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The Relationship Between Entrepreneurial Intensity and Shareholder Value Creation

  • Pierre Erasmus

    (University of Stellenbosch, South Africa)

  • Retha Scheepers

    (University of Stellenbosch, South Africa)

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    Innovation and entrepreneurship have long been regarded as sources of value and wealth creation. Previous research has shown that there is a positive relationship between enterprises’ levels of entrepreneurship and their financial performance. Little research, however, has hitherto focused on measuring the relationship between entrepreneurship and shareholder value creation. In this study the relationship between the entrepreneurial intensity and the shareholder value created by an enterprise is investigated. An adapted corporate entrepreneurship (CE) measurement instrument is applied in order to gauge entrepreneurial intensity, while shareholder value creation is measured by the market adjusted total share return (TSR) and the value based financial performance measure Economic Value Added (EVA). The study is conducted for a sample of enterprises listed in the industrial sector of the Johannesburg Securities Exchange (JSE) for the period 2003–2005. The contribution of the study is the focus on the relationship between entrepreneurial intensity and shareholder value creation, rather than purely on the accounting-based financial performance of an enterprise.

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    File URL: http://www.fm-kp.si/zalozba/ISSN/1581-6311/6_229-256.pdf
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    Article provided by University of Primorska, Faculty of Management Koper in its journal Managing Global Transitions.

    Volume (Year): 6 (2008)
    Issue (Month): 3 ()
    Pages: 229-256

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    Handle: RePEc:mgt:youmgt:v:6:y:2008:i:3:p:229-256
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    1. Morgan, Robert E. & Strong, Carolyn A., 2003. "Business performance and dimensions of strategic orientation," Journal of Business Research, Elsevier, vol. 56(3), pages 163-176, March.
    2. Zahra, Shaker A., 1991. "Predictors and financial outcomes of corporate entrepreneurship: An exploratory study," Journal of Business Venturing, Elsevier, vol. 6(4), pages 259-285, July.
    3. Zahra, Shaker A. & Garvis, Dennis M., 2000. "International corporate entrepreneurship and firm performance: The moderating effect of international environmental hostility," Journal of Business Venturing, Elsevier, vol. 15(5-6), pages 469-492.
    4. Antoncic, Bostjan & Hisrich, Robert D., 2001. "Intrapreneurship: Construct refinement and cross-cultural validation," Journal of Business Venturing, Elsevier, vol. 16(5), pages 495-527, September.
    5. Biddle, Gary C. & Bowen, Robert M. & Wallace, James S., 1997. "Does EVA(R) beat earnings? Evidence on associations with stock returns and firm values," Journal of Accounting and Economics, Elsevier, vol. 24(3), pages 301-336, December.
    6. Hornsby, Jeffrey S. & Kuratko, Donald F. & Zahra, Shaker A., 2002. "Middle managers' perception of the internal environment for corporate entrepreneurship: assessing a measurement scale," Journal of Business Venturing, Elsevier, vol. 17(3), pages 253-273, May.
    7. Morris, Michael H. & Sexton, Donald L., 1996. "The concept of entrepreneurial intensity: Implications for company performance," Journal of Business Research, Elsevier, vol. 36(1), pages 5-13, May.
    8. Knight, Gary A., 1997. "Cross-cultural reliability and validity of a scale to measure firm entrepreneurial orientation," Journal of Business Venturing, Elsevier, vol. 12(3), pages 213-225, May.
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