Academic journal article Journal of Small Business Strategy

Comparing Nascent Entrepreneurs and Intrapreneurs and Expectations of Firm Growth

Academic journal article Journal of Small Business Strategy

Comparing Nascent Entrepreneurs and Intrapreneurs and Expectations of Firm Growth

Article excerpt

ABSTRACT

While both entrepreneurial and intrapreneurial processes yield new ventures, similarities and differences between these two initiation processes and their impact on subsequent venture performance may be substantial. Operating factors that are typically influenced by the founder, such as expectations for growth, activity such as formal business planning, perceptions of environmental uncertainty, and risk preference within the context of new venture initiation processes are explored in this study. We find that nascent entrepreneurs and intrapreneurs are largely similar in terms of their risk tolerance and perceptions of environmental uncertainty. Nascent intrapreneurs, by contrast, appear to be more sophisticated planners than their counterparts and perhaps more aggressive in their expectations for financial growth. These findings enter significantly into a path model of nascent founder growth expectations that should provide a useful foundation in future investigations.

Keywords: nascent entrepreneur; nascent intrapreneur; planning; uncertainty; risk tolerance

INTRODUCTION

Entrepreneurship involves making judgmental decisions about the coordination of scarce resources in the creation of new enterprises (Casson, 2003; Low & MacMillan, 1988) seeking to exploit profitable opportunities (Shane & Venkataraman, 2000). While both entrepreneurial and intrapreneurial processes yield new ventures, theory suggests that differences between these two initiation processes and their impact on subsequent venture performance may be substantial. For example, organizational theory suggests that entrepreneurs acting independently confront a lack of organizational legitimacy (Freeman, Carroll & Hannan, 1983) making the acquisition of scarce yet necessary resources difficult in early venture stages and the venture's demise more likely as a result (Laitinen, 1992). In contrast, while intrapreneurs acting on behalf of their respective corporations may have access to a relative wealth of resources in the absolute sense, they may elect to pursue only certain types of strategies (i.e., those consistent with existing organizational processes) as they seek to develop new opportunities for economic enterprise (Shrader & Simon, 1997). Despite theoretical evidence suggesting that important systematic differences may in fact exist, our knowledge of nascent venture activity remains limited due to the sparse and largely anecdotal nature of research to date. As a result, researchers often struggle to explain paradoxes frequently observed between the entrepreneurial and intrapreneurial contexts. For example, while a resource laden, protected corporate environment seems more conducive for nurturing a nascent intrapreneurial venture than does the wide-open environment of the standalone entrepreneurial startup, evidence suggests that corporate ventures often underperform independent startups in similar industries (e.g., Christensen, 1997). In short, the comparative evidence to date suggests that our current understanding of the nascent stages of the new venture creation process, in general, and the antecedents of expectations of firm growth, in particular, remains quite limited. While a number of researchers have addressed the issue of the relationship between planning and performance, the logical extension of how these variables may or may not be relevant in the realm of early entrepreneurial activity especially with regard to growth expectations remains underdeveloped. Consequently, our ability to provide prescriptive guidance to those seeking to support, nurture or promote the development of individuals engaged in nascent entrepreneurial activity also remains limited (Honig, 2001).

Given the crucial nature of decisionmaking and these preliminary observations of systematic differences during the early stages of ventures, this paper seeks to take a step toward extending previous theory and research by focusing explicitly on antecedents influencing growth expectations across nascent entrepreneurs (NEs) and nascent intrapreneurs (NIs). …

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