How Creative Destruction Functions in Corporate Entrepreneurial Process: An Empirical Investigation of Schumpeterian Concept in Engineering Firms Setting in Pakistan

Abstract

\n Schumpeter s idea of creative destruction (CD) explains innovation functions in organisations. This paper investigates the CD concept in engineering firms by explaining how technical opportunity (TO) transforms into corporate entrepreneurship (CE) actions once opportunities have a market orientation (MO). A survey conducted using a structured questionnaire with 132 managers in engineering firms in Pakistan. Structural Equation Modeling (SEM) using Partial Least Square (PLS) approach has been used to analyse the data. Results reveal that MO and TO exerts a positive influence on CE. MO is the reason for the emergence of TO, which is exploited by CE s in engineering firms. CD intensifies the impact of MO on TO significantly. Opportunity recognition in engineering firms is distinguished and bounded by MO and technical viability. Engineering firms need to identify gaps in the market through naturally occurring obsolescence of products and services (CD) to create TO with appropriate MO. This study has revived a classical debate over opportunity recognition by proposing a CE model by incorporating external factors. The Schumpeterian opportunity recognition process and CD have been explained for engineering firms that are distinguished from other types of firms. Kirznerian opportunity recognition view has also been debated to dialect Schumpeterian view.