Research highlights the role of external knowledge sources in the recognition of strategic opportunities, but is less forthcoming with respect to the role of such sources during the process of exploiting or realizing opportunities. We build on the knowledge-based view to propose that realizing opportunities often involves significant interactions with external knowledge sources. Organizational design can facilitate a firm's interactions with these sources, while achieving coordination among organizational members engaged in opportunity exploitation. Our analysis of a double-respondent survey involving 536 Danish firms shows that the use of external knowledge sources is positively associated with opportunity exploitation, but the strength of this association is significantly influenced by organizational designs that enable the firm to access external knowledge during the process of exploiting opportunities.
Extant research offers relatively little insight into the organizational design correlates of entrepreneurship in established firms. We argue on theoretical grounds that the same organizational designs support the realization as well as the discovery of opportunities. Specifically, decentralized structures are associated with opportunity realization as well discovery, and this effect is reinforced by formalization. Decentralization gives managers the discretion and autonomy needed to recognize and realize opportunities, while formalization enables the standardization and codification of actions and processes. To test these ideas, we use a data-set based on paired responses from 474 Danish firms operating in several industries for our analyses. We find that decentralization and formalization have direct, positive, and significant associations with opportunity realization. We also address how these organizational design variables are related to opportunity discovery. We find similar effects. We discuss the theoretical and practical implications of our reasoning and results, such as implications for the idea in the innovation and organizational learning literatures that optimal performance over time requires that firms either vacillate between organizational designs or adopt ambidextrous designs.
Research summary:We study the association between firms' entrepreneurial outcomes and their gender composition. Though highly topical, there is little solid empirical knowledge of this issue, which calls for an inductive approach. We match a paired-respondent questionnaire survey with population-wide employer-employee data, and find evidence that the presence of female top managers is positively related to entrepreneurial outcomes in established firms. Yet, this relation is conditional on the proportion between male and female top managers. Another finding is that the overall proportion of women in the firm's workforce negatively moderates the relation between female top managers and entrepreneurial outcomes. We discuss various mechanisms that can explain these findings, and argue that they are best understood in terms of the dynamics of social categorization. Managerial summary:We investigate how companies benefit from having more women on the top-management team. We show that beyond a threshold level of female top managers, more women are associated with more entrepreneurial outcomes (more products and services profitably launched). However, this positive effect is weakened in firms that have many women in the workforce. These effects may be explained in terms of the ways employees mentally categorize managers and how this influences their work motivation. We find evidence for such an explanation.
Research Summary: Much research suggests that entrepreneurial opportunities in established firms result from bottom‐up initiative in a diverse workforce, senior management's main role in the entrepreneurial process is to select among opportunities generated in the bottom‐up process, and it should refrain from directly getting involved in this process. We develop an alternative and more active view of the role of senior management in the opportunity formation process in which senior management intervenes in the entrepreneurial process to resolve coordination and collaboration problems across initiatives and decide on resource allocation. We proffer rival hypotheses concerning the effect of such senior management involvement in the entrepreneurial process. Specifically, we hypothesize that the positive relations between bottom‐up initiative/employee diversity and opportunity formation are positively (negatively) moderated by such direct involvement by senior management. We examine these ideas using two matched data sources: a double‐respondent survey of CEOs and HR managers and employer–employee register data. We find support for the view that senior management involvement positively moderates the relations between bottom‐up processes/diversity and opportunity formation. Managerial Summary: What are the processes through which entrepreneurial opportunities emerge in established companies? Research has pointed to diversity and bottom‐up initiative, but our understanding is limited with respect to what senior managers should do to optimally promote entrepreneurship in such companies. In one view, senior management should keep a distance and limit their involvement to picking the best opportunities out of those they are presented with in the bottom‐up process. In contrast, we argue that given bottom‐up initiative in the context of a diverse workforce, senior management should play a more direct role in the entrepreneurial process. The reason is that senior‐management involvement at early stages of the opportunity formation process is required to handle the management challenges arising from diversity and bottom‐up initiative. Overall, our study suggests that firms that wish to seize the potential benefits (in terms of entrepreneurial opportunities) of having a more diverse workforce and more bottom‐up initiative need senior managers that directly engage in the entrepreneurial process.
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