Entrepreneur vs. Intrapreneur

Tables of Contents

Almost every company in business today was started by someone who saw a market for a product or service and launched an enterprise to fill that need. While not every new business idea is innovative or industry changing, the entrepreneurial spirit driving new businesses is a marker of a healthy economy.

Nowadays, the title of entrepreneur — and its counterpart, intrapreneur — is specifically assigned to business leaders who take risks, innovate, and get financial support from investors and buy-in from customers. Who’s an entrepreneur vs. intrapreneur? How do they differ? What attributes do they share?

Business Owner vs. Employee

An entrepreneur takes a new business idea and starts a company to bring that idea to market. An intrapreneur is an employee who channels that same creativity and innovation to develop new products and services — and sometimes even markets — for an employer. Some common characteristics entrepreneurs and intrapreneurs share are creativity, enthusiasm, resilience, drive, and focus. They need to have great communication skills, since they have to be able to advocate their idea to investors, business leaders, employees, and potential customers.

A smiling entrepreneur reviews plans at a desk.

Success or Failure: Who’s More at Risk?

One major difference between an entrepreneur vs. intrapreneur centers on risk. Entrepreneurs bear more of the financial risk of failure if a new idea doesn’t succeed — their companies might fail, and they could lose their investment. However, they also reap more of the rewards of success. Because intrapreneurs work for companies with existing revenue from other products and assets uncommitted to the new venture, they’re protected from that kind of failure. However, if their ideas are wildly successful, the profits go to their companies.

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Critical Role in Economic Growth

Entrepreneurs and intrapreneurs are both critical to the economy and business climate. These innovative business leaders create the technology, services, and products that help grow a healthy economy. However, not every new idea succeeds, and just presenting a new idea isn’t enough. Creative thinkers need a framework to bring those ideas to market. That’s why innovative leaders’ having a foundation in business principles that an online Master of Business Administration (MBA) program provides is crucial.

What Is Entrepreneurship?

The definition of entrepreneurship is the act of investing time and money to build a business around a new idea, creating demand for a new product, service, or market. Entrepreneurship requires a high-energy leader who has faith in an idea and a game plan to bring it to market. Potential success and the financial and other rewards of that success motivate entrepreneurial leaders. The risk of failure doesn’t deter them, even when that failure might bring financial ruin; savvy entrepreneurs take those risks into account and take steps to mitigate them. No matter how good an idea is, no matter how revolutionary or groundbreaking, failure is always a possibility.

Despite the risk, entrepreneurship is an essential part of the economy and drives economic growth in several ways.

Creating New Jobs

New businesses create new jobs, and when small businesses succeed, they employ increasing numbers of workers as they grow. However, success is far from guaranteed. According to the U.S. Small Business Administration (SBA), the U.S. had about 250,000 new startups in 2018, generating 863,000 new jobs. During the same period, 220,000 businesses failed, for a loss of 762,000 jobs. Risk of failure will always be an essential part of entrepreneurship.

Boosting Productivity

Entrepreneurship also boosts productivity, a key driver of economic growth, according to the Center for American Entrepreneurship. When a small, nimble startup enters a market, established companies need to become more competitive to meet the challenge. They have to identify efficiencies and new products of their own to fend off the new competition, leading to increased productivity.

Disrupting Markets

Small business startups are incubators for big ideas, and innovation also leads to economic growth. New products and processes lead to consumer demand, creating space for new competitors to move into the market, which leads to more innovation. Truly disruptive innovation can revolutionize an entire industry or sector: Consider the ride-hailing company Uber, which transformed the taxi and transportation industry and led to a number of competitors (Lyft and small, local ride-hailing startups).

Innovation can also disrupt other innovations. For example, taxi companies weren’t the only businesses that ride-hailing services impacted. The relatively recent innovation of car sharing, in which urban dwellers could share a car without the cost of buying, fueling, parking, and maintaining an expensive vehicle, also lost ground to ride-hailing giants Uber and Lyft. Car-sharing service Car2Go pulled out of North America in 2019.

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Principles of Entrepreneurship

The main principles of entrepreneurship can be summed up as innovation, risk-taking, evangelism, financial judgment, resilience, and enterprise-building. Entrepreneurs who understand these principles have a better chance of being successful at building a new business.

Innovation Fuels Entrepreneurship

Innovation is crucial to entrepreneurship. A new idea can be a product, process, service, delivery system, or even business structure. However, innovation is only the beginning.

The Greater the Risk, the Sweeter the Reward

Risk-taking is in an entrepreneur’s DNA. Rather than being put off by risk, entrepreneurs embrace it. Smart entrepreneurs know that they can’t play it safe when creating new businesses, so they create business plans that acknowledge risk and how to mitigate it.

Evangelism and Promotion

Entrepreneurship and evangelism go hand in hand. Entrepreneurs have to sell their ideas to bankers, investors, employees, business partners, and customers. Entrepreneurship requires outstanding communication skills to tell a story about a product and get everyone else excited about it.

Financial Judgment: Speaking Investors’ Language

Financial judgment is the foundation on which successful entrepreneurship rests. Entrepreneurs who are financially savvy have a leg up on their competition. They understand the different budget needs for initial launch and market growth, and they can present their requirements to investors. Investors trust entrepreneurs who possess good financial judgment.

The Hard Work of Enterprise Building

A successful startup is not brought about by an idea alone. Entrepreneurship is the act of building a company, and all the hard work that the process entails. Smart entrepreneurs know they have to hire top-quality employees in finance, accounting, manufacturing, development, marketing, sales, and operations — and then lead the business.

Resilience in the Face of Failure

Resilience is a hallmark of entrepreneurship. Failure can come at any stage in the process — when an idea fails to secure investor backing or when a business fails despite all the preparation and funding behind it. Entrepreneurs need to be prepared to push past rejection and continue to refine their ideas or find solutions to setbacks, such as product development roadblocks or supply chain snafus.

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Launching a Company

Entrepreneurs with a background in business concepts are better prepared to successfully bring a concept to market. Savvy entrepreneurs know that they’ll need detailed business plans to secure buy-in from investors, startup plans to open their doors, and growth plans.

Creating a Business Plan

Before starting a business, entrepreneurs need to develop business plans. A business plan includes a description of the product or service, market analysis, a financial and marketing plan, a sales strategy, and financial projections. Investors will need to see the business plan to be comfortable investing in a new product or service.

Starting a Company

With funding in place, the entrepreneur needs to hire employees and begin the work of producing the product or service. Entrepreneurs need to hire financial and accounting staff, managers, and workers who make the product. They need to handle the daily management responsibilities as well as business development, sales, and strategy planning. At this stage, an entrepreneur may be acting as everything from CEO to janitor and working long hours.

Growing a Company

Entrepreneurs who successfully launch companies and products can’t rest on their laurels. Growing an enterprise requires a different skill set than growing a startup. Maturing companies need to develop additional products and services to remain competitive. Other challenges may be internal, such as a changing workforce or supply chain and manufacturing concerns, or external, such as an economic recession or a global pandemic.

As a company matures, the role of the entrepreneur-leader may change as well, from innovator to daily manager. Many entrepreneurs find this transition difficult. Some choose the role of serial entrepreneur, bringing a new business concept to market and starting the process all over again.

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Examples of Entrepreneurship

Some of the most common examples of entrepreneurship come from the tech world. The origin stories of Apple and Hewlett-Packard — companies that started in garages — are two of the best known. However, several types of entrepreneurship go beyond the realm of technology, and all of them are important drivers of economic growth.

Small Business Entrepreneurship

Most small business founders can be considered entrepreneurs, even if they don’t create industry-disrupting technologies or services. As local innovators, they significantly impact their local communities. The principles of entrepreneurship still apply, and founders may have even more skin in the game than a high-tech startup with a venture capital investment behind it.

Small tech companies aren’t completely without options for funding. SBA has two programs, Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR), that encourage small businesses to develop new technology and innovations. Since the SBIR program was founded in 1982, it has awarded more than $54 billion.

Examples of innovative small businesses are:

  • Taking advantage of the trend in no-code applications, Bubble offers a platform for nonprogrammers to build their own websites.
  • org. Independent bookstores that had to close during the COVID-19 pandemic pivoted to Bookshop.org to sell to their customers.
  • XP Health. A vision benefits provider, XP Health uses neural network technology to take measurements via smartphone and fill eyeglass prescriptions.

Scalable Startups

A scalable startup begins with an idea and an aggressive plan for growth. These startups are high risk and high reward and are what usually come to mind when people think of entrepreneurial enterprises. These businesses receive a lot of attention from venture capitalists and angel investors. Artificial intelligence (AI), healthcare, financial technology, and educational technology are sectors where scalable startups abound. Some examples are:

  • Button Wallet. This startup company provides cryptocurrency trading services.
  • This medical device company helps track respiratory health.
  • This survey app collects geolocation and hyperspatial data as well as survey results.

Large Company Entrepreneurship

Leaders of large, well-established companies know that to remain competitive and grow, they need to continue to be entrepreneurial and innovative. Entrepreneurial companies use their resources to support new technologies and products, giving them an advantage over small businesses and startups, which have to seek outside funding. Some examples of highly innovative corporations are:

  • Google’s parent company spent $27.5 billion on research and development in 2020.
  • The members-only retailer uses customer data to manage a host of operational issues.
  • The streaming service continues to adapt its technology to create new ways for customers to access content.

Large company entrepreneurship and intrapreneurship overlap to a certain degree. The key difference is that in a large innovative company, new ideas are part of the strategy and growth projections.

Social Entrepreneurship

Social entrepreneurs use the principles of entrepreneurship to build businesses that not only show profits, but also contribute to the social good. Their mission statements focus on solving a problem or meeting a need. Some examples of social entrepreneurship are:

  • The shoe company donates a pair of shoes for every pair it sells.
  • From its inception, the outdoor products retailer has always factored social responsibility into its business strategy and operations.
  • The cosmetics chain sells vegan and organic products that aren’t tested on animals. A portion of its profits goes to animal rights and conservation organizations.

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What Is Intrapreneurship?

Entrepreneurship and intrapreneurship both occur in companies. However, intrapreneurship tends to be independent and driven by outsiders, and often it occurs in organizations that don’t have a culture of innovation.

For that reason, many of the same principles that are the hallmarks of entrepreneurship guide intrapreneurship. For example, intrapreneurs need to be innovative and enthusiastic. They need to have drive and focus, and they need to show great resilience in the face of setbacks and roadblocks.

Successful intrapreneurs need to be mindful of some significant differences, though. For example, their innovations need to mesh with the organization’s existing operations. They may face great resistance to change, and they’ll have to work in a company culture, understand company politics, and build a coalition of internal stakeholders who support their ideas. For those reasons, it may be more difficult to be a successful intrapreneur than an entrepreneur.

What is intrapreneurship, and how are its principles expressed in a corporate setting?

Innovation in the Face of Resistance to Change

An intrapreneur may have a great idea for a new product or market or a new way to do things. However, companies have established product lines and processes. Intrapreneurs need to overcome opposition from managers and executives who may see a new idea as a threat.

Evangelism and Enthusiasm

As a result of internal resistance to change, intrapreneurs may have to be even more enthusiastic about their innovations than entrepreneurs. They’ll have to sell their ideas to the leadership teams, and to do so, they have to make a case that the innovation is worth the disruption.

Resilience and Perseverance

Intrapreneurs need to be prepared for rejection. Unlike entrepreneurs, however, they can’t just move on to the next investors on their lists. Intrapreneurs whose ideas get shot down need to show resilience differently. They may have to accept the verdict and move on to other ideas, or refine their innovations so that it better fits a company’s overall strategy and goals.

Building Stakeholder Relationships

A successful intrapreneur needs to build relationships with managers and leaders who can support their idea and help evangelize it to the leadership team. Building this type of relationship requires enthusiasm and diplomacy and must take into consideration existing office relationships and politics. An intrapreneur needs to build a solid business case for a new idea, justifying how it’ll lead to profits or efficiencies, overcoming the downside of a disruptive change.

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Moderate Risk vs. Reward

The rewards for successful intrapreneurship may not be as flashy as those for a disruptive entrepreneurial innovation. Generally, companies own the products their employees develop. The rewards for intrapreneurship may be a bonus, promotion, or raise. On the other hand, the company takes the financial risk, so while the reward is modest, so is the risk.

Examples of Intrapreneurship

Intrapreneurship can occur in any type of company, big or small, in any industry. The results of intrapreneurship can vary — a company may pivot to a new industry or service line or introduce a product that revolutionizes a business sector. Companies that prize innovation try to create a climate for intrapreneurship. Tech companies in particular host hackathons, idea labs, and other brainstorming events to capture that lightning in a bottle.

Some famous examples of intrapreneurship are:

  • Sony PlayStation. After tinkering with his daughter’s Nintendo, an engineer at Sony, which wasn’t in game consoles at the time, took his work to his superiors. His prototype became the PlayStation, opening up a vast new market for the company.
  • Southwest Airlines. Flight attendant Marty Gibbs started making jokes during her safety briefing. The airline adopted humor across the company and estimates that it’s earned the company $140 million annually in customer loyalty.
  • The Post-it was born when one staff scientist created a removable adhesive, and another scientist used it to create a nonpermanent bookmark.

Other examples are the Facebook Like button, Amazon Prime, and the Apple iPhone swipe to unlock feature.

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Conclusion: Entrepreneur vs. Intrapreneur: Which Is Right for You?

You are innovative, enthusiastic, driven, focused, and resilient. Rejection only makes you work harder. You come in early, stay late, and are motivated by dreams of success. You’re undaunted by risk. Entrepreneur vs. intrapreneur: which one is right for you?

If you like to run the show, build something from start to finish, and are motivated by knowing the next big thing will have your name on it, then entrepreneurship may be right for you. On the other hand, if you like having a team and resources already in place and the security of an established company with lower risk, and you’re comfortable with rewards such as company recognition, promotions, bonuses, or raises, then you’re likely an intrapreneur.

Whichever you decide, an advanced business degree such as that from the Maryville University’s online MBA can provide you with the business principles that will support your big idea. Begin your path to a career in innovation today.

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Recommended Reading

Exploring Entrepreneurship: Starting and Operating a Small Business

Importance of Entrepreneurship: Types, Benefits, and Styles

Four Ways a Business Degree Can Prepare Entrepreneurs for Economic Volatility


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