Does Intrapreneurship exist in Asia?

Published within, Howard Frederick, Allan O’Connor, and Don Kuratko. Entrepreneurship Theory Process Practice. 3rd Asia-Pacific edition. Melbourne: Cengage Learning Australia, 2012.

Traditionally, Asian businesses have been viewed as bureaucratically structured public companies, or as family-owned patriarchal organizations – two corporate forms that on the face of it might hinder the growth of an intrapreneurial culture. However if one looks a little closer, intrapreneurship has in fact been one of the major ways in which Asian companies have been able to develop and grow. In fact, one could observe that much of the national economic development that took place during the 1980s and 1990s within the Asian Tigers (Hong Kong, Singapore, South Korea, and Taiwan) was due to corporate intrapreneurship that brought great innovation and diversity to Asian firms.

Modern intrapreneurship in Asia probably has its roots in the European colonial trading companies at the beginning of the last century that controlled the majority of business dealings between manufacturers and distributors. The colonial companies expanded primarily through the creation of new divisions that were set up by a manager with great freedom to exercise discretion, take initiative, and promote innovation. These people were usually groomed from the day of their induction into the firm. Like modern intrapreneurs, their major job was to enter into new markets and industries, and to grow their operations into conglomerates and monopolies. The traditional activity during the colonial era was trading, and then after political independence diversifying into retail, and local assembly, eventually becoming exporters, i.e., Harpers, Inchcape, Hagemeyer, and the Borneo Companies for example.

Similarly, many of the Chinese business groups growing out of colonial times within the ASEAN region grew in that manner. Most had humble beginnings as a trader leading to direct investment in industrial activities, later vertically integrating into downstream activities, real estate and property, and even banking and financial services. Each division had a different member of the family at the helm, e.g., the Salim Group (cement, automobiles, flour, food, chemicals, banking property, and insurance) in Indonesia, the Kuok (plantations, flour, shipping, hotels, mining, computer services, retail, and film distribution) and Hong Leong (banking, insurance, automobile franchises, construction, hardware, and manufacturing) groups in Malaysia, and the Charoen Pokphand (animal feed, poultry, chemicals, automobiles, telecommunications, textiles, property, and retail) group in Thailand for example. Of late one can also see many government regional and economic development authorities setting up subsidiary companies driven and managed by executive groups, e.g., the state economic development authorities in Malaysia.

Like everywhere, initiating intrapreneurship within any Asian firm, requires both a bright idea and a champion. The problem is that a conservative patriarch typically controls the scope of acceptable new ideas. The opportunity environment is seen differently due to his cultural values. For example, to one the opportunity to vertically integrate may be seen as a means to control and dominate the market, at the same time adding security to the company’s supply chain. Another might see that such vertical integration would destroy the years the years of developed cooperation and trust with vendors and customers that had been built up. Thus the potential of a firm to expand within its industry may hinge upon these simple beliefs.

Consequently some firms will be more open to new ideas than others and this is why many firms within the region fail to grow, actually declining. The chairman/CEO must see these ideas as opportunities and this to a great extent depends on cultural values and where they see their firm’s role within the environment. Some people welcome new challenges whilst others see new opportunities as a road to risk and potential destruction. Notwithstanding the above, only a very small number of people in any Asian firm will have the chance to advocate new ideas to the decision makers.

Intrapreneurship in Asia is deeply based upon the trust amongst the owners of firms, usually with some forms of nepotistic relationships involved. In colonial companies, new inductees were usually in some way related or vouched for by relatives or other trusted employees. Within the Chinese business groups, most pioneers of new divisions were either a direct relative, or related by marriage. Only in the last few years have ASEAN based firms selected candidates based on entrepreneurial qualities of proven leadership, creativity, and ability to manage a project.

However modern intrapreneurship is slow to take on in the region. The persona of being a manager is still very much linked with the concept of management prerogative, a hangover from the values of respect for seniority and feudalistic structure of society. While managers feel they have the prerogative, employees still feel hesitant to openly give opinions out of sensitivity of potentially offending senior employees. The actions of moving resources into new activities of a firm may often leave other employees with a feeling of insecurity, where they may feel that cooperating with the intrapreneur is contrary to their personal interests.

Many firms that need to transform within the changing global environment find it difficult to break away from the top-down orientation that initially brought success when the founder started and grew the business. Consequently, generational struggles have often emerged between parents wanting to maintain their prerogatives and their children, who want to expand, change and diversify aspects of the family businesses. In family companies, firms tend to become part of family life rather than singularly a profit-orientated organization. As a result intrapreneurship can be confused with power struggles and succession issues. This is the dilemma of traditional family businesses in Asia.

Intrapreneurship in Asia has its dark-side. The autonomy that intrapreneurship may bring to an individual or group opens up possibilities of taking advantage of the firm, which can lead to abuse of trust and corrupt dealings. Currently many state-owned enterprises face this problem where any new company or division that is formed drains finances and fails because of the conflict between employee and personal interests. Intrapreneurship has also encouraged a cowboy mentality where firms enter industries that they don’t really understand leading to losses and even bankruptcies. One just has to drive around the region and see all the failed construction projects and closed down factories that had short operational existences.

So the opportunities to become intrapreneurs within Asian firms are paradoxical. Intrapreneurship made many companies what they are today, yet at the same time, opportunities are very limited because the low level of trust perceived in employees without family connections and long periods of service within the firm. However this is changing, Asian firms that have transformed their styles from the traditional to professional management have realized the need for intrapreneurship and are now beginning to actively promote it. However some forms of neo-nepotism still structurally exist as a result of mentor-mentee programs within firms. These relationships have great impact upon an employee’s ability to influence tightly knit management circles. Thus one of the important qualities of intrapreneurs within the Asian region is the ability to handle relationships, something far away from the myths of the maverick intrapreneurs we read about in Western literature.

Published within, Howard Frederick, Allan O’Connor, and Don Kuratko. Entrepreneurship Theory Process Practice. 3rd Asia-Pacific edition. Melbourne: Cengage Learning Australia, 2012.

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