How corporate entrepreneurship affects the performance of small and medium-sized enterprises in Korea: The mediating and moderating role of vision, strategy, and employee compensation
Objective: The objective of the article is to provide implications for improving the competitiveness of SMEs by analysing the structural impact relationship of the corporate entrepreneurship of Korean SMEs on business performance.
Research Design & Methods: The established research model based on precedent studies was empirically analysed with PLS-SEM by employing the 3299 survey data collected by the Ministry of SMEs and Start-ups in 2018.
Findings: Empirical analysis revealed that corporate entrepreneurship affects business performance through a relationship between moderation (employee compensation) and mediation (vision and strategy). Hence, the findings suggest that, along with the importance of corporate entrepreneurship, the proper management of vision and strategy and employee compensation has a significant influence on the business performance of SMEs.
Implications & Recommendations: The implications of this research are expected to be applied by the government in establishing policy direction to enhance the corporate entrepreneurship of SMEs in the future.
Contribution & Value Added: This study provides empirical evidence that shows the relationship between corporate entrepreneurship and business performance by using the data of Korean SMEs. In particular, it incorporated the effects of vision and strategy, and employee compensation and rendered theoretical and managerial implications.
corporate entrepreneurship; vision & strategy; employee compensation; business performance; moderated mediation
Al-Awlaqi, M. A., Aamer, A. M., & Habtoor, N. (2021). The effect of entrepreneurship training on entrepreneurial orientation: Evidence from a regression discontinuity design on micro-sized businesses. The International Journal of Management Education, 19(1). https://10.1016/j.ijme.2018.11.003
Amankwah-Amoah, J., Danso, A., & Adomako, S. (2019). Entrepreneurial orientation, environmental sustainability and new venture performance: Does stakeholder integration matter? Business Strategy and the Environment, 28(1), 79-87. https://10.1002/bse.2191
Angela, A., Sari, E. P., & Oktavianti, O. (2020). The effect of total quality management on employee performance with compensation as moderation variable. Jurnal Akuntansi: Kajian Ilmiah Akuntansi, 7(2), 134-147. https://10.30656/jak.v7i2.1818
Babin, B. J., Griffin, M., & Hair, J. F. (2016). Heresies and sacred cows in scholarly marketing publications. Journal of Business Research, 69(8), 3133-3138. https://10.1016/j.jbusres.2015.12.001
Barber, A. E., Dunham, R. B., & Formisano, R. A. (1992). The impact of flexible benefits on employee satisfaction: A field study. Personnel Psychology, 45(1), 55-74. https://10.1111/j.1744-6570.1992.tb00844.x
Barney, J. (2016). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120. https://10.1177/014920639101700108
Bhatti, A., Rehman, S. U., & Rumman, J. B. A. (2020). Organizational capabilities mediates between organizational culture, entrepreneurial orientation, and organizational performance of SMEs in Pakistan. Entrepreneurial Business and Economics Review, 8(4), 85-103. https://10.15678/eber.2020.080405
Branco, M. C., & Rodrigues, L. L. (2006). Corporate social responsibility and resource-based perspectives. Journal of Business Ethics, 69(2), 111-132. https://10.1007/s10551-006-9071-z
Brockner, J. (2002). Making sense of procedural fairness: How high procedural fairness can reduce or heighten the influence of outcome favorability. Academy of Management Journal, 27(1), 58-76.
Burgelman, R. A., Christensen, C. M., & Wheelwright, S. C. (2004). Strategic management of technology and innovation. New York: McGraw-Hill.
Camelo-Ordaz, C., Fernández-Alles, M. L., & Valle-Cabrera, R. (2008). Top management team’s vision and human resources management practices in innovative Spanish companies. The International Journal of Human Resource Management, 19(4), 620-638. https://10.1080/09585190801953665
Chang, S. D., & Zhu, Y. M. (2012). Corporate entrepreneurship, social capitals, and SMEs performance in China. The e-Business Studies, 13(2), 283-299. https://10.15719/geba.13.2.201206.283
Chrisman, J. J., Bauerschmidt, A., & Hofer, C. W. (1998). The determinants of new venture performance: An extended model. Entrepreneurship Theory and Practice, 23(1), 5-29. https://10.1177/104225879802300101
Covin, J. G., & Slevin, D. P. (1989). Strategic management of small firms in hostile and benign environments. Strategic Management Journal, 10(1), 75-87. https://10.1002/smj.4250100107
Covin, J. G., & Slevin, D. P. (1991). A conceptual model of entrepreneurship as firm behavior. Entrepreneurship Theory and Practice, 16(1), 7-25. https://10.1177/104225879101600102
Covin, J. G., & Wales, W. J. (2012). The measurement of entrepreneurial orientation. Entrepreneurship Theory and Practice, 36(4), 677-702. https://10.1111/j.1540-6520.2010.00432.x
Crawford, M. C. (2018). South Korea’s unstoppable taste for haste. Retrieved from https://www.bbc.com/travel/story/20180708-south-koreas-unstoppable-taste-for-haste
Drucker, P. F. (2015). Innovation and entrepreneurship. London and New York: Routledge.
Dunford, B. B., Oler, D. K., & Doudreau, J. W. (2008). Underwater Stock options and voluntary executive turnover: A multidisciplinary perspective integrating behavioral and economic theories. Personnel Psychology, 61(4), 687-726. https://10.1111/j.1744-6570.2008.00128.x
Ferreira, J., Coelho, A., & Moutinho, L. (2020). Dynamic capabilities, creativity and innovation capability and their impact on competitive advantage and firm performance: The moderating role of entrepreneurial orientation. Technovation, 92. https://10.1016/j.technovation.2018.11.004
Geisser, S. (1974). A predictive approach to the random effect model. Biometrika, 61(1), 101-107. https://10.2307/2334290
Giese, C. E., Jr., & Stogdill, R. M. (1974). Handbook of leadership: A survey of theory and research. Naval War College Review, 27(4), 108-110.
Green, K. M., Covin, J. G., & Slevin, D. P. (2008). Exploring the relationship between strategic reactiveness and entrepreneurial orientation: The role of structure–style fit. Journal of Business Venturing, 23(3), 356-383. https://10.1016/j.jbusvent.2007.01.002
Griffeth, R., & Gaertner, S. (2001). A role of equity theory in the turnover process: An empirical test. Journal of Applied Social Psychology, 31(5), 1017-1037. https://10.1111/j.1559-1816.2001.tb02660.x
Gupta, A. K., & Govindarajan, V. (1984). Business unit strategy, managerial characteristics, and business unit effectiveness at stategy implementation. Academy of Management Journal, 27(1), 25-41.
Guth, W. D., & Ginsberg, A. (1990). Guest editors’ introduction: Corporate entrepreneurship. Strategic Management Journal, 11(4), 5-15.
Habib, A., & Hasan, M. M. (2017). Firm life cycle, corporate risk-taking and investor sentiment. Accounting and Finance, 57(2), 465-497. https://10.1111/acfi.12141
Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2017). A primer on partial least squares structural equation modeling (PLS-SEM) (2 ed.). LA: Sage Publications.
Hausknecht, J. P., Rodda, J., & Howard, M. J. (2009). Targeted employee retention: Performance-based and job-related differences in reported reasons for staying. Human Resource Management, 48(2), 269-288. https://10.1002/hrm.20279
Hayes, A. F. (2015). An Index and Test of Linear Moderated Mediation. Multivariate Behavioral Research, 50(1), 1-22. https://10.1080/00273171.2014.962683
Hayes, A. F. (2018). Introduction to mediation, moderation, and conditional process analysis: A regression-based approach (2 ed.). New York: Guilford Press.
Heneman, H. G., & Berkley, R. (1999). Applicant attraction practices and outcomes among small businesses. Journal of Small Business Management, 37, 53-74.
Henseler, J., Ringle, C. M., & Sarstedt, M. (2014). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115-135. https://10.1007/s11747-014-0403-8
Hitchcock, J. A., & Stavros, J. (2017). Organizational collective motivation: A new framework for motivating employees in organization. OD Practitioner, 49(4), 28-35. https://10.5465/ambpp.2016.10264abstract
Hoffman, R. C., & Hegarty, W. H. (1993). Top management influence on innovations: Effects of executive characteristics and social culture. Journal of Management, 19(3), 549-574. https://10.1177/014920639301900303
Hult, G. T. M., Hurley, R. F., & Knight, G. A. (2004). Innovativeness: Its antecedents and impact on business performance. Industrial Marketing Management, 33(5), 429-438. https://10.1016/j.indmarman.2003.08.015
Hwang, H. K. (2020). Small and medium-sized enterprises are the ‘9983’ of the Korean economy...99% of all companies and 83% of workers. Retrieved from https://www.yna.co.kr/view/AKR20201028071600030
Jagersma, P. K. (2003). Innovate or die. The Journal of Business Strategy, 24(1), 25-28.
James, K., & Lahti, K. (2011). Organisational vision and system influences on employee inspiration and organisational performance. Creativity and Innovation Management, 20(2), 108-120. https://10.1111/j.1467-8691.2011.00595.x
Jespersen, K. R. (2012). Stage-to-stage information Dependency in the NPD Process: Effective Learning or a Potential Entrapment of NPD Gates? Journal of Product Innovation Management, 29(2), 257-274. https://10.1111/j.1540-5885.2011.00894.x
Kantur, D., & İşeri‐Say, A. (2013). Organizational context and firm‐level entrepreneurship: a multiple‐case analysis. Journal of Organizational Change Management, 26(2), 305-325. https://10.1108/09534811311328362
Kao, J. J. (1991). Managing Creativity. New Jersey: Prentice Hall.
Kock, N., & Lynn, G. S. (2012). Lateral collinearity and misleading results in variance-based SEM: An illustration and recommendations. Journal of the Association for Information Systems, 13(7), 546-580. https://10.17705/1jais.00302
Koontz, H., & O’Donnell, C. (1972). Principles of management: an analysis of managerial functions (5 ed.). New York: McGraw-Hill.
Koys, D. J. (2001). The effects of employee satisfaction, organizational citizenship behavior, and turnover on organizational effectiveness: A unit-level, logitudinal study. Personnel Psychology, 54(1), 101-114. https://10.1111/j.1744-6570.2001.tb00087.x
Lambert, S. (2000). Added benefits: The link between work-life benefits and organisational citizen behaviours. Academy of Management Journal, 43, 801-815. https://10.5465/1556411
Laursen, K., & Salter, A. (2006). Open for innovation: the role of openness in explaining innovation performance among U.K. manufacturing firms. Strategic Management Journal, 27(2), 131-150. https://10.1002/smj.507
Liao, K.-H., & Huang, I. S. (2016). Impact of vision, strategy, and human resource on nonprofit organisation service performance. Procedia - Social and Behavioral Sciences, 224, 20-27. https://10.1016/j.sbspro.2016.05.395
Liao, Y.-C., & Zhao, H. (2020). The moderating effect of entrepreneurship orientation on new product innovation performance. International Journal of Business, 25(2), 195-213.
Lumpkin, G. T., & Dess, G. G. (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1), 135-172. https://10.2307/258632
Miller, A. R., & Dess, G. G. (1996). Strategic Management (2 ed.). Washington, USA: McGraw-Hill.
Miller, D. (1983). The correlates of entrepreneurship in three types of firms. Management Science, 29(7), 770-791. https://10.1287/mnsc.29.7.770
Mintzberg, H. (1973). Strategy-making in three modes. California Management Review, 16(2), 44-53. https://10.2307/41164491
Moore, M. H. (2000). Managing for value: Organisational strategy in for-profit, nonprofit, and governmental organisations. Nonprofit and Voluntary Sector Quarterly, 29(1), 183-204. https://10.1177/0899764000291s009
Morris, M. H., Kuratko, D. F., & Covin, J. G. (2008). Corporate entrepreneurship and innovation: entrepreneurial development within organizations (2 ed.). Mason, Ohio: Thomson South-Western.
Mulvey, P., LeBlanc, P., Heneman, R., & McInerney, M. (2002). Study finds that knowledge of pay process can beat out amount of pay in employee retention, organisational effectiveness. Journal of Organisational Analysis, 21(4), 29-42. https://10.1002/npr.10041
Nitzl, C., Roldan, J. L., & Cepeda, G. (2016). Mediation analysis in partial least squares path modeling: Helping researchers discuss more sophisticated models. Industial Management & Data Systems, 116(9), 1849-1864. https://10.1108/IMDS-07-2015-0302
Onwe, C. C., Ogbo, A., & Ameh, A. A. (2020). Entrepreneurial orientation and small firm performance: The moderating role of environmental hostility. Entrepreneurial Business and Economics Review, 8(4), 67-84. https://10.15678/eber.2020.080404
Pandher, G. S., Mutlu, G., & Samnani, A. K. (2017). Employee-based innovation in organisations: Overcoming strategic risks from opportunism and governance. Strategic Entrepreneurship Journal, 11, 4. https://10.1002/sej.1252
Podsakoff, P. M., & Organ, D. W. (1986). Self-reports in organisational research: Problems and prospects. Journal of Management, 12(4), 531-544. https://10.1177/014920638601200408
Poudel, K. P., Carter, R., & Lonial, S. (2020). The Impact of entrepreneurial orientation, technological capability, and consumer attitude on firm performance: A multi‐theory perspective. Journal of Small Business Management, 57(sup2), 268-295. https://10.1111/jsbm.12471
Prahalad, C. K. (1983). Developing strategic capability: An agenda for to management. Human Resource Management, 22(3), 237-254. https://10.1002/hrm.3930220304
Preacher, K. J., & Hayes, A. F. (2008). Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior Research Methods, 40(3), 879-891. https://10.3758/brm.40.3.879
Rauch, A., Wiklund, J., Lumpkin, G. T., & Frese, M. (2009). Entrepreneurial orientation and business performance: An assessment of past research and suggestions for the future. Entrepreneurship Theory and Practice, 33(3), 761-787. https://10.1111/j.1540-6520.2009.00308.x
Riggs, D. E. (1994). Visionary leadership: Creating a compelling sense of direction for your organization by Burt Nanus. The Journal of Academic Librarianship, 20(5-6), 336-336. https://10.1016/0099-1333(94)90090-6
Sauermann, H. (2018). Fire in the belly? Employee motives and innovative performance in startups versus established firms. Strategic Entrepreneurship Journal, 12(4), 423-454. https://10.1002/sej.1267
Stam, W., & Elfring, T. (2008). Entrepreneurial orientation and new venture performance: The moderating role of intra- and extraindustry social capital. Academy of Management Journal, 51(1), 97-111. https://10.5465/amj.2008.30744031
Stone, M. (1974). Cross-validatory choice and assessment of statistical predictions. Journal of the Royal Statistical Society. Series B (Methodological), 36(2), 111-147.
Sutton, N. A. (1985). Do employee benefits reduce labor turnover? Benefits Quarterly, 1(2), 16-22.
Wahyuni, N. M., & Sara, I. M. (2020). The effect of entrepreneurial orientation variables on business performance in the SME industry context. Journal of Workplace Learning, 32(1), 35-62. https://10.1108/jwl-03-2019-0033
Wang, H. K., & Yen, Y. F. (2012). An empirical exploration of corporate entrepreneurial orientation and performance in Taiwanese SMEs: a perspective of multidimensional construct. Total Quality Management & Business Excellence, 23(9-10), 1035-1044. https://10.1080/14783363.2012.670917
Weon, J. H. (2007). A Study on the Influence of Human Resource Management Practices of Venture Firms on Performance. Asia-Pacific Journal of Business Venturing and Entrepreneurship, 2(3), 61-102. https://10.16972/apjbve.2.3.200709.61
Wiklund, J., & Shepherd, D. (2005). Entrepreneurial orientation and small business performance: a configurational approach. Journal of Business Venturing, 20(1), 71-91. https://10.1016/j.jbusvent.2004.01.001
Wright, P. M., Gardner, T. M., & Moynihan, L. M. (2003). The impact of HR practices on the performance of business units. Human Resource Management Journal, 13(3), 21-36. https://10.1111/j.1748-8583.2003.tb00096.x
Wright, P. M., McMahan, G. C., & McWilliams, A. (1994). Human resources and sustained competitive advantage: a resource-based perspective. The International Journal of Human Resource Management, 5(2), 301-326. https://10.1080/09585199400000020
Youndt, M. A., Snell, S. A., Dean, J. W., & Lepak, D. P. (1996). Human resource management, manufacturing strategy, and firm performance. Academy of Management Journal, 39(4), 836-866. https://10.5465/256714
Zahra, S. A. (1991). Predictors and financial outcomes of corporate entrepreneurship: An exploratory study. Journal of Business Venturing, 6(4), 259-285. https://10.1016/0883-9026(91)90019-A
Zahra, S. A., & Covin, J. G. (1995). Contextual influences on the corporate entrepreneurship-performance relationship: A longitudinal analysis. Journal of Business Venturing, 10(1), 43-58. https://10.1016/0883-9026(94)00004-e
This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a CC BY-ND licence that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are asked to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) only the final version of the article, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access). We advise using any of the following research society portals: