CHAPTER 3: THE ENTREPRENEURIAL MIND-SET IN ORGANIZATIONS - CORPORATE

ENTREPRENEURSHIP
TRUE/FALSE
1. Corporate Entrepreneurship activity occurs outside the firm.
ANS: F
PTS: 1
KEY: page 56
2. Polaroid and 3M have had successful corporate entrepreneurship ventures.
ANS: T
PTS: 1
KEY: page 53
3. One reason that corporate entrepreneurship has become popular is because it allows corporations to tap the innovative
talents of the personnel.
ANS: T
PTS: 1
KEY: page 53
4. As part of creating an innovative climate, a firm should base rewards given upon results achieved.
ANS: T
PTS: 1
KEY: page 68
5. A corporation can encourage entrepreneurship activities if top management sponsors entrepreneurial projects.
ANS: T
PTS: 1
KEY: page 69
6. Few firms today realize the need for corporate entrepreneurship.
ANS: F
PTS: 1
KEY: page 57
7. The need for entrepreneurship has risen in response to the rise of the global economy.
ANS: T
PTS: 1
KEY: page 53
8. Clever bootlegging of ideas refers to secretly working on new ideas on company time as well as on personal time.
ANS: T
PTS: 1
KEY: page 55
9.Individuals may avoid corporate entrepreneurial behavior due to the impact of traditional management techniques.
ANS: T
PTS: 1
KEY: page 57
10. Skunkworks are project groups that work within the traditional lines of authority.
ANS: F
PTS: 1
KEY: page 58
11. Very large corporations such as 3M have really struggled with corporate entrepreneurship ventures.
ANS: F
PTS: 1
KEY: pages 53, 63-64
12. Todays managers must foster excitement for innovation and remove obstacles for employees to engage in corporate
entrepreneurship.
ANS: T
PTS: 1
KEY: page 57
13. Firms do not need to alter management techniques to encourage corporate entrepreneurship since it tends to occur
naturally.
ANS: F
PTS: 1
KEY: page 57
14. Trust from the company is one key element to successful corporate entrepreneurship.
ANS: T
PTS: 1
KEY: pages 54 and 62
15. Employees shouldnt expect feedback on their entrepreneurial ideas.
ANS: F
PTS: 1
KEY: pages 54 and 73
16. Corporations that promote personal growth will attract the best people.
ANS: T
PTS: 1
KEY: page 55
17. When an entrepreneurial environment is created, a company does not usually set aside traditions of the company.
ANS: F
PTS: 1
KEY: page 61

18. Every business person feels comfortable operating in an entrepreneurial environment.

ANS: F
PTS: 1
KEY: page 61
19. The first step in planning a strategy of corporate entrepreneurship is sharing the vision of innovation that executives
wish to achieve.
ANS: T
PTS: 1
KEY: page 61
20. Systematic evolution of a product or service into newer or larger markets is referred to as radical innovation.
ANS: F
PTS: 1
KEY: page 63
21. Corporate entrepreneurs should be restricted to the resources of their own divisions of the corporation.
ANS: F
PTS: 1
KEY: page 54
22. Researchers have identified specific factors that organizations can concentrate on in helping individuals develop more
entrepreneurial behavior.
ANS: T
PTS: 1
KEY: page 67
23. Corporate venturing flourishes when a vertical management system is in place.
ANS: F
PTS: 1
KEY: page 58
24. A healthy environment for corporate entrepreneurship exists when employees can feel a sense of ownership in the
company.
ANS: T
PTS: 1
KEY: page 70
25. Radical innovations must be nurtured.
ANS: T
PTS: 1

KEY: page 63

26. A champion is a person with a big ego and just gets in the way of corporate entrepreneurship.
ANS: F
PTS: 1
KEY: page 63
27. A competitors move to increase market share can be a precipitative event in corporate entrepreneurship.
ANS: T
PTS: 1
KEY: page 57
28. Corporate entrepreneurs are people who are action oriented and self-determined.
ANS: T
PTS: 1
KEY: page 69
29. The resources of the organization are irrelevant to the ability of the corporate entrepreneur to implement an idea.
ANS: F
PTS: 1
KEY: page 74
30. Understanding the entrepreneur is only part of understanding the entrepreneurial process.
ANS: T
PTS: 1
KEY: pages 54, 59
31. Corporate entrepreneurs generally are power oriented or power hungry.
ANS: F
PTS: 1
KEY: page 69
32. The Interactive Process is a result of individuals and organizational characteristics interacting with some precipitating
event.
ANS: T
PTS: 1
KEY: page 58
33. The success of corporate entrepreneurship depends on the entrepreneurs within the firm.
ANS: T
PTS: 1
KEY: page 72
34. Organizational boundaries allow people to focus on new ideas.
ANS: F
PTS: 1
KEY: page 54
MULTIPLE CHOICE
1. Corporate entrepreneurial activity takes place
the firm.
a. only with outside suppliers to
c. both inside and outside
b. with anyone outside
d. Inside
ANS: D

PTS: 1

KEY: page 56

2. Which of the following was one of the factors Drucker mentions to explain the development of the entrepreneurial
economy?
a. the rapid evolution of technology and knowledge
b. demographic trends
c. government regulation
d. a robust venture capital market
ANS: A

PTS: 1

KEY: page 53

3. One reason why corporate entrepreneurship has done so well is that it allows organizations to
a. increase salaries.
c. encourage high risk taking.
b. fire the dead wood.
d. tap the innovative talents of their people.
ANS: D

PTS: 1

4. Intrapreneurship is also referred to as:

a. inside entrepreneurship
b. internal entrepreneurship
ANS: C

PTS: 1

KEY: page 53
c. corporate entrepreneurship
d. outside entrepreneurship
KEY: page 53

5. ____people thoroughly understand the concept of corporate entrepreneurship.

a. Just about all
c. Many
b. Most
d. Few
ANS: D

PTS: 1

KEY: page 53

6. The major thrust of corporate entrepreneurship is to

a. encourage greater risk taking.
c. encourage innovation.
b. raise profitability.
d. increase morale.
ANS: C

PTS: 1

KEY: page 55

7. All of the following are reasons for the growth of corporate entrepreneurship except
a. a desire to dramatically increase profitability.
b. a rapidly growing number of new and sophisticated competitors.
c. a sense of distrust in the traditional methods of corporate management.
d. an exodus of some of the best people out of corporations.
ANS: A

PTS: 1

KEY: page 57

8. Which of the following helps account for the rise of interest in corporate entrepreneurship?
a. There is a decrease in the number of sophisticated competitors.
b. Government regulation of small entrepreneurs.
c. Corporations are now losing some of their best people.
d. A general increase in the number of competitors.
ANS: C

PTS: 1

KEY: page 57

9. Which of the following is an obstacle to corporate entrepreneurship?

a. orientation to the market
b. a system of feedback and positive reinforcement
c. traditional management techniques
d. rewards based upon results
ANS: C

PTS: 1

KEY: page 57

10. In following the rules for innovation, a manager should do all of the following except
a. encourage action.
c. punish failure.
b. use formal meetings whenever possible. d. reward performance.
ANS: C

PTS: 1

KEY: page 54

11. In restructuring corporate thinking, top management should

a. identify potential entrepreneurs after an innovation program is in operation.
b. make the entrepreneur follow strict corporate guidelines.
c. promote entrepreneurship through experimentation.
d. create diversity and order in strategic activities.
ANS: C

PTS: 1

KEY: page 55

12. Which of the following is not a question in the corporate entrepreneurial planning process?
a. does the firm encourage and reward entrepreneurs?
b. do employees frequently require permission?
c. Does the firm direct resources toward entrepreneurship?
d. Have you met government regulations for innovation?
ANS: D

PTS: 1

KEY: page 54

13. Secretly working on new ideas on company time as well as on personal time is referred to as
a. skunkworks.
c. bootlegging.
b. champion.
d. interactive learning.
ANS: C

PTS: 1

KEY: page 55

14. The adverse impact of

can be so destructive that individuals within the enterprise will tend to avoid
entrepreneurial behavior.
a. traditional management techniques
c. specific entrepreneurial strategies
b. innovative climate rules
d. informal meetings
ANS: A

PTS: 1

KEY: page 57

15. Innovative factors identified by James Brian Quinn that exist in large organizations experienced in successful
innovation include all of the following except:
a. interactive learning.
c. multiple approaches.
b. uniform compensation.
d. skunkworks.
ANS: B

PTS: 1

KEY: page 58

16. Groups that function outside traditional lines of authority permitting rapid turnaround of new ideas as well as instilling
a high level of group loyalty are called:
a. skunkworks.
c. champions.
b. multiple approaches.
d. strategic innovators.
ANS: A

PTS: 1

KEY: page 58

17. Which of the following would not be considered as encouraging to an entrepreneurial environment?
a. uniform compensation
b. identifying potential entrepreneurs
c. top management sponsorship of entrepreneurship
d. promotion of entrepreneurship through experimentation
ANS: A
PTS: 1
KEY: page 55
18. In an innovative climate, failure is viewed as
a. the end of the world.
b. a learning experience.
c. O.K., inevitable, since the employee is probably not capable of further innovative thought.
d. a basis for firing.
ANS: B
PTS: 1
KEY: page 55
19. One step an organization can take to make its corporate environment more innovative is to
a. gain top management support of an entrepreneuring program.
b. fire top management and hire young executives.
c. change the dress code to casual attire.
d. give across-the-board raises.

ANS: A

PTS: 1

KEY: page 55

20. Which of the following will help to foster an innovative climate?

a. encourage action from employees
b. punish mistakes
c. eliminate coffee breaks to encourage employees to work harder
d. do away with dress codes
ANS: A

PTS: 1

21. Bureaucrats in an organization must

a. standardize procedures
b. engage in horizontal management
ANS: C
PTS: 1

KEY: page 55
c. learn to give way to intrapreneurs
d. avoid risky moves
KEY: page 55

22. Authoritarian management is being replaced by

a. networking.
c. Japanese managers.
b. independent contractors.
d. benevolent managers.
ANS: A
PTS: 1
KEY: page 61
23. Corporate entrepreneurial strategy should be thought of as
a. vision directed
c. restricted to one group in the firm
b. Dichotomous
d. management directed
ANS: A
PTS: 1
KEY: page 56
24. In attempting to create an entrepreneurial climate, the organization should consider that
a. the corporations that promote personal growth will attract the best people.
b. strict management rules work best.
c. third-party contractors of labor will not be used.
d. workers like independence.
ANS: A
PTS: 1
KEY: page 55
25. All of the following are important characteristics for establishing an intrapreneurial climate except
a. the presence of explicit goals.
c. positive reinforcement.
b. feedback.
d. punishment of mistakes.
ANS: D
PTS: 1
KEY: page 55
26. Rewards should be based upon _____ to encourage the desired behavior.
a. Seniority
c. attitude
b. Results
d. morale
ANS: B
PTS: 1
KEY: page 74
27. Key features in the success of any innovative program include all of the following except
a. confidence.
c. accountability.
b. trust.
d. high profitability.
ANS: D
PTS: 1
KEY: page 54
28. Entrepreneurship within the corporate structure allows employees to develop their ideas without
a. losing their jobs to more loyal subordinates.
b. the risk associated with leaving the company.
c. making their spouses angry that they quit their jobs.
d. fear of being promoted.
ANS: B
PTS: 1
KEY: page 57
29. The first step in planning a strategy of entrepreneurship for enterprise is
a. identifying specific objectives.
b. sharing the vision of innovation.
c. applying the exact tools of the entrepreneur.
d. developing radical innovation.
ANS: B

PTS: 1

KEY: page 61

30. The second step in planning a strategy of entrepreneurship for the enterprise is
a. identifying specific objectives.
b. sharing the vision of innovation.
c. applying the exact tools of the entrepreneur.
d. developing and encouraging innovation.
ANS: D

PTS: 1

KEY: page 61

31. Which of the following terms represents the systematic evolution of a product or service into newer or larger markets?
a. radical innovation
c. collective entrepreneurship
b. incremental innovation
d. strategic management
ANS: B

PTS: 1

KEY: page 63

32. Which of the following terms represents the inaugural breakthroughs launched from experimentation and determined
vision?
a. radical innovation
c. collective entrepreneurship
b. incremental innovation
d. strategic management
ANS: A

PTS: 1

KEY: page 63

33. Which of the following are specific factors identified by researchers, that organizations can concentrate on in
structuring an entrepreneurial climate.
a. radical innovation, incremental innovation, and vision
b. skunkworks, multiple approaches, and vision
c. top management support, time, resources, rewards, and organizational boundaries
d. rewards, resources, innovation, and vision
ANS: C

PTS: 1

KEY: page 55

34. Internal venture capital that is set aside for special entrepreneurial projects is termed:
a. intracapital.
c. intrapreneurial seed money.
b. project capital.
d. collective capital.
ANS: A

PTS: 1

KEY: page 69

35. Which of the following are innovative rules that the 3M Corporation uses to encourage its employees to foster ideas?
a. tolerate failure
c. kill projects selectively
b. keep the focus on your main business
d. reward performance relative to profits
ANS: A
PTS: 1
KEY: page 64
36. Employee perception of
a. equality.
b. a good benefits program.
ANS: D
PTS: 1

is critical for the success of corporate entrepreneurship.

c. interactive learning.
d. an innovative environment
KEY: page 65

37. Which of the following is an advantage to developing an entrepreneurial environment?

a. a good benefits program.
b. the firm helps to retain and motivate the best employees
c. creation of a work force that adheres to strict rule
d. a flexible work environment regarding time off work
ANS: B

PTS: 1

KEY: page 55

38. Which of the following is not a strategy for corporate entrepreneuring?

a. promote personal growth
c. decrease the use of third-party contracts
b. use people-style management
d. allow entrepreneur to develop ideas
ANS: C

PTS: 1

KEY: page 61

39. In order to develop an entrepreneurial environment, factors that organizations need to be aware of include:
a. management support and rewards
c. business plans and inventions

b. autonomy and time

ANS: D

PTS: 1

d. a and b should be considered

KEY: page 68

40. Brazeals model for internally developed corporate entrepreneurial ventures emphasizes
a. growth through acquisition
c. organizational boundaries
b. institutionalized innovation
d. time availability
ANS: B

PTS: 1

KEY: page 66

41. Developing corporate entrepreneurial managers involves teaching them to

a. Conduct business as usual
c. Give across-the-board raises.
b. Break out of the box.
d. Think of new ad campaigns.
ANS: B

PTS: 1

KEY: pgae 55

42. The person who has the opportunity to lead and run with an idea would be coined which of the following:
a. Department Manager
c. Champion
b. Manager
d. Visionary
ANS: C
43.

PTS: 1

KEY: page 63

Which is not a precipitating event that Zahra identifies as motivating the decision to act entrepreneurially
a. market instability.
c. new demand for a firms products.
b. competitive threat from rivals.
d. a big increase in earnings.
ANS: D

PTS: 1

44. Entrepreneurial characteristics include

a. a strong drive to succeed.
b. superior intelligence.
ANS: A

PTS: 1

KEY: page 56
c. high risk taking.
d. low morals.
KEY: page 54

45. Typically, when faced with setbacks or failure, entrepreneurs

a. remain optimistic and view it as a learning experience.
b. become outraged and take a short vacation.
c. blame top management.
d. resign.
ANS: A

PTS: 1

KEY: page 54

46. Success of the corporate entrepreneurship plan depends on

a. resources provided by the firm.
c. a few individuals.
b. high morals and ethics.
d. the reaction of rivals.
ANS: A

PTS: 1

KEY: page 54

47. Sustaining corporate entrepreneurship requires

a. keeping up with market trends.
c. keeping the corporate vision strong.
b. maximizing profits.
d. equal pay raises.
ANS: C

PTS: 1

KEY: page 69

48. One research model illustrated the process of entrepreneurship as an interaction of which elements?
a. organization, individual, precipitating
c. myths, realities, perceptions
event
b. intrapreneur, entrepreneur, manager
d. price, marketing, suppliers
ANS: A

PTS: 1

KEY: page 72

49. Precipitating events in the corporate entrepreneurship process could include:

a. laying off workers.
c. change in company location.
b. development of new technologies.
d. higher productivity standards.

ANS: B

PTS: 1

KEY: page 72

SHORT ANSWER
1. Describe the steps necessary to take an individual from a climate that is very hierarchical in nature to an
entrepreneurial setting.
ANS:
As a quote from the text states, To establish corporate entrepreneuring, companies need to provide the freedom and
encouragement that intrapreneurs require to develop their ideas. This statement is very true, but it could be
developed further. For example, managers coming from a traditional style of management believe in keeping ideas
bottled up in their heads because they actually believe that it will serve no purpose to present them to upper
management. Often, shop floor personnel are overlooked in terms of being innovative. Secondly, a more horizontal
way of communication and delegation would be better. This way no one person could stop a project completely and
everyone could work as a team providing input. Lastly, develop and practice the basics as mentioned in the text.
PTS: 1

KEY: page 68

2. Using the Signodes V-Teams example from the text, explain how some programs may succeed or fail using this
approach.
ANS:
Signode is using an aggressive strategy to pursue new products. Success will be tough for some products, but
the stringent rules placed on the new products will help to keep the basic use of technology that Signode has and
possibly develop new technologies, instead of branching out into some area that the company has never pursued,
i.e., the clothing industry. The failure may come from the fact that Signode wants to be worth $1 billion-plus by
1990. It may not be enough time for them to accomplish this task. If the push is big enough, the company may
find itself in bad shape financially and have to rethink the primary purpose of the company.
PTS: 1

KEY: page 71

3. Explain some of the disadvantages that may occur in firms that are trying to incorporate entrepreneurship into their
organizations.
ANS:
One disadvantage may be that there is resistance to change by some managers. Also, if a company jumps into
intrapreneuring too quickly without proper training, there may be some managers left not knowing what to do. If
the corporate climate is not right for intrapreneuring, there is almost no chance for success.
PTS: 1

KEY: page 56