Intrapreneurship

Abstract

Intrapreneurship is a particular form of entrepreneurship that has been discussed off and on since the 1970s. Entrepreneurship is usually thought of as a lone individual with a dream of starting a business and the personal drive to bring that dream to fruition by scraping together resources and working long hours with only a faint hope of success. Intrapreneurship is similar, but it involves a person who, rather than toiling alone in her garage to build an invention that will change the world, works within an established company and to some extent has the benefit of the company’s resources. The intrapreneur seeks to use her drive and creativity to push the company in new directions.

Overview

The key aspect of intrapreneurship that is important to understand is that it is activity that is not part of the employee’s official duties. Intrapreneurship occurs when an employee has an idea for how the company he or she works for can operate in a new and innovative way, or can develop a new type of product or service different from the company’s current offerings. The intrapreneur then, instead of letting the idea simply fade away, takes up the responsibility for acting as a champion for the idea and for the company, by trying to explain to others how it could benefit the company, the world, or both. This can be an extremely challenging task in some companies, because it is not uncommon for companies to have rather inflexible ideas about whose job it is to innovate (Szycher, 2015). Some authors have jokingly referred to this as a sort of corporate immune system, which seeks out and neutralizes good ideas that do not follow the proper channels of communication and authority.

Intrapreneurs also face challenges within their organizations because the nature of the intrapreneur’s role is that it comes with many of the responsibilities of leadership but it does not automatically bring with it the authority that leaders usually wield (Brussel, 2012). This occurs because intrapreneurs can come from any part of an organization—the top, the bottom, or somewhere in between. Because organizations tend to have a small number of people in leadership positions, and a much larger number of people who are in subordinate positions, it is more likely for intrapreneurs to emerge from the lower ranks of the organizational hierarchy. This makes it more difficult for an intrapreneur to implement ideas about how things can be done differently, because most organizations are based upon the idea that leaders are those with power, and it is their role to have ideas and to order subordinates to implement those ideas. Intrapreneurs who are not in official leadership positions do not have any trouble having ideas, but they lack the actual authority within the organization to compel others to help implement those ideas. If intrapreneurs wish to enlist the help of others in the organization, they must first persuade them that the cause is a worthy one, that the idea is one that will benefit the organization and those it serves, and that their efforts are necessary for the idea’s success (Scala, 2014).

Much of the research related to intrapreneurship in recent years has sought to explore how its benefits to the organization can be quantified. Without this information, it has largely been a mystery why some organizations embrace the idea and others view it with skepticism. Thus, there have been a number of studies conducted that try to identify a connection between an organization’s adoption of a stance favorable to intrapreneurship, and that organization’s subsequent financial performance. While these studies generally agree that there is some kind of connection between these two variables, the precise mechanism of their interrelation is not yet fully understood.

Some propose that intrapreneurship has a direct financial benefit, because employees of the organization develop new products or new efficiencies that generate additional profits. While this makes sense on an intuitive level, it has proven difficult to locate many instances of this happening in the real world. This has led some to propose that the influence of intrapreneurship on the bottom line is more subtle, and that it is largely derived from the fact that when an organization encourages intrapreneurship, it is really telling its employees that the company wants them to become personally invested in what goes on at the organization, and that their contributions will be valued and respected at all times (Rekha, Ramesh & Jaya Bharathi, 2015). When employees know that this is how the organization will treat them, their trust in the organization builds, as does their commitment to it. In other words, when people feel that their input matters, the quality of that input improves, and this benefits the whole organization (Strauss, & World Entrepreneurship Forum, 2014). Companies that encourage intrapreneurship within their organization are more adaptive and innovative (Park, Kim & Krishna, 2014).

Another set of theories about the mechanism of intrapreneurship uses the lens of organizational learning and knowledge management to try to understand why some individuals are able to innovate by seeing problems in new ways, so that new solutions become obvious to them. The main idea here is that innovations are discovered by some individuals because those individuals have an unusual combination of aptitude and education that allows them to see issues in innovative ways. At a traditional organization, a creative person might think of a way that the organization could innovate, but this is where the progress of events would come to a halt, because there would be no way for the individual to alert the organization to the presence of the innovation, nor would there be any way for the innovator to push the organization into taking action (Desouza, 2011).

In an organization that values intrapreneurship, on the other hand, the culture of the firm makes it possible for an innovative individual who has a useful idea to educate the organization so that the organization will be able to appreciate the significance of the information and take action to benefit from it. This dynamic explains why organizations that support intrapreneurship are sometimes described as learning organizations. Instead of being impervious to new information or information that contradicts its assumptions, as traditional organizations tend to be, learning organizations are open to new ways of seeing the world and new ideas about how to contribute to it in ways that meet people’s evolving needs.

Organizations that support intrapreneurial efforts establish a pattern of leveraging information to meet changing needs, and this serves them well in a broad range of scenarios, frequently improving the organization’s overall financial performance. Research is still ongoing into what methods of information transfer are most often used and which are most effective for the transfer of knowledge between an intrapreneur and the organization he or she is a part of; once this area is better understood, there may be large steps forward in the adoption of favorable attitudes toward intrapreneurship, because companies will know how to put the information they provide to good use, and will be more able to predict the results (Samit, 2015).

Companies have been paying increased attention to intrapreneurship. One explanation for this is that intrapreneurship and the personal qualities that are its foundation represent resources that the organization can use for an indefinite period of time. Most of the resources corporations use—raw materials, office supplies, computers, fuel, and so on—are finite and non-renewable. This means that they are in limited supply and eventually are used up. Intrapreneurship, on the other hand, is an employee characteristic that is not used up when it is applied—a person that has an idea about how deliveries can be made in a more cost effective manner does not have to wait a set period of time to "recharge" before having another idea.

The value of this is often lost on critics of intrapreneurship, many of whom view the idea of intrapreneurs as little more than a fad or a clever play on words. For companies that do not close themselves off from their employees’ creativity, this criticism is far from accurate. Seen from this perspective, the topic of intrapreneurship has much in common with a modern acknowledgement of the importance for companies of embracing their employees’ social and emotional lives, because being open to individuals’ expressions of creativity—as occurs when intrapreneurship is supported—has many advantages over the managerial approaches of the past.

The intrapreneur is not a rogue element within the organization, seeking to destabilize existing structures of power and channels of communication (Lumpkin & Katz, 2011). A company that embraces intrapreneurship is one that values its employees beyond what is found in their job descriptions or listed in their resumes. An intrapreneur looks at a system and sees not what is wrong with it, but how it can be made better. Such an individual functions best in an environment where people are seen not as cogs in the machine but as potential innovators. When an organization like this and an employee with the intrapreneurial gift find one another, amazing things can happen (Rogers & Makonnen, 2014).

Further Insights

The main reason why intrapreneurship can be so challenging is that the corporations in which it occurs tend to be risk averse (Bernstein, 2013). Companies that survive long enough to grow to a substantial size do so because they avoid taking risks that are unlikely to bring sizable returns. Intrapreneurship is based on the risk inherent in any new idea or process. In a sense, intrapreneurs must demonstrate to key members of their organization that while their idea is risky enough to have never been tried before, there is good reason to believe that the idea is worth that risk because if it succeeds it will produce valuable results (Arentsen et al., 2010).

Several studies have attempted to understand what combination of qualities must come together to transform a person into an intrapreneur. Some of these have been noted above, such as the capacity for innovation, and the willingness to take risks. Creativity is very important to intrapreneurship, but creativity alone will not make someone an intrapreneur. This is because it is possible for a person to be highly creative, and yet not use this creativity to influence the behavior of the organization to which he or she belongs.

Another important characteristic is the ability to be proactive. For many, the workplace is a site characterized by passivity, in which employees receive their assignments from their supervisors, and work on them until they are completed or until another assignment takes priority. Intrapreneurship requires the employee to be in the frame of mind to take action when the situation demands it, rather than continue to perform the same tasks they always do, in the same way they always do. For example, if a salesperson specializing in computer network technology has been instructed to focus on selling customers the company’s new digital switch, but discovers that one of the customers on her contact list has just had their whole wireless network fail, the proactive response would be for the salesperson to try to sell that customer some new wireless equipment. A non-proactive response would be for the salesperson to simply stick to the instructions she had been given and not pay any attention to the change in circumstances of the failed wireless network (Guo & Bielefeld, 2014).

Innovative companies that actively promote intrapreneurship often resemble lean startups rather than established firms. Some companies maintain a "skunkworks," that is, a small group of people engaged in intense research and development. A relatively new phenomenon is open innovation, which is the sharing of ideas and research outside the organization. One company, for example, may come to a dead end in an area of research that provides a solution for another company. Open innovation is seen to be beneficial because it draws on the collective power of many researchers while minimizing the risk that anyone will keep useful solutions secret.

Overview

Much of the research related to intrapreneurship in recent years has sought to explore how its benefits to the organization can be quantified. Without this information, it has largely been a mystery why some organizations embrace the idea and others view it with skepticism. Thus, there have been a number of studies conducted that try to identify a connection between an organization’s adoption of a stance favorable to intrapreneurship, and that organization’s subsequent financial performance. While these studies generally agree that there is some kind of connection between these two variables, the precise mechanism of their interrelation is not yet fully understood.

Some propose that intrapreneurship has a direct financial benefit, because employees of the organization develop new products or new efficiencies that generate additional profits. While this makes sense on an intuitive level, it has proven difficult to locate many instances of this happening in the real world. This has led some to propose that the influence of intrapreneurship on the bottom line is more subtle, and that it is largely derived from the fact that when an organization encourages intrapreneurship, it is really telling its employees that the company wants them to become personally invested in what goes on at the organization, and that their contributions will be valued and respected at all times (Rekha, Ramesh & Jaya Bharathi, 2015). When employees know that this is how the organization will treat them, their trust in the organization builds, as does their commitment to it. In other words, when people feel that their input matters, the quality of that input improves, and this benefits the whole organization (Strauss, & World Entrepreneurship Forum, 2014). Companies that encourage intrapreneurship within their organization are more adaptive and innovative (Park, Kim & Krishna, 2014).

Another set of theories about the mechanism of intrapreneurship uses the lens of organizational learning and knowledge management to try to understand why some individuals are able to innovate by seeing problems in new ways, so that new solutions become obvious to them. The main idea here is that innovations are discovered by some individuals because those individuals have an unusual combination of aptitude and education that allows them to see issues in innovative ways. At a traditional organization, a creative person might think of a way that the organization could innovate, but this is where the progress of events would come to a halt, because there would be no way for the individual to alert the organization to the presence of the innovation, nor would there be any way for the innovator to push the organization into taking action (Desouza, 2011).

In an organization that values intrapreneurship, on the other hand, the culture of the firm makes it possible for an innovative individual who has a useful idea to educate the organization so that the organization will be able to appreciate the significance of the information and take action to benefit from it. This dynamic explains why organizations that support intrapreneurship are sometimes described as learning organizations. Instead of being impervious to new information or information that contradicts its assumptions, as traditional organizations tend to be, learning organizations are open to new ways of seeing the world and new ideas about how to contribute to it in ways that meet people’s evolving needs.

Organizations that support intrapreneurial efforts establish a pattern of leveraging information to meet changing needs, and this serves them well in a broad range of scenarios, frequently improving the organization’s overall financial performance. Research is still ongoing into what methods of information transfer are most often used and which are most effective for the transfer of knowledge between an intrapreneur and the organization he or she is a part of; once this area is better understood, there may be large steps forward in the adoption of favorable attitudes toward intrapreneurship, because companies will know how to put the information they provide to good use, and will be more able to predict the results (Samit, 2015).

Companies have been paying increased attention to intrapreneurship. One explanation for this is that intrapreneurship and the personal qualities that are its foundation represent resources that the organization can use for an indefinite period of time. Most of the resources corporations use—raw materials, office supplies, computers, fuel, and so on—are finite and non-renewable. This means that they are in limited supply and eventually are used up. Intrapreneurship, on the other hand, is an employee characteristic that is not used up when it is applied—a person that has an idea about how deliveries can be made in a more cost effective manner does not have to wait a set period of time to "recharge" before having another idea.

The value of this is often lost on critics of intrapreneurship, many of whom view the idea of intrapreneurs as little more than a fad or a clever play on words. For companies that do not close themselves off from their employees’ creativity, this criticism is far from accurate. Seen from this perspective, the topic of intrapreneurship has much in common with a modern acknowledgement of the importance for companies of embracing their employees’ social and emotional lives, because being open to individuals’ expressions of creativity—as occurs when intrapreneurship is supported—has many advantages over the managerial approaches of the past.

The intrapreneur is not a rogue element within the organization, seeking to destabilize existing structures of power and channels of communication (Lumpkin & Katz, 2011). A company that embraces intrapreneurship is one that values its employees beyond what is found in their job descriptions or listed in their resumes. An intrapreneur looks at a system and sees not what is wrong with it, but how it can be made better. Such an individual functions best in an environment where people are seen not as cogs in the machine but as potential innovators. When an organization like this and an employee with the intrapreneurial gift find one another, amazing things can happen (Rogers & Makonnen, 2014).

Terms & Concepts

Academy for Corporate Entrepreneurship: The Academy for Corporate Entrepreneurship (ACE) is an organization that exists to encourage companies to develop their own innovation strategies to take advantage of their employees’ creativity and energy.

Corporate Immune System: The idea of a corporate immune system is a somewhat facetious reference to the fact that traditionally, corporations have not encouraged innovation from within their own ranks, unless it came from those whose job was to innovate. For any other employee who proposed a new idea or a way to improve operations, the corporate culture would act like an immune system responding to an infection, and would discourage the employee from pressing forward with the suggestion.

Corporate Social Entrepreneurship: A corporate social entrepreneur is a person who works within a corporation but also seeks to move the corporation closer toward actions that are socially responsible, such as donating employee time and company resources to charity, adopting company-wide recycling efforts, and encouraging work life balance in its employees.

Lean Startup: A lean startup is an approach to innovation that concentrates on developing products rapidly and efficiently, testing them to see if they are likely to succeed, and treating failure as an opportunity for redesign and refinement rather than as an end to the project. It is common for groups following an intrapreneurship model to use an approach similar to that of lean startups.

Open Innovation: Open innovation is an approach to creativity and product design that asserts that companies should be open to inspiring ideas not just from within their own ranks, but from people and events external to the company as well. This is in contrast to the more traditional approach to innovation, which was for a company to hire a group of experts and have them innovate without influence from the outside world.

Skunkworks: A skunkworks is one example of intrapreneurship, because it describes a small group of people engaged in intense research and development in order to achieve radical advances in product development or scientific research. The term comes from the Skunk Works, a project at defense manufacturer Lockheed Martin that began in the years following World War II. There is often an air of secrecy and urgency surrounding a skunkworks project, which may derive from the fact that much of Lockheed Martin’s work was and remains for the military, and is thus confidential and also related to national security.

Bibliography

Arentsen, M. J., Rossum, W., Steenge, A. E., & Belgian-Dutch Association for Institutional and Political Economy. (2010). Governance of innovation: Firms, clusters and institutions in a changing setting. Cheltenham, UK: Edward Elgar.

Bernstein, N. (2013). "Intrapreneurship"—Can big business pull it off?. Workforce Solutions Review, 4(5), 12–16. Retrieved January 3, 2016, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=92630688&site=ehost-live

Brussel, G. J. J. C. M. (2012). Creating space with style: Developing intrapreneurship as a career perspective for senior professionals: A Dutch study in non-profit organisations. Heerlen: Open Universiteit.

Desouza, K. C. (2011). Intrapreneurship: Managing ideas within your organization. Toronto, Ontario: University of Toronto Press.

Guo, C., & Bielefeld, W. (2014). Social entrepreneurship: An evidence-based approach to creating social value. San Francisco, CA: Jossey-Bass.

Lumpkin, G. T., & Katz, J. A. (2011). Social and sustainable entrepreneurship. Bingley, UK: Emerald.

Park, S. H., Kim, J., & Krishna, A. (2014). Bottom-up building of an innovative organization: Motivating employee intrapreneurship and scouting and their strategic value. Management Communication Quarterly, 28(4), 531–560. Retrieved January 3, 2016 from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=98709043&site=ehost-live

Rogers, S., & Makonnen, R. (2014). Entrepreneurial finance: Finance and business strategies for the serious entrepreneur. New York, NY: McGraw-Hill Education.

Rekha, S. K., Ramesh, S., & Jaya Bharathi, S. (2015). Empherical study on the relationship between entrepreneurial mindset and the factors affecting intrapreneurship: A study in Indian context. International Journal of Entrepreneurship, 19, 53–59. Retrieved January 3, 2016 from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=108588449&site=ehost-live

Samit, J. (2015). Disrupt you!: Master personal transformation, seize opportunity, and thrive in the era of endless innovation. New York, NY: Flatiron Books.

Scala, K. (2014). Leadership learning for the future. Charlotte, NC: Information Age Publishing.

Strauss, S. D., & World Entrepreneurship Forum. (2014). Planet entrepreneur: The World Entrepreneurship Forum’s guide to business success around the world. Hoboken, NJ: John Wiley & Sons.

Szycher, M. (2015). The guide to entrepreneurship: How to create wealth for your company and stakeholders. Boca Raton, FL : CRC Press, Taylor & Francis Group.

Suggested Reading

Berzin, S., & Pitt-Catsouphes, M. (2015). Social innovation from the inside: Considering the "intrapreneurship" path. Social Work, 60(4), 360–362.

Felício, J. A., Rodrigues, R., & Caldeirinha, V. R. (2012). The effect of intrapreneurship on corporate performance. Management Decision, 50(10), 1717–1738. Retrieved January 3, 2016 from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=83359162&site=ehost-live

Haase, H., Franco, M., & Félix, M. (2015). Organisational learning and intrapreneurship: Evidence of interrelated concepts. Leadership & Organization Development Journal, 36(8), 906–926.

Moriano, J. A., Molero, F., Topa, G., & Lévy Mangin, J. (2014). The influence of transformational leadership and organizational identification on intrapreneurship. International Entrepreneurship and Management Journal, 10(1), 103–119.

Rigtering, J. C., & Weitzel, U. (2013). Work context and employee behaviour as antecedents for intrapreneurship. International Entrepreneurship and Management Journal, 9(3), 337–360.