One of the hottest topics in management research right now is the relationship between entrepreneurship and innovation. Not surprisingly, much of this research has been focused on small, early-stage companies, as they are generally associated with a higher level of innovative capacity and entrepreneurial spirit.
Despite some interesting work being done in the field of “intrapreneurship” – the idea of fostering entrepreneurial drive, independence and creativity within the context of a broader, existing corporate structure – the concept has remained significantly less understood than the more traditional style of entrepreneurship practised by startups working independently.
Thankfully, a duo of researchers has recently provided the most comprehensive explanation to date of the relationship between entrepreneurship and innovation in large firms. For managers looking for an edge, this research should have a far-reaching impact on corporate leaders wishing to harness the productive and innovative power of entrepreneurship.
Professors Tahseen Arshi of Majan University College in Oman and Paul Burns of the University of Bedfordshire in Great Britain place their study within the context of what is known in management scholarship as an entrepreneurial architecture (EA), a term which refers to the broad and interconnected “ecosystem” of a firm which practises entrepreneurship.
Central elements of an EA include leadership, organizational structure, workplace culture and operational strategies aimed at unleashing a more entrepreneurial orientation to business problems. Arshi and Burns use this framework as a backdrop to a quantitative study of 400 different firms.
Entrepreneurship in large firms is, unequivocally, a precursor to innovation.
The authors highlight one central takeaway: Entrepreneurship in large firms is, unequivocally, a precursor to innovation. In other words, the more entrepreneurial a large company is, the more innovative it will be in aligning its product or service offering with the demands of its intended market.
The framework developed by Arshi and Burns emphasizes several key characteristics that a large firm must possess in order to make itself more entrepreneurial. What is most useful about this study is twofold: First, its clear articulation of how such a process can be implemented in a universal fashion across all types of large firms; and second, the ability of the authors to provide solid research proof of how effective such a program can be in fostering long-term innovation.
Overall, the authors identify 22 separate measures or prescriptions which can act as precursors to innovation. In terms of building an entrepreneurial architecture, four separate areas are emphasized: culture, structure, practical strategies and leadership style.
Elements include an emphasis on teamwork and team dynamics, a high level of employee autonomy, openness to new ideas and concepts, vision-oriented leadership and organizational resource sharing, to name just a few.
For managers, the most important aspect of this is not so much that all 22 separate measures are equally implemented, but rather that any which are implemented are mutually supportive and reinforcing.
The key element here is finding a balance between the details of management and the “big-picture” view of leadership, a goal which is often far more challenging in large organizations that might struggle with moving towards a more entrepreneurial and innovative style.
Mischa Kaplan is the CEO of Cardinal Research Group, a boutique consulting firm focused on innovation management and organizational design, as well as a part-time professor in the School of Business at Algonquin College.