Linking Corporate Entrepreneurship to Strategy, Structure, and Process: Suggested Research Directions

Dess, Gregory G., Lumpkin, G. T., McKee, Jeffrey E., Entrepreneurship: Theory and Practice

Intensifying global competition, corporate downsizing and delayering, rapid technological progress, and many other factors have heightened the need for organizations to become more entrepreneurial in order to survive and prosper. Few firms are exempt. Rather, virtually all organizations - new start-ups, major corporations, and alliances among global partners - are striving to exploit product-market opportunities through innovative and proactive behavior. Understanding entrepreneurial processes has been a central theme in a good deal of both the strategic management (e.g., Miller, 1983; Miles & Snow, 1978) and entrepreneurship (e.g., Covin & Slevin, 1991; Sandberg & Hofer, 1987) literatures.

Although the concept of entrepreneurship has been limited to new venture creation by some scholars (e.g., Vesper, 1985), corporate entrepreneurship (CE) may be viewed more broadly as consisting of two types of phenomena and processes: (1) the birth of new businesses within existing organizations, whether through internal innovation or joint ventures/alliances; and (2) the transformation of organizations through strategic renewal, i.e., the creation of new wealth through the combination of resources (Guth & Ginsberg, 1990).

Bringing about strategic renewal requires both sound corporate-level strategies, i.e., addressing product-market scope, and business-level strategies, i.e., identifying sources of sustainable competitive advantage. But, in a sense, this is only a starting point. We concur with Paul Allaire, CEO of Xerox, that a firm must also have a good fit among the three components of an organization's "architecture": hardware, people, and software (Howard, 1992). Elements of each component are depicted in Table 1.

Table 1

Components of an Organization's Architecture(a)

Hardware              Organization Structure
                      Business Planning Systems
                      Control Mechanisms
                      Measurement Systems
                      Reporting Relationships
                      Reward Systems
People                Skills Managers Need
                      Personality
                      Character
Software              Informal Networks and Practices
                      Value System
                      Culture

a Source: Howard, 1992

The attributes in Table 1 roughly parallel Bartlett and Ghosal's (1990) essential organizational challenges for strategic innovation including developing the organization's anatomy (goals, formal structure), physiology (systems and relationships that allow the lifeblood of information to flow through the organization), and psychology (the shared norms, values, beliefs that shape the way individual managers think and act).

Although such concepts are highly interrelated and interdependent, we feel that they capture the salient attributes inherent in successful corporate entrepreneurship. Also, given the virtue of parsimony, they provide a framework for how we have decided to divide our paper. In the three paragraphs below, we summarize the major sections of our paper that address what we believe are some important research questions associated with strategies, structures, and processes in the context of corporate entrepreneurship. These three domains are also consistent with what strategic management researchers have considered to be the essence of organization form and content (Hambrick, 1989; Miles & Snow, 1978).

Strategic issues associated with corporate entrepreneurship are addressed in the first section. In particular, we ask whether Porter's (1980) "traditional" strategies - low-cost leadership, differentiation, and focus - remain valid in the context of corporate entrepreneurship. The demands of global competition have heightened the need for cost-based strategies at the same time that advances in technology are requiring firms to update and differentiate by innovating and reengineering. Thus, we suggest that successful corporate entrepreneurship may hinge on a firm's ability to combine structural approaches that focus on efficiencies, processes, and "fit" with strategic approaches that emphasize quality and effectiveness. We also take a close look at the usefulness of cost cutting and control techniques as a means to achieve competitive advantage and posit a curvilinear relationship between cost-based strategies and performance.

The second section addresses the difficulties of fostering corporate entrepreneurship in traditional, hierarchy-driven organizational models. The central premise is that such models impede entrepreneurial behavior because their emphasis on clearly defined boundaries tends to limit flexibility and choke communications. We suggest that to overcome this impediment, firms need to embrace the concept of "boundarylessness" by adopting innovative organizational configurations. We present three such configurations - the modular firm, the virtual firm, and the barrier-free firm - and discuss their usefulness in enhancing performance by reducing or even eliminating the conventional boundaries found within firms and between firms.

The third major section addresses process issues associated with CE. In it, we build on the authors' previous work on the concept of "entrepreneurial orientation" (Lumpkin & Dess, 1996). An underlying theme is our position that much of the normative literature on entrepreneurial processes is overly simplistic and may be counterproductive to managerial practice. We suggest how an appreciation of the multidimensionality and independence of the subdimensions of an "entrepreneurial orientation" (e.g., risk taking, proactiveness, innovativeness) can enhance normative and descriptive theory building. We draw on examples from John Deere & Company and ADP.

In developing our ideas, we have adopted Murray Davis's guidance from his thought-provoking article That's Interesting! (Davis, 1971) as our intellectual compass (summarized in Rosenzweig, 1980). That is, we have tried to pose research questions and propositions that we believe "[deny] some aspect of the assumption ground of (our) audience . . . it tells them some truth they already knew was wrong" (Davis 1971, p. 329). We have also attempted to avoid the three traps that Davis claims give rise to uninteresting propositions:

1. It affirms some aspect of their assumption-ground. . . . The proposition is saying to its audience: "What seems to be the case is in fact the case." "What you always thought was true is really true. . . ." The audience's response to propositions of this type will be: "That's obvious!"

2. It does not speak to any aspect of their assumption-ground at all. . . . The proposition is saying to its audience: "What is really true has no connection with what you always thought was true. . . ." The audience's response to propositions of this type will be: "That's irrelevant!"

3. It denies their whole assumption-ground.... The proposition is saying to its audience: "Everything you always thought was true is really false. . . ." The audience's response to propositions of this type will be: "That's absurd!" (1971, p. 329).

Thus, in the following sections, we have tried to raise some "interesting" ideas. (And, on the downside, we sincerely hope that we have not been overly "obvious," "irrelevant," or "absurd"!) We will gauge our overall success by the extent to which we are able to encourage critique, debate, and the further exchange and development of ideas.

One caveat: We believe that the ideas in this paper are largely "context-free." That is, we feel they are relevant for the entrepreneurial processes of strategic renewal or new venture development within existing corporations, but also in strategic alliances between firms and within smaller firms including, in many cases, start-ups. Thus, in many instances, the modifier in the term "corporate entrepreneurship" has been omitted.

NEW STRATEGIC COMBINATIONS FOR SUCCESSFUL CORPORATE ENTREPRENEURSHIP

Does corporate entrepreneurship (CE) require new approaches to strategy or will "traditional" methods of competitive positioning, resource deployment, and industry adaptation still be effective? For example, are cost-based approaches useful to corporate entrepreneurs? Strategies that emphasize innovation and new product introductions are generally associated with an entrepreneurial approach to competitive advantage whereas strategies based on cost control and incremental process improvements tend to be in the domain of established firms seeking to sustain advantage by erecting scale economy barriers. Can firms pursuing CE successfully use low-cost strategies as well as differentiation strategies? In this section, we will consider the strategic implications of corporate entrepreneurship. We will first revisit Porter's (1980) framework in terms of its applicability to corporate entrepreneurship and then discuss how contemporary techniques such as "reengineering" and "core process redesign" are being used to further CE in a highly cost-conscious fashion. Finally, we will examine how, in the context of corporate entrepreneurship, too much or too little cost …

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Publication information: Article title: Linking Corporate Entrepreneurship to Strategy, Structure, and Process: Suggested Research Directions. Contributors: Dess, Gregory G. - Author, Lumpkin, G. T. - Author, McKee, Jeffrey E. - Author. Journal title: Entrepreneurship: Theory and Practice. Volume: 23. Issue: 3 Publication date: Spring 1999. Page number: 85. © 2007 Baylor University. COPYRIGHT 1999 Gale Group.

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