William & Mary Law School Research Paper No. 09-334
54 Pages Posted: 20 Jan 2016 Last revised: 14 Feb 2017
Date Written: February 13, 2017
This Article on “intrapreneurship” has several goals. First, it points out that while much of the legal literature on innovation is concerned with startups (entrepreneurship), the innovation that takes place inside our largest corporations (intrapreneurship) is substantial, important, and understudied. Second, the piece observes that while large technology corporations that used to be startups may remain intrapreneurial in culture, intrapreneurship is less common in the aggregate than we might expect. Reasons include organizational bureaucracy, laws favoring entrepreneurship, and what Clayton Christensen (Harvard Business School) calls “the innovator’s dilemma.” The innovator’s dilemma is, put simply, that good management causes large corporations to please existing customers with new and improved products at the expense of cultivating disruptive innovations that could replace those products altogether. Third, the Article detours to corporate law, which might, as a descriptive matter, play at the margins of the innovator’s dilemma and the entrepreneurial/intrapreneurial balance. Finally, the Article explores a hybrid approach — corporate venture capital — that combines entrepreneurial and intrapreneurial advantages. In corporate venture capital, a large corporation’s venture arm can invest in promising startups, and thus share in disruptive gains, without having to overcome obstacles to developing those projects internally.
Keywords: intrapreneurship, entrepreneurship, corporate law, startup, innovation, duty to monitor, business judgment rule, corporate venture capital, disruption, innovator's dilemma, Clayton Christensen
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