Unpacking the mechanism linking market orientation and corporate entrepreneurship: the mediating role of human resource management strength

Abstract

Corporate entrepreneurship is becoming increasingly important for firms to gain competitiveness in the marketplace. Yet, insufficient knowledge has been accumulated on how to develop entrepreneurial behaviors within firms, specifically how firms are motivated to develop entrepreneurship and what managerial process facilitates the development process. Drawing on the literature of market orientation, human resource management (HRM) and corporate entrepreneurship, we propose a model in which the relationship between market orientation and corporate entrepreneurship is mediated by HRM strength, and hierarchical culture and competitive intensity moderate the relationship between HRM strength and corporate entrepreneurship. Using time-lagged matching survey data obtained from 97 CEOs, CFOs and also 220 employees in 97 Chinese companies, we show that HRM strength mediates the relationship between market orientation and corporate entrepreneurship, and that the relationship between HRM strength and corporate entrepreneurship is stronger when the organizational culture is more hierarchical and the competition is less intensified. Both theoretical and practical implications and limitations of the study are discussed.