1
THE INTRAPRENEUR WITHIN PHILIPS BENELUX
A Case Study on the Role of Organizational Factors and Individual
Characteristics in the Intrapreneur’s Willingness to Allocate Time to
Intrapreneurial Activities.
University of Amsterdam, Faculty of Economics and Business
MSc Business Studies 2013-‐2014
Track: Leadership and Management
Supervisor: L. Albers
Second reader: A. Keegan
2
16 November 2014
Master Thesis
INDEX
PREFACE………..4 ABSTRACT………..5 1. INTRODUCTION………..………...6 2. LITERATURE REVIEW………9 2.1 Intrapreneurship………...9 2.2 The Intrapreneur………10 2.3 Organizational Factors………15 2.3.1 Resource Availability………15 2.3.2 Management Support………..16 2.3.3 Rewards………...16 2.3.4 Autonomy………18 2.3.5 Organizational Boundaries………..18 2.3.6 Summary……….19 2.3 Individual Characteristics……….…19 2.4.1 Personality Traits………..20 2.4.2 Personal Motives………212.4.3 Differences between Entrepreneur and Intrapreneur………..23
2.4.4 Summary………..………...24 2.5 Research Question……….24 3. METHODS………26 3.1 Research Approach………...26 3.2 Case Description……….…26 3.3 Sample Selection……….29 3.4 Data collection……….30 3.5 Data analysis……….32 4. RESULTS………..………34 4.1 Individual Characteristics……….34 4.1.1 Personal Motives………..34
4.1.2 Big Five Personality Traits………..37
4.2 Organizational Factors………39 4.2.1 Resource Availability……….39 4.2.1.1 Time Availability………...39 4.2.1.2 Other Resources……….42 4.2.2 Management Support……….43 4.2.2.1 Top Management………..43
4.2.2.2 Lower Level Management………45
4.3 Rewards………..47
4.2.4 Autonomy………..52
4.2.5 Organizational Boundaries……….53
4.3 An Answer to the Research Question………55
5. DISCUSSION………...……59
5.1 Interesting Findings……….59
5.2 Strengths and Weaknesses………..62
6.CONCLUSION………...………..67 REFERENCES………..…70 APPENDIX………75 Appendix 1……….75 Appendix 2……….76 Appendix 3……….77 Appendix 4……….78 Appendix 5……….80 Appendix 6……….81
PREFACE
Innovation has my attention because I am interested in the mechanisms behind creativity and I am amazed by the fact that people are, over and over again, able to create something new, beyond the beaten path. From my point of view it is a phenomenon that has to be explored in a real life setting. That is why, about a year ago, I hit upon the idea to put my personal network to the test to see into the opportunities of doing an internship in an innovative organization, which made me think of Philips. Thanks to Roy Scheepens this quest became a success, and I got the opportunity to write my thesis at Philips Benelux. It was a complex challenge to establish a research question that would contribute to the academic world, and would simultaneously provide Philips with some useful insights. This challenge was also a chance to learn a bit of both worlds. During the three months at Philips Benelux, I did not only go through a researcher’s life, but also got the opportunity to experience what it would be like to work for such a large company, for which I am very thankful.
An interesting personal experience is that the dynamics and mechanisms involved in the world of an intrapreneur can be brought back to the dynamics involved in my own thesis process. Especially when I got stuck, it was a tough, but educational challenge to pull myself out of routines and standard ways of thinking in order to take a new direction. Sometimes therefore, I felt like being a participant in my own research.
I would like to thank Sander Slegt and Jeroen van Genuchten, for their patience, their time, and all the helpful conversations during my internship period and after. I would also like to thank all the respondents for participating in my research, and for sharing their personal views on the intrapreneurial phenomenon. Furthermore, I would like to thank my supervisor Luuk Albers for understanding and supporting my choice to write my thesis in an organization, and for all the provided feedback along the process.
For now, I would like to invite you to step into the world of the intrapreneur, enjoy!
ABSTRACT
This case study explored the role of individual characteristics and organizational factors in the intrapreneur’s willingness to allocate time to intrapreneurial activities. Specifically, it focused on the intrapreneur’s perspective on personal motives that drive this willingness and on the encouraging or disturbing influence of organizational factors on their intrapreneurial actions. Semi-‐structured interviews were held with employees from Philips Benelux who participate in intrapreneurial within this organization. This provided qualitative data that were coded to identify personal motives that play a role (i.e. intrinsic motivation, belief in the necessity of intrapreneurship, and need for achievement); organizational factors that have the potential to stimulate intrapreneurship and their relative importance (time availability, management support, and the reward system have a major role). Results point out that an autonomous workforce will not foster intrapreneurship when it is combined with organizational factors that stimulate performance on the organization’s core-‐business. Moreover, while ‘need for achievement’ drives the willingness to allocate time to intrapreneurial activities, it also reinforces the negative influence of rewards provided for regular job performance (based on well-‐defined performance goals) on the allocation of time to the intrapreneurial activities. In addition, the results on the mini-‐IPIP questionnaire that is used to explore the role of personality traits among the intrapreneurs show a positive correlation between extraversion and imagination and the willingness to allocate time to intrapreneurial activities. These findings contribute to the intrapreneurial literature by refining the existing knowledge and providing new directions for future research. Furthermore, the findings can guide practitioners in their challenge to stimulate intrapreneurship among employees in addition to the responsibility of maintaining their core-‐business.
1. INTRODUCTION
It is not new to the world that organizations need to innovate and that their entrepreneurial ability is of great importance in order to respond to a fast changing, dynamic environment (Zahra, 1991). Since the 1980s, scholars have shown an interest in this entrepreneurial phenomenon within existing organizations (Antoncic & Hisrich, 2001), which can be defined as intrapreneurship (Antoncic, 2007). Intrapreneurship involves strategic renewal, innovation, the creation of new organizations within the existing organization (Sharma & Chrisman, 1999), or proactiveness (Antoncic, 2007), and leads to organizational outcomes like the ability to seize opportunities in the market, organizational growth and profitability (Zahra, 1991; Antoncic, 2007), and innovative performance (Alpkan, Bulut, Gunday, Ulusoy & Kilic, 2010).
Since intrapreneurship is of such importance for organizations, the individuals that are needed to execute the entrepreneurial activities within the organization, the intrapreneurs, cannot be neglected. Like the independent entrepreneur, they develop new and creative ideas, and try to transform those ideas in profitable reality. (Menzel, Aaltio & Ulijn, 2007). Because those individuals play a major role in the organizations’ intrapreneurship and thus in the organization’s growth and profitability, it is worthwhile to pay more attention to the intrapreneur.
In contrast to independent entrepreneurs, intrapreneurs operate within the context of an existing organization and its related rules, operations, structures and strategies. While entrepreneurs can perform their activities independent from the influence of a supervisor, intrapreneurs have to obey to a direct manager and the existing management structure. According to Kanter (1985) this organizational context encompasses management that is concerned with continuation of the already-‐developed activities and management that is concerned with establishing something new. While the organization is in need of both, these different management types can create a field of tension, which can complicate the allocation of resources accordingly (Kanter, 1985). Logically, when organizations expect their employees to
job, those employees also experience a field of tension. Allocating time to extra intrapreneurial activities might be at the expense of time they can spend to meet the requirements of their regular job, or the other way around. This raises some questions. What makes intrapreneurs willing to allocate time to those intrapreneurial activities despite the demands from the traditional business? What enables them to do so? How can they be effective as an intrapreneur while they also have to achieve other job responsibilities?
In the intrapreneurial literature, much is written about organizational factors that can stimulate organizational intrapreneurship, such as management support and the appropriate use of rewards (e.g. Alpkan et al., 2010). Furthermore, there is a growing recognition about the vital role of the lower level intrapreneur. However, there is little knowledge about the view and experience of the intrapreneurs with respect to the role of these organizational factors on their intrapreneurial activity. Moreover, little is known about the weight the intrapreneur puts on the different organizational factors as means to encourage and facilitate intrapreneurial action.
In addition, some scholars acknowledge that organizational factors influence intrapreneurship in interaction with individual characteristics, like need for achievement (Hornsby, Naffziger, Kuratko & Montagno, 1993). In their work they mainly base their arguments and explanations on the knowledge about the individual characteristics of the independent entrepreneur. However, since the intrapreneur and independent entrepreneur operate within a different context, it may be that different individual characteristics play a role for the intrapreneur. The intrapreneurial literature fails to provide an in-‐depth explanation on this topic.
To respond to both shortcomings the current research aims to explore the role of individual characteristics and organizational factors on the intrapreneur’s willingness to allocate time to intrapreneurial activities. Therefore a case study has been conducted within Philips Benelux. They have launched a program that aims to manage and encourage the development of new businesses, which involves intrapreneurial activities. By taking a qualitative approach this case study attempts to gain an in-‐depth understanding of the perspective of the intrapreneurs
who are involved in one of the new business development projects within Philips. Semi-‐ structured interviews with the intrapreneurs to address this aim are complemented with the mini-‐IPIP questionnaire (Donnellan, Oswald, Baird, Lucas, 2006) to explore the influence of personality traits.
The focus on the intrapreneur has led to some interesting results that contribute to the intrapreneurial literature. The results point out where existing intrapreneurial theory needs refinement. Furthermore, the findings indicate that, in their attempt to identify optimal enablers of intrapreneurship, scholars may be benefited by an approach that also integrates factors that try to manage and maintain the organization’s traditional activities. Moreover, the results provide some new directions for future research.
This study is of practical importance for firms similar to Philips Benelux that operate in a saturated market and that aim to grow through engaging in intrapreneurship. The results can provide managers with some useful insights in their challenge to balance resources between their intrapreneurial and traditional activities. In specific, they put a finger on the sore points of intrapreneurs that faces the multitask responsibility of intrapreneurship and performing its regular job, and show managers that have to facilitate this challenge, where to pay attention to.
The next chapter presents a review of the academic knowledge on intrapreneurship; the organizational factors that can foster intrapreneurship; and individual characteristics that may influence the intrapreneur (2. Literature Review). The third chapter provides a detailed description of the research method and data analysis applied to this case study (3. Methods). The results and an answer to the research question are presented in the fourth chapter (4. Results). The fifth chapter provides a discussion on the results, shows the strengths and weaknesses of the current study, and gives recommendations for future research (5. Discussion). Finally, a summary of this case study is provided (6. Conclusion).
2. LITERATURE REVIEW
This chapter pays attention to the existing literature regarding intrapreneurship. First, it briefly explains the concepts intrapreneurship and intrapreneur (2.1; 2.2). Second, it presents organizational factors that influence intrapreneurship (2.2). Third, it takes a closer look at the role of individual characteristics in intrapreneurship (2.3). Finally, it presents the research model and research question that are developed to guide the researcher throughout this case study (2.4).
2.1 Intrapreneurship
In 1934 Schumpeter already paid attention to the concept of entrepreneurship as a process in which new combinations are carried out (Schumpeter, 1934 in: Sharma & Chrisman, 1999). Other researchers broadly defined entrepreneurship as “the creation of organizations” (Gartner, 1988, p. 26). When the entrepreneurial activities of corporates became more important, terms that refer to the entrepreneurial phenomenon within an existing organization came into existence, like intrapreneurship (Antoncic, 2007), or corporate entrepreneurship (Sharma & Chrisman, 1999). Intrapreneurship can be defined as “the process whereby an individual or a group of individuals, in association with an existing organization, create a new organization or instigate renewal or innovation within that organization (Sharma & Chrisman, 1999, p. 28).” Pressing problems like dissatisfaction with traditional mechanisms of corporate management or required changes to avoid decline, have increased the need to become more intrapreneurial (Kuratko, Montagno & Hornsby, 1990), which can lead to organizational growth and higher financial performance (Zahra, 1991; Antoncic, 2007)
Based on the content or the activities involved, four different dimensions of intrapreneurial engagement can be identified: new business venturing, innovativeness, self-‐ renewal, and proactiveness. New business venturing refers to “efforts that lead to the creation of new business organizations within the corporate organization (Sharma & Chrisman, 1999,
creation of business through partnering with another organization, the acquisition of a new business or through a new business unit (Hayton, 2005). Innovativeness focuses more on the technological development of new products and services. It includes product improvements, new production methods and new product development (Schollhammer in: Antoncic & Hisrich, 2001). Self-‐renewal is concerned with organizational and strategic change, like redefining the business concept and the renewal of the organization’s key ideas (Guth & Ginsberg, 1990; Zahra in Antoncic & Hisrich, 2001). Proactiveness includes competitive aggressiveness, boldness and risk taking. It has to do with the extent to which organizations can be characterized as leaders rather than followers of competitors (Antoncic& Hisrich, 2001; Antoncic, 2007). Based on this knowledge, one can identify the new business development program that is de subject of the current case study, as one that comprises intrapreneurial activities that are similar to the content of new business venturing as described above. The remainder of this study will not further examine the differences between those dimensions and the related consequences, but rather uses the overall construct of intrapreneurship.
While intrapreneurship came into existence as a response to difficulties organizations faced, the emergence of this phenomenon also gave rise to new organizational and theoretical challenges. At a practical level it is a challenge to know how to allocate resources in advance of the execution of an effective intrapreneurial strategy. At a theoretical level it raises questions as to which dimensions have to be identified that are of influence on this process (Kuratko, et al., 1990). Likewise, one may assume that those challenges will also affect those who are engaged in the intrapreneurial process, the intrapreneurs.
2.2. The Intrapreneur
The intrapreneur is the individual who is executing the intrapreneurial activities presented above, within the context of an already established organization (Hisrich, 1990). However, the intrapreneur is similar to the independent entrepreneur, in that this individual has an entrepreneurial spirit and is concerned with the execution of new ideas and the creation of
functioning and profitable businesses (Hisrich, 1990). Those individuals can identify uncertain, new and high potential business opportunities, which the organization may have missed otherwise (Brundin, Patzelt & Stepherd, 2008). They can be found at any level of the organization (Menzel et al., 2007). To take advantage of intrapreneurship, the organization is thus highly dependent on those intrapreneurs (Menzel et al., 2007) and on their willingness to engage in intrapreneurial projects (Monsen, Patzelt, Saxton, 2010; Brundin et al., 2008).
The intrapreneur operates within the context of an already established organization. According to Kanter (1985) this context will involve administrative and entrepreneurial management. The administrative management aims to maintain and continue the already-‐ developed activities, tries to maximize efficiency and wants to hold things in place. Entrepreneurial management on the other hand, focuses on developing something new in order to bring about change. These are different types of management that focus on different outcomes and that may have contradictory requirements causing tension. As the organization is in need of both, organizations need to find a balance between those types of management (Kanter, 1985). One may now assume that the intrapreneurs, who take initiative to go beyond their narrow job description to develop new business (Hellmann & Thiele, 2011), also have to deal with both types of management and experience a similar field of tension between the two types of management and responsibilities. Likewise, they might face the same challenge as to finding the right balance between the two and allocating their working hours accordingly. But what makes intrapreneur willing to allocate time to the intrapreneurial activities, despite the existence (and pressure and demands) of administrative management and the traditional, standard activities?
In previous studies on organizational intrapreneurship scholars have focused on the influence of organizational factors (e.g. Hornsby et al., 1993; Alpkan et al., 2010; Antoncic, 2007; Christensen, 2005; Hisrisch, 1990, Srivastava & Agrawal, 2010), the external environment (Hornsby et al., 1993; Hisrisch, 1990) and to a limited extent of individual characteristics (Hornsby et al., 1993; Davis, 1999). Due to the scope of this research, this case study will
primarily focus on organizational factors and individual characteristics, to which Section 2.3 and Section 2.4 pay more attention.
Figure 1
An Interactive Model of Corporate Entrepreneuring (Hornsby et al., 1993, p. 31)
Some researchers, like Hornsby et al. (1993) have taken an interactive approach, arguing that it is the interaction between the characteristics that has an impact on intrapreneurship. In this sense, Hornsby et al. (1993) have proposed an interactive model (see Figure 1) that is based on a review of past empirical and literature research. It includes the intrapreneurial process from the characteristics that precede the decision to act intrapreneurially to the idea implementation phase. They propose that the decision to act intrapreneurially is influenced by the interaction of three factors: individual characteristics, organizational characteristics and a precipitating (triggering) event. The decision to act intrapreneurially is then proposed to link to the development of an effective business plan. The link between the development of an effective business plan and the actual idea implementation is proposed to be influenced by the availability of resources and the ability to overcome organizational barriers.
While the paper of Hornsby et al. (1993) provides a useful framework to understand the intrapreneurial process it can be criticized for the following reason: according to their model the
Figure 1
An Interactive Model of Corporate Entrepreneuring
Organ izationaf Characteristics * Management suppoit • Work Discretion * Rowsf osyRsInf orc6 niont • Time AvailaUDty • Organizational Boundaries / r Precipitating Event t Indiv Charac r iduai teristics • Rlsl»Talilng Propensity • Desire for Antonomy • Need tor Actiievement • Goal Orientation * Intemal Locus ot Comrol
4 Decision To Act Intrapreneuriaiiy Resource Avaiiabiiity Business/ Feasibiiity Pianning \ ' > Idea Implementation Abiiity to Overcome Barriers
managers to facilitate entrepreneurial projects (Hisrich & Peters, 1986; Sykes, 1986;
Souder, 1981; Sykes & Block, 1989; Macmillan, Block, & Narasimha, 1986; Quinn,
1985). Resources (which includes time) and their availability are a third element
rec-ognized in many of the writings. Employees must perceive the availability of resources
for innovative activities (Sathe, 1985; Von Hippel, 1977; Souder, 1981; Sykes, 1986;
Hisrich & Peters, 1986; Katz & Gartner, 1988; Kanter, 1988; Sykes & Block, 1989). A
fourth element is organizational stmcture, which is identified in various ways yet always
appears as an essential factor (Souder, 1981; Sathe, 1985; Hisrich & Peters, 1986;
Sykes, 1986; Burgelman, 1983; Schuler, 1986; Bird, 1988; Sykes & Block, 1989).
Finally, risk taking appears as a consistent element in that employees and management
must be willing to take a risk and have a tolerance for failure should it occur (Macmillan,
Block, & Narasimha, 1986; Sathe, 1985; Sykes, 1986; Burgelman, 1983, 1984; Quinn,
1985; Ellis & Taylor, 1988; Kanter, 1988; Bird, 1988; Sykes & Block, 1989).
Based on an analysis of the most consistent elements in the literature, Kuratko,
Montagno, and Hornsby (1990) developed a multidimensional scale (the Intrapreneurial
Assessment Instrument [IAI]) consisting of five factors to summarize the major
sub-dimensions of the concept of intrapreneurship. These sub-dimensions were: management
support for intrapreneurship, reward and resource availability, organizational structure
and boundaries, risk taking, and time availability. Subsumed under each of these factors
were various procedures and policies that may exist in an organizational setting and
that reflect many of the points cited earlier in this paper. The results of their study
supported the existence of three factors: Managerial Support, Organizational Structure,
and Reward and Resource Availability. This initial empirical study established the
existence of a multidimensional framework for fostering an intrapreneurial culture in
organizations.
three types of characteristics only influence the decision to act intrapreneurially, and not the next phases in the process. In other words, their model does not take into account that those characteristics can influence intrapreneurs along the intrapreneurial process, until the idea implementation phase. As they are still operating in the context of the existing organization, it is likely that those characteristics remain influential in the following phases in the process.
The current case study will build on their model by exploring how the intrapreneur views the influence of the organizational factors and individual characteristics. Moreover, it will focus on the willingness to allocate time to intrapreneurial activities regardless the phase in which the intrapreneur operates. In this manner, this study acknowledges that the intrapreneurial process is an on-‐going process that can be influenced by organizational and individual characteristics at any time.
Another stream of intrapreneurship researchers places the middle manager in the center. They focus on factors that influence the middle level manager’s behavior, as a response to the growing recognition of those individuals as important key persons in the intrapreneurial process (Kuratko, Ireland, Covin, Hornsby, 2005; Hornsby, Kuratko, Zahra, 2002). Middle managers can identify, praise and distil entrepreneurial opportunities. They can further pursue those opportunities by identifying appropriate resources and by allocating those to the opportunities (Kuratko et al., 2005). Those studies mainly focus on organizational characteristics and do hardly pay attention to the role of individual characteristics.
Many scholars have thus tried to identify organizational factors that influence intrapreneurship on the organizational level, and on the level of the middle level managers. Some have also included individual characteristics in their studies. However, these studies lack an in-‐depth understanding of the perspective of the intrapreneur him or herself on those factors or characteristics (Srivastava & Agrawal, 2010). This is unfortunate, because those individuals are of such importance for the success of intrapreneurship, as explained above.
Two exceptions on this lack of research are identified. Srivastava and Agrawal (2010) found that most employees perceive organizational support, team spirit, leader's support and
empowerment as factors supporting corporate entrepreneurship. However, they have based their findings only on a structured questionnaire and not on in-‐depth interviews. Therefore, they have not provided with a deep understanding of the influence of those factors from the perception of the intrapreneurs, leaving this open for further investigation.
In another study by Christensen (2005), interviews where indeed part of their empirical material. However, they conducted interviews only among a limited number of four respondents, comprising two managers, one engineer and one project manager. Besides, their research only took into account organizational characteristics, ignoring the perspective that focuses on the interaction between organizational and individual characteristics. Therefore, more in-‐depth research is needed at this point.
The next sections pay more detailed attention to the various organizational factors and individual characteristics that play a role in the intrapreneurial and entrepreneurial literature.
Table 1.
Overview of Organizational Factors that Influence Intrapreneurship
Alpkan, Bulut, Gunday
& Kilic (2010) Management support (* with innovative performance) for generating and developing new business ideas, allocation of free time, work discretion (*-‐ with innovative performance), appropriate use of rewards, tolerance for risk taking (*with innovative performance
Antoncic & Hisrisch
(2001) Communication, formal controls, environmental scanning, organizational support, competition-‐related values, person-‐related values
Antoncic (2007) Communication openness, control mechanisms, environmental scanning intensity, organizational and management support, and organizational values
Christensen (2005) Rewards, management support, resources, organizational structure, risk, communication, culture, process
Kuratko, Montagno &
Hornsby (1990) Management support for intrapreneurship, organizational structure, resource availability, work discretion
Hornsby, Kuratko &
Zahra (2002) Appropriate use of rewards, gaining top management support, resource availability, and supportive organizational structure. (Factors that foster middle manager activity)
Hornsby, Naafziger, Kuratko & Montagno (1993)
Management support, work discretion, rewards/reinforcement, time availability, and organizational boundaries.
Kuratko, Ireland, Covin & Hornsby (2005)
Management support, work discretion/autonomy, rewards or reinforcements, time availability, organizational boundaries.
(Antecedents of middle-‐level managers’ entrepreneurial behavior)
Srivastava & Agrawal
(2010) Organizational system, team spirit, leaders’ support and empowerment.
Zahra (1991) Formal and qualitative communication, environmental scanning, growth-‐oriented strategies
2.3 Organizational Factors
In the literature, many organizational factors have been argued to foster intrapreneurship (for an overview, see Table 1). A few of the common cited organizational factors are: resource availability, management support, rewards and reinforcements, autonomy or work discretion, and organizational boundaries, which are presented below.
2.3.1 Resource Availability
In the intrapreneurial literature, many scholars refer to the availability of time as an important resource to incubate new and innovative ideas (Hornsby et al., 1993; Kuratko et al, 1990), without the burden of routine workload (Alpkan et al., 2010). It also involves the structuring of jobs in such a way that it supports efforts to achieve both short-‐term and long-‐term organizational goals (Kuratko, et al, 2005). Providing free time encourages risk taking for putting new ideas into practice (Alpkan et al., 2010). To foster intrapreneurship, organizations should not put time constraints on every aspect of a person’s job; they should moderate the workload of its employees and allow them to work with other people on long-‐term problem solving (Hornsby et al., 1993). Well-‐known examples of organizations that highlight the importance of time management for innovation are Google (Savoia & Copeland, 2011), and the 3M case. (Garud, Gehman, Kuaraswamy, 2011) In both organization employees are allowed to spend 20 or 15 percent of their working hours on own projects to stimulate creativity and innovation.
Other resources that can support the intrapreneurial activity are financial resources and knowledge and skills of the employees (Christensen, 2005). It is important that employees have the perception that resources are available for the intrapreneurial activities in order to have the desired effect on intrapreneurship. This encourages risk taking and experimentation (Kanter, 1985; Hornsby et al., 2002).
2.3.2 Management Support
This factor is about the support of top-‐level or middle managers to promote and facilitate entrepreneurial behavior (Kuratko et al., 2005; Brundin et al., 2008). The management structure can encourage the employees’ belief that it is part of their role set to be innovative (Hornsby et al., 1993). Therefore, verbal support from leaders is very important (Krause, 2004). Furthermore, Brundin et al. (2008) found that manager’s emotional display influences the willingness to act entrepreneurially. Displays of satisfaction about the intrapreneurial project and confidence have a positive effect on the willingness to act entrepreneurially. Emotional displays of worry, bewilderment and frustration on the other hand, are negatively associated with the willingness to act entrepreneurially. Finally, Alpkan et al. (2010) found support for positive influence of management support on the innovative performance of organizations. Practical examples of management support include: investing money or providing resources to get projects of the ground; and quick adoption of employee ideas and recognizing people that bring ideas forward (Hornsby et al., 1993).
2.3.3 Rewards
A reward system that includes rewards based on results, considers goals and feedback, and that provides challenge can positively affect the intrapreneurial behavior (Hornsby et al., 1993, Kuratko et al., 2005). One can think of financial or other tangible rewards as extrinsic rewards to elicit intrapreneurial behavior (Kuratko et al., 2005). Employees’ trust in a reward system is important as it can foster commitment to innovation (Bulut & Alpkan, 2006) and willingness to accept the risks involved in the intrapreneurial activities (Kuratko et al., 1990). Thus, the appropriate use of rewards can stimulate individuals to engage in innovative behavior (Hornsby et al., 1993).
Some scholars paid specific attention to the impact of incentives on the corporate venture managers and the intrapreneurial process. In a study about incentive practices for corporate venture managers Block and Ornati (1987) found that companies seem to agree on
the following types of performance related incentives that are important for the improvement of venture performance: variable bonuses based on venture returns on investments, milestone achievement bonuses and options or equity in the new venture. Effective incentive plans must recognize motivation of internal entrepreneurs that is variable and changing. The risks involved in new corporate venture creation must be worth taking. Performance incentives can be seen as a form of feedback, which is desired by entrepreneurial personalities (Block & Ornati, 1987).
Monsen et al. (2010) found that the positive relation between profit sharing and the willingness to participate in a new corporate venture is moderated by: the expectation of success (higher success expectation leads to a stronger positive relation); pay risk (high pay risk leads to weaker positive relation); and job risk (high job risk leads to weaker positive relation). This means that in order to understand new venture participation, one needs to take into account additional risk and employee expectations about the outcomes, and that not only profit-‐ sharing bonuses affect the willingness to participate in corporate venturing (Monsen et al., 2010).
Finally, a study by Hellmann and Thiele (2011) examines the influence of incentives on the intrapreneur’s multitask choice between engaging in their assigned (standard) tasks and seizing an innovative opportunity. Because innovation is an unplanned activity, it is hard to provide incentives based on measurable goals, and ex post bargaining for compensation is more appropriate. For the execution of the standard activities on the other hand, organizations can provide compensation determined by a well-‐defined performance measure. According to their proposed model “the higher the performance bonus, the less the employee pursues unplanned innovation (Hellmann & Thiele, 2011, p. 80).” Consistent to their model, Subramanian (2005) confirms that there is a negative relationship between incentive compensation and intrapreneurial activities. This shows how incentives can play an important role in encouraging intrapreneurship among the employees. Incentives can be used to foster innovation, but it is important to consider the possible opposite effect: incentives based on well-‐defined
performance measures can cause a primary focus on the standard or planned activities that support the organization’s core business.
2.3.4 Autonomy
Another factor that is frequently mentioned to play a role in intrapreneurship is autonomy or work discretion. This factor is concerned with the decentralization level strategic flexibility (Alpkan et al, 2010), and refers to the extent to which the employees can make their own decisions with regard to performing their own work (Hornsby et al., 1993). Logically, this might also involve making their own decisions with regard to the allocation of their working hours they have available. Some scholars also mention tolerance for failure as an important element of autonomy. Following the model of Hornsby et al. (1993) organizations should create an autonomous workforce to foster intrapreneurship. In contrast to this the study of Alpkan et al. (2010) shows that work discretion is not significantly correlated to organizational innovative performance. Moreover, when this factor is regressed together with other dimensions of organizational support (management support, allocation of free time, appropriate use of rewards and tolerance for risk taking) it is found to have a negative effect on organizational innovativeness. They argue that this finding may be due to the overshadowing effect of the strongest drivers of innovativeness: management support and tolerance for risk taking. They do not conclude that work discretion is unimportant, but rather suggest that organizations should first invest in an organizational environment that includes management support and tolerance for risk taking.
2.3.5 Organizational Boundaries
This final factor refers to boundaries that prevent people from looking at challenges and opportunities outside their job. Organizations should remove those boundaries in order to foster intrapreneurship. The organization should encourage its employees to look at the firm from a broad perspective. Having standard operating procedures for all major parts of the job should be
avoided (Hornsby et al., 1993) and the organizational structure should be supportive for the administrative mechanisms used for the evaluation and implementation of ideas (Hornsby et al., 2002). According to Sathé (in Christensen, 2005) organizations that have a functional or “silo” structure can impede intrapreneurship with respect to new business creation. Therefore organizations should pool competencies in cross-‐functional business units. This provides the convergence of competencies from different functions. To overcome organizational inertia and functional fixedness, it can be helpful to involve external actors. This allows organizations to look at problems from a different angle and to gain new perspectives for given complexities, and can contribute to the creative processes in the organization (Andersen, Kragh, and Lettl, 2012).
2.3.6 Summary
In conclusion, previous literature points out that an organization needs to make sufficient resources available to pursue intrapreneurial activities; should have a supportive management for intrapreneurial efforts; should make use of appropriate rewards and incentives; should provide employees with an autonomous workforce; and should remove organizational boundaries that inhibit intrapreneurial progress, in order to foster intrapreneurship. But not only organizational factors are influential; also individual characteristics play a role in the intrapreneurial process (Hornsby et al. 1993), which is explained in the next section.
2.4 Individual Characteristics
While much is know about the individual characteristics of the independent entrepreneur, less research is conducted on the influence of individual characteristics on the intrapreneurial process, and no clear-‐cut personality profile of the intrapreneur exists (Menzel et al., 2007). Intrapreneurship scholars that did involve individual characteristics in their studies, like Hornsby et al. (1993), mainly based their arguments and propositions on existing knowledge about individual characteristics that can be ascribed to the independent entrepreneur. They
The next sections show what is known about the personality traits (2.4.1) and personal motives (2.4.2) of the entrepreneur.
2.4.1 Personality traits
In general, a dominant model used to describe personality structures is the Big Five model (Donnellan et al., 2006). According to this model, the Big Five factors of personality are: Extraversion, Agreeableness, Conscientiousness, Neuroticism, and Imagination/Openness to experience. An extravert person can be characterized as sociable, optimistic, active and energetic. They have the tendency to experience positive emotions. People high on
agreeableness are sympathetic, cooperative and trusting. This dimension refers to one’s
behavior toward others. Conscientiousness is about the extent to which a person has self-‐control, and work motivation. High conscientious people are well organized and diligent. Neuroticism is a trait that describes someone who is vulnerable to psychological stress and sensitive to negative feedback. People high on neuroticism experience negative emotions and may feel easily worried (Zhao, Seibert & Lumpkin, 2010; Costa & McCrae, 1992).
The Five Factor model has increasingly been applied to research on the personality of the entrepreneur (Brandstätter, 2011). Brandstätter (2011) compared entrepreneurs with managers and found that personality traits make a difference. Entrepreneurs have a significant higher score on conscientiousness, openness to experience, and extraversion and score significantly lower on neuroticism and agreeableness. Furthermore, those characteristics are relevant to predict the intention to become entrepreneur and the entrepreneurs’ performance. Both variables are positively associated with conscientiousness, openness to experience and extraversion, and negatively associated with neuroticism.
Zhao et al. (2010) also found a link between personality traits and entrepreneurial intention and performance. Extraversion, emotional stability (opposite of neuroticism), conscientiousness and openness to experience are all associated with successful entrepreneurship. Openness to experience appeared to be have the strongest link and is
therefore argued to play the most important role in the emergence and success of entrepreneurs (Zhao et al., 2010).
That personality traits have some influence logically stems from basic characteristics ascribed to the entrepreneur that are part of the personality traits. For example, the ability to find new opportunities and the ability to develop the new enterprise are elements of openness to experience, and building a social network is part of extraversion (Brandstätter, 2011). Despite the different context in which the intrapreneur operates, the intrapreneurial activities involved will still involve those basic characteristics (Hisrisch, 1990). Consequently, it can be hypothesized that conscientiousness, openness to experience, and extraversion are personality traits that can influence the intrapreneur’s willingness to allocate time to intrapreneurial activities.
Other personality traits being frequently associated with entrepreneurial intentions or entrepreneurial behavior are proactive personality (Crant, 1996), stress tolerance, self-‐efficacy, and innovativeness (Rauch & Frese, 2007) risk-‐taking propensity, goal orientation, and internal locus of control (Hornsby et al., 1993)
2.4.2 Personal Motives
One can also distinguish individuals based on their personal motives to engage in certain behavior (Brandstätter, 2011). In general, people can vary in the underlying goals and attitudes that give rise to action (orientation of motivation). People that are intrinsically motivated to execute a task are inherently interested in the task itself. When someone is extrinsically motivated, action is taken in order to achieve a separable outcome. Extrinsic motivation can be divided into four different types that vary in their degree to which they are autonomous or the degree to which a person experiences the feeling of choice: external regulation, introjections, identification and integrated regulation. External regulation refers to doing something to satisfy an external demand and is the least autonomous form. Introjected regulation is referring to behavior performed because of a feeling of pressure and is still quite controlling. Identification is
already more self-‐determined in that the person has identified with the personal importance of certain behavior. The most autonomous form is integrated regulation, where the person has fully aligned and accepted new regulation with his or her other values and needs. The motivation for action has been fully assimilated to the self. This form of motivation is highly similar with intrinsic motivation as they are both autonomous and unconflicted. The more one internalizes and integrates regulations into their own, the more the behaviors become self-‐determined or autonomous. More self-‐determined forms of extrinsic motivation and maintaining intrinsic motivation can be positively influenced by interpersonal events and structures (e.g., communications, feedback, rewards) that enhance feelings of competence if accompanied by a sense of autonomy. This can then cause greater engagement and better performance (Ryan & Deci, 2000).
Thus, when the organization wants to bring about greater engagement in certain activities, it needs to take into account the interaction of certain implemented organizational structures and mechanisms with the individual’s motivational states to allocate time to those activities. For greater engagement in intrapreneurship for example, the organization should fulfill the needs of the intrapreneurs, for which they can use organizational factors like rewards and feedback. Therefore, it is interesting to take the intrapreneur’s underlying attitudes and goals into account, and the interaction with certain organizational support factors.
Common personal motives to engage in entrepreneurial behavior are a desire for autonomy and a need for achievement. Following again the assumption that entrepreneur and intrapreneur are similar constructs, those motives are also expected to drive the intrapreneurial action (Hornsby et al., 1993). The achievement motive refers to individuals that prefer tasks of moderate difficulty. They seek feedback on action outcomes, and take responsibility for results. Individuals that try to avoid restrictive environments express the need for autonomy. Those individuals establish their own goals and action plans. They prefer to be independent of their manager in the decision they make (Rauch & Frese, 2007).
