Shane and Venkataraman (2000) identified the entrepreneurial process as one of three primary domains of entrepreneurship research. The entrepre- neurial process involves discovering, evaluating, and exploiting opportu- nities to create commercial or societal gain (Shane, 2000; Shane &
Venkataraman, 2000). In this general domain, several works have been published that address the first stage in the process of entrepreneurship – discovery (Shane, 2000). These studies focus on the decisions involved in searching for and recognizing opportunities (e.g., Baron, 2006; Gaglio &
Katz, 2001; Keh, Foo, & Lim, 2002). Likewise, studies dealing with the second stage in the entrepreneurial process, evaluation, have explored the decisions defining when and if an opportunity will be pursued (Choi &
Shepherd, 2004). To date, research on exploitation, which considers how opportunities are commercialized, has been less popular. Most research in this third stage of the entrepreneurial process has only addressed the modes and types of entrepreneurial structures used to pursue opportunities. For instance, Shane and Venkataraman propose two institutional modes of exploitation, ‘‘the creation of new firms (hierarchies) and the sale of opportunities to existing firms (markets)’’ (2000, p. 224).
Despite limited research in the area, the opportunity exploitation stage of the entrepreneurial process is especially important in the context of established companies that are trying to expand operations by seizing new markets or capitalizing on new technologies. Whether such organizations purchased an opportunity on the market, as Shane and Venkataraman (2000) suggest, or developed the opportunity internally, it seems that exploitation of opportunities for commercial benefit is often an issue of major importance to corporations. Indeed, in the corporate context, a key DILENE R. CROCKETT ET AL.
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question in need of further exploration is, ‘‘what processes do corporate parent firms use to exploit entrepreneurial opportunities?’’
Research in corporate entrepreneurship has long examined the modes of exploiting opportunities, identifying much needed types for the budding entrepreneurship field (Ginsberg & Hay, 1994; Covin & Miles, 1999;
Miles & Covin, 2002). Existing corporate entrepreneurship research has also acknowledged that the implementation of an entrepreneurial initiative requires a great deal of resource support (Venkataraman, 1997; Ahuja &
Lampert, 2001). However, by themselves these studies do not provide a unified answer to the question of corporate processes expressed above; there remains much that is unknown. This study, then, contributes to the field by providing an examination of the resource and decision-making implications of the implementation processes involved in exploiting an entrepreneurial opportunity inside an existing corporation.
Toward this end, this study seeks to answer two related, yet separate research questions; these are more specific than the general question mentioned above. These questions are built on two issues that are central to the venture exploitation processes taking place within corporations:
resource availability and decision-making autonomy. First, the resources that have been identified in the literature as important to a successful launch of an internal entrepreneurial initiative are considered. These include initiative support from the top management team (TMT) and internal stakeholders (Hitt, Nixon, Hoskisson, & Kochhar, 1999; Nonaka &
Takeuchi, 1995), as well as support in the form of material provisions and corporate competencies. In keeping with the general upper echelons theory (e.g., Hambrick & Mason, 1984) and resource-based views (RBVs) (e.g.,Barney, 1991;Peteraf, 1993), this paper suggests that a TMT’s support is a firm resource that may have an important impact on the outcomes of an entrepreneurial initiative. This is supported by studies of TMTs in new independent ventures (e.g.,Ensley, Pearson, & Pearce, 2003) and corporate venture champions (e.g., Greene, Brush, & Hart, 1999). As Greene et al.
(1999, p. 106) argue, TMT’s ‘‘underlie the decisions about resource combinations and deployment that can determine success or failure.’’
In addition to top management support, the fact that established corporations already possess material resources (e.g., financial and human capital) and competencies (e.g., distribution, manufacturing, and marketing) suggests that they could be leveraged to increase the likelihood of initiative success (Bloodgood, Sapienza, & Almeida, 1996;Burgelman, 1983;Zahra, 1993). However, not all resources and competencies affect the success of a venture equally. Considering that some resources and corporate functional
competencies are more critical to the success of internal entrepreneurial initiatives than others, the following question is presented: ‘‘What is the best source of critical resources for exploitation initiatives?’’
The second major issue considers the plethora of decisions that must be made throughout the implementation phase of an entrepreneurial initiative.
Extant research suggests that the owner of resources often expects to maintain control of decisions about the use of those resources (Bruton, Fried, & Hisrich, 1997). In the case of corporate entrepreneurial initiatives, the corporate parent is often the initial provider of the resources and competencies needed to ensure the initiative’s success. Therefore corporate representatives, either in functional areas or in divisions, may prefer to maintain decision control over the resources being provided to the initiative.
However, this is not typically a good practice; the extant research has shown that corporate initiatives react better to their dynamic environments if they possess more flexibility in decision making (Block, 1983, 1989). These kinds of decision control issues make corporate entrepreneurial initiatives especially complex. Therefore, the second key question is: ‘‘Where is the best place for decision-making control to reside when exploiting entrepre- neurial initiatives?’’
The thesis of this manuscript is that the answers to these two research questions are contingent upon the fit between the expertise and appro- priateness of the source of the resources and decisions and the specific critical needs of the entrepreneurial initiative. For example, the managers of an internal entrepreneurial initiative may be more successful if they procure resources from outside the corporation, as independent ventures do, rather than obtaining them from inside the corporation; this is especially true if the outside sources offer a better fit with the needs of the initiative than that which is available internally to the corporation (Thornhill & Amit, 2000).
Likewise, decision autonomy in the functional areas critical to the venture’s success may best remain with those whose expertise most closely fits the needs of the venture regardless of whether they come from the corporation or are independently garnered by the initiative (MacMillan, Block, &
Narasimha, 1986).
To examine such contingencies, a sample was needed that allowed for the isolation of corporate initiatives in the implementation stage of the entrepreneurial process. The sample of firms needed to share a commonly defined, already discovered opportunity about which the firms had already evaluated and chosen to pursue. In this way, the discovery and evaluation of opportunities can be held constant and allow for the study to focus on the effects of the resource and control decisions made during the DILENE R. CROCKETT ET AL.
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implementation phase of the entrepreneurial process. The newspaper industry and its exploitation of the Internet to deliver news content to new and existing customers seemed to provide an excellent context of study. In other words, the news industry provides an appropriate sample for this study because the Internet represented a new, uncertain technology and each newspaper chose a variety of implementation strategies aimed at commer- cializing the opportunities that the new technology created (Amit & Zoot, 2001).
This study proceeds as follows. First, this chapter reviews the applicable literature relating to corporate entrepreneurial initiatives and develops testable hypotheses relating functional resource support and decision autonomy to entrepreneurial initiative performance. Next, this chapter explains the methods used in the research and outlines the results of the empirical analyses. Finally, a discussion of the findings is given, including an overview of the limitations and contributions of the research.