Amazon is an American e-commerce company originally founded in July 1994 by Jeff Bezos, before its launch a year later

in 1995 representing part of the dotcom bubble (TechCrunch, 2012). Originally an online book retailer, Amazon has been expanding throughout its 17-year history, continually diversifying its retail catalogue as well as developing consumer electrics and web services. This wide and expansive product portfolio is the fruition of an innovation led culture instilled in the company by Bezos as Amazon continually demonstrates corporate entrepreneurship to facilitate its almost unprecedented growth. Corporate entrepreneurship can be viewed as a strategy or a process of organizational renewal that has two distinct but related dimensions: innovation and venturing, and strategic renewal (Zahra 1993). This relates to an organisations ability to continually develop its external and internal contexts to maintain competitive advantage and drive expansion. Amazon is an organisation that has successfully identified the benefits of corporate entrepreneurship as a strategy to survive and indeed thrive in an industry that has been evolving for almost two decades. Its ability to do so has allowed it to evolve from the dotcom bubble bust, into the 206th largest company in the world by revenue (CNN Money, 2012). Amazon is the worlds largest online retailer, with specific retail websites in ten countries, international shipping available beyond those and further location specific websites planned. This international presence and the ensuing domination of the online retail industry has facilitated exponential revenue increases, particularly within recent years. The company first recorded an operating profit in 2002, the same year it first broke US$ 1 billion of revenue in a single quarter (Regan, 2002). This acted as a precedent for years to come with the company going on to report an annual revenue of US$ 48.07 billion in 2011 (Yahoo Finance, 2012). In the same time, share prices rose from US$ 18.9 in December 2002, to US$ 252.05 in November 2012 (Yahoo Finance, 2012). Such financial growth demonstrates the prominence of Amazons ability to identify consumer interests and construct an appropriate way to meet them within their limitations, and in doing so exemplify many of the concepts behind corporate entrepreneurship. This dynamic versatility has seen Amazon bring commercial electronic products such as the Amazon Kindle, an e-book reader, and the Kindle Fire, a tablet computer, to market; as well as developing a range of cloud computing services. This is compounded by various acquisitions worth US$3.18 billion that allowed further access to additional online markets making Amazon the dominant force in e-commerce. The success of Amazon as an organisation is undeniable, and indeed it is clear that it owes much of its success to the principles and concepts that shape corporate entrepreneurship, in terms of innovation, venturing and strategic renewal. However within the corporate entrepreneurship literature, there are a number of frameworks that act as blueprints to link theory into strategic management practice. Indeed, for the purpose of this essay, I would like to evaluate the success of Amazon in terms of Guth and Ginsbergs domain framework established in 1990. Guth and Ginsberg reference the idea that entrepreneurship can result from the redistribution and reconfiguration of existing resources (Schumpeter, 1934) as a basis to view corporate

entrepreneurship beyond a simplistic process of new venture creation. Instead it is viewed as the creation of wealth through new combinations of resources, in addition to innovation and venturing within existing organisations. Such a view and the framework it precedes offer the opportunity to evaluate the successes of Amazon in a broader context of corporate entrepreneurship theory, whilst placing an emphasis on the external issues that have resulted in Amazon achieving industry dominance, something that other frameworks cannot do as succinctly. The limitations of the framework, although valid, do not prevent Amazon and its success to be viewed in terms of a more generalised understanding of corporate entrepreneurship. Guth and Ginsberg (1990): A Domain Framework

The above framework demonstrates the two processes involved in corporate entrepreneurship: innovative venturing and strategic renewal. Furthermore, the framework suggests that the extent to which corporate entrepreneurship occurs and the subsequent ways it manifests are determined by four domains: environment, strategic leaders, organisational conduct or form and organisation performance. Viewing Amazon in terms of these four domains, offers an insight into the factors that allowed the company to demonstrate entrepreneurship, and allows for a more complete evaluation of its success in regards to innovation, venturing and strategic renewal. The initial domain highlighted by Guth and Ginsberg that determines the extent and the manifestation of corporate entrepreneurship is the environment the company operates in, as the opportunity for new products and services arise as a result of new technologies or the commercialisation of existing technologies, in addition to mediating factors such as competitive, social and political shifts. This is substantiated by three key findings. Firstly, major environmental shifts

can affect strategy (Zajac and Shortell, 1989), as is evident from Amazons release of the Amazon Kindle, an e-reader, in 2007. At the time of release, there was a major social and technological shift towards easy access hand held media. Apples original iPhone was released in the same year, demonstrating a competitive shift in the environment, as the propensity to access personal digital media became acutely enhanced. As a result, Amazon released an e-reader that simulated the experience of reading a paper book as closely as possible, whilst making the device lightweight and giving it expandable storage so multiple publications could be stored on the same device, granting the consumer instant access to a wealth of media. The realisation and exploitation of the environmental shifts towards hand held media proved pivotal for Amazon, as the kindle sold out within 5.5 hours (Patel, 2007) and wasnt back in stock until April 2008 (Sorrell, 2008). It was Amazons first consumer electrical product, granting them first mover advantage in a continually expanding industry. Secondly, the extent of corporate entrepreneurship, particularly across a number of firms within an industry, may be determined by how dynamic and hostile the environment is (Miller, 1983). Indeed the introduction of the Amazon Kindle prompted companies such as Apple, Kobo and B&N (Hoffeider, 2012) to enter the e-book market. The low margins and increasing number of customers resulted in an industry where companies are continually trying to innovate beyond each other in terms of their respective devices, with elements such as 3G accessibility, touch screens and enhanced graphics all introduced into technically proficient devices. This is further testimony to the initial point that new technologies offer opportunities for additional technologies and services, creating an environment where corporate entrepreneurship is integral to creating and maintaining competitive advantage. Finally, the structure of the industry presents opportunity for new product development (Cooper, 1979). This is particularly pertinent to Amazon, as the launch of the Amazon Kindle in 2007 actually represents the fruition of the companys attempt to redefine the book industry, ever since its launch in 1994. Initially the company changed the way in which the consumer shopped, with one click purchasing and free delivery over US$25 (Rao, 2011). From there Amazon targeted publishers and distribution networks, marketing a means of publishing for small publishers, before introducing self-publishing and finally making publishing via the Kindle simplistic and convenient whilst introducing a royalty structure (Rao, 2011). Throughout this time Amazon was initially utilising ondemand printers in tandem with its 24-hour shipping model to mass publish books on demand; and as traditional publishers struggled to compete, they introduced an e-book experience that was as similar to traditional books as possible. It was this restructuring of the book industry that created the opportunity for the Amazon Kindle to successfully exploit, in a clear demonstration that the manipulation and understanding of its environment, was integral to the companies corporate entrepreneurship strategy. The second domain proposed as an influence on corporate entrepreneurship is the influence of strategic leaders. Although documenting the lack of research into the effect of management teams on corporate

entrepreneurship, Guth and Ginsberg stipulate the management styles of toplevel managers influences the success of corporate ventures (Kanter, 1983). This is reflected at Amazon in the way in which varying ventures are run by specifically catered teams, who are accountable for profit and loss within the project. By placing an emphasis on ownership of new ventures, Amazon allow these top managers the opportunity to develop individual management styles best suited to developing their respective projects. Furthermore, these managers and the freedom they are granted represents Amazons attempt to develop experts in their respective fields, with a correlation between innovation and highly educated managers reported within the banking industry (Bantel and Jackson, 1989). This is seen as an investment in human capital, something duplicated amongst middle management. The concept of ownership is again pivotal, as local branch managers are encouraged through the distribution of Restricted Stock Units as part of their annual bonuses and merit increase schemes, their successes rewarded with an additional stake in the company. The development of managers at all levels, in addition to ownership, results in a decentralised power distribution throughout the company, and consequently individuality is encouraged. Such initiatives work in tandem with coalitions among peers and managers to demonstrate a greater investment in entrepreneurial ideas from all levels and such investment is critical to their successful implementation (Bantel and Jackson, 1989). Evidently Amazons commitment to developing management cultures and structures that encourage individuality, ownership and accountability represents a commitment to creating a context in which corporate entrepreneurship can materialise. Guth and Ginsberg also suggest that corporate entrepreneurship can be influenced by the organisational form and conduct. The core belief that belies Amazons strategies and practices is that the company is tailored to the customer, and all products and services are designed to fulfil consumer demands. In fact, the Amazon mission statement reads: Our vision is to be earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online. (Amazon, 2012). Amazons commitment to creating the most effective user experience represents the modus operandi (Ireland et al., 2009) that guides the company through the evolution of different strategies. Amazons decision to cut the prices of Amazon Web Services a total of 23 times in its six year history (Seeking Alpha, 2012), is testimony to the companys guarantee to prioritise its customers and guarantee competitive advantage. Indeed it is this commitment to achieving the best possible user experience that resulted in a lengthy start up process that incurred huge losses in Amazons early years, as heavy investment was needed to achieve a significant competitive advantage in its e-commerce activities. Much of this competitive advantage stems from inherent advantages as a digital based company, thanks to a limitless inventory, advanced customer care and high margins with low prices. From there they pursued both organic internal growth and external acquisitions and ventures to expand and satisfy continually changing consumer preferences. Interestingly Guth and Ginsberg suggest that firms pursuing acquisitive expansion are less likely to pursue internal growth through innovation (Hitt et al., 1989). However US$3.18 billion represents a large capital investment in acquisitions (TechCrunch, 2012) across a wide range

of web based services and products, whilst a total of US$1 billion had been invested in research and development by 2009 (Technology Review, 2009), suggesting that Amazon are willing to pursue both growth strategies in order to best satisfy their consumers. There is the possibility however, that cuts in terms of acquisition spending may result in a further effort to pursue internal growth through innovation, thereby furthering the companys corporate entrepreneurship. Furthermore, due to the ever-evolving nature of consumer trends and demands within a retail industry, Amazons mission statement can perhaps be viewed as a commitment to continuous corporate entrepreneurship. The desire to satisfy ever-changing consumer demands inherently implies the business model must evolve appropriately. This is made possible by the fact Amazon is based online, as unlimited shelf space means niche products can be sourced and sold with ease. This dynamism and flexibility in terms of the business model and strategy is critical to creating the environment in which corporate entrepreneurship can exist. The final domain that influences corporate entrepreneurship is organisational performance. It is clear that a company may only be in a position to take advantage of particular opportunities if there is appropriate capital available to make the opportunity viable. This process may be cyclical as astute and robust investment strategies allow companies to continue investing both internally and externally. This is most certainly the case with Amazon, as the US$1 billion invested in research and development by 2009 only represented 5.4% of the companys revenue until that point (Tech Review, 2009). Such substantial revenue streams allow firms to make more radical and more frequent innovations than unsuccessful firms (Mansfield, 1963). Furthermore, Amazon has placed a large emphasis on stakeholder satisfaction as a performance measure. Whether that be from offering a customer centric business model to allowing mid and high level managers the freedom to run their own branches and ventures whilst rewarding them Restricted Stock Units, Amazon maintains a harmony throughout its stakeholders that allows for effective and efficient response to opportunities such as cloud computing, consumer electrics or the acquisition of an online movie rental service. This environment of financial strength and stakeholder satisfaction acts as a prerequisite to allow corporate entrepreneurship to grow the business. Having discussed various factors that can determine the extent and manifestation of corporate entrepreneurship, Guth and Ginsbergs framework continues to illustrate two separate processes, both of which represent corporate entrepreneurship. The first process refers to innovation or venturing within existing companies, compromising a traditional view of corporate entrepreneurship. These activities involve high levels of research and development to design new products and services from within the organisation, compromising a method of wealth creation, in addition to developing successful resources and competences. An effective example of Amazons ability to invest in innovation was the launch of Amazon Web Services (AWS) in 2006 (Amazon, 2012). Identifying the advantages of digitally based services in tandem with technological progression and social and political preferences towards greener computing, Amazon developed an IT infrastructure known as cloud computing.

Cloud computing allows users to outsource IT infrastructure, negating the need for business specific hardware. This means that user data and applications can be designed, stored and accessed online. These web services are entirely scalable, low cost solutions for developers that offer computing solutions for businesses in over 190 countries (Amazon, 2012). The success of AWS has resulted in a forecast of US$2 billion between 2006 and 2014 (Statista, 2012), in an industry that is relatively new and under populated. This venture typifies Amazons ability to recognise and take advantage of potential opportunities, illustrating the importance of new venture creation as part of a corporate entrepreneurship strategy. The other process that may be considered corporate entrepreneurship is strategic renewal. In this instance wealth is created from a realignment of existing resources, facilitated through actions such as: refocusing a business competitively, radically changing marketing or distribution, redirecting product development or reshaping operations (Guth and Ginsberg, 1990). The impact Amazon has had on the book industry has already been discussed and represents a major attempt to not only reshape distribution channels, but also redefine them in order to sync them with the companies existing resources, thereby creating a competitive advantage. Furthermore, the launch of Amazons Kindle Fire represents a new direction for the existing e-reader, demonstrating the redirection of product development. The Kindle Fire is a tablet computer, aggressively priced in an attempt to obtain market share from Apples iPad. With improved graphics and touch screen capabilities, it represents a shift from what Amazon was originally hoping to achieve with the Amazon Kindle (the provision of an e-reader to match customer demands), towards a tablet computer that represents renewed customer preferences. Furthermore, it shows the influence that new commercial technology can have on competitors within the same industry, as the introduction of the iPad 2010 has forced a competitive response. Strategic renewal also refers to the realignment of resources achieved through acquisitions (Guth and Ginsberg, 1990). One such acquisition is Kiva Systems Inc., which was bought by Amazon for US$775 million (Letzing, 2012). The acquisition represented not only an aggressive expansion strategy to realign resources, but it also saw Amazon reshape its operations as Kiva Systems Inc. produces robots used in shipping centres, however Amazon bought the company to utilise in their expansive warehouses. The shift away from human labour within these warehouses not only reduces costs, but it increases efficiency, allowing the respective warehouses to maximise utility. It is once again evident that Amazon continually redefines its strategies and redistributes resources in order to move towards being the earths most customer centric company. It must be noted however, that despite offering insights into corporate entrepreneurship by viewing the concept from a more generalised perspective, Guth and Ginsbergs framework does have a number of limitations. Firstly, the framework acts as a guide to the context that corporate entrepreneurship may take place in, without delivering authoritative strategies to implement the theory into management practice. However this is perhaps negated, as by nature Amazon is an entrepreneurial company in the sense it has continually demonstrated a willingness to establish consumer trends and dynamically tailor

its business model accordingly. This inherent understanding of corporate entrepreneurship as a strategy within the company means that it can be viewed in a more generic context to establish what factors allowed the strategy to flourish. Furthermore, the framework implies a sequential relationship between corporate entrepreneurship and the factors that determine it, despite briefly mentioning the effect of corporate entrepreneurship on organisational performance in the article. This undermines the organic nature of corporate entrepreneurship as a process. Once again this doesnt prevent Amazon being viewed in a context; and so the consequent effects that corporate entrepreneurship might have had on the factors that determine it, may be relevant to the sustenance of corporate entrepreneurship as a strategy, but not to the factors that allow it to occur in the first place. Finally, the importance of employees as intrapreneurs is negated. The term intrapreneur refers to individuals within a large organisation who demonstrate entrepreneurial tendencies through identifying new opportunities and generating innovative strategic options for the organisation (Wickham, 2004). Whilst undoubtedly relevant to the implementation corporate entrepreneurship, intrapreneurship requires a certain set of circumstances to have any influence on the organisation, and it is these circumstances that Guth and Ginsberg explore. Guth and Ginsbergs domain framework has successfully portrayed Amazons commitment to corporate entrepreneurship. The company clearly demonstrates an ability to expand and create wealth; whether that be through conventional new ventures and innovation such as the Amazon Kindle or Amazon Web Services, or through strategic renewal and the realignment of resources. The four domains outlined as necessary to cultivate corporate entrepreneurship offer separate insights into varying aspects of the company. Each insight displays an inherent understanding of corporate entrepreneurship, and it is surely this understanding that has resulted in the continued financial success of Amazon, and in its ability to satisfy stakeholders, moving it ever closer to its eventual aim: to be the earths most customer centric company.

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