A high level of risk was difficult to vote for directors found it difficult found it difficult to vote for a proposal in the early 1990s why oard of Pentium to commit US$5 billion to making the chip five times the amount of money needed for its previous In looking back on tha board meeting, then-CEo Andy Grove remarked, "I remember eyes looking at that and getting big. I wasn't even sure I believed those numbers at the time." The proposal committed the company to building new factories something Intel had been reluctant to do A wrong decision would mean that the company would end up with a killing amount of over capacity. Based on Grove's presentation, the board decided to take the gamble. Intel's result- ing manufacturing expansion eventually cost US$10 billion but resulted in Intel's obtaining 75% of the microprocessor business and huge cash small firms
Risk might be one reason that significant innovations occur more often in is often than in large, established corporations. A small firm managed by an entrepreneur willing to accept greater risk than is a of diversified ownership run by professional large firm and are not managers. It is one thing to take a chance if you are the primary shareholder something concerned with periodic changes in the value of the company's common stock. It is takeover else if the corporation's stock is widely held and acquisition-hungry competitors or below artists surround the company like sharks every time the company's stock price falls some external assessment of the firm's value.