Intrapreneurship and Corporate Venturing 389
“borrowed” assets for future projects. The same can be said for human, technical, and
organizational resources. The trick, therefore, is for the intrapreneur to employ these
resources in a way sufficiently different from their traditional use.
Another basic difference between intrapreneurs and entrepreneurs involves the sepa-
ration of ownership and control^18 —the agency problem. Entrepreneurs own and control
their businesses, so ownership and control are unified and there are no inconsistencies.
In a large corporation, however, the shareholders are the principals (owners) and the
managers are the agents (controllers). A manager who wants to undertake an
intrapreneurial venture must be able to act as a principal and have the same incentives.
The owners of the corporation tend to discourage this because they are unwilling to
trust managers and give them these types of incentives. Frequently, this means that
intrapreneurs are forced to leave the company. This resolves the agency problem, but it
often leaves the corporation worse off because the managers leave with resources that
are valuable, rare, hard to copy, and nonsubstitutable. Most often these resources are
technical information, expertise, and the managers themselves (the human resource).
The corporation is deprived of the intrapreneurship it needs to succeed.
ADVANTAGES OF AND BARRIERS TO INTRAPRENEURSHIP
Large companies have certain advantages in creating and exploiting intrapreneurial
ideas. Some of these advantages relate directly to the intrapreneurs, who are sometimes
more secure operating from within a large organization. They already have a job, a
steady income with benefits, and a social network within the firm made up of friends,
colleagues, and knowledgeable individuals who can provide encouragement, resources,
and technical aid.
Intrapreneurial Advantages and Resources
The financial resources for the internal corporate venture come from the corporation.
Although no corporation has unlimited financial resources, most have resources well
beyond the capabilities of private individuals and their friends and relatives. This source
of financing lowers the personal financial risk for intrapreneurs. Of course, there is an
element of career risk if the intrapreneur is unable to make the new venture a success.
However, a supportive environment for intrapreneurship is more forgiving of failure
than the external environment facing independent entrepreneurs.
Moreover, the corporation has all or most of the necessary resource base of the new
venture. It already has a set of organizational systems—marketing, engineering, person-
nel, legal, and accounting—with many of the attributes that support its sustainable com-
petitive advantage. Finally, most large corporations have a visibility and a reputation that
can be extended to the new venture. These can provide early credibility and legitimacy
for the intrapreneurial effort and act as strategic momentum factors.
Innovator Dilemmas and Organization Barriers
There are also barriers to corporate venturing and impediments to successful execu-
tion.^19 The major barrier is the corporate bureaucracy. Large corporations have many
