A conceptual model of public sectorcorporate entrepreneurship

Claudine Kearney & Robert Hisrich & Frank Roche

Published online: 2 May 2007# Springer Science + Business Media, LLC 2007

Abstract Entrepreneurship has been conceptualized as a process that can occur inorganizations of all sizes and types (Burgelman, Academy of Management Review, 8,32–47, 1983; Miller, Management Science, 29, 770–791, 1983; Gartner, Academy ofManagement Review, 10, 696–706, 1985; Kao, Entrepreneurship, creativity andorganization, 1989). This paper develops a conceptual model of public sector cor-porate entrepreneurship. The proposedmodel is intended to depict the main antecedentsthat relate to corporate entrepreneurship within the public sector and the impact ofcorporate entrepreneurship on public sector organizational performance (growth,development and productivity), as well as factors influencing its continuous perfor-mance. Following discussion of the model’s contents, the potential value for researchersand those engaging in public sector corporate entrepreneurship are described.

Keywords Public sector . Entrepreneurship . Corporate entrepreneurship

Corporate entrepreneurship has been defined in previous studies as: a process bywhich individuals inside organizations pursue opportunities independent of theresources they currently control (Stevenson and Jarillo 1990), doing new things anddeparting from the customary to pursue opportunities (Vesper 1990); a spirit ofentrepreneurship within the existing organization (Hisrich and Peters 2007); and thecreation of new organizations by an organization, or as an instigation of renewal andinnovation within that organization (Sharma and Chrisman 1999). Corporate

Int Entrep Manag J (2008) 4:295–313DOI 10.1007/s11365-007-0048-x

C. Kearney (*) : F. RocheUCD Michael Smurfit School of Business, Carysfort Avenue, Blackrock, Co Dublin,Republic of Irelande-mail: claudine.kearney@ucd.ie

F. Rochee-mail: frank.roche@ucd.ie

R. HisrichThunderbird, Glendale, AZ, USAe-mail: hisrichr@t-bird.edu

entrepreneurship involves “extending the firm’s domain of competence andcorresponding opportunity set through internally generated new resource combina-tions” (Burgelman 1984, 154). For the purpose of this study, corporate entrepre-neurship is defined as entrepreneurship within an existing public sector organization.It refers to the process that exists within a public sector organization that results ininnovative activities such as: the development of new and existing services,technologies, administrative techniques, and new improved strategies.

The results, whether the performance of entrepreneurial entities (Murphy et al.1996) or entrepreneurs creating new ventures or innovative project teams withinestablished corporations (Hisrich and Peters 1986), can be measured in terms ofeconomic profit (Schumpeter 1934, 1975, Zahra 1995), product innovation(Jennings and Young 1990), new venture growth (Baum et al. 2001), concern forpublic welfare and social legitimacy (Pfeffer 1994), or simply personal satisfaction(Miner 1997), among other measures (Zahra and Covin 1995). Corporateentrepreneurship is fundamental for the performance of organizations. It is howeverimportant to recognize that there are significant differences in organizationalrealities, suggesting that the goals, objectives, constraints, approaches and outcomesassociated with successful entrepreneurs are unique in public sector organizations.Furthermore, corporate entrepreneurship in the private sector is generally fostered bysmaller organizations with clear and consistent goals, control over resources and anorganic flexible organizational structure (Sadler 2000). These characteristics are lesssignificant in corporate entrepreneurship in the public sector where larger,hierarchical and relatively rigid organizations with several, conflicting yet wellunderstood objectives and generally less control over resources have continuouslyadopted entrepreneurial processes (Sadler 2000).

For the purpose of this research the components of performance are growth,development and productivity. Growth refers to the annual budgetary surplus ordeficit, in terms of economic profit, development refers to revenue generated fromproducts and services that did not previously exist, in terms of economicdevelopment and productivity refers to the level of efficiency and effectiveness ofthe public sector organization in relation to meeting the needs of the clients andutilizing resources.

Corporate entrepreneurship (entrepreneurial activities and orientations in anestablished organization) is an important component of organizational and economicdevelopment and wealth creation (Antoncic and Hisrich 2004). Over the past twodecades scholars and practitioners have been interested in corporate entrepreneurshipdue in part to its importance in revitalization and performance of organizations(Schollhammer 1981, 1982; Burgelman 1983, 1985; Kanter 1984; Pinchot 1985;Rule and Irwin 1988, McKinney and McKinney 1989; Guth and Ginsberg 1990;Zahra 1991). Corporate entrepreneurship is not only beneficial to organizations butalso to economies, as it can effect an economy by increasing productivity, improvingbest practices, creating new industries, and enhancing international competitiveness(Wennekers and Thurik 1999).

First, a theoretical exploration of the construct of corporate entrepreneurshipwithin the public sector is presented. It is argued that innovation, broadly defined, isthe single most common theme underlying all forms of corporate entrepreneurship.Yet, the presence of innovation alone is not sufficient to define an organization as

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being entrepreneurial. The term better applies to organizations that use innovation asa mechanism to enhance performance. By examining the direct effects of corporateentrepreneurship as well as the indirect and interaction effects with its two keyantecedents (public sector organizational characteristics and external environmentalconditions) in predicting organizational growth, development and productivity, thispaper provides new insights on the phenomenon. The fundamental objective is togain a better understanding of the role of corporate entrepreneurship in organiza-tional performance within the public sector organization by developing a conceptualmodel of corporate entrepreneurship in this context. Following an overall descriptionof the model, the main components of the model are discussed. This discussioncommences with a review of corporate entrepreneurship in order to provide anunderstanding of entrepreneurship in both the private and the public sector andtheorist’s view of successful corporate entrepreneurship. Then an overview of whatactually constitutes successful corporate entrepreneurship and ways to enhancecorporate entrepreneurship are identified.

The literature on corporate entrepreneurship has identified two main sets ofcorporate entrepreneurship antecedents: the public sector organization and theexternal environment. These antecedents and their corresponding dimensions arediscussed in terms of the interrelationships among these dimensions. Since oneconsequence of corporate entrepreneurship is performance, the influence ofcorporate entrepreneurship and its two antecedents (public sector organization andexternal environment) on organizational performance are then examined. The paperconcludes by considering, the limitations and the theoretical and managerialimplications of the model. In general, certain conclusions can be drawn highlightingthat in order to engender entrepreneurship in the public sector there is a need tocreate an environment conducive to exploration, generate trust and motivate staff tobe entrepreneurial and innovative.

Public sector corporate entrepreneurship model

The adoption of a corporate entrepreneurship model that can be applied to the publicsector organization has a number of benefits over more traditional entrepreneurshipmodels and theories that focus on organizations in the private sector. Considering thelevel and depth of analysis, an organizational level model of corporate entrepre-neurship is appropriate since entrepreneurial effectiveness is arguably an organiza-tional level phenomenon. Corporate entrepreneurial effectiveness can be measured interms of organizational performance. Organizational performance is a function of theorganization as well as individual level behavior (Covin and Slevin 1991).

The proposed model of Public Sector Corporate Entrepreneurship is depicted inFig. 1. A meaningful model of corporate entrepreneurship within the public sectorneeds several essential characteristics, including the following discussed below.

The ultimate dependent variable in this model is performance (growth, develop-ment and productivity). As asserted by Covin and Slevin (1991: 9) “Entrepreneurshipis studied for a variety of reasons, but the overriding reason for current interest inthe topic is the widespread belief that entrepreneurial activity stimulates generaleconomic development as well as the economic performance of individual firms.”

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Each element and corresponding dimensions of this model are derived from theliterature fundamental to the development of a good model. “Clearly defined variablesallow models to be developed which precisely integrate conceptually similar streamsof research and theories” (Covin and Slevin 1991: 9). This model incorporatescorporate entrepreneurship and its two antecedents (public sector organization andexternal environment) and its direct and indirect impact on performance. Structure/formalization, decision-making/control, rewards/motivation, culture, risk taking andproactiveness can affect the ability of an organization to engage in corporateentrepreneurial activity. The external environment has been recognized as afundamental determinant in influencing corporate entrepreneurship (Miller 1983,Khandwalla 1987, Covin and Slevin 1991; Zahra 1993a; Zahra and Covin 1995, Desset al. 1997). Political, complexity, munificence and change, are dimensions of theexternal environment that can effect the organization in its entrepreneurial endeavors.

Corporate entrepreneurship

Corporate entrepreneurship requires engendering entrepreneurial behaviors within anestablished organization. Terms such as: intrapreneuring (Pinchot 1985), intra-preneurship (Nielson et al. 1985, Pinchot 1985, Hisrich and Peters 2007; Antoncicand Hisrich 2000, 2001), intra-corporate entrepreneurship (Cooper 1981), corporateventuring (Biggadike 1979, MacMillan 1986, Ellis and Taylor 1987, Vesper 1990,Block and MacMillan 1993), internal corporate entrepreneurship (Schollhammer1981, 1982; Jones and Butler 1992), innovative (Miller and Friesen 1983), entre-preneurial strategy making (Dess et al. 1997), firm-level entrepreneurial posture

Corporate Entrepreneurship•Innovation

Performance•Growth•Development•Productivity

Public Sector Organization•Structure/ Formalization•Decision-Making/ Control•Rewards/ Motivation•Culture•Risk Taking•Proactivity

External Environment•Political •Complexity•Munificence•Change

Fig. 1 Model of public sector corporate entrepreneurship

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(Covin and Slevin 1986, 1991) and orientation (Lumpkin and Dess 1996; Knight1997) have all been used to describe the phenomenon of corporate entrepreneurship.Corporate entrepreneurship can be conceptualized as enhancing organizationalcompetencies and the development of opportunity through internally generatedinnovation. Internal generation of innovation requires action from motivatedindividuals and groups and is influenced by organizational and environmentalcharacteristics (Russell 1999).

There are no established criteria that characterize an entrepreneurial organization(Slevin and Covin 1990; Jennings 1994). Sadler (2000: 29) stated that, “Corporateentrepreneurship, and those factors facilitating it, are not absolutes: if certain factorsexist they will promote or inhibit the opportunity for corporate entrepreneurship.” It isnecessary that organizations understand the factors that inhibit corporate entrepre-neurship in order to overcome these obstacles and foster corporate entrepreneurshipwithin the organization. After recognizing the inhibiting obstacles, managers need toimplement at least some of the aspects of successful innovative companies.

Quinn (1985) identified the following factors in large successful innovativecompanies: atmosphere and vision; orientation to the market; small, flat organizations;multiple approaches; interactive learning; skunkworks (Quinn 1985). The potential ofcorporate entrepreneurship to rejuvenate and revitalize organizations is recognized(Miles and Covin 2002). Organizational support in terms of making resourcesavailable to employees (Kanter 1984; Pinchot 1985) also positively influences a firm’sentrepreneurial activities and behavior. Zahra (1993a) stressed the importance oforganizational support for corporate entrepreneurship. Organizational support elementssuch as management support, work discretion, rewards, time availability, and looseintra-organizational boundaries (Hornsby et al. 1990, 1993) have all been recognizedas crucial organizational elements impacting corporate entrepreneurship.

Sadler’s (2000: 35/36) survey on corporate entrepreneurship in the public sectordemonstrated various constraints and stimulants of corporate entrepreneurship thatwere replicated in both the public and private sectors. The results indicated thatentrepreneurial public sector organizations:

& Recognized the environment as more turbulent than conservative organizations.& Tended to have participative decision-making processes and dispersed power bases

which fostered many innovation-supporting sub-coalitions.& Tended to use fewer integrating devises than conservative organizations. Integrating

devises in the public sector typically include public consolidation in decision-making.& Were more autonomous than conservative organizations.& Tended to be output focused (Sadler 2000: 35/36).

Enhancing corporate entrepreneurship

Innovation plays a significant role in the presence or absence of entrepreneurshipwithin an organization and can be identified as something new to a given situation(Spence 1994). Peled (2001: 189) defines public innovation as, “a political processthat propels organizations to launch a significant new public project that alters rules,roles, procedures, and structures that are related to the communication and exchange

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of information within the organization and between the organization and itssurrounding environment.” A key challenge for the public sector is learning tomanage innovation, with increasing pressures to offer new kinds of services andimprove process efficiencies in their delivery (Bessant 2005).

Traditionally the study and practice of innovation has been a private sector phe-nomenon, where the impetus to successfully innovate is a fundamental part oforganizational growth, development and productivity. Innovation in the public sectorhas not been cited as a critical determinant of growth, development and productivity.“Public choice theory argues that public sector agencies are usually monopolies,with no competitive pressure to innovate” (Borins 2002: 467). Generally the publicsector is recognized as being a more complex open system and this could also act asan impediment to innovation. “Political scientists have observed that the media’sand opposition parties’ interest in exposing public sector failures forms a powerfulimpediment to innovation” (Borins 2002: 467).

Some public management academics have argued that innovation from withinthe public sector could conflict with traditional values such as due process andaccountability (Goodsell 1993; Terry 1998; Gawthrop 1999). Rainey et. al. (1976)indicated that managers in public organizations have less flexibility than managers inprivate organizations. Organizational sociologists have noted that public sectororganizations are usually large bureaucracies structured to perform their core taskswith stability and consistency, and resist change or disruption of these tasks (Wilson1989). Public managers report lower organizational commitment, lower satisfactionof work needs, and lower job satisfaction than private sector managers (Rhinehart et al.1969; Buchanon 1974; Rainey 1983). This is further asserted by Boyne (2002: 102)who stated that, “the level of organizational commitment is believed to be lower inthe public sector, largely because of the inflexibility of personnel procedures and theweak link between performance and rewards.” The incentive and motivation to beinnovative in the public sector have been low and the associated risk high due topublic scrutiny. Borins (2002: 468) supports this by asserting: “stability-seekingpublic sector organizations having strong central controls and operating in hostileenvironments can be expected to have personnel systems that do not reward careerpublic servants for successful innovation but punish them for unsuccessful attempts.”

On the other hand, Damanpour and Evan (1984) argued that empirical evidencedoes not support the claim that public organizations are less innovative than othertypes of organizations. Baldridge and Burnham (1975) assert that large, complex,and heterogeneous organizations such as governmental ministries are more likely tobe innovative than small, simple and homogeneous organizations because largeorganizations create problems of coordination, control and management that demandinnovative solutions. Present research tends to focus less on individual entrepreneursand more on roles, organizational processes and environmental factors in order toexplain public innovation (Baldridge and Burnham 1975; Hubbell 1991).

Barriers to public sector innovation

Mulgan and Albury (2003) in their study identified a number of key barriers toinnovation that are particularly prevalent in the public sector. These include: delivery

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pressures and administrative; short-term budgets and planning horizons; poorrewards and incentives to innovate; culture of risk aversion; poor skills in activerisk or change management; reluctance to close down failing programmes ororganisations and technologies available.

Mulgan and Albury (2003) identified key barriers to public sector innovation thatfocused on the characteristics of the public sector that inhibit innovative thinking,implying that the public sector is not conducive to innovation. Borins (2001)provides a more constructive approach and observes that thinking innovatively anddesigning an innovative program is only the beginning of what is required; hesuggests that actually developing an innovative culture in the public sector is allabout achieving and learning from successful cases of implementation andinnovations. Borins (2001) provides empirical findings about obstacles in imple-menting innovation in the public sector from his study of over three hundredgovernment reformers around the world. He categorized the obstacles to implement-ing innovation into three groups: The first group consists of barriers that arise fromwithin the bureaucracy/organization, such as hostile attitudes, turf fights, difficulty incoordinating organizations, logistical problems, difficulty in maintaining theenthusiasm of program staff, difficulty in introducing new technology, unionopposition, middle management resistance, and public sector opposition toentrepreneurial action. The second group of obstacles emanates from those thatarise primarily in the political environment; these include: inadequate funding orresources, legislative or regulatory constraints and political opposition. One obstaclethat is frequently emanating from both the bureaucratic and the political arena isinadequate resources, which is a result of funding decisions made at either thebureaucratic or political levels. The third group of obstacles is those existing in theexternal environment: public doubts about the effectiveness of the program,difficulty reaching the program’s target group, opposition by those affected in theprivate sector, including entities that would experience increased competition, andgeneral public opposition or skepticism.

Of the three sets of obstacles, Borins (2001) acknowledged that the largestnumber of obstacles arose from within the internal organization and bureaucraticcontext. This in reflects the fact that public sector innovations can impact operatingprocedures, power structure and dynamics, and occupational patterns.

Overcoming barriers to public sector innovation

Research has identified various ways of overcoming barriers to public sectorinnovation with various levels of success. Borins (2001) identified three main classesof tactical approaches: (1) persuasion—highlighting the benefits of an innovation,establishing demonstration projects and social marketing; (2) accommodation—consulting with affected parties, co-opting affected parties by engaging them in thegovernance of the innovation, training those whose work would be affected,compensating losers, and ensuring the program was culturally and linguisticallysensitive; and (3) others—finding additional resources, resolving logistical problems,preserving and exerting continuous effort, gaining political support and buildingalliances, having a clear vision and focusing on the most important aspects of the

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innovation, modifying technology, changing legislation or regulations, providingrecognition for program participants or supporters. The study clearly illustrates thatthe successful innovators took objectives seriously and sought to address concerns ina systematic way.

To be effective, innovation needs to be effectively managed, and should conformsomewhat to corporate strategy. It must also be integrated into the culture of theorganization, and be a fundamental aspect of the organizational behavior pattern.Innovation does not just happen. “Rather, it is a calculated outcome of strategicmanagement and visionary leadership that provide the people, structures, values, andlearning opportunities to make it an organizational way of life” (Tushman andNadler 1986: 92). Corporate entrepreneurship is envisioned to be a process that canfacilitate the effort of an organization to constantly innovate and effectively copewith changes that occur in both the internal and external environment. “Innovationhas become a topic of great interest to managers in both the public and privatesectors” (Sandford 2002: 467). Bessant (2005: 35) asserted that, “the core process ofinnovation has equal relevance for public organizations.” Innovation is one of thekey dimensions of entrepreneurial attitudes and behaviors, which is fundamental forboth public and private sector organizations to prosper and flourish.

Public sector corporate entrepreneurship antecedents

The literature on corporate entrepreneurship has identified two main sets ofantecedents: one pertains to the organization which concentrates on the intraorganizational environment of the public sector and the second pertains to theexternal environment of the public sector organization. A consequence of corporateentrepreneurship is organizational performance.

Internal environment

The internal environment of a public sector organization is critical for any corporateentrepreneurship to occur. There are many dimensions that make up thisenvironment including: structure/formalization, communication, goals, decisionmaking/control, rewards/motivations, culture, management support, risk taking,and proactiveness.

Structure formalization

Minimal hierarchy has been regarded as a structural attribute of entrepreneurship(Covin and Slevin 1991). For entrepreneurship to occur within the public sectorthere is a need for greater flexibility and adaptability, as high levels of rigidity andred tape are in conflict with the development of an entrepreneurial culture. Slevinand Covin (1990), Cornwall and Perlman (1990) and Jennings (1994) in theirdistinction between the organic and mechanistic structures claimed that an organicorganizational structure fostered entrepreneurial behavior. “Organic structures aremore adaptable, more openly communicating, more consensual and more looselycontrolled than mechanistic structures” (Sadler 2000: 30).

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Proposition 1 Corporate Entrepreneurship is more positively related to organiza-tional performance among organizations with organic structures and low formaliza-tion than among organizations with mechanistic structures and high formalization.

Decision making/control

It is evident that structures and systems are necessary for the management andcontrol of an enterprise; however, as stated by Thompson (1999: 210) thesestructures and systems “must not destroy flexibility, intuition, flair and creativity.”MacMillan et al. (1986) and Zahra (1991) stressed the inhibiting effect of theexcessive use of formal controls. Potentially enterprising managers can findthemselves constrained and frustrated in a non-entrepreneurial environment”(Thompson 1999: 210). It is therefore not surprising that public sector employeesin general appear to be less innovative than their private sector counterparts.

Proposition 2 Corporate Entrepreneurship is more positively related to organiza-tional performance among organizations with a more flexible, decentralized decisionmaking and less formal control systems than among organizations with more rigid,centralized decision making and highly formal control systems.

Rewards/motivation

Jennings and Lumpkin (1989) found that entrepreneurial organizations tend not topenalize managers if risky projects fail. Managers must perceive an environment thatencourages calculated risk taking while maintaining reasonable tolerance for failure(Hornsby et. al. 2002). If good performance is not recognized and rewarded there isno incentive for employees to take risks. “Theorists, therefore, stress that an effectivereward system that spurs entrepreneurial activity must consider goals, feedback,emphasis on individual responsibility, and results-based incentives” (Hornsby et. al.2002: 259).

Proposition 3 Corporate Entrepreneurship is more positively related to organiza-tional performance among organizations with high rewards and motivation thanamong organizations with low rewards and motivation.

Culture

Organizational culture is thought to be an influential factor in the promotion ofentrepreneurship (Zahra 1993b; Moon 1999). Culture is believed to provide the keyto a commitment to excellence from which organizational success and survival willfollow, as well as a determinant of employee behavior and commitment (Peters andWaterman 1982). Knight (1986) and Legge and Hindle (1997) maintained that theeffective management of corporate entrepreneurship involves managing a culturethat: views all staff as self-perceiving intrapreneurs, applauds failures and successes

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and provides screening mechanisms to aid and facilitate innovative direction andprocess.

Proposition 4 Corporate Entrepreneurship is more positively related to organiza-tional performance among organizations with a culture that is flexible, supports andfacilitates entrepreneurship and innovation than among organizations with a culturethat is rigid, and fails to support or facilitate entrepreneurship and innovation.

Risk taking

Organizations with a higher degree of red tape, weak lines between promotion andperformance, and high involvement with elected officials tend to have a less riskyculture (Bozeman and Kingsley 1998). Additionally, Bozeman and Kingsley (1998:110) asserted that, “characteristics of high level public sector jobs means that risktaking behavior of public managers may be subject to greater scrutiny.” Riskaversion impedes entrepreneurial behavior. Although risk taking decisions are notalways desirable in the public sector, public organizations need to encourage risktaking behavior because their policy environment in never entirely predictable andstable (Ford Foundation 1996). An understanding of the risk behavior of topmanagement and decision-makers provides an understanding into perceptions ofacceptable behavior concerning risk.

Proposition 5 Corporate Entrepreneurship is more positively related to organiza-tional performance among organizations that facilitate moderate risk taking thanamong organizations that are risk adverse.

Proactiveness

Proactiveness is concerned with implementation, which is doing what is required inorder to bring the entrepreneurial concept to fruition. Proactiveness refers to aposture of anticipating and acting on future wants and needs in the marketplace(Lumpkin and Dess 1996). This involves a high level of commitment andperseverance, flexibility and adaptability, and a willingness to take responsibilityfor possible failure. Proactive individuals are said to “...scan for opportunities, showinitiative, take action, and preserve until they reach closure by bringing aboutchange” (Bateman and Crant 1993: 105). Timmons (1994: 7) defines an entrepreneuras someone who “pursues an opportunity, regardless of the resources they control.”This fits the proactivity definition of “...one who is relatively unconstrained bysituational forces...” (Bateman and Crant 1993: 105). Morris and Jones (1999: 76)stated that, “Proactiveness entails an action-orientation and an emphasis onanticipating and preventing public sector problems before they occur. This action-orientation includes creative interpretation of rules, skills at networking andleveraging of resources, and a high level of persistence and patients in affectingchange.” There is no reason to believe that a public manager cannot be an entre-preneur if he or she carries necessary characteristics that are “task related motivation,

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expertise, personal gain, and a supportive environment” (Casson 1982 cited inEnnew and Whynes 1998: 60).

Proposition 6 Corporate Entrepreneurship is more positively related to organiza-tional performance among organizations that support and encourage proactivitythan among organizations that restrict and restrain proactive behaviour.

External environment

The external environment is a fundamental determinant in influencing corporateentrepreneurship (Miller 1983; Khandwalla 1987; Covin and Slevin 1991; Zahra1993a; Zahra and Covin 1995; Dess et al. 1997). The external elements in theproposed model of public sector corporate entrepreneurship relate to several basicdimensions of the public sector’s external environment. A significant level ofresearch has demonstrated that the external environment has a strong if notdeterministic influence on the existence and effectiveness of entrepreneurial activity(Covin and Slevin 1991).

Political

A study undertaken by Antoncic and Hisrich (2001) demonstrated that theenvironment tends to have a strong indirect impact, which is mediated by corporateentrepreneurship, on firm performance. Antoncic and Hisrich (2004: 525) furtherasserted that, “environmental characteristics may also interact with corporateentrepreneurship dimensions in their impact on performance.” Studies have proposedthat the relationship between corporate entrepreneurship and performance should beviewed in the context of strategy and environmental factors (Miller and Friesen1983; Covin and Slevin 1989; Dess et al. 1997). According to Nutt (2005: 5) “Theexternal environment of a public organization is littered with political consider-ations.” As a result of political constraints, there are frequent changes in policy andthe imposition of short time-horizons on public managers. The views of opinionleaders, outright manipulation by legislators and interest groups, and opposition toan agency’s prerogatives are more important than economic issues, which are crucialfor private organizations (Levine et. al. 1975).

Proposition 7 Corporate Entrepreneurship is more positively related to organiza-tional performance among organizations that can adapt and change with thepolitical environment than those that cannot.

Complexity

The external environment of public sector organizations can be characterized ashighly turbulent, which implies a dynamic, hostile and complex set of environmentalconditions (Miller and Friesen 1982; Osborne and Gaebler 1992; Nutt and Backoff

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1993). The environment facing public sector managers is now more complex,dynamic and threatening than it was in the past. The ability of an organization torespond to their changing circumstances is significantly limited not only byresources but also by the management philosophies and structures that characterizepublic enterprises (Morris and Jones 1999).

Proposition 8 Corporate Entrepreneurship is more positively related to organiza-tional performance in more complex environments than organizations in morebenign environments.

Munificence

Munificence refers to the environment’s support for organizational growth, and it ismanifested in high industry sales growth (Dess and Beard 1984). Environmentalmunificence can be identified as a multidimensional concept that incorporatesdynamism, technological opportunities, industry growth, and the demand for newproducts (Zahra 1993a). Dess and Beard (1984) noted that munificent environmentshelp firms build slack resources, which, in turn, aid conflict resolution. Furthermore,munificent environments enable firms to access external resources for support duringperiods of internal and external problems (Hambrick and Finkelstein 1987).

Proposition 9 Corporate Entrepreneurship is more positively related to organizationalperformance in more munificent environments than in more stagnant environments.

Change

Environmental changes in industry competitive structure and the underlyingtechnologies are thought to influence intrapreneurship (Guth and Ginsberg 1990).Zahra (1993a) asserted that the perceived decline of an industry would pushcompanies into increased renewal activities. New product demand also presents animportant demand-pull (Zahra 1993a) that encourages intrapreneurship. It istherefore anticipated that dynamism, technological opportunities, industry growthand new product demand will be positively related to corporate entrepreneurship.

Proposition 10 Corporate Entrepreneurship is more positively related to organiza-tional performance among organizations in more dynamic changing environmentsthan among organizations in stagnant stable environments.

Performance

“The growing interest in the study of entrepreneurship is a response not only to thebelief that entrepreneurial activity will result in positive macroeconomic outcomesbut to the belief that such activity can lead to improved performance in establishedorganizations” (Covin and Slevin 1991: 19). There is general agreement that a well

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performing public sector must rely on creativity and innovation to overcomeproblems (Vigoda 2002). According to Antoncic and Scarlat (2005: 71) “Corporateentrepreneurship activities and orientations can be considered important predictors oforganizational performance.” Organizations adopt entrepreneurial postures under theassumption that the associated behaviors will help to create or sustain high level ofperformance (Cornwall and Perlman 1990).

Peters and Waterman (1982); Kanter (1984) and Pinchot (1985) suggest that firmsthat develop organizational environments that are conducive to corporate entrepre-neurship and actually engage in corporate entrepreneurship in terms of entrepre-neurial orientations and behaviors may have higher levels of growth, profitability, ornew created wealth than firms that do not. In general, corporate entrepreneurship hasbeen considered an important element of organizational success (Peters andWaterman 1982; Kanter 1984; and Pinchot 1985). Growth and profitability areperformance dimensions that can be considered fundamental consequences ofcorporate entrepreneurship (Antoncic and Scarlat 2005). Creating an environment tofacilitate successful management and adaptability to the external environment meansthe capacity for developing an entrepreneurial organization. This type of organiza-tion will need to create and sustain the culture within which individual managers andstaff can behave entrepreneurially and be rewarded for it. Covin and Slevin (1991)and Lumpkin and Dess (1996) in their conceptual studies of corporate entrepre-neurship propose that the corporate entrepreneurship effect on performance may bemoderated by organizational factors. Naman and Slevin (1993) have illustrated thatthe fit between organizational factors and corporate entrepreneurship may be afundamental component for increasing organizational performance. This is furtherconfirmed by Antoncic and Hisrich (2004: 528) who asserted that, “the interactionbetween organizational factors and corporate entrepreneurship can impact perfor-mance.” Corporate entrepreneurship is necessary for organizations to achieve growthwhich will be further enhanced by a more comprehensive understanding of theprocess of corporate entrepreneurship and the collaboration between organizationsand their internal entrepreneurs.

Conclusions

This paper suggests that corporate entrepreneurship within the public sectorproduces superior organizational performance. The challenge for public sectormanagers is to identify the entrepreneurial processes that lead to various forms ofcorporate entrepreneurship, and to verify the forms of this phenomenon that producethe best results for their organization. There are several implications to the proposedmodel that should be identified prior to the discussion of its implications. First,despite its deliberately generic orientation, the model may not be applicable to allorganizations. It is specifically intended to depict the causes and consequences ofcorporate entrepreneurship within the public sector and is therefore not applicable tosmall/medium size new ventures within the private sector. Second, while theelements of the model are clearly specified, many of them represent broad constructsthat operate, at a high level of generality. For example the external environment canbe operationally defined in terms of forces or elements that are too numerous to

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specifically incorporate in a single model. A primary theoretical implication is thatorganizations can and should be viewed as entrepreneurial entities. It is a defensibleand meaningful assertion based on the fact that public sector organizations, likeindividuals, can create new value for society. Another implication is that twofundamental antecedents affect corporate entrepreneurship within the public sector.Specifically, because of the numerous and complex interrelationships betweencorporate entrepreneurship and other dimensions, management must create, to theextent possible, an organizational context that supports and helps sustain effectivecorporate entrepreneurship that enhances performance. This would require consid-eration of aspects of the two main antecedents: public sector organization andenvironment and their direct effect to either support or constrain corporateentrepreneurship and indirect effect on performance. The proposed model has valuein that it depicts corporate entrepreneurship and its antecedents and the effect ofthese on performance.

This paper proposes that entrepreneurship is a universal construct and can beapplied to the public sector organization. This is supported by Steyaert and Katz(2004) who proposed that entrepreneurship takes place in multiple sites and spaces,that entrepreneurship should not be seen solely from an economic-profit perspectiveand that entrepreneurship is a matter of everyday activities rather than actions ofelitist groups of entrepreneurs. Corporate entrepreneurship involves fosteringentrepreneurial behaviors within existing organizations. A greater understanding ofthe corporate entrepreneurial process will facilitate the collaboration betweenorganizations and their internal entrepreneurs. The degree to which an undertakingillustrates some level of innovativeness, risk taking and proactiveness can bedetermined an entrepreneurial event and the individual undertaking this event can bedefined as an entrepreneur. Morris and Jones (1999: 76) stated that, “anorganization’s overall entrepreneurial orientation, or “intensity,” is the result ofcombining the number of entrepreneurial events that are taking place (frequency)with the extent to which these events are innovative, risky, and proactive (degree).”Corporate entrepreneurship can only be fostered in an organizational context thatfacilitates and encourages innovation. According to Sadler, whose study sought toidentify if the factors that stimulate corporate entrepreneurship in the private sectorwere replicated in the public sector, while the framework of analysis was similar, thepublic sector experiences different environmental influences than the private sector.He concludes that the factors that facilitate corporate entrepreneurship also differbetween the sectors (Sadler 2000).

Organizations in both the public sector and the private sector cannot stand still. Inglobal markets effective performance depends more and more on successfulmanagement of innovation. Entrepreneurs can gain competitive advantage only bymanaging effectively today while simultaneously creating innovation for tomorrow.The challenge for entrepreneurs is to build congruent organizations both for today’swork and tomorrow’s innovation. Entrepreneurs in the public sector and the privatesector need to organize their company in such a way that they have sufficientinternal diversity in strategies, structures, people and processes to facilitate differentkinds of innovation. This is supported by Morris and Jones (1999: 87) whoconcluded in their research on public sector entrepreneurship “...that entrepreneur-ship must be an integral component in whatever models or frameworks are adopted.

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Table 1 Distinction between private (independent), corporate and public sector entrepreneurs

Private (independent)entrepreneur

Corporate entrepreneur Public sector entrepreneur

Objectives Freedom to discover andexploit profitableopportunities; independentand goal orientated; highneed for achievement

Requires freedom andflexibility to pursueprojects without beingbogged down inbureaucracy; goalorientated; motivated but isinfluenced by the corporatecharacteristics

An individual who ismotivated by power andachievement; undertakespurposeful activity toinitiate, maintain oraggrandize, one or morepublic sector organizations;not constrained by profit

Focus Strong focus on the externalenvironment; competitiveenvironment andtechnological advancement

Focus on innovativeactivities and orientationssuch as development ofnew products, services,technologies, administrativetechniques, strategies andcompetitive postures;Concentrate on the internaland external environment

Aim to create value forcitizens by bringingtogether uniquecombinations of publicand/ or private resources toexploit social opportunities;learns to use external forcesto initiate and achieveinternal change

Innovation Create value throughinnovation and seizing thatopportunity without regardto either resources (humanand capital); producesresources or endowsexisting resources withenhanced potential forcreating wealth

A system that enables andencourages individuals touse creative processes thatenable them to apply andinvent technologies thatcan be planned, deliberate,and purposeful in terms ofthe level of innovativeactivity desired; instigationof renewal and innovationwithin that organization

Public managers areentrepreneurial in the waythey take risks with anopportunistic bias towardaction and consciouslyovercome bureaucratic andpolitical obstacles theirinnovations face

Opportunity Pursues an opportunity,regardless of the resourcesthey control; relativelyunconstrained by situationalforces

Pursues an opportunitiesindependent of theresources they currentlycontrol; doing new thingsand departing from thecustomary to pursueopportunities

Uses every opportunity todistinguish their publicenterprise and leadershipstyle from what is the normin the public sector;understand the business aswell as supporting theopportunity for businessgrowth and development

Risk taking Risk taking is a prime factorin the entrepreneurialcharacter and function;assumes significantpersonal and financial riskbut attempts to minimizethem

Moderate risk taker;recognizes that risks arecareer related

Calculated risk taker; takesrelatively bigorganizational risks withouttaking big personal risks

Characterand Skills

Self-confident; strongknowledge of business

Self-confident; strong selfbelief that they canmanipulate the system;strong technical or productknowledge; goodmanagerial skills

Self-confident; hightolerance for ambiguity;strong political skills

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Entrepreneurship implies an innovative, proactive role for government in steeringsociety toward improved quality of life. This includes generating alternativerevenues, improving internal processes, and developing novel solutions toinadequately satisfied social and economic needs.” A genuine assessment of publicsector entrepreneurial success is not a “one off” success in the short-term butcontinuous long-term sustained growth, development and productivity. Successrelates to the overall entrepreneurial process and its ability to consistently contributeto the future growth, development and productivity of the enterprise.

Based on the findings of this literature, engendering corporate entrepreneurship andinnovation in the public sector is realistic and feasible provided it has organizationaland top management support and commitment, with an appropriate more organicstructure, low formalization, more flexible decentralized decision making, less formalcontrol systems, more positive rewards and greater degree of motivation and a flexiblesupporting culture that facilitates moderate risk taking and encourages proactivity.Additionally, public sector organizations must adapt a political, complex, munificentand changing external environment within which they are positioned. Although itwould be unrealistic to expect corporate entrepreneurship and innovation to be fullyintegrated in the public sector as evident in the private sector, it is apparent that thereare huge benefits that the public sector could derive from having an entrepreneurialand innovative culture. These include: improved customer service and satisfaction,better internal processes, more appropriate reward systems, improved communication,and better management-employee relationships. Therefore, engendering corporateentrepreneurship and innovation within the public sector would be challenging butbeneficial in enhancing the overall performance of the public sector (Table 1).

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