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Organizational capital on corporate entrepreneurship: A Theoretical Framework

Author: LongXianDongˇˇWangWenFeng From: www.yourpaper.net Posted: 2009-10-14 18:50:10 Read:
[Abstract] organizational capital (OC) provides enterprises a potential source of sustainable competitive advantage. Corporate entrepreneurship (CE) is a process that is not currently able to control the resource constraints and pursue and take advantage of opportunities. This paper proposed a three-latitude of analyzing corporate organizational capital theoretical framework, namely, knowledge capital, the relationship between capital and structural capital, enterprise resource basis of concept, analysis of organizational capital company's entrepreneurial impact period is after the empirical study provides a theoretical support .
[Keywords] corporate entrepreneurship; organizational capital; resource dependence theory; intellectual capital; relationship capital; structural capital

In traditional strategic management, the development of the strategy's core mission is to gain and maintain a competitive advantage. With the development of the market, the basic factors of production means and ways of increasing homogenization of these elements can only bring the compensation cost of capital gains, and Chan et al (2001) and Hall (1993), studies have shown that, Overall, R & D only get a return of capital cost. Excess return of the competition in order to achieve the unique resources, companies need to look for other ways to nurture the core competitiveness. Value, scarcity, not completely replicable and irreplaceable standards, organizational capital to start as a core resource concern (Barney, 1991). On the other hand, organizational behavior scholars studies have shown that the size of the organization and behavior, the expansion of the size of the organization inevitably produce "big company disease", the company's core capabilities evolve into a black hole of rigid core. So large companies have started strategic transformation, strategic renewal, corporate entrepreneurship theory came into being. The company entrepreneurial innovation, strategic renewal and corporate risk activities (Corporate Venturing), through the operation of the business expansion into new or existing product markets and reach new business expansion (Lumpkin and Dess, 1996). Natural complementarity between the company's business opportunity-oriented and competitive advantage of strategic management oriented entrepreneurial companies with high financial results between positive correlation (Loof and Heshmati, 2002), especially in the fast-changing, highly competitive environment. The outstanding performance by the favor of the research areas of strategic management (Meye, Neck & Meeks, 2002). Hope to explore the regulatory role of the organization capital on corporate entrepreneurship and corporate entrepreneurship - business performance relationship based the organizational capital companies entrepreneurship theory.

Corporate entrepreneurship

Entrepreneurship Theory (Entrepreneurship) has always been concerned about the individual entrepreneurs and new enterprises (start-ups). Schumpeter (1934) in entrepreneurial theory analysis also emphasized entrepreneurial activity within organizations, academia or think company the venture initially began groundbreaking study by Peterson and Berger (1972), this study is trying to find the impact of corporate entrepreneurship organization of activities and environmental factors (Zahra, Jennings and Kuratko, 1999)). Miller began a systematic study of entrepreneurship theory paradigm used in large enterprise organizations, proposed a "venture is related to the product / market and technology innovation company activities" (Miller, 1983) the concept of corporate entrepreneurship was widespread concern by academia. In order to distinguish in 1985, Pinchot coined a relative term and Entrepreneurship Intrapreneurship (intrapreneurship) to open up a new area of ??research, and entrepreneurial activities in the internal market for large enterprise organizations with respect to the external market. Stevenson (1983), Schuler (1986) and other entrepreneurship is to study the construction company (established corporation) or new companies in the pursuit of opportunity to create or update the actual activities of the product / service. Then, there was a group of scholars or stressed on the importance of entrepreneurial activity in the company has been built to explore and develop a variety of corporate entrepreneurship model, or an empirical test of Miller (1983) proposed measurement company scale entrepreneurial activities and revision (Covin and Slevin , 1988,1989; Zahra, 1991).
In 1990, the United States, "Strategic Management Journal" published a special issue on "corporate entrepreneurship" (Corporate Entrepreneurship, CE), corporate entrepreneurship theory started to become a new growth point in the study of strategic management. Subsequent empirical research also proved an effective means of corporate entrepreneurship as a regeneration and improve financial performance (Zahra, 1991; Covin and Slevin, 1991), in which Zahra and Covin (1995), based on the last seven years three different samples of the study, to evaluate the long-term impact on corporate performance of corporate entrepreneurship. Found that corporate entrepreneurship has a positive impact on the financial indicators of the performance of the company. The impact tend to be moderate in the first few years, and then will be enhanced. This suggests that corporate entrepreneurship is indeed a universal and effective means to improve the company's long-term financial results.
Despite this entrepreneurial company has also not formed a common recognition of the concept. Guth and Ginsberg (1990) departure from the organization of the overall strategy, pointing out that corporate entrepreneurship around the following two types of phenomena and processes: the generation of new business (1) existing within the organization, such as internal innovation or risk-taking activities; (2) update for organizations to establish the core concepts, such as strategic renewal and organizational transformation. Stevenson (1990) from the perspective of entrepreneurship theory that entrepreneurship is personal (independent individual or individuals in the organization) is not able to control the resource constraints, and capture every opportunity. Entrepreneurial activity can be applied to both the business start-up period, also apply to those long established enterprise. Zahra (1995) Corporate Entrepreneurship to understand the company's innovative, update, and the sum of the risk activities. Sharma and Chrisman (1999) defined entrepreneurship for individuals with an existing organization or group of individuals to create a new organization or updated within the organization or innovation process, the type of company business: strategic renewal, innovation and company risk activities. Therefore, based on the above analysis, this paper adoption entrepreneurial innovation, the definition of the strategy update and the sum of the risk-taking activities.

Second, organizational capital

Generally believed that economists organizational capital can be traced back to Marshall. In his view, the organization reserves and accumulated reflect the knowledge of the production technology, the accumulation of knowledge is a kind of do not get the measure of capital (unmeasured capi-tal), this capital with those in the standard model of growth in the physical and human capital (Atkeson and Kehoe, 2005). Since then, there have been economists noted that condenses on the organizational structure and process these intangible assets (Ericson and Pakes, 1985).
First proposed the concept of "organizational capital" (Organization Capital) Prescott and Visscher (1980). They believe that information is an asset of the enterprise, because it affects the production possibility set, with products produced, this part of the assets of the enterprise is the organizational capital. (1) as organizational capital, including employees and match the tasks in the work team matching employees between the three parts of the enterprise-specific human capital, of which the third part of the information for enterprises through training is reflected in employee who's scarce resources. (2) the rapid development of the enterprise, internal adjustment is needed to adapt to the environment, development costs, and the acquired organizational capital cost is greater than the cost of the organization through internal accumulation of capital. It is the organization of the accumulation of capital requires the cost, will limit the pace of development of the enterprise, affect the production possibility set.
Tomer (1987) focus on the fusion process personal endowments and organizations, in order to avoid the employees in their own interests and the interests of the Organization inconsistent efforts caused by insufficient organizational efficiency loss. The process of integration of the employees and organizations have invested three basic factors of production technology, employees and organizations to form a combination of the three kinds of capital: first, purely human capital, strong liquidity; second, purely organizational capital, because of organizational accumulated internal constantly running, and organizational structure, organization related to the coordination between the members and technical adaptation for organization-specific; Third, the organization - human capital, is the interaction between the organization and its members. Therefore, Tomer, organizational capital is a reflection on the collection of information in organizational relations, organization members as well as organizations, to improve organizational function of human capital (cited Weng Junyi, 1999). As one of the sources able to provide enterprises with unique sustainable competitive advantage, organizational capital has been concern by the researchers, but the perspective of the analysis and the content contained different. The organizational capital Barney (1991) include formal reporting structure, formal and informal plan, control, and cooperation system and enterprise, between business and environmental groups between informal relationship. Chowdhry & Gramaise (2003) from the enterprise tacit knowledge (or internal language) enterprise output this perspective to understand and measure organizational capital. When to start a new project in the enterprises, the informal working practices, facilitate technical terms and a set of vocabulary from the past experience of cooperation memory formation of internal tacit knowledge, which is a common internal language. Diamantaras & Swanson (2004) focused on the openness of the organization to explain the differences in different areas of economic growth. Basic cultural organizations as economic growth in the capital, a learning skills. However, only the owners of this cultural skills added to the same cultural groups, such cultural skills is valuable. Here, the basic culture (basic culture) to uncover the monopoly rent (monopoly rents) (Parente & Prescott, 2000) led to the phenomenon of a concept. In an organization, when some employees get a high enough monopoly rent, these employees will choose not to adopt the new technology through legal channels, but tend to build barriers that hinder the application of new technologies that inspire people due to cultural differences tend prevention technology adoption.
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