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62. ____ is one of the reasons for the differences in rates of entrepreneurship among different countries.
a.
Climate
b.
Competitiveness
c.
Culture
d.
Constitution
63. Induced strategic behavior as a form of internal innovation is a(n) ____ process.
a.
bottom-up
b.
top-down
c.
free-flowing
d.
external
64. The new abrasive, Cubitron II, was developed through cooperative relationships among 3M business units. As such,
Cubitron II is an example of:
a.
the use of autonomous strategic behavior.
b.
the use of induced strategic behavior.
c.
development of novel innovations.
d.
innovation through acquisitions.
65. Research suggests that _________ is needed to encourage entrepreneurial behavior.
a.
individualism rather than collectivism
b.
a balance between individualism and cooperative behavior
c.
collectivism rather than individualism
d.
limited autonomy and incentives
66. Charles is a customer service representative for a home improvement store. He has creative ideas about how to
increase customer satisfaction. Charles’s talents will be most likely to be used in a firm that:
a.
uses the induced strategic behavior form of internal corporate venturing.
b.
uses the autonomous strategic behavior form of internal corporate venturing.
c.
makes significant investment in research and development.
d.
focuses on an acquisition strategy for gaining innovative ideas.
67. When used effectively, cross-functional teams will often bring about:
a.
faster product development processes.
b.
an increased need for additional information.
c.
conflicting information about the business environment.
d.
future cooperative alliances.
68. Isidore Security Services is a national provider of guard and security services for businesses. It has been in business
for over 90 years, having been founded by one of Teddy Roosevelt’s Rough Riders (Isidore O‘Malley). Lately it has been
losing clients to more aggressive and innovative firms offering remote security monitoring systems instead of a guard-
based approach. The board of directors of Isidore Security Services is concerned that this downward trend may threaten
the existence of this venerable firm and the jobs of its employees. Which one of the following is true?
a.
This is an example of an established firm neglecting the opportunity-seeking aspect of strategic
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entrepreneurship.
b.
This example shows the dysfunctional aspects of unrestricted entrepreneurialism.
c.
This is an example of the lack of human capital hampering internal innovation.
d.
Isidore Security Services is suffering from the “novelty effect” wherein new firms are more attractive to
clients/customers merely because they are new and not because they add value.
69. According to Peter Drucker,the primary goal of innovation is to:
a.
promote social well-being.
b.
increase the number of jobs.
c.
create wealth.
d.
support national economies.
70. ____are individuals, acting independently or as part of an organization, who see an opportunity and then take risks to
develop an innovation to exploit it.
a.
Leaders
b.
Innovators
c.
Entrepreneurs
d.
Transformative leaders
71. Internal corporate venturing does NOT involve:
a.
autonomous strategic behavior.
b.
induced strategic behavior.
c.
strategic alliances.
d.
product champions.
72. ____ is(are) critical in order for a firm to gain access to resources from partners in a cooperative alliance.
a.
Complementary strategic goals
b.
Shared values
c.
An entrepreneurial mind-set
d.
Compatible organizational cultures
73. Which of the following is one of the barriers to effectiveness when using cross-functional teams to integrate
organizational functions?
a.
dissension within the top management team
b.
informal organizational processes within the firm
c.
the firm’s strategic orientation
d.
organizational politics
74. Panera Bread has innovated to improve the quality of its distribution system, to improve the quality of its bread dough,
and to introduce new menu items. These are examples of:
a.
incremental innovation.
b.
invention.
c.
imitation.
d.
the use of social capital.
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75. If the firm’s current employees are well-trained in their jobs, but also have other knowledge, skills, and abilities, these
employees have:
a.
social capital.
b.
entrepreneurial capabilities.
c.
high absorptive capacity to learn.
d.
intellectual slack.
76. Innovation creates a(n):
a.
opportunity for a new product or process.
b.
new product or process.
c.
commercial product.
d.
idea for potential exploitation.
77. To be successful, an autonomous process for developing new products relies on:
a.
the diffusion of tacit knowledge.
b.
the acquisition of innovative firms.
c.
strategic alliances with other firms.
d.
internal corporate venturing.
78. Innovations that involve significant technological breakthroughs and create new knowledge:
a.
build incrementally on the firm’s existing technologies and knowledge.
b.
are the most common type of innovation.
c.
involve substantial uncertainty and risk.
d.
typically have clear market opportunities.
79. GreenBox, a company that recycles paper products to make cardboard cartons, has introduced a new product that
resists damage by moisture. GreenBox can expect that:
a.
this innovation will resist competitors’ attempts to imitate it.
b.
its investors will react positively to the introduction of the new product because of the potential for higher
returns.
c.
its investors will react negatively because of the risk and cost entailed in introducing a new product.
d.
this will be recognized in the industry as a radical innovation.
80. QuadroVax is investing heavily in research and development on new methods of vaccine development that would
speed up the creation of vaccines for newly emerging viruses and to get these vaccines to the market rapidly. QuadroVax’s
shareholders can expect:
a.
immediate wealth creation.
b.
a long wait for an uncertain payoff.
c.
a long wait for a high probability payoff.
d.
a large payoff in the short term with rapidly decreasing wealth generation in the longer run.
81. One of the distinguishing differences between the two sources of internal corporate venturing (autonomous strategic
behavior and induced strategic behavior) is whether the innovation process:
a.
is encouraged through a bottom-up or top-down process.
b.
is encouraged by a product champion or an entrepreneur external to the organization.
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c.
relies on internal structure or existing strategy to encourage innovation.
d.
is in a large or small organization.
82. The main risk in a strategic alliance is that:
a.
the alliance will not result in a successful innovation.
b.
critical employees will be hired away by the strategic partner.
c.
one partner will use the other partner’s knowledge and use it to enhance its own competitive abilities.
d.
the partners will lose control over their internal processes.
83. Blixin Concrete Products, an established firm, is seeking a technologically advanced partner for a strategic alliance. If
the potential partner is a new entrepreneurial venture, the main benefit the Blixin Concrete can offer is probably:
a.
investment capital.
b.
management expertise.
c.
research and development competencies.
d.
social networks.
84. A major barrier to the use of cross-functional teams is:
a.
excessive individualism of creative people.
b.
lack of communication skills of technical people.
c.
independent frames of reference of team members.
d.
lack of social capital by team members.
85. Roland has developed and patented an inexpensive and organic way to enhance the fertility of clay soils without the
addition of chemical fertilizers. But established agricultural chemical companies have rejected his proposals. After 6
months of promoting his invention during his time off from his regular job, Roland has decided to set his dream aside.
Roland lacks a key characteristic of successful entrepreneurs, which is:
a.
the ability to identify opportunities.
b.
a corporate sponsor.
c.
financial slack.
d.
passion for his invention.
86. Why have large pharmaceutical companies been forming alliances with biotechnology companies?
a.
To evade legislative restrictions on drug research in the United States
b.
To develop new products and bring them to market
c.
Because both firms had declining profitability and needed cash infusions from other firms
d.
In order to gain absorptive capacity
87. A cross-functional work team is having difficulties in operating smoothly and friction has developed among some of
the members. Many of the strongest complaints are from the representatives of management who complain that the
research scientists are disorganized, haphazard, and undisciplined. Managers complain the scientists do not adhere to any
fixed rules or procedures. On the other hand, the research scientists complain that the managerial representatives are
excessively rule-oriented bureaucrats, and have no flexibility or spontaneity. The main problem with this team seems to be
centered around differences in:
a.
interpersonal orientation.
b.
time orientation.
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c.
goal orientation.
d.
formality of structure.
88. Regarding partnering in cooperative alliances, entrepreneurial new companies may seek ____ while more established
companies may need _____.
a.
distribution channels; tacit knowledge
b.
deep technological expertise; distribution channels
c.
social capital; technical capital
d.
investment capital; new technological knowledge
89. A negative effect of acquiring other firms for the purpose of innovation is:
a.
innovations cannot be transferred between organizations.
b.
the effect it can have on the firm’s own ability to produce innovations.
c.
innovations may not actually be present in the firm after the purchase is completed.
d.
the acquired firm’s employees usually leave.
90. The competition for resources among those representing different organizational functions within a firm often leads to:
a.
erosion of social capital.
b.
heightened communication.
c.
organizational politics.
d.
empowerment of organizational members.
91. A successful ____ innovation will be less risky but less profitable than a successful ____ innovation.
a.
incremental; novel
b.
novel; incremental
c.
alliance-generated; acquisition-generated
d.
acquisition-generated; alliance-generated
92. WayWard Products has a deliberate strategy to encourage internal innovations. It has established processes to support
autonomous strategic behavior as well as induced strategic behavior. WayWard Products is involved in:
a.
entrepreneurial incubation.
b.
creative destruction.
c.
internal corporate venturing.
d.
cooperative innovation strategies.
93. Research shows that internationally diversified firms tend to be ____ than domestic-only firms.
a.
less profitable
b.
more innovative
c.
less technologically advanced
d.
more likely to have an individualistic culture
94. The dimensions on which functional departments can vary include all the following EXCEPT ____ orientation.
a.
time
b.
customer
c.
technological
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d.
interpersonal
95. The development of the original personal computer (PC) was a(n) ____ innovation at the time, whereas adding a
different kind of whitening agent to a soap detergent in an example of a(n) ____ innovation.
a.
incremental; novel
b.
novel; incremental
c.
concentric; novel
d.
novel; concentric
96. The number of patents held by an organization is a rough guide to the:
a.
effective use of organizational politics.
b.
future success of an initial public offering.
c.
amount of venture capital a firm will be able to attract.
d.
level of innovation in a firm.
97. Value creation through internal innovation originates with:
a.
an entrepreneurial mind-set.
b.
cross-product development teams.
c.
shared values and entrepreneurial leadership.
d.
innovation.
98. Successfully creating innovations through internal means requires:
a.
a highly individualistic culture.
b.
significant spending on R&D.
c.
acquisitions of innovative firms.
d.
venture capital.
99. ____ exist(s) when there is a need in the market that can be satisfied by new goods or services.
a.
Potentiality
b.
Market readiness
c.
Entrepreneurial opportunities
d.
Critical core competencies
100. Induced strategic behavior is a process that fosters product innovations that:
a.
are likely to change a firm’s strategic intent and mission.
b.
will lead to greater financial returns.
c.
are aligned closely with current strategy and structure.
d.
will come to market in a short period of time.
101. New entrepreneurial firms are better than larger established firms at:
a.
implementing innovations.
b.
gaining competitive advantage.
c.
making alliances.
d.
identifying entrepreneurial opportunities.
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102. Firms develop innovations in all the following ways EXCEPT:
a.
through autonomous or induced strategic behavior.
b.
by acquiring other companies.
c.
through cooperative strategies.
d.
via divestiture of low-performing units.
103. Discuss the differences between autonomous strategic behavior and induced strategic behavior.
104. Discuss the potential benefits and disadvantages of innovation through cooperative strategies.
105. What is the importance of international entrepreneurship?
106. Describe the three strategic approaches used to produce and manage innovation: internal corporate venturing,
cooperative strategies, and acquisitions.
107. Define the three types of innovative activity. Which is the most critical activity for U.S. firms?
108. Discuss the methods an organization can use to facilitate cross-functional integration.
109. Discuss the benefits and risks of acquiring another firm to gain access to innovations.
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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
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
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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
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.