Page 1 of 11
Journal for Studies in Management and Planning
Available at http://internationaljournalofresearch.org/index.php/JSMaP
e-ISSN: 2395-0463
Volume 01 Issue 11
December 2015
Available online: http://internationaljournalofresearch.org/ P a g e | 123
Organizational Culture as Potential Moderator on the Relationship
between Corporate Entrepreneurship and Business Performance: A
Proposed Framework
Waheed Ali Umrani1
, Rosli Mahmood2
1PhD Scholar University Utara Malaysia; Lecturer Sukkur Institute of Business Administration,
Sindh, Pakistan
waheed.ali@iba-suk.edu.pk
2College of Business, University Utara Malaysia,
rosli@uum.edu.my
Abstract
A number of factors have been suggested to
explain how business performance of an
organization can be improved. To date,
some of these factors that have been
considered include entrepreneurial
orientation, market orientation, total quality
management practices and others. Despite
these studies, however, few have considered
to attempt the influence of corporate
entrepreneurship on business performance.
Even if any, the results of those studies are
confusing. Therefore, a moderating variable
is suggested. Present study proposes
organizational culture as potential
moderating variable on the corporate
entrepreneurship and business performance
relationship.
Keywords: Business performance;
corporate entrepreneurship; organizational
culture; conceptual framework
1. INTRODUCTION
The past literature witnesses that business
performance has been center of interest as a
critical construct (Combs, Crook & Shook,
2005). In this connection, massive amount
of attention has been paid for determining
the factors and mechanisms that affect
business performance either positively or
negatively (Jing & Avery, 2008). On the
other hand, first, there have been
disagreements on having any universal
definition for the construct (Ford &
Schellenberg, 1982; Johannessen, Olaisen,
& Olsen, 1999). Second, there have also
been great debate in the literature regarding
measuring business performance,
traditionally it has been based on numbers
(Demirbag, Tatoglu, Tekinus, & Zaim, 2006
and Jusoh, Ibrahim, & Zainuddin, 2008).
However, it has also been potentially
measured non-financially (Lumpkin and
Dess, 1996). The proponents of financial
performance supported it due to its
objectivity in measurement. On the other
hand, the opponents of financial measures to
study business performance stated that it
lacks the strategic focus and it could mislead
in predicting future (Kaplan & Norton,
1996).
Literature also provides that non-financial
outcomes offer a variety of benefits to
organizations such as increasing employee
motivation, involving them into task(s),
keeping high potential employees of the firm
Page 2 of 11
Journal for Studies in Management and Planning
Available at http://internationaljournalofresearch.org/index.php/JSMaP
e-ISSN: 2395-0463
Volume 01 Issue 11
December 2015
Available online: http://internationaljournalofresearch.org/ P a g e | 124
who might have left due to lack of
opportunities, and creating organizational
culture that positively encourages
employees and organizational needs
integration (Peters & Waterman, 1982).
Similarly, McGrath, Venkatraman, and
MacMillan (1992) added 1) enhancing the
value of the firm, 2) creating worth for
customers, and 3) insulating the firm
from its competition on evaluating firm’s
performance on non-financial basis.
Present study bases business performance on
the definition provided by Antony and
Bhattacharyya (2010) who concluded
business performance as organizational
success measure with regard to creating and
delivering value to its internal and external
customers. The business performance is
organizational phenomena and is influenced
by external and internal organizational
factors (Barrett et al., (2012). Businesses
should pay equal attention to internal
organizational strategies in cultivating
creative culture as they pay attention to
external factors like economic, consumer
and competitors (Barrett et al., (2012). The
external factors at-large remain out of the
control of a firm and the relative effect of
internal factors over business performance is
greater than external factors (Covin &
Slevin, 1991). Hence, studying corporate
entrepreneurship for improved business
performance becomes critical. The corporate
entrepreneurship is a key concept that
contributes to creative climate of business
performance (Barrett & Weinstein, 1997;
Barrett et al., 2012). The businesses hope
that entrepreneurial pastures would help
them in creating and sustaining high level of
performance (Cornwall & Perlman, 1990).
Hence, it can be inferred that the influence
of corporate entrepreneurship over business
performance is huge. However, literature
reports mix findings of the relationship in
determining the potential influence of
corporate entrepreneurship over business
performance. Therefore, academic
researchers require to step ahead and
propose a possible resolution. Present study
is an attempt to resolve this conflict. This
paper will be significantly different than
studies published in the past because it
contributes to the knowledge gap on the
corporate entrepreneurship and business
performance relationship.
2. REVIEW OF LITERATURE
2.1. Business Performance
It is argued that business performance is a
multifaceted construct, which according to
Lumpkin and Dess (1996) should be based
on non-financial as well as financial
measures. Overall, there has been an
excessive discussion over measuring
performance either non-financially or
financially. In such a debate the supporters
of financial performance have emphasized
on its objectivity in measuring performance.
Although business performance at large has
been measured using account-based
measures, however, it is also difficult to
ignore the point of those who supported
non-financial measures according to which
the strategic focus is missing in financial
measures which could mislead in forecasting
the future performance (Kaplan & Norton,
1996).
Similarly, literature reports divergences in
defining business or organizational
performance. Antony and
Bhattacharyya (2010), stated that
organizational performance is a measure
which evaluates and assesses organizational
Page 3 of 11
Journal for Studies in Management and Planning
Available at http://internationaljournalofresearch.org/index.php/JSMaP
e-ISSN: 2395-0463
Volume 01 Issue 11
December 2015
Available online: http://internationaljournalofresearch.org/ P a g e | 125
success for creating and delivering value for
its internal and external customers.
2.2. Corporate Entrepreneurship and
Business Performance
It is assumed that entrepreneurship, that
affects performance, more likely will be
different from organization to organization
(Rumelt, Schendel & Teece, 1994; Slater &
Olson, 2001). Rather than driving
performance independently it is
continuously interacting with the other
organizational factors (Hult, Ketchen &
Nichols, 2002). However, looking into
market competitiveness it becomes critical
for the survival and prosperity of businesses
to behave entrepreneurially in an
independent fashion (Zhang, 2008; Zahra,
Jennings & Kuratko, 1999; Dess, Lumpkin
& McGee, 1999) and pay attention towards
internal organizational strategies Barrett et
al., (2012) this encourages to adopt
entrepreneurial behaviors inside businesses
(Hurley & Hult, 1998; Hult & Ferrell, 1997)
under which corporate entrepreneurship is a
key element (Barrett & Weinstein, 1997;
Barrett et al., 2012).
In an attempt to define corporate
entrepreneurship Rutherford and Holt,
(2007) explained it as a process to improve
the ability of an organization in order to
cultivate and utilize innovative skills.
Literature also explains that individual’s
attitude, management’s behavior and
organizational structure promote corporate
entrepreneurship (Heinonen & Tivonen,
2008). The corporate entrepreneurship is a
set of strategies that are exploited by the
businesses in order to promote their growth
and development (Burgelman, 1983; Sharma
& Chrisman, 1999). The corporate
entrepreneurship concept is embraced here
as firm behavior that reflects its orientation
towards entrepreneurship development for
improving business performance.
Although, Ireland et al., (2009) clearly
stated that business that act entrepreneurially
actually practice corporate entrepreneurship.
But the question of what makes the
corporate entrepreneurship the most
appropriate has also remain under great
debate. For identifying the vitality of the
internal environment of a business Kuratko
et al., (1990) reported factors that included
management support, organizational
structure and rewards. To further confirm
these factors and their influence on business
performance, the results of Kuratko et al.,
(1990) were replicated in other two
researches, one conducted by Hornsby,
Kuratko, and Montagno (1999) and the other
by Hornsby et al. (2002). These studies
confirmed that corporate entrepreneurship
emerges with five factors including
management support, work discretion,
rewards and reinforcement, time availability,
and organizational boundaries. The results
of the study of antecedents and outcomes of
corporate entrepreneurship (Wood et al.,
2008) also supported these findings.
Therefore, fostering corporate
entrepreneurial culture means promoting
these five basis of corporate
entrepreneurship without which it would be
quite hard to nurture entrepreneurial
orientation within an organization for
improving its performance.
Organizations can seek competitive
advantage confidently by acquiring
corporate entrepreneurship as it upholds the
overall performance of a business (Wood et
al., 2008; Covin & Slevin, 1991; Zahra,
1993). The term corporate entrepreneurship
has been used interchangeably with
