The Relationship between Corporate Entrepreneurship and Strategic Management

Barringer & Bluedorn, 1999

Assumptions:

Opportunity recognition

Organizational flexibility

Firm’s ability to measure, encourage and reward innovative and risk-taking behavior

=

Basis for organization’s ability to be entrepreneurial.

Variables of the study:

Dependent variable:

Corporate entrepreneurship intensity Independent variables:

1. Scanning intensity

2. Planning flexibility

3. Planning horizon

4. Locus of planning

5. Control attributes

1 .Scanning intensity

Scanning = managerial activity of learning about events and trends in the environment;

Scanning helps to cope with uncertainty (but only reduce uncertainty – not eliminate uncertainty)

High level of environmental scanning is congruent with entrepreneurial process

Scanning is the bridge to remaining competitive

Scanning more important in turbulent environments

2 .Planning flexibility

Planning flexibility refers to the capacity of a firm’s strategic plan to change in respond to environmental threats = a plan by design subject to change;

Flexible planning systems allow firms to adjust to pursue opportunities;

“The more clearly articulated the strategy, the greater the resistance to change”;

Flexible planning system good for turbulent environments but may undermine effectiveness of conservative firms.

3 .Planning horizon

Planning horizon refers to length of future time period that decision-makers consider in planning;

Short horizon (less than 5 years) optimal for entrepreneurial firms;

Short planning horizon + intensive environmental scanning + high degree of flexibility – capacity to recognize environmental change and develop innovations;

Long planning horizon (more than 5 years) optimal for conservative firms.

4 .Locus of planning

Depth of employee involvement in a firms’ strategic planning activities;

Deep locus (high involvement of employees) facilitates opportunity recognition;

Deep locus maximizes diversity of viewpoints –as opposed to negative influence of homogenous teams ;

In conservative organizations deep locus of planning (which is expensive in terms of managerial time and energy) not necessary.

Control attributes

In entrepreneurial firm control systems must stimulate innovativeness, risk-taking and pro-activeness;

Two forms of control important: strategic control and financial control;

Strategic control measures – customer satisfaction criteria, new patent registration, success in meeting target dates for new product or process introductions, achievement of quality control standards;

Financial control measures - net income, return on sales, etc.

Control attributes (continued) Entrepreneurial firms – emphasis on strategic

controls Conservative firms – emphasis on financial

controls

Results

What is the relationship between corporate entrepreneurship and strategic management?