BUSHOR-1088; No.

of Pages 11

Business Horizons (2013) xxx, xxx—xxx

Available online at www.sciencedirect.com

ScienceDirect
www.elsevier.com/locate/bushor

Diagnosing a firm’s internal environment for

corporate entrepreneurship
Donald F. Kuratko a,*, Jeffrey S. Hornsby b, Jeffrey G. Covin a

a
Kelley School of Business, Indiana University, 1309 E. Tenth Street, Bloomington, IN 47405-1701, U.S.A.
b
Bloch School of Management, University of Missouri—Kansas City, Kansas City, MO 64110, U.S.A.

KEYWORDS Abstract Apple, 3M, Procter & Gamble, and Google know the importance of an
Corporate internal environment supportive of innovative activity. But how is that environment
entrepreneurship; identified or measured? As research on corporate entrepreneurial activity has evolved,
Measurement; numerous researchers have acknowledged the importance of internal organizational
Internal environment; dimensions to promoting and supporting an environment for innovation. This research
Corporate has identified five specific dimensions that are important determinants of an environ-
Entrepreneurship ment conducive to entrepreneurial behavior: (1) top management support, (2) work
Assessment discretion/autonomy, (3) rewards/reinforcement, (4) time availability, and (5) organi-
Instrument; zational boundaries. If an organization is serious about developing an internal envi-
Diagnostic tools ronment conducive to entrepreneurial activity, then it must seek to measure the
specific dimensions associated with an innovative environment. In this article we
introduce an instrument, the Corporate Entrepreneurship Assessment Instrument
(CEAI), as a diagnostic tool used for assessing managers’ perceptions of the five major
dimensions critical to creating an entrepreneurial/innovative environment. This in-
strument provides an indication of a firm’s likelihood of being able to successfully
implement an innovative strategy, and highlights areas of the internal work environ-
ment that should be the focus of ongoing development efforts.
# 2013 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights
reserved.

1. The innovation imperative

Today, continuous innovation–—in terms of products,

processes, and administrative routines and struc-
tures–—is needed to compete effectively in the glob-
al markets of the 21st century. Executives agree that
* Corresponding author
innovation is the most important pathway for com-
E-mail addresses: [email protected] (D.F. Kuratko),
[email protected] (J.S. Hornsby), [email protected] panies to accelerate their pace of change in the
(J.G. Covin) global environment. Yet Apple questions how the

0007-6813/$ — see front matter # 2013 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved.
http://dx.doi.org/10.1016/j.bushor.2013.08.009
BUSHOR-1088; No. of Pages 11

2 D.F. Kuratko et al.

death of Steve Jobs will impact its internal environ- and initiatives, regardless of the ‘rules.’ As Steven
ment of innovation (Bedigian, 2011); 3M works Brandt of Stanford once said: ‘‘Ideas come from
mightily to regain its former innovative heritage people. Innovation is a capability of the many’’
(Gunther, 2010); Procter & Gamble (P&G) develops (Kuratko, 2014, p. 68).
a special division to cultivate innovations for tomor- Research has shown that there are uncontrollable
row but still wonders how this translates to its factors in the external environment which may be
internal environment (Brown & Anthony, 2011); related to entrepreneurial activity inside an organi-
and Google is contemplating various strategies for zation. For instance, hostile and technologically
enhancing the innovative prowess of its workforce sophisticated environments have been shown to
(Finkle, 2012). It is clear that some of today’s most be conducive to developing and implementing a
recognized innovative companies are working over- corporate entrepreneurial strategy (Bradley, Al-
time to figure out the challenge of sustaining an drich, Shepherd, & Wiklund, 2011; Chattopadhyay,
innovative environment amidst constant change. Glick, & Huber, 2001). Hostile environments are
Apple, 3M, P&G, and Google are just four examples characterized by such factors as high firm failure
of growing firms where the mantras are all too rates, intense competitive pressure, and price-
similar: sustain an internal environment of innova- based competition. Technologically sophisticated
tion in order to excel in the 21st century. These firms environments are characterized by such factors as
and thousands of others realize there must be ele- significant R&D investments, frequent product and/
ments within their organization that should be man- or process technology changes, and a reliance on
aged in order to enhance the innovative capacities superior technical personnel as key bases of compet-
of their managers. There are numerous writings itive advantage (Bettis & Hitt, 1995). Ireland, Covin,
about reward systems, management support, and and Kuratko (2009) argue that an organization’s top-
managerial autonomy to encourage the innovative level managers should exhibit a strategic intention
environment. But how are organizational leaders toward entrepreneurial activity for their firms to
supposed to gauge these elements? successfully compete in such environments. This in-
Corporate entrepreneurship–—a significant form tention finds managers seeking methods under their
of corporate innovation–—is envisioned to be a pro- control that could enhance the organization’s inter-
cess that can facilitate firms’ efforts to innovate nal environment for entrepreneurial activity.
constantly and cope effectively with the competi- Recognizing the importance of an organization’s
tive realities companies encounter when competing commitment to the perpetuation of innovation as a
in world markets. Leading strategic thinkers are strategy, Ireland et al. (2009, p. 21) conceptualized
moving beyond the traditional product and service a corporate entrepreneurship strategy as ‘‘a vision-
innovations to pioneering innovation in processes, directed, organization-wide reliance on entrepre-
value chains, business models, and all functions of neurial behavior that purposefully and continuously
management (Govindarajan & Trimble, 2005). Thus, rejuvenates the organization and shapes the scope
corporate entrepreneurship and innovation are con- of its operations through the recognition and exploi-
cepts that have captivated the interest of execu- tation of entrepreneurial opportunity.’’ It should be
tives in many corporate boardrooms (Morris, recognized that this type of strategy is hard to
Kuratko, & Covin, 2011). All organizations are facing create and, perhaps, even harder to perpetuate
times requiring innovative vision, courage, calculat- in organizations because entrepreneurial activity
ed risk-taking, and strong leadership. As Kuratko is not inherently focused, cumulative, productive,
(2009) pointed out, organizations must realize the or strategically relevant. Morris et al. (2011) warn
entrepreneurial imperative of the 21st century is managers that to be successful, entrepreneurial
now at hand. activity must be carefully integrated into the orga-
Firms that exhibit corporate entrepreneurship nization’s overall strategies. In doing so, the inter-
are typically viewed as dynamic, flexible entities nal environment of an organization–—which can be
prepared to take advantage of new business oppor- influenced by managers–—must be conducive to the
tunities when they arise (Kuratko, Goldsby, & initiation and sustainment of innovation-inducing
Hornsby, 2012). They explore new business domains, strategies.
as well as new ways of conducting business within
existing domains. Deviation from prior routines,
strategies, business models, and operating environ- 2. An internal environment for
ments are typical modes of operation in these corporate entrepreneurship
innovation-minded companies. In other words, cor-
porate entrepreneurship flourishes in established One of a manager’s controllable areas of corporate
firms when individuals are free to pursue actions entrepreneurship is creating a work environment
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Diagnosing a firm’s internal environment for corporate entrepreneurship 3

highly conducive to innovation and entrepreneurial with discretion over how to perform their work,
behaviors. Within such an environment, each em- as well as by those encouraged to engage in
ployee has the opportunity to ‘step up to the plate.’ experimentation.
The willingness and ability to act upon one’s innate
entrepreneurial potential is based on a calculated 3. Rewards and reinforcement: The extent to which
assessment. Conditions in the internal work envi- one perceives the organization uses systems that
ronment dictate the perceived costs and benefits reward based on entrepreneurial activity and
associated with taking personal risks, challenging success. Reward systems that encourage risk
current practices, devoting time to unproven ap- taking and innovation have been shown to have
proaches, persevering in the face of organizational a strong effect on individuals’ tendencies to
resistance, and enduring the ambiguity and stress behave in entrepreneurial manners. Numerous
entrepreneurial behavior can create. Therefore, studies have identified ‘reward and resource
credible innovation is more likely in companies availability’ as a principal determinant of en-
where all individuals’ entrepreneurial potential is trepreneurial behavior by middle- and first-level
sought and nurtured, and where organizational managers.
knowledge is widely shared. The managerial chal-
lenge becomes that of using workplace design ele- 4. Time availability: A perception that the work-
ments to develop an innovation-friendly internal load schedules ensure extra time for individuals
environment. and groups to pursue innovations, with jobs
As research on corporate entrepreneurial activity structured in ways to support such efforts and
has evolved, numerous researchers have acknowl- achieve short- and long-term organizational
edged the importance of internal organizational goals. Research suggests time availability among
dimensions to promoting and supporting an environ- managers is an important resource for generating
ment for innovation (Hornsby, Kuratko, Shepherd, & entrepreneurial initiatives. For example, the
Bott, 2009; Kuratko, Ireland, & Hornsby, 2001; availability of unstructured or free time can
Kuratko, Montagno, & Hornsby, 1990). This research enable would-be corporate innovators to consid-
identified five specific dimensions that are impor- er opportunities for innovation that may be pre-
tant determinants of an environment conducive to cluded by their required work schedules.
entrepreneurial behavior: (1) top management sup-
port, (2) work discretion/autonomy, (3) rewards/ 5. Organizational boundaries: The extent to which
reinforcement, (4) time availability, and (5) organi- one perceives there are flexible organizational
zational boundaries. These underlying organization- boundaries that are useful in promoting en-
al dimensions are required for individuals to trepreneurial activity because they enhance
perceive an innovation-friendly environment. Let’s the flow of information between the external
briefly examine each one from the perspective of environment and the organization, as well as
the organization’s employees: between departments/divisions within the orga-
nization. However, innovative outcomes emerge
1. Top management support: The extent to which most predictably when innovation is treated as a
one perceives that top managers support, facil- structured and purposeful (vs. chaotic) process.
itate, and promote entrepreneurial behavior, Consistent with this point, organization theorists
including the championing of innovative ideas have long recognized that productive outcomes
and providing the resources people require to are most readily accomplished in organizational
take entrepreneurial actions. Top management systems when uncertainty is kept at manageable
support has been found to have a direct positive levels; this can be achieved through setting
relationship with an organization’s innovative boundaries that induce, direct, and encourage
outcomes. Also, research shows each level of coordinated innovative behavior across the or-
management plays key roles in facilitating cor- ganization. In short, organizational boundaries
porate entrepreneurship. can ensure the productive use of innovation-
enabling resources.
2. Work discretion: The extent to which one per-
ceives that the organization tolerates failure, When trying to establish an internal environment
provides decision-making latitude and freedom conducive to individual entrepreneurial activity,
from excessive oversight, and delegates author- these suggested elements are controllable by
ity and responsibility to lower-level managers managers (as opposed to uncontrollable forces in
and workers. Research suggests entrepreneurial the external environment or elements that are
opportunities are often best recognized by those simply outside the control of the manager). However,
BUSHOR-1088; No. of Pages 11

4 D.F. Kuratko et al.

without proper assessment of these elements, there dimensions critical to creating an entrepreneurial/
can be no understanding of how these elements are innovative environment (shown in Table 1). More
perceived in the organization. As such, managers specifically, the CEAI can be used to assess, evalu-
are challenged to measure the existence of these ate, and manage the firm’s internal work environ-
elements and the perception of them through the ment in ways that support entrepreneurial behavior,
eyes of employees. Managers at all levels must be which becomes the foundation for successfully im-
committed to the establishment of innovative behav- plementing a corporate innovation strategy.
iors if corporate innovation is ever going to be fos- The CEAI was developed around the five elements
tered in an organization (Kuratko, Ireland, Covin, & previously discussed as the underlying dimensions
Hornsby, 2005). Thus, the ability to measure the needed to support corporate entrepreneurial
existence and employee perceptions of these internal activity. These dimensions are: (1) management
elements becomes a priority. support–—the willingness of top-level managers to
facilitate and promote entrepreneurial behavior, in-
cluding the championing of innovative ideas and
3. Measuring the internal providing the resources people require to behave
environment: The CEAI entrepreneurially; (2) work discretion/autonomy–—
top-level managers’ commitment to tolerate failure,
If an organization is serious about developing its to provide decision-making latitude and freedom
internal environment to promote entrepreneurial from excessive oversight, and to delegate authority
activity, then it must seek to measure the specific and responsibility to middle- and lower-level man-
dimensions associated with an innovative environ- agers; (3) rewards/reinforcement–—developing and
ment. In order to understand the most effective using systems that reinforce entrepreneurial behav-
internal environment for corporate entrepreneurial ior, highlight significant achievements, and encour-
activity, an examination of antecedents to individ- age pursuit of challenging work; (4) time availability
ual entrepreneurial behaviors is critical. As dis- –—evaluating workloads to ensure individuals and
cussed earlier, much of our understanding of the groups have the time needed to pursue innovations
impact of organizational antecedents on individual- and to structure their jobs in ways supportive
level entrepreneurial behavior is based on the em- of efforts to achieve short- and long-term organiza-
pirical research of Kuratko and his colleagues tional goals; and (5) organizational boundaries–—
(Hornsby, Kuratko, & Zahra, 2002; Kuratko et al., precise explanations of outcomes expected from
1990). From that research an instrument was devel- organizational work and development of mechanisms
oped, the Corporate Entrepreneurship Assessment for evaluating, selecting, and using innovations. The
Instrument (CEAI), as a diagnostic tool used for CEAI instrument measures the degree to which indi-
assessing managers’ perceptions of the five major viduals within a firm perceive these five elements

Table 1. The corporate entrepreneurship assessment instrument (CEAI)#

We are interested in learning about how you perceive your workplace and organization. Please read the following
items. Using the scale below please indicate how much you agree or disagree with each of the statements. If you
strongly agree, write ‘‘5.’’ If you strongly disagree write ‘‘1.’’ There are no right or wrong answers to these
questions so please be as honest and thoughtful as possible in your responses. All responses will be kept strictly
confidential. Thank you for your cooperation!
Strongly Strongly
Disagree Disagree Not Sure Agree Agree
1 2 3 4 5

Section 1: Management support for corporate entrepreneurship

–— 1. My organization is quick to use improved work methods.
–— 2. My organization is quick to use improved work methods that are developed by workers.
–— 3. In my organization, 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.
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Diagnosing a firm’s internal environment for corporate entrepreneurship 5

–— 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 organization 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 organization 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 organization 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 organization about ideas for
new projects.
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 organization provides the chance to be creative and try my own methods of doing the job.
–— 23. This organization provides the freedom to use my own judgment.
–— 24. This organization 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.
–— 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.
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.
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 organizational 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.
Section 5: Organizational 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.
# Donald F. Kuratko & Jeffrey S. Hornsby, 2013
(permission for use in part or in its entirety must be obtained from the authors)
BUSHOR-1088; No. of Pages 11

6 D.F. Kuratko et al.

critical to an internal environment conducive for Wales, 2013). In Table 2 we highlight the studies that
individual entrepreneurial activity. have demonstrated the validity of the CEAI and the
The CEAI instrument consists of 48 Likert-style correlations identified.
questions. The instrument has been shown to be The instrument can be used to develop a profile of
psychometrically sound as a viable means for assess- a firm across the dimensions and internal elements
ing areas requiring attention and improvement in discussed earlier. Low scores in any one area of the
order to reach the goals sought when implementing CEAI suggest the need for development activities
an innovative strategy (Hornsby, Kuratko, Holt, & to enhance the firm’s readiness for entrepreneurial

Table 2. Validity assessment of the CEAI

Authors Findings
Hornsby, Kuratko, and  U.S. and Canadian managers perceive the workplace similarly in terms of
Montagno (1999) entrepreneurial climate as measured by the CEAI.
 Levels of intrinsic satisfaction of Canadian managers are lower than in the U.S.
 Overall levels of entrepreneurial behaviors are similar between the U.S. and
Canada but for Americans, entrepreneurial behavior is significantly related to
the existence of the CEAI factors.
Hornsby, Kuratko, and  Exploratory and confirmatory factor analyses yielded the same five-factor
Zahra (2002) solution for the CEAI.
 Management level differences were found for all the factors except the rewards/
reinforcement factor.
Kuratko, Hornsby, and  Job satisfaction serves as a mediator between CEAI factors and new ideas offered
Bishop (2005) and implemented (R-squared = .78).
Rutherford and Holt (2007)  CE mediates the relationship between the CEAI antecedents and individual
entrepreneurial outcomes.
Hornsby, Kuratko, Shepherd,  Management support, rewards/reinforcement, and autonomy/discretion were
and Bott (2009) significantly correlated with number of ideas implemented.
 Management level moderated the relationship between management support
and ideas implemented and autonomy/discretion and ideas implemented.
Specifically, senior and middle managers were likely to implement more
entrepreneurial ideas than frontline managers.
Goodale, Kuratko, Hornsby,  R-squared of .10 between CEAI factors and innovation performance.
and Covin (2011)  R-squared of .30 when moderators of operations control and risk control are
entered into the model.
van Wyk and  Significant positive correlations between extrinsic job satisfaction and the
Adonisi (2012) corporate entrepreneurship sub-scales of work discretion, rewards, and
innovative initiatives.
 The market orientation sub-scales of intelligence generation and responsiveness
each correlated positively with the corporate entrepreneurship sub-scales of
management support and risk acceptance, and rewards.
 Responsiveness correlated positively with innovative initiatives and financial
support. Intrinsic job satisfaction correlated positively with the sub-scales of
corporate entrepreneurship work discretion and rewards.
 Extrinsic job satisfaction correlated positively with the corporate
entrepreneurship sub-scales of work discretion and rewards.
 The flexibility sub-scale formality correlated positively with management
support and risk acceptance, and innovative initiatives.
 The flexibility sub-scale authoritarianism correlated negatively with the
corporate entrepreneurship sub-scale of sufficient time.
Hornsby, Kuratko, Holt,  Assessing the convergent validity of the CEAI composite and individual factors,
and Wales (2013) the CEAI composite–—EO relationship was .32.
 When considering the factors of the CEAI, management support was the most
strongly correlated at r = .45 ( p < .01). EO was less strongly correlated with the
other CEAI factors but these relationships were positive and significant. These
included work discretion (r = .17, p < .01), rewards/reinforcement (r = .15,
p < .01), and time availability (r = .13, p < .01).
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Diagnosing a firm’s internal environment for corporate entrepreneurship 7

behavior in order to establish the successful imple- each participant’s scoring sheet should be collected.
mentation of a corporate entrepreneurship strategy. However, it is extremely important that all informa-
tion be kept confidential since some of the items
regarding the employee’s feelings concerning man-
4. Implementing the CEAI agement are sensitive. Calculate average scores for
each of the CEAI factors for the entire organization
The CEAI measures employee perceptions of the and any other relevant functional or divisional units.
overall organizational entrepreneurial environ- The organization’s overall score on each scale is
ment. While looking at any one individual employ- figured by averaging the relevant functional or divi-
ee’s scores on the instrument’s factors may be sional scores. An organizational profile can be creat-
interesting, that is not the real intent of the instru- ed by graphing the averages across the corporate
ment. In general, higher scores on the CEAI factors entrepreneurship elements. Additionally, identifica-
are related to increased entrepreneurial activity, so tion of the scales’ standard deviations will reveal how
the goal should be to aggregate employee scores consistently those corporate entrepreneurship ele-
across work units, divisions, and–—ultimately–—the ments are perceived to operate within the organiza-
entire organization to assess each level’s readiness tion, with low standard deviations indicating
for implementing a corporate entrepreneurship consistent perceptions of the relevant attribute by
strategy and to take appropriate actions to remedy organizational members and high standard devia-
areas identified as problematic. The CEAI is in- tions indicating the opposite.
tended for those employees in managerial, profes-
sional, and technical positions. While it could be 4.4. Step #4: Interpreting the scores
used for operational workers, most organizations
have not given those workers the mandate or the The highest score possible for any scale is 5 and the
autonomy to act in an entrepreneurial manner. lowest is 1. In general, the higher the score, the
Specific recommendations for implementing the more the organization’s environment supports these
CEAI include the following. types of activities and the more ready an organiza-
tion is to implement a corporate entrepreneurship
4.1. Step #1: Distribution of the CEAI strategy. Organizations should examine their profile
instrument and identify weak areas. Just as in any change
effort, it is critical for the organization to assess
Administer the CEAI instrument to all employees in its readiness for the change and make efforts to
the organization. This is important so that the re- prepare the organization to successfully implement
sults can be examined based upon the levels of the change–—in this case, corporate entrepreneur-
management, departmental areas of responsibility, ship.
or differing reporting lines. In very large organiza-
tions, one could randomly sample employees from 4.5. Step #5: Point of responsibility
these different areas and levels, but this may alien-
ate some employees and thereby hinder buy-in to If a consultant is not being employed to administer
project implementation. the CEAI, a department or an assigned group within
each department should be empowered to tally the
4.2. Step #2: Individual scoring scores and report back regarding the findings. They
should calculate average scores for each of the
In order to provide immediate feedback to the CEAI factors for the entire functional or divisional
employee regarding his or her perceptions of the unit. Once the scores are reported back to every-
firm’s internal entrepreneurial environment, each one in the unit then a special session can be held to
participant should be allowed to score the survey. analyze the gaps between overall organization
Each form has its own scoring box via which employ- scores and business unit or division scores. Honest
ees can transfer their answers and calculate an discussions should revolve around the organiza-
average score for each scale. Items 21, 36, 39, tional system to reveal possible moderating con-
40, 42, 43, 44, 45, 47, and 48 are revised scored. flicts or issues that may inhibit entrepreneurial
See Appendix A for the actual scoring scales. performance, even when there appears to be a
positive entrepreneurial environment. This is the
4.3. Step #3: Organizational scoring critical value behind the use of the CEAI: attempt-
ing to identify the perceived ‘gaps’ by unit or
In order for the firm to assess the internal environ- division and then working to rectify those specific
ment’s conduciveness to entrepreneurial activity, areas.
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8 D.F. Kuratko et al.

5. Final thoughts for individual entrepreneurial activity, a well-

planned corporate entrepreneurship strategy and
Innovation is now widely recognized as the path to operational procedures are necessary to ensure its
competitive advantage and success in organizations success.
of all types and sizes (Kuratko et al., 2012). A The CEAI can significantly benefit organizations
sustainable corporate entrepreneurship strategy and is of value to managers and academic research-
will drive organizations toward innovation needed ers. For managers, the instrument provides an indi-
to operate in the challenging global economy cation of a firm’s likelihood of being able to
(Kuratko, 2009). successfully implement an innovative strategy. It
Managers and employees across a firm are highlights areas of the internal work environment
most likely to engage in entrepreneurial behavior that should be the focus of ongoing design and
when the organizational antecedents to that be- development efforts. Further, the CEAI can be used
havior are well-designed and are widely known and as an assessment tool for evaluating corporate train-
accepted. Individuals assess their entrepreneurial ing and development needs with respect to entre-
capacities in reference to what they perceive to be preneurship and innovation. Determining these
the set of organizational resources, opportunities, needs sets the stage for improving managers’ skills
and obstacles related to entrepreneurial activity. and increasing their sensitivity to the challenges of
An organization’s sustained effort in corporate en- eliciting and then supporting entrepreneurial be-
trepreneurship is contingent upon individual mem- havior. For researchers, the instrument can be com-
bers continuing to undertake innovative activities bined with other measures to explore a host of
and upon positive perceptions of such activity by questions surrounding entrepreneurial behavior in
the organization’s executive management, which established organizations. For instance, the CEAI
will in turn support the necessary organizational provides a basis for determining ways in which
antecedents to entrepreneurial activity. controllable factors within the internal work envi-
The major thrust behind corporate entre- ronment influence employee actions, together with
preneurship is a revitalization of innovation, crea- insights regarding the relative importance of various
tivity, and leadership in today’s organizations. The contextual factors in different industry, market, and
development of corporate entrepreneurship holds organizational settings (Hornsby et al., 2009).
promise for future productivity and effectiveness of Overall, our intent was to introduce a viable and
organizations in every industry. The ability to iden- valuable diagnostic instrument for measuring em-
tify and measure an organization’s internal envi- ployees’ perceptions regarding the critical elements
ronment for entrepreneurial activity is and will needed for an internal environment conducive to
continue to be critical as an aspect of any corporate entrepreneurial activity. The use of this instrument
entrepreneurial strategy. Thus, the instrument we and the information gained from its results can
introduced here, the CEAI, may be a valuable diag- provide a foundation for improving specific areas
nostic tool for managers to utilize in assessing the of the department or functional unit that can trans-
elements critical for an internal environment condu- late into greater entrepreneurial activity on the
cive to entrepreneurial activity. However, assessing a part of employees–—the first and most important
firm’s readiness for corporate entrepreneurship is step in developing a company-wide strategy for
only the first step. Once the organization is prepared entrepreneurial activity.
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Diagnosing a firm’s internal environment for corporate entrepreneurship 9

Appendix A
SCORING SCALES
Scale 1: Management Support for Entrepreneurship
Statement
1 1 2 3 4 5
2 1 2 3 4 5
3 1 2 3 4 5
4 1 2 3 4 5
5 1 2 3 4 5
6 1 2 3 4 5
7 1 2 3 4 5
8 1 2 3 4 5
9 1 2 3 4 5
10 1 2 3 4 5
11 1 2 3 4 5
12 1 2 3 4 5
13 1 2 3 4 5
14 1 2 3 4 5
15 1 2 3 4 5
16 1 2 3 4 5
17 1 2 3 4 5 Total
18 1 2 3 4 5 Score
19 1 2 3 4 5 (Scale 1)
Sub-Totals + + + + =

Scale Score = Total Score (19)

Scale 2: Work Discretion

Statement
20 1 2 3 4 5
*21 5=1 4=2 3 2=4 1=5
22 1 2 3 4 5
23 1 2 3 4 5
24 1 2 3 4 5
25 1 2 3 4 5
26 1 2 3 4 5
27 1 2 3 4 5 Total
28 1 2 3 4 5 Score
29 1 2 3 4 5 (Scale 2)
Sub-Totals + + + + =

Scale Score = Total Score divided by (10)

*Item 21 revised scores.

BUSHOR-1088; No. of Pages 11

10 D.F. Kuratko et al.

Scale 3: Rewards/Reinforcement
Statement
30 1 2 3 4 5
31 1 2 3 4 5
32 1 2 3 4 5
33 1 2 3 4 5 Total
34 1 2 3 4 5 Score
35 1 2 3 4 5 (Scale 3)
Sub-Totals + + + + =

Scale Score = Total Score divided by (6)

Scale 4: Time Availability

Statement
*36 5=1 4=2 3 2=4 1=5
37 1 2 3 4 5
38 1 2 3 4 5
*39 5=1 4=2 3 2=4 1=5 Total
*40 5=1 4=2 3 2=4 1=5 Score
41 1 2 3 4 5 (Scale 4)
Sub-Totals + + + + =

Scale Score = Total Score divided by (6)

*Items 36, 39, 40 are revised scores.

Scale 5: Organizational Boundaries

Statement
*42 5=1 4=2 3 2=4 1=5
*43 5=1 4=2 3 2=4 1=5
*44 5=1 4=2 3 2=4 1=5
*45 5=1 4=2 3 2=4 1=5
46 1 2 3 4 5 Total
*47 5=1 4=2 3 2=4 1=5 Score
*48 5=1 4=2 3 2=4 1=5 (Scale 5)
Sub-Totals + + + + =

Scale Score = Total Score divided by (7)

*Items 42, 43, 44 , 45, 47, and 48 are revised scores.

BUSHOR-1088; No. of Pages 11

Diagnosing a firm’s internal environment for corporate entrepreneurship 11

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