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The Relationship Between Entrepreneurial Intensity and Shareholder Value Creation

Author

Listed:
  • Pierre Erasmus

    (University of Stellenbosch, South Africa)

  • Retha Scheepers

    (University of Stellenbosch, South Africa)

Abstract

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.

Suggested Citation

  • Pierre Erasmus & Retha Scheepers, 2008. "The Relationship Between Entrepreneurial Intensity and Shareholder Value Creation," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 6(3), pages 229-256.
    • Handle: RePEc:mgt:youmgt:v:6:y:2008:i:3:p:229-256
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    References listed on IDEAS

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    Cited by:

    1. Justyna Franc-Dabrowska, 2009. "Does Dividend Policy Follow the Capital Structure Theory?," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 7(4), pages 367-382.

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    More about this item

    Keywords

    entrepreneurial intensity; value based financial performance measures; economic value added;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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