386 ENTREPRENEURSHIP
values. Internal development is often preferable because it allows the corporation to
manage the process and control its costs.
Intrapreneurship gives the corporation the ability and opportunity to conduct mar-
ket experiments. These experiments are comparable to the evolutionary biological
process of natural selection. Each intrapreneurial venture is a form of mutation of cur-
rent corporate resources. These mutations provide diversity. If the corporate and eco-
nomic environment is receptive to the mutation, it is “selected” and may grow into a
large and profitable division or company. Other corporations may imitate the success,
and a whole new category of businesses may emerge. Just as entrepreneurship can cre-
ate entire new industries, so can intrapreneurship.
One safe way to conduct these experiments is through corporate investment in entre-
preneurial companies. Intel, the world’s leader in innovative microprocessors and chip
development, has set up a China Technology Fund with an initial capitalization of $200
million. As of mid-2006 it has made 12 investments in Chinese technology start-ups.
The last four investments are in a semi-conductor company, two software development
ventures, and a company that focuses on marketing on Chinese university campuses.
Intel also invests heavily in India, pursuing similar goals. China currently has an advan-
tage because its government encourages technology and provides infrastructure,
“...whereas in India,” according to Intel Capital president Arvind Solhani, “the govern-
ment’s involvement is more limited.”^10
Intrapreneurship can also be valuable to established corporations by serving as a
training ground for new managers. Corporations can develop future leaders by moni-
toring the progress of these intrapreneurs. Managers who succeed in the new venture
have much to offer the “mother” firm.
Also, intrapreneurial activities open new channels of distribution and media commu-
nications, especially since the emergence of the Internet. Established firms use the
Internet to sell directly to customers, to form cooperatives with other firms for selling and
purchasing, and to develop consumer data and knowledge bases. PepsiCo, for example,
has used the Web to find a new generation of customers. Its Web site, http://www.pep-
sistuff.com, enabled consumers to collect points for prizes on bottle caps. This short cam-
paign netted Pepsi three million logged and registered users, giving the company a data-
base that would have cost millions and taken months to build. Sales volume rose 5 per-
cent during the promotion, and the cost was about one-fifth of a mail-in project.^11
Another example of this, with a social network twist, is Edmonds.com’s launch of
CarSpace.com. Edmonds.com is a leader in online car sales and research. CarSpace.com
is a place for people obsessed with cars who want to talk about them with folks who
share their interest. CarSpace will be part of MySpace.com, a leader in social network-
ing. Edmunds hopes that by consolidating many of the fragmented auto-interest Web
sites, it can generate more activity for its core business. CarSpace might even surpass the
company’s primary site if it gets the right buzz. “Self-generated content creation and net-
working are now clearly one of the biggest media growth stories,” says Curt Hecht,
chief digital officer at GM Planworks, General Motors’ media agency.^12
Finally, established corporations use intrapreneuring to augment their bottom lines,
primarily through direct investment in entrepreneurial companies. Intel certainly hopes
that its China Technology fund makes money for the stockholders.