Industrial Management & Data SystemsEmployee satisfaction, intrapreneurship and firm growth: a modelJasna Auer Antoncic Bostjan Antoncic

Article information:To cite this document:Jasna Auer Antoncic Bostjan Antoncic, (2011),"Employee satisfaction, intrapreneurship and firm growth: amodel", Industrial Management & Data Systems, Vol. 111 Iss 4 pp. 589 - 607Permanent link to this document:http://dx.doi.org/10.1108/02635571111133560

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Employee satisfaction,intrapreneurship and firm

growth: a modelJasna Auer Antoncic

Faculty of Management, University of Primorska, Koper, Slovenia, and

Bostjan AntoncicFaculty of Management, Faculty of Tourism Studies Portoroz – Turistica,

University of Primorska, Koper, Slovenia andFaculty of Economics, University of Ljubljana, Ljubljana, Slovenia

Abstract

Purpose – Organizational performance, growth and development may depend considerably onentrepreneurship in existing organizations (intrapreneurship) and intrapreneurship employee-relatedantecedents. The purpose of this study is to focus on employee satisfaction (composed of fourdimensions: general satisfaction with work; employee relationships; remuneration, benefits andorganizational culture; and employee loyalty), intrapreneurship and firm growth. The model’sunderlying hypotheses were conceptually developed and empirically tested.

Design/methodology/approach – Using data collected via a structured questionnaire sent by e-mailto 149 firms from Slovenia, the model’s hypotheses were tested by applying structural equation modeling.

Findings – The findings support the hypothesized relationships between employee satisfaction,intrapreneurship and growth. The influence of the control variables was also assessed in the modeland firm age was found to be influential.

Research limitations/implications – Firm growth can depend strongly on intrapreneurship andintrapreneurship employee-related antecedents. The study contributes to intrapreneurship research byempirically examining the relationship between employee satisfaction and intrapreneurship andtesting the impact of employee satisfaction on firm growth.

Practical implications – Firms need to take a detailed and systematic approach to employeesatisfaction in order to improve intrapreneurship and growth.

Social implications – Activities related to the stimulation of employee satisfaction andintrapreneurship can have also social implications, since they can increase creation of the new wealthin the society.

Originality/value – This study can be differentiated from past studies, since it considers anensemble of employee satisfaction elements (general satisfaction with work, employee relationships,remuneration, benefits and organizational culture and employee loyalty) as a crucial antecedent ofintrapreneurship and builds a model of employee satisfaction-driven intrapreneurship and firmgrowth, which has not been examined before.

Keywords Employees, Employee behaviour, Job satisfaction, Entreprenurialism,Business development, Slovenia

Paper type Research paper

1. IntroductionOrganizational performance, growth and development may depend considerably onentrepreneurship in existing organizations (intrapreneurship) and intrapreneurshipemployee-related antecedents. The study focuses on employee satisfaction,

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Employeesatisfaction

589

Received 2 November 2010Revised 21 January 2011

Accepted 6 February 2011

Industrial Management & DataSystems

Vol. 111 No. 4, 2011pp. 589-607

q Emerald Group Publishing Limited0263-5577

DOI 10.1108/02635571111133560

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intrapreneurship and firm growth. It deals with the elements of job satisfaction importantfor the survival and growth of firms. Elements of employee satisfaction are intertwinedwith elements of organizational factors related to intrapreneurship. Previous research onthe relationship between organizational elements and intrapreneurship has focused on thecharacteristics of internal organizational environments and their relationships withentrepreneurship in existing organizations (Souder, 1981; Schollhammer, 1982; Kanter,1984; Pinchot, 1985; Luchsinger and Bagby, 1987; Hornsby et al., 1993; Antoncic andHisrich, 2001; Antoncic, 2007). In addition to some descriptive evidence (Kanter, 1984;Pinchot, 1985), in one study Kuratko et al. (2005) empirically examined the relationshipbetween corporate entrepreneurship, internal organizational antecedents and jobsatisfaction and found that they are related, but used a narrower measure of employeesatisfaction and focused only on one aspect of intrapreneurship (number of new andimplemented ideas and unofficial improvements). Past research in intrapreneurship hascovered some elements important for employee satisfaction, but has only partiallyaddressed the relationship between employee satisfaction and intrapreneurship. Thisstudy can be differentiated from past studies, since it considers an ensemble of employeesatisfaction elements (general satisfaction with work, employee relationships,remuneration, benefits and organizational culture and employee loyalty) as a crucialantecedent of intrapreneurship and builds a model of employee satisfaction-drivenintrapreneurship and firm growth, which has not been examined before. This study fillsthe research gap by developing and empirically testing a model. Based on theoreticalstarting points, we developed hypotheses and sought to find out whether the hypothesizedrelationships between employee satisfaction, intrapreneurship and growth exist. The keycontribution of our research is the model which sheds light on the linkages betweenemployee satisfaction, intrapreneurship and firm growth.

2. Theory and hypothesesThis section describes the elements of employee satisfaction, intrapreneurship alongwith the hypotheses on the relationships between employee satisfaction,intrapreneurship and firm growth.

2.1 Elements of employee satisfactionEmployee satisfaction is the satisfaction of employees with their jobs or the degree towhich employees like their jobs (Spector, 1997). An overall job satisfaction and elementsof employee satisfaction were traditionally emphasized as important elements oforganizational management, behavior and development (Lofquist and Dawis, 1969;Smith et al., 1969; Locke, 1976; Cranny et al., 1992). Varoius job satisfaction-relatedelements exist. For example, on one hand, job satisfaction factors can be classifiedaccordingly to the well-known Herzberg’s (1964, 1966) two-factor theory into hygienes(supervision, working conditions, co-workers, pay, policies/procedures and jobsecurity), which lead to dissatisfaction, and motivators (achievement, recognition, thework itself, responsibility, advancement and growth), which lead to satisfaction.On the other hand, job satisfaction elements can be considered in relative terms,as proposed in equity theory (Adams, 1963; Vecchio, 1982), in which employees evaluatethe fairness of exchange and base their satisfaction-related elements on the comparisonof the ratio of personal outcomes (pay, recognition, job satisfaction, opportunityand advancement) and personal inputs (time, effort, knowledge and skills) with

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the ratio of reference group outcomes and inputs. Important elements that affectemployee satisfaction, which are used in this study, are:

. General satisfaction with work, consisting of the work conditions (Mozina, 1991;Miskell, 1994), working time (Pierce and Newstrom, 1980; Ronan, 1981;Christensen and Staines, 1990) and reputation of the company (Mulej, 1986).

. Employee relationships, consisting of relationships between employees (Mayer,1991; Miskell and Miskell, 1994; Welsby, 2003) and also includes annual personalinterviews with employees (Majcen, 2004).

. Remuneration, benefits and organizational culture, these elements include salary(Hanneman and Schwab, 1985; Brecko, 2005), remuneration in the form of benefitsand praise (Rosenbloom and Hallman, 1991), promotion (Mozina, 2002), education(Tsui et al., 1997; Joy-Matthews et al., 2007; Noe, 2008), permanency of the job(Maslow, 1997; McGregor, 2002) and the organizational climate and culture(Pinchot, 1985; Fiedler, 1993; Hisrich and Peters, 1995).

. Employee loyalty (Meyer and Allen, 1997; Tsui et al., 1997; Varona, 2002).

These elements are important for anyone directly or indirectly related to the company’soperations. Employees value the operation of a company based on their own needs andinterests. If the firm functions internally in accordance with their interests, stemmingfrom their needs, they are satisfied. The way employees in the company are dealt withdetermines whether employees can be considered a true competitive advantage of thecompany.

2.2 IntrapreneurshipEntrepreneurship can be defined:

[. . .] as the process of uncovering and developing an opportunity to create value throughinnovation and seizing that opportunity without regard to either resources (human and capital)or the location of the entrepreneur – in a new or existing company (Churchill, 1992, p. 586).

Intrapreneurship can be defined in broad terms as entrepreneurship within an existingorganization. Intrapreneurship includes entrepreneurial behaviors and orientations ofexisting organizations. Intrapreneurship exists in a firm, for example, when the firm actsentrepreneurially in pursuing new opportunities; in contrast, a non-intrapreneurial firmwould be mostly concerned with the management of the existing (Antoncic and Hisrich,2003) and would make decisions predominantly on the basis of the currently controlledresources (Stevenson and Jarillo, 1990). Intrapreneurship may be seen as doing new thingsand departing from the customary to pursue opportunities (Vesper, 1984); as a process bywhich individuals inside organizations pursue opportunities without regard to theresources they currently control (Stevenson and Jarillo, 1990); as a spirit of entrepreneurshipwithin the existing organization (Hisrich and Peters, 1995); or as emergent behavioralintentions or behaviors deviating from the customary way of doing business (Antoncic andHisrich, 2003, 2004; Antoncic, 2007). Intrapreneurship (corporate entrepreneurship,intrapreneuring) can also be defined by its content (for a more precise conceptual definition,see Antoncic and Hisrich, 2003) including dimensions based on the Schumpeterianinnovation concept that can be considered a building block of entrepreneurship.Previous views of intrapreneurship can for the purpose of this study be classified in fourdimensions which encompass the following entrepreneurial activities in existing firms:

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. New business venturing (Schollhammer, 1982; Hisrich and Peters, 1984; Vesper,1984; Rule and Irwin, 1988; Zahra, 1991; Stopford and Baden-Fuller, 1994) – thenew business venturing dimension refers to the creation of new businesses relatedto existing products or markets and the creation of new units without regard to thelevel of autonomy or size.

. Product/service innovativeness (Schollhammer, 1982; Covin and Slevin, 1991;Zahra, 1993; Knight, 1997) – the product/service innovativeness dimension refersto product and service innovation.

. Process/technology innovativeness (Schollhammer, 1982; Covin and Slevin, 1991;Zahra, 1993; Damanpour, 1996; Knight, 1997; Tushman and Anderson, 1997;Antoncic et al., 2007) – the process/technology innovativeness dimension refers toinnovations in production processes, procedures and techniques, as well as intechnologies.

. Self-renewal (Vesper, 1984; Guth and Ginsberg, 1990; Zahra, 1991; Stopford andBaden-Fuller, 1994; Muzyka et al., 1995) – the self-renewal dimension reflects thetransformation of organizations through a renewal of the key ideas on which theyare built.

2.3 HypothesesHypotheses are developed in terms of relationships between employee satisfaction,intrapreneurship and firm growth.

2.3.1 Employee satisfaction and intrapreneurship. The elements of employeesatisfaction described above, namely:

. general satisfaction with work;

. employee relationships;

. remuneration, benefits and organizational culture; and

. employee loyalty are important for the company’s operations.

In their nature, the elements of employee satisfaction are important organizational elementsthat can be very influential for the development of entrepreneurial activities andorientations in the organization. In particular, they tend to be related to organizational andmanagement support and organizational values – the driving forces of intrapreneurship.Previous research on the relationship between organizational elements andintrapreneurship has focused on characteristics of intra-organizational environments thatcan facilitate or impede intrapreneurship development (Souder, 1981; Schollhammer, 1982;Kanter, 1984; Pinchot, 1985; Luchsinger and Bagby, 1987; Hornsby et al., 1993; Antoncic andHisrich, 2001; Antoncic, 2007). Organizational characteristics such as communicationopenness, control mechanisms, environmental scanning intensity, organizational andmanagement support, and organizational values can be considered important predictors ofintrapreneurship, with organizational and management support, and organizational valueshaving a particularly strong association with intrapreneurship (Antoncic and Hisrich, 2001).

Kuratko et al. (2005) demonstrated positive relationships between corporateentrepreneurship internal organizational antecedents (management support, workdiscretion, rewards/reinforcement, time availability and organizational boundaries)and job satisfaction. Top management’s style of dealing with employees is crucial foremployee satisfaction and employee involvement in entrepreneurial activities and can play

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an important role in innovation performance (Huang and Lin, 2006). Giving employees workdiscretion, rewards, time availability, training, trust, loose intra-organizational boundaries,and management support, commitment and involvement may be considered vitalcharacteristics of organizational support conducive to intrapreneurship (MacMillan, 1986;Hornsby et al., 1990; Stevenson and Jarillo, 1990; Merrifield, 1993). Investing in employeescan encourage their self-initiative (Hom et al., 2009), which is important for intrapreneurship.Managers and employees, who are involved in the team for changing the organization, needto be able to implement new business processes (McAdam and Galloway, 2005). Supportfrom senior management may represent important encouragement for employees toinnovate (Lee and Tsai, 2005). As important elements of organizational culture, values canbe essential for the development of intrapreneurship. Values are an important component ofan innovative organizational culture in which individuals are continuously encouraged togenerate new ideas, solutions and knowledge (Wong, 2005). Employee emotional and valuecommitment tends to improve innovativeness in organizations (Kanter, 1984). Employeesatisfaction is also built on values-related drivers of intrapreneurship such as: the attitudesof individuals within the firm (Stevenson and Jarillo, 1990), individual-centeredintrapreneurship and organizational values (focusing on ways in which employees aretreated in the organization) and competition-centered organizational values (focusing onapproaches organizational members should follow when attempting to achieveorganizational goals) (Zahra, 1991). It may be concluded from the above research thatelements of organizational factors intertwine with elements of employee satisfaction andmay be important for the development of intrapreneurship. Therefore, the expectedrelationship between employee satisfaction and intrapreneurship is positive:

H1. Employee satisfaction is positively associated with intrapreneurship.

2.3.2 Employee satisfaction and growth. Employee satisfaction can be related to firmperformance in terms of growth. The practices of managing human resources show thatthe possibility of education, adequate pay, benefits, continuity of employment and theright approach to employees encourage a high level of employee motivation and theirwillingness to invest in their own knowledge and skills (Shaw et al., 1998; Tsui et al.,1997). Improving the satisfaction of workers is a central task of management sincesatisfaction creates confidence, loyalty and consequently improved quality in the outputof employees (Tietjen and Myers, 1998). Top management’s commitment to improvingemployee satisfaction takes into account factors that affect employee satisfaction andcan encourage employees to improve the performance of their tasks and boost the levelof their work performance, which can in turn contribute to the company’s growth(Tsui et al., 1997; Shaw et al., 1998; Gerhart and Rynes, 2003). The role of employeetraining and the top management leadership of employees can be essential for thequality and performance of firms (Demirbag et al., 2006). Employee job satisfaction andperformance can be moderately related ( Judge et al., 2001). Practices which increaseemployee satisfaction tend to increase the quality of employees and the level of theirperformance (Gerhart and Rynes, 2003) and may impact the growth of the firm(Antoncic, 2008). Investing in employee development is crucial for the organization andits business results (Tsui et al., 1997; Merkac Skok, 2008). Therefore, the expectedrelationship between employee satisfaction and growth of the company is positive.On the basis of the above research, the following hypothesis is proposed:

H2. Employee satisfaction is positively associated with firm growth.

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2.3.3 Intrapreneurship and growth. Firm performance can be considered the mostimportant consequence of intrapreneurship (Antoncic and Hisrich, 2001) and usuallydenotes performance in terms of growth and profitability (Covin and Slevin, 1991).Entrepreneurial activities can be important for the growth of firms and economic growthsince entrepreneurship tends to contribute to economic performance through theintroduction, creation and enhancement of innovations, change, rivalry and competition(Wennekers and Thurik, 1999; Carree and Thurik, 2003). Successful enterprises have beencharacterized with intrapreneurship (Peters and Waterman, 1982; Kanter, 1984; Pinchot,1985). Empirical evidence from past research indicates intrapreneurship is related tosmall-firm growth (Covin, 1991), performance in hostile environments (Covin and Slevin,1989), large-firm growth (Covin and Slevin, 1986; Zahra, 1991, 1993; Zahra and Covin,1995) and the growth of existing firms regardless of their size (Antoncic and Hisrich, 2001,2004; Antoncic, 2007). This research underpins the following hypothesis:

H3. Intrapreneurship is positively associated with firm growth.

3. Research methodsThe research methods include the survey questionnaire, the sample and methods of dataanalysis.

3.1 Survey questionnaireAn anonymous questionnaire with mainly closed questions was developed and used forsubsequent detailed processing. In the study, we used a questionnaire containingquestions divided into four parts, based on employee satisfaction, intrapreneurship,growth and control variables. Likert-type scale ratings of responses to the question aremainly based on the scale, ranging from 1 – very untrue to 5 – very true. Employeesatisfaction was measured with questions taken and adapted from previous research(Brayfield and Rothe, 1951; Porter et al., 1968; Churchill et al., 1974; Hackman andOldham, 1975; Teas, 1979; Oliver and Brief, 1983) and based on the following dimensionsof employee satisfaction:

. general satisfaction (working hours, conditions of work and reputation);

. employee relationships (relationships with co-workers);

. remuneration, benefits and organizational culture (salary, remuneration in theform of benefits and praise, promotion, education, job stability, organizationalclimate and culture); and

. employee loyalty.

The reliabilities of the four dimensions of employee satisfaction (with retained items afterfactor analysis) were very good to moderately good: general satisfaction (12 retaineditems, Cronbach’s alpha reliability 0.94), employee relationships (four retained items,Cronbach’s alpha reliability 0.92), remuneration, benefits and organizational culture(nine retained items, Cronbach’s alpha reliability 0.88) and employee loyalty (two retaineditems, Pearson’s correlation coefficient 0.43, significant at the 0.05 level) (Table I).

Intrapreneurship, growth and control variables (industry, company size and age)were assessed by using questions from previous research (Antoncic and Hisrich, 2004;Antoncic, 2007). The 23 questions of intrapreneurship (Table II) assessed four aspects ofintrapreneurship: new businesses, product/service innovation, process/technology

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innovation and self-renewal (23 retained items, Cronbach’s alpha reliability 0.90).Growth was measured by three questions addressing absolute and relative growth(three retained items, Cronbach’s alpha reliability 0.75).

3.2 Data collection and description of the sampleThe data were collected by e-mail sent to firm managers stating the purpose of the surveyand asking them to complete the attached questionnaire. The top manager of a firm wasselected as a key informant, since he or she has the most knowledge about theorganizational-level questions and therefore is being able to provide the most valid data,relative to other people in a given firm. The questionnaire was pre-tested on a smallnumber of companies in order to check its usefulness to avoid incomprehensible

Items Mean SD

General satisfactionEmployees are relatively well-rewarded financially for their work 3.34 0.94Employees find their work challenging, exciting and giving them a sense ofaccomplishment 3.38 0.86The employees are commited to the organization 3.70 0.87Employees are proud to tell others that they are part of their organization 3.43 0.89For employees, this is the best of all possible organizations for which to work 3.07 0.94Most people in our organization feel a great sense of personal satisfaction when they dothe job well 3.59 0.80Most people in our organization are very satisfied with the job 3.46 0.83Employees are generally satisfied with the kind of work they do in our company 3.56 0.78Employees think their job is very interesting 3.52 0.85Employees find real enjoyment in their work 3.36 0.87Employees feel they have the opportunity for independent thought and action in theirworking position 3.34 0.84Employees feel the prestige of their position inside the company (that is, the regardreceived from others in the company) 3.56 0.81Employee relationshipsEmployees feel that their fellow workers are the kind they would like to have around 3.44 0.73Employees get along well with their coworkers 3.65 0.83Employees are happy with their relationship with their fellow workers 3.66 0.85Employees feel that their fellow workers are stimulating 3.43 0.83Remuneration, benefits and organizational cultureEmployees are satisfied with the pay they receive for their job 3.05 0.95The basic values of this organization include learning as key to improvement 3.50 0.96The sense around here is that employee learning is an investment, not an expense 3.69 1.09Supervisors in this company are willing to share all relevant information withsubordinates 3.59 0.97This organization can be described as flexible and continually adapting to change 3.71 0.95This organization is always moving toward improved ways of doing things 3.90 0.96The opportunity for personal growth and development exists in our organization 3.72 0.86Employees feel they receive enough information from their supervisor about their jobperformance 3.42 0.83Employees are satisfied with their working time 3.71 0.90Employee loyaltyEmployees talk up their organization to their friends as a great organization to work for 3.58 0.89Employees feel very little loyalty to their organization (r) 3.89 0.99

Table I.Employee satisfaction

items

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and sensitive items. To improve the understanding of the questionnaire items, somequestions were edited by replacing some words on the basis of reasonable proposals frombusinesspeople before the main data collection. The data were collected from firms inSlovenia. Questionnaires were sent to 2,977 large, medium and small companies;all companies with e-mail addresses in the complete database of Slovenian firms with 20 ormore employees (full-time equivalent). As part of the data collection via e-mail, a second

Items Mean SD

Stimulating your new demand on your existingproducts in your current markets through aggressiveadvertising and marketing 2.95 1.34Broadening your business lines in your currentindustries 3.36 1.18Pursuing new businesses in new industries that arerelated to your current business 3.35 1.25Finding new niches for your products in your currentmarkets 3.62 1.03Entering new businesses by offering new lines andproducts 3.20 1.27Your company’s emphasis on developing newproducts 3.48 1.04Rate of new product introduction into the market 3.15 0.92Your company’s spending on new productdevelopment activities 3.05 1.09The number of new products added by yourcompany 3.07 1.01The number of new products introduced by yourcompany 2.81 1.19Your investment in developing proprietarytechnologies 3.07 1.27Your emphasis on creating proprietary technology 3.09 1.19Your adoption of technologies developed by othercompanies or industries 2.96 1.05Your company’s emphasis on technologicalinnovation 3.18 1.12Your company’s emphasis on pioneeringtechnological developments in your industry 3.25 1.19The percent of the company’s revenue generatedfrom products that did not exist three years earlier 2.82 1.56Defining your company’s mission 3.61 1.01Revising your business concept 3.53 0.94Redefining the industries in which your companywill compete 3.18 1.08Reorganizing units and divisions to increaseinnovation 3.07 1.14Coordinated activities among units to enhancecompany innovation 3.16 1.12Increasing the autonomy (independence) of differentunits to enhance their innovation 2.65 1.05Adopting flexible organizational structures toincrease innovation 3.09 1.20

Table II.Intrapreneurship items

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reminder was sent out two weeks after the first one in order to achieve a better response rate.After sending the questionnaire out in the first round, it was found that 31 e-mail recordsincluded a false e-mail address (wrong characters), whereas 671 e-mail addresses wereinvalid because they no longer existed. The surveys were ultimately sent out to 2,275 e-mailaddresses. In total, 149 of the questionnaires which were returned were usable for analysis(a 6.5 percent response rate). The response rate to the e-mail survey was relatively lowbecause generally a lot of junk e-mail (“spam”) is sent to companies and individuals andbecause we targeted the total population (Slovenian firms with 20 or more employees).Comparisons of mean values of key model variables and comparisons of control variablesbetween two sub-samples based on the response time (earlier respondents – responded inthe first two weeks, n ¼ 37; later respondents – responded after the first two weeks,n ¼ 112) showed no differences, which indicated an absence of non-response bias.

The sample was represented by firms from various industries. Most firms in thesample were from service industries (56.9 percent) and less from manufacturingindustries (36.1 percent). The key service industries included in the sample are:transportation and public goods (13.9 percent of firms in the sample); consulting andbusiness services (11.8 percent); retail and wholesale trade (10.4 percent); tourism(6.3 percent); construction (5.6 percent); banking, investment and insurance (4.2 percent);and engineering, research and development (4.2 percent). Manufacturing industriesincluded in the sample are: production of industrial goods (26.4 percent) and productionof consumer goods (9.7 percent). The average firm in the sample was 11-20 years old,had total annual sales of e1,600,000-e4,000,000, and was small with 20-50 employees.These figures are very close to the data in the total database population and henceindicate the good representativeness of the sample.

3.3 Methods of data analysisAll model constructs were checked for their reliability. The employee satisfactionconstruct was checked by using exploratory factor analysis to identify R-type factordimensions by employing the SPSS software package. An oblique rotation oblimin wasused where the factors are correlated. The data were suitable for factor analysis becausethe variables were adequately correlated, which was reflected in the correlation matrix.Keiser-Meyer-Olkin measure of sampling adequacy and Bartlett’s test of sphericity wereadequate. The initial number of factors was selected according to the theory-basedexpectations. When the model was re-specified on the basis of eigenvalues, the decisionwas made on how many factors to retain (four factors). The decisions on which variablesto retain were based on communality values (higher than 0.2) of individual variables andthe associations of variables with one or more factors.

To test the hypotheses, we used structural equation modeling with the EQS programpackage. The ERLS method was used, noting it is less sensitive to deviations ofvariables from the normal distribution than the ML method. The model with structuralequations included three key constructs: employee satisfaction, intrapreneurship andfirm growth. The four employee satisfaction dimensions were included as elementscomposing the independent variable, whereas intrapreneurship was included as theintermediate dependent variable and growth as the final dependent variable. The controlvariables age and size of the company were included as additional independentvariables, whereas the impact of industry was tested by dividing the sample by the twokey industry groups (services and manufacturing).

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4. FindingsThe findings after testing the hypotheses by using structural equation modeling arepresented below. The findings are related to the hypothesized relationships betweenemployee satisfaction, intrapreneurship and firm growth which are included in thestructural model together with control variables, which refer to firm age and size.The structural model with standardized coefficients is shown in Figure 1. Model fitindices indicate a moderately good model fit (NFI 0.86, CFI 0.89, RMSEA 0.12); NFI andCFI are very close to the threshold of 0.9, which indicates a very good model fit, whereasthe value of RMSEA is somewhat too high, although its value may be increased due tothe inclusion of control variables in the model.

H1. predicted a positive association between employee satisfaction andintrapreneurship. The estimated standardized coefficient was found to be positive(0.59) and significant (sig. , 0.05). This finding is in support ofH1. Employee satisfaction(composed of four dimensions) was found positively related to intrapreneurship.H2 predicted a positive association between employee satisfaction and growth.The standardized coefficient was found to be positive (0.33) and significant (sig. , 0.05).This finding is in support of H2. Therefore, employee satisfaction showed a positiverelationship with intrapreneurship and firm growth. An indirect effect of employeesatisfaction on firm growth (through intrapreneurship) was also estimated. Thestandardized coefficient for the indirect effect was also found to be positive (0.17) andsignificant (sig. , 0.05). This indicates that employee satisfaction may importantly affectfirm growth both directly and indirectly (via intrapreneurship). H3 predicted a positiveassociation between intrapreneurship and firm growth. The estimated standardizedcoefficient was found to be positive (0.29) and significant (sig. , 0.05). This findingsupports H3. Intrapreneurship can be predictive of firm growth.

Figure 1.Structural equation model(standardized coefficients)

ER

RE

GS

EL

IN 0.80 E79*

GR E80*0.81Age

Size

–0.21*

0.10

0.29*

ES

0.97

E75* 0.23

0.85*E76* 0.53

0.88*

E77* 0.47

E78* 0.75

0.66*

0.59*

0.33*

–0.02

–0.06

Notes: *Significance at: 0.05; ES – employee satisfaction; IN – intrapreneurship;GR – firm growth; GS – general satisfaction; ER – employee relationships; RE – remuneration,benefits and organizational culture; EL – employee loyalty; age – firm age; size – firm size;E – error terms

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The impacts of control variables (industry, age and size of the firm) were checked in themodel. Only one relationship including a control variable was found substantial andsignificant: a negative relationship between firm age and growth (standardizedcoefficient 20.21, sig. , 0.05). Therefore, firm age may negatively affect firm growth;younger firms tend to grow faster than older firms. The impact of the industry controlvariable was checked by estimating the model on two sub-samples based on industry(manufacturing, n ¼ 52 and services, n ¼ 82). All hypotheses-related estimatedstandardized coefficients were found to be positive and significant (sig. , 0.05), whichindicated an absence of the industry control variable impact in the model.

5. DiscussionThe findings are in support of the proposed model, which includes the hypothesizedpositive relationships between employee satisfaction, intrapreneurship and firmgrowth. In addition, the employee satisfaction construct was confirmed (by factoranalysis and structural equation modeling) as being composed of four factors(1 – general satisfaction, 2 – employee relationships, 3 – remuneration, benefits andorganizational culture and 4 – employee loyalty). The employee satisfaction constructincludes various dimensions and composite elements which are important for achievingsatisfaction among employees; these range from financial and non-financial incentivesto the conditions and characteristics of work and even further to psychological and valueaspects or employee satisfaction with work. The elements of employee satisfaction as aconstruct tend to be predictive of the ensemble of intrapreneurship activities (newbusiness venturing, product/service innovation, process/technology innovation andself-renewal). Employee satisfaction tends to positively impact growth of the firm (bothabsolute and relative growth). This study confirmed a positive intrapreneurship-growthrelationship, which is in accordance with past intrapreneurship research (Covin, 1991;Covin and Slevin, 1986; Zahra, 1991, 1993; Zahra and Covin, 1995; Antoncic and Hisrich,2001, 2004; Antoncic, 2007). Firm growth can also be influenced by employeesatisfaction indirectly through intrapreneurship. Two control variables may notbe important in the model, namely firm size and industry, whereas firm age may benegatively related to firm growth.

6. Contributions and implicationsThe study’s key contribution is the development and testing of a model of employeesatisfaction-driven intrapreneurship and firm growth. The study contributes tointrapreneurship research by empirically examining the relationship between employeesatisfaction and intrapreneurship. In methodological terms, this study has contributedby developing and partly empirically validating a wide-ranging construct of employeesatisfaction (with 27 explanatory variables), which was found to be composed of fourdistinctive dimensions:

(1) general satisfaction (including working hours, conditions of work and reputation);

(2) employee relationships (including relationships with co-workers);

(3) remuneration, benefits and organizational culture (including salary,remuneration in the form of benefits and praise, promotion, education,job stability, organizational climate and culture); and

(4) employee loyalty.

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The construct of employee satisfaction as a whole was also found to be predictive ofintrapreneurship and firm growth, indicating nomological validity. The studycontributes to the term human capital, which refers to the range of valuable skills andknowledge accumulated over time (Burt, 1992) and is embodied in people (Becker,1993); the scope of the study included employee satisfaction, which is embodied inpeople – employees and may be considered an element of human capital, and the roleof employee satisfaction in intrapreneurship and firm growth. The study also indicatedthat employee satisfaction and intrapreneurship may contribute to sustainability of afirm in its business environment by positively affecting firm growth.

The study has important implications for researchers and practitioners.We recommend that intrapreneurship researchers take employee satisfactionvariables into account when designing models of intrapreneurship-influenced growth,and that researchers in other areas recognize the importance of employee satisfactionelements in firm growth. In addition to the “classic” recommendation to practitioners tosupport and foster intrapreneurship activities (entering new businesses, innovatingproducts, services, processes and technologies, and self-renewing the firm in strategicand organizational terms) in order to achieve the firm’s faster growth, we believe thatfirms need to take a detailed and systematic approach to employee satisfaction.Recomendations are linked to the results of the study, which include the associationsfound in hypotheses testing and the structure of the two key constructs in the study(employee satisfaction and intrapreneurship; see items in Tables I and II), which can beimportant for firm growth. First, employee satisfaction-related recommendations are:

. companies should ensure that their employees are paid fairly for their work;

. companies should make it possible for employees to work on challenging andinteresting tasks;

. learning should be considered as a value;

. education should be considered as an investment;

. it is important that leaders and managers share relevant information with theirsubordinates;

. leaders and managers should provide sufficient information to employees aboutthe effectiveness of implementing work tasks;

. companies should be flexible in response to changes and continuously look for andmake improvements;

. an excessive number of formal procedures in the implementation of tasks shouldbe avoided;

. employees should be allowed to make decisions related to their workplace; and

. companies should provide opportunities for personal growth and development fortheir employees.

Second, in terms of intrapreneurship, companies are recommended to:. stimulate new demand;. enter new businesses in new markets;. find new market niches;. offer and develop new products;

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. develop their own technology;

. introduce technological newness and innovations;

. redefine the mission of the company;

. re-assess the business concept;

. redefine industries in which the company will compete in the future;

. reorganize parts of the organization;

. increase the autonomy of their units;

. improve co-ordination between the units; and

. create a flexible organizational structure to advance business innovation.

Firms, regardless of their age, size and industry, can increase their chances of achieving allof these entrepreneurial activities, as well as firm growth, by stimulating employees andmaking improvements in employee satisfaction (the ten employee satisfaction-relatedrecommendations stated above). Older firms in particular need to be very active inencouraging employee satisfaction and intrapreneurship, since they tend to grow slowerthan younger firms. Improvements in employee satisfaction elements (for example,learning and education potential, information sharing, flexibility, decision-makingpossibilities and reduced number of formal procedures) may advance information flows,employee collaboration and network tie formation and so strengthen an ongoing effort tobetter utilize social networks within a company. Activities related to the stimulation ofemployee satisfaction and intrapreneurship can have also social implications, since theycan increase creation of the new wealth in the society.

7. Limitations, future research opportunities and conclusionThe key limitations of the study relate to the study design, concepts, sample, andquestionnaire and data collection. The study design was cross sectional; a longitudinalstudy may provide even better results. The focus of the study was limited to a fewconcepts (employee satisfaction and intrapreneurship) which are important for firmgrowth; it did not include other factors that might also be important for growth, althoughit did examine the focal concept of employee satisfaction, its structure and its impact onintrapreneurship and growth. The study did not differentiate between blue andwhite-collar (as well as knowledge) workforce and between less and more project-basedfirms (e.g. construction, design and R&D). In limiting the sample, we selected companiesfrom Slovenia and not from other countries and restricted the sample to existing firmswith 20 or more employees; yet, the sample was very representative and findings basedon Slovenian samples tend to be comparable to other countries as shown in pastcross-nationally comparative studies in intrapreneurship (Antoncic and Hisrich, 2000,2001; Antoncic, 2007), business ethics (Bucar et al., 2003), entrepreneurship education(Antoncic et al., 2005) and technological innovativeness (Antoncic et al., 2007). The datawere obtained by an e-mail survey with a structured questionnaire. The respondentswere able to choose between pre-formulated answers which represents a weakness sincesuch responses are limited in content and number; however, they provide preciseanswers to the focal questions. With each firm the response was given by only oneperson – the manager, who should have the most knowledge and information aboutorganizational-level matters of the firm. The respondents’ answers were based on their

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perceptions and questions about the company’s growth were not based on companies’annual financial statements. However, despite the limitations, the collection of data onthe growth and profitability of firms based on perceptions of company representativeshas already been identified as very relevant in previous studies in intrapreneurship(Antoncic and Hisrich, 2001, 2004; Antoncic, 2007).

Some future research opportunities can be noted. In order to form a morecomprehensive and integrative model, some other variables possibly important tointrapreneurship and firm growth could also be included, such as the characteristics ofstrategic alliances and networks, or the personalities of managers. Since employeesatisfaction and organizational antecedents of intrapreneurship can be related(Kuratko et al., 2005), it may be interesting to empirically partition the antecedentsinto groups (employee satisfaction related and employee satisfaction non-related) to findout if there are differences between the groups in their impact on intrapreneurship andgrowth. Cross-cultural comparisons may further validate the construct of employeesatisfaction and the model generally.

Firm growth can depend strongly on intrapreneurship and intrapreneurshipemployee-related antecedents. The study has confirmed the importance of employeesatisfaction for intrapreneurship and firm growth where employee satisfaction wasdescribed using four dimensions (general satisfaction with work; employee relationships;remuneration, benefits and organizational culture; and employee loyalty). The role ofemployees and their satisfaction with work can be considered essential in all companiesregardless of their size, age, or industry. Despite the limitations, the study contributes tointrapreneurship research by empirically examining the relationships in the model,which includes employee satisfaction, intrapreneurship and firm growth.

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About the authorsJasna Auer Antoncic is a Researcher in the field of Entrepreneurship at the Faculty ofManagement, University of Primorska, Koper, Slovenia. She obtained her Master of Science degreefrom the Faculty of Management. Her area of expertise covers customer satisfaction, psychologyof the entrepreneur, corporate entrepreneurship and company growth. She has authored amonograph, a scientific paper in the journal Management, various scientific papers in conferenceproceedings, as well as technical papers.

Bostjan Antoncic is Full Professor of Entrepreneurship at the Faculty of Management,the Faculty of Tourism Studies Portoroz – Turistica, University of Primorska, and the Faculty ofEconomics, Ljubljana, Slovenia. His main research interests include corporate entrepreneurship,entrepreneurial networks, entrepreneurial personality and international entrepreneurship. He hasauthored or co-authored 14 books (11 of them in the area of entrepreneurship) and various scientificresearch articles. His papers were published in academic journals such as the Journal of BusinessVenturing, Entrepreneurship and Regional Development, Industrial Management and DataSystems, Journal of Developmental Entrepreneurship, Journal of Enterprising Culture, ManagingGlobal Transitions, Journal of Management Development, and Journal of Small Business andEnterprise Development. Bostjan Antoncic is the corresponding author and can be contacted at:b.antoncic@gmail.com

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