This paper was presented at The XXVI ISPIM Conference Shaping the Frontiers of Innovation

Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.

Entrepreneurial Organizational Culture as a Predictor

of Entrepreneurial Outcomes
Stephen J.J. McGuire
California State University Los Angeles, 5151 State University Drive,
Los Angeles, CA 90032, USA.
E-mail: smcguir@calstatela.edu

Ellen A. Drost*
California State University Los Angeles, 5151 State University Drive,
Los Angeles, CA 90032, USA.
E-mail: edrost@calstatela.edu
* Corresponding author
Abstract: This paper defines a firm-level construct, entrepreneurial
organizational culture (EOC), and presents a validated instrument via survey of
multiple respondents in organizations. Evidence of EOCs content, construct,
concurrent, and discriminant validity are provided for a subsample of these
organizations. The paper also tests hypotheses regarding the relationship
between EOC and (1) entrepreneurial business strategy, (2) firm-level
entrepreneurial outcomes and (3) entrepreneurial strategic posture for a subsample of 119 organizations. Results indicate support for the constructs
reliability and validity. Moreover, EOC was positively related to the type of
business strategy espoused by CEOs, to the firms degree of entrepreneurial
strategic posture, and to certain entrepreneurial outcomes including revenue
from new sources.
Keywords: entrepreneurial organizational culture; business strategy; firm-level
entrepreneurial outcomes; entrepreneurial strategic posture; entrepreneurship;
business strategy types; construct validity; corporate culture

Introduction
At the societal level of analysis, culture has long been recognized as a critical variable in
the explanation of variances in entrepreneurial activity. In fact, it has been claimed that
the most important barriers to entrepreneurship are non-economic and that what does
matter is culture. At the firm level, researchers of corporate entrepreneurship have
postulated that both business strategy and organizational culture are antecedents to
corporate entrepreneurship (Zahra, 1993). Empirical evidence of such a relationship is
scarce, particularly regarding organizational culture. In order to study the relationship
between organizational culture and entrepreneurship, researchers need validated
measures that are grounded in theory. Building on previous research, this study defines
entrepreneurial organizational culture and its factors, validates a measurement
instrument, and tests the relationships between Entrepreneurial Organizational Culture

This paper was presented at The XXVI ISPIM Conference Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.

(EOC) and business strategy and certain entrepreneurial outcomes, as depicted in

Figure 1.

Conceptual Model

Figure 1. Conceptual Framework of Organizational Entrepreneurship (adapted from

Zahra, 1993)
Entrepreneurship is the transformation of innovation (no matter what the source) into a
new product, service, or business in order to take advantage of a market opportunity
(Covin and Slevin, 1991). Entrepreneurship occurs when a person (a single entrepreneur)
or group attempts to capture revenue from new sources - previously untapped, underexploited, or previously inexistent market opportunities. Entrepreneurship implies
recognizing and seizing opportunities, either innovating or developing someone elses
innovation, and converting opportunities into marketable ideas by adding time, effort,
money, skills and by assuming the risk associated with the opportunity.
Entrepreneurship can be described at the individual level (the garage tinkerer), the
organizational level, and the societal level. Independent entrepreneurship is
entrepreneurship through the creation of a new, independent organization. Corporate
entrepreneurship, on the other hand, is entrepreneurship within (or in association with) an
existing organization, which may or may not lead to creation of a new organization.
Corporate entrepreneurship, intrapreneurship, corporate venturing and other terms have
been advanced for entrepreneurship within (or in association with) an existing
organization.

Culture and entrepreneurship

Conceptually, culture shapes how groups attempt to solve the problems presented to them
by their environment; solutions that are successful tend to be repeated and taught to new
members (Schein, 1985). Cultural values affect how organizational members perceive
opportunities in their environment, and the decisions that they make about innovation,
risk-taking, and the urgency of changing. If meaning is socially constructed, then it is
through social interaction that members of any group make sense of their observations
and behaviors. Over time, the different perceptions of members of any group tend to
converge as they mutually influence each other (Weick, 1995).
Since the work of Jaques (1952), it has been accepted (and later deemed obvious) that
not only societies but also organizations have cultures. Like members of all other groups,
members of organizations develop a culture that they pass on from current to new
members. Organizational culture influences how members view the world in which their
organization exists. It includes implicit, shared values, beliefs, and behavioral norms
about how the world works, what is human nature, how work is or should be organized,
and on what criteria decisions should be made.

Organizational Entrepreneurship
Organizational entrepreneurship is the transformation of innovation (no matter what its
source) into a new product, service, or business venture in order to take advantage of a
market opportunity by (or in association with) an existing firm. Entrepreneurship is an
ongoing process that neither requires nor precludes the creation of a new organization
(Zahra, 1993; Covin and Slevin, 1991).
The antecedents of organizational entrepreneurship include the external environment
(namely market growth and opportunities, access to capital, etc.), business strategy, and
internal resources including organizational culture. Measures of organizational
entrepreneurship are, for instance, the extent to which the organization obtains revenues
from new sources (new products, services, or business ventures) in the medium term,
often measured in research as three years. A second measureperhaps less
informativeis the overall growth of revenue in the same period. Both measures
suggest the extent to which an organization identifies and exploits market opportunities.

Entrepreneurial Organizational Culture

Entrepreneurial Organizational Culture (EOC) is a system of shared values, beliefs and
norms of members of an organization, including valuing creativity and tolerance of
creative people, communicating openly and frequently, believing that innovating and risk
taking to seize opportunities are appropriate behaviors to deal with problems of survival
and environmental uncertainty, and expecting organizational members to behave
accordingly.

Intrapreneurship
Pinchot (1985) coined the term intrapreneurship to refer to autonomous initiatives by
employees that may lead to innovation. Pinchot claimed that granting power and
autonomy to employees would lead to the development of innovations by employees who
had not been specifically directed to do so by senior management. Conceptually,
intrepreneurship is compatible with Entrepreneurial Organizational Culture.

This paper was presented at The XXVI ISPIM Conference Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.

Security-oriented Norms
Norms are expectations of behaviour shared by members of a group. Security-norms are
characteristic of groups that avoid or minimize interpersonal conflict, avoid risks, rely on
a supervisor to assume accountability for decisions, and seek to avoid being blamed for
mistakes (Rousseau, 1991). Conceptually, security-oriented norms are incompatible with
an entrepreneurial organizational culture. Rousseau (1991) found a negative relationship
between unit performance and three out of four unit-level scores on security-oriented
norms: (1) approvalagreeing with and being liked by others, (2) conventional
conforming and following the rules, and (3) dependentdo as told and clear all decisions
with a superior. The final norm, (4) avoidanceemphasis on avoiding blame and
punishment for mistakes, was negatively correlated but not statistically significant.

Strategy and Organizational Entrepreneurship

Strategy is typically described as a rational activity, preceding and influencing the
decisions that managers make. Grant (1991) defined strategy as a set of guidelines for
how an organization will achieve its goals: the means by which an organization will
survive in the long run. A less conventional definition of strategy is a pattern in a stream
of decisions; deliberate strategies are planned while emergent strategies are patterns
realized despite, or in the absence of, intentions (Mintzberg and Waters, 1985).
Espoused strategy is the way an organizations leaders describe how their organization
attempts to achieve its overall mission and survive in the long term. In other words,
sometimes CEOs talk the strategy that their organizations may or may not walk. In
other cases, strategy is described only after observing how the organization has been
performing. Espoused strategy is not necessarily consistent with actions taken, and
plausibly follows, rather than precedes, tactical choices.
Miles and Snow (1978) described four strategy types that an organization can pursue:
prospector, analyzer, defender, and reactor, they are described next.
Prospectors seek to obtain and retain competitive advantage by creating change within
their industry through new product development and the introduction of new
technologies. Conceptually, organizational entrepreneurship fits closer with a prospector
strategy than with any other type (Segev, 1998).
Analyzers identify and exploit new ideas, products/ services and markets, while
simultaneously maintaining a base of traditional products and customers in their core
area of activity. Analyzers are less likely to lead innovation in their industry sector and
more likely to imitate innovations first introduced by othersperhaps high-profile firms,
market leaders or direct competitors. Analyzers may have a dual approach to technology,
seeking incremental improvements in the core area of activity and radical changes in
peripheral or new products/services or markets. An analyzer strategy, therefore,
corresponds to entrepreneurial strategies.
Defenders try to create a stable domain by being efficient very focused on, and very
good at, what they do. Defenders do little scanning for opportunities to launch new
products/services. A successful defender obtains and holds onto a niche within its
industry that other firms can only penetrate with great difficulty (Segev, 1998).
Defenders may be innovative in that they develop and/or adopt technologies and new
processes in order to increase efficiency. Defenders are decidedly not innovative, when it

comes to launching new product/services or business ventures that deviate from

established product lines or markets.
Reactors respond to changing conditions without a clear commitment either to
efficiency, focus or differentiation and expansion of services. While reactors may have
an advantage over organizations with other strategies in the short term, the reactor
strategy is the only one of the four that is unlikely to be successful in the long term (Miles
& Snow, 1978).
Next our research methodology, which describes our sample description, development
of the EOC scale, hypotheses testing the validity of the EOC scale and the relationship
between EOC and (1) entrepreneurial business strategy, (2) firm-level entrepreneurial
outcomes and (3) entrepreneurial strategic posture.

Research Methodology
Sample
Data were collected from 119 organizations of three types: 66 technology firms, 48
nonprofit organizations, and 5 U.S. state departments of motor vehicles (DMVs). The
technology firms were randomly selected from a database of U.S. technology firms.
Nonprofit organizations and state departments of motor vehicles (DMVs) were also
invited to participate in the research project (convenience samples). Multiple key
informants from the organizations completed surveys on entrepreneurial organizational
culture and other variables, totaling 627: 443 from technology firms, 147 from
nonprofits, and 37 from DMVs. Tech firms on average had 7,228 employees and US$
1.2 billion in revenue (range US$ 1.5m to 12.9b). Of the 66 Tech firms, 16 (24.2%) were
from the software and services industry, 15 (11.2%) were from the telecommunication
industry, and the remaining were from other tech industries.
Three types of reliability tests were applied to the measures used in the study. (1)
When information was available in the database, it was compared with data provided by
firms. (2) Tests of interrater reliability were applied to data obtained from firms. (3)
Each scales reliability was expected to meet or exceed a Cronbachs alpha of 0.70.

Development of Entrepreneurial Organizational Culture (EOC) Scale

Eleven Subject Matter Experts (SMEs) reviewed the proposed EOC dimensions and
items. All proposed dimensions and 75 (out of 78) items were retained, thus providing
initial evidence of content validity. A pilot study of the EOC instrument was then
conducted in 13 organizations, and results discussed with the management teams of these
organizations. Subsequently, revisions were made taking into account feedback from the
12 organizations and methodologists recommendations for item and scale development.
The proposed EOC model was then subjected to confirmatory factor analysis. Results
indicated moderate to good fit between the model and the data. A review of the errors
produced by the model led to a revised model, a six-factor EOC model, including:
Tolerance of Creative Deviance; Risk Taking; Open Communication; Cooperation;
Proactive Innovation and Voice. These six factors or dimensions are defined next.
Tolerance of Creative Deviance. The extent to which members accept and value
diverse approaches to work, and in particular tolerate differences in behavior by creative

This paper was presented at The XXVI ISPIM Conference Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.

or talented members who challenge the status quo. The belief that an essential role of
management is to find talented people and provide them conditions in which they can be
entrepreneurial.
Risk Taking. The degree to which members believe that reasonable risks should be
taken by people at all levels of the organization, and that failure is a source of learning
rather than a source of shame. The extent to which members believe that successes as
well as intelligent failures should be rewarded.
Open Communication. The extent to which members believe that frequent and open
communication with each other and with outsiders, and relatively unfettered access to
information by all, is an appropriate approach to work. The belief that ideas and
suggestions can come from many sources, including employees at all levels.
Cooperation. The extent to which people value the achievement of goals through
collective effort and by cooperating with one another.
Proactive Innovation. The extent to which members find it legitimate and appropriate
to think and act ahead of the customer/ beneficiary, rather than only satisfying current or
emerging needs. The belief that proactive innovation is an appropriate means of
organizational survival.
Voice. The extent to which members believe it appropriate to allow people to express
their dissatisfaction with the organization in an attempt to improve it, rather than
suffering in silence or leaving the organization, as well as the extent to which it is seen as
appropriate to accommodate and thus retain talented people, even if doing so requires
creative or unusual solutions to resolve dissatisfaction.
In-group consensus was verified by several tests, including r*WG(J) and ADM(J), thus
justifying aggregating data to constitute organizational-level scores. All data included in
the study demonstrated sufficient in-group consensus.

Independent and Dependent Variables

Entrepreneurial Organizational Culture. Data were collected from multiple respondents
per firm on the EOC Scale and mean scores calculated per confirmed factor, converted to
a 0 to 100 scale. The scales included Proactive Innovation (8 items, x = 40.62, = 0.89),
Cooperation (6 items, x = 30.87, = 0.91), Open Communication (4 items, x = 24.9, =
0.88, Risk Taking (6 items, x = 26.37, = 0.85, Tolerance of Creative Deviance (6 items,
x = 27.16, = 0.83) and Voice (4 items, x = 28.24, = 0.75).
An index is a composite measure of a construct constructed by adding or averaging the
scores of distinct indicators or scales An index is one useful way to combine the
measures of multiple, related constructs into a single value. For the purpose of the present
study, the EOC Index was computed as the average of the scores of the six confirmed
EOC factors, divided by 7, times 100, thus generating an easy-to-interpret single value
per organization from 0 to 100. The Cronbachs alpha of the EOC Index was 0.94.
Intrapreneurship. Intrapreneurship was assessed using the 6-item second scale ( = .78)
by Kuratko, Montagno and Hornsbys (1990).
Security-Oriented Norms. Security-oriented Norms were assessed using a 4-item scale (
= .82) from Rousseau (1990).
Business Strategy. Business strategy was identified by the firms CEO on a continuum
from 1 to 7 identifying relative change in products/services or markets, using a scale

developed by Zajac and Shortell (1989). Strategy was treated as a continuous variable, or
responses were collapsed into discrete groups of defenders, analyzers, and prospectors.
Organizational Entrepreneurship. Organizational Entrepreneurship was operationalized
using both objective and subjective measures. The primary outcome of corporate
entrepreneurship was revenue from new sources, as per our definition of the construct.
Therefore, corporate entrepreneurship was operationalized as the percentage of revenue
obtained from new products, services, and business ventures over three years.
Organizational Performance. The CEOs subjective assessments of their firms
entrepreneurial performance was assessed with Zahras (1996) Commitment to
Innovation scale (5 items, = .86) and Venturing Activities Scale (5 items, = .72), as
well as the importance of new products and services, a single item used by Pearce and
Carland (1999).
Entrepreneurial Strategic Posture (ESP). ESP was measured by asking CEOs to indicate
their firms orientation on Covin and Slevins (1989) adaptation of Miller and Friesens
(1982) scale, which represents a unidimensional construct (9 items, = .924). ESP
indicates the extent to which the implementation of strategy is entrepreneurialthe
extent to which an organization enacts its strategy by innovating, taking risks and acting
proactively (Shortell and Zajac, 1990).
Interrater reliability was assessed obtaining data from a second executive in the
participating firm. The second executive completed a follow-up questionnaire, in an
identical format as the original. Responses from the two executives were significantly
correlated.
Firm size (revenues and number of employees) and industry type were control
variables.

Results
Within-Group Consensus
Conceptually, organizational culture was represented by the shared perceptions of
organizational members. Individuals have experiences and form perceptions, which over
time become shared phenomena. It is the requirement of shared that differentiates the
group-level construct culture from individual perceptions (Kozlowski & Klein, 2000).
This study follows what Martin (1992) called the uniformity perspective. In other
words, the researchers assumed that an organization has a predominant, characteristic
organizational culture.
For this purpose, data were first analyzed for within-group consensus using three
different tests: SDX, r*WG(J), and ADM(J). SDX, the standard deviation of group members
ratings, was calculated to report the disagreement (lack of consensus) of members of a
group. Higher scores indicated higher levels of dissensus, but there are no standard
cutoff values. r*WG(J) was designed as measures of agreement or consensus among
members of a group when using multiple items in a scale, and is specifically
recommended for research in which individual perceptions are aggregated to represent
group-level constructs (Klein, et al., 2001). Values of r*WG(J) were tested for statistical

This paper was presented at The XXVI ISPIM Conference Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.

significance using a chi square test. The higher the coefficient, the higher the within
group agreement, and scores below 0.0 suggest insufficient consensus to justify
aggregating individual scores to group level constructs.
ADM(J) is a measure of the average deviation of interrater agreement on one scale on a
single occasion (Burke & Dunlap, 2002). Like SDx, it is a measure of within-group
dissensus. The measure provides an easily interpretable statistic in the metric of the
original unit of measurement, here a 7-point Likert-type scale. The lower the score, the
less dispersion around the mean of all raters on the items of a scale. The cut-off score
was determined by dividing the number of response options by six for a 7-point scale
(1.167), above which there is insufficient agreement to justify aggregating individual
responses. We eliminated any organization where the key informants had insufficient
agreement.

Confirmatory Factor Analysis

A confirmatory factor analysis (CFA) was performed of the proposed EOC model, based
on the covariance matrix of responses from key informants on 75 items. Skewness and
kurtosis were verified and indicated that the data were distributed normally. The analysis
used the maximum likelihood estimation procedure, as implemented in LISREL v8.53
(Joreskog and Sorbom, 1996; Kelloway and Kelvin, 1998). Based on the analysis of the
proposed EOC model, six factors were extracted: (1) Proactive Innovation (PRO), (2)
Cooperation (COOP), (3) Open Communication (OC), (4) Risk Taking (RISK), (5)
Tolerance of Creative Deviance (TOL), and (6) Voice (VOICE).
The model
demonstrated a good fit with the data (Chi Square = 2328.45, p = 0.00; RMSEA = 0.079;
GFI = .80.) These six factors were used to test the hypotheses in this study.

Convergent Validity
The first hypothesis assessed the degree to which EOC scores converged with scores on
an instrument that assesses a construct tapping into a similar latent construct,
intrapreneurship, specifically,
Hypothesis 1: There is a positive relationship between EOC and intrapreneurship.
The first test examined the bivariate correlations between scores on the EOC
Instrument and the IAI scale. Correlations ranged between 0.64 and 0.80 for the six
confirmed EOC factors (p < 0.01), and IAIs correlation with the EOC Index is 0.84 (p <
0.01). Correlations with each of the six EOC factors was positive and significant,
ranging from r = 0.69 to r = 0.808, p < .01). The second test used least squares regression
for both the EOC Index and Intrapreneurship (R2 = 0.707, p =0.000), and then all six
EOC factors simultaneously with IAI (R2 = 0.746, p =0.000). The standardized betas for
each EOC predictor were not all significant, only the betas corresponding to Open
Communication and Voice met the 0.05 significance threshold.
In summary, each EOC factor had a positive and significant relationship with IAI.
When examined as a composite index, EOC had a positive and significant relationship
with Intrapreneurship. However, when examined in a multivariate analysis, results
indicated that the overall relationship was positive and significant, but that the individual

contributions of some of the factors to that relationship were small and nonsignificant.
Examined collectively, results provide support for Hypothesis 1.

Concurrent Validity
Five hypotheses were tested to establish the degree of concurrent validity of the EOC
Instrument. Hypotheses 2, 3 and 4 tested strategy and strategic posture, while hypotheses
5 and 6 addressed EOCs relationship with measures of corporate entrepreneurship.
Because the methodology to test Hypothesis 3 is different, it will be discussed later. The
following five hypotheses were tested through an examination of the bivariate and
multivariate relationships between EOC and other variables:
Hypothesis 2. There is a positive relationship between EOC and espoused
entrepreneurial strategy (STRAT).
Hypothesis 4. There is a positive relationship between EOC and entrepreneurial
strategic posture (ESP).
Hypothesis 5. There is a positive relationship between EOC and the percentage of a
firms revenues from products, services, and business ventures introduced within the
past 3 years (NEWREV).
Hypothesis 6. There is a positive relationship between EOC and CEOs subjective
assessments of their firms entrepreneurial performance (CE1, CE2, NPS).
The first set of hypotheses tests regarding concurrent validity examined the bivariate
correlations (Pearsons r) between EOC and the measures of strategy, ESP, and corporate
entrepreneurship, as shown in Table 1. The EOC Index had a positive relationship with
each one of the strategy and corporate entrepreneurship variables.
Table 1. Bivariate Correlations EOC, Strategy, ESP, and Corporate Entrepreneurship
Variable

STRAT

ESP

EOC Index

.462 * *

.557 * *

PRO

.472 * *

COOP

CEI

CE2

NPS

NEWREV

.362 * *

.350 * *

.379 * *

.312 *

.624 * *

.520 * *

.347 * *

.549 * *

.359 * *

.384 * *

.500 * *

.290 *

.360 * *

.294 *

.283 *

OC

.383 * *

.493 * *

.335 *

.384 * *

.318 *

0.237

RISK

.340 * *

.402 * *

.208

.14

.19

0.245

TOL

.435 * *

.466 * *

.266 *

.293 *

.352 * *

0.253

VOICE

.429 * *

.498 * *

.320 *

.328 *

.325 *

.292 *

* * Correlation significant at the 0.01 level (2-tailed). * Significant at the 0.05 level (2-tailed). N = 55 all cells.

This paper was presented at The XXVI ISPIM Conference Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.

The second set of hypotheses tested concurrent validity through least squares
regression. The results indicated partial support for four of the five hypotheses
concerning EOCs concurrent validity.
For Hypothesis 2 (EOC and strategy), all bivariate correlations are positive and
significant with the EOC Index and each of the six confirmed EOC factors. The
regression analysis detected as positive but small (R2 = 0.214, p < 0.01) relationship
between the EOC Index and Strategy. The multivariate analysis also revealed a
significant relationship between EOC and Strategy (R2 = 0.247, p < 0.05), however a ttest of the beta coefficients corresponding to the six independent variables (6 EOC
factors) do not indicate significance at the 0.05 level.
For Hypothesis 4 (EOC and ESP) a similar result occurs when testing. All bivariate
correlations are positive and significant, from 0.402 (RISK and ESP) to 0.624 (PRO and
ESP). The relationship between the EOC Index and ESP is significant, as shown by the
regression (R2 = 0.214, p < 0.01). When testing all 6 EOC factors simultaneously, the
relationship with ESP remains significant (R2 = 0.4, p < 0.01), however only the beta
corresponding to Cooperation (COOP) is significant at the 0.05 level.
For Hypothesis 5 (EOC and Percentage Revenue from New Sources) results were less
compelling. When the EOC Index was regressed on NEWREV, the equation was
significant but very small (R2 = 0.097, p <0.05). However, when using multivariate
approach, the EOC NEWREV relationship was not significant at the 0.05 level.
For Hypothesis 6 (EOC and Subjective Measures of Corporate Entrepreneurship)
results indicated positive and significant relationships with the EOC Index. However,
one of the EOC factors did not indicate a positive and significant relationship with the
three Corporate Entrepreneurship measures, Risk Taking. Thus, the degree of Risk
Taking of an organizational culture is not significantly related to corporate
entrepreneurship, as operationalized in this study, and within the limitations of this
research.
The final hypothesis regarding concurrent validity required the re-classification of
strategy scores into two categories, Analyzers and Prospectors.
Hypothesis 3. The relationship between EOC and an espoused prospector strategy is
stronger than the relationship between EOC and an espoused analyzer strategy.
The first test of Hypothesis 3 was made through a t-test of the differences in mean
EOC scores of Analyzer firms (x = 70.13) and Prospector firms (x = 75.08). Prospectors
had a significantly higher mean score on the EOC factor Proactive Innovation than did
Analyzers, and both scored higher than Defenders, thus supporting the hypothesis.
However, when a second test employed logistic regression with the two categories of
strategy; results were not generally significant; EOC scores did a poor job of predicting
that a given technology firm in the sample was an Analyzer or a Prospector (R2 = .05,
R2 = .067). Based on these results, Hypothesis 3 was not supported. These results do not
exclude any relationship between EOC and type of strategy. Specifically, it is possible
that EOC in the presence of a certain strategy type has a stronger or weaker relationship
with other variables, such as revenue from new products, services and business ventures.
Such relationships could be explored in future research.
In summary, when it is tested through its composite measure (the EOC Index), there
are significant relationships between EOC and strategy (H2), entrepreneurial strategic
posture (H4), revenue from new sources (H5), and 3 subjective measures of corporate

10

entrepreneurship (H6). When EOCs relationship with these variables is examined via
multivariate analysis with the six confirmed EOC factors, the results are not statistically
significant. Therefore, Hypotheses 2, 4, 5, and 6 were partially supported. Results from
Hypothesis 3 were not supported.

Discriminant Validity
The construct validity of the EOC Instrument was also assessed taking into account the
degree to which EOC scores differentiated the construct from other distinct constructs,
two hypotheses were advanced to ascertain the discriminant validity of the EOC
Instrument. EOC should have a negative relationship with security-oriented norms and
defender strategies.
The first hypothesis to be tested refers strategy types. While EOC did not
differentiate between the two entrepreneurial strategies, Analyzers and Prospectors, it
should be negatively related to a non-entrepreneurial strategy type: Defender.
Hypothesis 7. There is a negative relationship between EOC and an espoused
defender strategy.
Logistical regression was used to test Hypothesis 7, in order to determine the
likelihood that EOC scores negatively predict a defender strategy. Results indicated
that EOC, when the composite index is used in the regression, negatively predicted a
defender strategy (R2 = 0.134, R2 = 0.218, p < 0.05). When all EOC factors were entered
into the equation, the prediction rate improves, but the coefficients for the independent
variables were not significant at the 0.05 level. Hypothesis 7 was partially supported.
The next hypothesis concerned EOCs relationship with shared norms about security,
such as avoiding risks and blame.
Hypothesis 8. There is a negative relationship between EOC and security-oriented
norms (SON).
Hypothesis 8 was first tested for its bivariate correlations. The EOC Index indicated
a negative correlation with SON (r = - .644, p < 0.01), as well as for each one of the six
EOC factors individually with SON (r = - .457 to -.653, p < 0.01). Next, regression
analysis tested the relationship between the set of EOC factors and SON. Both the
bivariate and multivariate equations indicated a strong relationship (R2 = 0.415 for the
EOC Index, 0.746 for the multivariate predictor set of all EOC factors, p < 0.01). Open
Communication, Risk Taking, Tolerance of Creative Deviance, and Voice were
significant at the 0.05 level. Surprisingly, and contrary to expectation, the relationship
between Risk Taking and SON was positive, whereas (as expected) relationships of the
other three factors were negative. Hypothesis 8 was partially supported.

Control Variables
We controlled for industry and firm size. Control variables were entered directly into
regression equations, rather than selected on the basis of their incremental contribution.
When controlling for firm size, results did not produce a significant change in R2.

11

This paper was presented at The XXVI ISPIM Conference Shaping the Frontiers of Innovation
Management, Budapest, Hungary on 14-17 June 2015. The publication is available to ISPIM
members at www.ispim.org.

In conclusion, results of hypotheses tests provided evidence of construct validity of

the EOC Instrument. When the relationship between EOC and other variables was tested
using the composite EOC Index, results suggested adequate convergent, concurrent, and
discriminant validity. Tests using the six EOC factors together and simultaneously also
produced significant relationships in the direction hypothesized, but the contribution of
the individual factors was not always statistically significant.

Discussion
Researchers of corporate entrepreneurship agree that organizational culture is related to
entrepreneurial outcomes at both the societal and organizational level. In fact, it has been
claimed that the most important barriers to entrepreneurship are non-economic and that
what does matter is culture. Nonetheless, little evidence so far has been presented of such
a relationship. In order to study the relationship between organizational culture and
entrepreneurship, researchers need validated measures that are grounded in theory. The
present study set out to define an entrepreneurial organizational culture and what, if any,
are its factors.
In this study, an Entrepreneurial Organizational Culture (EOC) was defined as a
system of shared values, beliefs and norms of members of an organization, including
valuing creativity and tolerance of creative people, believing that innovating and seizing
market opportunities are appropriate behaviors to deal with problems of survival and
environmental uncertainty, and competitors threats, communicating openly with one
another, and thinking and acting ahead of customer, and believing that proactive
innovation is an appropriate means of organizational survival, and expecting
organizational members to act and behave accordingly. These shared beliefs, values, and
norms are manifested in the reported attitudes of the employees of an organization.
The main contribution of the research is its clarification of the role that organizational
culture plays in relation to corporate entrepreneurship. The framework of corporate
entrepreneurship that helped shape the present study includes organizational culture as
one among the antecedents of corporate entrepreneurship alongside strategy, the external
environment, and other internal resources such as HR practices and organizational
structures.
The relationship between organizational culture and organizational performance is
another area in which the research makes a contribution to the body of available
knowledge. The number of studies that have empirically tested the organizational culture
firm performance relationship remains small, and a study of culture and corporate
entrepreneurship is a welcome addition. In the context of management research and
education, having evidence that culture matters to organizational outcomes is critical.
For practicing managers, the study depicts of the organizational culture that is
associated with entrepreneurial strategies and performance, backed up by research
evidence. Practitioners may also benefit from obtaining a tool and procedures for
assessing organizational culturesa tool specifically designed for detecting the degree to
which a firm has an EOC. Management consultants may also find the tool useful. This
study may help participants identify aspects of their organization that facilitate and
impede entrepreneurship, and determine actions they can take to become more
entrepreneurial.

12

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