The phase specificity of factors influencing entrepreneurial activity in corporate settings

Preliminary Survey Results By Mikkel Draebye

Structure
1. 2. 3. 4. 5. 6. Context and definitions Theory Background Research Question Hypotheses Research Design Data Analysis
a) b) c) d) e) Sample profile Scales Scale reliability & factor analysis Correlation analysis and hypotheses testing Development of empirical model

7. Discussion 8. Implications & Future research

Context and definitions The field of Corporate Entrepreneurship (CE)
• The research is inserted in the “stream” of entrepreneurship research that deals with entrepreneurial behaviour and activity within existing structures. This stream started to distinguish itself in the early 80ies with authors like Pinchot & Zahra (Pinchot, 1985 & Zahra, 1991) labelling concepts like “intrapreneuring” and “intrapreneuship”, but has developed into a welldefined research area with several textbooks written and a good share of articles in the peer reviewed Entrepreneurship Journals CE is defined as: “the process whereby an individual or a group of individuals, in association with an existing organization, create a new organization or instigate renewal or innovation within that organization” (Sharma & Chrisman 1999)

Demarcation: CE vs Independent Entrepreneurship
Entrepreneurship

Independent Entrepreneurship

Corporate Entrepreneurship

Strategic Renewal

Innovation

Corporate Venturing

External corporate venturing Potential outcomes: • Joint ventures • Spin off • Venture capital initiat.

Internal corporate venturing Potential outcomes: • integration • new divisions • new ventures

Source: Sharma / Chrisman (1999)

Research Question & Theory Background
• • The research investigates phase-specificity of the determinants of corporate entrepreneurship We know quite a lot of what in general influence entrepreneurial activity in corporate settings
– – – – – – Organizational Structure( Covin & Slevin , 1988, 1990 – Mair, 2002 – pettigrew 2000) HRM Systems and Practises (Sykes 1992, Hayton 2005, Kuratko 2008) Psychometrical profile of the corporate entrepreneur (Begley & Boyd 1987, Frese 2007, Baron 2007, D’intino 2008) Social Captial & Contracting Skills (MacMillan 1990, Zimmerman 2002, Casson 2003) Innovation Competencies (Hayton&Kelly 2006) Organization Skills (Zott&Huy 2003, Grichnik 2010)

Literature review revealed these established relationships

Research Question
• What we DO NOT know so much about is how the different determinants influences different PHASES in the entrepreneurial process Entrepreneurship is a process. It can be described in 6 phases
– – – – – – Opportunity identification Business Concept definition Resource requirement assessment Resource acquisition Venture management Harvesting

• The research question is whether different factors affect different phases differently and how

Relevance
• In CE in general, but especially in champion research, the process is “blacked-boxed”. It’s Input-Output without looking at the throughputs. An innovation process might be blocked at the venture management stage because there’s a lack of organization skills, but if the phase specificity is not monitored, researchers (and practitioners) don’t know where it went “wrong” or where to intervene. Examining the phase-specificity of the determinants can shed light on this and is therefore relevant

Research Question

7 Hypotheses were developed
Hypothesis 1: Corporate entrepreneurial activity can be measured on different levels that correspond to the phases in the corporate entrepreneurial process. The level of entrepreneurial activity in terms of : 1) Ideas that are generated, 2) Ideas that are formalized through concept definition and communication , 3) Ideas that have been subject to a formalization in terms of resource planning and assessment, 4)

Ideas/Projects for which resources for their implementation has been acquired , 5) Implemented ideas and projects and 6) Successfully implemented projects, will be

a) H1a: significantly correlated, indicating that successfully implemented ideas depends on activity in the 5 preceding phases . b) H1b: significantly decreasing, indicating that the number of successfully implemented ideas will increase if the preceding phases outcome levels will be increased and/or “kill-rates” between phases can be affected.

Hypotheses H1a and H1b basically state that phases exist and therefore establish an empirical rationale for analyzing them.

Hypothesis 2: depend on

The activity level of the “idea generation” phase will mainly the individual’s creative skills and the entrepreneurship

“friendliness” of the organizational climate Hypothesis 3: The activity level of the “concept definition” phase will mainly depend on the individual’s organization skills and self-confidence Hypothesis 4: The activity level of the “resource assessment” phase will mainly depend on the individual’s organization skills in particular business planning skills

Hypothesis 5: The activity level of the “resource acquisition” phase will mainly depend on the individual’s social capital and social networking skills

Hypothesis 6 : Project/Venture management teams that contains at least one original “ideator” will be more successful in harvesting the venture Hypothesis 7: “Efficient” corporate entrepreneurship processes, defined as

processes with low kill rates in phases following concept definition, are processes that combines individual skill sets together with systems of departmental/functional integration and communication in the organization

Research design
• To test the hypotheses a questionnaire composed of 90 questions was designed (see attached) • Sampling strategy was based on collecting responses from managers / employees with at least 2 years of employment history in the same company • Questionnaire was an on-line internet questionnaire (coded in google docs) • The questionnaire form requires poststratification considerations for the dataanalysis (see Simsek, Veiga, Lubatkin: “Challenges and Guidelines for Conducting Internet-Based Surveys in Strategic Management Research”, in Research Methodology in Strategy and Management, Emerald, 2005 )

Data Analysis
• The questionnaire was closed on October 15°. 195 responses had been collected.. After datavalidation 190 were retained • Because of distribution method (directly to companies AND through professional forums on networks like LinkedIn) it’s not possible to calculate a precise responserate, but the rate is low – less than 0,3% (at least 5000 potential respondents were exposed to the questionnaire) • In the following slides some summary statistics are presented

Summary Sample Statistics
Educational level

140

120

100

count

80

60

40

20

0 Bachelor High School Master PhD

Summary Sample Statistics
Field of degree
120

100

80

count

60

40

20

0 Bussiness/Economics Engineering Humanities Law Other Sciences

Summary Sample Statistics
Which functional responsibilities was/is associated you position?

30

count

20

10

0

General Management

Marketing

Project Management

Sales

Summary Sample Statistics
Gender
140

120

100

80

count
60 40 20 0

Female

Male

Summary Sample Statistics
Which functional responsibilities was/is associated you position?
30

25

20

1. "Chemicals, raw- and basic materials" 2. "Distribution and sales of equipment and material to other businesses" 3. "Distribution and sales of consumer products" 4. "Industrial manufacturing" 5. "Information Technology & Software" 6. "Non profit/Public administration/association" 7. "Other / Not Applicable" 8. "Pharmaceuticals and medical equipment" 9. "Services- Consulting/Training" 10. "Services-Banking/Finance"

count

15

10

5

0

1

10

2

3

4

5

6

7

8

9

Summary Sample Statistics
Size of organization in term of employees (excluding volunteers)
60

50

40

count

30

20

10

0

0-50

1001-2500

2501-5000

251-500

5001-7500

501-1000

51-250

More than 7501

Summary Sample Statistics
System (stage-gates)

100

80

60

count
40 20 0

No

Yes

Summary Sample Statistics

Summary Sample Statistics
Type of Entrepreneurial Ideas
12. Change of internal work processes /work flows /habits / behaviors not mentioned above 11. Ideas for 12% launching one-off events (with business impact) 8% 10. Changes in administrative processes 7% 9 .Changes in the organization’s Human Resource Management Practices 5% 3. Changes in marketing mix and/or processes (including pricing) 9% 8. Changes in production processes 6% 6. Changes for partnerships used by the organization 10% 4. Changes for technology/components used in products /services 8% 5. Changes for material used in products /services 4%

1. Ideas for launching new products/services 17% 2. Identifying new customer groups /markets for the organization’s products/services 9%

7. Changes technology used internally in the firm 5%

Data Analysis: The Scales
Table 5.9: The scales used
Scale Social capital Organization skills Innovation skills Opportunity identification Concept definition Assessing Resource requirements Resource Acquisition Venture/project management Harvesting Organization climate Number of questions 9 16 7 12 4 11 6 9 6 15

Data Analysis: Scale Reliability
• To test the reliability of the scales, Cronbach’s alphatest with alpha values > 0,7 was used. ALL scales proved reliable
Cronbach’s Alpha values for scales used
raw_alpha Soc_cap Org_skill Inn_skill Org_cli Opp_id Conc_def Res_need Res_acq Vent_mgmnt Harvest 0.7 0.88 0.74 0.81 0.81 0.86 0.92 0.82 0.7 0.72 std.alpha 0.71 0.88 0.75 0.81 0.82 0.85 0.92 0.83 0.7 0.74

Data Analysis: Factor analysis
• To identify the individual weights of the questions, a simple factor analysis without rotation was applied
Factor weights and constructs following factor analysis
Soc_cap Org_skill Factor formula for obtaining z-scores -5.97 + Soc_cap_1*0.15 + Soc_cap_2*0.06 + Soc_cap_3*0.17 + Soc_cap_4*0.2+Soc_cap_5*0.29 + Soc_cap_6*0.19 + Soc_cap_7*0.09 + Soc_cap_8*0.34+Soc_cap_9*0.11 -5.24 + Org_skills_1*0.04 + Org_skills_2*0.08 + Org_skills_3*0.13 + Org_skills_4*0.1 + Org_skills_5*0.08 + Org_skills_6*0.19 + Org_skills_7*0.06 + Org_skills_8*0.08 + Org_skills_9*0.06 + Org_skills_10*0.08 + Org_skills_11*0.09 + Org_skills_12*0.1 + Org_skills_13*0.08 + Org_skills_14*0.09 + Org_skills_15*0.09 + Org_skills_16*0.08. -5.1 + Inn_skills_1*0.3 + Inn_skills_2*0.17 + Inn_skills_3*0.18 + Inn_skills_4*0.19 + Inn_skills_5*0.09 + Inn_skills_6*0.29 + Inn_skills_7*0.14 -3,42 + Oc_1*0.14 + Oc_2*0.23 + Oc_3*0.11 + Oc_4*0.14 + Oc_5*0.08 + Oc_6*0.08 + Oc_7*0.07 + Oc_8*0.11 + Oc_9*0.01 + Oc_10*0.03 + Oc_11*0.01 + Oc_12*0.03 + Oc_13*0.02 + Oc_14*0.02 + Oc_15*0.03 -0,99 + Opp_id_1*0.05 + Opp_id_2*0.02 + Opp_id_3*0.03 + Opp_id_4*0.01 + Opp_id_5*0.03 + Opp_id_6*0.04 + Opp_id_7*0.07 + Opp_id_8*0.03 + Opp_id_9*0.06 + Opp_id_ 10*0.02 + Opp_id_11*0.04 + Opp_id_12*0.04 -0.95 + Conc_def_1*0.03 + Conc_def_2*0.03 + Conc_def_3*0.01 + Conc_def_4*0 -0.77 + A_res_req_1*0.01 + A_res_req_2*0.02 + A_res_req_3*0.02 + A_res_req_4*0.01 + A_res_req_5*0.01 + A_res_req_6*0.01 + A_res_req_7*0.01 + A_res_req_9*0.01 + A_res_req_10*0.01 + A_res_req_11*0.01 -0,7 + Res_acq_1*0.02 + Res_acq_2*0.04 + Res_acq_3*0.02 + Res_acq_4*0.01 + Res_acq_5*0.03 -0.62 + Ven_man_1*0.02 + Ven_man_2*0.02 + Ven_man_3*0.02 + Ven_man_4*0. 04 + Ven_man_6*0.01 + Ven_man_7*0.02 + Ven_man_8*0.02 + Ven_man_9*0.05 + Ven_man_10*0.02 -0.7+ Harvest_1*0.04 + Harvest_2*0.03 + Harvest_3*0.06 + Harvest_4*0.03 + Harvest_5*0.03 + Harvest_6*0.04

Inn_skill Org_cli

Opp_id

Conc_def Res_need

Res_acq Vent_mgmnt Harvest

Data Analysis: ANOVA analysis for objective variables in the sample
• To examine the relationship between the factor drivers and the objective variables (gender, education, size of company etc), students-t or an ANOVA analysis was performed (depending on the number of categories) • Factor values are given in Z-scores: arithmetical mean of z-score is 0, standard deviation is 1, 50% of the sample is in the range -0.66 to 0.66 zscores, so the difference between groups close to 0.66 is the criterion for significant conclusion.

Data Analysis: ANOVA analysis for objective variables in the sample
Table 5.50 : Gender
Female Male soc cap org skills inn skills Oc -0.14 -0.21 t P 0.19 0.09 0.86 0.05 -1.32 0.08 -1.72 0.18

0.02 -0.01 -0.01

0.01 -0.12 0.904

As seen from the table, gender does not influence the factor values

Data Analysis: ANOVA analysis for objective variables in the sample
Table 5.51 : Field of degree
Business/ Economics Engineering soc cap org skills inn skills Oc -0.02 0.19 0.08 0.23 0.19 0.07 -0.11 -0.38 t -1.55 0.84 1.4 3.54 p 0.124 0.403 0.165 0.001

As seen from the table, the respondents who have a Business / Economics degree have a significantly more positive perception of the entrepreneurship friendliness of the climate in the organizations where they work. It’s likely that this is due to either position in the company (see below) or a different way of interpreting the organizational reality.

Data Analysis: ANOVA analysis for objective variables in the sample
Table 5.52: What is/was your position
Business Unit / Functional Manager

General Manager / CEO

Division Manager

Team Manager

Employee

F

p

soc cap

-0.14 -0.18 -0.13 0.03 0.25 -0.06 -0.2 0.36 -0.1

1.76 0.139 1.74 0.144 0.29 0.885

org skills 0.13 inn skills Oc

-0.05 -0.05 -0.08 0.12 0.06 0.01 0.02 -0.2

0.74 -0.13 4.69 0.001

The respondents, who have a job of General Manager / CEO depict the higher index of organization climate than the employees. The rest has the average scores.

Data Analysis: ANOVA analysis for objective variables in the sample
Table 5.53: Industry
Information Technology & Software Industrial manufacturing Distribution and sales of consumer products

Other / Not Applicable Services- Consulting /

Training

F

soc cap

-0.31 0.13

0.15 0.23

-0.18 0.27 2.24 0.069 -0.47 0.1 0.06 5.62 0

org skills -0.16 0.56 inn skills Oc 0.03 0.18

-0.08 0.08 0.01

0.07 0.15 0.963

-0.13 -0.25 0.25 1.39 0.241

As seen from the table, there is a significant variance in the level of organizational skills across industries. The categorization is too high level to allow for an interpretation of the differences though

p

Data Analysis: ANOVA analysis for objective variables in the sample
Table 5.54: Size of organization
0-50 soc cap -0.06 51-250 More than 7501 F -0.19 0.05 0.17 -0.15 0.05 0.14 0.07 0.04 p

0.71 0.492 4.06 0.02 0.76 0.47 1.58 0.21

org skills -0.38 inn skills Oc -0.08 0.28

As seen from the table, organizational skill is related with organization size. The respondents from the <50 employees have the lowest ones. The very large companies employees have higher organizational skills.

Data Analysis: Testing the Hypotheses through correlation analysis
• To test the developed hypotheses, a correlation analysis using Pearsons correlation coefficient on the developed factor constructs was applied. The sample size and the obtained response distribution accommodated such analysis.

Data Analysis: Testing the Hypotheses through correlation analysis
Table 5.55: Pearsons r Correlation table: Drivers and Phases
a_res_req org_skills inn_skills conc_def ven_man
0.03 0.13 0.1 1

soc_cap

res_asq

soc_cap org_skills inn_skills Oc opp_id conc_def a_res_req res_asq ven_man Harvest

1 0.38***

0.38*** 0.39*** 0.24*** 0.19** 1 0.42*** 0.34*** 0.3*** 1 0.18* 1

0.1 0.3***

0.13

0.17*

0.05 0.17* 0.2**

0.3*** 0.27*** 0.18* 0.23**

0.39*** 0.42***

0.19** 0.36*** 0.26*** 0.23** 0.21** 1 0.18* 0.21** 0.14

0.24*** 0.34*** 0.19**

0.19** 0.3*** 0.36*** 0.18* 0.1 0.13

0.63*** 0.54*** 0.55*** 0.47*** 0.48*** 1 0.85*** 0.81*** 0.62*** 0.61*** 1 0.87*** 0.53*** 0.54*** 1 0.58*** 0.45*** 0.56*** 1

0.3*** 0.26*** 0.18* 0.63***

0.3*** 0.23** 0.21** 0.54*** 0.85*** 0.18*

0.17* 0.27*** 0.21** 0.03 0.05 0.13 0.23** 0.17*

0.14 0.55*** 0.81*** 0.87*** 0.1

0.47*** 0.62*** 0.53*** 0.58***

0.2** 0.48*** 0.61*** 0.54*** 0.45*** 0.56***

* - p≤0.05; ** - p≤0.01; *** - p≤0.001

harvest

opp_id

oc

Data Analysis: Testing the Hypotheses through correlation analysis
Social capital Opportunity identification

Concept definition Innovation skills
Cross correlated

Assessing resource requirements Organization climate Resource acquisition

Venture / project Organizational skills management Harvesting the venture

Data Analysis: Factor analysis: Building an empirical model
• Principal axes factorial analysis with varimax rotation was performed. To choose the most reliable variables randomization method with 100 repitition was applied and different methods to determine the number of factors was tries: Parallel Analysis , Cattell's scree test , Very Simple Structure Criterion , Velicer MAP criterion and Bayesian Information Criterion. • Following the test a 4-factor model was designed

Data Analysis: Factor analysis: Building an empirical model
Opportunity identification

Concept definition Creativity Skills Assessing resource requirements Organizational E -Unfriendlines s Lack Business Analytics Skills skills Harvesting the venture of reduce Venture / project management reduce Resource acquisition skills

Conclusions (H1)
5.3.1 H1: Existence of phases in the entrepreneurial process
The hypothesis of the existence of phases in the corporate entrepreneurial process is fully confirmed. Each phase can be measured by the questionnaire. Measurement result is a Z-score, which reflect the success of each phase.

The analysis also confirmed the existence of drivers that have a positive influence on the success of the phases. The identified drivers are not independent, they are

strongly correlated and form a coherent cluster.

Organizational skills affects all the phases. This driver has a particularly strong influence on opportunity identification and concept definition. Organizational climate has a strong effect only on two phases: Assessing resource requirements and Harvesting the venture. Innovation skills increases the effectiveness of four phases: Opportunity identification, Concept definition, Assessing resource requirements, Resource acquisition. Social capital increases the efficiency of opportunity

identification.

Conclusions (H2)

5.3.2 H2: The activity level of the idea generation phase will mainly depend on the individual’s creative skills and the entrepreneurship friendliness of the organizational climate

This hypotheses is only partially confirmed. Increased idea generation activity does indeed depend on innovation skills, but the organizational climate has no statistical correlation with activity in this phase

Conclusions (H3)

5.3.3 H3: The activity level of the concept definition phase will mainly depend on the individual’s organization skills and self-confidence

True. Concept definition phase depends on organizational skills. The data collected in the survey did not allow for testing the relationship between self-confidence and concept definition

Conclusions (H4)

5.3.4 H4: The activity level of the resource assessment phase will mainly depend on the individual’s organization skills in particular business planning skills
True. Resource assessment phase depends on organizational skills.

Conclusions (H5)
5.3.5 H5: The activity level of the ―resource acquisition phase will mainly depend on the individual’s social capital and social networking skills

This hypotheses is only partially confirmed. The resource acquisition phase does not depend on the individual’s social capital, but only on the persons social networking skills. Also, the activity level of the resource acquisition phase is also influenced by the individuals organizational and innovation skills.

Conclusions (H6)

5.3.6 H6 :

Project/Venture management teams that contains at least one

original ideator will be more successful in harvesting the venture

The data collected are insufficient to test this hypotheses

Conclusions (H7)
5.3.7 H7: Efficient corporate entrepreneurship processes, defined as

processes with low kill rates in phases following concept definition, are processes that combines individual skill sets together with systems of departmental/functional integration and communication in the organization.

The factor analysis shows that kill rates exist and that they are influenced by the individual’s business analysis skills and entrepreneurship UNFRIENDLY organizational climate, because the negative organizational climate decrease activity levels in the re source assessment, re source acquisition and harvesting phase. Low levels of

business analysis skills decreases success in the venture / project management phase.

The collected data does not though allow for a detailed analysis of the kill-rates.

Conclusions (others)
5.7 Other findings
Because not all the hypotheses were fully confirmed an attempt was made to redefine the theoretical model based on the empirical data collected. This analysis suggests that a model containing 4 factors 1. Innovation skill (creativity) 2. Organizational climate 3. Analytical business skills 4. Organizational skills.

Has better explanation power than the original theoretical model. Drivers in this model are independent. This means that is no significant correlations between them. But their influence on the phases is still remains. Organizational skill depends on all phases and increase their levels. Innovation creativity increase activity level of the Opportunity identification, concept definition, Assessing resource requirements, and resource acquisition. Negative climate in organization reduce the level of the assessing resource requirements and harvesting. Low analytic skills reduce the level of the venture/project management phase.

Implications
6.3 Stimulating corporate entrepreneurship: The case for betting on the individual
As can be seen from the above consideration, the present research results, support a case for CE stimulation in corporation which is based on 2 principles 1.1 Eliminate perceptions in the employee and management base that the organization is NEGATIVE towards entrepreneurial initiatives. This should be done through policies of ALLOWANCE and FREEDOM
1.2 For corporate entrepreneurship, the entrepreneur matters. Individual skills and traits in terms of a general business acumen, creativity (phases up to venture management) and sales and marketing skills (in the venture management) are the key drivers of entrepreneurial activity. These skills can be developed through HR hiring and assessment practices and postrecruitment training.

Un-answered questions and need for follow-up research
• Understanding the interaction and relationship between organizational drivers and individual traits • Understanding of project management and business planning skills phase specific role • Drivers and determinants of “Kill Rates”

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