Exploring corporate entrepreneurship in privatized firms

This paper reports an analysis of whether state-owned enterprises (SOEs) increase their levels of corporate entrepreneurship after privatization. The study uses agency theory to discuss why SOEs display little entrepreneurial behavior and how privatization may alter this situation by changing firms’ systems of controls and incentives. The study also uses a sample of Spanish firms for its empirical research. Data on these firms were available for three years before and after privatization. The findings show that corporate entrepreneurship increases after privatization when firms are in highly competitive industries, either because competition was greater after privatization or because the firm was already in a highly competitive industry. In summary, corporate entrepreneurship in privatized firms seems to be favored by two factors, a change of ownership and competition.     

Entrepreneurial retrenchment among small manufacturing firms

Strategic management researchers have traditionally focused on growth-oriented strategies for small firms. Yet studies of small businesses have consistently cited overzealous pursuit of growth as the number one contributor to financial decline and failure. Record numbers of small firms are finding themselves confronted with declines of sufficient magnitude to require the implementation of turnaround strategies.Much has been written about turnaround strategies for large corporations—the problem is that the commonly recommended turnaround strategies are not often feasible for small firms. Unfortunately, there are no investigations reported in the literature that approach the subject of turnaround from the perspective of the small-market-share businesses.The purpose of this research was to explore turnaround from the small firm perspective. The study focused on the turnaround strategy most often referred to as entrepreneurial retrenchment, i.e., the aggressive pursuit of cost and asset reduction. The results showed that firms that pursued entrepreneurial retrenchment were more successful than firms that continued to pursue growth with the preexisting configuration of assets, even after a period of extensive cost cutting. The findings suggest strongly that managers of successful small-market-share firms must be able to quickly recognize and ameliorate underper forming assets when they encounter turnaround situations.The findings were a result of empirical analyses of 33 small-market-share firms that had encountered turnaround situations. Turnaround situations were initially identified by the incidence of at least two successive years of declining profitability that exceeded any industry-wide decline that may have occurred over the same time period. The firms were subsequently contacted to verify that they considered the timeframe to indeed coincide with a period during which their managerial actions were targeted to achieve a performance turnaround.Each of the firms was then classified according to the direction of their cost and asset changes over the turnaround period. Nonretrenchers were those firms that did not achieve net reductions in costs or assets for any years after the decline. Cost retrenchers were those firms that achieved net costs reductions but not asset reductions for a minimum of one year succeeding the decline. Finally, entrepreneurial retrenchers were those firms that sustained a minimum of one year of asset reductions in addition to cost reductions in the years immediately after the decline.Although entrepreneurship research has traditionally focused on developing and investing in new businesses, little has been done on the issue of asset restructuring that precedes entrepreneurial endeavors in established companies (Robinson and Pearce 1988). For single businesses the essence of entrepreneurship is the ability to quickly respond to marketplace opportunities. The underside of this pursuit is the ability to quickly reposition assets to accompany ensuing moves for competitive viability.For single business firms, an inability to respond quickly to financial downturns creates turnaround situations. Therefore, an examination was prepared to determine the value of retrenchment as a means to achieve turnaround and financial stability.The results were produced through an analysis of longitudinally collected financial data that was used to profile each firm's turnaround situation severity, their classification of retrenchment, and the degree to which they were able to successfully achieve a return to predownturn financial performance.     

Origin matters: Institutional imprinting and family firm innovation in China

During the early 1990s, a swathe of small state-owned enterprises (SOEs) was privatized as family businesses in China. This paper examines whether and how the origin (i.e., restructured vs. entrepreneurial) of family firms affects corporate innovation. Using the data of Chinese family firms from 2009 to 2018, we find that restructured family firms generate fewer patents generally than entrepreneurial family firms, but create more high-quality patents than their entrepreneurial counterparts. This effect is more pronounced for those family firms which had formerly been SOEs for a more extended period, without generational succession, and previously controlled by governments entirely. Further mechanism tests show that restructured family firms have a higher likelihood of hiring professional managers, are subject to less intervention from family members, and have fewer informal hierarchies, providing direct evidence for the institutional imprinting channel. Our findings suggest that the institutional imprint underlying the origin of family firms can be critical to their innovation decisions.     

The Virtues and Weaknesses of Insider Shareholding

Abstract

Following privatization in Russia, insider shareholders secured supremacy in their companies in most cases. The literature concerned with corporate governance in Russia frequently shows too much affection to the claim that the arrangement when control is allocated to insiders is generally sub-efficient in the long run. It is often concluded that the current pattern of control has negative impact on the progress of reforms. This paper argues in favor of a more balanced view, which takes into account the social responsibility of firms towards stakeholders and the influence the latter have over corporate performance. The question addressed is how real the insiders' threat is in privatized Russian enterprises with regard to the advancement of reforms and development of the workable corporate governance system.     

Motivations and Obstacles for Small Business Entrepreneurship in Russia: Fifteen Years in Transition

A longitudinal survey of small business entrepreneurs was conducted in Russia in two stages: in 1994 and in 2008. This study examined entrepreneurial climate and developments in Russia's small businesses with a focus on motivations and obstacles in starting up and operating businesses. It also aimed at analyzing entrepreneurs’ needs for training, consulting, and other types of assistance in a comparative context. Russia's climate for small and medium enterprises (SME) and entrepreneurship has improved, although it is still a work in progress. The 2008 survey indicated younger age, greater share of female entrepreneurs, and remaining small size of the firms. Though the level of SME entrepreneurial activities in Russia is still lower than in major developed economies, the gap is diminishing. Thise study found no significant differences between 1994 and 2008 in terms of entrepreneurial motivations and obstacles; several shifts and trends in motivations and obstacles were identified in their relative importance in SME dynamics.     

Entrepreneurship in the Soviet Union and post-Socialist Russia

This article advances the understanding of the present and future of Russian entrepreneurship. Based on secondary information published in the West and in contemporary Russia, empirical research and personal interviews, general characteristics of Russian entrepreneurship within different controversial periods that occurred during different periods of this country's history are presented. Also discussed are the influences of ethnic and religious minorities and foreign businesses on entrepreneurship development as well as the relatively low social status of the entrepreneur. The vitality of entrepreneurial response is discussed in terms of recent events in post-Socialist Russia including the transformation of its economy and society and its integration into the global market. In so doing, the article presents the latest trends in entrepreneurship in the country as well as a profile of the Russian entrepreneur.     

The Successful Product Pioneer: Maintaining Commitment while Adapting to Change

Introducing pioneering products is an important entrepreneurial activity and the lifeblood of small businesses, yet previous literature on pioneering and performance in small firms has been inconclusive. Based on data gathered from entrepreneurs in 51 small computer firms, the study found that commitment (entrepreneurial confidence) and adaptability (corporate entrepreneurship and environmental dynamism) were especially beneficial to pioneers. The other three variables (product championing, marketing emphasis, and technological newness) contributed to performance across all new product introductions but did not have modifying effects on pioneering introductions in particular.     

The development of new products: The role of firm context and managerial cognition

We explore the effect of organizational factors and managerial cognition on firms' entrepreneurial actions and investigate the relationship between these antecedents by drawing from prior work on corporate entrepreneurship, managerial cognition, and the attention-based view of the firm. The analysis of data from 84 firms shows that firm strategy and resources influence the degree of negativity with which managers interpret events that lead to the development of new products. Our results also suggest that more negative evaluations of the triggering event lead to less innovative new products. While the strategy and the resources of a firm also have an effect on a new product's degree of innovativeness, at least part of this effect is mediated by executives' evaluation of the triggering event. The theoretical elaboration and our results contribute to a better understanding of the drivers of corporate entrepreneurial activities and point to the importance of considering both managerial and organizational factors for advancing our knowledge on firms' entrepreneurial actions.     

Entrepreneurial orientation and international commitment

This paper contributes to the development of the field of international corporate entrepreneurship (ICE) by examining the influences that the time lapse between foundation and first international market entry may have on the development of an entrepreneurial orientation (EO). Moreover, the paper highlights the existence of a positive relationship between the development of an entrepreneurial orientation and both internationalization decision and dimensions (degree, scope) in established companies. Based on a sample of 155 Spanish firms, our findings suggest that an entrepreneurial orientation positively influences a firm’s propensity to internationalize activities. The results obtained confirm the idea that fast entry into foreign markets is positively related to the development of an entrepreneurial orientation in established firms, and that firms with a marked entrepreneurial orientation have higher relative international sales and operate in a greater number of foreign countries.     

Innovation and corporate entrepreneurship in service businesses

The strategic entrepreneurship field has established the importance of a generalized entrepreneurial behaviour across the organization. However, extant research has failed to establish how the association with innovation is different in service businesses. This is a relevant gap in the literature addressed by the paper, given the role of services in the world economy and the importance of employee–client interactions for the competitiveness of most service businesses. An empirical analysis from 127 service and non-service firms, using hierarchical multiple regression, confirms there are relevant differences, with important theoretical and managerial takeaways.     

Internationalization and entrepreneurial orientation of family SMEs: The influence of the family character

Internationalization is an important entrepreneurial strategy for promoting the long-term growth and survivability of small and medium-sized enterprises (SMEs). Family involvement in top management teams (TMTs) can explain the heterogeneous behaviors of these firms’ international entrepreneurship process. This paper analyzes the moderating effects of the family’s influence on the relationship between entrepreneurial orientation and internationalization with two TMT diversities found only in family firms: the family TMT ratio and generational involvement. An analysis of 191 Spanish family SMEs indicated that entrepreneurial orientation plays a significant role in explaining the degree of internationalization in family firms and that a diversely formed TMT shapes this relationship. A high concentration of family members in managerial positions hinders the international entrepreneurship process. This fact highlights the importance of hiring non-family managers to promote internationalization. The results also reveal that involving multiple generations in decision-making hampers entrepreneurial internationalization, generating control and coordination problems.     

Contextual influences on the corporate entrepreneurship-performance relationship: A longitudinal analysis

Over the past several years corporate entrepreneurship has been widely touted by executives and researchers alike as an effective means for revitalizing companies and improving their financial performance. For the most part, the call for greater entrepreneurial behavior on the part of established companies has been accepted on faith as an inherently desirable objective. The implicit logic behind the pervasive belief in the value of corporate entrepreneurship seems to be that risk taking, innovation, and aggressive competitive action—the key elements of entrepreneurial corporations—will help in identifying and pursuing lucrative product/market opportunities and in providing new bases for achieving superior competitive positions.But what do we really know about the financial consequences of corporate entrepreneurship? Most of the evidence that corporate entrepreneurship “pays off” is anecdotal in nature or based on cross-sectional studies that focus on the short-term implications of entrepreneurial behaviors. As such, in a definitive sense, we know very little about the financial consequences of corporate entrepreneurship.In an attempt to improve our understanding of this issue, this article describes a study of corporate entrepreneurship and its impact on company financial performance. Data were collected from three different samples over a seven-year period to assess the longitudinal impact of corporate entrepreneurship on firm performance. These samples consist of 24 medium-sized manufacturing firms representing 14 industry segments, 39 chemical companies, and 45 Fortune 500 industrial firms representing five industry segments. Data were gathered on each sample using both primary and secondary sources. Regression analysis was then used to analyze the data.The results suggest that corporate entrepreneurship has a positive impact on financial measures of company performance. This effect on performance, which tends to be modest over the first few years, increases over time, suggesting that corporate entrepreneurship may, indeed, be a generally effective means for improving long-term company financial performance. Moreover, the results indicate that corporate entrepreneurship is a particularly effective practice among companies operating in hostile environments (as opposed to benign environments).The study has three principal implications for practicing managers. First, the study documents the general financial viability of engaging in corporate entrepreneurship. This is not to suggest that corporate entrepreneurship is a panacea for improving financial performance. However, entrepreneurial behavior, when considered on the whole (i.e., across firms and industries), is associated with superior financial performance. Second, the study suggests a need to use a long-term time horizon in order to adequately judge the financial consequences of corporate entrepreneurship. The use of a shorter evaluation period may not allow sufficient time for entrepreneurial actions to have their full market and corresponding financial impact. Finally, the study identifies the context-specific character of effective entrepreneurial practice. Specifically, corporate entrepreneurship appears to be a particularly effective strategic practice among firms operating in hostile business settings.     

Dynamic managerial capability portfolios in early internationalising firms

It is acknowledged that dynamic capabilities can underlie internationalisation of firms, yet extant research has tended to examine the role of capabilities in international entrepreneurship in separate studies, neglecting that international enterprises tend to develop different bundles or portfolios of capabilities that may have differing impacts on their internationalisation. Applying the concept of dynamic managerial capabilities, this study illustrates how different capability portfolios of entrepreneurial decision-making and network capabilities explain early internationalisation of small- and medium-sized enterprises (SMEs). Employing a machine learning method through artificial neural network (ANN) analysis, the findings show how early internationalisation is predicted by a portfolio of different dynamic managerial capabilities. This study thus contributes to the international entrepreneurship literature by outlining the capability portfolios necessary for early internationalisation and proposing a taxonomy for capability portfolios for early and late internationalising firms, by clarifying the role of dynamic managerial capabilities in early and successful entrepreneurial internationalisation and by introducing the ANN methodology as a useful tool in the research corpus of the international entrepreneurship domain.     

Entrepreneurship,economic development,and institutional environment: evidence from OECD countries

The purpose of this article is to establish a typology of entrepreneurship for OECD countries over the 1999–2012 period. Our aim is to draw a distinction between managerial and entrepreneurial economies, to identify groups of countries with similar economic and entrepreneurial activity variables, and to determine the economic and institutional drivers of entrepreneurial activities in each group. We show that the level of development, sectoral specialization, and institutional variables related to entrepreneurship, functioning of the labor market, and openness of the country are decisive to understand differences in entrepreneurship activity across countries. Results show that the pre-crisis period, from 1999 to 2008, is a period of growth favorable to entrepreneurship. The financial crisis involved a break in entrepreneurial dynamism, with agricultural economies withstanding the financial crisis better. The 2010–2012 period of recovery is a period of a sharp slowdown in entrepreneurial activity, during which the countries that are less dependent on the financial sector proved to be the most resilient in terms of entrepreneurial activity. Nevertheless, it is the advanced knowledge economies with developed financial markets, fewer institutional regulatory constraints, and greater scope for qualitative entrepreneurship that show lower unemployment rates. These findings have important implications for the implementation of public policy in order to promote entrepreneurial activity and reduce unemployment.     

Is your organization conducive to the continuous creation of social value? Toward a social corporate entrepreneurship scale

Over the last decade, explicit emphasis on the creation of social value has grown in profit-seeking firms as well as nonprofits and has even led to the emergence of a new legal organizational classification known as for-benefit corporations. Like financial value, social value is dynamic and therefore subject to perpetual changes in the firm’s external environment, changes that yield opportunities and threats for the firm. Although social entrepreneurship researchers have begun to study the identification and exploitation of opportunities to create social value, this research has taken place primarily within the context of startup organizations. In contrast, corporate entrepreneurship research has emphasized value creation within existing firms, but focused primarily on the identification and exploitation of opportunities to create financial value. Combining the two, we examine the creation of social value within the firm by proposing the social corporate entrepreneurship scale (SCES), a new instrument that measures organizational antecedents for social corporate entrepreneurship and offers managers an opportunity to analyze whether the perceived environment is supportive of corporate entrepreneurial behaviors intended to create social as well as financial value. The article concludes with a discussion of the instrument’s potential contribution to managerial practice.     

Managerial Incentives and Heterogeneous Firms

An industry where managerial firms and entrepreneurial firms coexist is considered. We analyze the effects of increasing competitiveness, defined by the increase in the number of managerial firms, on the equilibrium managerial incentive scheme. Our analysis shows that an increase in the number of managerial firms would induce a managerial firm to tie the incentives more closely to profits. We also compare the equilibrium with the regular Cournot model.     

董事会断裂带对创业导向的影响——行为整合机制的调节效应

以高阶梯队理论和群体断裂带理论为基础,探索董事会断裂带与创业导向之间的关系,以及影响二者关系的两种重要行为整合机制——董事会成员交叉任期和董事长职能背景广泛性.基于信息传输、软件和信息技术服务业A股上市公司2012~2016年面板数据的实证研究表明:董事会断裂带对创业导向具有负向影响;董事会成员交叉任期和董事长职能背景广泛性对上述关系具有正向调节作用.文章探讨特定行为整合机制下董事会断裂带与创业导向的关系丰富了有关创业导向前因的研究,通过提出并验证交叉任期和董事长职能背景广泛性这两个具体的行为整合机制而丰富了高阶梯队理论,对企业的创业管理实践亦具有重要启示.     

The role of an entrepreneurially alert information system in promoting corporate entrepreneurship

The literature has suggested that an entrepreneurially alert information system may be a salient driver of corporate entrepreneurship, even though this role has been neither theoretically articulated nor empirically substantiated. Building upon the organizational learning, information orientation, and entrepreneurial awareness literatures we identify three key elements of a firm's entrepreneurially alert information system, and then develop a parsimonious model that examines the impact of these elements on corporate entrepreneurship. Using both single- and multi-source survey data from 495 small- to medium-sized firms, we test our model and find that each element individually and collectively imparts significant positive influence on corporate entrepreneurship.     

Individualism,collectivism, and entrepreneurship: A framework for international comparative research

This article presents a theoretical framework and seven related propositions linking national culture—specifically individualist and collectivist orientations—to entrepreneurship. The framework identifies how both orientations affect the functions of entrepreneurship. This perspective casts new light on cross-cultural research that, while generally confirming individualism-entrepreneurship ties, has had less success accounting for the entrepreneurial vitality of largely “collectivist” nations—especially Japan.There are two main streams of research on the effects of individualism and collectivism on entrepreneurship. The micro-level stream finds that those who generate variety—founders and corporate entrepreneurs—tend to be individualistic. This work does not identify proclivities for the other entrepreneurial function, leveraging resources. The macro-stream associates both individualism and collectivism with national levels of economic growth and innovation.The framework comprises two dimensions depicting (1) levels of individualism and collectivism, and (2) the entrepreneurial functions. I conceive of individualism and collectivism as two characteristic orientations distributed in varying proportions within and between cultures and individuals. These characteristic are not polar ends of a continuum, as commonly described. The second dimension recognizes that entrepreneurship requires two activities: generating variety through innovation or new ventures, and leveraging resources internally or by establishing external ties.This paper's main contribution comes from the recognition that two entrepreneurial functions are very different processes. Variety generation requires mostly individual creativity and initiative; resource leverage depends on efficient relationships that thrive under collectivism, but can be induced contractually between individualists. These differences reveal that individualism and collectivism neither categorically encourage nor discourage entrepreneurship; rather they influence how its functions are accomplished.The propositions outlined in this paper can sharpen future research on individualism, collectivism, and entrepreneurship. In short, the paper claims individualists produce breakthroughs that collectivists implement and improve. Individualists show proclivities for new venture formation and making major innovations. They tend to leverage their resources through contract-based relations. For example, resources are stretched internally using contingent, performance-based incentives, and outside funds can be acquired through venture-capital agreements. In contrast, collectivists generate variety through group-based, incremental improvements and changes. Collectivists leverage their own resources by harnessing “clanlike” affiliations, and securing the use of the resources of other firms by building close relational ties, like keiretsu. Theory acknowledging that individualism and collectivism are not negatively related allows us to recognize that both orientations can contribute to entrepreneurship.The framework has key implications for entrepreneur/managers and policymakers. Recognizing that individualism and collectivism both contribute to entrepreneurship can guide decision-makers to examine the inventory of these orientations in their firms or regions, and implement policies to address shortfalls. For example, Americans can concentrate more on building close network ties while Japanese can focus on encouraging individual innovations.     

Middle managers' perception of the internal environment for corporate entrepreneurship: assessing a measurement scale

This study assesses the measurement properties of a scale that measures the key internal organizational factors that influence middle managers to initiate corporate entrepreneurship activities. In this study, corporate entrepreneurship is used in a broad sense to include the development and implementation of new ideas into the organization. Using this definition, this study describes an instrument used to empirically identify the internal conditions that influence middle manager's participation in corporate entrepreneurship activities. During the last decade, the role of the middle manager in corporate entrepreneurial activity has been recognized in the literature. The empirical research on the internal organizational factors that may foster middle manager activity has been limited, both in volume and scope. However, the literature does converge on at least five possible factors. The appropriate use of rewards: The literature stresses that an effective reward system that spurs entrepreneurial activity must consider goals, feedback, emphasis on individual responsibility, and results-based incentives. This factor, therefore, highlights middle managers' role in this regard. Gaining top management support: The willingness of senior management to facilitate and promote entrepreneurial activity in the organization, including championing innovative ideas as well as providing necessary resources, expertise or protection. This factor captures middle managers' role in this area. Resource availability: Middle managers must perceive the availability of resources for innovative activities to encourage experimentation and risk taking. Supportive organizational structure: The structure must foster the administrative mechanisms by which ideas are evaluated, chosen, and implemented. Structural boundaries tend to be a major stumbling block for middle management in corporate entrepreneurial activity. Risk taking and tolerance for failure: Middle managers must perceive an environment that encourages calculated risk taking while maintaining reasonable tolerance for failure. The literature on the internal factors was utilized to develop an assessment instrument called the Corporate Entrepreneurship Assessment Instrument (CEAI). The instrument contained 84 Likert-style questions that were believed to assess a firm's internal entrepreneurial environment. Understanding middle manager perceptions about the internal corporate environment is crucial to initiating and nurturing any entrepreneurial process. A scale such as the CEAI, therefore, could be very useful for companies that wish to embark on a strategic transformation through corporate entrepreneurship. The measurement properties of the CEAI, including a factor analysis and reliability assessment, were determined. Results confirmed that five distinct internal organizational factors, similar to those suggested in the literature, do exist. Based on how the items loaded on each factor, the factors were entitled management support, work discretion, organizational boundaries, rewards/reinforcement, and time availability. The reliability of each of these factors also met acceptable measurement standards. From a managerial perspective, the results indicate that CEAI can be a useful tool in diagnosing a firm's environment for corporate entrepreneurship, identifying areas where middle managers can make a significant difference, and develop strategies that can positively spur and sustain corporate entrepreneurship efforts. The results of such diagnosis can be useful in designing effective training programs for middle managers.