Corporate entrepreneurship is a very broad concept that includes the generation, business development, and implementation of new ideas or behaviors. A corporate entrepreneur style innovation could be a new product or service, a new administrative system, or a strategic plan or program pertaining to organizational members. In this context, entrepreneurship centers on reenergizing and enhancing the firm’s innate ability to acquire innovative skills and capabilities (Damanpour, 1991). Creating viable new products or new strategic business entities are two of the most common end goals of corporate entrepreneurship.
In Japan, corporate entrepreneurism is the engine that generates innovation and technological breakthroughs. According to Helms, Japan’s yearly venture capital investment is equivalent to 0.02% of GDP compared with 0.29% for the US (Helms). Japanese start-ups are at a low of 4.1% which is the lowest start-up rate among industrialized nations. Thus the burden of bring new products and services falls under the charge of corporate entrepreneurism. The 2006 introduction of Nintendo Wii was an example of the results intensive corporate entrepreneurship can have in turning a company around.
In the battle for market share in the home entertainment business, Nintendo was a distant third to Microsoft’s X-Box and Sony’s Playstation II in 2005. Nintendo’s corporate entrepreneurs took competitive data from the product announcement for Sony’s Playstation III as a clarion call to arms. Two key engineers and a group of Nintendo marketers planned to introduce an unproven technology that was seen as risky by top management. This disruptive technology became the Wii remote system that monitors the players hand and arm movements (in addition, users push the buttons, which is the only actions required by X-Box or Playstation) as the key determinant in manipulating the various games.
In addition to the product innovation, Nintendo targeted the price of $250 retail for the new Wii. With product delays from Sony on the Playstation III and its $600 price tag, Nintendo exploited their advantage over both key competitors during holiday promotions. The result was a monstrously successful holiday sales period for Nintendo Wii for 2007-2009 and “drafting” momentum as a company in the handheld segment featuring Nintendo’s DS hand held players. Corporate entrepreneurism was a key element in the success of Nintendo’s Wii since the introduction was handled as a start-up within the corporate enviornment.
What can entrepreneurs learn from this case in Japan? When start-up investment capital is not readily available or venture activity is under-valued by the market or private investors, corporate enterpreneurism becomes the key engine to drive innovation and new product development.