The contingent effects of differentiation and integration on corporate entrepreneurship

This paper develops a contingency view regarding the effects of structural differentiation and integration on levels of corporate entrepreneurship. Integrating notions of benefits and costs resulting from integration with structural contingency theory, we argue that the joint effects of structural differentiation and integration on corporate entrepreneurship levels are moderated by organizational size and environmental dynamism. Our findings from a time‐separated sample demonstrate that in smaller organizations and more dynamic environments, the positive effects of integration on the structural differentiation‐corporate entrepreneurship relationship strongly diminish. As such, with this research we begin to identify contingencies that influence the corporate entrepreneurship levels observed among firms striving to balance the needs for structural differentiation and integration. Copyright © 2014 John Wiley & Sons, Ltd.     

Project Suspensions and Failures in New Product Development: Returns for Entrepreneurial Firms in Co‐Development Alliances

Entrepreneurial biotech and large pharmaceutical firms often form alliances to co‐develop new products. Yet, new product development (NPD) is fraught with challenges that often result in project suspensions and failures. Considering this, how can firms increase the chances that their co‐development alliances will create value? To answer this question, the authors build on insights from signaling theory to argue that prior project suspensions provide positive signals leading to an increase in value creation, while project failures have the opposite effect. In addition, drawing on insights from temporal construal theory, this research predicts that the strength of these effects is contingent on the stage along the exploration–exploitation continuum at which the alliance is formed. The authors undertook event study analyses of 248 alliances formed by 104 biotechnology firms from the United States and Europe listed on eight stock exchanges over an 8‐year period between 1996 and 2003. The results confirm that prior NPD project suspensions have a stronger value creation effect (or prior failures have a weaker value destruction effect) in the case of exploration alliances in the upstream of NPD processes than in the case of moderate‐scale exploitation alliances in the downstream of NPD. This study is among the first to examine how both prior NPD project suspensions and failures of firms affect the abnormal returns achieved from co‐development alliances. This research therefore contributes to the innovation literature by honing a better understanding of setbacks and failures in NPD. Moreover, the findings contribute to the literature on strategic alliances by identifying new conditions under which firms can create or preserve value. This research also contributes to signaling theory by providing evidence of the moderation effect caused by the signaling environment. Finally, this study contributes to the entrepreneurial literature on value creation for entrepreneurial firms in alliances following adverse events.     

Project Ranking in Petroleum Exploration

Abstract

Project ranking based on project value is an essential management task for organizations that face resource bottlenecks. Project value focuses on the hard elements of projects that can be expressed in monetary terms. In the petroleum exploration business, however, there is also soft information, like effects on corporate liquidity, advantages of compliance with the strategic goals, or learning potential and organizational development, which may change the ranking hierarchy. The aim of this research is to provide a solution for incorporating industry-based selected soft data in the project ranking process. The process is illustrated with a case study. We took the structured system of criteria identified from the petroleum industry.     

Can Perceived Support for Entrepreneurship Keep Great Faculty in the Face of Spinouts?

Despite the recent increase in academic entrepreneurship research, we still know relatively little about the degree of involvement of academic inventors in university spinouts. In this study, we distinguish between academic inventors who leave the university after the creation of a spinout (academic exodus) and those who maintain their university affiliation (academic stasis). Drawing from the literature on innovation‐supportive climates and from organizational support theory, we argue that perceptions of institutional support and departmental norms regarding entrepreneurship are associated with the exodus versus stasis decision. We find that inventors who have higher perceptions of institutional support for entrepreneurship are less likely to leave. This relationship is enhanced by perceptions of favorable departmental norms toward entrepreneurship. We discuss the implications of our work for the literature on academic entrepreneurship, innovation‐supportive climates, and perceived organizational support. Our study has clear policy implications for universities, policymakers, and funders who aim to stimulate academic entrepreneurship, but are concerned about losing entrepreneurial faculty. Specifically, we advise universities and policymakers to actively support academic inventors wishing to spin out and to monitor this support in a customer‐friendly manner, in order to ensure that the inventors' perceptions of support are favorable. It is also important for universities to look out for inconsistencies between a supportive environment for entrepreneurship at the institutional level and unfavorable norms toward entrepreneurship at the departmental level; such inconsistencies can lead good faculty members out of academia. More broadly, universities can pursue an aggregation strategy that aims to retain both a research and commercialization identity while building strong links between them.     

Assessing a Measurement of Organizational Preparedness for Corporate Entrepreneurship

Research has shown that the manifestation of corporate entrepreneurship is an important strategy for the success of private‐ and public‐sector organizations. The Corporate Entrepreneurship Assessment Instrument (CEAI) is an instrument that was developed to measure the key internal organizational factors that influence a firm's entrepreneurial activities and outcomes. The present research employs three studies to assess the content, construct, and convergent validity of the CEAI using a well‐established framework for scale development and refinement. The CEAI was found to be a relatively stable instrument, although the factor structure that emerged varied slightly from the original instrument. In sum, as a result of our analyses, a more parsimonious and psychometrically sound set of items for each factor was derived yielding an 18‐item instrument based upon the original 48‐item measure. Our studies of the CEAI present a timely contribution toward advancing research in the area of organizational preparedness for corporate entrepreneurship.     

The development of entrepreneurship in Chinese communities: An organizational symbiosis perspective

Why has the rate of entrepreneurship recently gone down in Singapore? Why is entrepreneurship in Southern China (e.g., Guangdong or Fujian provinces) relatively higher than in the rest of China? Why is corruption rampant in some Chinese business communities but virtually nonexistent in others? Although we often speak of ??Chinese entrepreneurship?? as a monolithic entity, the fact is that there are many variants of Chinese entrepreneurship and these variants continue to rapidly evolve and take on new forms. Yet mainstream management or organizational theories have been at a loss to explain these high rates of variation and evolution. To shed light on these issues, we introduce the idea of symbiosis from biology and adapt it to the development of entrepreneurship in Chinese ethnic communities. Symbiosis is the science of how different organisms coexist with each other in a self-sustaining system. Using this approach, we develop six propositions to explain what types of entrepreneurship are likely to evolve in different Chinese ethnic communities and how this process of evolution is likely to proceed. The implications for researchers and practitioners are discussed.     

Knowledge,Use and Effectiveness of Social Acceptance Measures for Wind Projects

Wind energy is one of the key technologies to become independent of fossil fuels. Implementation of wind energy on a local level, however, has sometimes proved to be challenging and dealing with local acceptance of onshore wind turbines has become troublesome for some projects. Communication and public involvement are seen as strategies to prevent or respond to local opposition. This paper analyses the views of a variety of experts in wind energy on this matter. It focuses on eliciting their experiences with public participation measures. Furthermore, the perceived effectiveness of the measures for the social acceptance of wind energy projects is analysed. To do so, this paper draws on an expert survey among 207 individuals across Europe linked to wind energy projects. The analysis shows that negative reactions to wind farms are reported more frequently than positive reactions. In nearly 40% of cases, projects experience negative consequences on project development due to a lack of social acceptance, ranging from delays to changes in project plans and even termination. The vast majority of wind project developers respond to this by carrying out public participation activity at least sometimes. However, a much lower share does this systematically and the level of activity is low in early project phases. With regard to the relationship between project activities and project success, there is some support for the assumption that early and systematic involvement of the public and stakeholders is likely to reduce negative reactions.     

Bias and Error in Mine Project Capital Cost Estimation

Previous analyses of small samples of mining projects have found that feasibility studies tend to underestimate the as-built capital costs of the project. Our review of 63 international mining and smelting projects confirms that as-built capital costs are, on average, 14% higher than as estimated in the bankable feasibility study. There is little attenuation over time of this bias in capital cost estimation, appearing to reflect an absence of learning on the part of the project sponsor or the consulting engineering firm. We argue that this persistence of bias is instead intentional and rational, driven by a scarcity of project financing and the need by project sponsors to inflate the project economics in a bid to secure financing. We find some empirical support for our contention. A second phase of the analysis examines estimation error. Roughly half of all projects' as-built capital costs fall outside of the expected ± 15% of the feasibility study capital cost estimate, even after allowing for intentional estimation bias. Cost overruns of 100% or more happen in roughly 1 out of 13 projects. Smaller projects have less estimation accuracy than large projects. Finally, our analysis of the cost overrun data reveals that a shifted lognormal probability distribution should be used when modeling mining project capital costs in a Monte Carlo analysis.     

Project visioning: Its components and impact on new product success

The concept of corporate vision has been receiving considerable attention in the strategy scholarship. A clear and lofty organizational vision can provide direction to a company and can positively impact its ability to succeed. Yet research on vision at the project level has been curiously lacking. The purpose of this research is to define project vision, discuss its components and explore its impact on successful new product development. After studying the vision on a series of 13 innovations at three companies (Apple, IBM and HP), we identified several components of an effective project vision that include vision clarity, vision agreement/support and vision stability and assessed their impact on new product success. To confirm the validity and generalizability of our observations, we then tested these insights on 509 new product teams from a wide variety of firms. We found that an effective vision varies depending on the innovation type - incremental, evolutionary and radical. Our results demonstrate that vision clarity is positively associated with success in evolutionary (market or technical), and radical innovations, but not for incremental projects. Vision stability is positively associated with success in incremental and evolutionary market innovations; and vision support is positively associated with success in incremental, and evolutionary technical innovations.     

Network development and firm growth: A resource-based study of B2B Born Globals

Using multiple case studies, we explore how Born Global networks develop as the firm's internal resources grow. Building on networks and entrepreneurship research, we develop a theoretical framework and advance five propositions that link resource development and entrepreneurial orientation to network content, structure, centrality, and management. We also explore the benefits that Born Globals gain from this development. Key findings include: resource accumulation and network development have a strong relationship while network content becomes increasingly strategic; strong entrepreneurial orientation coincides with calculative network management; network benefits are not always advantageous to the firms. This study makes empirical contributions to Born Global and Networks research in the context of Business-to-Business firms, and provides practical implications for Entrepreneurs and Born Global managers.     

Entrepreneurial beacons: The Yale endowment,run‐ups,and the growth of venture capital

Research summary : This article investigates the social context of entrepreneurship in organizational sectors. Prior research suggests that firm foundings are driven by collective patterns of activity—such as patterns of prior foundings in a given sector. Building on research on social salience and signals, we consider the influence of singular sector‐level triggers, which we call entrepreneurial beacons. We argue that the actions or outcomes of single, salient organizations attract and motivate entrepreneurs, thus increasing the rate of foundings. We test this logic by examining the impact of the Y ale U niversity endowment's investment choices and of venture‐capital‐backed IPO run‐ups on venture‐capital foundings between 1984 and 2011. We find support for the existence and influence of beacons and outline boundary conditions for their effects . Managerial summary : What leads entrepreneurs to found new companies in nascent sectors? In contrast to prior research, which emphasizes patterns of activity, we argue that entrepreneurial activity can sometimes be driven by the actions of a singular trigger—what we call an entrepreneurial beacon. We examine the influence of two such beacons, Y ale U niversity's endowment investments and exceptional venture‐capital‐backed IPO run‐ups, on the founding of new venture‐capital firms over a 28‐year period. We find that Y ale's increased allocations to the venture‐capital asset‐class has a significant influence on the founding of new venture‐capital firms, while exceptional venture‐capital‐backed IPO run‐ups only influence venture‐capital foundings under certain conditions. Overall, we offer an explanation for heretofore anecdotal accounts of certain organizations or events that appear to have an outsized influence on entrepreneurial activity . Copyright © 2016 John Wiley & Sons, Ltd.     

Leveraging internal and external experience: exploration,exploitation, and R&D project performance

Although one tenet in the alliance literature is that firms learn from prior experience, we posit that any potential learning effects depend on the type of experience. In particular, we hypothesize that alliance exploitation experience has positive effects on R&D project performance, while alliance exploration experience has negative effects. We further posit that an internal exploration competence allows firms to leverage their external exploitation experience more fully. In contrast, when firms combine internal exploitation experience with external exploration experience, the negative effects on R&D project performance become more pronounced. To test this integrative model of organizational learning, we leverage a unique and detailed dataset of 412 R&D projects in biotechnology conducted by large pharmaceutical companies between 1980 and 2000. Using a competing risk event history model predicting successful product approval versus project termination, we find support for our theoretical model. Copyright © 2010 John Wiley & Sons, Ltd.     

Organizational Environment, New Product Process Activities, and Project Outcomes

Results of a study of 95 new product projects in 75 Australian manufacturing firms reveal two important sets of links. Firstly, links between the elements of firms' organizational environments and proficiency of new product process activities. Secondly, links between activity proficiency and new product project outcomes. The two findings enable links to be posited between the organizational characteristics of firms and the outcomes of new project projects. The findings have implications for managers wishing to increase the likelihood of successful new product development.     

Innovation Process and Outcomes for Large Japanese Firms: Roles of Entrepreneurial Proclivity and Customer Equity

The authors investigate the structural relationships among entrepreneurial proclivity, innovation process characteristics (technological strength, marketing strength, and marketing–R&D integration), and customer equity in achieving business growth and financial return in the Japanese context. Following field interviews and a pilot test, survey data are collected from 207 pairs of marketing and R&D executives from strategic business units (SBUs) of large manufacturing companies in Japan. Based on the partial least squares analysis of data, the authors find nuanced effects of organizations' entrepreneurial proclivity on the critical organizational process, resource, and business performance. The study theorizes and empirically supports the idea that customer equity is a potent intermediary outcome that contributes to both top‐line (growth) and the bottom‐line (ROI) of a business. Specifically, the study shows that: (1) entrepreneurial proclivity directly and positively influences technology strength, marketing strength, and marketing‐R&D integration; (2) entrepreneurial proclivity's effect on business growth and financial return is positive and mediated by customer equity; (3) marketing–R&D integration has a moderating effect on the positive impact of technology strength on customer equity; and (4) customer equity is a strong driver of business growth and financial return. There is a dearth of research on entrepreneurship in Asia; very few empirical studies have been reported from Japan in particular. This study contributes to boundary testing of the theoretical relationships. Although entrepreneurial proclivity appears to be an inspirational concept, its actual adoption remains an important question for many Japanese companies. Those Japanese firms that aspire to be entrepreneurial need to be mindful what innovation processes and resources it takes to fulfill the positive influences of entrepreneurship.     

企业治理之租金视角研究--一个理论框架及其在高科技企业中的应用

本文从租金的角度对企业治理进行了研究,指出组织租金创造与分配是现代企业治理的重要内容,企业家精神在其中占据着关键地位。文章提出一个关于治理的一般性分析框架,在此框架下结合企业生命周期对高科技企业治理进行了动态研究,并对中国高科技企业治理进行了分析。     

The relationship between corporate entrepreneurship and strategic management

This study examines the relationship between corporate entrepreneurship intensity and five specific strategic management practices in a sample of 169 U.S. manufacturing firms. The five strategic management practices include: scanning intensity, planning flexibility, planning horizon, locus of planning, and control attributes. The results of the study indicated a positive relationship between corporate entrepreneurship intensity and scanning intensity, planning flexibility, locus of planning, and strategic controls. The fine‐grained nature of these results may be of practical use to firms that are trying to become more entrepreneurial and may help researchers better understand the subtleties of the interface between strategic management and corporate entrepreneurship. Copyright © 1999 John Wiley & Sons, Ltd.     

New Product Development: Impact of Project Characteristics and Development Practices on Performance

Concurrent product development process and integrated product development teams have emerged as the two dominant new product development (NPD) “best practices” in the literature. Yet empirical evidence of their impact on product development success remains inconclusive. This paper draws upon organizational information processing theory (OIPT) to explore how these two dominant NPD best practices and two key aspects of NPD project characteristics (i.e., project uncertainty and project complexity) directly and jointly affect the NPD performance. Contrary to the “best practice” literature, the analysis, based on 266 NPD projects from three industries (i.e., automotive, electronics, and machinery) across nine countries (i.e., Austria, Finland, Germany, Italy, Japan, Korea, Spain, Sweden, and the United States), found no evidence of any direct impact of process concurrency or team integration on overall NPD performance. Instead, there is evidence of negative impact of the interaction between project uncertainty and concurrent NPD process and positive impact of the interaction between project complexity and team integration on overall NPD performance. Moreover, the study found no evidence of any direct negative impact of project uncertainty or complexity on overall NPD performance as suggested in the literature, but found evidence of a direct positive relationship between project complexity and overall NPD performance. The practical implications of these results are significant. First, neither process concurrency nor team integration should be embraced universally as best practice. Second, process concurrency should be avoided in projects with high uncertainty (i.e., when working with unfamiliar product, market, or technology). Finally, team integration should be encouraged for complex product development projects. For a simple product a loosely integrated team or a more centralized decision process may work well. However, as project complexity increases, team integration becomes essential for improved product development. There is no one‐size‐fits‐all solution for managing NPD projects. The choice of a product development practice should be determined by the project characteristics.     

Product Development as Core Competence: How Formal Product Development Practices Differ for Radical,More Innovative,and Incremental Product Innovations

Although universally recognized as an important consideration in building product development (PD) competency, the effect of a firm's ability to vary its PD practices to develop winning products has been given scant attention in large‐scale, multiorganizational, quantitative studies. This research explores differences in formal new PD practices among three project types—incremental, more innovative, and radical. Using a sample of 380 business units, this research investigates how development practices differ across these three classes of innovation with respect to the formal PD process, project organization, PD strategy, organizational culture, and senior management commitment. Our results diverge from several commonly held beliefs about formal PD processes and the management of radical versus incremental innovations. Our results indicate that radical projects are managed less flexibly than incremental projects. Instead of being an offshoot of less strategic planning, radical projects are just as strategically aligned as incremental projects. Instead of being informally introduced entrepreneurial adventures, radical projects are often the result of more formal ideation methods. While these results may be counterintuitive to suppositional models of how to radical innovation happens, it is the central theme of this research to show how radical innovation actually happens. Our findings also provide a foundation for reexamining the role of control in the management of innovation. As the level of innovativeness increased, so too did the amount of controls imposed—e.g., less flexibility in the development process, more professional, full‐time project leadership, centralized executive oversight for new products, and formal financial assessments of expected NP performance.     

Evolving corporate entrepreneurship strategy: technology incubation at Philips

Established firms tend to pursue incremental innovation by modifying and refining their existing products and processes rather than developing radical innovations. In the face of resistance to change and incumbent inertia, which prevent the generation of novelty, established firms have turned towards corporate entrepreneurship as a means of exploiting knowledge accumulated within its own boundaries and exploring external markets. This paper focuses on one mode of corporate entrepreneurship, corporate incubation, informed by a study of a Technology Incubator at Philips. An account of the history of the incubator traces its progress from its inception in 2002–2006 when further incubators were formed, building on this experience and focusing on lifestyle and healthcare technologies. We identify ways in which the Philips incubator represents an alternative selection environment that effectively simulated the venture capitalist model of entrepreneurial innovation.     

CEOs’ Transformational Leadership and Product Innovation Performance: The Roles of Corporate Entrepreneurship and Technology Orientation

Product innovation is an important research topic that has stimulated significant interest among management scholars and practitioners. Leadership has been suggested to be a critical factor affecting product innovation. Numerous studies have documented that transformational leadership positively influences product innovation performance, which is conceptualized as the degree to which a new product and/or service has achieved its market share, sales, rates of asset return, rates of investment return, and profit objectives. However, there is a lack of studies examining the specific means through which transformational leadership influences product innovation performance at the firm level. Therefore, this study aimed to investigate the processes through which such effect is achieved and to determine whether corporate entrepreneurship and technology orientation as intervening factors influence this effect. To test the hypotheses, data were collected from 151 matched top management team (TMT) members and chief executive officers (CEOs) from Chinese manufacturing firms. Two separate questionnaires were used to collect the data. TMT members’ questionnaire included measures of CEO's transformational leadership, whereas CEOs’ questionnaire included questions about corporate entrepreneurship, technology orientation, and product innovation performance. Hierarchical linear regression was used to test the hypothesized effects. The results of the analysis provided the support for the fully mediating role of corporate entrepreneurship on the relationship between CEOs' transformational leadership and product innovation performance. In addition, technology orientation was found to significantly moderate the CEOs' transformational leadership–corporate entrepreneurship linkage. Furthermore, the mediated moderation effect of corporate entrepreneurship on the relationships among CEOs’ transformational leadership, technology orientation, and product innovation performance was significantly supported. By studying leadership among CEOs, this study contributes to the research by elucidating the mechanisms through which transformational leadership influences product innovation performance. The mediating role of corporate entrepreneurship encourages managers to improve their leadership style so as to enhance the development of corporate entrepreneurship and innovation practices. The findings also show that technology orientation provides the conditions for the smooth translation of the CEO's transformational leadership into actual entrepreneurial activities. Hence, firms should prioritize technology orientation to optimize the implementation of transformational leadership so as to emphasize innovation and new venture creation.