Entrepreneurial Behavior In Large Traditional Organizations:

Identifying Key Drivers

Work in progressComments are welcome

Johanna MairINSEAD

77305 FontainebleauFrance

+33-1-60712560 (tel)+33-1-60724242 (fax)

johanna.mair@insead.fr

Key wordsStrategy implementationManaging large traditional organizationsEntrepreneurial behavior

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ABSTRACT

Innovative use of resources to pursue opportunities has become vital for all—even large

traditional—organizations. While traditional management literature has identified contextual

features to foster entrepreneurial behavior, little research has looked at why—in the same

organizational context–some manager’s act entrepreneurially and others don’t. Integrating

different literatures, I suggest that variance in entrepreneurial behavior within the same

objective context can be best explained at the individual level. I propose and empirically test a

micro-model on how to induce entrepreneurial behavior in large traditional organizations.

Using structural equation modeling, I analyze survey data on 150 managers of a large

European financial service company striving to become “entrepreneurial”. Results reveal that

managers’ subjective interpretation of their sociopolitical support and access to resources

stimulates entrepreneurial behavior. Contrary to the predictions of the literature, individual

cognitive and emotional competencies do not affect entrepreneurial behavior directly, but are

critical in shaping managers’ perceptions of their “playground for action”. Findings also show

that managers’ entrepreneurial self-efficacy beliefs—managers’ perceived capability to

perform entrepreneurial tasks—are a powerful predictor of entrepreneurial behavior. They are

critical to translate perceptions of context and individual dispositions into behavior, and

represent an important cognitive and motivational device to steer and regulate entrepreneurial

behavior.

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INTRODUCTION

According to the business press and practitioners the preferred managerial mindset for the

next decade is “entrepreneurial”. Entrepreneurial behavior—innovative use of resources to

pursue opportunities—is perceived as vital for “virtually all” sizes and types of organization

(Normann 1971; Dess, Lumpkin et al. 1999; Morris and Jones 1999; Sharma and Chrisman

1999). Thus it is not surprising that over the last decade many large hierarchical organizations

operating in stable and mature markets have established a strategic long-term orientation

based on entrepreneurial initiative. Entrepreneurship in these companies is not restricted to

grand entrepreneurship, aiming at new venture creation or new product development

(Normann 1971; Vesper 1985), but refers to day-to-day entrepreneurship, a new management

style aimed at “doing things in an entrepreneurial way”.

Entrepreneurial approaches within established organizations are not a new

phenomenon. Even large hierarchical organizations have been encouraging entrepreneurial

behavior for decades. In general, innovative and entrepreneurial projects in these

organizations were relatively isolated, i.e., carried out predominately in specialized new

venture or new product development divisions. As a result, entrepreneurial and traditional

(administrative) management styles were often considered as mutually exclusive and

incompatible within the same division (Vesper 1985; Jelinek and Litterer 1995). Yet,

empirical evidence shows that managers in companies such as 3M or Hewlett Packard do

have the capability to enact both managerial and entrepreneurial behavior more or less

simultaneously (Birkinshaw 1997). Today, an increasing number of large corporations

actively seek a management model that integrates entrepreneurial and traditional management

methods. The entrepreneurial behavior (EB) constituting this new management model is at the

core of this paper.

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A considerable amount of literature has investigated ways to induce EB in large

organizations. Scholars in strategic management have traditionally focused on the role of

organizational and behavioral context 1 in fostering entrepreneurial activity. These studies

have led to a comprehensive understanding of the “ideal” behavioral context for

entrepreneurial initiative to flourish (Ghoshal and Bartlett 1994). I do recognize the

importance of context in shaping managerial behavior. I argue that differences in the

behavioral context might explain variance in EB between companies, yet, they do not address

the puzzling phenomenon of why some mangers act entrepreneurially and others, facing the

same objective behavioral context, do not. I propose that variance in EB within the same

objective context can be best explained at the individual level and present a model on the

micro-foundations of EB in large traditional organizations. Accordingly, EB is affected by

managers’ subjective interpretations of their “playground for action” and their cognitive and

emotional competencies. Acknowledging a proactive role of individuals in controlling their

own behavior, context and cognition (Castaneda, Kolenko et al. 1999), I introduce

entrepreneurial self-efficacy beliefs—defined as managers’ perceived capability to perform

entrepreneurial tasks—as a critical cognitive and motivational device to steer and regulate

managers’ EB. I empirically test this model and use structural equation modeling (SEM) to

analyze data from 150 middle managers of a large European financial service company

striving to become “entrepreneurial”.

In the following sections I first conceptualize EB in the context of large traditional

organizations. Secondly, I review existing literature on the key drivers of EB and present the

theoretical model, key constructs and hypotheses. In a third step I describe the research design

and discuss results from the empirical analysis. To conclude I emphasize the main

contributions of the paper and derive implications for managerial practice.

1 In the management literature ‘behavioral context’ is often used interchangeably with the terms ‘organizational climate’ or‘culture’. In this paper I follow Ghoshal and Bartlett (1997), who note that ‘culture’ is heavily loaded, and use the term

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BACKGROUND AND DEFINITIONS

Entrepreneurial activities are widely conceived as key drivers for corporate success

(Stevenson, Roberts et al. 1989). They are important means (1) to seize opportunities

regarding new businesses, markets and processes, (2) to proactively compete against more

flexible small companies, (3) to develop innovative and adaptive capabilities through resource

combinations, and, (4) to stimulate employees and keep managerial talent within the

organization (Pinchot 1985; Burgelman and Sayles 1986; Kanter 1989; Kuratko and Hodgetts

1989).

Besides their relevance for managerial practice, entrepreneurial activities are of

particular interest for research in strategic management. First, they enhance a company’s

competency base and extend its opportunities through internally generated processes. Second,

new resource combinations result in changes in strategy that alter the pattern and magnitude

of resource deployment (Guth and Ginsberg 1990). And finally, entrepreneurial activities

across hierarchical levels provide the raw material for strategic renewal (Burgelman 1983;

Guth and Ginsberg 1990), and constitute the base for continuous corporate transformation

processes (Shapero 1981; Ghoshal and Bartlett 1996).

The main objectives of this paper are to explain variance in EB within a homogenous

context, and to explore the micro-foundations of entrepreneurial behavior in large traditional

organizations to set the stage for future multilevel research. In the reminder of this section I

delineate my research approach and define EB in the context of this paper.

Entrepreneurial Behavior In Large Traditional Organizations

Studies on entrepreneurship in existing organizations differ substantially in approaches and

definitions employed. As Gartner notes, “the choice of words we use to define

entrepreneurship sets the boundaries of how we think about and study it” (Gartner 1993 p.

232). In this paper I follow a behavioral approach that emphasizes entrepreneurial activities

‘behavioral context’. For a more stylized distinction between these terms see (Denison 1996).

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(Gartner 1988)2, recognizes the role of context (Stevenson and Jarillo 1990) and is centered

on the individual (Bird 1988; Herron and Sapienza 1992).

While some authors delimit EB to entrepreneurial events such as the creation of new

organizations (Gartner 1988), new ventures (Vesper 1985) or new product development (von

Hippel 1977), others define it more broadly (Stevenson & Jarillo 1990). I view EB in large

traditional organizations as a broad set of activities required in all firms (Penrose 1959), and

define it as

…a set of activities and practices by which individuals at multiple levelsautonomously generate and use innovative resource combinations to identify andpursue opportunities.3

The defining elements of EB are innovation, autonomy, opportunities and balanced

nature. Opportunities represent future states that are both desirable and feasible; they depend

on individuals’ preferences and perceived capabilities, and vary over time (Stevenson and

Jarillo 1990). The term innovation, as used in this paper, does not solely refer to technological

novelty but is employed in a commercial sense. Innovation is not limited to technological

development but can be understood as a process through which resources are developed and

utilized to generate higher quality or lower cost processes, products and services.4 The

meaning of autonomy, as employed here, goes beyond traditional views—perceiving

autonomy as “free” from structural or hierarchical constraints—and refers to independent

behavior based on “the ability and will to be self-directed in the pursuit of opportunities”

(Lumpkin and Dess 1996, p. 140).

While innovation, autonomy and opportunities are defining elements of EB in general

(Miller 1983; Stevenson and Jarillo 1990; Lumpkin and Dess 1996), EB within large

2 While studies following a trait approach view entrepreneurship as a set of personality traits and characteristics, behavioralapproaches conceive entrepreneurship seen as a set of activities (Gartner 1988).3 I am deliberately focusing on a definition that is based on the individual taking entrepreneurial actions. This does notexclude that groups and teams or even organizations do engage in EB. However, groups and organizations are composed ofindividuals and in the end it is those individuals who have to carry out actions.4 Already Schumpeter (1934) notes that innovation is aiming at original combinations of resources affecting new ventures,product development or technological advancement, but also organizational processes and environmental influences.

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traditional organizations is particular because it comprises a spectrum of activities ranging

from independent/autonomous to integrative/cooperative behavior (Ghoshal and Bartlett

1994; Kanter 1982). It implies heedful stretching of organizational boundaries as well as

dealing with corporate politics, both requiring innovative approaches to control, incentives

and communication. Also, entrepreneurial oriented managers need to continuously balance

“exploration” of new resource combination with “exploitation” of existing of organizational

capabilities.

As mentioned before, EB as employed in this paper denotes a specific management

style, “a way to use or expand companies’ resources to raise long-term capacity” (Kanter

1982). While various authors distinguished between entrepreneurial and administrative

management techniques (Birkinshaw 1997; Kanter 1985)5, I argue that the new

entrepreneurial management style envisioned by many large traditional companies integrates

and combines both entrepreneurial and administrative approaches: it includes (1) the

identification of opportunities regarding business, internal processes and procedures, markets,

products, approaches towards customer and employees; (2) the allocation, commitment and

innovative use of resource to pursue these opportunities; and (3) supervision and integration

of entrepreneurial opportunities into ongoing activities. In the next section I present the

theoretical model and derive hypotheses based on an extensive interdisciplinary literature

review.

THE THEORETICAL MODEL AND HYPOTHESIS

Aiming at a more comprehensive picture of the key determinants of entrepreneurial initiative

in large traditional business organizations, I introduce a model that considers managers’

subjective interpretation of their behavioral context and their emotional and cognitive

competencies. Furthermore, I introduce entrepreneurial self-efficacy beliefs—managers’

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perceptions of their entrepreneurial capability—as a key concept. I argue that entrepreneurial

self-efficacy beliefs are a critical mediating variable to translate perceptions of behavioral

context and individual emotional and cognitive competencies into EB and a powerful

predictor of EB. Figure 1 summarizes the model proposed for empirical testing.

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The Effect Of Individual Competencies On Entrepreneurial Behavior

As Edith Penrose notes, entrepreneurial behavior is “a slippery concept, not easy to

work into formal economic analysis because it is so closely associated with the temperament

or personal qualities of individuals” (Penrose 1959, p.33). While it is widely accepted that

individual characteristics matter (Stevenson & Jarillo 1990), findings on which ones matter

most remain ambiguous and inconclusive (Brockhaus 1982; Gartner 1985; Low and

MacMillan 1988). A large number of studies—grounded in psychology and aiming at

psychological profiles of entrepreneurs —has examined innate personality traits (Kets De

Vries 1977; Brockhaus 1982; Miner 1997). Entrepreneurs are largely depicted as risk takers

(Brockhaus 1980) and high in need for achievement (McClelland 1961) and internal locus of

control (Brockhaus 1982). Despite their popularity, studies merely focusing on psychological

predisposition of entrepreneurs have been repeatedly criticized. First, they are regarded as

inadequate to predict EB as the identified psychological profiles do not significantly differ

from profiles of successful managers in general (Burt 1999; Gartner 1985, Low & MacMillan

1988); second, they are incomplete as they do not consider situational aspects, and third; they

suffer from conceptual and methodological inadequacies (Greenberger and Sexton 1988)6.

5 Birkinshaw (1997), for example, refers to the “entrepreneurial challenge” as to “ move from an idea to a commitment ofresource”, while the “managerial challenge” consists of making “resultant business activity profitable” (p. 209).6 Studies differ substantially in sample size and selection, are very often based on inadequate psychometric properties andmultidimensionality of constructs (Greenberger and Sexton 1988).

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Traditional studies based on individual traits portray a rather static picture of

entrepreneurs and EB, implying “a state of being” (Gartner 1988) rather than an “a process of

becoming”. Cognitive and emotional competencies—dynamic in time and space—are largely

ignored. However competencies dealing with recognition, regulation and expression of

thoughts and feelings are increasingly important in today’s business organizations (Fox &

Spector 2000). To enhance parsimony of the model I confine my analysis to the following set

of four competencies associated with the ability to monitor one's own and others' feelings and

emotions, to discriminate among them and to use one’s information to guide one's thinking

and actions (Salovey and Mayer 1990): self-monitoring and perspective taking—capturing

cognitive aspects—and emotional self-awareness and positive emotions at work—capturing

affective aspects. Theoretical arguments and empirical evidence indicate that these cognitive

and emotional competencies positively influence EB.

Self-monitoring. People differ in the extent to which they monitor, i.e., observe, and

control their expressive behavior, self-presentation and nonverbal displays of emotion and

affect (Snyder 1979). Self-monitoring refers to the tendency to regulate one’s own behavior to

meet the demands of social situations. Being sensitive to strategic self-presentation, high self-

monitors are willing and able to adapt and modify their behavior as they move from one

situation to another (Brehm, Kassin et al. 1999). Entrepreneurial activities in hierarchically

organized firms involve a series of very different tasks. High self-monitors are more likely to

better adapt to changing situation, and may also do better in switching between different tasks

involved in EB. Accordingly, I propose:

Hypothesis 1: Self-monitoring has a direct, positive effect on EB.

Perspective taking. Perspective taking—the cognitive dimension of empathy (Davis

1983)—reflects the ability to adopt the perspective, or point of view, of other people, a basic

requirement of all social behavior (Hass 1984). It involves the cognitive comprehension of

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others’ internal thoughts and feelings. With respect to the topic of this paper, individuals high

on perspective taking are assumed to more easily adopt and internalize new entrepreneurial

approaches envisioned by top management, and are more likely to cooperate, a critical aspect

of EB within large organizations. Accordingly, I propose that managers able to take the

perspective of others more readily engage in new entrepreneurial patterns of behavior.

Hypothesis 2: Perspective taking has a direct, positive effect on EB.

Positive emotions at work. The pervasiveness and utility of emotions in

organizational life has been increasingly emphasized by management research (Ashforth and

Humphrey 1995). Extensive empirical evidence exists on the effect of positive emotions on

task performance and other work related outcomes (Ashforth and Humphrey 1995; George

and Brief 1996). Isen and Baron (1991) point to robust empirical evidence on the effect of

positive emotions on creativity and divergent thinking on one hand, and cooperative and

helping behavior on the other. Additionally, positive emotions do enhance problem-solving

capabilities and promote a sense of personal freedom or self-determination in action taking7.

In sum, positive emotions seem to be beneficial to both integrative and autonomous behavior,

the two building blocks of EB within traditional organizations. Accordingly, I propose:

Hypothesis 3: Positive emotions at the workplace have a direct, positive effect onEB.

Emotional self-awareness. Emotional self-awareness refers to individuals’ ability to

recognize their own emotions and their effects (Goleman 1998). Individuals who are self-

aware of their emotions are able to link their feelings with their thoughts and actions, and

more readily express, share and describe their feelings. Emotional self-aware managers are

assumed to be more sensitive to changes in behavioral standards and values induced by

changes in the strategic orientation of a firm. Baron theoretically establishes a strong link

7 For detailed references refer to Isen and Baron (1991).

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between “careful and effortful thought” and entrepreneurship (Baron 1998, p.289). Thus I

propose:

Hypothesis 4: Emotional self-awareness has a direct, positive effect on EB.

The Effect Of Perceived Behavioral Context On Entrepreneurial Behavior

Theoretical and empirical findings from research in entrepreneurship and strategic

management provide a comprehensive understanding on the “ideal” behavioral context for EB

in established organizations (Kanter 1985; Sathe 1985; MacMillan, Block et al. 1986; Schuler

1986; Sykes 1986)8. Kuratko et al. (1990), for example, establish and validate a

multidimensional instrument to assess the effectiveness of behavioral context (culture) to

induce EB. They identify management support, organizational culture, and resource

availability as critical factors. Ghoshal and Bartlett (1994) apply a case based approach and

detect stretch, support, trust and discipline as key contextual features to nurture and diffuse

entrepreneurial spirit. Although studies differ substantially in working definitions of EB as

well in methodology9, one message is conveyed by almost all studies: support is critical to

induce EB in large traditional organizations. “If managers feel the atmosphere within their

organization does not support their efforts, intrapreneuring will probably not occur” (Kuratko,

Montagno et al. 1990, p.50). Supportive behavioral context can be viewed as a

multidimensional construct being composed of four sub-dimensions: freedom to act (often

referred to as autonomy) (Peters and Waterman 1982; Schollhammer 1982; Lumpkin and

Dess 1996; Ghoshal & Bartlett 1994, Schuler 1986), availability of and access to resources

(Kanter 1985; Hisrich & Peters 1986; Kuratko, Montagno et al. 1990; Ghoshal and Bartlett

1994; Conger and Kanungo 1988; Sewell Jr. 1992; Spreitzer 1996), and information

8 See Kuratko et al. 1990 for review.9 Empirical studies are mainly case based (Ghoshal & Bartlett 1994; Burgelman 1983; MacMillan et al. 1986), however thespectrum of methodologies also includes multiple cases (Sykes 1986), quasi experiments (Kuratko et al. 1990) and surveystudies (Hisrich and Peters 1986).

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(MacMillan, Block et al. 1986; Churchill and Muzyka 1994), and interpersonal or socio-

political support (Hisrich & Peters 1986, Kuratko et al.1990, Ghoshal, 1994; Spreitzer 1996).

Again, while the “ideal” contextual features identified by this stream of literature

might explain variance in EB between firms, they do not elucidate the puzzling phenomenon

of why some managers do act entrepreneurially and others, facing the same organizational

context, do not. In this paper I apply a cognitive lens and explicitly consider the role of

managers’ perceptions in creating the “ideal” behavioral context from EB.

The fact that a manager might perceive the same objective behavioral context very

differently is hardly considered in studies on EB within established firms. However, empirical

and theoretical evidence shows that the way individuals interpret and perceive their

“playground” for managerial activities guides their (entrepreneurial) behavior and influences

performance (Berger and Luckmann 1966; Brazeal 1993). Dutton et al. claim that when

perceptions are altered in content or evaluation, individuals are likely to modify their behavior

(Dutton, Dukerich et al. 1994). And Brazeal (1993) argues that perceptions may even explain

the gap between entrepreneurial potential and intentions.

Perceptions are multidimensional constructs. They consist of personal assessments

brought about by a combination of different factors, such as knowledge, insight, judgment and

personal values (Liles 1974). As a detailed examination of the perception-formation process

went beyond the scope of this paper, I focus on the effect of individual cognitive and

emotional competencies on perceptions of behavioral context. I briefly propose—

speculative—hypotheses on the impact of cognitive and emotional competencies on perceived

supportive behavioral context.

While it is widely accepted that individual competencies are critical for forming

perceptions, little research—within the field of management—has looked at how single

competencies affect perceptions of support. I propose that managers perceive their objective

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supportive context very differently depending on their set of emotional and cognitive

competencies and that high levels in self-monitoring, perspective taking, positive emotions at

work, and emotional self-awareness positively affect managers’ perceptions of their

supportive behavioral context.10

Subsequently I derive hypotheses on the effect of perceived supportive behavioral

context on EB.

Perceived freedom to act (autonomy). The term freedom to act includes both a sense

of independence and lack of structural constraints. It is widely recognized that how managers

perceive their freedom to act (autonomy) substantially influences their level of entrepreneurial

activity (Ghoshal and Bartlett 1994). Accordingly, I propose:

Hypothesis 5: Perceived freedom to act has a direct, positive effect on EB.

Perceived sociopolitical support. Sociopolitical support—viewed as assistance from

various organizational constituencies—is typically gained from membership in social

networks (Kanter 1983). These networks, informal or formal, provide the “social glue” of

an organization and constitute important channels for getting things done (Brass and

Burkhardt 1993; Ibarra and Andrews 1993). Support networks comprise individuals’ boss,

peers, subordinates and members of working groups (Spreitzer 1996). The perception of

social support and social exchange encourages a sense of empowerment and stimulates

innovative autonomous behavior. Thus I propose:

Hypothesis 6: Perceived sociopolitical support has a direct, positive effecton EB.

Perceived access to information. Free flow of information and information creation

is critical for innovative behavior within organizations (Nonaka 1988). Information creates a

sense of meaning and purpose (Conger and Kanungo1988), which encourages alignment of

individual and organizational goals. It is critical to understand the strategic orientation

10 The hypotheses put forward in this paper are of explorative nature. A more detailed elaboration on the relationship between

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towards entrepreneurial initiative set by top management, and to internalize and enact it.

Furthermore, the availability and clarity of information regarding strategic orientation, daily

workflow, internal results and benchmarks, competitors and markets is critical for managers

to efficiently pursue opportunities with respect to business and internal processes. Thus, I

propose:

Hypothesis 7: Perceived access to information has a direct, positive effect onEB.

Perceived access to resources. Access to resources allows managers to tap locally

what they need to get things done (Kanter 1986). Resources refer to tangible and intangible

assets, and include financial and human resources, material and know how. Greater

availability of resources encourages lower level initiatives and entrepreneurship (Ghoshal and

Bartlett 1994). Positive perceptions regarding access to resources favor proactiveness and a

sense of control over the environment and oneself (Spreitzer 1996). Accordingly I propose:

Hypothesis 8: Perceived access to resources has a direct, positive effect on EB.

Social Cognitive Theory – Entrepreneurial Self-Efficacy Beliefs

Social cognitive theory has enormous potential to enhance our understanding of

managerial effectiveness (Shipper and White 1999). It rejects classical stimulus response

models in explaining behavior (Ginsberg 1990), and claims that beliefs of personal efficacy

are key to human agency (Bandura 1997). Perceived self-efficacy refers to

…beliefs in one’s capabilities to mobilize the motivation, cognitive resources, andcourses of action needed to meet given situational demands (Wood and Bandura1989).

The main sources of self-efficacy beliefs—as discussed in the literature—are information cues

related to enactive mastery (repeated performance accomplishment), vicarious experience

(modeling), verbal persuasion (convincing), and psychological state (physiological and

emotional arousal) (Bandura 1977). It is the way individuals cognitively appraise and

individual dispositions and perceptions of context will be the topic of a separate research paper.

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integrate any relevant information regarding these sources that ultimately determines

perceived self-efficacy (Bandura 1982; Stajkovic and Luthans 1998).

Perceived self-efficacy differs from traditional personality and motivational concepts

such as self-esteem (Rosenberg 1979), expectancy theory (Vroom 1964) or locus of control

(Rotter 1954). First, it is a dynamic construct that changes in reaction to new information on

behavioral context and task experience; and second, it involves the judgment of one’s ability

to perform a specified behavior rather than the judgment of the outcome of behavior or causal

beliefs of action-outcome contingencies (Gist and Mitchell 1992; Bandura 1997; Stajkovic

and Luthans 1998). It is because of its dynamic nature and the described mobilization aspect

that self-efficacy beliefs assume significant explanatory power in understanding why

individuals with a similar level of objective technical ability and/or exposure to the same

organizational circumstances behave differently (Gist and Mitchell 1992; Stajkovic and

Luthans 1998). Individuals constantly weigh, integrate, and evaluate information about their

capabilities and accordingly regulate their choices and efforts (Bandura, Adams et al. 1980).

Self-efficacy beliefs have been conceived as a central construct in examining

behavioral self-regulation, i.e., the cognitive, individual determination of behavior (Scheier

and Carver 1988; Gist and Mitchell 1992). In situations where new behavioral patterns

“compete” with existing patterns, perceived self-efficacy proves an important motivational

and volitional device (1) to increase persistence and avoid inefficacious thought, (2) to reduce

discrepancies between new and old behavioral patterns (Bandura 1989), and (3) to translate

knowledge and ability into skilled performance (Gist and Mitchell 1992). It has been shown

that self-efficacy beliefs lead to greater willingness to seek feedback and encourage the

commitment to difficult goals and effective task strategies (Mitchell 1997). In sum, self-

efficacy beliefs are assumed to enhance motivation and performance as they determine level

and magnitude of involvement and effort invested in a course of action (Bandura 1989).

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The concept of self-efficacy has gained increasing attention in traditional management

literature; and the positive effect of self-efficacy beliefs on managerial behavior or task

performance in organizational settings is well documented in a number of empirical studies

(Barling and Beattie 1983; Frayne and Latham 1987; Lee and Gillen 1989). Self-efficacy

theory is also highly relevant to entrepreneurial phenomena (Jarillo & Stevenson 1990; Liles

1974) as entrepreneurship “rests heavily on a robust sense of efficacy to sustain one through

the stress and discouragement inherent in innovative pursuits” (Bandura (1997, p. 455).

Various authors provide empirical evidence on the positive relationship between

entrepreneurial self-efficacy beliefs and entrepreneurial activities: Baum (1994) shows that

managers achieved entrepreneurial performance through beliefs in their efficacy rather than

their general personality traits; Krueger and Dickson (1994) demonstrate that managers with

high levels of perceived self-efficacy see more opportunities and take more risks; Chen,

Greene et al. (1998) reveal that founders have higher levels of self-efficacy in innovation and

risk-taking; and Chandler and Jansen (1992) find a positive relation between founder’s self-

efficacy beliefs and venture performance. Accordingly, I propose:

Hypothesis 9: Entrepreneurial self-efficacy beliefs have a direct, positive effect on EB.

Gist and Mitchell (1992) note that personal and contextual factors must be considered

to successfully assess self-efficacy beliefs and their impact on behavior. Although previous

empirical research examined the mediating influence of self-efficacy beliefs in a variety of

task domains (Prussia, Anderson et al. 1998), limited research has been conducted on the

mediating effect of entrepreneurial self-efficacy beliefs. I introduce a series of hypothesis that

underline the mediating role of entrepreneurial self-efficacy beliefs proposing an indirect

effect of emotional and cognitive competencies and perceptions of supportive behavioral

context on one hand and EB on the other.

The mediating effect of entrepreneurial self-efficacy beliefs

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Self-monitoring. Self-monitoring influences self-efficacy beliefs through its impact on

two critical information cues. High self-monitors are sensitive to outcomes of their own

behavior (enactive mastery) and behavior of others (vicarious learning). As a result they are

more likely to engage in self-modeling, which alters thought, affect, and action through

observation of task relevant experiences. I suggest that self-monitoring exerts significant

influence on EB through its mediating effect on entrepreneurial self-efficacy beliefs. Thus:

Hypothesis 10: Self-monitoring indirectly influences EB through its positive effecton entrepreneurial self-efficacy beliefs.

Perspective taking. Perspective taking encourages self-regulatory processes and

allows the individual to better control the course of action. It enhances self-efficacy beliefs

through facilitating vicarious experience and verbal persuasion, two main information cues

informing perceived self-efficacy. Accordingly, I propose:

Hypothesis 11: Perspective taking indirectly influences EB through its positiveeffect on entrepreneurial self-efficacy beliefs.

Positive emotions at work. Individuals’ affective state and emotional competencies

provide the psychological and emotional support to enhance self-regulation and self-efficacy

beliefs. They lead to more favorable global self-evaluations and selective attention in the

information about the self (Mischel, Cantor et al. 1996). They affect self-efficacy beliefs via

two informational cues: first, positive emotions influence enactive mastery by making recall

of previous successes more likely; and second, positive mood prevents emotional distraction

and tendencies to be inhibited. Staw, Sutton et al. (1994) empirically show that positive

emotions bring about favorable outcomes at work through an intervening process. Positive

emotions enhance persistence and cognitive functioning, which increase the level of perceived

self-efficacy and positively affect task activity. Accordingly, I propose:

Hypothesis 12: Positive emotions at work indirectly influence EB through theirpositive effect on entrepreneurial self-efficacy beliefs.

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Emotional self-awareness. Knowing and recognizing how their feelings affect

behavioral performance, emotionally self-aware managers are able to better control their

emotions, cognition and, last but not least, actions. Being sensitive to their inner workings

managers are particularly concerned about their ability to effectively perform specific tasks.

Accordingly I propose:

Hypothesis 13: Emotional self-awareness indirectly influences EB through itspositive effect on entrepreneurial self-efficacy beliefs.

Perceived freedom to act. Besides its direct influence perceived freedom to act also

affects EB indirectly. It strengthens efficacy beliefs through enactive mastery of task

performance and facilitates internalization of behavioral goals through promoting volitional

and motivational regulation of behavior. Consequently, I propose:

Hypothesis 14: Perceived freedom to act indirectly influences EB through itspositive effect on entrepreneurial self-efficacy beliefs.

Perceived sociopolitical support. Supportive relationships within the organization

positively affect self-efficacy beliefs via two important information cues, namely verbal

persuasion and vicarious experience. Managers who perceive their formal and informal

network as supportive are first, more easily convinced and open for verbal persuasion, and

second, they are more inclined to adopt new behavioral patterns through vicarious experience,

i.e., learning from other members of the network. Accordingly, I suggest:

Hypothesis 15: Perceived sociopolitical support indirectly influences EB throughits positive effect on entrepreneurial self-efficacy beliefs.

Perceived access to information. Access to relevant information also critically affects

managers’ EB via self-efficacy beliefs. It enhances managers’ judgment of their

entrepreneurial capabilities by providing a more accurate understanding of task attributes,

complexity and environment (Gist and Mitchell 1992). Accordingly, I suggest:

Hypothesis 16: Perceived access to information indirectly influences EB throughits positive effect on entrepreneurial self-efficacy beliefs.

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Perceived access to resources. Managers’ perceptions of adequate access to resources

create a sense of control over environmental contingencies and therefore enhance perceived

self-efficacy (Gist and Mitchell 1992). Thus, I propose:

Hypothesis 17: Perceived access to resources indirectly influences EB through itspositive effect on entrepreneurial self-efficacy beliefs.

In sum, to provide a comprehensive model for investigation, I consider direct effects—as

suggested by the traditional literature—as well as indirect effects of individual competencies

and perceptions of context on EB.

RESEARCH DESIGN

To my knowledge, no general theory exists on the enactment of EB in large business

organizations. To capture and at the same time control for the complexity of the phenomenon

I focused on one company and combined in-depth clinical investigation with a survey.

Research Setting

In 1997, ABN AMRO—a large Dutch financial service company—launched a project

to promote entrepreneurial initiative, and accordingly reshuffled its operations in the

Netherlands. It split the domestic market into 215 micro markets and appointed an area

manager for each of these newly created autonomous (independent) units. Each area belongs

to one of 11 regional units, and area managers, although autonomous in principal, formally

report to their general regional manager. Area managers are expected to manage their unit in

an entrepreneurial way and diffuse entrepreneurial spirit throughout the organizations. While

all area managers faced the same objective organizational context, the manner in which they

implemented entrepreneurial approaches in their units was left to them. It is these area

managers and their actions that are at the center of this study.

20

Research Procedures

The data collection process included extensive clinical fieldwork to corroborate the

theoretical framework and to operationalize the key constructs. The total number of

interviews in the initial, qualitative, stage was 40. In the second phase—the survey phase—I

developed measurement items by drawing from my qualitative findings as well as from

relevant literature. The resulting items were pre-tested, first by a group of academics and

professionals, and secondly, by a restricted number of area managers. The final questionnaire

was mailed to the whole population under study (207 area managers) and returned by 150

managers, indicative of a highly satisfactory overall response rate of 72%. I evaluated non-

response biases by comparing regional distribution, size, and financial performance of the

areas in the “returned” sample with the ones in the “not-returned” sample. No significant

differences were found. As suggested by the relevant literature I eliminated social desirability

effects as much as possible by clarifying introductions and accurate phrasing of questions

(Rossi, Wright et al. 1983).

Respondents. The sample of managers who returned the questionnaire exhibited the

following characteristics: 81.3% of the managers assumed the position of area manager in

1997, the year the entrepreneurial project was launched. The remaining 19.7% joined during

1998 (6.7%) and 1999 (12%). No significant differences could be identified in answers from

managers joining at separate times.

Four percent of all area managers in the return sample were female, and 71% of all

respondents were less than 50 years old. The educational level was quite elevated: 77.3%

have enjoyed higher education (39% hold university degrees). These results are consistent

with the distribution in the overall population of area managers. On average, area managers in

the sample had been with ABN AMRO for 22 years and were responsible for 59 employees.

Depending on the size of area the latter number ranged between 14 and 217 employees.

21

Model structure . Following Anderson and Gerbing (1988) and Fornell and Larcker

(1981) I chose a two-step structural modeling approach with latent constructs11. I selected

AMOS 3.61, a second-generation multivariate analysis technique analogous to LISREL, to

estimate the proposed model, and used Full Information Maximum Likelihood estimators,

which are recognized as efficient estimators for theory testing and development (Anderson

and Gerbing 1988) to assess the model.

The structural model—specifying the hypothesized relationships between constructs

(endogenous or endogenous latent variables—can be expressed as 12

η= βη + Γξ + ζ

The model is based on perceptual variables. Latent endogenous variables are

perceived freedom to act, perceived sociopolitical support, perceived access to resources,

perceived access to information, entrepreneurial self-efficacy beliefs and EB. Latent

exogenous variables are self-monitoring, perspective taking, positive emotions at the

workplace, and emotional self-awareness. I specified a variance-covariance matrix of latent

exogenous variables (φ) and allowed the exogenous constructs to inter-correlate freely.

The measurement model—specifying how constructs or latent variables are

measured in terms of observed variables— can be written as 13

y = Λyη + εx = Λxξ + δ

11 A latent construct is not directly observable and is defined by the loadings of all indicators or manifest variables used tomeasure it.12 Where:

β is an (m x m) matrix of endogenous variable coefficients (βij = 0 means that ηj and ηi are not related),Γ is an (m x n) matrix of exogenous variable coefficients (γij = 0 means that ηi is not related to ξj),η is an (m x 1) column vector of constructs derived from the latent endogenous (dependent) variables (y),ξ is an (n x 1) column vector of constructs derived from the exogenous latent (independent) variables (x),ζ is an (m x 1) column vector of the errors in the structural equation (residuals),m is the number of constructs (latent variables) developed from the observed endogenous (dependent) variables,n is the number if constructs (latent variables) developed from the observed exogenous (independent) variables.

13 Where:y is a ((p x 1) column vector of observed dependent variables,x is a (q x 1) column vector of observed independent variables,Λy is a (p x m) regression coefficient matrix of y on η,Λx is a (q x n) regression coefficient matrix of x on ξ,ε is a (p x 1) column vector of measurement errors for the indicators of endogenous variables,δ is a (q x 1) column vector of measurement errors for the indicators of exogenous variables.

22

I specified one indicator of each latent construct as having a factor-loading equal to

one to provide a metric (Bollen 1989).

Measures

Descriptive statistics and correlations are shown in Table 1, and results of the

measurement model are reported on Table 2.

----------------Insert Table 1----------------

All measures were analyzed for validity and internal consistency following the guidelines

offered by Fornell and Larcker (1981). Factor analysis revealed one common factor for each

construct with items adequately correlated. Relevant survey questions for this study are

presented in the Appendix.

----------------Insert Table 2----------------

Endogenous Variables. As frequently used general scales on perceived self-efficacy

or EB do not reflect the particular entrepreneurial tasks at the center of this study, I built

original indicators based on the qualitative findings from interviews with area managers,

subordinates, bosses and internal/external experts. To measure perceptions of behavioral

context I developed context specific indicators, with the exception of sociopolitical support.

All measures, with the exception of entrepreneurial self-efficacy beliefs are based on seven-

point Likert-type scale.

Entrepreneurial behavior. Given the context-specific conceptualization of EB, it was

essential that its measure captured its main aspects, i.e., balanced nature, innovation,

autonomy and opportunity. EB was operationalized by asking respondents about the extent to

which they engaged in particular activities focusing on new opportunities, processes and

23

procedures, and reorganization and targeted at employees, customers, and markets. Five

indicators covering the spectrum of activities were chosen to measure EB.

Entrepreneurial self-efficacy beliefs.. In this study I followed Bandura’s original

approach and measured entrepreneurial self-efficacy beliefs in terms of people’s expectations

to successfully perform tasks leading to entrepreneurial success (Bandura 1977; Jones 1986).

Focusing on efficacy strength (Bandura 1977; Prussia, Anderson et al. 1998) to assess

entrepreneurial self-efficacy beliefs, I operationalized the construct by asking respondents to

indicate the level of confidence in their ability to perform specified tasks on a scale ranging

from ‘not confident at all’ (0) to ‘totally confident’ (10) (Lee and Bobko 1994). Six indicators

reflecting self-efficacy beliefs with respect to entrepreneurial tasks were extracted.

To capture the various dimensions of perceived supportive behavioral context I

adapted an existing scale on perceived sociopolitical support and developed specific

indicators to measure perceived freedom to act, and perceived access to information and

resources.

Freedom to act. I operationalized the level of perceived freedom to act (autonomy) by

assessing the extent to which respondents were allowed to manage their area in an

autonomous and self-determined manner. Three reflective indicators were employed.

Perceived sociopolitical support. I adapted a scale developed by (Spreitzer 1992) to

measure the level of perceived sociopolitical support, and used tree reflective indicators to

capture the respondents’ perceived level of support from bosses and peers at headquarter and

regional level.

Perceived access to resources. Two reflective indicators generated from fieldwork

were used to measure the level of perceived access to resources.

Perceived access to information. I measured the level of perceived access to

information using two reflective context-specific indicators generated from fieldwork.

24

Exogenous variables. I operationalized cognitive and emotional competencies by

adapting existing scales. Again, all indicators were based on seven-point Likert-type scales.

Self-monitoring. I focused on the cognitive aspect of self-monitoring, and measured it

by four reflective indicators, adapted from a scale developed by (Lennox and Wolfe 1984).

Perspective taking. The cognitive aspect of empathy was captured by five reflective

indicators adapted from a 9-item scale developed by (Davis 1980).

Positive emotions at work. Positive emotions at work was measured through three

indicators extracted from a 10-items scale developed by (Staw, Sutton et al. 1994). Staw,

Sutton et al. (1994) do not distinguish between felt and expressed emotions arguing that

strong reciprocal effects exist between the two. The items consisted of questions regarding the

frequency of felt emotions.

Emotional self-awareness. No validated scales for measuring emotional self-

awareness could be found in the literature. Thus I captured emotional functioning by adapting

a subscale from the “BarOn Emotional Quotient Inventory”, a frequently used intra-personal

measurement device in management education. The three indicators indicate individuals’

perceived ability to express, share, and describe their feelings.

RESULTS AND DISCUSSION

I first assessed reliability and validity of the measurement model, and second, the

relationships between constructs within the structural model (Anderson and Gerbing 1988;

Capron 1999).

Measurement Model Results

Internal consistency, average variance extracted (convergent validity), and

discriminant validity are reported in Table 2. All non-fixed indicator loadings for each

construct are significant at a 0.01 level. Indicators’ loadings—ranging from 0.69 to 0.98—

25

largely in line with the widely accepted rule of thumb to accept items with loadings greater

than 0.70.14

All scales demonstrate adequate internal consistency measured according a formula

suggested by (Fornell and Larcker 1981)15. Scores range between 0.89 and 0.95 and meet the

recommended ‘0.7 threshold’ (Fornell and Larcker 1981). I assessed the amount of variance

captured by the construct’s measure in relation to the amount of variance due to measurement

error and calculated the average variance extracted 16—a more conservative measure for

convergent validity. Convergent validity of estimates is demonstrated as all scores exceeded

the 0.50-benchmark17.

Finally, I evaluated discriminant validity.18 Table 1 exhibits the correlation matrix for

the constructs as well as the square root of the average variance extracted (reported in the

diagonal). As all diagonal elements were significantly greater than the off-diagonal elements,

each construct shares more variance with its measure than it shares with other constructs.

Structural Model Results

I proposed a positive and significant influence of entrepreneurial self-efficacy beliefs

on EB, significant effects of cognitive and emotional competencies on perceptions of

supportive behavioral context, and, last but not least, I hypothesized individual competencies

and perceptions of behavioral context to directly and indirectly influence EB. Figure 2

graphically presents the results for the structural model exhibiting significant standardized

path coefficients and correlations.

------------------Insert Figure 2------------------

14 Factor loading > 0.7 demonstrate more explanatory power than variance15 Internal consistency = ((Σ λyi)2) / ((Σ λyi)2 + Σ var (εi))(Fornell and Larcker 1981)16 Average variance extracted = ((Σ λyi)2) / (Σ λyi

2 + Σ var (εi)) (Fornell and Larcker 1981)17 Fornell and Larcker (1981) note, “if average variance extracted is less than 0.5, the variance due to measurement error islarger than the variance captured by the construct, and the validity of the individual indicators as well as the constructbecomes questionable” (Fornell and Larcker 1981, p. 46).18 According to Fornell and Larcker (1981) discriminant validity is supported if the square of the parameter estimate betweentwo constructs (F2) is less than the square root of the average extracted of the two constructs (Fornell and Larcker 1981).

26

Squared multiple correlations (SMC’s) for EB and entrepreneurial self-efficacy beliefs

exhibit a highly satisfactory fit. The proposed model explains 43 % of the variance in EB of

area managers, which is particularly satisfactory given the complexity of managerial behavior.

In addition, almost half of the variance in entrepreneurial self-efficacy beliefs (45%) is

captured by the proposed model (shown in Figure 2).

As hypothesized, entrepreneurial self-efficacy beliefs have a strong positive and

highly significant impact on EB (0.54, p < 0.01), suggesting entrepreneurial self-efficacy

beliefs are a powerful predictor of EB (Stajkovic and Luthans 1998). With respect to their

formation, two variables in particular exhibit a highly significant and strong influence on

entrepreneurial self-efficacy beliefs: managers’ ability to self-monitor their own behavior and

perceived freedom to act (0.46, p < 0.01; and 0.36, p < 0.01 respectively).

Contrary to studies in entrepreneurship and social psychology that portray EB as

determined primarily by individual characteristics, data analysis revealed no significant direct

effect of cognitive and emotional competencies on EB. Instead, individual competencies

affect EB indirectly through a significant effect on perceptions of supportive behavioral

context and entrepreneurial self-efficacy beliefs, both key determinants of EB. Perspective

taking and positive emotions significantly influence perceptions of support in the predicted

positive manner (freedom to act: 0.30, p < 0.01 and 0.53, p < 0.01; socio-political support:

0.32, p < 0.01 and 0.34, p < 0.01; access to info: 0.47, p < 0.01 and 0.42, p < 0.01; access to

resources: 0.25, p < 0.05 and 0.64, p < 0.01). While I initially speculated on positive effects,

self-monitoring, exerts a significant negative effect on the different sub-dimensions of

perceived supportive behavioral context (freedom to act: -0.26, p < 0.05; socio-political

support: -0.39, p < 0.01; access to info: -0.40, p < 0.01; access to resources: 0.30, p < 0.05).

Emotional self-awareness has a significant negative effect on only one sub-dimension, i.e.,

27

perceived freedom to act (-0.20, p < 0.10). Effects on the remaining sub-dimensions are not

significant.

In addition to the significant effect on managers’ interpretation of their supportive

organizational environment, self-monitoring proves to be a highly significant and strong

predictor of managers’ entrepreneurial self-efficacy beliefs, i.e., their judgment of their

entrepreneurial capabilities.

Two out of the four sub-dimensions for supportive context considered in the model

directly affect EB: perceived socio-political support exerted a positive and significant (0.26, p

< 0.05), and perceived access to resources a positive and marginally significant (0.32, p

marginal) influence. Both variables do not reveal any indirect effect on EB. While not

exerting a direct effect on EB, perceived freedom to act significantly affects entrepreneurial

self-efficacy beliefs supporting the proposed indirect effect. Perceived access to information

reveals no significant direct and indirect on EB.

In sum, my analysis reveals that emotional and cognitive competencies are key in

determining managers’ perceptions of their supportive behavioral context. These perceptions

in turn significantly influence EB. Entrepreneurial self-efficacy beliefs not only is a powerful

predictor of EB, it also plays an important role in mediating the positive effect of managers’

self-monitoring competence and their perceptions of freedom to act on EB.

Correlation between exogenous variables. Analysis also demonstrates significant

correlations between exogenous variables (individual dispositions). Perspective taking is

significantly correlated with self-monitoring (0.38, p < 0.01), and positive emotions at the

workplace are significantly correlated with emotional self-awareness (0.45, p < 0.01). These

findings corroborate previous theoretical insights and support my earlier distinction between

cognitive and emotional competencies.

28

Fit measures. Assessing the overall goodness-of-fit in structural equation models is

not as straightforward as with other multivariate techniques (Morgan and Hunt 1994;

Netemeyer, Boles et al. 1997; Hair Jr., Anderson et al. 1998). Two frequently used measures,

the goodness-of-fit index (GFI) and the adjusted-goodness-of-fit index (AGFI) and indicate

marginal fit (0.79 and 0.74 respectively). Incremental fit measures equally demonstrate

marginal fit: the estimates for the Tucker-Lewis index (TLI), a comparative index between the

proposed and null model, and the comparative fit index (CFI), appropriate in the model

development stage and using small samples are 0.80 and 0.83 respectively.19

Control variables. I controlled for potential sources of heterogeneity: tenure as area

managers, number of years within ABN AMRO, age, gender, salary, size and geographical

location of the area. A number of control variables had a significant effect on perceived

supportive behavioral context; one (age) had a significant effect on perceived self-efficacy;

and none had had a significant impact on entrepreneurial behavior. Overall, the stability and

robustness of previous results remained largely unaffected.

Age. Age significantly affects perceived self-efficacy (-.0186, p < 0.05), indicating

that older managers—in general—have lower levels of perceived ability in successfully

performing entrepreneurial tasks. This is not surprising as entrepreneurial tasks in the context

of this study are fundamentally different from the traditional set of behaviors exhibited over

years. Interestingly, age has no significant effect on actual EB. This suggests that although

older managers proceed with humility when judging their entrepreneurial abilities they still

engage in these new activities. I found no significant effect of age on perceived behavioral

context.

Education. The level of education exerts no significant effect on EB or perceived self-

efficacy. However, it significantly affects the way managers perceived their supportive

19 The values for fit measures lie between 0 and 1.0, and higher values indicate better fit. While no established thresholdexists for GFI; levels of 0.9 for TLI and CFI are recommended (Hair Jr., Anderson et al. 1998).

29

organizational environment. In general, managers with an elevated level of education assume

a less favorable perspective on support in their organizational context than their colleagues

who enjoy lower levels of education. A high level of education has a negative and significant

impact on managers’ perceptions of socio-political support (-0.161, p < 0.10), access to

resources (-0.0172, p < 0.10), and access to information (-0.0210, p < 0.05).

Tenure within ABN AMRO. The number of years managers spent within ABN AMRO

before assume does not significant affect the endogenous variables.

Start as area manager. Whether area managers started their job in 1997—the

beginning of the entrepreneurial project—or later has a significant effect on how they

perceive their socio-political support (-0.151, p < 0.10) and their freedom to act (0.155, p <

0.10). In other words managers who joined the entrepreneurial project at an early stage

perceive their sociopolitical support more negatively than their colleagues who joined later.

On the other hand, managers who started in 1997 interpret their freedom to act more

favorably than their colleagues. Besides this effect on perceived supportive context, tenure as

“entrepreneurial area manager” has no significant impact on perceived self-efficacy and EB.

Professional background and gender. Both, professional background and gender of

managers has no significant effect on endogenous variables.

Salary. The level of salary only significantly affects managers perceived access to

resources. Mangers with higher salaries interpret their access to resource more negatively than

their colleagues with lower salaries.

Size of the area. While size of the area has any significant impact on neither

managers’ perceived self-efficacy nor their EB, it significantly and negatively affects their

perceptions of socio-political support (-0.161, p < 0.10) and of access to resources (-0.261, p

< 0.01).

30

Region. The fact that the different areas belong to 11 different regions only

significantly influences managers perceived access to information. This suggests that regional

managers substantially differ in their approaches to convey. No other regional effects was

detected.

The robust results of the model support and strengthen the main argument of the

paper. Perceptions of supportive behavioral context and individual cognitive and emotional

competencies are important to enact EB in large traditional organizations. However, the way

they influence EB is more complex than predicted by traditional literature in strategic

management, entrepreneurship and organizational behavior. First, in contrast to predictions of

traditional theories on entrepreneurial profiles, individual cognitive and emotional

competencies do not affect EB directly. Yet, they are critical for shaping managers’

perceptions of supportive behavioral context. Second, it is these perceptions of supportive

behavioral context that significantly affect EB and therefore explain part of the variance of

EB within the same organizational context. Third, individual dispositions and perceptions of

support also influence EB indirectly, through entrepreneurial self-efficacy beliefs, an

important mediating mechanisms. As such, entrepreneurial self-efficacy beliefs—managers’

own judgment of their entrepreneurial capabilities—are a powerful regulating force to

translate commitment and intentions to act entrepreneurial into actual EB.

CONCLUSIONS

Previous strategy process literature has emphasized the importance of contextual features in

fostering entrepreneurial initiatives and analyzed inter-firm differences in behavioral context.

I argued that, while variation in objective behavioral context might explain differences in

entrepreneurial behavior between companies, it fails to explain differences within the same

objective context. I argued that variance in entrepreneurial behavior—opportunity-oriented

31

behavior based on innovative use of resources—within the same objective context can be best

explained at the individual level, by taking into consideration how managers perceive their

“playground for action”, and their own capabilities to perform entrepreneurial tasks, and by

examining their emotional and cognitive competencies to regulate thought, feelings and

actions.

Integrating literature in strategic management, organizational behavior,

entrepreneurship, and social cognitive theory, I developed and empirically tested a model on

the micro-foundations of entrepreneurial behavior within large traditional organizations. Data

on 150 managers in a traditional company striving to become more “entrepreneurial” revealed

that the way managers perceive their supportive organizational context, notably their

perceptions on support from colleagues, peers and bosses as well as on access to resources,

drives entrepreneurial behavior. Perceptions of behavioral context in turn were critically

shaped by managers’ cognitive and emotional competencies. While positive emotions at work

and managers’ ability to take the perspective of others exerted a positive effect on perceived

supportive context, self-monitoring—managers’ ability to self-present themselves according

to changing situations—and emotional self-awareness negatively influenced perceived

supportive context.

Findings also accentuate the importance of entrepreneurial self-efficacy beliefs—

defined as perceived capability to successfully perform entrepreneurial tasks—as a powerful

predictor of entrepreneurial behavior. They act as a mediating force to translate self-

monitoring—an individual cognitive disposition—and managers’ perceived level of freedom

to act into entrepreneurial behavior. The critical role of entrepreneurial self-efficacy beliefs—

conceived as an important self-regulatory device—suggests that managers apply an “inner

compass” to navigate through the perils of moving towards new entrepreneurial patterns of

32

behavior. This inner compass presents an important cognitive and motivational device to steer

and regulate entrepreneurial behavior.

This paper enhances existing research on entrepreneurial behavior in established firms

by focusing on “day-to-day entrepreneurship” examined at an individual level. It

complements traditional studies and sets the stage for future multilevel research on this

phenomenon. Given the exploratory nature of the phenomenon understudy, I chose to

examine one company in depth. This allowed me to capture richness and context-specificity

of the phenomenon, and ensured adequate and meaningful measurement of exogenous and

endogenous variables. The survey-instrument build for this study therefore effectively

combines existing measures and scales with context specific measures derived from

fieldwork.

However, a few limitations should be pointed out. First, it is difficult to derive

generalizations on how managers in traditional organizations engage in entrepreneurial

activities. Second, to examine the micro foundations of entrepreneurial initiative, I

concentrated on perceptual data, a method associated with well-known shortcomings

(Podsakoff 1986). A third limitation of this study consists in the reciprocal nature of the

relationships between constructs. Entrepreneurial self-efficacy beliefs, for example, can be

perceived as both an antecedent and consequences of entrepreneurial behavior (Bandura 1978;

Bandura 1982). Finally, the cross-sectional nature of the survey data impedes insights on time

related issues, and causal effects can’t be assessed.20

Meaningful implications for managerial practice can be derived. Findings suggest that

managers interpret and give subjective meaning to objective organizational context and

therefore “construct” their own behavioral context (Weick 1979; Dutton 1993). Perceptions,

however, are learned and learnable (Krueger and Brazeal 1994), and top management can

20 However, a longitudinal design to explore time-based effects was not feasible because of restricted access to the managersundergoing the behavioral change process.

33

facilitate change towards entrepreneurial behavior by influencing this “sense-making” process

(Jelinek and Litterer 1995). Findings also reveal that entrepreneurial self-efficacy beliefs are

critical in explaining why some managers act entrepreneurially, and others, in the same

objective organizational context, do not: it is not because these mangers lack necessary skills

but because they don’t belief in their capabilities to perform entrepreneurial activities. Thus

identification and removal of such “self-doubts” enable managers are critical to enact

entrepreneurial behavior (Chen, Greene et al. 1998). Previous research showed that favorable

self-efficacy beliefs are readily teachable and that these amplified perceptions of self-efficacy

persist over time (Gist 1987; Krueger and Dickson 1994). Top management can deliberately

influence the primary sources of entrepreneurial self-efficacy beliefs. First, structuring

behavioral change programs in a way that initial objectives are easily attainable and executed

successfully allows managers more easily to accomplish behavioral goals, which in turn

reinforces self-efficacy beliefs (Beer 1980). Second, supervisors’ exemplary behavior

stimulates vicarious experiences, which foster self-efficacy beliefs of subordinates to perform

in a like manner (Conger and Kanungo 1988). Third, continuous encouragement and verbal

feedback exhibits a similar effect via verbal persuasion. And fourth, emotional and

psychological stimulation has been shown to enhance mangers’ personal competence

expectations (Bandura 1997).

34

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