An examination of the effects of organizational norms, organizational structure, and environmental uncertainty on entrepreneurial strategy

Journal of Management, Dec, 1992 by Robert D. Russell, Craig J. Russell

Burgelman (1984) defined corporate entrepreneurship as "extending the firm's domain of competence and corresponding opportunity set through internally generated new resource combinations" (1984:154). Schumpeter (1934), in his seminal work on entrepreneurship, viewed innovation as the creation of "new combinations of resources" (5). Combining these two perspectives, the practice of corporate entrepreneurship may be seen as the improvement of organizational competencies through innovation.

Van de Ven (1986) argued for a wide-ranging definition of innovation as the "development and implementation" (590) of a variety of new ideas, including technical, product, process, and administrative innovation. Adding Van de Ven's perspective on innovation to the definition of corporate entrepreneurship further broadens the scope of corporate entrepreneurial activities. Corporate entrepreneurship now includes the initiation and implementation of a wide range of innovation as a means of creating and exploiting opportunities perceived in competitive environments.

Some successful firms formalize this process, persistently gaining a competitive advantage through "new resource combinations" (innovation) as their main strategic thrust (i.e., 3M) or as a major element of a grand strategy (i.e., GE). Such an "entrepreneurial strategy" entails the proactive search for new opportunities as well as the ongoing management of the process of innovation. This approach to entrepreneurial strategy creates a distinction between entrepreneurship as an ongoing process versus one-time only efforts to adopt innovation. Hence, corporate entrepreneurship is broadly conceived here to include firms engaging in single, infrequent efforts to gain advantage through innovation and firms engaging in persistent patterns of innovation. In contrast, an entrepreneurial strategy involves a persistent, organizationally sanctioned pattern of innovation-related activities and resource allocations that compose one component of the firm's comprehensive corporate strategy. A successful entrepreneurial strategy would produce innovations that add value to the firm. Thus, a corporation could be conceived of as pursuing an entrepreneurial venture but not following an entrepreneurial strategy.

Although entrepreneurial strategies are often associated with the persona of the individual entrepreneur, they do not necessarily exist only in the mind of a powerful chief executive. Entrepreneurial strategies may be associated with groups of organizational members who focus their day-to-day efforts on producing a stream of innovations. Organizations such as 3M or Johnson and Johnson are good examples of how entrepreneurial strategies are successfully implemented over the tenures of numerous chief executives (Mitchell, 1989).

Despite a recent surge of interest in entrepreneurship and its sub-topic, corporate entrepreneurship, little progress has been made in developing empirically supported theories. Wortman (1987) reported that most research efforts have concentrated on individual characteristics of entrepreneurs and that "in terms of macro organizational behavior, few studies have been attempted" (1987:266). Wortman's review of the entrepreneurship literature contains no models or theories, concluding that a shift from exploratory to causal research is just starting. He cites a "continuing need to develop a comprehensive theoretical framework of entrepreneurship that includes theoretical variables and the relationships between those variables" (1987:268). This view is echoed by Low and MacMillan (1988) who critiqued existing studies for a lack of conceptual clarity and weak theory development. In light of these critiques, the current study attempts to contribute to the literature in two ways. First, we present a preliminary model of known macro-level antecedents to corporate entrepreneurship that also contains a possible micro-level "process variable" explanation for the generation of within-firm innovation-supporting behaviors. With one notable exception, this model is a simple summary of previously established relationships in the literature. Second, we report the results of an initial empirical test of relationships hypothesized by the model.

Model Development

Entrepreneurial Strategy

As defined above, entrepreneurial strategy is conceived of as a component of corporate strategy promoting the persistent search for competitive advantages through innovation. These efforts may compose a firm's main strategic thrust or may be a minor element of a broader grand strategy.

Successful entrepreneurial strategies require the effective management of innovation processes. Zaltman, Duncan, and Holbek (1973) described innovation processes as being highly uncertain; innovators are unable to predict final outcomes and are unable to define the appropriate means of achieving any desired innovation prior to engaging in the process. Due to these uncertainties, entrepreneurial strategies cannot be formulated and controlled in the rational, deliberate fashion described in many strategy textbooks. Mintzberg (1983) describes innovation-based strategies as emerging from an often chaotic process of trial and error. Specific strategies coalesce around promising innovations only at the end of the development process. Because of this difficulty in planning and controlling innovation, entrepreneurial strategies appear to be "process" oriented: that is, they seem to focus on the management of the context within which innovation occurs in order to create innovation-conducive structures and to stimulate innovation-producing behaviors (Mintzberg, 1983).