Value creation through entrepreneurial activity: A multiple constituency approach
AbstractWhile both business press and scholarly research largely portray entrepreneurship within well-established companies as inherently good, empirical evidence for positive performance implications based on rigorous research is scarce. This paper empirically assesses whether and for whom entrepreneurial activity creates value in a large traditional firm. In contrast to previous research I adopt a less "heroic" view and emphasize day-to-day entrepreneurship -"getting things done in an entrepreneurial way"- instead of focusing on grand entrepreneurship, i.e. new venture creation or new product development. Furthermore, I consider the perspectives of multiple constituencies to assess performance implications over time, and acknowledge the value creation potential at the sub-unit level. In the empirical part of the paper I analyze entrepreneurial activities of 121 middle managers in a large European financial services firm and their effect on changes in economic performance, customer satisfaction, and subordinate satisfaction. I combine subjective (survey) data on entrepreneurial activity and objective data on performance collected over three consecutive years (1997-2000). My results show that entrepreneurial activities of middle managers are positively and significantly related to change in economic results, measured in terms of profit growth. Non-significant results linking entrepreneurial activities and changes in customer or subordinate satisfaction suggest that entrepreneurial activities hardly connote a "quick fix" in these dimensions. The results furthermore accentuate the importance of personal characteristics of middle managers for the development of economic performance. My data, e.g., suggest that female middle managers and managers holding lower-level educational degrees do significantly better in achieving profit growth.
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Bibliographic InfoPaper provided by IESE Business School in its series IESE Research Papers with number D/468.
Length: 21 pages
Date of creation: 23 Sep 2002
Date of revision:
Entrepreneurship; intrapreneurship; middle managers;
Find related papers by JEL classification:
- M10 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - General
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
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- Romer, P.M., 1988. "Capital Accumulation In The Theory Of Long Run Growth," RCER Working Papers 123, University of Rochester - Center for Economic Research (RCER).
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- Eugene W. Anderson & Claes Fornell & Roland T. Rust, 1997. "Customer Satisfaction, Productivity, and Profitability: Differences Between Goods and Services," Marketing Science, INFORMS, vol. 16(2), pages 129-145.
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