Entrepreneurial Behaviour and Barriers to Corporate Entrepreneurship – A Case Study of L’oreal

Introduction

In the modern business context, the term ‘entrepreneurship’ becomes excessively familiar than the last few years, however, for many people, this is still an emerging topic of enquiry. Based on some of the recent evidence of a number of larger organisations, it can be stated that currently business researchers provide their attention on the exploration and explanations of the entrepreneurial prediction associated with several aspects, such as creation of new venture, growth, development, innovation, and so on. According to the viewpoints of some business developers, it can be stated that entrepreneurship is not any business attitude; it is actually a state of mind of the business personnel. However, as mentioned earlier that many people do not have any clear idea about the entrepreneurial attitudes, therefore, organisations often face several barriers due to these entrepreneurial concepts. The report highlights the entrepreneurial concepts and the barriers regarding this matter faced by the renowned organization, L’oreal.

Corporate Entrepreneurship Principle followed by L’oreal

The main concept of corporate entrepreneurship followed by L’orealis dependent on a number of progressive business elements; such as strategic renewal, innovation, and corporate venturing. Corporate entrepreneurship is often termed as intrapreneurship, as it only occurs inside the established organisations. Evidence suggests that every organisations want innovation and organic growth in their operational process, but in most cases, they do not have proficient supports for increasing and upholding the growth factors over time. As per the statement of Ardichviliet al. (2003), focusing only on innovations is not sufficient for improving the positional aspect in the modern competitive corporate world.

Figure 1: Corporate Entrepreneurship

(Source: Ardichviliet al. 2003, p.108)

In order to maintain or improve the business standards of L’oreal, organisation requires building some innovative strategic frameworks for accelerating their new business growth. Block and MacMillan (1993) mentioned that at these viewpoints, L’oreal focus on the process of corporate entrepreneurship, for developing new business process, products, and services, through which they would create new values and uphold their revenue standards in the current competitive market place. Based on some recent corporate reviews of L’oreal, it can be stated that the creativity and passionate behaviours of the L’oreal employees support them in retaining their entrepreneurial behaviour. However, based on the comments of Ucbasaranet al. (2010), organisations need to focus on determining and analysing the right opportunities, which would be applied to their entrepreneurial ventures.

Analysis of Entrepreneurship opportunities present before L’oreal

Due to the reason of globalisation, the modern market places are changing rapidly, through transformation in technology, innovative business process, and other factors. These rapid changing business operations support the development of healthy competitive business environment, through which L’oreal will get more opportunities of creating new business processes, through the entrepreneurial actions (Dutta and Crossan, 2005). The role played by entrepreneurs at this point is that they require imaging beyond the market requirement and investing in the processed fulfilling that future demands. For example, the R&D team of L’oreal focuses on the identification of the changing demands and expectations of the modern customers, through sensing processes, creating, scanning, interpretiving, and learning. All of these are under the entrepreneurial opportunities, and can be identified as the key skills related with entrepreneurship. However, the opportunities identified by L’oreal might be different in case of Garnier, as these aspects would be dependent on a number of corporate factors.

Figure 2: Opportunity recognition as Pattern Recognition

(Source: Dutta and Crossan, 2005, p.430)

As mentioned earlier, the entrepreneurial opportunities are dependent on a number of key factors, such as entrepreneurial alertness, prior knowledge about entrepreneurial ventures, information asymmetry, social networks, opportunity types, and personality traits. Through reviewing the reports of L’oreal Company, it can be stated that recognition of internal and external opportunities is also vital for understanding the requirements of entrepreneurial approaches.

It is evident that rapid growth in the sophisticated competitor list becomes one of the major factor behind the corporate entrepreneurship strategies followed by the company. Besides this, distrust on the traditional corporate process and downsizing of the larger organisations accelerate the process entrepreneurial ventures (Kazanjianet al. 2017). Apart from the reasons, technological development, economic growth, creative skills, collaborative operations, and new opportunity evaluation, can be considered as the internal entrepreneurial opportunities of L’oreal. Additional to the above, larger customer basis, government supports, political stability, and many other factors work as the external accelerator behind the entrepreneurial opportunities.

Barriers to corporate entrepreneurship faced by L’oreal

The main barrier behind the entrepreneurial concept faced by the organisation is the fear of failure. Evidence suggests that organisations often face the stages of failure after creating proper entrepreneurial plans, and often the best innovative ideas might cause the greater obstacle. However, on the contradictory viewpoint of Bloodgoodet al. (2015), failure is actually dependent on the analytical level followed by the firms. The insurer RSA reports reflect the facts that among most of the UK start-up companies, around 55% fails in every five-year interval. Some of the main reasons behind the failure are absence of financial supports, over-confidence about success, stretched resources, inflexibility in managerial structures, and lack of career guidance, instability in macro-environmental status, contextual constraints, and instability, which create main issues in developing the entrepreneurial actions of L’oreal. Besides this, cultural norms, social media interruption, and many other corporate factors can act behind the failure reasons, which are required to be identified.

In case of L’oreal, one of the main reasons would be their bureaucratic leadership and management style, which is eliminated from the current market place, besides this, based on a survey of L’oreal employees, it can be stated that the managers of the company communicate very rare with their entry level or novice employees. Due to this reason, the novice employees could not get proper supports from the hierarchies. Apart from this, the company does not follow the principle of employee communication and collaboration, therefore, an environment of panic urgency is always present there. Moreover, based on the limited training methods, it is also proved that the organisation undergoes through a ‘sink or swim culture’ in their workplace. Absence of employee career pathway, fire drill mentality of the managers, and antiquated IT systems, would also decrease the entrepreneurial attitudes of the organisation. Kuratkoet al. (2015) opined that most of the entrepreneurial firms follow the structure of systems, structures, strategic directions, cultures, people, and polices.

Strategic recommendations for L’oreal in order to mitigate barriers

Through analysing the status of the organisation, corporate entrepreneurs need to rely on several strategic viewpoints. According to the statement of McGrath and MacMillan (1995), incorporation of social capital, legitimacy establishment, and resource management would be essential. Besides this, in case of L’oreal employees, they need proper professional and ethical training sessions, through which they would understand the main aim, purpose, and objectives of the company. Apart from this, the company members would understand and adapt the entrepreneurial codes and conducts, which would be beneficial for the entire corporation. Additional to this, for aligning the entrepreneurship with the on-going business process, L’oreal can also focus on the strategic entrepreneurship model followed by the renowned company IBM.

Figure 3: Model of Strategic Entrepreneurship

(Source: McGrath and MacMillan,1995, p.50)

Conclusion

Therefore, based on the entire discussion, it can be stated that every organisations, like L’oreal, need to focus on the alignment of the entrepreneurial rules, by evaluating the venture-based practices, technological advancements, and so on. Studies recommend that entrepreneurial opportunities are associated with the modern business structure. However, the process of converting the entrepreneurial opportunities into innovative value-adding services would be analysed through entrepreneurial strategies.

Reference List

Ardichvili, A., Cardozo, R. and Ray, S. 2003. A theory of entrepreneurial opportunity identification and development. Journal of Business venturing, 18(1), pp.105-123.

Block, Z. and MacMillan, I.C. 1993.Corporate venturing: Creating new businesses within the firm. Boston, MA: Harvard Business School Press. Bloodgood, J.M., Hornsby, J.S.,

Burkemper, A.C. andSarooghi, H. 2015. A system dynamics perspective of corporate entrepreneurship. Small Business Economics, 45. p.383.

Dutta, D. K., and Crossan, M. 2005. The nature of entrepreneurial opportunities: Understanding the process using the 4I organizational learning framework. Entrepreneurship Theory and Practice, 29(4), pp.425-449.

Kazanjian, R.K., Drazin, R. and Glynn, M.A., 2017. Implementing strategies for corporate entrepreneurship: A knowledge‐based perspective. Strategic entrepreneurship: Creating a new mindset, pp.173-199.

Kuratko, D.F., Hornsby, J.S. and Hayton, J., 2015. Corporate entrepreneurship: the innovative challenge for a new global economic reality. Small Business Economics45(2), pp.245-253.

McGrath, R. G. and MacMillan, I. C. 1995. Discovery Driven Planning. Harvard Business Review. 73, pp.44-54.

Ucbasaran, D., Westhead, P., Wright, M., and Flores, M. 2010. The nature of entrepreneurial experience, business failure and comparative optimism. Journal of Business Venturing, 25, pp.541-555.

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