Entrepreneurial Strategic Processes: Volume 10

This tenth volume in the series Advances in Entrepreneurship, Firm Emergence, and Growth focuses on entrepreneurial strategic processes. Papers related to strategic processes in entrepreneurship have been a recurring feature of the Advances series, starting with the second volume, which included Slevin and Covin's (1995) article of record on entrepreneurial strategic behavior, as well as process-related strategy articles by Carsrud and Kruerger (1995) and Bloodgood, Sapienza, and Carsrud (1995). Subsequent explorations included Volume 7's material on corporate entrepreneurship, Fernhaber and McDougall's (2005) work on strategic adaptation in Volume 8, as well as Salvato, Lassini, and Wiklund's (2006) acquisition process model and Samuelsson's innovative-imitative process comparison in Volume 9. Common to all of these has been the central intent of the strategy approach: the pursuit of organizational success.

In business environments characterized by intense competition, globalization, rapid technological diffusion, accelerated product life cycles, and evolving industry boundaries, the ability of firms to adapt effectively to their changing environments is a strategic imperative (Hitt, Keats, & DeMarie, 1998; Nadler & Tushman, 1999). The exhibition of strategic adaptability – the ability of a firm to alter its alignment with the environment through reactive and proactive behaviors (Evans, 1991) – is a function of the goodness-of-fit that exists between the capabilities of a firm and the demands imposed by its relevant industry context (Burgelman & Grove, 1996). When firm capabilities are well aligned with industry success factors, those capabilities constitute strategic assets for the firm, or resources that lead to the achievement of competitive success in that context (Amit & Schoemaker, 1993). The possession of strategic assets thus contributes to a state of adaptation, defined by Chakravarthy (1982) as a state in which an organization exhibits the capacity to survive the conditions of its changing environment. Because of the constantly shifting nature of the environment, a state of adaptation is not a permanent settling point for the organization, but rather a moving target for the organization as it attempts to remain “mapped on” to the exigencies of the environment.

This chapter examines the role that resource support and decision autonomy play in the successful launch of corporate entrepreneurial initiatives. Specifically, this study assesses whether entrepreneurial initiatives receiving higher levels of support from top management and more resource contributions in key functional areas actually have higher levels of performance. Additionally, this study investigates whether or not the entrepreneurial initiatives that receive greater decision autonomy in the same critical functional areas will experience higher levels of performance. Hypotheses arguing these points are tested using data obtained from the Internet divisions of major metropolitan newspapers. This allows for the discovery and evaluation of an opportunity (i.e., the Internet) to be held constant, so that a better understanding of the exploitation stage of the entrepreneurial process might be obtained. Results suggest the importance of resource support and decision autonomy to initiative performance, but with more importance being placed on the marketing functional group for resource support and the accounting and legal functional areas for decision autonomy.

This chapter introduces the term “interpreneurship” to refer to entrepreneurship that occurs through inter-organizational alliances, which represent a salient vehicle for combining complementary resources and capabilities across firms in order to gain a competitive advantage. The interpreneurship concept implies the integration of internal (firm) and external (network) resources through alliance formation and management. The purpose of this research is to introduce social structure to the rational action paradigm by examining the complementarity of entrepreneurial and relational resources in achieving organizational goals in an alliance context. In this study, interpreneurial capability is operationalized as the combination of entrepreneurial resources (via an internal growth strategy) with relational resources (via an external growth strategy). These effects are assessed through the examination of three competing research models. The hypothesized interaction-only model tests the impact of complementarity of entrepreneurial and relational resources on firm-level performance for both partners to an alliance. A second model tests relational resources as a mediator of the relationship between entrepreneurial resources and the alliance partners’ performance. Finally, a third model assumes that the two resources have independent effects on the alliance partners’ performance. We find that the interaction-only model yields the strongest relationship to organizational performance, supporting the interpreneurial perspective we proffer in this chapter.

Intrapreneurs are those employees who identify and pursue opportunities in a firm. By pursuing these opportunities with new products, services or processes, intrapreneurial employees may influence the strategic direction of the firm, a process called intrapreneurial strategy-making. Little consideration has been given to how small firms may use this process to improve performance. To this end this paper describes the results of an empirical study conducted with 454 small firms. Analysis of the data indicates that intrapreneurial strategy-making has a significant positive relationship with firm performance, depending on the size of the firm, its organizational structure and the dynamism of the environment. It further shows that differentiation strategies may mediate this relationship.

The entrepreneurs’ ability to identify opportunities can lead to wealth creation and competitive advantage. Often, however, opportunities that are innovative may defy up-front analysis suggesting that the entrepreneurs may have had somewhat inaccurate perceptions and need to refine their ideas after the ventures are started. This paper therefore focuses on mitigating the negative impact of early misperceptions through the use of learning-oriented information processing systems to refine opportunities post starting a venture. Specifically, it suggests that an experienced and heterogeneous top management team and a decentralized, organic structure enhance the system's ability to gain knowledge from acting on early misperceptions and may even form the basis for a distinctive capability that leads to competitive advantage.

The relationship between knowledge and innovation is well established in the strategy and entrepreneurship literatures. However, little is known about how absorptive capacity – the firm's ability to acquire, assimilate, and use new knowledge – effects innovation in new firms. We build on extant conceptual arguments from scholars who assert that the concept of absorptive capacity can be delineated into a number of individual components, and we test the influences of each component on innovation using a sample of new firms in the Swedish telecom, IT, media, and entertainment sectors. We find that while all of the components of absorptive capacity influence innovation in new ventures, acquiring new technological knowledge and employing mechanisms for exploiting new knowledge have the greatest effects. Our results provide a direct empirical test of the linkage between absorptive capacity and innovation, and suggest that the effects of these components of absorptive capacity on performance are more complex than previously articulated in the literature. We conclude with implications for future research surrounding absorptive capacity.

Time considerations are an important element of entrepreneurial processes in organizations. The current study analyzes the interface between time and entrepreneurship in the firm, examining the relationships between organizational time norms that are shaped by the firm and individual time structures that reflect individual personality differences and how individuals perceive and interpret the organizational time norms. The study seeks to determine if, how, which, and to what extent organizational time norms and individual time structures impact employees’ attitudes toward undertaking entrepreneurial activities and practices related to corporate entrepreneurship in the organization. The chapter develops a model and five hypotheses that are empirically tested in an Israeli manufacturing company that encouraged its employees to pursue entrepreneurial activities within the company. The findings show that, as hypothesized, individual time structures moderate the relationship between organizational time norms and undertaking corporate entrepreneurial activities. It was found that under loose (flexible) organizational time norms, employees with defined time structures generated entrepreneurial proposals. In contrast, employees with vague time structures did not produce entrepreneurial proposals. The results highlight the importance of matching employee time structures with their firm's time norms as a means of promoting corporate entrepreneurial activities.

This paper explores the origin of entrepreneurial orientations (EO) from an organizational embeddedness perspective. It examines the impacts of firms’ network embeddedness such as structural, positional and relational on three dimensions of EO, namely, risk-taking, proactiveness and innovativeness. After a brief review of the EO construct and social network theory, we derive a set of testable propositions that relate embeddedness properties such as centrality, structural holes, direct/indirect ties, and network density, to the magnitude of three key EO dimensions. We argue that each dimension may vary independently with each other and has its own formation mechanism, which entails rich implications for entrepreneurial network research.

Past entrepreneurship research has emphasized the importance of the context of the entrepreneur (e.g., personality) along with environmental characteristics as predictors of the success of new ventures. Additional literature has expanded our understanding of how implementation processes such as business planning, social networking, and external financing may be key to new venture performance. This paper offers 12 propositions that link these two literatures. Specifically, we argue that the personality and goals of the entrepreneur, as well as the dynamism and munificence of the environment, may affect how well implementation processes enhance new venture performance.