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The Impact of Managerial Environmental Perceptions on Corporate Entrepreneurship: Towards Understanding Discretionary Slack's Pivotal Role
Author(s) -
Simsek Zeki,
Veiga John F.,
Lubatkin Michael H.
Publication year - 2007
Publication title -
journal of management studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.398
H-Index - 184
eISSN - 1467-6486
pISSN - 0022-2380
DOI - 10.1111/j.1467-6486.2007.00714.x
Subject(s) - entrepreneurship , dynamism , incentive , perception , business , outcome (game theory) , structural equation modeling , industrial organization , marketing , economics , microeconomics , finance , psychology , statistics , physics , mathematics , quantum mechanics , neuroscience
abstract This study seeks to further delineate how a firm's competitive environment influences the firm's pursuit of entrepreneurial activities. To do so, we develop and test a parsimonious model that establishes the role of discretionary slack as a salient mediating mechanism through which managerial environmental perceptions influence corporate entrepreneurship. In addition, we examine two contingencies that further explain discretionary slack's impact on corporate entrepreneurship, including managements' market sensing capacity and use of outcome‐based incentives. Using single‐ and multi‐source survey data from 495 small‐ to medium‐sized firms, we find support for our model and its associated hypotheses. Specifically, we find that discretionary slack is significantly influenced by managerial perceptions of environmental munificence and dynamism and, in turn, mediates the impact of these perceptions on corporate entrepreneurship. In addition, we find that discretionary slack's impact on corporate entrepreneurship is significantly enhanced by managements' market sensing capacity but, interestingly, not by outcome‐based incentives.