Kacperczyk (2013). Opportunity Structures in Established Firms: Entrepreneurship versus Intrapreneurship in Mutual Funds

Author:
Aleksandra Kacperczyk, MIT Sloan School of Management

Interviewers:
Martina Montauti, University of Lugano
Margarita Cruz Barrientos, University of Lugano

Article link: http://asq.sagepub.com/content/57/3/484

Question 1. The paper unpacks a novel mechanism –i.e. intrapreneurship- further explaining the negative effect of large and mature firms on entrepreneurship. What motivated you to explore intrapreneurship? Did you start from the observation of a specific firm or did you find inspiration from the literature?

We all have heard about large established firms that are known for trying to keep their entrepreneurial mojo. For example, companies like Google and Amazon spend billions of dollars every year to provide their employees with opportunities and resources to set up new ventures. But we also know from research on entrepreneurship that large organizations spawn lower rates of entrepreneurs than small and nimble start-ups. Having identified this contradiction, I became interested in exploring the idea of “intrapreneurship” – typically defined as entrepreneurship within a large established organization. Though large and old firms are considered more bureaucratic, they also have more resources to put behind new-business generation. Similarly, many older firms have developed well-established competencies in bringing new ideas to the market. So it occurred to me that we needed to re-assess the conventional wisdom that large and old firms generate lower rates of entrepreneurship because they stifle the entrepreneurial spirit.

Question 2. Your paper conveys an interesting lesson about bureaucracies: that these can be effective incubators for entrepreneurial behavior. In your opinion, what are the policy implications of this lesson, especially when considering the growing faith in start-ups?

Since Schumpeter, entrepreneurship has been thought to benefit economic growth. And we often privilege small entrepreneurial start-ups – or the formation of entrepreneurial ventures outside organizations. But ventures developed internally may be just as beneficial for economic growth. Conventional wisdom is that policies to promote new venture formation should focus on independent ventures formed outside any established firm. Consequently, policies currently in place are less attentive to the fact that creative individuals may also pursue new and economically beneficial ventures inside large, mature organizations. Hence, encouraging venturing activity and therefore economic growth requires reassessing existing policies to focus not only on small, entrepreneurial firms but on intrapreneurship within large, complex organizations as well. If both types of ventures are important drivers of growth, then the relevant question from the policy perspective is about the relative weight of both entrepreneurship and intrapreneurship.

Question 3. The paper also argues about the infrastructure supporting intrapreneurship in large and mature firms. However, oftentimes employees are constrained to implement their ideas internally when they are not entitled to do so or their position within the organization does not provide the necessary resources. Is it possible to think of some structural enablers (e.g. at the organizational level) for employees to deploy intrapreneurial behavior?

We currently have much anecdotal evidence about structural and organizational enablers (and inhibitors) of intrapreneurship. One well-established practice for promoting intrapreneurship is to give individuals allocated time away from their “day jobs” in order to encourage their creative processes and support them in the development of new ideas and initiatives. For example, innovation-led companies such as Apple, Helwett Packard, Amazon and Google provide employees with ongoing “flex time” or “tinker time” to experiment with new ideas. Such policies have famously given birth to Gmail, Google Earth, and Gmail Labs. Other organizations, including the likes of Dell and Google, have formalized the role of the intrapreneur through official positions such as the “Entrepreneur In Residence” or “Chief Innovation Officer,” while still others have sought to ‘buy-in’ intrapreneurs by acquiring start-ups with an entrepreneur in situ. Finally, a number of companies, including LinkedIn, launch internal incubator programs, essentially operating as an internal “startup” incubator. At LinkedIn, engineers can get 30 to 90 days away from their regular work to develop ideas of their own into products.

Of course, this is all anecdotal evidence, and future research should assess systematically what types of organizational structures and incentives foster intrapreneurship.

Question 4. In your paper we really appreciated your references to the “classics” (e.g. Thompson, Schumpeter, Stinchcombe, Weber), which are sometimes overlooked in favor of more recent work. In your opinion, what is the value of these classics for the development of the field?

Revisiting a classic might not teach us anything we did not know before (in fact, with a classic we sometimes discover something we have always known), but current work can still benefit from being informed by the luminaries of the past. This is because foundational studies (such as Thompson or Weber) help us understand the genealogy of fundamental ideas as well as the core debates in the field. For example, since Weber, scholars have debated the merits of bureaucracy. Couching my study within this long-standing debate helps highlight how important it is to provide a substantive answer. Similarly, I have found that classics can be used as a source of novel and interesting hypotheses that have not yet been fully explored. We now have better methodological tools to test some of the well-known classical assertions in organizational theory. Finally, reading and citing classics is aspirational since they provide great examples of how to develop organizational theory.

Question 5. Publishing a paper in ASQ is a great and rewarding challenge. Can you tell us something about the moment in which you realized that your argument could be appealing to the journal and to its audience?

It is rewarding to realize that my study might make a meaningful contribution to the long-standing debates about the core issues in Organization Theory.

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