Entrepreneurship vs. Intrapreneurship
March 29, 2023
Intrapreneurs are entrepreneurs who operate within an established company, an arrangement that offers benefits as well as considerable drawbacks. This article discusses both.
The Merriam-Webster dictionary defines an entrepreneur as "one who organizes, manages, and assumes the risks of a business or enterprise." We typically associate the term with green field, or startup, entrepreneurs; that is, business people who conceive and build an independent business. These trailblazers must master a host of tasks and skills, from producing a new product or service and developing a business plan to raising capital and staffing up. It's a big job fraught with many potential pitfalls; that's why 90 percent of startup businesses fail.
There is another form of entrepreneurship, one that doesn't attract nearly as much attention as the type practiced by the Steve Jobs and Elon Musks and Janice Bryant Howroyds of the world. It's called corporate entrepreneurship, a term used to describe the launch of new business ventures, business ideas, and innovative projects from within established companies. This practice is sometimes referred to as intrapreneurship, although, as we'll see later, some academics reserve this term for a specific subcategory of corporate entrepreneurship.
As we'll discuss in this article, corporate entrepreneurship offers new opportunities and new markets to companies willing to imagine business beyond established products and markets. Therein lie the challenges of corporate entrepreneurship: the conservative practices that make established profit-generators so reliable can be anathema to the risk-taking, boundary-crossing efforts that drive successful entrepreneurial enterprises.
How wide are the boundaries that separate entrepreneurship and intrapreneurship? To explore the contract of entrepreneurship vs. intrapreneurship, we'll discuss the following questions:
- What is entrepreneurship?
- Is entrepreneurship possible within a corporation?
- What is intrapreneurship?
- Examples of intrapreneurship
- Developing corporate entrepreneurship skills
What is entrepreneurship?
Entrepreneurship is the process by which new businesses come into being. According to Investopedia, the defining behaviors of entrepreneurs include "bearing most of the risks and enjoying most of the rewards" of a new venture. They are typically seen as innovators, "a source of new ideas, goods, services, and businesses or procedures."
Entrepreneurs run the gamut from independent contractors to startup companies launching new products or delivering new services. At every level, entrepreneurship speaks to ingenuity, creativity, and a profound belief in one's idea for their own business. From food truck proprietors to high-tech moguls, successful entrepreneurs employ guts and brains to take financial risks in hope of financial gains.
Is entrepreneurship possible within a corporation?
Skeptics doubt that true entrepreneurship is possible within corporate strictures. Scott Kirsner argues in the Harvard Business Review that corporate bureaucracy, fear of failure, reluctance to make long-term investments in properties that don't quickly return profits, and, in the case of publicly traded companies, pressure from the board and investors to keep metrics strong every quarter all undermine entrepreneurial activity.
Real-world examples suggest otherwise. Perhaps the most famous corporate entrepreneurship experiment takes place at Google, where a 20 percent rule enables employees to commit one-fifth of their working hours to exploring their own ideas and developing new skills. The policy, according to the Google IPO letter, "empowers [workers] to be more creative and innovative. Many of our significant advances have happened in this manner." Among them: Google Maps, Gmail, and AdSense.
What is intrapreneurship?
According to some, intrapreneurship is a synonym for corporate entrepreneurship ("Intrapreneurship is acting like an entrepreneur within an established company… [it]'s creating a new business or venture within an organization," writes Meredith Somers in an MIT Management blog).
Others take a more granular approach, defining intrapreneurship as one of many forms of corporate entrepreneurship. Under this model, articulated in Neal Thornberry's Corporate Entrepreneurship: Antidote or Oxymoron? (European Management Journal), intrapreneurship identifies a group of managers within a corporate structure and encourages them to develop the mindset of green field entrepreneurs. These managers are typically directed to pursue promising spin-up business development opportunities or simply to offer "outside the box" perspectives on ongoing ventures. The goal is to create opportunities for risk-taking and nimble strategies.
By either definition, intrapreneurs operate within existing organizations. This means they enjoy the freedom to innovate within the personal financial risk of their own resources that startup entrepreneurs must endure. They may also benefit from more robust funding, although that varies from company to company.
Not all the key differences between entrepreneurs and intrapreneurs favor the latter. Intrapreneurs must cope with corporate hierarchies and the potentially toxic politics they foster. They must also conform to corporate procedures and regulations that can be considerably more restrictive than they are at many startups. And of course they don't reap nearly as great a financial windfall if the venture takes off. For many, that may be the main difference and the chief drawback.
Examples of intrapreneurship
It's nearly impossible to go through daily life without directly engaging with the fruits of intrapreneurship. Examples include office mainstays like Post-It Notes, a product of 3M's innovation rule.
When companies empower intrapreneurs, new businesses have the opportunity to arise from unexpected places. W.L. Gore serves as a perfect example of intrapreneurial encouragement paying off. While most famously responsible for the waterproof but breathable Gore-Tex material, the company encourages employees to devote about 10 percent of their time to new ideas. One product of this commitment to intrapreneurship is Gore's Elixir guitar strings, which build on the existing version by utilizing a polymer coating to extend string life. By some accounts (the data are hard to verify), Elixir Strings are now the top-selling acoustic guitar strings in the United States.
Established legacy companies would do well to imitate some of the disruptor spirit that seemingly fuels the tech world. Beyond Google, companies like Facebook, Sun Microsystems, and Shutterstock all benefit from intrapreneurship.
Developing corporate entrepreneurial skills
Corporate entrepreneurship occupies only a small slice of the entrepreneurial pie, and accordingly it receives sporadic attention in academia. Universities offer Master of Science and Master of Business Administration degrees in entrepreneurship, but none focus on corporate entrepreneurship. Many of these programs commit no more than one course to the subject, and others omit it entirely. Most degree, certificate, and single-course offerings in entrepreneurship focus most or all of their attention on startup (aka green field) entrepreneurs. However, as more businesses devote resources and org-chart space to these endeavors, expect to see more research and teaching in the field.
MBA programs with entrepreneurship concentrations
Several business schools offer a Master of Business Administration (MBA) with a specialization in entrepreneurship. Others cast their net a bit more broadly, defining their degree as an MBA in corporate innovation and entrepreneurship. This latter group typically focuses more course content on corporate entrepreneurship (as opposed to startup entrepreneurship).
Of course, an MBA represents a major commitment of time—a full-time program typically runs two years, a part-time program three or more—and money (the most expensive MBA programs approach $140,000). You'll learn a broad swath of business management fundamentals in the program through courses in finance, marketing, operations, supply chain management, leadership, and communications. Many apply to entrepreneurship. However, you will commit relatively little time to direct study of entrepreneurship and intrapreneurship.
Certificate programs typically consist of a series of related courses that can be completed in a year or less. Certificate programs are like miniature graduate degrees. Many are designed with working professionals in mind, which is why so many are delivered online. Again, much of the material covered in these programs may pertain primarily or exclusively to startup entrepreneurs.
For speed and convenience, it's hard to beat single courses. Some can be completed in just a few weeks, and at a fraction of the cost of a certificate program. Their short duration produces yet another benefit: more, and more frequent, start times, meaning you won't have to wait a semester or a year for the next enrollment period. You may be able to start work within days of deciding to enroll. Columbia University offers an online course entitled Corporate Entrepreneurship taught by internationally renowned expert Rita McGrath.