how companies motivate entrepreneurial employees
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How companies motivate entrepreneurial employeesTRANSCRIPT
ORI GIN AL PA PER
How companies motivate entrepreneurial employees:the case of organizational spin-alongs
Patricia Klarner • Theresa Treffers • Arnold Picot
� Springer-Verlag Berlin Heidelberg 2013
Abstract This paper investigates how high-profile employees with entrepreneurial
abilities can be attracted, retained, and nurtured in order to foster companies’ cor-
porate entrepreneurship through innovations. We find that the spin-along design
provides entrepreneurial employees with a combination of flexibility and security
(flexicurity), corporate management, and control. Based on five in-depth case
studies within an innovative company, our results show that the organizational spin-
along structure supports and enhances entrepreneurial employees’ motivation and
leads to the attraction, nurturing, and retention of such employees. We also find that
senior management has a critical leadership role in enabling such an organization
design by balancing flexibility and security with control.
Keywords Entrepreneurial employees � Motivation � Organization design �Qualitative research � Spin-along
JEL Classification D01 � J01 � J24
P. Klarner (&)
Munich School of Management, Institute of Strategic Management,
University of Munich (LMU), Ludwigstr. 28, 80539 Munich, Germany
e-mail: [email protected]
T. Treffers � A. Picot
Munich School of Management, Institute for Information, Organisation and Management,
University of Munich (LMU), Ludwigstr. 28, 80539 Munich, Germany
e-mail: [email protected]
A. Picot
e-mail: [email protected]
123
J Bus Econ
DOI 10.1007/s11573-013-0657-5
1 Introduction
In order to survive and grow in increasingly dynamic markets, companies have to
continuously innovate (Ancona and Caldwell 1992; Daneels 2002). Generating
innovations is thus a strategic goal for organizations. Innovation implies that
companies gain new knowledge and transform it into new outcomes (Wineman
et al. 2009), expand existing competences, and build new ones over time (Daneels
2002). Since innovation results from individual ideas (Scott and Bruce 1994),
organizations have to attract, nurture, and retain employees with explorative
knowledge (March 1991) and novel ideas (Van de Ven 1986).
Such high-profile employees, i.e., employees with specific knowledge and
entrepreneurial abilities, convert new knowledge into new products, processes, or
services—a process called corporate entrepreneurship (Shane and Venkataraman
2000). However, there are few such employees in the labor market (Whitley 2002).
Since they can apply their abilities in different settings and pursue several
professional opportunities, the competition between companies to attract and retain
them is fierce. Assuming that labor market can formalize and compare the available
employees’ professional knowledge (Griliches 1997), employees with entrepre-
neurial abilities, i.e., innovative employees, are especially important for companies
faced with continuous pressures to innovate. Since access to such employees can
distinguish innovative firms from less innovative ones, it is important to understand
how companies can attract and retain them over time.
Prior innovation research has examined several contextual features, such as
organic structures characterized by high degrees of decentralization and autonomy,
that support organizational innovation (Burns and Stalker 1961). Scholars have also
studied other drivers of innovation, such as the competences required for innovation
(Daneels 2002; Leonard-Barton 1992), supportive leadership (Van de Ven 1986),
and a strong innovation culture (O’Reilly 1989). In addition, research has examined
employees’ innovative behavior, which is defined as developing, applying, and
implementing new ideas in the organization (Shalley et al. 2004; Yuan and
Woodman 2010; Zhou 2003). Employee innovation has been found to be affected
by job characteristics (Oldham and Cummings 1996), positive affect (Amabile et al.
2005), the relationship between employees and their supervisors (Janssen and Van
Yperen 2004), and employees’ social context (Munton and West 1995). Related
entrepreneurship research focusing on the individual skills required to become an
entrepreneur has found that entrepreneurs need the skills and experience to combine
tangible and intangible assets in new ways and to deploy them to better meet
customer needs (Amit et al. 1990). Entrepreneurial abilities therefore enable
individuals to demonstrate innovative, entrepreneurial behavior. Similarly, organi-
zations need employees with entrepreneurial abilities to innovate in the corporate
context (Shabana 2010). While prior research has examined how employees become
innovative in organizations, we lack insights into how companies can appeal to and
motivate entrepreneurial employees to foster corporate entrepreneurship through
innovation.
This paper addresses this gap by investigating how firms can attract, retain, andnurture entrepreneurial employees through organization design. Specifically, we
P. Klarner et al.
123
are interested in how a company convinces high-profile employees to accept its
offering of a context in which they can best apply their entrepreneurial abilities, and
how it can prevent its current entrepreneurial employees from accepting opportu-
nities outside the company. Owing to the lack of prior research on this topic, we use
qualitative methods to explore the role of corporate structure in providing an
attractive environment for innovative employees.
We conducted in-depth case studies at a German biotech company. Previous
studies have shown that the spin-along approach—a specific organization design—
supports organizations’ innovative activities (Michl et al. 2012, 2013; Rohrbeck
et al. 2009). Findings from this paper reveal that such a spin-along approach may be
particularly supportive in motivating entrepreneurial, innovative employees to join
and remain in a company. Our findings show that spin-alongs—separate organi-
zational units—provide entrepreneurial employees with the necessary structural
flexibility and employment security (flexicurity) to use their abilities. Structural
flexibility offers entrepreneurial employees sufficient autonomy to experiment with
their ideas, while spin-alongs provide such employees with more employment
security than a start-up setting, due to the parent company’s financial backing, the
reduced danger of an uncertain business environment, and a lower risk of failure. At
the same time, spin-alongs provide the parent company with monitoring options that
help ensure that the units’ objectives are aligned with the parent company’s strategic
goals. We further find that senior management plays a critical role in balancing
employees’ flexicurity with control. With the strategic innovations generated in
spin-alongs, the company studied achieved its strategic long-term goal and secured
its strategic survival.
Our study contributes to the innovation and corporate entrepreneurship literature,
as well as to managerial practice in several ways. First, it highlights how
entrepreneurial employees can be attracted, retained, and nurtured by a specific
organization design, the spin-along approach, which combines elements of internal
and external venturing. This is the first study to show that the spin-along design is
strongly linked to employees’ entrepreneurial motivation, thereby fostering
corporate entrepreneurship through strategic innovations. Our findings support the
allegation that the company context has a critical role to play in motivating
entrepreneurial employees and should thus receive more attention in future research
(Latham and Pinder 2004). Using an expectancy theory lens, we specifically provide
insights into how companies contribute to entrepreneurial employees’ motivation
through the specific spin-along design. Second, in contrast to most previous studies
that mainly examine how current employees can become more innovative, this
study provides additional insights, since we also investigate how entrepreneurial
employees can be attracted. Third, this study uses an explorative design with the
spin-along as a process-oriented organization design in a dynamic context.
The studied company operates in a global context in the biotechnology industry,
which allows us to provide in-depth insights into a so-called ‘hidden champion’
(Simon 1990, 2009, 2012). Hidden champions are defined as global market players
with low public awareness. Simon (1990, 2009, 2012), one of the first scholars to
examine German hidden champions, described them as highly specialized
organizations that strongly and closely adapt their production to customer
How companies motivate entrepreneurial employees
123
requirements. Therefore, one of these organizations’ biggest challenges lies in
attracting international and highly specialized professionals. At the same time, their
entrepreneurial culture and leadership style support their employees’ loyalty and
identification. Our in-depth study of a typical hidden champion allows us to offer
insights into the challenges that many other hidden champions face in attracting,
nurturing, and retaining valuable human capital.
This paper is structured as follows: We first review the theoretical background of
corporate entrepreneurship, the motivation theory, and the concept of entrepre-
neurial motivation. We then present the case study method, including the case
descriptions, followed by a presentation of the findings. After this, we discuss our
findings, and conclude with avenues for future research.
2 Theoretical background
2.1 Corporate entrepreneurship, corporate venturing, and spin-along
Corporate entrepreneurship—or intrapreneurship—is defined as the development of
a new venture in an organization, the exploitation of new opportunities, and the
creation of economic value (Parker 2011; Pinchot 1985). It describes a strategic set
of activities that center on ‘‘the discovery and pursuit of new opportunities through
innovation, new business creation, or the introduction of new business models’’
(Hayton and Kelley 2006, p 407). It is therefore a central element in firms’
revitalization and improved performance (Antonic and Hisrich 2001; Kuratko et al.
1990; Parker 2011). Prior research has provided insights into the nature,
antecedents, and consequences of corporate entrepreneurship (Burgelman 1983;
Pinchot 1985; Webster 1977; Zahra et al. 1999).
Some scholars have examined corporate venturing as part of corporate
entrepreneurship. Corporate venturing is defined as an activity that seeks to create
new businesses for a company by establishing external or internal corporate
ventures (von Hippel 1977). Internal corporate ventures are kept within the parent
organization, whereas external corporate ventures are created as semi-autonomous
or fully autonomous organizational entities that reside outside the organization (Keil
2002; Sharma and Chrisman 1999).
A spin-along is a dynamic organization design that combines elements of internal
and external venturing. Spin-alongs were initially described as semi-autonomous
organization units controlled by and with linkages to the parent firm in order to
support the parent’s innovation activities (Michl et al. 2012, 2013). They use the
parent company’s resources and enjoy its protection (Dushnitsky and Lenox 2006),
but simultaneously act independently of it in the market, which reduces their
dependence on the parent. From a corporate perspective, it generally takes several
years for a spin-along to produce valuable innovations for the parent firm.
Therefore, the spin-along approach should be considered from a process perspective
and managed with a long-term corporate focus.
Figure 1 illustrates the spin-along approach as a combination of spin-off and
spin-in/acquisition with two bold lines. The term spin-offs is used instead of spin-
P. Klarner et al.
123
outs, because the parent firm retains shares in the venture when spinning off. The
term spin-ins is used when the spin-along has venture characteristics after the spin-
along phase, i.e., when it has been semi-autonomous from the parent firm for several
years. The term acquisitions is used when the spin-along has grown into a larger
organization with formalized structures and processes during the spin-along phase.
While spin-offs, spin-ins, and acquisitions can be mainly regarded as specific points
in time, spin-alongs combine these points over a period of several years. The spin-
along approach can therefore be regarded as a process that includes at least two
separate points in time. Furthermore, we extend previous definitions of the spin-
along approach (Michl et al. 2012, 2013) by arguing that a spin-along can start as
(1a) a spin-off or as (1b) a spin-in/acquisition, and terminate as (2a) a spin-in/
acquisition or as (2b) a spin-off. In Fig. 1, the internal and external boxes on the left
describe, from a corporate perspective, whether the spin-along originated internally
as a spin-off, or externally as a spin-in/acquisition. Depending on the spin-along’s
origin, the company can increase or decrease the spin-along’s internal or external
corporate venturing elements.
Similar to other corporate venturing activities, the organization’s goal with one or
more spin-alongs is to generate strategic innovations in order to secure its long-term
survival and success. Spin-alongs are created to serve this strategic goal by
engaging in innovation activities. These innovation activities can be more
(incremental) or less (radical) related to the company’s core business and can be
focused on geographical markets unrelated to the current core business (unrelated
diversification), or related to the core business (related diversification). The
organization’s overall goal to survive is a strategic goal that only employees who
are creative and have new ideas, i.e., entrepreneurial employees, can support.
Hence, attracting, retaining, and nurturing innovative and entrepreneurial, and
thus strategically relevant, employees for spin-alongs is another strategic company
goal. Entrepreneurial employees are very likely to unfold their skills in a more
spinning-along
(2a) spinning-in /acquisition
(1a) spinning-offInternal
External innovation process(external venturing)
Internal innovation process(internal venturing)
(1b) spinning-in /acquisition
(2b) spinning-off External
*adapted from Michl et al. (2012)
Fig. 1 The spin-along approach*
How companies motivate entrepreneurial employees
123
flexible and open start-up structure rather than in a formalized and hierarchical
setting. Therefore, such employees should work in spin-alongs detached from the
corporate hierarchy to give them room to explore new ideas, experiment, and
produce innovative new products that may or may not be related to the current core
business. Attracting, retaining, and nurturing entrepreneurial employees are
therefore strategic company tasks and, as this study shows, spin-alongs are
particularly suitable for this task.
2.2 Spin-alongs: conceptualization and related concepts
To conceptualize the spin-along approach in more detail, it is important to elaborate
on spin-alongs’ benefits for a parent company. First, parent firms can change their
stakes in a spin-along over time, depending on its success. If a spin-along is
successful, i.e., if the parent company considers its innovations beneficial for its
future strategic direction, the parent is likely to buy all the spin-along shares and
reintegrate it into the parent. Depending on the contract between the parent and the
spin-along, the parent may have negotiated a first buyer right. However, a spin-
along’s success does not necessarily imply its full reintegration into the parent firm.
It can also be partly integrated, depending on which parts of the spin-along
contribute to the company’s long-term strategic goals and how specific the spin-
along assets are. Conversely, if the spin-along is not successful, i.e., if the parent
decides that the innovations generated in the spin-along are not strategically
important for the parent’s future direction, it may sell its shares in the spin-along.
Second, during the spin-along phase, the parent company can also benefit from
the spin-along’s real assets and employees in various ways. For instance, the parent
can hire spin-along employees for corporate projects when their expertise is needed.
Such job rotation is very valuable for the company’s knowledge base. Parent firms
can also benefit from a spin-along’s real assets—for example, its innovative
reputation, customer base, machines, patents, or stocks. While spin-alongs can be
valuable real assets for a company, this is not their initial goal. Instead, their main
goal is to generate strategic innovations through entrepreneurial employees to
secure the long-term organizational success.
Therefore, spin-alongs should rather be regarded as real options that provide the
parent firm with the strategic flexibility that is required when the parent seeks to
generate strategic innovations that often involve uncertainty. Real options (Myers
1977) describe the right, but not the obligation, to engage in certain business
initiatives related to a capital investment project, such as a spin-along. The
opportunity to invest, buy, or sell a spin-along can be described as the real call or
put option of the parent company. This option can also include the decision to delay
decisions and wait for future market developments. The extending, buying, or
selling of the spin-along are treated as real options. However, this option also makes
it difficult to determine a spin-along’s full value, which is similar to the difficulties
associated with determining the value of a potential innovation.
The notion of a spin-along as a real option is only valid for its innovations but not
for its entrepreneurial employees, who can decide to stay with the parent company
or to leave it after the parent company has made a decision regarding the spin-
P. Klarner et al.
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along’s innovations. Thus, the decision of a spin-along’s entrepreneurial employees
is largely independent of its innovation success or failure. In an ideal scenario, the
company gains the spin-along’s innovation and also retains its high-profile
employees.
In addition to this conceptualization, there are several commonalities and
differences between the spin-along design and related concepts, such as entrepre-
neurial universities and skunk works. Entrepreneurial universities—in which faculty,
staff, and students start entrepreneurial activities in the university context—generate
inventions in university labs, and subsequently create start-up firms to commer-
cialize their inventions (Kenney and Patton 2011; Mowery and Shane 2002).
Scholars have examined designs that support the commercialization of university
inventions, focusing on issues such as the location, experience, culture, and
incentive systems (Friedman and Silberman 2003; Jacob et al. 2003; Owen-Smith
and Powell 2001; Rothaermel et al. 2007). However, while this literature focuses on
entrepreneurial activities originating in university settings that allow start-up
ventures to emerge (Astebro et al. 2012; Rothaermel et al. 2007; Zucker et al. 2002),
research on spin-alongs examines how entrepreneurial employees and their
innovative activities are anchored in the context of established companies with
the goal of generating strategic innovations.
In theory, university start-ups could also become spin-alongs. The university may
function as an incubator for internal ventures, or may buy shares in an external
venture. These ventures are then supported by university resources, but it acts
independently from the university’s structures and processes. After keeping the
venture semi-autonomous for a few years, the university could fully or partly
(re-)integrate the spin-along and its employees into the university. However, in practice,
there is evidence that universities mainly engage in spin-offs (Astebro et al. 2012)
rather than in spin-ins or a combination of the two. Given that universities’ venture-
related goals differ from those of organizational ventures, this is intuitive.
Organizations conduct spin-alongs to secure their long-term survival through
strategic innovation, while universities may conduct spin-alongs for financial
reasons, or to generate new insights. Nevertheless, a corporate spin-along could be a
combined project between a university and a company. In such a combined case, the
spin-along may be started with a team made up of both university and company
employees. After a semi-autonomous phase, the university and the company may
decide to share the innovation and the financial benefits, or one of them can decide
to sell its shares to the other party.
Conversely, skunk works are specialized R&D teams within the organizational
setting that secretly work on projects detached from the corporate hierarchy and
often without explicit management orders and knowledge (Jostmeier 2009; Leitl
2006). The term skunk works emerged during World War II when the US military
asked the aircraft manufacturer Lockheed Martin to develop a fast jet fighter to
counter the threat that German jets posed (Martin 2012). A project team of highly
qualified developers quickly created a new jet fighter in a confidential skunk workproject. This approach—aimed at freeing inventive talent from the corporate
bureaucracy to develop radical innovation projects in a short time—has a similar
goal to spin-alongs, i.e., to foster entrepreneurial activities in large organizations.
How companies motivate entrepreneurial employees
123
However, in contrast to skunk works, organizational spin-alongs are separate
organizational units (rather than teams) that operate transparently (instead of
working secretly) in a semi-autonomous organizational setting. In addition, spin-
alongs—contrary to skunk works—operate with management’s knowledge of their
projects and have official contracts for their projects.
Organizations with entrepreneurial capability tend to combine several innovative
activities over time and actively foster their employees’ entrepreneurial abilities
(Dess et al. 1999; Hornsby et al. 1993). Some of these companies set up an
organizational structure—such as the spin-along approach—to support entrepre-
neurial employees’ abilities (Kuratko et al. 1990; Shabana 2010). It is crucial to
have high-profile employees with entrepreneurial abilities, i.e., who are able to
create strategic innovations, for the spin-along approach. These corporate
entrepreneurs, who work in internal or external corporate ventures, need the same
skills and conviction as external entrepreneurs (Shabana 2010). They need to
demonstrate entrepreneurial abilities that foster innovative behavior and contribute
to organizational innovation (Covin and Slevin 1991). Companies need to support
employees with such abilities, allowing these entrepreneurs to succeed in the
corporate context and ensuring they do not leave to start their own companies
(Shabana 2010). However, employees’ entrepreneurial abilities are not the only
factor that may impact corporate innovation. Since employee performance is a joint
function of ability and motivation, companies also face the challenge of motivating
employees to use their entrepreneurial abilities as best as they can (Ambrose and
Kulik 1999; Moorhead and Griffin 1998).
In the following section, we therefore provide the theoretical foundation of
motivation and incentives in work environments, and of entrepreneurial motivation
in particular.
2.3 Motivation and expectancy-valence theory
Motivation has been described as the psychological processes that direct and sustain
individual action and that result from individuals’ interaction with their environment
(Grant 2008; Latham and Pinder 2005). A general assumption in motivation theories
is that instincts (motives) drive people’s specific behaviors (Locke 1997). Motives
are defined as ‘‘relatively stable individual characteristics (e.g., need for achieve-
ment, need for affiliation, need for power) that drive behavior’’ (Waldman and
Spangler 1989 p 34). Individuals apply motives either consciously or subcon-
sciously to each given situation and task (Latham and Pinder 2005). Both internal
and external motives can induce three aspects of individuals’ actions (Mitchell and
Daniels 2003): direction (choice), intensity (affect), and duration (persistence)
(Locke and Latham 2004; Pinder 1998 p 11).
While there is a set of theories on motivation, studies on the work context have
often focused on the expectancy (or expectancy-valence) theory (for comprehensive
reviews of motivation theories, see Pinder 1998; Porter et al. 2003; Steers et al.
2004). In this study, we too concentrate on expectancy theory, since it provides an
adequate framework to study entrepreneurial motivation in the context of businesses
(Wiklund et al. 2003; Wiklund and Shepherd 2005). The basic cognitive expectancy
P. Klarner et al.
123
framework, which is grounded in the psychological literature on motivation,
assumes that individuals’ behaviors are goal-directed and largely based on
conscious intentions (Porter and Lawler 1968; Tolman 1959; Vroom 1964).
Individuals will engage in behavior that they believe will lead to desired end states
and the most valued rewards (Deci 1972; Vroom 1964). Thus, motivation to act in a
specific way is influenced by (a) the positive subjective reward value or ‘valence’ of
actions, and (b) the expectation or perceived probability that one is capable of
performing in a way that will result in earning the reward (Vroom 1964).
The literature typically contrasts two types of rewards or incentives that can
stimulate individual action (Barnard 1968): extrinsic and intrinsic ones. While
extrinsic rewards, such as money, recognition or advancement opportunities, were
originally believed to motivate individual behavior, later studies adopted a new view of
motivation that considered individual behavior as driven by inherently interesting and
enjoyable tasks (Grant 2008; Heath 1999; McGregor 1960). Thus, intrinsic rewards
relate to the satisfaction of curiosity, the joy of involvement, the opportunity to be
creative, or the sense of mastery (Harter 1978; Ryan and Deci 2000). Accordingly,
intrinsic motivation generally involves individuals engaging in an activity for its own
sake, since they find it interesting and derive spontaneous and enduring satisfaction
from it (Deci 1975; Deci and Ryan 1985; Gagne and Deci 2005). Conversely, extrinsicmotivation requires an instrumentality between the activity and separable conse-
quences, such as tangible or verbal rewards, while satisfaction results from the
extrinsic consequences to which the activity leads and is derived from outside the
person in question (Amabile 1993; Brief and Aldag 1977; Gagne and Deci 2005).
While extrinsic and intrinsic motivation are often considered opposites,
motivation crowding theory proposes a combination of these motivation types
(Frey and Jegen 2001; Frey and Oberholzer-Gee 1997). According to the self-
determination theory (Deci and Ryan 1985, 2000), external rewards may have a
detrimental effect on intrinsic motivation, thus crowding out’ intrinsic motivation.
In such a situation, individuals shift their attention from the activity to the reward,
and the activity itself becomes less important for them (Frey and Jegen 2001; Frey
and Osterloh 2005). A prerequisite for crowding out to occur is that individuals
should be intrinsically motivated from the outset. Prior studies supported the
crowding out effect if the study participants perceived the external rewards as
controlling (Frey 1997; Osterloh and Frey 2000; Wiersma 1992). However, the
other way round may also occur. An individual may be extrinsically induced to
fulfill a task but, on first performing this task for the sake of a reward, discovers the
value and attractiveness of this specific work content and continues to perform—
now intrinsically motivated—(relatively) regardless of the promised reward.
In the organizational context, understanding employees’ motivation helps one
better understand and explain their behavior in the work context (Mitchell and Daniels
2003). Work motivation is defined as a set of internal and external factors that
originates within and beyond an individual to initiate and affect work-related behavior
(Latham and Pinder 2004; Pinder 1998). Management scholars suggest that employee
motivation is a strategic issue (Huselid 1995; Osterloh and Frey 2000; Wright and
McMahan 1992). Smith (2009), however, mentions that recent management studies
do not sufficiently consider motivation theories from the field of psychology. As
How companies motivate entrepreneurial employees
123
motivation is a context-dependent concept, prior studies have examined several
contextual variables of work motivation, such as the national culture (Steers and
Sanchez-Runde 2002; Sue-Chan and Ong 2002), job design (Ambrose and Kulik
1999), as well as the organization culture and leadership (Latham and Pinder 2004).
For example, job designs that include a high degree of employee autonomy, the
ability to apply their skills, as well as opportunities to obtain feedback to develop
professionally, affect work motivation positively (Dwivedula and Bredillet 2010).
While work motivation is a more general concept applicable to the work
environment, several scholars have narrowed this concept to specific corporate
settings, such as entrepreneurial firms. Using a motivation lens, entrepreneurship
researchers have explored the concept of entrepreneurial motivation, defined as
people’s willingness to engage in the entrepreneurial process (Shane et al. 2003),
and have related it to entrepreneurial intention as a predictor of subsequent behavior
(Fitzsimmons and Douglas 2011; Gatewood et al. 2002). Entrepreneurial motivation
can be intrinsic or extrinsic (Carsrud and Brannback 2011). Carsrud and Brannback
(2011) state that while most entrepreneurship research assumes that entrepreneurs
are motivated by external rewards (such as power, status, and money), extrinsic and
intrinsic motivation can co-exist. Thus, entrepreneurs can be motivated by their
internal desire to succeed and by external rewards (Naffziger et al. 1994).
Since entrepreneurs and intrapreneurs have similar characteristics, conviction,
passion, and skills (Shabana 2010), both demonstrate entrepreneurial motivation,
but in different settings. In the organizational context, employees with entrepre-
neurial motivation are particularly valuable to companies, since they may be more
committed to the entrepreneurial process than others. In this paper, we study
entrepreneurial employees’ motivation in the corporate entrepreneurship context by
applying the expectancy framework (Porter and Lawler 1968; Tolman 1959; Vroom
1964) to this context. Specifically, we examine the role of corporate structure in
enhancing employees’ entrepreneurial motivation, i.e., in having these employees
attribute a positive valence to entrepreneurial activities with the expectation that
they can perform these activities in such a way that it will result in them earning the
(intrinsic or extrinsic) reward (Vroom 1964). While scholars have argued that
motivation is context-dependent, we do not know enough about how unique
organizational structures enable entrepreneurs, enable companies to attract and
retain their employees, as well as foster entrepreneurial motivation (Carsrud and
Brannback 2011; Carsrud et al. 2009; Edelman et al. 2010). We argue that the
contextual impact on entrepreneurial motivation also requires further exploration in
the intrapreneurship context, and therefore examine how companies can foster their
high-profile employees’ entrepreneurial motivation through elements of structure.
3 Methods
3.1 Case study introduction
Owing to the lack of prior research on how companies can stimulate entrepreneurial
employees’ motivation through organization design, our chosen research design was
P. Klarner et al.
123
an inductive, in-depth case study. The case study research method has already
provided many answers to management problems (Eisenhardt and Graebner
2007), and is especially recommended when the boundary between a phenom-
enon and a context is not clearly distinguishable (Yin 2008). Case study research
is also particularly suitable to answer how and why questions, and allows for
deeper insights into new research areas than quantitative methods (Siggelkow
2007).
The case studies in this paper can be classified according to the following
dimensions (Keil 2002; Yin 2008): First, they are instrumental case studies, since
they were selected to advance the understanding of entrepreneurial employees’
motivation in the organizational context of spin-alongs. Second, a multiple case
approach was chosen instead of a single case to allow for a reliable data analysis and
a general but thorough understanding of the overall case context. The choice of the
company was not intended to be representative or random in respect of theory
building, but to allow for theoretical sampling (Eisenhardt 1989). Cases should be
selected deliberately and should be easily accessible. Thus, we chose a company
that provided good access for unique insights and which successfully supported its
corporate entrepreneurship activities. The good access was due to one of the authors
serving on the company’s supervisory board; we used this access to identify a
gatekeeper in the company, who recommended individuals who were particularly
knowledgeable about our research topic without conveying the specifics of this
investigation’s subject or intent. The gatekeeper briefed these individuals about our
general research topic and the study prior to our interviews. This multistep process
allowed us to rule out potential response biases that may have occurred if the
authors had contacted the company’s employees directly. In addition, ‘purposeful
sampling’ strategy (Corley and Gioia 2004) allowed us to gain access to the most
qualified informants to discuss our research question. During the data collection, we
ensured that, as far as we knew, no relevant managers had been omitted (we would
have interviewed such individuals) and that interviewees had responded openly by
also addressing critical issues. Third, our case studies have an inductive purpose and
are based on theory building rather than theory testing. Fourth, this case study is
retrospective, since we collected past data at a single point in time. Fifth, we
employed an embedded design by analyzing multiple spin-alongs within the context
of the corporate company.
3.2 Research setting
The chosen company’s headquarters is located in Germany. It was founded more
than 100 years ago as a technology spin-off of a university and is currently a leading
international technology provider. In 2011, its sales exceeded €700 million and it
had more than 5,000 employees. The parent company’s two divisions—division A
and division B—are managed separately for strategic and operational reasons.
Division A is fully owned by the group and primarily manufactures equipment and
systems featuring specific application technologies. In 2011, this division had
revenues of approximately €260 million and more than 2,000 employees. Division
B is located in a publicly listed company specializing in specific industry
How companies motivate entrepreneurial employees
123
equipment, in which the parent company has a major and dominating stake. In 2011,
this division had revenues of more than €480 million and had more than 2,500
employees.
Companies in this industry generally face global competitors, as well as rapid
changes in the industry and market structures, in the customer needs, and in the
technologies. It is therefore very important for these companies to attract, retain, and
nurture high-profile employees to support their innovation activities. As a highly
specialized, medium-sized company that has and maintains its global market
leadership positions, the case company is a typical ‘hidden champion’ (Simon 1990,
2009, 2012). It has achieved its goals of becoming a total solutions provider, of
defending its global market position, and of maintaining its competitive advantage.
In the process of covering the entire value chain and ensuring a high innovation rate,
the company has managed to attract, retain, and nurture a considerable number of
high-profile employees. Hence, we consider this an excellent case to explore our
research question.
3.3 Data collection
We collected qualitative and quantitative data from multiple sources in order to
ensure a triangulation of the findings (Yin 2008), which provides a stronger
foundation for emerging constructs and their relationships. The data sources
included interviews, internal and public reports and presentations, the company’s
website, and observations. In a phenomenological study, in-depth interviews are a
key means of probing individuals’ subjective experiences (Suddaby 2006).
However, searching and using multiple data sources and ensuring data triangulation
allow one to establish the qualitative research’s reliability and validity (Huberman
and Miles 1994).
The chosen case study is part of a larger research project on the spin-along
approach. Previous studies on different topics, and based on different data covering
a shorter time period, have therefore already been published (Michl et al. 2012,
2013). The first paper by Michl et al. (2012) presents, from a corporate management
perspective, a basic model for the spin-along approach. On the basis of four case
studies in four companies, Michl et al. (2012) argue that corporations conducting
spin-alongs are ambidextrous, i.e., they are able to exploit existing business while
exploring new opportunities. Furthermore, the paper addresses the organizational
prerequisites that are necessary to successfully conduct spin-alongs and highlights
the role of senior management in this context. This paper paved the way for the
second paper by Michl et al. (2013), which addresses the spin-along approach with a
deeper focus on strategic ambidexterity. This research was conducted from a
corporate perspective by means of an in-depth single case study that seeks to
combine the concepts of strategic management and organizational ambidexterity.
Both studies (Michl et al. 2012, 2013) are aimed at explaining the innovative
performance of corporations.
Conversely, the purpose of the paper at hand is to examine how the spin-along
design can support the motivation of entrepreneurial employees and lead to their
attraction, nurturing, and retention. Thus, this paper focuses on aspects related to
P. Klarner et al.
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human capital and, specifically, high-profile entrepreneurial employees. Further, it
examines the elements that are essential from a corporate perspective, as well as
from an employee perspective. The paper is based on a more extensive data
collection effort than the previous studies, with data collected at different points in
time. First, we collected data over a three-month period in 2009, using a wide focus
on organization design and innovative performance. This first data collection
enabled us to gain a broad understanding of the company. Certain parts of this data
collection were used for the two papers described above. Building on the general
insights from our first round of data collection, we collected additional data in 2011
and 2012, focusing specifically on organization design and entrepreneurial
employees’ motivation. Hence, the second data collection differed from the first
in terms of its time period, research topic, and scope.
We investigated five innovation ventures: one in the company’s division A
and four in division B (Table 1 provides an overview). The parent company
also engaged in several other innovation activities. These mainly include
incremental R&D projects, but also a few spin-outs and acquisitions, as well as
one reverse merger. Since these actions were not intended as spin-alongs, we
explored only the five ventures that the informants described as innovative
ventures and as a combination of internal and external organizational elements
aimed at supporting corporate entrepreneurship. Thus, these ventures allowed
us to explore how entrepreneurial employees were attracted, retained, and
nurtured.
Table 1 shows the duration of each spin-along process. In addition, the employee
numbers and revenues of each spin-along are given at the start of the spin-along and
in 2011. Success or failure cannot be derived from these numbers, which have a
solely informative purpose. Instead, each spin-along’s success or failure is
determined in terms of its strategic innovations for the parent company.
For the purpose of this study, we define spin-alongs’ success or failure in two
ways. While we follow established research (Gartner et al. 1999; Shepherd 1999;
Shepherd et al. 2000) to objectively describe venture success as survival and venture
failure as death, we also want to examine the innovation-related factors that
contribute to venture success or failure. Since the company’s goal with spin-alongs
is to generate innovations that serve its long-term development, we define spin-
alongs as successful if they generate innovations that serve the parent’s strategic
Table 1 Overview of spin-along cases
Epsilon Alpha Beta Gamma Delta
Company division Division A Division B Division B Division B Division B
Spin-along process 1998 to 1999 2000 to 2007 2006 to 2008 1999 to 2005 Since 2004
Employees at spin-along
start
151 124 31 20 16
Revenue at spin-along start €13 million €30 million €4 million €2 million €10 million
Employees in 2011 136 234 45 90 46
Revenue in 2011 €22 million €70 million €8 million €10 million €41 million
How companies motivate entrepreneurial employees
123
goal. Given these considerations, our sample consists of three successful (Alpha,
Beta, and Delta) and two failed ventures (Epsilon, Gamma).
Figure 2 illustrates the individual spin-alongs from a process perspective. Four of
the five units were created externally, while one unit was founded internally. Of the
four external spin-alongs, two started as spin-ins and the other two after an
acquisition. One external spin-along can even be described as a double spin-along,
since it followed the spin-along process twice. The spin-along portfolio with its
different characteristics and success rates allowed us to explore how different types
of entrepreneurial employees, such as former venture founders and employees from
other major companies, were attracted by and retained in the company.
The spin-along in division A (Epsilon) was a 100 % acquisition by the parent
company in order to build specialized knowledge in a new market segment. This
venture failed after a year because it could not generate any strategic innovation
ideas. A spin-along (Alpha) in division B started with an acquisition of 90 % and,
after 7 years as a semi-autonomous unit, was gradually integrated into the parent
company. Another spin-along (Beta) was fully spun in after a two-year distribution
alliance with the parent company. The third spin-along (Gamma) was spun in by
division B buying 75 % of the shares in 1999. In 2001, the parent company
considered offering Gamma as an initial public offering (IPO). However, the new
organization failed and the project was terminated in 2005. Gamma was
subsequently fully reintegrated into the parent company and functions within the
parent’s structure, although it retains its independent work setting. Finally, another
spin-along (Delta) was founded in 2004 as an internal unit. The company recruited
an external CEO with special application knowledge for it, but its employees came
from the parent company. Delta is a current spin-along of the case company; it acts
independently from the parent company but is monitored by the corporate
structures.
We conducted 11 semi-structured interviews with informants from the parent
company and the spin-alongs to ensure an embedded view of the cases. Most of the
Internal
External innovation process(external venturing)
Internal innovation process(internal venturing)
Gamma
Delta
Epsilon
Alpha
Beta
External
Fig. 2 A process view of the individual spin-alongs
P. Klarner et al.
123
parent company informants could provide insights into all five spin-alongs. We
interviewed five people from the parent company. One informant sat on the
supervisory board. Three parent company informants held positions in the executive
board (marketing, sales, services, business development; research and development;
procurement, production, and supply chain management). Another informant
worked in an engineering position in division A of the company, but was a former
Epsilon employee. We interviewed six people from the spin-along units. The two
Alpha informants were managing directors with an engineering background. We
also interviewed Beta’s two managing directors, one of whom was its co-founder;
both had a biotechnology background. The Gamma informant was its founder and
managing director, and had strong biotechnology expertise. Finally, we interviewed
Delta’s managing director, who was hired externally as a biotechnology expert.
We personally conducted all interviews at the informants’ workplace for
additional observations and quantitative data collection at each site. We started all
interviews with a short introduction to the research project and questions. We then
asked the informants about the company structure and its entrepreneurial
employees’ motivations, but also gave the informants the opportunity to refer to
other topics. All the interviews, which were recorded, lasted between 1 and 2 h. The
tapes were all transcribed. Besides the recorded interviews, we also had unrecorded
conversations with informants. Since we mostly spent half a day at an informant’s
workplace, we also collected a broad range of informal information. Data was
collected until no new evidence appeared, i.e., category saturation was reached
(Eisenhardt 1989; Glaser and Strauss 1967; Suddaby 2006). We wrote short
summaries of approximately three pages about each interview and sent them to the
informants to double check for accuracy.
Since four of the five spin-along units were created after an acquisition, internal
company politics could have impacted the creation of these units. For example, the
parent firm could have sought to satisfy important employees, who might have
interfered with the transactions if the acquired companies had been fully integrated.
We therefore asked our informants about the role that internal politics had played in
the units’ creation. They told us that the company’s key players had explicitly
supported the acquisitions, because they had seen the potential for contributing to
the parent’s development and innovation strategy. They emphasized that internal
politics had not played a role in the creation of the units. The separate units had been
created to enable entrepreneurial employees to work on specific innovation projects
with a sufficient degree of autonomy. We are thus very certain that these spin-alongs
were solely created to support the parent’s strategic innovation activities.
Throughout the data collection, we took various steps to minimize informant
biases. We interviewed informants at multiple hierarchical levels, including the top
management responsible for the parent company’s innovation strategy, the board
chairman responsible for monitoring the parent’s innovation strategy, the senior
management responsible for the coordination between the spin-alongs and the
parent, as well as spin-along heads responsible for fostering and implementing
innovation projects. These people are all likely to have different views on how the
company supports entrepreneurial employees. Owing to the lack of differences in
these informants’ descriptions, we concluded that informant biases were not an issue
How companies motivate entrepreneurial employees
123
(Graebner and Eisenhardt 2004; Seidler 1974). In addition, we interviewed
individuals closely involved in innovation, including highly influential and
knowledgeable informants, who could be reliably trusted to recall important events
(Graebner and Eisenhardt 2004; Huber and Power 1985; Seidler 1974). Finally, we
promised confidentiality to motivate all the participants to provide accurate data
(Huber and Power 1985; Miller et al. 1997).
3.4 Data analysis
In the corporate context, we conducted within-case analyses focused on developing
the constructs and relationships in the case company. Furthermore, we conducted
cross-case analyses on the basis of the five spin-alongs (Eisenhardt 1989), which
allowed us to compare our findings across these observations.
We first synthesized the information from all the interview transcripts and
archival data (Eisenhardt 1989), applying triangulation between the interview and
archival sources to create a richer account (Graebner and Eisenhardt 2004; Jick
1979). From these sources, we created summaries of each of the examined five spin-
alongs of about 15 pages per spin-along and one summary for the parent company.
We concurrently read and compared the original interviews with the interview
summaries and the case summaries. From these case summaries, we identified
similar statements and grouped them into concepts (open coding). Because we
focused on the inductive and interpretative processes, we allowed concepts to
emerge from this process instead of being guided by specific hypotheses (Graebner
and Eisenhardt 2004). We subsequently engaged in axial coding by searching for
relationships between these constructs (Corbin and Strauss 1990). We looked for
similar constructs and relationships across the five spin-alongs and developed
tentative propositions.
In this process, we followed a replication logic (Eisenhardt 1989) by often
revisiting our data to examine the similarities and differences between the spin-
along cases and, where necessary, to refine the emerging concepts and their
relationships. To further sharpen our concept definitions, we constantly compared
our emerging framework with our detailed venture summaries and other qualitative
and quantitative data (Eisenhardt 1989; Eisenhardt and Graebner 2007; Yin 2008).
Theory building from case study research requires simultaneous data collection and
analysis (Glaser and Strauss 1967). This supports flexible adjustments as new
concepts and relationships emerge from unique case features. We used charts and
tables to compare the spin-alongs cases (Miles and Huberman 1984).
To ensure data reliability during the entire data analysis process, two of the
authors coded the data separately into concepts and then discussed their emerging
results. The two raters fully agreed on the construct codings. We then had another
independent rater with management training code 20 % of our data (Mishina et al.
2004). This independent rater fully agreed with the two authors’ codings, indicating
that the cross-coder reliability was very high. Further, all the raters discussed their
conclusions about the relationships between the concepts. We placed these final
concepts and their emergent relationships in a conceptual framework.
P. Klarner et al.
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4 Results
4.1 Spin-alongs combine flexibility, security, and control
Prior research has found that organic organizational structures, defined by a high
degree of decentralization and autonomy, support flexibility and innovation (Burns
and Stalker 1961). Such an organization design is likely to foster employees’
innovative behavior. Nevertheless, we find that structural flexibility is not sufficient
to attract, nurture, and retain entrepreneurial employees. Instead, the case company
structures its ventures in the two divisions in a spin-along approach (Michl et al.
2012, 2013; Rohrbeck et al. 2009). Findings reveal that spin-alongs combine three
central elements that attract, nurture, and retain high-profile employees: they enable
companies to combine structural flexibility and employment security for such
employees with management’s control of the venture units.
4.1.1 The role of structural flexibility in spin-alongs
Structural flexibility is shown to be fostered by spin-alongs’ high autonomy.
Autonomy refers to employees’ freedom, independence, and discretion to carry out
their work assignment, including scheduling their work, making decisions, and
choosing work methods to perform their tasks (Breaugh 1985; Hackman and
Oldham 1975; Morgeson and Humphrey 2006). In the spin-along setting, this
includes employees’ freedom to define the work agenda and setting, to develop a
business and innovative projects on their own with the parent firm resources, and to
work under the general parent firm guidelines instead of specific work procedures.
We identify three major findings related to spin-along employees’ autonomy.
First, entrepreneurial employees require autonomy to experiment with new ideas
and to use and develop their entrepreneurial abilities. The founder, and current
managing director, of spin-along Gamma maintained that, ‘‘The parent company
gives us freedom. As long as we produce the numbers, they leave us alone.’’ It thus
seems that entrepreneurial employees are specifically motivated by the work
autonomy they enjoy in spin-alongs and because the parent company retains them if
a spin-along fails. A Beta manager mentioned that, ‘‘I need this entrepreneurial
environment. If this were to change, I wouldn’t continue working for this company.
However, if the freedom and autonomy that our parent company has provided so far
are maintained, I will stay here.’’ Beta was acquired by the parent company after its
first 9 years as a small and independent company, and Beta’s entrepreneurial
employees were retained in the spin-along during the acquisition process. The
highly decentralized spin-along context allowed these employees to explore their
entrepreneurial abilities and to contribute to the parent’s innovation.
Second, the high autonomy afforded to spin-along employees not only helps
companies retain such employees, but also attracts new entrepreneurial employees
from outside the company. The head of Delta, for example, recalled: ‘‘I joined the
parent company from my prior position at one of its clients. What really motivated
me to take this job was the far greater freedom to shape the business. There was no
material incentive.’’ He continued: ‘‘The parent company was known for its
How companies motivate entrepreneurial employees
123
flexibility, innovativeness, and for being at the cutting edge of technology
development. Nevertheless, I could have stayed in my old job at [a major market
player]. I was a well-respected developer and could most probably have stayed in
this position until retirement. What really motivated me to take this job was the
opportunity to develop my own business. Resources are sometimes more limited
than in a large, established company, but I can do whatever I think is necessary with
these resources. In addition, the parent company gave me enough time to develop
this unit.’’
Third, autonomy supports the entrepreneurial employees’ identification with the
spin-along and the entrepreneurial culture. A Beta manager stated: ‘‘This company
is our baby—we have grown it from its founding year. We have seen it starting to
perform. It would be very sad to give all this up. I find doing what I am interested in
highly motivating.’’ The head of Delta recalled: ‘‘One of our credos is: Fail fast,
correct fast. You experiment and once you realize you made a wrong decision, you
do not invest in it any further.’’ Continued support for such a culture of
experimentation in the spin-alongs after the acquisition increased the entrepreneur-
ial employees’ intention to stay with the parent company. Their work setting
remained similar after the acquisition, although the spin-along now operated under
the corporate umbrella. The high degree of autonomy that continued in the spin-
alongs was a major element in retaining the entrepreneurial employees.
The parent company’s management also emphasized the need to ensure that the
entrepreneurial employees enjoy autonomy. When asked how the company retains
an acquired venture’s entrepreneurial employees such as its founders, an executive
board member said: ‘‘You need to provide them with freedom in their daily work
and a certain freedom to shape their work, and maintain a creative environment.
They have a strong entrepreneurial spirit, great ideas, and enjoy autonomy, and
these employees are very valuable. However, if we don’t give them enough
autonomy and freedom, this would be like putting a hamster in a cage—they would
then leave the company.’’ The parent company’s chairman underlined the
importance of creating a work context in which founder employees can flourish:
‘‘These employees are very interested in their work and show high intrinsic
motivation. They feel that their work is more valuable in the spin-along context than
in their prior work situation.’’
4.1.2 The role of employment security in spin-alongs
Providing greater employment security within corporate ventures than that found in
independent start-up ventures has been revealed as another motivating dimension
for entrepreneurial employees. Employment security can include a lower risk in
performance-based variable pay (pay risk) and a lower job loss risk (job risk)
(Monsen et al. 2009). In our case, the pay risk and job risk are lower for
entrepreneurial employees working in a spin-along than when working as
independent entrepreneurs. Both the pay risk and job risk of spin-along entrepre-
neurs are managed by regular work contracts with the parent company. These
contracts contain a fixed monthly salary; most are indefinite but not tenured working
contracts. For young employees, these contracts may also be definite for a certain
P. Klarner et al.
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probation period, and the salary is likely to be lower. However, spin-along
entrepreneurs can add a variable payment to their monthly salary by buying shares
in the spin-along; most spin-along founders or managers have shares in their spin-
along.
A parent company senior manager explained as follows: ‘‘Many of the
entrepreneurial employees working in spin-alongs feel that their leeway has been
extended, since they are less dependent on small changes than in [an independent
start-up]. A large company like ours leads to greater stability and employees enjoy
greater financial security.’’ This underscores that the security a larger company can
provide is a major motivating factor for employees, as they are given access to
financial resources, and setbacks in the entrepreneurial process are less likely to lead
to unemployment (Monsen et al. 2009) and a loss of income. In addition, a large
company with a strong financial resource base is better buffered against external
shocks in the industry environment than a small venture. This increased
employment security enhances the likelihood of employees choosing a corporate
spin-along setting. As a result, the founders of ventures acquired by a parent
company joined the parent’s spin-alongs rather than starting new external ventures,
which provided the parent company with valuable entrepreneurial abilities.
After a spin-along has been terminated, the spin-along employees have the option
to choose between an attractive corporate position and an exit strategy with an
appropriate payout. This choice is independent of the spin-along’s success or
failure. This differs crucially from independent entrepreneurs’ position at such a
point. While independent entrepreneurs lose their income and job when a venture
fails, spin-along entrepreneurs are not exposed to this risk, but instead have the
security of payment and employment. Spin-along employees can thus be described
as ‘‘protected entrepreneurs.’’
From a corporate perspective, it is beneficial in most spin-along cases to retain
the spin-along employees, although the company is likely to be mainly interested in
retaining high-profile employees with entrepreneurial abilities and highly specific
knowledge. To retain these employees, the parent company offers them corporate
positions with challenging tasks and management responsibilities. The case
company managed to retain such high-profile employees from the spin-alongs
Epsilon, Beta, and Gamma after these spin-alongs had been terminated. In the final
phase of the spin-along Alpha, one of the founders and managing directors and other
entrepreneurial employees left the company in 2007 due to irreconcilable
differences with the corporate management. This position was filled by an external
manager, who successfully supported the spin-along’s end phase. These examples
from previous spin-alongs indicate that spin-alongs’ entrepreneurial employees use
both options in their employment contract, i.e., staying with or leaving the company
after a spin-along has been successfully or unsuccessfully terminated. In our case,
the corporation retained some of the high-profile employees after Gamma failed,
while, in the case of Alpha, some high-profile employees left Alpha despite its
success.
However, to attract, retain, and nurture entrepreneurial employees, both
flexibility and security are needed; this was highlighted by a senior parent company
manager: ‘‘Entrepreneurial employees can explore new topics under the parent
How companies motivate entrepreneurial employees
123
company’s umbrella and are offered interesting new areas in which they can work.
At the same time, they gain security in the corporate setting. This combination
makes them accept that they can no longer make all the decisions themselves.’’
Thus, both flexibility and security, which we term flexicurity, should be provided to
attract, retain, and nurture entrepreneurial employees.
4.1.3 The control role of the parent company
While flexicurity in spin-alongs is important for entrepreneurial employees’
motivation, from a management perspective, entrepreneurial activities should be
monitored over time to ensure that they contribute to the company’s innovation
targets and meet its strategic goals. Specifically, spin-alongs need to contribute to
the parent company’s goal in order to build new competencies, knowledge, and
technologies. Therefore, the parent company has to monitor spin-along activities
and their contribution to the overall knowledge extension. The company mainly
does so by means of financial metrics. Spin-alongs also provide the parent firm with
a monthly activity report, which enables quick adjustments.
Controlling requires the definition and constant monitoring of each spin-along’s
goals. A parent company senior manager explained, ‘‘It is important to define goals
very clearly right from the beginning in order to ensure that the parent company and
the spin-alongs share the same goals and direction. We ensure that the entrepre-
neurial employees working in the spin-alongs are aware of the autonomy that they
enjoy, but also make sure that they are working under the corporate context’s
guidelines, and that they accept this context.’’
Monitoring spin-alongs therefore also implies that those entrepreneurial
employees who are not ready to accept the corporate guidelines may be asked to
leave the company. If the multiple spin-alongs in the company are not controlled,
the parent company’s top and senior management may lose their oversight and may
spend financial resources on projects that do not contribute to the company’s
innovation strategy. This implies that only those entrepreneurial employees who can
flourish under the corporate umbrella should be attracted and retained. Another
senior parent company manager highlighted: ‘‘Some of the entrepreneurial
employees are not used to a large company’s strict structures and guidelines. This
may lead to tensions, since these employees are not used to following company
guidelines.’’
In addition, monitoring is important in order to identify which spin-along
employee competences can be used in the parent company, and vice versa, to
optimize the knowledge exchange between the parent and the spin-alongs and create
synergies. This also nurtures and extends the knowledge of entrepreneurial
employees. A senior manager exemplified: ‘‘If I see that an employee of one of
our spin-alongs has specific abilities that are needed in a specific geographical
location, this employee may be assigned a task in this location. Our worldwide
functional organization ensures that we identify which competences we have in
which locations and then control and use these competences. Today, our human
resources department also screens our knowledge resources and identifies which
employees should be trained and developed in specific areas. This screening is done
P. Klarner et al.
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in respect of spin-along and parent company employees.’’ Spin-alongs share
important knowledge, such as R&D or technology-related knowledge, with the
parent company, which can then be used to broaden innovative efforts or apply
knowledge to new business areas. Therefore, both the parent’s and the spin-along’s
knowledge needs to be constantly evaluated and monitored to optimize the transfer
of knowledge, and to ensure that entrepreneurial employees are continuously
nurtured and the company invests in the necessary knowledge extension.
Gamma’s history taught the case parent company that the controlling of ventures
should start in the early phase of acquiring a new venture and integrating it into the
company. When acquiring Gamma, the parent company selected outside managers
to build the business, but these managers had an insufficient understanding of the
business, and the company’s focus was lost, which led to the failure of Gamma.
A Gamma founder remembered: ‘‘This was a bad time for us. Some people left the
company because they didn’t agree with what was going on. The people brought in
from other companies were promised a great deal of money. They did not really
plan to stay with the company, but were just driven by the money. It was a bad
situation because management didn’t care about this place.’’ The parent subse-
quently dismissed Gamma’s management and reintegrated the venture into the
company. The head of the integrated Gamma mentioned that the company currently
has, ‘‘…a lot more control over what we do. They allow us to operate our business.
We work with them. They give us what we need to invest in the business.’’ The
entrepreneurial spirit was reinstated in Gamma by providing the employees with
more autonomy and opportunities to use their entrepreneurial abilities. The Gamma
case illustrates that the parent company needs to very carefully attract and select
appropriate managers for ventures and should constantly monitor their abilities to
manage the venture unit, as well as the employees’ entrepreneurial spirit and
abilities.
4.2 The senior management role
Our findings show that senior management has a crucial role in ensuring that spin-
alongs offer their entrepreneurial employees flexibility and security, while
simultaneously monitoring them. Thus, senior managers need to evaluate how
much autonomy entrepreneurial employees need in order to flourish, and how much
control is necessary for each spin-along. Senior management needs to control the
spin-alongs by clearly setting their goals, which should align with the parent
company’s strategic goals, and communicating these goals to the spin-along
employees. These goals are mainly formalized in a business plan, but additional
milestones are also defined. These goals and their achievements are discussed in
regular meetings that take place at least four times per year, and where all the
responsible managers are present. An executive board member explained: ‘‘Some
entrepreneurial employees are not used to working in a corporate structure with its
strict guidelines. This may lead to problems, and we therefore try to give them as
much leeway as possible.’’ Senior management has to balance this leeway with
sufficient control of the venture to ensure that the spin-alongs’ goals align with the
company’s innovation goals. The head of Delta explained: ‘‘On the one hand, senior
How companies motivate entrepreneurial employees
123
management gave us the flexibility to work according to our principles. There was
no micromanagement by them, and we had enough autonomy in our unit. On the
other hand, there was much pressure to succeed. They had high expectations of our
work.’’
Our data indicates that senior management has a relatively high degree of
discretion in exercising their role. Some parent company informants provided hints
of this by mentioning: ‘‘we take the concerns of the spin-alongs employees’
seriously and openly and respectfully discuss them.’’ In the process, senior
managers need to demonstrate the same preferences for independence, risk, and
exchange that the spin-along entrepreneurs do in order to understand these
employees’ need for autonomy. At the same time, senior managers should also
understand the parent’s need for control and incorporate this into the spin-along goal
setting. A supervisory board member stated that. ‘‘senior managers ought to
demonstrate that they are prepared to accept and are capable of accepting that the
company has exchanges with the spin-alongs at a strategic innovation level and does
not only concentrate on its internal strategy. This understanding is conveyed to the
company.’’ Management should ‘‘constructively recognize and accept upcoming
projects and ideas,’’ as well as demonstrate ‘‘the ability to realistically evaluate them
and decide about them.’’ As a result, ‘‘spin-alongs need strong mentoring by senior
management and this cannot be delegated.’’
Importantly, the spin-alongs’ entrepreneurial employees often perceived senior
management as a neutral party. Senior managers could communicate clearly and
could take extreme measures when problems arose. A senior manager explained:
‘‘Senior management has an important role in communicating with the spin-alongs
and during joint projects [between the spin-alongs and the parent]. Responsibilities
must be made clear and the communication needs to work. Since we are a global
company, this implies a lot of travel. It is important to communicate to employees
that they are part of this family, and this communication cannot be relayed through
video-conferences. Intercultural management skills are very important.’’
To create the right working environment for entrepreneurial employees in spin-
alongs, senior management has to develop a trusting relationship with them. This
also requires strong communication skills and trustworthy individuals. Gamma’s
manager explained: ‘‘Senior management’s ability to leave us alone [in the spin-
along], to have trust in us, was very important.’’ Beta’s managers confirmed this:
‘‘Senior management had a major role in the acquisition and integration of Beta. We
always approached them with questions and problems. It was very important to
know we have a trusting relationship with the decision-makers. When we were
acquired, some of the parent company’s divisions felt they had to compete with us,
since we had previously taken market share from them, but then suddenly belonged
to the same company. We obviously didn’t only make friends during this time, but
senior management protected us, and this helped a lot.’’
Senior management also has an important role in integrating acquired ventures
into the parent company. An Alpha employee noted: ‘‘Senior management actively
implemented the integration of our acquired venture and had a major role in the
integration success. For example, it put spin-along employees in touch with parent
employees who were knowledgeable about specific issues. Senior managers
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constantly tried to build these contacts. This was the most important step.’’ While
top management decides which venture to acquire, senior management has key
responsibilities in integrating these ventures and making them flourish in the
corporate setting. This includes choosing the right timing for the integration or, if
needed, to divest an unprofitable spin-along. The parent company chairman
explained: ‘‘Spin-alongs should, as far as possible, have the freedom to develop.
Senior management needs to be open to new projects but should at the same time
have a strong ability to judge projects, as well as a highly developed decision-
making ability. This is also necessary when projects do not deliver the expected
outcomes.’’
A parent company senior manager highlighted another senior manager role: ‘‘It is
very important to quickly build a new identity for the employees of an acquired
venture, and not to alienate key performers through too much change. We have
learned that, specifically in the case of acquired units, a senior manager needs to
channel contacts between the spin-along and the parent. He also needs to protect the
spin-along, since entrepreneurial employees work successfully with flexible
structures and we cannot overwhelm them with a large company’s bureaucracy.’’
Thus, senior management must balance the parent and the spin-along’s goals and
actions, and should sponsor the spin-alongs in the corporate setting, while
simultaneously ensuring that they are sufficiently controlled through adherence to
clear responsibilities and measurable goals.
Finally, the culture in a spin-along is often more entrepreneurial than that of the
parent company. Thus, senior management needs to foster the spin-along’s
entrepreneurial culture, while also following the overall corporate guidelines and
innovation goals. Overall, senior management needs a high degree of cultural
sensitivity, leadership, and management skills. A senior manager explained: ‘‘We
had to exchange people and divest units over time and integrate others. Integration
only worked because senior managers, who were culturally intelligent managers,
were made responsible for it. These people needed to clearly communicate the goals
of the integration, but also had the ability to make tough decisions, like laying off
employees who did not flourish in the corporate setting, and hiring others.’’ He also
mentioned that managers with strong social competence and understanding of the
company’s goals are needed to retain entrepreneurial employees who are willing to
work in the corporate setting.
5 Discussion
The case results indicate that the spin-along approach combines flexibility and
security (flexicurity) for entrepreneurial employees with control in the form of
management’s monitoring of spin-alongs. From the parent company’s perspective,
this organization design supports the attraction, retention, and nurturing of
entrepreneurial employees, who contribute to the overall corporate entrepreneurship
goal by generating strategic innovations. Senior management has a critical
leadership role to play in fostering entrepreneurial motivation through the spin-
along design and to balance the design features of flexibility and security with
How companies motivate entrepreneurial employees
123
control through loose-tight leadership. These contributions of our study are
illustrated in Fig. 3 and discussed below.
5.1 Flexicurity as a design element to support employee motivation
Our aim was to uncover structural elements that enable companies to motivate high-
profile employees to engage in entrepreneurial activities. Our study offers several
insights into how organization design can contribute to employee motivation. A first
insight is that entrepreneurial employees are motivated by an organizational
structure that combines flexibility and security, i.e., flexicurity. Organization theory
scholars have long discussed the importance of mechanistic structures that rely on
high autonomy and decentralization to support innovation (Burns and Stalker 1961;
Duncan 1976). In addition, it has been found that corporate entrepreneurship
enhances employees’ innovative abilities (Kuratko et al. 1990). Yet, the impact of
organizational structure in motivating entrepreneurial employees has received little
attention in prior research (Carsrud and Brannback 2011). Our study fills this gap by
revealing that spin-alongs’ flexicurity provides a corporate entrepreneurship
structure that fosters and enhances employees’ motivation to use their entrepre-
neurial abilities.
Parent companyFostering corporate entrepreneurship with innovations
• Attract entrepreneurial employees• Retain entrepreneurial employees• Nurture entrepreneurial employees
Spin-alongFlexicurity to enhance entrepreneurial employees` motivation
Flexibility• Autonomy• Experimentation• Creative environment
Security• Limited risk of failure in spin-along• Financial backing of parent company
Senior ManagementFostering entrepreneurial motivation with a loose-tight leadership: balance flexicurity of the spin-alongs and control by the parent company
Fig. 3 Emerging conceptual framework
P. Klarner et al.
123
From an expectancy theory perspective, employees engage in entrepreneurial
activities when they attribute a positive reward value to such activities and presume that
their performance will earn the reward (Deci 1972; Vroom 1964). The entrepreneurial
employees in our case company seemed to be motivated more by intrinsic than extrinsic
rewards (Atkinson 1964; Leonard et al. 1999; Porter and Lawler 1968). For them,
engaging in entrepreneurial activities and work content that interested them was very
rewarding. Several employees told us that they were motivated by the opportunity and
responsibility to ‘create something new’ in their spin-along units, such as developing a
new market or an innovative product. These employees were looking for ‘a personal
challenge’ to work on something new rather than an increase in their income. Hence,
extrinsic rewards such as money were less important to them. The employees attributed
a very high positive valence to entrepreneurial activities, and derived satisfaction from
the joy related to such activities, from exploring ideas, and creating new businesses.
Motivation theory posits that individuals’ valence of an activity has to be significant in
order to prompt action (Atkinson 1964; Vroom 1964). Since entrepreneurial activities
performed in the spin-along setting were nonroutine activities, its creative employees
seemed to attribute a significant positive valence to them.
The unique organization design of the spin-alongs, which combined flexibility
and security, enhanced these employees’ expectation of earning an intrinsic reward,
i.e., the satisfaction of working on entrepreneurial, innovative projects (Ryan and
Deci 2000). Structural flexibility gave these entrepreneurial employees sufficient
autonomy to experiment with their ideas in a similar setting to that of a start-up
structure. Working in a separate venture unit provided them with sufficient work
freedom to build and maintain a creative environment. These work conditions,
which are very similar to an entrepreneur start-up environment (Gemunden et al.
2005; Heller 1999), seemed to enhance the employees’ expectation of being able to
perform their activities in a way that leads to great satisfaction (e.g., Vroom 1964).
Thus, structural flexibility provided the entrepreneurial employees with a work
setting from which they expected to derive great satisfaction by being allowed to
explore their curiosity and ideas, and being involved in innovative activities.
Structural flexibility also seems to be a reason for these employees not leaving the
company to work for other large companies that may provide less flexibility, impose
more administrative hurdles to entrepreneurial activities, and thus lower entrepre-
neurial employees’ expectation of deriving satisfaction from their work. Overall,
such employees’ intrinsic motivation was strongly fostered in the spin-along setting.
In addition, the spin-alongs provided the entrepreneurial employees with higher
employment security than they would have in a start-up setting. Since these
employees enjoyed better access to financial resources for experimenting with their
ideas in the spin-along context, they faced fewer hurdles in the entrepreneurial
process than a start-up entrepreneur would (Heller 1999). If a project failed, the
entrepreneurial employees did not face immediate unemployment (Monsen et al.
2009), and temporal changes in their industry environment or changes during the
entrepreneurial process could be better handled by their established parent company
with its secure financial resources. Such security seems to enhance entrepreneurial
employees’ intrinsic motivation, since their expectation of deriving satisfaction
from being involved in entrepreneurial activities should be higher without the
How companies motivate entrepreneurial employees
123
potential frustration associated with the inability to secure sufficient resources and
with facing the high stakes of failure as in a start-up setting. In addition, since the
established parent company was working on larger, innovative projects than some of
the employees had in their prior start-up structure, these employees’ leeway had
been extended in the spin-alongs. They thus derived even greater satisfaction from
working on larger projects and potentially building entirely new, high-impact
businesses. This circumstance may have increased their positive reward value
attributed to entrepreneurial activities in the spin-along setting as opposed to their
own start-ups, therefore enhancing their motivation.
Overall, from a motivation theory lens, the corporate spin-along setting, with its
dimensions of flexibility and security, seems to provide a context in which
entrepreneurial employees’ motivation is enhanced. Such employees seem to be
confident that they can engage in entrepreneurial activities in the spin-alongs and
that such activities will lead to significant individual satisfaction (i.e., intrinsic
reward). Thus, their ‘‘effort-reward expectancy’’ (Atkinson 1964; Lawler and Porter
1967; Locke 1968; Vroom 1964) is enhanced in the spin-along context.
Our findings also contribute to organization design research by supporting the
importance of providing employees with autonomy to support their entrepreneurial
abilities (e.g., Burns and Stalker 1961; Duncan 1976). We extend prior findings on
organizational structure by identifying autonomy as a supportive element to attract,
nurture, and retain entrepreneurial employees in a larger company. Contrary to prior
research’s emphasis on flexibility, we find that entrepreneurial employees need both
flexibility and security to be motivated to join and remain with a company. While
autonomy allows them to continue working in small, flexible units with an
entrepreneurial spirit and culture, the parent company’s financial backing offers
them security, reducing the risk inherent in an uncertain business environment (Bull
and Willard 1995; Fabel 2004) and lowering the risk of failure inherent in an
entrepreneurial start-up setting (Campbell et al. 2012). Thus, companies that can
offer entrepreneurial employees both flexibility and security may be in a better
position to compete for innovative human capital in the workplace.
5.2 Spin-alongs as a design for intrinsically motivated high-profile employees
It should be noted that the entrepreneurial employees in our case company were all
intrinsically motivated, which does not rule out that these employees could have
been partly motivated by extrinsic rewards, such as money and a higher recognition
in the company after contributing to innovative outcomes. However, entrepreneurial
employees are motivated more by intrinsic rewards, and spin-alongs thus seem to be
an ideal design for intrinsically motivated high-profile employees, since it supports
and enhances intrinsic motivation (e.g., Carsrud and Brannback 2011; Deci and
Ryan 1985; Gagne and Deci 2005; Ryan and Deci 2000). For example, two of our
case company’s venture managers were hired from outside the company. Both
mentioned that their primary driving force for accepting the offer was the challenge
to become entrepreneurially active in a secure setting. Thus, spin-alongs provide a
good balance between flexibility and security, thereby combining the benefits of
alternative professional opportunities for high-profile employees in a single entity.
P. Klarner et al.
123
In addition, the challenges and responsibilities of the position (Gagne and Deci
2005; James and Jones 1980; Lawler and Hall 1970; Piccolo and Colquitt 2006) also
motivated the managers to accept it and, perhaps even more importantly, to remain
with the company. Given that the headquarters is not located in an area with
exceptionally high living standards, it is worth mentioning that not only these
managers, but also other high-profile employees, moved closer to their workplace.
This is surprising, since one would assume that high-profile employees are more
likely to be attracted by a workplace in an area with high living standards. In
addition, the parent company only offered salaries in line with market salaries rather
than excessive ones. It therefore seems that our case company managed to provide
positions that made high-profile employees trade the prospects of reaping extrinsic
rewards for the possibility to work on something more consistent with their intrinsic
motivation. Overall, our case results indicate that high-profile employees seem to
prefer companies that are global players, have an entrepreneurial and experimental
culture, but also offer security. These aspects may outweigh cutbacks in extrinsic
rewards. Consequently, despite prior literature stating that extrinsic rewards may
motivate employees to engage in intrapreneurship (Hornsby et al. 2002; Shabana
2010), we find that intrinsic motivation is important and needs to be considered
when setting up a context in which high-profile employees can flourish.
It is also questionable whether corporate entrepreneurs earn less than independent
entrepreneurs. Traditional entrepreneurship research assumed that individuals
become independent entrepreneurs owing to their higher earnings, but recent
studies show that independent entrepreneurship often offers few monetary benefits
(Hamilton 2000; Headd and Kirchhoff 2009; Moskowitz and Vissing-Jorgensen
2002). Hence, some studies (Benz and Frey 2008; Evans and Leighton 1989;
Polkovnichenko 2003) explain the fact that individuals become entrepreneurs
despite being substantially underpaid in terms of nonmonetary or intrinsic rewards.
Corporate entrepreneurs benefit from ‘‘entrepreneurial employment’’ in spin-alongs
in two ways: first, they have a safer workplace than independent entrepreneurs.
Second, they have a higher and more stable income than independent entrepreneurs.
In line with crowding theory (Frey 1997; Frey and Jegen 2001; Frey and
Oberholzer-Gee 1997), extrinsic rewards for entrepreneurial employees might even
undermine their intrinsic motivation. Since entrepreneurial employees demonstrate
high intrinsic motivation from the outset, rewarding them with very high salaries
may pose a threat to the organization, since such employees may shift their attention
from the entrepreneurial activity to the extrinsic reward, reducing the activity’s
importance for them (Frey and Jegen 2001; Frey and Osterloh 2005). Therefore, the
case company’s approach to refrain from excessive payment for their entrepre-
neurial employees may have proved beneficial in terms of avoiding the crowding
out effect (Deci et al. 1999; Frey 1997; Frey and Osterloh 2005).
5.3 Aligning employees’ intrinsic motivation with the parent’s goal: the role
of control
Another insight is that, from the parent company’s perspective, flexicurity needs to
be balanced with control to ensure effective corporate entrepreneurship. The spin-
How companies motivate entrepreneurial employees
123
along structure combines these elements to enhance the motivation of entrepre-
neurial employees, who require flexicurity, as well as management’s control of
venture units. While the parent firm needs entrepreneurial employees’ intrinsic
motivation for creative and innovative projects, their intrinsic motivation should
support the parent firm’s strategic goals concerning knowledge extension (Osterloh
and Frey 2000). Scholars have stated that the ‘empowerment’ of employees, which
can be achieved through employee participation, strengthens their intrinsic
motivation (Spreitzer 1995; Zhang and Bartol 2010). In the spin-along setting,
entrepreneurial employees participate in the entrepreneurial process through their
high degree of autonomy in the venture unit, which—as noted—further strengthens
their intrinsic motivation to engage in entrepreneurial activities. At the same time,
the parent company needs to control spin-along employees to prevent them from
pursuing projects that may be intrinsically motivated but do not correspond with the
company’s goals (Heller 1999). The parent company established controlling
structures that most of its entrepreneurial employees accepted, since they were
aware of the benefits of working in a corporate setting and the corresponding need
for them to accept some corporate monitoring policies. As long as these employees
benefitted from flexicurity in their daily work, they agreed to the controlling
structures.
In addition, entrepreneurial employees’ intrinsic motivation has two important
knowledge-related benefits: First, it enables entrepreneurial employees to generate
specific innovation-related and tacit knowledge. Second, it can foster the transfer of
such knowledge accumulated over time to the parent company’s employees (Gagne
2009; Osterloh and Frey 2000). As shown in our findings, the parent company seeks
to exchange knowledge between the spin-along and itself. In order to foster the
creation of strategically relevant entrepreneurial knowledge in the spin-alongs, the
parent company seems to support and enhance these employees’ intrinsic
motivation and to monitor the process of knowledge creation and transfer over time.
Finally, prior literature provides evidence that companies need to balance
innovation and control (Thompson 1967) in ambidextrous designs (Duncan 1976).
Ambidextrous designs combine organic structures to foster innovation and
mechanistic structures to implement these structures (Adler et al. 1999; Duncan
1976; Raisch and Birkinshaw 2008). Our findings support prior research (Michl
et al. 2012, 2013) that describes spin-alongs as a dynamic organization design and
an ambidextrous structural form that help companies manage multiple innovation
ventures and foster effective corporate entrepreneurship. The combination of
flexicurity for the innovation units and control by the parent company merges
elements of organic and mechanistic structures that allow management to motivate
entrepreneurial employees while, simultaneously, monitoring them over time.
5.4 Leadership’s role in balancing flexicurity and control
A final insight relates to how companies can balance flexicurity and control. First,
senior managers have a critical role in balancing these elements to ensure effective
corporate entrepreneurship. With regard to hidden champions, management is an
especially crucial component. Management development is therefore described as a
P. Klarner et al.
123
scarce resource (Simon 1990, 2009, 2012). Simon (1990) identifies the optimal
management style for hidden champions as open-minded and patriarchal.
Similar to this study, prior research has found that, in order to manage the tension
between innovation and efficiency, or exploration and exploitation, the managers
too need to be ambidextrous (Mom et al. 2009). Our findings show that this
statement also refers to the senior management level, although it previously referred
to the top management team level (Smith and Tushman 2005). Our results show that
senior managers should not only be sensitive to the spin-along employees’ goals and
ambitions, but also to those of the parent. Senior managers’ central role is to
communicate between the spin-along and the parent as a neutral mediator, to
manage tensions between the two, to sponsor a new spin-along in the corporate
setting, and to balance the spin-along employees’ entrepreneurial culture and
motivation with the parent company’s corporate culture and innovation goals
(Covin and Slevin 1991; Michl et al. 2012, 2013). Overall, senior management has a
critical role in nurturing high-profile employees’ abilities and retaining them, while
simultaneously deciding when to divest ventures that fail and to lay off employees
who do not accept the parent’s norms. Balancing entrepreneurial and managerial
goals, or innovation and efficiency, requires senior managers who (1) are
experienced at working in innovative settings and managerial responsibilities, (2)
are able to swiftly acquaint themselves with new and complex topics in the spin-
along units and adapt to required changes in the parent company’s strategy, and (3)
have the strong social skills and the intercultural sensitivity required to commu-
nicate with different colleagues in the spin-along and the parent.
Second, senior management’s role in balancing flexicurity and control requires a
combination of different leadership styles. A possible management approach could
be the loose-tight leadership model—a combination of central directive and
individual freedom (Sagie 1997). A directive leadership style is described as
providing subordinates with a framework for decision-making and action in
alignment with the leader’s vision, whereas a participative leadership style is a
process through which influence is shared between superiors and subordinates
(Sagie et al. 2002). While transformational leaders provide direction by commu-
nicating a vision and, at the same time, empowering employees, their leadership
style is often characterized as static. Conversely, loose-tight leadership is a more
dynamic leadership style, since it implies that, depending on the various situational
factors, either directive or participation dominates. Our findings suggest that, by
using the loose-tight leadership style, senior management can balance flexicurityand control. Thus, in times of strong performance by a spin-along, senior
management may foster entrepreneurial employees’ greater participation in the
innovation process, while they provide these employees with more guidelines when
a unit performs poorly, or when its innovative activities progress slowly.
5.5 Practical implications
According to Steers et al. (2004) pp 383–384), ‘‘…the past decade has witnessed
greater workplace changes than any other decade in memory […] and managing
knowledge workers continues to perplex experienced managers across divergent
How companies motivate entrepreneurial employees
123
industries. These changes can have a profound influence on how companies attempt
to attract, retain, and motivate their employees.’’ Our study expands on this
statement and has examined how companies support entrepreneurial employees’
motivation and convince these employees to join them and remain with them. This
study’s results have several implications for practice.
First, with only 4.2 % independent entrepreneurs, Germany has one of the lowest
start-up rates in Europe (Brixy et al. 2010), although many high-profile employees
are willing to found their own venture. Since this valuable human capital is set to
decrease for demographic reasons, companies need to shift the trend towards
corporate entrepreneurship. Thus, hidden champion companies (Simon 1990, 2009,
2012) that seek to foster corporate entrepreneurship need to create entrepreneurial
jobs in their organizational structure in order to attract, retain, and nurture
entrepreneurial employees. In this respect, spin-alongs are an adequate structure to
support these high-profile employees in the company while reinforcing account-
ability and control.
Second, companies need to actively communicate the flexible and safe working
environment in spin-alongs to better attract (potential) high-profile employees. This
may be done in two ways. On the one hand, existing high-profile employees are
likely to recommend their attractive work environment to other highly skilled
employees when, for example, attending professional and scientific conferences, or
other meetings in their professional networks. The labor market for high-profile
employees is far smaller than for other employees, which facilitates communication
between them in their social and professional networks. Thus, existing high-profile
employees’ social capital (Adler and Kwon 2002) can prove valuable regarding
attracting new entrepreneurial employees, as companies can benefit from their
word-of-mouth communication with others who share the company’s entrepreneur-
ial dynamics and have an intrinsic entrepreneurial motivation. Overall, in a labor
market with dense social networks between high-profile employees, these
networked employees may self-select themselves for an entrepreneurial spin-off
setting. While the process of attracting entrepreneurial employees through social
networks has been described in terms of founders of new ventures (Stuart and
Sorensen 2005), we argue that entrepreneurial employees can follow a similar
process and attract their high-profile peers to their company. In contrast, companies
may actively communicate the benefits of spin-alongs during scientific and industry
conferences that high-profile employees attend. For example, our case company
actively organizes such conferences to contact high-profile employees and
communicate with them. Companies may also communicate the secure environ-
ment, as well as flexibility and accountability in their recruitment strategy in order
to better attract high-profile employees.
Third, companies need to select and train senior managers to balance the
flexicurity in their spin-along units with the parent organization’s control. Senior
managers with some entrepreneurial experience may be well suited to understand
the value of flexicurity in ventures, as well as high-profile employees’ needs in such
settings. Such managers also need to demonstrate industry and managerial
experience in order to best evaluate their spin-alongs’ activities from the parent
company’s perspective. Senior managers with both entrepreneurial and managerial
P. Klarner et al.
123
experience may better counsel (Shabana 2010), sponsor (Kuratko et al. 1990), and
protect (Heller 1999) spin-alongs in the corporate setting, as well as communicate
better between the spin-along and the parent.
Finally, companies that use the spin-along approach need to carefully evaluate
their high-profile employees’ activities and performance over time. While
entrepreneurial employees are often intrinsically motivated, not all of them may
accept the corporate context and may perceive the parent’s control as constraining
(Campbell et al. 2012). High-profile employees who do not accept the corporate
setting may demonstrate decreased job satisfaction, higher frustration, and lower
motivation, which lead to reduced work efforts over time. Thus, companies need to
prevent these employees from creating a negative environment for their colleagues
and from convincing other high-profile employees to leave the company and join
them in new external projects (Campbell et al. 2012; Fost 2008). Overall, it is
important to evaluate which entrepreneurial employees to retain in the long run,
particularly if such employees are part of a company acquired by the parent
company.
5.6 Limitations and future research directions
Despite the in-depth data used in this study, the findings are drawn from a single
company. We therefore cannot generalize our results to other companies but can
offer specific insights for hidden champions faced with the challenge of attracting
and retaining valuable human capital. Future research may further explore spin-
alongs’ role in motivating entrepreneurial employees in other companies and
industries, and undertake a cross-case analysis of multiple case companies to
identify comprehensive patterns (Eisenhardt 1989). It would be particularly
interesting to compare spin-alongs’ role in industries in which there is high
pressure to innovate with their role in those with less pressure.
While our data is based on retrospective recalls of informants at the spin-along
and parent company levels (Shachar and Eckstein 2007), future longitudinal
research may explore how such ventures evolve in the corporate setting, and how
entrepreneurial employees are motivated throughout a spin-along’s different
development stages, in greater depth.
In addition, while we could not access specific company data about its success in
attracting, nurturing, and retaining high-profile employees, the success of most of
the spin-along units serves as an indicator that our case company fulfilled these
goals. Future researchers seeking to understand whether and how companies
succeed in attracting, nurturing, and retaining such employees are advised to attempt
to access companies’ internal documentation on human resource management.
Interesting data could include HR statistics on hiring employees with high-profiles,
high fluctuation rates that are far above the usual attrition rates regarding these
employees in a company and industry, as well as employee satisfaction surveys of
their development opportunities and responsibilities in the company. In addition,
researchers with long-term access to a company need to examine whether an
entrepreneurial mindset and culture were established in the company and its
entrepreneurial units some years after the creation of the spin-alongs. In turn, this
How companies motivate entrepreneurial employees
123
may serve as an indicator of whether companies have retained entrepreneurial
employees in the long run.
Based on inductive studies’ findings, quantitative research may test whether our
findings hold in a large-scale study of companies within and across industries. The
challenges in a quantitative investigation will certainly include the definition of
appropriate measures. Such studies would also need to only focus on a specific part
of the emerging theory on the spin-along approach and its motivating function.
Furthermore, it may be difficult to identify companies that create spin-alongs, since
this term is not commonly used or accepted among companies. However, if
quantitative approaches succeed, the interpretations would greatly benefit from
multilevel analyses. Consequently, more qualitative studies and quantitative studies
are needed to advance a theory of spin-alongs.
6 Conclusion
For most companies, attracting, retaining, and nurturing high-profile employees
could be one of the greatest present and future challenges. Hence, this study’s
results are especially relevant for companies in knowledge-intensive and rapidly
changing industries. Our results show how companies can attract, retain, and nurture
high-profile employees with an organization design, i.e., a spin-along, that offers
employees flexibility and security. The spin-along approach also offers the parent
company the opportunity to control its employees by means of its organizational
structure. By combining these three elements, the spin-along design can foster
corporate entrepreneurship, as well as secure an organization’s long-term survival
and success.
Acknowledgments We thank our interview informants for their time and insights, as well as the editor
and two anonymous reviewers for their excellent comments and suggestions.
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