Corporate Entrepreneurship. What we know so far

Table of Contents

List of Figures

List of Tables

List of Abbreviations and Symbols

1. Introduction
1.1 Motivation
1.1.1 Research Gap
1.1.2 Personal Motivation
1.2 Aim of Research Study
1.3 Methodology
1.4 Thesis Structure

2. Theoretical Foundation
2.1 Definition of Terms
2.1.1 Innovation
2.1.2 Entrepreneurship
2.1.3 Corporate Entrepreneurship
2.2 The Struggle of Implementing Corporate Entrepreneurship

3. Themes Related to Corporate Entrepreneurship
3.1 Environmental Factors
3.1.1 Environmental Scanning
3.1.2 Characteristics of Environments
3.1.3 Other Environmental Aspects
3.2 Strategy and Management
3.2.1 Organisational Types
3.2.2 Strategy Development
3.2.3 Responsibilities of Management
3.3 Organisational Structure
3.3.1 Hierarchy and Structure
3.3.2 Routines and Processes
3.3.3 Control System
3.3.4 Reward System
3.3.5 Corporate Culture
3.4 Financial Factors
3.4.1 Financial Performance
3.4.2 Ownership Systems

4. Closing Chapter
4.1 Summary
4.2 Conclusion
4.3 Limitations and Recommendations for Future Research

References

Appendix

Abstract

Corporate Entrepreneurship - What we know so far

It is known that established organisations have to act entrepreneurial in order to remain competitive, especially in the long term (Engelen et al., 2015, p. V). Corporate entrepreneurship offers the opportunity for organisations to maintain this dynamism and realise new business models (Reiter, 2016, p. 30). Although there are numerous studies on this topic, a general overview is still not available as most authors refer to only parts of corporate entrepreneurship. Thus, the aim of this thesis is to offer a holistic summary of the concept and deepen readers’ understanding by consolidating a multitude of individual perspectives. A literature review was applied for this author to gather information from the most relevant sources. Based on this review, the subject of corporate entrepreneurship can be divided into four categories of related factors: strategy and management, organisational structure; environment; and finances. However, all of these factors are connected, and the comprehensive review of existing literature suggests that corporate entrepreneurship should be achieved through a holistic approach. The first two subdivisions were found to receive the greatest attention in literature.

Kurzreferat

Corporate Entrepreneurship – Was wir bisher wissen

Es ist bekannt, dass etablierte Unternehmen fortlaufend unternehmerisch agieren müssen, um langfristig wettbewerbsfähig zu bleiben (Engelen et al., 2015, S. V). Corporate Entrepreneurship bietet die Chance, diese Dynamik zu erhalten und neue Geschäftsmodelle zu realisieren (Reiter, 2016, S. 30). Obwohl es zu diesem Thema zahlreiche Literaturen gibt, fehlt noch ein allgemeiner Überblick, da sich die meisten Autoren lediglich auf Teilaspekte beziehen. Ziel der Arbeit ist es daher, einen ganzheitlichen Überblick von Corporate Entrepreneurship zu bieten und durch die Zusammenführung der Vielzahl von Einzelaspekten das Wissen zu vertiefen. Dabei wird die Forschungsmethode der Literaturrecherche angewandt, um die Informationen aus relevanten Quellen zu erhalten. Die Studie hat gezeigt, dass das Thema wie folgt unterteilt werden kann: Strategie und Management, Organisationsstruktur, Umweltfaktoren und finanzielle Faktoren. Die Inhalte sind jedoch miteinander verbunden und legen nahe, dass Corporate Entrepreneurship aus einem ganzheitlichen Ansatz heraus erreicht werden sollte. Außerdem zeigt die Studie auf, dass die ersten beiden Unterteilungen in der Literatur die größte Aufmerksamkeit erhalten.

List of Figures

Figure 1: Literature including published year and citation count

Figure 2: Google Books Ngram Viewer term search ‘innovation’ from 1940 to 2008

Figure 3: Distinction between invention and innovation

Figure 4: Thematic subdivisions related to corporate entrepreneurship

Figure 5: Organisational typologies

Figure 6: Three generic strategies of Porter

Figure 7: Top management responsibilities to enable CE

Figure 8: Comparison of mechanistic and organic organisational structures

Figure 9: Corporate culture defined in four models

List of Tables

Table 1: Synonym and alternative spellings for corporate entrepreneurship

Table 2: Definitions of corporate entrepreneurship, chronological order

List of Abbreviations and Symbols

i.e. id est, that is

e.g. exempli gratia, for example

etc. et cetera, and so forth

et al. et alii, and others

ff. folio, following pages

vs. versus, against

viz. videlicet, namely

Nr. Number

chpt. Chapter

CE corporate entrepreneurship

KPI key performance indicators

TM top management

RQ research question

1. Introduction

Innovation is of fundamental importance for the development and progress of companies (Drezner, 2001, p. 6), specifically for them to maintain a competitive advantage (Hauschildt et al., 2016, p. V). Most companies understand this, but fall short when it comes to execution. Although 84% of executives state that innovation is vital for their growth strategy, no more than 6% are truly satisfied with their performance in innovation (McKinsey, 2020). In PwC’s Innovation Benchmark, it was found that half of the companies that participated struggle to bridge the gap between their innovation and business strategies (Staack & Cole, 2017, p. 7).

Business leaders realise the advantages and benefits of innovation, but also understand that their companies’ limitations. Their organisations are simply not built for innovation, but are rather designed to sustain existing practices (Wessel, 2012, p. 8). Years of success create complacency among organisations. They lose the entrepreneurial dynamism to recognise and leverage new opportunities (Engelen et al., 2015, p. V).

Start-ups, on the other hand, have no issues creating new products or services, even in circumstances of extreme uncertainty (Ries & Eric, 2011, p. 27). They often see the value of business ideas that established companies do not recognise or do not dare to realise. With innovative ideas and products, some start-ups have managed to create completely new markets within a few years and become global players (Engelen et al., 2015, p. V).

Established organisations must learn from these start-ups (Reiter, 2016, pp. 14–15). In a volatile business world, with decreasing product lives and innovation cycles, it is essential for established companies to seek and exploit new opportunities (Engelen et al., 2015, p. V).

Corporate entrepreneurship (CE) offers an opportunity for established companies to create new business models and thereby develop new markets (Reiter, 2016, p. 30) . The aim of this strategy is for even established companies to become as agile, flexible and creative as their young competitors who have only just started (Kuckertz, 2017, p. 4). Corporate entrepreneurship is essential for a company to increase its profitability and sustain its growth (S. A. Zahra, 1996, p. 1713). Only companies that continuously question themselves and expand their fields of activity can continue to operate successfully in their markets for decades to come (Engelen et al., 2015, p. V) .

Although innovation is a key component of a business strategy, the mere occurrence of innovation does not characterise a firm as entrepreneurial (Covin & Miles, 1999, p. 47). This paper explores the scope of corporate entrepreneurship (CE) based on existing literature.

1.1 Motivation

This chapter describes the motivation behind thesis, introducing both the scientific objective, namely the research gap being addressed, and the author’s personal motivation.

1.1.1 Research Gap

Currently, there are a number of studies on the topic of CE available. This topic has been studied since 1971, when Peterson and Berger first researched the concept of integrating entrepreneurial activities into organisations (Hornsby et al., 2002, p. 254). Although CE may seem to take on a clear structure, various authors have reasoned that it appears in different forms (Sharma & Chrisman, 2007; as cited in Hornsby et al., 2002, p. 255). The viewpoints from which different authors approach the topic are diverse.

While some authors focus on the benefits and advantages of CE, especially from a financial perspective (S. A. Zahra & Covin, 1995; Shaker A. Zahra, 1991, 1993), others concentrate on the strategic or managerial factors that influence it (Barringer & Bluedorn, 1999; Robert A. Burgelman, 1983; Hornsby et al., 2002). Therefore, also the initial introduction within the articles regarding the existing literature is addressed in the respective direction. Up to this point, no general outline of literature concerning CE has been developed. This research contributes to the larger field of study by offering a holistic summary of existing literature on CE.

1.1.2 Personal Motivation

In the course of my studies, it has become clear how important it is for companies to drive innovation in order to maintain a competitive advantage. Innovation management repeatedly came to my attention in relation to many subjects as it touches many aspects of business. I wondered how larger corporates with established processes and appropriate mind-sets can create such an entrepreneurial spirit in their organisations. It was at this point that I became aware of the topic of CE.

At the same time, I started to work for an organisation that presents itself as a laboratory for business model innovation. By identifying new growth areas, developing and implementing product and service innovation the business involves acting as a company builder for corporates. Among other innovation-related activities. Thanks to my professional experience, I already had some exposure to CE activities from a practical point of view. However, I am curious to explore this subject further from a theoretical perspective.

I would like to gain a better understanding of the relevant literature on CE that has been created up to this point. My aim is to gain genuine insights into this matter based on existing studies and expand my knowledge to become an expert in this field.

1.2 Aim of Research Study

This section focuses on introducing the aim of this thesis.

For this bachelor’s thesis, the method of literature research has been applied. This paper is concentrated on building in-depth understanding of content, while also providing a proper overview rather than focusing on partial aspects. In order to achieve this, bundles of topics from a comprehensive perspective and a multitude of individual aspects are structured. The goal is to offer a holistic summary of the most relevant literature on CE, including key findings, without missing any valuable information or connection. In this way, this bachelor’s thesis contributes to the existing body of literature on CE and deepens readers’ understanding of the main aspects of this topic.

To achieve its objective, this paper defines three research question. According to Eriksson and Kovalainen (2016), research questions are the key to success in a qualitative study (p. 40). Research questions guide readers through the thesis and help provide a focused theoretical approach. For this thesis, the research questions are as follows:

RQ1: Into which thematic categories can the comprehensive research results be summarised?

RQ2: How are the findings in these subdivisions evaluated?

RQ3: Which subdivisions receive the most attention in existing research?

These three questions are examined and answered throughout this thesis.

1.3 Methodology

In this chapter the methodology is described which is used to approach the research study. Additionally, a justification for the literature selection is included.

This bachelor’s thesis is a qualitative study based on a literature review. According to Eriksson and Kovalainen (2016, p. 49), there are two ways to conduct a literature review. The first is by offering a descriptive summary of previous research, including a brief description of the most important research projects and their results. The second approach is through an evaluative, problematizing, and critical analysis of prior research. This approach creates new knowledge by examining and reorganising previous studies, their overall approach, theoretical concept, methods and results. Both of these approaches are considered in this thesis. The first approach offers an informative overview, which is essential for providing a holistic view on the topic of CE. The second approach primarily contributes to answering the research questions listed above.

As this is a qualitative study, no hypotheses are developed. Rather, theoretical elements regarding the central topic are drawn from existing literature, and the research questions are examined and answered throughout the text.

With regard to the literature review, it was important to make the right selection based on a wealth of titles (Esselborn-Krumbiegel, 2014, p. 73). The search for literature and sources was divided into three steps. First, the relevant search keywords were identified and derived from the title or topic of this work (Oehlrich, 2019, p. 27). When identifying suitable search parameters, certain issues must be examined. For this purpose, business dictionaries can be used to define the field of research or to find suitable synonyms for terms. Alternative spellings can also have an impact on research and must be taken into account (Bryman & Bell, 2007, p. 112). In order to define suitable search terms for this study, this author compiled a collection of synonyms, including alternative spellings for the term ‘corporate entrepreneurship’, as is displayed below.

Abbildung in dieser Leseprobe nicht enthalten

Table 1: Synonym and alternative spellings for corporate entrepreneurship

Source: own illustration, based on information from chapter 2.1.3 Definition of Term CE

In a second step, these terms were used to conduct an initial search on the internet, as well as through library catalogues and article databases (Oehlrich, 2019, p. 27). In a systematic literature review, literature databases play a major role because they offer simple search options with high topicality and an extensive database (Ebster & Stalzer, 2017, p. 49). For this bachelor’s thesis, the literature database tool Scopus, which was developed by Elsevier,was used. This database is described as the world's largest citation platform, consisting of peer-reviewed research literature and qualitative online resources. Scopus offers nearly 20,500 journals from about 5,000 international publishing houses (Elsevier, 2019, p. 1).

Finally, the literature and sources found were evaluated according to their content and scientific criteria in order to select the ‘right’ literature and sources (Oehlrich, 2019, p. 27). To determine the quality of a literature of source, authors can apply a key citation count (Eriksson & Kovalainen, 2016, p. 48). For this study, the minimum citation count of 400 was set to prove the relevance of the source.

The figure below illustrates the outcome of the search for the keywords through the Scopus tool. Only results above the citation number of 400 were considered for this thesis.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Literature including published year and citation count

Source: own illustration, based on merged findings SCOPUS (2020)

Most of the highly cited sources are articles written before the year 2000. However, newer sources with lower citation frequencies, but high standards of recommendation were also considered for this research.

1.4 Thesis Structure

This bachelor’s thesis is organised into three several main chapters containing a number of subchapters as follows.

First, the theoretical background of CE is established. This section of the thesis covers the origins and definition of relevant terms, including innovation, entrepreneurship and CE. This is followed by a short summary of the obstacles established organisations face in implementing CE.

After the theoretical base is established, the key findings of the literature research are presented under four thematic subdivisions. Each subdivision summarises the results and findings of the research.

The first subchapter on environmental factors explains the characteristics that influence the perception of the environment as well as other factors. Then, strategic and managerial matters are discussed, starting with the different types of organisations and then moving into the development of strategies and the responsibilities of managers. The next subchapter concerns organisations’ internal structure, explaining the ways in which a proper structure can enable the development of CE activities within an organisation. An effective internal structure includes hierarchical organisation, routines and processes, control as well as reward systems and a sense of corporate culture. Then, the chapter on financial factors presents findings related to organisations’ financial performance and ownership systems.

Finally, the closing chapter presents the conclusion of this bachelor’s thesis. In this section, the general findings of this study are summarised, and the research questions are answered. The last part of this text also provides a critical appraisal of this study and makes recommendations for further research.

2. Theoretical Foundation

In this chapter the theoretical background of CE is outlined. Hence literature is reviewed to allow a comparison of the serval definitions of relevant terms within this research. This chapter also discusses possible explanations for why companies struggle to drive innovation.

2.1 Definition of Terms

This chapter defines the terms innovation, entrepreneurship and CE, summarising the common understanding of their meaning, including the origins of the term and any further information.

2.1.1 Innovation

The word innovation originated from the late Latin term ‘innovation’ and signifies the act of renewal or changing.(Duden, 2020). However, although the word innovation has always been associated with renewal, it was perceived with a negative connotation, as excessive novelty, without purpose or end (Lepore, 2014, p. 5):

“Edmund Burke called the French Revolution a “revolt of innovation”; Federalists declared themselves to be “enemies to innovation.” George Washington, on his deathbed, was said to have uttered these words: “Beware of innovation in politics.” Noah Webster warned in his dictionary, in 1828, “It is often dangerous to innovate on the customs of a nation”.”(Lepore, 2014, p. 5).

The redemtion began in 1939, when economist Joseph A. Schumpeter applied the word innovatio n to describe the introduction of new products to the market in his ground-breaking study about business cycles. This more neutral use of the term then spread slowly within expert literature on economics and business (Lepore, 2014, p. 5).

This trend can be observed in an analysis of the phrase innovation throughout a corpus of books published between 1940 and 2008.¹ In Figure 2, the y- axis contains the results in n-grams² and indicates a clear increase in the use of the term over the years.

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: Google Books Ngram Viewer term search ‘innovation’ from 1940 to 2008

Source: illustrated by Google Books Ngram Viewer; Michel et al. (2020)

Although the term ‘innovation’ has been used more frequently recently, there is still no consensus on its definition. Existing literature outline the multifaceted nature of the term, and the following basic criteria can be filtered out: renewal, novelty and diversity. From a business management perspective, this term is mostly understood to describe business renewal (Vahs & Brem, 2015, pp. 20–21). Additionally, it is often believed to be limited to describing the development of new products or services. However, innovation touches on many more aspects of an organisation, as the concept of renewal can be useful in any part of a business, including procedures, contract forms, distribution channels, advertising messages, corporate identity and much more (Hauschildt & Salomo, 2016, p. 3,4).

According to Drucker (2015), innovation is ‘the act that endows resources with a new capacity to create wealth’ (p. xii). Another aspect to consider is what innovation actually involves. Vahs and Brem (2015) distinguish between invention and innovation. According to them, invention describes the preliminary stage of innovation. Idea generation can be planned or occur spontaneously, but it is often triggered by an impulse. The idea is then evaluated and developed so that an organisation can go onto the next stage of economic exploitation, or the innovation stage. At this stage, the invention is moulded according to market needs and other influential factors before it is introduced to the market. In some instances, the market penetration resulting from this process is also considered part of innovation (p. 21).

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Figure 3: Distinction between invention and innovation

Source: own illustration, based on Vahs and Brem (2015) p. 21

Excursus: Sustaining vs. Disruptive Innovations

According to Christensen (2013), there are two types of innovation:³ sustaining and disruptive. Sustaining innovations are usually incremental in nature since they often result out of the necessity to improve the performance of an already existing product. They are often built upon internally developed competencies. On the other hand, a disruptive innovation brings an entirely new value proposition to the market than had been offered before (p. xix, 30). While the definition of disruptive innovation is widely accepted, Lepore (2014) has criticised the use of this term, explaining that it is merely a new term for something that has existed before, viz. progress (p. 4).

2.1.2 Entrepreneurship

The word entrepreneurship originates from the Old French word for ‘an undertaking’, entrepenre. The related word entrepreneur was assigned its current meaning by the economist Jean-Baptiste Say in 1800, yet only in French. In English, the terminology began to be commonly used in the mid-1900s and was applied synonymously to the word ‘undertaker’ (a literal translation of French). Later, people began to prefer to use it as a synonym for ‘adventurer’ (Carlen, 2016, p. 1).

Several economists have greatly shaped our understanding of modern entrepreneurship. Two well-known economists are Israel M. Kirzner and Joseph A. Schumpeter. Schumpeter, who also greatly impacted the term innovation, stated in 1936 that entrepreneurs perform ‘creative destruction’. This means that they continually destroy existing products or production methods to replace them with new ones. He assessed this process positively because innovation typically represents a beneficial improve ment, thus generating greater buyer interest and higher overall economic activity(Schumpeter, 1936; as cited in Barringer& Bluedorn, 1999, p. 422). Examples of creative destruction include the displacement of horse-drawn carriages by the automobile in the beginning of the 20th century, the replacement of typewriters with computers or the substitution of stationary retail outlets with online shopping platforms (Fritsch, 2019, p. 8).

Kirzner, on the other hand, used the term entrepreneur in his 1973 writing to describe people’s ability to lead change and turn ideas into reality over time. He explains that this behaviour is essential for organisations to enable economic activity by maximising efficiency (I. M. Kirzner, 1973, p. 3; as cited in Reiter, 2016, p. 28). His view of entrepreneurial activity consists mainly of taking advantage of profitable opportunities arising from market imperfections, e.g., when arbitrage transactions exploit price differences between markets to lead price convergence. For Kirzner, an entrepreneur contributes to markets by approaching or even reaching an optimum (Fritsch, 2019, p. 8). He himself even clarified the main distinction between his understanding of entrepreneur and the definition of Schumpeter: ‘As a result, the entrepreneur who dominated my 1973 book did not need to be creative at all; he simply had to be alert to price differentials that others had not yet noticed’ (Israel M. Kirzner, 2009, p. 147).

Based on these two perspectives, Guth and Ginsberg (1990) stated that ‘entrepreneurship involves the identification of market opportunity and the creation of combinations or resources to pursue it’ (p. 5). Similarly, Kuckertz (2017) defines the term as follows: ‘Entrepreneurship is the effective use of opportunities to initiate a growth-oriented design process’ (p.3). Yet there is no commonly used definition for the terms entrepreneurship or entrepreneur (Gartner, 1990, p. 28).

Excursus: Internal vs. external entrepreneurship

Burgelman (1983) stressed the importance to distinguishing between internal and external entrepreneurship. According to him, external entrepreneurship occurs when resources dispersed in the environment are combined with internal, already existing resources in an entirely new way. Whereas internal entrepreneurship refers to the use of mainly internal resources, again in new combinations, and depends more greatly on the organisation. He concluded that the absence of some degree of dependency between the use of internal resources and the new combination is likely to result in a spin-off (p.1354).

2.1.3 Corporate Entrepreneurship

The definition of CE is based on the previous chapter and applies the terms defined earlier to a large organisation.

Corporate entrepreneurship was initially captured within academic literature in the 1980s and has since progressed over the years. Previous articles have noted how the concept of entrepreneurship could be applied in large organisations and explored the value it would bring to them (Robert A. Burgelman, 1983; Covin & Slevin, 1988; Hisrich & Peters, 1986; R. Kanter, 1985; Miller, 1983; Pinchott, 1985). The most commonly used definition, which influenced later articles, was introduced by Miller in 1983 (S. A. Zahra & Covin, 1995, p. 45). He explained that as companies grow and become more complex there is a necessity for organisational renewal, innovation and constructive risk-taking. Further, he emphasised that this should not only be executed by one individual, but rather an entire organisation. In this way, an organisation can act in an entrepreneurial manner (Miller, 1983, p. 770). Although the main focus of literature in the 1980s was related to strategic and managerial developments, it soon shifted toward a more market-oriented view. In this transition, innovation played a role, but not in relation to research and development (R&D) or classical innovation management. The term CE was mainly mentioned in connection with the development of new products (Kuckertz, 2017, p. 6). Then, in the 1990s, this view was adjusted, is also presented in the current understanding of CE. Today, CE describes how established organisations address strategic renewal, developing new business fields and bringing the opportunities of small start-ups into the large company (Kuckertz, 2015, as cited in 2017, p. 6).

Although Miller (1983) left his mark when it comes to the definition of CE, there is still no universally accepted description of the term (Covin & Miles, 1999, p. 47). Moreover, different terminology is used across existing literature to describe CE. Some refer to it as internal CE (Schollhammer, 1982), intrapreneurship (Pinchott, 1985), corporate venture (J. R. Ellis & Taylor, 1987) or internal corporate venture (R. A. Burgelman & Sayles, 1986). Hence all of these terms describe the same concept (Shaker A. Zahra, 1991, p. 260). Some of the available definitions of CE are summarised in Table 2.

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Table 2: Definitions of corporate entrepreneurship, chronological order

Source: as cited in table

2.2 The Struggle of Implementing Corporate Entrepreneurship

‘Companies stumble for many reasons, of course, among them bureaucracy, arrogance, tired executive blood, poor planning, shot-term investment horizons, in adequate skills and resources and just plain bad luck’ (Christensen, 2013, p. xiii).

With respect to the declaration of Christensen, there are several reasons for which established organisations fail to implement CE in their companies. Some of them are mentioned by different authors and discussed in greater detail than others. For a better understanding of this issue, this chapter contains a few well discussed arguments.

The dependence of company resources on customers and investors

‘Big companies are really bad at innovation because they’re designed to be bad at innovation’ (Wessel, 2012, p. 2). This observation relates back to a corporation’s typical life cycle. In an organisation’s initiation phase, success is measured based on alignment of the problem and solution, and investments by venture capitalists are based on this fit. If those solutions are improved, the company experiences growth in revenue and ultimately, profitability. Yet for corporations which have reached maturity, the success indicators shift to being based on profit (Wessel, 2012, pp. 2–3). As a result, innovations that could lead to lower gross margins and therefore lower profitability attract fewer resources and little interest from executives (Christensen, 2013, p. 38).

In his theory of resource dependence, Christensen (2013) explains that although managers believe they have power over resource allocation, in reality, investors and consumers are the ones who determine the level of investment. Only organisations that ultimately please both will survive (pp. xxiii-xxiv). The issue, especially with new innovation, lies with customer demand, as some do not even realise that they need a certain product or service until they want it. This makes it difficult for organisations to quantify the market size and estimate the financial return required by investors, as market data, expected revenues and associated costs cannot be analysed at this stage (Christensen, 2013, p. xxvi).

Risk avoidance by doing what is known

The activities of many large companies are aimed at minimizing risks (P. Burns, 2013; as cited in Engelen et al., 2015, p. 23). However, it is a willingness to take risks that brings most companies into existence in the first place (Reiter, 2016, p. 23). When looking at the distribution of risk, it becomes clear that in small businesses, entrepreneurs themselves bear the responsibility. In established organisations, on the other hand, the company bears the risk, but the person executing the project also faces a corresponding career risk (Engelen et al., 2015; as cited in Kuckertz, 2017, p. 7). Given contradictory opinions on the effectiveness of CE, it is understandable that many managers shy away from new entrepreneurial initiatives because they are not prepared to bear the associated risk (Kuckertz, 2017, p. 12).

Consequently, risk avoidance often involves the use of solutions that have already been applied in the past and have proven to be successful. This familiarity gives the problem solver a certain degree of assurance that his or her efforts will not lead to failure (Fleming, 1999; as cited in Ahuja & Morris Lampert, 2001, p. 528).

Familiarity can also be explained as a cycle of experience and competence. A company’s experience with a particular approach or strategy leads to increased competence, which in turn promotes increased use of this approach (Cohen & Levinthal, 1990; as cited in Ahuja & Morris Lampert, 2001, p. 526). This cycle leads to the development of more specialised competence, as this seems more attractive. While problem solving and learning appear to be easier in areas where a company already has competence, alternative directions of development are perceived as unpleasant and therefore potentially less rewarding (Ahuja & Morris Lampert, 2001, p. 526) .

Bureaucracy as a barricade

Over the years, many larger organisations have developed and maintained standardised rules and procedures (P. Burns, 2013; as cited in Engelen et al., 2015, p. 23) to ensure reliable throughput and output. Research suggests that standardisation leads to formalisation and bureaucratisation, which has a deteriorating effect on organisations, making them unable to cope with a changing environment (Hannan & Freeman, 1989; Sorensen & Stuart, 2000; as cited in Ahuja & Morris Lampert, 2001, p. 522).

Unfortunately, entrepreneurial and administered (bureaucratic) economic activity have long been seen as essentially opposing modes with little or no link between them (Robert A. Burgelman, 1983, p. 1362). Bureaucracy can often work against entrepreneurial initiatives and act as a barricade. In this context, entrepreneurially managed companies must be flexible and willing to break existing rules when an opportunity is identified (P. Burns, 2013; as cited in Engelen et al., 2015, p. 23).

3. Themes Related to Corporate Entrepreneurship

This chapter presents the summaries and findings of the literature review. It comprises four thematic subdivisions.

According to a model proposed by Zahra (1991), there are three main variables that influence an organisation’s pursuit of CE viz. environment, strategy and internal organisation. All of these variables are expected to have an impact on a corporation’s financial performance (p. 268). A similar structure of correlates was derived by Guth and Ginsberg (1990) in their model for mapping CE. In this section, the subdivisions are defined as environment, strategic leaders, organisational conduct/form and organisational performance (p. 8–9). All of these concepts are also quite similar in terms of content.

Based on the comprehensive insights and multitude of perspectives there are certain subject matters which have characterized themselves throughout the literature research. Given the existing models developed by authors, it is clear that CE can be investigated from four different perspectives without missing any valuable content. This chapter is thus divided into four distinct thematic focuses: environmental factors, strategy and management, organisational structure, and financial factors. Within these thematic subdivisions, the results and findings of this study are summarised.

Abbildung in dieser Leseprobe nicht enthalten

Figure 4: Thematic subdivisions related to corporate entrepreneurship

Source: own illustration based on Zahra (1991) and Guth & Ginsberg (1990)

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¹ The end year 2008 has been chosen because no data are available after 2008.

² N-grams are the result of breaking a text into fragments. This analysis shows what percentage of all fragments contained in the Google sample of books written in English are innovation.

³ The term innovation is used alternately with the word technology.