Strategic Management Journal

Strat. Mgmt. J., 20: 421–444 (1999)

THE RELATIONSHIP BETWEEN CORPORATE

ENTREPRENEURSHIP AND STRATEGIC
MANAGEMENT
BRUCE R. BARRINGER1* AND ALLEN C. BLUEDORN2
1
College of Business Administration, University of Central Florida, Orlando,
Florida, U.S.A.
2
College of Business and Public Administration, University of Missouri—Columbia,
Columbia, Missouri, U.S.A.

This study examines the relationship between corporate entrepreneurship intensity and five
specific strategic management practices in a sample of 169 U.S. manufacturing firms. The five
strategic management practices include: scanning intensity, planning flexibility, planning horizon,
locus of planning, and control attributes. The results of the study indicated a positive relationship
between corporate entrepreneurship intensity and scanning intensity, planning flexibility, locus
of planning, and strategic controls. The fine-grained nature of these results may be of practical
use to firms that are trying to become more entrepreneurial and may help researchers
better understand the subtleties of the interface between strategic management and corporate
entrepreneurship. Copyright  1999 John Wiley & Sons, Ltd.

INTRODUCTION neurial behavior is largely determined by the

compatibility of its management practices with
Many authors have singled out corporate its entrepreneurial ambitions (Murray, 1984).
entrepreneurship as an organizational process that Among the management practices believed to
contributes to firm survival and performance facilitate entrepreneurial behavior are a firm’s
(Covin and Slevin, 1989; Drucker, 1985; strategic management practices (e.g., Covin and
Lumpkin and Dess, 1996; Miller, 1983; Zahra, Slevin, 1991a; Miller, 1983; Murray, 1984; Zahra,
1993). In short, these authors argue that entrepre- 1991). This research is consistent with the general
neurial attitudes and behaviors are necessary for notion that a firm’s strategic management prac-
firms of all sizes to prosper and flourish in com- tices should be tailored to support its organi-
petitive environments. As a result of these senti- zational objectives and context (Chakravarthy,
ments, a growing body of literature is evolving 1987; Child, 1972). Unfortunately, no study has
to help firms understand the organizational proc- focused specifically on the relationship between
esses that facilitate entrepreneurial behavior a firm’s strategic management practices and its
(Covin and Slevin, 1991a; Guth and Ginsberg, entrepreneurial intensity. Instead, the studies that
1990; Miller, 1983; Sathe, 1988; Zahra, 1991). have examined the organizational characteristics
This stream of research is extremely valuable that facilitate entrepreneurial behavior have
because a firm’s ability to increase its entrepre- looked at a broad array of variables and have
not provided extensive insight about the impact
of a firm’s strategic management practices on its
Key words: corporate entrepreneurship; strategy; plan- entrepreneurial intensity.
ning; scanning; flexibility To develop a more comprehensive picture of
* Correspondence to: Prof. B. Barringer, College of Business
Administration, University of Central Florida, Orlando, Flor- how a firm’s strategic management practices
ida, 32816-1400, USA influence its entrepreneurial behavior, we exam-

CCC 0143–2095/99/050421–24 $17.50 Received 23 April 1996

Copyright  1999 John Wiley & Sons, Ltd. Final revision received 27 August 1998
422 B. R. Barringer and A. C. Bluedorn

ined the relationship between the strategic man- duction with new ones. Schumpeter (1936, 1950)
agement practices and corporate entrepreneurship viewed this process favorably, because inno-
intensity of a sample of 169 U.S. manufacturing vations typically represent an improvement in
firms. We selected five dimensions of the strategic terms of product or process utility and as a
management process to include in the study, result create greater buyer interest and overall
including scanning intensity, planning flexibility, economic activity.
planning horizon, locus of planning, and control Although Schumpeter’s writings focused pri-
attributes. The process of selecting the dimensions marily on the activities of the individual entrepre-
of strategic management to include in the study neur, in many settings entrepreneurship is argu-
struck a balance between completeness and parsi- ably a firm-level phenomenon (Covin and Slevin,
mony. In designing the study, we sought to 1991a, 1991b; Miller, 1983; Stevenson and Jar-
include enough dimensions of strategic man- illo, 1990). For example, 3M, one of the world’s
agement to reflect the overall essence of the largest corporations, has a long history of entre-
strategic management process while keeping the preneurial behavior, transcending the tenures of
number of dimensions manageable and theo- CEOs and top management teams (Hussey,
retically relevant. Accordingly, the dimensions 1997). Similarly, a recent study of the role of
of strategic management were selected through entrepreneurship in reformulating Intel Corpor-
a literature review focused on identifying the ation’s corporate strategy suggested that entrepre-
areas of strategic management most relevant to neurial activities were the outcome of the inter-
the pursuit of corporate entrepreneurship. Thus action of individuals and groups at multiple levels
the approach taken in this study was to examine within the firm (Burgelman, 1991).
the relationship between each of the dimensions The end result of these and similar observations
of strategic management included in the study has been the conceptualization of entrepreneurship
and a firm’s corporate entrepreneurship inten- as a firm-level phenomenon (e.g., Burgelman,
sity. 1983; Covin and Slevin, 1988, 1991a; Miller,
This article proceeds in the following manner. 1983; Zahra, 1991, 1993). The main assumption
First, we provide a review of the corporate that underlies the notion of corporate
entrepreneurship literature. Second, we examine entrepreneurship is that it is a behavioral phenom-
and discuss the relationship between each of the enon and all firms fall along a conceptual con-
dimensions of strategic management included in tinuum that ranges from highly conservative to
the study and corporate entrepreneurship intensity, highly entrepreneurial. Entrepreneurial firms are
and we articulate a research hypothesis to summa- risk-taking, innovative, and proactive. In contrast,
rize each of the individual discussions. Third, we conservative firms are risk-adverse, are less inno-
describe the research design and report the results vative, and adopt a more ‘wait and see’ posture.
of the hypothesis tests. Finally, we examine the The position of a firm on this continuum is
implications of the results for managers and referred to as its entrepreneurial intensity.
researchers. Against this backdrop, one of the main themes
that has emerged in the corporate
entrepreneurship literature is that a firm’s level
CORPORATE ENTREPRENEURSHIP of entrepreneurial intensity is influenced by both
its external and its internal corporate context
Contemporary entrepreneurship research orig- (Zahra, 1991). Firms in turbulent vs. stable
inated in the work of economist Joseph Schum- environments tend to be more innovative, risk-
peter (1883–1950). In his writings, Schumpeter taking, and proactive (Naman and Slevin, 1993).
argued that the main agents of economic growth Previous studies have identified attributes of
are the entrepreneurs who introduce new products, highly entrepreneurial firms that differ from those
new methods of production, and other innovations of firms exhibiting lower levels of entrepreneurial
that stimulate economic activity (Schumpeter, intensity. In the next section of this article, we
1936, 1950). Schumpeter described entrepreneur- discuss the relationship between each of the indi-
ship as a process of ‘creative destruction,’ in vidual dimensions of strategic management
which the entrepreneur continually displaces or included in this study and corporate
destroys existing products or methods of pro- entrepreneurship intensity.
Copyright  1999 John Wiley & Sons, Ltd. Strat. Mgmt. J., 20: 421–444 (1999)
 Corporate Entrepreneurship and Strategic Management 423

THE RELATIONSHIP BETWEEN tainty can produce a false sense of security in

CORPORATE ENTREPRENEURSHIP managers that makes it easy for them to miss
AND FIVE DIMENSIONS OF signals coming from the environment. Thus, scan-
STRATEGIC MANAGEMENT ning can help managers cope with uncertainty,
but only if they realize that uncertainty can only
Three variables that underlie a firm’s ability to be reduced, not eliminated. Managers must
behave in an entrepreneurial manner are consis- remain vigilant, regardless of the degree of rigor
tently mentioned in the literature. These are in their scanning practices.
opportunity recognition (Miller, 1983; Stevenson A high level of environmental scanning is
and Jarrillo-Mossi, 1986; Zahra, 1993), organi- congruent with the entrepreneurial process
zational flexibility (Murray, 1984; Naman and (Miller, 1983; Stevenson and Jarrillo-Mossi,
Slevin, 1993; Stevenson and Gumpert, 1985), and 1986; Zahra, 1991). Recall that entrepreneurial
a firm’s ability to measure, encourage, and reward firms are innovative, risk-taking, and proactive;
innovative and risk-taking behavior (Sathe, 1988; and a central theme of the innovation literature
Zahra, 1993). The strategic management practices is that information gathering and analysis is criti-
included in this study (i.e., scanning intensity, cal to the development and maintenance of suc-
locus of planning, planning flexibility, planning cessful innovation strategies (Covin, 1991;
horizon, and control attributes) were selected on Kanter, 1988; Zumd, 1983). In addition, indus-
the basis of their potential for influencing one or tries that pay a premium for innovative behavior
more of these key enablers of firm-level entrepre- require constant monitoring and analysis to
neurial behavior, and a firm’s overall entrepre- remain understood. Examples of environmental
neurial intensity. settings, called high-velocity environments
The following is a discussion of each of the (Eisenhardt, 1989), that fit this profile include
strategic management practices included in the the electronics, computer software, biotechnology,
study and its effect on firm-level entrepreneurial and health care industries (Covin and Slevin,
behavior. A research hypothesis is postulated to 1991b; Zahra, 1993). These industries are charac-
summarize each of the discussions. It should be terized by products and services that have rela-
noted that for ease of discussion we refer to tively short life cycles. As a result, firms that
the polar ends of the corporate entrepreneurship compete in these industries must adopt short plan-
continuum as ‘conservative’ (low corporate ning horizons and develop scanning mechanisms
entrepreneurship intensity) and ‘entrepreneurial’ that focus on detecting shifts in environmental
(high corporate entrepreneurship intensity). trends that provide opportunities for new products
and services.
Scanning also facilitates the risk-taking and
Scanning intensity
proactiveness dimensions of entrepreneurial
Environmental scanning refers to the managerial behavior. As a means of partial uncertainty
activity of learning about events and trends in absorption, scanning may lower the perception of
the organization’s environment (Hambrick, 1981). risk associated with a potential entrepreneurial
The philosophical roots of the scanning concept venture, increasing the likelihood that the firm
date back to the ancient Greeks, who believed will engage in the venture. Entrepreneurial man-
that success in combat was dependent upon agers may also realize that scanning is their
adequate intelligence for the purpose of making bridge to remaining competitive. A firm in a
good tactical and strategic decisions (Box, 1991). turbulent environment must be continually inno-
Today scanning is important to managers for vative to remain competitive, which requires
more benign, yet similar reasons. Scanning pro- extensive scanning to recognize and exploit
vides managers with information about events environmental change. As a result, an intensive
and trends in their relevant environments, which scanning regime, complemented by a short plan-
facilitates opportunity recognition (Bluedorn et ning horizon and a flexible planning system, is a
al., 1994). In addition, scanning is a method of practical approach for entrepreneurial firms.
‘uncertainty absorption,’ although the uncertainty In contrast, scanning is less likely to be a
absorption component of scanning is a two-edged critical strategic management function for con-
sword. A belief that scanning reduces all uncer- servative firms. Conservative firms are usually
Copyright  1999 John Wiley & Sons, Ltd. Strat. Mgmt. J., 20: 421–444 (1999)
424 B. R. Barringer and A. C. Bluedorn

located in industries that compete in stable psychological factors. Newman argued that once
environments (Covin, 1991). These environments an executive prepares a plan there is a tendency
generate low levels of uncertainty and, conse- to try to ‘make it work’ which engenders a
quently, do not require an extensive search proc- resistance to change as a result of an established
ess to remain understood (Covin and Slevin, mindset and a fear of loss of face. Similarly,
1989; Miller and Friesen, 1983). Because product Mintzberg (1994: 175) argued that ‘The more
and service life cycles are longer in stable vs. clearly articulated the strategy, the greater the resist-
turbulent environments, planning horizons can be ance to change—due to the development of both
longer and scanning activities typically focus on psychological and organizational momentum.’
subtle shifts in environmental trends, quality Despite these observations, a number of theo-
improvements, and opportunities to gain market rists have argued that the need for flexibility in
share. In addition, there is a considerable cost of all areas of organizational design is increasing
environmental scanning in terms of both mana- due to the increasingly rapid pace of environmen-
gerial time and cash outlays (Jennings and Sea- tal change (Aaker, 1995; Aaker and Mascarenhas,
man, 1994). Thus an overemphasis on environ- 1984; Bahrami, 1992; Chakravarthy, 1996).
mental scanning for conservative firms may be Applying this notion to strategic management,
counterproductive. This discussion leads to the Gardner, Rachlin, and Sweeney (1986: 2.22)
following hypothesis: observed that ‘one of the hallmarks of good
strategies is the willingness of the drafters to
Hypothesis 1: A positive relationship exists encompass the likelihood of change and conse-
between scanning intensity and corporate quent uncertainties.’ Similarly, Koontz (1958: 55)
entrepreneurship intensity. wrote, ‘effective planning requires that the need
for flexibility be a major consideration in the
selection of plans.’
Planning flexibility
A concerted effort in the direction of planning
Planning flexibility refers to the capacity of a flexibility facilitates a high level of corporate
firm’s strategic plan to change as environmental entrepreneurship intensity for several reasons.
opportunities/threats emerge. The notion of plan- First, a flexible planning system, coupled with
ning flexibility was first suggested by Kukalis intensive environmental scanning, allows a firm’s
(1989) to investigate how environmental and firm strategic plan to remain ‘current’ and permits a
characteristics affect the design of strategic plan- firm’s entrepreneurial initiatives to be planned
ning systems. Kukalis theorized that firms in rather than to take place in an ad hoc manner
complex environmental settings maximize per- outside the parameters of a strategic plan. This
formance by adopting ‘flexible’ planning systems. latter point is important because involvement in
Flexible planning systems allow firms to adjust entrepreneurial behavior does not imply an aban-
their strategic plans quickly to pursue opportuni- donment of the rational–deliberate ‘scan–
ties and keep up with environmental change formulate–implement–evaluate’ approach to plan-
(Stevenson and Jarrillo-Mossi, 1986). Kukalis ning. What entrepreneurial behavior does imply
theorized that firms in highly complex environ- is that the pace of this process must be acceler-
ments need flexible planning systems because of ated and made more flexible because the essence
the frequency of change in their business environ- of entrepreneurship is capitalizing on environmen-
ments. tal change (Schumpeter, 1936). Second, although
In general, planning flexibility is an organi- the entrepreneurial process is intended to keep a
zational design attribute that has not received firm in step with environmental change, entrepre-
much research attention, but scholars have noted neurial firms are not completely free from inertia.
that planning has a natural tendency to engender As a result, putting a planning system in place
inflexibility. Newman (1963: 62) observed that that is flexible and is by design subject to change
‘The establishment of advanced plans tends to may remove a potential obstacle to change when
make administration inflexible; the more detailed it is needed.
and widespread the plans, the greater the inflexi- In contrast, planning flexibility may undermine
bility.’ Both Newman (1951) and Mintzberg the effectiveness of conservative firms. Because
(1994) attribute the inflexibility of planning to conservative firms are not innovative, they typi-
Copyright  1999 John Wiley & Sons, Ltd. Strat. Mgmt. J., 20: 421–444 (1999)
 Corporate Entrepreneurship and Strategic Management 425

cally seek to obtain a competitive advantage The adoption of a relatively long planning
through reliability in executing repetitive trans- horizon is not tenable for entrepreneurial firms.
actions and routine activities. In this setting, a A reliance on a long-term planning horizon may
flexible planning system runs the risk of dis- engender a reluctance to deviate from a long-
rupting rather than facilitating a firm’s business term view of the future despite short-term
activities. There is a danger that plans may environmental change, which runs counter to the
change too frequently, more as an artifact of proactive nature of the entrepreneurial process. In
the planning system rather than as a result of addition, entrepreneurial firms operating in turbu-
competitive necessity (Amburgey, Kelly, and Bar- lent environments must survive the short term to
nett, 1993). Therefore we propose the following get to the long term. As a result, a reliance on
hypothesis: long-term planning would not be practical.
Conversely, a relatively ‘long’ planning horizon
Hypothesis 2: A positive relationship exists (more than 5 years) may be optimal for conserva-
between planning flexibility and corporate tive firms. Conservative firms are not predisposed
entrepreneurship intensity. to continually look for opportunities to introduce
new products or services as a result of environ-
mental change. As a result, these firms tend to
Planning horizon
operate in stable, predictable environments
A firm’s planning horizon refers to the length of (Covin, 1991; Covin and Slevin, 1991a). In these
the future time period that decision-makers con- environmental settings, competitive advantage is
sider in planning (Das, 1987). For most firms, usually derived from reliability in production and
this period corresponds to the length of time brand awareness rather than speed of new product
necessary to execute the firm’s routine strategies introduction. Firms achieve reliability of pro-
(Camillus, 1982). According to Rhyne (1985), duction in part through long-term planning and
the planning horizon for individual firms can vary forecasting, which are compatible with a rela-
from less than one year to more than fifteen tively long-term planning horizon. This discussion
years. The rationale for a given planning horizon leads to the following hypothesis:
is that it should be long enough to permit plan-
ning for expected changes in strategy and yet be Hypothesis 3 A negative relationship exists
short enough to make reasonably detailed plans between planning horizon length (short-term
available (Das, 1991). Clearly, within this broad vs. long-term) and corporate entrepreneur-
framework firms will have a portfolio of planning ship intensity.
horizons that are necessitated by the need to
manage both short-term and long-term strategies
Locus of planning
simultaneously (Capon, Farley, and Hulbert,
1987; Judge and Spitzfaden, 1995). The term locus of planning refers to the depth
A relatively ‘short’ average planning horizon of employee involvement in a firm’s strategic
(less than 5 years) may be optimal for entrepre- planning activities. Organizations can be charac-
neurial firms. These firms typically compete in terized as having either a shallow or a deep locus
turbulent environments that are characterized by of planning. A deep locus of planning denotes a
short product and service life cycles. As a result, high level of employee involvement in the plan-
the paramount concern of an entrepreneurial firm ning process, including employees from virtually
is product and service innovation, which typically all hierarchical levels within the firm. Conversely,
must be accomplished in the short term rather a shallow locus of planning denotes a fairly
than the long term to maintain a sustainable exclusive planning process, typically involving
competitive advantage. A short planning horizon, only the top managers of a firm. A deep locus
coupled with intensive environmental scanning of planning is akin to the Japanese style of
and a high degree of organizational and planning planning, which is team oriented and places a
flexibility, provides an entrepreneurial firm with heavy emphasis on employee participation (Reid,
the capacity to quickly recognize environmental 1989). Although the Japanese style of planning
change and develop appropriate product and ser- has deep roots in the Japanese culture, it has
vice innovations. served as a model for American firms that have
Copyright  1999 John Wiley & Sons, Ltd. Strat. Mgmt. J., 20: 421–444 (1999)
426 B. R. Barringer and A. C. Bluedorn

tried to make their planning systems more parti- access increases the likelihood of a breach of
cipative. confidentiality, which may damage a firm’s com-
There are several reasons to believe that a petitive stature. This discussion supports the fol-
deep locus of planning facilitates a high level of lowing hypothesis:
corporate entrepreneurship intensity. First, a high
level of employee involvement in planning brings Hypothesis 4: A positive relationship exists
the people ‘closest to the customer’ into the between a deep locus of planning (i.e., high
planning process. This characteristic of employee level of employee involvement) and corporate
participation in planning may facilitate oppor- entrepreneurship intensity.
tunity recognition, which is central to the entre-
preneurial process (Schumpeter, 1936). Moreover,
Control attributes
a deep locus of planning legitimizes the active
participation of middle and lower-level managers The purpose of a control system is to make sure
in the planning process. Doing so avoids the that business strategies meet predetermined goals
potential of good ideas being overlooked simply and objectives (Lorange, Morton, and Ghoshal,
because managers at these levels are not involved 1986). In the context of this study, this means
in the planning process (Burgelman, 1988). that the control systems of entrepreneurial firms
The second reason that a deep locus of plan- must stimulate innovation, proactiveness, and
ning facilitates the entrepreneurial process is that risk-taking. Two forms of control are particularly
it maximizes the diversity of viewpoints that a relevant to a discussion of corporate
firm considers in formulating its strategic plan. entrepreneurship. These are strategic controls and
The diversity of viewpoints considered is neces- financial controls (Hitt, Hoskisson, and Ireland,
sarily limited when planning is restricted to a 1990). In most firms, both forms of control are
firm’s top managers, not only by the small num- present (Hoskisson and Hitt, 1988). Financial
ber of people involved but also by the homo- controls base performance on objective financial
geneous nature of many top management teams criteria such as net income, return on equity, and
(Lant, Milliken, and Batra, 1992). This latter return on sales (Hitt et al., 1990). In contrast,
issue can constrain entrepreneurial activity, as strategic controls base performance on strategi-
evidenced by the results of several studies that cally relevant criteria as opposed to objective
have found a negative relationship between top financial information (Gupta, 1987; Hoskisson
management team homogeneity and an openness and Hitt, 1988). Examples of strategic control
to innovation and change (Bantel and Jackson, measures include customer satisfaction criteria,
1989; Judge and Zeithaml, 1992). In many new patent registrations, success in meeting target
instances this problem can be overcome by dates for new product or process introductions,
involving a deeper and more diverse mix of and the achievement of quality control standards.
employees in the strategic planning process Because strategic controls and financial con-
(Dutton and Duncan, 1987). trols can both be present simultaneously in a
Conservative firms have less to gain from a firm, they do not represent opposite ends of a
high level of employee participation in planning. conceptual continuum; therefore, we articulate
Although strategic planning may be just as com- separate hypotheses to summarize our discussion
plex in a conservative firm as it is in an entrepre- of the relationship between each form of control
neurial firm, it does not emphasize opportunity and corporate entrepreneurship intensity.
recognition and the pursuit of new ideas to the
same extent. As a result, deep participation in
Strategic controls
planning, which is expensive in terms of mana-
gerial time and energy, may not be necessary. In An emphasis on strategic controls is consistent
addition, there are pitfalls associated with a high with the entrepreneurial process. Strategic con-
degree of employee participation in planning that trols are capable of rewarding creativity and the
conservative firms can avoid. For example, a deep pursuit of opportunity through innovation. These
locus of planning may necessitate providing a characteristics of strategic controls are important
large number of employees with access to pro- to sustain the innovation process because long
prietary information and other sensitive data. This time-lags frequently intervene between innovative
Copyright  1999 John Wiley & Sons, Ltd. Strat. Mgmt. J., 20: 421–444 (1999)
 Corporate Entrepreneurship and Strategic Management 427

initiatives and their eventual pay-off (Drucker, sample: (1) to ensure a least a minimal degree
1985; Kanter, 1989). A well-designed strategic of homogeneity among the respondents, we
control system is capable of rewarding firm restricted the firms included in the sample to
employees for incremental but substantive prog- manufacturing firms (SIC codes 2000–4000); and
ress on product or process innovations that take (2) to reduce the confounding effects of diversi-
a long time to reach market (Goold and fication, we limited the firms in the sample to
Campbell, 1987; Hoskisson, Hitt, and Hill, 1991). those that generate at least 70 percent of their
Conversely, for conservative firms, strategic con- sales from a single industry. The 70 percent
trols are less important. Conservative firms do figure was based upon Rumelt’s (1974) definition
not gain their competitive advantage by pursuing of a single or dominant firm.
opportunities through innovation. There are costs We collected data from two sources: a self-
involved in maintaining strategic controls in terms report mail survey and the Compustat Annual
of managerial time and effort (Goold and Quinn, Data Tape. We obtained measures of corporate
1990; Hayes and Abernathy, 1980), which con- entrepreneurship, the five dimensions of strategic
servative firms can avoid. As a result of this management included in the study, and two con-
discussion we hypothesize: trol variables (i.e., environmental turbulence and
environmental complexity) from the self-report
Hypothesis 5a: A positive relationship exists survey. We collected firm demographic and fi-
between the degree of emphasis on strategic nancial data from the Compustat Annual Data
controls and corporate entrepreneurship inten- Tape. The administration of the mail survey was
sity. preceded by a pilot study, involving the CEOs
of 30 midwestern manufacturing firms. The pur-
pose of the pilot study was to assess the face
Financial controls
validity and the reliability of the psychometric
Financial controls are congruent with the distinc- measures included in the survey. As a result of
tive competencies of most conservative firms. the feedback obtained, we refined several of the
Financial controls are clear and unambiguous, measures and made them more theoretically
which introduces a high degree of discipline into meaningful.
the control process. Financial controls also pro- We administered the self-report survey follow-
vide an opportunity for the parties involved to ing a modified Dillman (1978) procedure. Follow-
agree on objective performance standards well in ing the completion of the pilot study, we prepared
advance of any performance evaluation. These and mailed a revised survey instrument to a
factors may be particularly beneficial to conserva- member of the top management team in each of
tive firms, which are firms that do not have as 501 midwestern and southern manufacturing
salient a need to encourage creativity and inno- firms. Two weeks later we sent a second copy
vation as entrepreneurial firms. This discussion of the survey to the nonrespondents. A total of
leads to the following hypothesis: 169 firms returned usable surveys, resulting in
a response rate of 34 percent, which compares
Hypothesis 5b: A negative relationship exists favorably to similar studies (e.g., Covin and
between the degree of emphasis on financial Slevin, 1988; Naman and Slevin, 1993; Zahra,
controls and corporate entrepreneurship inten- 1991). The firms that responded to the survey
sity. represented a broad cross-section of manufactur-
ing firms, ranging in size from 50 employees to
280,000. The mean number of employees for the
RESEARCH DESIGN responding firms was 4720.
We conducted three tests to check for bias in
Sample and data collection
the self-report survey data, including interrater
The sample of firms that participated in the study reliability, common method variance, and nonre-
included 169 manufacturing firms located in the sponse bias. Bias in self-report data is a threat
midwestern and southern regions of the United to validity. First, following the data collection
States. We employed two criteria to determine effort described above, we sent an identical copy
the specific population from which we drew our of the survey to a second top manager in each
Copyright  1999 John Wiley & Sons, Ltd. Strat. Mgmt. J., 20: 421–444 (1999)
428 B. R. Barringer and A. C. Bluedorn

of the 169 responding firms. A total of 57 firms control variables: environmental complexity and
returned the second survey. We used these data environmental turbulence. Each of the multi-item
to conduct a check of interrater reliability for the measures were based on 7-point Likert scales. A
57 firms that provided two surveys. The results copy of these measures, with the exception of
were supportive of good interrater reliability. For the control variables, is included in the Appendix.
each variable except planning horizon, the
responses across the matched pair of raters dif-
Corporate entrepreneurship
fered by an average of less than 1 scale point
on a 7-point Likert scale. For planning horizon, We used a nine-item scale to measure a firm’s
the responses across the matched pair of level of corporate entrepreneurship intensity
reviewers differed by an average of 1.44 scale (alpha = 0.87). The scale was developed and
points on a 7-point Likert scale. validated by Covin and Slevin (1986) based on
We used Harman’s one-factor test to check for previous scale development work by Khandwalla
the presence of common method variance, as (1977) and Miller and Friesen (1982). The scale
suggested by Podsakoff and Organ (1986). To contains items that measure a firm’s tendency
test for this potential threat to validity, we entered toward innovation, risk-taking, and proactiveness,
the variables in the study into a factor analysis. which are the subdimensions of corporate
We then examined the results of the unrotated entrepreneurship (Miller, 1983). The mean score,
factor analysis to determine the number of factors calculated as the average of the nine items,
that were necessary to account for the variance assesses a firm’s position on a conservative–
in the variables. The basic assumption of this entrepreneurial continuum. The higher the score,
procedure is that if a substantial amount of com- the more the firm demonstrates an entrepre-
mon method variance in the data exists, either a neurial orientation.
single factor will emerge or one ‘general’ factor
will account for the majority of the covariance
Scanning intensity
among the variables. Harman’s one-factor test for
common method variance in this study yielded We developed a 12-item scale specifically for
13 factors with eigenvalues greater than one, this study to measure scanning intensity (alpha =
and no single factor was dominant. These results 0.83). In this study, we conceptualized scanning
suggest that common method variance is not a as the extent of effort dedicated towards environ-
significant problem in our data. mental scanning and the comprehensiveness of
Finally, to assess the presence of nonresponse the environmental scanning process. A separate
bias in our data, we compared the firms that six-item scale measured each of these subdimen-
responded to our survey against those that did sions of scanning. The first set of six items was
not on three characteristics: firm sales, number a modified version of Miller and Friesen’s (1982)
of employees, and 1994 return on assets (ROA). Effort Dedicated Towards Scanning scale. The
There was no significant difference between second set of six items measured scanning com-
responding and nonresponding firms on firm sales prehensiveness. These items asked the respondent
and ROA. The respondent firms were larger than to assess how thoroughly his or her firm scans
the nonrespondents in terms of number of elements of the firm’s task and societal environ-
employees (the respondent firms averaged 4720 ments. The mean score, averaged across the 12
employees while the nonrespondents averaged items, assesses a firm’s degree of scanning inten-
3960, p ⬍ 0.01). Although this difference is sta- sity.
tistically significant, we do not feel it has any
practical significance.
Planning flexibility
For this study, we developed a nine-item scale
Measures
to measure planning flexibility (alpha = 0.80).
The survey instrument included psychometric The scale is straightforward and asked the respon-
scales designed to measure corporate dents to assess how difficult it is for their firms
entrepreneurship intensity, the dimensions of stra- to change their strategic plans to adjust for each
tegic management included in the study, and two of nine theoretically relevant environmental con-
Copyright  1999 John Wiley & Sons, Ltd. Strat. Mgmt. J., 20: 421–444 (1999)
 Corporate Entrepreneurship and Strategic Management 429

tingencies. The mean score on the scale, averaged Control attributes

across the nine items, assesses a firm’s level of
planning flexibility. Control attributes included separate scales for
strategic controls and financial controls. We
modified a three-item scale used by Johnson,
Planning horizon
Hoskisson, and Hitt (1993) to measure strategic
We developed a four-item multipart scale speci- controls (alpha = 0.64). Similarly, we modified
fically for this study to measure planning horizon a three-item scale used by Hitt et al. (1996) to
(alpha = 0.90). The scale asked the respondent measure financial controls (alpha = 0.77). For
to assess the degree of emphasis his or her firm each scale the mean score, calculated as the
places on business strategies or firm investments average of the three items, assessed a firm’s
for each of the following predetermined time emphasis on the respective type of control.
periods: less than 1 year; 1–3 years; 3–5 years;
and more than 5 years. In addition, the respondent
Control variables
was asked to make this assessment for each of
the following hierarchical levels in his or her We included five control variables in the data
firm: board of directors, top management, middle analysis, including two measures of the external
management, and lower-level management. environment (turbulence and complexity), two
Only a portion of the data captured by this measures of financial stability (debt level and
scale was actually of interest in this study. We current ratio), and firm size. We used a nine-
used the other items to sensitize the respondents item scale to measure environmental turbulence
to the various time horizons that may exist in a (alpha = 0.67). The scale was based on similar
firm. We were interested in the amount of empha- turbulence scales used by Naman and Slevin
sis placed on planning horizons of more than 5 (1993), Miller and Friesen (1982), and Khand-
years, averaged across the four hierarchical levels. walla (1977). Similarly, we used a five-item,
The 5-year plateau is arbitrary but has been used 7-point Likert scale to measure environmental
as a heuristic in past management studies as a complexity (alpha = 0.73). We developed the
conceptual dividing line between a ‘long’ (more environmental complexity scale specifically for
than 5 years) and a ‘short’ (less than 5 years) this study and it is consistent with Aldrich’s
planning horizon (e.g., Kukalis, 1989; Lindsay (1979) conceptualization of the complexity con-
and Rue, 1980; Rhyne, 1986). struct. We obtained archival data pertaining to
debt level, current ratio, and firm size from the
1994 Compustat Annual Data Tape.
Locus of planning
We developed specifically for this study a five-
Data reliability and validity
item multipart Likert scale to measure locus of
planning (alpha = 0.89). The scale measures the In evaluating the quality of the psychometric
extent to which employees from different hier- properties of the measures we obtained from the
archical levels in a firm are involved in their self-report survey, we focused on two properties:
firm’s strategic planning process. The following reliability and validity.
hierarchical levels in a firm were included: top
management, middle management, lower-level
Reliability
management, and rank-and-file employees. The
scale items, including goal formation, environ- As reported in the previous section, we calculated
mental scanning, strategy formulation, strategy Cronbach’s coefficient alpha to evaluate the
implementation, and evaluation and control, rep- reliability of the measures. An alpha level of 0.70
resent the basic steps in the strategic management or above is generally considered to be acceptable
process (Schendel and Hofer, 1979). We deter- (Cronbach, 1951). All the measures in the survey
mined locus of planning by averaging the scores exceeded this minimum threshold with the excep-
for middle management, lower-level management, tion of strategic controls (alpha = 0.64) and
and rank-and-file employees across the five steps environmental turbulence (alpha = 0.67).
in the strategic management process. Although the alpha levels for these variables were
Copyright  1999 John Wiley & Sons, Ltd. Strat. Mgmt. J., 20: 421–444 (1999)
430 B. R. Barringer and A. C. Bluedorn

disappointing, they did not preclude these vari- for conceptual reasons. The first two items were
ables from further analysis. However, they do Scanning 1a and Scanning 1d, with factor load-
suggest caution when interpreting results involv- ings of 0.39 and 0.35 respectively. These items
ing these scales. did not load higher on any other factors, and are
both part of the Miller and Friesen (1982) Effort
Dedicated Towards Scanning scale. The third item
Validity
that did not reach the 0.40 minimum was Stra-
Reliability is a form of validity, which we dis- tegic Controls 1c. This item had a factor loading
cussed above. Other assessments of validity of 0.20 on the strategic controls factor. We
include theoretical and observational meaning- retained it to keep the three-item strategic controls
fulness, discriminant validity, and convergent va- scale intact, thereby maintaining consistency with
lidity (Binning and Barrett, 1989; Venkatraman its use in other studies.
and Grant, 1986). The following is a discussion For ease of presentation, Table 1 shows only
of each of these forms of validity as they relate the factor score coefficients greater than or equal
to the variables in our study. to 0.40 and the three additional coefficients
retained for conceptual reasons.
Theoretical and observational meaning-
fulness. At a basic level, validity is established Convergent validity. Convergent validity is an
by developing measures from well-grounded assessment of the consistency in measurement
theory. Although entrepreneurship is an old topic, across multiple ways of measuring the same vari-
the resurgence of interest in entrepreneurship is able. The corporate entrepreneurship construct
a fairly recent phenomenon (Wortman, 1987). was measured by two different scales in separate
Thus, although the corporate entrepreneurship portions of the self-report survey. The first scale
construct measure has good reliability and has was the nine-item corporate entrepreneurship
performed well in previous studies, it is based scale described earlier. The second scale was a
on a stream of literature that is still developing. simple one-item, 7-point Likert scale that assessed
As a result, the theoretical validity of the corpo- the respondent’s position on the conservative–
rate entrepreneurship construct is still in its for- entrepreneurial continuum. The correlation
mative stage. between these two measures was r = 0.62
In regard to the measures of strategic man- (p ⬍ 0.0001), demonstrating good convergent va-
agement included in the study, strong literature lidity across separate measures of this construct.
bases exist to support the theoretical validity of Overall, the tests reported above, along with
scanning intensity, control attributes, and planning the tests designed to check for bias in the self-
horizon. Less mature streams of literature support report survey results, indicate that the measures
planning flexibility and locus of planning. in this study have good reliability and validity.
The most serious area of concern pertains to the
Discriminant validity. Discriminant validity planning horizon construct, which may have only
shows that a measure is distinct and is empirically moderate validity in this study as evidenced by
different from other measures. We employed the relatively low interrater reliability.
exploratory factor analysis to assess the discrimi-
nant validity of the variables in this study.
Data analysis and hypothesis test results
Specifically, we conducted a principal compo-
nents analysis with varimax rotation, constraining
Data analysis
the number of factors to seven. The results of
this factor analysis are shown in Table 1, and The respondents (N = 169) to the mail survey
they support the discriminant validity of the mea- represented a broad cross-section of the manufac-
sures used in this study. turing sector in the United States. The largest
As shown in Table 1, all the variables in the number of respondents (N = 36) came from SIC
study loaded cleanly on separate factors. With 35, Machinery, Except Electrical. A total of 17
only three exceptions, the scale items had factors of the 20 SIC codes in the manufacturing sector
loadings in excess of 0.40, a common threshold were represented in the sample, improving the
for acceptance. We retained these three items study’s generalizability.
Copyright  1999 John Wiley & Sons, Ltd. Strat. Mgmt. J., 20: 421–444 (1999)
Copyright  1999 John Wiley & Sons, Ltd.

Table 1. Results of the principal-components analysis with varimax rotation

Factor 2 Factor 3 Factor 4 Factor 5 Factor 6 Factor 7

Factor 1 Scanning Locus of Planning Planning Financial Strategic
Item name Entrepreneurship intensity planning flexibility horizon controls controls

Entrepreneurship 1a 0.58
Entrepreneurship 1b 0.73
Entrepreneurship 1c 0.83
Entrepreneurship 2a 0.56
Entrepreneurship 2b 0.66
Entrepreneurship 3a 0.62
Entrepreneurship 3b 0.75
Entrepreneurship 3c 0.61

Corporate Entrepreneurship and Strategic Management

Entrepreneurship 4a 0.80
Scanning 1a 0.39
Scanning 1b 0.67
Scanning 1c 0.58
Scanning 1d 0.35
Scanning 1e 0.55
Scanning 1f 0.66
Scanning 2a 0.41
Scanning 2b 0.62
Scanning 2c 0.44
Scanning 2d 0.65
Scanning 2e 0.68
Scanning 2f 0.66
Planning flexibility 1a 0.63
Planning flexibility 1b 0.62
Planning flexibility 1c 0.64
Planning flexibility 1d 0.50
Planning flexibility 1e 0.70
Planning flexibility 1f 0.41
Planning flexibility 1g 0.51
Strat. Mgmt. J., 20: 421–444 (1999)

Planning flexibility 1h 0.61

Planning flexibility 1i 0.54

431
Copyright  1999 John Wiley & Sons, Ltd.

432
B. R. Barringer and A. C. Bluedorn
Table 1. Continued

Factor 2 Factor 3 Factor 4 Factor 5 Factor 6 Factor 7

Factor 1 Scanning Locus of Planning Planning Financial Strategic
Item name Entrepreneurship intensity planning flexibility horizon controls controls

Planning horizon 1a 0.69

Planning horizon 1b 0.78
Planning horizon 1c 0.85
Planning horizon 1d 0.70
Locus of planning 1a 0.69
Locus of planning 1b 0.78
Locus of planning 1c 0.76
Locus of planning 1d 0.78
Locus of planning 1e 0.81
Strategic controls 1a 0.76
Strategic controls 1b 0.77
Strategic controls 1c 0.20
Financial controls 1a 0.69
Financial controls 1b 0.85
Financial controls 1c 0.68

Eigenvalue 8.93 4.77 2.91 2.39 2.18 2.05 1.67

Note: All factor loadings ⬍ 0.40 were excluded from the table except the three underlined loadings. The names of the items correspond to the way they are labeled on their
Strat. Mgmt. J., 20: 421–444 (1999)

measurement scales, as shown in the Appendix.

 Corporate Entrepreneurship and Strategic Management 433

The means, standard deviations, Pearson For each hypothesis we completed a separate
product–moment correlations, and coefficient hierarchical regression as shown in Table 3. Each
alphas (where applicable) for the variables hierarchical regression involved two steps. In step
included in the study are shown in Table 2. The one, we regressed corporate entrepreneurship
range of responses on all of the variables was intensity on the control variables. In step two,
broad, avoiding a restriction of range problem in we regressed corporate entrepreneurship intensity
the data. The correlation matrix shows statistically on the control variables and the dimension of
significant correlations in the direction expected strategic management associated with the hypo-
between corporate entrepreneurship and four of thesis. The F-test that constituted the test of the
the six dimensions of strategic management hypothesis was based on the statistical signifi-
included in the study. Corporate entrepreneurship cance of the change in R2 between the restricted
correlated positively with scanning intensity model (control variables only) and the full model
(p ⬍ 0.05), planning flexibility (p ⬍ 0.01), locus (control variables plus the dimension of strategic
of planning (p ⬍ 0.05), and strategic controls management associated with the hypothesis).
(p ⬍ 0.01). There was not a significant correlation Table 3 reports the results of the hypothesis
between corporate entrepreneurship and either tests. Hypothesis 1 was supported (p ⬍ 0.05).
planning horizon or financial controls. For the firms in our sample, there is a positive
As the correlation matrix indicates, the inter- relationship between scanning intensity and
correlations among the dimensions of strategic corporate entrepreneurship intensity. Hypothesis 2
management included in the study were generally was also supported (p ⬍ 0.001), indicating a posi-
low, thereby minimizing the problem of multi- tive relationship between planning flexibility and
collinearity. A high level of multicollinearity can corporate entrepreneurship intensity. Hypothesis
result in unstable regression coefficients in linear 3, which postulated a negative relationship
regression models (Pedhazur, 1982). between a planning horizon of more than 5 years
and corporate entrepreneurship intensity, was not
supported. Recall that the planning horizon meas-
Results of the tests of the hypotheses
ure had poor interrater reliability. Thus, the failure
To test the hypotheses, we used hierarchical of this hypothesis may be due to a bias in
regression analysis. For each hypothesis, this the data or a misapplication of the theoretical
approach allowed us to regress corporate arguments. Hypothesis 4 was supported, demon-
entrepreneurship against a set of control variables strating a positive relationship between a broad
and then add the respective dimension of strategic locus of planning and corporate entrepreneurship
management into the equation and test whether intensity (p ⬍ 0.01). Support was also found for
the incremental change in R2 resulting from the Hypothesis 5a, which postulated a positive
addition of the strategic management variable was relationship between an emphasis on strategic
statistically significant (Pedhazur, 1982). The controls and corporate entrepreneurship intensity
control variables included environmental turbu- (p ⬍ 0.001). Hypothesis 5b was not supported.
lence, environmental complexity, firm size, debt This hypothesis postulated a negative relationship
level, and current ratio. Previous studies have between an emphasis on financial controls and
found that environmental turbulence (Naman and corporate entrepreneurship intensity. Overall, four
Slevin, 1993) and environmental complexity of the six hypotheses were supported.
(Zahra, 1991) are positively related to corporate
entrepreneurship. Firm size, debt level (long-term
debt divided by firm sales), and the current ratio DISCUSSION OF THE RESULTS AND
(current assets divided by current liability) are CONCLUSION
demographic and financial measures that have
been found to influence elements of entrepre- The results of this study suggest that a firm’s
neurial behavior (Hitt et al., 1996). We expected entrepreneurial intensity is influenced by the
negative relationships between corporate nature of its strategic management practices. This
entrepreneurship and firm size and debt level; we conclusion is not surprising, because a firm’s
expected a positive relationship between corporate strategic management practices are intended to
entrepreneurship and the current ratio. shape and mold its behavior. For firms that are
Copyright  1999 John Wiley & Sons, Ltd. Strat. Mgmt. J., 20: 421–444 (1999)
Copyright  1999 John Wiley & Sons, Ltd.

434
B. R. Barringer and A. C. Bluedorn
Table 2. Pearson product–moment correlation matrix including corporate entrepreneurship, dimensions of strategic management included in the study, and
control variables. N ranges from 148 to 167

Variable name Mean S.D. 1 2 3 4 5 6 7 8 9 10 11

1. Corporate entrepreneurship 4.48 1.05 (0.87)

2. Scanning intensity 4.92 0.83 0.16* (0.83)
3. Planning flexibility 4.82 0.85 0.34** 0.11 (0.80)
4. Planning horizon 2.32 1.27 0.13 0.30** 0.25** (0.90)
5. Locus of planning 4.11 0.96 0.19* 0.48** 0.25** 0.31** (0.89)
6. Strategic controls 5.57 0.92 0.29** 0.33** 0.29** 0.31** 0.33** (0.64)
7. Financial controls 5.41 1.04 0.04 0.32** 0.11 0.24** 0.19* 0.33** (0.77)
8. Environmental turbulence 3.88 0.80 0.09 0.14+ −0.13 0.12 0.08 −0.11 −0.08 (0.67)
9. Environmental complexity 3.79 1.12 0.10 0.10 −0.04 0.15+ 0.10 −0.05 0.00 0.25** (0.73)
10. Firm size 3.67 1.91 −0.21** 0.15* −0.10 0.22** −0.02 −0.07 0.28** 0.04 −0.03
11. Debt level 2.75 2.13 −0.05 −0.11 0.10 −0.10 −0.03 0.04 −0.11 −0.02 −0.09 −0.46**
12. Current ratio 3.01 3.19 −0.04 −0.06 −0.03 −0.06 −0.01 −0.00 −0.20** −0.09 −0.00 −0.39** 0.74**
+
p ⬍ 0.10; *p ⬍ 0.05; **p ⬍ 0.01
Coefficient alphas are on the diagonal where applicable. Variables 1–9 were measured on 7-point Likert scales (1 low–7 high).
Firm size is the log of the total number of employees. Debt level is long-term debt/firm sales. Current ratio is current assets/current liabilities.
Strat. Mgmt. J., 20: 421–444 (1999)
Copyright  1999 John Wiley & Sons, Ltd.

Table 3. Results of the hypothesis tests using hierarchical regression

Full models
Restricted model Control variables plus individual dimensions of strategic management
Control variables regressed against regressed against corporate entrepreneurship
corporate entrepreneurship
Hypothesis 1 Hypothesis 2 Hypothesis 3 Hypothesis 4 Hypothesis 5a Hypothesis 5b
Scanning intensity Planning flexibility Planning horizon Locus of planning Strategic controls Financial controls

Control variables
Environmental turbulence 0.05 0.01 0.11 0.06 0.00 0.09 0.07
Environmental complexity 0.16+ 0.15+ 0.12 0.14 0.13 0.15+ 0.19*
Firm size −0.23* −0.26** −0.20* −0.21* −0.17+ −0.21* −0.25**
−0.02 −0.09 −0.02

Corporate Entrepreneurship and Strategic Management

Debt level 0.04 0.04 0.06 0.06
Current ratio −0.12 −0.16 −0.05 −0.16 −0.16 −0.11 −0.17

Strategic management dimensions

Environmental scanning 0.21*
Planning flexibility 0.32***
Planning horizon 0.15
Locus of planning 0.26**
Strategic controls 0.30***
Financial controls 0.16

F-ratio 2.03+ 2.55* 3.98*** 1.90+ 2.52* 3.98*** 2.54*

R2 0.08 0.12 0.17 0.10 0.12 0.17 0.12
F-ratio testing the ⌬ 4.95* 12.78*** 2.20 5.89* 12.77*** 5.00*
in R2 between the full
and partial model
+
p ⬍ 0.10; *p ⬍ 0.05; **p ⬍ 0.01; ***p ⬍ 0.001
The F-ratio testing the change in R2 between the full and partial models assesses the significance of each of the dimensions of strategic management beyond the contribution
of the control variables.
Strat. Mgmt. J., 20: 421–444 (1999)

Regression coefficients shown are standardized coefficients.

435
436 B. R. Barringer and A. C. Bluedorn

attempting to become more entrepreneurial, how- As reported earlier, we did not find a relation-
ever, the value-added contribution of this paper ship between the length of a firm’s planning
lies in providing a sharper picture of exactly horizon and corporate entrepreneurship intensity.
how five specific strategic management practices The lack of results may be due to the poor
influence a firm’s entrepreneurial intensity. This reliability of our planning horizon measure. A
type of fine-grained information is of practical contributing factor to the poor reliability of the
use to managers and helps researchers better measure may have been the fact that the respon-
understand the subtleties of the strategic man- dent was asked to assess the planning horizon
agement corporate entrepreneurship interface. for four different hierarchical levels in his or her
This study produced several normative impli- firm, which may have required the respondent to
cations. It is clear from the results that scanning speculate too far beyond his or her personal
intensity is an important correlate of entrepre- experience. In addition, dichotomizing a firm’s
neurial behavior. This result is consistent with planning horizon as either short (less than 5
similar findings reported by Miller (1983) and years) or long (more than 5 years) may be too
Zahra (1993). What is particularly instructive simplistic. Capon et al. (1987) found that more
about this result is that the pursuit of than 80 percent of the firms in their sample of
entrepreneurship requires an increase in the inten- 258 manufacturers produced plans with more than
sity of some management practices, such as scan- one planning horizon (typically one short and
ning intensity. Opportunity recognition, which is one long), and some firms produced plans with
a precursor to entrepreneurial behavior, is often up to three. The manner in which entrepreneurial
associated with a flash of genius, but in reality firms conceptualize the future and manage their
is probably more often than not the end result of planning horizons is not well understood. An
a laborious process of environmental scanning entrepreneurial firm faces the dual challenge of
and industry awareness. As a result, the funda- remaining responsive to current environmental
mental practice of scanning the environment to trends, which suggests the adoption of a short-
recognize opportunities and threats should be a term planning horizon, while at the same time
principal concern of entrepreneurially minded remaining visionary, which suggests the adoption
firms. of a longer-term perspective. The manner in
The results of the study also depict a strong which entrepreneurial firms resolve this tension
relationship between planning flexibility and represents potentially interesting research.
corporate entrepreneurship intensity. Recall that The positive relationship between locus of
planning flexibility refers to the ease with which planning and corporate entrepreneurship intensity
a firm can change its strategic plan in response indicates that a high level of employee involve-
to environmental change. In practice, planning ment in planning facilitates firm-level entrepre-
flexibility may be difficult to achieve. Many firms neurial behavior. This result is supportive of the
expend enormous effort and cost in developing general notion that employee participation at all
sophisticated short-term and long-term plans. As levels is an essential key to the entrepreneurial
a result, in some instances the extent of this process (e.g., Burgelman, 1984). The result is
effort may actually work against a firm by engen- also consistent with Sathe’s (1988) observation
dering a hesitancy on the part of managers to that if entrepreneurship is to flourish in an organi-
deviate from plans for fear that the deviations zation, lower-level managers need to be free to
will be interpreted as flaws in the initial planning identify and pursue promising opportunities. The
process. In addition, as noted by Stevenson and positive relationship between strategic controls
Jarrillo-Mossi (1986: 14), the sentiment that and corporate entrepreneurship intensity is also
‘good plans do not need to be changed’ also consistent with the literature (e.g., Sathe, 1988).
hinders the recognition that planning flexibility is This result reaffirms the notion that control sys-
necessary. The implication of the results in this tems capable of rewarding creativity and the pur-
area is that entrepreneurially minded firms should suit of opportunity through innovation are an
work hard to institutionalize flexibility in their essential part of the entrepreneurial process.
planning systems. The manner in which this is Along with the normative implications dis-
accomplished is a potentially fruitful topic for cussed above, an important contribution of this
future research. study is the development of the psychometric
Copyright  1999 John Wiley & Sons, Ltd. Strat. Mgmt. J., 20: 421–444 (1999)
 Corporate Entrepreneurship and Strategic Management 437

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440 B. R. Barringer and A. C. Bluedorn

APPENDIX: MEASUREMENT SCALES USED IN THE SELF-REPORT MAIL

SURVEY
The Corporate Entrepreneurship Scale (coefficient alpha = 0.87)
The following statements are meant to identify the collective management style of your firm’s key
decision-makers.
Please indicate which response most closely matches the management style of your businesses
key managers.

1. In general, the top managers of my firm favor . . .

a. A strong emphasis on the 1 2 3 4 5 6 7 A strong emphasis on R&D,

marketing of tried and true technological leadership, and
products and services innovation
b. Low-risk projects with normal 1 2 3 4 5 6 7 High-risk projects with
and certain rates of return changes of very high returns
c. A cautious, ‘wait and see’ 1 2 3 4 5 6 7 A bold, aggressive posture in
posture in order to minimize order to maximize the prob-
the probability of making ability of exploiting potential
costly decisions when faced when faced with uncertainty
with uncertainty

2. How many new lines of products or services has your firm marketed in the past 5 years?

a. No new lines of products or 1 2 3 4 5 6 7 Many new lines of products

services or services
b. Changes in product or service 1 2 3 4 5 6 7 Changes in product or service
lines have been mostly of a lines have usually been quite
minor nature dramatic

3. In dealing with its competitors, my firm . . .

a. Typically responds to actions 1 2 3 4 5 6 7 Typically initiates actions to

which competitors initiate which competitors then
respond
b. Is very seldom the first firm 1 2 3 4 5 6 7 Is very often the first firm to
to introduce new products/ introduce new products/
services, operating technol- services operating technol-
ogies, etc. ogies, etc.
c. Typically seeks to avoid com- 1 2 3 4 5 6 7 Typically adopts a very com-
petitive clashes, preferring a petitive, ‘undo-the-competitor’
‘live-and-let-live’ posture posture

4. In general, the top managers of my firm believe that . . .

a. Owing to the nature of the 1 2 3 4 5 6 7 Owing to the nature of the

environment, it is best to environment, bold, wide-
Copyright  1999 John Wiley & Sons, Ltd. Strat. Mgmt. J., 20: 421–444 (1999)
 Corporate Entrepreneurship and Strategic Management 441

explore gradually via cau- ranging acts are necessary to

tious behavior achieve the firm’s objectives

Sources: Items 1a, 2a, and 2b measure innovation; Items 1b, 1c, and 4a measure risk-taking; Items
3a, 3b, and 3c measure proactiveness. Items are based on Khandwalla (1977); Miller and Friesen
(1982); Covin and Slevin (1988).

The Scanning Intensity Scale (coefficient alpha = 0.83)

1. Rate the extent to which the following scanning devices are used by your firm to gather
information about its business environment.

Not ever used Used frequently

a. Routine gathering of opinions from clients 1 2 3 4 5 6 7
b. Explicit tracking of the policies and tactics of 1 2 3 4 5 6 7
competitors
c. Forecasting sales, customer preferences, tech- 1 2 3 4 5 6 7
nology, etc.
d. Special marketing research studies 1 2 3 4 5 6 7
e. Trade magazines, government publications, news 1 2 3 4 5 6 7
media
f. Gathering of information from suppliers and other 1 2 3 4 5 6 7
channel members
Sources: The items above measure effort devoted towards scanning. Items 1–4 are from Miller and
Friesen (1982). Items 5–6 are original.

2. How often do you collect information to remain abreast of changes in each of the following areas?

Never Frequently
a. Economic trends 1 2 3 4 5 6 7
b. Technological trends 1 2 3 4 5 6 7
c. Demographic trends 1 2 3 4 5 6 7
d. Customer needs and preferences 1 2 3 4 5 6 7
e. Competitor strategies 1 2 3 4 5 6 7
f. Supplier strategies 1 2 3 4 5 6 7
Sources: The items above measure scanning comprehensiveness. All items are original.

The Planning Flexibility Scale (coefficient alpha = 0.80)

1. How difficult is it for your firm to change its strategic plan to adjust to each of the following
contingencies/possibilities?

Very difficult Not at all difficult

a. The emergence of a new technology 1 2 3 4 5 6 7
b. Shifts in economic conditions 1 2 3 4 5 6 7
c. The market entry of new competition 1 2 3 4 5 6 7
d. Changes in government regulations 1 2 3 4 5 6 7
e. Shifts in customer needs and preferences 1 2 3 4 5 6 7
f. Modifications in supplier strategies 1 2 3 4 5 6 7
g. The emergence of an unexpected opportunity 1 2 3 4 5 6 7
Copyright  1999 John Wiley & Sons, Ltd. Strat. Mgmt. J., 20: 421–444 (1999)
442 B. R. Barringer and A. C. Bluedorn

h. The emergence of an unexpected threat 1 2 3 4 5 6 7

i Political developments that affect your industry 1 2 3 4 5 6 7
Sources: All items are original.

The Planning Horizon Scale (coefficient alpha = 0.90)

1. Recall that a planning horizon is the length of the future time period that decision-makers
consider in planning. At each of the following hierarchical levels in your firm, what degree of
emphasis is placed on managing business strategies and firm investments that have the following
planning horizons?

Very little emphasis Considerable emphasis

a. Board of Directors

Length of planning horizon of business strategy

or firm investment

Less than 1 year 1 2 3 4 5 6 7

1 to 3 years 1 2 3 4 5 6 7
3 to 5 years 1 2 3 4 5 6 7
More than 5 years 1 2 3 4 5 6 7

b. Top management

Less than 1 year 1 2 3 4 5 6 7

1 to 3 years 1 2 3 4 5 6 7
3 to 5 years 1 2 3 4 5 6 7
More than 5 years 1 2 3 4 5 6 7

c. Middle management

Less than 1 year 1 2 3 4 5 6 7

1 to 3 years 1 2 3 4 5 6 7
3 to 5 years 1 2 3 4 5 6 7
More than 5 years 1 2 3 4 5 6 7

d. Lower-level Management

Less than 1 year 1 2 3 4 5 6 7

1 to 3 years 1 2 3 4 5 6 7
3 to 5 years 1 2 3 4 5 6 7
More than 5 years 1 2 3 4 5 6 7

Sources: All items are original.

The Locus of Planning Scale (coefficient alpha = 0.89)

1. Strategic management can be broken down into the five phases shown below. To what extent
is each of the following categories of employees involved in each of these phases of the strategic
management process in your firm?
Copyright  1999 John Wiley & Sons, Ltd. Strat. Mgmt. J., 20: 421–444 (1999)
 Corporate Entrepreneurship and Strategic Management 443

No Involvement Substantial Involvement

a. Goal Formation

Top Management 1 2 3 4 5 6 7
Middle Management 1 2 3 4 5 6 7
Lower-level Management 1 2 3 4 5 6 7
Rank-and-file Employees 1 2 3 4 5 6 7

b. Scanning the Business Environment

Top Management 1 2 3 4 5 6 7
Middle Management 1 2 3 4 5 6 7
Lower-level Management 1 2 3 4 5 6 7
Rank-and-file Employees 1 2 3 4 5 6 7

c. Strategy Formulation

Top Management 1 2 3 4 5 6 7
Middle Management 1 2 3 4 5 6 7
Lower-level Management 1 2 3 4 5 6 7
Rank-and-file Employees 1 2 3 4 5 6 7

d. Strategy Implementation
Top Management 1 2 3 4 5 6 7
Middle Management 1 2 3 4 5 6 7
Lower-level Management 1 2 3 4 5 6 7
Rank-and-file Employees 1 2 3 4 5 6 7

e. Evaluation and control

Top Management 1 2 3 4 5 6 7
Middle Management 1 2 3 4 5 6 7
Lower-level Management 1 2 3 4 5 6 7
Rank-and-file Employees 1 2 3 4 5 6 7

Sources: All items are original.

The Strategic Controls Scale (coefficient alpha = 0.64)

1. How important is each of the following in making sure that your firm’s employees and business
strategies meet predetermined objectives?

Unimportant Important

a. Face-to-face meetings between top managers and 1 2 3 4 5 6 7

business unit or functional area personnel

b. Informal face-to-face meetings between top man- 1 2 3 4 5 6 7

agers and business unit or functional area person-
nel

c. Measuring performance against subjective stra- 1 2 3 4 5 6 7

Copyright  1999 John Wiley & Sons, Ltd. Strat. Mgmt. J., 20: 421–444 (1999)
444 B. R. Barringer and A. C. Bluedorn

tegic criteria such as improvements in customer

satisfaction or progress on product innovations

Sources: Items 1–2 are from Johnson et al. (1993). Item 3 is original.

The Financial Controls Scale (alpha = 0.77)

1. How important are each of the following factors in evaluating the performance of business
unit/or functional area personnel?

Unimportant Important

a. Objective strategic criteria such as return on 1 2 3 4 5 6 7

assets

b. Return on investment 1 2 3 4 5 6 7

c. Cash-flow 1 2 3 4 5 6 7

Sources: All items are modified from Hitt et al. (1996).

Copyright  1999 John Wiley & Sons, Ltd. Strat. Mgmt. J., 20: 421–444 (1999)