The corporate entrepreneurial climate within the South

African banking sector

by

Brett Andre van der Merwe

Submitted as part of the requirements for the degree

MPHIL: ENTREPRENEURSHIP

in the

Faculty of Economics and Management Sciences

University of Pretoria

November 2007

Study Leader: Dr. Alex J. Antonites

ACKNOWLEDGEMENTS
TO THE LORD GOES THE GLORY, HONOUR AND MY DEEPEST THANKS

I would like to thank the following people, without whom the successful completion of this
dissertation would not have been possible:

• Dr. Antonites for his guidance, encouragement and unwavering support during the
entire course of this study.

• Dr. Rene van Wyk for her help in editing both the literature and statistics. Her
assistance and motivation, made me realise my true potential and capabilities.

• Mrs. Rina Owen for turning a pile of questionnaires in valuable, meaningful

information.

• Mondi van Zyl for her quick and efficient language editing.

• My family Mom, Dad, El Rad, Kex and Kels, thank you for your love and constant
support. It has enabled me complete this dissertation and look to the future with
great excitement.

• Stewart Clegg for walking the road with me, for the many late nights and laughs.

• Renee Lombard for her constant encouragement and support, and always helping
me see the positive side to everything.

• Malcolm and Nelis for your non-stop support and invaluable advice.
I, Brett Andre van der Merwe, declare that this dissertation, The corporate entrepreneurial
climate within the South African banking sector, is my own original work. Where other sources
have been quoted or used I have given due acknowledgement by means of complete
references made according to departmental requirements.

Brett Andre van der Merwe Date

Student No: 21059293
 ABSTRACT

Due to the current competitive nature of the banking sector, South African banks are
continually striving to better competitive postures and competitive advantages (Mboweni,
2007:2). This can be achieved through continual innovation (Ireland, Ireland, Kuratko, &
Morris, 2006a:10). In order to increase levels of competition and innovation, a higher
degree of corporate entrepreneurship (CE) has to be achieved (Kellermanns &Eddleston,
2006:809). This can be done by creating a conducive CE climate which supports the
establishment and development of CE within the organisation (Taylor, 2006:15).

The main objective of this study is to investigate the corporate entrepreneurial climate
within the South African banking sector. This will be achieved using the Corporate
Entrepreneurship Assessment Instrument (CEAI), taking into consideration the five factors
of the CEAI: Management support, work discretion, time availability, rewards and
reinforcements and organisational boundaries. A non-parametric Kruskal-Wallis One-Way
Analysis of Variance was employed to investigate the differences in the biographic and
demographic variables as independent variables, and the five identified CE factors of as
dependent variables. Both the descriptive and inferential statistics will be reported and
findings discussed. The research conducted contributes to a better understanding of CE,
as well as the CE climate within the sector, and can be used as a basis for the successful
rehabilitation of CE in the banking sector.

KEYWORDS: Entrepreneurship, Corporate Entrepreneurship, Intrapreneur, Innovation,

Corporate Entrepreneurial Climate, CEAI (Corporate Entrepreneurship
Assessment Instrument).
 TABLE OF CONTENTS
CHAPTER 1: Introduction and Background

1.1 Introduction...……………………………………………………………….1
1.2 Problem formulation……………...……………………………………….4
1.3 Problem statement..……………………………………………………….6
1.4 Aim/Importance of this study….. ……………………………………….7
1.5 Research methodology…. ……………………………………………….7
1.6 Demarcation of chapters... ……………………………………………….8
1.7 Conclusion... ……………………………………………………………….9

CHAPTER 2: Literature Review

2.1 Defining Entrepreneurship …………………………………………….11

2.1.1 Defining the entrepreneur...........……………………………………...13
2.2 Corporate entrepreneurship…….……………………………………..14
2.2.1 Defining the intrapreneur……….………………………………………16
2.3 Corporate venturing…….............................................................…..18
2.3.1 Internal corporate venturing…...………………………………………20
2.3.2 External corporate venturing…..………………………………………20
2.4 Corporate entrepreneurial culture….... ………………………………21
2.5 Corporate entrepreneurial climate…………………………………....23
2.6 Organisational areas of influence……. ………………………………24
2.6.1 Management support...........……………………………………………25
2.6.1.1 Middle Management....... ………………………………………………26
2.6.1.2 Operational Employees..………………………………………………27
2.6.2 Organisational boundaries……………………………………………..27
2.6.3 Rewards and reinforcements…………………………………………..28
2.6.4 Time availability…………………………………………………………..29
2.6.5 Work Discretion…………………………………………………………..30
2.7 Innovation………………………………………………… .............…….30
2.8 Corporate entrepreneurship, innovation and competition……….33
2.8.1 Entrepreneurship and Corporate Entrepreneurship………………33
2.8.2 Corporate Entrepreneurship and Innovation……………………….33
2.8.3 Innovation and competitive advantage…………………………….34
2.8.4 Competitive advantage and competition…………………………..35
2.8.5 Corporate entrepreneurship, innovation and competition……..35
2.9 Developing a corporate entrepreneurial strategy………………..36
2.9.1 Developing a vision……………………………………………………38
2.9.2 Encouraging innovation………......................................................38
2.9.3 Forming venture teams………………………………… …………….39
2.9.4 Structuring for corporate entrepreneurial climate……………….39
2.10 South African banking sector………………………………………..40
2.10.1 Introduction and background………………………………………40
2.10.2 Current competitive climate in the South African
banking sector………………………………………………………...42
2.10.3 How South African banks can use innovation to compete…...43
2.10.4 Corporate entrepreneurship and innovation in the South
African banking sector……………………………………………....44
2.11 Conclusion……………………………………………………………….46

CHAPTER 3: Research Methodology

3.1 Introduction………………………………………………. ..................47

3.2 Aims and objectives of the study………………………….............47
3.2.1 Primary objective……………………………………………………...47
3.2.2 Secondary objectives…………………………………………….......47
3.2.3 Propositions……………………………………………………………48
3.3 Research Methodology………………………………………………48
3.3.1 The research design………………………………………………….48
3.3.2 Population and sample design……………………………………..49
3.3.3 Data Collection………………………………………………………...51
3.3.4 Measurement Instrument…………………………………………….52
3.3.5 Data Analysis…………………………………………………………..54
3.3.6 Limitations……………………………………………………………...54
CHAPTER 4: Results and Findings

4.1 Introduction…………………………………………………………….55
4.2 Construct discussion…………………………………………………55
4.2.1 Dependent variables…………………………………………………..55
4.2.2 Independent variables………………………………………….. ……55
4.3 Conclusion……………………………………………………………...74

CHAPTER 5: Conclusions, recommendations and limitations

5.1 Conclusions and Recommendations……………………...……....75

5.1.1 Management support……. …………………………………………...75
5.1.2 Work discretion…………………... .......……………….……………..76
5.1.3 Rewards and Reinforcements……………………………………….77
5.1.4 Time availability………………………………………………………..78
5.1.4 Organisational boundaries…………………………………………..78
5.1.5 Management Implications……………………………………………79
5.3 Limitations………………………………………………………………...80
5.4 Future Studies…………………………………………………………….80
5.5 Conclusion………………………………………………………………...81

REFERENCES…………………………………………………………………82

APPENDIX……………………………………………………………………...95
 LIST OF TABLES

Table 1: Components of an Entrepreneurial

Culture: Three Perspectives……………………………………….. 22
Table 2: Underlying variables which form part
and make up the CEAI………………………………………………..53
Table 3: Educational level of participants…………...............……………..56
Table 4: Position of participants………………………………………………57
Table 5: Number of years in the company…………………………………..58
Table 6: Number of years in the banking sector…………………………...59
Table 7: Management level (Authority and Responsibility)……………...60
Table 8: Gender of participants……………………………………………….61
Table 9: Age of participants…………………………………………………...62
Table 10: Mean, standard deviation, minimum and maximum
of the five CE factors……………………………………………….63
Table 11: Results of Kruskal-Wallis One Way Analysis of Variance withfactor one,
the management support sub-scale (CE1) as dependent variable (N =
63) .....................................................70
Table 12: Results of Kruskal-Wallis One Way Analysis of Variance with factor two,
the work discretion sub-scale (CE2) as dependent variable (N = 63)
…………………………………………………….71
Table 13: Results of Kruskal-Wallis One Way Analysis of Variance with factor three,
the rewards and reinforcement sub-scale (CE1) as dependent variable (N
= 63)…………………………………..72
Table 14: Results of Kruskal-Wallis One Way Analysis of Variance with factor four,
the time availability sub-scale (CE1) as dependent variable (N = 63)
…………………………………………………….73
Table 15: Results of Kruskal-Wallis One Way Analysis of Variance with factor five,
the organizational boundaries sub-scale (CE1) as dependent variable (N
= 63)………………………………………74
 LIST OF FIGURES
Figure 1: Categories of Corporate Entrepreneurship……..……………….16
Figure 2: An illustration of corporate entrepreneurship
and intrapreneurship…………………………………………………18
Figure 3: The 5 influential factors of corporate entrepreneurship……....24
Figure 4: The relationship between corporate entrepreneurship,
Innovation, competitive advantage and competition………….35
Figure 5: Flowchart of the key steps in developing a
Corporate entrepreneurial strategy.............................................37
Figure 6: Educational levels of participants…………………………………56
Figure 7: Position of participants……………………………………………...57
Figure 8: Number of years in the company………………………………….58
Figure 9: Number of years in the banking sector…………………………..59
Figure 10: Management level (Authority and Responsibility)……………60
Figure 11: Gender of participants……………………………………………..61
Figure 12: Age of participants………………………………………...……….62
Figure 13: Means of the five CEAI factors…………………………………...63
Figure 14: “The rewards I receive are dependent upon
my work on the job”…………………………………………………64
Figure 15: “My supervisor will increase my job responsibilities if
I am performing well in my job”……………………………………64
Figure 16: “My supervisor will give me special recognition
if my work performance is especially good”.................................65
Figure 17: “I always seem to have plenty of time to get things done”……….66
Figure 18: “I have just the right amount of time and workload to
do everything well”…………………………………………………...66
Figure 19: “I feel that I am always working with time constraints
on my job”…………………………………………………………….67
Figure 20: “There are many written rules and procedures that exist
for doing my major tasks”…………………………………………..68
Figure 21: “On my job I have no doubt of what is expected of me.”…………68
Figure 22: “My job description clearly specifies the standards
of performance on which my job is evaluated.”…………………..69
Figure 23: “I clearly know what level of work performance is
expected from me in term of amount, quality and
time line of output”......................................................................69
 CHAPTER 1

INTRODUCTION AND BACKGROUND TO STUDY

1.1 Introduction

Since the dawn of the global economy, competition posture has begun to influence
organisational performance and success. Similarly, as a result of globalisation there is
currently a global increase in levels of competition (Blanke, 2007:5). Sources and methods
of competing have to be identified and utilised, and one such source of competition is
innovation (Hoy, 2006:832). Innovation is deemed to be a powerful driver of organisational
growth and competition (Scheepers, Hough & Bloom, 2007:238). Many leading
organisations claim to be innovative and attribute their successes to innovation, or
innovative stances by them (McGregor, Arndt, Berner, Rowley, Hall, Edmondson, Hamm,
Ihlwan, & Reinhardt, 2006:1).

According to recent studies and research, innovation is directly related to, and is a
resultant product of, entrepreneurship and corporate entrepreneurship (CE) (Antoncic,
2006:59; Bhardwaj, Camillus & Hounshell, 2006:47; Kamffer, 2004:4; Kuratko, Ireland,
Covin & Hornsby, 2005:699). Organisations have realised that embracing CE, and creating
a CE enabling climate, fast-tracks the innovation process, resulting in increased levels of
innovation, competitive advantage and competitive stature (Åmo & Kolvereid, 2005:9;
Dess, Lumpkin & McFarlin, 2005:149)

South African banks are following international trends of successful organisations and
have started placing substantial emphasis on innovation, as well as the adoption and
development thereof (Planting, 2004:1). According to Planting (2004:1) innovation is
prevalent and a priority for South African banks. Due to the direct relationship between
innovation and CE, if some form of innovation is present, the assumption can be made that
some degree of CE is consequently also present (Bhardwaj & Momaya, 2007:131). The
assumption can therefore be made that some degree of CE is present within South African
banks and the banking sector.
In order to increase levels of competition and innovation, a higher degree of CE has to be
achieved (Kellermanns &Eddleston, 2006:809; Nayager & Van Vuuren, 2005:30). This can
be done by creating a conducive CE climate which supports the establishment and
development of CE within the organisation (Taylor, 2006:15).

The theory of corporate entrepreneurship is currently a very popular and constantly

evolving topic of research and study. It is the subject of an ever-growing field of research
amongst academic scholars and corporate organisations alike.

CE caters for the need for infusion of dynamic entrepreneurial behaviour into larger,
established organisations and structures, in order to revitalise and give them a fresher,
newer, more dynamic approach to conducting business (Morris, Kuratko & Covin, 2008:8).
CE has also been proven to have a significant influence and impact on organisational
growth and performance (Hitt, Ireland, Camp & Sexton, 2002:173; Kuratko, Ireland &
Hornsby, 2001: 69; Zahra, 1995:240).

Corporate entrepreneurship, however, still remains a very contemporary ever evolving

subject (Lassen, 2007:1). The concept of corporate entrepreneurship is comprised and
made up of many different forms. Three of the most predominant forms, which will be
discussed in this study, are organisational CE, intrapreneurship, and corporate venturing,
both internal and external corporate venturing (Bouwmeesters, 2006:1).

Corporate entrepreneurship is the term referring to a multidimensional phenomenon

incorporating the individual, a group of individuals, or the entire organisation as well as the
business culture and orientation of the organisation (Michalski, 2004:7). It is the process
through which individuals or a group of individuals within an established organisation
pursue entrepreneurial opportunities through innovation (Ireland, Kuratko & Morris.
2006a:10).

Organisational CE is therefore the label given to the form of entrepreneurship existing

within large organisations and can be defined as the entrepreneurial spirit permeating
throughout the entire organisation, resulting in entrepreneurial behaviour and orientation
within organisation (Chen, Zhaohui & Wang, 2005: 529).
Intrapreneurship, a subfield of corporate entrepreneurship, can be generally defined as
entrepreneurship in existing organisations, with the main focus upon the individual
entrepreneur within an existing organisation. (Antoncic & Hisrich, 2003 a:7). The individual
corporate entrepreneur, defined and more commonly known as the intrapreneur, has been
a successful catalyst in the initiation of innovation and creation of a beneficial, and often
more profitable organisational revival (Zhao, 2005:36).

Intrapreneurship involves the employees (individuals and teams) working within the
existing organisations who identify new ideas and opportunities, and transform these into
profitable, commercial successes (Maes 2003:24; Shepherd & Krueger, 2007:176). These
intrapreneurs share the same characteristics of their independent entrepreneur
counterparts, the only aspects which differ in comparison are the environment in which
they operate, and the associated risk (Thornberry, 2003:330). The environment is that of
an established organisation, enabling them greater accessibility to resources, yet less
autonomy while the organisation bears the associated risk.

Corporate venturing can best be described as a business development strategy that aims
to create new business for the parent or host organisation, and is often used as a means
to encourage corporate renewal and rejuvenation therein (Husted & Vintergard, 2004:297).
Corporate venturing characterises the promotion of internally or externally originated
ventures, the soul purpose of these ventures is to pursue both strategic and financial goals
from which the parent organisation is able to benefit (Little, 2002:4).

External corporate ventures are established outside of the parent organisation and
primarily focus on opportunities identified outside the host organisation, and the core
commercial focus of the organisation (Birkinshaw & Hill, 2003:247).

Internal corporate ventures on the other hand can be defined as businesses that are
created, grown and owned by the parent organisation (Morris, Kuratko & Covin, 2008:81).
This type of venture unit focuses on opportunities which have been identified within the
organisation, and are closely linked to the core commercial focus and objectives of the
organisation (Rajagopal, 2006:704).
For the intended purpose of this study corporate entrepreneurship will be used in the
context of describing the behaviour in large established organisations which engage in
both entrepreneurial and innovative activities, as well as the promotion of entrepreneurial
orientation, mindset, and culture.

Due to the highly competitive nature of modern business, organisations have to constantly
remain competitive in order to remain successful (Meyer, 2007:1; Shepherd & Krueger,
2007:167). According to Maes (2003:1), the higher the frequency of CE, the greater the
levels of innovation and resulting competitiveness. In order to increase the frequency of
CE, a supportive, fostering climate has to be established (Taylor, 2006:15).

Corporate entrepreneurial climate can be defined as a set of existing internal conditions;

administrative and social arrangements; and organisational stimuli that influence the
behaviour of individuals in the manner in which they act, over which management has
some control, and which results in the diffusion of CE throughout the organisation
(Gantsho, 2006:42; Hayton, 2005: 140; Rutherford & Holt, 2007:432).

The focus of this chapter is to briefly introduce and clarify the scope of the study. The
corporate entrepreneurial climate of the South African banking sector will be investigated
by means of testing the perceptions of employees within the South African banking sector.

1.2 Problem formulation

The inclusion of South Africa into an emerging, dynamic, free-market global economy has
resulted in resurgent economic growth and has increased the business potential within the
South Africa economy (Saville, Bader & Spindler, 2005:675). This has led to the
introduction and increase in the number of foreign businesses and operations in the
country (Petrou, 2007:377).

Both these factors have ultimately shaped the competitive landscape of the economy,
making it intensely competitive. Hence, local businesses have to now compete with each
other, as well as international players. The flipside to this coin, however, is the expansion
of South African businesses into the international arena (Saville, Bader, Spindler,
2005:689). This is apparent in the South African banking sector.
There are currently forty four international banks operating in South Africa (Reserve Bank,
2007b:1). Coupled with this is the introduction of new legislation (Basel II compliance
framework and the National Credit Act), as well as continual pressure in the regulation of
banking competition, which has transformed the South African banking sector into a very
competitive environment, forcing banks to commit to innovation as a source of competition
and competitive advantage (Planting, 2007:1)

In a rapidly changing world, organisations need to continually identify new opportunities

beyond existing competencies if they are to survive and remain competitive (Shepherd &
Krueger, 2007:167). The banks have to maintain, and also try to increase, their respective
market share through enhancing their competitive position (Martin, 2006:1).

The question has to be asked: What can be done to improve the level of competitiveness
of South African banks? The answer is simple - to develop forms of sustainable
competitive advantage over other competitors (Bonaglia, Goldstein & Mathews, 2007:369).
Competitive advantage is seen as a measure to increase the competitive stature of an
organisation (Nieman, Hough & Nieuwenhuizen, 2003:85).

Competitive advantage is a product of innovation, and is achieved through the continuous

adoption and implementation of innovation objectives and innovative measures (Bertola &
Texeira, 2003:185; Echecopar, Fetters & McDermott, 2003:2). Innovation is a strategic
process and source that enables organisations to establish a position of competitive
advantage (Poon & MacPherson. 2005:259). Innovation provides a basis for profit and is a
resultant product of entrepreneurship (Antoncic & Hisrich, 2003a:8; Shepherd & Krueger,
2007:167). In order for banks to increase their competitive postures they have to increase
their respective levels of CE (Scheepers, Hough & Bloom, 2007:239).

Maes (2003:1) roughly defined corporate entrepreneurship as a tool which can be used to
initiate innovation. Hence the presence of CE in existing organisations leads to a
competitive advantage through established innovation, as well as organisational growth
and improved financial performance (Hitt et al., 2002:173; Kuratko et al., 2001:69; Marvel,
Griffin, Hebda & Vojak, 2007:753). Organisations therefore have to increase the levels of
CE and CE activities in an attempt to maximise potential innovation and competitive
advantages.
Corporate entrepreneurship (CE), corporate entrepreneurial behaviour, and corporate
entrepreneurial activities are promoted and encouraged by the structuring of a CE climate
which fosters and develops such directives within organisations, and stimulates CE and
intrapreneurial behaviour and activities (Dhliwayo, 2007: 144; Ireland et al., 2006b:27;
Kuratko & Welsch, 2001:354). Banks are like any other organisation and are no exception
to this statement, thus they have to establish a CE climate if they are to foster increased
levels of CE and innovation.

There are climate-related organisational factors that represent and potentially encourage
corporate entrepreneurship (Cates, 2007:IV). They are namely: management support, time
availability, rewards and reinforcements, organisational boundaries and work discretion
(Morris & Kuratko, 2002:291; Wilkinson, 2006:104).

The purpose of this study is to investigate the current corporate entrepreneurial climate
within the South African banking sector. This will be achieved by establishing how
supportive and conducive the CE climate in the banking sector is when it comes to
inducing and promoting corporate entrepreneurship, by testing employees’ perceptions
within the South African banking sector.

Although current studies and literature have recognised numerous corporate

entrepreneurial variables and factors, only a few have been consistent throughout. For the
purpose of this study the above-identified climate-related constructs and factors will be
concentrated on, namely: managerial support, work discretion, rewards and
reinforcements, time availability, and organisational boundaries (Cates, 2007:IV; Morris &
Kuratko, 2002: 299).

1.3 Problem statement

Due to the current competitive nature of the banking sector, SA banks are continually
striving to innovate and maintain competitive postures and competitive advantages
(Hedley, 2007:2; Mboweni, 2007:2). In order to do so it is suggested to develop a fostering
CE climate. The main aim of this study is to investigate and explore the current corporate
entrepreneurial climate within the South African banking sector.
1.4 Aim/Importance of this study

This study is exploratory in nature and will investigate the climate of corporate
entrepreneurship within the South African banking sector. It will also identify variables
which have a direct influence upon the CE climate. Furthermore it will also allow us to
briefly evaluate how supportive the corporate environment is in the promotion of corporate
entrepreneurship within the South African banking sector, which may be used for
application in non-performing sectors.

A study such as this can be used to establish the degree of entrepreneurial orientation and
promotion thereof, and be used as a basis or foundation for a more in depth and thorough
research on the same subject at a later stage.

This study will focus on previously highlighted and identified variables which have an
influential effect a corporate entrepreneurial climate. Thus allowing for possible
suggestions to be made in terms of what steps and actions should be taken in improving
and creating a more favourable climate which will result in a higher degree of CE and
innovation in the South African banking sector.

1.5 Research methodology

The research design is comprised of a formal, ex post facto, design. The study is based on
the four major commercial role players of the South African banking sector, namely:
ABSA, FirstRand (FNB), Nedcor (Nedbank) and Standard Bank (Hazelhurst, 2004:1).
These four banks constitute the sample which will be used for this study.

The intention of this study was to test employees’ perceptions of the corporate
entrepreneurial climate in South African banking sector. For the purposes of this study, the
employees’ perceptions which will be tested will be those of middle managers and
operational level employees.

The time dimension was taken over the period of 60 days, thus making it a cross-sectional
study (Anderson, Sweeney & Williams, 2003:7). Further statistical analysis will be
conducted on all empirical data obtained, and will be used to draw inferences and
descriptive statistics. The relevant propositions will be tested quantitatively.
The highest measurement of reliability and high construct validity will be pursued, while the
only foreseeable limitations of the study design being used could be the lack of depth and
inside perspective. Potential sources of error that can occur can be singled to and
attributed to questionnaire error, incorrect answering of questionnaires, or possible data
capturing errors.

The measurement instrument used is known as the Corporate Entrepreneurship

Assessment Instrument (CEAI). CEAI is a specific structured questionnaire and has been
designed to evaluate the manner in which an individual of an organisation perceives
his/her current work environment and to tap the climate-related organisational factors that
represent and potentially encourage corporate entrepreneurship (Cates, 2007:IX; Morris &
Kuratko, 2002:295).

The CEAI has been designed to measure the five key corporate entrepreneurial variables:
management support, work discretion, time availability, rewards/reinforcement, and
organisational boundaries (Morris & Kuratko, 2002:295). All answered questions are
measured according to the Likert scale. Results will be analysed and scrutinised according
to these specific variables and scale

The demographic variables have been broken into age, gender, number of years at the
organisation, management level, position, highest qualification obtained, and how many
years experience the individual has within the banking sector. Non-probability sampling will
be used and the sample will consist of 63 respondents.

The data will take the form of empirical data, and the data will be analysed descriptively as
well as inferentially. Means, standard deviations, frequencies, and variances will be
determined for further comment and analysis of data. Such data and results will be used to
draw conclusions for the findings of the study.

1.6 Demarcation of chapters

Chapter one: The first chapter, as above mentioned, provides a background and
introduction to this study and the associated problem, as well as a condensed version of
the methodology which will be used for this study.
Chapter two: This chapter is primarily the literature review for this study. The literature
used is done so as to provide a clearer insight into the study, and a better
conceptualisation of the associated variables and constructs of the study, as well as to
substantiate and support the propositions of this study. A brief discussion of the South
African banking sector and its associated history and trends, will be given in this chapter.
All the related constructs which make up the theory of corporate entrepreneurship will be
discussed, defined, explained and explored, in order to provide a clearer understanding of
the study and the associated variables. All other related elements which are pertinent to
this study will also be explored and elucidated for the same reason.

Chapter three: The third chapter will contain all the associated research methodology
used in the study. An exact explanation will be given in terms of the aims and objectives of
the study, the research design, research sample, and the methods of data collection and
analysis. A detailed description of the questionnaire used will be given in this chapter.

Chapter four: The forth chapter will contain all the findings of the study, comprising of all
the relevant, interpreted data which will be commented on and explained.

Chapter five: The final chapter will contain an overall conclusion of the study. Areas of
interest, specifically areas of corporate entrepreneurship, within the South African banking
sector will be highlighted, explained, and recommendations given.

1.7 Conclusion

This chapter serves as a brief overview of the study. It has introduced corporate
entrepreneurship, its relevance as well as importance in any organisation, with a focus on
South African banks.

In this chapter CE and its relative construct have been introduced briefly and discussed,
highlighting the influential effect it has on organisations. More importantly the relationship
and link between CE and innovation has been established. The link will be used as a
basis, in context of the South African banking sector, to investigate the corporate
entrepreneurial climate within the sector.
In this chapter it is explained how the state of corporate entrepreneurial climate in the
South African banking sector will be investigated and evaluated by employees’ perceptions
of it. After all the data has been collected and evaluated results will be used to identify
influential areas of CE which can affect the CE climate. Areas of importance and value will
be discussed and recommendations will be given with the purpose of increasing levels of
CE by improving entrepreneurial climate within the South African banking sector.
 CHAPTER 2

LITERATURE REVEIW

The purpose of this chapter is to give an extensive review of the relative constructs and
factors associated with corporate entrepreneurship. This will be achieved using all
applicable literature to define, explain and elucidate the constructs and factors associated
with corporate entrepreneurship and the establishment of a corporate entrepreneurial
climate. The literature in this chapter will be used to create foundation for this study.

2.1 Defining Entrepreneurship

Entrepreneurship, entrepreneurial thinking and entrepreneurial actions are changing the

way business is conducted at every level and in every country (Kamffer, 2004:1).
Entrepreneurship is both an individual and organisational behavioural phenomenon which
is fast gaining recognition as an important element in economic growth, as well as an
effective means of attaining a sustainable competitive advantage; and positive financial
returns for both independent business ventures and organisations alike (Antoncic &
Hisrich, 2003a:8; Scheepers, Hough & Bloom, 238:2007; Urban, 2007:91).

The term entrepreneurship originates from the French word "entreprendre" and the closely
related German word "unternehmen”, both these words mean to "undertake" (Anderson,
2003:1). The entrepreneurial mindset denotes a way of thinking about business and its
opportunities that capture the benefit of uncertain dynamic environments (Dhliwayo,
2007:144), and revolves around the actions associated with the perceiving of opportunities
and “undertaking” the creation of means to pursue them (Nieman, Hough &
Nieuwenhuizen, 2003:9), whether it be in an individual capacity or in an organisational
context (Antoncic & Hisrich, 2003b:8).

Entrepreneurship involves a process of creating value by bringing together a unique

combination of resources to exploit an opportunity (Morris, Kuratko & Covin, 2008:10;
Schumpeter, 1934:74).
The process of entrepreneurship can be summed up as the undertaking of all the
functions, activities and actions associated with the identifying of opportunities; the
creation of methods and organisations which are harnessed to exploit and seize these
opportunities for commercial gain; through a process of innovation (Anderson, 2003:1;
Jones, 2005:502; Kuratko & Hodgetts, 1989:47).

From a Schumpeterian point of view entrepreneurship is the key catalyst which is needed
for innovation to occur and it is a critical component of the entrepreneurial process
(McFadzean, O’Loughlin & Shaw, 2005a:350; Wickham, 2001:9). According to Ireland,
Kuratko and Morris (2006a:10) entrepreneurial behaviour is the foundation for
organisational innovation in which competitive advantages are grounded.
Entrepreneurship is thus equated with the concept of innovation, stating that if innovation
was present it constituted entrepreneurship (University of Colorado, 2007:1). Innovation
lies at the heart of entrepreneurship (Wickham, 2001:57), and entrepreneurship is termed
as the act of innovation, inside or outside an existing business (Kamffer, 2004:11).
Innovation is the most relevant factor linking entrepreneurship to economic and
organisational growth (Wennekers & Thurik, 1999:34)

Entrepreneurship, in a nutshell, can be described as dynamic process of pursuing an

opportunity and creating incremental wealth and value (Echecopar, Fetters & McDermott,
2003:2). Exploiting an opportunity, whether through an independent personal capacity, or
through an organisational capacity, constitutes the core of entrepreneurship (Antoncic &
Hisrich, 2003a:8; Hitt, Ireland, Camp & Sexton, 2002:6).

Key elements of entrepreneurship include adaptability, flexibility, speed, aggressiveness,

risk taking, and innovativeness (Kuratko & Morris, 2002:15; Zhoa, 2005:26). Below is a list
of some additional dominant characteristics of entrepreneurship and entrepreneurs
synthesised and compiled by Kirby (2003:210):

• Innovative
• Proactive
• Able to cope with uncertainty, risk and ambiguity
• Goal-orientated
• Visionary
• Opportunistic
 • Tolerant of Failure
• Flexible
• Informal
• Committed to growth

In its broadest conception, entrepreneurship is a comprehensive term that captures all

actions related to the discovery, evaluation, and exploitation of opportunities, in the
process of value creation.

2.1.1 Defining the entrepreneur

The entrepreneurial process always involves teams and individuals (Morris, Kuratko &
Covin, 2008:167). The entrepreneur is an individual who carries out the effective
application of a number of enterprising attributes such as: creativity and innovation; new
combinations; taking proactive initiative; responsibility and autonomy; managing risk and
uncertainty; dogged determination and persistence; creating new novel innovations;
developing solutions to problems; and focusing on new, fresh and ground-breaking
activities (Business Network, 2007: 1; Gantsho, 2006:24; Johnson, 2001:137 ; Pirich,
Knuckey & Campbell, 2001:4; Schumpeter, 1934:74).

Entrepreneurs are the people who identify an opportunity, gather the required resources,
or effectively arrange new combinations of the resources they have, and create and grow
a business venture to meet these needs. They bear the associated risk of such an
undertaking, yet are rewarded with the profits if it succeeds (Nieman et al., 2003:9).

“Schumpeter positioned the entrepreneur as an agent of change, whose creative

behaviour in terms of different innovation aspects was seen as a creative disruption”
(Antoncic and Hisrich, 2003:8). Being innovative is therefore a prominent personality trait
of entrepreneurs, and it is safe to classify the entrepreneur as an innovator (McFadzean et
al., 2005a; Wickham, 2001:9).
2.2 Corporate entrepreneurship

Entrepreneurship does occur in large companies and organisations and manifests in the
form of corporate entrepreneurship. Much like the field of entrepreneurship itself, a
considerable degree of ambiguity surrounds the corporate entrepreneurship (CE)
construct. While it is beyond the scope of this paper to resolve these issues, it is important
to clarify, define and conceptualise the CE construct. It is also imperative to explore and
define other pertinent aspects which are closely related and fall under the umbrella of CE,
which include organisational corporate entrepreneurship, intrapreneurship and corporate
venturing (Antoncic, 2006:59; Morris, Kuratko & Covin, 2008:11).

Corporate entrepreneurship is the term referring to a multidimensional phenomenon

incorporating the presence of entrepreneurship and entrepreneurial behaviour within an
established organisation; encompassing innovative, proactive, or risk-seeking behaviours;
in both formal and informal structures; where the organisation is holistically described as
being entrepreneurial; and where the entrepreneurial spirit permeates throughout the
entire organisation (Birkinshaw, 2003: 3; Chen, Zhaohui & Wang, 2005:529; Doh & Pearce
II, 2004: 648; Gantsho, 2006:3; Kamffer, 2004:14; Morris et al., 2008:11; Scheepers,
Hough & Bloom, 240:2007). Expanding upon this definition CE can be defined as a
process through which individuals within an established organisation pursue
entrepreneurial opportunities, through innovation, without regard to the level of resources
currently available (Bhardwaj & Momaya, 2007:134; Ireland, Kuratko & Morris. 2006a:10).

The function of CE is to seek feasible opportunities, utilise the resource base to pursue
and exploit the opportunities, with the aim of creating additional value (Teng, 2007:123),
and CE is a result of entrepreneurial culture, behaviours and activities, or a combination of
all three within the organisation (McFadzean et al., 2005a:350). Generally speaking the
main objective of corporate entrepreneurship is to utilise and harness the successful
characteristics of smaller entrepreneurial businesses and organisations, and apply them to
larger, more established organisations (Maes, 2003:20).

This was supported by Thornberry (2003:330) who elaborated on this by stating that
corporate entrepreneurship is merely an attempt to take the mindset, skill and
entrepreneurial culture of an independent, individual entrepreneur and inculcate these
characteristics into the cultures and activities of a larger organisation, in order to achieve
the same resultant effect. For the purpose of study, the term corporate entrepreneurship
(CE) will be used to describe entrepreneurial behaviour within an already established
organisation.

Corporate entrepreneurship is not confined to a specific industry, sector or particular

organisational size, and is not dependent on the stage in the organisation’s life cycle
(Kamffer, 2004:15; Zhoa, 2005: 28). Hence, CE can happen in any organisation, at any
time and often acts as a reenergising factor for the organisation through the utilisation and
acquisition of innovative skills and capabilities (Åmo & Kolvereid, 2005:9; Morris et al.,
2008:11)

In order to remain competitive, organisations have to continually utilise these innovative

skills and capabilities to discover new methods through which they can create, increase
and maintain levels of competitive postures (Bhardwaj & Momaya, 2007:134; Maes;
2001:1). As a business tool CE stimulates business rejuvenation and revitalisation,
development, revenue growth, profitability, pioneers the development of new products,
services and processes through innovation (Nayager & Van Vuuren, 2005:29; Pirich,
Knuckey and Campbell, 2001:1; Scheepers et al., 2007:240).

CE acts as the spark and catalyst which is required to assist the organisation to become
more dynamic and more competitive, by changing their competitive profile through
innovation (Goosen, De Coning & Smit, 2002b:21; Kellermanns &Eddleston, 2006:809;
Nayager & Van Vuuren, 2005:30). There is a positive relationship between the CE and
financial performance, and all these factors lead to greater levels of profitability and
competitive standing for the organisation (Goosen et al., 2002b:26; Maes; 2003:1;
Michalski, 2004:4;).

In addition to this, CE acts as a mechanism to leverage the existing resources and

competencies within an organisation, to achieve new and increased levels of innovation,
resulting in optimal opportunity realisation and value creation (Michalski, 2004:8). CE, for
that reason yields above-average returns and is a means to creating a sustainable
competitive advantage, and superior organisational performance culminating in the
promotion of corporate competitiveness (Dess, Lumpkin & McFarlin, 2005:147; Gantsho,
2006:3).
CE can be broken down into three closely, interrelated categories, which form the basis for
corporate entrepreneurship within an organisation: individual (intrapreneurship);
organisation (organisational entrepreneurship); and environment (corporate
entrepreneurial climate) (Gantsho, 2006:30; Kuratko & Hodgetts, 1989:47; Michalski,
2004:7; Pirich et al., 2001:10).

Figure 1: Categories of Corporate Entrepreneurship

INDIVIDUAL
ORGANISATION

ENVIRONMENT

Source: Adapted from Adonisi, 2003:24

From the above characteristics it can be concluded that corporate entrepreneurship, for
the most part is an organisational process and that businesses with an entrepreneurial
orientation are innovative, proactive, and prepared to take risks. Corporate entrepreneurial
organisations are by definition more proactive than traditional organisations. Their quick
market response therefore gives them added competitive advantage (Bhardwaj &
Momaya, 2007:131).

2.2.1 Defining the intrapreneur

Corporate entrepreneurship is an area of growing research, to which intrapreneurship is a

closely related subfield. Intrapreneurship can be roughly defined as the science of the
individual entrepreneur within an existing organisation (Antoncic and Hisrich, 2003a:7).
Individuals and employees that exercise entrepreneurial orientation and insight are
referred as intrapreneurs (Åmo & Kolvereid, 2005:10; Michalski, 2004:7; Pirich et al.,,
2001:10).
Intrapreneurs are corporate entrepreneurs and can be defined as individuals who promote
entrepreneurial activities, innovation and organisational change by championing new and
fresh ideas and outlooks, while at the same time mobilising support for the acceptance and
willingness to adopt change within established organisations (Jones, 2005:491; Kamffer,
2004:15; Maes, 2003:24; McFadzean et al., 2005b:400). Intrapreneurs share the same
characteristics of their independent counterparts, with the only significant difference being
the environments in which they operate, and their risk associations (Thornberry,
2003:330).

Intrapreneurs are creative and resourceful individuals by nature who are comfortable with
ambiguity, uncertainty and risks, and don’t mind long lead times. They are also highly
motivated by problem-solving, thus, they can’t be appointed they have to be volunteers
(Morris & Kuratko, 2002:236).

From a Schumpeterian point of view the intrapreneur is seen as the heart of the
organisation and acts as a catalyst for innovation, developing new innovative ideas, and
innovations (Hellstrom, Jacob & Malmquist, 2002:175; Hitt et al., 2002:8).

The role of the intrapreneur is to systematically generate innovations in the shape of new
successful products, services, processes, new technologies, and new business, as well as
to maximise all levels of efficiency within an already established organisation (Goosen et
al., 2002a:26; McFadzean et al., 2005b:400; Michalski, 2004:7).

Corporate entrepreneurs use basic management procedures and skills, while embracing
behavioural attributes and style that challenges contemporary bureaucracy, by being
prepared to break organisational rules and challenge norms to implement change and
pursue potential opportunities (Barringer & Bluedron, 1999:429; Jones, 2005:491;
Wickham, 2001:389). Intrapreneurs are determined, take decisive action and decisions.
They are the corporate risk takers and due to their dedication and commitment they see
projects through until completion (Kamffer, 2004:72).
Figure 2: An illustration of corporate entrepreneurship and intrapreneurship

Answer to Corporate
a request Entrepreneurship
INNOVATION BEHAVIOUR AMONG EMPLOYEES

Intrapreneurship
Self-determined

Source: (Åmo & Kolvereid, 2005:10)

As seen in Figure 2.2.1 innovation and CE must initially be encouraged by a “top-down”

approach and entrepreneurial strategy implemented by top management. Whereas
intrapreneurship on the other hand, conversely, has the opposite origins where many of
the best ideas are self-determined and come from the “bottom-up”. Individual employees
exercise entrepreneurial and innovative behaviour (Åmo & Kolvereid, 2005:10; Dess et al.,
2005:149).

Intrapreneurship is the process of creating innovation and pursuing potentially feasible

opportunities within an organisational setting, through the adoption and replication of the
mindset and approach of independent entrepreneurs, by the individual employees of an
organisation. (Thornberry, 2003:331).

2.3 Corporate venturing

In modern organisations there is a management dilemma of how to foster and encourage

innovation and CE from within. Corporate venturing is a simple answer to this problem and
is regarded as a vehicle and a means for identifying new trends, technologies, markets,
and opportunities, as well as a means to fostering of entrepreneurial activity (Hellstrom,
Jacob & Malmquist, 2002:172; Little, 2002:34).

The traditional definition of corporate venturing (CV) pertains to the fostering of new young
ventures by larger, more established parent organisations (Little, 2002:3).
Corporate venturing is focused on new opportunities for growth (Teng, 2007:119),
therefore CV acts as a business development strategy. Strategic corporate venturing aims
to create new businesses for the parent organisation and is often used as a means to
encourage corporate renewal and rejuvenation therein as it stimulates and increase levels
of innovation (Husted & Vintergard, 2004:299). Corporate venturing can be used by an
organisation to increase its knowledge base, to strengthen its ability to innovate, and is a
powerful supplement to own research and development (Little, 2002:11).

Corporate venturing activities involve substantial risks, but also have the potential for
extraordinary returns (Hayton, 2005:137). Gompers (2002:2) made light of the fact that the
corporate ventures have, on average, been more profitable and successful than
independent ventures. He attributed this to the flexibility and adaptability, through
innovation, of corporate ventures and the pool of resources (both financial and human) at
their disposal.

Little (2002:6) is of the opinion that there are two main types of corporate ventures, and
both are differentiated by their reasons for existence. The author believed one is a
financially motivated corporate venturing, and this type of venturing has the sole objective
of rapidly increasing the financial gains and position of the parent organisation. The
second type is strategically motivated corporate venturing, and is primarily involved in the
increasing of value in the organisation. This can take the form of new skills and expertise,
or even a new direction of business operations and activities. (Birkinshaw & Hall,
2005:252; Little, 2002:6).

The highest form of sustained profitable growth comes from when an organisation
expands and pursues avenues of operations and business which differ from its core
business activities (Zook & Allen, 2003:2). Corporate venturing acts as a means to exploit
this because it involves the starting of new business ventures within an established
organisation, usually stemming from totally different core competencies and activities of
the host organisation (Thornberry, 2003:330).

Corporate venturing provides for an alternative medium to pursue other business

opportunities and facilitate continuous growth by harnessing high levels of innovation and
cutting-edge technologies, as well as intense levels of skills and entrepreneurial flair
(Rajagopal, 2006:704). CE and innovation are generated from both internal and external
sources (Morten, Neubaum & Gabrielsson. 2005:315), therefore CV is used as a means to
encourage corporate renewal and rejuvenation within an organisation, and takes the form
of both internal and external corporate venturing (Birkinshaw and Hill, 2005:247; Husted &
Vintergard, 2004:297; Little, 2002:3; Thornberry, 2003:330).

2.3.1 Internal corporate venturing

Morris et al., (2008:81) define internal corporate venturing as new business creation,
grown and owned by the parent organisation. The authors are of the opinion that internal
corporate ventures generally fall within the parent organisation’s organisational structure,
either as additions to pre-existing sections or as totally new entities.

Internal corporate venturing can thus be defined as the establishment of a separate entity
within itself in order to enter new markets or develop entirely new products or services
(Rajagopal, 2006:704; Zahra, Jennings & Kuratko, 1999:52).

2.3.2 External corporate venturing

This type of corporate venturing focuses on external opportunities, outside to the

organisation and refers to entrepreneurial activity in which businesses are created by
parties which do not form part of the host organisation; which are ventures separate from
the original organisation; and are subsequently invested in or acquired by the parent
organisation (Morris, Kuratko & Covin, 2008:81; Zahra et al., 1999:52). External ventures
often take on the form of independent start-ups (Birkinshaw & Hill, 2005:247).
Often it is more beneficial for the organisation to pursue a combination of both the internal
and external opportunities than to focus purely on one type of corporate venturing. This is
known as cooperative corporate venturing or joint corporate venturing, and it has recently
become very popular among larger organisations. It refers to the entrepreneurial activity in
which business are started and owned by both the organisation and external parties
(Birkinshaw & Hill, 2005:247; Morris et al., 2007:81).
2.4 Corporate entrepreneurial culture

Organisational culture is a very powerful governing dynamic of the organisation and can
be seen as “a social energy that drives or fails to drive a firm” (Ireland et al., 2006a:16).
Organisational culture is often referred to as “the way we do things around here” (Zhao,
2005:29), and can best be defined as a set of expected behavioural patterns, beliefs,
norms and value (Nieman et al., 2003:81; Logenecker, Moore & Petty, 2003:377). A CE
culture forms the foundation for corporate entrepreneurship and entrepreneurship within
an organisational context (Gantsho, 2006:65).

The implications of this framework suggest that culture and beliefs act as catalysts rather
than causal agents of entrepreneurial outcomes. Essentially this means that there has to
be an established culture to enable a conducive CE climate, which in turn fosters and
encourages increased levels of CE within a favourable environmental setting (Pirich et al.,
2001:11; Urban, 2007:91). The first step to establishing an entrepreneurial culture is
securing the commitment and support of management (Gantsho, 2006:58).

Once management is committed and is supportive of a CE culture within the organisation

employees are persuaded to both act and think entrepreneurially within the business
environment (Kirby, 2003:211). This is very influential in the promotion of corporate
entrepreneurship as it stimulates creativity, new opportunity identification, innovation and
encourages employees to take the initiative and to think “outside the box” (Ireland et al.
2006b:27; Gantsho, 2006: 65; Pirich et al., 2001:11; Zhao, 2005:29).
Morris et al., (2008:252) considered culture to be comprised of substance and forms.
Substance refers to the shared system of expected values, beliefs and norms, while forms
refer to the ways in which substance is manifested throughout the organisation.

Culture substance refers to the shared beliefs, values and doctrines within the
organisation. These doctrines are logically integrated sets of beliefs that create a shared,
combined meaning throughout the organisation (Adonisi, 2003:28). While culture form,
serves as a control mechanism that guides and shapes the attitudes and behaviours of
employees, and takes the form of the ‘social glue’ which binds the organisational members
into a cohesive entrepreneurial unit (Nayager & Van Vuuren, 2005:31)
Table 1: Components of an Entrepreneurial Culture: Three Perspectives

Timmons (1999)

Clarity, being well-organised

High standards, pressure for excellence
Commitment
Responsibility
Recognition Cornwall and Perlman (1990)
Espirit de corps
Risk
Earned respect
Ethics, integrity, trust and credibility
Peters (1997) People
Emotional commitment
Listening Work is fun
Embracing change Empowered leadership throughout firm
Customer focus Value wins
Total integrity Relentless attention to detail, people,
Excellence structure, and process
Involve everyone in everything Effectiveness and efficiency
Experimentation
Fast-paced innovation
Small starts and fast failures
Visible Management
Measurement/ Accountability

Source: Morris, Kuratko & Covin (2008:259)

Table 2.4 presents a synopsis of the work done by the respective writers on influential
elements which shape an organisational culture, which fosters innovation and CE.
According to Morris et al. (2008:259) these can be synthesized, resulting in the essential
elements required in the establishment of a conducive and successful entrepreneurial
culture:

• Focus on people and empowerment

• Value creation through innovation and change
• Attention to basics
• Hands-on, involved management
• Doing the right thing
• Freedom to grow and to fail
• Commitment to personal responsibility
• Focus on the future and a sense of urgency
When an organisation adopts an entrepreneurial culture, the employees increase their
ability to act entrepreneurially, and this is further complimented by the development of a
supportive corporate entrepreneurial climate (Ireland et al.2006a:16).

2.5 Corporate entrepreneurial climate

In order to stimulate CE in organisations the CE culture has to work in conjunction with the
correct complimentary organisational CE climate (Ireland et al. 2006b:27). The
environment, rather than the individual determine the employees' involvement in CE,
innovation, and change, meaning that the fostering of a CE climate in organisations
stimulates CE, because individuals are encouraged to engage in innovative and
entrepreneurial activities freely. (Åmo & Kolvereid, 2005:9; Dess et al., 2005:149; Ireland
et al. 2006b:27; Kuratko & Hodgetts, 1989:66).

Corporate entrepreneurial climate can be defined as a set of existing internal conditions;

administrative and social arrangements; organisational stimuli that influence the behaviour
of individuals in the manner in which they act, and over which management has some
control, and which results in the diffusion of CE throughout the organisation (Gantsho,
2006:42; Hayton, 2005: 140; Rutherford & Holt, 2007:432). A corporate entrepreneurial
climate is based upon the organisation’s openness to new ideas and willingness to take
risks, as well as the extent to which intrapreneurs are recognised, appreciated and
supported (Taylor, 2006:15). The consequence of this is a direct relationship: the higher
the employees’ perception of a supportive CE climate, the greater the levels of
intrapreneurship and corporate entrepreneurial activity (Kuratko & Welsch, 2001:354).

The identification of CE characteristics needs to be done so that organisations can focus

on these characteristics in order to develop an entrepreneurial climate (Adonisi, 2003:24).
Management has control over the organisational factors, which have a direct influence on
the CE climate. Climate is therefore top management’s commitment to establishing an
environment conducive to the creation and development of corporate entrepreneurship
(Dhliwayo, 2007: 144; Ireland et al. 2006b:27). Factors such as management support, time
availability, rewards and reinforcements, organisational boundaries, and work discretion
are all assumed to affect the corporate entrepreneurial climate of an organisation (Morris &
Kuratko, 2002:291; Wilkinson, 2006:104).
2.6 Organisational areas of influence

In order to foster successful innovation and corporate entrepreneurship, management has

to be flexible and support employees by giving them a certain degree of autonomy and
responsibility, provide adequate time and resources for innovation, as well as rewards for
successful innovation and intrapreneurial activities (Nayager & Van Vuuren, 2005:32).

There have been 5 main factors which have been identified and highlighted as factors
which dictate and influence the corporate entrepreneurial climate, and how supportive an
organisation is of CE (Hornsby et al., 2002:267; Ireland et al., 2006b:25; Kuratko & Morris,
2002: 295). They are namely:

• Management Support
• Organisational boundaries
• Rewards and reinforcement
• Time availability
• Work discretion and autonomy

Figure 3: The 5 influential factors of corporate entrepreneurship

COPORATE
ENTREPRENEURSHI
P

Org Rew
Man time WO
anis ards
age RK
atio and avai
men DIS
nal reinf
t labil CRE
bou orce
sup TIO
ndar men ity
port N
ies ts

Source: Own compilation

These 5 factors form the basis of the CEAI (Corporate entrepreneurial assessment
instrument) which is used to test how supportive an organisation is of CE, ultimately the
corporate entrepreneurial climate within an organisation (Kuratko and Morris, 2002: 295).

Intrapreneurs are very dynamic people and often leave the larger organisations to pursue
their own interests and ideas by themselves, rather than the achievement of corporate
objectives. This often happens because these entrepreneurially minded individuals
become frustrated by the exhaustive bureaucratic process and systems of the
organisation. Another contributing factor of the loss of these intrapreneurs is the lack of
sufficient or adequate compensation (Kirby, 2003:302).

2.6.1 Management support

Management support is defined as the willingness of top level management to facilitate

and promote both corporate entrepreneurial behaviour and activities within an
organisation; including the championing of innovative ideas and providing the resources
intrapreneurs require to take entrepreneurial actions (Bhardwaj et al., 2007:51; Ireland et
al. 2006b:27)

According to Thompson (2004:1082) the main reason behind the failure of CE is that
intrapreneurs do not receive the required support from management, and are unable to
develop their true entrepreneurial potential.

Successful corporate entrepreneurship is initiated from management and management

tends to adopt a mentorship role to create, support and encourage CE and entrepreneurial
behaviour within the organisation, as managerial values will also influence which strategic
objectives are pursued, in this case CE objectives (Åmo & Kolvereid, 2005:9; Hayton,
2005: 140; Kamffer, 2004:100).

Rutherford & Holt (2007:431), identified management support as one of the crucial
variables of successful CE implementation. Management support captures the
introduction, support, encouragement and willingness of managers to facilitate
entrepreneurial activity within an enterprise (Kamffer, 2004:4; et al., 2007:242)
Support can take many forms, including championing innovative ideas, providing
necessary resources or expertise, or institutionalising intrapreneurial behaviour and activity
within the organisation’s systems and processes (Hornsby et al., 2002:255). In order to
achieve this, management’s role is not only direct, but also influential, thereby shaping
managerial processes and resource deployments (Bhardwaj & Momaya, 2007:133).

Levels of CE are highest when controls are very informal, and where management
encourages uncertainty, promotes risk tolerance, encourages focused experimentation,
and empowers employees to act entrepreneurially (Morris, Allen, Schindehutte & Avila,
2006:476).

Within the CE context, positive perceptions about the organisation and its management’s
supportive nature will positively influence employees’ receptivity towards the organisational
efforts to introduce and implement CE, causing employees and intrapreneurs to act more
entrepreneurially (Rutherford & Holt, 2007:433).

While all managerial behaviour and influence is critical to attaining CE success, successful
corporate entrepreneurship hangs on the dependence of middle managers (Kuratko et al.,
2005:699). For the purposes of this middle management will be deemed to fall under
management support, and hence will be explored.

2.6.1.1 Middle Management

Management, especially middle management, have a key role in supporting and promoting
CE (Hornsby et al.,). They are responsible for the identification and exploitation of
opportunities, as well as providing unwavering support for CE throughout the entire
organisation (Kamffer, 2004:76).

Middle managers (middle management) have a very influential and supportive role when it
comes to fostering entrepreneurial behaviour, and they are able to influence all facets of
the organisation, as they are less vulnerable to organisational boundaries (Hornsby, et al.,
2002:260). The role of middle managers is to initiate and lead CE (Srivastava, Singla &
Chaturvedi, 2004:62), and to focus on effectively communicating information between the
firm’s two internal stakeholders: top managers and operational level employees. (Kuratko
et al., 2005:707).
2.6.1.2 Operational Employees

The most informative and often most innovative employees are the operational level (lower
management) employees (Fearon, Cavaleri & Prairie, 2006:66). This is because these
employees have a direct ‘hands on’ contact, hence they have direct experiences with
business operations. Fearon et al. (2006:66) were of the opinion that operational level
employees are the most intrapreneurial as they are in the best position to identify new
opportunities, as well as to make decisions, give feedback on what works best, and what
doesn’t work in practice to middle managers.

Middle managers communicate their own ideas and these ideas from operational levels
employees, entrepreneurial activities and innovation to upper management (Hornsby et
al., 2002:256). The fact that middle managers interact with all levels within the organisation
they are successfully able to convey communication about the company’s mission, goals,
and priorities throughout (McFadzean et al., 2005b:402)

2.6.2 Organisational boundaries

In order to have a successful corporate entrepreneurial climate in an organisation

employees must be encouraged to diversifying their skills by operating outside of their
specified job descriptions (Ireland et al. 2006b:28). This can be done by talking and
interacting with people in other departments and by pursuing areas of interest, and can
only be supported by fewer and more flexible organisational boundaries (Bhardwaj &
Momaya, 2007:136).

Organisational boundaries can be referred to as the precise confines and structures

implemented by respective organisations. These boundaries form expected measures of
organisational work and become mechanisms used for evaluating and bench marking
(Ireland et al. 2006b:28). Boundaries can be real or imaginable and could either prevent or
encourage employees to act entrepreneurially or not (Adonisi, 2003:31). Researchers
have identified fewer and flexible organisational boundaries as critical for the success of
corporate entrepreneurship (Bhardwaj & Momaya, 2007:136).
Organisational boundaries are enforced through organisational structure, thus the
structure needs to have fewer boundaries to be supportive of innovation and
entrepreneurship (Gantsho, 2006: 59).

Formal centralised structures have many boundaries and layers, they tend to also be very
bureaucratic and restrictive in nature (Adonisi, 2003:32; Goosen, De Coning & Smit,
2002b:22). Hierarchical and elongated structures tend to create an old “one-way top-down”
approach with many different boundaries that smother CE development, leading to
opportunity loss identified in lower organisational levels (Srivastava et al., 2004:62).

An organisational structure which best facilitates and promotes CE is one consisting of

fewer barriers and boundaries, which is flatter; with fewer layers; decentralised; more
horizontal over vertical in structural design; and a network-orientated structure which
encourages entrepreneurial activities by allowing for free-flowing movement of knowledge,
information and skills (Adonisi, 2003:32; Bertola & Texeira. 2003:189; Bhardwaj et al.,
2007:50; Dhliwayo, 2007: 112; Hellstrom et al., 2002:173; Ireland et al., 2006a:14;
Scheepers et al., 2007:242; Viswanathan & Nagarajan. 2004:20).

2.6.3 Rewards and reinforcements

Our review of the literature revealed that reward structures in particular are critical for
aligning individual goals with organisational goals (Rutherford & Holt, 2007:432).
Intrapreneurs are goal-oriented and seek rewards, feedback, and recognition. An
appropriate reward system keeps these individuals motivated and committed, constantly
striving for new ideas and opportunities (Adonisi, 2003:35; Viswanathan & Nagarajan.
2004:21)

The rewards and reinforcement philosophy influences the degree of continued

commitment that management can expect from individuals (Nicholson-Herbert, Mkhize &
Schroder, 2004:44), and develops individuals’ motivation to engage in innovative,
intrapreneurial behaviour. Innovative organisations are characterised by the awarding of
bonuses and rewards subject to performance, offering challenges, increasing
responsibilities, and making the ideas of innovative people known to others in the
organisational hierarchy (Scheepers et al., 242:2007).
Use of appropriate rewards can enhance employees’ willingness to assume the risks
associated with entrepreneurial activity (Ireland et al., 2006b:28). An effective reward
system that spurs entrepreneurial activity must consider goals, feedback, emphasis on
individual responsibility, and results based incentives (Bhardwaj & Momaya, 2007:136).

Rewards are very influential in motivating employees, and rewards can take on both
financial and intangible forms (Kirby, 2003:304). Financial rewards in the forms of
bonuses, incentives or resources needed for new ideas/ innovations (Ireland et
al.2006b:28). Intangible rewards in the form of greater responsibility and autonomy, status
through promotion, recognition, career enhancement, and social rewards (Morris et al.,
2008:175).

2.6.4 Time availability

Time availability involves the relationship of employees/team’s workloads and time needed
for the pursuit of new innovations. It is defined as evaluating workloads to ensure that
individuals have the time needed to complete workloads detailed in their job description,
as well as having enough additional time to pursue innovations and opportunities (Ireland
et al., 2006b:28). Employees’ jobs are structured in ways that support efforts to achieve
short-term and long-term organisational goals (Bhardwaj & Momaya, 2007:131; Ireland et
al., 2006b:28). Time availability becomes of greater importance when innovation is the
focus. More time is needed in the successful development of innovations and CE
(Gantsho, 2006: 59).

Organisations need to devote “work time” to intrapreneurs to create and develop new
innovative ideas. 3M is a testimony to this approach as they deliberately foster innovation
and CE through people by devoting 15% of their overall “work time” to the development of
employees’ new ideas, thereby cultivating organisational entrepreneurship (Thompson,
2004:1084).

Researchers have emphasised the criticality of availability of time for CE, stating that in
successful entrepreneurial work environments, employees are permitted to conduct
creative, entrepreneurial experiments in a limited portion of their working time (Scheepers
et al., 242:2007).
2.6.5 Work Discretion

Work discretion refers to the degree of autonomy given for entrepreneurial efforts
(Bhardwaj et al., 2007:51). Autonomy refers to employees’ discretion and the extent to
which they are empowered to make decisions on the performance of their own work in the
way they believe is most effective (Scheepers et al., 2007:242).

The facilitation of entrepreneurship appears more consistently with role flexibility and
autonomy, which can be achieved if employees are given greater responsibility and self-
governance, thereby being empowered and able to use their own discretion whilst
conducting business operations (Gantsho, 2006: 58).
In the organisational environment, work discretion induces and contributes to a corporate
entrepreneurial culture and climate by allowing the employees and intrapreneurs of an
organisation the freedom to “break the rules”; work outside of their job description; make
their own decisions and use their own judgement regarding their direct areas of activity
and operations (Ireland et al., 2006b:27).

People should be encouraged to diversify and develop their skills, ultimately broadening
their job description. This can be done by talking and interacting with people in other
departments and by pursuing areas of personal interest (Hellstrom et al., 2002:173; Ireland
et al., 2006a:14; Ireland et al., 2006b:28). It should be the employees own responsibility to
decide how the job should be done and this is achieved through work discretion (Ireland et
al., 2006b:27).

2.7 Innovation

The modern day organisations are faced with slow growth, commoditisation and global
competition, innovation is an extremely, influential economic multiplier an effective solution
to this ever-growing dilemma (Hitt, et al., 2002:6; Montalvo. 2006:312; Sawhney, Wolcott &
Arroniz. 2006:75). To be successful, a firm must have the capacity to innovate faster than
its best competitors. Essentially, this capacity is about identifying opportunities, new ways
of doing business, as well as developing new technologies and products, (Bhardwaj &
Momaya, 2007:131; Teng, 2007:119).
Traditionally, innovation has been defined as the successful development and
implementation of creative ideas, which initiate the creation of new, or improved products,
services and technologies, resulting in some form of value creation (Hayton, 2005:33;
Ireland, Kuratko & Morris. 2006a:10; McFadzean, et al., 2005a:353; Pirich et al., 2001:15;
Scheepers et al., 2007:240). From an entrepreneurial perspective innovation can best be
defined as the application of creativity to create, identify and exploit opportunities (Kirby,
2003:132).

This organisational creativity and experimentation leads to efforts to improve or develop

new resources, discover new opportunities, or novel solutions. The net result of this
approach is the improvement or development of new products, new services, or improved
technological processes (Dess et al., 2005:150; Lassen, Gertsen & Riis, 2006:361; Teng,
2007:122). Innovation is currently recognised as a key means of initiating change and from
a broad, organisational perspective, innovation can consequently be referred to as the
creation of substantial value by creatively initiating some form of change in the dimensions
of the organisational business systems (Montalvo, 2006:312; Pirich et al., 2001:11;
Sawhney et al., 2006:79).

This change often comes in the form of applied research in one or more dimensions in the
organisational business systems, allowing for the successful transfer of new opportunities
and knowledge into new commercially feasible products and processes (Gantsho,
2006:25). It focuses on developing new resources and capabilities that offer growth
potential, and tends to be the most important and influential driver of organisational
performance and growth (Antoncic, 2006:59; Teng, 2007:122; Zhoa, 2005:28).

It should also be noted that, as with all business operations, such changes and the
innovation process is also susceptible to failure, hence involves some degree of risk, but
has the potential for extraordinary returns (Hayton, 2005: 137; Kamffer, 2004:83).

Another key feature of innovation is its knowledge orientation, as it deals with generating
know-how for doing things differently, this results in greater effectiveness and efficiencies
for the organisation (Ireland et al., 2006a:10; Teng, 2007:131).
The main goal or purpose of innovation within in an organisation is for the entire
organisation and its employees to work proactively in locating or identifying new ideas and
opportunities which, once exploited, will render an increase and added value to the
organisation. An organisation’s innovativeness is positively correlated to its ability to
identify applications, products and opportunities, and to also commercialise them for
profitable success (Poon & MacPherson, 2005:270).

Innovations can be distinguished in three forms: (1) Product/service innovation- the

development of new and improved products and services, (2) Process innovation- the
harnessing and implementation of new technologies in business activities, and (3)
Organisational innovation- the establishment of new organisational structures and
administrative systems (Morten et al., 2005:316).

Product/ service innovation: This is the organisation’s pursuit to create new products and
services by means of radical innovation, or the improvement of existing products and
services by means of incremental innovation (Canibano, Garcia-Ayuso & Sanchez,
2000:331). This is often the area of the most concentrated focus and need for innovation
(Morten et al., 2005:316).

Process innovation: represents the organisation’s effort in introducing (radical innovation)

or improving (incremental innovation) the methods, processes, and procedures in which
business operations and activities occur. Often the main objective with process innovation
is increasing the overall organisational innovation and efficiency (Morten et al., 2005:316;
Pirich et al., 2001:15).

Organisational innovation: reflects on an organisation’s attempt to encourage and promote

innovation through various organisational structures and systems (Poon & MacPherson.
2005:270). The organisation’s structure, decision making procedures, and reward
systems, as well as training programs can be changed to make the innovation process
easier, by the introduction of effective administrative systems to foster innovative and
entrepreneurial behaviour (Morten et al., 2005:316).
2.8 Corporate entrepreneurship, innovation and competition

2.8.1 Entrepreneurship and Corporate Entrepreneurship

The greatest most significant factors differentiating entrepreneurship and corporate

entrepreneurship are the respective environments in which they work and the associated
risk they deal with (Thornberry, 2003:330). CE is the process of creating innovation and
pursuing potentially feasible opportunities within an organisational setting, through the
adoption and replication of the mindset and approach of independent entrepreneurs,
through the individual employees of an organisation (Thornberry, 2003:331).

Entrepreneurs and intrapreneurs share the same personality traits, qualities and
characteristics (Pirich et al., 2001:10; Thornberry, 2003:330). Both entrepreneurship and
intrapreneurship are fairly grounded in innovation, and both entrepreneurs and
intrapreneurs actively engage in innovation and are catalysts for the innovation processes.
(Åmo & Kolvereid, 2005:10; Hellstrom et al., 2002:175; Hitt et al., 2002:8; Ireland et al.,
2006a:10; Zhoa, 2005:28) Therefore it is logical to assume that corporate entrepreneurs
think, act, and behave in the same manner as their independent counterparts.

2.8.2 Corporate Entrepreneurship and Innovation

Innovation cannot be ignored as a defining element of both intrapreneurship and

entrepreneurship. Innovation is the most relevant factor linking any form of
entrepreneurship to economic and organisational growth (Wennekers & Thurik, 1999:34).
CE and innovation are increasingly understood as the basis for wealth and value creation
within larger organizations (Echecopar et al., 2003:2).

There are strong complimentary interdependencies and direct relationship between

corporate entrepreneurship and innovation (McFadzean et al., 2005b:402; Zhoa, 2005:34).
There is a definite, positive relationship between entrepreneurship and innovation (Åmo &
Kolvereid, 2005:16; Bhardwaj & Momaya, 2007:131; Lassen et al., 2006:359).
According to Ireland et al. (2006a:10) corporate entrepreneurial behaviour is reciprocally
related to innovation. This means that where innovation exists in an organisation,
corporate entrepreneurial behaviour will be present (Maes, 2003:22) and where corporate
entrepreneurship is found some form of innovation will also be present (Viswanathan &
Nagarajan. 2004:20).

Innovation can be perceived to be a focal point of corporate entrepreneurship and without

corporate entrepreneurship there is no innovation (Lassen et al., 2006:361). Consequently,
in order to create innovation, the organisation has to have an internal environment and
climate that supports entrepreneurship (Nayager & Van Vuuren, 2005:37). CE acts as the
catalyst which changes the ‘ideas’ into implemented ‘action’. The outcome of the
methodical application of CE in the marketplace, thus results in innovation (Kirby,
2003:132; Michalski, 2004:4).

2.8.3 Innovation and competitive advantage

Entrepreneurial activities and innovations have a positive link to organisational

performance (Zhoa, 2005: 28). The strength of a business is achieved by the development
and maintenance of a competitive advantage, which is the development of unique
opportunities through innovation (Bertola & Texeira, 2003:185). Competitive advantage is
the product of innovation (Zahra & Covin, 1995: 55) and Ireland et al. (2006a:10) firmly
believe that in business, innovation holds greater competitive advantage than the
organisation’s physical assets.

Innovation has a positive effect on firm performance. “This positive relationship stems from
the reasoning that knowledge is, and innovations are, a strategic resource that enables the
firm to establish a position of competitive advantage” (Poon & MacPherson. 2005:259).

Competitive advantage is what distinguishes an organisation from its competitors and

occurs when an organisation is able to provide something unique or superior to customers
than its competitors, and is difficult for others to imitate (Nieman et al., 2003:85). The only
way an organisation is able to achieve and maintain a sustainable competitive advantage
is through continuous innovation (Echecopar et al., 2003:2; Goosen et al., 2002b:22;
Morris & Kuratko, 2002:10).
The level and degree of innovation in which a business is involved acts as a source of
sustainable competitive advantage (Wickham, 2001:155).

2.8.4 Competitive advantage and competition

In South Africa, the innovation imperative is emphasised by intensified competition

(Scheepers et al., 2007:239). The competitive posture or competitive aggressiveness of an
organisation refers to a firm’s predisposition to directly and intensely challenge its
competitors through its competitive advantage (Lassen et al., 2006:362). Competitors can
only be out-performed by the establishment of a superior organisational competitive
position. This can be achieved by creation of a sustainable competitive advantage (Morris
et al., 2008:8).

In order to maintain a sustainable competitive advantage, organisations have to continually

and constantly reinvent and improve themselves (Morris et al., 2008:8). The competitive
position of an organisation is ultimately based upon the organisation’s competitive
advantage/s and the rate thereof (Bertola & Texeira. 2003:185).

2.8.5 Corporate entrepreneurship, innovation and competition

There is a growing awareness of the beneficial effect that both corporate entrepreneurship
and innovation are having on the performances of organisations (McFadzean et al.,
2005a:350). Corporate entrepreneurship and innovation are deemed to be the basis for
competitive advantage (Echecopar et al., 2003:2). Zhao (2005:25) argued that in the
modern business environment of rapid change the combination of entrepreneurship and
innovation is imperative to sustainable competitiveness, and organisational stability.

Figure 4: The relationship between corporate entrepreneurship, innovation,

competitive advantage and competition

CORPORATE
COMPETITIVE OVERALL
ENTREPRENEURSHI
INNOVATION ADVANTAGE COMPETITIVENESS
P

Source: Own compilation

Corporate entrepreneurship, innovation and competitive advantage have a direct
relationship and a positive influence on organisational growth and performance (Hitt et al.,
2002:173; Scheepers et al., 2007:238). Hornsby et al., (2002:254) explored this evident
link between corporate entrepreneurship, innovation and competitive advantage. They
explained that corporate entrepreneurship, through innovation, could be used as a growth
strategy and a means for achieving a superior competitive position through the
development and implementation of competitive advantages.

Corporate entrepreneurship is becoming an increasingly important means of regulating the

organisation competitive posture (Antoncic, 2006:59). CE actions can be used to exploit
opportunities, through continual innovation which in turn results in the creation of
sustainable competitive advantages (Bhardwaj et al., 2007:47; Kamffer, 2004:4; Kuratko et
al., 2006:699).

2.9 Developing a corporate entrepreneurial strategy

It has been established that employees conduct themselves and act in accordance to
strategically set objectives and goals which they need to achieved (Montalvo, 2006:312).
Strategy is thus an effective means of channelling employees’ behaviour, energy, and
actions and aligning them with organisational objectives (Wickham, 2001:108).

Strategy can be defined as a plan of action that co-ordinates the allocation resources and
commitments of an organisation to achieve its respective and goals (Longenecker, Moore
& Petty, 2003:30; Wickham, 2001:163). CE can be developed through integrated
management strategies (Michalski, 2004:4). The process of encompassing CE with
strategic requirements for an established organisation results in corporate
entrepreneurship (Kamffer, 2004:1). Ultimately a company’s strategy has a significant
influence on its entrepreneurial efforts (Scheepers et al., 242:2007). A corporate
entrepreneurial strategy (CES) has been recognised as an important factor in
organisational growth, performance and value creation, adding to a conducive CE climate
(Antoncic, 2006:49).
A CES is a bold, opportunity seeking, form of strategy that is implemented to initiate,
encourage, and stimulate the development of corporate entrepreneurship within an
organisation (Antoncic & Hisrich, 2003a:16; Dess et al., 2005:147; Ireland et al.,
2006a:14).

CES is a “vision-directed, organisation-wide reliance on entrepreneurial behaviour that

purposefully and continuously rejuvenates the organisation and shapes the scope of
operations by recognising and exploiting entrepreneurial opportunities that are orientated
towards innovation” (Ireland et al., 2006b:21).

Through a corporate entrepreneurial strategy, management is able to cultivate an

entrepreneurial climate and encourage innovation within an organisation. This involves the
building of appropriate flexible structures, empowering employees with an entrepreneurial
mindset and skills, all of which are enforced and supported through the implementation of
a CES (Åmo & Kolvereid, 2005:16; Dhliwayo, 2007: 144).

Figure 5: Flowchart of the key steps in developing a corporate entrepreneurial

strategy

2.8.1 Developing the

vision

2.8.2 Encouraging
Innovation

Radical Incremental
Innovation Innovation

2.8.3 Forming
Venture Teams

2.8.4 Structuring for an

Corporate Entrepreneurial
Climate

CORPORATE
ENTREPRENEURIA
L ACTIVITY

Source: Adapted from Kuratko and Welsch (2001:349)

2.9.1 Developing a vision

The basic definition of entrepreneurial vision would be an indication of what the

organisation wants to achieve, and where it wants to strategically be in the future
(McFadzean et al., 2005a:365).

Morris et al. (2008:167) are of the opinion that a clear organisation-wide entrepreneurial
vision has to be given, accepted, and conceptualised within the organisation through
strategy, for corporate entrepreneurship and all the associated benefits to flourish. They
believed vision to be an initiative that comes from top management, and is conveyed
through a CE strategy.

2.9.2 Encouraging innovation

The successful promotion, stimulation and implementation of innovation occur through CE

strategies, enabling innovation within an organisation is an important means of instigating
and maintaining both CE and competitive advantage (Hoy; 2006:832).

All forms of strategic CE have one thing in common: the adoption of innovation (Morris et
al., 2008:88). Innovation is only made possible through the presence of entrepreneurship,
and corporate entrepreneurship within an organisation. Innovation and CE are positively
correlated and directly related, so in order to increase CE, innovation is encouraged and in
order to stimulate levels of innovation CE objectives are pursued as part of the corporate
entrepreneurial strategy (Antoncic, 2006:51; Dess et al., 2005:150; Ireland et al.,
2006a:10; Kirby, 2003:212; Morris et al., 2008:167; Poon & MacPherson. 2005:270;
Wennekers & Thurik, 1999:34). Innovation allows for the implementation of new products,
services, processes, and technology changes. These changes are either incremental or
radical in nature, and both form part of the CES (Canibano et al., 2000:331).

Radical innovation is the formation of new, revolutionary and untried products, services or
processes and is often very experimental and revolutionary, adding new additional
product/ service lines to the organisation (Morten et al., 2005:316; Pirich et al., 2001:15).
Incremental innovation is the continual improvement; routine adjustments and expansion
of current operational lines of products, services and processes (Pirich et al., 2001:15;
Zhoa, 2005:27).
2.9.3 Forming venture teams

A venture team can be defined as a group of individuals, with different skills, knowledge
and experience, that work interdependently to achieve a common goal (Gido & Clements,
2003:324). Venture teams can be seen as a form of collective entrepreneurship
(Bouwmeesters, 2006:19). CE can be efficiently maximised by the inclusion of teams in
the CES (Gido & Clements, 2003:328). By grouping employees into specific groups
intrapreneurs are effectively able to share ideas and knowledge with other intrapreneurs
and able to influence the employees who are not entrepreneurially orientated (Hellstrom et
al., 2002:173).

Organisational teams act with autonomy, greater responsibility and work discretion and
these are factors which positively influence corporate entrepreneurship (Kuratko & Morris,
2002:295). Through teams CE is consequently permeated through the organisation as
more employees are actively involved, resulting in greater levels of entrepreneurial
orientation throughout the organisation (Bouwmeesters, 2006:20)

2.9.4 Structuring for corporate entrepreneurial climate

The establishment of a CE climate promotes and increases levels of CE within the

organisation (Dess et al., 2005:149). All the expected norms, attributes, values and
attitudes are entrepreneurially orientated and motivated with a correctly structured CE
climate (Adonisi, 2003:24; Taylor, 2006:15).

A CE climate stimulates innovation and CE (Åmo & Kolvereid, 2005:9), and can be defined
as the existing internal conditions and organisational stimuli that influence the diffusion of
CE throughout the organisation (Gantsho, 2006:42; Hayton, 2005:140; Rutherford & Holt,
2007:432). Climate is the organisation’s and top management’s commitment to
establishing an environment conducive to the creation and development of corporate
entrepreneurship (Ireland et al. 2006b:27).
A successful and complimentary CE climate acts as a stimulant which encourages and
motivates employees to think and act intrapreneurially (Taylor, 2006:15). Employees must
perceive that the entrepreneurial climate is one where they can engage in intrapreneurial
activities freely, in order for the climate to be conducive for CE (Åmo & Kolvereid,
2005:10).
The cultivation of an entrepreneurial climate within an organisation involves the building of
appropriate flexible structures, empowering employees with an entrepreneurial mindset
and skills, all enforced and supported by a CES (Dhliwayo, 2007:144).

Through the structuring of a conducive CE climate, by a CES, greater CE contributions

and collaborations occur, as employees feel comfortable and purpose driven with a
collective CE objective, resulting in a greater degree of organisational CE (Srivastava et
al., 2004:58).

The intended purpose of this study is to explore the CE climate within the South African
banking sector. In order to give a sufficient background to the study, as well as to establish
the link upon which this research is based, the following section will be on the South
African banking sector, and South African banks link with innovation and CE.

2.10 South African banking sector

2.10.1 Introduction and background

Since the beginning of the 1990s the South African banking sector has gone through
substantial changes, resulting in a world-renowned banking industry of the highest
standard able to compete internationally (FMD, 2003:1).

Over the past decade new bank legislation and regulatory requirements were introduced,
foreign banks entered the domestic market, competition from non-bank entities intensified
(FMD, 2003:1), resulting in South Africa establishing a well-developed and well-structured
banking system, which ranks ahead of those of France and Japan (Harris, 2007:1) and
compares favourably with those in many developed countries and which sets South Africa
apart from many other emerging market countries.
South African banks are currently regulated in accordance with the principles set by the
Basel Committee on Banking Supervision (Mboweni, 2004:1). This compliance framework
addresses the risk sensitivity much further by allowing capital to vary according to the
credit, operational, and market risk of the bank, leveraged off innovations made in risk
management within the banking industry (Rosengren, 2007:36).
South Africa’s political transformation and the relaxation of exchange controls effectively
opened up the South African economy and banking markets (Standard Chartered,
2007:1). Post 1994 and after amendments to the Banks Act were made (Mboweni,
2004:3), a number of foreign banks entered the country, setting up subsidiaries, branches,
and representative offices in an attempt to capitalise and gain market share and be “part of
the action” (Lofton, 2007:22; Martin, 2006:2). This resulted in increased competitive
pressure within the South African banking sector (Hazelhurst, 2004:1).

With the liberalisation of African economies, the market potential in Africa has been
realised by the global economy and banks, resulting in a growing demand for value added,
structural products and services in Africa (Standard Chartered, 2007:1). From a banking
point of view this has led to a surge in South African and foreign banks expanding and
establishing themselves on the continent (Standard Chartered, 2007:1). South African
banks have started implementing operations and offices in over 18 African countries
(Harris, 2007:1), resulting in a new competitive dimension for the banks.

The South African economy and banking industry suffered an initial blow as a result of
global instabilities in 2002. However, 2003 and 2004 saw a significant recovery in global
economies, resulting in greater stability and progressive advancements within the South
African banking sector (Mboweni, 2004:3).

The National Credit Act came into full effect on 1 June 2007, providing for enhanced
transparency, fairness and responsibility in the extension of credit. While in some
instances it is likely to result in more rigorous processes in the screening of credit
applications (Reserve Bank, 2007:1). The introduction of the new national credit act (NCA)
and its associated legislation, as well as recent interest rate increases, greater regulation
and pressure put on banks in an attempt to regulate competition, has intensified the
competitive aggressiveness between banks in the sector (Geldenhuys, 2007:11).
Consequently, South African banks have become more complex, it has become
increasingly important for institutions to develop their own internal models and innovations
to remain competitive and develop some form of sustainable competitive advantage
(Rosengren, 2007:36).
As a result of all these specific changes, the South African banking sector has evolved into
a highly competitive environment. In order for banks to remain competitive they have to
maintain, as well as try to increase, their competitive posture and this can be achieved
through constant and continual innovation (Martin, 2006:1). Innovation can be encouraged
and increased through the continual adoption of corporate entrepreneurial orientations and
mindsets (Zhao, 2005:25).

2.10.2 Current competitive climate in the South African banking sector

According to the annual report by the South African Reserve Bank, the Herfindahl-
Hirschman index - a measure of concentration and competition in the banking system,
taking into account both the size and number of institutions - worsened from 0.182 in 2004
to 0.184 in 2005. The higher the index the weaker the competition and the higher the
levels of concentration in the banking system (Mafu, 2006:2).

The report attributed to the deterioration in the index due to the fact that the four largest
banking groups (namely: ABSA, FirstRand, Nedcor and Standard Bank) dominated the
banking system, with 83.8 percent, or R1.4 trillion, of the industry's total assets of R1.7
trillion (Hazelhurst, 2004:1).

Traditionally South Africa's banking sector has been dominated by the ‘big four’ banks,
which tended to stifle competition, as it was difficult for newcomers to break into this sector
(Mafu, 2006:2). But since the “spotlight” has been put on banking competition, the
competitive state in the banking sector has been unhindered and intensified. This can be
attributed to recommendations based on the findings of the Jali commission on banking
competition, as well the National Treasury and Reserve Bank’s specialised task teams
(Competition Commission, 2004:1; Hazelhurst, 2004:1). The big four banks, nonetheless,
still do compete more aggressively with each other, which is a sign of a challenging and
competitive environment (Mafu, 2006:2).
With global financial and economic stability, a more stable economy and currency, as well
as inflation being brought under control, the South African banking sector has been further
strengthened. The number of South African citizens holding bank accounts jumped by
11% to 15.9 million in the year 2005, against 4% in 2004 (RNCOS, 2007:2). This shows
the growth in the banking sector, and this can be translated into new potential customers
and markets for banks.
One of the main reasons for the growth in ‘bankable’ populace is the introduction of an
innovative system called Mzansi. The Mzansi account was launched in October 2004 and
is a low-cost national bank account which extends banking to low-income earners and
those previously living beyond the reach of banking services (SouthAfrica.Info, 2005:1). As
it can be well assumed, a decrease in the level of the ‘unbanked’ and a similtaneous
increase in the potential ‘bankable’ population has resulted in a new dimension of an
‘untapped’ customer market for South African banks, ultimately resulting in greater levels
of competition amongst banks, as they pursue the capture this new market (RNCOS,
2007:2; SouthAfrica.Info, 2005:1).

A smaller scale of competition has now emerged at the retail end. New feasible
opportunities have risen from the introduction and implementation of the Dedicated Banks
Bill, as it opens up for retailers, cellular operators, insurers, and micro lenders to become
involved and offer a limited range of banking service business (e.g. Pick ’n Pay
GObanking, Vodacom and Discovery credit facilities) (Hazelhurst, 2004:1). The legislation,
combined with technological advances, will make it possible for new entrants to deliver
cost effectively to the low end of the retail market, thereby placing competitive pressures
on the traditional banks (Hazelhurst, 2004:1).

Currently major developments within the banking sector have created a climate of
heightened competitiveness within the sector. New players both inside and outside the
South African banking sector have to enhance their competitive aggressiveness and
posture, to remain competitive, and innovation is a manner in which they are able to do
that (Hedley, 2007:2).

2.10.3 How South African banks can use innovation to compete

Briefly stated, competition drives margins down and thus erodes profits. As a
consequence, the bank’s profitability declines, thereby leaving banks with two options (1)
take on more risk, which may induce more severe liquidity issues or (2) adopt a new
competitive strategy of innovation (Bolt & Tieman, 2004:783). Banks have responded by
significantly enhancing their contingency planning, through creative and innovative
approaches (Rosengren, 2007:36).
Due to the increase in the competitive nature of the South African banking sector, and
heightened levels of competition in the banking industry, South Africa banks have to be
competitive, flexible and dynamic in nature in order to operate successfully and maintain
levels of profitability. Competition undermines prudent and conservative banking practices,
causing banks to think ‘outside the box’ and more creatively, resulting in banks being more
innovative and entrepreneurial (Bolt & Tieman, 2004:784). In order to do so, and to remain
competitive, banks have to constantly develop and maintain competitive advantages over
other rival banks. This competitive advantage can be developed through successful
implementation of innovation by the banks (Bertola & Texeira, 2003:185).

There are various ways in which banks in the South African banking sector compete with
each other. Generally speaking South African banks compete with each other in terms of
levels of pricing, innovation, product and service offering, customer service, relationship
management, delivery channels, and advertising (Falkena, Davel, Hawkins, Llewellyn,
Luus, Masilela, Parr, Pienaar & Shaw, 2004:18). However, the two most prominent factors
of competition, and the most contested factors between banks are (1) pricing and (2)
innovation. Innovation in terms of the product range, constantly resulting in new, innovative
products and services offered (Falkena et al., 2004: 18). Therefore, innovation can be
used as a medium of competitive advantage, or used as a source to develop a competitive
advantage for South African banks (Wickham, 2001:155).

2.10.4 Corporate entrepreneurship and innovation in the South African banking

sector

Hedley (2007:1) stated that innovation is changing the banking industry and that the
success of most modern banks is built on a firm foundation of innovation. He believes
innovation is important because differentiation is crucial for successful competitiveness in
today’s banking environment.
South African banks, and the South African banking sector, have been considered to be
world leaders in terms of banking innovation (Harris, 2007:1) and many world-wide
banking innovations originated in South Africa. According to Harris (2007:1) South African
banks have achieved the following groundbreaking feats:

• The first country in the world to introduce interoperability of ATM cards through
SASwitch.
• The first developing country to introduce credit cards.
• The first African country to introduce ATMs.
• The first country in the world to introduce biometrics on cards for the payment of
pensions.
• The first countries to use satellite communication for branch operations.

Further indication of high levels of innovation within the South African banking sector has
become prevalent in years where competition was stiffest, banks were forced into
successful innovative measures which served as an indication that competition not only
benefits consumers but can also work as a rejuvenating stimulant for banks (Hazelhurst,
2004:1).

The overload of laws weighing down heavily on the South African banking and financial
services sector has also forced institutions to utilise innovation in an attempt to find new
and innovative measures in which to conduct business (Nyamakanga, 2007a:1).

Due to the stability of the South African economy and the banking sector, as well as global
financial markets there has been a noted significant increase in the levels of innovation
and integration on an unprecedented scale (Mboweni, 2007:2).
From all the above evidence it is evident that innovation is rife in the South African banking
sector. Corporate entrepreneurship is the foundation and basis for organisational
innovation (Zhao, 2005:25). Therefore, it is logical to deduce that if innovation is so
ubiquitous in the sector, corporate entrepreneurship and corporate entrepreneurial
behaviour is present within the South African banking sector (Hellstrom et al., 2002:175;
Hitt et al., 2002:173; Ireland et al., 2006a:10; Maes, 2003:22; Michalski, 2004:4).
2.11 Conclusion
This chapter served as an introduction to the study, a well as forming the basis for the
study. An extensive review all the relative constructs and factors associated with corporate
entrepreneurship and the establishment of a corporate entrepreneurial climate took place,
as well as how these constructs and variables are positioned and related within the South
African banking. The research methodology will be based upon the above mentioned
review and will be discussed in chapter 3.
 CHAPTER 3

RESEARCH METHODOLOGY

3.1 Introduction

The purpose of this chapter is to provide a detailed description of the research

methodology used in this study, as well as to provide the results of the empirical research.

This chapter includes a discussion of the research methodology used, which includes the
aims and objectives, the research design, the measuring instrument used, method of data
collection, and data analysis which was used in this study.

3.2 Aims and objectives of the study

The intended purpose of this study is to explore and assess the current corporate
entrepreneurial climate, as well as to test perceptions towards the corporate
entrepreneurial climate within the South African banking sector. This study will also
highlight influential factors which have a direct or indirect affect upon it. Recommendations
to help encourage and promote a supportive climate for corporate entrepreneurship within
the sector will also be given after the relevant conclusions have been achieved.

3.2.1 Primary objective

The primary objective of this study is to investigate the corporate entrepreneurial climate
within the South African banking sector.

3.2.2 Secondary objectives

In order to achieve the primary objective the following secondary objectives have to set:

• Establish the management support of corporate entrepreneurial behaviour in the

South African banking sector.
• Determine the level of work discretion permitted for enabling of corporate
entrepreneurship within the South African banking sector.
• Determine employees’ perception towards rewards and reinforcements.
• Asses the time availability as a resource in inducing corporate entrepreneurial
behaviour.
• Measure organisational boundaries as a factor of corporate entrepreneurial climate.

3.2.3 Propositions

Proposition 1: Managerial support contributes significantly to a favourable corporate

entrepreneurial climate within the South African banking sector.

Proposition 2: Organisational boundaries do contribute significantly to the corporate

entrepreneurial climate within the South African banking sector.

Proposition 3: Work discretion does contribute significantly to the corporate

entrepreneurial climate within the South African banking sector.

Proposition 4: Rewards do contribute significantly to the corporate entrepreneurial

climate within the South African banking sector.

Proposition 5: The availability of time does contribute considerably to the corporate

entrepreneurial climate within the South African banking sector.

3.3 Research Methodology

3.3.1 The research design

The degree to which the research question has been crystallised indicates that this is a
formal study, as the study begins with a research question. This study focuses on precise
procedures, specific to a data source, with the main objective of testing the research
propositions. It is a formal study with an ex post facto design, as no control was able to be
extended over the variables and the outcomes of the study, and data couldn’t be
manipulated (Cooper & Schindler, 2003: 149). The fact that the intention of this study is to
quantify findings makes it quantitative study (Diamantopoulos & Sclegelmilch, 2000: 27). It
was only possible to report what was happening and what had already happened.
The purpose of this study is to derive descriptive results. The method of data collection
renders this as a type of interrogation/ communicative study (Cooper & Schindler, 2003:
147) as all relevant data and information was derived through the completion of personal
questionnaires by the respondents.

The data was collected over a single, particular period in time, a snapshot of
approximately 60 days, making it a cross-sectional study. A cross-sectional study is one
which is taken over a specific moment in time (Anderson, Sweeney & Williams, 2003:7).
All data was collected in a research environment of exact everyday settings where
participants’ perceptions were captured and recorded in the actual routine, everyday
conditions and approaches to conducting business operations within the South African
banking sector.

All relevant information sources will be consulted, the majority of them being published
academic papers, books and articles. Information gathered from all these different sources
will act as basis of the literature review, which will in turn be used to give a greater
understanding of the study.

3.3.2 Population and sample design

A population is the set of all elements of interest in a particular study, such as a collection
of individuals, objects, or events of people (Diamantopoulos & Sclegelmilch, 2000:10;
Anderson et al., 2003:14). The population of the current study can be defined as middle
managers and operational employees within.

Middle managers and operational level employees are in the best position to identify new
opportunities, as well as to encourage, promote and initiate corporate entrepreneurship
(Hornsby, Kuratko & Zahra 2002:260).

A sample is an extract, or subset, of the population which is representative of it (Anderson

et al., 2003:14).
A sample of both middle managers (middle management) and operational employees
(lower management) was drawn from the four leading banks in South Africa, namely,
ABSA, FirstRand (FNB), Nedcor (Nedbank) and Standard Bank.
The fact that these four banks hold a combined market share of 83.8 percent (Hazelhurst,
2004:1) deems them sufficient to constitute valid sample, and represent the South African
banking sector for the purposes of this study

The largest group, which formed the biggest portion and majority of the sample, was the
middle managers group. The middle managers group was constituted of and included the
some of the following: organisational managers, divisional managers, team leaders,
project managers, and bank managers.

The operational level employees form the smaller portion of the sample and were made up
of two subsets: Influential Employees and Consultants. The latter group Consultants
consisted of internal consultants such as human resources consultants, financial
consultants, sales consultants, legal consultants, and organisational business consultants.
Influential Employees included control analysts, business analysts, and general
operational banking clerks.

For the purpose of the research a subjective, arbitrary approach using non-probability
sampling was applied, meaning that the selection of sample respondents was left to the
discretion of the researcher, allowing the “at random” selection of sample elements
(Cooper & Schindler, 2003:184). This specific method of non-probability sampling is
unrestricted and hence is the best suited method as the researcher has freedom of choice
within the sample, in order to find suitable candidates and have the CEAI completed.
The sample which was drawn included middle management, managers and operational
employees from the four respective banks from within Gauteng. The sample used was
drawn from the respective banks’ head offices and larger more commercially active
branches, and was selected randomly, irrespective of age, gender, race, department, bank
or experience.

A total amount of 100 questionnaires (25 per bank) were issued to managerial staff and
operational employees within the four banks for the data collection. In total 63 respondents
were interviewed and completed questionnaires (n=63), resulting in a response rate 63
percent.
3.3.3 Data Collection

All data and responses used in the study were collected by means of the Corporate
Entrepreneurial Assessment Instrument (CEAI) questionnaire, developed by Kuratko and
Morris (2002:295). The CEAI is a basic self-administered questionnaire, and was
distributed using two methodologies, either paper-based or electronic based
questionnaires.

The researcher conducted personal interviews and questioned a large majority of the
respondents, while a smaller percentage was completed by the aid of ‘contacts’ within the
respective banks during August and September 2007.

The method of data collection used in this type of study is empirical by nature, while the
parameter of interest and type of data used consists of nominal and ordinal data.

Nominal data is data on a variable that can be classified but no order, distance or origin
can be given. Nominal data can be grouped into two or more categories which are
mutually exclusive and collectively exhaustive, which is used to determine equality
(Cooper & Schindler, 2003:223). The nominal data for this study included the following
classifications: age; gender; years in the organisation; management level; position; highest
qualification and number of years experience in the banking sector.

Descriptive data such as age, gender, years in the organisation, and number of years in
the banking sector had to be specifically given by each respondent. They had to select
management level from a list of: senior, middle and lower management, as well as highest
qualification, from a list of: matric, national diploma, undergraduate degree and posted
graduate degree. Each respondent also had to specifically state their position within the
organisation, and the researcher grouped these into one of the three groups of: Middle
mangers, Consultants and Influential Employees.

The groups: Middle mangers, Consultants and Influential Employees were selected
because Middle mangers directly perform organisational and administrative functions like
planning, organising, leading and controlling (Venter & Rwigeni, 2005:6). They generally
have substantial authority, responsibility and have a direct impact on the manner in which
business is conducted.
Consultants within the banks have considerable autonomy as well as management
influence. They tend to have less restrictive mandates, coupled with greater flexibility and
authority, which allows them to act as entrepreneurial managers. Influential employees are
employees who have significant impact and say in the manner in which the business
operates, and are in a position to effect change, and encourage new changes within the
organisation, as they are involved in the ‘frontline’ activities and business operations of the
organisation.

Ordinal data, on the other hand, is data which can be classified and ordered, yet no
distance or origin can be given, and is used to determine a greater or lesser value
(Diamantopoulos & Sclegelmilch, 2000:25). Ordinal data was derived from the Linkert
Scale, through ranked answers (strongly disagree, disagree, not sure, agree, strongly
disagree) which were used for answering the 48 questions contained in the CEAI
questionnaire.

3.3.4 Measurement Instrument

The measurement instrument known as the Corporate Entrepreneurship Assessment

Index (CEAI) is a diagnostic tool which has been developed by leading researchers in the
corporate entrepreneurship research field, namely Kuratko, Hornsby and Montango
(Morris & Kuratko, 2002:295). It was designed to tap the climate-related organisational
factors that represent and potentially encourage corporate entrepreneurship, and is used
for evaluating individual’s perceptions of his/ her current work environment and climate
within the organisation (Cates, 2007:IV).

The questionnaire takes approximately 25 minutes to complete and consists 7 the

demographic based questions, in addition to the 48 Linkert-style questions of the CEAI. In
the additional demographic questions added by the researcher, the following information
was required:

• Age
• Gender
 • Years in the organisation
• Management level
• Position
• Highest qualification
• Number of years experience in the banking sector.

In the CEAI a five-point Linkert scale is used, for the original 48 questions, and
respondents have to answer the questions by choosing: strongly disagree, disagree, not
sure, agree, strongly agree. Each question may only be answered once and has only one
answer.

The CEAI as a measurement instrument has been designed to measure the following five
key climate-related corporate entrepreneurial variables: (1) management support (2) work
discretion (3) rewards/reinforcement (4) time availability (5) organizational boundaries
(Hornsby et al., 2002:269; Kuratko et al., 2005:703; Morris & Kuratko, 2002:291).

All the results were analysed and scrutinised according to these specific variables, in
conjunction with using the five-point Linkert scale. The five key variables are broken down
and designated into the following sections in the structure of the CEAI

Table 2: Underlying variables which form part and make up the CEAI

Section Questions
1. Management Support for corporate Entrepreneurship Q1 – Q19
2. Work Discretion Q20 – Q29
3. Rewards/ Reinforcement Q30 – Q35
4. Time availability Q36 – Q41
5. Organisational boundaries Q42 – Q48

The CEAI is a practical, reliable and validated measurement instrument, making the
results of the instrument equally reliable and valid (Adonisi, 2003:94; Cates, 2007: 27;
Gantsho 2006:83). The CEAI which can be easily applied to any business environment
and therefore it can be successfully used to gauge the organisational factors that foster
corporate entrepreneurial climate and activity within an the banking sector, allowing for the
researcher to make deductions regarding the entrepreneurial climate within the South
African banking sector (Adonisi, 2003; 93).
3.3.5 Data Analysis

For all intensive purposes of this study, the data collected was analysed to yield
descriptive statistics which include frequencies, means, and standard deviations of the
captured data. Results were received from the statistically analysed data in an attempt to
capture the population’s characteristics by making inferences from the sample’s
characteristics. The objective of these results was to yield descriptive indicators, which will
be used to substantiate of the propositions of the study.

A statistical computer package, BMDP Statistical Software, was used by an external

researcher in the analysis of collected data.

Due to the small sample size nonparametric tests were used instead of parametric test.
Nonparametric tests are used to test the propositions and hypotheses with normal and
ordinal data (Cooper & Schindler, 2003:531). For this study the Kruskal-Wallis test was
used. The Kruskal-Wallis test is a one-way analysis of variance by ranks, across three or
more independent groups and does not require the assumption of normally distributed
populations (Cooper and Schindler, 2003: 554; Diamantopoulos & Sclegelmilch, 2000:182
and Anderson et al., 2003:775).

Inferential statistics involving the analysis of variance (ANOVA) were used to determine
results in order to determine differences between the respective groups and management
levels, which was used in the culminating of conclusions for the research.

3.3.6 Limitations

Certain limitations could have affected the initial outcomes of the study, such as depth and
the lack thereof in this study. Depth of the study is listed as a limitation, as the sample
size, in a relation to the population, was very small. The sample consisted of 63
respondents, only taken from Gauteng, opposed to thousands who constitute the
population. Errors could also have occurred during the course of the study which could
have altered the eventual outcomes. These errors include: questionnaire error, interviewer
error or undue influence, data capturing errors and analysis errors (Mouton, 2001:153).
 CHAPTER 4

RESULTS AND FINDINGS

4.1 Introduction

The purpose of this chapter is to report the findings of the study and to give a brief
explanation of them. The results of the study are described in this chapter. Both the
descriptive statistics of the sample and the inferential statistics of the sample will also be
reported in this chapter. The inferential results will be used in answering the research
propositions previously establish for the study, in chapter 3.

4.2 Construct discussion

4.2.1 Dependent variables

The dependent variables of this study are comprised of the following five CE variables,
identified by Morris and Kuratko (2002: 299): management support, work discretion,
rewards and reinforcements, time availability, and organisational boundaries. These
variables have all been highlighted as playing an important role in the development of a
CE climate (Cates, 2007:IV).

4.2.2 Independent variables

The independent variables comprised of the following variables: educational level,

position, years of employment in current organisation, number of years in the banking
sector, management level, gender, and age of the participants respectively.

This chapter will be used as a basis to address the research questions and problems
discussed in chapter 1, and will also be used in support for forming arguments,
conclusions, and interpretation of the study.
The relationship between the independent and dependent variables will be analysed by
means of Kruskal-Wallis One Way Analysis of Variance. The descriptive statistics of the
participants are displayed in Tables 4.1-4.7, representing the independent variables of the
study. Namely: educational level, position, years of employment in current organisation,
number of years in the banking sector, management level, gender, and age of the
participants respectively.

Table 3: Educational level of participants

Educational level Frequenc Percent Cumulative Cumulative

y Frequency Percent
Matric 32 50.79 32 50.79
National Diploma 9 14.29 41 65.01
Under-graduate 13 20.63 54 85.71
Post-graduate 9 14.29 63 100.00
Total 63 100.00 63 100.00

Figure 6: Educational levels of participants

Educational Levels

14.29%

Matric
National Diploma
20.63% 50.79%
Under-graduate
Post-graduate
14.29%

The above table indicates that the majority of the participants (50.79%) had a matric
qualification, followed with 20.63% of respondents holding some form of under-graduate
qualification. A small percentage of respondents (14.29%) had either a national diploma or
post-graduate qualification.

Table 4: Position of participants

 Position of participants Frequency Percent Cumulative Cumulative
Frequency Percent
Consultant 12 19.05 12 19.05
Middle management 35 55.55 47 74.6
Influential employees 16 25.40 63 100.00
Total 63 100.00 63 100.00

Figure 7: Position of participants

Position of Participants

12
16

Consultant
Middle management
Regular employees

35

Table 4.2 indicates that the majority of the participants (n = 35), were in middle
management positions, followed by regular employees that made up just of a quarter of
the sample (n=16), forming the focal group of the study with 51 respondents, while the
remainder of the sample was made up of consultants (n=12).

Table 5: Number of years in the company

Number of years in Frequenc Percent Cumulative Cumulative

 the company y Frequency Percent
0-10 36 57.14 36 57.14
11-20 15 23.81 51 80.95
21-40 12 19.05 63 100.00
Total 63 100.00 63 100.00

Figure 8: Number of years in the company

No. of years in the company

19.05%

0 to10
11 to 20
57.14%
23.81% 21 to 40

Of the sample drawn 57.14%, more than half, consist of employees who have been
working at their respective banks for less than 10 years. The second longest time frame
working for the same bank is between 11 and 20 years which formed 23.81% of the
sample, while the rest of the sample (19.05%) have been working for the same bank for
anywhere between 21 and 40 years.

Table 6: Number of years in the banking sector

Number of years in Frequenc Percent Cumulative Cumulative

the banking sector y Frequency Percent
0-10 31 49.21 31 49.2
 11-20 15 23.81 46 74.02
21-40 17 26.98 63 100.00
Total 63 100.00 63 100.00

Figure 9: Number of years in the banking sector

No. of years in the banking sector

17

0 to10
31 11 to 20
21 to 40

15

Thirty one of the 63 people of the sample drawn, the majority of the sample, have been
working in the banking sector for 10 years or less.
The remainder of the sample was rather evenly distributed into the different classes, with
115 people involved in the banking sector in the last 11 to 20 years, and 17 others for
more than 21 years.

Table 7: Management level (Authority and Responsibility)

Management level Frequenc Percent Cumulative Cumulative

y Frequency Percent
Senior Management 10 15.87 10 15.87
Middle Management 20 31.75 30 47.62
Lower Management 33 52.38 63 100.00
Total 63 100.00 63 100.00
Figure 10: Management level (Authority and Responsibility)

Management level
(Authority and Responsibility)
15.87%

Senior Management
Middle Management
52.38%
Low er Management
31.75%

The management levels of the sample were graded according to three tiers of
management in terms of authority and responsibility with 52.38% being lower management
(limited authority and responsibility), 31.75% middle management (substantial authority
and responsibility), collectively making up an area of interest representing percentage
84.13%. Senior management formed the smallest percentage of the sample with only 10
respondents, resulting in forming only 15.87% of the sample (extensive authority and
responsibility).

Table 8: Gender of participants

Gender Frequenc Percent Cumulative Cumulative

y Frequency Percent
Male 16 25.40 16 25.40
Female 47 74.60 63 100.00
Total 63 100.00 63 100.00

Figure 11: Gender of participants

 Gender of praticipants

25.40%

Male
Female

74.60%

The sample consisted of a skew distribution of men (25.40%) and women (74.60%), with
women forming the majority of the sample.

Table 9: Age of participants

Age Frequenc Percent Cumulative Cumulative

y Frequency Percent
20-30 23 36.51 23 36.51
31-40 17 26.98 40 63.49
41-50 13 20.64 53 84.13
51-60 10 5.87 63 100.00
Total 63 100.00 63 100.00

Figure 12: Age of participants

 Age of participants

5.87%

20.64% 20-30
36.51%
31-40
41-50
51-60

26.98%

The sample drawn can be generalised as being a relatively young sample as majority of
the respondents were below 30 years of age (36.51%). The number of employee
decreased as age increased, with 26.98% between 31 and 40 years of age, 20.64%
between 41 and 50 years of age. The smallest percentage recorded was 5.87% between
the ages of 51 and 60.

The mean, standard deviation, minimum, and maximum of each of the five dependent
variables identified by the CEAI (Morris & Kuratko, 2002:295) are reported below in Table
4.8.

Table 10: Mean, standard deviation, minimum and maximum of the five CE factors

Factor name Mean Standard Minimum Maximum

deviation
Management 3.38 0.59 2.37 5.00
support
Work 3.42 0.58 2.00 4.90
discretion
Rewards and 3.75 0.64 1.00 4.83
reinforcement
Time 2.98 0.45 2.17 4.00
availability
Organisational 3.84 0.70 2.00 5.00
boundaries
Figure 13: Means of the five CEAI factors

Means of the five CEAI factors

Organisational boundaries 3.84

Time availability 2.98

Factors

Rewards and reinforcement 3.75

Work discretion 3.42

Management support 3.38

0 1 2 3 4 5
Range

Table 4.8 and figure 4.1 indicate that none of the CE factors performed significantly above
or below average. Only the rewards/reinforcement and organisational boundary sub-scales
stood out as performing slightly above average, while time availability seemed to perform
slightly below average.

Figure 14: “The rewards I receive are dependent upon my work on the job”

Question 31

40 38
No. of Respondents

30

20

8 9
10 7
1
0
Strongly Disagree Uncertain Agree Strongly Agree
Disagree

The combined majority of the employees (74.6%) of the sample agreed that receiving of
rewards was only dependent upon the work they do, detailed by their job description and
not additional or extra work. While the minority (25.4%) of the sample either were
uncertain or disagreed with the statement. This is a possible indication that rewards are
used as a means to motivate employees.

Figure 15: “My supervisor will increase my job responsibilities if I am performing well in
my job”

Question 32

40
34
No. of Respondents

30

20
11
9
10 7
2
0
Strongly Disagree Uncertain Agree Strongly Agree
Disagree

It is revealed that 17.5% of employees strongly agree that responsibilities are extended as
a result of good performances, followed closely by the majority of 54% who merely agree
with the statement. Although 14.3% were undecided, a further collective 14.3% opposed
this statement, indicating that the majority of respondents felt that superior job
performance allowed them to receive an increase in warranted responsibilities.

Figure 16: “My supervisor will give me special recognition if my work performance is
especially good”
 Question 33
50
40
40
No. of Respondents

30

20
8 8
6
10
1
0

Strongly Disagree Uncertain Agree Strongly Agree

Disagree

The majority of 40 respondents believed that exceptionally good work performance was
recognised and acknowledged by their superiors, 6 respondents were uncertain whether
or not recognition was given, and a collective amount of 9 respondents felt no recognition
was given for good works. The assumption can be made that superiors give praise and
recognition when due and this acts as an additional form of motivation for employees.

Upon investigation into time availability some of the following significant results were
revealed, which can accounted for the below average of this section.

Figure 17: “I always seem to have plenty of time to get things done”
 Question 37

40
No. of Respondents
29
30

20 17
12
10
3 2
0
Strongly Disagree Uncertain Agree Strongly Agree
Disagree

19.1% of respondents strongly disagreed that they do not have sufficient time to get things
done, complimented by 46% who disagreed with the statement, making it a collective
65.1% who feel they have insufficient time to get everything done. This is a possible
indication that shows that the majority of people need more time to get their jobs done.

Figure 18: “I have just the right amount of time and workload to do everything well”

Question 38

40
32
No. of Respondents

30
20
20

10 5 6
0
0
Strongly Disagree Uncertain Agree Strongly Agree
Disagree

An overwhelming amount of 37 respondents feel they do not have the right amount of time
to get to get there workload done, and to have it well done. Alternatively 20 respondents
do feel the time they have is sufficient to get the job done well, while a remaining 6 are
uncertain. This means workloads, standards of completed jobs and the amount of allotted
time are, currently, mismatched and have to be addressed and correctly apportioned
should a CE climate be developed.

Figure 19: “I feel that I am always working with time constraints on my job”

Question 40

40 37
No. of Respondents

30

20

9 8 8
10
1
0
Strongly Disagree Uncertain Agree Strongly Agree
Disagree

The collective amount of 45 people, the majority (71.4%), of people feel they are
constrained by time on their jobs, opposed to 18 respondents (28.6%) who were either
uncertain or disagreed with the statement to some degree. This indicates that people are
constantly pressured and restricted by time while doing their jobs, possibly restricting a
healthy CE climate.

Organisational boundaries were also examined and investigated and revealed the
following results which substantiate slightly above average performance in this section.

Figure 20: “There are many written rules and procedures that exist for doing my major
tasks”
 Question 43

40
31
No. of Respondents

30

20 18
12
10
1 1
0
Strongly Disagree Uncertain Agree Strongly Agree
Disagree

The majority, 49 of respondents agree to some extent, that there are rules and procedures
in place for doing major tasks, while a joint 13 respondents disagreed with the statement.
Only 1 respondent was uncertain about the extent of the rules and procedures for doing
major tasks. This is proof of the institution of rules and procedures which are adhered to
while completing major tasks.

Figure 21: “On my job I have no doubt of what is expected of me.”

Question 44

40
No. of Respondents

30
30
22
20

10 6 5
0
0
Strongly Disagree Uncertain Agree Strongly Agree
Disagree

The larger majority 87.3% agree, to some extent, that there is no doubt or confusion
regarding their job description, followed the remainder 17.4% of respondents who were
either uncertain or disagreed with this statement. This is an indication the majority of
people clearly understand what their job descriptions entail and what is expected of them.
Figure 22: “My job description clearly specifies the standards of performance on which my
job is evaluated.”
 Question 47

40 37
No. of Respondents

30

20 15

10 8
3
0
0
Strongly Disagree Uncertain Agree Strongly Agree
Disagree

Of the total 63 respondents a total of 37 agree that their job description clearly specifies
the standards of performance on which the job was evaluated, while an additional 15
strongly agree with the statement. As a result the minority of the sample believe otherwise
with 3 respondents impartial on the matter, while the remaining 8 merely disagree. It is
evident that the job descriptions and evaluation benchmarks are made clear to the majority
of respondents.

Figure 23: “I clearly know what level of work performance is expected from me in term of
amount, quality and time line of output”

Question 49

40
33
No. of Respondents

30
23
20

10 6
0 1
0
Strongly Disagree Uncertain Agree Strongly Agree
Disagree

A grouped cluster of 56 respondents (88%) know and understand what level of work
performance is expected of them and what there job description involves. 1 respondent
(2%) is uncertain and not sure what is expected of them, while 6 respondents (10%) of the
sample don’t know what level of work performance is expected of them. The deduction
can be made that, for the most part, employees are clearly aware of what level of work
performance is expected from them in term of amount, quality and time line of output, and
what is expected of them in their job description.

In order to investigate the relationships between the different CE factor-scales, reported in

Table 4.8 as dependent variables and the categorical biographic variables as independent
variables, a non-parametric Kruskal-Wallis One Way Analysis of Variance was conducted.
For the purposes of this study a non-parametric test was used due to the small sample
size and lack of the assumption of a normal distribution (Cooper & Schindler, 2003:531).
The results are shown in Tables 4.9 to 4.14.

Table 11: Results of Kruskal-Wallis One Way Analysis of Variance with factor one,
the management support sub-scale (CE1) as dependent variable (N = 63)

Independent F df p>F
Variable
Age 5.82 3 0.1207
Gender 0.45 1 0.5018
Management level 1.37 2 0.5049
Years in sector 1.31 2 0.5194
Years in org/comp 2.57 2 0.2764
Position 12.28 2 0.0022*
Qualification 1.08 3 0.7823
*p = .05

Only groups formed in terms of position were shown to be as significantly different at the
95% level of significance, on the management support sub-scale as dependent variable,
as shown in Table 4.9.

These differences were further investigated by means of a Z-test on the LS-mean scores
on the management support sub-scale. Significant differences were indicated between
consultants and middle management and consultants and influential employees at the 95
percent level of significance, with consultants scoring significantly higher than middle
management and influential employees on the management support sub-scale.
Table 12: Results of Kruskal-Wallis One Way Analysis of Variance with factor two,
the work discretion sub-scale (CE2) as dependent variable (N = 63)

Independent F df p>F
Variable
Age 4.07 3 0.2543
Gender 3.79 1 0.0514
Management level 6.08 2 0.0478*
Years in sector 5.52 2 0.0633
Years in org/comp 3.86 2 0.1450
Position 6.44 2 0.0399*
Qualification 2.63 3 0.4522
*p = .05

Only groups formed in terms of management level and position were shown to be as
significantly different at the 95% level of significance, on the work discretion sub-scale as
dependent variable shown in Table 4.10.

These differences were further investigated by means of a Z-test on the LS-mean scores
on the work discretion sub-scale. Significant differences were indicated between senior
and lower management levels on the work-discretion sub-scale at the 90 percent level of
significance, with senior management scoring higher than lower management concerning
work discretion.

Further differences were indicated between middle managers and influential employees at
the 95 percent level of significance, with middle managers scoring higher than the regular
employees on the work discretion sub-scale.

Table 13: Results of Kruskal-Wallis One Way Analysis of Variance with factor three,
the rewards and reinforcement sub-scale (CE1) as dependent variable (N = 63)

Independent F df p>F
Variable
Age 0.70 3 0.8740
Gender 0.46 1 0.4998
Management level 0.93 2 0.6277
Years in sector 0.11 2 0.9476
Years in org/comp 1.65 2 0.4389
Position 2.14 2 0.3432
Qualification 5.83 3 0.1201
*p = .05

None of the groups formed were shown to be as significantly different at the 95% level of
significance, on the rewards and reinforcement sub-scale as dependent variable shown in
Table 4.11.

Table 14: Results of Kruskal-Wallis One Way Analysis of Variance with factor four,
the time availability sub-scale (CE1) as dependent variable (N = 63)

Independent F df p>F
Variable
Age 5.12 3 0.1630
Gender 1.14 1 0.2853
Management level 0.60 2 0.7408
Years in sector 0.06 2 0.0484*
Years in org/comp 4.16 2 0.1252
Position 4.20 2 0.1224
Qualification 0.91 3 0.8223
*p = .05

Only groups formed in terms of years in sector were shown to be as significantly different
at the 95% level of significance, on the time availability sub-scale as dependent variable as
shown in Table 4.12.

These differences were further investigated by means of a Z-test on the LS-mean scores
on the time availability sub-scale. Significant differences were indicated between
individuals working between 0-10 years in the banking sector and individuals working
between 21-40 years in the banking sector, at the 95 percent level of significance.
Individuals working between 0-10 years scored higher on the time-availability sub-scale
than individuals working between 21-40 years.

Table 15: Results of Kruskal-Wallis One Way Analysis of Variance with factor five,
the organizational boundaries sub-scale (CE1) as dependent variable (N = 63)

Independent F df p>F
Variable
Age 2.10 3 0.5527
Gender 2.35 1 0.1256
Management level 5.35 2 0.0690
Years in sector 0.15 2 0.9300
Years in org/comp 0.07 2 0.9638
Position 3.32 2 0.1904
Qualification 6.42 3 0.0929
None of the groups formed as independent variables were shown to be as significantly
different at the 95% level of significance, on the organizational boundaries sub-scale as
dependent variable shown in Table 4.13.

4.3 Conclusion

The current chapter discussed both the descriptive and inferential statistics of the current
study. The descriptive statistics indicated and verified the biographic and demographic
variables of the participants. A non-parametric Kruskal-Wallis One-Way Analysis of
Variance was employed to investigate the differences in the biographic and demographic
variables as independent variables, and the five identified CE factors of (management
support, work discretion, rewards and reinforcements, time availability, and organisational
boundaries) as dependent variables. The significant differences and findings were
examined. The following chapter will be a discussion of the findings of the current chapter
in combination with the indications of the literature and theory, discussed in chapter 2.

CHAPTER 5

CONCLUSIONS, RECOMMENDATIONS AND LIMITATIONS

This is the final and concluding chapter of the study. All the recommendations, conclusions
and limitations of the study will be discussed and interpreted, based upon the findings of
this study and related to the literature findings reported in chapter 2. The findings will be
discussed in relationship to the five CE factors, identified by Morris and Kuratko
(2002:295), namely management support, work discretion, rewards and reinforcements,
time availability and organisational boundaries.

5.1 Conclusions and Recommendations

5.1.1 Management support

The first factor, management support refers to the introduction, support, encouragement
and willingness of managers to facilitate entrepreneurial activity within an enterprise
(Kamffer, 2004:4; Scheepers, Hough & Bloom, 2007:242), and promote both corporate
entrepreneurial behaviour and activities within an organisation (Bhardwaj, Camillus &
Hounshell, 2007:51; Ireland et al. 2006b:27).

It was found that as far as management support is concerned, results indicated that
management granted significantly higher support to consultants than to middle
management, as well and regular employees at the 95% level of significance. It has been
established that a successful CE climate is dependent on support and encouragement
from middle management (Kuratko, et al., 2005:699).

The management support for CE seems to be unevenly distributed, with consultants being
the focal group opposed to middle managers and regular employees. It is concerning to
see that the findings of the current study indicates a lack of support from management for
their own middle management and regular employees, but that the expected support is
channelled to consultants.
In view of Kuratko et al.’s (Kuratko et al., 2005:699) argument that management should be
supportive in advancing a climate of CE, as well as the findings of Adonisi (2003:123) that
management support contributes to internal, external as well as total job satisfaction, it is
concerning that this support did not feature in the current study.

5.1.2 Work discretion

The investigation into the second factor, work discretion, refers to the degree of autonomy
given to individuals to complete or conduct business operations, as well as entrepreneurial
efforts (Bhardwaj, Camillus & Hounshell, 2007:51). Autonomy refers to employees’
discretion and the extent to which they are empowered to make decisions on the
performance and direction of their own work in the way they believe is most effective.
(Scheepers, Hough & Bloom, 2007:242).

Findings indicate that senior management scored significantly higher than lower
management at a 90% level of significance, and middle management scored significantly
higher than regular employees at a 95% level of significance, concerning work discretion.
This reveals that top management have significantly more discretion (extensive authority
and responsibility), than lower levels of management (limited authority and responsibility)
as far as corporate entrepreneurial authority and responsibilities are concerned.
Gantsho (2006: 58) suggests that in order to develop and maintain a conducive CE
climate, a more even distribution of authority, responsibility and autonomy should take
place at all levels of the organisation. The indication is that an even distribution of CE
authority and responsibility leads to internal, external as well as total job satisfaction
(Adonisi, 2003:123&124).

The significantly lower authority and responsibility granted to lower management, in

comparison to middle management is understandable in the light of their lower experience
and therefore exposure to possible risks. Methods should be developed allowing lower
management greater work discretion, responsibility and authority, under controlled
environments. Similarly in order to create a supportive CE climate, the gap between
middle management and regular employees should be decreased. In the light of Adonisi’s
(2003:123) study, this can potentially prevent job dissatisfaction.

Indications are that in the current study, responsibility and authority concerning the CE
factor of work discretion is significantly uneven and skewly distributed to top management,
leaving little or no opportunities of work discretion to lower management and regular
employees.

5.1.3 Rewards and Reinforcements

The third factor of rewards and reinforcements refers to an appropriate reward system that
keeps employees motivated and committed, constantly striving for new ideas and
opportunities (Morris and Kuratko, 2002, 296; Viswanathan & Nagarajan. 2004:21).
Rewards are the very influential in motivating employees, and rewards can take on both
financial and intangible forms (Kirby, 2003:304). According to Adonisi (2003:123&124),
rewards and reinforcement also contribute to internal, external and total job satisfaction.

The Kruskal-Wallis One Way Analysis of Variance indicated that none of the groups
formed were shown to be as significantly different at the 95% level of significance, on the
rewards and reinforcement sub-scale. This can be interpreted as an equal distribution to of
rewards and reinforcements on the measured independent variables of age, gender,
management level, years in the sector and organisation, position and qualification. Thus,
rewards and reinforcements can be seen as a constant factor which is impartial to any of
the measured independent variables. The conclusion can therefore be drawn that rewards
and reinforcements were equally distributed on the independent variables.

An overwhelming majority of respondents made it clear that rewards and recognition were
given in accordance to their work related performances, and they knew what they had to
do in order to achieve it. This compliments CE and contributes to the development of a CE
climate, as employees are rewarded for acting entrepreneurially. According to Bhardwaj
and Momaya (2007:136) an effective reward system is important means of encouraging
and promoting entrepreneurial activity and behaviour.

Rewards and reinforcements seem to play a healthy role in the corporate entrepreneurial
climate of the current study.

5.1.4 Time availability

The fourth factor of time availability involves the relationship of employees/ team work
loads and time needed for the pursuit of new innovations. It is defined as evaluating
workloads to ensure that individuals have the time needed to complete workloads detailed
in their job description, as well as having enough additional time to pursue CE activities
and opportunities (Ireland et al.2006b:28).

Only groups formed in terms of years in sector were shown to be as significantly different
on the time availability sub-scale. Significant differences were indicated at the 95% level of
significance for individuals working between 0-10 years in the banking sector > than
individuals working between 11-20 years and > than individuals working between 21-40
years in the banking sector.

This is an indication that individuals working for les than ten years had more time available
for CE activities than individuals working more than 11 years. This finding indicates an
implicit possible imbalance, indicating that individuals with the most work experience had
the least amount of time to pursue CE activities. The fact that the majority of employees
indicate they have insufficient time for CE activities, can contribute to a potentially
unhealthy CE climate.
To create a situation which will compliment the CE climate, it’s suggested that there be an
equal distribution of time across all groups, with additional time given to pursue CE
orientated activities (Scheepers, Hough & Bloom, 2007:242).

5.1.4 Organisational boundaries

The fifth and final factor of organisational boundaries can be referred to as the particular
precincts and structures which differentiate certain areas within organisations.
Organisational boundaries form expected measures of organisational work and become
mechanisms used for evaluating and bench marking (Ireland et al. 2006b:28).

None of the groups formed as independent variables were shown to be as significantly

different, on the organisational boundaries sub-scale. This means that no differences were
found with organisational boundaries as the dependent factor and age, gender, position,
qualification, management level, years in the sector and years in the organisation.

There is a distinct indication that employees know and understand what is expected of
them in terms of standards, levels of work performance as well as the quality and time
frame of output. Hence, a healthy CE climate concerning organisational boundaries is
seen to exist in the current study.

In a study by Adonisi (2003:123) the CE factors of rewards/reinforcement, work

improvement, work discretion had a total prediction of 47.34% in extrinsic job satisfaction
as dependent variable. Additionally, the CE factors of rewards/reinforcement, work
improvement, work discretion and a significant prediction of 26.98% in internal job
satisfaction as dependent variable. Total job satisfaction was predicted 21.42% by the
three CE factors of rewards/reinforcement, work improvement, work discretion (Adonisi,
2003:124). This finding emphasises the importance of the nurturing of CE in an
organisation, as it is not only advantageous to the development of a CE culture, but it has
a direct influence on the external, internal and total experience of job satisfaction of
employees. Therefore the notion of CE should be carefully fostered in any organisation to
preserve a healthy organisational culture.
5.1.5 Management Implications

The fact that consultants enjoy more management support for CE activities than middle
management and regular employees is concerning. Similarly senior management scored
higher on the work discretion CE scale than middle management and regular employees,
which could lead to many frustrations. Time-availability was also unevenly distributed, with
individuals with less experience in years in the banking sector enjoying more time
availability for CE activities than individuals with more experience in years. Seen in the
light of the findings of Adonisi (2003:123&124), that a healthy CE climate leads to job
satisfaction, it is concerning that middle management and regular employees do not enjoy
the necessary support for CE activities, but that consultants rather enjoy this advantage.

Work discretion is also less allowed to middle management and regular employees than
senior management, while time availability is an overall problem, but significantly more so
for individuals with more than 11 years experience than those with less than 10 years
experience. This could potentially lead to a climate of job dissatisfaction, if the results of
Adonisi (2003:123&124) are brought into consideration. Management should therefore
take extra care in creating a healthy support climate for CE activities amongst their own
employees, not only to uplift the CE climate in the banking sector, but also to implicitly
create a culture of job satisfied individuals.

5.3 Limitations

The greatest limitation to this study is the lack of depth associated with the relatively small
sample size of 63 respondents. It should be indicated that the results should be interpreted
with caution.

The findings of the current study can only be generalised to the four representative South
African banks that took part in the study, namely ABSA, FNB (FirstRand), Nedbank
(Nedcor) and Standard Bank. No generalisation or assumptions can be made in relation to
the other banks which make up the banking sector.
Due to possible response bias, it could be that results are slightly skewed, however
individuals were ensured of anonymity and confidentiality of their responses.

5.4 Future Studies

The following six areas might be considered for future research into the subject of CE in
the banking sector. Firstly, a more detailed and in-depth study involving a much larger
sample, which is more representative of the whole population, should be conducted.
Secondly, ‘bank specific’ studies should be conducted upon the respective banks.
Meaning each bank’s CE climate should be individually evaluated as comparisons
between banks will allow for more accurate conclusions to be achieved. These findings
could be used as a guideline to rehabilitate CE short comings in the different banks.

Thirdly, studies should be done comparing the CE climate of the South African Banking
sector opposed climates of banking sectors outside South Africa. The fourth possible
future study is one which involves the monitoring of the CE climate within the banking
sector over time to see changes in CE climate and levels of CE. Lastly, a study should be
conducted comparing the CE climate of the banking sector versus, other financial
institutions.

5.5 Conclusion

This chapter has concluded the research by giving a summary of the climate of the five
different CE factors, concerning the independent variables of educational level; position;
years of employment in current organisation; number of years in the banking sector;
management level; gender and age. The findings illustrate the use of the CEAI as a means
of assessing and testing the CE climate in the South African banking sector. The research
conducted contributes to a better understanding of CE, as well as the CE climate within
the sector, and can be used as a basis for the successful rehabilitation of CE in the
banking sector.
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 APPENDIX

APPENDIX 1: The CEAI Questionnaire

 CORPORATE ENTREPRENEURIAL CLIMATE WITHIN THE SOUTH
AFRICAN BANKING SECTOR

The theory of corporate entrepreneurship (CE) is currently a very popular and constantly
evolving topic of research and study. The purpose of this study is to determine and
evaluate the corporate entrepreneurial climate within the South African banks which
make up the South African banking sector.

Corporate Entrepreneurship can be defined as the form of entrepreneurial spirit

permeating throughout an organisation, brought about by the visions, actions and
mindsets of employees and management alike, and results in entrepreneurial behaviour
and orientation within established organisations.

Dear Respondent,

All the information will be treated as STRICTLY CONFIDENTIAL.

Instructions for completion

• All information will be treated as confidential and respondents aren’t required

to fill in their names or the names of their respective organisations.
• Please answer the questions as objectively and honestly as possible.
• Please answer based on your own business and experiences as much as
possible.
• Please mark the option which reflects your answer the most accurately by
making an (X) in the space provided.
• Please answer all the questions as this will provide more information to the
researcher so that an accurate analysis and interpretation of data can be made

FOR OFFICE USE

RESPONDENT NUMBER V1

A BIOGRAPHICAL DETAILS

1 Age V2
 2 Gender

Male 1 V3
Female 2

3 Number of years at company V4

4 Management Level

Senior Management 1
Middle Management 2 V5
Lower Management 3

5 Position
V6

6 Highest qualification obtained?

Matric (Grade 12/Std 10) 1

National Diploma 2 V7
Undergraduate degree 3
Postgraduate degree 4

How many years experience do you have in the banking

7
sector?

V8

Please mark the respective

column with an ‘X’:
Strongly Disagree

Strongly Agree
Uncertain
Disagree

Agree

Code: Please mark the respective

No.
column with an ‘X’
Management Support for Corporate Entrepreneurship
Our departmental vision and
1 Q1
strategies are clear to me.
My organization is quick to use
2 improved work methods that are Q2
developed by workers.
In my organization, developing
3 ideas for the improvement of the Q3
corporation is encouraged.
Upper management is aware of
4 and very receptive to my ideas Q4
and suggestions.
A promotion usually follows from
5 the development of new and Q5
innovative ideas.
Those employees who come up
with innovative ideas on their own
6 Q6
often receive management
encouragement for their activities.
The “doers” on projects are
allowed to make decisions without
7 going through elaborate Q7
justification and approval
procedures.
Senior managers encourage
innovators to bend rules and rigid
8 Q8
procedures in order to keep
promising ideas on track.
Many top manages are known for
9 their experience with the Q9
innovation process.
Money is often available to get
10 Q10
new project ideas off the ground.
Individuals with successful
innovative projects receive
additional rewards and
11 Q11
compensation for their ideas and
efforts beyond the standard
reward system.
There are several options within
the organization for individuals to
12 Q12
get financial support for their
innovative projects and ideas
Stro
Unc
Stro

Disa

Agre

Please mark the respective

column with an ‘X’:
 ngly Disagree

ngly Agree
ertain
Code: Please mark the respective

gree
No.

e
column with an ‘X’

People are often encouraged to

13 take calculated risks with ideas Q13
around here.
Individual risk takers are often
recognized for their willingness to
14 Q14
champion new projects, whether
eventually successful or not.

The term “risk taker” is considered

15 a positive attribute for people in Q15
my work area

This organization supports many

small and experimental projects
16 Q16
realizing that some will
undoubtedly fail

An employee with a good idea is

17 often given free time to develop Q17
that idea.

There is considerable desire

among people in the organization
18 for generating new ideas without Q18
regard for crossing departmental
or functional boundaries.
People are encouraged to talk to
employees in other departments of
19 Q19
this organization about ideas for
new projects.
Work Discretion
I feel that I am my own boss and
20 do not have to double-check all of Q20
my decisions with someone else.
Harsh criticism and punishment
21 result form mistakes made on the Q21
job
This organization provides the
22 chance to be creative and try my Q22
own methods of doing the job.
This organization provides the
23 freedom to use my own judgment Q23
and initiative
 Please mark the respective
column with an ‘X’:

Strongly Disagree

Strongly Agree
Uncertain
Disagree

Agree
Code: Please mark the respective
No.
column with an ‘X’

This organization provides the

24 chance to do something that Q24
makes use of my abilities.
I have the freedom to decide what
25 Q25
I do on my job.
It is basically my own responsibility
26 Q26
to decide how my job gets done
I almost always get to decide what
27 Q27
I do on my job.
I have much autonomy on my job
28 and am left on my own to do my Q28
own work.
I seldom have to follow the same
29 work methods or steps for doing Q29
my major tasks from day to day.
Rewards/Reinforcement
My manager helps me get my
30 work done by removing obstacles Q30
and roadblocks.
The rewards I receive are
31 dependent upon my work on the Q31
job.
My supervisor will increase my job
32 responsibilities if I am performing Q32
well in my job
My supervisor will give me special
33 recognition if my work Q33
performance is especially good
My manager would tell his/her
34 Q34
boss if my work was outstanding
There are a lot of challenges in my
35 Q35
job.
Time Availability
During the past three months, my
36 workload kept me from spending Q36
time on developing new ideas.
I always seem to have plenty of
37 Q37
time to get everything done.
 Please mark the respective
column with an ‘X’:

Strongly Disagree

Strongly Agree
Uncertain
Disagree

Agree
Code: Please mark the respective
No.
column with an ‘X’

I have just the right amount of time

38 and workload to do everything Q38
well.
My job is structured so that I have
39 very little time to think about wider Q39
organizational problems.
I feel that I am always working with
40 Q40
time constraints on my job
My co-workers and I always find
41 Q41
time for long-term problem solving
Organizational Boundaries
In the past three months, I have
always followed standard
42 Q42
operating procedures or practices
to do my major tasks.
There are many written rules and
43 procedures that exist for doing my Q43
major tasks.
On my job I have no doubt of what
44 Q44
is expected of me.
45 There is little uncertainty in my job. Q45
During the past year, my
immediate supervisor discussed
46 Q46
my work performance with me
frequently
My job description clearly specifies
47 the standards of performance on Q47
which my job is evaluated
There are people in the
48 department who always lend a Q48
hand when needed.
I clearly know what level of work
performance is expected from me
49 Q49
in terms of amount, quality, and
time line of output.