Abstract. Fostering middle managers' entrepreneurial behavior is a key concern for established firms. Budgets are one of the most widely used management tools in organizations and several conceptual articles claim that the way in which they are usedmost notably, an interactive way -affects middle managers' autonomous strategic actions (ASA). This type of entrepreneurial behavior in established firms focuses on opportunities outside the firms' currently served product-market domains. Using structural equation modeling (SEM) and a formative measurement instrument for interactive use of budgets, we test these claims advanced in conceptual literature within a broad sample of large firms. We find that the way in which budgets are used does not significantly impact middle managers' engagement in ASA. In contrast, firms' boundary systems and middle managers' autonomy seem important antecedents to ASA.
[130 words]Keywords: budgets; interactive use; autonomous strategic action; middle managers Managerial Relevance Statement. Budgets are one of the most widely used management tools in organizations and several conceptual articles claim that the way in which budgets are used influences the level of a particular type of intrapreneurship: middle managers' autonomous strategic actions (ASA). This type of intrapreneurship focuses on new business opportunities by introducing new products to new markets. An interactive way of using budgets has been suggested to foster such intrapreneurial behaviors. Since fostering middle managers' entrepreneurial behavior is a key concern for many established firms today, and as managers can choose the way in which they use budgets, testing these claims empirically has high practical importance for advising engineering management. We draw on a broad sample of large Danish firms to test these claims for the use of annual budgets.
2In contrast to views advanced in conceptual literature, our results suggest that the way annual budgets are used does not significantly impact the level of ASA. Rather, it is boundary systems and middle managers' autonomy which significantly affect the level of such intrapreneurship. Our findings thus provide advice to engineering managers on where to look in order to promote intrapreneurial behaviors. [190 words]