The paper argues that entrepreneurship in an existing organization
(intrapreneurship) is the outcome of the interlocking entrepreneurial
activities of multiple participants, entrepreneurship is distributed
throughout a structure, not mainly the strategic apex, and appropriate
organizational settings are required to promote entrepreneurial behavior
among organization members. The paper distinguishes among three
types/roles of intrapreneurship in the nonprofit sector: social/human
service, fund raising, and venture. A set of research questions is
tested empirically to assess organizations' environment in
fostering entrepreneurship. Survey result (219 nonprofit managers) shows
that nonprofits are likely to develop organizational characteristic
attributes of entrepreneurship and that certain organizational
characteristics are associated with intrapreneurial behavior as measured
by organization members' risk-propensity. Also, the result shows
that aspects of organizational culture and management style (more
controllable factors) seem to have more influence than the
organizational structure and resource aspects (less controllable).
Nonprofit managers are advised to establish organizational culture and
context of receptive conditions for new ideas and the possibility of
failure. This study fills a research gap of how nonprofit organizational
characteristics foster entrepreneurship or retard it.
There is a strong argument that entrepreneurship and innovation are
essential characteristics of successful nonprofits (e.g., Brinckerhoff,
2000; Hisrich et al, 2000; Kanter, 1999). Nonprofit entrepreneurship is
emerging as an innovative approach for dealing with a dynamic and
competitive environment. The magnitude of environmental adversity
(shrinking resources, competition) and social and economic changes
create pressure on these organizations to adopt a model of nonprofit
entrepreneurship as "a proactive style of management through which
leaders of nonprofit organizations seek to implement change through new
organizational and programmatic initiative" (Young, 2001, p. 218).
While the traditional role of nonprofit entrepreneur is about
start-up activity and new nonprofit creation, not all entrepreneurial
roles fit this mold (Shane & Venkataraman, 2000). Many individuals
are attracted to the nonprofit mission of an existing organization and
its working environment and to the idea of helping in building or
revitalizing a failing organization. Frumkin (2002) asserts that the low
rate of nonprofits closure is explained by entrepreneurial activities of
individuals who join existing nonprofits. Low rate of nonprofits failure
by its turn may contribute to the widely observed expansion of the
The concepts of social entrepreneurship and social enterprise have
been rapidly emerging as an integrating theme for entrepreneurship
models or roles in achieving social mission (Renz, 2001; Johnson, 2000;
Leadbeater, 1997). Social entrepreneurial activities blur the
traditional boundaries between nonprofit and for-profit sectors and
emphasize hybrid models for social and economic activities (Young,
2002). Broadly defined, "social entrepreneurship" refers to
activities encouraging more entrepreneurial approaches in the nonprofit
sector in order to increase organizational innovation and effectiveness
(Thalhuber, 1998). According to this view, social entrepreneurship is a
means by which nonprofits enhance the entrepreneurial abilities of their
Several authors have argued that entrepreneurship in an existing
organization is the outcome of the interlocking entrepreneurial
activities of multiple participants, and that hospitable organizational
settings and environmental opportunities are required for
entrepreneurial behavior (e.g., Shane & Venkataraman, 2000; Sykes
& Block, 1989).
Thompson et al (2000) note that the process of nonprofit
entrepreneurship often happen when entrepreneurial people are linked
with the visionary idea, appropriate autonomous organizational setting,
and opportunity to act. Current studies of entrepreneurship in an
existing organization have focused on the interaction between
individuals' characteristics and internal and external environments
(e.g., Walley & Taylor, 2002; Busenitz et al, 2000).
This paper focuses on organizational characteristic attributes of
intrapreneurship and how they influence nonprofit entrepreneurship. This
study assumes that entrepreneurship is distributed throughout a
structure, not mainly the strategic apex (the board and CEO/ED). The
paper distinguishes between multiple roles/types of intrapreneurial
participants and examines organizational characteristics (culture,
structure, and management style) that seem to facilitate and develop
nonprofit entrepreneurship. Specific research questions are outlined and
tested empirically. Organizational setting will be assessed using a
survey originally designed to assess an effective organizational
intrapreneurial environment in the private sector.
Despite numerous discussions of nonprofit entrepreneurship, the
writers are not aware of empirical research that examines organizational
characteristics that seem to enhance and facilitate internal
entrepreneurship. In their recent literature review of entrepreneurship
in the nonprofit sector, Hisrich et al (2000) identify this research gap
and have argued for the need to know how nonprofit organizational
characteristics foster entrepreneurship or retard it (p.332).
Exploration and research on this area seem to be needed at both of the
theoretical and application levels.
Similar to all entrepreneurs, nonprofit entrepreneurs are energetic
individuals, with a higher than average tolerance for risk, uncertainty
and desire for autonomy, and a willingness to pursue their goals in
spite of initial obstacles or lack of resources values (Waddock and
Post, 1991; Doig and Hargrove, 1987).
As illustrated in the literature, the concept of intrapreneurship
is almost synonymous with innovation initiated and implemented by
employees (e.g., Ucbasaran et al, 2001; Zahara & Pearce, 1994).
Intrapreneur has also been referred to as the "in-house
entrepreneur" (Pinchot, 1985), the "idea manager"
(Tropman, 1984), and the "corporate entrepreneur" (Carrier,
Nonprofit intrapreneurship may emerge spontaneously if the
situation permits. Burgelman (1983) found that intrapreneurship consists
of autonomous behavior by employees that emerge as a result of belief in
mission, personal inclination, and internal opportunity (in terms of
availability of untapped resources or organizational structure
opportunity). On their study of intrepreneurship in nonprofits, Neilson
et al (1985) and Quinn et al (1988) characterize this role as being
involving promoting innovations in a rapidly than slowly evolving
environment. "In these situations, it is often not the boss, but
someone in an odd corner of the organization--a champion for some
technology or strategic issue--who takes on the entrepreneurial
role" (Quinn et al (1988, p.531). While these two last studies
focus mainly on large nonprofits, this sort of entrepreneurial behavior
is found to be observed as well in medium and small sized organizations
(e.g., Carrier, 1996; Zahara & Pearce, 1994).
Also, Nielsen et al (1985) found that part of the intrapreneurial
internal role is to resolve conflict between structural differentiation
and integration in the organization. They cite for-profit, nonprofit and
public organization cases that show this conflict can be solved by means
of intrapreneurial activity. In this case, the intrapreneurial role is
to resolve conflict between the need for integration of the total
organization and the need for flexibility/innovation of different
programs/units and to make sure that secondary activities satisfy or are
integrated into the organization's mission and strategic needs.
This can be an important function if the nonprofits have commercial
activities. This integration function also imply that some
intrapreneurial roles required the skills or the involvement necessary
for the administration.
Ucbasaran et al (2001) have argued "... entrepreneurship is
not necessarily a single-action event. Entrepreneurs, among themselves,
may display differing characteristics and patterns of behaviour, which
warrants research into different types of entrepreneurs" (p.61).
Some of these intraprenuerial roles are briefly outlined below.
NONPROFIT INTRAPRENEURSHIP ROLES/TYPES
In comparison to the private sector, nonprofit entrepreneurs seem
to be motivated more by a wider range of personal intrinsic needs and
social desires. Thompson et al (2000) note that the motivations of the
nonprofit entrepreneurs are not homogeneous and go beyond profit. Young
(1985) studied 11 human service organizations with a focus on
entrepreneurship. He found that motivations vary widely to include the
fulfillment of strong social, religious beliefs or causes, the
artistic-like urges to build and create, the seeking of status or inner
satisfaction from professional achievement and accomplishment, the
psychological need to test oneself and prove that one is capable of
carrying off a major project or program, the pursuit of innate desires
to help, teach, or serve the less fortunate members of society, the
intellectual satisfaction from shaping and implementing new ideas, the
achievement of personal recognition, power, or social status, the desire
for autonomy and independence (to be one's own boss), the
maternal-like satisfaction of parenting an enterprise and seeing it
grow, and the material security and gain.
The literature shows that nonprofit entrepreneurs are found to
assume a variety of types or roles for a wide range of personal and
organizational reasons. This section attempts to distinguish between
three nonprofit entrepreneurship roles or types. Differences in terms of
personal characteristics and purpose for change/innovation are briefly
emphasized in order to sharpen the distinction. The purpose of the
following discussion is not to develop a typology but rather to build
the argument that entrepreneurship is distributed throughout a structure
and that nonprofits are entrepreneurial and innovative when they display
attributes that facilitate entrepreneurial characteristics and behavior
of the organization's members.
The Social/Human Service Role
Social entrepreneurs are creative thinkers, even more than other
entrepreneurs. They create a new social concept or a new way of
providing an existing human service. The social or human service
entrepreneurial role involves coping effectively with environmental
complexity and the dynamics of social changes and customers' needs
(e.g., Heimovics et al, 1993) and it requires the ability to deal with a
"complex social" problem by converting it into a specific
social value "vision" (Waddock and Post, 1991).
The Fund Raising/Charity Role
While chief executives and trustees are usually involved in fund
raising activities, the nonprofit organization is still in need of a
fund raising or philanthropy entrepreneur (Reis & Clohesy, 2001).
With a new idea or concept, the fund raising entrepreneur is able to
raise public consciousness and marshal support. This is especially
important in a time of social crisis or economic down turn, or when the
range of options is smaller due to organizational structure and
charitable purpose constraints.
As characterized in the literature, this role seems to require
artistic and creative types of individuals who are motivated by
human/social crisis situations (e.g., Reis & Clohesy, 2001). In
their study of popular fund raising cases (e.g., Hands Across America
and Partnership for Drug Free America), Waddock and Post (1991) also
found that leading fund raisers act to perform boundary-spanning and
coalition-building activities. Fundraisers look for new resources and
networks and they provide knowledge of external conditions and valuable
advisement services to the organization. If we accept the idea that, in
comparison to other types, fund raiser entrepreneurs may not be required
to have the skills or the involvement necessary for the administration,
then it is safe to suggest that this is a role that fits volunteers very
The Commercial Venture Role
This role is similar to the venture strategy in terms of
revenue-producing activities. Hofer and Sandberg (1987) characterize
successful venture entrepreneurs as having a detailed knowledge of the
key success factors in their businesses and the ability to identify
potential venture opportunities. Nonprofits need this type of
entrepreneur when it is necessary to raise revenue that can be used to
finance their nonprofit operations. Federal and state funding for
nonprofits decreased 23% in the 1980s (Salamon, 1989) and continued to
decline in the 1990s (Mcleod, 1997). Hisrich et al (2000) consider
commercial venture as an important category of entrepreneurial activity
in the nonprofit sector.
Also, as explained in the literature, a venture entrepreneur is the
person who has innovation and growth as main objectives (e.g., Carland
et al, 1984). However, the venture expansion of a nonprofit organization
should be gradual in order to avoid disruption of core operations,
threats to their legal and tax status, or risks to their charitable and
financial conditions (Dees, 1998). The commercial entrepreneurial
problem includes how to locate and exploit new opportunities while
simultaneously maintaining a firm core business/mission.
The next section deals with organizational characteristics that are
found to be important to foster intrapreneurship. Research issues are
ORGANIZATIONAL CHARACTERISTICS NEEDED TO FOSTER INTRAPRENEURSHIP
Entrepreneurial organizations are those which are willing to accept
uncertainty and the possibility of failure for the purpose of gaining
benefit from innovations (Firestenberg, 1986). Research has attempted to
identify internal organizational factors that facilitate
entrepreneurs' personal characteristics, such as risk-taking
propensity, internal locus of control, and desire for autonomy and
motivate them to engage in innovation and entrepreneurship. While the
published research contains a wide variety of these factors, some
consistent elements are found to include the elements of management
practices, organizational resources and competencies, organizational
culture, organizational structure, and organizational strategy (e.g.,
Busenitz et al, 2003). Subsumed under each of these elements are
assortments of organizational policies and procedures that may be
established by management. Given the breadth of the concepts of
organizational cultural and structure, scholars have addressed them from
Some of the nonprofit organizational characteristics that are
assumed to be a good potential environment to foster entrepreneurship
include employees' participation (Durst & Newell, 2001), an
adaptive and learning internal environment (Weeler, 2000), and a flat
and flexible structure with a culture of trust and creativity
(Leadbeater, 1997). In her study of human service organizations and
their adaptation strategies for the current nonprofit environment,
Alexander (2000) found that the hierarchical model of traditional
command and control has limited applicability because nonprofits are
usually smaller, leadership has a weaker authority, and the composition
of employees is by large professionally licensed, highly mobile and
peopled by volunteers. Management style is more participative and
In addition, the growing interest in the process and practice of
corporate entrepreneurship or intrapreneurship in the private sector has
produced several frameworks in fostering entrepreneurship (e.g., Covin
& Miles, 1999; Hornsby et al, 1993; Covin & Slevin, 1991). Covin
and Slevin (1991) propose a conceptual model of a corporate
entrepreneurship process that includes individual, organizational and
environmental factors and their interactions. Kuratko et al (1990)
present a multi-dimensional scale, to assess a hospitable working
environment, that includes the factors of management support for
innovation, flexible organizational structure, risk taking
encouragement, and time availability to pursue ideas, and resource
availability. This last framework is adopted in the current study.
Literature in the nonprofit sector has recognized the existence of
entrepreneurship as part of life or intrinsic force in the nonprofit
sector (e.g., Drayton, 2002; Frumkin, 2002; Hisrich et al, 2000). For
example, Frumkin (2002) argues that nonprofits are vehicles to bring
about change for entrepreneurs. Hisrich et al (2000) assert that social
and human service organizations are publicly supported and explicitly
designated with their own tax code for the purpose of bringing about
change and innovation (p.323). Young (2001) cites the following
developments in the nonprofit sector as evidence of entrepreneurial
effort : (1) over the last two decades, the nonprofit segment of the
American economy has grown rapidly in comparison to the government and
business, which suggests the presence of considerable entrepreneurial
effort, (2) the nonprofit segment shows a steady entry of new
organizations and is populated largely by young organizations, which
reflects nonprofit entrepreneurial behavior in addressing unsatisfied
social, health, and other needs, forming their own organizations,
mobilizing resources, and introducing new programs and services, and (3)
missions of many nonprofits are framed in terms of introducing change,
which exhibits the entrepreneurial character. That said, we suspect that
nonprofit organizations in general would exhibit receptive
Furthermore, using risk-taking propensity of employees in the
public sector as a dependent variable, Moon (1999) found that flat
structure, low level of formalization, low level of centralization, and
high level of organizational trust between members and leaders tend to
promote a high level of risk-taking propensity and entrepreneurship of
organization members. Hisrich et al (1996) found that risk-taking and
persistence are two very important personal characteristics associated
with innovation in the nonprofit sector.
Considering the reviewed literature, at least two propositions are
1. With regard to the responsiveness of nonprofits to encourage
employees' entrepreneurships, nonprofits, in part due to a range of
flexible structure, procedures and policies and autonomy, are likely to
develop organizational attributes of intrapreneurship.
2. Nonprofit organizations that are characterized by more
organizational attributes of intrapreneurship are likely to promote more
risk-taking behavior than nonprofits with fewer characteristics.
However, due to the exploratory nature of this study, analyses were
structured around the following fundamental research questions rather
than specific hypotheses:
1. What are relevant organizational characteristics that foster
2. How do members of nonprofits respond to these characteristics?
3. To what extent do organizational characteristics explain the
variance in the members' intrapreneurship behavior?
The paper will next explore these research questions. Results and
implications will then be discussed.
To gather a sample, we looked in the National Directory of
Nonprofit Organizations, published by the Taft Group, in the New York
State. Hospitals, schools, and religious organizations were not included
in the study. Each company selected was assigned a number starting with
one. The first 457 companies with even numbers were selected.
The instrument used in this study is the intrapreneurial assessment
instrument (IAI) developed by Kuratko et al (1990) to identify the
dimensional structure of organizations in terms of its ability to
support intrapreneurial activity. This instrument focuses on factors
which are essential in developing a perceived entrepreneurial
environment for managers and employees. We considered this survey since
it is already been used in the private sector and it is comparatively
applicable as will to smaller firms (e.g., Covin & Slevin, 1991).
This is an important consideration since nonprofits on the average are
smaller than for-profit organizations (Kushner & Poole, 1996)
The original IAI consists of 28 descriptive statements constructed
around five factors: (1) management support (recognition and
encouragement of innovation/innovators, etc.), (2) organizational
structure (cross functional teams, unrestricted communication, flexible
job description, etc.), (3) risk-taking encouragement and tolerance for
failure (risk-takers are recognized and encouraged, mistakes are
permitted, etc), (4) time availability (e.g., slack time to develop
ideas and deal with long term problems), and (5) reward (for
risk-takers) and resource availability (for new ideas/projects, etc).
Respondents were asked to indicate how descriptive of their work areas
or the organization they feel the items are on a five-point Likert scale
(1 = Not at all descriptive, 5 = Very descriptive).
Companies selected were mailed three questionnaires each, with
return envelops, to the executive director. Executive directors were
asked to fill one of the questionnaires and to distribute the other two
to top- and lower-level management. In their review of studies of
entrepreneurial firms, Lyon et al (2000) find that management
perceptions of firm-level variables such as strategy and structure are
often used and that several studies often rely on the responses of a
single key player to represent the views of the whole firm.
We received 247 responses out of total 1371 questionnaires for a
response rate of 18.02 percent. Missing data reduced the usable sample
size to 219. The components of managerial positions in the final sample
include 72 (32.8%) president/CEO/ED, 65 (29.9%) V.P./director/top
management, 43 (19.6%) associate director/middle level, and 39 (17.8%)
program manager/counselor/first level. Average seniority with the
current organization is 7 years. Range of organization size is between 5
to 3033 full time employees and the average is 96. Almost sixty percent
(59.8%) described their organizations' mission as social and human
service and forty percent (40.2%) as other types of services
Fifty-nine percent (59.4%) of the sample reported they had
previously worked for business firms before they moved to their current
nonprofit organizations. Almost thirty-nine percent (38.7%) of these
individuals had experienced a salary decrease as a result of joining
nonprofits. Thirty percent (29.8%) had experienced a salary increase.
Table 1 shows other demographic characteristics. Table 1 also shows
the sample responses to statements regarding how they get involved with
the current organization.
In this study, we attempted to determine the impact of
organizational setting on entrepreneurship in terms of individuals'
risk-propensity behavior. As depicted in the literature, the propensity
for risk taking is an essential element in the entrepreneurship process
and it refers to a variety of financial, social and psychological risk
associated with the pursuit of opportunities, change, new ideas or
innovations (e.g., Tropman, 1989; Quinn, 1985).
One way to deal with the first question (What are relevant
organizational characteristics that foster employees'
intrapreneurship?) is to examine the factor structure of the IAI
instrument and compare it with Kuratko et al's (1990) findings in
the private sector using the same instrument. The results of the
principle components factor analysis, based on a Varimax rotation,
suggested the hypothesized five factors. The resulting factors, item
abbreviations, factor loading, and alpha reliability are in Table 2. The
analysis was done by using SPSSx. Similar procedures were followed in
Kuratko et al's (1990) original study. Our resulting factors are
risk-taking encoutagement (five items), management support for
innovation (five items), flexible organizational structure (three
items), time availability (three items), and reward and resource
availability (two items).
Essentially, one management support item was integrated into the
risk taking encouragement factor and one structure item was integrated
into the management support factor. Total number of items was reduced
from 28 to 18. The dimension of reward and resource availability does
not include many of the items that are in the original survey. It
includes only two items ("lack of funding" and "problems
with the budget"). The rest of the items were reduced from the
Kuratko, et al's (1990) original study suggests a three-factor
solution instead of the hypothesized five factors scale. Their
three-factor solution includes management support (nine items),
organizational structure (six items), and reward and resource
availability (six items). According to their result, the time
availability factor was integrated into rewards and resource
availability while the risk-taking factor was integrated into the
management support factor. Their number of items was reduced from 28 to
21. Our resulting five factors (Table 2) provide empirical evidence as
to the existence of certain structural dimensions that are proposed to
To analyze organizational characteristics' effects (How do
members of nonprofits respond to these characteristics? To what extent
do organizational characteristics explain the variance in the
members' intrapreneurship?), a least squares regression analysis
was conducted. There were six independent variables that include: (1)
Risk Taking Encouragement, (2) Management Support, (3) Organizational
Structure, (4) Time Availability, (5) Reward and Resource Availability,
and (6) Employees' Participation. The first five measures were
composite indices created from factor analysis listed in Table 2.
Employees' participation measure was added since the original scale
(Kuratko et al, 1990) does not include participation as a relevant
aspect of organizational setting. Several studies have reported greater
emphasis by nonprofits on providing opportunities for employees'
participation (Durst and Newell 2001; Montes, 1997; Siciliano, 1997).
Our survey asked respondents to indicate their agreement or
disagreement, from Not at all descriptive (1) to Very descriptive (5),
on the following statement "Employees participate in most decisions
that directly impact them".
The dependent variable was a behavior statement regarding
organization members' propensity for risk taking. Respondents were
asked to indicate their agreement or disagreement, from Not at all
descriptive (1) to Very descriptive (5), on the following statement
"Most employees in this organization are not afraid to take
risks". A similar statement was used by Moon (1999) as a dependent
variable. Table 3 lists the independent and dependent variables and
their mean, standard deviation, and correlation coefficients.
Table 4 displays the result of the regression model. The [R.sup.2]
is .225 and the factors of risk-taking encouragement (p-value = 0.00),
participation (p-value = 0.00), and management support (p-value = 0.098)
are statistically significant. The three other factors of organizational
structure, time availability, and availability of resources are not
The results in tables 3 and 4 shows that nonprofits that are
characterized by more organizational attributes of entrepreneurship are
likely to promote more risk-taking behavior than nonprofits with fewer
The results show that if nonprofits develop organizational
characteristic attributes of intrapreneurship, these attributes are
likely to promote entrepreneurial behavior. The result is, in fact, more
positive than reported by Kuratko et al (1990). Our result shows more
support for the dimensions of risk-taking and time availability. Table 3
shows the factors of participation, risk taking encouragement and
management support for innovation as having above average values. There
is no reason to doubt the sampling procedure that followed by the study.
The response rate was not high (almost 18%), however the responding
organizations were quite diverse in terms of mission, size, and locale.
The regression model (table 4) suggests that the model is modestly
able to explain a little over 20 percent (adjusted [R.sup.2] = .203) of
members' risk-propensity (the dependent variable). Tables 3 and 4
show that the factors of tolerance for mistakes or risk-taking
encouragement, employees' participation, and management support for
innovation can be significant predictors of employees' risk
propensity by themselves and in combination with the other factors
(McNabb, 2002). Overall, these three factors are more organizational
culture than structure aspects.
Table 4 shows that organizational structure and time and resource
availability are not significant. These factors are still important by
themselves (table 3), but not in combination with the other factors
(McNabb, 2002). Table 3 shows moderate-to-high correlations among all
Individual characteristics may lead entrepreneurial behavior if the
internal conditions facilitate this behavior. Entrepreneurs'
personal characteristics may also be enforced by the existence of an
internal hospitable environment. Scholars argue that, similar to other
entrepreneurs, nonprofit entrepreneurs are energetic individuals, with a
higher than average internal locus of control, need for achievement,
tolerance for risk, and desire for autonomy and a willingness to pursue
their goals in spite of initial obstacles or lack of resources values
(e.g., Diaz & Rodriguez, 2003; Waddock & Post, 1991). While they
were not tested in the current research, personal characteristics such
as tolerance for risk, achievement motivation, locus of control are
found to be related to risk-taking behavior (e.g., Gatewood et al, 1995;
McClelland, 1987). For example, participation and flexible job design
are expected to empower employees and encourage their desire for
autonomy and internal locus of control.
The next section will attempt to integrate the earlier discussion
of intrapreneurial roles/types with the empirical part of the study.
LINKAGE BETWEEN ENTREPRENEURIAL TYPES/ROLES AND CONTEXT
The earlier part of the paper argues that nonprofit
entrepreneurship is typically the result of the interlocking
entrepreneurial activities of multiple participants and that the roles
of entrepreneurs are to provide the required diversity. The paper
differentiates between social/human service, commercial venture, and
fund raising intrapreneurships. As argued by Moon (1999) and Hornsby et
al (1993), dimensions of organizational characteristics are each
significant in different ways to the entrepreneurs' characteristics
(e.g., risk-taking, locus of control, autonomy) and behavior.
Some linkages or testable relationships between entrepreneurial
types/roles, personal characteristics and context are proposed here to
guide future research based on our framework. The following is few
illustrations that partially use some of our empirical results.
For example, in a situation where a nonprofit needs to develop a
new commercial venture (venture entrepreneurship) or where it is
necessary to raise funds that can be used to finance their nonprofit
operation (fund raising entrepreneurship) , high levels of management
support (in terms of encouraging self-appointed innovators, innovators
to bend rules and rigid procedures, and employees to generate new ideas
without regard for crossing departmental or functional boundaries) and
tolerance for mistakes (in terms of allowing calculated risk and that
mistakes are defined as learning experiences) are suggested. Individuals
with high tolerance for uncertainty and/or internal locus of control are
expected to be involved in risk-taking and entrepreneurial activity.
Another illustration is that in a situation where a nonprofit deals
with a "complex social" problem, it is recommended that low
levels of job descriptions, high levels of slack times and high levels
of employees' participation be provided to employees. These will
enhance developing ideas and will give the social and human entrepreneur
more room to plan to target innovation areas. Individuals with high
desire for autonomy and tolerance for uncertainty are expected to be
involved in risk-taking and entrepreneurial activity.
This paper attempts to identify nonprofit internal environment that
facilitates and motivates employees to engage in entrepreneurship. The
result of the empirical data shows that the elements of risk-taking
encouragement, employees' participation, management support for
innovation, structure, and time and resource availabilities are related
to entrepreneurship as measured by employees' risk-taking
propensity. This should be important to management since change and
innovation are associated with risk propensity. Several researchers have
asserted that individual differences in the willingness to bear risk
influence the decision to exploit entrepreneurial opportunities (e.g.,
Shane & Venkataraman, 2000).
In our nonprofits sample, the organizational culture aspects seem
to have more direct impact on entrepreneurship than the organizational
structure and resource aspects. While management may not be able to
change organizational structure or to control its resources, they may
have more control over organizational culture and management style by
establishing, by means of policies and procedures, of receptive
conditions for new ideas and the possibility of failure. This should
attract skilled and talented volunteers and staff. As Fisher (2004)
noted, the maturing of baby-boom business people is a huge potential
energy boost for nonprofit and the real question is weather nonprofits
are ready for the influx of new talents. Table 2 shows the sample
response to the question of how they get involved with current
organization. Respondents selected the reason of the working environment
(almost 67%) more than other reasons, including organization mission.
Given the diversity among entrepreneurs, perhaps future studies
should try to investigate whether certain organizational contexts are
more associated with or encouraging a specific type or role and to
establish linkages between types and various contexts, on the one hand,
and measures of organizational performance, on the other.
Some testable statements that include personal characteristics,
organizational characteristics, intrapreneurial types/roles were
previously offered to guide future research based on our framework. This
study did not measure actual organizational performance.
Entrepreneurship was measured perceptually in terms of risk propensity.
While this should increase our prediction of the final outcome, it is
recommended that future research may need to include both long-term
measures (outcomes) in addition to short-term measures (internal
perspective). Examples of outcomes include organizational growth
(increased revenue and resources, expansion to new location, etc.) and
social impact (increased the number of client served, expansion of
services, enhance client satisfaction, etc.) (Kaplan, 2001; Alexander,
It is important to acknowledge certain limitations to this study.
The study applies an instrument (IAI) that was based on one firm in the
private sector to our sample of many and different types of nonprofits.
While the study added the characteristic of employees'
participation as another dimension obviously more research is needed to
identify more nonprofit-relevant entrepreneurial contexts.
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Table 1: Sample Characteristics/Profile (n=219)
College degree 40.2
Master degree 46.1
Full time 92.7
How did you get involved with the current organization? Percent (1)
Because of the working environment 66.7
Because of perceived social need 63.9
Belief in the mission 35.6
Because of financial compensation factors 21.0
To start an organization that centers on personal
Others (2) 29.2
(1) Respondents answer more than one category
(2) Many reasons including commuting and convenient working hours.
Table 2: Rotated factor structure (n=219)
Scale 1: Risk Taking Encouragement (scale alpha = 0.7261)
1.Mistakes are rarely given second chances * 0.72
2.Calculated risks are encouraged 0.49
3.Mistakes are defined as failure * 0.72
4.Mistakes are defined as learning experiences 0.64
5.Ideas are not fully developed by original
innovators * 0.54
Scale 2: Management Support (scale alpha = 0.7573)
1.Self appointed innovators receive encouragement 0.55
2.Senior managers encourage bending rules 0.53
3.Top managers are known for their experience with
4.Top management provide sponsorship for innovative
5.Members generate new ideas without regard for
crossing functional boundaries 0.55
Scale 3: Organizational Structure (scale alpha = 0.5988)
1.Job descriptions are of strong concern * 0.67
2.Defining turf is important * 0.75
3.Slack time is given to develop ideas 0.60
Scale 4: Time Availability (scale alpha = 0.6284)
1.Jobs are too structured to think about wider
problems * 0.69
2.Always working with time constraints on job * 0.74
3.Workers find time for long term problem solving 0.55
Scale 5: Reward and Resource Availability (scale alpha = 0.7041)
1.Ideas often die because of lack of funding * 0.81
2.Budgeting process leads to problems with continued
funding for new project * 0.77
* Score is reversed because item is stated in a negative terms
Table 3: Descriptive statistics and correlations of all the variables
Variables Mean s.d. 1
1.Participation 3.68 1.23
2.Risk Taking 3.78 .81 .239 **
3.Management Support 3.46 .84 .320 **
4.Organizational Structure 3.03 .98 .264 **
5.Time Availability 3.13 1.04 .140 *
6.Resource Availability 2.52 1.21 .135 *
7.Risk Propensity 3.68 1.16 .342 **
Variables 2 3 4
3.Management Support .494 **
4.Organizational Structure .451 ** .419 **
5.Time Availability .332 ** .251 ** .415 **
6.Resource Availability .161 * .234 ** .331 **
7.Risk Propensity .375 ** .331 ** .262 **
Variables 5 6
6.Resource Availability .161 *
7.Risk Propensity .148 * .137 *
* p .05: ** p .01
Table 4: Least Squares Regression Results for Risk-Propensity (n=219)
Independent Variables Coefficient p-value
Constant 0.917 .002
Participation 0.222 .0003
Risk Taking 0.362 .0008
Management Support 0.169 .098
Organizational Structure 0.074 ns
Time Availability -0.072 ns
Resource Availability -0.003 ns
Adjusted [R.sup.2] .203
F (Total equation) 10.235 .0000