The Relationship Between Corporate Entrepreneurship and Firm Performance: Evidence From Malaysian Large Companies

Abstract

The present study is focused on the effects of corporate entrepreneurship (CE) on performance of large sized firms in Malaysia. These companies are currently facing more challenging environments compared to past, as their survival rates are declining and suffering from low level of profitability. The paper uses survey method and secondary sources by collecting data from 130 companies listed in the main market of Bursa Malaysia. In order to analyze the survey data, the study uses Partial Least Squares (PLS) approach to Structural Equation Modelling (SEM). This study has concluded that the entrepreneurial orientation (EO) is positively related to firm’s profitability but has no relationship with firm’s growth whereas corporate venturing (CV) is positively related to firm’s growth but has no relationship with firm’s profitability. The environmental dynamism moderates these relationships. The paper has significant implications for the top management decision making on the importance of CE on firm growth and profitability. Besides, in developing countries like Malaysia, most of the researches on entrepreneurship are based on small firms or individual entrepreneurships. Thus, it is timely to conduct research on CE among the large sized firms to further expand the literature.Keywords: Corporate Entrepreneurship; Corporate Venturing; Entrepreneurial Orientation; FirmPerformance; Large Firm;Partial Least Squares (PLS).

Corporate entrepreneurship of emerging market firms: current research and future directions

“…Mohamad et al (2011) found that CE affects firm performance positively in some Indonesian medium-sized manufacturing firms. Ambad and Wahab (2016) concluded that corporate venturing was related to firm growth but not firm profitability in Malaysian large companies. Hanci-Donmez and Karacay (2019) argued that CE mediates the link between high-performance human resource practices and firm performance.…”

Corporate entrepreneurship and business performance

“…For example, in their seminal works, Miller and Camp (1985), as well as Zahra (1986), have established that CE plays an important role in enhancing BP. Following these seminal works, researchers have reported that CE remains a prominent factor that potentially influences BP in a variety of studies (Ambad and Wahab, 2016;Barrett and Weinstein, 2015;Simsek and Heavey, 2011;Zahra and Covin, 1995;Zahra 1991; Barrett and Weinstein, 1998;Lee et al, 2001;Hult et al, 2003;Dimitratos et al, 2004;Wood et al, 2008;Zahra, 2010;George and Marino, 2011;Zahra, 2012;Heavey and Simsek, 2013;Frese et al, 2014). Relatedly, studies have also indicated the importance of organizational culture (OC) for influencing BP effectively (Ogbonna and Harris, 2000;Lee and Yu, 2004;Scholz, 1987;Denison, 1990;Sadri and Lees, 2001).…”

Assessing the Impact of Corporate Entrepreneurship in the Financial Performance of Subsidiaries of Colombian Business Groups: Under Environmental Dynamism Moderation

“…Furthermore, entrepreneurial firms are bold to introduce products and take part in high-risk projects with high-return possibilities, which commit extensive amounts of resources to undertake in uncertain environments (De Clercq, Dimov & Thongpapanl, 2013;Miller, 1983). Additionally, the literature shows a favorable relationship between EO and company performance (Ambad & Wahab, 2016;Anderson et al, 2015;Covin & Slevin, 1991;Karacaoglu, Bayrakdaroglu, & San, 2012;Kaya, 2006;Lee, Zhuang, Joo, & Jun, 2019;Mohamad, Ramayah, Puspowarsito, Natalisa, & Saerang, 2011;Wiklund, 1999).…”

“…Although some scholars have shown that in developed countries CV initiatives generate economic benefits for the company and improve its market performance (e.g. Antoncic & Hisrich, 2001;Garud, Jain & Kumaraswamy, 2002;Zahra, 1996), it has not yet been shown whether that is true in emerging economies, specifically in SCBG; moreover, prior studies have related CV to the firm's growth and profitability (Ambad & Wahab, 2016;Antoncic & Hisrich, 2001). However, many companies that use CV activities never achieve or support positive overall outcomes through their venturing efforts (Covin & Miles, 2007).…”

“…Prior literature has revealed a positive causal relationship between CE and FP in developed economies (Bierwerth, Schwens, Isidor & Kabst, 2015;Morris, Kuratko & Covin, 2011;Wiklund & Shepherd, 2003), and moderating effects of ED over the relationship between CE and FP (Ambad & Wahab, 2016;Lumpkin & Dess, 2001). Besides, many studies have approached the effects of CE on FP in developed economies (Narayanan, Yang & Zahra, 2009;Wiklund, 1999).…”