The Impact of Managerial Environmental Perceptions on Corporate Entrepreneurship: Towards Understanding Discretionary Slack's Pivotal Role

27 Pages Posted: 11 Dec 2007

See all articles by Zeki Simsek

Zeki Simsek

University of Connecticut; University of Connecticut

John F. Veiga

John F. Veiga

Michael H. Lubatkin

University of Connecticut - Department of Management

Abstract

This study seeks to further delineate how a firm's competitive environment influences the firm's pursuit of entrepreneurial activities. To do so, we develop and test a parsimonious model that establishes the role of discretionary slack as a salient mediating mechanism through which managerial environmental perceptions influence corporate entrepreneurship. In addition, we examine two contingencies that further explain discretionary slack's impact on corporate entrepreneurship, including managements' market sensing capacity and use of outcome-based incentives. Using single- and multi-source survey data from 495 small- to medium-sized firms, we find support for our model and its associated hypotheses. Specifically, we find that discretionary slack is significantly influenced by managerial perceptions of environmental munificence and dynamism and, in turn, mediates the impact of these perceptions on corporate entrepreneurship. In addition, we find that discretionary slack's impact on corporate entrepreneurship is significantly enhanced by managements' market sensing capacity but, interestingly, not by outcome-based incentives.

Suggested Citation

Simsek, Zeki and Simsek, Zeki and Veiga, John F. and Lubatkin, Michael, The Impact of Managerial Environmental Perceptions on Corporate Entrepreneurship: Towards Understanding Discretionary Slack's Pivotal Role. Journal of Management Studies, Vol. 44, Issue 8, pp. 1398-1424, December 2007, Available at SSRN: https://ssrn.com/abstract=1065901 or http://dx.doi.org/10.1111/j.1467-6486.2007.00714.x

Zeki Simsek

University of Connecticut ( email )

Storrs, CT 06269-1063
United States

University of Connecticut ( email )

Storrs, CT 06269-1041
United States

John F. Veiga

John F. Veiga ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

Michael Lubatkin (Contact Author)

University of Connecticut - Department of Management ( email )

Storrs, CT 06269-1041
United States

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