The Relationship between Corporate Entrepreneurship and Strategic Management

1. The Relationship between Corporate Entrepreneurship and Strategic Management Barringer & Bluedorn, 1999

2. Assumptions: Opportunity recognition Organizational flexibility Firm’s ability to measure, encourage and reward innovative and risk-taking behavior = Basis for organization’s ability to be entrepreneurial.

3. Variables of the study: • Dependent variable: Corporate entrepreneurship intensity • Independent variables: • Scanning intensity • Planning flexibility • Planning horizon • Locus of planning • Control attributes

4. 1. Scanning intensity • Scanning = managerial activity of learning about events and trends in the environment; • Scanning helps to cope with uncertainty (but only reduce uncertainty – not eliminate uncertainty) • High level of environmental scanning is congruent with entrepreneurial process • Scanning is the bridge to remaining competitive • Scanning more important in turbulent environments

5. 2. Planning flexibility • Planning flexibility refers to the capacity of a firm’s strategic plan to change in respond to environmental threats = a plan by design subject to change; • Flexible planning systems allow firms to adjust to pursue opportunities; • “The more clearly articulated the strategy, the greater the resistance to change”; • Flexible planning system good for turbulent environments but may undermine effectiveness of conservative firms.

6. 3. Planning horizon • Planning horizon refers to length of future time period that decision-makers consider in planning; • Short horizon (less than 5 years) optimal for entrepreneurial firms; • Short planning horizon + intensive environmental scanning + high degree of flexibility – capacity to recognize environmental change and develop innovations; • Long planning horizon (more than 5 years) optimal for conservative firms.

7. 4. Locus of planning • Depth of employee involvement in a firms’ strategic planning activities; • Deep locus (high involvement of employees) facilitates opportunity recognition; • Deep locus maximizes diversity of viewpoints –as opposed to negative influence of homogenous teams ; • In conservative organizations deep locus of planning (which is expensive in terms of managerial time and energy) not necessary.

8. Control attributes • In entrepreneurial firm control systems must stimulate innovativeness, risk-taking and pro-activeness; • Two forms of control important: strategic control and financial control; • Strategic control measures – customer satisfaction criteria, new patent registration, success in meeting target dates for new product or process introductions, achievement of quality control standards; • Financial control measures - net income, return on sales, etc.

9. Control attributes (continued) • Entrepreneurial firms – emphasis on strategic controls • Conservative firms – emphasis on financial controls

10. Results What is the relationship between corporate entrepreneurship and strategic management?