From Invention to New Business via the New Venture Approach

Abstract

Introduction The popular view of the entrepreneur consists of an independent, courageous, enthusiastic and tenacious individual who seizes on an idea or invention and who somehow establishes a new enterprise in order to exploit that idea commercially. However, while this “classical entrepreneur” continues to play an important role as an initiator of innovations and founder of new business enterprises, the emergence of the large corporation, along with an increasing degree of concentration of industry, and particularly of the science‐intensive industries, requires the recognition and encouragement of a second type of entrepreneur, namely the “intracorporate entrepreneur”. As a company grows through exploiting its initial innovation, its management requirements change from something that is normally an idiosyncratic management style which is innovative, fluid and willing to accept high risk developments, to one of stable management which has high administrative skills and which is capable of ensuring the efficient running of the increasingly more complex organisation. But administrators, in general, tend to take a jaundiced view of risk taking and innovation: they are bureaucrats who wish to maintain the status quo and to do things always “according to the book”. The environment created, therefore, in the larger organisation will often militate against innovation (particularly radical innovation) and individual entrepreneurship occurring within that organisation. Indeed, a recent US Department of Commerce study showed that many highly significant innovations are generated outside the industry utilising them rather than in the major organisations within that industry (e.g. nylon, xerography, the transistor) and Shimshoni, from his study of the mobile scientists in the American instrument industry, ascribed a causal relationship between the absorption of small firms (i.e. increasing concentration) and the reduction in growth rate in that industry.