I NTERNAL ANTECEDENTS

3.3.1.1.1 Trust and support for autonomy

This also includes the top management's ability to provide autonomy to make workers feel freedom and decision-making authority in projects, while feeling it is accepted to fail in risky projects (Kuratko et al.

2014). (Sathe 1985) argues that a fundamental dilemma of an organization is seeking to enhance CE while simultaneously maintaining corporate control. This can be solved if reporting systems are balanced with a strong entrepreneurial culture based on both mutual trust and open communication. This is supported by (Matthews & Brueggemann 2015), who argues that the empowerment of workers, by adopting "managed freedom", can increase creativity for workers, leading to improved CE performance.

Conversely, excessive formal controlling procedures will constrain entrepreneurial activities and the pursuit of CE (MacMillan et al. 1986) because it may frustrate creative employees having to follow too many procedures in order to receive support for their ideas (Zahra 1991). Furthermore, (Chung &

Gibbons 1997) argue that high levels of trust among organizational members have a positive influence on innovation through information exchange, while trust flourishes when information channels are open and strong norms of information sharing are prevalent (Adonisi 2003).

Moreover, (Behrens & Patzelt 2016)found past project failure experience, the firm's growth rate, and hierarchical level as an impacting factor for top managements decisions on terminating corporate entrepreneurial initiatives or supporting autonomous initiatives. As such, top management can be argued to be path dependent, in turn leading to their assessment of risk not truly reflecting the actual situation of the initiatives. This often leads to scenarios of falling into a familiarity trap, I.e. companies tend to favor and continue developing already known technology instead of pursuing new and unfamiliar technology, as these are perceived to contain greater risk and insecurity related to profit, thereby becoming less attractive (Ahuja & Lampert 2001; Penrose 1959; Elkjær 1992).

3.3.1.1.2 Reward systems

Another factor of top management support is the nature of rewarding in relation to CE. Research points to organizational systems that provide rewards and recognition for creative work and accomplishments as having a positive affect on CE (Amabile et al. 1996). As such, reward systems can have a significant impact on entrepreneurial activity in a company and be used as a tool to increase such activity, while also having a discouraging effect on innovative activity by rewarding performance not related to CE.

Companies should therefore look to specific motivational factors for employees working with CE and innovations.

In relation to this, both extrinsic and intrinsic rewards are well-known tools for top management to motivate workers (Gammelgaard 2007; West & Sacramento 2006; Matthews & Brueggemann 2015).

An employee can be extrinsically motivated, i.e. obtain goals apart from the work itself, (increased salaries, bonuses and promotions) or intrinsically motivated, i.e. gain personal satisfaction from doing the job (acknowledgements and personal development)(Gammelgaard 2007). In line with Gammelgaard, (Matthews & Brueggemann 2015) finds extrinsic incentives useful as motivation for employees, if goals can be seen and are easy to reach, although they block creativity if the goal is farfetched. They find intrinsic motivation good for work life, which similarly spur motivation and creativity. (Burroughs et al. 2011) finds that combining extrinsic rewards with intrinsic rewards such as personal development will enhance the capabilities of workers.

However, the use of rewards for entrepreneurial behavior should be implemented with care.

Experiments have shown complex interactions between risk (expected success, pay risk and employment risk), profit sharing and the extra effort employees are willing to exert when participating in new initiatives (Villiers-scheepers 2012). In this, (West & Sacramento 2006) finds that that what should be rewarded is not the success of an innovation, but the genuine attempts at innovation.

3.3.1.1.3 Time availability

Extra time to pursue innovations is also found to be a strong factor of promoting CE. Fostering new and innovative ideas require that employees are afforded time to incubate these ideas. The workload of people must be moderated to allow people to work with others on long-term problem solving.

Managers should schedule extra time for individuals and groups to pursue innovations, and structure jobs in ways to support such efforts and achieve short- and long-term organizational goals (Kuratko et al. 2014; Tasavori 2011). Furthermore, (Lerner et al. 2007) found that when employees have defined time structures, which includes a certain amount of time to pursue personal projects, they generated more entrepreneurial proposals.

3.3.1.2 Organization

3.3.1.2.1 Organizational structure and strategy

(Zahra 1991) further identified two key antecedents of successful corporate entrepreneurship in a company, namely Grand Strategy and Organization. The grand strategy encompasses the overall strategy of the company and is seen as a prerequisite for CE in companies, as it relates organizational missions and goals, and subsequently guides the deployment of a company's resources. Thus, if a project is congruent with the strategy, the probability of its adoption increases, while a project not congruent with strategy will be deemed as risky and falling out of the company's area of expertise (and grand strategy) (Zahra 1991).

Organization contains those organizational factors from the specific context in which employees perceive opportunities, and falls into two broad categories: tangible and intangible variables. Tangible variables relate to the formal organizational structure, whereas the intangible includes dominant organizational values, primarily consisting of the persistent belief system of a company (Zahra 1991).

Organizational structures can often be divided into two main poles, namely the organic and mechanistic structure. Organic structures are characterized by higher decentralization, flexibility and a lower degree of control and formality, whereas mechanistic structures on the other hand is characterized by more formalized and centralized structures that exhibit higher degree of hierarchies and control. Mechanistic structures are often seen as the most efficient way to operate in stable environments, as it allows full control and optimization of existing processes. Organic Structures on the other hand are more suitable for companies seeking to promote CE, as it allows organizations and employees to react more quickly to changes in the environment (Jones & George 2012). The informality of the organic structure also invites employees to create diverse interpersonal networks with other members of the inside and outside of the organization, which can benefit entrepreneurial behavior. However, some authors also argue that companies need to balance the two poles, as a pure organic structure might lead to chaos (Wit & Meyer 2014).

3.3.1.2.2 Culture and values

Organizational culture can be defined as the shared set of values, beliefs, attitudes, expectations, and assumptions, which determine the norms for appropriate behavior within an organization (Wheelen &

Hunger 1988) in (Covin & Slevin 1991). As such, an organization's ability to develop and maintain an entrepreneurial posture becomes dependent upon the specific culture and values. (Zahra 1991) analyzed and distinguished between two unique aspects of company values relating to CE, namely individual-centered and competitive-focused values. The prior relates to the overall nature of motivating individuals' creativity and risk-taking by having an internal climate that integrates both employee and company goals in the daily routines. The latter represents a company’s assumptions about the correct response to environmental moves, leading to industry monitoring, more experimentation with new ideas, and possibly initiating new businesses to capitalize on emerging opportunities (Zahra 1991). As such, both are seen as being supportive for CE if they are strongly present in a company, and thus it is important for companies to combine the top management support for an entrepreneurial culture with pre-existing values to foster a supportive environment for CE.

3.3.1.2.3 Knowledge management

An organizations capability to effectively pursue CE is also affected by its ability to manage knowledge.

Knowledge management is concerned with identifying, translating, sharing and exploiting knowledge

within an organization. One key issue is the relationship between individual and organizational learning, and how individual learning can be translated into organizational learning, and ultimately into new processes, products and businesses (Tidd & Bessant 2014). Five steps of knowledge management can be identified, namely generating and acquiring new knowledge, identifying and codifying existing knowledge, storing and retrieving knowledge, sharing and distributing knowledge across the organization, and exploiting and embedding knowledge in processes, products and services (Tidd &

Bessant 2014). This can also be argued to relate to the absorptive capabilities of a firm, which are defined as the capability of a firm to recognize the value of new, external information, assimilate it, and apply it (Zahra & George 2002), in (Tidd & Bessant 2014)". These are further discussed in section 3.3.2.1.2

3.3.1.2.4 Resources and capabilities

Resources and their availability constitute an important element in the facilitation of CE initiatives, which is also linked to the top management support. These are broadly defined to include human capital, financial capital, physical capital, and organizational capital (Barney 1991). Organizational capital is covered in regards to culture and values as well as knowledge management discussed above, while physical capital is deemed less relevant in our case.

It is important to examine company resources available for CE, as entrepreneurial initiatives are resource-consuming activities and constrained by available resources (Adonisi 2003; Covin & Slevin 1991). Several researchers have also found it important that employees perceive an availability of resources, which motivates them to engage in innovative initiatives (Tasavori 2011) (Kuratko et al.

2014)(Covin & Slevin 1991).

More specifically, the human capital in a firm is perceived as an important antecedent for CE. Human capital are seen as the source of "inspiration" and the ability to "change things" in an organization (Schumpeter 1934). The drive, skill, and ambition of employees are all individual traits that should be fostered and integrated into the organization through socialization, network development, and information sharing so that the individuals entrepreneurial spirit can be leveraged through being a part of the organization (Stevenson & Jarillo, 1990)(Starr & MacMillan 1990; Stevenson & Jarillo 1990).

This is in particular the case of large companies, where large pools of employees are likely to be preoccupied in daily routines.

Moreover, financial resources can be a strong promoter or barrier to CE, as they often have a direct determinant of initiating a CE initiative. This can become a paradox, as struggling companies will often tend to be cost-saving and reduce R&D, thus not having the financial resources for initiating larger

initiative. This potentially makes it more difficult for them to find new growth opportunities (Financial Times 2009) (Cantner et al. 2010).

Financial resources often links to firm size, as some smaller companies might lack the funds to conduct larger CE initiatives (OECD 2005). Adding to this, (Nason et al. 2015) examines the relationship between the size of the firm and CE, and found organizational size an important factor that contributes to the heterogeneous nature of CE. The authors identified how size promote CE via slack resources and resource structuring processes, while hindering it via large bureaucratic structures and resource bundling. A study of (Burgelman & Sayles 1986) also indicate that the availability of slack resources persuades employees to take more risks.

3.3.1.2.4.1 Dynamic Capabilities

Two specific types of firm resources and capabilities that is often mentioned when looking at CE and innovation, is ambidextrous- and dynamic capabilities (Teece & Pisano 1994; Teece 2012; Cantarello et al. 2012; Corbett & Neck 2010). Ironically, consistency in entrepreneurship and innovations involves a paradox, as companies must deal with both continuous improvement and radical innovation simultaneously in order to enforce sustainable growth. Here the tension is where to put the main focus and whether to push employees towards exploration activities for novel ideas or exploitative activities to improve existing processes and products. Thus, companies must be able to operate in two paths: one short-term path adapting to the needs of current markets, and a long-term patch finding ways to create entirely new markets and products through radical leaps (Wit & Meyer 2014).

This has resulted in the term ambidextrous organization (Benner & Tushman 2003), which relates to companies that are able to simultaneously deploy both exploration and exploitation strategies throughout processes and actions (Cantarello et al. 2012). Many companies often have difficulties leading more radical innovation, as there is a tendency to only innovate incrementally. In order to solve this and promote a true entrepreneurial spirit, companies should firstly acknowledge the paradox, and then promote duality and scenario planning to introduce a collective future (Lassen & Sørensen 2006) (Wit & Meyer 2014).

Many also refer to ambidexterity as a kind of Dynamic Capability (Benner & Tushman 2003; O’Reilly III & Tushman 2007; Cantarello et al. 2012), which is a term coined by (Teece & Pisano 1994) as a notion of how companies can become better to “to integrate, build, and reconfigure internal and external resources/competences to address, and possibly shape, rapidly changing business environments” (Teece 2012, p.1). More specifically, Dynamic Capabilities also include the capabilities to improve, adapt and innovate and change old routines if necessary (Tidd & Bessant 2014). These can

be divided into three clusters of abilities: Identify new opportunities (sensing), mobile resources to address an opportunity to capture value from it (seizing), and finally continuing renewal (transforming) (Teece 2012), all areas highly relevant to CE. There are mainly two ways of building dynamic capabilities: one is internal through utilization of the creativity and knowledge from employees, while the other is external through the search of external competencies that complement the company's existing capabilities (Teece 2012)(Teng 2007).