Board behavior’s impact on entrepreneurial orientation in public enterprises

Abstract

Public enterprises find themselves in increasingly competitive markets, a situation that makes having an entrepreneurial orientation (EO) an urgent need, given that EO is an indispensable driver of performance. Research describes politicians delaying the strategic change of public enterprises when serving as board members, but empirical evidence of the impact of board behavior on EO in public enterprises is lacking. We draw on stakeholder-agency theory (SAT) and resource dependence theory (RDT) and use structural equation modeling (SEM) to investigate survey data collected from 110 German energy suppliers that are majority government owned. Results indicate that board strategy control and board networking do not seem to predict EO on first sight. Closer analysis reveals a board networking–EO relationship depending on ownership structure. Remarkably, we find that it is not the usually suspected local municipal owner who hinders EO in our sample organizations but minority shareholders engaging in board networking activities. The results shed light on the intersection of governance and entrepreneurship with special reference to the fine-grained conceptualization of RDT.

Corporatization of public services

“…Importantly, Krause and van Thiel (2019) find that German municipalities' efforts to strengthen their control over corporatized entities have a damaging effect on managers' perceptions of their autonomy within those entities. Interestingly, Tremml et al (forthcoming) find that German municipal energy companies that are majority public‐owned have a stronger entrepreneurial orientation than those that are minority‐owned because municipalities exert less control over the board of directors than private partners. All of which points toward the need for more studies investigating the complex relationships between different approaches to corporatization and public service innovation.…”