The internal environment for corporate

entrepreneurship within a South

African organisation

submitted by:

Sifanelesibonge Vushemakota
1543786

A consultancy report submitted to the Faculty of Commerce, Law and

Management, University of the Witwatersrand, in partial fulfilment of the
requirements for the degree of Master of Business Administration

Johannesburg, 2018

26 March 2018

i
Declaration
I, Sifanelesibonge S. I. Vushemakota, declare that this consultancy report is my own
work except as indicated in the references and acknowledgements. It is submitted in
partial fulfilment of the requirements for the degree of Master of Business
Administration in the Graduate School of Business Administration, University of the
Witwatersrand, Johannesburg. It has not been submitted before for any degree or
examination at this or any other university.

______________________________
Sifanelesibonge S. I. Vushemakota

Signed at Johannesburg,

On the 26th day of March 2018

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Acknowledgements
I attribute the successful completion of this research paper to many individuals who
have supported me in countless ways. Firstly, I would like to acknowledge my two
young daughters, who, with many objections and sometimes tears, bravely spent
numerous weekends and nights without me throughout the duration of the MBA and
research writing. Secondly, I appreciate the support of my siblings, parents and
babysitter who so generously cared for my children, provided meals and stood in for
my husband and I at school and sports events while we studied. I thank my husband
who has been my study partner and pillar of strength. Doing the MBA together has
been an absolute adventure. I am also grateful to many other friends and colleagues
for their encouragement, brainstorming partnership and support. And I thank my proof
reader for her efforts in further refining my report.

Furthermore, I would like to acknowledge my sponsors who paid for my studies and
agreed to allow me to study their organisational climate for this consultancy report. I
thank their staff who so graciously took time to complete my survey. Key knowledge
on innovation and business improvement arose from visits to organisations during the
MBA global tour in Australia. These assisted in providing practical views on innovation.
I therefore thank the business school for facilitating the tour. Many thanks to Wits
faculty members who generously offered assistance when called upon, particularly
Prof Anthony Stacey, who organised boot camps and provided clarity throughout the
research writing process. Finally, I would like to express a special thanks to my
supervisor, Deborah Levy, for her guidance and encouragement. She certainly made
this daunting research project feel doable, as a result, I have benefitted immensely
from the research writing process.

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Supplementary information

Supervisor: Deborah Levy

Word count: 13 942 words (starting from executive summary including

references)

iii
Table of Contents
Declaration ............................................................................................................................................ i
Acknowledgements ........................................................................................................................... ii
Supplementary information............................................................................................................ iii
Executive summary ........................................................................................................................ viii
Keywords .......................................................................................................................................... viii
1. Introduction ..................................................................................................................................... 1
1.1 The innovation imperative ........................................................................................................ 2
1.2 Organisational context .............................................................................................................. 2
2. Application of prior research...................................................................................................... 5
2.1 Introduction ................................................................................................................................. 5
2.2 The internal environment .......................................................................................................... 8
2.2.1 Management support ....................................................................................................... 10
2.2.2 Work discretion ................................................................................................................. 10
2.2.3 Rewards and reinforcement............................................................................................ 10
2.2.4 Time availability ................................................................................................................ 10
2.2.5 Organisational boundaries .............................................................................................. 10
2.3 Corporate entrepreneurship and management ................................................................... 11
2.4 Consultancy approach ............................................................................................................ 12
2.5 Conclusion ................................................................................................................................ 14
3. Research methodology .............................................................................................................. 15
3.1 Introduction ............................................................................................................................... 15
3.2 Research design ...................................................................................................................... 15
3.3 Sampling method ..................................................................................................................... 16
3.4 Research instrument ............................................................................................................... 16
3.5 Data analysis ............................................................................................................................ 18
3.6 Research limitations ................................................................................................................ 19
4. Presentation of results ............................................................................................................... 21
4.1 Introduction ............................................................................................................................... 21
4.2 Sample distribution .................................................................................................................. 21
4.3 Factor analysis ......................................................................................................................... 23
4.4 Analysis of results.................................................................................................................... 26
4.4.1 Innovation perceptions .................................................................................................... 26
4.4.2 CEAI Factors ..................................................................................................................... 29
4.4.3 Segmentation analysis .................................................................................................... 36

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 4.5 Findings of the study ............................................................................................................... 36
4.6 Conclusion ................................................................................................................................ 37
5. Recommendations and conclusions ...................................................................................... 38
5.1 Introduction ............................................................................................................................... 38
5.2 Recommendations................................................................................................................... 38
5.3 Financial projections ............................................................................................................... 44
5.4 Suggestions for further research ........................................................................................... 44
5.5 Conclusions of the study ........................................................................................................ 45
References ......................................................................................................................................... 47
Appendix A: Climate survey results (2014/2015 Survey) ...................................................... 50
Appendix B: Research instrument .............................................................................................. 51
Appendix C: Segmentation trees ................................................................................................. 56

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List of Tables and Figures
Table 1: Definitions of innovation types and examples of each .................................. 6

Table 2: CEAI confirmatory factor analysis output ................................................... 25

Table 3: Average innovation score by demographic data......................................... 28

Table 4: Grouped innovation levels by average CEAI factor scores ........................ 30

Table 5: Correlation between CEAI factors and innovation level .............................. 30

Table 6: Demographics by average CEAI factor scores ........................................... 35

Table 7: Intersection between the management support, reward reinforcement and

time availability segments ........................................................................................ 36

Table 8: Recommendations ..................................................................................... 42

Table 9: Financial investment and projected revenue .............................................. 44

Figure 1: The innovation value chain.......................................................................... 5

Figure 2: Demographic distribution of the achieved sample ..................................... 22

Figure 3: Innovation level of the organisation and subsidiaries ................................ 26

Figure 4: Level of innovation by job level ................................................................. 27

Figure 5: Average scores and standard deviations of the five CEAI factors ............. 29

Figure 6: Management support top and bottom scoring statements ........................ 31

Figure 7: Work discretion top scoring statements .................................................... 32

Figure 8: Rewards/ Reinforcement top and bottom scoring statements ................... 33

Figure 9: Time availability top and bottom scoring statements ................................. 34

Figure 10: Organisational boundaries top scoring statements ................................. 35

Figure 11: Action plan .............................................................................................. 43

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Executive summary
This consultancy project was conducted on behalf of a South African organisation to
assess its internal environment for corporate entrepreneurship. This assessment is
key to determining organisational readiness for participation in strategic renewal
through sustained innovation as part of the organisation’s response to the current fast-
paced and highly competitive digital age. The research therefore isolates innovation
drivers specific to the organisation in order to inform future strategies.

The organisation comprises multiple businesses in various industries and regards

innovation as one of its core values. As such, it was necessary to understand whether
employees across its subsidiaries viewed the organisation as perpetuating innovation.
Commencing with the consultation of senior management to understand the
organisation’s strategic objectives, this report evaluates academic theory and embeds
it with business practice to provide practical solutions to the organisation. Using the
academically sound Corporate Entrepreneurship Assessment Instrument (CEAI),
factors underpinning the level of innovation within the organisation were measured.

An electronic survey was administered to the organisation’s employees through an

anonymous survey link to obtain a cross-sectional view of employee perceptions at
the time of the survey. It was found that employees viewed the organisation as having
a moderate level of innovation. This view was underpinned by several factors,
including the absence of financial resources and limited time to pursue innovation.
Managers in the organisation encouraged ideation, cross-functional collaboration and
autonomy, yet the organisation lacked the structural backing to enable the selection,
prioritisation and development of chosen ideas into valuable innovations. The practical
implication of these findings is that although the organisation demonstrates a healthy
internal culture, it might not be sufficiently prepared to innovate at a fast pace.

Two key recommendations are provided in the report, and the financial investment
required to implement the recommendations is extrapolated. The first
recommendation is that the organisation should leverage its existing strengths by
developing a structural framework for innovation that would support constant, result-
bearing innovation. The internal environment, as suggested by the literature, is a key
factor in supporting and developing such a structural framework. The second
recommendation is that the organisation should create an innovation brand

vii
communication strategy that is consistent across all its subsidiaries. This would
provide employees with an emotive cause for engaging in organisational development.

This consultancy report provides a novel research approach for the organisation. This
has been valuable in exposing unexpected antecedents that the organisation may
leverage in the development of a successful innovation stance. The real competitive
advantage stemming from sustained innovation lies in the institution of internal
competencies that enable the generation and prompt implementation of novel
opportunities. This competency far outweighs the value of the innovations themselves.

Keywords
Innovation; corporate entrepreneurship; internal environment; strategic renewal;
sustained innovation; ideation/idea generation.

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1. Introduction
The contemporary rate of technological advancement creates complexity for
managers in the design and implementation of strategy. This is in an environment
where no single organisation can claim sustained competitive advantage but is instead
confronted with the need for constant innovation. Due to an increasingly competitive
local and global landscape, the need to maintain a competitive advantage necessitates
the development of internal organisational competencies to enable sustained
innovation (Atuahene-Gima, 1996; Kraus, Rigtering, Hughes, & Hosman, 2012).

Innovation, and specifically digital innovation, has become a business standard that
neither large, nor small organisations can afford to ignore, while the risk of disruption
by smaller organisations also encourages larger organisations to innovate
purposefully (Christensen, McDonald, Altman, & Palmer, 2016). This growing
complexity beckons organisations to rethink strategy formulation, strategy renewal
and environment scanning to ensure optimum and guaranteed results. There is
agreement in literature that the internal environment is most influential to the
formulation of innovation in established organisations (Covin & Slevin, 1991; Hornsby,
Kuratko, & Zahra, 2002; Tellis, 2006). Global organisations, which are synonymous
with revolutionary innovation, such as Apple, Amazon and Google, and South African
organisations, such as Discovery and FNB, place strategic emphasis on nurturing an
internal environment conducive to innovation as a means of continuous corporate
renewal.

This consultancy report considers a South African organisation’s current innovation

approach against employee readiness for innovation, to recommend how
management ought to proceed when dealing with the challenges of pursuing
sustained, result-bearing innovation in the age of competency destroying innovation.
Specifically, the business problem that this research seeks to diagnose is to gain a
measure of employee perceptions of the current internal environment and suggest
how the incumbent can facilitate successful corporate renewal. This diagnosis is
based on the five factors provided by the CEAI instrument: management support, work
discretion, rewards/reinforcement, time availability, and organisational boundaries
(Hornsby et al., 2002).

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1.1 The innovation imperative
The 2016 World Economic Forum sitting acknowledged the beginning of the Fourth
Industrial Revolution (4IR), which represents an ongoing shift in the global means of
production (World Economic Forum, 2016). The 4IR was instigated by recent
technological advances that combine digital, physical and biological elements.
Building upon previous industrial ages, new technologies enable faster, cheaper and
more ubiquitous production of goods, many of which depend on the use of machines
instead of human capital. As a result, one key risk that the 4IR poses is the disruption
of society through the replacement of human workforce by machines. Other
consequences of the 4IR include the incremental speed of digital innovation, increased
competitive risk, and the democratisation of previously exclusive technological
capabilities. These in turn intensify opportunities for innovation more than previously.

Innovations in digital technology are known to diminish geographic and industry

boundaries (Christensen et al., 2016), as exemplified by the rapid global entry of
technology company, Uber, into the metered taxi industry (Cramer & Krueger, 2016),
and First National Bank’s (FNB’s) entrance into the telecom industry (FNB Press
Office, 2015). It is evident that South African organisations are not exempt from the
impact of the ever-increasing rate of innovation. In response, South African
organisations perhaps need to do even more to ensure a greater pace of local
environment-specific innovation, and as a social cause, to empower staff against
redundancy.

The professed speed of technological advancement is not a new phenomenon. During

the 1960s, management theorist K. E. Knight (1967) highlighted the need for sustained
innovation to combat the speed of technological change. However, the 4IR further
increases the speed of change and the need for organisations to become more agile
in their innovation quest. As such, one significant area of exploration in this
consultancy report was to establish the organisation’s readiness for innovation to be
able to compete in a global environment.

1.2 Organisational context

While agreeing to be the subject of this research, the organisation preferred to remain
anonymous. As such, elements that can be linked directly to the organisation in
question have not been discussed in this paper. The organisation is nevertheless keen

2
to gain insight from this consultancy project, as it addresses an urgent organisational
imperative. In gathering company-specific information to provide context to the
organisational problem addressed in this consultancy report, unstructured face-to-face
interviews were conducted with four senior executives. Outcomes of these discussions
and details of the organisational context and problem follow.

The organisation comprises multiple companies in various industries and geographic

locations within South Africa, with a head office conducting a largely administrative
function. The organisation had not previously commissioned consultancy services on
the theme of improving entrepreneurial behaviour. Instead, annual climate surveys
were conducted during 2014 and 2015 to measure various aspects of the internal
environment. Results of the climate surveys revealed distinct organisational issues
within the various subsidiaries (relevant results for the organisation are included in
Appendix A). Tracked results demonstrated indications of organisational improvement
due to interventions emanating from the climate surveys, as managers were
encouraged to work actively on improving dimensions measured by the surveys.
Broadly, key insights from the surveys that were relevant to this consultancy report,
were that reward, change management and recognition were some of the lowest
scoring dimensions, whereas employee relationships, organisational values and
employee engagement scored highly.

Innovation represents a core value for the organisation, and the industries in which it
operates, are advancing rapidly. As such, the organisation has up until now invested
heavily in innovation. This was accomplished through efforts, such as the
establishment of a quasi-independent company (a smaller organisation created within
the existing organisation to innovate independently from the mother company)
responsible for innovation, led by a Chief Innovation Officer (a member of the
executive), the recent appointment of specialists in 4IR-related competencies,
acquisitions of pioneering software, and continuous efforts to encourage collaboration
among its subsidiaries. All this was in line with the imperative of remaining a market
leader and continuing to provide unmatched customer value through innovation. With
the heavy investment placed on innovation, senior managers were also keen to
understand whether their current efforts had had an impact on the internal
environment.

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By senior managers’ own admission, the innovation strategy had until now invited little
effort from middle managers and lower-level employees, and had instead
overburdened senior managers, making the strategy somewhat inefficient. This was
based on the view that lower-level employees could only contribute towards minor
improvements in their personal work processes and not the organisational-impacting
innovation that the company was targeting. Senior managers also doubted whether
junior employees fully understood the strategy or could contribute meaningfully to it.
The scope of this research might be unable to empirically answer questions on
innovative competencies of employees in the organisation or on their understanding
of strategy. Rather, the research seeks to uncover the organisation’s cultural
underpinnings that might guide management in future strategies. Yet still the literature
review will seek to validate a participative approach to innovation as the basis to
corporate entrepreneurship.

Considering the risk of employee redundancy in the 4IR and potential resistance
towards adopting new digital methods, the organisation is faced with the need to
ensure that it includes its employees on the innovation journey, that employees are
fully aware of its aims, and buy into the organisation’s strategic imperatives. The
organisation plans to launch a new digital transformation campaign, which is aimed at
increased operational efficiency, improved client service, product innovation and the
development of its employees. As such, it is important to understand the perceptions
and level of preparedness of employees at different levels of the organisation to
guarantee project success. The digital transformation process will impact employees
at all levels. This effort has direct bearing on the organisation’s internal environment
and on employees’ innovative capacity.

Like any organisation navigating innovation in the digital age, the organisation
continues to question whether its efforts have been sufficient to establish it as a digital
innovation leader in the African context, and whether it had done enough to guarantee
success. This consultancy report therefore explores management theory, links it to
practice and seeks to enrich the organisation’s approach to pursuing an environment
for sustained innovation.

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2. Application of prior research
2.1 Introduction
Innovation results from ideation, with the crossover between ideation and innovation
being when the product/process assumes value to consumers or users (Kastelle &
Steen, 2011; Knight, 1967; Lumpkin & Dess, 1996). Innovation has the influence to
change what customers consider value (Christensen et al., 2016) and is essential for
economic evolution and growth (Brown & Eisenhardt, 1995; McFadzean, O'Loughlin
& Shaw, 2005; Schumpeter, 1942). Innovation therefore plays a significant role in
strategic renewal. Kastelle and Steen (2011) argued that idea generation alone was
insufficient to enable innovation. Rather, the key role of management was to establish
organisational processes that would enable the development of innovation from idea
generation to idea selection and execution (Figure 1). Organisations have tended to
assume that encouraging idea generation alone would be sufficient in engendering
innovation, this assumption was observed to be both incorrect and a risk to
organisational development (Kastelle & Steen, 2011).

Idea generation and Idea Idea Market

Strategic
Scaling renewal
selection development implementation reception

Figure 1: The innovation value chain (Adapted from Kastelle & Steen, 2011)

McFadzean et al. (2005) put forward multiple types of innovation. Broadly, these relate
to the product offering, organisational processes and strategic management. More
specifically, Knight (1967) classified five types of innovation, namely: product/service,
process, organisational model, organisational structure and employees. Recent
literature supports these classifications, thereby affirming that to be able to compete
effectively in today’s ever-changing environment organisations should engage in all
the various types of innovations (Abdel-Razek & Alsanad, 2014). A process of
innovation mapping allowed organisations to measure the balance and cost of the
different types of innovation. In accordance with Abdel-Razek and Alsanad’s findings,
global technology giant Google has innovated in multiple areas, but has also
specifically emphasised the internal environment (Lyons, Chatman & Joyce, 2007).
Interestingly, in 2017, Apple and Google were the world’s two most valuable brands
(Forbes, 2017). A case study relating Google’s internal culture revealed its emphasis

5
on its employees or internal culture as being core to its innovation strategy
(Noviantoro, 2014). Innovating in multiple areas depended on engaging all employees
to form part of the innovation process, and thus, the internal environment was
identified as a key aspect of an organisation’s ability to develop innovation strategies
that future-proof the organisation (Hornsby et al., 2002).

The spectrum of innovation ranges from imitation to radical (Koberga, Detienneb &
Heppard, 2003). The differences in these innovation approaches are set out in Table
1. Whether an organisation innovates incrementally, with constant improvements to
existing innovations, or radically in a novel/disruptive manner, its internal environment
sets the scene for sustained innovation which should be deliberate and well planned
(Hornsby et al., 2002). In choosing to be a market leader in innovation, with radical
innovation being its intended strategic approach, the organisation needs to investigate
whether its internal environment is conducive to the desired scale of innovation.

Table 1: Definitions of innovation types and examples of each

Innovation
Description Example
type
Imitation Introducing innovations in a business to Other car manufacturers release
match competitor activity electric cars to match the Toyota Prius
Incremental Gradual improvement to existing Increases battery life on electric cars
innovations over time
Dramatically Innovations that offer a renewal of Move from hybrid to fully electric cars
continuous existing innovations
Radical Breakthrough innovation that introduces Invention of the first automobile in
a previously unwitnessed innovation 1885 to replace the horse-drawn
that changes market needs carriage
Source: Researcher’s own construct (2017)

The Australian financial services company, Suncorp, innovates across multiple

innovation types (Maxwell & Randell, 2017). Aided by agile methodologies, they have
developed execution speed as a competency for employees throughout the
organisation. This competency has become a key competitive advantage for Suncorp.
Their innovation process not only affords the organisation the ability to test and
implement its own ideas at unmatched speed, but also allows them to swiftly imitate
competitor advances before they could become a risk to their business. Imitation is a

6
form of innovation, and as such, an organisation’s ability to engage all types of
innovation provides it with continuity in its innovation efforts.

In making the choice on how to compete effectively, management theory provides

numerous options that an organisation may choose to take, be it a human resource
strategy, acquisitions, R&D, the creation of a quasi-independent organisation in start-
up fashion, or other options (McFadzean et al., 2005). However, common to
management theory, the selection process begins with a scan of the environment
(“benchmarking”) (Choo, 1999) and an analysis of internal competencies (“mapping”)
(Alabbas, 2016). In exploring potential innovation areas, organisations need to map
existing innovations to uncover unexplored gaps and decide on which to focus in
future. For the organisation in question, this is a key step considering the magnitude
of investment already having been made towards innovation.

Studies of organisations that have been successful in sustaining innovation have

shown that such organisations have created a digital literacy foundation; removed the
barriers of resistance to digital transformation; had a structure in place that allowed
employees to contribute freely; a clear strategy for choosing which path they would
like to take; great vision; and a sense of urgency towards innovation implementation
(Fitzgerald, Kruschwitz, Bonnet & Welch, 2014). This assertion was synonymous with
Google and FNB’s approaches. Choosing a sustained innovation approach implies
constant intermittent change to the work environment and the ways of work, as such
an organisation must be adequately structured to be ready for such change (Guth &
Ginsberg, 1990).

In discussing organisational success through sustained innovation, dialogue on

corporate entrepreneurship (CE) also becomes relevant. Guth and Ginsberg (1990)
defined CE as a process of strategic renewal that emanates from innovation and
corporate venturing, whereas Foley (2014) stated that CE can be regarded as
providing the infrastructure that supports and sets the scene for sustained innovation.
These are not opposing definitions, yet one focuses on the scope of entrepreneurial
activities, while the other focuses on the enablers of CE. For the purpose of this
research, the definition of CE will be regarded as the advancement of innovative
behaviours in an established organisation through the promotion of autonomy, in order
to stimulate the exploration, selection, implementation, resourcing, commercialisation

7
and exploitation of novel opportunities (McFadzean et al., 2005). This definition alludes
to the enablement of innovation. In answering the research question under
investigation, this definition narrows down discussion of CE to exclude the external
environment. CE therefore lends itself to management theory in human resources
management as well as innovation management and is an enabler of innovation within
organisations. In the following section, the difference between the internal and external
environment for CE is elucidated.

The concept of CE as a management theory has been a theme of academic research

over many years (Hornsby et al., 2002), with it having been regarded as a key strategy
for organisational growth, a continued source of competitive advantage and
organisational ambidexterity. Organisational ambidexterity is the action of innovating
for now and for the future simultaneously (Gibson & Birkinshaw, 2004). The focus of
this consultancy report will be to review employee perceptions of the current innovation
strategy of their organisation, and to measure their perceptions of the internal
environment. Against this background, areas of future focus towards meeting
organisational goals are recommended. The subsequent analysis of literature covered
two key issues. Firstly, CE and the factors influencing the development of innovation,
these having been classified as internal and external factors. Secondly, management
practices are explored, as this is a critical factor influencing the internal environment
within an organisation.

2.2 The internal environment

Guth and Ginsberg (1990) identified the factors impacting on CE as being the external
environment, strategic management, organisational culture and organisational
performance. For purposes of simplification, it is beneficial to categorise these as
external and internal factors.

Direct external factors included competitor behaviour, technological advances,

changing customer needs and suppliers, while indirect external factors included
political, economic, legal, social and climate factors, among others (Yachmeneva &
Vol’s’ka, 2014; Zakić, Jovanović & Stamatović, 2008). Internal factors included the
financial position, age and size of an organisation, internal competencies (including
technology), organisational structure, management behaviour and organisational

8
culture. Evidently, internal factors included aspects that contribute to encouraging
employees to proactively participate in innovation, whereas external factors
necessitated innovative behaviour in response to the macro environment.

External factors often cannot be controlled by the organisation. As such, interventions

towards external factors may only be beneficial in the short term, whereas a focus on
internal factors may result in the development of internal competencies that may
become an organisation’s competitive advantage (Tellis, 2006). Consequently, the
focus in this report is on the internal factors affecting innovation.

As evidenced by organisations such as Google and FNB, a focus on organisational

culture, produced significant results in the quest for corporate renewal through
innovation (Gaylard & Viedge, 2011; Noviantoro, 2014). Much can be learned from
FNB’s journey to becoming highly innovative. This organisation took a radical step
towards encouraging innovation by offering a million-rand incentive for the best
innovation. They began by rewarding idea generation, but as the innovation project
became more established, they evolved to rewarding the value of the innovations. The
success of the project was attributed to the establishment of a structural framework to
facilitate idea development and implementation. The FNB CEO’s direct involvement in
the project was proof of the organisation’s commitment to innovation. In the end, they
had developed a highly organised innovation process, which was embedded in
employee empowerment.

Corporate entrepreneurship, as defined for the purpose of this research, focused on

the internal environment as an enabler of innovation. Hornsby et al. (2002) developed
a research instrument called the corporate entrepreneurship assessment instrument
(CEAI) that aids the measurement of an organisation’s internal environment for
entrepreneurship. A Google Scholar search proved the tool to be widely researched
with 966 citations and 101 related articles. The instrument was further refined by
Kuratko, Hornsby and Covin (2014), they also showed that since its development,
rigorous analysis has proven the reliability of the instrument. The tool revealed areas
on which organisations could focus to improve CE behaviours, and so, proved to be a
robust measurement for exploring the organisational problem that this consultancy
project wishes to explore.
9
The CEAI describes five main factors that impact on the internal environment for
corporate entrepreneurship as being management support, work discretion,
rewards/reinforcement, time availability and organisational boundaries (Kuratko et al.,
2014). Each of these factors is discussed in more detail below.

2.2.1 Management support

This is management’s perceived participation and encouragement of innovative
activities. Managers reinforce entrepreneurial behaviour through their response to
employee actions and achievements. It may be through verbal encouragement,
adoption of innovations, or financial backing and rewards.

2.2.2 Work discretion

This entails a measure of employee engagement that influences employee freedom
and autonomy to innovate. It affects the entrepreneurial psychology, i.e. employee
willingness (interest and drive) and latitude to innovate. It gives employees a sense of
safe to fail, which is required for them to attempt the implementation of innovation.

2.2.3 Rewards and reinforcement

When employees have clear expectations of the rewards or outcomes of innovative
behaviour, they are more likely to go out of their way to find and effectively implement
it. This was exemplified by FNB, having successfully managed to create an
environment conducive for CE through its rewards programme (Gaylard & Viedge,
2011). Reinforcement, or management’s indication of approval for employees’ efforts
have a similar effect.

2.2.4 Time availability

Among other resources, the perception of time availability affects innovative activities.
Often, when employees are under pressure to achieve revenue targets (short-term
objectives), longer-term objectives may be neglected. This is also true for times of high
profit, where management focus tends to push towards pleasing existing customers
and forgetting to plan for the future (Christensen, 1997).

2.2.5 Organisational boundaries

Organisational boundaries impact on both the flexible and the rigid confines necessary
for innovation (enabling and limiting boundaries). These include the perception of
flexibility, for example in interactions among employees in different functional
departments to encourage idea sharing, and confines such as structural frameworks

10
in the selection of ideas to pursue, known processes, and clarified roles to enable
innovation.

2.3 Corporate entrepreneurship and management

As a catalyst of organisational renewal, CE is not without complexity as it is
multifaceted in nature (Phan, Wright, Ucbasaran & Tan, 2009). The leadership team
within an organisation are the custodians responsible for managing such complexity.
The five dimensions brought forward by the CEAI instrument that were discussed in
the previous section (management support, work discretion, rewards/reinforcement,
time availability and organisational boundaries) are all within management’s control.
As such, management’s role in facilitating CE is reviewed in more detail in this section.

As a form of strategic renewal, CE is the responsibility of managers. Strategic renewal

is defined as the development of innovations or corporate ventures targeted at future
benefit for an organisation (Agarwal & Helfat, 2009). In addition, corporate venturing
includes activities such as acquisitions and mergers, the establishment of quasi-
independent organisations, small business incubation and joint ventures (Phan et al.,
2009). It is a function of visionary leadership, where senior managers make decisions
concerning the future that may divert from the status quo, thereby making leadership
critical to strategic renewal (Christensen, 1997; Tellis, 2006). As a result, Kodak’s
failure and eventual filing for bankruptcy were attributed to leadership failure (Lucas &
Goh, 2009).

Management’s CE proficiency and employee contribution are related (and likewise

important) to an organisation’s ability to act in an entrepreneurial fashion. Managers
at various levels play a pivotal role in both promoting and supporting entrepreneurial
activities. This may be due to management’s own entrepreneurial activities, or their
influence/encouragement towards their subordinates to engage in entrepreneurial
behaviour. Good management skills are therefore required to successfully instigate,
manage and support CE (Phan et al., 2009).

Managers at all organisational levels are well positioned to sponsor lower-level

employees’ engaging in entrepreneurial activities, due to their influence, networks and
access to resources (Phan et al., 2009). Furthermore, due to their decision-making

11
power, managers influence entrepreneurial behaviours such as risk-taking,
innovativeness and pro-activeness (Lumpkin & Dess, 1996; Murimbika & Urban,
2014). This was described in a management theory called Core Group Theory, which
purported that senior managers are influencers of decision-making throughout an
organisation and should therefore enable lower-level employees to think and act
independently of them. Such actions encourage innovation instead of followership
(Kleiner, 2005). In support of this theory, former FNB CEO, Michael Jordaan, attributed
his success in engendering an innovation culture at FNB to the inversion of the top-
down management approach, preferring to encourage autonomy among employees
(Brand South Africa, 2012; Gaylard & Viedge, 2011).

This review of literature has shown that organising for innovation is a complex and
elaborate process. As a result, the selection of sufficiently equipped managers to lead
the implementation and change process is a key driver to successful corporate
entrepreneurship (Hornsby et al., 2002).

2.4 Consultancy approach

Consultancy method refers to the process that the consultant follows to conclude
his/her findings including the reporting structure for communicating results. This
process not only entails the steps the consultant would take, for example, conduct
desk research, collect data, analyse results; but also, the tools or instruments he/she
uses to collect or analyse the data. Large consultancy firms often employ proprietary
methodologies and may also have multiple customised processes for each unique
type of organisational problem they seek to resolve (Werr, Stjernberg & Docherty,
1997). Some commonly known consulting frameworks include the Boston Consulting
Group (BCG) Matrix, Porter’s five forces, and the McKinsey 7S Framework. The key
purpose of consulting being to resolve client problems and bring about organisational
change. Werr, et al. (1997) explored consulting methods employed by a sample of
large consulting firms and found that methods were developed through experience
and were a way of safeguarding the consistency of quality output that firms produced.
They argued that whereas models may be considered to be overly prescriptive and
limiting, they allowed for consulting to be teachable and replicable, aa well for further
development of the process through learning from past engagements. This report

12
therefore uses the CEAI instrument as a widely recognised and proven tool for
assessing an organisation’s internal environment. The robustness of the CEAI tool has
already been discussed in the previous section.

In general, the consulting process much like academic research, which broadly
entailed setting objectives of the consulting process, a scope, approach, the
presentation of findings and recommendations, as well as referencing sources of
information (Turner, 1982). A key difference is that consultancy typically involved at
least two active data collection phases, whereas academic research typically required
only one. Apart from collecting data to answer the research question, consultants were
often commissioned to investigate or resolve an organisational problem specified by
the client. Understanding the organisational problem is critical to successful consulting
and required client briefing, followed by qualitative data collection (Werr et al., 1997).
The qualitative process often followed a face-to-face interview format and safeguards
the consultancy project from pursuing inaccurate or insufficiently defined
organisational problems (Turner, 1982).

The consultant may also be commissioned to implement recommendations. Although

desk research is often required for consulting engagements, a formal review of
academic literature is not required. Unlike typical desk research or market analysis, a
review of academic literature adds to a deeper form of knowledge creation, as it is
more stringent and relies on critical engagement with concepts in case of fake data
sources or collusion with clients to distort findings. A review of academic literature or
an equivalent information reliability check is therefore recommended as a step in the
consultancy process. As such, an attempt was not only made with this consultancy
report to resolve the organisation’s identified problem, but also to provide a solid basis
of academic and practical knowledge. This suggests that the recommendations in this
consultancy report are not prescriptive in nature but should contribute to
management’s knowledge on which to base future organisational strategies. Details
of the methodology that was followed by this consultancy project are provided in the
forthcoming methodology section.

13
2.5 Conclusion
Having established innovation as a core value for the organisation, both key definitions
and scholarly articles have been explored in the application of prior research. These
have described the relevance of CE, the internal environment, as well as
management’s role in navigating corporate renewal. The study of management theory
thus providing a robust basis for decision making on future strategies, considering that
budgets were not large enough for trial and error and that organisational failure might
be permanent.

Academic literature has been useful in answering some of the organisation’s

questions, specifically it has shown that employees involvement in CE is pivotal to
facilitating continuous innovation. Literature also showed that the internal environment
can be measured by evaluating five key factors, including: management support, work
discretion, rewards/reinforcement, time availability and organisational boundaries.
Management influences these factors at different organisational levels through their
ability to relinquish power and allow employees to participate in innovation.

14
3. Research methodology
3.1 Introduction
A systematic enquiry process includes the selection of a methodology that answers
the research question fully and can be applied appropriately to produce reliable results
(Hofstee, 2006). Considerations of project timing and practical feasibility of the
research are also critical and were applied in the research methodology. This section
describes the research methodology that was followed in answering the research
problem. This entails a description of the research design, data collection process,
and data analysis approach. The key emphasis of the section is to validate the chosen
research methodology as a robust foundation for making research findings and
conclusions.

3.2 Research design

Due to the consultancy nature of this research project, consultation with senior
managers within the organisation was required to identify and fully appreciate the
consultancy problem under investigation. This is a necessary and conventional step
in consultancy projects (Werr et al., 1997). As such, unstructured face-to-face
interviews were conducted, and outcomes of this data were discussed in the
introduction to this report.

In answering the consultancy problem, a quantitative study was appropriate as it

measured the specific outcomes that senior managers wished to explore. The
quantitative method allowed for a structured data collection format as well as
confidentiality. These elements are valuable, as the research asked questions relating
to management behaviours, which are sensitive in nature (Hofstee, 2006). Yet
because the quantitative method might not provide an in-depth understanding of the
reason for respondent sentiment, open-ended questions had been included to allow
respondents to fully express their views if they wished to do so.

Other reasons supporting quantitative data collection included:

▪ suitability for measuring employee readiness and gathering perceptions on
innovation;
▪ ease of distribution to employees across South Africa via an anonymous survey
link; and

15
 ▪ a less time consuming and less invasive data collection method compared to
other data collection formats such as a financial review or face-to-face
interviews.

3.3 Sampling method

Conventional research methodology suggests the selection of a sample from a large
population. Yet in the case of organisational research, the study of the entire
population is often necessary, as the selection of a sample may introduce biased
results or create blind spots (Zikmund, 2003). The study of the entire population also
allows the researcher to gain a holistic view of the subject under investigation.

The population for this consultancy project included all the organisational employees.
As the goal was to of the organisation’s internal environment, a. This was practical, as
the organisation had consented to the distribution of the survey to the entire employee
mailing list. An anonymous survey link was therefore distributed to the full population
of employees, excluding those who had participated in the pilot study, thus amounting
to approximately 900 employees. The chosen distribution channel did not guarantee
a high response rate yet ensured that all employees would have equal opportunity for
participation. Following the initial distribution of the survey link via email, the survey
link was further distributed via the organisation’s internal social media platform to
improve the response rate. It was noted that this approach introduced a potential bias
towards employees who interacted more often on social media than others.

Of the organisation’s total population of approximately 900 employees who were

provided with an equal opportunity to participate, 88 respondents participated in the
study, which represented a ten percent response rate. Out of the 88, 75 respondents
answered all the questions in the survey, while 13 incomplete responses were deleted
from the final data file. As detailed in the data analysis methodology section, 75
responses are sufficiently robust for both descriptive and inferential statistics to be
conducted on the data.

3.4 Research instrument

The research instrument which was a quantitative questionnaire is included in
Appendix B. The questionnaire consisted of two sections, Section A was based on the
CEAI questions developed by Hornsby et al. (2002), Section B included demographic

16
questions, as well as questions relating to the level of innovation in the organisation
and its subsidiaries.

The 48 CEAI statements were asked as prescribed by Kuratko et al. (2014), based on
a five-point Likert scale, where some statements were worded negatively to avoid
response bias. As discussed in the literature review section, the CEAI instrument is a
dipstick measurement that allows an organisation to gain a cross-sectional view of the
factors relevant to encouraging entrepreneurial activities. The CEAI questions
therefore answer the main research problem of this consultancy report which was to
measure the internal environment for corporate entrepreneurship within the
organisation. It was therefore used to develop a profile across the five dimensions and
internal elements, where low average scores in any dimension revealed areas
requiring developmental activities to enhance an organisation’s readiness for
entrepreneurial behaviour and establish the successful implementation of a CE
strategy (Kuratko et al., 2014). By using a well-established research instrument, this
assists in ensuring the reliability of the survey results (Zikmund, 2003).

In addition to the CEAI, employees were requested to rate the level of innovativeness
of the organisation and of the subsidiary to which they belonged. This was a key
measurement, as the CEAI provided the reasons for employee perceptions of
subsidiary level innovation. The CEAI specifically provided reasoning for the
innovation level within subsidiaries and might not necessarily be related to the overall
organisational innovation level, as it is based on perceptions of lived experiences. This
was particularly true for middle management and lower-level employees, who did not
have direct interactions with the holding company and other subsidiaries.

Demographic questions had also been included to further explore themes arising from
the various organisational groupings. Demographics such as age, tenure, job level
and function might be related to perceptions of the internal environment. Research by
Kuratko et al. (2014) had shown that job level was related to employee innovative
capacity due to increased autonomy of higher level employees. It was important to
obtain a proportionate representation of employees in various demographic groupings
to match the structure of the population. Ensuring that the resulting sample matched
the structure of the population is a critical factor in establishing the generalisability or
external validity of survey outcomes (Zikmund, 2003).

17
A pilot study was conducted in a smaller subsidiary with 30 employees to gauge the
level of understanding of the CEAI questions. The pilot study only asked CEAI
questions and revealed a general understanding of the questions across job grades.
Furthermore, the results were consistent throughout the organisation, which
suggested a uniform understanding of the questions. However, some survey
respondents, particularly senior managers, indicated that they were sometimes
uncertain about whether the survey questions targeted the subsidiary or the overall
organisation. An introductory statement was included in the main survey to clarify that
employees were being asked to rate their direct internal environment within their
subsidiary. Data from the pilot study was not included in the final analysis as it
excluded questions in Section B. Employees who were sampled for the pilot study
were not asked to participate in the main survey. In addition to administering a pilot
study, two senior managers from the organisation were given the opportunity to review
and approve the questionnaire and methodology before distribution to employees.

3.5 Data analysis

Prior to detailed data analysis, confirmatory factor analysis was conducted to allow an
independent determination of factor groupings specific to the organisation under
investigation. Factor analysis is useful in summarising information contained in
multiple variables and condensing them into composite dimensions with minimum loss
of information (Hair et al. 2010). Factor analysis also allowed for further verification of
the validity of the five factors suggested by Hornsby et al. (2002), particularly, in a
South African context. Yet, due to the consultancy nature of this project, verification of
the CEAI instrument was not a priority. Instead, the internal validity and
representativeness of collected data were critical for allowing useful insights and
recommendations to be made. The demographic questions allowed for such an
analysis. Factor analysis requires a minimum sample size of 50 cases and a preferred
sample size of 100 cases or more (Hair, Black, Babin & Anderson, 2010). Factor
analysis is therefore valid for the achieved sample size of 75 cases. Yet the results will
be treated as indicative as 100 or more cases would be required for a more robust
result.

The basic analysis was conducted through descriptive statistics. This allowed for the
distribution of observations across the organisation to be measured (Zikmund, 2003).
According to Kuratko et al. (2014), descriptive statistics are regarded as sufficient for

18
measuring an internal environment for corporate entrepreneurship within an
organisation, which was the primary concern of this consultancy project. The analysis
of descriptive statistics therefore ensures the internal validity of the survey results
(Zikmund, 2003). By utilising demographic data, linkages might be observed among
the five dimensions of the CEAI instrument. It was also useful to observe whether
differences existed based on management level, as measured by Hornsby et al.
(2002).

To understand behaviours and perceptions of employees at different levels,

segmentation analysis was also used to explore homogeneous respondent groupings
within the data. Further descriptive statistics would unpack the statistical
characteristics of the various segments.

3.6 Research limitations

Voluntary data collection within an organisation is subject to non-response error, self-
selection bias and deliberate falsification (Zikmund, 2003). Considering the sensitive
nature of questions regarding management practices, these factors have a significant
bearing on the applicability and generalisability of the results. Some subsidiary
groupings may influence results in a distinct direction, as leadership practices may not
be uniform throughout the broader organisation. Yet still the survey allows the holding
company to understand common themes throughout the organisation. And access
whether these themes might be driven by actions or policies emerging from the holding
company. These may be either positive or unintended consequences.

The response rate could not be controlled nor predetermined and impacted the level
of analysis that was possible. All the above factors had direct bearing on the validity
and reliability of the results. However, in administering the survey, care was taken to
ameliorate these concerns as already described in preceding sections. In addition,
care will be taken to observe and address distortions in the data during analysis.

Unintended consequences of the research might arise due to the primary researcher’s
association with the organisation under study. Yet, in observing research ethics,
survey data was treated with the strictest confidentiality, and results were only reported
where sufficient base sizes existed. Generally, groupings of close to 30 respondents
were analysed to ensure statistical validity of stated results. Another key consideration
in reporting the results was not to disclose information that could be linked back to the

19
identity of the organisation under investigation. As such, names of companies, industry
and divisions are not specified, while still endeavouring to describe nuances in the
results that are affected by such demographics.

20
4. Presentation of results
4.1 Introduction
In this section, results of the research survey will be described and analysed to lay a
solid foundation for providing recommendations towards resolving the organisational
problem. The analysis will include sample definition, factor analysis and a cross-
section of CEAI results by demographic data. This analysis is aimed at answering the
key research objectives, which are to measure employee perceptions of the current
internal environment and understand whether it is conducive to successful corporate
renewal. The analysis is also aimed at understanding employee perceptions of
management actions, as they impact on employees’ willingness to innovate.

4.2 Sample distribution

The graphs in Figure 2 provide a description of the sample that participated.
Homogeneous respondent categories have been merged to allow large enough base
sizes for valid statistical analysis. The organisation’s demographic distribution has
been inferred from the climate survey as demonstrated in Appendix A. The climate
survey was commissioned by the organisation itself and achieved a 74 percent
response rate. It is therefore a valid benchmark for the distribution of the employee
population. Based on this benchmark, the distribution of the achieved sample as
shown in Figure 2, is comparatively similar to the current organisational structure.

Specifically, the achieved proportions of gender and division matched the population.
While no major demographic skews are evident in the achieved sample, tenure and
job level did indicate overrepresentation for employees with tenure of over five years
and underrepresentation for employees in the general staff job level. Considering the
relatively small base size, the data has not been weighted to correct these distortions,
instead caution is rather taken when interpreting results for these two demographics.
The climate survey did not provide data to benchmark functional area and age. Having
grouped the functions into internal operations, product delivery, and age groups 18 –
37, 3 – 44 and 45 – 65, an analysis of these demographics will be used to understand
behavioural preferences of the broad groupings.

21
Figure 2: Demographic distribution of the achieved sample

22
Employees from all ten different subsidiaries responded, with the highest participation
rate being 37 percent from a single subsidiary, and the lowest being 1 percent. For
statistical robustness, the subsidiaries have been grouped into industry-related
divisions as per the organisation’s brand strategy. The divisions have been named
arbitrarily to ensure anonymity, as was required by the organisation. 71 percent of the
employees in divisions B and C were involved in product delivery, and the remaining
29 percent in internal operations, this is owing to the nature of operations conducted
by these divisions. The majority of Division A employees on the other hand are
involved in non-customer facing operations, fittingly 65 percent of observations for this
division were internal operations employees. Predictably, head office employees were
all internal operations employees.

Overall, the achieved sample distribution provides a good reflection of the

organisation’s population and meets the external validity criteria. The data is therefore
sufficient to provide answers to the research objectives of this consultancy project and
to draw inferences on the entire organisation. In the analysis of the CEAI factors,
demographic data will be useful in investigating differences in employee perceptions.

4.3 Factor analysis

Factor analysis was conducted on the 48 CEAI variables, results are indicated in Table
2. At factor loadings of 0.4 and above (highlighted in blue in Table 2), most statements
could be grouped into distinct factors. Only five of the 48 statements did not meet
statistical requirements for inclusion under any specific factor. This is a typical result
in factor analysis and is therefore a good indication of the validity of conducting factor
analysis on this data set (Hair et al., 2010).

Confirmatory factor analysis applied to the data set produced four factors. These are
largely consistent with theoretical constructs observed by Hornsby et al. (2002), except
that this data set only produced four instead of five factors. This is an interesting result
which warrants further exploration. The four factors matching the CEAI model were
management support, work discretion, time availability and organisational boundaries.
Statements representing management support and those pertaining to
rewards/reinforcement have loaded as a single factor. This reveals that the
organisation’s employees perceive the two dimensions as being related. When taking
a closer look, some statements under management support are related to rewards

23
(statements 5 & 11) and reinforcement (statements 3, 4, 6, 10, 12, 13, 16 & 17).
Wording for the statements’ descriptions are provided in Appendix B. This means that
ten out of the 18 management support statements overlap with the
rewards/reinforcement dimension, which clarifies why employees regarded the two as
a single factor. The result confirms the earlier assertion that management support
overlaps with other factors. As such, management behaviours are strongly linked to
the organisation’s ability to innovate. The significant research outcome is that
reinforcement is a significant theme in the organisation, and warrants analysis
separate to other management support elements.

The results of the factor analysis indicate the soundness of the data collected for this
research, as the data fits the CEAI model. Moreover, it contributes towards academic
literature by confirming the validity of four out of five factors of the CEAI model. This
is significant as it produces a solid basis for analysing the organisation’s internal
environment making use of the CEAI factors. Since the primary purpose of this
research is to understand employee perceptions of the internal environment for
corporate entrepreneurship, further reliability analysis of the factors would be
unnecessary. Yet this provides a compelling basis for further academic research to
verify the applicability of the CEAI instrument in a South African context.

24
Table 2: CEAI confirmatory factor analysis output
CEAI Rotated Factor Pattern (at 0.4 factor loading)
Factors Statement Factor1 Factor2 Factor3 Factor4
Q1_1 0.57226
Q1_2 0.76697
Q1_3 0.69383
Q1_4 0.52323
Q1_5 0.56152
Q1_6 0.57903
Management Support

Q1_7 0.47209
Q1_8 0.56276
Q1_9 0.62617
Q1_10 0.65399
Q1_11 0.75284
Q1_12 0.70946
Q1_13 0.79941
Q1_14 0.72773
Q1_15 0.70923
Q1_16 0.62677
Q1_17 0.60294
Q1_18 0.45112
Q1_19 0.57318
Q2_1 0.73031
Q2_2 -0.06101
Q2_3 0.56631
Work Discretion

Q2_4 0.66065
Q2_5 0.46745
Q2_6 0.80426
Q2_7 0.81256
Q2_8 0.72697
Q2_9 0.70037
Q2_10 0.60123
Q3_1 0.44984
Reinforcement

Q3_2 0.57942
Rewards/

Q3_3 0.34151
Q3_4 0.42019
Q3_5 0.45369
Q3_6 -0.08308
Q4_1 -0.68631
Time Availability

Q4_2 0.71177
Q4_3 0.62215
Q4_4 -0.2026
Q4_5 -0.54422
Q4_6 0.54106
Q5_1 0.44828
Q5_2 0.38152
Organisational
Boundaries

Q5_3 0.64435
Q5_4 0.56803
Q5_5 0.53591
Q5_6 0.67058
Q5_7 0.63755

25
4.4 Analysis of results
4.4.1 Innovation perceptions
Employees were requested to rate the level of innovation of both the broader
organisation and that of the subsidiary that directly employs them. The CEAI data then
provides reasons for the organisation’s perceived level of innovation. As discussed in
the methodology section, this question is most pertinent to the subsidiary, as the
subsidiaries represent the employees’ internal environment. Employee perceptions of
the level of innovation is a key measurement, as it reveals perceptions based on the
qualitative knowledge that employees might have gained regarding, for instance
industry norms, the national or international landscape, the pace of technological
change experienced by them, coupled with their experience of the internal
organisational environment.

Employees were asked to rate the level of innovation on an 11-point scale where 5
was the mid-point, results are indicated in Figure 3. A mean score of 6.4 for the
organisation (holding company) is therefore moderate and arguably below standard
for an organisation intending to regard innovation as a key strategic pillar. Instead,
organisations that successfully innovate at a rapid pace solicit unquestionably high
levels of innovation perceptions among staff and customers. Only 13 percent of
employees view the organisation as being highly innovative. The subsidiaries score
slightly lower at 6.0, where only 9 percent view their subsidiary as being highly
innovative. These mid-ranging scores seem discouraging, yet half of the employees
view their subsidiary as being innovative at a level higher than 7, while the other half
view it as moderately innovative (4 – 6). Similar proportions are indicated for the overall
organisation. The results therefore indicate that staff have widely varying perceptions
organisational innovation levels.

Figure 3: Innovation level of the organisation and subsidiaries

26
A deeper look into the innovation scores, as illustrated in Table 3, indicates
demographic skews. Middle management view their nuclear organisation (subsidiary)
as significantly less innovative than other employee levels. Considering middle
management’s responsibility to implement subsidiary level strategy (as discussed in
the literature review section), this is not a healthy result. Similarly, general employees
view the holding company as being significantly more innovative. Senior management
indicate an opposing view and perceive their own subsidiary as being more innovative
than the broader organisation. This disparity of perceptions seems to indicate that
employees with less exposure to other organisations (except their own subsidiary)
tend to express a more positive view of what is taking place outside their own
organisation. This disparity is further highlighted in Figure 4 which illustrates clear
difference in innovation level by job level. It is again questionable whether the
organisation has been successful in creating a consistent brand across all its
subsidiaries. Evidently, there is insufficient cross function collaboration across all
subsidiaries for middle management and lower-level employees, as was stated by
managers and articulated in the introduction of this report.

Figure 4: Level of innovation by job level

Table 3 also indicates that Division A, which held the highest proportion of general
employees in the data set, views the organisation as being significantly more
innovative than the subsidiary they belonged to. Also, employees in differing divisions
express dissimilar views of the organisation’s innovation level. This supports the
finding of an incongruent brand.

27
Table 3: Average innovation score by demographic data
Innovation score
Average Organisation Subsidiary SUM Row n
Functional Internal operations 6.3         6.3         12.6         40        
Area
Product delivery 6.6         5.6         12.1         35        
Job level Senior Management 5.7         6.4         12.1         16*      
Middle Management 6.1         5.2 ↓ 11.2 ↓ 33        
General staff 7.3 ↑ 6.7         14.0 ↑ 26        
Divisions Division A 7.0 ↑ 6.2         13.2         37        
Divisions B and C 6.0         5.9         11.9         31        
HO 5.0         5.1         10.1         7*      
Tenure 0 to 4 years 6.9         6.1         12.9         29        
5 or more years 6.2         5.9         12.0         46        
Gender Male 6.5         6.0         12.5         31        
Female 6.4         5.9         12.3         44        
Age 18 to 34 years 6.3         5.7         12.0         27        
35 to 44 years 6.4         5.7         12.1         27        
45 years + 6.6         6.6         13.1         21*      
NET 6.4         6.0         12.4         75        
Column n 75         75         75        
Total sample; Unweighted; base n = 75, Multiple comparison correction: False Discovery Rate (FDR) (p = 0.05)
*low base size
Red font shows statistically significantly low results whereas blue shows statistically significantly high scores.

Non-statistically significant results from Table 3 include that employees over the age
of 45 did not perceive a difference in the innovative status of their subsidiary versus
the organisation. Moreover, they expressed a more optimistic view of the subsidiary’s
innovation level than younger employees. Although statistically insignificant, this
indicates a potential age bias regarding perceptions of innovativeness. Such an age
bias seems logical, as younger employees would be more aware of technological
innovations and therefore measure the organisation by a higher standard.

Employees who have been part of the organisation longer tend to view it as less
innovative than newly appointed employees. It might be that employees who have
been in the organisation longer have become familiar and therefore less optimistic.
They might also have been met with barriers while attempting to innovate. The
organisation might need to consider ways of keeping such employees engaged and
feeling enabled to innovate.

28
4.4.2 CEAI Factors
As indicated in Figure 5, the organisation’s CEAI dimension scores are relatively close
to the 3.0 mid-point. Work discretion, organisational boundaries and
rewards/reinforcement score highest, with scores of 3.4, 3.4 and 3.3 respectively. This
indicates relative strength in these dimensions, which was possibly influenced by past
efforts towards asserting innovation as a core value in the organisation, together with
efforts such as the climate survey. Management support and time availability score
comparatively weaker with scores of 2.9 and 2.8, these are however not far off from
the 3.0 mid-point. The overall average for all CEAI statements in this data set is 3.12,
this is a positive, yet moderate score.

Average scores shown in blue above the standard deviation.

Figure 5: Average scores and standard deviations of the five CEAI dimensions

Generally, the organisation’s performance on these key drivers of innovation within

the internal environment is healthy, as the organisation scores above the mid-point.
This is a key finding as it answers the primary research question, which is to gain a
measure of the current internal environment for CE within the organisation. This result
supports employees’ perception of the organisation having a moderate innovation
level, as was indicated in Figure 3. Though the environment is healthy, based on these
results, the organisation may not claim its internal environment as providing a lasting
competitive advantage for CE. Further analysis of the individual factors will provide a
more considered answer to the research question, as well as clarity on organisational
readiness and key organisational drivers towards a successful CE strategy.

An analysis of the CEAI scores against perceptions of innovation at subsidiary level in

Table 4 reveals that employees who score the organisation moderate to low on
innovation intensity also score management support low. It is these employees who
significantly lower the management support score. Employees who view the

29
organisation as highly innovative also rated it highly on rewards/reinforcement. As
further verified in Table 5, a moderate to high correlation exists between subsidiary
innovation level with management support and reward/reinforcement respectively.
Again, there is a moderate to strong positive correlation of 0.61 between management
support and rewards/reinforcement. This confirms the results of the factor analysis that
associated the two dimensions as a single factor and further proves an association
between innovation level and CEAI dimensions. Though these outcomes do not prove
any causal relationships, it does indicate that these two factors are most influential to
CE in the organisation. It is important to highlight yet again, that the interpretation of
CEAI data corresponds with perceptions of subsidiary innovation level and not the
broader organisation. Yet noticeably, holding company results in Table 4 coincide with
subsidiary results.

Table 4: Grouped innovation levels by average CEAI factor scores

Management Work Rewards/ Time Organisational
Average support Discretion Reinforcement availability boundaries Row n
HO Innovation level categories
Low to Moderate (0-
6) 2.7 ↓ 3.5         3.2 ↓ 2.7         3.2 ↓ 39        
High (7-10) 3.1 ↑ 3.4         3.5 ↑ 3.0         3.6 ↑ 36        
NET 2.9         3.4         3.3         2.8         3.4         75        
Subsidiary Innovation level categories
Low to Moderate (0-
6) 2.5 ↓ 3.3         3.1 ↓ 2.7         3.2         40        
High (7-10) 3.3 ↑ 3.6         3.6 ↑ 3.0         3.5         35        
NET 2.9         3.4         3.3         2.8         3.4         75        
Total sample; Unweighted; base n = 75, Multiple comparison correction: False Discovery Rate (FDR) (p = 0.05)
Red font shows statistically significantly low results whereas blue shows statistically significantly high scores.

Table 5: Correlation between CEAI factors and innovation level

CEAI factor scores by Innovation level
Correlation Organisation Subsidiary SUM
Management support 0.26 ↑ 0.64 ↑ 0.53 ↑
Work Discretion -0.09         0.20         0.07        
Rewards/Reinforcement 0.20         0.50 ↑ 0.41 ↑
Time availability 0.35 ↑ 0.33 ↑ 0.39 ↑
Organisational boundaries 0.25 ↑ 0.33 ↑ 0.33 ↑
SUM 0.29 ↑ 0.60 ↑ 0.52 ↑
Column n 75 75 75
Total sample; Unweighted; base n = 75, Multiple comparison correction: False Discovery Rate (FDR) (p = 0.05)
Red font shows statistically significantly low results whereas blue shows statistically significantly high scores.

30
4.4.2.1 Management support
The average score of 2.9 for this factor was informed by the bottom scoring statements
illustrated in Figure 6. All three bottom scoring statements relate to the absence of
financing for both project execution and employee reward for engaging in
entrepreneurial activity. Top scoring statements indicate that idea generation and
cross-departmental sharing were encouraged in the organisation. These results
demonstrate that while managers encourage ideation, they lack financial commitment
to deliver innovation. The organisation therefore demonstrates an incomplete
innovation process, which confirms Kastelle and Steen’s (2011) finding that
organisations tend to replace innovation with ideation. This poses a significant risk to
the organisation’s strategic renewal project. While the organisation appears to
encourage innovation, it lacks the structural framework to enable innovation to
progress from ideas to valuable innovations.

Only extreme scoring statements are indicated.

Figure 6: Management support top and bottom scoring statements

As illustrated in Table 6, employees in the product delivery functional area and those
working in divisions B and C have a weak perception of management support in the
organisation. It is difficult to make assertions of what the reason for this might be.
Managers in these divisions would need to investigate and understand this employee
response. Considering the significantly low score for product delivery staff, managers
would need to attend to this problem, as these employees are best positioned to
innovate with customer needs in mind. The conflicting perceptions about this factor
across organisational divisions also highlight the need for the brand to create a more

31
convergent image for employees across the broader organisation. Management
practices have an overarching impact on all other elements of the internal
environment. And as discussed in the literature review section, management
behaviour is pivotal in the perpetuation of CE.

4.4.2.2 Work discretion

This was the highest scoring factor with an average of 3.4 which indicates
organisational success in giving employees autonomy. Perhaps even more impressive
is employees’ feeling a sense of fulfilment in having been afforded the opportunity to
make use of their natural talents (top statements shown in Figure 7). This is a
noteworthy result, as it indicates the organisation’s success in engendering employee
engagement. The organisation should therefore maximise this strength in its design of
future interventions.

Only extreme scoring statements are indicated.

Figure 7: Work discretion top scoring statements

The internal operations functional area and employees with tenure of over five years
had the most positive experience regarding work discretion. This could possibly be
attributed to internal operations employees naturally having more flexibility in their
work, whereas client facing staff might be bound to following certain standards.
Interestingly, millennials (18 to 34 years), as well as more mature employees (45 years
and older), perceive themselves as having autonomy, unlike those in the 35 to 44-
year-old age group. As suggested by the generation theory, millennials have been
shown to have a disparate attitude to methods of work (Lyons & Kuron, 2014). While
older employees, as well as those with higher tenure, potentially report high levels of
work discretion due to their familiarity with the job and work environment.

A potential downside of this result is that employees might find change difficult, as they
may be set in their own ways of work. This would have an impact on the organisation’s

32
planned digital transformation project, as such senior managers should take note of
this result. Less significant results (due to low base sizes) showed that head office
employees, as well as senior managers, also scored high on this factor, as could be
expected.

4.4.2.3 Rewards and reinforcement

This was another high scoring factor. The high score seems to contradict the results
of the factor analysis that associated this dimension with management support.
However, a closer look at the statements driving this high score in Figure 8, reveals
that the reinforcement statements score highly, with reward statements at the bottom
end. This in fact confirms the factor analysis results, as the association with
management support was based on reinforcement statements. These also scored
highly under management support. It is therefore apparent that management
reinforcement and reward are distinct themes in the organisation. As put forward by
Hornsby et al. (2002), reward is a key driver of entrepreneurial behavior. The
organisation should therefore think more deeply about developing employee reward
programs to better align with its strength in employee reinforcement.

Internal operations employees, senior management and older employees scored the
organisation highest on this factor. There emerges a growing pattern that shows these
staff groups as thriving in their manager relationships. The impressively high score of
4.0 for challenge in the job is the highest average, with 83 percent of staff agreeing
with the statement. This supports the finding of an engaged workforce within the
organisation. As such, the recommendations will suggest how managers might
channel this strength in enabling innovation.

Only extreme scoring statements are indicated.

Figure 8: Rewards/Reinforcement top and bottom scoring statements

33
4.4.2.4 Time availability
Time availability is a low scoring factor, indicating that employees throughout the
organisation are fully utilised. As shown in Figure 9, these are among the lowest
scoring statements in the entire study. While it is positive that employees are fully
invested in their work, it might alternatively be an indication of employees focusing on
short-term delivery at the expense of long-term development. This represents a failure
in achieving organisational ambidexterity and is a key risk to sustaining innovation.
Allowing staff free time is critical to experimentation and innovation. It is a common
pitfall for organisations to tend to focus on profit targets at the expense of strategic
renewal (Christensen et al., 2016). The organisation’s subsidiaries report to a central
head office, this includes reporting on profit targets. This structural dynamic warrants
careful consideration as it has potential to bring about unintended consequences.

Only extreme scoring statements are indicated. Average scores for positively worded statements where inverted to match other scores.

Figure 9: Time availability top and bottom scoring statements

Not surprisingly, senior management is subject to time constraints, more so than other
employees. While this can be expected, it indicates a risk for managers’ ability to
maintain strategic focus. Divisions B and C experienced high-pressure work
environments, managers may need to explore this further. Open-ended data suggest
that lack of time availability might also raise concerns for employee wellness and work-
life balance.

4.4.2.5 Organisational boundaries

As discussed in the literature review, organisational boundaries are two-fold in nature,
with both limiting and enabling boundaries. The high score on this dimension can be
attributed to robust performance management structures that provide clear job
descriptions and well-defined performance indicators (Figure 10). This indicates the
existence of well-established human relations (HR) processes in the organisation.

34
Only extreme scoring statements are indicated.

Figure 10: Organisational boundaries top scoring statements

Employees also report a level of predictability in their jobs depending on the type of
work in which an employee was engaged, precision or creativity focused. This might
have a positive or negative effect. Positive, in revealing good employee training
mechanisms that enable precision. And negative, in limiting the development of
innovations, or else, limiting general employee progression due to familiarity. There
were no distinct demographic differences regarding respondents’ experience of this
factor.

Table 6: Demographics by average CEAI factor scores

CEAI Factor
Demographic Management Work Rewards/ Time Organisational
Average support Discretion Reinforcement availability boundaries Row n
Internal
Functional operations 3.1 ↑ 3.5         3.5 ↑ 2.8         3.3         40        
Area Product
delivery 2.6 ↓ 3.3          3.1 ↓ 2.8         3.1         35        
Senior
Management 3.0         3.6         3.5         2.6         3.0         16*     
Job level Middle
Management 2.8         3.4         3.2         2.9         3.2         33        
General staff 3.0         3.4         3.4         2.9         3.3         26        
Division A 3.1         3.4         3.4         2.9         3.3         37        
Divisions B
Division
and C 2.7         3.4         3.2         2.7         3.1         31        
HO 3.0         3.7         3.6         2.8         3.2         7*      
0-4 years 2.8         3.2         3.2         2.9         3.2         29        
Tenure 5 or more
years 2.9         3.6         3.4         2.8         3.3         46        
Male 2.8         3.4         3.4         2.8         3.3         31        
Gender
Female 3.0         3.4         3.3         2.8         3.2         44        
18 to 34
years 2.8         3.5         3.3         2.8         3.2         27        
Age 35 to 44
years 2.9         3.2         3.3         2.8         3.2         27        
45 years + 3.0         3.6         3.5         2.8         3.2         21*    
Column n 75         75         75         75         75        
Total sample; Unweighted; base n = 75, Multiple comparison correction: False Discovery Rate (FDR) (p = 0.05)
*low base size
Red font shows statistically significantly low results whereas blue shows statistically significantly high scores.

35
4.4.3 Segmentation analysis
Latent class analysis was conducted on multiple iterations of data to observe
segmentation patterns. Distinct segments emerged within the management support,
work discretion and time availability dimensions. Resulting segmentation trees are
indicated in Appendix C. The segments represent opposing perceptions of each
dimension. One segment tended to disagree with most statements, while another
segment tended to agree with all the statements within each of the three dimensions.
Furthermore, it was the same employees who tended to score either negatively or
positively in the specific segments (Table 7). These results reveal polarisation in the
organisation, which confirms the earlier finding of an incongruent brand.

While no clear demographic distortions were apparent among the segments, it is

statistically significant to assert that 65 percent of employees in the product delivery
functional area are CE ready. In practice, this indicates that in some employee clusters
CE readiness was apparent across almost all the CEAI dimensions. Yet conversely,
in some settings, the internal environment still required much work.

Table 7: Intersection between the management support, reward reinforcement

and time availability segments
Management support – time availability segments
Column % Segment 1 Segment 2 Row n
Management support Segment 1 95% 0% 36
- reward
reinforcement Segment 2 5% 100% 39
Column n 38 37
Total sample; Unweighted; base n = 75, Multiple comparison correction: False Discovery Rate (FDR) (p = 0.05)
Red font shows statistically significantly low results whereas blue shows statistically significantly high scores.

4.5 Findings of the study

The core purpose of the research was to measure the organisation’s internal
entrepreneurship environment. The CEAI scores demonstrated a moderately healthy
internal CE environment (above the 3.0 average). But having looked at the individual
CEAI dimensions, it is apparent that the organisation does well in mostly the
organisational culture aspects of CE, yet CE also entails structural enablement of
innovation. This was a neglected area in the organisation as they tended to focus on
cultural aspects that enabled ideation but lacked the structures and internal
competencies to deliver continuous innovation. Employee’s moderate perceptions of
the organisation’s innovation levels confirmed this finding.

36
Findings also indicated clusters of employees who lack a healthy internal culture. It is
recommended that managers explore these and other demographic specific outcomes
that were discussed in the analysis.

In summary, key findings of the data analysis indicated the following:

➢ Cultural enables (providing the foundation for innovation)

▪ Managers do well in staff reinforcement, engagement and idea
generation
▪ Work discretion is a strength that should be leveraged, yet also poses a
potential barrier to change
➢ Structural enablers (assisting in converting ideas into innovations)
▪ There was a lack of financial commitment towards innovation
▪ Time availability poses a risk to continuous innovation
▪ Absence of innovation execution competencies and management ability
▪ Different divisions had widely differing experiences of the organisation’s
innovative potential

4.6 Conclusion
The data collection and analysis process sought to uncover employee perceptions of
the internal environment for CE. Having tested the robustness of the data sample as
well as the CEAI instrument (through sample description and factor analysis), a solid
foundation for statistical analysis was laid. Factor analysis backed by correlation
analysis showed four key factors to driving innovation which are specific to the
organisation. These are management support/reinforcement, work discretion, time
availability and organisational boundaries.

The CEAI factors have been a useful tool for investigating the internal environment.
Perceptions of the level of innovation within the organisation provided a reference
against which to understand the internal environment. Among the key findings was the
need for a more structured and unified approach towards innovation. Data analysis
through the lens of academic theory led to the uncovering of innovation drivers specific
to the organisation, this will prove useful in mapping future steps.

Finally, care was taken to avoid compromising respondent anonymity, observe ethical
standards and avoid unintended consequences resulting from the above presentation
of results.

37
5. Recommendations and conclusions
5.1 Introduction
In this section, recommendations will be made with the aim of informing the
development of future CE strategies within the organisation. These recommendations
are based on the results of survey data, face-to-face interviews, academic literature
and management practice. They highlight both the organisation’s identified strengths
and areas of weakness. Suggestions for specific actions required to reach the desired
organisational position will be provided, together with financial projections to allow for
optimal decision-making. As discussed in the consultancy approach section, the
recommendations are not intended to be prescriptive, as the researcher may not be
fully aware of organisational nuances. Rather, based on academic theory, the
recommendations seek to contribute to management’s knowledge, on which to base
future business strategies. Recommendations for future research within the
organisation are also forwarded.

5.2 Recommendations
This consultancy process was set up with the clear objective of assisting the
organisation in its quest for gaining a competitive edge through continuous innovation.
Using the CEAI instrument, the organisation’s current internal environment has been
measured and found to be healthy. Survey results prove that employees are engaged
and are encouraged to develop new ideas, they have autonomy and perceive
management as supportive. Yet, based on its moderate innovation level, the
organisation appears not to be ready to innovate at a highly competitive pace. As
supported by academic theory on ideation versus innovation (Kastelle & Steen, 2011),
this was due to the absence of idea execution competencies in the organisation. As
an enabler of innovation, CE provides the structure for speed and continuity in
innovation (Guth & Ginsberg, 1990). Employees are already engaged what is lacking
is competencies in both managers and staff to innovate at an accelerated pace.
Managers need to provide the resources for innovation, which is time and financial
resource. As shown in the literature review, success in innovation has been proven to
require the participation of the entire organisation.

The first key recommendation therefore is that the organisation should develop a
structured internal innovation process that will support the collection, selection,
development and implementation of ideas. The organisation requires a process that
38
entails the creation of an online idea collection platform that is accessible to all
employees. As well, management must commit to reviewing and providing staff with
feedback on their input. This recommendation entails the development of internal
competencies to trial (proof of concept) and select ideas and the development of a
pipeline for future innovations, all in alignment with organisational strategy. Selected
ideas should then be fully explored, implemented and taken to market. As per the
scholarly definition of innovation, it is only at this point (once an idea assumes value)
that innovation has taken place (Knight, 1967; Lumpkin & Dess, 1996; Kastelle &
Steen, 2011). Internal competencies that enable staff across employee levels to
innovate in this fashion is what will provide a lasting competitive advantage for the
organisation.

The survey findings have indicated that the organisation has made great strides
towards encouraging an innovation culture, also managers and employees are fully
aware of innovation as an organisational value. However, a structural framework to
fully derive value from CE is lacking. The research findings of this consultancy project
were very much aligned to previous climate survey results in Appendix A. These had
shown employee relationships, organisational values and employee engagement as
high scoring attributes, while change management, reward and recognition were some
of the lowest scoring dimensions. It appears that since the climate survey, the
organisation’s internal environment had made very little movement. This would
indicate that the organisation is now stagnant in the development of internal
competencies for innovation. The key findings of this project attribute this stagnancy
to the unintended substitution of innovation stimulation with ideation enablement. The
critical gap between the two is innovation implementation capacity.

Therefore, key to the success of the first recommendation is that the innovation
processes should be led by an internal team of organisational improvement
specialists. These would be equipped to remedy the current stagnancy and accelerate
the trial and selection of novel opportunities. The findings showed that the organisation
lacked implementation ability. And so critically, the team would guide and educate
employees on the implementation of innovation, with the view of developing
implementation competencies among them as a lasting competitive advantage. The
team will also assist managers in deploying adequate resources for innovation, both
to finance and reward innovation. Table 8 indicates these distinct initiatives including

39
their key benefits and drawbacks. The team should neutralise the identified potential
drawbacks through the development of a structured innovation process.

This focused approach towards enabling innovation will also address the lack of
financial investment towards innovation. It is recommended that the team of innovation
experts be given a budget and autonomy for both financing and rewarding innovation.
This will allow for the de-duplication and prioritisation of innovations as per
organisational needs. One key drawback for creating an innovation implementation
team will be that the team may not have subsidiary management level support to
influence innovation. The team should therefore be highly skilled in change
management and able to demonstrate value and provide tangible benefit to the
organisation. Another drawback worth mentioning is that the organisation comprised
subsidiaries in multiple industries and geographic locations. It is therefore
recommended that the team should adopt a phased approach to implementing
innovation processes, one subsidiary at a time.

One recurring outcome of the survey results was that the organisation demonstrates
an incongruent brand. The second key recommendation is therefore that the
organisation should develop a brand positioning strategy regarding innovation. This
would be achieved through the launch of an internal communication campaign
pertaining to the first recommendation. The brand communication strategy forms part
of a change management process. As indicated in Table 8, the approach is initially
targeted at providing a compelling value proposition to employees, which would in turn
encourage participation in the first recommendation. The approach would then be
followed by an external brand communication strategy that would be fuelled by
innovation success driven by the first recommendation.

The internal brand communication strategy should include setting the ground rules for
innovation in the organisation, and importantly, communication of a well-designed
incentivisation programme for participation in innovation. This was certainly FNB’s
strategy, as was discussed in the literature review. The internal brand communication
strategy must be publicised via online platforms, through employee and manager
training and repetitive emphasis by managers. This strategy includes the
communication of the organisational benefit of innovation, defining and demystifying
innovation, and communication of emotional and monetary benefits of participation.

40
Further to this, upon successful implementation of the first recommendation, the entire
brand will benefit from increased consumer brand affinity, and increased brand
knowledge through a renewed brand positioning, thereby encouraging co-branding of
subsidiaries with the main organisation’s brand.

An important outcome of the recommendations is that the organisation would develop

a lasting competitive advantage through the development of key competencies in its
employees. Even without the expectation of employees contributing towards
innovation, implementation skill is a core competency for organisational success, as it
increases the organisation’s ability to respond to market changes and the ever-
increasing pace of digital transformation. The corresponding action plan for the
recommendations is illustrated in Figure 11.

41
Table 8: Recommendations
Initiatives Key Benefits
Developing a ▪ Ensures good ideas are not lost
structured innovation ▪ Develops staff competencies in
process translating ideas into innovations
▪ Leverages the strength of existing
internal CE environment
▪ Increases idea generation
▪ Improves staff productivity and
high-performance culture
▪ Enables cross-functional
collaboration
Hiring a team of ▪ Ensures value is derived and
business maximised from innovation
improvement activities
specialists ▪ Increases speed of innovation
▪ Enables innovation mapping and
resourcing
▪ Simplifies idea selection and
criteria for financial investment
▪ Provides clear ROI and guarantees
profit maximisation on innovation
efforts
▪ Mitigates risk of managers focusing
on profitability at the expense of
corporate renewal
Brand communication ▪ Provides a compelling employee
strategy value proposition
▪ Rewards staff for participation in
strategic renewal
▪ Increases staff participation
▪ Attracts best of breed staff
Key Drawbacks
▪ Development of a successful
process may be complex
▪ Change management process
requires dedicated effort and
careful planning
▪ Keeping employees engaged even
when their ideas are rejected may
be challenging
▪ Complex, unproven business
model
▪ Project success delicately tied to
the selection of the right
implementation team
▪ Organisation comprising
subsidiaries in multiple industries
and geographic locations
▪ Separates strategic decision-
making authority and
implementation responsibility
▪ Long-term benefit realisation
▪ Difficulty in building a unified brand
image across subsidiaries in
various industries and geographies
Key Performance Indicators
▪ Increase in perceived innovation
level from 6.0 to > 8.0 across all
subsidiaries
▪ Number of useful ideas logged on
the online portal
▪ +50% execution rate on ideas put
forward by staff after two years
▪ R100 million revenue generated as a
direct result of innovation in first four
years and increased growth
thereafter
▪ Strategic renewal – increased market
adoption of novel product offerings
▪ 100% of subsidiaries fully benefiting
from business improvement within
ten years (proven by increased
profitability)
▪ Increased health of the internal
environment for corporate
entrepreneurship. CEAI scores >4
▪ Increased consumer brand affinity
42
 In an effort to make the
recommendations easy to
implement, an action plan
is provided. The action
plan illustrates some key
actions leading to the
development of sustained
innovation as a core
business competency.
These are plotted on a 10-
year time line with a view
for continuity. The
implementation team has
the responsibility of
implementing the action
plan based on the
recommendations.

Figure 11: Action plan for implementing recommendations

43
5.3 Financial projections
Ensuing from the development of recommendations, it is necessary to provide
projections for financial investment and revenue. These projections are indicated in
Table 9. Although the project is primarily aimed at benefiting subsidiaries, it should be
implemented from a centralised head office, as this is the most cost-efficient approach.
As such, the financial projections are not subsidiary-specific, yet illustrate additional
revenue that will come to the overall organisation due to the development of
continuous innovation as an organisational competency. The projections are based on
the reasonable assumption that an organised innovation process guarantees that the
organisation will develop profitable innovations. In practice, the plan will not yield
immediate financial return, considering that this is a new approach, a development
phase of at least one year is expected. Conservatively, return on investment is
projected from the third year. The financial projections are indicative and are intended
to allow managers to make an informed decision in pursuing the recommendations of
this consultancy report.

Table 9: Financial investment and projected revenue

Initiative Additional Revenue
Purpose Year1 Year2 Year3 Year4 Total
Additional Revenue - - R35M R65M R100M
Developing a Specialised
structured innovation assessment
(R200K) (R200K) (R200K) (R200K) (R800K)
process across all and
subsidiaries development
Hiring a team of
business Recruitment of
(R6M) (R6,6M) (R7,7M) (R11M) (24M)
improvement team
specialists
Brand communication Marketing and
(R100K) (R100K) (R100K) (R200K) (R160K)
strategy communication
Net Total (R6,3M) (R6,9M) R27M R53,6M R67,4M

5.4 Suggestions for further research

Successful achievement of the recommendations of this consultancy project can be
measured by a re-assessment of innovation levels and CEAI factors in the
organisation. As such, this research should be replicated on an annual basis to
measure progress on innovation-specific outcomes in the organisation. This will in turn
enable the organisation to benchmark the survey year-on-year. One limitation of this

44
consultancy project was the relatively low employee participation rate compared to
research commissioned and monitored by the organisation itself. The organisation
may therefore find value in orchestrating similar research which will result in increased
employee participation.

Following previous consultancy projects conducted by the organisation (specifically

the 2014/2015 climate surveys), it had been successful in implementing research
findings pertaining to the internal environment. The positive CEAI score achieved in
the research findings of this consultancy report is testament to this. However, a key
outcome of this research that was guided by academic theory, is that innovation not
only requires a conducive internal environment but also a structured process to
develop ideas into innovations. Innovation management is a specialised area that
requires specific attention. As a result, it is recommended that the organisation should
assess other innovation assessment measurements such as entrepreneurial intensity.
Measuring entrepreneurial intensity provides an organisation with a measure of
innovativeness, risk-taking and proactive measures against the frequency of
innovation in the organisation, of which these are key aspects for measuring
innovation success within established organisations (Morris & Sexton, 1996).

Confirmatory factor analysis conducted on the collected data produced four instead of
the five factors observed by Hornsby et al. (2002). This indicated a reorganisation of
management support and reinforcement constructs. Yet validation of the factors was
non-essential in addressing the problem statement explored in this consultancy
project, also considering the research was not primarily focused on contributing
towards the body of academic knowledge. However, further exploration of this result
may be interesting for academic purposes. There is a need for validation of the CEAI
instrument in the South African context, and this will be a worthwhile exploration for
future academic research.

5.5 Conclusions of the study

The outline of this consultancy report highlighted the need for organisations to sustain
innovation in order to maintain relevance and competitive advantage in a fast-
changing digital age. In line with the incumbent organisation’s values and the need for
corporate renewal, the development of internal competencies to enable and sustain
innovation is critical.

45
Key outcomes of this research showed that internal organisational health for CE can
be broken up into internal culture and structural readiness for innovation.
Organisational culture does not amount to innovation capability, more so at a fast
pace. The culture merely lays a foundation upon which innovation competencies must
be built. The organisation’s culture and staff attitudes have been found to be innovation
ready. Yet employees await strategic guidance to focus on the right efforts and
capabilities to innovate at the required pace. Of which corporate entrepreneurship is
concerned with the development of structures that enable the extraction of value from
innovative activities. The proposed recommendations and corresponding financial
projections seek to address these organisational gaps.

The organisation is ready for the planned digital transformation project, provided the
project implementation is well managed with considerations of change management.
Together with sufficient execution competencies, the internal organisational
environment can provide a lasting competitive advantage that by far outweigh the
innovations themselves. Such an approach will require full employee participation. To
succeed, innovation should feel doable, and take centre stage in the minds of all
stakeholders. African organisations competing in a global landscape must commit to
radical innovation that will be relevant to their local communities and the world at large,
instead of accepting an imitation strategy as their dominant approach. The
organisation must therefore adopt a radical stance towards enabling innovation
competencies.

46
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49
Appendix A: Climate survey results (2014/2015 Survey)
Data source: (Incumbent, 2016)

50
Appendix B: Research instrument
Informed consent
Dear participant,

I am conducting research on corporate entrepreneurship to understand how employees in

‘the incumbent organisation” perceive their work environment in encouraging innovative
behaviours. The research is for academic purposes towards the completion of an MBA
qualification. Because this is a professional course, the research format allows for the study
of real business outcomes, as such, results will be used to recommend improvements to
your work environment.

You are invited to participate in this research project. All responses will be kept strictly
confidential, will remain anonymous and results will only be reported on an aggregated level.
Your participation is voluntary and you can withdraw at any time without penalty. By
completing the survey, you indicate that you voluntarily participate in this research. The
survey will take no more than 10 minutes to complete.

If you have any concerns, please contact my supervisor or myself. Our details are provided
below.

Busi Vushemakota (primary researcher) Deborah Levy (research supervisor)

boosyvushe@gmail.com levydeboraha@gmail.com
076 283 9836 079 491 6232

Again, we are the only people who will be able to see your responses. Once we have
conducted the analysis; the findings that are presented will be of SUMMARISED data i.e. no
INDIVIDUAL’S responses will ever be revealed to management!

Many thanks and regards

Busi Vushemakota

Section A: CEAI Questions

Thank you for taking the time to participate in this research. Using the scale below please
indicate how much you agree or disagree with each of the statements. There are no right or
wrong answers to these questions so please be as honest and thoughtful as possible in your
responses.
Please answer the questions with your everyday work environment in mind.
Answer Options (Across)
Strongly Disagree Not Sure Agree Strongly
Disagree Agree
1 2 3 4 5

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 Questions (Down)

Section 1: Management support for corporate entrepreneurship

1. My organisation is quick to use improved work methods.

2. My organisation is quick to use improved work methods that are developed by workers.
3. In my organisation, developing one’s own ideas is encouraged for the improvement of the
corporation.
4. Upper management is aware and very receptive to my ideas and suggestions.
5. A promotion usually follows from the development of new and innovative ideas.
6. Those employees who come up with innovative ideas on their own often receive management
encouragement for their activities.
7. The “doers on projects” are allowed to make decisions without going through elaborate justification
and approval procedures.
8. Senior managers encourage innovators to bend rules and rigid procedures in order to keep
promising ideas on track.
9. Many top managers have been known for their experience with the innovation process.
10. Money is often available to get new project ideas off the ground.
11. Individuals with successful innovative projects receive additional rewards and compensation
beyond the standard reward system for their ideas and efforts.
12. There are several options within the organisation for individuals to get financial support for their
innovative projects and ideas.
13. People are often encouraged to take calculated risks with ideas around here.
14. Individual risk takers are often recognized for their willingness to champion new projects, whether
eventually successful or not.
15. The term “risk taker” is considered a positive attribute for people in my work area.
16. This organisation supports many small and experimental projects, realizing that some will
undoubtedly fail.
17. An employee with a good idea is often given free time to develop that idea.
18. There is considerable desire among people in the organisation for generating new ideas without
regard for crossing departmental or functional boundaries.
19. People are encouraged to talk to employees in other departments of this organisation about ideas
for new projects.
A1. Is there anything you would like to add regarding management support for innovation and
corporate venturing? (open ended)

Section 2: Work discretion

20. I feel that I am my own boss and do not have to double check all of my decisions with someone
else.
*21. Harsh criticism and punishment result from mistakes made on the job.
22. This organisation provides the chance to be creative and try my own methods of doing the job.

23. This organisation provides the freedom to use my own judgment.

24. This organisation provides the chance to do something that makes use of my abilities.

25. I have the freedom to decide what I do on my job.

26. It is basically my own responsibility to decide how my job gets done.

27. I almost always get to decide what I do on my job.

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28. I have much autonomy on my job and am left on my own to do my own work.
29. I seldom have to follow the same work methods or steps for doing my major tasks from day to
day.
A2. Is there anything you would like to add regarding work discretion? (open ended)

Section 3: Rewards/Reinforcement
30. My manager helps me get my work done by removing obstacles and roadblocks.
31. The rewards I receive are dependent upon my innovation on the job.

32. My supervisor will increase my job responsibilities if I am performing well in my job.

33. My supervisor will give me special recognition if my work performance is especially good.

34. My manager would tell his/her boss if my work was outstanding.

35. There is a lot of challenge in my job.

A3. Is there anything you would like to add regarding rewards/reinforcement? (open ended)

Section 4: Time availability

*36. During the past three months, my workload kept me from spending time on developing new
ideas.
37. I always seem to have plenty of time to get everything done.
38. I have just the right amount of time and workload to do everything well.
*39. My job is structured so that I have very little time to think about wider organisational problems.
*40. I feel that I am always working with time constraints on my job.
41. My co-workers and I always find time for long-term problem solving.
A4. Is there anything you would like to add regarding time availability? (open ended)

Section 5: Organisational boundaries

42. In the past three months, I have always followed standard operating procedures or practices to
do my major tasks.
43. There are many written rules and procedures that exist for doing my major tasks.
44. On my job I have no doubt of what is expected of me.
45. There is little uncertainty in my job.
46. During the past year, my immediate supervisor discussed my work performance with me
frequently.
47. My job description clearly specifies the standards of performance on which my job is evaluated.
48. I clearly know what level of work performance is expected from me in terms of amount, quality,
and timelines of output.
A5. Is there anything you would like to add regarding organisational boundaries? (open ended)
* indicates negatively worded statements which are inverted in calculations of mean scores

53
Section B: Demographic Questions
To best understand perceptions across different groups of employees, we’d like to understand
a bit more about you and where you sit in the organization. This information will not be directly
linked to any individual. Remember, this is confidential.

B1. Which company do you work for?

1. Company A
2. Company B
3. Company C
4. Company D
5. Company E
6. Company F
7. Company G
8. Company H
9. Company I
10. Company J

B2. To what extent do you believe that the OPERATING COMPANY you work for is
innovative?
0 1 2 3 4 5 6 7 8 9 10

Not innovative at all Very innovative

B3. To what extent do you believe that the BROADER GROUP/ INCUMBENT is innovative?
0 1 2 3 4 5 6 7 8 9 10

Not innovative at all Very innovative

B4. What job level best represents your current position?

1. General Staff
2. Specialist
3. Junior Management
4. Middle Management
5. Senior Management
6. General management/ Executive
7. Other (specify) ________________________________________________

B5. What is your main functional area?

54
 1. General Management
2. HR
3. IT
4. Marketing
5. Sales
6. Finance
7. Operations
8. Facilities
9. Other

B6. Which of the following best describes your tenure with your current employer?
1. Less than 1 year
2. 1-2 years
3. 3-4 years
4. 5 or more years

B7. What is your gender?

1. Male
2. Female

B8. What is your age?

1. Under 18 years
2. 18 to 24 years
3. 25 to 34 years
4. 35 to 44 years
5. 45 to 54 years
6. 54 to 65 years
7. 66 years or older

55
Appendix C: Segmentation trees
Time Availability Segmentation Tree
Total sample; Unweighted; base n = 75. For the 3 negatively worded statements disagreement is a positive result

56
Management Support Segmentation Tree
Total sample; Unweighted; base n = 75

57
Work Discretion Segmentation Tree
Total sample; Unweighted; base n = 75. For the negatively worded statement disagreement is a positive result
(negatively worded statements specified in Appendix B)

58