Intrapreneurship Law and Legal Definition
Intrapreneurs are employees who work within a business in an entrepreneurial capacity, creating innovative new products and processes for the organization. Intrapreneurship is often associated with larger companies that have taken notice of the rise in entrepreneurial activity in recent years; these firms endeavor to create an environment wherein creative employees can pursue new ways of doing things and new product ideas within the context of the corporation. But smaller firms can instill a commitment to intrapreneurship within their workforces as well. In fact, small businesses, which often originate as entrepreneurial ventures, are ideally suited to foster an intrapreneurial environment, since their owners have first-hand knowledge of the opportunities and perils that accompany new business initiatives. For larger companies, nurturing an environment of intrapreneurship is a way to recapture a dynamic spirit while for smaller companies, it can be a way of maintaining the entrepreneurial drive from which they began.
Intrapreneurship practices have developed in response to the modern world's rapidly changing marketplace. Businesses of all sizes have long had internal units dedicated to research and development and new product development. Nonetheless, the task of maintaining a creative environment in which innovative ideas may be nurtured is not an easy one and the larger the organization the more difficult that may be. As an organization grows it naturally becomes more bureaucratic and for people of a creative bent a bureaucratic environment can be stifling. Frequently, organizations loose creative people as they grow. Intrapreneuring in its current form represents the determination of employers to solve the resulting brain drain. They are doing so by creating the environment and incentives for entrepreneurship within their existing business operations.
Small businesses have a natural advantage in terms of establishing such an environment, although it may not come naturally even for a smaller business. Internal "incubators" are one innovative example of the trend towards intrapreneurship. In these programs, employees can use the company's resources (including their already established name and reputation, as well as management experience, financial assistance, and infrastructure) to build and promote their own new business ideas. These and similar arrangements enable companies to stem the loss of ambitious and talented employees to entrepreneurial ventures. Entrepreneurial-minded employees, meanwhile, "get the challenge—and the profits—of creating their own 'companies' with little of the risk they would face on their own," observed David Cuthill in Los Angeles Business Journal.
ORGANIZATIONAL CHARACTERISTICS THAT ENCOURAGE INTRAPRENEURSHIP
The single most important factor in establishing an "intrapreneur-friendly" organization is making sure that your employees are placed in an innovative working environment. Rigid and conservative organizational structures often have a stifling effect on intrapreneurial efforts. Conservative firms are capable of operating at a high level of efficiency and profitability, but they generally do not provide an environment that is conducive to intrapreneurial activity. Some keys to instilling an intrapreneurial environment in a business include the following:
- Support from ownership and top management. This support should not simply consist of passive approval of innovative ways of thinking. Ideally, it should also take the form of active support, such as can be seen in mentoring relationships. Indeed, the small business owner's own entrepreneurial experiences can be valuable to his firm's intrapreneurial employees if he makes himself available to them.
- Recognition that the style of intrapreneurialism that is encouraged needs to be compatible with business operations and the organization's overall culture.
- Make sure that communication systems within the company are strong so that intrapreneurs who have new ideas for products or processes can be heard.
- Intelligent allocation of resources to pursue intrapreneurial ideas.
- Reward intrapreneurs. All in all, intrapreneurs tend to be creative, dedicated, and talented in a variety of areas. They are thus of significant value even to companies that do not feature particularly innovative environments. Their importance is heightened, then, to firms that do rely on intrapreneurial initiatives for growth. Since they are such important resources, they should be rewarded accordingly (both in financial and emotional terms). For while intrapreneurs may not want to go into business for themselves, they still have a hunger to make use of their talents and a wish to be compensated for their contributions. If your small business is unable or unwilling to provide sufficient rewards, then it should be prepared to lose that intrapreneur to another organization that can meet his/her desires for professional fulfillment.
- Allow intrapreneurs to follow through. Intrapreneurs who think of a new approach or process deserve to be allowed to maintain their involvement on the project, rather than have it be handed off to some other person or task force. Ensuring that the individual stays involved with the initiative makes sense for several important reasons. The intrapreneur's creativity and emotional investment in the project can be tremendously helpful in further developing the process or product for future use. Moreover, they usually possess the most knowledge and understanding of the various issues under consideration. Most importantly, however, the small business enterprise should make sure that its talented and creative employees have continued input because not allowing them to do so can have a profoundly morale-bruising impact.
SEE ALSO Entrepreneurship; Innovation
Carrier, Camille. "Intrapreneurship in Large Firms and SMEs: A Comparative Study." International Small Business Journal. April-June 1994.
Carrier, Camille. "Intrapreneurship in Small Businesses: An Exploratory Study." Entrepreneurship: Theory and Practice. Fall 1996.
Cutbill, David. "Incubators: The Blueprint for New Economy Companies." Los Angeles Business Journal. 27 March 2000.
Fattal, Tony. "Intrapreneurship at Work: Championing projects to push innovation in your company." CMA Management. November 2003.
Huggins, Sheryl E. "Internal Moonlighting: Use Your Day Job to Branch Out on Your Own." Black Enterprise. October 1997
Millner, Marlon. "Intrapreneurship: Techie Turns System He Built for Former Employer into a Small Business." Washington Business Journal. 1 May 1998.
Oden, Howard W. Managing Corporate Culture, Innovation, and Intrapreneurship. Greenwood Press, 1998.
Pinchot, Gifford, and Ron Pellman. Intrapreneuring in Action: A Handbook for Business Innovation. Berrett-Koehler, 1999.
Pryor, Austin K., and E. Michael Shays. "Growing the Business with Intrapreneurs." Business Quarterly. Spring 1993.
Sathe, Vijay. Corporate Entrepreneurship: Top Managers and New Business Creation. Cambridge University Press, 26 June 2003.
Hillstrom, Northern Lights
updated by Magee, ECDI