True / False
1. An organization engaging in strategic entrepreneurship focuses on identifying opportunities that it can exploit
through innovations.
a. True
b. False
2. Most large, complex firms innovate through cooperative strategies or strategic alliances, but not through internal
activities.
a. True
b. False
3. Corporate entrepreneurship describes the opportunity seeking and exploitation of innovations in new start-up
enterprises.
a. True
b. False
4. Entrepreneurial opportunities exist because of competitive imperfections in the markets and among the factors of
production.
a. True
b. False
5. The essence of entrepreneurship is to capture most of the existing markets from less aggressive and innovative
competitors.
a. True
b. False
6. Entrepreneurship is the economic engine driving national economic growth in many nations.
a. True
b. False
7. Innovation is the means by which the entrepreneur creates wealth.
a. True
b. False
8. Entrepreneurial opportunities are conditions in which new goods or services can satisfy a need in the market.
a. True
b. False
9. 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
10. Invention is defined as the adoption of a similar innovation by different firms.
a. True
b. False
11. 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
12. Evidence demonstrates that large firms with well-funded R&D operations are more effective at innovation than are
smaller firms.
a. True
b. False
13. Given the rapid rate of technological change, patents are not a useful gauge of a firm’s entrepreneurial prowess.
a. True
b. False
14. 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 “sleeps, eats, and drinks“ this concept. Rosalie has the entrepreneurial characteristic of
passion.
a. True
b. False
15. The entrepreneurial mind–set is found primarily among managerial and scientific employees.
a. True
b. False
16. 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
17. If the company‘s workers have scant existing knowledge, their “absorptive capacity” to learn new knowledge will
be limited.
a. True
b. False
18. For firms to be entrepreneurial, they must stress individualism in their employees above all other characteristics.
a. True
b. False
19. A society’s cultural characteristics influence a nation’s rate of entrepreneurship and its related practices.
a. True
b. False
20. In order to be successful, a new entrepreneurial enterprise should be sheltered from the global environment until it
is firmly established in domestic markets.
a. True
b. False
21. Research has shown that internationally diversified firms are generally more innovative.
a. True
b. False
22. Larger, established firms, mainly those competing globally, use their R&D labs to create disruptive technologies and
products.
a. True
b. False
23. Most innovations are incremental, not radical.
a. True
b. False
24. Toyota’s Prius, the first mass-produced hybrid-electric car is an example of a radical innovation as changed the
industry by providing new functionalities for users.
a. True
b. False
25. A company with a need for immediate, large returns should invest in research and development.
a. True
b. False
26. While both incremental and radical 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
27. Some of the new products to be produced by the joint venture between Intel and Nokia integrating smartphones and
computers would be considered radical innovations.
a. True
b. False
28. 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
29. A innovation developed through autonomous strategic behavior will probably take the firm into new markets not
addressed by its current strategy.
a. True
b. False
30. 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
31. 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
32. Autonomous strategic behavior results in internal innovations that are highly consistent with the firm’s current
strategy.
a. True
b. False
33. 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
34. Cross-functional work teams are best supported by vertical organizational structures.
a. True
b. False
35. 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
36. 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
37. Innovations can only be produced by actions and activities within the firm.
a. True
b. False
38. 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
39. 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
40. Acquisitions are a low–risk approach to producing and managing innovation.
a. True
b. False
41. 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
42. Entrepreneurial ventures often produce more radical innovations than do their larger, more established counterparts.
a. True
b. False
43. Larger and well-established firms often have more resources and capabilities to produce more radical innovations
than do smaller entrepreneurial firms.
a. True
b. False
44. Women are the fastest-growing group of entrepreneurs in Africa and Asia.
a. True
b. False
Multiple Choice
45. 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.
46. 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.
47. 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.
a. This is an example of an established firm neglecting the opportunity-seeking aspect of strategic
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.
48. 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.
49. 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
50. 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
51. Since 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.
52. 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.
53. 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.
54. 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.
55. The three types of innovative activity include all of the following EXCEPT
a. invention.
b. imitation.
c. implementation.
d. innovation.
56. Products developed through
developed through
a. innovation; imitation.
b. imitation; invention.
c. imitation; innovation.
d. innovation; invention.
are often offered at lower prices without as many features than products
57. 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.
58. 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 radical innovation.
c. an incremental innovation.
d. a(n) innovation created through a cooperative strategy.
59. ____ 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
60. 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.
61. 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.