MAN 4720 Chapter 13

a type of innovation that builds on the existing knowledge bases and provide small improvements in current products

Incremental Innovation

102. ____ 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

(A) Complementary strategic goals

74. ____ 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

(A) Internal corporate venturing

44. 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.

(A) This is an example of an established firm neglecting the opportunity-seeking aspect of strategic entrepreneurship.

95. 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.

(A) an entrepreneurial mind-set.

89. When used effectively, cross-functional teams will often bring about: (A) faster product development processes. (B) an increased need for additional information. (C) conflicting information about the business environment. (D) future cooperative alliances.

(A) faster product development processes.

69. 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.

(A) incremental innovation.

71. 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

(A) incremental; novel

97. 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.

(A) investment capital.

77. 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.

(A) is encouraged through a bottom-up or top-down process.

46. 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

(A) opportunities; resources

79. 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.

(A) product champions.

43. Pet Care Companion Connection (PCCC) is an organization that trains persons with mild-t-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.

(A) taking advantage of a need in the marketplace.

83. 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.

(A) the diffusion of tacit knowledge.

60. 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.

(A) the receiving party has adequate absorptive capacity to learn.

100. 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

(B) To develop new products and bring them to market

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

(B) a balance between individualism and cooperative behavior

70. 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: (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.

(B) a long wait for an uncertain payoff.

48. 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.

(B) creative destruction.

66. 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.

(B) have international experience.

87. 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

(B) horizontal

49. 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.

(B) its investors will react positively to the introduction of the new product because of the potential for higher returns.

62. Research shows that internationally diversified firms tend to be ____ than domestic-only firms. (A) less profitable (B) more innovative (C) less technologically advanced (D) more likely to have an individualistic culture

(B) more innovative

72. 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

(B) novel; incremental

86. 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

(B) parallel or overlapping

68. 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.

(B) significant spending on R&D.

80. 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.

(B) the effect it can have on the firm's own ability to produce innovations.

82. 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.

(B) the use of induced strategic behavior.

85. Induced strategic behavior as a form of internal innovation is a(n) ____ process. (A) bottom-up (B) top-down (C) free-flowing (D) external

(B) top-down

81. 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.

(B) uses the autonomous strategic behavior form of internal corporate venturing.

64. ____ is one of the reasons for the differences in rates of entrepreneurship among different countries. (A) Climate (B) Competitiveness (C) Culture (D) Constitution

(C) Culture

47. ____ 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

(C) Entrepreneurial opportunities

56. ____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

(C) Entrepreneurs

67. 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.

(C) a balance of individualism and collectivism.

96. 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.

(C) alignment of complementary assets.

55. 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.

(C) an incremental innovation.

84. Induced strategic behavior is a process that fosters product innovations that: (A) are likely to change a firm's strategic intent and mission. (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.

(C) are aligned closely with current strategy and structure.

50. 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.

(C) commercial product.

51. 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.

(C) create wealth.

59. 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.

(C) high absorptive capacity to learn.

53. 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

(C) imitation; innovation

52. The three types of innovative activity include all of the following EXCEPT: (A) invention. (B) imitation. (C) implementation. (D) innovation.

(C) implementation.

88. 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.

(C) independent frames of reference of team members.

76. 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.

(C) internal corporate venturing.

73. 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.

(C) involve substantial uncertainty and risk.

99. 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.

(C) one partner will use the other partner's knowledge and use it to enhance its own competitive abilities.

93. 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.

(C) organizational politics.

63. 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

(C) positively related to

57. 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.

(C) preference for certainly about projects.

94. 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.

(C) shared values.

75. Internal corporate venturing does NOT involve: (A) autonomous strategic behavior. (B) induced strategic behavior. (C) strategic alliances. (D) product champions.

(C) strategic alliances.

92. The dimensions on which functional departments can vary include all the following EXCEPT ____ orientation. (A) time (B) customer (C) technological (D) interpersonal

(C) technological

78. Autonomous strategic behavior is a(n) ____ process in which product champions pursue new ideas. (A) top-down (B) horizontal (C) integrated (D) bottom-up

(D) bottom-up

45. 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.

(D) corporate entrepreneurship.

91. 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.

(D) formality of structure.

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.

(D) identifying entrepreneurial opportunities.

98. 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

(D) investment capital; new technological knowledge

54. 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.

(D) level of innovation in a firm.

90. 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 (D) organizational politics

(D) organizational politics

58. 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.

(D) passion for his invention.

61. 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.

(D) strong "buy-domestic" programs.

42. 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.

(D) via divestiture of low-performing units.