5.amir forouharfar-understanding barriers to intrapreneurship inwork and social affairs governmental

7/28/2019 5.Amir Forouharfar-Understanding Barriers to Intrapreneurship InWork and Social Affairs Governmental

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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

COPY RIGHT 2011 Institute of Interdisciplinary Business Research 490

APRIL 2011VOL 2, N O 12

Understanding Barriers to Intrapreneurship in Work and Social Affairs Governmental

Organization (A Case Study in Iran)

Habibollah Salarzehi (Corresponding Author)

Assistant Professor, Faculty of Management and Accounting, University of Sistan and Baluchestan, Zahedan, Iran

Amir Forouharfar

Masters Student of Entrepreneurship, Faculty of entrepreneurship, University of Sistan and Baluchestan,

Zahedan, Iran

Abstract

Many studies have been carried out on the barriers to intrapreneurship or corporate

entrepreneurship, but a few ones have prioritized these studied barriers to the domesticatmosphere of Eastern countries. Therefore, as a case study, Work and Social Affairs

Organization in Iran has been chosen. This organization is in charge of promoting and paving theway for entrepreneurship in Iran. Based on the size of the organization, a sample of 15 employees

in this organization in its Fars Province branch has been chosen .They answered to the

questionnaires which had the list of barriers. Since they are familiar with the barriers tointrapreneurship in the atmosphere of Iran, the frequency of their answers (stated barriers) were

shown in a final bar chart. Based on this study the tension between the values of the intrapreneur

and its organization, is the principal barrier to intrapreneuship in Iran.

Key Words: Entrepreneurship, Intrapreneurship, Corporate Entrepreneurship, Barrier

1. Introduction

In 1985 Pinchot[33] coined the term "intrapreneurship", short for intra-corporateentrepreneurship, which describes the practice of entrepreneurship withinorganisations.Sathe[37]defined corporate entrepreneurship as a process of organizational

renewal. Other researchers have conceptualized corporate entrepreneurship as embodying

entrepreneurial efforts that require organizational sanctions and resource commitments for the

purpose of carrying out innovative activities in the form of product, process, and organizational

innovations[13],[3].

If we want to have prosperous and successful companies, especially the large ones, we need to

know the general and idiosyncratic barriers to our companies. In this study, the general barriershave been the main place of attention for this study. We need to know them, to be able to facethem scientifically. The main way for understanding these barriers is to know firstly those

important factors on fostering intrapreneurship and then to study the obstacles on the way of

these fostering factors of intrapreneurship.Therefore, the necessary requisites for intrapreneurshiphave been studied in different intrapreneurship literature.Since,logically what ever blocks the way

of these requisites formation could be the potential barrier to intrapreneurship,the requisites have

library studied and brought in the literature review.


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Policy makers in different countries are trying to implement policies that facilitate the direction

of intrapreneurship as one of the key elements of economic progress. In Iran as a developing

country, almost we have the same difficulties, but with special deviations from the global

difficulties. Experience shows that successful countries have paid enough attention toentrepreneurship in technology, marketing, organizational aspects, etc.They have welcomed

change .Since logical change is the threshold to innovation [39]. What concerns here is theentrepreneurship in the framework of the corporation, the action which is called Corporate

Entrepreneurship of Intrapreneurship.Leader of the organizations respect the people who have

thoughts, because they are the very beginning of innovation which leads to entrepreneurship.Knowing the barriers to intrapreneurship, could help the policymakers of the companies and the

country to face these barriers with wide open eyes and get ready to wipe or to moderate the effect

of the barriers, and open a new horizon before their company and consequently, their

country[8],[11],[28].

This study's main goal is to understand the frequency of some of the common barriers with

intrapreneurship according to an official organization for the promotion of entrepreneurship in

Iran, as a case study, Work and Social Affairs Organization has been chosen. Therefore, the studyhas a localized perspective. By knowing the localized barriers to intrapreneurship, we can pave

the way for the innovation and reach to superiority to our rivals. As Meg and Roberts [27]

believe, in a world of constant change, products in the world marketplace derive less and less oftheir value from production labor or capital goods and more and more from the quality of thought

and innovation imparted to the products.

Concerning the triadic relationship among innovator-intrapreneur, organization-management, and

market environment, Piatier [32] categorized barriers between organization and market

environment as exogenous barriers, while those between innovator-intrapreneur andorganization-management he termed endogenous barriers. Therefore, both the exogenous and the

endogenous barriers have been studied here.

2. Literature Review

The literature about barriers to intrapreneurship has been reviewed in two levels: endogenous and

exogenous.

2.1Endogenous Barriers

2.1.1Barriers to Intra-Organizational Innovation

Innovation starts by the perception of the opportunity.Adonies [1] believes, unless opportunities

and events perceived and acted upon by the members of the organizations, entrepreneurship willnot take place. Entrepreneurial firms create mechanisms that focus the attention of the

organizational members on innovative opportunities and generate behaviors that support

entrepreneurial venturing. Some organizational variables which seems to be instrumental in thecreation of attention to innovative opportunities and generation of entrepreneurial organizational

behaviors are :entrepreneurial strategy, organizational culture, organizational structure, resource


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availability, reward systems, management support, and risk taking [1].On the other hand to have

innovation within the large companies, definitely we need individual entrepreneurs who work

together.So,the attention on the individual characters of these entrepreneurs, who collectively

make the intrapreneurship is worthy of attention. What facilitates the formation of entrepreneurscould have some impact on corporate entrepreneurship. Recent research on entrepreneurs, have

focused on their personal traits [7], [41], [17]. Hornsby, et al. [21] point out that there aredistinctive characteristics which define potential entrepreneurial behavior, such as risk-taking

propensity, desire for autonomy, need for achievement, goal orientation, and internal locus of

control. Adonis [1], believes, although the suggested individual characteristics by Hornsby et al.[21] are notions, with empirical basis in the CE literature, they nevertheless furnish useful

guidelines to avoid incompatibility between the individual and the organization. If we understand

these individual characteristics, we could help them to foster in the people which could lead tointrapreneurship.On the other hand to put this innovation, as an innovative project, into action we

must overcome significant organizational obstacles and build a support network with

management representatives, before finally being unveiled to face the inevitable criticism and(hopefully, eventually) acceptance. This body of literature appears to (a) adopt the perspective of

the necessity of overcoming (1) resistance from upper management and (2) barriers of corporate

procedures and inflexibility, and to (b) advocate initiation of innovative endeavors throughempowerment of individuals at various organizational levels and roles[18].Resistance to change

is one of the main internal barriers to intrapreneurship.some organizations block the way ofinnovation completely and some others partially.Devarajan et al.[14]believe ,many mature

organizations, unwilling to alter the status quo, tend to create focused initiatives that are

mandated to identify and exploit new opportunities. While such focused initiatives may stimulateinnovation, the very nature of their design erects barriers between the existing organization and

the innovation effort. Sometimes this resistance is individual. Individuals often resist change

because they have already invested a great deal of time and energy in mastering a certain job, andfear that their investment will be wasted [6]. According to Moerdyk and Fone [30], resistance to

change can generally be judged in terms of three different factors - the individual s self interest,

his / her personality structure, and the social psychology of persuasion. Change is also resistedbecause the future is unknown and failure could potentially cause risk to personal status and

esteem, meaning that innovation could threaten existing power structures and relations [19].

Insert Figure 8 here Simplified schematic of origion of innovation barriers[27].

2.1.2 Individual and Organizational Barriers

Individual and organizational factors are related to intrapreneurship, besides the environmentalones [10], [4], [23], [24].

Individual propensity to act entrepreneurially is a function of motivation [26], [29]. Lack of

effective individual training for some of the employees which could act intrapreneurially could beanother barrier. Zimmerman [42] suggests that high potential individuals should receive training

concerning the CE process, including an introduction to the CE, background on the company s

successes and failures in CE, training on opportunity recognition/creation and creativity, commonbarriers to CE, and finally an overview of how corporate entrepreneurs can launch their initiatives

at the company.


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Organizational context, could lead to intrapreneurship [4], [31], [15], [20]. Traditional

bureaucratic structure could be a barrier to the previously mentioned propensity, since they have

up-down dictates of programs. Herbert [18] mentions that corporate entrepreneurship programs

are usually built around bottom-up processes. Moreover, formality in relationships significantlydecreases the possibility of any interactions by forming a gap between the corporation and its

entrepreneurship goals and there is an inverse relationship between complexity (complexity ofcommunications inside organization both in vertical and horizontal directions) and corporate

entrepreneurship [13], [22].

Roberts [35] identified important organizational policies and attitudes that tend toward defeating

entrepreneurial efforts; these include: bias against younger personnel taking on venture

responsibility, less encouragement of and less latitude for independent action, difficulty insecuring capital support, and lower sponsorship. According to Fry[16], there are four clusters of

factors which help to explain why large organizations have trouble becoming and staying

intrapreneurial and why they have trouble regaining a level of intrapreneurship once it is lost:(a)resistance to change,(b)inherent nature of large organizations,(c) lack of entrepreneurial

talent,and explains that on the whole, one finds very few entrepreneurs in large organizations, as

typically they are not attracted to large organizations because of (d)inappropriate compensationmethods. Fry [16] states that,"Even though monetary rewards may not be especially important to

entrepreneurial individuals, some mechanism of rewarding innovation must be evident ifinnovation is to continue."

Mintzberg [26] believed that continuing innovation is best met through the structural "type" hetermed the "Adhocracy". In fact, he notes that all other organizational forms are either pass or

simply current, but that the Adhocracy "is clearly tomorrow's" structure [18].Inappropriate

organizational culture is another endogenous barrier. In his study of Singapore middle managers,Tan [38] found that organizational culture, flexibility, and sponsorship influenced middle

managers to become internal corporate entrepreneurs. Boksjo and Delin [5] identified the origins

of the barriers to be the differences in mental attitudes, behavior, and styles accumulated fromorganizational culture. Meg and Roberts [27] mentions such organizational culture as barrier in

some" behavioral and organizational culture-based barriers" to innovation[34],[36] such as,(a)the

proposed innovation poses a threat to individual positions and the existing power structure;(b)ahigh individual risk exists of being blamed for possible failure of the innovation attempt;and(c)a

reluctance exists to enter new fields or new businesses due to unfamiliarity.Therefore, these

fears("threat barrier", "risk barrier , and "reluctance barrier") reflect an underlying tendency tofight to remain the same.

Other subtle barriers result from tension between organization and entrepreneur's values andneeds at different stages of entrepreneur's growth pattern [27] as summarized in figure2.

Insert Figure 9 here.Conceptual illustration of barriers resulting from tension between

organization and entrepreneur's values and needs at different stages of entrepreneur's

growth pattern [27].

2.2Exogenous Barriers

Environmental factors, such as customers,suppliers,competitors and institutional bodies with

which the organization interacts, influence the behavior of the individual in the


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organization.Ghoshal and Nohria[1]; and Birkinshaw[4] argue that the behaviors of the

individuals are formed by other factors more than just the administrative ones.

Governmental regulations can be stumbling blocks to entrepreneurship [2].Martin [25], mentionssupportiveness of relevant government policies as one of the criteria for evaluating innovation.

Most researchers either explicitly or implicitly agree that the following environmental categoriesof factors influence the entrepreneurial process [9]:

(a) Political factors (e.g., legal restrictions, quality of law enforcement, political stability, andcurrency stability), (b) market forces (e.g., structure of the industry, technology regime, potential

barriers to entry, market size, and population demographics), and (c) resources (e.g., availability

of investment capital, labor market including skill availability, transportation infrastructure, andcomplementary technology).

Domestic or rural culture could be another exogenous barrier.Winogrodzka [40], states that the

main barrier of entrepreneurship development in rural areas is miss adapting the revitalizations'programs to the specific cultural conditions. Most of the industrial towns, with most of the

factories in Iran are in the suburbs or outskirts of cities, and have villagers as workers.

3. Conceptual Framework

Looking at only the major components, one can formulate a conceptual model describing theinterrelationships among exogenous and endogenous barriers (Figure 3).

According to the conceptual framework, most of the barriers are the endogenous ones, since the

inappropriate organizational culture, strategy, management, values, policies, structure,

compensation methods, etc., which are to some extent in management control could have more

sever impact on intrapreneurship than the exogenous barriers, which are completely or mostly outof management control .Definitely, more flexibility could be implemented in the organization

than the environment.

4. Methodology

15 questionnaires were distributed among the employees of Work and Social Affaires

Organization, which is a governmental organization in Iran for the promotion of

entrepreneurship. The demographical data have been shown in table1 .

The prioritized list of barriers to intrapreneurship was compiled and simplified, as summarized in

conceptual framework. This list was the basis of questions on barriers. Then 30 questionnaires

were filled and the reliability of the questionnaire was calculated by Cronbach's Coefficient inSPSS, which was 0.7137, and more than 0.7, so it was acceptable. The omission of none of the

questions helped the increase of the coefficient, so no question was omitted.

Insert Table 1 here .Demographical data of the respondents.

The questionnaires were collected and analyzed by SPSS.As mentioned before, this study's maingoal is to understand the frequency of barriers to intrapreneurship in Iran's atmosphere.So, the

frequency of the respondents answers, were derived and shown in figure 4.

Insert Figure 4 here.Frequency of barriers according to respondents.


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5. Conclusion

Figure 4, shows the frequency of the barriers in Iranian organizations according to the

respondents. Therefore, the most important barrier for intrapreneurship in Iran, according to therespondents is the tension between the values of the individual intrapreneurs and the

organization's values.The other frequent barrier is the domestic culture in Iran, which is notappropriate for intrapreneurship.Other barriers, to some extent have near frequencies. The result

is interesting, since culture and values are interrelated concepts, and both of them are strong

barriers to intrapreneurship in a country like Iran. It is noteworthy to mention that the presentstudy is a survey and hence reflexes the idea of those who are in charge of intrapreneurship in

that country. Definitely, there could be some other domestic barriers, which the writers of the

present study did not focus on. Barriers like, economic problems , sanctions, low education aboutintrapreneurship,lack of job security,etc.,which need the investigation of the future researchers to

define the barriers to intrapreneurship more locally .To overcome the cultural and value-based

barriers, we recommend that each large firm in Iran, make an Intrapreneurship Committee totravel to successful countries' intrapreneurial firms and get familiar to the organizational culture

in these firms , and after coming back to Iran, hold some sessions with the top management to

redefine the cultural norms of the organization,and accommodate the norms with local conditionsand try to make the values of organization as close as possible to the values of prospective

intrapreneurs .The other cultural variable, which is hard or impossible to change for theorganization is the domestic culture of the country. It is agreeable for those firms that want to

overcome this barrier, to change their head office to another country, to be able to deal with

international environment and culture which promotes competition and intrapreneurship, moreeasily.


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Figure 10. Simplified schematic of origion of innovation barriers[27].

Figure 2.Conceptual illustration of barriers resulting from tension between organizationand entrepreneur's values and needs at different stages of entrepreneur's growth pattern

[27].


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Figure 3.Both endogenous/internal barriers and exogenous/external barriers are in work to block

intrapreneurship.

Exogenous Barriers1. Environmental

Factors

CustomersSuppliers

Competitors

2. Governmental

Regulations

3. Domestic Culture

Endogenous Barriers

1.Intra-Organizational InnovationBarriers

Lack of

opportunityperception

Insufficient

intrapreneurs

Organizational

obstacles

Resistance to

change

Tensionbetween

intrapreneurs'an

d organization's

values

2. Organizational Barriers

Bureaucratic structure

Organizational

policies

Nature of large

organizations

Inappropriate

compensation

methods

Organizational culture

Barriers to

Intrapreneurship


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Figure 4.Frequency of barriers according to respondents.


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Cumulative PercentValid PercentPercentFrequencyValid

Demographical

Characteristics

86.786.786.713

13Male

100.013.313.322Female

Sex

100.0100.015Total

13.313.313.323

20.06.76.714

46.726.726.745

66.720.020.038

73.36.76.719

80.06.76.7110

86.76.76.7111

93.36.76.7112

100.06.76.7115

100.0100.015

Total

Experience

6.76.76.7125

13.36.76.7127

26.713.313.3228

40.013.313.3229

46.76.76.7130

53.36.76.7132

60.06.76.7133

66.76.76.7135

Age


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80.013.313.3236

86.76.76.7140

93.36.76.7143

100.06.76.7149

100.0100.015Total

20.020.020.03Diploma

66.746.746.77Associate

93.326.726.74Bachelor

100.06.76.71Masters

100.0100.015Total

Educational background

Table 1.Demographical data of the respondents.

5.amir forouharfar-understanding barriers to intrapreneurship inwork and social affairs governmental

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