Modeling Dynamic Capabilities and
Corporate Entrepreneurship for innovation focused
growth economies
Ruta Aidis
Senior Fel...
Objectives
• Explore how entrepreneurship and dynamic
capabilities have been quantified
• Identify the essential component...
Outline
1. Introduction
2. Quantifying Entrepreneurship for crosscountry comparison
3. Quantifying Dynamic Capabilities fo...
I. Introduction
• no clear conceptual model for the
interrelationships among dynamic capabilities,
corporate entrepreneurs...
Our perspective
Dynamic capabilities (DC) = creating the conditions for
the implementation of innovative practices as well...
Our working model
Antecedent

Input

Output

Consequent

Back loop

Consequent

Corporate
entrepreneurship

Tech and
innov...
2) Quantifying entrepreneurship:
Suitable conditions

Institutions matter for entrepreneurship
development
(Baumol, North,...
Quantifying Entrepreneurship:
individuals
• Global Entrepreneurship Monitor (GEM)
– Total Entrepreneurship Activity (TEA)
...
Quantifying Entrepreneurship within
firms: Corporate entrepreneurship
Entrepreneurial Employee Activity (EEA) – GEM
• 54 c...
EEA in selected countries
Country

Entrepreneurial Employee
Activity (EEA)

Total Entrepreneurship
Activity (TEA)

Lithuan...
EEA explained
• Countries with high rates of EEA tend to
–
–
–
–
–

Highly educated employees
High level economic freedom
...
Conceptualizing DC:
Teece et al (1997, 2007)

Adapting, integrating and reconfiguring internal and
external organizational...
Conceptualizing DC
In terms of organizational learning (March 1991)
Exploring vs. Exploiting resources
Exploring: search, ...
Quantifying Dynamic Capabilities 1
• Deeds et al (1999) 94 biotech company IPOs – firm,
environment, quality of team
• Alv...
Quantifying Dynamic Capabilities 2
Alsos, Borch, Ljunggren and Madsen (2008)

Empirically test the validity of DC conceptu...
Entrepreneurship, Innovation and
Dynamic Capabilities Model
“Transforming”

“Seizing”

“Sensing”

Institutional
Environmen...
Measurement dimensions
Transforming : Institutional
Environment
• R&D expenditure
• Globalization
• Business Risk
• Regula...
Conclusions
• Dynamic Capabilities are measurable
• The overall institutional environment matters
and affects DC developme...
Further steps
• Identify firm sample
• Pilot dynamic capabilities measurements
• Model development/testing/refining

R. Ai...
Upcoming SlideShare
Loading in …5
×

Modeling Dynamic Capabilities and Corporate Entrepreneurship for Innovation Focused Growth Economies

1,345 views

Published on

With limited resources and the need for constant innovation, entrepreneurship is perceived as an important factor for assuring economic growth and development at the venture and national levels. In this conceptual paper, we focus our analysis to corporate entrepreneurship as it contributes to the innovative processes within a venture. Though corporate entrepreneurship is a quite well explored phenomenon, few efforts have been made to elaborate on the antecedents and cohesion between dynamic capabilities and corporate entrepreneurship especially for high growth economies. This paper aims to explore the role of the dynamic capabilities as the antecedent of corporate entrepreneurship and the nature of the cohesion between them. The authors model the cohesion between dynamic capabilities and corporate entrepreneurship and argue that it generates business innovations that in turn generate aggregate demand and growth of the economy.

Published in: Business, Technology

Modeling Dynamic Capabilities and Corporate Entrepreneurship for Innovation Focused Growth Economies

  1. 1. Modeling Dynamic Capabilities and Corporate Entrepreneurship for innovation focused growth economies Ruta Aidis Senior Fellow, George Mason University Senior Researcher, Kaunas University of Technology Asta Pundziene, Vice Rector of Research, KTU Solveiga Buoziute-Rafanaviciene, Assoc. Professor, KTU Monika Petraite, Dean, Social Science Faculty, KTU Sigita Neverauskaite, PhD Candidate Evelina Meiliene, Head, Development Project Center Center for Entrepreneurship and Public Policy (CEPP)
  2. 2. Objectives • Explore how entrepreneurship and dynamic capabilities have been quantified • Identify the essential components • Introduce a model and framework Goal: To create a quantitative measurement tool for dynamic capabilities and corporate entrepreneurship at the firm level R. Aidis - RENT XXVII - Vilnius - 2013 2
  3. 3. Outline 1. Introduction 2. Quantifying Entrepreneurship for crosscountry comparison 3. Quantifying Dynamic Capabilities for crosscountry comparison 4. Assessment, Essential Components, Framework and Model R. Aidis - RENT XXVII - Vilnius - 2013 3
  4. 4. I. Introduction • no clear conceptual model for the interrelationships among dynamic capabilities, corporate entrepreneurship, innovation and economic growth. • Some suggest that entrepreneurial activities are antecedents of dynamic capabilities (Lei-Yu 2007) • Others identify dynamic capabilities as a moderating variable for developing innovations (Zahra, Sapienza and Davidsson 2006) R. Aidis - RENT XXVII - Vilnius - 2013 4
  5. 5. Our perspective Dynamic capabilities (DC) = creating the conditions for the implementation of innovative practices as well as new knowledge and concept development through learning Entrepreneurship = impetus to apply new knowledge and concepts through experimentation and institutionalization of innovations • Within firms, dynamic capabilities are the foundations for corporate entrepreneurship • Which creates a double loop for organizational learning. R. Aidis - RENT XXVII - Vilnius - 2013 5
  6. 6. Our working model Antecedent Input Output Consequent Back loop Consequent Corporate entrepreneurship Tech and innovation based business Economic growth Analytical system; organizational settings for; Learning & knowledge management Opportunity search; recognition; exploitation. Innovation level: Innovations in model; product; services, investment in R&D etc. Growth in GDP, jobs, demand& supply Antecedent Dynamic capabilities Learning loop R. Aidis - RENT XXVII - Vilnius - 2013 6
  7. 7. 2) Quantifying entrepreneurship: Suitable conditions Institutions matter for entrepreneurship development (Baumol, North, and others) R. Aidis - RENT XXVII - Vilnius - 2013 7
  8. 8. Quantifying Entrepreneurship: individuals • Global Entrepreneurship Monitor (GEM) – Total Entrepreneurship Activity (TEA) – Entrepreneurial attitudes, activity and aspirations • Global Entrepreneurship and Development Index (GEDI) - Institutional and Individual Variables combined Penalty for Bottleneck methodology Brings in data from the World Bank’s Ease of Doing business Index World Economic Forum’s Global Competitiveness Index R. Aidis - RENT XXVII - Vilnius - 2013 8
  9. 9. Quantifying Entrepreneurship within firms: Corporate entrepreneurship Entrepreneurial Employee Activity (EEA) – GEM • 54 countries in 2011 • EEA characteristics – Similar to TEA: skills, opportunity, fof, know entrepreneur – Less exposed to financial risk – Access to additional resources • EEA not very widespread – 5% of employees • Most prevalent in innovation driven economies R. Aidis - RENT XXVII - Vilnius - 2013 9
  10. 10. EEA in selected countries Country Entrepreneurial Employee Activity (EEA) Total Entrepreneurship Activity (TEA) Lithuania 3.4 11.3 Poland 2.3 9.0 Slovakia 2.7 14.2 Latvia 2.2 11.9 Denmark 9.2 4.6 Sweden 13.5 5.8 Finland 8.0 6.3 US 5.3 12.3 Germany 3.5 5.6 R. Aidis - RENT XXVII - Vilnius - 2013 10
  11. 11. EEA explained • Countries with high rates of EEA tend to – – – – – Highly educated employees High level economic freedom High level of social security ‘perceived employer support’ National cultural that supports job autonomy • Supportive internal organizational culture • EEA is most prevalent in the private sector (2/3) but also takes place in the public sector (1/3) R. Aidis - RENT XXVII - Vilnius - 2013 11
  12. 12. Conceptualizing DC: Teece et al (1997, 2007) Adapting, integrating and reconfiguring internal and external organizational skills, resources and functional competences to match the requirements of the changing environment Three stages of building DC: • Sensing • Seizing • Transforming R. Aidis - RENT XXVII - Vilnius - 2013 12
  13. 13. Conceptualizing DC In terms of organizational learning (March 1991) Exploring vs. Exploiting resources Exploring: search, variation, risk-taking, experimentation, play, flexibility, discovery and innovation Exploitation: refinement, choice, productions, efficiency, selection, implementation and execution Are inter-related activities (Zollo & Winter 2002) R. Aidis - RENT XXVII - Vilnius - 2013 13
  14. 14. Quantifying Dynamic Capabilities 1 • Deeds et al (1999) 94 biotech company IPOs – firm, environment, quality of team • Alvarez and Merino (2003) Savings and Loans institutions in Spain – firm & environment • Lei-Yu Wei (2007) 200 Taiwanese high-tech firms managing resources, ability to respond, cooperative teams • MacInerney-May (2012) 265 business units from 179 large companies in Germany – knowledge & capability flexible/decentralized/formalization supports DC R. Aidis - RENT XXVII - Vilnius - 2013 14
  15. 15. Quantifying Dynamic Capabilities 2 Alsos, Borch, Ljunggren and Madsen (2008) Empirically test the validity of DC conceptualized as 4 types of activities: Internal Exploration/ Exploitation External Exploration/ Exploration 677 innovative firms in Norway Renamed categories: 1. External observation and evaluation 2. External resource acquisition 3. Internal resource reconfiguration 4. Internal resource renewal Dutch study (Leliveld & Smeitink, 2013)- 99 SMEs also found that age, education and international focus effects firm performance R. Aidis - RENT XXVII - Vilnius - 2013 15
  16. 16. Entrepreneurship, Innovation and Dynamic Capabilities Model “Transforming” “Seizing” “Sensing” Institutional Environment Managerial practices Individual-level responses Macro-level factors Firm-level factors Entrepreneurial action (EEA) External Incentives Internal Incentives •Opportunity Recognition •Regulatory Environment •Resources •Willingness to fail • Decentralization •R&D Environment •Strategic Alliances •Skill & Capabilities •Macro-Stability •Capabilities R. Aidis - RENT XXVII - Vilnius - 2013 •Developing & innovative activity 16
  17. 17. Measurement dimensions Transforming : Institutional Environment • R&D expenditure • Globalization • Business Risk • Regulatory environment • Social Security • National culture (Hofstede) • National values (World Values Survey) • Economic Freedom Seizing: Organizational Culture • Decentralization • Flexibility • Formalization • Exporting/Globalization • Internal/External Exploring/Exploitation Sensing: Entrepreneurial Employee characteristics • Opportunity Recognition • Skills • Willingness to Fail • Age • Education R. Aidis - RENT XXVII - Vilnius - 2013 17
  18. 18. Conclusions • Dynamic Capabilities are measurable • The overall institutional environment matters and affects DC development which in turn affects corporate entrepreneurship • Entrepreneurs and Entrepreneurial employees share many similar characteristics but may also be affected by different incentives R. Aidis - RENT XXVII - Vilnius - 2013 18
  19. 19. Further steps • Identify firm sample • Pilot dynamic capabilities measurements • Model development/testing/refining R. Aidis - RENT XXVII - Vilnius - 2013 19

×