Question 1

Which of the following is an example of social entrepreneurship?

Accepted Answer

Social entrepreneurs evaluate the performance of their ventures not only by financial metrics but also by ecological and social contribution. Therefore, the committee that approved the new formula for an all-purpose cleaner because it cleaned as well as other cleaners and used organic ingredients is practicing social entrepreneurship.

Question 2

What is strategic entrepreneurship?

Accepted Answer

Strategic entrepreneurship describes the pursuit of an innovation using tools and concepts from strategic management.

Question 3

Which of the following statements is strongly influenced by the not-invented-here syndrome?

Accepted Answer

Firms following the closed innovation model are much more likely to fall prone to the not-invented-here syndrome. People from a firm that has this attitude would likely state: "If a product was not created and developed at our company, it could not be good enough."

Question 4

Which of the following statements is true of firms pursuing a closed innovation?

Accepted Answer

Firms in the closed innovation model are extremely protective of their intellectual property. This allows firms not only to capture all the benefits from their own R&D, but also prevents competitors from benefitting from it.

Question 5

Researchers at Games First Inc.spent several months coming up with a fun game for toddlers that incorporates a new idea in preschool education.This scenario describes step _____ of the innovation process.

Accepted Answer

This scenario describes step two of the innovation process. These steps are as follows:1. The innovation process begins with an idea. The idea is often presented in terms of abstract concepts or as findings derived from basic research.2. In a next step, invention describes the transformation of an idea into a new product or process, or the modification and recombination of existing ones.3. Innovation concerns the commercialization of an invention by entrepreneurs.4. The innovation process ends with imitation. If an innovation is successful in the marketplace, competitors will attempt to imitate it.

Question 6

Which of the following statements accurately brings out the difference between closed innovation and open innovation?

Accepted Answer

In closed innovation, strength in R&D is equated with a high likelihood of benefitting from first-mover advantages. In open innovation, the focus is on building a more effective business model to commercialize (internal and external) R&D, rather than focusing on being first to market.

Question 7

A firm's ability to understand external technology developments,evaluate them,and integrate them into current products or create new ones is called

Accepted Answer

A firm's ability to understand external technology developments, evaluate them, and integrate them into current products or create new ones is called absorptive capacity.

Question 8

Large companies,such as AT&T,IBM,and GE,have been shifting their knowledge landscape from closed innovation to open innovation because of the

Accepted Answer

The increasing supply and mobility of skilled workers has led to a shift in the knowledge landscape from closed innovation to open innovation. Even the largest companies, such as AT&T, IBM, and GE, are shifting their innovation strategy toward a model that blends internal with external knowledge-sourcing via licensing agreements, strategic alliances, joint ventures, and acquisitions.

Question 9

Which of the following lists the stages of the industry life cycle in the correct order?

Accepted Answer

As an industry evolves over time, five distinct stages occur in the following order: introduction, growth, shakeout, maturity, and decline.

Question 10

Which of the following key assumptions are innovations like Procter & Gamble's "Connect + Develop" based on?

Accepted Answer

An example of open innovation is Procter & Gamble's "Connect + Develop," or C + D (a play on research and development, or R&D). One key assumption underlying the open innovation model is that combining the best of internal and external R&D will more likely lead to a competitive advantage.

Question 11

Which of the following scenarios would typically happen in a firm that uses open innovation?

Accepted Answer

Open innovation allows a firm to benefit not only from internal ideas and inventions, but also from ideas and innovation from external sources. Because a meeting with professors involves using an external source, this scenario would be found in a firm that uses open innovation.

Question 12

Which of the following scenarios would be characteristic of an entrepreneur?

Accepted Answer

Entrepreneurs are the agents that introduce change into the competitive system. They do this not only by figuring out how to use inventions but also by introducing new products or services, new production processes, and new forms of organization. Entrepreneurs innovate by commercializing ideas and inventions. By implementing a new and more efficient way to produce pottery, Rachel is introducing a new production process and is therefore practicing entrepreneurship.

Question 13

Norce Autos Inc.allows its customers,suppliers,researchers,and the community in general to contribute their ideas toward new product developments.Customers and other interested stakeholders can let the company know what new features they want to see in their next car.If the company faces any technical complexities that its internal R&D team cannot solve,it posts the problem on its website and allows people from the external community to provide solutions.In this scenario,Norce Autos Inc.is primarily leveraging its

Accepted Answer

Norce Autos Inc. is leveraging its open innovation model. Companies using an open innovation approach realize that great ideas can come from both inside and outside the company. Significant value can be had by commercializing external R&D and letting others commercialize internal R&D that does not fit with the firm's strategy. The focus is on building a more effective business model to commercialize (internal and external) R&D, rather than focusing on being first to market.

Question 14

A new product often has a high price when it is launched because of a

Accepted Answer

A new product often has a high price when it is launched because of a large investment in designing a product while producing small quantities.

Question 15

Which of the following would be the result of product innovation?

Accepted Answer

Product innovations, as the name suggests, are new or recombined knowledge embodied in new products, such as a refrigerator. On the other hand, process innovations are new ways to produce existing products or to deliver existing services.

Question 16

Which of the following reasons led to the launch of Procter & Gamble's "Connect + Develop," a web-based interface that connects the company's internal-innovation capability with the distributed knowledge in the global community?

Accepted Answer

P&G is an $85-billion company whose investors expect it to grow at least 4-6 percent a year, which implies generating between $3 and $5 billion in incremental revenue annually. P&G was no longer able to generate this amount of growth through closed innovation. By 2000, P&G's closed-innovation machine had stalled, and the company lost half its market value. It needed a change in innovation strategy to drive organic growth.

Question 17

Which of the following is an open innovation principle?

Accepted Answer

"External R&D can create significant value." is an open innovation principle.

Question 18

Globe Source Inc.is a consumer electronics company that follows an open innovation model.Which of the following can be concluded about this firm?

Accepted Answer

Globe Source Inc. will buy others' intellectual property whenever it advances its own business model. Companies using an open innovation approach realize that great ideas can come from both inside and outside the company. Significant value can be had by commercializing external R&D and letting others commercialize internal R&D that does not fit with the company's strategy.

Question 19

First movers often have several competitive benefits including

Accepted Answer

First movers often have several competitive benefits including network effects.

Question 20

What is an invention?

Accepted Answer

Invention describes the transformation of an idea into a new product or process. If an invention is useful, novel, and nonobvious, it can be patented.

Quiz 7: Business Strategy: Innovation and Entrepreneurship