The fundamental difference between intrapreneurs and entrepreneurs is who they are accountable to. Entrepreneurs work for themselves and are free because they are not bound by any rules of any company. They also generate profits for themselves – or, in the case of social entrepreneurs, to make a social impact.
In contrast, intrapreneurs work and become employees for companies. They are bound by policies and rules within the company. Moreover, they make a profit not for themselves but for the company they work for.
Then, different from entrepreneurs, intrapreneurs receive compensation such as salary and benefits. In addition, the company may promote or appoint them to lead in a new business unit if they successfully develop it.
On the other hand, entrepreneurs are compensated only if the new business they start is profitable. Otherwise, they could even lose the money they invested into the business.
Although there are some differences, entrepreneurs and intrapreneurs also share some similarities. Both have an entrepreneurial spirit, are willing to take risks, and initiate and develop ideas and innovations. They also seek to generate benefits by providing solutions.
Furthermore, many entrepreneurs start out as intrapreneurs. They work in companies, take initiatives to develop new businesses, and gain promotions. They all provide a mature experience before deciding to leave the company and start their own business.
The difference between intrapreneurs and entrepreneurs is who they are accountable to. Intrapreneurs work as company employees. So, they have to account for their initiatives to the companies they work for. For this reason, they have less autonomy than entrepreneurs because they are bound by company rules and policies.
On the other hand, entrepreneurs have complete freedom to start a new business. They are outside the organization and therefore independent. They are responsible to themselves, not to the company. So, in other words, they become their own boss and are independent in making decisions.
Objectives and benefits
Intrapreneurs aim to encourage the companies they work for to remain competitive and grow. They work in the best interests of shareholders. For example, by initiating a new business, a company can diversify or increase revenue.
In other cases, intrapreneur innovation creates value even if it does not generate new revenue streams. For example, they make business processes more efficient and effective. Thus, companies can lower costs and create more value for existing customers, enabling them to pay a premium price. Such initiatives ultimately help companies maintain a competitive advantage.
Meanwhile, entrepreneurs aim to bring something new to the market. They develop products or services to satisfy consumer needs and wants. Some seek to maximize profits. Others seek to balance three goals: profit, social and environmental – as in social entrepreneurs.
Motives are the next difference between intrapreneurs and entrepreneurs. Intrapreneurs are motivated to make changes for the better. It could be to create value for the company they work for or generate a new revenue stream.
So, if successful, it enhances or diversifies an existing one. Or it is to drive changes to business processes and the way the company operates towards a sustainable competitive advantage.
Meanwhile, there are several motives for entrepreneurs to set up new businesses. Getting profit and more money is what is usually quoted. However, some entrepreneurs also run businesses because they want to monetize their hobbies or skills. So, they can finance their life and lifestyle without having to work in a company. Others may want to be independent and be their own boss.
Furthermore, for social entrepreneurs, their motive is to positively impact society and the environment. They may be profit-oriented, but it is not to maximize their wealth but for social welfare. For example, they redistribute profits for social programs such as establishing education and health facilities.
Type of innovation
Intrapreneur ideas may not necessarily lead to new products or new businesses. Instead, they may develop process innovations to help solve the company’s internal problems. Thus, it may not generate new revenue for the company, but it creates value.
On the other hand, the entrepreneur’s idea always leads to goods and services. They create value by processing inputs into higher-value goods and services. Then they sell it to consumers to satisfy their needs.
Intrapreneurs bear the minimal risk if their initiative fails. Instead, most of the risk is borne by the company. They may lose their career. Or, companies delay their promotions but still pay their salaries.
On the other hand, the entrepreneur bears all the risks involved in running a business. For example, if their business fails, they must lose the money they invested in the business. Furthermore, if they operate under a sole proprietorship, they may also lose personal assets to pay off business debts.
Compensation is another differentiating aspect between entrepreneurs and intrapreneurs. As an employee, intrapreneur salary and benefits. They may lose their career when their initiative fails. On the other hand, if their business idea is successful, they can get a promotion or a chance to lead in a new business.
On the other hand, entrepreneurs will not receive compensation until their business is successful in making money. There is no regular income like the salary received by intrapreneurs. But, if the business is successful, all the business profits are theirs when operating under a sole proprietorship.
Intrapreneurs are bound by the rules and policies of the companies they work for. They may have the authority and some autonomy to develop ideas. However, they are not as flexible as entrepreneurs.
Meanwhile, entrepreneurs are independent and not bound by organizational rules and policies. As a result, they are flexible in commercializing ideas and making decisions.
Entrepreneurs often use the money in their own pockets as capital to finance a business. They risk it and hope to get a return through business profits.
Some other entrepreneurs may combine their own money with contributions from their colleagues or family. Others may raise it through crowdfunding or submit proposals to investors – such as angel investors and venture capital firms – to be willing to invest their money in the company.
Long story short, entrepreneurs are free to determine where they finance their business. But, it is also a challenge, especially if you rely on capital from outside parties. They must be able to convince the funders. And it can be difficult for new entrepreneurs.
In contrast, intrapreneurs do not risk their own money. Instead, their companies provide the capital to realize their initiatives.
The company’s support for intrapreneurs is not only on capital. However, it also includes other supporting resources. The company completes and facilitates their needs, including teams, support materials, and equipment. And, it’s free without them having to pay.
Instead, the entrepreneur must gather related resources and organize them. Then, they use the capital they raise to pay suppliers for these resources, such as employee salaries, equipment rental, and raw material costs. They also have to be careful with their money. Thus, their capital is sufficient until the business actually generates income and profits.
Entrepreneurs sell goods or provide services to consumers, who are external parties. Then, they collect payments as their revenue.
In contrast, intrapreneur customers can be external or internal, depending on what idea they are initiating. For example, new products may be for sale to generate revenue. Alternatively, it may be for internal consumption as a business input. Meanwhile, process innovation always leads to serving internal customers.
- How Do Entrepreneurs Play a Role in Society and the Economy?
- Intrapreneur: Meaning, Characteristics, Differences with Entrepreneur
- Social Entrepreneur: Definition, Importance, Characteristics
- Where Do Entrepreneurs’ Business Ideas Come From?
- 8 Qualities of a Successful Entrepreneur
- Challenges Faced by Entrepreneurs in New Small Businesses
- 10 Characteristics of Entrepreneurs You Need to Emulate
- Entrepreneur: Meaning, Characteristics, Roles, Challenges