ABSTRACT
In discussions of entrepreneurship, one hears a great deal about the “bureaucracy” of big organizations and of their “conservatism.” Both exist, of course, and they are serious impediments to entrepreneurship and innovation—but to all other performance just as much. And yet the record shows unambiguously that among existing enterprises, whether business or public-sector institutions, the small ones are least entrepreneurial and least innovative. If entrepreneurship and innovation do not well up in an organization, something must be stifling them. That only a minority of existing successful businesses are entrepreneurial and innovative is thus seen as conclusive evidence that existing businesses quench the entrepreneurial spirit. For the existing business to be capable of innovation, it has to create a structure that allows people to be entrepreneurial. It has to devise relationships that center on entrepreneurship. It has to make sure that its incentives, its compensation, personnel decisions, and policies, all reward the behavior and do not it.
