3 The corporate entrepreneurship process: a research model.

The research model presented in this review is adapted from the work of Kuratko et al. (2004; 2005). It integrates and extends previous theoretical and empirical research in order to develop a framework of the current state of the knowledge regarding CE and managers' entrepreneurial behavior. The first part of the model is based on theoretical foundations from previous strategy and entrepreneurship research. The empirical research on organizational factors is also discussed thoroughly in this review. Contributions to the entrepreneurship and strategic management literatures suggest the viability of integrating theoretical and empirical findings as a means of better understanding conditions and relationships that are associated with CE (Hitt et al., 2001; Ireland et al., 2001). Hornsby et al. (1993) for example, advanced an interactive model of CE suggesting that a combination of circumstances lead to entrepreneurial behavior by managers. In their multidimensional model, Baum et al. (2001) integrated research findings regarding personality traits, general motives, personal competencies, situational specific motivation, competitive strategies and the business environment to study venture growth. The second part of the model then considers the comparisons made at the individual and organizational level on organizational outcomes, both perceived and real, that influence the continuation of the entrepreneurial activity. Of importance to the purpose of this work is the Baum et al. (2001) finding that the interaction among individual, organizational and environmental domains was the strongest predictor of venture growth. The second part of the model's theoretical underpinnings are based on Porter and Lawler III (1968) Integrative Model of Motivation, which incorporates important elements of Adams's (1965) Equity Theory of Motivation and Vroom's (1964) Expectancy Theory of Motivation. In the following sections, each stage of the model is discussed beginning with the transformational triggers that cause the pursuit of entrepreneurial activities in the first place.

3.1 Transformational Triggers

Tushman et al. (1986) argued that most re-orientations are triggered by performance crises that push organizations to replace managers who cannot or will not adapt. However, they found that the most successful re-orientations occurred in organizations whose managers foresaw the need for radical change and initiated it before crises occurred. Decision makers, therefore, are the architects of their environments and adapt to these interpretations. Managers must minimize misfits between their strategy-structure matches as they prepare their organizations to deal with organizational changes (Jennings and Seaman, 1994). The "transformational trigger" provides the impetus to behave entrepreneurially when other conditions are conducive to such behavior (Johnson, 1996). Zahra (1991) identified a number of influencing factors in corporate entrepreneurship that could be viewed as types of precipitating or transformational triggers. These include environmental factors such as hostility (threats to a firm's mission through rivalry), dynamism (instability of a firm's market because of changes), and heterogeneity (developments in the market that create new demands for a firm's products). Some specific examples of transformational events in the CE process could include: a change in company management; a merger or acquisition; a competitor's move to increase market share; the development of new technologies; change in consumer demand; and economic changes. Schindehutte et al. (2000) identified a comprehensive list of 40 triggering events that were classified into five distinct categories: internal/external source; opportunity-driven/threat-driven; technology-push/market-pull; top-down/bottom-up; and systematic or deliberate search/chance or opportunism. (see Table 3.1).

Kuratko et al. (2001) found that external circumstances caused one particular organization to institute a more entrepreneurial strategy that helped the company to regain its position as a market leader. Therefore, as seen in the model, a transformational trigger (or precipitating event) will cause executive management to pursue a corporate entrepreneurial strategy to cope with the change.

Although there are many ways in which these precipitating factors could be classified, each of the ones identified has potential strategic relevance. For instance, it may be that resource requirements differ markedly for entrepreneurial projects triggered by internal developments as opposed to those initiated principally by external developments and for technology-driven projects versus market-driven projects. Triggers from outside the company such as technological change may tend to produce entrepreneurial projects that are more innovative or that represent bigger departures from the status quo than do triggers from inside the company. Triggers related to the actions of competitors might lead to more imitation, and those related to threat from a substitute product might produce more innovative solutions. Managerial support may be more easily obtainable for entrepreneurial projects triggered by threats (e.g., an impending government regulation) as opposed to opportunities (e.g., an untapped market niche). The same may be true for those where the source of the trigger is more top-down as opposed to bottom-up. Further, in terms of outcomes, if the trigger is some successful action by a competitor, then the entrepreneurial project may represent a reactive response that comes too late to have any marketplace impact. Similarly, it may be that entrepreneurial events that are in response to a particular supplier or customer request are associated with higher levels of success. There is a need to systematically review triggering events for both successful and unsuccessful products, service, and processes that have been pursued by the firm over the past five years. Further, managers should apply the groupings or categories above and then look for associations between types of triggers and types of entrepreneurial projects and between types of triggers and the outcomes of entrepreneurial endeavors (Morris and Kuratko, 2002). Thus, a CE strategy pursued by the firm is a response to a precipitating event.

3.2 Corporate Entrepreneurship Strategy

The choice of the firm's strategy or strategies is a critical organizational decision--a decision that has a major influence on organizational performance (Borch et al., 1999). Consistent with that, a strategy for CE is an option that a firm can choose to pursue once triggers from the external environment denote the need for organizational change and strategic adaptation (Kuratko et al., 2001). A strategy for CE is a set of commitments and actions that is framed around entrepreneurial behavior and innovation in order to develop current and future competitive advantages that are intended to lead to competitive success (Ireland et al., 2003b). The choice of using a strategy for corporate entrepreneurship as a primary means of strategic adaptation reflects the firm's decision to seek competitive advantage principally through innovation and entrepreneurial behavior on a sustained basis (Russell, 1999).

Increasingly environmental triggers are interpreted by today's decision makers as ones that call for the formation and use of CE as the core of the firm's efforts to adapt strategically. Lumpkin and Dess (1996) suggested that organizations facing a rapidly changing, faster-paced competitive environment might be best served by implementing corporate entrepreneurship behaviors as an adaptation mechanism. Labels have been attached to organizations relying on entrepreneurship actions as the core of their commitments, decisions, and strategies. Examples of these labels have included entrepreneurial firms (Mintzberg, 1973), prospectors (Miles and Snow, 1978), and adaptive, innovative, and impulsive firms (Miller and Friesen, 1980).

The operational essence of using a strategy for CE as the foundation of a firm's adaptation responses is the call for an organization's employees to rely on entrepreneurial behavior as the source of adjustments required to assure current and future marketplace success. In this context, a CE strategy encompasses the full set of commitments, decisions, and entrepreneurial behavior required for the firm to improve the likelihood of achieving current and future competitive success. When using CE as the source of strategic adaptation to the realities of a firm's external environment, the intention is to rely on innovation as the foundation for creating new businesses or reconfiguring existing ones. In general, CE calls for firms to innovate boldly and regularly and to be willing to accept considerable, though reasonable levels of risk in doing so (Miller and Friesen, 1982). To Sykes and Block (1989), reasonable risks are "affordable" to the organization in terms of its current and future viability as an operating entity. Resulting from successful use of CE firms may deliberately reposition themselves within their environment, including the main arena(s) in which they compete (Covin and Slevin, 1991).