Technovation 20 (2000) 427–436

www.elsevier.com/locate/technovation

Linking entrepreneurship and strategic management: evidence from

Spanish SMEs
Montserrat Entrialgo *, Esteban Fernández , Camilo J. Vázquez
Departamento de Administración de Empresas y Contabilidad, Universidad de Oviedo, Facultad de CC. Económicas y Empresariales, Avda. del
Cristo, s/n -33006, Oviedo, (Asturias), Spain

Received 9 August 1999; accepted 24 September 1999

Abstract

This study examines the relationship between entrepreneurship and strategic management, from the perspective of the process
and from the point of view of the content. In particular, we analyse the influence of the competitive strategy and the practices of
analysis, flexibility, horizon, locus of planning and control attributes on entrepreneurship. The results, tested on a sample of 233
Spanish SMEs, indicate a positive relationship between entrepreneurship and analysis, flexibility, locus of planning, controls and
strategy based on differentiation.  2000 Elsevier Science Ltd. All rights reserved.

Keywords: Entrepreneurship; Strategic management; Competitive strategy; SMEs

1. Introduction 1993; Karagozoglu and Brown, 1988; Miller and Friesen

Entrepreneurial behaviour has been defined in many
ways. One of the most accepted is that of Miller (1983)
which considers that the individual presents entrepren-
eurial behaviour if he performs product-market inno-
vations, takes risks and behaves proactively. Numerous
researchers have used this conceptualisation in their
works including Covin and Slevin (1989), Ginsberg
(1985), Morris and Paul (1987), Naman and Slevin
(1993) and Schafer (1990).
Risk-taking is compiled in the literature on
entrepreneurship as a consequence of comparing the
entrepreneur to the self-employed worker. Cantillon, one
of the first authors to formally use the term
“entrepreneurship” already indicated in his work pub-
lished in 1755, that the main factor to differentiate
entrepreneurs from employed workers was the uncer-
tainty and risk taken by the former. Since then, risk-
taking is one of the concepts most commonly used by
researchers to describe entrepreneurship (Dean et al.,
* Corresponding author. Tel.: +34-98-510-4973; fax: +34-98-510-
3708.
E-mail address: mentrial@econo.uniovi.es (M. Entrialgo).
1982, 1983).
Schumpeter (1934, 1942) was one of the first econom-
ists to highlight the importance of business innovation,
referring to the process of creative destruction. In agree-
ment with this process richness was created when things
were changed, either by the introduction of a new asset
or a new production method, the opening of a new mar-
ket, the conquest of a new source of provisioning or the
creation of a new organisation. The key to this cycle
of activity was entrepreneurship which consists in the
introduction of “new combinations” causing the dynamic
evolution of the economy. Innovation becomes an
important factor used to characterise entrepreneurship
(Covin and Slevin, 1989; Karagozoglu and Brown, 1988;
Miller, 1983; Miller and Friesen, 1982).
Proactivity is related to taking the initiative, anticipat-
ing and carrying out new opportunities and creating or
participating in emerging markets. This third character-
istic of entrepreneurship was pointed out by Penrose
(1959) who sustained that entrepreneurs are important
for the growth of firms given that they provide the vision
and imagination necessary to carry out an opportunist
expansion. Various works include this characteristic as
an important factor of entrepreneurship (Covin and Sle-
vin, 1989; Lumpkin and Dess, 1995), works which
emphasise the importance of being first-movers as the

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428 M. Entrialgo et al. / Technovation 20 (2000) 427–436
best strategy to attain a sustainable competitive advan-
tage capable of securing high profits.
In recent years the need for managers to adopt
entrepreneurship when formulating their strategies has
become apparent. Although the need to innovate has
always existed, this has been accentuated in recent years
due to the acceleration of technological change and
growing world wide competition (Veciana, 1996). Many
authors have singled out entrepreneurship as an organi-
zational process that contributes to firm survival and per-
formance (Covin and Slevin, 1989; Drucker, 1985;
Lumpkin and Dess, 1995; Miller, 1983; Zahra, 1993). In
short, these authors argue that entrepreneurial attitudes
and behaviors are necessary for firms of all sizes to pros-
per and flourish in competitive environments. There are
many variables which influence the adoption of
entrepreneurship; among which we can quote the charac-
teristics of the individual and his motivations or the
characteristics of the industrial setting in which he oper-
ates (Covin and Slevin, 1989; Miller and Friesen, 1982).
Nevertheless, many authors defend the greater influence
of variables of an organizational and strategic nature on
entrepreneurship (Zahra, 1993). As a result of these sen-
timents, a growing body of literature is evolving to help
firms understand the organizational processes that facili-
tate entrepreneurial behavior (Covin and Slevin, 1991;
Guth and Ginsberg, 1990; Miller, 1983; Sathe, 1988;
Zahra, 1991).
This stream of research is extremely valuable because
a firm’s ability to incresease its entrepreneurial behav-
iour is largely determined by the compatibility of its
management practices with its entrepreneurial ambitions
(Murray, 1984). Among the management practices
believed to facilitate entrepreneurial behavior are a
firm’s strategic management practices (Covin and Sle-
vin, 1991; Miller, 1983; Murray, 1984; Zahra, 1991).
Consequently, the aim of this research work is to ana-
lyse the relationship between the degree of
entrepreneurship and, firstly, the strategic management
practices (analysis, flexibility, locus of planning, hor-
izon, controls) and its degree of entrepreneurship, and
secondly, the competitive strategy (cust leadership, mar-
keting differentiation and innovative differentiation). To
this end, after presenting the theoretical bases and the
study methodology, we present the results of our empiri-
cal research, conducted on a sample of 233 SMEs, end-
ing with the main conclusions to be drawn from the
study.
2. The relationship between entrepreneurship and
strategic practices and competitive strategy
The strategic management practices included in this
study (analysis, locus of planning, flexibility, horizon
and control attributes) were selected on the basis of their
potential for influencing one or more of these key
enablers of firm-level entrepreneurial behavior, and a
firm’s overall entrepreneurial intensity. The following is
a discussion of each of the strategic management prac-
tices included in the study and its effect on firm level
entrepreneurial behavior. A research hypothesis is postu-
lated to summarize each of the discussions.
2.1. Strategic management practices
Research consistently finds that entrepreneurial firms
are more likely to engage in strategic management prac-
tices than are conservative firms (Bracker et al., 1988;
Shuman et al., 1985; Woo et al., 1989). We will describe
the effect that some practices employed in the formu-
lation and implementation of the strategy have in the
development of an entrepreneurial behaviour.
2.1.1. Analysis
Analysis refers to the managerial activity of learning
about events and trends in the organization’s environ-
ment (Hambrick, 1981). Analysis provides managers
with information about events and trends in their rel-
evant environments, which facilitates opportunity recog-
nition (Bluedorn et al., 1994).
In addition, analysis is a method of uncertainty
absorption although the uncertainty absorption compo-
nent of analysis is a two-edged sword. A belief that
analysis reduces all uncertainty can produce a false sense
of security in managers that makes it easy for them to
miss signals coming from the environment (Barringer
and Bluedorn, 1999).
A high level of analysis is congruent with the
entrepreneurial process (Miller, 1983; Zahra, 1991).
Recall that entrepreneurial firms are innovative, risk-tak-
ing and proactive; and a central theme of the innovation
literature is that information gathering and analysis is
critical to the development and maintenance of success-
ful innovation strategies (Covin, 1991; Kanter, 1988;
Zund, 1983). Analysis also facilitates the risk-taking and
proactiveness dimensions of entrepreneurial behavior.
As a means of partial uncertainty absorption, analysis
may lower the perception of risk associated with a poten-
tial entrepreneurial venture, increasing the likelihood
that the firm will engage in the venture. Entrepreneurial
managers may also realise that analysis is their bridge
to remaining competitive. A firm in a turbulent environ-
ment must be continually innovative to remain competi-
tive, which requires extensive analysis to recognize and
exploit environmental change. As a result, analysis is a
practical approach for entrepreneurial firms (Barringer
and Bluedorn, 1999).
Regarding the empirical evidence, Shuman et al.
(1985) and Shuman and Seeger (1986) identified four
key areas that determine the strategic management prac-
tices in entrepreneurial firms, and they conclude that
 M. Entrialgo et al. / Technovation 20 (2000) 427–436
analysis is one of the most important areas. In short, all
of this enables us to propose the following hypothesis:
Hypothesis 1: A positive relationship exists between
analysis and degree of entrepreneurship.
2.1.2. Flexibility
Flexibility refers to the capacity of a firm’s strategic
plan to change as environmental opportunities/threats
emerge. The notion of flexibility was first suggested by
Kukalis (1989) to investigate how environmental and
firm characteristics affect the design of strategic plan-
ning systems. Kukalis theorized that firms in complex
environmental settings maximize performance by adopt-
ing flexible planning systems. Flexible planning systems
allow firms to adjust their strategic plans quickly to pur-
sue opportunities and keep up with environmental
change. Kukalis theorized that firms in highly complex
environments need flexible planning systems because of
the frequency of change in their business environments.
A concerted effort in the direction of flexibility facili-
tates a high degree of entrepreneurship for several
reasons. First, a flexible system, coupled with intensive
environmental scanning, allows a firm’s strategic plan
to remain current and permits a firm’s entrepreneurial
initiatives to be planned rather than to take place in an
ad hoc manner outside the parameters of a strategic plan.
What entrepreneurial behaviour does imply is that the
pace of this process must be accelerated and made more
flexible because the essence of entrepreneurship is capi-
talizing on environmental change (Schumpeter, 1934).
Second, although the entrepreneurial process is intended
to keep a firm in step with environmental change,
entrepreneurial firms are not completely free from iner-
tia. As a result, putting a planning system in place that is
flexible and is by design subject to change may remove a
potential obstacle to change when it is need (Barringer
and Bluedorn, 1999).
With respect to the empirical evidence, Hambrick and
Crozier (1985), in their study of 30 entrepreneurial firms,
found that entrepreneurial firms are very flexible in their
planning process. Their findings, along with those of
Fredriksen et al. (1989) and Swift (1989) suggest that to
be successful, entrepreneurial firms must have the capa-
bilities to manage the high level of organizational change
that is demanded by high growth. On the other hand,
Jelinek and Schoonhoven (1990) provide some useful
insights into how strategic planning is managed in high-
technology firms. They find that such firms have formal
planning systems and do strategic planning; however,
these firms also incorporate other elements to have
flexibility and to help them cope with the requirements
of competing in such difficult environments. To sum up,
this enables us to propose the following hypothesis:
429
Hypothesis 2: A positive relationship exists between
flexibility and degree of entrepreneurship.
2.1.3. Horizon
A firm’s planning horizon refers to the length of the
future time period that decision makers consider in plan-
ning (Das, 1987). For most firms, this period corresponds
to the length of time necessary to execute the firm’s rou-
tine strategies (Camillus, 1982). According to Ryne
(1985), the horizon for individual firms can vary from
less than one year to more than fifteen years. The ration-
ale for a given planning horizon is that it should be long
enough to permit planning for expected changes in strat-
egy and yet be short enough to make reasonably detailed
plans available (Das, 1991).
A relatively short average planning horizon (less than
five years) may be optimal for entrepreneurial firms.
These firms typically compete in turbulent environments
that are characterized by short product and service life
cycles.
The adoption of a relatively long planning horizon is
not tenable for entrepreneurial firms. A reliance on a
long term planning horizon may engender a reluctance
to deviate from a long-term view of the future despite
short term environmental change, which runs counter to
the proactive nature of the entrepreneurial process. In
addition, entrepreneurial firms operating in turbulent
environments must survive the short term to get to the
long term. As a result, a reliance on long term planning
would not be practical (Barringer and Bluedorn, 1999).
Shuman et al. (1985) and Shuman and Seeger (1986)
conclude from their results the short term planning
showed by the entrepreneurial firms. This enables us to
propose the following hypothesis:
Hypothesis 3: A negative relationship exists between
planning horizon length and degree of
entrepreneurship.
2.1.4. Locus of planning
The term locus of planning refers to the depth of
employee involvement in a firm’s strategic planning
activities. Organizations can be characterized as having
either a shallow or a deep locus of planning. A deep
locus of planning denotes a high level of employee
involvement in the planning process, including
employees from virtually all hierarchical levels within
the firm. Conversely, a shallow locus of planning
denotes a fairly exclusive planning process, typically
involving only the top managers of a firm (Reid, 1989).
Although the Japanese style of planning has deep roots
in the Japanese culture, it has served as a model for
American firms, that have tried to make their planning
systems more participative.
430 M. Entrialgo et al. / Technovation 20 (2000) 427–436
There are several reasons to believe that a deep locus
of planning facilitates a high level of entrepreneurship
intensity. First, a high level of employee involvement in
planning brings the people closest to the customer into
the planning process. This characteristic of employee
participation in planning may facilitate opportunity rec-
ognition (Schumpeter, 1934). Moreover, a deep locus of
planning legitimizes the active participation of middle
and lower-level managers in the planning process. Doing
so avoids the potential of good ideas being overlooked
simply because managers at these levels are not involved
in the planning process (Burgelman, 1988).
The second reason that a deep locus of planning facili-
tates the entrepreneurial process is that it maximizes the
diversity of viewpoints that a firm considers in for-
mulating its strategic plan. The diversity of viewpoints
considered is necessarily limited when planning is
restricted to a firm’s top managers, not only by the
homogeneous nature of many top management teams.
This latter issue can constrain entrepreneurial activity,
as evidenced by the results of several studies that have
found a negative relationship between top management
team homogeneity and an openness to innovation and
change (Bantel and Jackson, 1989).
From an empirical perspective, Jennings and Lumpkin
(1989) show that the entrepreneurial decision-making
process is participative and relies on specialized person-
nel. They find that entrepreneurial organizations do not
penalize managers if risky products fail, and they arrive
at performance objectives based on shared participation.
In addition, Gilmore and Kazanjian (1989) rec-
ommended a structured decision-making approach to
team building that would force information sharing and
the delegation of decision making. These findings, along
with those of Sexton and Bowman-Upton (1991), show
the importance of developing a generation of leaders to
carry on the entrepreneurial strategy. This enables us to
propose the following hypothesis:
Hypothesis 4: A positive relationship exists between
a deep locus of planning and degree of
entrepreneurship.
2.1.5. Control
The purpose of a control system is to make sure that
business strategies meet predetermined goals and objec-
tives (Lorange et al., 1986). In the context of this study,
this means that the control systems of entrepreneurial
firms must stimulate innovation, proactiveness and risk-
taking. Two forms of control are particularly relevant
to a discussion of entrepreneurship. These are strategic
controls and financial controls (Hitt et al., 1990). In most
firms, both forms of control are present (Hoskisson and
Hitt, 1988). Financial controls base performances on
objective financial criteria such as net income, return on
equity, and return on sales (Hitt et al., 1990). In contrast,
strategic controls base performance on strategically rel-
evant criteria as opposed to objective financial infor-
mation (Gupta, 1987; Hoskisson and Hitt, 1988).
Because strategic controls and financial control can both
be present simultaneously in a firm, they do not represent
opposite ends of a conceptual continuum; therefore, we
articulate separate hypotheses to summarize our dis-
cussion of the relationship between each form of control
and degree of entrepreneurship.
An emphasis on strategic controls is consistent with
the entrepreneurial process. Strategic controls are cap-
able of rewarding creativity and the pursuit of opport-
unity through innovation. These characteristics of stra-
tegic controls are important to sustain the innovation
process because long time-lags frequently intervene
between innovative initiatives and their eventual pay-off
(Drucker, 1985; Kanter, 1989). A well-designed strategic
control system is capable of rewarding firm employees
for incremental but substantive progress on product or
process innovations that take a long time to reach market
(Goold and Campbell, 1987; Hoskisson et al., 1991).
Aldrich and Zimmer (1986) note that entrepreneurial
firms, at some point, must have been affected by
relations with socializing agents who motivated them.
This enables us to propose the following hypothesis:
Hypothesis 5a: A positive relationship exists between
the degree of emphasis on strategic controls and
degree of entrepreneurship.
Financial controls are congruent with the distinctive
competencies of most conservative firms. Financial con-
trols are clear and unambiguous, which introduces a high
degree of discipline into the control process. These fac-
tors may be particularly beneficial to conservative firms,
which are firms that do not have as salient a need to
encourage creativity and innovation as entrepreneurial
firms (Barringer and Bluedorn, 1999). All of this enables
us to propose the following hypothesis:
Hypothesis 5b: A negative relationship exists between
the degree of emphasis on financial controls and
degree of entrepreneurship.
2.2. Competitive strategy
Jovanovic (1982) affirms that managers of entrepren-
eurial firms may be expected to learn from their experi-
ences and demonstrate strategies that are in some
respects different from the strategies of firms emphasiz-
ing profit objectives. In this sense, the firm’s competitive
strategy is another variable influencing entrepreneurship
(Covin, 1991; Covin and Adler, 1989).
Of the generic strategies identified by Porter (1980)
 M. Entrialgo et al. / Technovation 20 (2000) 427–436
that of cost leadership is similar to that of the “defen-
sors” proposed by Miles and Snow (1978). This strategy
suggests an internal orientation according to which the
firm concentrates on efficiency and cost control in order
to undercut competitors. Minimizing cost is frequently
achieved by marketing standardised products (generally
of low added value). As a result, the use of resources in
activities such as experimentation, risk-taking or inno-
vation can be to the detriment of an effective implemen-
tation of a cost leadership strategy.
On the other hand, product differentiation-based strat-
egy consists in offering customers unique products
(Porter, 1980) and is similar to that of “prospectors” pro-
posed by Miles and Snow (1978). Miller (1986) ident-
ifies two types of differentiation: marketing differen-
tiation and innovative differentiation. Differentiation in
marketing is characterised, among other factors, by the
high volume of spending in advertising and the impor-
tance attributed to the firm’s image. Innovation-based
differentiation is linked to product development, the
original applications of new technologies and design
quality. In short, strategies based on differentiation seem
to be well suited to the context of entrepreneurship given
the apparent similarity of objectives and means.
From an empirical point of view, few researchers have
comprehensively investigated the competitive strategies
of entrepreneurial firms. Cooper et al. (1986) provide
one of the few exceptions. These authors delved into
issues relating to the “niche” strategy as a viable alterna-
tive strategy for small entrepreneurial firms. Hannan
(1987) also focused on the content of strategies
employed by entrepreneurial firms. In his book, Fast
Growth Strategies, Hannan used anecdotal evidence to
identify nine “basic model” entrepreneurial strategies
which he termed: 1) niching, 2) branding, 3) valuing, 4)
teaming, 5) databasing, 6) marketcentering, 7) con-
sulting, 8) partnering, and 9) participation.
In their study of 30 entrepreneurial firms, Hambrick
and Crozier (1985) found that they demand high levels
of financial resources, and therefore, it was likely they
formulate innovation-based differentiation strategies. On
the other hand, Hills and Narayana (1989) reviewed 63
entrepreneurial SMEs and a content analysis suggested
that the four most important success factors were the
quality of the product/service provided by the firm, a
good reputation with customers, the ability to respond
to a customer’s desires/request and hard work and devo-
tion to the business. The firms in the Hills and Narayana
sample did not display as high a degree of entrepreneur-
ial behavior as those in the Hambrick and Crozier sam-
ple. Finally, Dsouza (1990) examined the content of stra-
tegies implemented by entrepreneurial firms. Surveying
a sample of 196 firms, he concluded that these firms
employ an innovativon-based differentiation strategy.
All of the above enables us to put forward the follow-
ing hypothesis:
431
Hypothesis 6: Firms presenting a differentiation strat-
egy are more likely to adopt entrepreneurship than
those formulating a strategy based on cost leadership.
3. Sample characteristics
The basic information of this work comes from a sam-
ple made up of 233 firms, the size of which ranges from
5 to 500 employees, and thus can be classified as SMEs
(adopting this concept of SME obeys the criterion
adopted by the European Observatory of SME, although
more recently, the European Commission has dictated
that within the subject of SMEs will be included those
organizations meeting the following three requirements:
not employing more than 250 employees, a turnover of
less than 40 million ECU and independence). All the
firms surveyed operate in the Spanish national territory
and develop their activity in different industrial settings;
mining, construction, food, wood, paper, chemicals and
transport among others. The average number of
employees of these firms is almost 81. (Only 4% of the
firms in the sample considered employ between 250 and
500 employees). The average age of the firms being
25 years.
4. Variables
The database used in this research work has its origin
in a questionnaire designed referring to the main works
undertaken in this field at an international level. The sur-
vey consists of a set of items measuring variables of a
diverse nature. In particular, the information used in this
work is organised in two blocks. The first block meas-
ures the firms’ entrepreneurship. The second block —
concerning the strategic characteristics — includes indi-
cators of their strategic management practices and their
competitive strategy. All the information was measured
by five-point Likert scales. We go on to describe the
main characteristics of the scales used.
Regarding entrepreneurship, the items constituting
this scale are those of innovation, risk-taking and proac-
tiveness, which have been employed in numerous pre-
vious works (Dess et al., 1997). Entrepreneurship is
measured by the sum of three indicators (Dean et al.,
1993; Thomas et al., 1991). Since the items of this scale
place emphasis on different aspects of strategic position
(innovation, proactiveness and risk-taking) were vali-
dated by a factor analysis. Validity by factor analysis is
a form of corroborating the validity of the scale. The
high score in the factor suggests that, although the items
are focused on different strategic aspects, they are
empirically related and constitute a different unidimen-
sional strategic orientation. All the items scored over 0.5
432 M. Entrialgo et al. / Technovation 20 (2000) 427–436

in the same factor, indicating that it is appropriate to 5. Results

combine these items in the same scale.
The second block measures the strategic variables. As Table 2 compiles the means and standard deviations
for the competitive strategy, information was gathered in for each of the variables under study. Regarding strategic
relation to the following variables: Importance of price management practices, it is observed that the greater
undercutting, Importance of innovations, Importance of scores are obtained in flexibility and analysis. It is
minimising advertising costs, Importance of quality, observed that the main shortcomings are presented in
Importance of being the first mover and Importance of financial controls. Similarly, it is revealed that the stra-
advertising. tegic priority of the firms under study is quality improve-
Regarding the strategic management practices we ment, followed by the search for being the first to intro-
employ the following variables. Analysis was measured duce new products or services. Finally, concerning
by means of two items: “We spend as much time as entrepreneurship, quite low scores are obtained. The
possible with customers and other key stakeholders, list- firms do not seem to be very proactive, are unwilling to
ening to what they have to say about the organization”. take risks and are generally not very innovative.
Flexibility was measured by one item: (“and our busi- In order to ascertain the existence of significant differ-
ness and product planning process involves customers, ences between the characteristics of the organisation and
suppliers, and providers of funds”. “Our organization its entrepreneurship, we first analysed the correlation
continually adapts by making appropriate changes in its between the strategic characteristics and the dimensions
strategy based upon feedback from the marketplace”). of entrepreneurship. To this end, we calculated the
To measure locus of planning we employ five items: Spearman correlation coefficients, obtaining the results
“Business planning in our organization is ongoing, as compiled in Table 3.
involving everyone in the process to some degree”, Entrepreneurship is positively correlated with inno-
“Most people in this organization have input into the vation-based differentiation strategy, analysis, flexibility,
decisions that affect them”, “Cooperation and collabor- locus of planning, horizon and strategic controls. No sig-
ation across functional roles are actively encouraged”, nificant correlations, however, are observed regarding
“Working in this organization is like being part of a entrepreneurship and horizon and entrepreneurship and
team” and “Decisions concerning business strategy are financial controls.
made on a consensus basis, involving people from many
departments”. The horizon was measured by means of Table 2
one item: “Long-term potential is valued over short-term Strategic characteristics and entrepreneurship (means and standard
performance in this organization”. Finally, the use of deviation)
strategic and financial controls was measured. The use of
financial controls was measured by means of one item, Variables Means Standard
deviation
whereas the use of strategic controls was measured by
means of five items: “customer’s need control”, “com- Our organization continually.... 3.87 0.80
petence control”, “technological control”, “coyuntural Most people in this.... 3.48 1.00
control” and “suppliers control”. Business planning in our... 3.21 1.01
We employed the Cronbach alpha coefficient to test Decisions concerning.... 3.64 0.90
Collaboration and Cooperation 3.81 0.80
the validity of the scales. As seen in Table 1 the values Working in this organization.... 3.84 0.78
are rather high. This enables us to validate the viability We spend as much time.... 3.90 0.86
of the scales used to measure the strategic management Our business and product.... 4.03 0.75
practices and competitive strategy of the firms. Long-term potential.... 3.39 0.87
Financial control 2.58 0.38
Customer control 3.85 0.70
Table 1 Competence control 3.48 0.84
Cronbach alpha coefficient Technology control 3.64 0.72
Coyuntural control 3.26 0.46
Variables Cronbach alpha coefficient Suppliers importance 2.84 0.45
Importance of innovation 2.84 1.10
Entrepreneurship (3 items) 0.72 Importance of being first mover 3.58 1.13
Analysis (2 items) 0.52 Importance of price undercutting 2.86 1.08
Locus of planning (5 items) 0.79 Importance of minimising 3.23 0.98
Horizon (1 item) –a Importance of quality 4.34 0.78
Flexibility (1 item) –a Importance of advertising 3.33 1.05
Strategic controls (5 items) 0.62 Innovation 3.81 0.81
Financial controls (1 item) –a Risk-taking 3.13 1.07
Competitive strategy (6 items) 0.52 Proactiveness 2.73 0.84
Entrepreneurship 9.99 2.38
a
It is not performed because the scale is made up of one item.
 M. Entrialgo et al. / Technovation 20 (2000) 427–436 433

Table 3
Correlations between strategic variables and entrepreneurship (Spearman Correlation)

Variables Risk-taking Innovation Proactiveness Entrepreneurship

Most people in this.... 0.15a 0.20b 0.16a 0.22b

Decisions concerning 0.17b 0.22b 0.32b 0.28b
Collaboration and.... 0.16 a 0.13a
Working in this.... 0.14a 0.19a 0.19 b 0.20b
Our organization.... 0.19 b 0.14a
b
We spend as much... 0.24 0.22b 0.16a 0.25b
Business planning in... 0.145a 0.208b 0.139a
Customers Control 0.20 b 0.18b 0.13a 0.22b
Competence Control 0.15a 0.22b 0.13a 0.22b
Technology Control 0.16a 0.14a
Importance of innovation 0.26b 0.20b 0.21b
Importance of quality 0.18a
Importance of being first mover 0.56b 0.29b 0.29b 0.25b
Importance of advertising 0.14a

a
Correlation is significant at 95%.
b
Correlation is significative at 99%.

In short, the results enable us to accept hypothesis 1.
There exists a positive relationship between analysis and
entrepreneurship. Similarly, hypothesis 2 is accepted. As
can be seen there exists a positive relationship between
flexibility and entrepreneurship. On the other hand,
hypothesis 3 is rejected. There is not a negative relation-
ship between horizon and entrepreneurship. Hypothesis
4, however, is accepted. There exists a positive relation-
ship between locus of planning and entrepreneurship.
Regarding to the relationship between controls and
entrepreneurship, hypothesis 5a is validated; there exists
a positive relationship between strategic controls and
entrepreneurship. Hypothesis 5b, however, is rejected.
Financial controls are not negatively related with
entrepreneurship. In respect to competitive strategy,
hypothesis 6 is accepted. The existence of significant and
positive correlations between innovation differentiation
strategy and entrepreneurship is observed.
Secondly, we analysed the existence of significant dif-
ferences in entrepreneurship due to a combination of
diverse variables. To this end, we performed a multiple
regression analysis, the results of which are compiled in
Table 4.
As can be seen in Table 4, the strategic variables that
best explain willingness to take risk are first mover,
analysis and people involved in the decision-making pro-
cess. Moreover, there exists a significant and positive
relationship between innovation and being first-mover,
analysis and locus of planning. Proactiveness is posi-
tively related with being first-mover and consensus and,
finally, entrepreneurial behaviour is explained by being
first-mover, analysis and consensus.
6. Conclusions
The results of this study suggest that a firm’s entrepr-
eneurial intensity is influenced by the nature of its stra-
tegic management practices and by its competitive strat-
egy. Moreover, it is important to note the greater impact

Table 4
Regresion analysis (standarized coefficients)b

Risk-taking Innovation Proactiveness Entrepreneurship

Constant 0.32 (n.s.) 0.97 (n.s.) 2.05 (n.s.) 3.16 (n.s.)

Being First Mover 0.59a 0.28a 0.23a 0.45a
Decisions concerning 0.31a 0.17a
We spend as much time... 0.16a 0.16a 0.15a
Business planning in our organization.... 0.20a
Most people in this organization.... 0.17a 0.14a
F Value 40.85a 14.22a 25.63a 38.79a
R2 0.41 0.15 0.18 0.33
Adjusted R2 0.40 0.14 0.17 0.32

a
p⬍0.01.
b
p⬍0.05.
434 M. Entrialgo et al. / Technovation 20 (2000) 427–436
of the competitive strategy compared to the strategic
practices on the degree of entrepreneurship. From the
point of view of the strategy, firms competing by means
of an innovation based differentiation are more entrepre-
neurial, compared to the rest.
Regarding the strategic practices, it is clear from the
results that analysis is an important correlate of entrepre-
neurial behaviour. This result is consistent with similar
findings reported by Barringer and Bluedorn (1999),
Miller (1983) and Zahra (1993). The results of the study
also depict a strong relationship between flexibility and
entrepreneurship. The implication of the results is that
entrepreneurial firms should work hard to institutionalize
flexibility in their planning systems. Similar results are
obtained by Barringer and Bluedorn (1999). The positive
relationship between locus of planning and
entrepreneurship indicates that a high level of employee
involvement in planning facilitates firm-level entrepren-
eurial behaviour. This result is supportive of the general
notion that employee participation at all levels is an
essential key to the entrepreneurial process (Burgelman,
1988). The result is also consistent with Sathe’s (1988)
observation that if entrepreneurship is to flourish in an
organization, lower-level managers need to be free to
identify and pursue promising opportunities. The posi-
tive relationship between strategic controls and
entrepreneurship is also consistent with the literature
(Barringer and Bluedorn, 1999; Sathe, 1988). This result
reaffirms the notion that control systems capable of
rewarding creativity and the pursuit of opportunity
through innovation are an esential part of the entrepren-
eurial process. As for the competitive strategy, it is the
firms which compete using differentiation which develop
a greater degree of entrepreneurship, compared to the
firm competing using cost leadership. In any case, it
would be interesting to analyse in future works the
influence of these variables under different industrial
scenarios.
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Montserrat Entrialgo is Bachelor and Doctor
of Economics and Management at Oviedo Uni-
versity. She has taught in technical schools at
the university since January 1995. Her doctoral
thesis relates to the study of entrepreneurship in
Spanish enterprises, a subject which has been
her concern since she started working at the uni-
versity.
436 M. Entrialgo et al. / Technovation 20 (2000) 427–436

Esteban Fernández has successively been
appointed Bachelor and Doctor of Economics
and Management at Oviedo University. Pro-
fessor of Firm Organization at Valladolid Uni-
versity (1986) and at Oviedo University (1987).
His research work has been directed towards the
study of technology, production management,
entrepreneurship and firm strategy.
entrepreneurship and growth policies.
Camilo J. Vázquez has successively been
appointed Bachelor and Doctor of Economics
and Management at Oviedo University and a
Professor of Firm Organization at Oviedo Uni-
versity (1999). He has been awarded the Special
Degree prize, Flores de Lemus prize (1987) and
Doctorate (1992). He has been teaching since
1987 in technical schools and Faculties of Eco-
nomics and Management. His research activity
has been based on the study of firm manage-
ment, especially the strategic technology man-
agement, the firm competitiveness, production,