included in management theories until the mid-1950s around the
time when some of the early thoughts on cybernetics and systems theory were being
133
presented (see for example Simon 1945 1960 Minsky 1956) The starting point
for these authors was often human intelligence as opposed to knowledge
incorporated in rule-based computer systems (cf Varela et al 1992)
Managers often discuss knowledge from different perspectives the differences
consisting in the way knowledge is perceived In other words the basic
epistemological perspectives differ Article five makes a distinction between two
different perspectives the first of which is the ldquoartefact-orientedrdquo perspective The
focus here is on information technology and the ways in which technology is be used
to codify knowledge for management decision-making It is assumed that everything
can be described and the more data a company collects the more knowledge it
possesses
The artefact-oriented perspective often relies on systems theory and information-
processing theories In practical applications it draws on information technology
Many authors have indicated that this has become insufficient for dealing with
management challenges created by the complexity of the knowledge society The
problem is not lack of documents data or access to information but rather the
quality content and organisation of the material
This has given rise to the second perspective which we term the process-oriented
perspective and is most clearly exemplified by Ikujiro Nonaka who regards
knowledge as a ldquodynamic human process of justifying personal beliefs as a part of an
aspiration for the lsquotruthrsquordquo (Nonaka 1994 p 15 cf Nonaka amp Takeuchi 1995)
Crucially the focus here is on the actual process by which knowledge is created not
on the document or rules which are based on the process This implies that
continuous and dynamic adaptation to lsquoreal lifersquo takes place Thus knowledge is a
continuous process which changes gradually as the individual framework of
understanding is developed
134
IMPORTANCE OF THE PERCEPTION OF KNOWLEDGE
Knowledge is a complex term which is often not easy to define precisely For
example Roos amp von Kroghrsquos (1995 p 1) statement ldquo[w]hat you see depends on
who you arerdquo implies that knowledge should be regarded as a subjective term From
this point of view knowledge can be expressed in many different ways since not
only knowledge but also knowledge about knowledge depends on the context It is
therefore essential to clarify the background for the various perceptions of
knowledge knowledge-management concepts etc
An understanding of the term knowledge or at least what it means to the individual
or organisation is important because it affects the importance which management
attaches to the term According to von Krogh amp Roos (1996 cf von Krog et al
1994) this implies that successful knowledge management requires that you relate to
lsquothe nature of knowledgersquo (von Krogh amp Roos 1996 p 224) Therefore knowledge
management also becomes a question of epistemological understanding
The more importance attached to epistemological views the greater the demands
made on the manager It is no longer sufficient lsquoonlyrsquo to act and make decisions
because reflection on onersquos own actions becomes part of the decision process which
must now also take account of other possible solutions The reflective manager must
therefore be familiar with different epistemologies because this gives a much larger
scope for action and it ensures a better understanding of the limitations of various
actions (see Venzin et al 1998 p 36)
More effective knowledge management may also result from adapting management
tools to the prevailing perception of knowledge This agrees with Marr et al (2003)
who suggest that knowledge management practices will be perceived as more
effective if they match personal epistemologies However knowledge management is
multi-faceted and our understanding of current practice has already been determined
135
by our choice of epistemology This illustrates the fact that the more an organisation
focuses on knowledge the more important it becomes to understand the
epistemological implications
An epistemology cannot be forced on individuals or an organisation Becoming
familiar with the way in which colleagues collaborators and others understand
lsquorealityrsquo will result in more possibilities and improved co-operation An
understanding of the alternative perspectives means that you can make an active
choice Since knowledge depends on both the starting point of the individual
employee and the organisational context (Lave amp Wenger 1991) ldquo[t]he conscious
choice of an epistemological mode is a critical success factor for research and
managementrdquo (Venzin et al 1998 p 37)
THE TWO ARTICLES IN THE SECTION
The first article in this section Understanding intrapreneurship by means of state-of-
the-art knowledge management and organisational learning theory presents a
theoretical perspective of innovation and knowledge and combines these in a
framework for knowledge-based intrapreneurship The framework consists of three
situations for innovation management exploitation sustainable change and
disruptive change and two tasks of intrapreneurship exploitation and exploration
The aim of the framework is to describe the content of intrapreneurship in six sub-
tasks based on the complexity of knowledge ndash tacitness demarcation and social
elements ndash that the intrapreneur needs to manipulate in each case together with the
corresponding type of learning involved The framework underlines the fact that the
complexity of knowledge has important implications for the way we think about
intrapreneurship and innovation
136
The second article Knowledge Management in Perspectives An Analysis of Project
Management in Two Companies touches on the challenges faced by knowledge-
intensive companies from another angle This article discusses the knowledge
resource and how to manage it in greater depth although the main focus is on an
understanding of the nature of knowledge-management activities ie how the
company can influence knowledge resources The article concludes that there are
different ways of managing knowledge resources and that not all of them encourage
intrapreneurship
The article presents two different ways of understanding knowledge ndash an artefact-
oriented perspective and a process-oriented perspective ndash and how knowledge
resources should be managed It is concluded that managerial awareness of the two
perspectives results partly in greater degrees of freedom and partly in enhanced
mutual understanding in the organisation Furthermore the article shows that the
perspectives are complementary and that the company needs to supplement the one
with the other A company that wants to create and maintain an intrapreneurial spirit
needs to supplement process-oriented initiatives with artefact-oriented initiatives A
company wanting to produce existing products more efficiently on the other hand
should supplement artefact-oriented initiatives with process-oriented initiatives
REFERENCES
Baxter J amp FW Chua 1999 Australian Accounting Review Vol 9 No 3 pp 3-14
Bukh PN J Mouritsen MR Johansen amp HT Larsen 2001 Videnregnskaber
Rapportering og styring af virksomhedens videnressourcer Copenhagen Boslashrsens
Forlag
Kaplan RS amp D P Norton 2004 Stratety maps converting intangible assets into
tangible outcomes Boston Harvard Business School Press
137
Lave J amp E Wenger 1991 Situated Learning Legitimate Peripheral Participation
Cambridge University Press
Lennon A amp A Wollin 2001 Learning organisations empirically investigating
metaphors Journal of Intellectual Capital Vol 2 No 4 pp 410-422
Marr B O Gupta S Pike amp G Ross 2003 Intellectual capital and Knowledge
management effectiveness Management Decision Vol 41 No 8 pp 711-781
Minsky M 1956 Some Universal elements for finite automat In Automata Studies
CE Shannon amp J McCarthy (eds) Princeton NJ Princeton University Press
Nonaka I 1994 A Dynamic Theory of Organizational Knowledge Creation
Organization Science Vol 5 No 1 pp 14-37
Nonaka I amp H Takeuchi 1995 The Knowledge-creating Company Oxford Oxford
University Press
Roos J amp G von Krogh 1995 What you see depends on who you are Think about
epistemology IMD Perspectives for Managers Vol 7 pp 1-4
Sher P J amp V C Lee 2003 Information technology as a facilitator for enhancing
dynamic capabilities through knowledge management Information amp Management
Vol 41 No 8 pp 933-945
Simon HA 1945 Administrative Behavior New York Free Press
Simon HA 1960 The New Science of Management Decisions New York Harper amp
Row Publisher
Sveiby KE 1997 The New Organizational Wealth Managing amp Measuring
Knowledge-based Assets San Francisco Berrett-Koehler Publishers
138
Varela FJ 1992 Whence Perceptual Meaning A Cartography of Current Ideas In
Understanding Origins Contemporary Views on the Origin of Life Mind and
Society F J Varela amp J P Dupuy (eds) Dordrecht Kluwer Academic Publisher
Venzin M G von Krogh amp J Roos 1998 Future Research into Knowledge
Management Knowing in firms Understanding Managing amp Measuring Knowledge
G von Krogh J Roos amp D Kleine (eds) London Sage
Von Krogh G G Roos amp K Slocum 1994 An essay on corporate epistemology
Strategic Management Journal Vol 15 No 5 pp 53-71
Von Krogh G amp J Roos 1995 Organizational epistemology Houndsmill
Macmillan
Von Krogh G amp J Roos 1996 Editorial and overview The Epistemological
Challenge Managing Knowledge and Intellectual Capital European Management
Journal Vol 14 No 4 pp 333-337
139
CHAPTER 8
Understanding Intrapreneurship by means of state-of-the-art knowledge management
and Organisational learning
Originally published in
Drejer Anders Karina Skovvang Christensen amp John Parm Ulhoslashi 2004
Understanding Intrapreneurship by means of state-of-the-art knowledge management
and Organisational learning Theory International Journal of Management and
Enterprise Development Vol 1 No 2 pp 102-119
140
102 Int J Management and Enterprise Development Vol 1 No 2 2004
Copyright copy 2004 Inderscience Enterprises Ltd
Understanding intrapreneurship by means of state-of-the-art knowledge management and organisational learning theory
Anders Drejer Karina S Christensen and John P Ulhoslashi Department of Organisation and Management Aarhus Business School Haslegaringrdsvej 10 DK-8210 Aarhus V Denmark E-mail adrasbdk
Abstract Ever since Peter Drucker stated that there are only two constant factors in business ndash innovation and marketing ndash the need for continuously reinventing and changing business organisations according to the present and future needs of the market place has been in existence in the management literature No less today external turbulence and dynamic market conditions have come to stay for good However the challenges are quite different today The emergence of knowledgendashbased organisations and increased importance of knowledge as the key to competitive advantage poses new and interesting challenges for managers and researchers alike In this paper we will attempt to enlighten theories of intrapreneurship and innovation by applying state-of-the-art knowledge management theory and organisational learning theory to them
Keywords intrapreneurship innovation management knowledge organisational learning
Reference to this paper should be made as follows Drejer A Christensen KS and Ulhoslashi JP (2004) lsquoUnderstanding intrapreneurship by means of state-of-the-art knowledge management and organisational learning theoryrsquo Int J Management and Enterprise Development Vol 1 No 2 pp102ndash119
Biographical notes Dr Anders Drejer is a Professor in Strategic Management and Business Development at Aarhus Business School and head of its group devoted to strategy
Karina S Christensen is a PhD student at Aarhus Business School specialising in knowledge management and intrapreneurship
Dr John Parm Ulhoi is Professor in Technology and Innovation Management at Aarhus Business School head of its group on innovation management and the supervisor of Karina S Christensen
1 On the developing need for intrapreneurship
We are slowly beginning to understand that innovation and learning are not the prerogative of start-ups and entrepreneurs any more Rather in the age of technological turbulence and hyper-competition even mature firms need to be innovative and agile This is why we are beginning to see a new strand of literature on intrapreneurship ie
Understanding intrapreneurship by means of state-of-the-art 103
innovators in mature organisations However as early as 1958 Peter Drucker remarked on management that
ldquohellipmanagement is first and foremost about the continuing development of the organisation and its employees The demands and needs of the environment is constantly evolving and management is about adjusting the company according to the needs and demands of the environmenthelliprdquo [1]
As a starting-point this paper rests on the following basic assumptions
bull the importance of innovation is increasing and will continue to grow in the years to come
bull external market-related turbulence for business organisations is not a passing phenomenon
bull the same observation goes for technological turbulence which further enhances the need for innovation and intrapreneurship
Space consideration does not allow us to go into any kind of detail regarding these assumptions Rather we will argue that environmental turbulence and knowledge in fusion should be regarded as an opportunity for innovative firms although recognise that market-related dynamics and technological turbulence can also pose serious risks for stagnant and complacent firms
But what are the implications of the more frequent technological changes increased market segmentation and global competition for organisations According to Kumpe and Bolwijn [2] the necessary organisational forms have undergone profound changes through the last decades This has increased the importance of innovation and underlined the need for renewal and extension of existing product portfolio For understanding this development Kumpe and Bolwijn [2] have produced a model which is shown in Figure 1
The external environment of business organisations has undergone radical changes since 1960s and successful companies have had to adjust to these changes in order to survive In the 1960s successful companies focused on effectiveness They were based on rationality and hierarchical structures that were bureaucratic Management was primarily focused on the efficiency of various important processes within organisation In the last decade the importance of product development and innovation however has increased considerably [34] Technological updates and design renewal are important today in order to sustain market share and remain competitive The challenge of the development function in organisations eg the RampD department has therefore increased considerably with limited resources and time changing the nature of development work The market place it can be said has short-term demands that often require long-term technology research and development which in turn pose great difficulties in prioritisation and management [5]
Therefore an important implication of the development discussed above is that innovative activities can no longer be assumed to be the domain of start-ups and entrepreneurs Now all firms need to pay attention to differentiating themselves by means of innovation and development [4] while at the same time maintaining operational effectiveness [6] In other words firms are caught between exploration and exploitation to use the firms of James March [7] and Leonard-Barton [8] This is a fourth assumption of the paper that we believe is justified by the above discussion ndash but what does it mean It means that firms and managers need to start paying attention to the creation of innovation by intrapreneurs and intrapreneurial activities
104 A Drejer KS Christensen and JP Ulhoslashi
Figure 1 The evolution of market demands and (required) competencies of firms
Source Adapted from [2]
Understanding intrapreneurship by means of state-of-the-art 105
The outlined developments have taken place in parallel with another important development ndash the shift from the industrial society to the knowledge society Today many organisations are becoming knowledge intensive organisations staffed with knowledge workers that will dominate the influence of global value creation [910] This has made a lot of people talk about knowledge management as a new managerial discipline for exactly the same reasons that others do talk about innovation management
Thus intrapreneurs in modern organisations manipulate knowledge instead of physical product and technologies in order to create the necessary innovations and technologies In that light it is paramount that we begin to understand the relationships between knowledge knowledge management and innovation management and intra-preneurship To provide a framework for such an understanding is the very purpose of this paper In order to propose a framework for knowledge and innovation management and intrapreneuship we will start by investigating intrapreneurship and its context ndash innovation management ndash before discussing what we today know about knowledge and knowledge management in firms Finally we will try to integrate the two managerial issues in a framework that outlines the task of intrapreneurship in modern organisations
2 Innovation management and intrapreneurship
Innovation and innovativeness are very much in the centre of the debate of how the business environment of firms has evolved over the years Even though a lot of incongruent definitions can be found in the literature (see the discussion by Carcia and Calantone [11] there seems to be general agreement that innovation (the process) is an iterative process initiated by the perception of a new market andor service opportunity for a technology-based invention which leads to development production and marketing tasks in order to bring about a commercial success of the invention (eg [41213]) On the other hand innovativeness (the quality of the outcome) is used as a measure of the lsquonewnessrsquo of an innovation where highly innovative products etc are seen as new to the world the industry or at least the firm [13]
Despite the necessity for innovation in many firms discussed in the introduction it is clear that no two firms should necessarily be innovative in the same manner Innovation can to be directed at products markets production competencies [1113] as well as administrative competencies as defined by Lowe [14] and Gaynor [15] This corresponds to the thinking behind Miles and Snowrsquos seminal strategy model [16] where strategic management is seen as a process of solving three independent problems the entrepreneurial problem (choices within the product-market domain) the engineering problem (choices related to operations) and the administrative problem (choices related to administration)
Miles and Snowrsquos model [16] of lsquoorganisational adaptationrsquo focuses on the integration between technology and organisation The model is also referred to as a model for lsquostrategic adaptationrsquo (eg [17]) The purpose of the model is to describe and diagnose existing organisational behaviors The model is based on the following three basic ideas
bull οrganisations can act to create (or choose) their environment
bull managementrsquos strategic choices shape the organisationrsquos structure and processes
bull on the other hand once chosen structure and process constrain strategy
106 A Drejer KS Christensen and JP Ulhoslashi
These basic ideas are in line with the work of authors such as Galbraith [18] and Mintzberg [19] The ideas describe a change in attitude towards strategy from the traditional perception of planning under stable external conditions to strategic management as a process of constantly developing and being innovative in order to keep up with turbulent and dynamic business conditions
21 Innovation management the context of intrapreneurship
The real issue however is how to create a constant stream of innovations in any kind of organisation It was Drucker [20] who first pointed out that innovation is not just an outcome innovation is a process In order to avoid confusion we will propose to call the set of managerial activities that together attempt to control the process of innovation for lsquoInnovation Managementrsquo We can therefore safely say that lsquoinnovationrsquo itself is reserved for the results of the process hopefully amply managed by innovation management A further note on innovations many have noted that innovation is more than just invention (eg [1213]) thereby emphasising that ideas need to be put into practice and inventions need to be commercialised in order to speak of innovation [21] In our fairly broad perception of innovation to cover more than just product innovation it is probably necessary to say that ideainventions need to be implemented in the products production or administrative competencies of the firm
Finally there is the issue of how new an innovation should be According to the strictest of definitions innovations should be new to the world (eg [22]) However this ignores the idea of parallel development of technologies in different industries ndash ie precursor to technology development [4] ndash not to mention the difficulties experienced by any firm struggling to implement something new to the firm itself (eg [23]) A suitable compromise between views seems to be to say that an innovation should be new to the firm and its industry
So what are the activities that constitute innovation management Notwithstanding the enormous differences between individual firms several authors have identified five important activities that together define innovation management in its proper context (eg [4]) The first three activities define innovation management per se whereas the last two define the context of innovation management The activities are
bull Technological integration This refers to the integration between technologies and the product-markets of the firm [24]) and emphasises the importance of satisfying the customer with the innovations of any firm In other words technology development (production and administration) needs to be integrated with product development [4] also at the strategic level
bull The process of innovation By this is meant the cross-functional (business) process of activities that create innovations across the departments of the firm Obviously no one department is responsible for innovation and it is thus necessary to see how departments together create innovations see Cooper [25] for one of the seminal accounts of this subject
bull Strategic technology planning This refers to the planning of technology andor competence projects with the aim of maintaining a balanced portfolio of technologies andor competencies see [26] or [27]
Understanding intrapreneurship by means of state-of-the-art 107
bull Organisational change Innovation is closely related to organisational change No matter how small or large the innovation it will effect the organisation with needs for new knowledge new markets new employees and so on Thus it is difficult to speak of innovation without considering organisational change
bull Business Development Of course innovation should be seen as a means for creating new and improved business for the company That is innovation can both drive and be driven by business development as the second very critical element of innovation management
In a systemic interplay we believe that these activities together constitute what we have defined as innovation management But innovation management is surely not the same phenomenon in all organisations
22 Contingent situations for innovation management
The recent emergence of quite complex products consisting of perhaps mechanical components electronics components and software not to mention interfaces to other IT products as well as a strong image part (of an expanded product concept) has given rise to many questions regarding the traditional idea of using the technological S-curve as a key to contingent use of the theory of innovation management
First of all many of the new products such as computers cellular phones and so on are in effect complex systems of many technologies each with individual life cycles And how are many individual life cycles added in to one life cycle for the entire product per se It seems as if the individual technologies and the complex products of which the technologies are a part need not develop according to the same logic But then what drives development of such complex products This is indeed very hard to say In the case of cellular phones it certainly seems as if it is not the end-users that drive development of new generations of cellular phones (eg [4]) But this does not have to mean that development is driven by technology push In conclusion we can say that it seems necessary to develop richer models for contingency of Innovation Management theory
Based on a firm empirical basis Christensen [28] discusses this in great detail He concludes that there must be two kinds of technology changes from one life cycle to the next (1) disruptive changes that create conditions like envisioned by Schumpeter as creative destruction and (2) sustainable changes that continue to support established firms and knowledge patterns in the industry [28] Whereas sustainable changes can be found to support established firms disruptive changes lead to the demise of established firms in favor of newcomer firms Christensen explains the difference between the two kinds of technological changes in terms of the S-curve Sustainable changes continue along the same basic pattern as measured by the same performance measure whereas disruptive changes start an entirely new S-curve (compared to earlier curves) that needs to be measured by another performance parameter
For instance disc drives for computers has changed dramatically on several occasions For instance in 1980 a new kind of technology was part of enabling the personal computer [28] However it was difficult for established firms to foresee that as their perception was driven by the old standard of performance (in that case capacity rather than size) Thus new firms became leading in the new market for personal computers The typical example of the computer-industry would be that of IBM versus
108 A Drejer KS Christensen and JP Ulhoslashi
Apple Computer Because Apple was driven by a value system that was about creating small computers for home use its managers could see the value of a disc drive that was smaller than the generation before albeit not performing quite as well On the other hand IBM was driven by a value system that favored making large computer for central computer departments in large firms and saw hence no value in a smaller disc drive Unfortunately ndash for IBM that is ndash the market favored the former option and an entirely new product was created Interestingly Christensen demonstrates that exactly the same forces are at play in an entirely different kind of industry ie that of machinery for the building industry Thus the phenomenon does not need to be new at all and certainly not limited to IT-based industries
We suggest that there must be at least three situations for innovation management We have the well-known situation of technology exploitation ie after the dominant design has been established This situation can of course be divided into a number of situations This has been amply demonstrated by the equally well-known AD Little approach to technology investment (eg [26]) that distinguishes between monitoringearly adoption selectively investingfollower developing key technology maintaining mature technology and divesting of obsolete technology as the life cycle nears another technology shift [26] Furthermore we argue that changes of technology between life cycles can be either sustaining or disruptive rather than the traditional idea of a discontinuous technological change leading to creative destruction
Based on the above discussions we can go beyond the popular distinction between creative destruction and technology exploitation and define three situations for innovation management
bull exploitation of existing technologies
bull stable technological change
bull disruptive technological change
Because these three situations are the key to a contingent framework for intrapreneurship related to knowledge and innovation they are important to understand in detail In order to do so it is necessary with research designed to yield this kind of detailed understanding A logical place to start would be to conduct case studies or action research in companies in order to present examples of the three situations and how they change over time Even though this article does not have space for a sufficient presentation of such case studies the authors will describe and illustrate the three situations in this Section This is based on a number of longitudinal case studies undertaken by one of the authors and presented in a recent book [4]
Exploitation of existing technologies This situation corresponds to the stable situation of the smooth part of the S-curve The task of Management of Technology (MoT) is to secure that the firm develops technologies faster than its competitors (or as a follower if that is desired) and exploit technologies in processes and secondarily products This is truly a race for technological development and a lead may not last forever This kind of competition can be compared with the metaphor of say 100 meter running Because of specialisation among athletes one will find that the same athletes compete (almost) every time Furthermore race tracks rules equipment etc will be the same every time ndash and the athletes probably train in similar fashion Thus it seems very difficult to maintain a leadership position in a competition of this kind ndash unless one is very competent in getting everything together The most obvious examples of such firms will be traditional industrial firms in many industries Car-manufacturing is a little atypical because of the
Understanding intrapreneurship by means of state-of-the-art 109
strong emphasis on the products still However research has shown that emphasis has changed from products to processes many years ago [29] and we also know it is a very difficult place to break in as a newcomer
Stable technological change Other firms go through a series of sustainable technological changes ndash usually at pretty high speed This is of course quite complex but we must remember that the technological changes happen within the boundaries of the same design concept and thus value system for the firm Therefore the task here is to configure ndash and sometimes develop ndash a set of technologies constituting a product within the time available Technological performance is often of less importance as long as the new product is on market in time We may compare this metaphorically with a group of athletes that agree to go from one distance to another sequentially from 100 meter to 200 meter to 400 and so on Every time the group changes there will be a change of advantages ndash albeit a small one However over time leadership may well change as the group moves from 100 to 800 meters for instance We see that there will be many similarities between each pair of distances and that the value system of athletes will only need to change slowly ndash relatively An obvious example of such firms can be found in mobile communications where a group of firms have followed each other through several generations of cellular phones The lead has changed over time and there has even been a few entries into the industry However many firms have followed along for very long time
Disruptive technological change Finally there are firms that have lived through creative destruction Here both market and technology change at the same time ie a new design concept as well as new components need to be designed ndash usually along with establishing a new firm to do so This means that everything must be designed simultaneously ndash product (concept and detailed construction) market processes administration and so on This by the way corresponds to inventing an entirely new game of sports ndash the rules equipment etc must be invented at the same time Examples of firms here rarely include established firms reinventing themselves ndash that is almost impossible because it requires changing the culture and value system of an established firm ndash and thus usually one-offs Apple Computer is a much researched example of a firm that invents an entire new industry by breaking the established rules and beliefs
23 Intrapreneurs who makes the innovations
Considering the past two decades the responses of the companies in the 1980s and to some extent the 1990s to the challenges outlined above have been characterised by reductions of work force downsizing rightsizing budget cuts and depressed morale in their workforce [30] The centre of attention has been a focus on short-term costs of production but no company can afford to rely on such an approach forever The real challenge of a company to remain a going concern is to establish a competitive advantage and the only way to accomplish that is continuous innovation and creation of new ideas According to Morris and Kuratko [30] the answer is adaptability flexibility speed aggressiveness and innovativeness which can be boiled down to one word ndash intrapreneurship (for going concern firms) and entrepreneurship (for start-ups)
In parallel with the downsizing wave (eg [31]) researcherrsquos interest in intra entrepreneurship seriously took off In particular interest in topics as entrepreneurial management corporate entrepreneurship and intrapreneurship in the last couple of years is remarkable This may in part be due to lsquore-labellingrsquo [3233] of existing concepts but it
110 A Drejer KS Christensen and JP Ulhoslashi
has paved the way to the emergence of new practices and theories From 1983 the interest for the topic has been on the increase which can be seen in relation to Pinchotrsquos introduction of the concept of intrapreneurship in 1983 and his book Intrapreneuring in 1985
New fads or concepts are often seen or claimed to be driven by practice [34] and the more popular part of the management literature which in the case of knowledge management was represented by Drucker [9] and Stewart [35] But as Abrahamson [36] has argued the researchers have often been aware of and interested in the new phenomenon for some time but the explosion seldom takes off before it has gained the interest from practitioners That is exactly what is happening at the moment for the overall concept of corporate entrepreneurship and the many different labels illustrate that even though the interest on the overall topic is growing there still is a lack of the consensus on what it really means andor should mean
It is again the purpose of this paper to help fill that void ndash what does intrapreneurship really mean
3 Knowledge in an innovation perspective
An important aspect about knowledge and knowledge management is that it is only within the last few years that the concepts of knowledge and knowledge management have risen to the top of the agenda of researchers and managers Even though we have discussed knowledge and learning in the educational realm for many years only recently have we begun to explore its ramifications in firms and for managers Therefore we will assert that there is a major contribution coming from discussing what is state-of-the-art about knowledge from an innovation perspective and try to integrate that into a framework for the task of the intrapreneur in modern organisations This is simply because this has not been done before and intrapreneurs in modern organisations ndash we have come to realise ndash manipulate knowledge rather than physical artifacts
31 Knowledge management in a knowledge society
Peter Drucker takes the development of the knowledge society [9] back to the Second World War and already in the 1960s he talks about lsquoknowledge workrsquo and lsquoknowledge workerrsquo However Thomas Stewartrsquos articles in Fortune magazine about lsquoBrainpowerrsquo [37] and lsquointellectual capitalrsquo [38] indicates the entry to the knowledge society for most scholars and practitioners which eg Nonaka and Takeuchi [39] and Baxter and Chua [34] have pointed out in different ways One of the clearest statements is Druckerrsquos [9] own prediction about lsquo[t]he basic economic resourcehellip is and will be knowledgersquo and the uniqueness about the knowledge society is that knowledge has become the resource rather than a resource [9 p 41] italics added by the authors)
Even though knowledge is introduced as the new crucial factor for the success of the organisations it is worth to remember that it may not be so new in the first place It is well known that old management concepts and techniques are re-launched under new labels to mobilise new interest and action [40] An example is knowledge in the sense of actor theory [32] where knowledge is related to linguistic and organisational actors and actants in the same way as Catasuacutes [33] did with environment and environmental management Whether this is due to a re-labelling or new practices and new theories
Understanding intrapreneurship by means of state-of-the-art 111
lsquonewrsquo concepts such as knowledge management knowledge worker and knowledge management strategy have gained a lot of attention recently As described by Bukh et al [40] the alertness of these concepts is among other things indicated by the centrality of the label lsquoknowledge managementrsquo in both organisations by consultants and scholars
A tendency to see knowledge and knowledge management from a wider ndash and often strategic ndash perspective rather than an exclusive artifact-oriented perspective [41] where the primary idea is to capture code and store data and information to make them available for an entire organisation has been promoted by many researchers [394142] Knowledge management however can be seen as an ongoing innovative process based on knowledge creation knowledge sharing and knowledge dissemination This process-oriented perspective [41] is rooted in Ikujiro Nonakarsquos article The Knowledge-Creating Company from 1991 which was the first summarised presentation of this perspective
Among others von Krogh et al [42] and Christensen and Bukh [41] argue that knowledge sharing is a combinantion between people and technology which means both social interaction and technological transactions This is supported by the fact that lsquogeneration of synthesisrsquo is important for knowledge creation The interplay between dichotomies such as tacit and explicit knowledge body and mind individual and organisation top-down and bottom-up bureaucracy and task force and relay and rugby [39] are core elements in the knowledge creation process The interaction between all these dichotomies is expressed in the knowledge spiral [39] A managerial purpose is to keep this spiral running to create dynamic knowledge which is crucial for the innovative activities in an organisation
32 Different types of knowledge
Typically knowledge is defined as lsquothat which is knownrsquo This is however only one way of looking at knowledge Another important way to look at knowledge is to look at lsquothe state of knowingrsquo The state of knowledge can be discussed along several dimensions most notably
bull The level of articulation ie to what extent is it possible to represent knowledge formally and explicitly and thereby share knowledge within the organisation Knowledge can be characterised on a continuum from tacit to explicit
bull Depth of knowledge ie how deep is the organisationrsquos understanding regarding a certain area of knowledge This can range from no knowledge (and inability to utilise that knowledge) to complete understanding and ability to utilise knowledge
bull Location of knowledge ie is the knowledge internal or external to the firm
bull Diffusion of knowledge ie to what extent is knowledge the possession of everybody in the organisation (so everyone can use the knowledge)
bull Complexity of knowledge ie a summary of the other factors of knowledge
Below we will discuss the level of articulation and complexity of knowledge only as these are the most important dimensions of knowledge within this context
321 Level of articulation tacit to explicit
Inspired by Michael Polyani it has only recently become accepted that not all knowledge in an organisation can be fully articulated [43] perhaps a recognition of the fact that not
112 A Drejer KS Christensen and JP Ulhoslashi
all knowledge of value is easily accessible via books the internet etc This is not surprising to us but merely another manifestation of the very thinking behind competence development and an internal focus in management of firms Typically a distinction is made between tacit and explicit knowledge (eg [394143]) Tacit knowledge is the kind of knowledge that cannot be articulated and codified whereas explicit knowledge is easy to codify Evidently different strategies for handling knowledge and for learning are needed for tacit and explicit knowledge respectively The two possible states of knowledge are to us merely end-points on a scale ndash in reality knowledge will be something in between It is thus important to note that tacitness of knowledge should not be seen as a form of mystification Tacit knowledge can be learned ndash just consider the craftsman education in Denmark ndash and it is a natural and important part of all domains of knowledge [44]
A number of factors can be said to contribute to the tacitness of knowledge Based on the references in this Section we have identified a number of continuums that expresse most importantly a factor contributing to tacitness of knowledge
bull Embodied or disembodied knowledge Examples of embodied knowledge are written procedures manuals or mechanical components that all seem to be physically part of the organisation Examples of disembodied knowledge are heuristics organisational values or culture [8]
bull Observable or non-observable in use Tacit knowledge will typically be difficult to observe in use Examples of non-observable knowledge therefore include knowledge related to craftmanship andor knowledge related to a large element of experience
bull Independent or part of a system Some kinds of knowledge are part of a larger system of knowledge and experience ndash eg craftmanship ndash whereas other kinds are independent It will be far more difficult to articulate knowledge of the former kind than of the latter kind
In summary tacit knowledge is disembodied non-observable in use and part of a system of knowledge whereas explicit knowledge is embodied observable in use and independent of other kinds of knowledge Many kinds of knowledge in a firm will be towards the tacit kind and hence more difficult to manage through formal systems and traditional forms of learning
322 Depth of knowledge Dreyfuss and Dreyfuss
An important point regarding knowledge relates to its lsquodepthrsquo by which we understand an expression of the organisationrsquos ability to utilise that knowledge Thus the greater the depth of knowledge the greater the ability to utilise that knowledge This assumption can be discussed ndash obviously some persons can understand quite a lot about an area and be unable to apply that knowledge However we assume that in relation to firms and this project this will not be the case However there is not necessarily any correlation between the depth of knowledge and its level of articulation ndash understanding and utilisation can be high even with tacit knowledge
There have been several contributions to this dimension of the state of knowing For instance Machlup [45] has identified 13 different lsquoelements of knowingrsquo and describes a number of levels in the development of knowledge For Machlup the central issue in his
Understanding intrapreneurship by means of state-of-the-art 113
lsquoelements of knowingrsquo is how well an individual or an organisation is able to perform utilising this knowledge He defines a number of stages ranging from lsquobeing acquainted withrsquo to lsquobeing able to performrsquo This corresponds to a continuum from having knowledge that exists (but being unable to do anything with it) to having thorough knowledge and being able to utilise that knowledge A somewhat similar typology has been proposed [46] with an eight-level typology of knowledge in relation to the description of processes
The most important contribution however is also the oldest one Dreyfuss and Dreyfuss [47] have proposed a model for the depth of knowledge that clearly can be said to contain the other newer contributions to the area The model describes the knowledge of a person as he becomes more and more competent in five levels ndash from novice to expert ndash and describes how true experts are highly dependent on tacit knowledge whereas others are dependent on explicit knowledge
323 Location of knowledge
Knowledge can reside in many different organisational contexts ranging from the individual person to networks of employees ndash and most notably in relation to modern organisations In networks consistent of internal and external persons to the firm the network of organisations being the ultimate form of that In this context two issues stand out as particularly important (1) the transfer of knowledge from one person to the entire organisation and (2) the transfer of knowledge external to the organisation to the inside of the organisation
In modern organisations knowledge will often be found in the tacit form and hence reside in the knowledge and experience of one person or just a few persons In order to enable the firm to utilise that knowledge to the largest possible extent ndash that is make more people capable of mastering the knowledge ndash the process of diffusing knowledge from one person to the entire organisation is critical There are several ways to do that It seems evident that the mechanism of codification making knowledge more explicit is vital to the process
In many firms other knowledge will often be found outside the organisation This is only natural for a relatively small firm with minor resources For instance suppliers often have knowledge critical for the customer firm on say processes customised process technology etc Therefore many firms engage in networking activities of different kinds for instance shared marketing RampD efforts etc with many different partners Thus the second important issue relating to location of knowledge is whether or not knowledge is internal to the organisation Learning processes for internalising knowledge are absolutely vital to modern organisations
324 Diffusion of knowledge undiffused to diffused
It is through the diffusion process that an organisation becomes capable of deriving value from the knowledge it has developed by eg RampD activities internalising networking etc [39] Evidently the diffusion of knowledge is very critical In order to be able utilise knowledge better more people need to have access to the knowledge and master the knowledge Thus the extent of diffusion in general is closely related to the dimension of depth of knowledge However not every part of the organisation will reach the same
114 A Drejer KS Christensen and JP Ulhoslashi
depth of knowledge at the same time ndash or be able to do so ndash so diffusion is a critical issue in its own right
Normally diffusion of knowledge is described along a continuum from undiffused (located with one person) to fully diffused (residing with every body) The latter end of the continuum suggests that diffusion of knowledge has a lot to do with the concept of corporate values and corporate culture As soon as something is fully diffused one can say that it has become part of the corporate culture Therefore learning processes need to be both formal and informal in order to diffuse knowledge
Of course diffusion is a relative construct in the sense that it should be measured on a lsquoneed to knowrsquo basis There is no point in diffusing knowledge to parts of the organisation where that knowledge is irrelevant Having noted that we would like to add that very often the need to know is greatly underestimated in organisations
325 Complexity of knowledge
The dimension of complexity of knowledge is seen as very important in relation to learningtransfer of knowledge [48] Complexity of knowledge is a function of
bull The tacitness of knowledge and thereby the way knowledge is being embedded and represented within the organisation Complex knowledge must be expected to have significant tacit elements [43]
bull The extent to which the knowledge can be demarcated from other areas of knowledge in the organisation Complex knowledge will typically be intertwined with other types of knowledge in the organisation and therefore be difficult to demarcate clearly [49]
bull The extent to which knowledge has social elements ie a large number of actors needed for the knowledge to exist [32] eg network knowledge Typically complex knowledge will be dependent on a number of actors and their ability to function together in a group or network
In other words the more complex the knowledge the more one or more of the three dimensions mentioned above will be present The more complex knowledge the more difficult will it be to model that knowledge and to acquire the same by formalised means
4 Understanding intrapreneurship better
Increasingly the need for innovation management is changing Innovation management these days is the domain of all modern organisations ndash not just start-ups Therefore it is crucial to consider the work of intrapreneurs in theory about innovation management Furthermore such modern intrapreneurs manipulate knowledge rather than physical artifacts Investigating state-of-the-art theory about knowledge we have concluded that complexity of knowledge is a construct that has large implications for the way we think about intrapreneurship and innovation In this Section we will link together complexity of knowledge and the work of the intrepreneur in a common framework In order to do that however we need to establish the context for the work of the intrapreneur We will do this by discussing the purpose of the intrapreneurrsquos work and its content
Understanding intrapreneurship by means of state-of-the-art 115
41 The purpose exploitation and exploration
Regarding the purpose of intrapreneurship we will assert that the intrapreneur is to fulfill the organisationrsquos need for renewal in light of its need for stability James March has formulated the idea that management is a balance between two forms of learning activities ndash exploration and exploitation ndash the finding of new resources and the use of existing ones [7] This is probably based on some of Marchrsquos early thinking on management since March from early on saw management as two fundamentally different activities that needed to be conducted quite differently (eg [50]) One has been labeled lsquothe technology of foolishnessrsquo [50] as a serious attempt to create a supplement to the analytical planning-oriented style of management that we know from operations management
The ideas of March have been inspiring for many others such as Dorothy Leonard-Barton [8] who has worked on experiments versus exploiting the knowledge assets and hence competencies of the company Leonard-Barton [8] too acknowledges that we are talking about two mentally different activities but does not discuss the managerial challenges of doing two fundamentally different mental activities Within the field of strategic management Hamel and Prahalad [51] have written a paper on lsquostrategy as stretch and leveragersquo in Harvard Business Review in almost similar terms while Michael Porter recently has written a thought-provoking article lsquoWhat is a strategyrsquo [6] in which he claims that strategy is about differentiation in the market place combined with operational effectiveness The latter to Porter is not even strategic in nature ndash but that is another point
42 The content learning leading to innovation
Regarding the content of intrapreneurship we will see this as learning Learning occurs under two conditions When there is a match or a mismatch between intentions and outcomes of intended actions in organisations If there is a mismatch the actions are corrected until there is a match between actions and intended outcomes [52] However several authors have discussed different levels of learning in organisations ie a radical change of behavior may not be the result of the same kind of learning as a minor adjustment of current behavior Argyris illustrates this with his model of single and double loop learning
Figure 2 Model of single- and double-loop learning
Source Adapted from [52]
116 A Drejer KS Christensen and JP Ulhoslashi
Single-loop learning can be compared to a thermostat A thermostat is programmed to detect if the surrounding temperature exceeds or is below the reference temperature and responds by simply turning the heat on or off If the thermostat asked itself why it was programmed as it was then it would be a double-loop learner since it was able to reconsider its own situation and thereby perhaps alter this situation In other words double-loop learning is mainly a matter of being able to question onersquos governing values ie self-assessment Single-loop learning is appropriate for routine and repetitive issues while double-loop learning seems more relevant for complex and non-programmable tasks [52]
Double-loop learning is not simple at all it often requires evaluation of your existing values and ways of doing things and how you influence your surroundings in both negative and positive ways Even if you are able to see and evaluate your own faults there is still a long way to go before an actual change occurs ndash if any occurs at all Double-loop learning means the unfreezing of paradigms prejudices and habits in order to be open-minded towards new and alternative ways of action [52] This furthermore involves a number of other psychological mechanisms that will not be discussed further within this context It is easy to relate to the problems dealing with double-loop learning Just think of the advice that you give other people but never use yourself Sometimes you even say to your self or to others lsquoYou shouldnrsquot be doing it the way I do but insteadrsquo You are often well aware of your own deficiencies but accept them as a solid implemented and non-changeable part of you If these lsquovaluesrsquo are changed it is often in connection with a major crisis or event that really shakes you out of balance
We will compare a personrsquos double-loop learning as a serious reconsideration of that personrsquos current situation often leading to radical changes with organisations and the way they learn when innovating In comparison with industrial organisations it is seen that double-loop learning and perhaps radical change often emerges as a result of a near fatal crisis ie major turn-around efforts crisis management and so on However if double-loop learning could be integrated into the formal and informal systems of organisations the organisations would have more time to reconsider their basic situation and prevailing values and from there develop serious alternative solutions Maybe organisations would even be able to develop entirely new ways of doing things ndash without the existence of a crisis
43 A framework for intrapreneurship in light of knowledge
The elements of a framework for intrapreneurship and innovation in light of a knowledge perspective are now in place The elements are
bull situations for innovation management ndash exploitation sustainable change and disruptive change
bull task of intrapreneurship ndash exploitation and exploration
bull complexity of knowledge bull tacitness bull demarcation bull social elements
bull type of learning involved
Combining these elements yields the following framework
Understanding intrapreneurship by means of state-of-the-art 117
The framework defines the task of intrapreneurship as a combination of the three situations for innovation management and the learning-related concepts of exploitation and exploration ndash the latter being closely related to single and double loop learning Furthermore the framework provides an attempt to describe the content of intrapreneurship in the six subtasks resulting from outlining the framework This is done by defining the complexity of the knowledge that the intrapreneur needs to manipulate in each instance and the corresponding type of learning involved In all this yields the framework proposed in Table 1
Table 1 Framework for intrapreneurship
Exploitation-task Exploration-task
Exploitation of the same technology
Priority 90 Purpose Reuse and add to
existing market and technology knowledge primarily internal
located
Complexity Low Explicit knowledge Clearly demarked
Few social elements
Learning Single loop learning
Priority 10 Purpose Experiment with
new technologies in order to test the basic assumptions of
the firm
Complexity High Tacit assumptions
Not demarked Totally social
Learning
Double loop learning
Sustainable technological change
Priority 50 Purpose Develop existing
knowledge on current markets or technologies
Complexity Medium
Explicit knowledge Often external and not demarked
Few social elements
Learning Single loop learning
Priority 50 Purpose Develop new
knowledge on new markets or technologies
Complexity Medium
Tacit knowledge Often outside of firm and
not demarked Few social elements (mostly
technology)
Learning Both forms of learning
Disruptive technological change
Priority 10 Purpose develop explicit knowledge organisational
procedures
Complexity High Tacit (should be explicit) Internal but not demarked
May social elements External located knowledge
Learning
Single loop learning
Priority 90 Purpose develop new and tacit knowledge on market
and technologies
Complexity High Tacit and new Not demarked
Many social elements
Learning Both forms of learning
118 A Drejer KS Christensen and JP Ulhoslashi
Obviously this framework is merely a first step The framework needs to be researched in greater detail both empirically and theoretically The boundaries of time and space prevent us from doing so in this paper but we look forward to contributing to the effort
References
1 Drucker PF (1958) The Practice of Management Harper and Row
2 Kumpe T and Bolwijn PT (1994) lsquoTowards the innovative firm ndash a challenge for RampD managementrsquo Reseach-Technology Management JanndashFeb Issue pp38ndash44
3 Tidd J Bessant J and Pavitt K (1997) Managing Innovation Wiley
4 Drejer A (2001) The Innovative Firm (In Danish) Boslashrsens Forlag
5 Rosenkopf L and Tushman ML (1994) lsquoThe co-evolution of technology and organisationrsquo in Joel et al (Eds) Evolutionary Dynamics of Organisations Oxford University Press pp403ndash424
6 Porter ME (1996) lsquoWhat is strategyrsquo Harvard Business Review Vol 17 NovemberndashDecember pp33ndash47
7 March J (1991) lsquoExploration and exploitation in organizational learningrsquo Organization Science Vol 2 No 1
8 Leonard-Barton D (1995) Wellsprings of Knowledge Harvard Business School Press
9 Drucker PF (1993) Post-capitalist Society Oxford Butterworth-Heinemann
10 Drucker PF (1994) lsquoThe theory of the businessrsquo Harvard Business Review SeptemberndashOctober
11 Drejer A (2002) Strategic Management and Core Competencies Quorum Books
12 Roberts EK (1981) Generating Effective Corporate Innovation The Free Press
13 Afuah A (1998) Innovation Management The Free Press
14 Lowe P (1995) The Management of Technology Prentice Hall
15 Gaynor GH (1991) Achieving the Competitive Edge Through Integrated Technology Management McGraw-Hill
16 Miles RE and Snow CC (1978) Organizational Strategy Structure and Process McGraw-Hill
17 Stacy R (1993) Strategic Management and Organizational Dynamics Prentice Hall
18 Galbraith J (1979) Organization Design The Free Press
19 Mintzberg H (1983) Structure In Five ndash Designing Effective Organizations Prentice-Hall
20 Drucker PF (1985) Innovation and Entrepreneurship Harper amp Row
21 Tushman L and Rosenkopf L (1986) lsquoOrganizational determinants of technological changersquo in Staw B and Cummings L (Eds) Research in Organizational Behaviour Vol 14 pp311ndash347
22 Tushman ML and Anderson P (1990) lsquoTechnological discontinuities and organisational environmentsrsquo Administrative Science Quarterly Vol 35 pp1ndash8
23 Voss CA (1988) lsquoImplementation a key issue in manufacturing technology the need for a field of studyrsquo Research Policy
24 Iansiti M (1998) Technology Integration ndash Making Critical Choices in a Dynamic World Harvard Business School Press
25 Cooper (1995) New Product Development The Free Press
26 Bhalla SK (1987) The Effective Management of Technology Batelle Press
27 Drejer A and Riis JO (2000) Competence-based Strategy (In Danish) Boslashrsens Forlag
Understanding intrapreneurship by means of state-of-the-art 119
28 Christensen JC (1998) Innovatorrsquos Dillema Harvard Business School Press
29 Abernathy WJ and Clark KB (1985) lsquoInnovation ndash mapping the winds of creative destructionrsquo Research Policy Vol 14 pp3ndash22
30 Eisenhardt H and Martin JE (2000) lsquoDynamic capabilities what are theyrsquo Strategic Management Journal Vol 21 pp1105ndash1121
31 Edvinsson L and Malone T (1997) Intellectual Capital HarperCollins
32 Latour B (1999) Pandorarsquos Hope Essays on the Reality of Science Studies Cambridge MA Harvard University Press
33 Catasuacutes B (2001) Borders of Management Five Studies of Accounting Organizing and the Environment Doctoral dissertation School of Business Stockholm University
34 Baxter J and Chua FW (1999) lsquoKnowledge management now and the futurersquo Australian Accounting Review Vol 9 No 3 pp3ndash14
35 Lei D Hitt MA and Bettis R (1996) lsquoDynamic core competences through meta-learning and strategic contextrsquo Journal of Management Vol 22 No 4 pp549ndash569
36 Spender JC (1996b) lsquoOrganizational knowledge learning and memoryrsquo Journal of Organizational Change Management No 9 pp63ndash79
37 Stewart TA (1991) lsquoBrainpower how intellectual capital is becoming Americarsquos most valuable assetrsquo Fortune June 3rd pp44ndash60
38 Stewart TA (1994) lsquoYour companyrsquos most valuable asset intellectual capitalrsquo Fortune October 3rd pp68ndash74
39 Nonaka I and Takeuchi H (1995) The Knowledge-creating Company Oxford Oxford University Press
40 Nonaka I (1991) lsquoThe Knowledge-Creating Companyrsquo Harvard Business Review NovemberndashDecember pp96ndash104
41 Christensen KS and Bukh PN (2003) lsquoVidenledelse ndash to perspektiver (trans knowledge management ndash two perspectives)rsquo in Bukh PN Christensen KS and Mouritsen J (Eds) Videnledelse ndash Et praksisfelt under Etablering (trans knowledge Management ndash Establishing a Field of practice) Koslashbenhavn DJOslashF pp65ndash85
42 Von Krogh G Roos J and Kleine D (1998) Knowing in Firms Understanding Managing and Measuring Knowledge London Sage
43 Winter S (1987) lsquoKnowledge and competence as strategic assetsrsquo in Teece DJ (Ed) The Competitive Challenge Ballinger pp159ndash184
44 Spender JC (1996) lsquoMaking knowledge the basis of a dynamic theory of the firmrsquo Strategic Management Journal Vol 17 Winter Issue pp45ndash62
45 Nevis EC DiBella AJ and Gould JM (1995) lsquoUnderstanding organizations as learning systemsrsquo Sloan Management Review Winter Issue pp73ndash85
46 Bukh PN Christensen KS and Mouritsen J (2003) Videnledelse ndash Et praksisfelt under Etablering (trans Knowledge Management ndash Establishing a Field of practice) Koslashbenhavn DJOslashF
47 Dreyfus H and Dreyfus S (1986) Mind over Machine The Power of Human Intuition and Expertise in the Era of the Computer Free Press
48 Duncan Rand Weiss A lsquoOrganisational learning implications for organisation designrsquo in Barry M Staw (Ed) Research in Organisational Behaviour JAI Press
49 Kolb D (1984) Experimental Learning Prentice Hall
50 March J (1994) Management in a Complex World Samfundsvidenskaberne
51 Von Krogh G and J Roos (1996) Managing Knowledge Perspectives on Cooperation and Competition London Sage
52 Argyris C and Schon DA (1998) Organisational Learning II Addison-Wesley
159
CHAPTER 9
Knowledge Management in Perspective(s) An Analysis of Project Management in Two
Companies
Christensen Karina Skovvang Per Nikolaj Bukh amp Heine Kaasgaard Bang 2007
Knowledge Management in Perspective(s) An Analysis of Project Management in
Danish Companies
160
161
August 2007
Knowledge Management in Perspectives An Analysis of Project Management in Two Companies
Assistant professor Karina Skovvang Christensen University of Aarhus Professor Per Nikolaj Bukh Aalborg University
Partner Heine Kaasgaard Bang Conmoto
Abstract
This article analyses project management activities in two companies from a knowledge management perspective It is shown how human competences it-systems and project management systems are integrated and how these knowledge resources reflect strategies for knowledge management The Knowledge Management activities are analysed from two perspectives an artefact oriented and a process oriented perspective From the first perspective project management seems to consist of similar components in the two firms whereas the process oriented perspective identify context dependent differences It is concluded how awareness of different perspectives opens up for more managerial options and better understanding in practice
Keywords Knowledge Management Strategy Project Management Case study Knowledge Management Practice Corresponding author Assistant professor Karina Skovvang Christensen University of Aarhus School of Economics and Management Building 1322 DK-8000 Aarhus C email kschristenseneconaudk The authors are grateful to Allan Krogh Erlandsen BampO and Hanne Buje Jensen FKI Logistex Crisplant for access to the companies and for comments to a previous version of the article
162
1 Introduction
Many different researchers have introduced the concept of knowledge in academic
discussions within varying fields Mouritsen et al (2001) focuses for instance on the
management of intellectual capital whereas Prahalad amp Hamel (1990) describe the
companyrsquos strategic work based on core competencies In other parts of the
management literature both Leonard (1995) and Nonaka (1994) are concerned with
knowledge in relation to innovation whereas Huber (1991) and Lyles amp Schwenk
(1992) focus on organising of information so that it can be collected stored and reused
in other connections A common characteristic of these theories is that knowledge is an
important factor which is structured in ways that ensure the applicability of knowledge
in accordance with the strategies of the company
In relation to projects and project organisations the attention to knowledge management
as well as the role that social processes practises and patterns have in effectively
managing project knowledge is relatively new as Bresnen et al (2003) have pointed out
Knowledge is however a vital resource in project based industries and well working
knowledge management is in project organisations for instance essential for improving
the utilisation of core capabilities and technological platforms and reduce development
time in project (Oshri et al 2005)
The purpose of this paper is to pay attention to how different perspectives on a subject ndash
in this case project management and knowledge management ndash can broaden ones view
and
This article is based on a study of knowledge management in two Danish project based
organisations The article presents knowledge management as a perspective of
management where knowledge and knowledge resources are brought into focus The
empirical part of the article is based on an analysis of knowledge management
initiatives in relation to project management in the development division of the Danish
company Bang amp Olufsen and in the Danish company FKI Logistex Crisplant It is in
the article demonstrated how different perspectives on knowledge and knowledge
management expressed through two different epistemologies the artefact-oriented and
163
the process-oriented epistemology implies different understandings of the nature and
the role of knowledge management
The remainder of the article is structured in the following way Section 2 discusses
briefly the meaning of knowledge management and the two perspectives are introduced
In the following section 3 a short introduction to the method applied as well as a short
description of the two companies are given In section 4 the companiesrsquo different
initiatives in relation to knowledge management will be presented and it is illustrated
how knowledge management may be an integrated part of project management In
section 5 knowledge management is analyzed from the two different perspectives and
finally section 6 discussed how the perspectives may help to show a more balanced
picture of knowledge management by focusing on different parts of knowledge
management
2 Knowledge management in practice
In recent years there has in the management literature been an overwhelming interest in
the concept of knowledge and knowledge based resources This is not only reflected in
the importance of knowledge-intensive companies but also in an interest in how
knowledge based resources interact in the creation of value in companies and how
knowledge can be managed
When managers discuss knowledge different perspectives are often taken The
difference consists in the way in which knowledge is perceived In other words the
basic epistemological perspectives differ In this article a distinction is made between
two different perspectives which will be outlined in more details below
21 The two perspective on knowledge management
The first perspective on knowledge and knowledge management will be termed the
artefact oriented perspective Focus is often on information technology and the ways in
which technology may be applied for the codification of knowledge It is more or less
explicitly assumed that everything can be described and the more data a company
164
collects the more knowledge it possesses Knowledge management is therefore mostly
based on collecting storing and distributing knowledge in the form of eg documents
and specific information (eg Huber 1991 Lyles amp Schwenk 1992) From the artefact-
oriented perspective knowledge management focus for instance on project memory (cf
Kaumlrreman et al 2004) and manuals for organisational processes (Malone et al 1993)
Many authors (eg Blackler 1995 Tsoukas 1996) have indicated that the artefact
oriented perspective has become insufficient when handling management challenges in
relation to the complexity of the knowledge society and has hence criticised the
restricted view of knowledge expressed by the artefact oriented perspective emphasising
instead that knowledge is situated in social and organisational practises as well as
relationships (Tsoukas amp Vladimirou 2001) The problem is not lack of documents
data or access to information The limitation can rather be found in the quality content
and organisation of the material This has given rise to the second perspective which
we term the process oriented perspective
The process oriented perspective is most clearly exemplified by Ikujiro Nonakarsquos
research where knowledge is perceived as a ldquodynamic human process of justifying
personal beliefs as a part of an aspiration for the lsquotruthrsquordquo (Nonaka 1994 p 15 Nonaka
amp Takeuchi 1995) An essential point is that focus is on the process in which knowledge
is created and not on the documents or the rules which are based on the process This
implies that continuous and dynamic adaptation to lsquoreal lifersquo takes place
From the process-oriented epistemology knowledge creation and sharing is considered
as a continuous process where knowledge is transformed between tacit and explicit
knowledge and between people and technology The point of departure is here the so-
called SECI-model (Nonaka amp Takeuchi 1995) which consists of four types of
processes which Nonaka amp Takeuchi (1995) identify as central in relation to
knowledge management Socialization Externalization Combination and
Internalization According to Nonaka amp Takeuchi (1995 pp 70-71) the development of
organizational knowledge are a continuous and dynamic interaction between tacit and
explicit knowledge
165
22 Knowledge Management and the perception of Knowledge
Knowledge is a complex term as it is often not easy to agree on an exact definition The
view of knowledge that pervades much research especially from the artefact oriented
perspective ndash but not limited to that ndash is positivist ie the Platonic view that knowledge
is lsquojustified true beliefrsquo However the more recent knowledge management researchers
eg Nonaka amp Takeuchi (1995) von Krogh amp Roos (1995) Mourisen et al (2001) and
others have initiated a move away from seeing the subject at standing in a static
cognitive relationship of certainty to propositions stating facts about the empirical world
(se also Jackson amp Klobas 2007)
Following this recent tradition we adopt an approach where knowledge neither as an
object to be managed nor as a research object is strictly defined on beforehand Rather
we as the basic idea of simultaneously working with different perspectives on
knowledge as presented above let the nature of knowledge be based on the individuals
set of beliefs or mental models used to interpret actions and events in the world This
opens up for different perceptions of knowledge and knowledge management in an
organisation much like Roos amp von Kroghrsquos (1995 p 1) reflect in their statement that
ldquo[w]hat you see depends on who you arerdquo which implies that knowledge should be
regarded as a subjective term Following this notion it is quite possible that knowledge
can be expressed in many different ways since not only knowledge but also knowledge
about knowledge depends on the context This implies that it is essential to clarify the
background for the various perceptions of knowledge knowledge management concepts
etc
The understanding of the term knowledge or at least what it means to the individual or
the organisation is important because it affects how knowledge enters the managerial
processes According to von Krogh amp Roos (1996) this implies that successful
knowledge management requires that you relate to lsquothe nature of knowledgersquo (von
Krogh amp Roos 1996 p 224) Therefore knowledge management also becomes a
question of epistemological understanding
More effective knowledge management may also result from adapting management
tools that fit the prevailing perception of knowledge This observation is in accordance
with Marr et al (2003) who suggest that knowledge management practises will be
166
perceived as more effective if they match the personal epistemology In relation to an
in-depth study of knowledge management in a project case study in an Australian
industrial engineering organisation Sense (2007 p 17-18) document similarly that the
project members favour knowledge sharing techniques that align with their cognitive
style type and further that they acknowledge the personal bias towards specific modes
of sharing knowledge
23 Strategies for knowledge management
Hansen et al (1999) have associated the understanding of knowledge management that
we have termed the artefact oriented perspective with a so-called codification strategy
which govern companies intend to collect existing knowledge and make it accessible to
the rest of the organization This form of strategy should be seen as an alternative or
more precisely a supplement to the personification strategy which focuses on the
aspects that are difficult to express in a way based on codification Thus the
personification strategy in more in line with the process oriented perspective on
knowledge management outlined above
While the codification strategy is a cornerstone in the bureaucratic organisation the
personification strategy has seen its strength in the knowledge intensive organisations
that rely on the competence of the individuals The two strategies seem according to
Hansen et al (1999) to dominate practice in general which among other things may be
due to the fact that they supplement each other instead of being mutually exclusive
Hansen et al (1999) point out that often one of the strategies normally will have a more
prevailing position in the organizationrsquos consciousness However knowledge
management is multi-faceted and our understanding of current practise has already been
set by our epistemology This illustrates that the more an organisation focuses on
knowledge the more important it becomes to understand the epistemological
implications
167
3 The Two Companies and the methodology
This article is anchored in a case study of how knowledge management takes place in
practice in two organisations The distinct strength of case studies is the ability to deal
with a variety of evidence documents questionnaires interviews and observations in a
flexible manner In particular when exploring the two companiesrsquo practises that are not
on beforehand perceived as knowledge management initiatives in the companies a case
study approach seems appropriate A case study approach offers in this context an
opportunity for observing and describing a complicated research phenomenon in a way
that allows analytical generalisations (Eisenhardt 1989 Tsoukas 1989) of the
observations
The empirical data includes 5 semi-structured interviews in each of the two companies
where the respondents were asked to tell about the companyrsquos history how knowledge
management affects their daily work how knowledge is created and shared as well as
how they work with different tools (eg project models and IT-systems) The interviews
took approx 1frac12 hour on average and they were taped and transcribed for later use The
interviews at BampO were carried through in the period 28-29 August 2003 whereas the
interviews at Crisplant were collected almost two years earlier ie in the period 29
October to 12 December 2001 Moreover data in the form of documents reports and
observations were collected General attitudes are expressed by the company name
whereas the respondentrsquos function is emphasized where it is of importance in
connection with a statement
Bang amp Olufsen (BampO) is known for its distinguished design and quality products
within audio and video which are the companyrsquos core business areas Development of
new products is a decisive competitive parameter to BampO and is ascribed much
attention Development costs thus represent more than 9 per cent of the companyrsquos
turnover This article only addresses knowledge management in the product
development division of BampO
FKI Logistex Crisplant AS (Crisplant) develops produces and installs solutions within
the so-called automatic high-speed transport and sorting systems (ATS) area which
forms a substantial part of operations at airports postal centres libraries mail order
168
businesses distribution centres etc all over the world These systems are developed and
implemented in a close cooperation not only with the customer but with a number of
other companies which supply other parts of the installation of which the sorting system
must be an integrated part
4 Knowledge Management in the two companies
The two organisations were chosen because they represent two different types of project
based organisations both focussing on product development BampO has organised
product development in a department separated from production with products being
manufactured at assembly plants and sold to customers all over the world Crisplant
develops customer specific solutions in projects more like a construction company with
development and installation at the customer site being separate phases of the same
project
Product development as it is undertaken in both companies is often generically
described a knowledge intensive activity (Meyer amp Utterback 1993) where managers
engineers and technicians apply the knowledge they have developed through formal
training and over time form experience while at the same time enhancing their skills and
capabilities through the project Such knowledge-intensive companies are dependent on
their employee based knowledge resources However neither BampO nor Crisplant have a
separate strategy for knowledge management Instead the analysis stresses the
importance of knowledge management being an integrated part of the companiesrsquo
processes and management activities trying to create an organizational culture which
encourages development sharing and anchoring of knowledge to support the main
strategic goal they each have
41 Knowledge management in Bang amp Olufsen
Knowledge management in BampO focus on interactions where employees meet across
departments and enter into a dialogue where creative ideas are being conceived new
knowledge generated and existing knowledge disseminated in the organization BampO is
169
dependent on tacit knowledge or unique competencies such as employees that have ldquoa
pair of good earsrdquo as it was expressed by a project manager which are able to hear
precisely when a loudspeaker or an amplifier sounds correct Such knowledge is very
difficult to transfer as explicit knowledge Instead BampO is committed to the fact that
knowledge transfer takes place through close cooperation where competences are
disseminated in the organization
The development processes are built around key personsrsquo unique knowledge resources
in a way that makes it difficult for competitors to imitate BampOrsquos products To
disseminate the specialist knowledge it is in the interviews stressed that it is important
that it is communicated to the organization that these lsquoknowledge keepersrsquo are available
It must be known who possess specific types of knowledge so that instead of being a
hidden resource the individual key persons become an available resource to be relied on
all over the organization A manager at BampO explains
hellip we have a culture in the development division where everybody walks around and talks to everybody about the problems they encounter hellip when an employee is designing something the person knows that he needs to go and talk to a specific colleague because the colleague knows something special about this And then he does so and they have a chat about it So we sense that in most cases there is free and open access to all the knowledge available via you could say personal contact
In this situation the sharing of knowledge is enabled by the autonomy that employees
are granted by management similarly to what Oshri et al (2005 p 16) found in a case
study of knowledge transfer in a multiple-project environment Further key employeesrsquo
expert knowledge is made available to the organisation by holding a large number of
internal courses at BampO where the employees teach each other
However explicit knowledge is also decisive to BampO because aside from the tacit
knowledge which is being applied in the development processes explicit and codifiable
knowledge is also applied to a great extent in all development projects It may both be
knowledge which is unique to BampO and at the same time it may be knowledge which
in principle is available on the world market To capture knowledge BampO uses the
TOP-model an adopted version of Cooperrsquos (2001) stage gate model in all
170
development projects In practice it means that when the first phases of a development
project (physical proximity and face-to-face contact) is completed only a few people
the quality people are responsible for making sure that knowledge is shared both in the
individual project and across projects
In addition to this BampO has strict documentation requirements during the development
projects due to the companyrsquos ISO-certification the internal strategies for knowledge
sharing and to make it possible to reuse earlier developed elements in future products
similar to what Tsai (2001) demonstrated in a study where transferring knowledge from
one base project to other projects enhances organisational innovation and performance
BampO thus appear to be very conscious about the importance of documentation and it is
attempted to extend the documentation activities further so that the company may reuse
more knowledge and thus reuse more solutions by building up modular products
42 Knowledge Management in Crisplant
All project activities in Crisplant are from development over production to
implementation project-organized and are run according to Crisplantrsquos project
management tool Crisplant Project Management Model (CPMM) which is an adopted
version of a state gate model (cf Cooper 2001) Due to the nature of the customer
specific solutions the context is somewhat similar to the construction industry where
eg Bresnan et al (2003) emphasise that organisations face substantial obstacles to be
overcome in ldquocapturing knowledge and in re-cycling of project based learning that
steam form the relatively self-contained idiosyncratic and finite nature of project tasksrdquo
(ibid p 158)
Crisplant develops solutions with a high degree of customization the individual projects
are very different and the composition of project teams takes place more on the basis of
employeesrsquo competencies than on the basis of specific technical components which
must be included in the project Thus knowledge management has to focus specifically
on employees and as a consequence the development sharing and anchoring of the
accumulated knowledge is an integrated part of the companyrsquos way of working
171
Crisplant says ldquoIt is natural for us to live by having knowledge and trying to give our
customers value through a continuous development and creative use of our knowledgerdquo
Thereby knowledge management becomes an integrated part of the management
activities influencing the organizational culture and supporting the overall main
strategic goals A manager at Crisplant furthermore says ldquoKnowledge management is
about presenting favourable conditions for the creative process of the individual in
cooperation with others and hence set the knowledge resources of the company at playrdquo
But Crisplant also uses a range of IT-tools for supporting the creation and transfer of
knowledge Like many other companies Crisplant has an extensive intranet which may
potentially play a role in codifying explicit knowledge and in lsquostoring and distributingrsquo
knowledge But the intranet is mainly used for the distribution of news creating a
possibility for the employees to be updated with the companyrsquos activities and as such it
does not constitute an essential part of Crisplantrsquos knowledge management
Standardized and codified knowledge is however of importance in relation to
documenting the experience from the separate development phases By codifying and
collecting knowledge in progress reports drawn up by the project leaders each month
Crisplant is however of the opinion that it is the employeesrsquo tacit knowledge which is
essential for the companyrsquos progress and growth Accordingly the Managing Director
explains that the work with eg the companyrsquos intranet is more expressing a wish for a
general IT-competence development among the staff to be able to respond to future
technological requirements from co-operators than it is due to a direct knowledge
management strategy
Crisplant is convinced that the informal knowledge sharing taking place daily as ldquoface-
to-facerdquo contact is by far of greatest strategic importance Crisplantrsquos management thus
attempts to make the frames for knowledge sharing and knowledge creation available by
focusing on teamwork in the project organization and by integrating a dialogue-based
company culture that cultivates trust norms and shared values where projects take the
character of communities of practice (Brown amp Duguid 1991 2001)
The manager responsible for organisational development explains that the day-to-day
knowledge sharing and knowledge creation to a wide extent is expressed through the
work with CPMM as well as a continuous focus on creativity in all processes To
172
improve creativity Crisplant works intensely with a model named internally as the
lsquoCreative Working Modelrsquo (CWM) This model facilitates the process at all levels from
structuring a project over the way a certain meeting is structured to how the individual
employees structure their working day
The CWM consists of five phases A seeing phase which focus on dialogue about
expectations with regard to the final goal and thus which objectives must be obtained to
reach the overall goals for the task or project Following this comes the idea phase
where it is established how the objectives and goal should be obtained The third phase
is the planning phase which is carried through in interaction with Crisplantrsquos Project
Management Model When the planning is done the project participants begin carrying
out the things as the fourth phase and subsequently the project group goes into a seeing
again phase where the course of events is evaluated and the project team learns from its
experiences
43 Knowledge Management as Project Management
BampOrsquos product development division as well as Crisplant are organized as project
organizations Competent efficient and reliable projects implementation is decisive for
business success in BampO as well as Crisplant For several years both companies have
applied a project management model inspired by Cooperrsquos so-called lsquostage gate modelrsquo
(Cooper 2001) The adoption of the model is denoted the Crisplant Project Management
Model and the TOP-model at BampO
At Crisplant the purpose of working with the Stage-Gate model is to establish ldquoa
common set of rules for project control management and execution internally as well as
in cooperation with customers suppliers and other partnersrdquo (Crisplant 1999 p 4) In
the product development division at BampO the Stage-Gate model has a more direct role
as knowledge management tool as it is continuously adjusted according to the
experiences from different product development projects At BampO the Stage-Gate
model thus functions as a dynamic model where knowledge is accumulated and later
disseminated through the application in the individual projects
173
Each phase of the Stage-Gate models ends with a lsquogatersquo In this connection the project
managers of both companies prepare a gate report on the status of the project both with
regard to progress and budget At the same time often major replacement among
employees takes place in between the individual phases and therefore a gate also
represents a critical point in relation to knowledge management as knowledge needs to
be transferred from one team to another
With respect to knowledge creation Crisplant focuses on how knowledge is collected
stored and passed on in each phase of the project through extensive documentation
requirements BampO works with similarly high documentation requirements in its
projects At the same time at BampO the awareness of the value of face-to-face
knowledge transfer along the way are very present the method manager in BampO
expresses it in the following way
hellip it is not such an lsquoover the wallrsquo-transfer taking place at each individual gate It is not the documentation that ensures knowledge transfer in the projects hellip it is only because people talk together and that we agree on how things should look that it works hellip it is not due to our documentation
Furthermore Crisplant emphasizes the metaphorical importance of a gate symbolizing a
door which closes at the completion of a phase while a new one opens to the next phase
and the future However like BampO Crisplant is aware of that not all types of
knowledge can be passed on in written-down documentation
Both companies apply pre-determined checklists which the project manager goes
through and on that basis he prepares a phase report after each individual phase of the
Stage-Gate model These phase reports are saved and used eg when the project
management tool is being updated At the end of a project a project evaluation meeting
is held at both Crisplant and BampO where the projectrsquos experiences good as well as bad
are collected in a final report
174
5 Knowledge Management in Perspective(s)
In the following two subsections project management of the two companies are
analyzed according to the two epistemological perspectives on knowledge management
the artefact oriented and the process oriented Hereby it is illustrated how the
presentation and the perception of knowledge management depend on the
epistemological starting point
51 Artefact-Oriented Epistemology
As a part of BampOrsquos codification strategy artefacts in the form of process
documentation product specifications development documentation etc are pointed out
as an essential element of the knowledge management activities At Crisplant such
documents also form an important part of the knowledge collecting process which the
then Managing Director expressed in this way
hellipAs we work out a concept proposal and a solution to our customer we document the thoughts and ideas we have concerning the solution to a specific project Thus the knowledge stays in the company so to say ndash because it has been taken down in writing
From this perspective knowledge is in both companies about writing and documenting
in order that the company may be capable of leaning on previous project descriptions
etc when new quotations are given and on the whole when working on the projects
Thus the project management systems function as a repository for routine solutions
where explicit knowledge can be reused (cf Markus 2001 p59)
If knowledge management is illustrated based on an artefact-oriented epistemology the
essential elements of the knowledge of both companies would be all the documents and
reports written down concerning the companyrsquos procedures and processes the project
management models and quality control systems in both companies IT-tools used in the
company such as intranet budget control systems databases administrative systems
etc support the collection storage and distribution of the formalized knowledge which
is the focal point of the artefact-oriented epistemology
175
Within the artefact-oriented epistemology knowledge management is thus focused on
the types of knowledge which may be explicated formalized and ultimately codified
Project management in the two companies appear to consist of more or less the same
components From a pure artefact oriented perspective knowledge management is
ensured by having these suitable systems The artefact oriented knowledge management
is about consistent documentation of development activities via Stage-Gate-models
quality management and data collection at both BampO and Crisplant In the artefact
oriented perspective there is much less focus on the context in which the knowledge
was created as the underlying assumption is that the knowledge can be re-used even
though the context in which it was created is less explicit
52 Process Oriented Epistemology
Knowledge management seen through a process-oriented epistemology (with emphasis
on the SECI model) is apparent in both BampO and Crisplant It may be illustrated by the
fact that the companies besides anchoring knowledge through process reports Stage-
Gate models and quality control systems are focusing on the personal relations
Crisplant uses the CWM to support the transfer of knowledge between project phases in
the stage gate model and BampO works with mentor arrangements and works hard on
creating a dialogue-based culture By sharing knowledge across the organizations the
companies attempt to internalize knowledge into more persons
At Crisplant the process-oriented epistemology is predominant in the work with the
CWM which structures the processes and becomes instrumental for creating sharing
and internalizing knowledge At both BampO and Crisplant the socialization phase is also
stressed by attaching importance to project teams meeting physically because this is the
way to share opinions values and knowledge and to obtain a common framework of
understanding
The externalization phase should be understood as the process where the employees
express their ideas Here Nonaka et al (2000) stresses that the use of images
metaphors analogies etc may help the employees to express a point without really
being able to explain it This is what happens in the idea phase of the CWM at
176
Crisplant When all thoughts and ideas have been aired and placed on the boards it is
important that they are combined and reduced in order to make a realistic plan for the
development of the project Therefore the ideas from Crisplantrsquos idea phase and BampOrsquos
development department are both incorporated in the companiesrsquo Stage-Gate models
which structure the development of the projects This is the equivalent of what takes
place in Nonakarsquos combination phase in the SECI-model
The internalization phase is the last phase of the SECI-model where the objective is to
embody common guidelines goals and objectives corresponding to Crisplantrsquos
executing phase in their CWM and the phases in the companiesrsquo Stage-Gate models
where the products are actually developed and installed at the customers site At this
stage experiences are gained from the project in hand and as far as possible these
experiences will also be incorporated in the stage gate model in order to be available for
later project
As knowledge sharing in Crisplant builds mainly on the Creative Working Model the
personification strategy is predominant in Crisplantrsquos knowledge management activities
Although documentation was emphasised by the managing director because knowledge
stays in the organisation when it is written down (see above) this from a process
oriented perspective does not mean that it is the capacity to document and codify that is
the essential feature Rather the project management systems in combination with the
CWM facility interaction
BampOrsquos knowledge management strategy is not as clear as it involves more elements
from both the codification strategy and the personification strategy In the same way as
Crisplant BampO acknowledges the importance of face-to-face communication but in
BampO it is more a question of making the structures and frameworks available to the
organisation thus leaving it to the initiatives of the employees to communicate when
needed Thus the experiences from BampO is in line with Keegan amp Turner (2001) who
in an study of learning across project found that the informal networks within
companies are the most important conduit for transferring knowledge between projects
(cf Sense 2007)
Damodaran amp Olphert (2000) as well as Edwards et al (2005) have argued that in
general a push-strategy ie when information and knowledge are lsquopushedrsquo through to
177
the potential users is less effective than a pull-strategy which is based on creating a
basic organizational culture and context which encourage organizational learning ndash and
where the employees have access to knowledge when needed From this point of view
Crisplant uses a form of push-strategy while similarly BampO uses a pull-strategy to
implement knowledge sharing through physical meetings However it is another form
for push than in Damodaran amp Olphertsrsquo terms when a process oriented epistemology is
adopted as it is the organizational structures and frames that are lsquopushedrsquo to the
employees
The ideal context of knowledge creation and sharing depends on the type of knowledge
For instance both BampO and Crisplant find it important that a project team meets
physically in the initial phases where the objective is to express thoughts and ideas
concerning the project At BampO the product development begins in Idea Land where a
group of designers are seated closely together Later in the construction phases physical
proximity is not imperative to the same degree
Following the process oriented epistemology both tacit and explicit knowledge and not
least the interplay between the two knowledge types are in focus From a process
oriented perspective it is the first two phases of the SECI model (Socialization and
Externalization) which differs the most between the two companies whereas the last
two phases (Combination and Internationalization) are more similar in the two
companies In the Combination phase knowledge management is primarily centred on
working with the Stage-Gate models and in the Internalization phase the specific
development work is conducted Contrary to BampO Crisplant still give priority to
physical proximity in the last phase as Crisplant focuses on a common internalization
phase for the group in preference to the individual
6 Concluding Remarks
Authors like Roos and von Krogh (1995 p1) have argued that the way we understand
knowledge depends on the existing knowledge and the basic assumptions we bring
along This means that whether we are researchers observing knowledge management in
action or practitioners involved in the management of knowledge our understanding of
178
knowledge and knowledge management will be in subjective term This understanding
or at least what knowledge management means to the individual the group or
organization is important because it as argued be von Krogh and Roos (1996) implies
that successful knowledge management requires that you relate to lsquothe nature of
knowledgersquo (von Krogh amp Roos 1996 p 234)
Therefore knowledge management becomes a question of epistemological
understanding By giving a multi-faceted view of knowledge management based on the
two different epistemologies this article illustrates how different epistemological points
of departure are essential to the way we lsquoseersquo and thereby think and act Generally it is
a way of illustrating how we are all more or less limited by our own existing
knowledge We are subconsciously controlled by our framework of reference and
understanding but the more conscious we become of this and the more we acknowledge
it the more we will be able to overcome these limitations and thus achieve a more
nuanced view of existing management activities
The analysis illustrated how the content of knowledge management differs depending
on the underlying epistemology It makes demands on the manager as conscious
reflection in relation to initiatives as the possibility that another departure implies
another decision becomes part of the decision process However in practice an
understanding of different perspectives will give a company a more nuanced picture of
the organization knowledge and management thereby expanding the optics which is
used for identification of potentials or any problems in relation to the management of
knowledge
In the analysis of the knowledge management activities in Crisplant the process oriented
epistemology was clearest The sharing of knowledge is encouraged by initiatives
where the employees physically are seated in relation to the projects to enable lsquoroomrsquo
for communication In addition to this other knowledge management initiatives become
visible eg in relation to collection of data and experiences from the projects when the
departure is the artefact oriented epistemology All this support the personification
strategy (cf Hansen et al 1999) where tacit and human interaction plays a crucial role
Knowledge management in BampOrsquos is also most obvious if departing in the process
oriented epistemology but the concrete initiatives are mainly based on methods which
179
are best understood from the artefact oriented epistemology For instance this is
expressed by the higher priority continuous documenting and updating of the models
are given in BampO compared to Crisplant In practice both tacit and explicit knowledge
are of more or less equal significance in BampO which mean that the company tries to
combine the personification and codification strategy
BampO finds the tacit knowledge which exists in the organization of great strategic
importance and therefore they try to distribute it in the organization through eg
mentoring close relations across departments and dialogue-based culture At the same
time codifiable knowledge is paid considerable attention at BampO which is best
expressed through the work on currently updating the dynamic stage-gate model
It can not generally be stated when a given strategy should be used as it is very
company specific When a companyrsquos competitive advantage are mainly to be found in
reuse of existing solutions which for example are put together in a new way or the
possibility for lsquomass productionrsquo of a new product The more standardized solutions a
company offers the more it points in the direction of the codification strategy and
thereby a knowledge management strategy departuring in the artefact oriented
epistemology or the process oriented epistemology supported by the artefact oriented
Otherwise when a company provides more customized solutions it points in the
direction of the process oriented epistemology and primarily knowledge management
initiatives based on this epistemology and thereby the personification strategy An
important thing is to notice that the epistemologies are supportive and not exclusive
If significant importance is attached to epistemological assumptions heavier demands
are to a certain extent placed on the manager It is no longer sufficient lsquoonlyrsquo to act and
make decisions because conscious reflection in relation to own acts and the opportunity
to take another point of departure involving another decision becomes part of the
decision process The reflective manager must be familiar with different epistemologies
as mentioned by Venzin et al (1998 p 36) as it provides a much larger managing
scope and ensures a better understanding of the limitations to the various sets of
actions More effective knowledge management may result from adapting management
tools that fit the prevailing perception of knowledge The more the organization focuses
180
on knowledge the more important it becomes to understand the epistemological
implications
7 References
Blackler F (1995) Knowledge knowledge work and organizations An overview and
interpretation Organisation Studies 16(6) 1021-1041
Bresnen M Edelman L Newell S Scarbrough H and Swan J (2003) Social practices
and the management of knowledge in project environments International Journal of
Project Management 21(3) 157-166
Brown JS and Duguid P (1991) Organizational learning and communities-of-practice
Towards a unified view of working learning and innovation Organization Science
2(1) 40-55
Brown JS and Duguid P (2001) Knowledge and organisation a social practice
perspective Organization Science 12 198-213
Cooper RG (2001) Winning at new products Perseus Cambridge MA
Crisplant (1999) Crisplant Project Management Model (In Danish Faseplan for
projektgennemfoslashrelse paring Crisplant)
Damodaran L and Olphert W (2000) Barriers and facilitators to the use of knowledge
management systems Behaviour and Information Technology 19(6) 405-413
Edwards JS Shaw D and Collier PM (2005) Knowledge management systems finding
a way with technology Journal of Knowledge Management 9(1) 113-125
Eisenhardt K (1989) Building theories from case study research Academy of
Management Review 14(4) 532-550
Hansen MT Nohria N and Tierney T (1999) Whatrsquos your strategy for managing
knowledge Harvard Business Review 77(2) 106-116
Huber G (1991) Organizational learning the contributing process and the literature
Organization Science 2(1) 88-116
181
Jackon P and Klobas J (2007) Building knowledge in projects A practical application
of social constructivism to information systems development International Journal of
Project Management (fortcoming)
Keegan A and Turner JR (2001) Quantity versus quality in project based learning
practises Management Learning 32(1) 77-98
Kaumlrreman D Alvesson M and M Blom (2004) Knowledge Management and
raquoOrganisational Memorylaquo ndash Remembrance and Recollection In a Management
Consultancy Company In Knowledge management establishing a field of practice
(Bukh PN Christensen KS and Mouritsen J eds) pp 124-148 Palgrave Macmillan
Houndsmill
Leonard D (1995) Wellsprings of Knowledge Building amp Sustaining the Sources of
Innovation Harvard Business School Press Boston MA
Lyles M and Schwenk C (1992) Top management strategy and organizational
knowledge structures Journal of Management Studies 29(2) 155-74
Malone TW Crowston K Lee J and Pentland B (1993) Tools for inventing
organizations toward a handbook of organizational processes In Proceedings of the
2nd IEEE Workshop on Enabling Technologies Infrastructure for Collaborative
Enterprises Morgantown WV
Markus L M 2001 Towards a theory of knowledge reuse Types of knowledge reuse
and factors n reuse success Journal of Management Information Systems Vol 18
No 1 pp 57-93
Marr B Gupta O Pike S and Ross G (2003) Intellectual capital and Knowledge
management effectiveness Management Decision 41(8) 711-781
Meyer MH and Utterback JM (1993) The product family and the dynamic of core
capabilities Sloan Management Review 34(3) 29-38
Mouritsen J Larsen HT and Bukh PN (2001) Intellectual Capital and the Capable
Firm Narrating Visualising and Numbering for Managing Knowledge Accounting
Organisations and Society 26(7) 735-762
Nonaka I (1994) A Dynamic Theory of Organizational Knowledge Creation
Organization Science 5(1) 14-37
182
Nonaka I and Takeuchi H (1995) The Knowledge-creating Company Oxford University
Press Oxford
Nonaka I Toyama R and Konno N (2000) SECI Ba and Leadership a Unified Model
of Dynamic Knowledge Creation Long Range Planning 33 5-34
Oshri I Pan SL and Newell S (2005) Trade-offs between knowledge exploitation and
exploration activities Knowledge Management Research amp Practice 3 10-23
Prahalad CK and Hamel G (1990) The Core Competence of the Corporation Harvard
Business Review 68(3) 79-88
Roos J and von Krogh G (1995) What you see depends on who you are Think about
epistemology IMD Perspectives for Managers 7 1-4
Sense AJ (2007) Stimulating situated learning within projects personalizing the flow of
knowledge Knowledge Management Research amp Practice 5 13-21
Tsai W (2001) Knowledge transfer in intraorganizational networks Effects of network
position and absorptive capacity on business unit innovation and performance
Academy of Management Journal 44(5) 996-1004
Tsoukas H (1989) The validity of idiographic research explanations Academy of
Management Review 14(4) 551-61
Tsoukas H (1996) The firm as a distributed knowledge system A constructionist
approach Strategic Management Journal 17 11-25
Tsoukas H and Vladimirou E (2001) What is organizational knowledge Journal of
Management Studies 38 973-993
Venzin M von Krogh G and Roos J (1998) Future research into knowledge
management In Knowing in Firms Understanding managing and measuring
knowledge (von Krogh G Roos J and Klein D eds) Sage London
Von Krogh G and Roos J (1995) Organizational Epistemology Macmillan London
Von Krogh G and Roos J (1996) Managing Knowledge Perspectives on Cooperation
and Competition Sage London
183
PART IV
184
185
CHAPTER 10
Findings and Perspectives
It has been argued in both the media and various reports that intrapreneurship might
be the key to making established organisations more innovative The emphasis on
intrapreneurs and particularly intrapreneurship is a challenge because on the one
hand intrapreneurship is a liberating force that allows individuals to master their
ideas and on the other it is part of a lsquoproduction functionrsquo in corporate life where
individuals are subordinated to the requirements of organisational interests The
practice of intrapreneurship is therefore somewhat paradoxical because in a sense it
requires individuals to subordinate themselves to organisational concerns that they
will have to master reflexively
As this dissertation has shown the concept and tools of intrapreneurship can be used
under a variety of circumstances in the area of management Intrapreneurship can be
applied to the organisation with a focus on corporate ventures internal resources and
internationalisation (Chapter 4) In relation to mergers or acquisitions the conversion
of entrepreneurship to intrapreneurship can be of central concern (Chapter 6)
Intrapreneurship can also be approached from a managerial perspective relating to
how various intrapreneurial mechanisms can be screwed up and down (Chapter 7)
These enablers have been shown to be differ between traditional industrial companies
and knowledge-intensive companies so understanding intrapreneurship from a
knowledge (management) perspective is crucial since it is the knowledge resource
that has been lsquomanipulatedrsquo in modern companies not physical products (Chapter 8)
186
If we look at the activities covered by intrapreneurship in more detail (eg as outlined
in Chapter 4) we can see that intrapreneurship not only provides a set of new
management tools and techniques but also the application of well-known
management techniques in new combinations often facilitated by the use of
innovation management and knowledge-management tools (as illustrated in Chapter
8 and 9)
The focus of this dissertation has been on the entrepreneurial aspects of the
organisation as well as activities processes and projects within organisations rather
than on the individual entrepreneur starting a new firm In this respect the
dissertation has followed Gartnerrsquos (1988 1989) suggestion of a change in focus
from the intrapreneur as a person to intrapreneurship as a process When
intrapreneurship is seen as a process it does not require the implementation or
exploitation of one particular technology or technical instrument Rather it
encourages more elements to work in concert But if intrapreneurship is a process
located within and between people processes and technologies how does
management know that lsquosomethingrsquo is worth exploring and how can it intervene to
enable and support intrapreneurship
However while may be of vital concern to many companies this dissertation has not
tried to answer the question of how management knows when lsquosomethingrsquo is worth
exploring The strategic entrepreneurship literature has touched on this by integrating
company initiatives that research shows to be relevant to the creation of wealth Thus
according to Hitt et al (2002 p 13) ldquostrategic entrepreneurship facilitates firmsrsquo
efforts to identify the best opportunities (matched to their resources and with the
highest potential returns) and to exploit them with the discipline of a strategic
business planrdquo This is definitely an area for further research
187
101 ELEMENTS OF THIS DISSERTATION
The chapters of this dissertation contribute to the mosaic of intrapreneurship as a
developing field The study has explored intrapreneurship from an internal resources
perspective (see Chapter 4) From this point of view the aim of intrapreneurship is to
identify previously undiscovered resources in the organisation or combine existing
resources in new ways that make them valuable innovations and thereby create new
organisational wealth (see for example Ireland et al 2001 Alvarez amp Barney
2002)
The aim of this section is to discuss the results of the five articles in relation to the
research question and their contribution to the intrapreneurial debate The overall
research question is the exploration and exploitation of internal resources with
respect to intrapreneurship while the overall aim of the dissertation is to study the
intrapreneurial potential in its natural settings
The five articles in this dissertation are related in the sense that they study
intrapreneurship intrapreneurial enablers and intrapreneurial management Figure
101 illustrates how the five articles are related to the intrapreneurial framework
developed in the first article (chapter 4)
188
Figure 101 Relation of the articles to intrapreneurship
In the first article intrapreneurship was placed within the wider scope of corporate
entrepreneurship Based on this intrapreneurship has been defined and a framework
for discussing intrapreneurship has been developed The second part of the
dissertation which took a starting point in the internal resource perspective
attempted to identify the mechanisms behind intrapreneurial opportunities in a
company based on its existing resources
The study of intrapreneurship in terms of innovation and enabling factors has been
based on case studies The second article discussed the change from entrepreneurship
to intrapreneurship and how this has influenced innovativeness and related issues in
a specific company The third article examined various factors which can enable
Corporate Entrepreneurship
Intrapreneurship ExopreneurshipEntrepreneurship
CorporateVenture
InternalResources
Internationa-lization
Enablers
1
2
3
Innovation
4
5
Knowledgeresources
189
intrapreneurship across the different organisational perspectives Article four and five
focused on one specific resource the knowledge resource and how it can be
managed with respect to intrapreneurship
102 MAIN POINTS AND CONTRIBUTIONS
This section will discuss the findings and contributions of the dissertation The aim of
the dissertation has been to contribute to the field of intrapreneurship and provide
managers in knowledge-intensive companies with managerial tools to influence the
level of intrapreneurship
The first contribution was the framework for discussing corporate entrepreneurship
presented in article 1 This shows how organisations utilizing corporate
entrepreneurship have to choose between different organisational opportunities
Based on the framework in article 1 the second contribution is that a clear distinction
between corporate entrepreneurship and intrapreneurship has been made These
concepts have been used interchangeably in the literature and still are Although the
basic ideas underlying the two concepts are similar both focusing on innovativeness
in established companies intrapreneurship takes place within the boundaries of the
firm whereas corporate entrepreneurship also takes place across organisational
boundaries This demonstrates the importance of the boundaries of the firm
The third contribution of the dissertation is that it demonstrates how an acquisition
strategy as a way for mature organisations to gain access to innovativeness and new
knowledge resources can easily fail Article 2 shows that the success of an acquisition
not only depends on retaining key employees Even though the competencies of the
acquired organisation are formally intact efforts are also needed to make the energies
of the two organisations act together and create a new intrapreneurial part of the
company Unless managers actively take part in facilitating an intrapreneurial spirit
190
then the acquired entrepreneurial part of the organisation will slowly stifle The
fourth contribution as demonstrated in articles 2 and 3 is that access to end
customers is an important driving force both in relation to innovativeness and to
preserving the entrepreneurial spirit
The fifth contribution in article 3 is an increase in the number of factors ndash from five
to eight ndash that need to be taken into account when enabling intrapreneurship The five
factors most often mentioned in the literature ndash rewards top management support
resources organisational structure and tolerance of risk ndash are not always sufficient to
encourage intrapreneurship in a knowledge-intensive company Employees in
traditional industrial companies and knowledge-intensive companies are likely to be
motivated in different ways This means that the enabling factors are different and
what may be an enabling factor in a traditional industrial company may only be
perceived as a basic or sustaining factor in a knowledge-intensive company
Thus article 3 has argued that communication ie the creation of a common
language culture in a broad sense and processes that support innovativeness should
be added to the original five factors enabling intrapreneurship With respect to
enabling factors a sixth contribution of the dissertation is a distinction between basic
and influencing factors since not all factors directly encourage intrapreneurship
although some are necessary in order to create an intrapreneurial climate
The seventh contribution is the framework for intrapreneurship presented in article 4
The framework defines the task of intrapreneurship as a combination of three
situations involving innovation management ndash exploitation sustainable change and
disruptive change ndash and the learning-related concepts of exploitation and exploration
Six sub-tasks the solution to which are based on the complexity of knowledge and
learning are derived from the framework
191
The eighth contribution of the dissertation appears in article 5 where an analysis of
knowledge management in two companies from the point of view of
intrapreneurship shows different aspects of how activities are practiced It is shown
how the different epistemological starting points of departure are essential to the way
we lsquoseersquo and thereby also how we think and act By applying these perspectives it is
emphasized how intrapreneurship can be enabled from a knowledge-management
perspective The ninth contribution of the dissertation is the indication that a
company should also take epistemological aspects into consideration when designing
organisational structures aimed at enabling intrapreneurship If the aim is to facilitate
intrapreneurship and an intrapreneurial spirit the company should base its activities
on process-oriented initiatives while these should be supplemented by artefact-
oriented initiatives if the aim is to streamline production and explore existing
resources
103 SYNTHESISING THE CONTRIBUTIONS
The dissertation presents two frameworks An overall framework for exploring and
discussing intrapreneurship (article 1) and a framework for exploring
intrapreneurship and innovation in light of knowledge and learning (article 4) Based
on the classification in the overall framework it was decided that the rest of the
dissertation would take a starting point in the internal resource perspective This
section attempts to provide a synthesis of the articles and their contributions to the
literature as described in the previous section This synthesis takes a starting point
especially in the framework developed in article 4
As the case studies showed the classification outlined in the framework was not only
theoretical but was also applicable in practice For instance Danfoss Drives had
actively used the organisational structure to enable intrapreneurship in the form of
corporate ventures internationalisation and formal networks (article 3) Other case
192
companies eg Bang amp Olufsen and Ericsson Telebit also had a similar
organisational structure albeit not as explicit Article 3 also found that the internal
organisation in Danfoss Drives had been organised to encourage innovation and the
creation and dissemination of knowledge which is characteristic of the internal
resource perspective as described in article 1 and which was the focus of article 4
and 5
The classification is applicable in both traditional industrial companies and
knowledge-intensive companies although this dissertation has focused on the latter
As described in chapter 4 the main difference between intrapreneurs in the two types
of companies is that in knowledge organisations they manipulate knowledge rather
than physical products and technologies
These two types of employees are different in nature which means that their
motivation might stem from different factors Managers in knowledge-intensive
companies therefore need other mechanisms to fine-tune the level of intrapreneurship
compared with managers in traditional companies Article 3 examined various
enabling factors with a potential to influence the level of intrapreneurship and found
that although not all factors directly encourage intrapreneurship some are necessary
in order to create an intrapreneurial climate The five enablers ndash rewards top-
management support resources organisational structures and risk ndash which seem to
be significant in traditional industrial companies (Hornsby et al 1993 Kuratko et
al 1990) are found insufficient to fine-tune the level of intrapreneurship in
knowledge-intensive companies
Metaphorically speaking the basic factors can be seen as a thermostat (see article 4)
which is programmed to detect whether the surrounding temperature is above or
below the reference temperature and which responds by simply turning the heat up
or down This means for example that if wages are below minimumaverage wages
193
they can be regulated accordingly Or if insufficient resources are assigned to a
project more resources can be allocated The basic factors can thus be related to
single-loop learning (Argyris and Schoumln 1996) inasmuch as this is mainly a question
of detecting a mismatch and regulating the factors involved until the intrapreneurial
activities are back on track
The intrapreneurial factors found in article 3 are more complex since they require an
active effort and to some extent challenge existing values with regard to innovation
Following the thermostat metaphor and the requirements for entering into a double-
loop learning mode as was also discussed in article 4 the three intrapreneurial
factors take on a new significance For example communication can be seen as an
intrapreneurial factor which encourages the questioning of existing values
Communication can lead to innovation-stimulating discussions and the sharing of
ideas and knowledge resources and can potentially result in a challenge to the
existing values of the organisation which may otherwise be an obstacle to
innovation
Following Argyris and Schoumln (1996) it was further argued in article 4 that single-
loop learning is appropriate for routine and repetitive issues while double-loop
learning seems more relevant for complex and non-programmable tasks This
supports the findings from article 3 that there is a need for other enabling factors in
knowledge-intensive companies than those in industrial companies It also indicates
that basic enablers are easier for managers to use because they can influence them
directly Conversely intrapreneurial enablers can only be influenced indirectly
An insight into these intrapreneurship-enabling factors might be of help to the
managers of an acquiring company eg the acquisition example examined in article
2 While it is often argued that top management should be actively involved in
acquisition processes the factors identified in article 3 show more specifically what it
194
takes to avoid stifling the entrepreneurial spirit in the acquired company One of the
employees from the case company Ericsson Telebit expressed this clearly with
respect to the acquisition of innovativeness ldquoIt is an illusion to believe that you can
take a small creative and innovative company and integrate it into a larger one ndash it is
uphill most of the timerdquo (article 2) It was also shown in article 2 that managers can
be the biggest obstacle to intrapreneurs since a single wrong decision can kill a
project before it gets started Furthermore the interviews reported in article 2 also
indicated that managers can be the worst enemy of ongoing projects too
New ideas and innovative activities will at some point normally acquire the nature
of a project Thus the management of projects and the sharing of knowledge through
the various phases of a project is just as crucial to intrapreneurship as it is to project
management Projects thus often serve as a ldquoframerdquo for innovative activities which
makes project management an important issue in intrapreneurship Article 5 showed
how knowledge management can be a significant managerial tool in project
management It also showed how the use of additional perspectives can enable
knowledge management to advance mutual understanding in the organisation and
make it easier to create and share knowledge Article 5 thus also shows how
intrapreneurship is best enabled in the specific situation
However in the light of the framework in article 4 it also depends on the complexity
of knowledge that intrapreneurs need to manipulate Again this is supported by the
findings in article 3 which showed that enabling factors in industrial companies are
insufficient to encourage intrapreneurship in a knowledge-intensive company
Finally returning to the research questions outlined in section 232 as explained
above article 1 addressed the first research question by clarifying the difference
between corporate entrepreneurship and intrapreneurship and by defining
intrapreneurship as entrepreneurship within the boundaries of the firm The
195
classification offers three organisational perspectives through which intrapreneurship
can be explored starting up a corporate venture using existing internal resources
and internationalisation This theoretical classification is supported by the
organisational structure in Danfoss Drives which is outlined in Chapter 7
The second research question is concerned with how intrapreneurship is influenced
by various factors and crucially if and how it can be influenced by management and
the rest of the organisation Question 2a was discussed in article 2 which showed that
acquiring innovativeness requires the active effort of management both to maintain
innovativeness and to overcome organisational inertia which are often characteristic
of mature organisations The active use of both extrinsic and intrinsic factors is
needed if an entrepreneurial spirit is to be converted into an intrapreneurial spirit
Research question 2b which was addressed in article 3 deals with factors that are
likely to influence intrapreneurship It was suggested that factors known to be
influential in traditional industrial companies ie rewards management support
resources organisational structure and risk are perceived as basic factors only in
knowledge-intensive companies whereas communication culture and processes are
perceived as intrapreneurial factors In general therefore in knowledge-intensive
companies extrinsic factors can be said to be basic factors while intrinsic factors are
more intrapreneurial Article 2 and 3 have offered two different views of how internal
resources can be influence by different extrinsic and intrinsic factors
The third research question is concerned with the relation between intrapreneurship
and the knowledge resources (article 4) Question 3a looked at how intrapreneurship
can be understood in light of knowledge management and article 4 developed a
framework for understanding the relation between intrapreneurship and knowledge
and the knowledge issues that should be taken into account ndash level of articulation and
the depth location and diffusion of knowledge ndash which together define the
complexity of knowledge Question 3b deals with the way in which the knowledge
196
resource can be managed with respect to intrapreneurship Article 5 demonstrated
how intrapreneurship can be enabled by taking a starting point in the process-oriented
knowledge-management perspective Together article 4 and 5 have showed that the
knowledge resource is of importance for intrapreneurship in knowledge-intensive
companies and that it should be addressed and managed based on its complexity
104 LIMITATIONS OF THE STUDY
The overall aim of the five articles has been to provide some answers to both the
overall research question ie exploration and exploitation of internal resources with
respect to intrapreneurship and how this has been influenced by the specific
organisation management managerial initiatives and employees of the organisation
the sub- questions in the three parts of the dissertation and the main question in each
article However due to the methodological choices made and the specific focus of
each article a number of limitations have to be taken into account if the synthesis
presented in the previous section is to be regarded as an overall conclusion
The obvious question is whether it is at all possible to say anything in general about
organisations management managerial initiatives and employees based on
literature reviews and a few case studies The immediate answer is probably not
However intrapreneurship is still a relatively young and unexplored field and the
purpose of this dissertation is just as much to identify areas that need further research
Of course the literature review only includes literature published before the article
was published in 2004 The body of knowledge is rapidly increasing with many new
studies being carried out and more articles and books being published This material
has not been taken into consideration when developing the framework in article 1
Furthermore the case-based articles are of course limited in the sense that they only
consider some of the relevant actors Only a few employees and managers have been
197
interviewed the interviews have not been carried out at multiple sites within the
organisation and the studies are snapshots in time Nor have customers or other
stakeholders been interviewed Doing so might have altered the conclusions in ways
that would not have been possible to control for in these articles and would have
necessitated another research setup
Specifically article 2 is subject to the limitation that it only focuses on employees
who have stayed with the acquired company Given the importance of the integration
phase new insights could be gained from following an acquisition more closely
regarding the attitudes both of those who stay and those who leave as well as of
employees at the acquiring company
Similarly article 3 only investigates one division of Danfoss The significance of the
factors that enable intrapreneurship could therefore gain from extending the study ndash
both to the whole company and to more companies both within the same industry
and in other industries In addition an expansion of the study in article 5 would
definitely increase generalisability
Besides these specific limitations of the articles a more general limitation is that it
was realised early in the research process that there were limited possibilities for
studying cross-sectional longitudinal phenomena since the companies included in
the KNORI project were so different and because changes within the companies also
meant changes in the research opportunities In retrospect more interviews over a
longer period might have given a more balanced view since it would have given
more room for longitudinal aspects of the research themes However it can only be
speculated what such interviews might have added In principle more comprehensive
data could have strengthened the conclusions by improving reliability On the other
hand more factors could be changing over time thus weakening the conclusions
198
With respect to possible generalisations the results would still be based on the same
number of observations represented by the companies in the KNORI project Thus I
have tried to make the most of the available possibilities given the context of the
project and my own absence due to two stays abroad and two maternal leaves I have
therefore framed the research issues in the specific articles without any attempt at
overall generalisation
105 REFERENCES
Alvarez SA amp JB Barney 2002 Resource-Based Theory and the Entrepreneurial
Firm In MA Hitt RD Ireland SM Camp and DL Sexton (eds) Strategic
Entrepreneurship Creating a New Mindset Oxford Blackwell Publishings pp 89-
105
Argyris C amp DA Schoumln 1996 Organisational Learning II Theory Method and
Practice Addison-Wesley Publishing Company
Gartner WB (1988) Who is an entrepreneur Is the wrong question American
Journal of Small Business Vol 12 pp 11-32
Gartner WB (1989) Some suggestions for research on entrepreneurial traits and
characteristics Entrepreneurship Theory amp Practice Vol 14 No 1 pp 27-38
Hitt MA RD Ireland SM Camp amp DL Sexton 2002 Strategic
Entrepreneurship Integrating Entrepreneurial and Strategic Management
Perspectives In MA Hitt RD Ireland SM Camp and DL Sexton (eds)
Strategic Entrepreneurship Creating a New Mindset Oxford Blackwell
Publishings pp 1-16
199
Hornsby JS DW Naffziger DF Kuratko amp RV Montagno 1993 An interactive
model of the corporate entrepreneurship process Entrepreneurship Theory amp
Practice Vol 17 No 2 pp 29-37
Ireland DR MA Hitt CM Camp amp DL Sexton 2001 Integrating
entrepreneurship and strategic management thinking to create firm wealth Academy
of Management Executive Vol 15 No 1 pp 49-63
Kuratko DF RV Montagno amp JS Hornsby 1990 Developing an intrapreneurial
assessment instrument for an effective corporate entrepreneurial environment
Strategic Management Journal Vol 11 No 1 pp 49-58
200
201
APPENDIX I
Case companies
In this appendix the case companies are described as they appeared at the time of
data collection ie in 2003 Since then some of the companies have gone through
major changes including reorganisations and different ownership and key employees
have left etc The companies would therefore look somewhat different today and
from a practical point of view access to them would also be different now In view of
this it was decided that a 2007-description of the companies would not be relevant to
this study
Below each of the companies is given a brief historic and financial description
followed by a short presentation of the different business models used One of the
main selection criteria for the study was to include a number of heterogeneous
companies Thus the first company is a subsidiary of a major electronics firm which
specialises in specific development projects while the second is a division of a large
industrial corporation The third company develops produces and sells electronic
goods while the fourth is a producer of large-scale sorting solutions for airports
postal services and industry The fifth is a network intermediator which specialises in
wireless solutions for the Internet Before going on to describe companies
individually a framework characterising five cases will be briefly presented
The cases for the study were selected on the basis of figure 31 (page 40) according
to which the companies obtain and improve knowledge internally and where renewal
was predicted to occur as described in the figure Another way used to categorise the
202
companies was Greinerrsquos (1972) life cycle model which was chosen for its wide
application especially in studies of company structures and strategies in a non-static
world A simplification of the model is shown in figure A1
Size of organi-zation
Large
Small
Age of organization
PHASE 1 PHASE 2 PHASE 3 PHASE 4 PHASE 5
Evolution stages
Revolution stages
1 Crisis of LEADERSHIP
5 Crisis of
2 Crisis of AUTONOMY
3 Crisis of CONTROL
4 Crisis of RED TAPE
1 Growth through CREATIVITY
2 Growth through DIRECTION
3 Growth through DELEGATION
4 Growth through COORDINATION
5 Growth through COLLABORATION
Young Mature
Figure A1 The five phases of growth (Greiner 1972 p 41)
Greinerrsquos life cycle characteristics were used as an overall framework to help
understand the different organisational challenges facing the companies in the study
This follows the hypothesis that age and history have a number of implications for
the innovation process The big difference in age and history ndash the youngest firm
having existed for only three years and the oldest for 88 years ndash was thus an
important factor in the study of innovation activities in the five companies
Since a company can be characterised by the products it makes theories about product
life cycles formed another important part of understanding a companyrsquos innovative
activities Tushman amp Nadler (1996) argue that the product life cycle has implications
for the type of innovation activities that dominates in certain periods This is illustrated
in figure A2
203
Emergence
Dominant Design
Growth
Mature
Major product Minor process
Major process Minor product
Minor product Minor process
Major product Minor process
Low High
Dominant Innovation Types
High HighLearning Requirement
ProductProcess Substitution
Figure A2 Types of innovation over product life cycle
(Tushman amp Nadler 1996 p 139)
Based on the position of their products in the life cycle therefore an analysis of the
companiesrsquo innovative activities was able to conclude whether they focused on product
or process innovation (Abernathy amp Utterback 1978) Grant (2002) argues that the
type of innovation can also be seen as an indicator of the rate of innovation as
illustrated in figure A3
Based on figure A3 product innovation is characterised by the highest rate of
innovation and process innovation the lowest Grant (2002 p 373) introduces a third
type of innovation strategic innovation which involves new combinations of markets
and products According to Grant this type of innovation can be seen as a medium
rate of innovation Figure A3 illustrates the importance of evolution over time where
strategic innovations form an important part of future innovations because of market
saturation and the lack of possible product innovations
204
Figure A3 Innovation over the life cycle from technological to strategic innovation
(Grant 2002 p 373)
A1 ERICSSON TELEBIT
Telebit was established in 1992 and employed 13 people In 1999 the firm merged
with the Swedish corporation LM Ericsson (Ericsson) when it acquired its current
name Ericsson Telebit (TED is the internal abbreviation for Ericsson Telebit) In the
process the number of employees grew from approximately 70 to 140 within twelve
months In 2003 TED was a local design centre mainly concentrating on software
development for Ericssonrsquos mobile and fixed Internet products
In 1995 TED became the first company to introduce a commercial router for Internet
Protocol version 6 (IPv6) and was a leading provider of software based on IPv6
technology working continuously to improve the application and development of this
IP-platform After joining Ericsson the company became a separate design centre for
long-term projects for different product units in the Ericsson organisation whereas
Rat
e o
f in
no
vati
on
Time
Productinnovation
Processinnovation
Strategicinnovation
205
previously it had developed customer products directly Since the company only had
one overall customer Ericsson the various product units became known as sponsors
The longer duration of projects and the move down the value chain had a number of
implications for organisational structure and put a strain on the companyrsquos
entrepreneurial culture Work was structured around two major projects instead of a
large number of smaller projects of short duration One project called SoftWare for
Internet Protocol for Ericsson (SWIPE) focused on software development for
routers while the other focused on IP solutions for mobile terminals and was named
Terminal Internet Protocol (TIP) Ericsson Telebit is represented by the middle arrow
in figure 31 which shows that an organisation based on a number of large projects
often acquires new knowledge through these projects even though the end product is
produced in another (production) process
The age and size of the organisation together with the focus on building an
appropriate structure for the running of the two large projects led to the conclusion
that Ericsson Telebit had reached the Coordination phase Since its owner was its
only customer Ericsson Telebit was forced to run an efficient and cost-minimising
organisation as well as nurturing creativity and opportunity The crisis which
followed the need to control costs in a creative environment had led to a new
structure where employees were more closely connected with specific projects
replacing the more organic structure there before the company joined Ericsson
Since all products were to be used in the mobile terminals and Internet of tomorrow
the rate of innovation was as high as it could be in the twenty-first century This is
illustrated by the fact that all the applications developed by Ericsson Telebit up to
now had not yet reached the market
206
A2 DANFOSS DRIVES
Danfoss Drives is the largest division of the Motion Control segment of Danfoss
Group one of Denmarkrsquos largest industrial corporations The Motion Controls
segment was established ultimo 2000 and apart from Danfoss Drives it also
includes two other divisions Gearmotors and Marine Systems In 2001 the turnover
of the Motion Control Segment was almost DKK 3 billion with customers all over
the world
Activities at Danfoss Drives can be dated back to 1968 with the introduction of the
first mass-produced frequency converter Heating Ventilation and Air-Condition
applications (HVAC) were introduced in 1990 and after the acquisition of Bauer a
gear motor manufacturer in 1999 the Motion Controls Segment was marketed as a
one-stop shop for the industry Apart from its headquarters in Graasten Denmark
Danfoss Drives had three production sites established via acquisitions in America
and the founding of a company in Germany In 2003 the company served a wide
range of customers across different industries eg chemicals and consumer goods
metals and mining pulp and paper refrigeration and the automotive industry
With its emphasis on the continuous introduction of new and improved products
Danfoss Drives has attached a lot of importance to technological innovation The
development of new products for the Drives division was the responsibility of a
Product Development manager has responsibility for The development process was
organised in a matrix structure with technology centres serving the different projects
which again were organised in a ldquocore teamrdquo and a number of ldquosub-teamsrdquo In
managing the development process the Product Development manager was assisted
by the Strategic Product Development Unit The Danfoss Group had a number of
cross-unit project groups which were set up to co-ordinate and assist in different areas
such as sales amp marketing production and ITfinance As with Ericsson Telebit
207
Danfoss Drives is represented by the middle arrow in figure 31 Although the general
organisational structure of Danfoss Drives was very different from Ericsson Telebit
the two companies were similar with regard to the organisation of the development
projects where projects were the main source of innovation and adoption of new
knowledge
With nearly 40 yearsrsquo experience of developing high-tech products for a broad range
of industries Danfoss Drives remains committed to continuous innovation Given its
size and number of markets and it was argued based on its actions and
organisational structure they had reached the collaboration stage The company had
formed a matrix structure to enable it to combine technological inventions with
market demands and the use of headquarter staff also followed the characteristics of
the collaboration stage inasmuch as they worked in interdisciplinary teams which
consult with rather than manage field units
It is difficult to precisely describe Danfoss Driversquos rate of innovation since they
focus on both product and strategic innovations And this was made even more
complicated by the fact that the companyrsquos products also provided process
innovations to its customers However based on the companyrsquos historical product
development the first mass-produced frequency converter developed in 1968 and the
HVAC technology developed in 1990 represent the main radical innovations All
subsequent innovations were incremental Danfoss Drivesrsquo future rate of innovation
was thus characterised as medium-high implying that they would continue to be at
the cutting edge of their technological platforms
A3 BANG amp OLUFSEN
Bang amp Olufsen (BampO) the best-known Danish company in the niche market for
electronic consumer goods was established in 1925 as a producer of radios By 2003
208
it had become a globally recognised niche producer of audio television and telephone
products at the high end of the market with a turnover in the financial year
20012002 of DKK 42 billion and after-tax profits of DKK 147 million The
company employs 2800 people and its main activities are located in Struer
Product development costs of DKK 333 million reflect the fact that innovation
through new product launches are an important part of the companyrsquos strategy as a
high-end producer BampO has divided its activities in two main groups branded and
non-branded businesses The branded businesses include activities in the audiovisual
and telephone markets while the non-branded businesses covered a number of
diversified activities
Branded businesses are by far the largest part of BampO accounting for more than 90
percent of turnover BampO Telecom is operated as a separate division and sells its
products through both BampO shops and telecom companies As a leading producer of
high-end audio products BampO is forced to continuously introduce new products
which in 2003 led to the presentation of ldquoa major acoustic productrdquo The telecom
division was established in 1986 in collaboration with the former Jysk Telefon Its
main product in 2003 was wireless telephones which account for more than 75
percent of turnover
BampO Medical AS is the largest of the non-branded businesses with an annual
turnover of DKK 250-300 million and 290 employees Products are developed in
collaboration with leading companies in the medical industry including Novo
Nordisk Another example was the partnership with 3M which led to the
development of the worldrsquos first digital stethoscope
BampO ICEpower AS was established by BampO and the inventor of a new technology
for digital amplifiers While initially experiencing significant growth in turnover
recent major investments in technology and product development had led to a loss of
209
more than 50 percent of turnover BampO has high hopes for the future potential of the
technology since it can be implemented in a large number of products
Under the name New Businesses 35 employees were involved in testing the potential
of developing and launching new products in new or existing markets Up to now the
company had identified opportunities in the market for car audio systems including
the further development of loudspeakers to be sold through existing distribution
channels
Apart from the divisions set up to develop and sell products BampO had also
established BampO Operations a division focusing on process-optimising the
production of products developed in the other divisions As part of this optimisation
BampO Operations had decided to outsource part of the production of telephones
BampOrsquos innovative activities were concentrated in a separate department with around
300 employees Apart from the joint activities with the medical industry in BampO
Medical all product innovation was carried out in this department BampO is thus an
example of a company that tries to benefit from ideas and knowledge generated in the
RampD department This was represented by the right-hand side of figure 31
As a more than 75-year-old company employing 2800 people in a complex
organisational structure BampO had reached the red-tape crisis because of the need to
move from the Coordination phase to the Collaboration stage To address this the
company began a process of reconfiguring those business activities where there was a
need for a more spontaneous way of working The lsquonewrsquo structure of the RampD
department can be seen in this perspective In 2003 BampO started on a restructuring
of the organisation from being ldquoproduct-project-orientedrdquo to combining all activities
in one central RampD department Prior to this BampO had RampD departments in all
product lines (except medical)
210
Even though innovation activities in the branded businesses were focused on product
development the rate of innovation was low because it involved a minor degree of
traditional product innovation This conclusion was based on the fact that from a
generic point of view all the products were late in their life cycle and the innovations
were mostly focused on design attributes and the addition of some new
functionalities BampO Medical and the New businessesrsquo focus on strategic innovation
was based on identifying new markets for launching products made using BampOrsquos
core competencies which is the main reason for the conclusion that BampOrsquos
innovation activities mainly involved a low rate of innovation
A4 CRISPLANT
Crisplant founded in 1951 by a Danish entrepreneur had had a number of different
owners since the beginning of the 1970rsquos In 2003 after a short period as an
independent company on the Danish stock exchange Crisplant AS became part of
the British engineering company FKI Group which had more than 17000 employees
and a total turnover of euro 2790 million Organisationally Crisplant AS was part of
FKI Logistex a division specialising in automated material flow solutions and
employed more than 900 employees with an annual turnover of approximately euro 160
million
As a project-oriented company Crisplant AS made customised sorting systems for
airport baggage-handling parcel carriers retailers mail-order companies internet
trading and manufacturersrsquo distribution In 2003 Crisplant had built more than 600
sorting systems around the world and was continuously looking for new markets
Software development was crucial to Crisplantrsquos product innovation and in 2001 it
therefore acquired Dator one of its main suppliers of operating systems at the same
time changing its name to Dator-Crisplant One of the reasons for acquiring Dator
was that the companyrsquos financial problems made its future uncertain Since this could
211
have interrupted Crisplantsrsquo supply of operating systems it seemed strategically
sound to secure the existence of one of its main suppliers by buying it In 2003 all
software development was carried out in Dator-Crisplant and this resulted in a
number of competitive advantages since Crisplant could now offer its customers a
more integrated software solution One example of this was the fully automated mini
post office Parcel Matetrade which enabled easy access to postal services either as a
single product or as an integrated solution
Project management was a cornerstone of Crisplantrsquos business model and the
company had therefore developed its own project management model based on the
identification of eight phases each characterised by a set of specific targets Before
moving to the next phase a ldquogaterdquo needed to be crossed which included a number of
evaluations and the preparation of plans and budgets for the next phase The use of a
common project model ensured that agreements time schedules and budgets were
kept and also made it easier to accumulate experience and knowledge for future
projects The model is illustrated in figure A4
Figure A4 Crisplantrsquos project management model
Although Crisplant was mainly structured around its three main business units the
company also had an RampD department which carried out basic research in relation to
Automatic High-Speed Transport and Sorting Systems which formed a substantial
part of operations In Crisplant therefore innovative activities were basically
represented by the lsquoright arrowrsquo in figure 31 similar to BampO ndash at least as regards the
more radical innovations The customer-oriented projects which had the character of
212
production processes also needed to be innovative although the innovations which
took place here were more incremental in nature All in all therefore major parts of
the companyrsquos knowledge generation took place in the projects as reflected by the
middle part of figure 31
A5 END2END
End2End was founded in 1999 by a group of executives from mobile network
operators with venture capital from Deutsche Bank Capital Venture Partners
Hewlett-Packard and Cisco Systems After the latest round of financing in August
2002 the total amount of invested capital including debt and equity was euro 654
million The company which was situated in both Denmark and the United Kingdom
had about 40 employees with the Headquarters and Network Operating Centre
(NOP) in Aalborg and the so-called Data Centre in Copenhagen
All management of the data centre was controlled electronically from Aalborg and
the company had no official address in Copenhagen As the first international Point-
of-Presence (POP) the company had a sales office in Bracknell UK and depending
on demand planned to open POPs in a number of locations around the world (See
figure A5)
213
Figure A5 Diagram of End2Endrsquos operations
The company was a managed service provider and contentapplication aggregator for
mobile data services and was a leader in its field in Europe End2End offered its
customers lower up-front investments and increased data speed enabling mobile
operators to take up opportunities as they arose End2End provided these benefits to
customers in the form of turnkey services via its infrastructure in Denmark and the
UK The actual software solutions were delivered in a partnership with third-party
software developers the solutions being based on open standards that complement
mobile operatorsrsquo existing offerings and capabilities End2End service delivery
infrastructure manages the complex network between end customer mobile operator
and software developer Apart from managing mobile data services End2End consults
its customers on opportunities tests and evaluations of profitable mobile data
services
Customers include mobile operators Internet portals providers of mobile service
applications network providers and brand owners looking for a quick flexible and
low-cost access to mobile infrastructure
214
With a management team of seven End2End mobile had reached the delegation
phase where all major areas had their own manager Tage Rasmussen who was CEO
in 2003 was responsible for the transition of the company from a technically led
company to a more commercially focused organisation while founder and president
Peter Langkilde was responsible for funding and overall business development
Apart from these two executives who also served on the board of directors End2End
had appointed five managers responsible for Sales Marketing Network Operations
Customer Operations and Finance With only 40 employees the company was not
expected to have reached the crisis of co-ordination but management seemed to be
concerned about the transition to a more commercially and effective organisation that
was focused on developing products and services to meet real market needs
The role of intermediator involved strategic innovation since End2End was creating
new combinations of services in the value chain which again created process
innovations for its customers Advising and consulting customers in the building and
outsourcing of digital infrastructures was part of its offerings and this clearly
underlined the importance of strategic considerations Because of the relatively new
and undeveloped market for the outsourcing of IT infrastructures the rate of
innovation was considered to be high This is based on the impact of strategic
innovations on the value chains of the future and in this respect the fact that
End2Endrsquos products and services created process innovation for its customers could
be seen as a valuable by-product
Based on the framework in figure 31 End2End can be seen as an example of a
company where innovation takes place in the production processes (software
development) Thus production was the main way of acquiring new knowledge and
ideas which is represented by the left-hand side of figure 31
215
A6 REFERENCES
Grant RM 2002 Contemporary Strategy Analysis Concepts Techniques
Applications Oxford Blackwell Publishing
Greiner LE 1972 Evolution and revolution as organizations grow Harvard
Business Rerview July-August pp 37-46
Tushman M amp D Nadler 1996 Organizing for innovation In Ken Starkey (ed)
How Organizations Learn A Critical Reader pp 135-155
216
217
APPENDIX II
English Summary
Intrapreneurship is a developing field which it is the purpose of this dissertation to
contribute to The study is primarily concerned with intrapreneurship from an internal
resources perspective The aim of intrapreneurship from this perspective is to identify
previously undiscovered organisational resources with respect to innovation or
combine existing resources in ways that enable these to become valuable innovations
The dissertation is comprised of five articles all of which are related to the overall
research theme exploration and exploitation of internal resources with respect to
intrapreneurship The overall agenda of the dissertation is to study the intrapreneurial
potential in its natural settings Based on data from the five case companies it was
decided to let the articles develop from the most interesting data and observations
This means that the articles are not part of a step-by-step research strategy leading to
a final conclusion but are discussions of different subtopics within the overall topic
drawing on different theories and different methodologies
The first article introduces the concept of corporate entrepreneurship This has been
used to explain various organisational phenomena ranging from strategy through
management in general to innovation and the abundant use of labels and
perspectives has consequently led to a lack of clarity Based on a literature review a
framework for corporate entrepreneurship has developed including intrapreneurship
exopreneurship and four organisational perspectives corporate venturing internal
resources internationalisation and external networks
218
The aim of the second article is to explore how innovativeness and creativity in a
small high-tech company changes after the company is acquired by a larger company
The empirical part of the article is based on interview and questionnaire data with a
focus on employeesrsquo perception of innovativeness and creativity including their own
innovativeness in relation to the possibilities offered within the organisational
structure The results indicate that entrepreneurial spirit innovativeness and
creativity in the case company were related to the lack of boundaries to and contact
with customers These driving forces could not be sustained when the organisation
matured and was acquired by a larger company
The aim of the third article is to provide an understanding of the various factors that
enable intrapreneurship in established companies The article reports on a case study
of intrapreneurship in a large knowledge-intensive industrial company Based on the
existing literature it is suggested that the use of different factors can either enable or
inhibit intrapreneurship and five enabling factors are identified Based on interviews
on-site observations and documents and reports the five factors are examined and
alternative factors considered The five enabling factors that are identified in the
literature are not sufficient to enable intrapreneurship in knowledge-intensive
companies and it is concluded that three additional factors ndash communication culture
and processes ndash should also be taken into account
The emergence of knowledge-based organisations and the increased importance of
knowledge as the key to competitive advantage poses new challenges for managers
and researchers alike The fourth article attempts to enlighten theories of
intrapreneurship and innovation by means of state-of-the-art knowledge management
theory and organisational learning theory
The fifth article analyses project management activities in two companies from a
knowledge management perspective It is shown how human competencies it-
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systems and project management systems are analysed from two perspectives an
artefact-oriented and a process-oriented perspective From the first perspective
project management seems to consist of similar components in the two companies
whereas the process-oriented perspective identifies context-dependent differences It
is concluded that awareness of different perspectives opens up the possibilities for
more managerial options and better understanding in practice
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APPENDIX III
Dansk resume
Intraprenoslashrskab er et felt under udvikling hvor mange brikker mangler at falde paring
plads for at opnaring en forstaringelse for hvorledes fornyelse og skabelse af nye
virksomheder kan ske inden for rammerne af etablerede virksomheder Formaringlet med
afhandlingen er at bidrage til dette puslespil Afhandling omhandler primaeligrt
intraprenoslashrskab fra et internt ressource perspektiv hvilket betyder at intraprenoslashrskab
belyses ved at fokusere paring udnyttelsen af interne organisatoriske ressourcer eller ved
at kombinere virksomhedens eksisterende ressourcer paring nye maringder som kan goslashre
dem vaeligrdifulde med henblik paring innovation
Afhandlingen bestaringr af fem artikler som alle er relateret til det overordnede emne
udvikling og udnyttelse af interne ressourcer med henblik paring intraprenoslashrskab
Afhandlingen studerer det intraprenante potentiale i dets naturlige omgivelser og
artiklerne er baseret paring de mest interessante data og observationer fra de fem case
virksomheder der har medvirket i projektet Det betyder at artiklerne ikke foslashlger en
skridtvis forskningsstrategi frem mod eacuten samlet konklusion men fremstaringr som
forskellige artikler der indenfor den overordnede problemstilling traeligkker paring
forskellige teorier og baseres paring forskellige metoder
Den foslashrste artikel introducerer begrebet corporate entreprenoslashrskab som er blevet
anvendt til at forklare forskellige organisatoriske faelignomener Fra strategi over ledelse
i al almindelighed til innovation Dette har medfoslashrt en mangfoldighed af begreber og
perspektiver som har skabt stor uklarhed omkring corporate entreprenoslashrskab Med
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henblik paring at etablere et fundamentet for de foslashlgende artikler redegoslashres der i den
foslashrste artikel for corporate entreprenoslashrskabsbegrebet ud fra forskellige perspektiver
Der praeligsenteres i artiklen endvidere et overblik ved hjaeliglp af en model der
indeholder intraprenoslashrskab og exoprenoslashrskab samt fire organisatoriske perspektiver
corporate venturing interne ressourcer internationalisering og eksterne netvaeligrk
Den anden artikel belyser hvordan innovation og kreativitet i en lille virksomhed
aeligndrer sig naringr virksomheden opkoslashbes af en stoslashrre virksomhed Den empiriske del af
artiklen er baseret paring interviews og sposlashrgeskemadata med fokus paring medarbejdernes
opfattelse af innovation og kreativitet inklusiv deres egen innovationsevne i relation
til de muligheder der findes inden for organisationen Resultaterne indikerer at den
entreprenante aringnd innovationsevne og kreativitet i case-virksomheden isaeligr var
relateret til den uformelle organisationsstruktur og taeligtte kundekontakt Disse
drivkraeligfter kunne ikke fastholdes da organisationen blev opkoslashbt af en stoslashrre og mere
etableret virksomhed
Den tredje artikel har til formaringl at skabe en forstaringelse for de forskellige faktorer der
kan fremme intraprenoslashrskab i etablerede virksomheder Med udgangspunkt i et
litteraturstudie identificeres fem faktorer der enten kan fremme eller haeligmme
intraprenoslashrskab Betydningen af de fem faktorer undersoslashges i et casestudie i en stor
videnintensiv industrivirksomhed De fem faktorer findes ikke tilstraeligkkelige til at
fremme intraprenoslashrskab og alternative faktorer foreslarings Det resulterer i at yderligere
tre faktorer ndash kommunikation kultur og processer ndash foreslarings som intraprenante
faktorer i videnintensive virksomheder
Den oslashgede forskningsmaeligssige og erhvervspolitiske interesse for videnintensive
virksomheder og stigende betydning af viden som noslashglen til konkurrencemaeligssige
fordele stiller ledere og forskere overfor nye udfordringer Derfor belyser den fjerde
artikel intraprenoslashrskabs- og innovationsteori ved hjaeliglp af videnledelsesteori og
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organisatorisk laeligringsteori Paring baggrund af et litteraturstudie udvikles en model der
belyser intraprenoslashrskab ud fra tre forskellige situationer for innovationsledelse Den
teknologiudnyttende situation den stabilt forandrende situation og den omvaeligltende
forandringssituation og to laeligringsrelaterede koncepter udnyttelse og udvikling
Modellen beskriver hvorledes intraprenoslashrskab vil fremstaring i hver af de seks
undergrupper
Den femte artikel analyserer projektledelsesaktiviteter i to virksomheder fra et
videnledelsesperspektiv Det vises hvordan menneskelige kompetencer it-systemer
og projektledelsessystemer kan analyseres ud fra to perspektiver et artefaktorienteret
og et procesorienteret perspektiv Med udgangspunkt i det foslashrste perspektiv fremstaringr
projektledelsen i de to virksomheder nogenlunde ens mens det procesorienterede
perspektiv identificerer kontekstafhaeligngige forskelle Det konkluderes at bevidsthed
om forskellige perspektiver giver flere ledelsesmaeligssige muligheder og en bedre
forstaringelse i praksis og af praksis
Det konkluderes at denne afhandling primaeligrt har bidraget med brikker til den del af
intraprenoslashrskabspuslespillet som vedroslashrer virksomheders eksisterende
organisatoriske ressourcer Den foslashrste artikel viste hvordan intraprenoslashrskab kan
gribes an fra forskellige perspektiver Mens artikel to og tre praeligsenterede to
forskellige syn paring hvordan interne ressourcer kan paringvirkes af forskellige indre og
ydre faktorer Artikel fire og fem pegede paring at videnressourcer er af afgoslashrende
betydning for intraprenoslashrskab i videnintensive virksomheder og at de derfor boslashr
adresseres og ledelses med udgangspunkt i deres kompleksitet