Jeffrey G. Covin

A Conceptual Model of Entrepreneurship as Firm Behavior

This article outlines a conceptual model of entrepreneurship as an organizational-level phenomenon. The model is intended to depict the organizational system elements that relate to entrepreneurial behavior among larger, established firms, but may also be applicable in varying degrees to many smaller firms. Entrepreneurship is described as a dimension of strategic posture represented by a firms risk-taking propensity, tendency to act in competitively aggressive, proactive manners, and reliance on frequent and extensive product innovation. The proposed model delineates the antecedents and consequences of an entrepreneurial posture as well as the variables that moderate the relationship between entrepreneurial posture and firm performance. The advantages of a firm-behavior perspective on entrepreneurship are discussed, as are the theoretical and managerial implications of such a perspective.

Contextual influences on the corporate entrepreneurship-performance relationship: a longitudinal analysis

Abstract Over the past several years corporate entrepreneurship has been widely touted by executives and researchers alike as an effective means for revitalizing companies and improving their financial performance. For the most part, the call for greater entrepreneurial behavior on the part of established companies has been accepted on faith as an inherently desirable objective. The implicit logic behind the pervasive belief in the value of corporate entrepreneurship seems to be that risk taking, innovation, and aggressive competitive action—the key elements of entrepreneurial corporations—will help in identifying and pursuing lucrative product/market opportunities and in providing new bases for achieving superior competitive positions. But what do we really know about the financial consequences of corporate entrepreneurship? Most of the evidence that corporate entrepreneurship “pays off” is anecdotal in nature or based on cross-sectional studies that focus on the short-term implications of entrepreneurial behaviors. As such, in a definitive sense, we know very little about the financial consequences of corporate entrepreneurship. In an attempt to improve our understanding of this issue, this article describes a study of corporate entrepreneurship and its impact on company financial performance. Data were collected from three different samples over a seven-year period to assess the longitudinal impact of corporate entrepreneurship on firm performance. These samples consist of 24 medium-sized manufacturing firms representing 14 industry segments, 39 chemical companies, and 45 Fortune 500 industrial firms representing five industry segments. Data were gathered on each sample using both primary and secondary sources. Regression analysis was then used to analyze the data. The results suggest that corporate entrepreneurship has a positive impact on financial measures of company performance. This effect on performance, which tends to be modest over the first few years, increases over time, suggesting that corporate entrepreneurship may, indeed, be a generally effective means for improving long-term company financial performance. Moreover, the results indicate that corporate entrepreneurship is a particularly effective practice among companies operating in hostile environments (as opposed to benign environments). The study has three principal implications for practicing managers. First, the study documents the general financial viability of engaging in corporate entrepreneurship. This is not to suggest that corporate entrepreneurship is a panacea for improving financial performance. However, entrepreneurial behavior, when considered on the whole (i.e., across firms and industries), is associated with superior financial performance. Second, the study suggests a need to use a long-term time horizon in order to adequately judge the financial consequences of corporate entrepreneurship. The use of a shorter evaluation period may not allow sufficient time for entrepreneurial actions to have their full market and corresponding financial impact. Finally, the study identifies the context-specific character of effective entrepreneurial practice. Specifically, corporate entrepreneurship appears to be a particularly effective strategic practice among firms operating in hostile business settings.

Corporate Entrepreneurship and the Pursuit of Competitive Advantage

This paper presents a theoretical exploration of the construct of corporate entrepreneurship. Of the various dimensions of firm-level entrepreneurial orientation identified in the literature, it is argued that innovation, broadly defined, is the single common theme underlying all forms of corporate entrepreneurship. However, the presence of innovation per se is insufficient to label a firm entrepreneurial. Rather, it is suggested that this label be reserved for firms that use innovation as a mechanism to redefine or rejuvenate themselves, their positions within markets and industries, or the competitive arenas in which they compete. A typology is presented of the forms in which corporate entrepreneurship is often manifested, and the robustness of this typology is assessed using criteria that have been proposed for evaluating classificational schemata. Theoretical linkages are then drawn demonstrating how each of the generic forms of corporate entrepreneurship may be a path to competitive advantage.

Entrepreneurial strategy making and firm performance: tests of contingency and configurational models

This field study explores the nature of entrepreneurial strategy making (ESM) and its relationship with strategy, environment and performance. In the first phase, we assess the independence of entrepreneurially oriented strategy-making processes through factor analysis. The second phase, using moderated hierarchical regression anlaysis, investigates the relative predictive power of two approaches for exploring the ESM–performance relationship: contingency and configuration. Findings from a sample of 32 firms competing in a wide variety of industries indicate that configurational approaches that align ESM, strategy, and environment have greater predictive power than contingency approaches. However, not all high performing configurations are consistent with normative theory. Thus, alternate theories linking entrepreneurial strategy making to competitive advantage should be developed and tested.

Strategic Process Effects on the Entrepreneurial Orientation–Sales Growth Rate Relationship

This research examined the effects of three strategic process variables—strategic decision–making participativeness, strategy formation mode, and strategic learning from failure—on the entrepreneurial orientation (EO)–firm sales growth rate relationship. Results based on a sample of 110 manufacturing firms indicated a positive effect of EO on sales growth rate. Moreover, the relationship between EO and sales growth rate was more positive among firms that employ autocratic decision making and that exhibit an emergent strategy formation process. Perceptions of proficiency at learning from strategic mistakes differentially affected the growth rates of firms at different ends of the EO continuum, but in manners inconsistent with the hypothesized relationship.

Environmental Marketing: A Source of Reputational, Competitive, and Financial Advantage

Corporate reputation is an intangible asset that is related to marketing and financial performance. The social, economic, and global environment of the 1990shas resulted in environmental performance becoming an increasingly important component of a companysreputation. This paper explores the relationship between reputation, environmental performance, and financial performance, and looks at the contingencies that impact environmental policy making.

Conceptualizing Corporate Entrepreneurship Strategy

Our knowledge of corporate entrepreneurship (CE) continues to expand. However, this knowledge remains quite fragmented and non–cumulative. Herein, we conceptualize CE strategy as a useful focal point for integrating and synthesizing key elements within CEs intellectual domain. The components of our CE strategy model include (1) the antecedents of CE strategy (i.e., individual entrepreneurial cognitions of the organizations members and external environmental conditions that invite entrepreneurial activity), (2) the elements of CE strategy (i.e., top managements entrepreneurial strategic vision for the firm, organizational architectures that encourage entrepreneurial processes and behavior, and the generic forms of entrepreneurial process that are reflected in entrepreneurial behavior), and (3) the outcomes of CE strategy (i.e., organizational outcomes resulting from entrepreneurial actions, including the development of competitive capability and strategic repositioning). We discuss how our model contributes to the CE literature, distinguish our model from prior models, and identify challenges future CE research should address.

New venture strategic posture, structure, and performance: An industry life cycle analysis

Examines the relationship of industry life cycle stage to strategic posture and organization structures in addition to new venture financial performance. Four hypotheses are presented for consideration. Data collected for this research were obtained from 90 firms located in western Pennsylvania. Criteria for the selection of these firms included that they had been in business for ten years or less, they operate in emerging, growing or mature industries, and they are in the manufacturing or service sector. The measure of strategic posture focused on innovation, proactivity, and risk taking. The organization structure measurement was based on whether the firm possessed organic manners or mechanistic manners. Results show that those new ventures in the emerging industries have the most strategic postures. For these ventures in the emerging industries, the score for strategic posture and performance are more positively correlated than for those ventures in mature industries. These same ventures are shown to have the most organic organization structures. Overall, the analysis shows that the determinants of a firms performance change as the industry matures. (SRD)

The Measurement of Entrepreneurial Orientation

This article explores how the concept of entrepreneurial orientation (EO) has been portrayed and assessed in prior research. The challenges and decision criteria associated with formative versus reflective measurement approaches are reviewed. It is argued that, as a latent construct, EO exists apart from its measures and that researchers are free to choose whichever measurement approach best serves their research purposes, recognizing that unidimensional versus multidimensional EO measurement models are consistent with fundamentally different conceptualizations of the EO construct. Recommendations are offered regarding potentially appropriate formative and reflective measures of EO.

A Model of Middle-Level Managers' Entrepreneurial Behavior

Middle–level managers’ entrepreneurial behavior is linked to successful corporate entrepreneurship. Herein, we integrate knowledge about corporate entrepreneurship and middle–level managers’ behaviors to develop and explore a conceptual model. The model depicts the organizational antecedents of middle–level managers’ entrepreneurial behavior, the entrepreneurial actions describing that behavior, and outcomes of that behavior as well as factors influencing its continuance. Following discussion of the models contents, we describe its potential value for researchers and those engaging in corporate entrepreneurship.