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Role of intrapreneurship in the firm’s ability to achieve

competitive advantage through IT capabilities

Master Thesis

Author: Manon M. Kollaart-Andries Student number: 10979018

Course: Executive Program Management Studies, Track: Strategy Thesis Supervisor: Dr. Sebastian Kortmann

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Statement of Originality

This document is written by Manon M. Kollaart-Andries who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

Manon M. Kollaart-Andries 10979018

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Preface

This thesis has been written out of person and professional interest in the role intrapreneurship plays within established organizations, especially now with all the opportunities new technology brings us. I got acquainted with intrapreneurship at my current job where a beautiful example of ambidexterity (exploring and exploiting innovation) can be found. An established family business with great ambition to keep challenging itself on different grounds. A new business unit was created to explore a new possible

untapped niche in consumer market services as the core kept exploiting the already in place processes and initiatives. After great success with this new, startup-like business unit, the core was getting behind and seem to be needing a breath of fresh air. Although many seem to knew it was a necessary change, it moved no ground. It is presumed that the reason was due to the absence of a top manager who was hungry for innovation and was willing to take thoughtful, calculated risks to unravel new fruitful grounds. The type of leader that shows proactive behavior to revitalize the core business and would make the core business as innovative as its newborn.

Additionally, during my master, I came to learn many possible explanations for what happened and also what should have happened. Especially courses such as Theory of Strategy, Strategic Organization Design and New Business Models. They all inspired me to put energy in this research. Moreover, as the company I work for is moving from a sales organization to an IT driven organization, I have chosen to focus on intrapreneurship within an IT (digital) landscape and its role in gaining a competitive advantage in product innovation and time-to-market.

Happy reading,

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Abstract

This paper examines the role and effect of intrapreneurship on gaining a competitive advantage in a IT (digital) landscape in a time where digital and IT driven inventions seem to float around like leaves in autumn. The outcome is defined as a competitive advantage originating in IT capabilities (IT business partnerships and external IT linkages) through product innovation and competitive time-to-market, drawing from resource theory, IT and management literature. The proposed model provides insights into unique skills and resources of the firm that assume added relevance in the context of competing in the era of IT (digital) enabled and supported businesses. By performing multiple regression analyses,

including a mediation test via bootstrapping method, the formulated hypotheses were put to the test. The model differs from past studies in that IT capabilities are solely defined as IT business partnerships and external IT linkages and competitive advantage is restricted to the level of product innovation and time-to-market. The data was collected via a structured e-mail questionnaire which provided a sample of 139 key informants from unique and different companies and industries operating in the Netherlands.

The results showed that (digital) ambidexterity, intrapreneurship and IT capabilities were

positively related to competitive product innovation and time-to-market. Both (digital) ambidexterity and intrapreneurship were positively associated with IT capabilities that link IT with business and

stakeholders and sponsor IT initiatives. Furthermore, IT capabilities positively mediated the relationship between intrapreneurship and competitive advantage but not between (digital) ambidexterity and competitive advantage. The results indicate that an intrapreneurial posture, making IT firm-wide operative, and fostering flexibility and efficiency, can be of great importance in the pursuit of gaining a competitive product innovation and time-to-market position.

Key words: digital ambidexterity, innovation, exploration, exploitation, intrapreneurship, competitive advantage, product innovation, time-to-market, IT capabilities, information technology.

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Table of content

1. Introduction ... 7

2. Literature review ... 10

2.1 Competitive advantage ... 10

2.2 Intrapreneurship ... 14

2.3 (Digital) ambidexterity ... 21

2.4 IT capabilities ... 27

2.5 Control variables ... 34

3. Analysis ... 35

3.1 Research method ... 35

3.2 Conceptual model ... 35

3.3 Sample ... 36

3.4 Data collection ... 36

3.5 Data analysis: measures, definitions and items ... 37

3.6 Validity and reliability of constructs ... 37

3.7 Common method bias ... 40

3.8. Non-response bias ... 41

3.9 Individual measures ... 41

4. Results ... 45

4.1 General statistics ... 45

4.2 Assumptions ... 49

4.3 Hypothesis testing for direct effects ... 50

4.4 Mediation analysis ... 56

5. Discussion and conclusion ... 61

5.1 Limitations and suggestions for future directions ... 66

5.2 Management recommendations ... 67

5.3 Acknowledgements ... 69

6. Literature ... 70

6.1. References ... 70

7. Appendix ... 91

7.1. Theoretical Model ... 91

7.2 Survey in English – Measurement and Items ... 92

7.3 Original plots and tables SPSS ... 95

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List of Figures

Figure 1 - Conceptual model ... 35

Figure 2 - Process model hypothesis 4 ... 57

Figure 3 - Mediating effect hypothesis 8 ... 60

List of Tables

Table 1 - Reflective outer models ... 39

Table 2 - Cronbach’s alpha ... 40

Table 3 - Descriptive statistics of constructs ... 45

Table 4 - Descriptive statistics of sample ... 46

Table 5 - Mean, standard deviation and correlations ... 48

Table 6 - Regression results hypothesis 1 ... 51

Table 7 - Regression results hypothesis 2 ... 52

Table 8 - Regression results hypothesis 3 ... 53

Table 9 - Regression results hypothesis 5 ... 54

Table 10 - Regression results hypothesis 6 ... 55

Table 11 - Regression results hypothesis 7 ... 56

Table 12 - Mediating effect hypothesis 4 ... 58

Table 13 - Mediating effect hypothesis 8 ... 60

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1. Introduction

Like landscapes in nature, business landscapes change over time. They evolve and almost always seem to enforce some kind of change. In business, there are organizations that sense, before the majority does, that elements need to be adapted to the current and future environment. However, many

organizations do not seem to have this kind of sense and stick to what they always have been doing. Consequently, finding themselves running behind and have trouble keeping their heads above water when times are changing. Especially in rough times, like the last economic crisis which started around 2008 (Erkens, Hung and Matos, 2012).

This thesis examines the relationship between intrapreneurship, (digital) ambidexterity, IT capabilities and competitive advantage. Aiming for advantages over competitors seem to attract more innovative approaches, such as giving the IT department a more prominent place within the organization (Ross and Beath, 1996) or having teams work on exploiting current processes and products while other team members focus on exploring new possibilities (Tushman and O’Reilly (1996). Which is not an easy game when resources need to be divided(Cao et al., 2009) but can bring firm growth and success

(Bharadway et al., 1999).

As new businesses and even established organizations seem to embrace the possibilities that can be created by information technologies (IT), it is interesting to find factors that influence this stream of ways to create a step ahead of competition. Specifically, from a human capital perspective. That is, to what extent does a more prominent proactive role of a top manager influence a landscape where IT is connected and positioned to play a role in product innovation, encouraged by a business context with both exploring and exploitative innovative activity within a firm? In turn, it is interesting to find factors that are affected by linking information technologies to the business and the world around the business, such as customers, suppliers and partners. Specifically, can it be linked to product innovation and the ability of a firm to competitively bring products and/or services to the market?

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In the research based view (RBV) theory, which is mainly influenced by authors such as Penrose (1959), Teece (1997), Barney (1986), Conner (1991) and Peteraf (1993), competitive advantage can be gained by firms that can handle intangible and tangible resources that are valuable, rare, inimitable and non-substitutable and use them to their advantage. In this respect, IT capabilities and intrapreneurship are not labeled as resources but as capabilities (Makadok, 2001). Capabilities are defined as firm-specific and are used to prearrange the resources within the firm, such as IT knowledge, to outsmart the competition (Makadok, 2001; Conner and Prahalad, 1996; Barney, Wright and Ketchen, 2001). Having top managers with entrepreneurial behavior, a human resource, who are more eager to keep challenging the status quo, are expected to be the solution when firms are stuck or want to gain more from their power to leverage technology that diffuses from the competition by product innovation, for example. And, as many inventions nowadays are launched when there not even perfectly developed, called a ‘MVP’ (minimum viable product) inspired by authors such as Eric Ries (The Lean Startup, 2011), firms must act quickly and need to take risks to make a chance on preventing the competition to take all the glory and prohibit them to eat all the cake before it is served. Therefore, it is interesting to research if IT business

partnerships and external IT linkages (in other words, connecting IT to business) influences competitive product innovation and improves the time it takes to launch a product or service on the market. Although several researches claim that using IT in combination with other firm resources lead to competitive advantage (Santhanam and Hartono, 2003; Raymond and Bergeron, 2008; Melville et al., 2004), there is a scarcity of research papers that assess the role of top managers in this scenario.

The main contributions of this research are fourfold. First it contributes to the ambidexterity literature by providing empirical evidence on the relation between intrapreneurship and achieving digital ambidexterity. Second it shows that, in turn, (digital) ambidexterity can positively influence two IT capabilities categories, namely IT business partnerships and external IT linkages which both will be explained in more detail in the literature review. Third, this research gives insights in how

intrapreneurship also can aid achieving competitive product innovation and improve time-to-market by stating that it can positively influence the effects of IT capabilities that link business to technology and

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external stakeholders, such as customers and suppliers, and is important for achieving competitive advantage. Fourth, this research provides more clarity about the influence of linking IT with internal business and key business partners and how these capabilities can positively support the achievement of gaining competitive advantage on product innovation and time-to-market. In sum, an organization with top managers with intrapreneurial skills will lead to higher levels of (digital) ambidexterity and may lead to more power to leverage product innovation through IT and launch products more quickly to beat the competition.

These considerations make topics interesting for research to both theory and business and has led to the following main research question: To what extent do organizations need intrapreneurship and support digital ambidexterity in order to gain advantage through product innovation and competitive time-to-market by linking business with IT, internal and externally?

In the next section the literature is reviewed to provide an overview of the most relevant literature of the topics of interest for this study, resulting in the presented hypotheses (chapter 2). This section is followed by the description of the research method applied (chapter 3), and the presentation of the empirical findings, using data of 139 key informants from different companies and a variety of industries (chapter 4). A discussion with the limitations and possibilities for further research, and a conclusion of the results with management recommendation (chapter 5) are concluded.

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2. Literature review

In an attempt to answer the research question, several theoretical constructs need to be examined. In the following chapter, the current status of scientific knowledge regarding the main concepts are described. First, the body of literature of the outcome variable competitive advantage will be discussed. The following theoretical construct concerns intrapreneurship. As the paragraph will show, this is an important construct for this thesis study. Next, the theoretical background is given on the concept of ambidexterity, which is in important related theory to product innovation. The fourth and final theoretical construct concerns IT capabilities. In the last section, the chosen control variables for this study will be discussed.

2.1 Competitive advantage

Not just now but already decades ago, companies were experiencing significant pressures from other businesses trying to be the best to win over the most customers (Porter, 1985). There is, however, no smooth sailing today and in the near future with current rapidly changing market requirements to stay relevant, high rates of technology getting out-of-date, shorter product life-cycles and customers getting more and more sophisticated and demanding faster and better products and services (McGrath et al., 1992; Shepherd and Ahmed, 2000). The product development lead times are increasing and new technologies are more frequently dropped on the markets than ever before (Narayanan, 2000). As it was more costly and complex to start frequently developing to the need of the customer back in the day, it is becoming easier and more affordable in order to gain the best position in the market. Even for smaller companies opposed to giants such as Microsoft and Apple (Reis, 2011). Meeting these challenges

depends largely on the nature of the business, the dynamic market forces, and which is interesting for this study, are the resources and skills available to meet business objectives (Shepherd and Ahmed, 2000).

Many recent published studies in the field of strategic management have discussed the

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advantage. As well as how this can be effectuated by firms, strategically and operationally (Porter, 1985). A much-cited author that contributed generously to the knowledge to this field, is Porter. In his definition, competitive advantage is the extent to which an organization is able to create a position with more

leverage than its competitors and can be achieved by creating a cost or differentiation advantage (Porter, 1985). A cost advantage is achieved when a firm is able to provide the same products and/or service for a lower price than its competitors. A differentiation advantage is achieved when better products and/or services are provided than the competing firms. Porter (1980; 1985) has emphasized primarily on the environmental sources of firm performance. Although his models are widely applied, his earlier work did not provide a complete view on all determinants of firm success (Hamel and Prahalad, 1989) as it mainly looked outside the firm instead of looking for sources existing within the firm that could lead to a

competitive advantage. Porter (1985) presented the five forces model to explain the important role of looking outside the firm by analyzing the firm’s competitors and attractiveness of the industry it was operating in. As there are two sides to every coin, the focus was later set to the inside of the firm, such as the important role of internal capabilities and resources (Penrose, 1959; Wernerfelt, 1984; Barney, 1991) which will be the subject of the next paragraph.

A resource based view perspective

Since the 1990s a great number of researchers have turned the sailing and have started exploring sources within the firm that might be related to firm performance. Authors such as Barney and Conner have contributed through the resource-based view (RBV) of which the premise lies in the links between internal resources, strategy and performance of the firm. Relevant to the discussion of this study is the absence of adequate factual knowledge about which IT resources support the ability to gain competitive advantage in product innovation and time-to-market, and what positively influences the strength of these resources.

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A firm that has gained a competitive advantage is described by Barney (1991) to have been able to implement a value creating strategy which is not copied by any other firm, now or in the near future. From a RBV perspective, this advantage can only be obtained when firm resources are valuable,

inimitable, rare and non-substitutable. That is, it must add value to the firm and it must be unique enough that competing firms cannot possess it with ease. Also, the resource should not be easy to imitate by others and should not be substituted with another resource by competitors (Barney, 1991; Conner, 1991; Wernerfelt, 1984). In most RBV literature, such as the studies of Barney (1991; 2001) and highlighted in the study of Wright et al. (1994), the resource category is divided in three subcategories: physical capital resources which cover the firm’s plant, equipment, technology and geographic location; human capital resources include the experience, judgement, intelligence of the individual managers and workers in the firm; and lastly, organizational capital resources which contain the firm’s structure, planning, controlling and coordinating systems, and the informal relations among groups within the firm and between the firm and other firms in its environment. The ability to differentiate a firm from its competitors is said to be an outcome of critical management decisions (Tracy et al., 1999) which can be labeled as a human capital resource. Although, according to Barney and Tyler (1991), managers are bounded in their ability to shape and manipulate every aspect of their firms but do have an important role in creating competitive

advantage. Wright et al. (1994) fills this gap by concluding that the role of managers is to recognize, develop and exploit the resources within the firm. In the sense of organizational capital resources, it is important to develop internal assets and processes that are inimitable and leverage core resources (Grant, 1991). When information is a crucial component of a firm, processes that are incorporate and use

information in a remarkable manner have the potential for creating a competitive advantage (Kearns and Lederer, 2003). Aligning IT with business is a process which a unique matter and combines knowledge of both in order to achieve business objectives (Kearns and Lederer, 2003; Reich and Benbasat, 1996). The RBV has been found to provide an understanding of how knowledge sharing can expose IT-based opportunities and how to leverage superior performance (Kearns and Lederer, 2003).

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Product innovation and time-to-market

Particularly competitive advantage gained through product innovation and time-to-market seem to be both topics of relevancy with increasing customer demands for better and avant-garde products and services, next to the ability of firms to speed up the pace of technology-based inventions (Hum and Sim, 1996). Firms are subsequently required to keep up and continually bring these innovations to the market place rapidly (Koufteros et al., 2002; Miltenburg, 2005). Product innovation refers to new product and/or services that are introduced to meet the needs of external users or market needs (Damanpour, 1999). It is stressed that this particularly counts for businesses in a dynamic environment that constitute rapid technological change, shortened product life cycles, and globalization (Damanpour, 1999). Time-to-market refers to the “elapsed time between product definition and product availability” (Vesey, 1991). Recent studies have shed a light on time-based competition in business (Li et al., 2006) which seem to be a logic development with current rapid technological change and dynamic business environments. In fact, it has gained more priority in literature regarding competitiveness of firms as it has been identified as the next source of competitive advantage (Vesey, 1991). Time has obviously become a required condition to keep up with the fast stream of product development by firms with new and improved products. Not to forget are revisions, expansions and extensions of products stuffing the markets in a higher rate than ever before. According to Hum and Sim (1996), the essence of time-based competition involves “compressing time in every phase of the product creation and delivery cycle”. They believe that this condition translates into a significant source of competitive advantage. In their opinion, as they solely studied current

literature, only firms that focus on achieving time-based competition will have the chance of dominating their industry. The reason that lies beneath this assumption is that customers have become refined and seasoned and sensitive to the magnitude of choice as firms are bettering their responsiveness. In line with their conclusion, Teece et al. (1997) claimed that successful firms achieve “timely responsiveness and rapid and flexible product innovation” when management is able to effectively coordinate and utilize the relevant competencies. In this article, the authors refer to this source of competitive advantage as

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innovation is accelerating and time-to-market is crucial for firm survival. Capabilities emphasize management’s role in adapting, integrating, and reconfiguring organizational skills, resources, and functional competencies to cope with a changing environment. The dynamic capabilities view emphasis on the ability of sensing, seizing and reconfiguring resources. All three capabilities need to be build and utilized (Teece et al., 2007).

In order to carry out these “dynamic” product innovation capabilities and be time-based

competitive, Daniels and Essaides (1993) state that a flat management structure (facilitates fast-decision making), extensive use of information technology (Stalk and Hout, 1990), customer-focus instead of competitor-focus, frequent advanced product introductions and some more elements, contribute to achieving competitive advantage. In this regard, as Tracy et al. (1999) and Wright et al. (1994) stated, top management’s actions and support are crucial as they can mobilize all these facets. This study aims, based on this knowledge, to provide significant proof that this is indeed the case and is positively affected by intrapreneurship of top management.

Above literature background positions this thesis in the resource-based view with an emphasis on the management of innovation empowerment. Prior research has given proof of innovation being an important ingredient in the process of gaining a competitive advantage and is key for survival in dynamic markets (Chen et al., 2015). There is some existing literature that is suggestive of a potential relationship between corporate entrepreneurship (Chen et al., 2015), IT capabilities and product innovation

performance (Bharadway, 2000). Consequently, a specific posture of management is further discussed in the next paragraph.

2.2 Intrapreneurship

This thesis has the purpose of exploring the role of intrapreneurship within an IT (digital) landscape when aiming for a competitive advantage in product innovation and time-to-market. Several definitions of intrapreneurship have been assessed among numerous authors, and this paragraph will shed

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a light on how this phenomenon is defined and what role it is presumed to have in the context of this thesis.

In the journey of enabling and redeeming the process of value creating opportunities through innovation with the use of the available resources within a firm’s realistic reach (human and capital), the concept of intrapreneurship has attracted quite some attention in research since the 1980s. This process has many names in the literature, such as corporate entrepreneurship (Burgelman, 1983; Hornsby et al., 2002), corporate venturing (Vesper, 1990) and internal corporate entrepreneurship (Jones and Butler, 1992) as Antoncic and Hisrich (2001) discovered while researching the concept of “entrepreneurship within existing organizations”. As will be discovered in the upcoming considered literature,

intrapreneurship is a multidimensional construct as it can take a variety of shapes. Shapes that are covered in research are, for instance, a formation of semi-autonomous or fully autonomous business units or an entire firm (Schollhammer, 1981; Vesper, 1984), comparatively to this is a corporate start-up (MacMillan et al., 1984) or behavioral characteristics (Collins et al., 2004). It seems that no longer than two decades, scholars and practitioners have shown an interest in the concept to clarify the definition and investigate the pros and cons for theory building and business practitioners. Its function and purpose has been associated with various business development objectives. For instance, strategic renewal (Guth and Ginsberg, 1990), cultivating innovativeness (Baden-Fuller, 1995), strategic change in order to generate new revenue streams (Zahra, 1996; Mcgrath et al., 1994) which is also called new business creation by Stopford and Baden-Fuller (1994) and the most alluring objective is profitability (Zahra, 1991). However, this last-mentioned study did only use one sample and did not cross-validated the findings. Combining this with the study of Antoncic and Hisrich (2001), who did perform a cross-cultural study, makes up for this weakness and show that profitability effects are not in all cultures the same. Continuing, results of several empirical studies show that intrapreneurship and firm growth, in terms of absolute growth (expansion in capacity and growth in total sales) and relative growth (boost in market share), are

positively related (Zahra, 1996; Antoncic and Hisrich, 2001). Additionally, intrapreneurship has shown in that it serves as an essential predictor in this relationship and has beneficial effect on performance and

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revitalization (Antoncic and Hisrich, 2001; Burgelman, 1983; Zahra, 1991). Zahra (1991, 1996) claims that when a firm has corporate entrepreneurial workers that are given the opportunity to use their creative side, it accelerates a firm’s response to the market. Although this is not empirically proven, it might be due to the capability of coming up with new innovations on a more frequent basis in combination with ambition to test these on the market as quickly as possible to validate the product-market fit. These firms seem to have commitment to creating and introducing products, services, processes and more (Lumpkin and Dess, 1996).

As entrepreneurship is mostly a concept related to small sized companies, intrapreneurship has proven its contribution also in medium and large corporations (Carrier, 1994; Antoncic and Hisrich, 2001). In more depth, this also seem to be the case in hostile environments with characteristics that can be find in industries where IT is at least a function within a firm. They find themselves in a market with intense competition and crushing business climate (Covin and Slevin, 1989). Further, most studies do not focus on a specific industry or specific line of work, with the exception of Zahra’s (1993) research which focuses on manufacturing firms. This study brings and relates intrapreneurship in to the IT playfield. As industries are not equal and a like (Fernhaber et al., 2007), it is interesting to see if it fits the IT gloves in order to see if it has a positive effect on the notion that IT and business should be connected in order to gain a competitive edge.

Further investigation of the available knowledge provides that intrapreneurship is a business-related concept that includes more than one dimension (Zahra, 1996; Antoncic and Hisrich, 2001). According to Antoncic and Hisrich (2001), which have conducted more studies than one about intrapreneurship, there are four distinct dimensions to consider which will be discussed in the next paragraph.

The facets of intrapreneurship

First, new-business-venturing which refers to “pursuing and entering new businesses related to the firm’s current products or markets” and is forthwith the most notable dimension as it can result in new

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business creation (Stopford and Baden-Fuller, 1994), reinvention of the current product and services portfolio (Rule and Irwin, 1988) and additionally result in expansion to new markets (Zahra, 1991; Block, 1995).

Second, the innovativeness dimension. The dimension of innovativeness refers to “the creation of new products, services, and technologies” (Antoncic and Hisrich, 2001). From organization to

organization, innovation is conceptualized in different ways (Miller and Friesen, 1982). While some firms tend to accept a more conservative approach towards innovation, other firms approach innovation from a more entrepreneurial perspective. This study will focus on the latter as this seem to better fit with the current rate of inventions and is expected to demand a more ‘challenging the status quo’ orientation.

Back to the dimension’s explanation of Antoncic and Hisrich (2001), this explanation effortlessly frames and emphasizes technology as something that exists besides the category product and not as an enabling factor of product creation. Fortunately, Zahra (1993) and Knight (1997) hold a more explanatory definition of this dimension as technology can be sold as a stand-alone product and also can function as part of product production. Not all intrapreneurial top managers should be expected to be technology-minded. Admittedly, living in a world where diversity of technology might outnumber the amount of human beings eventually, it might be a small probability. Furthermore, this dimension is by most researches not limited by radical product development but also to smaller incremental product, process and method improvements (e.g. Antoncic and Hisrich, 2001). As disruptive innovation is a topic which gets much attention nowadays (Christensen, Raynor and McDonald, 2015), intrapreneurship does not seem to capture itself only associated with this radical form of invention. This is to the contrary of how Covin and Slevin (1991) and Miller and Friesen(1983) define corporate entrepreneurship. They argue it involves radical product innovation yet Covin and Slevin (1991) consider the frequency and

extensiveness of product innovation and technological leadership that is related to this part of the posture of entrepreneurship. This shows a lack of consistency in what it involves and could narrow the

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Third, the self-renewal dimension which emphasizes the reformulation of strategy,

reorganization, and organizational change. It reflects the transformation of a firm’s foundation (Guth and Ginsberg, 1990; Zahra, 1993; Baden-Fuller, 1994) and refers to revitalization of entrenched operations as well as changing the type of business or even the approach towards the market a firm is in (Stopford and Baden-Fuller, 1994, Zahra, 1993, 1996). Revitalization can be accomplished by building or acquiring new capabilities and use them to add value (Zahra, 1996). This might be the case when current structure does not leverage enough value to stakeholders. This study excludes this dimension on the premise that not all companies might be in the situation where they need to revitalize their core business but look for new ways of gaining a competitive edge by product innovation and time-to-market fueled by their ambition to grow.

Finally, the proactiveness dimension which “reflects top management orientation in pursuing enhanced competitiveness and includes initiative and risk-taking, and competitive aggressiveness, and boldness” (Dess et. al., 1997; Antoncic and Hisrich, 2004). On the contrary, Augusto Felício et al. (2012) separate proactiveness from risk-taking. As proactiveness is defined as focus on growth and involves “intuition to gauge opportunities in anticipation of future demand” and is associated with a work-related behavior which leads to self-starting actions to overcomes barriers to achieve a goal (Frese and Fay, 2001; Augusto Felício et al., 2012). In contrast, risk-taking comprises the willingness to make decisions leading to exploratory activities without full knowledge of the likely outcome. It involves commitment to allocate resources to projects in unknown and uncertain environments in order to discover new initiatives to gain profit and growth while tolerating possible, yet calculated, losses (Keh et al., 2002; Augusto Felício et al., 2012). This dimension is putting the concept in a more broader sense by looking at the posture it upholds towards other firms in the market. Stopford and Baden-Fuller (1994) connect this dimension to

experimentation within a firm which shows signs of risk-taking as the outcome cannot be guaranteed or even fully forecasted (March and Shapira, 1987). Making this part of the activities of a firm, it takes boldness and an aggressive attitude in seizing opportunities (Covin and Slevin, 1991). The crucial role of proactiveness has been emphasized by Lieberman and Montgomery (1988) as Augusto Felício et al.

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(2012) lay out in their study and is important when aiming for a first-mover (pioneering advantage) to catch a market opportunity. What this shows is that a firm in an industry where new technology is invented and introduced to the market on a daily basis must show competitive aggressiveness and boldness in their actions in order to compete competitively (Davis et al., 1991; Augusto Felício et al., 2012). This is congruent with studies in strategic management such as the study of Miles and Snow (1978) who defined this type as prospector firms which show risk-taking and proactive behavior. Evidently, these actions must be supported by those that give direction within a firm (Mintzberg, 1973) such as top management.

The evaluated dimensions of the intrapreneurship construct implicate that they are distinctive enough apart from being adequately related to belong to one construct. The multidimensional nature of intrapreneurship has been proven and is influenced by proactive and innovative behavior, and is associated with the level of risk propensity (Augusto Felício et al., 2012).

This study treats the dimensions on an individual level reflecting the innovative and proactive disposition of top management within a given firm. Although most research that is considered for this literature review seem to make the concept of intrapreneurship more concrete, the studies lack

consistency in framing the activities of an entrepreneur within an existing organization. Knowing that the choice of definition stays subject to debate in behavioral science (Chua, Sharma and Chrisman, 1999; Hoy, 1995), this makes sense and it is clear that intrapreneurship is a multidimensional construct. Therefore, in this study, intrapreneurship is defined as entrepreneurship within an existing organization and uses the dimensions selected and empirically tested by Augusto Felício et al. (2012). The construct contains three factors innovativeness, proactiveness and risk-taking and refers to a posture and attitude of a top manager which leads to the intention of innovative activities such as development of new products, services, technologies and has a competitive orientation. The activities resulting from innovativeness, proactiveness and risk-taking are considered to link to the capability of leveraging technology that diffuses from the competition and brings competitive product innovation and fasten the time-to-market speed of a given firm. Granting all this, Burgelman (1983) argues that it is the organization as a whole, or

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partly, that constitutes an opportunity structure for entrepreneurial behavior and should be taken into account when providing managerial connotations.

As the definition and benefits are ratified, prior research has also put a step in deepening our understanding of what influences the existence of intrapreneurship. The available literature is in most cases focused on how to measure the concept of entrepreneurship and intrapreneurship (Antoncic and Hisrich, 2001; Covin and Slevin, 1986; Knight, 1997; Augusto Felício et al., 2012) and associates it with the orientation of an employee or firm in general. As it is rather a young concept in research, researchers in this field such as Zahra (1991, 1993 ,1996) and Alpkan et al. (2010) are interested in how to encourage corporations to enable and support intrapreneurship as it is an essential predictor of a much-wanted business outcome, namely firm growth and performance. According to Zahra (1991) implementing intrapreneurship requires in most cases fundamental changes in culture, structure and a different management approach. As this study positions intrapreneurship as an independent variable, this part is reduced to only presenting the found organizational factors of influence and does not fully explore the individual factors in depth or the environmental factors that may play a part in encouraging and

supporting entrepreneurship within an existing organization. A successful initiation and implementation are formed by information sharing (Antoncic and Hisrich, 2004; Zahra, 1991), formal control for evaluation purposes of the effects of intrapreneurship (Zahra, 1991; Kuratko et al., 1993), scanning the industry environment in order to forecast trends and changes to grasp opportunities and offsetting threats (Zahra, 1991), organizational support in terms of support, trust, appointed time to work on new initiatives (Kuratko et al., 1990; Zahra & Covin, 1995), and finally the attitude of employees (person-related values) within the firm (Guth and Ginsberg, 1990; Zahra, 1991). Noteworthy, scanning the industry environment and attitude of the employees has not been proven to be significant positively related to the

intrapreneurship construct in the cross-cultural study of Antoncic and Hisrich (2004).

To all appearances, I puzzle if there could exist an equation to achieve any of the mentioned outcomes, as the concept can take many forms. There is some research evidence linking intrapreneurship to product innovation performance when aiming for business value by IT. Chen et al. (2015) found that

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corporate entrepreneurship fully mediates the effect of IT capabilities on product innovation performance. However, they used different constructs from less cited research and the study was not cross-culture validated as it only used data from Chinese manufacturing firms. It leaves room for further investigating the relationship between intrapreneurship, IT capabilities and competitive advantage without limiting to one specific type of firm only. As such, the following relationships are posited:

H2a: Intrapreneurship is positively related to having adequate IT capabilities. In other words, intrapreneurship will have a positive effect on establishing partnerships

between IT and business and linking IT with external stakeholders.

H2b: Intrapreneurship is positively related to gaining a competitive advantage. That is, intrapreneurship will have a positive effect on competitive product innovation and time-to-market.

2.3 (Digital) ambidexterity

This part of the literature review will assess what digital ambidexterity means, and why it is relevant for this research. When researchers talk about new technologies, dynamic and flexible markets where experimentation is needed and also stability is prized by controlling for efficiency and maturity of technology, ambidexterity is since two decades the most collective word used for this duality (O’reilly III and Tushman, 2013). For this (organizational adaptability) to successfully co-exist, researchers have argued that a firm needs the ability to both explore and exploit. That is, to “simultaneously pursue both incremental and discontinuous innovation” (Tushman and O’Reilly, 1996) and would be a condition in order to survive in the long run (O’Reilly and Tushman, 2013) or to achieve strategic renewal (March, 1991). A firm must take actions that have the intention to be revolutionary as well as evolutionary (Gibson and Birkinshaw, 2004; He and Wong; 2004). What must be kept in mind, and a much-discussed rule in business, there is no “one size fits all” approach. This means that what can be considered as a great

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strategy, continuously scaling exploitation and exploration to adapt to the changes in a firm’s environment, is not the holy grail for and applicable to all businesses. The right structural alignment depends on the environment, which can be dynamic or static, and asks for another approach (Burns and Stalker, 1961; Aldrich, 1999; Tushman and O’ Reilly, 2002). In this thesis study, a scenario is taken into account where a firm finds itself in a dynamic market where new technologies are translated into business or consumer goods and/or services at a high pace but is looking for ways to step in or keep up in order to become or stay competitive through product innovation and a competing time-to-market. This seems to be the right conditions for ambidexterity to flourish (Auh and Menguc, 2005; Geerts et al., 2010).

Continuing with definitions and benefits of ambidexterity in current literature, both Hamel and Prahalad (1990) and Tushman and O’Reilly (1996) agree that exploiting capabilities that are already developed by a firm and continuously creating new capabilities, is of strategic order and is key in gaining a competitive advantage. A calculated balance between exploratory and exploitative innovation has indeed been positively associated with firm performance (He and Wong, 2004). Innovations that are explorative of nature, are radical or discontinuously developed and serve new customers or markets (e.g. Lubatkin, Simek, Ling and Veiga, 2006). Innovations that are exploitative of nature, are incrementally developed and seem to be made for current markets and generally existing customers a firm already serves (e.g. Tushman and Smith, 2002; Benner and Tushman, 2003).

Taking both exploration and exploitation, on a large-scale research has empirically proven the potential benefits of ambidexterity. O’Reilly and Tushman (2013) presented in their symposium paper a comprehensive list of research that claim to have found positive firm performance due to ambidextrous activities. For instance, sales growth, back in the 1990s by Cusumano and Nobeoka (1998) and affirmed in the 2000s by Geerts, Blindenbach-Driessen and Gemmel (2010). For this study relevant, it is also documented that ambidexterity has a positive effect on innovation (Adler, Goldoftas and Levine, 1999; McGrath, 2001; Yang and Atuahene-Gima, 2007). Where Adler et al., (1999) conducted a study

specifically for an auto assembling plant (Toyota) and McGrath (2001) used manufacturing, service and retail firms in his empirical research on innovation capacity and managerial oversight. Complementary,

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Geerts, Blindenbach-Driessen and Gemmel (2010) showed that there are differences between manufacturing and service firms in their aim and success for firm growth through ambidextrous strategies. In search for literature regarding product innovation, Yalcinkaya, Calantone and Griffith (2007) have conducted an empirical study in the U.S. and theorized about the relationship between this type of innovation and market performance in regard of ambidextrous activities. Their findings show that technological resources influence the development of exploration capabilities. In addition, these

capabilities are positively related to product innovation. On the contrary, exploitative capabilities are negatively related to the degree of product innovation. Which seem to be a logical finding as exploitative capabilities are geared to incremental product optimizations and not towards radical product renewal. But what is the result of competitive product innovation when both capabilities are effectuated? And, besides product innovation, time-to-market is an important force for competitive advantage (e.g. Datar et al., 1997; Perols, Zimmermann and Kortmann, 2013). This seems inevitable to consider in flexible and dynamic markets with rapid new technological inventions. However, there is less known about this driver and which capability, explorative and/or innovative, have an (positive) effect. This study connects what is known about ambidexterity to product innovation and time-to-market competitiveness as this seems to be relevant in this era with rapidly expanding dynamic markets. As such:

H1c: Digital ambidexterity is positively related to gaining a competitive advantage. That is, digital ambidexterity will have a positive effect on competitive product innovation and

time-to-market.

There is a turn-side. Organizational ambidexterity may be duplicative and inefficient as March (1991) and Ebben and Johnson (2005) admit in their studies. Ebben and Johnson (2005) even reported not to have found effects on performance, although some report positive effects but under specific conditions. Earlier studies even argued that ambidexterity may be impossible to realize (e.g. Miller and Friesen, 1986). This seem to fade out in more recent literature that finds its use by stating conditions under which

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it might or might not be achieved. For instance, it has more value for firms in uncertain environments (e.g. Jansen et al., 2005; Wang and Li, 2008) and the effect is stronger for firms that are in the field of technology opposed to manufacturing (Junni et al., 2013).

How to become ambidextrous

As it sounds like a perfect strategy with a few points of attention in order to succeed as described in the previous paragraph, researchers have been searching for the right way to make this successfully possible within one firm (e.g. March, 1991; Jansen et al., 2009). It entails both steams, exploring and exploiting, get the right amount of resources and attention. In this matter, it is important to have no physical constraints to provide and support both and have enough resources at hand (Cao et al., 2009; Goosen et al., 2012). The resources include existing knowledge, skills, competencies, incentives and processes for exploitative as well as explorative innovations (Levinthal and March, 1993; Jansen et al., 2006; Lubatkin et al., 2006; O’Reilly and Tushman, 2008). Yet, Gilbert (2005) claims that it is not so much the allocation of adequate resources but the process change that is necessary to use these resources effectively, a good addition to our understanding on how to achieve organizational ambidexterity.

Obviously, there is a constant trade-off in order to find a relative balance between exploration and exploitation (Levinthal and March, 1993; Floyd and Lane, 2000; Gibson and Birkinshaw, 2004), a

continuous tension between efficiency and flexibility (Thomson, 1967). Besides resources Tushman and O’Reilly (1996) have suggested, in the aim for simultaneously explore and exploit, a firm needs to establish autonomous subunits that are anatomically separated. That is, each with its own people, structure, processes and culture but with shared resources and firm-wide capabilities. Supplemented by Gibson and Birkinshaw (2004), this involves a set of processes or systems that encourages and promotes autonomous behavior by individuals who decide for themselves where they spent their time on, alignment or adaptability. As earlier literature seems to be focused at the organizational level, also called contextual ambidexterity, more recent studies have proven that it is a multilevel occurrence by studying the role of those individuals who manage activities and create the strategic context within an organization

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(Birkinshaw and Gupta, 2013; Kortmann et al., 2014). In effort to become an ambidextrous organization prior literature affirms the role of top management as a fundamental element (Jansen et al., 2009; Good & Michel, 2013). The reason lies in the creation and renewal of structural alignment by mobilizing,

coordinating, integrating and applying activities that foster both innovation streams. It is therefore interesting to research if an innovative, proactive and risk-taking top manager have positive influence on the outcome. In this case: the level of ambidexterity and the ability to acquire the right balance between exploitation and exploration innovation activities. According to March (1991) this is not an easy position as there is a potential bias in favor of exploitation as it brings short-term success and entails in most cases more certainty. A risk-taking manager is expected in this thesis study to be able to break this bias and also would invest in explorative activities that involve failure and inefficiency together with an unknown outcome. As O’Reilly and Tushman (2013) considered in their literature review, the ability to detect and cash new opportunities through simultaneous exploration and exploitation is fundamental and is

obviously linked to leadership (e.g. O’Reilly and Tushman, 2011; Smith, Binns and Tushman, 2010) as someone must manage the tensions the various alignments within one firm creates (Burgers et al., 2009; Hill and Birkinshaw, 2014). Continually, also other studies have painted managers as protagonists that take the role as mediator between forces of stability and forces of change (Tushman and Romanelli, 1985; Floyd and Woolridge, 1996). This projection justifies the fact that literature has viewed and labeled ambidexterity as a dynamic capability (e.g. Ancona and Tushman, 2001). That is, “the firm’s ability to integrate, build and reconfigure internal and external competencies to address rapidly changing environments” (Teece, Pisano and Shuan, 1997, p. 516). From an organizational level perspective, this capability results in a firm to be adaptive in regard of its resources in order for exploration and

exploitation to exist (Eisenhardt and Martin, 2000). This can be achieved by reallocation and

reconfiguring of knowledge, skills and assets. From an individual level, this process is caused by the dynamic capability of senior management (O’Reilly and Tushman, 2013) and is embodied in the decisions, routines and actions of those in charge. Therefore:

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H1a: Intrapreneurship is positively related to ambidexterity. Specifically,

intrapreneurship leads to exploring new, and exploiting existing, innovation initiatives.

Interestingly, some researchers have argued that it is almost impossible to succeed the mission of being efficient and flexible at the same time (e.g. Lawrence and Lorsch, 1967). According to another group, this should be realistic by engaging in two organizational structures with their own significant features. These two structures are called “mechanistic” and “organic” by Burns and Stalker (1961). Mechanistic structures entail standardization, centralization and flourish by hierarchy whereas organic structures are defined by decentralization and autonomy. A combination seems to be an ideal

organizational configuration but a collective organizational context should also be effective according Gibson and Birkinshaw (2004). This paradox could be of positive impact on the process of connecting different business units. For instance, when a firm is taking the step to initiate incremental and radical innovation and aims for stability and transformation, a firm could be motivated to blend business and technology expertise to create a collective organizational context. It is argued that IT is a critical element in the process of achieving this two-way vision (Feeny and Willcocks, 1998). The reason lies in the ability of IT to more quickly share new and existing knowledge and other valuable information throughout the organization. Consequently, a climate could arise in which people are more inspired to take calculated risks and experiment more. This would be in line with the realization of ambidextrous innovative activities to stimulate incremental and radical innovation, and could be positive for the

connection between business and IT. In this study, it is expected that IT business partnership and external linkages between IT and stakeholders such as customers and suppliers, could benefit from an

ambidextrous strategy within the organization. This would be the case because a firm is more driven to continuously improve current products and service but also processes suppliers might use. On the other hand, keeping the business stable through efficiency goals might reduce the risk of uncertain cooperation continuation and maintain current quality. In turn, these partnerships and linkages are expected to be enablers of greater product innovation and competitive time-to-market as a firm is able to extent their

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knowledge and capabilities and find more synergy to seize product innovation opportunities when they arise or are created. As such:

H1b: Digital ambidexterity is positively related to having adequate IT capabilities.

2.4 IT capabilities

The role information technology (IT) plays in modern day organizations, is rising to strategic importance (Bharadway et al., 1999; Chen et al., 2015; Ross and Beath, 1996). Diving in the research about IT and digital business has given insights about what it potentially could provide and how researchers and practitioners look at the associated organizational capabilities. The emergence of new kinds of IT, such as big data analytics, cloud computing, mobile device technology and their applicability in business, has made it earn a more prominent position on higher management agenda because it is becoming a critical enabler of firm outcome such as product innovation (Wang et al., 2013). From a theoretical point of view, it is clear that current literature is influenced by the resource-based view (RBV) by famous authors such as Barney (1991) and Penrose (1959). Especially the competitive advantage implications of IT have been theoretically analyzed by applying the resource-based view (Mata et al., 1995) to find interdependencies between IT and other firm resources (Powell and Dent-Micallef, 1997). As discussed earlier, in order to gain superior performance, firms need to possess resources that are valuable, rare, inimitable and non-substitutable (Barney, 1991). More elaborated, Barney (1991) argues that a resource is “all assets, capabilities, organizational processes, firm attributes, information,

knowledge and more, controlled by a firm that enable a firm to conceive of and implement strategies that improve its efficiency and effectiveness”. In general, the RBV supports a distinction between resources and capabilities (Grant, 1996; Makadok, 2001). In this matter, capabilities reflect the ability of firms to combine resources in ways that build up and endorse superior performance (Amit and Schoemaker, 1993; Bharadwaj et al., 1999). This includes assembling, integrating, and deploying resources that are valuable. The two elements, resources and capabilities, differ from each other in ease of protecting a firm from being copied by others as capabilities are more difficult to replicate as they are deeply connected to the

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history, culture and experience of the firm (Bharadwaj et al., 1999). Specifying the IT capability, these organizational activities are usually done in combination or co-presence with other resources and capabilities in the possession of the firm (Peppard and Ward, 2004; Bhatt, 2005; Russo et al., 1997; Bharadwaj et al., 1999). This seems to be of great importance when treating IT resources as a potential source of competitive advantage as information technology researchers argue that competitors may easily copy them by purchasing the same hardware and software. This dismantles its power to provide

sustainable competitive advantage. On the other side, Mata et al. (1995) and Wade and Hulland (2004) argue from a resource-based view perspective, that development of IT capabilities over long period of time can become embedded in the organization and become difficult to duplicate or trade. Hence, not the technology and IT resources themselves, but the associated capabilities tend to provide firms a

competitive sustainable advantage because they are heterogeneously distributed across firms. Ross and Beath (1996) support this notion by providing illustrative examples of cases which all emphasize this idea. In sum, it is subsequently wrong to think that IT entails merely technological functionalities because it has proven to be over and above an organizational-wide capability to leverage technology that enables a firm to differentiate itself from the competition (Bharadwaj et al., 1999; Ross and Beath, 1996; Bassellier, 2003).

In more depth, recent literature provides enriched definitions of IT capability, such as

Bharadwaj’s (2000) definition which includes several broad categories based on empirical archival data. Bharadway positions it as an organizational capability that is created by the interaction of IT

infrastructure, human IT resources, and IT-enabled intangible resources. Ross and Beath (1996) define three conceptual IT assets: human resources, technology and relationship IT assets and state that defining the business value of information technology has always been a big challenge. Due to the missing transparency of the costs and the difficulty of connecting the benefits to firm-wide activities and

performance, IT value is labeled as unquantifiable and uncertain. However, there is a shift happening that unites IT to more functions, departments and business processes than one. They believe that IT can be of help by gaining a competitive edge by managing the three IT assets rigorously which should result in a

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“highly competent” IT human resource, transformable technology base and a forceful relationship between business management and IT. This is supported by Bharadway and is of great relevancy for this thesis research as it aims for a empirically supported positive connection with intrapreneurship and assumes an impact on gaining a competitive advantage through product innovation and time-to-market.

Furthermore, Santhanam and Hartono (2003) confirm the view of Bharadwaj and extents it with the finding that “firms with superior IT capability also exhibit superior firm performance” as its facets have the potential to support a firm in their competitive search to outperform rivals by enhancing

productivity, enabling cost reduction, boost profits and more. This is supported by Bhatt et al. (2010) and Jacks et al. (2011).

Melville et al. (2004) specify the IT capability in three facets, namely technological IT resource, human IT resource, complementary organizational resources in a conceptual framework based upon various research. Although these studies are greatly supported in the field of IT literature, recent studies such as Zhang’s (2003) conceptual model enhancement and Qi’s (2006) literature review lack empirical testing and are missing any theoretical foundation.

The construct IT capability

As the IT capabilities construct is referred to as a broad range of tools that take care of firm-wide communication by enabling information and knowledge sharing services, prior literature has proposed to view the construct broadly and use it as a formative second-order construct (Bharadway et al., 1999). The study of Bharadwaj et al. (1999) can be used with good confidence in which they present a proposition of the definition of the IT capabilities construct since it reports upon a multi-year empirical investigation and has gotten much attention from other researchers in this specific field. The construct bounds six categories to define firm-wide IT capabilities: IT business partnerships, external IT linkages, business IT thinking, IT business process integration, IT management and IT infrastructure. In this study, this view is adopted. And, due to its focus on the relationship between intrapreneurial posture of top management, it is most relevant to solely use two categories that are more likely to transmit with intrapreneurship and product

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innovation activities and should be able to explain any variability in the outcome variable. Namely, IT business partnerships and external IT linkages as these are the factors top managers, who are not IT specialists or dedicated IT managers, can influence. Furthermore, these factors and their underlying items are relevant and related to product innovation and time-to-market as they yield connection and blending of business and technology expertise and the relationship with line management of different departments and other internal and external stakeholders. Specifically, by enabling transportation of information and facilitation of knowledge sharing across different parts of the organization and with outside partners, it strengthens the ability of the firm to implement and force changes in business processes when new innovation opportunities arise (Byrd and Turner, 2001; Chen et al., 2015). Furthermore, as intrapreneurial activities frequently overpass more departments and business units (Antoncic and Hisrich, 2001), the focus should not be too narrow regarding the IT capabilities’ categories in order to provide an extensive understanding of the expected relationship between intrapreneurship and IT capabilities.

IT business partnerships

IT business partnerships refers to the firm’s ability to nurture and stimulate rich partnerships between the technology providers (IT professionals) and the technology users (business unit managers). It includes aspects related to the blending of business and IT experience through multi-disciplinary teams and encouraging risk sharing and experimentation with IT (Bharadway et al., 1999; Henderson, 1990). It is argued that encouragement of rich interaction between IT staff and business unit managers is crucial for development of innovative IT applications, which can lead to innovative end-user products (Chen et al., 2015) that are diffused from those of the competition. According to Goldsmith et al. (1991) this

development in collaboration between both the business and IT utilizes organizational knowledge to its most valuable application. It reflects the ability to partner up with different business units to exploit and explore new business opportunities which can lead to seizing competitive advantages. Given that only business units are in the lead to effectuate this relationship by using IT to their advantage in strategy and daily work (Boynton, Zmud and Jacobs, 1994), the shared responsibility should lie with both parties. That

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is, line management and IT management (Carr, 2006). This is a crucial part in making IT valuable for the business as it otherwise will not be able to acquire, deploy and leverage IT resources productively.

This relationship between business units and IT managers include social behavior such as speaking the same language, building friendships and trust (Reich and Benbasat, 2000) and needs time to develop and cannot easily be copied as it is difficult to observe (Fink and Neumann, 2007). In this paper, it is expected that top managers of business units are in the position to enable this relationship and start the interaction with potential to utilize IT resources in order to mobilize product innovation. Especially, a top manager who has an intrapreneurial posture who takes proactive initiative to champion, adopt and use information technology (Carr, 2006). Although current literature does give top managers a prominent position in this context (Bassellier, 2003), it does not specify in more depth if the characteristics and posture of entrepreneurial managers are what is needed to be cultivate this opportunity. As the above, it is this interaction and partnership that energizes other key IT facets such as IT business process integration and IT infrastructure in order to add business value by information technology (Reich and Benbasat, 2000; Ross and Beath, 1996)

External IT linkages

As the previous paragraph highlighted, the internal partnership is of great importance to unfold business value from IT. External partnerships, on the other hand, is as well as of significant importance (Bharadway et al., 1999). And is called External IT linkages by Bharadway et al. (1999) and refers to technology-based connection between the firm and its key business partners, including customers, suppliers, and other external collaborators. Interorganizational networks and other electronically supported distribution channels facilitate sophisticated interactions with people within the organization and external partners. These channels foster sharing of knowledge and information about the customer (Konsynski and McFarlan, 1990; Zaheer and Venkatraman, 1994; Bharadway et al., 1999). The outcome differs between firms as firm-specific information and knowledge is combined, which makes it a source of competitive advantage from a resource-based view perspective according Mata et al. (1995) and

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Peteraf (1993). Both internal and external alignment can therefore result in competitive advantage when this process is heterogeneous and immobile (Barney, 1993; Peteraf, 1993). This approach is supported by Kearns and Lederer (2003) as the advantage can be achieved when this unique knowledge is used to leverage firm IT resources in some inimitable way. Bharadway et al. (1999) illustrate that, to encourage collaborative relationships in order to gain knowledge the competitors do not have, education of

customers regarding the advantages of interorganizational connections is one solid solution. Kearns and Lederer (2003) add to this that the success depends on the support and participation of top management. Which is relevant for this study as it finds empirical support this notion.

IT capability, intrapreneurship and competitive advantage

IT capabilities is a sum of abilities of a firm that uses IT-based resources to leverage technology that diffuses from the competition and enables a firm to add value for their stakeholders (Bharadway, 1999, 2000). Chen et al. (2015) state that IT-enabled innovation is influenced by both a firm’s internal activities and processes and external influences from the environment surrounding a firm. From a RBV perspective, this has the potential of being a source of competitive advantage when these processes are valuable, inimitable, rare and non-substitutable, as earlier elaborated. That is, processes that cannot be easily copied by other firms and should lead to unique product innovations. Although Kearns and Lederer (2003) could not find empirical support for the assumption that IT alignment with business can be used to implement IT-based competitive advantage, this study will take this to the test when it concerns product innovation competitiveness and is encouraged by an intrapreneurial top manager. As it is suggested that efforts to establish and refine business and IT alignment, from a RBV perspective, could lead to a competitive achievement. Furthermore, their study hints at more support and participation from CEO’s and top managers in a more proactive way. Current literature can use supplementation in the discussion on how to achieve a competitive edge through product innovation and time-to-market, on what factors can strengthen the relationship with IT capabilities that connect business with IT and other stakeholders. It is expected to gain positive support from internal entrepreneurship and a culture that pursuits both

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explorative and exploitative innovation initiatives. The reason for this assumption lies in the characteristic of intrapreneurship and the elements in ambidextrous activities and the value IT can add. That is, the presence of interaction between business and IT can facilitate information and knowledge sharing and encourage collaboration between various functions, departments and business units (Bharadwaj et al., 1999; Chen et al., 2015) and promote new product innovation by support of gained market and customer data. Consequently, IT can activate collaboration that is able to accelerate the production and time-to-market. It is expected that an innovative, proactive and risk-taking top manager has great benefit from this and is motivated to support and encourage these activities in order to innovate and deliver products to customers faster than the competition is able to. As the study of Chen et al. (2015) focuses on the same relationship between corporate entrepreneurship, IT capabilities and product innovation, this study differs in the direction of the model and the composition of the concerning constructs. That is, instead of

empirically exploring if IT capabilities enable corporate intrapreneurship, it reserves the conceptual model by stating that an intrapreneurial top manager is motivated and enable to encourage and strengthen the IT capabilities addressed and used in this thesis study in order to improve product innovation. A firm is expected to benefit from linkages between functions, departments and business units besides being connected to outside stakeholders such as customers and suppliers. It is therefore interesting to explore what impact intrapreneurship has on the facilitating abilities IT capabilities bring and if this leads to competitive product innovation and time-to-market. The following associations are hypothesized:

H2c: IT capabilities is positively related to gaining a competitive advantage.

Specifically, IT capabilities leverage technology to differentiate from competition. H2d: IT capabilities mediates the relationship between intrapreneurship and competitive advantage. That is, intrapreneurship leads to IT capabilities, which in turn leads to

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