The first article/ Case 1
Author, article, and reference
Urbano and Turró authored the first article with the title “Condition Factors for corporate entrepreneurship: an in/external approach”. The article is referenced as
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Urbano, David, and Andreu Turró. “Condition factors for corporate entrepreneurship an in(ex)ternal approach.” International Entrepreneurship Management Journal 9.3 (2013): 379-396. Print.
The article is based on research carried out to find out some of the key internal and external factors affecting corporate entrepreneurship. Urbano and Turró recognize the role of corporate entrepreneurs in economic growth and the consequent interest of scholars and economists on the subject of corporate entrepreneurship. As such, numerous literature has been published and diverse opinions on corporate entrepreneurship put forward. Moreover, various scholars have suggested different definitions of corporate entrepreneurship.
As such, the article uses two theoretical frameworks, including the resource-based theory (RBT) and institutional economics (IE) to evaluate the factors that affect corporate entrepreneurship. It is worth noting that using the two theoretical frameworks in one study is uncommon since a majority of researchers use one theory in a study.
RBT considers corporations as bundles of tangible and intangible resources and capabilities and, therefore, they perform well or poorly depending on resource endowment. On the other hand, EI associate entrepreneurial success/failure to institutionalization, which entails structures, processes, programs, policies, and/or procedures.
Using the combination of the two theoretical frameworks, Urbano and Turró came up with six assumptions concerning factors affecting corporate entrepreneurship. The hypothesis under the RBT included
- “It is more likely that individuals become corporate entrepreneurs when they have some high education experience or more” (Urbano and Turró 379-396) and therefore knowledge is a key resource that determines the success of corporate entrepreneurship.
- “It is more likely that individuals become corporate entrepreneurs when they know other entrepreneurs” (Urbano and Turró 379-396)and, therefore, personal networks and social capital are a key determinant of corporate entrepreneurship.
- “It is more likely that individuals become corporate entrepreneurs when they can identify business opportunities” (Urbano and Turró 379-396)and, therefore, opportunity recognition is a vital element of corporate entrepreneurship.
The hypotheses under EI included:
- “It is less likely that individuals become corporate entrepreneurs when they have a fear of failure when starting a business” (Urbano and Turró 379-396) and, therefore, risk aversion could be associated with hampered corporate entrepreneurship growth.
- “It is more likely that individuals become corporate entrepreneurs when the media often report stories about successful new businesses” (Urbano and Turró 379-396).
- “It is less likely that individuals become corporate entrepreneurs when they have to follow many procedures to create a company” and as such, enhanced opening of corporate entrepreneurship is realized when entrepreneurs adhere to set guidelines” (Urbano and Turró 379-396).
After the study, Urbano and Turró realized that hypotheses under RBT were considered significant in the starting and developing corporate entrepreneurship. Hypothesis 1, 2, and 3 recorded at least 95% of significance in the development of corporate entrepreneurship in all the countries regardless of the level of GDP (Urbano and Turró 379-396).
On the other hand, hypotheses under EI recorded insignificant levels of importance in the development of corporate entrepreneurship. As such, any form of institutionalization has a limited effect on corporate entrepreneurship in all the countries the level of GDP notwithstanding.
In carrying out the study, Urbano and Turró adopted a database generated by the Entrepreneurship Monitor (GEM), which contains information from 2004 to 2008 concerning countries in Europe including Greece, Spain, Italy, Ireland, the Netherlands, France, the United Kingdom, Denmark, and Finland. Furthermore, Urbano and Turró used data from the Doing Business project, which is concerned with the provision of objective measures of business regulation and enforcement globally.
Variables were grouped into three major categories including the dependent variable (corporate entrepreneurship activity), independent variables (resource endowment and capabilities vis-à-vis institutional factors), and control variables (demographic factors such as gender, and economic sector) (Urbano and Turró 379-396).
Urbano and Turró analyzed the collected data using a static cross-sectional analysis technique and made the regression adopting country random effects (Urbano and Turró 379-396). The binary nature of the dependent variable made the two researchers use negative binomial regression, which is commonly adopted other business-related studies. The variables were to be worked out using the suggested formula (Urbano and Turró) Y it = þ+ d1Z1it + d2Z2it + b1X1it + μi + eit. Where Z1it collected RBT-related information; Z2it collected EI-related information; X1it collected the effect of the control variables; μi is the random effect; and; eit is the random disturbance (Urbano and Turró).
To address the evident issue of variables correlation, (Urbano and Turró) did a multi-collinearity diagnostic evaluation and it was evident that multicollinearity no significant effects on the study. Also, estimation was used to address the chances of heteroscedasticity and autocorrelation (Urbano and Turró 379-396).
In addition to the findings discussed earlier in this paper, it was found out that gender, a control variable, had no significance relevance and, therefore, both men and women have equal chances of becoming corporate entrepreneurs. On the other hand, the economic sector corporate entrepreneurship is operating is considerably important.
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Evaluation of the article
The work is commendable, especially due to the technique of using the two theoretical frameworks concurrently. As such, the comparison between the resources and capabilities of the firm and institutional economics is attainable. Further, the methodology and models of dealing with variables were reliable and, therefore, the findings had a high degree of validity and authenticity.
It is, therefore, prudent to agree with the findings that resource endowment and company capabilities highly affect corporate entrepreneurship. Concerning the influence of institutional economics, it is agreeable that they have fewer effects on the development of corporate entrepreneurship relative to resource endowment and capabilities. However, Urbano and Turró seem to suggest that the effect of IE is extremely low. The view is debatable. For instance, corporate entrepreneurship is affected by issues such as fear of failure at a more significant level than Urbano and Turró suggested.
Conclusion and five learned things
Decisively the article is quite relevant to the study and literature on corporate entrepreneurship. It provides vital insight into the internal and internal factors that affect corporate entrepreneurship. Some of the things learned include
- It is not only possible but also more effective to use the RBT and the IE theories together in the study on corporate entrepreneurship.
- Corporate entrepreneurship is significant in the economic development of any country.
- Scholars and policymakers have different opinions concerning corporate entrepreneurship, including the definition.
- While gender has no significant influence on corporate entrepreneurship, the economic sector is significantly important.
- It is important to have resources and economic capabilities for the success of corporate entrepreneurship in any country regardless of the level of GDP.
The second article/Case two
Author, title, and reference
Green and George authored the second article with the title “Corporate Entrepreneurship and Value Creation for Stockholders.” The article is referenced as
Green, Kimberly M, and Bradley George. “Corporate Entrepreneurship and Value Creation for Stockholders.” Frontiers of Entrepreneurship Research 31.17 (2011): 581-591. Print.
Articles summary and key findings
The key objective of the study is to examine the link between corporate entrepreneurship and returns to stakeholders by evaluating the view that innovative corporates, as recognized by the press, realize abnormal stock returns (Green and George 581-591).
Green and George appreciated the role corporate entrepreneurship play in established firms, especially since they are conceptualized as a strategy or strategic posture. Moreover, stockholders have considerable concerns on share pricing while innovations have conflicting effects on corporates earnings, which include both reduced and increased revenues.
A key aspect of discussion being the effect of positive reporting by the press on corporate entrepreneurship, the article sought to recognize whether media coverage has any significance in value creation.
Hypothetically, positive media reporting could be linked to increased revenue while negative coverage results in poor performance. However, research has revealed that counter effects are possible where positive press reporting results in negative performance.
Green and George put forward hypotheses including:
- “The publication of the list of “World’s Most Innovative Companies” will result in positive abnormal returns to stockholders for the listed companies;
- The publication of the list of “World’s Most Innovative Companies” will result in positive abnormal returns to stockholders for the companies that are new to the list (i.e., not included in previous year’s list);
- The publication of the list of “World’s Most Innovative Companies” will result in positive abnormal returns to stockholders for the companies that are included primarily for process or business model innovations rather than for product or service innovations” (Green and George 581-591).
The findings, however, could not confirm any of the hypotheses since evidence to link the appearance of corporates in press publications and success in revenue was statistically insignificant. Moreover, considerable/significant differences between corporates having positive and negative abnormal returns were missing. Finally, the indication to link abnormal returns and corporate recognition for corporate entrepreneurship activities and innovations was statistically trivial.
In data collection and sampling, Green and George used information on magazine publications on innovative companies from 2007 to 2010. Ranking of firms was based on three factors; including a survey of chief executive globally (80%), stock returns (10%), and three-year performance (10%). Green and George adopted an initial sample of 250 firms comprising only the firms in public trading.
In data analysis, Green and George used the event study methodology, which has been adopted in many similar studies. The methodology is based on the efficient market theory that gives the proposition that all public information pertinent to prospect cash flows of any corporate are readily available in the market and in-stock pricing and, therefore, any change of information would have consequences on returns.
Further, Green and George also adopted the ordinary least squares (OLS) regression in estimating parameters for every firm over stipulated time and the estimates obtained were used in defining abnormal returns related to positive reporting on corporate entrepreneurship activities. The standardization of abnormal returns (SAR) was done by dividing SAR by standard deviations of every firm under the study. Cumulative abnormal returns for every corporate under the study were obtained. To address the concern of information of some firms being released earlier than expected, Green and George evaluated the hypotheses using a 2-day event window.
Lastly, Green and George calculated the test static to determine average cumulative abnormal returns.
Evaluation of the article
The article provides significant information about corporate entrepreneurship research and literature. The demystifying of the view that positive press reporting on a firm may result in positive returns to stockholders is noteworthy. As such, corporate entrepreneurship and innovation reporting may have unexpected results.
The results of the study are agreeable to the extent that positive reporting can only result in increased returns. The view can only hold in theory but the reality is somewhat divergent.
Conclusion and things learned
Definitively, information has a significant influence on stock pricing and revenue returns. As such, press reporting has considerable influence on firms’ revenues. Some of the learned things include
- It is relatively challenging to establish the association between corporate entrepreneurship activity and growth/profitability measure of.
- Corporate entrepreneurship and innovation are expensive.
- In the financial market, the past may not inform the future, especially on corporate entrepreneurship and innovation press reporting and revenue generation.
- Corporate entrepreneurship is an integral aspect of strategizing in many established firms.
- In dealing with corporate entrepreneurship, it is possible to separate innovativeness and risk-taking, especially when using the entrepreneurial orientation (EO) scale.
The third Article
The author, title, and reference
Karacaoglu, Bayrakdaroğlu, and San authored the third article with the title “The Impact of Corporate Entrepreneurship on Firms’ Financial Performance: Evidence from Istanbul Stock Exchange Firms” referenced as
Karacaoglu, Korhan, Ali Bayrakdaroğlu, and Firat Botan San. “The Impact of Corporate Entrepreneurship on Firms’ Financial Performance: Evidence from Istanbul Stock Exchange Firms.” International Business Research 6.1 (2013): 163-175. Print.
Summary of the article and key findings
Karacaoglu, Bayrakdaroğlu, and San investigated the effect of corporate entrepreneurship on business performance. Karacaoglu, Bayrakdaroğlu, and San pay considerable attention to terms definitions, including the definition of corporate entrepreneurship. Corporate entrepreneurship is termed as entrepreneurship within a firm that results in deviations from the traditional operations.
They noted that insufficient research on the relationship between corporate entrepreneurship and revenue generation has not been done. Among the few research done, there were contradicting results of the relationship between corporate entrepreneurship and firms’ financial performances (Karacaoglu, Bayrakdaroğlu, and San 163-175).
As such, the article delved into the effects on various dimensions, including risk-taking, innovation, proactiveness, and firms’ aggressiveness, which were the basis of hypothesis formulation. As such, five hypotheses were developed, including (Karacaoglu, Bayrakdaroğlu and San 163-175);
- “Autonomy as a dimension of corporate entrepreneurship affects a firm’s performance;
- innovation as a dimension of corporate entrepreneurship affects a firm’s performance;
- risk-taking as a dimension of corporate entrepreneurship affects a firm’s performance;
- proactiveness as a dimension of corporate entrepreneurship affects a firm’s performance;
- competitive aggressiveness as dimension entrepreneurship affects a firm’s performance” (Karacaoglu, Bayrakdaroğlu and San 163-175).
The study support hypotheses 2, 3, and, 4 but hypotheses 1 and five were not supported (Karacaoglu, Bayrakdaroğlu, and San 163-175). As such, innovation, risk-taking, and Proactiveness positively influence firms, performance. It is worth noting that the two models used in the study had different results.
The five-dimeson model had a somewhat negative linkage between corporate entrepreneurship activities and performance. Moreover, the five-dimension model was ineffective in explaining the relationships between variables. The original model, (three-dimension), on the other hand, illustrated the positive association between corporate entrepreneurship and firm performance. As such, proactiveness, innovation, and risk-taking, significantly improve the performance of a firm, especially in Return on Assets, Return on equity, Net Sales/ Assets (Karacaoglu, Bayrakdaroğlu and San 163-175).
Data collection and sampling involved 140 firms operating in the manufacturing industry and listed in ISE. The 140 firms were randomly selected from the 175 companies publicly trading in the ISE and thereafter a surveyed (using questionnaires) carried out (Karacaoglu, Bayrakdaroğlu and San 163-175).
The five dimensions of corporate entrepreneurship, including autonomy, innovation, risk-taking, proactiveness, and competitive responsiveness, were used as the independent variables while the dependent variable was a firm’s financial performance (Karacaoglu, Bayrakdaroğlu and San 163-175).
Data analysis was done using SPSS and LISREL where two models were adopted. The first model was used to analyze data from all the five corporate entrepreneurship dimensions while the second model used three dimensions. For the reliability and validity of data, Karacaoglu, Bayrakdaroğlu, and San used exploratory/confirmatory factor analysis techniques. Further, the Structural Equation Model (SEM) was adopted. It is worth noting that SEM has been used effectively in testing relationships between independent and dependent variables in different fields (Karacaoglu, Bayrakdaroğlu, and San 163-175).
Evaluation of the third article
Karacaoglu, Bayrakdaroğlu, and San examined a vital element on corporate entrepreneurship and, therefore, they made a significant contribution to the field research. The findings on the positive effect of the three dimensions, including innovation, risk-taking, and proactiveness, on the performance of a firm, is agreeable. However, of the other dimensions, it is difficult to agree with the findings since other studies have given different reports. It is not accurate to rule out the effects of autonomy and competitive aggressive on corporate entrepreneurship.
Conclusion and five learned things from the third article
The article’s third article has investigated the effects of the key dimensions of corporate entrepreneurship on a firm’s performance. Using two models, the study has revealed that corporate entrepreneurship is significant in the financial success of a firm. The following concepts have been learned
- Adopting different models in analyzing dimensions of corporate entrepreneurship and their effects on firm’s performance can result in different findings and, therefore,
- it is imperative to use the most appropriate model in analyzing the effects of each dimension of corporate entrepreneurship to the performance of a firm;
- Corporate entrepreneurship can be subdivided into five dimensions including, autonomy, innovation, risk-taking, proactiveness, and competitive aggressiveness;
- While it is generally agreed that the original dimensions, including innovation, risk-taking, and proactiveness, have a significant influence on firms’ economic performance, there are disagreements about the other two dimensions. It is worth noting that models adopted in data analysis could be linked to the disagreement among researchers and scholars in corporate entrepreneurship;
- Less research has been done on the effect of corporate entrepreneurship in countries with lower GDP relative to great economies. Therefore, the is need to research corporate entrepreneurship in emerging economies.
Green, Kimberly M and Bradley George. “Corporate Entrepreneurship and Value Creation for Stockholders.” Frontiers of Entrepreneurship Research 31.17 (2011): 581-591. Print.
Karacaoglu, Korhan, Ali Bayrakdaroğlu and Firat Botan San. “The Impact of Corporate Entrepreneurship on Firms’ Financial Performance: Evidence from Istanbul Stock Exchange Firms.” International Business Research 6.1 (2013): 163-175. Print.
Urbano, David and Andreu Turró. “Condition factors for corporate entrepreneurship an in(ex)ternal approach.” International Entrepreneurship Management Journal 9.3 (2013): 379-396. Print.