Predictors and Financial Outcomes of Corporate Entrepreneurship: An Exploratory Study

Posted: 17 Nov 2009

See all articles by Shaker A. Zahra

Shaker A. Zahra

University of Minnesota - Twin Cities - Carlson School of Management

Date Written: 1991

Abstract

Presents and tests a model of the precursors and effects of corporate entrepreneurship in order to determine the antecedents of corporate entrepreneurship and the association between corporate entrepreneurship and company performance. The proposed model suggests that three variable sets influence the pursuit of corporate entrepreneurship: environment, strategy and internal organization. Five hypotheses are presented to operationalize the model: (1) environmental dynamism, hostility, and heterogeneity are associated positively with corporate entrepreneurship; (2) growth-oriented grand corporate strategies will be positively associated with pursuit of corporate entrepreneurship. In contrast, a stability strategy will be negatively associated with corporate entrepreneurship; (3) formal communication, scanning and differentiation will be positively associated with corporate entrepreneurship; (4) clearly articulated organizational values that are employee (person)-supportive and competition-oriented are positively associate with corporate entrepreneurship; and (5) corporate entrepreneurship is positively associated with corporate financial performance -- that is, positively with accounting measures and negatively with market-based criteria. Data were gathered from 119 responses to questionnaires sent to U.S. industrial corporations appearing on the Fortune 500 list. Results indicate that firms promoted corporate entrepreneurship when they considered their environment as becoming more dynamic, hostile, and heterogeneous. Growth-oriented strategies were positively related to corporate entrepreneurship, while stability strategies were negatively associated with corporate entrepreneurship. Increased firm controls were also negatively associated with corporate entrepreneurship activities. In contrast, both person-related and competition-oriented values were positively associated with corporate entrepreneurship. Finally, results suggest a positive associate between corporate entrepreneurship and company performance. (SFL)

Keywords: Organizational values, Organizational structures, Corporate entrepreneurship, Internal ventures, Innovation process, Environment, Strategic planning, Startups, Corporate ventures, Manufacturing industries, Firm strategies, Firm performance, Financial performance, Organizational behavior

Suggested Citation

Zahra, Shaker A., Predictors and Financial Outcomes of Corporate Entrepreneurship: An Exploratory Study (1991). Journal of Business Venturing, Vol. 6, Issue 4, p. 259-286 1991. Available at SSRN: https://ssrn.com/abstract=1505899

Shaker A. Zahra (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

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