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Funded by the Norweg ian Research Counc i l

INTRAPRENEURSHIPAn Exp lora tory S tudy o f Se lec t Norweg ian Indus t r ies

Alf Steinar Sætre, Ph.D. Associate Professor

Department of Industrial Economics and Technology Management

NTNU

Trondheim May 2001

I N T R A P R E N E U R S H I P I N N O R W E G I A N I N D U S T R I A L F I R M S , 2 0 0 1

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With headlines and trade literature full of new technologies and

market innovations which make millionaires overnight a casual

observer might be left with the impression that the new economy is

populated entirely by dot coms and new actors like Yahoo and

Mindspring. Are established companies unwilling or incapable of

innovation? Looking at, for example, the fiercely competitive

world of high tech, many of this century's technology giants remain

significant market forces because of their internal entrepreneurial

efforts. What have we learned from the numerous examples of

intrapreneurial success, and why are there are still countless other

examples of companies struggling to pull off their new ventures?

In pursuit of an illusive innovation divining rod we've studied what

happens to new ventures created within existing organizations.


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Table of Contents

TABLE OF CONTENTS ..............................................................................................................................................3

INDEX OF TABLES OF FIGURES .............................................................................................................................5

INTRODUCTION.........................................................................................................................................................7

THE LITERATURE REVISITED ...............................................................................................................................9

New-venture creation..........................................................................................................................................9 Defining the terms...............................................................................................................................................9 Why is intrapreneurship interesting?..............................................................................................................12 What does the innovation process in organizations look like? ..................................................................15 Definitions of spin-off: .....................................................................................................................................16 Structure of “Mother Organization”...............................................................................................................19 Championing ......................................................................................................................................................20

RESEARCH FOCUS................................................................................................................................................. 22

What experiences do Norwegian industrial firms have with their intrapreneurial efforts?..................22 What distinguishes spin-inns from spin-offs? ..............................................................................................23

METHODS AND FINDINGS .................................................................................................................................... 24

Study 2.................................................................................................................................................................27

DATA ANALYSIS .................................................................................................................................................... 29

Differences between Spin-Offs and Spin-Ins ...............................................................................................29 The role of the innovator/champion:..............................................................................................................35 Further exploration of the data ........................................................................................................................36 Systematic effort towards corporate innovation throughout the organization. .......................................38 The number of Projects Currently Running..................................................................................................39 The magnitude of the innovation effort.........................................................................................................40 Analysis of Data Set 1 ......................................................................................................................................42 Study 2.................................................................................................................................................................43

QUALITATIVE DATA ............................................................................................................................................. 45

Intrapreneurial experience. ..............................................................................................................................45 Search mechanisms in organizations..............................................................................................................49 Incentives for innovation and new venture creation....................................................................................52 How are new ideas and projects financed?...................................................................................................54 Evaluation, Selection and Development of New Projects ..........................................................................57 How are new ideas developed?.......................................................................................................................59 Support for Spin-Ins..........................................................................................................................................62 Support for Spin-Offs .......................................................................................................................................63


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DISCUSSION AND IMPLICATIONS . ...................................................................................................................... 66

REFERENCES .......................................................................................................................................................... 72

APPENDIX 1............................................................................................................................................................. 74

APPENDIX 2............................................................................................................................................................. 76

APPENDIX 3............................................................................................................................................................. 89


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Index of Tables of Figures

Figure 1 Burgelman's Typology.......................................................................................................................... 17

Table 1 Distribution of Sample Population and Response Rates.................................................................. 24

Table 2 Distribution of Sample Population and Response Rates.................................................................. 25

Table 3: Study 1 T-Tests ..................................................................................................................................... 26

Table 4: Study 2 T-Tests ..................................................................................................................................... 27

Table 5: Ordering of reasons for Spin-In and Spin-Off ................................................................................ 29

Table 6: Study 1 Item descriptions for scales 38 and 51................................................................................ 30

Table 7: Study 1 F-Test for Between Subject's Effects.................................................................................. 30

Table 8: Study 1 Descriptives, Paired Sample Statistics............................................................................... 31

Table 9: Study 1 Paired Samples T-Test........................................................................................................... 31

Table 10: Study 2 Item descriptions for scales 38 and 51............................................................................ 33

Table 11: Study 2 F-Tests for Between Subjects Effects............................................................................... 33

Table 12: Study 2 Descriptives Paired Samples Statistics........................................................................... 34

Table 13: Study 2 Paired Samples T-Test ....................................................................................................... 34

Table 14: 1 st Study, Comparison of Innovator's role in Spin-In and Spin-Off projects .......................... 35

Table 15: 2nd Study, Comparison of Innovator's role in Spin-In and Spin-Off projects.......................... 36

Table 16: Sample 1 Descriptives ...................................................................................................................... 37

Table 17: Sample 2 Descriptives......................................................................................................................... 37

Table 18: Bivariate Correlations for Joint Data ........................................................................................... 38

Table 19: Bivariate Correlations for Study 1 ................................................................................................. 42

Table 20: Bivariate Correlations for Study 2 ................................................................................................. 43

Table 21 Examples of firms that have run into structural or organizational difficulties.......................... 45

Table 22 Examples of organization with mixed experiences with organizationwide innovation efforts 46

Table 23 Examples of organization with positive experiences with organization wide innovation efforts........................................................................................................................................................ 47

Table 24 Examples of organization with negative experiences with organization wide innovation efforts........................................................................................................................................................ 48

Table 25 Examples of organization with formalized search routines for innovations.............................. 49


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Table 26 Examples of organization with market oriented, or externally focused, search routines for innovations................................................................................................................................... 50

Table 27 Examples of organization with integrated search routines for innovations............................... 51

Table 28 Examples of organizations.................................................................................................................. 52

Table 29 Examples of organizations.................................................................................................................. 53

Table 30 Examples of organizations with external dependencies for funding of innovative efforts ....... 54

Table 31 Examples of organizations with various budgetary mechanisms for funding of innovative efforts............................................................................................................................................. 55

Table 32 Examples of organizations with various mechanisms for funding of innovative efforts........... 56

Table 33 Examples of organizations without systematic evaluation of innovative ideas.......................... 57

Table 34 Examples of organizations with systematic evaluation procedures for innovative ideas. ....... 58

Table 35 Examples of organizations who transfer new projects to the product development department.................................................................................................................................... 59

Table 36 Examples of organizations with an integrative approach to new ideas from outside R&D. ... 60

Table 37 Examples of organizations with identical treatment of ideas regardless of point of origin. ... 61

Table 38 Examples of organizations where the support of individuals was crucial to the realization of the project..................................................................................................................................... 62

Table 39 Examples illustrating the importance of attention for garnering support .................................. 63

Table 40 Support for the Spun-Off projects: Study 1 ..................................................................................... 64

Table 41 Support for the Spun-Off projects: Study 2 ..................................................................................... 64

Figure A1: Study 1 Crosstabulation, BRANSJE * RESPRECOa................................................................... 74

Figure A2: Study 1 Chi-Square Tests................................................................................................................ 74

Figure A3: Study 2 Crosstablulation, BRANSJE * RESPONS ..................................................................... 74

Figure A4: Study 2 Chi-Square Tests1.............................................................................................................. 75

Figure A5: Study 1 Descriptives, Group Statistics......................................................................................... 75

Figure A6: Study 2 Descriptives, Group Statistics......................................................................................... 75


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Introduction

This report's literature review introduces and focuses primarily on, a few select topics

not adequately explored previously that are particularly pertinent to the empirical

study at hand. A precursory comprehensive review of the literature pertinent to

intrapreneurship can be found in the 1998 report by Wandsvik and Waagø.

The ensuing literature examination begins with a look at new venture creation and

intrapreneurship; defining the key terms used throughout the paper. These

foundational matters are followed by a delineation of why intrapreneuship is

interesting to study, and what the innovation process looks like in organizations. The

latter part of the introductory chapter looks at spin-offs versus spin- ins. In view of the

fact that an inquiry into the motivation behind why certain ventures are retained in an

organization, while others are externalized (spun-off) constituted one of the feature

concerns of the original (1997) grant proposal, this subsequent treatment of the

subject begins with Bargeman's (1984) framework, and moves into other factors such

as the structure of the mother organization and championing.

This focused review of the literature is followed by the methodology and findings

section. The present study was conducted in two stages. The first round of data

collection used SIC codes 29 through 33, while for the second round of data

collection SIC codes 24, 25, 26, 34 and 35 were selected. As these industrial

categories are production oriented, firms in these groupings were considered most

likely to have had experience both with spin-offs and spin- ins. Furthermore, only

firms with 50 employees or more were included in this study.

The two general research topics central in the project proposal were analyzed using

both quantitative and qualitative data. These topics are: (1) Norwegian industrial

firms' experiences with intrapreneurial efforts; (2) distinguishing new ventures that


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are spun-off from those that are spun- inn. The quantitative analysis of the survey data

is presented first. This section is organized topically, so that data from both rounds of

data collection are analyzed before proceeding to the next topic. The final section of

this report contains a discussion of the results and some implications of the findings.


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The Literature Revisited

New-venture creation

As the world transitions deeper into the knowledge-based postindustrial economy the

role of innovation and entrepreneurship becomes increasingly important. This is

particularly true for a small, natural resource-based economy like Norway's. In order

to reduce its reliance on the offshore oil and gas economy, Norway not only strives to

be a world market leader in technology, but is dependent upon creating new products

and services and bringing these to the international marketplace quickly and

efficiently. To achieve this Norway must maintain higher rates of innovation and new

venture creation in its on-shore economic sector. The requisite new venture creation

can, in principle, come from two separate sources; the first source being individuals

who create new products and ventures. This process is generally known as

entrepreneurship. The second is existing corporations, which spend some of their

resources in developing new ventures and new products. This study focuses on

innovation and entrepreneurship in a corporate setting, also known as

intrapreneurship.

Defining the terms.

There are three principle types of corporate entrepreneurship (Stopford & Baden-

Fuller, 1994). One, is the creation of a new business within an existing organization.

This is usually referred to as corporate venturing or sometimes intrapreneurship

(Elfring, Meeusen-Henninger & Volberda, 1995; Stopford & Baden-Fuller, 1994).

Second, is the transformation or renewal of existing organizations. This can also be a

processual innovation, including the adoption of new solutions to old problems. The

third type is what Tushman and Romanelli (1985, 1986) call frame-breaking or

discontinuous change. This is what Stopford and Baden-Fuller (1994) call changing

the rules of competition of an industry. However, this type of corporate


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entrepreneurship or innovation is only clear in hindsight (Elfring et al., 1995).

Although firms can strive to achieve this level of innovation, it is difficult to plan for.1

Jennings and Lumpkin (1989, p. 489) define corporate entrepreneurship as “the extent

to which new products and/or new markets are developed.” That is, if an organization

develops more than an average number of new products and markets it is considered

to be entrepreneurial. This is a workable definition that is not only conceptually

comprehensible, but also makes sense operationally.

The term intrapreneurship was coined by Pinchot III (1985) in his book

“Intrapreneuring: Why you don't have to leave the corporation to become and

entrepreneur.” Pinchot III (1985) formed the term intrapreneurship as a contraction of

“intraorganizational entrepreneurship.”

Some authors, writing on corporate entrepreneurship, have used the terms corporate

venturing and intrapreneurship synonymously (see Stopford & Baden-Fuller, 1994). I

argue that this is imprecise. As discussed above, corporate entrepreneurship and

intrapreneurship are synonymous, whereas the term corporate venturing is narrower

and implies the creation of a new entity within the corporation, a venture.

Intrapreneurship is an encompassing term, inclusive of corporate venturing.

There is little definitional agreement among entrepreneurship and intrapreneurship

scholars when it comes to a workable definition of the intrapreneurship concept.

Nielsen, Peters, and Hisrich (1985) take an unorthodox view and argue that:

Intrapreneurship is the development within a large organization of internal markets

and relatively small and independent units designed to create, internally test-market,

and expand improved and/or innovative staff services, technologies or methods within

the organization. This is different from the large organization

1 There are basically two fundamentally different types of innovation or change. One is what Tushman and Romanelli (1985, 1986) call competence-enhancing change, which is incremental in nature. The other is what they call competence destroying or frame-breaking change. This type of change is sporadic and unpredictable. It renders previous competencies obsolete, such as the change from vacuum-tube technology to transistor technology. What Stopford and Baden-Fuller (1994) call frame-breaking change does not fit in this category. The type of change they describe “changes the rules of competition” (p. 521). What Stopford and Baden-Fuller (1994) are describing is the change that occurs when one competitor becomes the industry leader and the other competitors are forced to respond to the leader's competitive initiatives. Although an admirable and worthwhile


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entrepreneurship/venture management strategy that tries to develop internal

entrepreneurial/venture units whose purpose is to develop profitable positions in

external markets (p. 181).

In other words, Nielsen, Peters and Hisrich (1985) claim that intrapreneurship is

nothing but an organization's efforts to improve its internal workings — through

internal markets — as distinguished from anything that an organization does that

increases external profitability, thus called corporate entrepreneurship. I have two

objections to their use of terminology. One, it may be conceptually possible to make

such a distinction, but I believe that when taking into consideration the second order

of effects of intrapreneurship — as they use the term — these terms are operationally

inseparable. Second, their use of terminology flies in the face of the conventional use

of these terms.

This study follows the conceptual definitions of Pinchot III (1985), using the terms

corporate entrepreneurship and intrapreneurship (intra-organizational

entrepreneurship) synonymously, both meaning entrepreneurship within a

corporation. This includes processual innovations aimed at improving the internal

workings of an organization, as well as innovations aimed at improving the

organization's standing in external markets, through whatever mechanisms deemed

appropriate. As stated earlier, corporate venturing indicates the creation of a separate

entity, a venture, and is thus an important subset of intrapreneuship.

Antoncic and Hisrich (2001) describe four intrapreneurship dimensions: (1) new

business venturing, (2) innovativeness, (3) self-renewal, and (4) proactiveness. They

define new business venturing as “the creation of new businesses within the existing

organization regardless of the level of autonomy” (Antoncic & Hisrich, 2001, p. 498).

Thus, Antoncic and Hisrich`s (2001) understanding of new business venturing is

slightly different than the definition of corporate venturing above. Nevertheless,

corporate venturing or new business venturing is perhaps the most salient dimension

of intrapreneurship, because it involves new business creation.

goal this type of change is not frame-breaking in the competence-destroying sense established by Tushman and Romanelli (1985, 1986).


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To summarize, intrapreneurship is the general focus of this study. Since this study

was conducted using product rather than process related industries, corporate

venturing is the specific focus of this study. More precisely, this study is concerned

with what happens to new ventures created within existing organizations. Much of

the existing empirical research on corporate entrepreneurship has been conducted in

the English-speaking world. However, Knight (1997) has shown that the concepts of

entrepreneurship in organizations have cross-cultural validity. Therefore, conducting

a study of corporate entrepreneurship and corporate venturing in Norway should not

pose any conceptual problems, nor prohibit conceptual extrapolation.

Why is intrapreneurship interesting?

It is generally observed that innovations come from small firms or individual

entrepreneurs. Today the most illustrative cases of this are start-ups like Yahoo and

Netscape, but even giants like Microsoft and Apple started with one or two people in

a garage or a basement. This begs the question, why large and resourceful

organizations did not see the opportunities that these entrepreneurs saw, and if they

did why did they not act? Quinn (1985) proffer some reasons why established firms

are less likely to provide us with the same innovations as smaller firms. First of all,

for each garage start-up that succeeds there are 99 that fail, and those that fail receive

no attention at all. Second, when an established firm wants to move a concept from

invention to market realization they must absorb all of the cost themselves (Quinn,

1985), as well as all the risk. Third, an established firm risks cannibalizing existing

products, since it is more likely that the invention in question will be related to

existing products and capabilities. Fourth, it is more likely that organized groups like

governmental agencies, special interest groups, as well as labor unions, will pay more

attention to a big firm than they will to a small one. This is particularly true when the

innovation involves retraining or the lay-off of employees.

The large organizations of the industrial age are inherently bureaucratic. It is

therefore reasonable to expect that in such organizations one would find a plethora of

ideas and potential ideas that go unnoticed because there are some structural

impediments to their realization, or little or no incentive for employees to bring such

ideas forth. In fact, in industrial organizations there are usually strong “disincentives”

for innovative activities. The upside of this is that there is a considerable amount of


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unrealized potential in such organizations (Wandsvik & Waagø, 1998). In fact,

Pinchot (1987) claims that the industrial organizations' inability to harvest ideas

generated within their boundaries has indirectly facilitated the rapid growth of the

venture capital industry. “The venture capital industry is producing 35 percent return

on investment by taking frustrated R&D people and their rejected ideas out of large

companies, and financing the commercialization of those ideas” (Pinchot III, 1987, p.

14).

This is related to a structural failure within industrial organizations. In their constant

quest for managing the balance between centralization and decentralization, between

interdependence and diversity, between integration and flexibility, and between

control and creativity, large organizations tend to favor efficiency and productivity

gains, thus sacrificing creativity and innovation.

The competitive arena of today is characterized by opposing demands on small as

well as large firms. In the industrial era, firms sought to exploit existing technologies,

to gain efficiency, seeking high-volume and low-cost output for standardized

products. Today, in the postindustrial era, firms need not only to exploit existing

technologies, they also need to be apt at exploring new technologies. The processes

underlying exploitation and exploration are diametrically opposite (March, 1991). In

the words of Kanter (1988, p. 170):

At its very root, the entrepreneurial process of innovation and change is at odds with the administrative process of ensuring repetitions of the past. … Structures and practices that may work well for the perpetuation of the known tend to be at odds with innovation.

In other words firms will not survive in the long run unless they are proficient at

exploring new technologies -- and they will not survive in the short run unless they

are proficient at exploiting existing technologies. In other words, organizations are by

their very nature structured towards efficiency, but increasingly they will now need to

also master creativity in order to survive.

In our postindustrial and knowledge based economy, a significant portion of value

adding activities take place in the minds of employees. If an employee has an idea or

a project that, for one reason or another, the corporation is not interested in pursuing,


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then the employee is left with three basic options. These options are what Hirschman

(1970) calls: exit, voice and loyalty. Applying Hirschman's typology to the problem

of large organizations impeding the ideas and creative urges of their employees,

yields the following results. If the employee chooses to exit the organization and

pursue his or her idea outside the constraints of the organization, at a minimum the

organization has lost a capable person. More than likely, the organization has missed

a business opportunity. Such events send a strong, and negative signal to the

remaining employees. Similarly, if the individual chooses to accept the idea rejection

and loyally go about business as usual, then at the very least the organization has

missed an opportunity for an insightful discussion. Frequently, the organization has

missed a potential business opportunity.

The third option is what Hirschman (1970) calls voice. Voice means that the

employee does not accept the rejection of his or her idea and “raises hell.” In this

case the organization is in for a learning experience whether it wants it or not. In

some organizations this practice is in fact embraced. At Hewlett-Packard,

management even gives out awards for “Meritorious Defiance” (Pinchot III, 1987).

One difference between an entrepreneur and an intrapreneur is that while the former

needs to be skilled at innovation, the intrapreneur also needs to be skilled at putting

together a team within the political constraints of an organization. The intrapreneur

needs to know where to find key players that complement his or her own

competencies. (see Elfring et al., 1995; Stopford & Baden-Fuller, 1994). For this

reason, corporate entrepreneurship is far more difficult to achieve since there are more

obstacles to entrepreneurial behavior within an organization than there are outside

one. These obstacles can be structural or cultural in nature, but most are rooted in a

strong resistance to change.

Wandsvik and Waagø (1998) note cases in which an employee who has been denied

the right to work on a specific project or idea, has subsequently left the organization

and started a new company. Not only did these organizations lose the employee, they

lost clients who felt that their ties to the departing employee were stronger that their

ties to his or her former employer.


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What does the innovation process in organizations look like?

The innovation process tends to have four distinctive characteristics (Kanter, 1988;

Kanter, 1985)

1. The innovation process is uncertain. The waters are littered with unpredictable

sandbanks and other unscheduled setbacks, as well as surprising breakthroughs.

2. The innovation process is knowledge intensive. Generates new knowledge at a

high rate of speed. The learning curve is steep.

3. The innovation process is controversial. Innovative efforts in existing firms are

always competing for scarce resources and attention.

4. The innovation process crosses boundaries. Both technological and prosessual

innovations are frequently interdisciplinary in origin.

Kanter`s (1988, 1985) four points are each illustrative of why innovation and

intrapreneurship is at times difficult to achieve within the framework of an existing

organization. First, the uncertainty and ambiguity associated with the innovation

process is contrary to the purpose of organization per se. Firms are organized to

minimize uncertainty and ambiguity, and they are therefore not designed to handle

these oftentimes-unstructured tasks. Second, the intensity of the learning process and

the rate with which changes and adaptations must be made are often impeded by sheer

organizational inertia. Third, the competition for resources, not only from other

innovative efforts, but also from the everyday functions of the organization itself,

draws attention away from the innovation process. Fourth, organizations are

structured along functional lines in order to gain efficiency, while successful

innovation processes are frequently dependent on interdisciplinary interaction. In

other words, the structural boundaries in an organization, by their very nature, impede

innovation processes.

All four of Kanter`s (1988, 1985) innovation process characteristics can be a catalyst

for externalizing (spinning-off) the project in order to avoid the structural

entanglement of an organization.

One of this study's lines of inquiry is the mapping of Norwegian industrial firms'

experiences with intrapreneurial efforts. How do Norwegian industrial firms


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stimulate the development of new ideas throughout the organization and how do they

search for, evaluate, fund, and develop these ideas. An additional goal is to explore

the antecedents of increased entrepreneurship levels within organizations.

As new ventures are created within organizations, it is expected that some will remain

within the mother organization, whereas others will be externalized or spun-off. In

the following we take a closer look at the spin-offs.

Definitions of spin-off:

Ito (1995, p. 431) defines a spin-off as “ a firm that is partially owned by the parent,

but independently managed and sometimes listed on various stock markets.” Ito uses

this definition to distinguish spin-offs from what he calls sell-offs or wholly owned

business units. Ito's (1995) use of terminology is different from Burgelman`s

(1984a,b) typology, shown below.


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Figure 1 Burgelman's Typology

Unrelated

3. Special Business Units

6. Independ-ent Business Units

9. Complete Spin-off

Partly Related

2. New Product Business Department

5. New Venture Division

8. Contracting

Strongly Related

1. Direct Integration

4. Micro New Ventures Department

7. Nurturing and Contracting

Very Important Uncertain Not Important

Ope

ratio

nal R

elat

edne

ss

Strategic Importance Burgelman's complete spin-off, wherein no ownership is retained, is what Ito (1995)

would call a sell-off. Some of Burgleman’s other categories, in which both strategic

importance and operational relatedness are low would probably, in Ito`s (1995)

terminology, be considered spin-offs. This illustrates that the boundaries between

these categories may not always be equally clear. Bearing this in mind, this study

uses the following definition of a spin-off: A spin-off is a corporate venture

organized as a new legal entity. This definition is clear-cut operationally as well as

conceptually. Furthermore, depending on the stake the mother corporation retains in

the new entity, one can apportion spin-offs into multiple sub-categories.

Brandth’s (1989) findings suggest that when the mother corporation supports the

innovation process, it will also support the spin-off. On the other hand, when the

“mother corporation” does not support the innovation process (negative motivation),

it does not support the spin-off. Brandth's (1989) study did not consider the

relatedness of the new venture, and her findings are probably far more mediated by

the strategic relatedness of the new venture.


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Garvin (1983) criticizes previous research on spin-off for confusing generally low

entry barriers to an industry with conditions that stimulate spin-offs. Although one is

likely to see a higher spin-off rate under such conditions, these conditions are

conducive to entry into an industry in general. Garvin (1983) further argues that the

rapidity of product change makes it virtually impossible to monitor concurrent

product and marked developments. Under such conditions the people in established

firms, working closest to a particular product line in a particular market segment, have

a distinct information advantage. Such conditions are expected to stimulate spin-offs

over other forms of market entry.

The most important condition for spin-off generation, according to Garvin (1983), is

that the core competencies are embodied in skilled labor rather than in physical assets.

“An industry whose technology is embodied in skilled human capital is a prime

candidate for spin-offs, for techniques, designs, and ideas are readily appropriable by

individuals and transferable to new firms” (Garvin, 1983, p. 11).

Garvin (1983) argues that even if an industry is generally considered to have entered

the maturity stage, new market segments continue to develop. In these new market

segments — due to the information advantages of insiders — spin-offs are more

likely to occur in these mature industry segments. The exception to this, of-course, is

when substantial capital investments are required early in the product's life-cycle.

Rapidly growing demand, changing technology, and limited scale economies all facilitate the entry of new firms. Spin-offs in particular are encouraged by the existence of multiple market segments, information and start-up advantages accruing to members of established firms, readily transferable technologies, and environments in which skilled human capital is the critical factor of production. (Gravin, 1983, p. 16).

It can be stipulated that large organizations are more capable of process innovation

(i.e. improving the production process in their constant quest for greater efficiency).

Smaller firms are organized in a way that allows greater levels of cross-functional

interaction, and hence lends itself to product innovation. The former innovation

variety does not lend itself to spin-offs, whereas the latter does. However, in the latter

case the organization is more able to adapt both their strategy and structure to “fit” the

new innovation, rather then to let it be spun-off.


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Kudla and McInish (1984) describe seven reasons spin-offs come about: (1)

Managerial reasons; (2) Capital marked conditions; (3) Risk effects; (4) Tax

benefits; (5) Marketing considerations; (6) Regulatory factors; (7) Legal factors.

Managerial considerations refers to the notion that if the venture is spun off then it is

more likely to get top management attention simply because it will have its own top

management.

Elfring and his associates (1995) argue convincingly that an “individual breaking

away from the parent company to start his/her own firm can not be seen as an

example of corporate entrepreneurship” (p. 16). Individuals leaving established firms

could just as easily be viewed as indicative of the exact opposite of corporate

entrepreneurship. Cases where the individual leaves the organization out of

frustration and dissatisfaction with the way the company deals with new ideas and

initiatives, are indicative of corporate rigidity and inflexibility, not corporate

entrepreneurship. “Had there been more opportunities for internal venturing those

individuals might have preferred to stay. Their new business ideas might have

contributed significantly to the growth of the firm” (Elfring et al., 1995, p. 16).

However, the fact that talented and entrepreneurial individuals leave established firms

does not necessarily mean that the firm they are leaving is rigid and un-

entrepreneurial. The fact that individuals are leaving the organization can just as

easily mean that the individual simply hoped for greater financial gain on his or her

own (Garvin, 1983). Alternatively it is possible that the individual intended to leave

all along, and just entered the organization to learn a “trade.” This is often seen in the

consultant business, and among external auditors. Other potential explanations can

be a lack of promotion, and downsizing (i.e. necessity). Clearly, the structural

characteristics of the organization are pertinent to the level of corporate

entrepreneurship that takes place within its boundaries.

Structure of “Mother Organization”

Brandth (1989, p. 5) expects the characteristically organic organizational structures to

yield more spin-offs than the characteristically mechanistic organizational structures,

because organic structures are likely to be more innovative. I would agree that one

could expect greater entrepreneurial activity in a comparatively organic structure than

in a mechanistic one, but this does not automatically translate into higher levels of


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spin-off activity. One would expect a percentage of all spin-offs are a result of the

entrepreneur(s) being discontent with the “mother organization,” and hence prone to

“spin-off” once the opportunity affords itself (Elfring et al., 1995). In short, one

would expect higher levels of innovation in an organic structure than in a mechanistic

one -- however one would expect a higher percentage of total innovations generated

in a firm to be spun-off from a mechanistic organization than from an organic one.

The net effect is unclear. One might expect similar levels of spin-off activity from

organic and mechanistic structures, but for different reasons.

Quinn (1985) lists several barriers to innovation in bureaucratic organizations. One of

them, inappropriate incentives, is frequently also an obstacle in more dynamic

organizations. Innovation structures are frequently geared towards increasing ROI by

reducing costs. Incentive structures in large firms are designed to minimize surprises,

yet innovation is inherently full of the unexpected. Accordingly, innovative efforts

often fall through the cracks inherent in most incentive systems.

Due to the frequent dearth of appropriate incentive structures for innovation within

the confines of traditional industrial firms, and the structural impediments imposed by

these organization's constant quest for gains in efficiency, new ideas often need avid

organizational advocates. These advocates of new ideas are called champions.

Championing

Venkatraman and his associates (1992) define a champion as: the agent who helps the

venture navigate the socio-political environment inside the corporation. Existing

theories of championing suggest that the most creative new ventures are championed

from the bottom-up. Day (1994) argues that such alternate championing modes can

also be conducive to innovative new ventures. Day (1994) found support for the

following hypotheses:

?? The lower the principal champion's hierarchical level, the more innovative the

venture will be.

?? In general, principal champions from corporate headquarters, particularly from

staff positions, will be negatively associated with innovativeness.


2 1

?? Within corporate headquarters, the higher the level of the principal champion

(i.e., CEOs and their subordinates), the greater the innovativeness of the venture.

?? Dual-role champions who play both the role of principal champion and of

organizational sponsor will be positively associated with innovativeness.

In general, it is expected that a champion will play an important role in ensuring the

advancement of the project at hand.

David (1994) argues that product innovation by internal venturing is influenced by the

mode of venturing that you choose and the relationship between intrapreneurs,

venture managers, and the R&D function. David's (1994) findings suggest that the

existence of an intrapreneur in the internal venturing process leads to a greater degree

of commercial success. He speculates that the reason for this is that the intrapreneur

is self-motivated, whereas a venture manager is assigned his role. New products

generated by internal corporate venturing efforts are more radical, or innovative if you

will, than new products generated by a firm's mainstream divisions (David 1994).

Existing research has shown that having a self-motivated initiator —innovator,

intrapreneur, or champion — is crucial for the success of a new venture. However,

little is said in the literature about whether the importance of this role differs between

projects that remained within the mother organization and projects that were

eventually spun-off. This potential difference is explored in this study.


2 2

Research Focus

What experiences do Norwegian industrial firms have with their intrapreneurial efforts?

The primary thrust of this research effort is to gain an overview of what experiences

Norwegian industrial organizations have had with their efforts of intrapreneuship2.

This was accomplished by exploring the following issues:

?????? How do industrial organizations search for potential new ideas outside of the

traditional R&D units.

?????? How do these industrial organizations develop innovations that originate outside

of traditional R&D units.

?????? What experiences have Norwegian industrial firms had with their intrapreneurial

efforts.

Furthermore, this study seeks to assess:

?????? how organizations funded their innovative efforts throughout the organization

?????? how they evaluated and selected projects.

?????? the antecedents of spin-offs and of spin- ins.

?????? mapping incentive structures for innovation in these organizations.

This study also seeks to explore:

?????? the antecedents of increased innovative efforts, measured by the number of

projects currently running.

?????? the effects of a broader intrapreneurship effort—here measured by spending on

innovative efforts outside of traditional R&D units—which are associated with

more traditional product development efforts. That is, what are the yields of

spending throughout the organization.

2 See NTNU's original grant proposal of September 1997.


2 3

What distinguishes spin-inns from spin-offs?

A second primary objective of this research effort is to explore the differences

between new ventures that remained within the mother organization (spin- in), and

those that were externalized (spin-off). Kudla and McInish (1984) describe seven

reasons for spin-offs, six of which were assessed in this study. These dimensions

were included in order to explore whether or not there are any differences in the

relative importance of these factors, between projects that were spun- in and projects

that were spun-off.

Based on Burgelman's (1984) framework it is hypothesized that the strategic

significance of the new venture in relation to the mother corporation and the

operational relatedness between the new venture and the mother corporation, would

be positively associated with spin- ins. Other dimensions explored include: the

importance of isolating the mother organization from exposure to risk, the focus of

managerial efforts, and market considerations.

Furthermore this study seeks to establish whether or not there are any differences in

the role of the innovator for projects that were spun-off and those that were spun-in.

That is, to what extent was the innovator able to secure funding and top management

support for the project? It is also of interest to look at what, if any, differences are

there in the support given by a mother organization to projects that were eventually

spun-off, and those that were spun- in.

Thus, the primary objective in this regard, is to explore and establish what are the

elements, or antecedents if you will, that distinguish spin- ins from spin-offs.


2 4

Methods and Findings

This study consists of two-stages of data collection using a survey instrument.

The Standard Industrial Classification (SIC) of Statistics Norway (Statisktisk

Sentralbyrå) was utilized in selecting a target population. For the first round of data

collection SIC codes 29 through 33 was selected. For the second round of data

collection SIC codes 24, 25, 26, 34 and 35 were selected. These industrial groups

were selected because they were production oriented, and therefore thought the most

likely to have had experience both with spin-offs and spin- ins. Furthermore, only

firms with 50 employees or more were included in this study. 50 employees is a

commonly used cut-off when researching intrapreneurship (Antoncic & Hisrich,

2001). The distribution of the population and responses for study 1, are shown in the

table below.

Table 1 Distribution of Sample Population and Response Rates

SIC Label Population Responses Response rate 29 Production of machines and

equipment (76)/563 28 50%

30 Production of Office machines and computers

2 0 0%

31 Production of other electric machines and devices

28 11 39%

32 Production of radio, TV, and other communication equipment

22 11 50%

33 Production of medical, precision, optical instruments and clocks.

12 5 42%

Total 120 55 46%

3 Total population for SIC 29 was 76 organizations, but 20 of these were used to pre-test the survey instrument, thus the target population for our study was 56.


2 5

The overall response rate was 46%, which is adequate for this type of data collection.

In addition to the 55 respondents who have returned valid survey instruments, another

10 firms responded and stated that they declined to participate. The actual response

rate is thus 54%, yielding 46% of valid data. The table below displays the

information for study 2.

Table 2 Distribution of Sample Population and Response Rates

SIC Label Total

Population Contacted Responses Response

rate 24 Production of chemicals

and chemical products 37 32 21 65,6%

25 Production of rubber- and plastic products

38 36 19 52,8%

26 Production of other non-metallic mineral products

29 25 16 64,0%

34 Production of motor vehicles, trailers and parts

13 11 5 45,4%

Total 117 104 61 58,6% The data collection was conducted in the following manner. All firms in a given

category were contacted before proceeding to the next. Consequently, only 4 firms in

category 35 were contacted and only 1 response obtained before the time period

allocated for data collection had expired. As 4 out of 81 is not a representative

sample by any stretch of the imagination this category was dropped from the analysis.

As the data collecting efforts were constrained to the period June-August we were not

able to establish the necessary contact with some firms. The overall response rate is

calculated based on responses from firms that we actually managed to contact and

request a response from. The overall response rate was 58,6%, which is pretty good

for this form of data collection.

In order to test for differences between the various groups in terms of a non-response

bias, those who had declined to participate were recoded as non-respondents, since

the purpose of the test is to establish if the valid responses are different from the non-

respondents. Figure A1 in Appendix 1 contains the cross tabulation that was used.


2 6

Based on this cross tabulation a Pearson ? 2 test revealed that there were no significant

differences between respondents and non-respondents. The test results are shown in

Figure A2 of Appendix 1. The Pearson ? 2 value was 2.97, p < .56. In other words,

there is no significant difference between the various industries in terms of response

rate.

The same cross tabulation was employed in study 2, and is shown in figure A3 in

Appendix 1. Based on the cross tabulation in Figure A3, a Pearson ? 2 test revealed

that there was no significant differences between respondents and non-respondents.

The test results are shown in Figure A4 of Appendix 1. The Pearson ? 2 value was

2.24, p < .52. In other words, there is no significant difference between the various

industries in terms of response rate.

To further test for non-response bias, an independent samples T-test was run to test

for differences between respondents and non-respondents in terms of organizational

size, measured by annual turnover (omsetn), number of employees (ansatte), and

organizational age (etablår). The descriptives for Study 1 are contained in Figure A5

of Appendix 1.

Table 3: Study 1 T-Tests

Levene's Test for Equal. of Variances

T-test for Equality of Means

95 % Confidence F Sig. t df

Sig. (2 tailed)

Mean Diff.

Std. Error Diff. Lower Upper

EVA 3,795 ,054 -1,329 106 ,187 -4,66 3,51 -11,61 2,29 etablår EVNA -1,324 101,017 ,188 -4,66 3,52 -11,64 2,32

EVA 9,108 ,003 1,855 104 ,066 1,42E+08 76480257 -9780412 2,9E+08 omsetn EVNA 1,855 74,107 ,066 1,42E+08 76480325 -1,1E+07 2,9E+08

EVA 1,405 ,238 1,090 108 ,278 55,6182 51,0139 -48,5002 156,7365 ansatte EVNA 1,090 106,999 ,278 55,6182 51,0139 -45,5109 156,7473

* EVA = Equal Variances Assumed **EVNA= Equal Variances Not Assumed As indicated by the group statistics, there is a tendency for the respondents to be older

and larger than the non-respondents. These differences are non-significant, with one

exception. The responding organizations have, on average, larger turnovers than non-


2 7

respondents (p < .10). However, a closer look revealed that only 2 companies have an

annual turnover in excess of two billion NOK. When dropping these two “outliers”

the difference disappeared, this time yielding p= .238. In short, there is a non-

significant bias towards larger and more established organizations in the data set.

This can, at least in part, be explained by our approach to the data collection. We

sought the individual in charge of new venture development as the preferred

respondent to our survey. Our experience was that in smaller organizations this

tended to be the CEO, whereas in larger organizations there was a VP (or the

equivalent) in charge of new venture development. The tendency is therefore fo r

respondents from larger organizations to have a greater interest in, and perhaps also a

greater opportunity to, answer our survey because the duties of respondents in the

larger organizations are narrower than those of a CEO or VP.

Study 2

The same tests were used in study 2. That is a T-test was run to test for differences

between respondents and non-respondents in terms of organizational size, measured

by annual turnover (omsetn1), and number of employees (ansatte), and organizational

age (etablår). The descriptives for study 2 are displayed in Figure A6 in Appendix 1.

Table 4: Study 2 T-Tests

Levene's Test for Equal. of Variances T-test for Equality of Means

95 % Confidence

F Sig. t df Sig.

(2 tailed) Mean Diff.

Std. Error Diff. Lower Upper

EVA 1,380 ,243 ,184 101 ,855 ,9663 5,2581 -9,4644 11,3970etablår EVNA ,179 81,388 ,858 ,9663 5,3992 -9,7757 11,7082

EVA 3,424 ,067 1,074 96 ,286 6,93E+08 6,45E+08 -5,9E+08 2,0E+09omsetn1 EVNA 1,290 58,867 ,202 6.93E+08 5,37E+08 -3,8E+08 1,8E+09

EVA ,553 ,459 ,499 102 ,619 95,6218 191,6218 -284,2264 475,4700ansatte EVNA ,565 85,984 ,574 95,6218 169,3315 -240,9990 432,2426

* EVA = Equal Variances Assumed **EVNA= Equal Variances Not Assumed


2 8

As indicated by the group statistics the differences between respondents and non-

respondents are non-significant. The means for turnover "omsetn1" appears to be

different, but not significantly so4.

A printed survey instrument was employed for these two studies. The instrument

contained the following. Section one contained a few questions re-question some

background information about the respondent and the organization. The second

section contained a number of general questions regarding the organization and its

innovative efforts. The third and fourth sections were similar. The third section

contained questions pertaining to an innovative effort that was internalized (spun- in).

The fourth section contained many of the same questions as in the third section, but

this time focused on innovative efforts that were externalized (spun-off).

An early draft of the instrument was circulated among the faculty and staff and

refined. Then the instrument was mailed to 20 organizations for pre-testing, after

which further adjustments were made. In the first study the questionnaires were

mailed out to the selected organizations. Four students were used to call the

respondents after about 1 week, to check that they had received the instrument and to

remind them to respond. In the second study an electronic version was posted on the

Internet (www.fakta.ntnu.no), and a research assistant called the selected respondent

and requested that they answer electronically. The respondents were also given the

option to have the survey instrument mailed or faxed to them.

4 The median turnover for respondents is 230,000,000, whereas it is 160,000,000 for non-respondents. The two groups have identical 75 percentiles.


2 9

Data Analysis

Differences between Spin-Offs and Spin-Ins

In study one, the respondents were asked to rank order 6 reasons for why the venture

remained within the organization or was spun-off respectively. In study two, the

respondents were asked to rate the importance of 6 reasons for why the venture

remained within the organization or was spun-off respectively. Since study one

effectively used a 6 point scale, whereas study two used a 5 point scale, the scores

from each study were converted to Z-scores before the data from the two studies was

collapsed. The ordering of the items was different for spin- ins and spin-offs, and

these differences remained intact across the two studies. The difference is quite

simply that risk was considered an important consideration for spinning-off a venture.

Other than this the order is identical. The results are shown in the table below.

Table 5: Ordering of reasons for Spin-In and Spin-Off

Rank Spin-In Spin-Off 1 Market reasons Market reasons 2 Organizational reasons Risk 3 Access to capital Organizational reasons 4 Risk Access to capital 5 Legal reasons Legal reasons 6 Tax reasons Tax reasons

When running a pair wise comparison of the means based on the Z-scores, all

differences are insignificant.

It is interesting to note that the ordering of these reasons was the same in both

samples, in spite of the fact that the measures were slightly different across the two

samples. The lack of significance may — in part — be due to the very small sample

size for the spin-offs in both samples.


3 0

The battery of questions concerning the "similarity" of the project in question as

compared to the mother organization is contained in question 38 (a-f) for the spin- ins

and in question 51 (a-j) for the spin-off. The individual items are shown below.

Table 6: Study 1 Item descriptions for scales 38 and 51

Item description Spin-In Spin-Off Strategic significance 38a 51a Operational similarity 38b 51b Core competencies 38c 51c Focus efforts 38d 51d Isolate from risk 38e 51e Market considerations 38f 51g

After having transposed the appropriate items from columns 51 (according to the table

above), a reliability test was run. The reliability test for these items yielded a

Cronbach's alpha of .58 when all six are included, and .67 when items C and D are

dropped. For this kind of exploratory work this alpha value is acceptable.

A multivariate test of variance (MANOVA) was run. The multivariate F-statistic

(Wilks lambda) yielded F=160.3, Df. 6/43, p<.001. The test of between-subjects

effects yielded the following results.

Table 7: Study 1 F-Test for Between Subject's Effects

Dependent Variable Type III Sum of Squares df Mean

Square F Sig.

A. Strategic significance 11,045 1 11,045 11,286 ,002 B. Operational similarity 10,1025 1 10,0125 5,408 ,024 C. Core competencies 1,620 1 1,620 ,732 ,397 D. Focus efforts ,320 1 ,320 ,282 ,598 E. Isolate from risk 10,125 1 10,125 8,050 ,007 F. Market cons iderations 47,045 1 47,045 51,586 ,000

* Corrected Model

This indicates that there are differences between the spin- ins and the spin-offs on

items A, B, E and F. These values indicate that: (A) spin- ins were significantly more

strategically important to the mother corporation than the spin-offs; (B) spin- ins were

more operationally similar to the mother corporation than were the spin-offs; (E)


3 1

spin-ins were considered to be less of a risk factor than were the spin-offs; and lastly,

(F) market considerations were more important for spin- ins than for spin-offs.

The multivariate test was run to avoid inflation of the Type I error (i.e. falsely

rejecting the tested hypothesis). The multivariate test includes all spin- in cases and all

spin-off cases. Curious as to whether these differences remain when one includes

only organizations that had both spin- in and spin-offs, (there were 8 such cases in this

data set) pair wise t-tests were conducted with the following results.

Table 8: Study 1 Descriptives, Paired Sample Statistics

Mean N Std. Deviation Std. Error Mean SPM38A 4,3750 8 ,9161 ,3239 Pair 1 SPM51A 3,0000 8 1,4142 ,5000 SPM38B 4,1250 8 1,3562 ,4795 Pair 2 SPM51B 2,7500 8 ,4629 ,1637 SPM38C 3,6250 8 1,6850 ,5957 Pair 3 SPM51C 2,5000 8 ,9258 ,3273 SPM38D 3,5000 8 1,1952 ,4226 Pair 4 SPM51D 4,2500 8 ,7071 ,2500 SPM38E 3,7143 7 1,4960 ,5654 Pair 5 SPM51F 3,0000 7 1,4142 ,5345 SPM38F 4,6250 8 ,7440 ,2631 Pair 6 SPM51G 2,0000 8 1,6036 ,5669

Table 9: Study 1 Paired Samples T-Test

Paired Differences 95 %

Confidence

Mean Std. Dev.

Std. Error Mean Lower Upper t df

Sig (2-

tailed) Pair 1 SPM38A - SPM51A 1,3750 1,0607 ,3750 ,4883 2,2617 3,667 7 ,008

Pair 2 SPM38B - SPM51B 1,3750 1,5059 ,5324 ,1160 2,6340 2,582 7 ,036

Pair 3 SPM38C - SPM51C 1,1250 1,7269 ,6105 -,3187 2,5687 1,843 7 ,108

Pair 4 SPM38D - SPM51D

-,7500 1,6690 ,5901 -2,1454 ,6454 -1,271 7 ,244

Pair 5 SPM38E - SPM51F

,7143 1,9760 ,7469 -1,1133 2,5418 ,956 6 ,376

Pair 6 SPM38F - SPM51G

2,6250 1,9955 ,7055 ,9567 4,2933 3,721 7 ,007


3 2

This tells us that strategic importance (pair 1), operational similarity (pair 2), and

market considerations (pair 6), were significantly more important for spin- inns than

they were for spin offs5.

As the careful observer will have noticed, the N in this test is low (8), due to the fact

that only 8 respondents had both a spin- in and a spin-off. With N=8 there is only a

very limited consequence to detecting any differences between the two groups,

nonetheless the test yielded 3 significant differences6.

First, units that were spun- in were considered significantly (p< .01) more important

strategically to the mother organization than were the units that were spun-off. This is

in line with Burgelman's (1984) assertions that only ventures that were considered

strategically insignificant would be spun-off. Furthermore, here one finds that units

that spun-off were considered to be significantly less (p< .05) related in an

operational sense to the mother organization than the ventures that were retained

(spun-in). This finding is also very much in line with Burgelman's (1984) typology.

In addition our findings show that market considerations were significantly (p< .01)

more important to ventures that were retained in the mother organization (spun- in)

than they were for ventures that were spun-off. One potential explanation for this is

that the mother corporation's existing marketing channels and distribution system

were considered crucial to the successful market entry for the new venture.

The data from study 2 was analyzed separately, because that the item's means and

standard deviations were different across the two samples.

The battery of questions concerning the "similarity" of the project in question as

compared to the mother organization is contained in question 38 (a-f) for the spin- ins

and in question 50 (a-e,g) for the spin-offs. The individual items are shown in the

subsequent table.

5 The pair 3 comparison has a probability only slightly greater than .10. Due to the limited sample size, power to detect differences is very low. With a larger sample size, if the same differences were observed, it would be a significant difference, due to greater degrees of freedom. 6 An alternative to the paired-samples t-test could potentially have been the independent groups t-test. However the result of such a test would be distorted due to the difference in sample size. Furthermore, the groups in this case are not independent; rather, it is one group that has had both spin-ins and spin-offs. The paired-samples t-test is therefore appropriate.


3 3

Table 10: Study 2 Item descriptions for scales 38 and 51

Item description Spin-In Spin-Off Strategic significance 38a 50a Operational similarity 38b 50b Core competencies 38c 50 Focus efforts 38d 50 Isolate from risk 38e 50 Market considerations 38f 50

After having transposed the appropriate items from columns 50 (according to the table

above), a reliability test was run. The reliability test for these items failed to yield

anything approaching acceptable levels.

A MANOVA was run. The multivariate F-statistic (Wilks lambda) yielded F=302.87,

and Df. 6/46, p<.001. The test of between-subjects effects yielded the following

results.

Table 11: Study 2 F-Tests for Between Subjects Effects

Dependent Variable Type III Sum of Squares

df Mean Square

F Sig.

A. Strategic significance 4,721 1 4,721 3,332 ,074 B. Operational similarity 8,650 1 8,650 6,558 ,013 C. Core competencies ,221 1 ,221 ,124 ,726 D. Focus efforts ,742 1 ,742 ,518 ,475 E. Isolate from risk 21,439 1 21,439 17,208 ,000 F. Market considerations 174 1 ,174 ,088 ,768

Source = Corrected Model

Showing that there are differences between the spin- ins and the spin-offs on items A,

B and E. In order, these differences indicate that spin- ins were significantly more

strategically important to the mother corporation than were the spin-off (p < .10).

Also, the spin- ins were operationally more similar to the mother corporation than the

spin-offs (p < .05). Further, spin- ins were considered to be less of a risk factor than

were the spin-offs (p < .05).


3 4

The multivariate test includes all spin- in cases and all spin-off cases. T-tests were run

in order to see if these differences remain when only including organizations that had

both spin- in and spin-offs. There were 8 such cases in this data set. Pair wise t-tests

were run with the following results.

Table 12: Study 2 Descriptives Paired Samples Statistics

Mean N Std. Deviation Std. Error Mean SPM38A 3,9091 11 1,3751 ,4146 Pair 1 SPM50A 3,4545 11 1,1282 ,3402 SPM38B 4,5455 11 ,6876 ,2073 Pair 2 SPM50B 3,0909 11 1,4460 ,4360 SPM38C 3,8182 11 1,1677 ,3521 Pair 3 SPM50C 3,6364 11 1,2863 ,3878 SPM38D 3,6000 10 1,0750 ,3399 Pair 4 SPM50D 4,2000 10 ,7888 ,2494 SPM38E 1,7273 11 1,3484 ,4066 Pair 5 SPM50F 3,2727 11 ,9045 ,2727 SPM38F 2,5000 10 1,5092 ,4773 Pair 6 SPM50G 2,1000 10 1,6633 ,5260

Table 13: Study 2 Paired Samples T-Test

Paired Differences 95 %

Confidence Mean

Std. Dev.

Std. Error Mean Lower Upper t df

Sig (2-

tailed) Pair 1 SPM38A - SPM50A ,4545 2,0671 ,6232 -,9341 1,8432 ,729 10 ,483

Pair 2 SPM38B - SPM50B 1,4545 1,7529 ,5285 ,2769 2,6322 2,752 10 ,020

Pair 3 SPM38C - SPM50C ,1818 1,7787 ,5363 -1,0131 1,3767 -,339 10 ,740

Pair 4 SPM38D - SPM50D -,6000 1,5776 ,4989 -1,7286 ,5286 -1,203 9 ,260

Pair 5 SPM38E - SPM50F

-1,5455 1,6348 ,4929 -2,6438 -,4471 -3,135 10 ,011

Pair 6 SPM38F - SPM50G ,4000 2,6331 ,8327 -1,4836 2,2836 ,480 9 ,642

Figure 14 indicates that only two differences remain significant. Spun- in projects

were considered to have a significantly higher degree of operational relatedness than


3 5

did the projects that were spun-off. It was furthermore considered important in the

spin-off cases to protect the mother corporation from risk.

The role of the innovator/champion:

The importance of the innovator, or champion to the development of the Spin-In, was

assessed by a 3- item battery of questions (questions 29-31). These items were

repeated for the Spin-Off cases (questions 41-43). Questions 29 and 41 measured

how important the innovator was during the development phase of the project.

Questions 30 and 42 measured how important the innovator was for the overall

development of the project. And questions 31 and 43 measured to what extent this

person acquired the support of top management. These measures were the same for

both studies.

It was expected that the innovator/initiator would be a central figure in all projects.

Analysis revealed no significant differences between the importance of this person to

a spin- in or a spin-off, in either of the two studies. The subsequent table shows the

descriptive statistics for the first study.

Table 14: 1st Study, Comparison of Innovator's role in Spin-In and Spin-Off projects

Distribution Item Item Description7 Mean St.Dev 1 2 3 4 5 N

29 Innovator's role in getting project funding, Spin-In 4,07 1,06 2 2 6 17 19 46

41 Innovator's role in getting project funding, Spin-Off

3,08 1,32 1 1 0 5 3 10

30 Importance of innovator's efforts for project, Spin -In 4,15 ,88 1 1 6 21 18 47

42 Importance of innovator's efforts for project, Spin -Off 3,80 1,23 1 0 2 4 3 10

31 Degree of mgmt. support for innovator, Spin-In

4,49 ,62 0 0 3 18 26 47

43 Degree of mgmt. support for innovator, Spin-Off 4,50 ,53 0 0 0 5 5 10

Table 4 indicates that both the means and distributions are very similar for both

groups.

7 These are truncated versions of the items. The full version can be found in the attached instruments.


3 6

The following table shows the descriptive statistics for the second study.

Table 15: 2nd Study, Comparison of Innovator's role in Spin-In and Spin-Off projects

Distribution Item Item Description8 Mean St.Dev. 1 2 3 4 5 N

29 Innovator's role in getting project funding, Spin-In

4,14 1,01 2 1 7 18 22 50

41 Innovator's role in getting project funding, Spin-Off

4,08 0,88 1 1 8 23 17 50

30 Importance of innovator's efforts for project, Spin-In

3,84 1,20 5 1 6 22 15 49

42 Importance of innovator's efforts for project, Spin-Off

4,45 0,69 0 0 1 4 6 11

31 Degree of mgmt. support for innovator, Spin-In

4,45 0,82 0 0 2 2 7 11

43 Degree of mgmt. support for innovator, Spin-Off

4,09 0,83 0 0 3 4 4 11

Table 5 indicates that both the means and distributions are very similar for both

groups. When only cases that had both spin- in and spin-of were included these small

differences tended to remain. In other words, there are no significant differences

between the perceived importance of the innovator for projects that were spun-off and

projects that were spun- in. In both cases the innovator was considered important

(scores consistently above 4 on a 5 point scale). The consistency across the two

samples further lends credibility to this finding.

Further exploration of the data

In order to further explore the data, a series of correlations were run. Before these

correlations were run some conversions were done. First, items 14, 19 and 20,

questions which called for responses in the form of percentages, were converted to Z-

scores9. Second, items 15 (number of projects currently running)10 and 16 (amount of

money spent in 1999), were recoded into categorical data. Both these conversions

were performed to avoid distortions stemming from extreme values. Furthermore,

the range, mean, and standard deviation for each item was compared across the two

8 These are truncated versions of the items. The full version can be found in the attached instruments. 9 Percentage scores were converted to Z-scores because Z-scores carry a standard interpretation that percentages do not. Also, Z -scores are on a continuous scale, which is appropriate for further analysis. 10 The recoding was as follows: Variable 15: 0=0, 1-2.9=1, 3-4.9=2, 5-7.4=3, 7.5-14.9=4, 15+=5. Variable 16: 0=0, 1-1.000.000=1, 1.000.001-5.000.000=2, 5.000.001-10.000.000=3, 10.000.001-30.000.000=4, 30.000.001+=5.


3 7

studies, and only items with comparable descriptives were collapsed. Below are the

descriptive statistics for sample 1.

Table 16: Sample 1 Descriptives

N Min. Max. Mean Std.Dev. SPM10 65 1,00 5,00 3,0909 1,0762 SPM11 52 1,00 5,00 4,1923 ,9709 SPM14 52 ,50 25,00 5,4298 5,3666 SPM18 50 1,00 5,00 2,7000 ,9313 SPM19 43 ,00 100,00 20,6512 27,4728 SPM20 50 ,00 100,00 30,4800 28,7757 RECODE15 50 ,00 5,00 2,0800 1,1220 RECODE16 49 ,00 5,00 2,7551 1,3468 COM27_CH 53 1,33 4,33 2,9686 ,6651 Valid N (listwise) 32

These can now be compared to the descriptives for sample 2.

Table 17: Sample 2 Descriptives

N Min. Max. Mean Std.Dev. SPM10 60 1,00 5,00 2,6333 1,1042 SPM11 52 1,00 5,00 4,4615 1,0377 SPM14 57 ,00 75,00 11,6667 15,3720 SPM18 55 1,00 5,00 2,4364 1,2287 SPM19 19 ,00 100,00 19,2245 29,0347 SPM20 58 ,00 90,00 12,3966 17,8256 RECODE15 58 ,00 5,00 2,1379 1,5497 RECODE16 45 ,00 5,00 2,3778 1,4027 COM27_CH 58 1,17 4,67 2,4282 ,6623 Valid N (listwise) 29

As can be seen from the tables above, the means, ranges, and standard deviations are

fairly similar across the two samples, with the exceptions of items 14 and 20.

Correlations for these two items were, as a precaution, run separately for the two

samples.


3 8

Table 18: Bivariate Correlations for Joint Data

SPEARMAN'S RHO SPM 10

SPM 11

SPM 18

Recode 15

Recode 16

Zscore SPM19

COMP 27_4

Corr. Coeff. 1,000 -,002 ,210* ,427** ,379** ,398** ,508**

Sig. (2 tailed) - ,986 ,032 ,000 ,000 ,000 ,000

SPM10

N 115 104 104 107 93 91 110

Corr. Coeff. -,002 1,000 ,001 ,245* ,000 ,116 -,100

Sig. (2 tailed) ,986 - ,995 ,015 ,998 ,301 ,320

SPM11

N 104 104 94 99 85 81 100

Corr. Coeff. ,210* ,001 1,000 ,303** ,216* ,189 ,332**

Sig. (2 tailed) ,032 ,995 - ,002 ,042 ,075 ,001

SPM18

N 104 ,94 105 101 89 90 100

Corr. Coeff. ,427** ,245** ,303** 1,000 ,524** ,395** ,312**

Sig. (2 tailed) ,000 ,015 ,002 - ,000 ,000 ,001

SPM15

N 107 99 101 108 90 88 103

Corr. Coeff. ,379** ,000 ,216* ,524** 1,000 ,202 ,347**

Sig. (2 tailed) ,000 ,998 ,042 ,000 - ,072 ,001

Recode 16

N 93 85 89 90 94 81 90

Corr. Coeff. ,398** ,116 ,189 ,395** ,202 1,000 ,227*

Sig. (2 tailed) ,000 ,301 ,075 ,000 ,071 - ,035

Zscore SPM19

N 91 81 90 88 81 92 87

Corr. Coeff. ,508** -,100 ,332** ,312** ,347** ,227** 1,000

Sig. (2 tailed) ,000 ,320 ,001 ,001 ,001 ,035 -

COMP 27_H

N 110 100 100 103 90 87 111 * Correlation is significant at the ,05 level (2-tailed). ** Correlation is significant at the ,01 level (2-tailed).

Question 27 consisted of various measures as to how the company had stimulated

creativity and innovation in the organization. Alpha reliability was calculated to .79

after 1 item was dropped.11 A composite variable was formed (comp27_H). This

composite variable shows how well the company is stimulating creativity and

innovation throughout the organization.

Systematic effort towards corporate innovation throughout the organization.

The composite variable measuring how the company had stimulated creativity and

innovation in the organization was correlated with question 10, measuring to what

extent the organization engages in a systematic corporate innovation effort beyond


3 9

what takes place in traditional R&D units. The correlation (.51) is strong and

significant, showing that organizations that make an effort to stimulate corporate

innovation outside R&D units: place a greater emphasis on implementing new

measures and stimulating employees, ask for ideas from employees, reward

employees, place a greater focus on innovation than their competitors, establish

special units, and foster champions, to a greater extent than those that do not engage

in a systematic corporate innovation effort.

There is also a positive (.21) and significant (p < .05) association between variable 10

and variable 18, which illustrates the proportion of funds allocated to the idea in the

pre-project or discretionary phase. In other words, organizations that are stimulating

creativity and innovation in the organization as a whole, are also better at allocating

more funds to the early stages of product development. Allocating funds during early

stages is associated with accelerated product development.

Furthermore, those organizations that engaged in a systematic effort to innovate also

tended to extend a greater effort in terms of the money spent. The association

between variable 10 and variable 16 is strong (.38) and significant (p < .01). These

organizations also tended to spend a greater portion of their funds outside of

traditional R&D units. That is, there is a strong (.40), and significant p < .01)

association between variable 10, and variable 19.

The number of Projects Currently Running

The amount of time the organization has engaged in a systematic effort to stimulate

innovation throughout the organization (variable 11) is only associated with the

number of projects currently running (variable 15): .25, p < .05. In other words, the

longer an organization has had a systematic effort for stimulating innovation

throughout the organization the greater the number of projects currently running.

Two other variables were also positively associated with variable 15 (number of

projects currently running). Variable 10, the degree to which a firm has made a

systematic effort to innovate, is strongly (.43) and significantly (p>.01) associated

11 Item h. (training employees in creativity techniques) was dropped.


4 0

with the number of projects presently running. Furthermore, the greater the firm's

tendency to allocate funding in the early stages (variable 18), the greater the number

of projects tended to be. (.30, p < .01).

In short, organizations which made a systematic effort to stimulate innovation over an

extended period of time tended to have a greater number of projects running

concurrently, as did those organizations that allocated funds to projects in the very

early stages.

The magnitude of the innovation effort.

In this section I will discuss how the magnitude of the innovation effort in an

organization is associated with other key variables. The magnitude of the innovation

effort was measured by the number of innovation projects presently underway

(variable 15), and the amount of money spent on product development and

innovation (variable 16). Both variables were positively and strongly correlated

(Spearman's rho .52).

The number of projects currently underway, and the total amount spent (variables 15

and 16) are both positively associated with how the company stimulates creativity and

innovation in the organization (composite 27). Not surprisingly, this shows us that

organizations that spend a greater amount of money, and have more projects running

concurrently, place a greater emphasis on implementing new measures, stimulating

employees, rewarding employees, have a greater focus on innovation than their

competitors, tend to establish special units, and foster champions, than those

companies that spend less money and run fewer projects.

There is also a positive (.40) and significant (p < .01) association between the number

of projects running (variable 15), and the portion of the money allocated to units

outside of traditional R&D units (variable 19). That is, the more money was spent

on individuals and departments outside of R&D, the greater the number of projects

developed.


4 1

There is also a positive association between how much money an organization spent

on innovation efforts (variable 16), and the percentage of these funds that were

allocated in the pre-project phase of innovation development (variable 18).

Interestingly, variable 18, measuring the portion of total funds allocated in the very

early stages of a project, was associated with composite variable 27. Thus indicates

that firms that are willing to allocate resources in the pre-project phases of the

innovation or product development process also place a greater emphasis on

implementing new measures, stimulating employees, asking employees for their

ideas, rewarding employees, have a greater focus on innovation than their

competitors, tend to establish special units, and foster champions, as compared to

those firms that only allocate money after an idea has become a project.

Furthermore, variable 19, the portion of innovation funds that were spent on units

outside of traditional R&D units, was positively associated with the composite

variable 27. This indicates that firms that manage to spend more money on

organization wide innovation efforts rather than more focused R&D efforts, also

manage to implement new measures, stimulate employees, ask employees for their

ideas, reward employees, have a greater focus on innovation than their competitors,

establish special units, and foster champions. In short, they have a much broader

approach to their innovative efforts.

Due to the differences in the ranges, means, and standard deviations for questions 14

and 20 across the two data sets, these analyses were run separately as a precaution.


4 2

Analysis of Data Set 1

Alpha reliability for the composite scale formed of variable 27 was .78 after 1 item

was dropped. Below are the correlations for items 14 and 20 for study 1.

Table 19: Bivariate Correlations for Study 1

SPEARMAN'S RHO

Zscore SPM14

Zscore SPM20

SPM 10

SPM 11

Recode 15

Recode 16

SPM 18

Zscore SPM19

COM 27_H

Corr. Coeff. 1,000 ,254 ,550** -,008 ,304* ,605** ,179 ,076 ,348*

Sig. (2-t) - ,082 ,000 ,954 ,035 ,000 ,223 ,634 ,013

Zsc

ore

S

PM

14

N 52 48 52 49 48 49 48 42 50

Corr. Coeff. ,254 1,000 ,138 -,056 ,337* ,295** -,039 ,266 ,072

Sig. (2-t) ,082 - ,340 ,711 ,024 ,046 ,797 ,092 ,629

Zsc

ore

S

MP

20

N 48 50 50 47 45 46 46 41 48

The extent to which the organization have a systematic corporate innovation effort,

beyond what takes place in traditional R&D units (variable 10) is strongly (.55) and

positively (.01 level) correlated with the percentage of the company's turnover that is

spent every year on product development and innovation (variable 14). That is,

companies that spend the most money, also tend to be better at stimulating innovation

throughout the organization, and do not just pass this responsibility on to R&D units.

The positive association between variable 14 (the percentage of turnover spent

product development and new venture creation) and the composite score (variable

27), further strengthens this finding. 12

The fact that variable 14, the portion of turnover spent on innovation, and variable 16

the total amount spent on innovation, are strongly (.61) and significantly (p < .001)

associated should not come as a surprise to anyone. Variable 14 is further associated

with the number of innovation projects presently running (variable 15). This finding

further corroborates the finding that the greater the magnitude of the innovation effort

the greater the number of projects that will result.

12 This evidence is further corroborated by the positive association between variable 10 and variable 15—measuring the number of innovation projects currently running—and 16—the amount of money spent.


4 3

Both variable 15 and variable 16, were positively associated with variable 19. That is,

the more projects that an organization is running concurrently, the greater the

percentage of turnover attributed to products that did not exist 3 years ago. Similarly,

the more money spent on innovation, the greater the percentage of turnover attributed

to products that did not exist 3 years ago.

Study 2

The alpha reliability for the scale was .74 after item "h" was dropped. Although in

this case the reliability of the scale would have been slightly better, .77, had the item

remained. It was dropped for consistency, since it did not affect reliability all that

much.

Table 20: Bivariate Correlations for Study 2

SPEARMAN'S RHO

Zscore SPM14

Zscore SPM20

SPM 10

SPM 11

Recode 15

Recode 16

SPM 18

Zscore SPM19

COM 27_H

Corr. Coeff. 1,000 ,277* ,191 -,066 ,233 ,610** ,212 ,187 -,083

Sig. (2-t) - ,043 ,159 ,656 ,090 ,000 ,131 ,213 ,550

Zsc

ore

S

PM

14

N 57 54 56 48 54 43 52 46 54 Corr.

Coeff. ,277* 1,000 ,381** ,213 ,212 ,125 ,134 ,276 ,144

Sig. (2-t) ,043 - ,003 ,142 ,119 ,417 ,338 ,058 ,294

Zsc

ore

S

MP

20

N 54 58 57 49 55 44 53 48 55

As is immediately obvious these correlations are vastly different from those of Study

One. The only common correlation, not surprisingly, is the strong positive

association between variable 14 and variable 16. That is, the percentage of turnover

spent on stimulating innovation efforts, and the total amount spent on innovation.

However, some new associations have appeared. First, here Variable 14 is positively

correlated with variable 20. That is, the greater the percentage of turnover spent on

stimulating innovation efforts, the greater the percentage of turnover stemming from

products that did not exist 3 years ago. This association was also present in Study

One, but failed to reach significance.


4 4

Further, there is in this sample a strong (.38) and significant (p < .01) association

between variables 10 and 20. That is, the greater a firms ability to stimulate

innovation and creativity in units outside of traditional R&D units, the greater the

percentage of turnover stemming from new products. {potentially an important

finding}.


4 5

Qualitative Data

As a part of the survey instrument, used for both study 1 and 2, eight open-ended

questions were posed. In the following sections, where direct quotes from

respondents are used, aliases are used for the companies in order to preserve

anonymity. The aliases are consistent throughout.

Intrapreneurial experience.

Question 12 asked the respondents about what experiences they had had with a

systematic effort towards internal innovation beyond what takes place in traditional

R&D units. Below I have collected some statements that illustrate March's (1991)

assertions about the conflicts between exploration and exploitation in organizations.

Table 21 Examples of firms that have run into structural or organizational difficulties.

Company Response Translated Response Jern & Metall AS

Den lille erfaring vi har er positiv, men det er vanskelig å kombinere satsing på nyskapning samtidig med den daglige driften.

Our limited experience is positive, but it is difficult to combine an effort towards innovation simultaneously with the running of the business.

Lande AS Gode erfaringer, men problemer i overføringen mellom FoU og tradisjonell konstruksjon.

Good experiences, but problems in the transfer between R&D and traditional construction.

KVT Det bedriften har utviklet i årenes løp, har man gjennomført nesten 100% med interne resurser. Hovederfaringen er at det krever store resurser av enkeltpersoner, samt at utviklingen tar mye lengre tid enn forutsatt, grunnet at personellet også er knyttet opp mot daglig drift.

What the firms have developed over the years has been accomplished almost 100% through internal resources. The core experience is that it demands great resources of individuals, and that the development takes longer than assumed, because people are also tied up in the daily operations of the business.


4 6

March (1991) and others (Kanter, 1988; Sætre, 1996; Wandsvik & Waagø, 1998)

have argued that the processes and procedures that underlie exploration and

exploitation are diametrically opposed. The above statements illustrate that it is

difficult, at best, to combine the processes of innovation with the processes of

efficient daily operations. The organizational devices — structures, rules, and

procedures — that ensure efficiency, not only impede, but also downright prohibit

innovative efforts.

In addition to those organizations who cite structural or organizational difficulties

with achieving organization wide innovation, other organizations have had mixed

experiences with their innovative efforts.

Table 22 Examples of organization with mixed experiences with organizationwide innovation efforts

Company Response Translated Response Hygen AS Blandede. FoU i utradisjonelle

miljøer har i Jordan hatt en tendens til å imøtekomme ønsker fra spesielle grupper, og har i for liten grad tatt hensyn til et helhetssyn. Resultatet har mange ganger vært at lønnsomheten ikke har stått i forhold til innsatsen.

Mixed. R&D in untraditional units has a tendency to cater to the desires of particular groups, and does not sufficiently consider the whole. The result has often been that profitability has not been commensurate with the effort put forth.

Dahl AS Positivt i forhold til marked og intern utv. av bedriften, men håpløst i forhold til det offentlige virkemiddelapparat å oppnå støtte. Spesielt pga. At bedriften ikke kommer inn under SMB ordningen.

Positive in relation to marked and internal dev. of the firm, but hopeless in relation to public means and obtaining support. Particularly since the firm does not fit under the SMB arrangement.

Granmoe AS Blandet, men deler av produksjonsprosessen har blitt veldig effektiv

Mixed, but parts of the production process have become very efficient.

As the statements in Table 4.2 illustrate, these organizations have achieved some

degree of success, either limited to a particular area or section. But they have also

experienced a fair amount of difficulty or outright failure in some areas. One

interesting question that arises is whether or not these organizations with mixed

experiences wish to continue with organizationwide innovation efforts. From their


4 7

survey responses it is possible to ascertain that one of the organizations represented

above established its own internal development fund, as well as interdisciplinary

groups to further innovation. Another organization has made room in their budget for

innovative efforts, and has established links across functional boundaries. The third

organization does not seem to have any informal or cross-functional links; rather their

innovation effort seems far more formalized as “all suggestions are sent to the

division manager.” This indicates that even organizations that have encountered

difficulties with their innovative efforts, find them worthwhile.

Then there are those organizations that have had positive experiences with their

efforts at organization wide innovation. The table below imparts a few illustrative

examples.

Table 23 Examples of organization with positive experiences with organization wide innovation efforts

Company Response Translated Response GVLU AS Svært god, brakt oss til globalt

ledende posisjon. Very good, brought us to a global leadership position.

Brovold Fabrikker AS

God erfaring så langt, med brukbart antall prosjektforslag/ -ideer, hvorav flere har resultert i markedsførte produkter.

Positive experience so far, with a decent number of ideas, suggestions for new projects. Several of these have led to marketed products.

Lube Products Ltd.

Forbedret systematikk har bidratt til mer effektiv utnyttelse av kunnskap, og raskere progresjon i arbeidet

Improved systems have contributed to a more effective use of knowledge, and a quicker work progress.

Wenn Pipelines AS

Gode. Det er denne utviklingsform som gjør oss i stand til å ha riktig produktspekter, og det skaper etterspørsel etter våre varer og tjenester.

Good. It is this development form that enables us to have the right assortment of products, and it creates demand for our products and services.

As indicated above, these organizations have had very positive experiences. The

efforts at organization wide innovation by GE Vingmed propelled them into a global

leadership position it its field. Other organizations have increased their number of

projects, new products and improved their exploitation of knowledge.


4 8

Finally, there are also those organizations that have negative experiences with their

innovative efforts.

Table 24 Examples of organization with negative experiences with organization wide innovation efforts

Company Response Translated Response Sneen Elektro AS

Høye kostnader, problemer med å finne kvalifiserte eksperter

High costs, problems in finding qualified experts.

Kor-Tra Ting har tatt lengre tid enn vi regnet med, og vi har ikke fått ønsket uttelling, hvilket har resultert i endel spin-off i andre områder.

Things have taken longer than we thought, and we have not had the desired returns, which has resulted in a few spin-offs in other areas.

Ivo GFU AS Ikke den mest positive. Not the most positive. Hans Scholl AS Slett Poor.

As the last two statements clearly , these organizations are understandably less

communicative about their experiences than those organizations that have had slightly

better experiences. Nevertheless, the statements from the other two illustrate some of

the problems associated with innovative efforts. First, the appropriate competency and

expertise is not readily available. Some organizations do not have sufficient in-house

innovative expertise available on hand, and must look outside their own organization.

This can, of-course, increase the associated costs. Second, the cost of innovation is

significant, and organization wide innovative efforts should perhaps not be

undertaken unless one has at least a minimal understanding of this fact. A lack of

knowledge and appreciation of the costs of innovation, can lead to disappointment.

Frustration and disappointment with innova tive efforts can lead to pre-mature shut

downs, spin-offs, or termination. Third, negative experiences can lead to the

externalization of projects, or spin-offs. In other words spin-offs do not necessarily

occur because things are going well, or because a project's potential is better realized

outside the mother-organization, spin-offs can also occur because the project is seen

as a liability.

The participating organizations of this study have had very mixed experiences with

their efforts at stimulating organization wide efforts. Those that have run into


4 9

problems have run into problems with structural rigidity and cost management.

Although this study revealed a mixed bag of experiences, the majority of

organizations seem to feel that their efforts have been worthwhile. One thing that

should be considered, and that this study has not measured, is that stimulating

organization wide innovation is a learning process, and that those who endeavor to do

so might eventually get good at it.

Search mechanisms in organizations

Question 21 sought to assess how the organizations search for potential new ideas

from parts of the organization other than traditional R&D units. A cursory

examination of the written responses indicated that most of the respondents and their

organizations were very much market oriented in their quest for new ideas. However,

a more careful examination revealed that there were important differences.

A more careful examination of responses revealed that although most organizations

were market oriented, or at least externally focused, in their search for new innovative

ideas, some were more formal than others. Below are some examples of

organizations that indicated that their search routines were carried out through formal

procedures and/or organizational structures.

Table 25 Examples of organization with formalized search routines for innovations

Company Response Translated Response GSD&M AS Via vår linjeorganisasjon ned

til HK i Tyskland og FoU i England

Through our line-organization down to HQ in Germany and R&D in England.

Krogstad Titanium AS

Hovedsaklig på basis av utveksling mellom fabrikker i konsernet og konsernets utviklingsavdelinger

Mainly on the basis of exchanges between factories within the group and the group's development departments.

Lavik Farge AS Kontakt med driftsavdeling, tekniske møter, forslagsordning

Contact with operations, technical meetings, suggestion box.

Just because the innovative idea search by these organizations followed along

formalized channels and structures, does not mean that their search efforts were not

externally focused, or that they were integrated. As can be seen from the preceding


5 0

table, 2 of the 3 organizations focused their activities outside their own unit. They

were externally focused. The third organization was more internally focused.

Nevertheless, the formalized emphasis does preclude these organizations from finding

new ideas in unexpected and untraditional places.

Other organizations are just as externally focused, without being pre-occupied with

following formalized communication lines and structures. The table below contains a

few statements that illustrate this.

Table 26 Examples of organization with market oriented, or externally focused, search routines for innovations

Company Response Translated Response Kjemi-Service a.s

Prosjektidéer kommer ofte fra markedet (kunder) til bedriftens Markedsavdeling.

Project ideas often come from the market (customers) to the firm's marketing department.

CH Robotics AS Salgsavd. / kunder. bransjen/konferanser/utstillinger og konkurrenter.

Sales dept./ customers. Industry/conferences/exhibitions and competitors.

Lande Voll AS Kunder, universiteter, forskning, tekniske institutter, underleverandører.

Customers, universities, research, technical institutes, suppliers.

As depicted by the statements in Table 4.6, these organizations are relatively market

— or at least externally — oriented. It is worth noting that the question they

answered was: “How does the firm search for new ideas from parts of the

organization other than traditional R&D units?” Although the question here clearly

asks the respondents to look outside of R&D units, it clearly states inside the

organization. Nevertheless, the respondents replied as to where they get new ideas

from outside their own organization. The question then becomes, why is it that the

respondents replied in this matter, listing sources outside of their own organization,

when the question so clearly asked them to list alternative sources inside their own

organizations? There are several potential answers to this question. One, perhaps the

respondents have little or no faith in the viability of the innovations that come from

their own organization, and so chose to mention sources they consider viable. Two,

the respondent's organization is in fact not at all innovative, and therefore not worthy


5 1

of mention. Three, it could be that the respondents misunderstood or misread the

question. Or finally, it could be that although the respondent's organization may not

necessarily be less internally innovative than any other organization, these particular

ones have historically had most or all, of their innovative ideas come from outside

their own organization.

Determining which of the potential explanations is the most appropriate is difficult,

but I suspect that perhaps there is a bit of truth in each one. Nevertheless, the above

responses accentuate the importance of an organization's market and context to its

very survival.

The last group of respondents that we shall look at are those who have primarily

replied as to the efforts inside of their own organization, yet have focused on the

necessity of the integration of said activities.

Table 27 Examples of organization with integrated search routines for innovations

Company Response Translated Response Phonotel Telecom AS

Nyskapning er en integrert del av operativ virksomhet

Innovation is an integrated part of operations.

CH Rye Norge AS

Gjennom erfaringsoverføring mellom salg/marked og operative enheter.

Through the transfer of experience between sales/marketing and operational units.

Phonotel Kabel AS

Nært samarbeid med markedsavdelinger og produksjonsenheter.

Close cooperation with marketing departments and production units.

As can be seen above, there are two different kinds of integration illustrated in the

responses in Table 4.7. First there is Alcatel Telecom, who claims that innovation is

an integrated part of operations. That is, innovation belongs, and goes on, in all parts

of their organization's operative units. The other two respondents, CH Rye Norge AS,

and Phonotel Kabel AS, see integration across functional boundaries as key to

innovation. That is, they hope that in the cross-disciplinary meeting of marketing

expertise and technical expertise new solutions will arise. This integration of cross-

functional activities can be seen as an attempt to ameliorate the inherent structural

problems of organizations (March, 1991; Kanter, 1988). Perhaps those organizations


5 2

that succeed in infusing internal cross-functional efforts with multiple-source external

information and ideas will be the ones succeeding in creating truly innovative

organizations.

In short, these varied responses show that there is no predetermined nor common

fashion in which industrial firms search for new ideas. How these various approaches

to the innovation search work, is in all probability contingent upon other

organizational factors, one of these being the incentive structure that is in place in

each organization.

Incentives for innovation and new venture creation.

Question 26 sought to assess the incentives which exist in the respondents'

organizations to stimulate innovation and new venture creation. A fair number of

respondents stated that their organization employed no incentives. One of these is

included as an example below. Table 4.16 presents exemplary responses from

organizations that employ no incentives for stimulating innovation and new venture

creation.

Table 28 Examples of organizations

Company Response Translated Response ConDoe AS Ingen - ideer prates bort -

tildels handlingslammelse i ledelsen

None—ideas are ditched—partial action paralysis in management.

Holt Fabrikker AS

Ingen spesielle No particular incentives.

Fly Wright AS Ingen utover det ansvar som ligger på hver enkelt for å trygge sin framtid.

None, beyond the responsibility each individual has for securing his or her future.

The first statement contains a certain amount of frustration. Not only does this

organization not have any proper incentives for stimulating innovation, those ideas

that do percolate to the top are “talked into oblivion” and discarded. In light of this

sentiment, the second example seems slightly “better”; there just are no incentives.

The third example is interesting in this context. This organization simply believes

that there are no incentives needed beyond the conscience of each individual. Each


5 3

organizational member, should, out of self- interest bring their ideas to the

organization in order to secure their own and their colleagues' work-places. It is a

questionable practice, whose success would require a unique corporate culture or

structure, and causes one to wonder if the management of this organization has an

adequate understanding of the human psyche.

However, not all organizations struggle with a lack of understanding of the

importance of appropriate incentive systems. The table below presents some

examples of various forms of incentive systems aimed at stimulating innovation and

new growth in business organizations.

Table 29 Examples of organizations

Company Response Translated Response Dahl AS Bonusordninger og

"kompensasjon" innefor lovens rammer for brukbare produktideer.

Bonuses and compensations within the legal limits for good product ideas.

DynaTel AS Kreativt kompensasjonssystem og opsjonsordning

Creative compensation system and option opportunities.

Aurora AS Bedriften arrangerer årlig en "Innovation Day", der ansatte som har gjort en spesielt god oppfinnelse/innsatt, blir belønnet. Mellom 5 og 10 priser deles ut hvert år. (i konsernet som har 6000 ansatte i 9 land) Godtgjørelse for patnatsøknader. Stor belønning for patenter som kan bevise stor inntjening.

The firm holds an annual ”Innovation Day”, where employees who have come up with a particularly good invention/effort, are rewarded. Between 5 and 10 awards are handed out every year (in the group of companies which have 6000 employees in 9 countries). Compensation for patent applications. Significant rewards for patents with documented large revenues.

As can be seen from the statements above, these organizations have realized the truth

in the old axiom “what gets measured gets done.” In these organizations innovation is

clearly important. In fact it is so important that the organizations, in various ways,

seek to compensate their members for this particular type of activity. The last

statement above is particularly illuminating. In this organization members are

rewarded for trying (patent applications) and significantly remunerated if and when

their invention generates large revenues. It should also be noted that the event itself


5 4

“Innovation Day” draws attention to the activity of innovation. This particular

organization sends a clear and unambiguous message to their members that

innovation is a “core activity.”

It is clear from the sheer number of this study's participating firms who did not

indicate that they employed an incentising system to stimulate innovation, that there is

a significant potential for improvement. Noted industrial juggernauts such as Hewlett

Packard, and 3M have well publicized systems for rewarding their employees for

trying, even if they fail. Most Norwegian industrial firms would be well advised to

study these systems and implement them in some form. I firmly believe that this is a

key issue in raising the level of innovation throughout Norwegian industry.

How are new ideas and projects financed?

Question 17 asked the respondents what mechanism the firm had for funding projects

and ideas. Over 40 respondents replied “none” or left the question blank. This type

of response accounted for, by far, the largest category of respondents, indicating that

internal financing and funding of new projects is, perhaps, one of the largest obstacles

to intrapreneurship in Norway. However, some of the respondents did find ways to

fund their innovative efforts. Curiously, in spite of the fact that the question's locus

was internal, some respondents, again, responded as to sources found outside of their

organization for funding their innovative efforts.

Table 30 Examples of organizations with external dependencies for funding of innovative efforts

Company Response Translated Response Ivo GFU AS Eksterne, NFR-støttede

prosjekter External, Norwegian Research Council supported projects.

Terra Fabrikker AS

NFR, SND, Trønderjämt Norwegian Research Council, Norwegian Industry development Fund, Regional Governments

DynaTel AS NFR, EU prosjektmidler, Kundestøtte

Norwegian Research Council, EC project funding, Customer support.

It is clear that these organizations rely heavily on finding the resources for their

internal innovation projects outside the organization. The lack of even a mention of


5 5

internal resources is striking. The fact that the first source of funding that comes to

mind for the managers and leaders of Norwegian corporations when asked about

support for new ideas and internal projects, is not only surprising it is positively

stunning. Since external funds generally are harder to come by, and the acquisition

process is quite a bit slower than allocating funds internally, a dependence on external

funding for internal innovation projects could help explain the dearth of innovation in

these corporations. Only one organization that focused on external funding had also

included internal funding. VIK AS stated that they "use the Norwegian Research

Council/Nordic Industry Fund and own funds".

A smaller percentage of organizations did manage to find a way to allocate some of

their own funds towards their innovative efforts. Table 4.9 below illustrates some

ways in which this allocation takes place through the use of budgets.

Table 31 Examples of organizations with various budgetary mechanisms for funding of innovative efforts

Company Response Translated Response Lumiere AS Fast budsjett for

utviklingsarbeide Fixed budget for development work.

Sæbøvik AS Prosjektene finansieres gjennom bedriftens budsjetter.

Projects are funded through corporate budgets.

Plasterboards AS

Midler til dette avsettes på investeringsbudsjettet

Means for this must be set aside in the investment budget.

Clearly, these organizations have some internal means by which they allocate funds to

the new and innovative project opportunities that present themselves. Maintaining

available internal funds, and therefore not being dependent upon a time consuming

external funds acquisition process is a potential significant advantage. In principle

there are essentially two ways in which budgets can be used:

1. Sums can be allocated to activities. That is, a specified amount is allocated to

the innovation activity, and then smaller amounts are doled out to specific

projects as they appear.

2. Sums are allocated to specific projects. In this way new projects that appear

will have to wait until the next budget is allocated to secure funding.


5 6

The most flexible is of course the former. This can enable funding for new projects

more quickly.

Table 4.10 is a collection responses concerning various mechanisms for obtaining

funding for new projects.

Table 32 Examples of organizations with various mechanisms for funding of innovative efforts

Company Response Translated Response Møre Plast AS Frie rammer for små

prosjekter innenfor budsjetterte rammer, deretter allokering av midler

Free access for small projects within budget, thereafter allocation of means.

Pebbles AS Det er ledergruppen som beslutter i hvert prosjekt. Består av markedsdir., tekn.dir., og adm.dir.

It is the leader group who decides in each project [sic]. Consists of VP of Marketing, Technical Director, and CEO.

Bevo Electronic AS

Nye prosjekter finansieres av driften

New projects are funded through cash flow from operations.

Sæplast combines budgets with the allocation of additional funds, presumably

allocated competitively by some manager or management group. The second

organization, Pebbles AS uses a management team consisting of the CEO, the

Marketing Manager, and the Technical Director to allot funds to each project.

Presumably this group then has a fixed or limited budget to allocate funds from. The

third firm, Mascot Electronics AS funds new projects through operations, which,

when one comes right down to it, is in fact how all internally funded projects are

financed.

As this discussion has illustrated, there are several ways in which projects are funded.

However, the examples also illustrate that funding is a problem area. A significant

number of organizations failed to employ any mechanisms aimed at securing funding

or resources for internal innovation projects. Other organizations look solely (or at

least indicated as such) outside the organization's boundaries for funding for internal

innovation projects. This is potentially problematic, due to the lengthy acquisition


5 7

process involved in acquiring external funds, and the importance of speed and time-

to-market in the success new innovations.

The rather peculiar thing here is the fact that so many industrial firms not only

primarily look externally to fund internal innovative projects, but that they look to

various nationally funded institutions. In other parts of the western world firms may

frequently look outside their own boundaries for funding, but then they generally go

to the private sector, to venture capitalists, banks etc. Apparently this is not the case

in Norway.

Evaluation, Selection and Development of New Projects

Question 22 sought to assess how the respondent's organization evaluates and selects

new projects. The table below contains some statements from organizations that do

not have a systematic approach for evaluating potential new projects.

Table 33 Examples of organizations without systematic evaluation of innovative ideas.

Company Response Translated Response ConDoe AS Har gjennomført noen

kost/nytte- og risikoanalyser. Imidlertid er det bortkastet så lenge det ikke er ressurser til å gjennomføre noen prosjekter

Have completed some cost/benefit and risk analyses. Meanwhile, this is a waste of time as long as there are no resources to implement any projects.

Bruun Electronics AS

Tilfeldig By chance

ChemFarm Norway AS

Ingen systematisk evaluering. Problemet er heller mangel på ideer som en kan forsvare å videreføre.

No systematic evaluation. The problem is rather a lack of ideas that are worth implementing.

Common to all these is the underlying sense of resignation that it is pretty much futile

to extend any effort. Either there are no worthwhile ideas, or there are no resources to

be found even if there were any worthwhile ideas. It must be frustrating to work in

organizations where organizational members feel so frustrated with organizational

processes and procedures. Fortunately, this is not the case in all organizations.


5 8

Table 4.12 presents some responses from organizations that did have some form of

systematic evaluation of new project ideas.

Table 34 Examples of organizations with systematic evaluation procedures for innovative ideas.

Company Response Translated Response Manu Led AS Diskuteres på utviklingsmøter.

Prosjekter blir prioritert etter potesial, kostnad, mulighet for å lykkes og konsekvens hvis vi ikke har produktet. Store prosjekter godkjennes av styret

Discussed at development meetings. Projects are prioritized according to potential, cost, likelihood of success and consequences if we do not carry the product. Large projects require board approval.

Lavik Farge AS Nye prosjekter foreslås av teknisk avdeling ( i samarb. med drift) og prioriteres i samarb. med administrasjonen

New projects proposed by the technical department (in cooperation with operations) and are prioritized in cooperation with the administration.

Kjemi-Service a.s

Gjennom sammenholding av evalueringer foretatt av Markedsavd. (kundebehov), Produksjonsavd. (produksjonsteknisk, produksjon- og lagerkapasitet), Teknisk avd. (produktutvikling).

Through a comparison of evaluations conducted by the market department (customer needs), Production department (production technical things, production and storage-capacity), Technical department (product development).

CH Kabel AS Markedspotensiale, lønnsomhet. Samarbeid mellom markedsavd. og produktavd. Beslutning i ledergruppen.

Market potential, profitability. Cooperation between market department and production department. Decision made by the executive leader group.

Common to all the organizations represented above is the fact that that they have

decision rout ines that involve multiple functional areas in their organizations. At the

very least, the decision-making in these organizations includes multi-disciplinary

input. This, in itself, has great potential for creating a certain enthusiasm and

engagement with regards to innovation in these organizations. It is interesting to note

that some of the respondents clearly state that the process is a cooperative one where

people from different units work together (e.g Larvik Pigment Norway AS). Whereas

in other organizations (e.g. Gjerde Kjemi AS) the response seems to indicate that each

department evaluates and comments primarily on that which pertains to their


5 9

particular area of expertise. If this were really the case, then these processes would be

fundamentally different. Theoretically, the former should of course work best, it

would however, be interesting to find out if this is really the case.

In addition to the two categories of respondents illustrated in the two tables above,

there were other types of responses. Examples of these include such responses as

“hearing-committee”, “no routines”, “based on business-plan”, and “executive-

group.” These few excerpts amply illustrate the fact that there is no one set way that

Norwegian industry goes about making these kinds of decisions.

How are new ideas developed?

Question 24 of the survey instrument sought to assess how organizations develop

innovations from parts of the organization other than R&D. A fair number of these

responses were very similar to the responses to question 12, and as such these are not

elaborated again.

Still, there were also a number of different approaches. Some organizations simply

transferred new projects that originated outside of product development unit into the

product development units. Table 4.13 lists some examples of organizations that did

it this way.

Table 35 Examples of organizations who transfer new projects to the product development department.

Company Response Translated Response Chem Oils AS Kanaliseres inn til PU-teamet Funneled into the product

development team. Grinnen Fabrikker AS

Overføres til produktutvikling Transferred to product development.

Wenn Industrier AS

Ideene blir overført til FoU - avdelingene som får ansvar for å føre dem videre.

Ideas are transferred to the R&D department which is responsible for the development of the project.

Lumiere AS Produktutvikling tar over Product development takes over.

Presumably, the rationale behind this approach is that product development units

have a certain expertise in bringing new ideas to fruition that other parts of the

organization do not have. To the extent that this is true such an approach would be


6 0

appropriate, but one should be very careful in how one treats the originator(s) of the

new idea. It might be fruitful to let the innovator follow the project. Responses from

other sections of the survey instrument indicate that innovators do tend to stay with

their respective projects, although the respondents have not indicted so here. On the

other hand, the rationale for this transfer is based on the assumption that the product

development department is actually apt at what it does once an idea has come to

fruition. Courting the idea originator may not be necessary to the process, but not

doing so may negatively affect the originator of the idea.

Below, in Table 4.14 are some responses illustrative of organizations that take a more

integrative approach.

Table 36 Examples of organizations with an integrative approach to new ideas from outside R&D.

Company Response Translated Response Origo Front AS Enten i driftorganisasjon

alene eller i samarbeid med R&D

Either in operations alone, or in cooperation with R&D.

Krogstad Titanium AS

I første fase er det vanlig at forprosjekt drives av den del av organisasjonen hvor ide-konseptet stammet fra, men med assistanse fra avdeling for prosjekter/preventivt vedlikehold

During the first phase it is usual that the pre-project is run by the part of the organization where the idea originated, with assistance from the department of projects/preventive maintenance.

Arctic LCC AS Igjennom tverrfaglige faggrupper

Through inter-disciplinary groups.

These organizations have sought to make use of a more integrative approach. That is,

in these organizations the new idea does not necessarily have to be put “into the fold”

of the product development unit. Ideas can, using this approach, be developed within

the unit where the idea originated with various degrees of help from product

development. Presumably, this integrative approach could have important

motivational effects on the organization as a whole. Then again these instances may

involve, at least to a certain extent, a certain degree of wheel reinventing because the

idea-originating unit must learn as they go instead of drawing on the experience

accumulated in the product development department.


6 1

Finally, I have included some examples of responses in which the respondents insist

that there is no difference in how ideas from outside R&D (product development) are

treated.

Table 3713 Examples of organizations with identical treatment of ideas regardless of point of origin.

Company Response Translated Response PharmaSu AS Prioriteres og utvikles etter

samme utvalgskriterier og prosedyrer som prosjektidéer fra FoU, med unntak av at de underkastes en preliminær vurdering i divisjonens ledergruppe mens FoU-interne idéer vurderes initialt av FoU-ledergruppen

Prioritized and developed according to the same selection criteria and procedures as project ideas from R&D, with the exception that they are subject a preliminary evaluation in the division's leadership team, while ideas from R&D are initially evaluated by the R&D leadership team.

Contra Medi AS Det betyr ingenting hvor ideen kommer fra. Det viktige er om vi har tro på produktet i markedet og om det gir rimelig inntjening

It does not matter where the idea comes from. The important thing is whether we believe in the product in the market, and if it yields a reasonable profit.

Rubben AS Som i spm.22 ingen forskjell hvorfra ideene kommer

As in question 22. No difference where the idea comes from.

It should be noted here that the locus of these responses goes to procedure, where as

the locus of the previous responses to this particular question were along the lines of

location and control.

There is clearly no universal way in which a new idea should be developed. Each

approach has its strengths and weaknesses, the sum of which depends on the attributes

of the product, the experience of the organization, and the complexities of the market.

In the final sections of this part of the report, we will look at the support given by the

mother organization and its leadership to spin- inns and spin-offs respectively.

13 It should be noted that these respondents have a somewhat different interpretation of question 24 that did the previous respondents. Nevertheless, their responses are informative.


6 2

Support for Spin-Ins

Question 33 sought to assess how projects that were eventually spun- in to the

corporation were supported. Table 4.18 below contains examples of statements from

respondents showing that an individual's support of the project idea was crucial.

Table 38 Examples of organizations where the support of individuals was crucial to the realization of the project.

Company Response Translated Response Aurora AS En av topplederne i selskapet

hadde stor tro på konseptet og fungerte som fadder (og beskytter)

One of the executives of the company had great faith in the concept and functioned as a sponsor (and guardian).

Kalvik Betong AS

Personen ble fritatt fra vanlig arbeid for å delta i prosjektet

The person was exempted from regular work in order to participate in the project.

Nortug Elektro AS

Økonomisk, men mest med å la innovatøren få stor frihet, og ved "og tillate feil"

Financially, but mostly by letting the innovator have a high degree of freedom, and by ”permitting mistakes”

Kor-Tra Sjefens "baby" The boss` ”baby” Vulken Myhr AS

Gjennom ekstraordinære investeringsbevilgninger og personlig deltakelse

Through extraordinary investment decisions and personal participation.

Statement 1 and 4 emphasize the importance of support from a member of top

management. In these cases the executive acted as a sponsor or champion of the

project. In example 2 and 3 we see that the person who drove the project forward was

not from top management, but the implication is that this person had the support of

top management. Thus, top management support is crucial for the fruition of new

innovative projects in organizations. In addition the statements above illustrate the

importance of personal commitment from a single person, a champion, or a group of

individuals (see also example 5). In sum, top management support combined with

personal engagement seems to be key in bringing a new project forward.

Not all respondents chose to focus on top management support or the importance of

having a champion. The statements contained in Table 4.19 below illustrate two new

points.


6 3

Table 39 Examples illustrating the importance of attention for garnering support

Company Response Translated Response Brobygger AS Full støtte fra ledelse/styre.

Alternative løsninger ofte kostnadsbesparende, og av erfaring lønner det seg å bruke penger på FoU. I dette tilfellet gjorde det at vi fikk jobben, noe vi ikke ville fått v. konkurr. på vegvesenets anbudsgrunnlag.

Full support from leadership/board. Alternative solutions are often cost reducing, and from experience it pays to spend money on R&D. In this case it caused us to get the job, something we would not have gotten if we competed on the basis of the request for proposal (RFP).

Hygen AS Stor interesse fra ledergruppen og styret. Produktet fikk rel. sett store ressurser til markedstesting og PR.

Huge interest from the executive group and board. The product received relatively large resources for marketing and PR.

Foils GBK AS Det ble fokusert på prosjektet, og midler ble stilt til disposisjon.

The project came in focus, and means were made available.

The first statement included here is unique. It shows a situation where innovation in

itself caused the organization to be awarded the project of constructing a new major

bridge. Brobygger AS apparently managed to alter the basis for the RFP such that it

was more cost efficient for the principal, due to an innovative suggestion.

Nonetheless, crucial to this process was, again, top management support. The two

subsequent statements illustrate the importance of attention. Both the respondents

here attribute the allocation of funds to the project to the amount of managerial

support one was able to secure for the project.

Common to all of these projects is the importance of having the support of top

management. Securing this support and attention for the project is important, and this

is presumably one of the important tasks for the champion of the idea or innovation.

Furthermore, these statements also stress the importance of personal engagement in

the development of new innovative project ideas.

Support for Spin-Offs

You need to introduce the question that the table is listing the responses for. Due to

the limited number of spin-offs in each study (10 in study 1, and 11 in study 2), and

because not all respondents answered all the questions, I have included all the


6 4

responses to the question about support for spin-offs. Furthermore the support given

to spin-offs appears to be less than that given to spin- ins, and it is definitely less

uniform. Table 4.20 below presents the responses from Study 1.

Table 40 Support for the Spun-Off projects: Study 1

Mother-Company Response Translated Response Veie & Co. AS Velvilje Benevolence Shearer AS Rådgivning Advice Bob`s Bil AS Budsjett, markedsstøtte,

kontakt-skapende tiltak Budget, market support, contacts.

Belt EAP AS Ledelsen fisjonerte ut fabrikken

Management fissioned out the factory.

Phonotel Kabel AS Ikke noen spesiell støtte No particular support Shafters AS Aksjekapital Equity Rubben AS Initiativtaker har eierandel i

den nye enheten Initiator has a share in the new unit.

As one can see from the statements above, the support for projects that were

eventually spun-off, was a great deal more sporadic than for the projects that

remained in the mother-organization. Only two of the spin-offs in Study 1 received

any kind of financial support from their mother-companies. The findings from Study

2 are contained in Table 4.21 below, wherein the results are similar to those of the

first study.

Table 41 Support for the Spun-Off projects: Study 2

Mother-Company Response Translated Response Krogstad Titanium AS

Prosjektet ble finansiert over bedriftens investeringsbudsjett samt støtte

Project was financed over the corporate investment budget, plus support.

PharmaSu AS Ressurser til intern og ekstern FoU

Resources for internal and external R&D.

Napolean AS Administrative ressurser i tidlig fase

Administrative resources in the early stages.

VIK AS Det ble opprettet et eget prosjektmandat

A separate project mandate was established.

Foils GBK AS Prosjektet fulgt opp ukentlig i ledergruppe og sterk engasjert styre i moder

The project was followed on a weekly basis in the leadership group, and a strongly engaged board in the mother-company.


6 5

Valhalla AS Økonomisk, markedsmessig, organisering etc...

Financial, market, organization etc..

GSD&N AS Prosjektet ble støttet strategisk som et for bedriften miljømessig image forbedring.

The project was supported strategically as an improvement of the environmental image.

The spin-offs in Study 2 appear to have received somewhat more support than the

spin-offs from Study 1. However, this support seems to have been more

heterogeneous, taking the shape of R&D engagement and administrative resources as

well as leadership engagement. We also see that one project was entirely externally

funded.

In short, the support from the mother corporation, in the form of top management

attention and support, as well as funding, is negligible when compared to the support

given projects that remained within the corporation.


6 6

Discussion and Implications.

The findings of this study support empirically Burgelman`s (1984) assertions that

strategic significance and operational similarity are crucial dimensions in the decision

to externalize or internalize a new venture. That is, new ventures that were eventually

spun-off were considered to be significantly less important strategically than those

that were internalized — in both studies, respectively p < .01 and p < .10. Those new

ventures that were externalized were also considered to significantly less related

operationally to the core business of the mother corporation than those that were

spun- in — p < .05, in both studies. This is an important finding as Burgelman`s

(1984) framework is widely accepted and used but has, until now, lacked empirical

support.

Furthermore, this study established that perceived risk was a factor in the decision to

externalize a new venture. Those new ventures that were considered a higher risk

were more likely to be spun-off. Given the above finding, it would be of interest to

investigate the nature of this perceived risk. Are the ventures which spin-off indeed

more risky than those that remain within the mother organization, or is the risk merely

perceived as higher because the mother corporation lacks the particular operational

and strategic expertise applicable to those innovative new ventures outside their

current operational nature? This is a topic well suited for future research.

This study also confirms earlier studies stating that the existence of a project

advocate, or champion, is crucial to the progress and success of a new venture.

Furthermore, we have established that this is true for both spin-offs and spin- ins. This

study was not designed to fully explore the potential differences between the role of

the champion in a spin- in versus a spin-off. This, however, should be a ripe field for

further research. One potential exploration which would be of particular of interest


6 7

here concerns the attitudes and preferences of the champion towards externalizing or

internalizing the new venture.

This study's findings show that those organizations seeking to stimulate innovation

outside of traditional R&D units, were allocating more funds in the earlier project

stages, thus accelerating project development. We found that these organizations

tended to have longer histories with innovative efforts, and presently had more

projects running. One of the most interesting findings of this study is the

confirmation that it pays off to spend money and effort on stimulating innovation and

creativity in the organization as a whole, outside of traditional R&D units. These

organizations tended to have significantly greater number of new projects in progress

than did those that focused their innovative efforts inside of traditional research and

product development departments. These assertions are further strengthened by the

strong positive association between an organization’s efforts to stimulate innovation

and creativity outside traditional R&D units and the proportion of turnover stemming

from products less than 3 years old.

To summarize, organizations that were successful in stimulating organizationwide

innovation, as opposed to innovation contained exclusively in R&D units, allocated

more funds in earlier stages, had more concurrent projects running, and a far greater

proportion of revenues stemming from new products. In short, these organizations

are successful intrapreneurs.

Norwegian industrial firms have had mixed experiences with their efforts at

stimulating organization wide efforts. Those that have encountered problems have

run in to problems with structural rigidity, and cost management. These difficulties

are to be expected as modern organizations strive to grapple with the inimical and

irrepressible demands of the post-industrial economy, requiring organizations to

master both exploration and exploitation simultaneously. In spite of these

difficulties, it appears that those organizations that have indeed used time and

resources on efforts to stimulate intrapreneurship in their organizations have

invariably found it to be a learning experience, and one that most found worthwhile.

The organizations in which we found frustration and anger, a lack of initiative and

structural rigidity were generally those organization making the smallest effort, and


6 8

sometimes none at all. The implications for industrial firms are clear. It is paramount

that Norwegian industrial firms endeavor to make a sufficiently pervasive innovative

and intrapreneurial effort, and preferably an effort aimed at the organization as a

whole.

A finding of this study that was less than encouraging, was that a significant portion

of the firms participating in this study lacked any incentive system aimed at

stimulating innovation. There is a significant potential for improvement here. It is

generally agreed that appropriate incentive structures are crucial in stimulating any

desirable action in general, and in stimulating organizational innovation and creativity

in particular. As most industrial organizations are primarily organized and structured

around making and maintaining gains in efficiency (exploitation), stimulating

innovation (exploration) is even more crucial. In other words, as organizations

become increasingly focused on gains in efficiency in order to cope with the

unrelenting pressures of the marketplace, as the effective organizational structures

and operating procedures become the sin qua non of survival, creating little pockets

permitting creativity and the formation of new ventures becomes paramount lest the

organization find itself the worlds most efficient manufacturer of a product nobody

wants.

The findings of this study further indicate that the manner in which a new idea is best

developed varies from situation to situation. What works well in one case might not

work at all in another. Each approach to new venture development has its strength

and weaknesses, the sum of which depends on the attributes of the product, the

experience of the organization, and the complexities of the market. Similarly, there

seems to be no standard way in which Norwegian industrial firms go about making

decisions about which projects to support and which to terminate.

The importance of obtaining the support of top management was throughout this

study consistently found to be critical. The consistency of this conclusion with other

recent empirical studies lends credibility to this finding. Securing this support is

presumably one of the important tasks for the champion of the idea or innovation

desiring to push his or her innovation to the marketplace. The findings of this study

also stress the importance of personal engagement in the development of new


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innovative project ideas. This conclusion holds true for both new ventures that

remain in the organization and those that are spun-off.

The rather odd finding of this study was that not only do many industrial firms in

Norway primarily look externally for their primary resource for funding internal

ventures, they look to various nationally funded institutions. The fact that established

industrial firms (all had more than 50 employees) in Norway choose to rely on one

form or another of governmental funding as their primary source for funding internal

ventures is alarming. This could indicate that these projects have such poor profit

potential or that they are so risky that the mother corporation does not want to fund

them. Should this be the case, I question the wisdom of government in funding such

projects, since these are projects that probably should not be funded at all.

On the other hand, it could be that these projects are actually worthwhile, in which

case the mother corporation should want to fund these projects themselves. Clearly

this desire is not always the present, so there are some obtuse incentives at work

causing this behavior on the part of these organizations. I shall refrain from

speculating further as to the causes for this rather odd behavior since the data does not

permit it, but a couple of alternative explanations spring to mind, none of them

attractive. It should, however, be noted that this finding is in line with the finding of

Waagø, Rasmussen, Kvaal, Gulbrandsen & Trondsen (2001). They found that the

attitudes of Norwegian (and Dutch) corporations were vastly different from those of

the rest of the Western world. Norwegian firms and organizations depend on the

government and government agencies (such as the research council) to fund most of

their research. This attitude, apparently, is equally evident in the funding of new

ventures.

The implications of this finding for policymakers are clear. We have over the past

year repeatedly been reminded in the press that Nokia alone spends more money than

Norwegian industry and government combined. The findings of this study and those

of Waagø and his associates (2001) indicate that there is something amiss with the

incentive structures pertaining to Norwegian industrial firms. One could speculate

that the present situation is a result of the burden placed on small organizations by the

government, both monetarily and bureaucratically, which are then further affected by


7 0

the dynamics of public funding and support, provided through intermediaries and

directly in support of various organizational efforts. At the very least the

aforementioned findings should provide an impetus and opportunity for policymaker

to revisit the situation.

The lack of support — both financial and otherwise — for projects that were

eventually spun off can in part be explained by the fact that those projects which

remained within the organization were considered to be significantly more important

strategically and more aligned with the operational core of the mother organization.

From the vantage point of the mother organization this might very well be a rational

decision process, insofar as any decision process is rational, and presumably of

benefit to the mother organization in the long run.

There is, however, a question as to whether this process is beneficial to society as a

whole. Society misses out on an unknown quantity of opportunities when those ideas

which fall outside a particular firm's strategy or which may be operationally

dissimilar, are not explored. That fact that most of these projects fall outside the

mother organization's core competencies leaves us with the question as to whether the

mother corporations are qualified to adequately evaluate the potential in these new

ventures.

The implication of this is quite clear. Presently many mother organizations have few

incentives to stimulate spin-offs other than reducing risk. The mother organization

stands to loose competent people from its own core, and perhaps even the most

competent. This is a strong disincentive for spinning-off, or externalizing a new

venture.

Consequently, we have a situation where it may be economically rational for a

company to impede spin-offs, despite the fact that this behavior is economically

disadvantageous to society. It is therefore, the challenge to governmental agencies

and policymakers to alter legislation and create incentising economic conditions ( via

taxation for example) which compel organizations to behave in a manner that benefits

society. It is doubtful whether minor alterations in tax policy would be sufficient for

the task. Organizations themselves need to alter their thinking when it comes to spin-


7 1

offs. There are organizations in existence today that support and encourage spin-off

ventures by their employees and take a stake in said spin-offs. This way the mother

organization stands to gain if the spin-off is acquired by another organization, or when

the spin-off grows into a mature and profitable business. The attitude of these mother

corporations seems to be that even if the spun-off entity becomes a competitor it only

serves as a impetus for increased effort on the part of the mother corporation, thus

contributing to its increased competitiveness. Competition is good for business. It

should be noted that most of these examples are from the United States, where the tax

policy is indeed different, and where the bureaucracy imposed on small and fledgling

organization is much more limited than it is in Norway. The implication again, is that

there is ample opportunity for policymakers to revisit the situation and review the

present implicit incentive structures.


7 2

References

Antoncic, B., & Hisrich, R. D. (2001). Intrapreneurship: construct refinement and cross-cultural validation. Journal of business venturing, 16(5), 495-527.

Brandth, B. (1989). God mor eller dårlig mor: Om organisasjonsmessige betingelser for spin-off. SINTEF Notat.

Burgelman, R. A. (1984a). Designs for corporate entrepreneurship in established firms. California Management Review, 16(3), 154-166.

Burgelman, R. A. (1984b). Managing the internal corporate venturing process. Sloan Management Review(Witner), 33 - 48.

David, B. L. (1994). How internal venture groups innovate. Research & technology management, March-April, 38-43.

Day, D. L. (1994). Raising radicals: Different processes for chapioning innovative corporate ventures. Organization science, 5(2), 148-172.

Elfring, T., Meeusen-Henninger, E., & Volberda, H. W. (1995). Spin-off as a linkage between intrapreneurship and entrepreneurship, RENT IX (pp. 1-19). Piancenza, Italy.

Garvin, D. A. (1983). Spin-Offs and the new firm formation process. California Management Review, 25(2), 3-20.

Hirschman, A. O. (1970). Exit, voice, and loyalty : responses to decline in firms, organizations, and states. Cambridge, Mass.: Harvard University Press.

Ito, K. (1995). Japanese spinoffs: Unexplored survival strategies. Strategic management journal, 16, 431-446.

Jennings, D. F., & Lumpkin, J. R. (1989). Functioning modeling coroprate entrepreneurship: An empirical integrative analysis. journal of Management, 15(3), 485-502.

Kanter, R. (1985). Supporting innovation and venture development in established companies. Journal of business venturing, 1, 47-60.

Kanter, R. M. (1988). When a thousand flowers bloom: Structural, collective, and social conditions for innovation in organization. Research in organizational behavior, 10, 169-211.

Knight, G. A. (1997). Cross-cultural reliability and validity of a scale to measure firm entrepreneurial orientation. Journal of business venturing, 12, 213-225.

Kudla, R. J., & McInish, T. H. (1984). Corporate spin-offs: Strategy for the 1980`s. Westport, CT: Quorum Books.


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March, J. G., Sproull, L. S., & Tamuz, M. (1991). Learning from samples of one or fewer. Organization Science, 2(1), 1-13.

Nielsen, R. P., Peters, M. P., & Hisrich, R. D. (1985). Intrapreneurship strategy for internal markets: Corporate, non-profit and government institution cases. Strategic management journal, 6, 181-189.

Pinchot III, G. (1985). Intrapreneuring : why you don't have to leave the corporation to become an entrepreneur. New York: Harper & Row.

Pinchot III, G. (1987). Innovation through intrapreneuring. Research management, 14-19

Quinn, J. B. (1985). Managing innovation: Controlled chaos. Harvard Business Review, 63(May-June), 73-84.

Saetre, A. S. (1996, March). The agile network: A model of organizing for optimal responsiveness and efficiency. Paper presented at the fifth National Agility Conference: "Becoming Agile by 2000: Ramping Up", Boston, MA.

Stopford, J. M., & Baden-Fuller, C. W. F. (1994). Creating corporate entreprenurship. Strategic Management Journal, 15(7), 521-536.

Tushman, M. L., Newman, W. H., & Romane lli, E. (1986). Convergence and upheaval: Managing the unsteady pace of organizational evolution. California Management Review, 19(1), 29-44.

Tushman, M. L., & Romanelli, E. (1985). Organizational evolution: A metamorphosis model of convergence and reorientation. Research in Organizational Behavior, 7, 171-222.

Ventakataraman, S., MacMillan, I. C., & McGrath, R. G. (1992). Progress in research on corporate venturing. In D. L. Sexton & J. D. Kasarda (Eds.), The state of the art of Entrepreneurship (pp. 487 - 519). Boston, MA: PWS - Kent Publishing Company.

Wandsvik, T., & Waagø, S. J. (1998). Intraprenørskap som strategi for bedriftsutvikling: En gjennomgang av utvalgt teori og empiriske studier. Trondheim: NTNU, Norges Teknisk-naturvitenskapelige Universitet.

Waagø, S., Rasmussen, E., Kvaal, T., Gulbrandsen, M., & Trondsen, E. (2001). The role of the university in economic development. Unpublished manuscript, NTNU, Trondheim.


7 4

Appendix 1

Figure A1: Study 1 Crosstabulation, BRANSJE * RESPRECOa

REPRECO* Brasnsje (SIC) 0 1 Total 29 28 28 56 30 2 2 31 18 11 29 32 11 11 22 33 6 5 11 Total 65 55 120

a RESPECO = Response Rate Recoded * Frequency

Figure A2: Study 1 Chi-Square Tests14

Value df Assymp.Sig.

(2-)sided Pearson Chi-Square 2,968a 4 ,563 Liklihood Ratio 3,736 4 ,443 Linear-by-Linear Assoc. ,135 1 ,713 N of Valid Cases 120

a. 2 cells(20,0%) have expected count less than 5. The minimum expected count is ,92

Figure A3: Study 2 Crosstablulation, BRANSJE * RESPONS

RESPONS* Brasnsje (SIC) 0 1 Total 24 11 21 32 25 17 19 36 26 9 16 25 34 6 5 11 Total 43 61 104

*Frequency

14 In general, all the expected frequencies in a chi squared analysis (crosstabs) should be at least 5. (Obtained by multiplying the respective marginal frequencies for a cell and dividing the result by total N). When not meeting this guideline, there is a tendency for the chi square statistic to be inflated and falsely indicate that there is a dependence between the two variables (i.e., to conclude that they are related). This chi-squared test is non-significant (p>.05). So, despite the tendency for chi squared to be inflated due to low expected frequencies for a few cells, we still fail to reject the null hypothesis.


7 5

Figure A4: Study 2 Chi-Square Tests1

Value df Assymp.Sig.

(2-)sided Pearson Chi-Square 2,239a 3 ,524 Liklihood Ratio 2,235 3 ,525 N of Valid Cases 104

a. 1 cell (12,5%) has expected count less than 5. The minimum expected count is 4,55

Figure A5: Study 1 Descriptives, Group Statistics

RESPONS N Mean Std.

Deviation Std. Error

Mean 1 53 1976,89 19,87 2,73 etablår 0 53 1981,55 16,47 2,22 1 53 3,6E+08 503439577,9 6,9E+07 omsetn 0 53 2,2e+08 237818760,0 3,3E+07

1 55 248,56 280,15 37,77 ansatte 0 55 192,94 254,25 34,28

Figure A6: Study 2 Descriptives, Group Statistics

RESPONS N Mean Std.

Deviation Std. Error

Mean 1 60 1970,85 24,46 3,15 etablår 0 43 1969,88 28,71 4,37 1 58 1,0E+09 4057018129 5,3E+08 omsetn1 0 40 3,2E+08 432067749,4 6,8E+07 1 61 346,45 1183,37 151,51 ansatte1 0 43 250,83 495,78 75,60


7 6

Appendix 2


7 7

NTNU Trondheim Norges teknisk-naturvitenskapelige universitet

Institutt for industriell økonomi og teknologiledelse

Intraprenørskap

et forskningsprosjekt finansiert av Norges Forskningsråd

All informasjon er konfidensiell og fortrolig


7 8

Bakgrunnsopplysninger Dette er generelle opplysninger om deg og bedriften. Identifiserende opplysninger er selvsagt konfidensielle og vil ikke framgå av studien. Opplysningene er likevel viktige med tanke på kategoriseringer og at vi evt. kan kontakte deg om noe skulle være uklart. 1. Navn: _________________________ 2. e-mail: _______________________ 3. Stilling/ansvarsområde: ______________________________ 4. Firma navn: ______________________________ 5. Firma adresse: ______________________________ 6. Organisasjonsnummer: _____________________ 7. Etableringsår: _____________ 8. Omsetning siste år: ______________ 9. Antall ansatte: ______________ Om bedriften Her er vi ute etter opplysninger om vanlig praksis i forretningsenheten/bedriften

generelt.

10. I hvilken grad har bedriften en systematisk satsing på nyskaping og innovasjon innad i bedriften utover det som skjer i tradisjonelle FoU og produktutviklingsenheter? (sett kryss).

11. Hvor lenge har bedriften hatt en slik satsning? 12. Hvilke erfaringer har dere hatt med denne satsingen? _____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

I svært liten grad

I svært stor grad 1 2 3 4 5

Mindre enn 6 måneder 6-11 mnd 1-2 år 3-4 år

5 år

eller


7 9

_____________________________________________________________________

____________________

13. I hvilken grad er du enig i følgende påstander vedrørende din bedrift? Helt Helt Uenig Enig

Det er i for liten grad samarbeid mellom markedsførere og tekniske spesialister ved produktutvikling.

Bedriften benytter seg i svært liten grad av tverr-faglige team.

Bedriften kjennetegnes av en god kommunikasjon mellom de ulike funksjoner og avdelinger.

Bedriften preges i altfor stor grad av byråkratiske strukturer.

Vi utvikler flere konkurrerende produktkonsepter for nye produktet samtidig.

Bedriften fortsetter stort sett å betjene de samme kundegrupper med samme type produkter.

Bedriftens strategi fokuserer primært på en gradvis forbedring av produktets funksjonelle ytelser.

Vekst kommer primært fra bedriftens eksisterende produktlinjer.

Bedriften satser primært på vekst gjennom intern utvikling av egne produkter.

Bedriften satser primært på vekst gjennom oppkjøp.

14. I prosent av omsetningen, hvor mye satser bedriften totalt hvert år på

produktutvikling og nyskaping? %

15. Hvor mange nyskapingsprosjekter er i gang nå? _______ 16. Hvor stor var satsingen i kroner i 1999? ____________________ 17. Hvilke mekanismer har bedriften for å gi ideer og konsepter ressursmessig støtte

(forprosjektmidler/ frie fonds etc.)?

__________________________________________________________________

__________________________________________________________________

__________________________________________________________________

__________________________________________________________________

____________________


8 0

18.Erfaringsmessig, hvor stor andel av et prosjekts totale prosjektkostnader allokeres i forprosjektfasen? (Sett kryss).

19. Hvor stor andel av satsingen på nyskaping ble brukt på personer og avdelinger som normalt ikke driver med FoU og produktutvikling? %

20. Hvor mange prosent av omsetningen siste år kommer fra produkter som ikke eksisterte for 3 år siden? %

21. Hvordan søker bedriften etter potensielle nye prosjektideer og nyvinninger fra

andre deler av organisasjonen enn fra FoU og produktutviklingsenheter? ____________________________________________________________________

____________________________________________________________________

____________________________________________________________________

____________________________________________________________________

____________________________________________________________________

_________________________

22. Hvordan evalueres, priorteres og velges nye prosjekter internt? ____________________________________________________________________

____________________________________________________________________

____________________________________________________________________

____________________________________________________________________

____________________

23. I hvilken grad er du enig i følgende påstander: Helt Helt Uenig Enig

Produkter har lang økonomisk levetid i vår bransje.

I vår bransje er det hyppige endringer i produksjonsteknologi.

Vår bedrift må ofte endre markedsstrategi.

Våre konkurrenter opptrer alltid forutsigbart.

I vår bransje er det vanskelig å forutsi endringer i etterspørsel.

Hard priskonkurranse er en del av hverdagen i vår bransje.

Konkurranseforholdene i vår bransje er svært komplekse.

I vår bransje er det svært lett å få et godt overblikk.

0-1% 2-5% 6-10% 11-20% >20%


8 1

Det er store forskjeller mellom markedene for våre ulike produkter.

24. Hvordan utvikles prosjektideer og nyvinninger som kommer fra andre deler av

organisasjonen enn fra FoU og produktutviklingsenheter? ____________________________________________________________________

____________________________________________________________________

____________________________________________________________________

____________________________________________________________________

________________________________

25. I hvilken grad er du enig i følgende påstander:

Helt Helt uenig enig

Bedriftens toppledelse har liten kontakt med bedriftens kunder.

Bedriftens toppledelse har god kontakt med bedriftens

produksjonsenheter.

Toppledelsen har klart å skape en atmosfære i hele bedriften som stimulerer til innovasjon.

Toppledelsen har ikke klart å etablere insentivstrukturer som stimulerer til innovasjon.

26. Hvilke incentiver har bedriften som stimulerer til innovasjon og nyskaping?

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

_______________

27. I hvilken grad har det følgende blitt vektlagt i din bedrift?

Svært Svært liten grad stor grad


8 2

Iverksette nye tiltak for å stimulere til innovasjon i hele bedriften. 1 2 3 4 5

Stimulere til kreativitet blant de ansatte. 1 2 3 4 5

Be om ansattes ideer for nye produkter. 1 2 3 4 5

Belønne ansatte for kreativitet. 1 2 3 4 5

Etablere en egen enhet som ansvarlig for innovasjon. 1 2 3 4 5

Utpeke ledere som ”champions” av en ide. 1 2 3 4 5

Bedriftens fokus på innovasjon i forhold til konkurrentene. 1 2 3 4 5

Trene ansatte i kreativitetsteknikker. 1 2 3 4 5 Spin-In Når du svarer på spørsmålene i denne seksjonen skal du tenke på ett konkret prosjekt

som ble utviklet internt i bedriften, og som etter utviklingsfasen kom i drift internt i

bedriften som en egen driftsenhet (avdeling) eller som ble integrert i en allerede

eksisterende enhet (avdeling).

28. Hva er navnet på prosjektet? _________________________________________

29. Hvilken rolle spilte idehaver eller innovatør i selve utviklingsfasen av prosjektet? 30. Hvor viktig var denne personens innsats for at ideen og prosjektet ble utviklet? 31. I hvilken grad ble denne idehaveren eller innovatøren støttet av en eller flere i

avgjørende lederstillinger?

32. Hvor avgjørende var denne støtten for prosjektets suksess? 33. Kan du si litt om hvordan prosjektet ble støttet?

Svært liten rolle

Svært Sentral rolle

Uten betydning

Helt avgjørende

I svært liten grad

I svært stor grad

Uten betydning

Helt avgjørende

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5


8 3

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

____________

34. I hvilken grad ble de som jobbet med prosjektet adskilt fra resten av

organisasjonen i utviklingsfasen? 35. Hvor stor andel i prosent av nyskapingsprosjektene som blir startet resulterer i

virksomhet som gir positiv avkastning? ______________ 36. Hvor mange personer jobbet i den nye enheten når driftsfasen startet?

37. Hvor viktig var følgende grunner for at prosjektet forble i moderbedriften (spin-

inn)? Uten Svært Betydning viktig

Organisatoriske grunner. 1 2 3 4 5

Kapitaltilgang 1 2 3 4 5

Risiko 1 2 3 4 5

Skattemessige grunner 1 2 3 4 5

Markedsmessige grunner 1 2 3 4 5

Juridiske grunner 1 2 3 4 5

38. I hvilken grad er du enig i følgende påstander? Helt Helt Uenig enig

Prosjektets strategiske betydning var avgjørende for at det ble i bedriften.

1 2 3 4 5

I svært liten grad

I svært stor grad 1 2 3 4 5

1-2 20+ 3-7 8-12 13-20 0


8 4

Den operasjonelle likheten mellom prosjektet og bedriftens øvrige virksomhet er svært stor.

1 2 3 4 5

Det er svært like krav til kjernekompetanse i prosjektet og bedriftens øvrige virksomhet.

1 2 3 4 5

Det ble vanskeligere for ledelsen å fokusere sin innsats med en ny aktivitet/virksomhet.

1 2 3 4 5

Det var viktig å isolere moderforetaket fra risiko forbundet med det nye prosjektet

1 2 3 4 5

Markedsmessige betraktninger spilte liten eller ingen rolle i avgjørelsen om å beholde det nye prosjektet internt.

1 2 3 4 5


8 5

Spin-Off Når du svarer på spørsmålene i denne seksjonen skal du tenke på ett konkret prosjekt som ble utviklet internt i bedriften, og som etter utviklingsfasen ble etablert som et eget selskap (egen juridisk og økonomisk enhet, uavhengig av om moderbedriften beholdt eierandeler eller ikke). 39. Hva er navnet på enheten? __________________________________________ 40. Hvor stor eierandel har moderbedriften i den nye enheten? 41. Hvilken rolle spilte idehaver eller innovatør i selve utviklingsfasen av prosjektet? 42. Hvor viktig var denne personens innsats for at ideen og prosjektet ble utviklet? 43. I hvilken grad ble denne idehaveren eller innovatøren støttet av en eller flere i

avgjørende lederstillinger? 44. Hvor avgjørende var denne støtten for prosjektets suksess? 45. Kan du si litt om hvordan prosjektet ble støttet? _____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

_______________

Uten betydning

Svært Sentral rolle

Svært lite viktig

Helt avgjørende

I svært liten grad

I svært stor grad

Uten betydning

Helt avgjørende

0-10% 67%+

11-32% 33-50% 51-66%

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5


8 6

46. I hvilken grad ble de som jobbet med prosjektet adskilt fra resten av organisasjonen i utvik lingsfasen?

47. Ved oppstart av den nye enheten, hvor mange personer forlot moderbedriften? 48. I hvilken fase vil du si at prosjektet/enheten var da den forlot moderbedriften?

___ Ide/konseptfase ___ Tidlig utviklingsfase ___ Utvikling/testfase ___ Tidlig driftsfase ___ Driftsfase

49. Hvor[AS42] viktig var følgende grunner for at enheten ble skilt fra

moderbedriften (spin-off) Uten Svært Betydning viktig

Organisatoriske grunner. 1 2 3 4 5

Kapitaltilgang 1 2 3 4 5

Risiko 1 2 3 4 5

Skattemessige grunner 1 2 3 4 5

Markedsmessige grunner 1 2 3 4 5

Juridiske grunner 1 2 3 4 5

I svært liten grad 1 2 3 4 5 I svært

stor grad

1-2 20+ 3-7 8-12 13-20 0


8 7

50. I hvilken grad er du enig i følgende påstander? Helt Helt Uenig enig

Den nye virksomheten var av stor strategisk betydning for moderbedriften.

1 2 3 4 5

Den operasjonelle likheten mellom den nye virsomheten og moderbedriften var svært liten.

1 2 3 4 5

Det var svært like krav til kjernekompetanse i den nye virsomheten og moderbedriften.

1 2 3 4 5

Det ble lettere for ledelsen å fokusere sin innsats med en spin-off. 1 2 3 4 5

Det ble mye lettere å oppnå en korrekt verdifastsettelse for den nye virksomheten.

1 2 3 4 5

Det var viktig å isolere mo derforetaket fra risiko forbundet med den nye virKsomheten.

1 2 3 4 5

Markedsmessige betraktninger spilte liten eller ingen rolle i avgjørelsen om å beholde den nye aktiviteten/virksomheten internt.

1 2 3 4 5

Personlige uoverenstemmelser mellom enkeltpersoner eller grupper var avgjørende for at virksomheten ble skilt ut (spin-off).

1 2 3 4 5

Ledelsesmessige uoverenstemmelser mellom enkeltpers. eller grupper var helt uten betydning for at virksomheten ble skilt ut (spin-off).

1 2 3 4 5

Den nye (spin-off) enheten fikk støtte og assisstanse fra morselskapet. 1 2 3 4 5

Den nye enheten ville ikke ha overlevd moderselskapets struktur og grad av formalisering.

1 2 3 4 5

Det ville være mer motiverende for de som jobbet på prosjektet å være i et eget selskap enn å bli en intern enhet.

1 2 3 4 5

TAKK FOR HJELPEN.


8 8

Utfyllt skjema kan returneres i vedlagte svarkonvolutt, eller fakses til Institutt for Industriell Økonomi og Teknologiledelse v/Alf Steinar Sætre

(faks nr. 73 59 64 26)


8 9

Appendix 3


9 0

NTNU Trondheim Norges teknisk-naturvitenskapelige universitet

Institutt for industriell økonomi og teknologiledelse

Intrapreneurship

A research project financed by

Norwegian Research Council

All information in private and confidential


9 1

Background Information

This section contains generall information about you and the company. Identifying information are confidential an will not be included in the stydy. This information is nonetheless important for categorization purposes. 1. Name: _________________________ 2. e-mail: _______________________ 3. Position/Area of responsibility: ______________________________ 4. Firm name: ______________________________ 5. Firm address: ______________________________ 6. Firm ID number: _____________________ 7. Year of Establishment: _____________ 8. Turnover last year: ______________ 9. No. of employees ______________ About the Business Here we are looking for information about common business practices in the business unit. 10. To what extent does the firm have a systematic effort towards internal innovation

beyond what takes place in traditional R&D units? (mark your reply with an x). 11. For how long has the firm had such an effort? 12. What experiences have you had with these efforts? _____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

To a very limited extent

To a great extent 1 2 3 4 5

Less than 6 months 6-11

mnths 1-2 yrs 3-4 yrs

5 yrs

or


9 2

_____________________________________________________________________

____________________

13. To what extent do you agree with the following statements about your firm ? Disagree Agree Completely Completely

There is too little cooperation between marketing people and product development specialists.

The firm does not use cross-functional teams very much.

The firm is characterized by good communication between various functions and units.

The firms is characterized by far too much bureacratic structures.

We develop competing products/concepts simultaneously, when we develop new products.

Our firm pretty much continues to serve the same customer with the same products year after year.

The firms strategy focuses primarily on a gradual development of product attributes.

Growth stems primarily from existing product lines.

The firm focuses on growing primarily through the internal development of own products.

The firm focuses on growing primarily through acquisitions.

14. As a percentage of turnover, how much does the business spend each year on

product development and innovation? %

15. How many innovation projects are currently being undertaken? _______ 16. How large was your spending (in US $) on innovation in 1999?

____________________ 17. How are ideas and concepts resourced? (discretionary means/ general funds etc.)?

__________________________________________________________________

__________________________________________________________________

__________________________________________________________________

__________________________________________________________________

___________________


9 3

18. From your experience, what percentage of the project’s total budget is allocated to the pre-project or discretionary phase? (Mark one box).

19. What percentage of the expenditure on innovation is used by people or departments that normally are not involved in R&D and product development? %

20. What percentage of the last year’s turnover came from products that didn’t exist three years ago? %

21. How does the business search for potentially new ideas/concepts/inventions from

other parts of the organization, apart from search within the R&D and product development units?

____________________________________________________________________

____________________________________________________________________

____________________________________________________________________

____________________________________________________________________

____________________________________________________________________

_________________________

22. How are new projects evaluated, prioritized and selected internally? ____________________________________________________________________

____________________________________________________________________

____________________________________________________________________

____________________________________________________________________

____________________

23. To what extent do you agree with the following statements/assertions: Completely Completely Disagree Agree

In our industry, products have a long economic life-time.

There are frequent changes in production technologies in our industry.

Our business must change market strategy often.

Our competitors always behave predictably.

Changes in demand are unpredictable in our industry

Tough price competition is part of day-to-day operation in our industry

0-1% 2-5% 6-10% 11-20% >20%


9 4

The nature of competition in our industry is complex.

It is very easy to obtain a good overview of our industry

There are large differences between markets for our various products. 24. How are ideas and concepts that originate outside of the R&D or product

development units developed? ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

25. To what extent do you agree with the following assertions/statements:

Completely Completely Disagree Agree

Top manangement has little contact with our customers.

Top management has good contact with the operating units

in our business

Top management has succeeded in creating an environment for stimulating innovation.

Top management have not succeeded to establish incentive structures that stimulate innovation.

26. Which incentives exist to stimulate innovation and new ventures in your

business?

_____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

_______________


9 5

27. To what extent have the following been emphasized in your business? Low High Degree Degree

Implementing new measures to stimulate innovation in the whole firm. 1 2 3 4 5

Stimulating creativity among employees. 1 2 3 4 5

Asking employees for ideas on new products. 1 2 3 4 5

Rewarding employees for creativity. 1 2 3 4 5

Establishing a separate unit responsible for innovation. 1 2 3 4 5

Appointing top managers as ”champions” for an idea. 1 2 3 4 5

The company’s focus on innovation relative to competitors 1 2 3 4 5

Training of management and employees in creativity. 1 2 3 4 5 Spin-In In answering the questions in this section, please consider one concrete project that was developed internally to the business, and that came into operation internally as an operating division or became integrated in an existing operating unit/division after the development phase. 28. What was the name of the project?

_________________________________________

29. What role did the innovator/originator of the idea itself play in the development phase of the project?

30. How important was this person’s contribution for the development of the idea and

project? 31. To what extent did one or more from top management support this person?

very limited role

very central role

very unimportant

absolutely crucial

to a very limited extent

to a large extent

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5


9 6

32. How important was this support for the success of the project? 33. Can you say something about how the project was supported? _____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

____________

34. To what extent were those working on the project separated from the rest of the

organization?

35. From past experience, what percentage of innovation projects that are started

result in an activity yielding a positive return on investment? ______________ 36. How many people were employed in the new unit when it came into operation?

37. How important were the following reasons in keeping the new unit within the

parent organization (spin in) Without Very Importance Important

Organizational reasons. 1 2 3 4 5

Access to capital 1 2 3 4 5

Risk 1 2 3 4 5

Tax reasons 1 2 3 4 5

Market reasons 1 2 3 4 5

Legal considerations 1 2 3 4 5

very unimportant

absolutely crucial


To a great extent

1-2 20+ 3-7 8-12 13-20

1 2 3 4 5

1 2 3 4 5


9 7

38. To what extent do you agree with the following assertions?

Completely Completely

Disagree Agree

The project’s strategic significance was crucial to deciding that it remains inside the company.

1 2 3 4 5

The operational similarity between the project and our other operations is very large.

1 2 3 4 5

The core competencies required in the project are very similar to those needed in our other operations.

1 2 3 4 5

The new activity / unit made it more difficult for top management to focus their efforts.

1 2 3 4 5

It was important to isolate the parent company from the risk associated with the new project

1 2 3 4 5

Market considerations played little or no role in the decision to hold the new project internally

1 2 3 4 5


9 8

Spin-Off In answering the questions in this section, please think about one concrete project that was developed internally in the organization, and that, after the development phase, was established as an independent business (separate legal and economic entity, independent of whether the parent organization owned shares or not) 39. What was the name of the entity?

__________________________________________ 40. What percentage shareholding does the parent organization have in the new

entity? 41. What role did the innovator/originator of the idea itself play in the development

phase of the project? 42. How important was this person’s contribution for the development of the idea and

project? 43. To what extent did one or more from top management support this person? 44. How important was this support for the success of the project? 45. Please describe how the project was supported? _____________________________________________________________________

_____________________________________________________________________

_____________________________________________________________________

_______________

Very little role

Very Central Role

Very Unimportant

Crucial


To a large extent

Very unimportant

Completely Crucial

0-10% 67%+

11-32% 33-50% 51-66%

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5


9 9

46. To what extent were those who worked on the project separated from the rest of

the organization during the development phase? 47. How many people left the parent organization when the new entity started? 48. In which phase would you say the entity left the parent organization?

___ Idea/Concept Phase ___ Early development phase ___ Development / Test phase ___ Early operation ___ Operational phase

49. How important were the following reasons in deciding that the entity would be

separated from the parent organization (spin-of)? Without Very Importance Important

Organizational reasons. 1 2 3 4 5

Access to capital 1 2 3 4 5

Risk 1 2 3 4 5

Tax reasons 1 2 3 4 5

Market reasons 1 2 3 4 5

Legal considerations 1 2 3 4 5

1-2 20+ 3-7 8-12 13-20

To a very limited extent 1 2 3 4 5 To a large

extent


1 0 0

50. To what extent do you agree with the following assertions? Completely Completely Disagree Agree

The new business was of great strategic importance for the parent organization.

1 2 3 4 5

The operational similarity between the new business and the parent organization was very limited.

1 2 3 4 5

There were similar requirements for core competencies in the new business and the parent organization. .

1 2 3 4 5

A spin off made it easier for top management to focus their efforts. 1 2 3 4 5

It was much easier to achieve a correct valuation of the new business. 1 2 3 4 5

It was important to isolate the parent organization from the risk associated with the new business.

1 2 3 4 5

Market considerations played little or no role in the decision to hold the activity or business internal.

1 2 3 4 5

Personal conflicts between individuals or groups made it necessary to separate out the new business.

1 2 3 4 5

Management conflicts between individuals or groups were absolutely unimportant for the spin off of the new business

1 2 3 4 5

The new entity received support and assistance from the parent organization..

1 2 3 4 5

The new entity would not have survived the structure and degree of formalization in the parent organization.

1 2 3 4 5

It would be more motivating for those working on the project to be in a separate company than to remain an internal unit

1 2 3 4 5

THANK YOU FOR YOUR ASSISSTANCE


1 0 1

The completed form can be returned in the attached envelope, or faxed to the Department for Industrial Economics and Technology Management

c/oAlf Steinar Sætre (fax no. 73 59 64 26)

intrapreneurship - ntnu · intrapreneurship in norwegian industrial firms, 2001 2 ... the role of...

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