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

Article excerpt

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
Software              Informal Networks and Practices
                      Value System

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. …