Strategic entrepreneurship, collaborative innovation, and wealth creation

Abstract

Strategic entrepreneurship refers to firms' pursuit of superior performance via simultaneous opportunity‐seeking and advantage‐seeking activities. Both small and large firms face impediments while pursuing strategic entrepreneurship. While small firms' opportunity‐seeking skills may be strong, their limited knowledge stocks and lack of market power inhibit their ability to enact the competitive advantages necessary to appropriate value from opportunities the firms choose to pursue. In contrast, large firms are skilled at establishing competitive advantages, but their heavy emphasis on the efficiency of their existing businesses often undermines their ability to continuously explore for additional opportunities. Building on a variety of theories, including network, learning, resource‐based, and real options, we suggest that collaborative innovation can enable both types of firms to overcome their respective challenges. Collaborative innovation is the pursuit of innovations across firm boundaries through the sharing of ideas, knowledge, expertise, and opportunities. For small firms, we contend that pursuing entrepreneurship collaboratively allows them to preserve their creativity and flexibility while mitigating the inherent liabilities of smallness. We argue that collaborative innovation permits large firms to exploit their advantage‐creating skills while concurrently exploring for opportunities outside their current domain. Thus, small and large firms that learn how to integrate strategic entrepreneurship and collaborative innovation are well positioned to create wealth. Copyright © 2008 Strategic Management Society.