Chapter 13: Strategic Entrepreneurship 427
As a means of innovating, autonomous strategic behavior is more effective when new
knowledge, especially tacit knowledge, is diffused continuously throughout the firm.^79
13-5c Induced Strategic Behavior
Induced strategic behavior, the second form of corporate venturing through which inno-
vations are developed internally, is a top-down process whereby the firm’s current strat-
egy and structure foster innovations that are closely associated with that strategy and
structure.^80 In this form of venturing, the strategy in place is filtered through a matching
structural hierarchy. In essence, induced strategic behavior results in internal innovations
that are consistent with the firm’s current strategy. Thus, the firm’s CEO and its top man-
agement team play an active and key role in induced strategic behavior.^81 This is the case
at IBM, where CEO Virginia Rometty challenged the firm’s employees “to move faster
and respond more quickly to customers” as a foundation for developing innovations that
will facilitate the firm’s efforts to “shift to new computing models.”^82
Induced innovation allows the firm and its managers to determine the type and
amount of innovation desired.^83 For example, the firm could develop an intense inno-
vation process in order to be the industry leader by regularly introducing new prod-
ucts even if they cannibalize currently successful products.^84 This has been the approach
employed by Intel for many years. An induced approach to innovation is used by a firm
to determine if it wishes to create open innovation, where innovation is used to establish
industry standards, or closed innovation, which the firm uses to generate returns disal-
lowing others to use it.^85 The majority of innovation is closed innovation, but open inno-
vation has become more common, especially in some industries. Often, firms engage in
evolutionary, path dependent R&D, which over time becomes more incremental (because
of the path dependence in the knowledge based used).^86
13-6 Implementing Internal Innovations
An entrepreneurial mind-set is critical to firms’ efforts to innovate internally, partly
because such a mind-set helps them deal with the environmental and market uncer-
tainty that are associated with efforts taken to commercialize inventions.^87 When facing
uncertainty, firms try to continuously identify the most attractive opportunities to pur-
sue strategically. Thus firms use an entrepreneurial mind-set to simultaneously identify
opportunities, develop innovations to meet those opportunities, and execute strategies to
successfully exploit the opportunities identified in the marketplace.^88 Often, firms pro-
vide incentives to individuals to be more entrepreneurial as a foundation for successfully
developing internal innovations, sometimes encouraging work teams to specify what they
believe are the most appropriate incentives for the firm to use.^89
Having processes and structures in place through which a firm can successfully exploit
developed innovations is critical. In the context of internal corporate ventures, managers
must allocate resources, coordinate activities, communicate with many different parties
in the organization, and make a series of decisions to convert the innovations resulting
from either autonomous or induced strategic behaviors into successful market entries.^90
As we describe in Chapter 11, organizational structures are the sets of formal relationships
that support processes managers use to exploit the firm’s innovations.
Effective integration of the functions involved in internal innovation efforts—from
engineering to manufacturing and distribution—is required to implement the incre-
mental and novel innovations resulting from internal corporate ventures.^91 Increasingly,
product development teams are being used to achieve the desired integration across organ-
izational functions. Such integration involves coordinating and applying the knowledge
