ENTREPRENEURS NECESSITATE INTRAPRENEURS TO FOSTER … · ENTREPRENEURS NECESSITATE INTRAPRENEURS TO FOSTER THEIR ORGANISATION ... It explores both entrepreneurship and intrapreneurship

Shabana Azami Page 21

ENTREPRENEURS NECESSITATE INTRAPRENEURS TO FOSTER THEIR

ORGANISATION

SHABANA AZAMI

LECTURER (BBA DEPARTMENT), MODERN COLLEGE OF PROFESSIONAL STUDIES

Abstract

It explores both entrepreneurship and intrapreneurship and the relations between them. An important

outcome of the review is the identification of the similarities and differences between entrepreneurship

and intrapreneurship and also the advantages and disadvantages of both concepts. Nowadays, when we

are facing economically difficult times, entrepreneurship and inrapreneurship are an excellent tool for

breaking out of the trend trough innovation, by bringing something new on the market. Both

entrepreneurship and intrapreneurship are instruments of innovation that help in creating new

competencies and accessing new markets. Finally, without developing the insight towards these various

aspects, no change of the company can be realized, and changing, so adapting means in fact, the survival

of that company. The value created yesterday, can mean nothing today, therefore only a sustainable

company, who recognizes the difference between an entrepreneur and intrapreneur, can turn ideas and

creativity into successful new values for tomorrow. Intrapreneurship is important for the economic

development of an organisation because it:

i. Increases employee productivity and motivation.

ii. Increases the speed and cost effectiveness of operations and business services.

iii. Promotes effective teamwork.

Keywords: Intrapreneurship, Enterpreneurship, Developing intrapreneurship, fostering the companies,

Economic growth, innovation and technically growth

Introduction:

The global economy is creating profound and substantial changes for organizations and industries

throughout the world, forcing them to carefully examine their purpose and to design strategies to satisfy

their multiple stakeholders. The task of management is to be aware of the changing scenario. This


awareness will allow managers to predict future problems and prepare strategies before crisis arise. The

changes are because of a variety of pressing problems, like----

• Increased global competition.

• Continual downsizing in the marketing –place, leading to fragmented markets.

• Dramatic changes in the market –place, leading to fragmented markets.

• Fast changing and less predictable economic environment and therefore, diminishing opportunity

streams.

• Increased resource specialization and nearly unpredictable resource needs.

. Intrapreneurship is a concept linked to the entrepreneurial orientation of an organization.

Intrapreneurship is the spirit of entrepreneurship within an established organization. Most successful

private organizations were once entrepreneurial start ups that grew to the point where they became mature

organizations. In situations like this sooner or later the spirit of entrepreneurship is no longer active and

alive.Hence the need to catalyse the organization and imbue it with a new spirit of intrapreneurship -

developing the spirit of entrepreneurship within the realms of an established organization. Intrapreneurs

work within corporations to develop new products, increase innovation, and build employee morale.

Intrapreneurship appeals to some because it allows them to pursue creative business ideas with the

support of a large company's resources.

In today’s increasingly competitive environment, companies need to find that ‘added extra’ to stay

competitive to retain existing customers and attract new customers. One way to do this is to encourage

innovative and creative behaviour within the organisation ie to encourage intrapreneurs. An intrapreneur

is a person within a large corporation who takes direct responsibility for turning an idea into a profitable

finished product through assertive risk-taking and innovation. They behave like an entrepreneur, except

within a larger organization

Intrapreneurs can enable businesses to expand into other areas of their market by identifying new

products or services to existing or new customers. This can require the organisation to take risks. In

large organisations this may challenge the management team who have to report to multiple stakeholders.

So an attitude towards accepting and promoting intrapreneurial behaviour needs to be incorporated within

the strategy and rules flexible enough to engage the innovative thinker. Management needs to change

from a culture of enforcing orders and rules to one with sufficiently flexible behaviour to stimulate

innovation and creative visions that guide and focus the efforts of potential intrapreneurs.


DEFINITION OF INTRAPRENEURSHIP

Intrapreneurship refers to employee initiatives in organizations to undertake something new, without

being asked to do so. As the detailed behavioural content of intrapreneurship is still uncharted, this paper

surveys three relevant strands of literature. These are early-stage entrepreneurial activity (business

founding) and two literatures on employee behaviour inside existing organizations, i.e. proactiveness and

innovative work behaviour. By combining insights from these domains with those from the emerging

intrapreneurship literature, we derive a detailed list of relevant activities and behavioural aspects of

intrapreneurship. Major activities related to intrapreneurship include opportunity perception, idea

generation, designing a new product or another recombination of resources, internal coalition building,

persuading the management, resource acquisition, planning and organizing. Key behavioural aspects of

intrapreneurship are personal initiative, active information search, out of the box thinking, voicing,

championing, taking charge, finding a way, and some degree of risk taking.

Intrapreneurship is a special type of entrepreneurship and thus shares many key behavioral characteristics

with this comprehensive concept, such as taking initiative, pursuit of opportunity, and some element of

'newness'. At the same time, intrapreneurship also belongs to the domain of employee behavior and thus

faces specific limitations that a corporate hierarchy and an intraorganizational context may impose on

individual initiative, as well as specific possibilities for support that an existing business may offer to a

nascent intrapreneur.

ENTREPRENEURSHIP VS INTRAPRENEURSHIP

Unlike the entrepreneur, the intrapreneur acts within an existing organization. The intrapreneur is the

revolutionary inside the organization, who fights for change and renewal from within the system. This

may give rise to conflicts within the organization, so respect is the necessary key in order to channel these

conflicts and transform them into positive aspects for the organization. Even though intrapreneurs benefit

from using the resources of the organization for the implementation of the emerging opportunities, there

are several motives why innovation is more difficult to implement in an existing organization, such as

(Malek & Ilbach, 2004):

• The size: the bigger the organization the more difficult it is to have an overview of the actions of every

employee

• Lack of communication: Specialization and separation, help in concentrating on the areas of interest, but

hinder communication.

• Internal competition: Internal competition amplifies the problem because instead of sharing the


knowledge with others it borders the knowledge sharing. Everyone wants to keep the information for

themselves.

• Feedback received in case of success/mistake: Costs in case of failure are too great and the reward for a

successful outcome too small. Intrapreneurs must be allowed to commit mistakes, because such mistakes

are an inevitable part in the entrepreneurial process. The recognition of success is also very rare. No

company provides payment in advance for what an entrepreneur might accomplish, but a lot of them like

to talk about the concept of intapreneurship and expected their employees to get involved and assume

their risk. But finally, when motivated employees get involves and have success their only reward is a

small bonus.

• Dullness: Many companies are slow and reluctant to change. Intrapreneurs bump many times into the

well known sentence “We always did it this way”, which leaves little or no space to creativity. The

willingness to try new things appears only when the company's shortcomings become apparent, but even

so they don’t give room to an innovative leadership.

• Hierarchies: Organizational hierarchies compel employees to ask permission for actions that fall outside

their daily duties. The more complex the hierarchy the more difficult it is to impose change. Hierarchies

have also tended to create a short-term thinking. Employees on lower hierarchical levels have a “Victim-

Mentality” due to a reduced area of action and reduced responsibilities

The Importance of Intrapreneurship to Economic Growth

Allowing employees to introduce and implement innovation within an organisation is a means of

fostering economic growth. Few innovations have been derived from a flash of genius, most are the result

of a conscious, purposeful search for innovation opportunities. Drucker (1998) has identified four areas of

opportunity which exist within a company and three that exist outside a company:

Areas of opportunity within a company or industry:

• Unexpected occurrences.

• Incongruities.

• Process needs.

• Industry and market changes.


Additional sources of opportunity, which exist outside a company in its social and intellectual

environment:

• Demographic change.

• Changes in perception.

• New knowledge.

Drucker acknowledges that the sources overlap and differ in the nature of their risk, difficulty and

complexity, and that the potential for innovation may well lie in more than one area at a time. However

Drucker stresses that they account for the majority of all innovation opportunities. Purposeful, systematic

innovation begins with analysis of new sources of opportunities. Innovation is both conceptual and

perceptual, an intrapreneur therefore must look, ask and listen. They must consider people and figures to

work out analytically how an innovation can satisfy an opportunity. The most effective innovations are

simple and focused, they should be directed towards a specific, clear and carefully designed application.

Most usually only do one thing. Intrapreneurism is work rather than genius, it requires integrity,

knowledge and focus. Intrapreneurism has evolved to include a number of concepts, Kautz (2003) lists

the following:

1. Identifying and fostering employees who are considered to have intrapreneurial traits;

2. Developing intrapreneurial processes for all or part of a business.

3. Developing innovation through rewarding intrapreneurial behaviour.”

INTRAPRENEURIAL ORGANISATION

Intrapreneurs have been credited with increasing the speed and cost-effectiveness of technology transfer

from research and development to the marketplace. While intrapreneurs are sometimes considered

inventors, inventors come up with new products. Intrapreneurs come up with new processes that get that

product to market. Part of the reason they are considered similar to inventors is that they are creative and

are risk-takers in the sense that they are stepping out of their traditional role within the business.

however, their risk-taking behavior is personal. In terms of the business, they actually work towards

minimizing the risk through the innovative approaches they use to more efficient and effective product

production and sales. Some methods that have been used by businesses to foster intrapreneurship are:

• Users of internal services are allowed to make their own choice of which internal vendor they wish to


use.

• Intrapreneurial employees are granted something akin to ownership rights in the internal interprise they

create.

• Companywide involvement is encouraged by insisting on truth and honesty in marketing and

marketplace feedback.

• Intrapreneurial teams are treated as a profit center rather than a cost center (i.e, they are responsible for

their own bottom line). One way some companies handle this is for the team to have their own internal

bank account.

• Team members are allowed a variety of options in jobs, in innovation efforts, alliances, and exchanges.

• Employees are encouraged to develop through training programs.

• Internal enterprises have official standing in the organization.

• A system of contractual agreements between internal enterprises is defined and supported by the

organization.

• A system for settling disputes between internal enterprises and between employees and enterprises is

part of the intrapreneurship plan.

Intrapreneurism in business has evolved to encompass a variety of concepts: identifying and

fostering employees who have what a considered to be intrapreneurial traits, developing an intrapreneurial

process for part or all of a business, and developing innovation through rewarding intrapreneurial

behavior.

NASCENT INTRAPRENEURSHIP INTO ORGANISATIONS

Many organisations have placed greater importance on a service-orientated approach to their business

activities. Customers are seen as both internal and external and employees are expected to be positive,

polite and professional. This customer service focus has resulted in an emphasis on being a team player.

In such a team performance environment employees must manage their own time, solve problems, apply

logic and reasoning skills and be able to set and follow through goals. “They need to be self-motivated

entrepreneurs who are fixers, not finger pointers.” Consequently, the culture and ethos of a customer

service focus has enabled an increase in intrapreneurism. This in turn has led to the development of

intrapreneurial competing teams within a company. Teams can function as small businesses within the

organisation, which are nested and networked together. Teams can focus on either a product or a process

(such as secretarial services or PR). Such practices result in a free market system where work is more

effectively co-ordinated and responsibility is distributed more evenly. Pinchot (1999) has noted that


intrapreneurial activity increases the speed and cost-effectiveness of technology transfer from research

and development to the marketplace. Pinchot has developed the “Ten Steps to an Entrepreneurial

Organisation” based on need factors, which he considers vital for the development of organizational

intrapreneurism.

1. “Give users of internal services a choice of more than one internal vendor.

2. Give employees the security.

3. Demand and engender truth and honesty, marketplace feedback and marketplace discipline, to support

widespread decision-making.

4. Give intrapreneurial teams responsibility for their own bottom line even if they are subsidised

as a profit centre rather than a cost centre.

5. Allow many options and diversity in personnel, in jobs, in innovation efforts, alliances, and exchanges.

6. Provide extensive training and education, and safety nets, so employees can develop and take risks as

their organisation develops.

7. Create an internal “bank account” for every internal enterprise.

8. Streamline systems for registering internal enterprises so that they have standing in the corporation.

9. Establish a system for registering agreements and contracts between internal enterprises, so that people

can give their word and trust the system.

10. Establish a justice system for adjudicating disputes between internal enterprises and between

employees and enterprises.”

CONCLUSION

It focuses on how different organizational factors affect intrapreneurship. Both the terms intrapreneurship

and entrepreneurship are used here. Generally intrapreneurship can be defined as entrepreneurship

without leaving the corporation. An intrapreneur is an entrepreneur within the confines of an established

organization. Therefore it is difficult to discuss intrapreneurship without basing it on the term

entrepreneurship Intrapreneurs are the ones to promote technological innovation in the companies, putting

into practice their new ideas. But what happens with most organizations is that they do not present a

favorable environment so that entrepreneurs appear, which usually blocks the innovation process.

When intrapreneurs appear, the way to the innovation becomes fertile and facilitated, once these

intrapreneurs are always open to continuous learning and to apply their new ideas. Pinchot and Pellman


(2004) also point out that the success of innovation depends much more on fast learning and quick

response to the new learning rather than on being sure one is right. They also say that in the complex

current world, mainly regarding multinationals, one or two people involved in the creation of a favorable

environment to intrapreneurs is not enough. It is necessary to develop a shared belief in the innovation

and the clear determination to keep it through the maintenance of intrapreneurs. For Santos and Zaffalon

(2005), technological innovation has close relationship with intrapreneuring in big organizations which

have already consolidated in the market where they are inserted.

Intrapreneurs can enable businesses to expand into other areas of their market by identifying new

products or services to existing or new customers. This can require the organisation to take risks. In

large organisations this may challenge the management team who have to report to multiple stakeholders.

So an attitude towards accepting and promoting intrapreneurial behaviour needs to be incorporated within

the strategy and rules flexible enough to engage the innovative thinker. Management needs to change

from a culture of enforcing orders and rules to one with sufficiently flexible behaviour to stimulate

innovation and creative visions that guide and focus the efforts of potential intrapreneurs.

Therefore, a direct relation between the existence of an intrepreneurial culture and technological

innovation becomes a real fact for the modern organizations. The incentive to the appearance of

intrapreneurs generates innovations that promote several competitive advantages for the companies

which lead the markets in which they are inserted.

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ENTREPRENEURS NECESSITATE INTRAPRENEURS TO FOSTER … · ENTREPRENEURS NECESSITATE INTRAPRENEURS TO FOSTER THEIR ORGANISATION ... It explores both entrepreneurship and intrapreneurship