Strategic management practices and corporate entrepreneurship: A cluster analysis of financial and business services firms in South Africa

Abstract

As emerging economies become more market-based, it is necessary for reformed enterprises to undergo an entrepreneurial transformation at the organizational level in order to adapt to the transitioning institutional environment and maintain competitiveness in both local and global markets. This study combines the research domains of strategic management and corporate innovation by examining the impact of strategic management practices on entrepreneurial orientation (EO). Recognizing the importance of internal business processes that enable firm entrepreneurial behavior, it is hypothesized that higher levels of EO are positively associated with the strategic management practices of (1) locus of planning, (2) scanning intensity, (3) planning flexibility, (4) planning horizon, and (5) strategy and financial control attributes. Cluster analyses and empirical testing take place in an African emerging market context on a sample of 219 financial and business services firms. The results provide support for the positive impact that the different strategic management practices have on EO. A practical consideration is for mangers to leverage the strategic management practices so that the firm’s position on the conservative-entrepreneurial continuum is increased by its propensity to be innovative, proactive, and be willing to take risks when confronted by uncertainty. Key words: Entrepreneurial orientation, strategic management, scanning, planning, controls.