A Conceptual Model of Entrepreneurship as Firm Behavior: A Critique and Extension

A Conceptual Model of Entrepreneurship as Firm Behavior: A Critique and Extension.

by Shaker A. Zahra

The study of entrepreneurship as a firm-level phenomenon has come of age. While the findings of empirical research in this area have been preliminary and tentative, this young body of literature shows great vitality and rigor. This increasing rigor is evidenced by a growing attention to methodological concerns and analytical tools (Low & MacMillan, 1988; Jennings & Lumpkin, 1989; Wortman, 1987).

Equally interesting is the growing focus on constructing models and theories of entrepreneurship.

Scientific progress is fueled by the emergence of paradigms (Kuhn, 1970), often codified in models and rival theories. For this reason, the recent contribution by Covin and Slevin (1991) of "A Conceptual Model of Entrepreneurship as Firm Behavior" is a most welcome addition to the literature. It sets the stage for a promising research agenda that, undoubtedly, will enrich the field. The Covin-Slevin model (hereafter referred to as "the model") integrates research findings to date, relates important constructs into a clear framework, theorizes about the contribution of entrepreneurship to company performance, articulates the conditions under which this contribution to company performance can materialize, and outlines salient research questions that emerge from the model. Scholars of firm-level entrepreneurship will agree that this is a major undertaking and an important contribution that will shape future research in this area.

It is this potential impact on future research direction that motivates this rebuttal. The Covin-Slevin model requires some revisions, refinements, and extensions. Therefore, this article focuses on four issues embodied in the model. The discussion will cover: (1) the nature of entrepreneurial behavior; (2) the locus of entrepreneurship; (3) redundancy in some constructs in the model; and (4) the nature of the link between entrepreneurial posture and firm performance.

THE NATURE OF ENTREPRENEURIAL BEHAVIOR

The model is described as behavioral in nature. This orientation is consistent with current thinking on the topic; what makes a firm entrepreneurial is its strong commitment to product and technological innovation, risk taking, and proactiveness (Miller, 1983). However, the current model does not specify the nature of entrepreneurship. Specifically, although the authors refer to "entrepreneurial posture," it is unclear whether the authors refer to: (1) the intensity of this behavior (Zahra, 1991, 1993); (2) the formality of entrepreneurial activities (Burgelman, 1983a, b, c; Pinchot, 1985); (3) the types of entrepreneurial activities a firm undertakes to rejuvenate or renew itself and redefine its business concept (Guth & Ginsberg, 1989; Schollhammer, 1982); or (4) the duration of such efforts. Although these dimensions are interrelated, they are distinct and appear to capture different aspects of the domain of firm-level entrepreneurship. By examining one of these dimensions, scholars only capture a "slice" of a firm's entrepreneurship activities. Besides failing to recognize the "wholeness" of entrepreneurship, ignoring one or more of these dimensions can lead to underestimation of the value of

entrepreneurship for company performance.

Lack of specificity about the nature of entrepreneurship has other negative implications. For instance, focusing on the intensity of entrepreneurial behavior raises a question about the appropriate level of a firm's commitment to risk taking and the implications of these activities for company performance. As Miller and Friesen (1982) have suggested, excessive entrepreneurship can be as dysfunctional as a lack of commitment to entrepreneurship. Therefore, it is important to recognize and analyze the extent to which the firm undertakes entrepreneurial activities in order to evaluate the performance implications of these ventures.

The Covin-Slevin model appears to emphasize the intensity dimension of entrepreneurship. This focus is appropriate: the majority of past research follows this tradition (e.g., Miller, 1983; Covin & Covin, 1990; Covin & Slevin, 1986, 1988, 1989; Zahra, 1991, 1993). Typically, this research suggests that increased entrepreneurship is associated positively with company financial performance--a proposition that has not received much attention in the empirical literature, as will be discussed later. Still, these studies (and the current model) tend to ignore Miller and Friesen's (1982) warning that increased entrepreneurship beyond a particular threshold can harm a company's financial performance.

The Covin-Slevin model (and research in this area) would benefit from recognizing other dimensions of firm-level entrepreneurship. For example, Burgelman's (1983a, 1991) work has established the need for differentiating formal ("induced") and informal ("autonomous") entrepreneurship activities. Formal efforts are sanctioned by senior executives and are pursued according to a deliberate strategic mandate. Informal activities reflect the autonomous efforts undertaken by individual members of an organization. Pinchot (1985) has popularized the importance of informal efforts ("intrapreneurship") carried out by groups of executives, middle managers, or employees. Since formal and informal entrepreneurial activities seem to manifest themselves in different ways, it is important to consider both types in investigating their consequences for company financial performance.

One can argue that the Covin-Slevin model (and similar research) seems to underestimate the contribution of informal firm-level entrepreneurship to a company's financial performance. Undoubtedly, the informal nature of these activities makes it difficult to document their existence, form, and contribution to company performance. However, to help advance theory building in this area, the Covin-Slevin model would benefit greatly from considering both the formal and informal types of entrepreneurship, thereby encouraging future researchers to think about the full range of firm-level entrepreneurship.

The Covin-Slevin model would also benefit from recognizing different types of entrepreneurial activities. For example, Schollhammer (1982) focuses on five types of internal corporate ventures: administrative, opportunistic, imitative, acquisitive, and incubative (new venture management). Each type requires different managerial skills and company resources. Thus, to treat all firm-level entrepreneurial