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Answer Key
1. True
2. True
3. False
4. False
5. False
6. True
7. True
8. True
9. False
10. True
11. False
12. False
13. False
14. True
15. True
16. False
17. True
18. False
19. False
20. True
21. True
22. True
23. False
24. True
25. True
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26. True
27. True
28. False
29. True
30. False
31. False
32. True
33. True
34. False
35. False
36. False
37. False
38. True
39. True
40. False
41. False
42. c
43. b
44. c
45. c
46. d
47. a
48. a
49. a
50. b
51. b
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52. a
53. c
54. c
55. c
56. c
57. c
58. d
59. d
60. a
61. b
62. c
63. b
64. b
65. b
66. b
67. a
68. a
69. c
70. c
71. c
72. a
73. d
74. a
76. c
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77. a
78. c
79. b
80. b
81. a
82. c
83. a
84. c
85. d
86. b
87. d
88. d
89. b
90. c
91. a
92. c
93. b
94. c
95. b
96. d
97. a
98. b
99. c
100. c
101. d
102. d
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103. Autonomous strategic behavior and induced strategic behavior are the two processes of internal corporate venturing.
Autonomous strategic behavior is a bottom-up process through which a product champion facilitates the
commercialization of an innovative good or service. Induced strategic behavior is a top-down process in which a firm’s
current strategy and structure facilitate product or process innovations that are associated with them.
104. A firm may not have the knowledge and capabilities necessary to be entrepreneurial and innovative. A strategic
alliance in those cases offers an excellent means to obtain the needed knowledge and resources. However, strategic
alliances are not without risks. The strategic alliance partner can appropriate a firm’s technology or knowledge and use
these to enhance its own competitive abilities. Additionally, a firm can become involved in too many alliances, which can
harm its innovative capabilities.
105. In general, internationalization leads to improved firm performance. Research shows that new ventures that enter
international markets increase their learning of new technological knowledge, which enhances their performance. Because
of the learning and the economies of scale and scope afforded by operating in international markets, firms are often
stronger competitors in their domestic markets as well. In addition, internationally diversified firms are generally more
innovative than domestic-only firms.
106. Internal corporate venturing is the set of activities a firm uses to create inventions and innovations through internal
means. There are two forms of internal corporate venturing, (1) autonomous strategic behavior (a bottom-up process
employing product champions) and (2) induced strategic behavior (a top-down process whereby product innovations are
fostered by the current strategy and structure of the firm). In the cooperative strategy approach to innovation, firms may
choose to share their knowledge and skills sets with other organizations through strategic alliances. The ideal partners
have complementary assets with the potential to lead to future innovations. Frequently, established firms exchange
investment capital and distribution capabilities with newer, entrepreneurial firms with new technical knowledge.
Acquisition of other companies represents the third approach firms use to produce and manage innovation. Acquiring
another firm rapidly extends the firm’s product line and increases the firm’s revenues. However, firms using the
acquisition strategy may lose the ability to innovate internally.
107. Firms engage in three types of innovative activity. Invention is the act of creating and developing a new product or
process. Innovation is the process of commercializing the products or processes that surfaced through invention. The
success of an invention is judged by technical criteria. The success of innovation is judged by commercial criteria.
Imitation is the adoption of an innovation by similar firms. Imitation usually leads to product or process standardization,
offering the product at a lower price without as many features. Innovation is the most critical activity because
commercializing inventions is difficult.
108. Shared values and effective leadership support cross-functional integration. The firm’s culture, based on its vision
and mission, promotes unity and supports cross-functional integration. Strategic leaders set goals and allocate resources
for cross-functional teams. A high-quality communication system allows team members to share knowledge. Effective
communications helps create synergy and gains team members’ commitment to innovation.
109. Through acquisition an organization can gain another firm’s innovations and innovative capabilities. Acquisitions are
a means to rapidly extend the firm’s product lines and increase revenues. Buying innovation, however, comes with the risk
of reducing a firm’s internal invention and innovative capabilities.
1. Toyota’s Prius, the first mass-produced hybrid-electric car is an example of a novel innovation that has changed the
industry by providing new functionalities for users.
a.
True
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limited.
a.
True
b.
False
3. Acquisitions are a low-risk approach to producing and managing innovation.
a.
True
b.
False
4. The entrepreneurial mind-set is found primarily among managerial and scientific employees.
a.
True
b.
False
5. While both incremental and novel innovations can create value, incremental innovations have the potential to contribute
more significantly to a firm‘s efforts to earn above-average returns.
a.
True
b.
False
6. Larger, established firms, mainly those competing globally, use their R&D labs to create disruptive technologies and
products.
a.
True
b.
False
7. Most innovations are incremental, not novel.
a.
True
b.
False
8. Joseph Schumpeter suggested that firms engage in three types of innovative activity when managing the innovation
process: imitation, invention, and innovation.
a.
True
b.
False
9. Invention is defined as the adoption of a similar innovation by different firms.
a.
True
b.
False
10. The iPod likely resulted from autonomous strategic behavior at Apple, though the iPhone was more the result of
induced strategic behavior.
a.
True
b.
False
11. Firms that continually change their strategic context and strategies because of the continuous changes in the current
competitive landscape are in danger of losing sight of their main competitive strengths.
a.
True
b.
False
12. In order to be successful, a new entrepreneurial enterprise should be sheltered from the global environment until it is
firmly established in domestic markets.
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a.
True
b.
False
13. A product champion should come from outside the organization in order to ensure that the entrepreneurial vision has
the objective support it needs.
a.
True
b.
False
14. A key risk of acquisitions is that a firm may substitute an ability to buy innovations for an ability to produce
innovations internally.
a.
True
b.
False
15. Entrepreneurship is the economic engine driving national economic growth in many nations.
a.
True
b.
False
16. The essence of entrepreneurship is to capture most of the existing markets from less aggressive and innovative
competitors.
a.
True
b.
False
17. An entrepreneurial mind-set, cross-functional product development teams, and shared values/leadership are the three
ways that firms implement internal innovations.
a.
True
b.
False
18. While smaller firms must use cooperative strategies as a means of producing innovations, larger firms with large R&D
units such as P&G and 3M can produce most if not all innovations internally.
a.
True
b.
False
19. Cross-functional work teams are best supported by vertical organizational structures.
a.
True
b.
False
20. Entrepreneurial opportunities are conditions in which new goods or services can satisfy a need in the market.
a.
True
b.
False
21. Entrepreneurial opportunities exist because of competitive imperfections in the markets and among the factors of
production.
a.
True
b.
False
22. Innovation is the means by which the entrepreneur creates wealth.
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a.
True
b.
False
23. Evidence demonstrates that large firms with well-funded R&D operations are more effective at innovation than are
smaller firms.
a.
True
b.
False
24. An innovation developed through autonomous strategic behavior will probably take the firm into new markets not
addressed by its current strategy.
a.
True
b.
False
25. An organization engaging in strategic entrepreneurship focuses on identifying opportunities that it can exploit through
innovations.
a.
True
b.
False
26. A society’s cultural characteristics influence a nation’s rate of entrepreneurship and its related practices.
a.
True
b.
False
27. Political activity that is centered on the allocation of resources to the different functions may limit the effective use of
cross-functional teams.
a.
True
b.
False
28. Given the rapid rate of technological change, patents are not a useful gauge of a firm’s entrepreneurial prowess.
a.
True
b.
False
29. Acquisitions are a means of extending the company‘s product line and increasing revenues. The capital market values
growth. Therefore, some firms make acquisitions to improve their standing in the capital markets.
a.
True
b.
False
30. A company with a need for immediate, large returns should invest in research and development.
a.
True
b.
False
31. Innovations can only be produced by actions and activities within the firm.
a.
True
b.
False
32. Rosalie has become totally preoccupied by her idea for creating a business leasing horses to riders on the same
principle as time-shares on condominiums. Rosalie is researching the legal, financial, and insurance aspects of her idea
and is preparing a prospectus to take to banks to ask for a business loan. Rosalie’s significant other is complaining that she
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“sleeps, eats, and drinks” this concept. Rosalie has the entrepreneurial characteristic of passion.
a.
True
b.
False
33. Entrepreneurial ventures often produce more novel innovations than do their larger, more established counterparts.
a.
True
b.
False
34. For firms to be entrepreneurial, they must stress individualism in their employees above all other characteristics.
a.
True
b.
False
35. Most large, complex firms innovate through cooperative strategies or strategic alliances, but not through internal
activities.
a.
True
b.
False
36. Corporate entrepreneurship describes the opportunity seeking and exploitation of innovations in new start-up
enterprises.
a.
True
b.
False
37. Bill Kroganski is the owner of a moderately successful industrial services firm. His reaction to the introduction of a
new process technology that could be a direct competitor to the process his firm utilizes is fear. He spends his time
considering ways to isolate his firm from this new technology. Bill has characteristics consistent with the entrepreneurial
mind-set.
a.
True
b.
False
38. As a process, entrepreneurship results in the “creative destruction” of existing products (goods or services) or methods
of producing them and replaces them with new products and production methods.
a.
True
b.
False
39. Research has shown that internationally diversified firms are generally more innovative.
a.
True
b.
False
40. Induced strategic behavior does not result in true innovation because it is a top-down process rather than a bottom-up
process.
a.
True
b.
False
41. Autonomous strategic behavior results in internal innovations that are highly consistent with the firm’s current
strategy.
a.
True
b.
False
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Indicate the answer choice that best completes the statement or answers the question.
42. The three types of innovative activity include all of the following EXCEPT:
a.
invention.
b.
imitation.
c.
implementation.
d.
innovation.
43. AgroPharm is searching for a top-level executive. AgroPharm has marketed its products only to U.S. farmers and
agribusinesses in the past. Now, the company plans to expand operations to Mexico and Central America in the next 2
years. To maximize the chances of success it is critical that the new executive:
a.
be of Hispanic descent.
b.
have international experience.
c.
possess an advanced degree in animal science.
d.
have a background in managing agribusiness firms.
44. 3M’s Cubitron II, described as “an industrial abrasive that cuts faster, lasts longer, sharpens itself, and requires less
elbow grease than any other abrasive on the market” is an example of:
a.
imitation of a competitor’s product.
b.
a novel innovation.
c.
an incremental innovation.
d.
a(n) innovation created through a cooperative strategy.
45. Products developed through ______ are often offered at lower prices without as many features as products developed
through ______.
a.
innovation; imitation
b.
imitation; invention
c.
imitation; innovation
d.
innovation; invention
46. Autonomous strategic behavior is a(n) ____ process in which product champions pursue new ideas.
a.
top-down
b.
horizontal
c.
integrated
d.
bottom-up
47. Pet Care Companion Connection (PCCC) is an organization that trains persons with mild-to-moderate mental
disabilities to care for pets in a pet boarding facility. This organization has been successful in providing a quality service
for pet owners and a supportive training environment for their trainees. The tuition charged to trainees is only somewhat
higher than the fee, which day-care providers would charge for these individuals. Graduates of the program are qualified
for employment by commercial kennels. PCCC is an example of:
a.
taking advantage of a need in the marketplace.
b.
creative destruction of existing services for pet boarding.
c.
institutionalized entrepreneurship.
d.
internal corporate venturing.
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48. Knowledge must be transferred to others in the firm to enhance the entrepreneurial competence of the firm. This
requires that:
a.
the receiving party has adequate absorptive capacity to learn.
b.
the communication process be highly intensive.
c.
the knowledge be broken into the smallest comprehensible units.
d.
training consultants be involved in every step of transference.
49. ____ involves internally developed incremental and novel innovations that result from deliberate efforts.
a.
Internal corporate venturing
b.
Autonomous strategic behaviors
c.
Bottom-up strategic behaviors
d.
Product championing
50. Because it replaces existing products and methods of production, entrepreneurship is a process of:
a.
harnessing the human potential.
b.
creative destruction.
c.
creation of opportunity.
d.
exploitation of innovation.
51. In the implementation of internal innovations, formal and informal processes are best supported through ____
organizational structures.
a.
vertical
b.
horizontal
c.
functionally oriented
d.
multidivisional
52. The idea that it is “vital to sell the ideas to others in the organization so that innovations will be commercialized” is the
rationale behind the use of:
a.
product champions.
b.
joint ventures.
c.
strategic leadership.
d.
cross-functional teams.
53. Entrepreneurs tend to have all the following characteristics EXCEPT:
a.
willing to take responsibility for projects.
b.
passion.
c.
preference for certainly about projects.
d.
optimism.
54. Which of the following is true? For firms to be entrepreneurial, they require a culture with:
a.
an emphasis on individualism in Western nations and an emphasis on collectivism in Eastern nations.
b.
an exceptionally high level of collectivism.
c.
a balance of individualism and collectivism.
d.
an exceptionally high level of individualism.
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55. The level of entrepreneurial activity in a nation is ____ the nation’s level of economic development.
a.
negatively related to
b.
independent of
c.
positively related to
d.
weakly related to
56. PracticalSolutions is a small firm providing employee assistance programs for companies with troubled employees.
PracticalSolutions frequently partners with other consulting firms to provide creative solutions for companies with
personnel problems. This history of partnering exemplifies:
a.
intellectual capital.
b.
institutional capital.
c.
alignment of complementary assets.
d.
technological capital.
57. The firm’s culture promotes unity of purpose for cross-functional work teams through:
a.
a collectivist structure.
b.
an entrepreneurial mind-set.
c.
shared values.
d.
resource allocation.
58. The risks of international entrepreneurship include all the following EXCEPT:
a.
unstable foreign currencies.
b.
problems with market efficiencies.
c.
limitations on market size.
d.
strong “buy-domestic” programs.
59. The use or application of entrepreneurship within an established firm is called:
a.
corporate emergence.
b.
transformational leadership.
c.
exceptional R&D.
d.
corporate entrepreneurship.
60. Entrepreneurship is the process by which individuals or groups identify and pursue ____ without being immediately
constrained by the ____ they currently control.
a.
opportunities; resources
b.
opportunities; core competencies
c.
threats; resources
d.
threats; core competencies
61. Through the work of cross-functional teams, product development stages are grouped into ____ processes.
a.
short-term and long-term
b.
parallel or overlapping
c.
serially ordered
d.
complementary