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Indicate whether the statement is true or false.
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
b.
False
2. If the company’s workers have scant existing knowledge, their “absorptive capacity” to learn new knowledge will be
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
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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.
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
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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.
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
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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
“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
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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
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
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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.
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.
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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.
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
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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
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.
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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
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
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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.
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:
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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.
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
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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.
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.
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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
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.
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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.
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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