Intrapreneurship and Innovation in Manufacturing Firms: An Empirical Study of Performance Implications

INTRODUCTION Entrepreneurship has long been associated with small businesses and new ventures (Carland, Hoy, Boulton & Carland, 1984). The idea of an individual identifying an untapped market niche or inventing a new product goes hand in hand with the traditional perspective. In fact, Stevenson, Roberts and Grousbeck (1989) define entrepreneurship as a process of creating value by employing a unique set of resources to exploit an opportunity. However, in recent years, entrepreneurship researchers have increasingly recognized that entrepreneurial activity can and does take place in large businesses (de Chambeau & Mackenzie, 1986; Adams, Wortman & Spann, 1988; Ellis & Taylor, 1988; Morris, Avila & Allen, 1993). Brandt (1986) presents the position that the entrepreneurial process has applicability to organizations of all sizes. In the large firm setting, the term generally used is intrapreneurship and an intrapreneur is defined by Pinchot (1985) as "Those who take the hands-on responsibility for creating innovation of any kind within an organization" (p. ix). In the small business setting, entrepreneurship is almost universally taken as a positive, beneficial phenomenon (Carland & Carland, 1993). It is intricately linked with innovation (Carland, et. al., 1984). Due to its rich background in the small business arena, the authors were interested in exploring the impact of entrepreneurship within the corporate setting. Given that intrapreneurship exists within large, established firms, how does it manifest itself? What is intrapreneurship and what effect does it have on a firm's performance? This paper represents an effort to investigate intrapreneurship and its linkage to financial performance. INTRAPRENEURSHIP The various definitions of intrapreneurship appearing in the literature are remarkably similar. De Chambeau & Mackenzie (1986) say that "Intrapreneurial activity ranges from the development of a new product to the creation of a more cost-efficient process (p. 45). " Jennings and Young (1990) define corporate entrepreneurship as the process of developing new products and/or markets. Hornsby, Montagno and Kuratko (1990) describe intrapreneurship as a means to increase corporate success through the creation of new corporate ventures. McGrath, Venkataraman, MacMillan and Boulind (1992) describe corporate entrepreneurship as a means for firms to change their pool of competencies to increase long term economic viability. Hornsby, Naffziger, Kuratko and Montagno (1993) refer to the development of new business endeavors within the corporate framework. Note that the intrapreneurial perspective is similar to the entrepreneurial in terms of its focus on innovation. In fact, the corporate entrepreneurial construct has three accepted dimensions in the literature (Morris, Avila & Allen, 1993). These include innovativeness, development of novel products, services, or processes; risk-taking; and proactiveness (Covin & Slevin, 1989; Ginsberg, 1985; Jennings & Young, 1990; Khandwalla, 1977; Miles & Arnold, 1991; Miller & Friesen, 1983). All of the definitions of intrapreneurship have been highly consistent (Cornwall & Hartman, 1988). Zahra (1986) examined the antecedents of corporate entrepreneurship and found that most people see it as being innovative activities within a firm. EMPHASIS ON INNOVATION Most researchers clearly see creativity and/or innovation as the focus of intrapreneurial activities. Intrapreneurs are innovators and idea generators. The outcomes of these innovations range from new products to new markets to new processes. However, Knight (1967) identifies new product/service innovations as the highest level results of intrapreneurial actions (Cornwall & Hartman, 1988). Jennings and Young (1990) defined intrapreneurship "as the process of developing new products and new markets" (p. 55). Morris, Pitt, Davis and Allen (1992) used the number of new products, services, and processes introduced by or within a firm to measure the frequency of entrepreneurship. …