Measuring Corporate Entrepreneurial Performance: Value Creation as an Alternative Approach

Abstract

Appreciation is expressed to Jim Chrisman and BenjaminOviatt and session participants at the 1992 Academy of Management, Entrepreneurship track, for their helpful comments on earlier versions of this paper. ABSTRACT It has increasingly been recognized that approprkJte theory based measures are required in entrepreneurial research (25). However, to date, the study of corporate entrepreneurship (CE) has principally used accounting measures which may not provide an accurate picture of the firms performance. This study examines value creation as an alternative approach to measuring the performance of corporate entrepreneurship. SOMMAIRE It est de plus en plus accepte que les mesures fondees sur des theories appropriees sont necessaires pour toute analyse entrepreneuriale. Toutefois, l'etude de /'entrepreneurship dans l'entreprise a surtout ete realisee au moyen de mesures comptables, ce qui n'aboutit pas forcement a une image exacte du rendement de I' entreprise. Cette etude examine Ia creation de valeurs comme nouvelle approache pour /'evaluation des resultats de /'entrepreneurship dans l'entreprise.

Linking Corporate Entrepreneurship to Financial Theory through Additional Value Creation

“…The proposed measure of additional value creation (AVC) has the benefit of being based on the firm's outputs, i.e., cash flows resulting from the impact of CE's entrepreneurial actions (Bruton, Merikas, Prasad, & Vozikis, 1996). Since the long-term view of the benefits from CE are taken into consideration and the timing (and risk) of the benefits are also considered, the proposed measure of additional value creation does not exhibit the problems associated with the accounting measures.…”