Diagnosing a firms internacorporate entrepreneursh

Business Horizons (2014) 57, 3747

Available online at www.sciencedirect.com

ScienceDirectDonald F. Kuratko a,*, Jeffrey S. Hornsby b, Jeffrey G. Covin a

aKelley School of Business, Indiana University, 1309 E. Tenth Street, Bloomington, IN 47405-1701, U.S.A.bBloch School of Management, University of MissouriKansas City, Kansas City, MO 64110, U.S.A.

1. The innovation imperative

Today, continuous innovationin terms of products,processes, and administrative routines and struc-turesis needed to compete effectively in the glob-al markets of the 21st century. Executives agree thatinnovation is the most important pathway for com-panies to accelerate their pace of change in theglobal environment. Yet Apple questions how the

KEYWORDSCorporateentrepreneurship;Measurement;Internal environment;CorporateEntrepreneurshipAssessmentInstrument;Diagnostic tools

Abstract Apple, 3M, Procter & Gamble, and Google know the importance of aninternal environment supportive of innovative activity. But how is that environmentidentified or measured? As research on corporate entrepreneurial activity has evolved,numerous researchers have acknowledged the importance of internal organizationaldimensions to promoting and supporting an environment for innovation. This researchhas identified five specific dimensions that are important determinants of an environ-ment conducive to entrepreneurial behavior: (1) top management support, (2) workdiscretion/autonomy, (3) rewards/reinforcement, (4) time availability, and (5) organi-zational boundaries. If an organization is serious about developing an internal envi-ronment conducive to entrepreneurial activity, then it must seek to measure thespecific dimensions associated with an innovative environment. In this article weintroduce an instrument, the Corporate Entrepreneurship Assessment Instrument(CEAI), as a diagnostic tool used for assessing managers perceptions of the five majordimensions critical to creating an entrepreneurial/innovative environment. This in-strument provides an indication of a firms likelihood of being able to successfullyimplement an innovative strategy, and highlights areas of the internal work environ-ment that should be the focus of ongoing development efforts.# 2013 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rightsreserved.

* Corresponding authorE-mail addresses: dkuratko@indiana.edu (D.F. Kuratko),

hornsbyj@umkc.edu (J.S. Hornsby), covin@indiana.edu(J.G. Covin)

0007-6813/$ see front matter # 2013 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved.http://dx.doi.org/10.1016/j.bushor.2013.08.009l environment forip

www.elsevier.com/locate/bushor

death of Steve Jobs will impact its internal environ- and initiatives, regardless of the rules. As Steven

38 D.F. Kuratko et al.ment of innovation (Bedigian, 2011); 3M worksmightily to regain its former innovative heritage(Gunther, 2010); Procter & Gamble (P&G) developsa special division to cultivate innovations for tomor-row but still wonders how this translates to itsinternal environment (Brown & Anthony, 2011);and Google is contemplating various strategies forenhancing the innovative prowess of its workforce(Finkle, 2012). It is clear that some of todays mostrecognized innovative companies are working over-time to figure out the challenge of sustaining aninnovative environment amidst constant change.Apple, 3M, P&G, and Google are just four examplesof growing firms where the mantras are all toosimilar: sustain an internal environment of innova-tion in order to excel in the 21st century. These firmsand thousands of others realize there must be ele-ments within their organization that should be man-aged in order to enhance the innovative capacitiesof their managers. There are numerous writingsabout reward systems, management support, andmanagerial autonomy to encourage the innovativeenvironment. But how are organizational leaderssupposed to gauge these elements?

Corporate entrepreneurshipa significant formof corporate innovationis envisioned to be a pro-cess that can facilitate firms efforts to innovateconstantly and cope effectively with the competi-tive realities companies encounter when competingin world markets. Leading strategic thinkers aremoving beyond the traditional product and serviceinnovations to pioneering innovation in processes,value chains, business models, and all functions ofmanagement (Govindarajan & Trimble, 2005). Thus,corporate entrepreneurship and innovation are con-cepts that have captivated the interest of execu-tives in many corporate boardrooms (Morris,Kuratko, & Covin, 2011). All organizations are facingtimes requiring innovative vision, courage, calculat-ed risk-taking, and strong leadership. As Kuratko(2009) pointed out, organizations must realize theentrepreneurial imperative of the 21st century isnow at hand.

Firms that exhibit corporate entrepreneurshipare typically viewed as dynamic, flexible entitiesprepared to take advantage of new business oppor-tunities when they arise (Kuratko, Goldsby, &Hornsby, 2012). They explore new business domains,as well as new ways of conducting business withinexisting domains. Deviation from prior routines,strategies, business models, and operating environ-ments are typical modes of operation in theseinnovation-minded companies. In other words, cor-porate entrepreneurship flourishes in establishedfirms when individuals are free to pursue actionsBrandt of Stanford once said: Ideas come frompeople. Innovation is a capability of the many(Kuratko, 2014, p. 68).

Research has shown that there are uncontrollablefactors in the external environment which may berelated to entrepreneurial activity inside an organi-zation. For instance, hostile and technologicallysophisticated environments have been shown tobe conducive to developing and implementing acorporate entrepreneurial strategy (Bradley, Al-drich, Shepherd, & Wiklund, 2011; Chattopadhyay,Glick, & Huber, 2001). Hostile environments arecharacterized by such factors as high firm failurerates, intense competitive pressure, and price-based competition. Technologically sophisticatedenvironments are characterized by such factors assignificant R&D investments, frequent product and/or process technology changes, and a reliance onsuperior technical personnel as key bases of compet-itive advantage (Bettis & Hitt, 1995). Ireland, Covin,and Kuratko (2009) argue that an organizations top-level managers should exhibit a strategic intentiontoward entrepreneurial activity for their firms tosuccessfully compete in such environments. This in-tention finds managers seeking methods under theircontrol that could enhance the organizations inter-nal environment for entrepreneurial activity.

Recognizing the importance of an organizationscommitment to the perpetuation of innovation as astrategy, Ireland et al. (2009, p. 21) conceptualizeda corporate entrepreneurship strategy as a vision-directed, organization-wide reliance on entrepre-neurial behavior that purposefully and continuouslyrejuvenates the organization and shapes the scopeof its operations through the recognition and exploi-tation of entrepreneurial opportunity. It should berecognized that this type of strategy is hard tocreate and, perhaps, even harder to perpetuatein organizations because entrepreneurial activityis not inherently focused, cumulative, productive,or strategically relevant. Morris et al. (2011) warnmanagers that to be successful, entrepreneurialactivity must be carefully integrated into the orga-nizations overall strategies. In doing so, the inter-nal environment of an organizationwhich can beinfluenced by managersmust be conducive to theinitiation and sustainment of innovation-inducingstrategies.

2. An internal environment forcorporate entrepreneurship

One of a managers controllable areas of corporateentrepreneurship is creating a work environment

highly conducive to innovation and entrepreneurial with discretion over how to perform their work,

Diagnosing a firms internal environment for corporate entrepreneurship 39behaviors. Within such an environment, each em-ployee has the opportunity to step up to the plate.The willingness and ability to act upon ones innateentrepreneurial potential is based on a calculatedassessment. Conditions in the internal work envi-ronment dictate the perceived costs and benefitsassociated with taking personal risks, challengingcurrent practices, devoting time to unproven ap-proaches, persevering in the face of organizationalresistance, and enduring the ambiguity and stressentrepreneurial behavior can create. Therefore,credible innovation is more likely in companieswhere all individuals entrepreneurial potential issought and nurtured, and where organizationalknowledge is widely shared. The managerial chal-lenge becomes that of using workplace design ele-ments to develop an innovation-friendly internalenvironment.

As research on corporate entrepreneurial activityhas evolved, numerous researchers have acknowl-edged the importance of internal organizationaldimensions to promoting and supporting an environ-ment for innovation (Hornsby, Kuratko, Shepherd, &Bott, 2009; Kuratko, Ireland, & Hornsby, 2001;Kuratko, Montagno, & Hornsby, 1990). This researchidentified five specific dimensions that are impor-tant determinants of an environment conducive toentrepreneurial behavior: (1) top management sup-port, (2) work discretion/autonomy, (3) rewards/reinforcement, (4) time availability, and (5) organi-zational boundaries. These underlying organization-al dimensions are required for individuals toperceive an innovation-friendly environment. Letsbriefly examine each one from the perspective ofthe organizations employees:

1. Top management support: The extent to whichone perceives that top managers support, facil-itate, and promote entrepreneurial behavior,including the championing of innovative ideasand providing the resources people require totake entrepreneurial actions. Top managementsupport has been found to have a direct positiverelationship with an organizations innovativeoutcomes. Also, research shows each level ofmanagement plays key roles in facilitating cor-porate entrepreneurship.

2. Work discretion: The extent to which one per-ceives that the organization tolerates failure,provides decision-making latitude and freedomfrom excessive oversight, and delegates author-ity and responsibility to lower-level managersand workers. Research suggests entrepreneurialopportunities are often best recognized by thoseas well as by those encouraged to engage inexperimentation.

3. Rewards and reinforcement: The extent to whichone perceives the organization uses systems thatreward based on entrepreneurial activity andsuccess. Reward systems that encourage risktaking and innovation have been shown to havea strong effect on individuals tendencies tobehave in entrepreneurial manners. Numerousstudies have identified reward and resourceavailability as a principal determinant of en-trepreneurial behavior by middle- and first-levelmanagers.

4. Time availability: A perception that the work-load schedules ensure extra time for individualsand groups to pursue innovations, with jobsstructured in ways to support such efforts andachieve short- and long-term organizationalgoals. Research suggests time availability amongmanagers is an important resource for generatingentrepreneurial initiatives. For example, theavailability of unstructured or free time canenable would-be corporate innovators to consid-er opportunities for innovation that may be pre-cluded by their required work schedules.

5. Organizational boundaries: The extent to whichone perceives there are flexible organizationalboundaries that are useful in promoting en-trepreneurial activity because they enhancethe flow of information between the externalenvironment and the organization, as well asbetween departments/divisions within the orga-nization. However, innovative outcomes emergemost predictably when innovation is treated as astructured and purposeful (vs. chaotic) process.Consistent with this point, organization theoristshave long recognized that productive outcomesare most readily accomplished in organizationalsystems when uncertainty is kept at manageablelevels; this can be achieved through settingboundaries that induce, direct, and encouragecoordinated innovative behavior across the or-ganization. In short, organizational boundariescan ensure the productive use of innovation-enabling resources.

When trying to establish an internal environmentconducive to individual entrepreneurial activity,these suggested elements are controllable bymanagers (as opposed to uncontrollable forces inthe external environment or elements that aresimply outside the control of the manager). However,

without proper assessment of these elements, therecan be no understanding of how these elements areperceived in the organization. As such, managersare challenged to measure the existence of theseelements and the perception of them through theeyes of employees. Managers at all levels must becommitted to the establishment of innovative behav-iors if corporate innovation is ever going to be fos-tered in an organization (Kuratko, Ireland, Covin, &Hornsby, 2005). Thus, the ability to measure theexistence and employee perceptions of these internalelements becomes a priority.

3. Measuring the internalenvironment: The CEAI

If an organization is serious about developing itsinternal environment to promote entrepreneurialactivity, then it must seek to measure the specificdimensions associated with an innovative environ-ment. In order to understand the most effective

dimensions critical to creating an entrepreneurial/innovative environment (shown in Table 1). Morespecifically, the CEAI can be used to assess, evalu-ate, and manage the firms internal work environ-ment in ways that support entrepreneurial behavior,which becomes the foundation for successfully im-plementing a corporate innovation strategy.

The CEAI was developed around the five elementspreviously discussed as the underlying dimensionsneeded to support corporate entrepreneurialactivity. These dimensions are: (1) managementsupportthe willingness of top-level managers tofacilitate and promote entrepreneurial behavior, in-cluding the championing of innovative ideas andproviding the resources people require to behaveentrepreneurially; (2) work discretion/autonomytop-level managers commitment to tolerate failure,to provide decision-making latitude and freedomfrom excessive oversight, and to delegate authorityand responsibility to middle- and lower-level man-agers; (3) rewards/reinforcementdeveloping andusing systems that reinforce entrepreneurial behav-ior, highlight significant achievements, and encour-

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40 D.F. Kuratko et al.internal environment for corporate entrepreneurialactivity, an examination of antecedents to individ-ual entrepreneurial behaviors is critical. As dis-cussed earlier, much of our understanding of theimpact of organizational antecedents on individual-level entrepreneurial behavior is based on the em-pirical research of Kuratko and his colleagues(Hornsby, Kuratko, & Zahra, 2002; Kuratko et al.,1990). From that research an instrument was devel-oped, the Corporate Entrepreneurship AssessmentInstrument (CEAI), as a diagnostic tool used forassessing managers perceptions of the five major

Table 1. The corporate entrepreneurship assessmen

We are interested in learning about how you perceive yitems. Using the scale below please indicate how muchstrongly agree, write 5. If you strongly disagree wrquestions so please be as honest and thoughtful as posconfidential. Thank you for your cooperation!

StronglyDisagree

1Disagree

2Not Sure

3

Section 1: Management support for corporate entrepr

1. My organization is quick to use improved w 2. My organization is quick to use improved w 3. In my organization, developing ones own id 4. Upper management is aware and very rece 5. A promotion usually follows from the devel 6. Those employees who come up with innova

encouragement for their activities. 7. The doers on projects are allowed to make

approval procedures.age pursuit of challenging work; (4) time availabilityevaluating workloads to ensure individuals andgroups have the time needed to pursue innovationsand to structure their jobs in ways supportiveof efforts to achieve short- and long-term organiza-tional goals; and (5) organizational boundariesprecise explanations of outcomes expected fromorganizational work and development of mechanismsfor evaluating, selecting, and using innovations. TheCEAI instrument measures the degree to which indi-viduals within a firm perceive these five elements

strument (CEAI)#

workplace and organization. Please read the following agree or disagree with each of the statements. If you

1. There are no right or wrong answers to thesee in your responses. All responses will be kept strictly

Agree4

StronglyAgree5

urship

methods. methods that are developed by workers.

is encouraged for the improvement of the corporation.e to my ideas and suggestions.ent of new and innovative ideas.

ideas on their own often receive management

cisions without going through elaborate justification and

8. Senior managers encourage innovators to bend rules and rigid procedures in order to keep promising ideason track.

9. Many top managers have been known for their experience with the innovation process. 10. Money is often available to get new project ideas off the ground. 11. Individuals with successful innovative projects receive additional rewards and compensation beyond the

standard reward system for their ideas and efforts. 12. There are several options within the organization for individuals to get financial support for their

innovative projects and ideas. 13. People are often encouraged to take calculated risks with ideas around here. 14. Individual risk takers are often recognized for their willingness to champion new projects, whether

eventually successful or not. 15. The term risk taker is considered a positive attribute for people in my work area. 16. This organization supports many small and experimental projects, realizing that some will undoubtedly

fail. 17. An employee with a good idea is often given free time to develop that idea. 18. There is considerable desire among people in the organization for generating new ideas without regard

for crossing departmental or functional boundaries. 19. People are encouraged to talk to employees in other departments of this organization about ideas for

new projects.

Section 2: Work discretion

20. I feel that I am my own boss and do not have to double check all of my decisions with someone else. 21. Harsh criticism and punishment result from mistakes made on the job. 22. This organization provides the chance to be creative and try my own methods of doing the job. 23. This organization provides the freedom to use my own judgment. 24. This organization provides the chance to do something that makes use of my abilities. 25. I have the freedom to decide what I do on my job. 26. It is basically my own responsibility to decide how my job gets done. 27. I almost always get to decide what I do on my job. 28. I have much autonomy on my job and am left on my own to do my own work. 29. I seldom have to follow the same work methods or steps for doing my major tasks from day to day.

Section 3: Rewards/Reinforcement

30. My manager helps me get my work done by removing obstacles and roadblocks. 31. The rewards I receive are dependent upon my innovation on the job. 32. My supervisor will increase my job responsibilities if I am performing well in my job. 33. My supervisor will give me special recognition if my work performance is especially good. 34. My manager would tell his/her boss if my work was outstanding. 35. There is a lot of challenge in my job.

Section 4: Time availability

36. During the past three months, my workload kept me from spending time on developing new ideas. 37. I always seem to have plenty of time to get everything done. 38. I have just the right amount of time and workload to do everything well. 39. My job is structured so that I have very little time to think about wider organizational problems. 40. I feel that I am always working with time constraints on my job. 41. My co-workers and I always find time for long-term problem solving.

Section 5: Organizational boundaries

42. In the past three months, I have always followed standard operating procedures or practices to do mymajor tasks.

43. There are many written rules and procedures that exist for doing my major tasks. 44. On my job I have no doubt of what is expected of me. 45. There is little uncertainty in my job. 46. During the past year, my immediate supervisor discussed my work performance with me frequently. 47. My job description clearly specifies the standards of performance on which my job is evaluated. 48. I clearly know what level of work performance is expected from me in terms of amount, quality, and

timelines of output.

# Donald F. Kuratko & Jeffrey S. Hornsby, 2013(permission for use in part or in its entirety must be obtained from the authors)

Diagnosing a firms internal environment for corporate entrepreneurship 41

critical to an internal environment conducive forindividual entrepreneurial activity.

The CEAI instrument consists of 48 Likert-stylequestions. The instrument has been shown to bepsychometrically sound as a viable means for assess-ing areas requiring attention and improvement inorder to reach the goals sought when implementingan innovative strategy (Hornsby, Kuratko, Holt, &

Wales, 2013). In Table 2 we highlight the studies thathave demonstrated the validity of the CEAI and thecorrelations identified.

The instrument can be used to develop a profile ofa firm across the dimensions and internal elementsdiscussed earlier. Low scores in any one area of theCEAI suggest the need for development activitiesto enhance the firms readiness for entrepreneurial

Table 2. Validity assessment of the CEAI

Authors Findings

Hornsby, Kuratko, andMontagno (1999)

U.S. and Canadian managers perceive the workplace similarly in terms ofentrepreneurial climate as measured by the CEAI.

Levels of intrinsic satisfaction of Canadian managers are lower than in the U.S. Overall levels of entrepreneurial behaviors are similar between the U.S. andCanada but for Americans, entrepreneurial behavior is significantly related tothe existence of the CEAI factors.

Hornsby, Kuratko, andZahra (2002)

Exploratory and confirmatory factor analyses yielded the same five-factorsolution for the CEAI.

Management level differences were found for all the factors except the rewards/reinforcement factor.

Kuratko, Hornsby, andBishop (2005)

Job satisfaction serves as a mediator between CEAI factors and new ideas offeredand implemented (R-squared = .78).

Rutherford and Holt (2007) CE mediates the relationship between the CEAI antecedents and individualentrepreneurial outcomes.

Hornsby, Kuratko, Shepherd,and Bott (2009)

Management support, rewards/reinforcement, and autonomy/discretion weresignificantly correlated with number of ideas implemented.

Management level moderated the relationship between management supportand ideas implemented and autonomy/discretion and ideas implemented.Specifically, senior and middle managers were likely to implement moreentrepreneurial ideas than frontline managers.

Goodale, Kuratko, Hornsby,and Covin (2011)

R-squared of .10 between CEAI factors and innovation performance. R-squared of .30 when moderators of operations control and risk control areentered into the model.

van Wyk andAdonisi (2012)

Significant positive correlations between extrinsic job satisfaction and thecorporate entrepreneurship sub-scales of work discretion, rewards, andinnovative initiatives.

The market orientation sub-scales of intelligence generation and responsivenesseach correlated positively with the corporate entrepreneurship sub-scales ofmanagement support and risk acceptance, and rewards.

Responsiveness correlated positively with innovative initiatives and financialsupport. Intrinsic job satisfaction correlated positively with the sub-scales ofcorporate entrepreneurship work discretion and rewards.

Extrinsic job satisfaction correlated positively with the corporateentrepreneurship sub-scales of work discretion and rewards.

The flexibility sub-scale formality correlated positively with managementsupport and risk acceptance, and innovative initiatives.

The flexibility sub-scale authoritarianism correlated negatively with thecorporate entrepreneurship sub-scale of sufficient time.

enEO

fa r =t ttionvail

42 D.F. Kuratko et al.Hornsby, Kuratko, Holt,and Wales (2013)

Assessing the convergthe CEAI composite

When considering thestrongly correlated atother CEAI factors buincluded work discrep < .01), and time at validity of the CEAI composite and individual factors, relationship was .32.ctors of the CEAI, management support was the most

.45 ( p < .01). EO was less strongly correlated with thehese relationships were positive and significant. These

(r = .17, p < .01), rewards/reinforcement (r = .15,ability (r = .13, p < .01).

behavior in order to establish the successful imple- each participants scoring sheet should be collected.

Diagnosing a firms internal environment for corporate entrepreneurship 43mentation of a corporate entrepreneurship strategy.

4. Implementing the CEAI

The CEAI measures employee perceptions of theoverall organizational entrepreneurial environ-ment. While looking at any one individual employ-ees scores on the instruments factors may beinteresting, that is not the real intent of the instru-ment. In general, higher scores on the CEAI factorsare related to increased entrepreneurial activity, sothe goal should be to aggregate employee scoresacross work units, divisions, andultimatelytheentire organization to assess each levels readinessfor implementing a corporate entrepreneurshipstrategy and to take appropriate actions to remedyareas identified as problematic. The CEAI is in-tended for those employees in managerial, profes-sional, and technical positions. While it could beused for operational workers, most organizationshave not given those workers the mandate or theautonomy to act in an entrepreneurial manner.Specific recommendations for implementing theCEAI include the following.

4.1. Step #1: Distribution of the CEAIinstrument

Administer the CEAI instrument to all employees inthe organization. This is important so that the re-sults can be examined based upon the levels ofmanagement, departmental areas of responsibility,or differing reporting lines. In very large organiza-tions, one could randomly sample employees fromthese different areas and levels, but this may alien-ate some employees and thereby hinder buy-in toproject implementation.

4.2. Step #2: Individual scoring

In order to provide immediate feedback to theemployee regarding his or her perceptions of thefirms internal entrepreneurial environment, eachparticipant should be allowed to score the survey.Each form has its own scoring box via which employ-ees can transfer their answers and calculate anaverage score for each scale. Items 21, 36, 39,40, 42, 43, 44, 45, 47, and 48 are revised scored.See Appendix A for the actual scoring scales.

4.3. Step #3: Organizational scoring

In order for the firm to assess the internal environ-ments conduciveness to entrepreneurial activity,However, it is extremely important that all informa-tion be kept confidential since some of the itemsregarding the employees feelings concerning man-agement are sensitive. Calculate average scores foreach of the CEAI factors for the entire organizationand any other relevant functional or divisional units.The organizations overall score on each scale isfigured by averaging the relevant functional or divi-sional scores. An organizational profile can be creat-ed by graphing the averages across the corporateentrepreneurship elements. Additionally, identifica-tion of the scalesstandard deviations will reveal howconsistently those corporate entrepreneurship ele-ments are perceived to operate within the organiza-tion, with low standard deviations indicatingconsistent perceptions of the relevant attribute byorganizational members and high standard devia-tions indicating the opposite.

4.4. Step #4: Interpreting the scores

The highest score possible for any scale is 5 and thelowest is 1. In general, the higher the score, themore the organizations environment supports thesetypes of activities and the more ready an organiza-tion is to implement a corporate entrepreneurshipstrategy. Organizations should examine their profileand identify weak areas. Just as in any changeeffort, it is critical for the organization to assessits readiness for the change and make efforts toprepare the organization to successfully implementthe changein this case, corporate entrepreneur-ship.

4.5. Step #5: Point of responsibility

If a consultant is not being employed to administerthe CEAI, a department or an assigned group withineach department should be empowered to tally thescores and report back regarding the findings. Theyshould calculate average scores for each of theCEAI factors for the entire functional or divisionalunit. Once the scores are reported back to every-one in the unit then a special session can be held toanalyze the gaps between overall organizationscores and business unit or division scores. Honestdiscussions should revolve around the organiza-tional system to reveal possible moderating con-flicts or issues that may inhibit entrepreneurialperformance, even when there appears to be apositive entrepreneurial environment. This is thecritical value behind the use of the CEAI: attempt-ing to identify the perceived gaps by unit ordivision and then working to rectify those specificareas.

5. Final thoughts

Innovation is now widely recognized as the path tocompetitive advantage and success in organizationsof all types and sizes (Kuratko et al., 2012). Asustainable corporate entrepreneurship strategywill drive organizations toward innovation neededto operate in the challenging global economy(Kuratko, 2009).

Managers and employees across a firm aremost likely to engage in entrepreneurial behaviorwhen the organizational antecedents to that be-havior are well-designed and are widely known andaccepted. Individuals assess their entrepreneurialcapacities in reference to what they perceive to bethe set of organizational resources, opportunities,

for individual entrepreneurial activity, a well-planned corporate entrepreneurship strategy andoperational procedures are necessary to ensure itssuccess.

The CEAI can significantly benefit organizationsand is of value to managers and academic research-ers. For managers, the instrument provides an indi-cation of a firms likelihood of being able tosuccessfully implement an innovative strategy. Ithighlights areas of the internal work environmentthat should be the focus of ongoing design anddevelopment efforts. Further, the CEAI can be usedas an assessment tool for evaluating corporate train-ing and development needs with respect to entre-preneurship and innovation. Determining theseneeds sets the stage for improving managers skillsand increasing their sensitivity to the challenges of

44 D.F. Kuratko et al.and obstacles related to entrepreneurial activity.An organizations sustained effort in corporate en-trepreneurship is contingent upon individual mem-bers continuing to undertake innovative activitiesand upon positive perceptions of such activity bythe organizations executive management, whichwill in turn support the necessary organizationalantecedents to entrepreneurial activity.

The major thrust behind corporate entre-preneurship is a revitalization of innovation, crea-tivity, and leadership in todays organizations. Thedevelopment of corporate entrepreneurship holdspromise for future productivity and effectiveness oforganizations in every industry. The ability to iden-tify and measure an organizations internal envi-ronment for entrepreneurial activity is and willcontinue to be critical as an aspect of any corporateentrepreneurial strategy. Thus, the instrument weintroduced here, the CEAI, may be a valuable diag-nostic tool for managers to utilize in assessing theelements critical for an internal environment condu-cive to entrepreneurial activity. However, assessing afirms readiness for corporate entrepreneurship isonly the first step. Once the organization is preparedeliciting and then supporting entrepreneurial be-havior. For researchers, the instrument can be com-bined with other measures to explore a host ofquestions surrounding entrepreneurial behavior inestablished organizations. For instance, the CEAIprovides a basis for determining ways in whichcontrollable factors within the internal work envi-ronment influence employee actions, together withinsights regarding the relative importance of variouscontextual factors in different industry, market, andorganizational settings (Hornsby et al., 2009).

Overall, our intent was to introduce a viable andvaluable diagnostic instrument for measuring em-ployees perceptions regarding the critical elementsneeded for an internal environment conducive toentrepreneurial activity. The use of this instrumentand the information gained from its results canprovide a foundation for improving specific areasof the department or functional unit that can trans-late into greater entrepreneurial activity on thepart of employeesthe first and most importantstep in developing a company-wide strategy forentrepreneurial activity.

Appendix ASCORIN G SCA LES

Scale 1: Manag ement Su pport for EntrepreneurshipStatement

1 1 2 3 4 52 1 2 3 4 53 1 2 3 4 54 1 2 3 4 5

5 1 2 3 4 56 1 2 3 4 57 1 2 3 4 58 1 2 3 4 59 1 2 3 4 510 1 2 3 4 511 1 2 3 4 512 1 2 3 4 513 1 2 3 4 514 1 2 3 4 515 1 2 3 4 516 1 2 3 4 517 1 2 3 4 5 Total18 1 2 3 4 5 Score19 1 2 3 4 5 (Scale 1)Sub-Totals + + + + =

Scale Score = Total Score (19)

Scale 2: Work DiscretionStatement

20 1 2 3 4 5*21 5=1 4=2 3 2=4 1=522 1 2 3 4 523 1 2 3 4 524 1 2 3 4 525 1 2 3 4 526 1 2 3 4 527 1 2 3 4 5 Total28 1 2 3 4 5 Score29 1 2 3 4 5 (Scale 2)Sub-Totals + + + + =

Scale Score = Total Score divided by (10)

*Item 21 revised scores.

Diagnosing a firms internal environment for corporate entrepreneurship 45

Scale 4: Time AvailabilityStatement

*36 5=1 4=2 3 2=4 1=537 1 2 3 4 538 1 2 3 4 5*39 5=1 4=2 3 2=4 1=5 Total*40 5=1 4=2 3 2=4 1=5 Score41 1 2 3 4 5 (Scale 4)Sub-Totals + + + + =

Scale Score = Total Score divided by (6)

*Items 36, 39, 40 are revised scores.

Scale 5: Organizational BoundariesStatement

*42 5=1 4=2 3 2=4 1=5*43 5=1 4=2 3 2=4 1=5*44 5=1 4=2 3 2=4 1=5*45 5=1 4=2 3 2=4 1=546 1 2 3 4 5 Total*47 5=1 4=2 3 2=4 1=5 Score*48 5=1 4=2 3 2=4 1=5 (Scale 5)Sub-Totals + + + + =

Scale Score = Total Score divided by (7)

*Items 42, 43, 44 , 45, 47, and 48 are revised scores.

Scale 3: Rewards/ReinforcementStatement

30 1 2 3 4 531 1 2 3 4 532 1 2 3 4 533 1 2 3 4 5 Total34 1 2 3 4 5 Score35 1 2 3 4 5 (Scale 3)Sub-Totals + + + + =

Scale Score = Total Score divided by (6)

46 D.F. Kuratko et al.

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Diagnosing a firm's internal environment for corporate entrepreneurshipThe innovation imperativeAn internal environment for corporate entrepreneurshipMeasuring the internal environment: The CEAIImplementing the CEAIStep #1: Distribution of the CEAI instrumentStep #2: Individual scoringStep #3: Organizational scoringStep #4: Interpreting the scoresStep #5: Point of responsibility

Final thoughtsReferences