THE WAY WE WERE: FOUNDATIONAL RESEARCH (1970- 1990)
Spurred by serious concerns in the US and elsewhere over the ability of maturing
large, expanding corporations to adapt to changing and volatile technological,
social and competitive forces, researchers have found a shared interest in CE.
Early CE research was phenomenon-driven, focusing on defining the territory
and distinctiveness of the entrepreneurial activities that occur in established
companies in comparison to those undertaken by individual (independent)
For years, researchers have restricted the notion of entrepreneurship to that of
individuals creating and growing their own companies. This focus changed with
the essay by Peterson and Berger (Peterson & Berger, 1971), “Entrepreneurship
in Organizations: Evidence from the Popular Music Industry”. The two authors
sought to identify the conditions in which entrepreneurship emerges and
the organizational strategies adopted to contain its disruptive organizational
effects. Employing Schumpeter’s (Schumpeter, 1934) definition of the term
“entrepreneurship” as a novel recombination of preexisting elements, Peterson
and Berger observed that, “entrepreneurship is a process variable which may
be seen in the leadership roles of widely divergent historical and organizational
contexts” (p. 103). One of Peterson and Berger’s seminal contributions was
to link individual initiatives with organizational-level entrepreneurial activities.
This important link served as a key foundation in the early study of CE but
has been overlooked in the field’s recent focus on generating generalizable
empirical findings. Fortunately, the intimate link between individual and firm-level CE activities has been rediscovered in the past few years by researchers
seeking to unravel and investigate the micro-foundations of CE.
Despite the importance of Peterson and Berger’s work, it was the publication
of Danny Miller’s (Miller, 1983) study, “The Correlates of Entrepreneurship
in Three Types of Firms” that stimulated and spurred broad interest in CE
research. Miller was able to show that firms can behave entrepreneurially.
Miller defined CE as having three related dimensions: innovation, risk-taking
and proactiveness. The fact that Miller developed standardized measures to
identify CE at the firm level further accelerated empirical research in this area.
Interestingly, Miller’s intention was not to define firm-level entrepreneurship
per se, but to identify the means by which managers can promote firm-level
entrepreneurial behavior through individual initiatives.
It is noteworthy that Covin and Selvin’s (Covin & Slevin, 1989; Covin & Slevin,
1986) extension, refinement and validation of Miller’s (1983) measures
inspired a surge in empirical CE research. These validated measures, in turn,
encouraged the use of mail surveys, which dominated early research into CE.
Covin and Slevin’s measures connected research into CE to another important
body of research that seeks to clarify a firm’s entrepreneurial orientation (EO).
EO is defined as a firm’s disposition to promote and pursue entrepreneurial
opportunities, whether discovered or created  Researchers often confuse CE and EO, probably
because.... The widespread use of the
Covin and Slevin scales, coupled with researchers’ emphasis on EO, might
have led some to believe that the two research streams (CE and EO) were one
and the same.
Another key point of transition in the study of CE was the work of Burgelman
(Burgelman, 1983a, 1983b, 1984), who studied internal corporate venturing.
Burgelman’s work identified and explicated two types of individual strategic
behaviors. Induced strategic behaviors fit into the existing categories of
organizations and also into familiar external environments. The structural
context aims at keeping strategic behavior at operational levels in line with
a firm’s current concept of strategy. Induced strategic behaviors can lead
to incremental innovations. Autonomous strategic behaviors fall outside
of the organization’s current concept of strategy. Burgelman (1983a: 1350)
concluded that, “… autonomous strategic behavior is conceptually equivalent
to entrepreneurial activity—generating new combinations of productive
resources in the firm. It provides the basis for radical innovation from the
perspective of the firm”.
Managing the tensions that frequently occur between autonomous strategic
behavior and structural context is accomplished through “strategic context”.
This is defined as the system of political mechanisms through which middle
managers question current concepts of strategy and provide top management
with the opportunity to retrospectively rationalize successful autonomous
strategic behavior. Autonomous strategic behaviors correspond to the notion of
“intrapreneurship” (Pinchot III, 1985). One of Burgelman’s main contributions,
therefore, is clarifying the individual behaviors intimately associated with CE.
Burgelman used a process research approach that captures “the vicious circles,
paradoxes, dilemmas, and creative tensions encountered by entrepreneurial
activities in organizations” (Burgelman, 1983a: 1353). Burgelman’s work
also succeeds in conceptually integrating the literatures of “management/
bureaucracy” (induced strategic behaviors) and “intrapreneurship” (autonomous
Gifford Pinchot III (1985) focused on the informal activities that give birth to
CE. Pinchot coined the term “intrapreneurship” to describe individual intracorporate entrepreneurship. An “intrapreneur” acts entrepreneurially in
response to organizational inertia, brought about by the size, bureaucracy
or strategic near-sightedness of their firm. Pinchot believed that this inertia
encourages employees and middle managers to work against the existing
rules of the organization to bring about change and innovation. Pinchot’s focus
was on individual initiatives.
Rosabeth Moss Kanter and her team of Harvard researchers (R. Kanter, 1985;
Kanter, North, Bernstein, & Williamson, 1990; R. M. Kanter, North, Richardson,
Ingols, & Zolner, 1991; Kanter, Quinn, & North, 1992; Kanter & Richardson,
1991; Kanter, Richardson, North, & Morgan, 1991) adopted a methodology
of multiple case studies and observed eight different companies that were
engaged in strategic renewal. Her analyses showed how these firms were
organized for CE activities through programs conceived to induce value creation
through new ideas. Kanter identified four generic approaches that companies
used to support and nurture CE: the “pure venture capital” model, where the
parent company invests in external ventures; the new “venture development
incubator”, where new ventures are managed as independent entities, either
internally or externally; the “idea creation and transfer center”, which develops
new activities and then passes them on for established operations to exploit,
and the “employee project” model, which is an entrepreneurial variant of
employee involvement programs. These activities focused on managing the
tensions between the “mainstream” and the “newstream”.
Ian MacMillan and his colleagues also studied corporate venturing activities,
focusing on understanding the criteria for successful corporate venture capital
initiatives. They (MacMillan, Block, & Narashima, 1986) found that success
was more likely when a joint venture was privileged in terms of resources and
its access to top management and when the experience from unsuccessful
ventures was maintained in the organization and reused in other venturing
projects. They also found that traditional planning tools were inefficient in
venturing contexts. MacMillan and Day (MacMillan & Day, 1987) examined
modes of entry into the market. The experience effect, in which companies
learn by doing in undertaking corporate venturing activities, was noticed in
the field of corporate venture capital (Siegal, Siegal, & MacMillan, 1988).
However, this effect was not always linear. For instance, those corporate
venture capital investors who remained close to the firm (in their management
style, compensation and decision-making activities) were less successful than
those who were more independent.
The research by MacMillan and his colleagues offered important insights into
different aspects of corporate venturing activities. What is remarkable about
this research is the close interactions that it involved between researchers,
venture capitalists and managers. These interactions not only provided
important sources of data but also gave theoretical grounding to findings that
have since withstood the test of time. MacMillan and his colleagues were also
attentive to the challenges that managers faced in developing, evaluating
and institutionalizing corporate venture activities. This attention generated
interesting actionable findings that are rare in the study of CE.
Guth and Ginsberg (1990) noted a lack of consensus among researchers
on what CE is. Their extensive review of the literature led them to view CE
as having two dimensions. The first involves corporate venturing/innovation
activities that relate to new business developments within existing firms. The
second is strategic renewal, which involves the creation of new wealth through
new combinations of resources (for example, refocusing a business, majorly
altering methods of marketing or distribution, redirecting product development
or reshaping operations). This definition has guided some subsequent empirical
research (Zahra, 1991, 1996b; Zahra & Garvis, 2000).
In Table 1, we give a recap of the key contributions to early CE research. As
Table 1 makes clear, the focus was on making the case for entrepreneurship as
an organizational-level phenomenon, defining CE and drawing its boundaries.
Most contributions were conceptual or qualitative studies, with some attention
to large-scale data analysis (Covin & Slevin, 1988; MacMillan, et al., 1986;
MacMillan & Day, 1987; Miller, 1983). An important distinction that some
researchers (e.g., Burgelman 1983; Pinchot III, 1985) made was between
formal and informal CE, which result from different forces within established
companies. These formal and informal CE activities sometimes complement
each other. However, on other occasions, formal and informal CE initiatives
compete with and stifle each other. This important insight has not been
empirically studied in the literature.
Table 1 -
Main contributions of the early literature
Peterson & Berger
Entrepreneurship should not be
equated to individuals, firms can
also make a novel use of means of
Firm level entrepreneurial behavior
The means to achieve firm-level
processes) vary by context, here firm
Individual entrepreneurial behavior
in an organizational setting
The firm is a source of opportunity
for its members.
The individual vs the organization
Individual initiatives, even when
sanctioned by management, sustain
Corporate venturing activities
Four generic types of entrepreneurial
vehicles; structure and management
Corporate venture capitalists
Experience effect, specific planning
tools for CVCs are needed
Guth & Ginsberg
Definition of CE
CE aims at either corporate
venturing/innovation or strategic