Chapter 13: Strategic Entrepreneurship 433
American Express has some significant problems, as explained in the Strategic Focus.
It has lost two major corporate partners that account for perhaps as much as 10 percent
of its annual revenue, In addition, it lost a major court case that may also reduce its
revenues or increase its costs. These concerns, when coupled with the fact that the firm
has not been innovative (while its rivals have been introducing innovative new services
and taking market share), suggest a rather bleak future. It seems that, due to inertia and
possibly hubris, AmEx has maintained its strategy and is losing its competitive advantage.
AmEx executives need to be entrepreneurial and strategic. In other words, they need to
engage in strategic entrepreneurship. To close this chapter, we describe how strategic
entrepreneurship helps firms create value for stakeholders.
13-9 Creating Value through Strategic Entrepreneurship
Entrepreneurial ventures and younger firms often are more effective at identifying oppor-
tunities than are larger established companies.^121 As a consequence, entrepreneurial ven-
tures often produce more breakthrough innovations than do larger, more established
organizations. Entrepreneurial ventures’ strategic flexibility and willingness to take risks,
at least partially, account for their ability to identify opportunities and then develop break-
through innovations. Yet, because these innovations are often quite novel, they are also
risky. Thus, they sometimes fail which frequently means that the new venture fails because
such firms have little slack.^122 Alternatively, larger, well-established firms often have more
resources and capabilities to manage their resources for the purpose of exploiting iden-
tified opportunities, but these efforts by large firms generally result in more incremental
than breakthrough innovations. For example, in recent times, Boeing has focused on
developing incremental innovations to build on and improve the successful new aircraft
such as the 787 Dreamliner. Currently, Boeing is developing seven new models that will
upgrade its existing fleet, largely taking advantage of the technologies already in use.^123
Thus, younger, entrepreneurial ventures generally excel in the taking of entrepreneurial
actions part of strategic entrepreneurship, while larger, more established firms generally
excel at the using a strategic perspective part of strategic entrepreneurship. Another way
of thinking about this is to say that entrepreneurial ventures excel at opportunity-seeking
(that is, entrepreneurial) behavior, while larger firms excel at advantage-seeking (that is,
strategic) behavior. However, competitive success and superior performance relative to
competitors accrues to firms that are able to identify and exploit opportunities and estab-
lish a competitive advantage as a result of doing so.^124 On a relative basis then, entrepre-
neurial ventures are challenged to become more strategic, while older, more established
firms are challenged to become more entrepreneurial.
Firms trying to learn how to simultaneously be more entrepreneurial and strate-
gic (that is, firms trying to use strategic entrepreneurship) recognize that, after iden-
tifying opportunities, entrepreneurs within entrepreneurial ventures and established
organizations must develop capabilities that will become the basis of their firm’s core
competencies and competitive advantages. The process of identifying opportunities is
entrepreneurial, but this activity alone is not sufficient to create maximum value, or
even to survive over time. In fact, the early goals for entrepreneurial firms are to survive
and grow, allowing them to accumulate resources to finance additional innovation and
growth.^125 As we learned in Chapter 3, to successfully exploit opportunities, a firm must
develop capabilities that are valuable, rare, difficult to imitate, and nonsubstitutable. When
capabilities satisfy these four criteria, the firm has one or more competitive advantages
to use in efforts to exploit the identified opportunities. Without a competitive advantage,
the firm’s success will be only temporary (as explained in Chapter 1). An innovation may
