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2010 42: 780 originally published online 4 August 2010Administration & Society Younhee Kim

Roles of Organizational CharacteristicsStimulating Entrepreneurial Practices in the Public Sector: The

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1East Carolina University, Greenville, North Carolina

Corresponding Author:

Younhee Kim, Department of Political Science, East Carolina University, Greenville, NC 27858Email: [email protected]

Stimulating

Entrepreneurial

Practices in the Public

Sector: The Roles

of Organizational

Characteristics

Younhee Kim1

Abstract

Unlike the practices of contracting out and privatization, which reduce publicsector involvement and responsibility in service provision, public entrepreneurial

practices may be one of the best ways to improve government performanceand meet citizens’ demand efficiently and effectively. This study examines therelationships between organizational characteristics and public entrepreneurshipin order to provide empirical support for entrepreneurial practices in stategovernments in the United States. The study found that most organizationalcharacteristics influence the entrepreneurial behaviors defined as risk-taking,innovativeness, and proactiveness. The findings suggest that organizationalstructures and strategies in the public sector need to be adjusted to stimulate

entrepreneurial activities and culture through opportunity-driven management.

Keywords

public entrepreneurship, innovativeness, proactiveness, risk-taking, reinventinggovernment

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Kim 781

The virtues of traditional ideas about government have been challenged as

significant changes have emerged in economic, societal, demographic, and

cultural movements. The need to be more competitive in a turbulent environ-

ment demands changes in the role of government, and the public sector has

created innovative ways of structuring and managing government arrange-

ments as a consequence of administrative reform activities. Recent adminis-

trative reforms under the umbrella term reinvention (e.g., the Government

Performance and Results Act and the New Public Management movement)

have been introduced and implemented to improve government performance.

With the goal of performing government tasks effectively, a number of market-

based approaches have been introduced into the public sector, such as priva-

tization, public–private partnerships, outsourcing, and entrepreneurship. Because public management is a multidimensional concept (Walker & Boyne, 2006),

introducing an entrepreneurial framework will provide important insights

into government’s reform strategies.

The form of entrepreneurial government is introduced as a means to

market-oriented practices for better services (Borins, 1998b; Boyett, 1996;

Drucker, 1985; Osborne & Gaebler, 1992). The adoption of some beneficial

entrepreneurial practices into the public sector could be a sound approach

for satisfying citizens’ needs for more efficient, more responsive, and lowercost government. Despite the enthusiasm and widespread belief in the appli-

cability of entrepreneurial practices to the public sector, there are still ongo-

ing debates about their suitability to public organizations in terms of core

values of the public sector (Cohen & Eimicke, 2000), such as democratic

theory (Terry, 1998), accountability (Roberts & King, 1996), and structural

and legal restrictions on managerial behaviors (Goodsell, 1993). However,

the main point behind public entrepreneurship is not to make the govern-

ment more businesslike or market savvy. Rather, the idea of public entrepre-neurship is to increase opportunities to take challengeable ideas and find

ways to offer more public choices and benefits, providing high-quality ser-

vices to citizens.

Unlike privatization or contracting out, which reduces public sector

involvement and responsibility as a significant service provider (Morris &

Jones, 1999), market-based practices like public entrepreneurship “provide a

great many advantages and have important roles to play in public policy and

management” (Bozeman, 2007, p. 7). Thus, adopting entrepreneurial prac-

tices, such as searching innovative opportunities and providing the ability to

be proactive, can improve in-house capacities for contributing to the public

values of sustainability and productivity (Bozeman, 2007) and could be the

best way to resolve recurrent perceptions of less efficient services (Llewellyn


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782 Administration & Society 42(7)

& Jones, 2003). Furthermore, implementing entrepreneurial approaches is

not contradictory to long-established views of the public management’s role

in providing services, being responsible to citizens, and supporting public

values using applicable market practices for efficiency and effectiveness. An

attempt to establish an appropriate balance between entrepreneurial manage-

ment and organizational structures is needed because the public sector lacks

built-in systems for stimulating entrepreneurial arrangements.

Prior research on public sector entrepreneurship has focused on psycho-

logical and behavioral characteristics of individuals, but such research has

been insufficient in terms of the need to understand the very heart of public

entrepreneurship as a systematic mechanism for improving government per-

formance. Individual qualities and motivations are far less important than theinstitutional and collective commitment to public entrepreneurialism (Forster,

Graham, & Wanna, 1996). Little research has been conducted to provide

empirical support for promoting public sector entrepreneurship through anal-

ysis of the effects of organizational factors on three aspects of entrepreneur-

ship: risk taking, innovativeness, and proactiveness. This research seeks to

fill the gap between conceptual arguments about public entrepreneurship and

the empirical realities of entrepreneurial practices by using large-scale survey

data that was specifically designed for assessing public entrepreneurship.Accordingly, after discussing the concept of public sector entrepreneurship

defined in terms of risk taking, innovative, and proactive dimensions, this

study examines the relationships between the organizational characteristics

and public entrepreneurship.

Framing Public Sector Entrepreneurship

Conceptualization

Entrepreneurship is considered to be a driving force of change and innovation

by introducing innovative opportunities to achieve efficient, effective perfor-

mance in both public and private sectors. Entrepreneurial efforts can respond

to changes in the environmental turbulence more promptly and effectively

than other public management models for improving performance (Cornwall

& Perlman, 1990; Covin & Slevin, 1989; Miller & Friesen, 1983). Since the

emergence of inquiry into entrepreneurship in the early 1980s, researchers

have continuously fine-tuned the field of entrepreneurship, focusing on the

concepts of entrepreneurial orientation and opportunities (Kirzner, 1979;

Shane & Venkataraman, 2000), economic growth (Baumol, 1990), firm per-

formance (Covin & Slevin, 1989; Lumpkin & Dess, 1996), new venture




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Kim 783

strategies (Gartner, 1985; Low & MacMillian, 1988), institutional changes

(North, 1990), psychological characteristics of entrepreneurs (Boyett, 1996;

Gartner, 1985), and social network (Aldrich & Zimmer, 1986).

At the organizational level, scholars have researched both entrepreneurial

orientation and entrepreneurial management (Fox, 2005). The term entrepre-

neurial orientation has been used to describe an organization’s commitment

to the intensity of entrepreneurial actions. This approach proposes that entre-

preneurial organizations tend to take risks and search for new business oppor-

tunities proactively more than other types of organizations (Mintzberg, 1973).

Furthermore, the field of management perceives entrepreneurship as an orga-

nizational process that promotes innovation, risk-taking, and proactivity (Miller

& Friesen, 1982), and Drucker (1985) noted that entrepreneurial manage-ment promoted openness to innovation, willingness to change, and creation

of practices of performance measurement.

The phenomenon of entrepreneurship is intertwined with a multifaceted

set of overlapping constructs such as management of change, innovation,

technological and environmental turbulence, and new product development

(Low, 2001). As a result, the notion of entrepreneurship encompasses differ-

ent disciplines, different theoretical frameworks, and different levels of anal-

yses and methodological traditions (Cornelius, Landstrom, & Persson, 2006;Stone, 1992). Thus, entrepreneurship research has been characterized as a

diverse and fragmented field (Davidsson, Low, & Wright, 2001; Gartner, 2001;

Schildt, Zahra, & Sillanpaa, 2006; Shane & Venkataraman, 2000) because of

its multidimensional approaches.

The early period of entrepreneurial government has been connected with

the New Public Management movement, promoting nonbureaucratic mech-

anisms to remedy fundamental problems of traditional bureaucracy. Along

with promotion of entrepreneurial government, the concept of entrepreneur-ship has been attractive to underperforming public organizations. Because of

the unique characteristics of public organizations, the application of private

sector entrepreneurial themes cannot be directly translated into the public

entities. Public entrepreneurship is more than simply being enterprising or

businesslike (Sadler, 1999). Thus, entrepreneurial government can adopt

techniques and efficiencies from the business side whereas bureaucracies are

still functioning within the legal and policy frameworks of the public sector

(Laurent, 2000). Public entrepreneurship is generally defined as a means of

achieving less inefficiency and inflexibility through promoting managerial

improvement and a process of creating value for citizens to exploit social

opportunities (Morris & Jones, 1999). Table 1 introduces the definitions of

public sector entrepreneurship. This study defines public sector entrepreneurship




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as any attempt at creating new opportunities with resulting improvement in

government performance characterized by risk taking, innovativeness, and

proactiveness.

Table 1. Definitions of Public Sector Entrepreneurship

Sources Definition

Bellone & Goerl (1992) Be participatory or one where the citizenryhave greater opportunities to participatein the designing and delivery of theirpublic goods and services (p. 132).

Carpenter (2001) The incremental selling of new programideas (p. 30).

Drucker (1985) Perceptiveness to change (p. 25).

Edwards, Jones, Lawton, &

Llewellyn (2002)

Driving the process of utilizing the energy

and creativity of the community tosupport managers to identify needs andsolutions to meet those needs (p. 1548).

Gansler (2003) The development of separate fee-for-service entities operating within agovernmental agency (p. 37).

Marcias (2000) The risky use of public resources in thecreation of value for the people (p. 6).

Moon (1998) Entrepreneurial role behavior (p. 52).

Morris & Jones (1999) The process of creating value for citizens bybringing together unique combinations ofpublic and/or private resources to exploitsocial opportunities (p. 74).

Roberts & King (1991) The process of introducing innovation— the generation, translation, andimplementation of new ideas—into thepublic sector (p. 147).

Roberts (1992) The generation of a novel or innovativeidea and the design and implementationof the innovative idea into public sectorpractice (p. 56).

Stone (1992) An organizational process involvinginnovation, risk and pro-activity whichresults in a disjuncture from standardoperating procedures and responsesby current systems in order to achievepublic purposes (pp. 31-32).




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Kim 785

Dimensionalities

Several dimensions of entrepreneurial orientation have been suggested in the

entrepreneurship literature. Harbison (1956) linked the modern entrepreneurial

organization, whether privately or publicly owned, to several functions, includ-

ing the undertaking of risk, the handling of economic uncertainty, planning and

innovation, coordination, administration and control, and routine supervision.

Moreover, a commonly accepted definition of entrepreneurship includes the

three dimensions of risk taking, innovativeness, and proactiveness (Collins &

Moore, 1970; Covin & Slevin, 1991; M. P. Miles & Arnold, 1991; Miller,

1983; Morris & Jones, 1999; Morris & Paul, 1987; Stone, 1992). These char-

acteristics could be translated to the public sector because public entrepreneur-ial efforts are intended to revitalize government performance.

Risk taking . Entrepreneurial risk taking entails making a conscious deci-

sion to assume uncertainty of outcomes when new services, products, or pro-

cesses are introduced; thus, risk taking requires an appreciation that “adversity

and uncertainty can be overcome in the quest for better outcomes” (Berman

& West, 1998, p. 346). Risk-taking behaviors are influenced by organizational

target performance, an organizational decision process, and a risk-seeking

organizational culture (West & Berthon, 1997), so mixed positive and nega-tive outcomes connected with financial risks linked to a net loss, service-

based risks linked to new or untried services, and relational risks linked to

rules and political relationships could discourage taking risks, especially in

the public sector, which has been commonly perceived as risk-averse because

of managerial ineffectiveness (Bozeman & Kingsley, 1998). In the public

sector, failures resulting from risk taking are less acceptable because of the

need for accountability and responsiveness, so public employees are inclined

to avoid risky alternatives in decision making (Berman & West, 1998). There-fore, the logic of “the greater the risk, the greater the reward” could not be

easily reproduced in the public sector (Eggers & O’Leary, 1995). However,

the possibility of and tolerance for failure cannot be ignored in the public sec-

tor because it needs to be competitive and flexible for dealing with unex-

pected changes. A risk-taking propensity can continuously contribute to desirable

outcomes of performance in responding to citizen demands, not just to satisfy

the status quo, and can be a common aspect of daily work life for public man-

agers (Bozeman & Kingsley, 1998). This study defines risk taking in public

entrepreneurship as the willingness to pursue risky alternatives and a toler-

ance for minimal failure on service-based risks.

Innovativeness. Environmental turbulence requires public organizations to

take innovative approaches to resolve emerging problems (Berman, 1998).




8/36


Although some public service activities can be transferred to the private sec-

tor through privatization, the more massive public services could not be con-

verted into profit-making enterprises. To provide these nontransferable

services effectively, public organizations need to develop new service strate-

gies and be more innovative in responding to social, technological, economic,

and demographic shifts as opportunities during rapid changes (Berman, 1998;

Drucker, 1985; Holzer & Callahan, 1998; Moon & deLeon, 2001). Although

innovation has generally been defined as the development and/or the use

of new ideas or behaviors resulting in a new outcome for an organization

(Damanpour & Schneider, 2009; Walker, 2008), innovation in the public

sector may not necessarily be associated with invention or creation of new

services and new managerial processes. The concept may be close to “arepackaging of existing concepts to create new realities” (Keys, 1988, p. 62).

Thus, innovation in the public sector may range from the development of new

services and programs to the improvement of managerial processes and

institutional tasks through reconceptualizing existing resources (Morris &

Kuratko, 2002). This study defines innovativeness as the willingness to seek

the adoption of new services and the reconstruction of managerial processes.

As Kanter (1983) suggested, public organizations may follow three steps of

advancing innovation: eliminating structural and practical barriers to flexibil-ity and prompt actions for innovation, providing tools and incentives for

entrepreneurial projects, and developing an entrepreneurial climate.

Proactiveness. Proactiveness defined as an aggressive behavior (Stevenson

& Jarillo-Mossi, 1990) focuses on the future by anticipating and preventing

problems, communicating effectively with internal and external environ-

ments, and preserving implementation of the new process or new product

(Morris & Kuratko, 2002). Organizations can exercise a proactive propensity

to be placed in a more competitive position than others because proactivenessinvolves seizing the initiative in an effort to shape the environment to one’s

own advantage (Lumpkin & Dess, 2001). Proactiveness in the public sector

implies “the active search for creative solutions, service delivery, taking the

initiative to introduce change, implementation, and responding rapidly to

opportunities and employing the best resources, not passiveness or reactive-

ness” (Salazar, 1992, p. 33). Although traditional organizations invariably

respond defensively, proactive public organizations are alert to new opportu-

nities and embrace them. Prior studies found that managers’ proactive atti-

tudes and orientations facilitate the adoption of innovation, development of an

innovative environment, and allocation of resources to acquire and implement

those opportunities (Damanpour & Schneider, 2006; Moon & Bretschneider,

2002). The proactive argument is also similar to the prospector’s system




9/36

Kim 787

suggested by R. E. Miles and Snow (1978), in which public-sector prospectors

would like to search for new market opportunities in response to emerging envi-

ronmental trends. To be more innovative and competitive as an early adopter, a

public-sector prospector could be eager to take risks and be more proactive

than other agencies (Boyne & Walker, 2004). Therefore, this study defines

proactiveness as the willingness to be aggressive for implementing actions in

pursuit of changes and improvement in inefficient organizational settings,

rather than simply responding to events as they occur.

Organizational Characteristics and

Entrepreneurial PropensitiesCharacteristics of the Organizational Structure

Organizational structure significantly influences a public entity’s capacity

to promote entrepreneurial tendency (Cornwall & Perlman, 1990; Slevin &

Covin, 1990). Traditional organizations depend on bureaucratic structures to

ensure that work is efficient by minimizing errors and reinforcing conformity

and control. Contemporary environments, however, are constantly changing

and unpredictable. Public institutions can deliver the demanded services only by being flexible, responsive, and less hierarchical. Therefore, organizations

having entrepreneurial tendencies may respond well to changing structural

conditions because an entrepreneurial organization is inclined to be more

consensual, loosely controlled, and flexible rather than being a mechanical

organization, which is considered more rigid, controlled, and hierarchical

(Slevin & Covin, 1990).

Hierarchy . A hierarchical system is likely to maintain the status quo in

organizations and reduce the probability of change and innovation (Hage &Aiken, 1970). Thus, a less hierarchical organization is likely to initiate inno-

vation and change in organizations. For instance, flat organizational struc-

tures are more flexible to adopting innovative programs and administrative

systems, but more hierarchical layers cause administrative delays, undermine

communications (Moon, 1999), and have greater transaction costs for adopt-

ing risky and innovative services. These conditions could inhibit innovative

decisions and new programs. However, proactive organizations like prospec-

tors tend to be less hierarchical (R. E. Miles & Snow, 1978). As a result, a

higher degree of hierarchy may have a negative effect on risk-taking, innova-

tive, and proactive tendencies.

Formalization. The degree of formalization in an organization refers to activi-

ties that are visible in written documents such as procedures, job descriptions,




10/36


regulations, and policy manuals (Hall, 1996). Formalization enhances an orga-

nization’s stability and accountability by formal devices (e.g., internal rules

and regulations, specific guidelines) designed for preventing unexpected changes,

increasing internal control, and reducing goal ambiguity. It also forces public

employees to follow general patterns of behaviors and hold attitudes and val-

ues for minimizing unexpected circumstances (Ingram & Clay, 2000). On the

other hand, those higher degrees of formalism in the public sector may under-

mine risk taking (Bozeman & Kingsley, 1998) as well as other outcomes of

reforms. Therefore, a higher degree of formalization will generally reduce risk-

taking, innovative, and proactive propensities.

Flexibility . Flexibility refers to the degree of feasible changes possible in

structural and managerial settings. Flexibility allows for greater possibilityof adopting innovative and risk-taking opportunities as quickly as possible

through structural and managerial changes. Bozeman and Kingsley (1998)

argued that having a risk-taking culture requires less rigid structures and

inflexible procedures. In addition, an entrepreneurial organization has similar

features to organically structured organizations that are flexible and less rigid

(Jennings, 1994). Accordingly, public entrepreneurship would be encouraged

by having a higher level of flexibility.

Size. There is no definitive empirical research on the impact of the organi-zational size on cultivating public entrepreneurship. Two contradictory argu-

ments are still discussed to analyze the effect of organizational size in the

public sector. One tenet asserts that smaller organizations engage in better

entrepreneurial behaviors than larger organizations because the latter have

rigid rules and procedures that hinder innovative entrepreneurial activities

(Jennings, 1994). On the other hand, some have argued that larger organiza-

tions may be more entrepreneurial because they are more competitive in

terms of external changes (Schumpeter, 1934) and have more opportunities toaccess extra resources. Given the opposing arguments and mixed empirical

results, this study proposes that organizational size will not be significantly

related to public entrepreneurial tendencies.

Characteristics of the Managerial Structure

The managerial aspect of public entrepreneurship should be able to promote

entrepreneurial hands-on managerial processes and behaviors (Cornwall &

Perlman, 1990), given that managerial characteristics should focus on factors

that influence employees’ empowerment and managerial behaviors for

cultivating entrepreneurial management. Autonomy and participatory deci-

sion making directly affect employees’ empowerment. On the other hand,




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Kim 789

performance-based rewards and specialization influence personal and orga-

nizational behaviors and attitudes for adopting entrepreneurial actions.

Autonomy . Autonomy refers to an independent action or decision making

by an individual or a team intended to bring a vision to fruition (Lumpkin &

Dess, 2001). As the commitment of public managers to public service has

been verified by many studies (Rainey, 1983), the provision of public service

would be motivated by allowing more autonomy for public managers, espe-

cially when services are less routinized tasks. In general, public organizations

have been strictly constrained in the areas of personnel, purchasing, and bud-

geting and accounting (Rainey & Bozeman, 2000) because of legislative and

political oversight and rules, so the magnitude of autonomy discussed here

does not mean offering unlimited and uncontrolled autonomy for public man-agers as it does in private sector practices. Rather, autonomy for public entre-

preneurship may occur on procedural and managerial occasions. Offering

more managerial autonomy would stimulate positive reactions toward risk-

taking (Bozeman & Kingsley, 1998), innovative, and proactive orientation in

the public sector (Forster et al., 1996; Ramamurti, 1986).

Participatory decision making . Empirical research has found that entrepre-

neurial organizations tend to be more participative in decision-making pro-

cesses (Jennings & Lumpkin, 1989) because diffusing the power of decisionmaking to all levels of employees could enhance entrepreneurial actions, espe-

cially for innovative activities (Hage & Aiken, 1970; Miller & Friesen, 1982).

Andrews, Boyne, Law, and Walker (2007) found that employee involvement

in decision making can make executive managers identify opportunities

effectively for better service delivery. Rainey and Bozeman (2000) also asserted

that employee involvement in the policy decision-making cycles is an impor-

tant aspect to increasing work satisfaction. Therefore, participatory decision

making would have a positive impact on encouraging innovative approaches,action-oriented attitudes, and even risk-taking behaviors.

Performance-based rewards. The appropriate use of performance-based

reward systems encourages managers to try more entrepreneurial activities

(Kanter, 1983), but reward expectancy for good performance has been con-

sistently low in public organizations, generally because of rule enforcement

and rigid managerial processes (Bozeman & Kingsley, 1998). Compared to

their private counterparts, who prefer the benefits of monetary rewards, pub-

lic managers tend to place lower value on financial rewards (Sadler, 1999)

and higher value on contribution to others and on “self-sacrifice, responsibil-

ity and integrity” (Rainey & Bozeman, 2000, p. 448). Therefore, performance-

based reward systems offering nonfinancial rewards (e.g., employee recognition

and promotion) and emotional rewards (e.g., self-sacrifice, self-satisfaction)




12/36


could play a significant role in generating entrepreneurial behaviors among

public employees. Assigning rewards based on employee performance rat-

ings in the public sector could lead to innovative and proactive attitudes,

but could also cause public mangers to avoid any nonguaranteed actions

from risky practices.

Specialization. Many studies have argued that professional employees gen-

erally recognize the needs for changes, so that an organization with a high

proportion of specialists could be more innovative (Hage & Aiken, 1970).

Because high levels of professional information and technical expertise cause

a decrease in uncertainty level when risky and innovative opportunities are

introduced in public agencies, higher specialization would contribute to sup-

porting risk-taking (Berman & West, 1998; Moon, 1999) and innovative propensities (Hage & Aiken, 1970). Public managers at the professional level

also tend to be more action oriented when entrepreneurial strategies are

implemented. Thus, higher specialization among employees could result in

positive interactions of all three entrepreneurial attributes.

Characteristics of the Cultural Structure

Cultural characteristics influence the understanding, development, and main-tenance in entrepreneurial organizations of value creation through innovation

and change, commitment and personal responsibility, and emphasis on the

future (Cornwall & Perlman, 1990) for not only employees but also organi-

zations themselves in terms of norms and values. Morris and Kuratko (2002)

further noted that creating an effective entrepreneurial culture is not simply

a matter of creating certain values but a choice among conflicting values. In

this study, organizational culture for public entrepreneurship was focused on

identifying factors that affect organizational missions and identities asdefined by Moon (1999), as well as employees’ commitment and responsibility

(Cornwall & Perlman, 1990). However, accountability, performance objec-

tives, and goal ambiguity factors would have an impact on organizational

commitment to common values and beliefs.

Accountability . Lack of accountability to citizens and managers is a major

obstacle to practicing public entrepreneurship (Morris & Jones, 1999)

because entrepreneurial characteristics identified as “an unwillingness to fol-

low rules and stay within bounds and a preference for action” need to hold

accountability (deLeon & Denhardt, 2000, p. 92). As Bellone and Goerl (1992)

discussed, a strong theory of public entrepreneurship should be supported by a

strong commitment to accountability as a civic-regarding entrepreneurship.

Accountability permits a more efficient allocation of organizational resources




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Kim 791

by lowering transaction costs and increasing the flexibility of decisions, and

it facilitates organizational decisions to search for new alternatives. In the

absence of commitment to accountability, government could easily be

exposed to negative reactions from political entities as well as citizen groups

when entrepreneurial opportunities are concerned. Thus, stimulating entre-

preneurial efforts in the public sector will require higher accountability to

stakeholders.

Goal ambiguity and multiplicity . A widespread assumption of public agen-

cies’ goal ambiguity is generally accepted in the literature (Bozeman & Kingsley,

1998; Rainey, 1993; Rainey & Bozeman, 2000), but studies of the relation-

ship between goal ambiguity and entrepreneurial orientations have returned

different empirical results. One empirical group found that goal clarityenhances the risk-taking and innovative propensities because they allow an

organization to tolerate a higher degree of outcome uncertainty for a certain

expected probability of goal achievement (Bozeman & Kingsley, 1998;

Moon, 1999; Morris & Jones, 1999). However, another group has argued that

goal ambiguity generates more opportunities to develop innovative solutions

and adopt entrepreneurial processes (Sadler, 1999). For public organizations,

goal ambiguity could be an opportunity for the exercise of entrepreneurial

discretion (Begley & Boyd, 1987; Ramamurti, 1986) because public organi-zations simultaneously manage competing demands that are positively asso-

ciated with goal ambiguity (Chun & Rainey, 2005). When objectives are too

strictly developed, organizations tend to be defensive and adopt rigid behav-

ioral patterns (Jennings & Lumpkin, 1989). Ambiguous and multiple-goal

setting in public organizations can provide room for risk-taking and innova-

tive opportunities at the cost of lack of a clear direction. Such ambiguous or

multiple goals, however, have a negative impact on the proactive propensity

because inconsistent objectives do not provide a clear direction when entrepreneurial opportunities are implemented.

Performance objectives. Performance objectives (Ramamurti, 1986) and a

high need for achievement (Shane & Venkataraman, 2000) generally give

rise to more entrepreneurial opportunities to improve government perfor-

mance. Unlike private entrepreneurship’s emphasis on quantitative and

resource-controlled performance, performance objectives for public entre-

preneurship can focus on outcomes-based performance in pursuing public

values, an approach that is similar to a primary characteristic of managing

publicness as argued by Bozeman (2007). Therefore, performance objectives

oriented toward outcomes-based management and administrative effective-

ness could allow for adopting risk-taking, innovative, and proactive practices

in the public sector.




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Characteristics of the Environmental Structure

External government environments have direct implications for searching

entrepreneurial opportunities and implementing their effects (Covin & Slevin,

1991; Davidsson, Low, & Wright, 2001). The operating external environment

of an organization influences the organization’s involvement and capacity to

engage in risky, innovative, and proactive tasks. Most prior studies in orga-

nization and management literature confirm the importance of external envi-

ronments in adopting entrepreneurial behaviors in the public organization

settings.

Political influence. The political environment exercises a critical influence on

public sector management (Nutt, 2006; Wanna, Forster, & Graham, 1996), and public organizations are highly regulated by political entities (Hood, Scott, Oli-

ver, & Travers, 1999). However, such political requirements may not corre-

spond with entrepreneurial practices if these activities do not guarantee

successful outputs and positive electoral consequences (Sadler, 1999). As a

result, an organization under a higher degree of political influence is subject to

greater external control from political authorities, thus limiting the exercise of

entrepreneurial opportunities in general (Moon, 1999). Borins (1998a), how-

ever, argued that political influence has a positive impact on innovative entrepreneurship. Political influence may have a differing impact depending on the

entrepreneurial dimension, for example, a positive impact on innovativeness,

but a negative impact on both risk taking and proactiveness.

Legal liability . Legal practices are generally used for financial and adminis-

trative control in both public and private sectors (Bovens, 2005), but public

organizations have more extensive legal constraints than those of the private

sector. As a result, wide-ranging legal liability has generally caused public

organizations to avoid the possibility of legal obligations resulting from risky,innovative behaviors (Moon, 1999). A high degree of legal liability in the

public sector may limit risky, innovative, and/or proactive practices.

Perceived competition. The reinvention movement in the public sector

applied the idea of competition because it was believed to guide the improve-

ment of “using resources in new ways to maximize productivity” (deLeon &

Denhardt, 2000, p. 92). If an organization recognizes external competition

through comparison with other government agencies or other benchmarking

organizations, it may lead to the adoption of entrepreneurial actions. Morris

and Jones (1999) found that lack of competition among public organizations

was ranked as a serious obstacle to behaving entrepreneurially. Therefore, a

higher level of perceived competition would generate more positive reactions

toward entrepreneurship. Figure 1 presents the conceptual framework for




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Kim 793

hypothesizing the relationships between organizational characteristics andthree entrepreneurial dimensions at the state level (see Appendix A).

Data and Methods

Sample and Data Collection

This study analyzes public sector entrepreneurship using state government

department data in the United States. As a part of the executive structure,

state government departments headed by commissioners have more daily

interactions with citizens than those in the federal government, so each state

has a more detailed written constitution than the federal counterpart to better

serve its residents. Within the state organization structure, a state government

department is a typical type of organization for investigating the common

Structural Characteristics

- Hierarchy- Formalization

- Flexibility- Size

Managerial Characteristics

- Autonomy- Participatory Decision Making- Performance-Based Rewards- Specialization

Cultural Characteristics

- Accountability- Goal Ambiguity & Multiplicity- Performance Objectives

- Political Influence- Legal Liability- Perceived Competition

Public Entrepreneurship

Risk-taking

Innovativeness

Proactiveness

Environmental Characteristics

Figure 1. Conceptual Relationship Framework




16/36


characteristics of state government entrepreneurship rather than executive

offices, divisions, and other special types.

Data were drawn from the public entrepreneurship survey mailed to 957

heads of state government departments in 48 U.S. states, except Alaska and

Hawaii. The self-administered survey questionnaire presented the closed-

ended question format that gives a uniform frame of reference for which

respondents could consider their answers (Weisberg & Bowen, 1977). To

measure the intensity of the respondents’ views, the semantic-differential

approach was used along a 7-point Likert-type scale. Because psychological

research has indicated that respondents can grasp seven distinctions reliably

(Weisberg & Bowen, 1977), a 7-point Likert-type scale is not overly compli-

cated for capturing the degree of agreement or disagreement with an item.The questions were grouped by topic to measure the intensity of a respon-

dent’s analysis concerning structural, managerial, cultural, environmental,

and entrepreneurial practices and organization demographic factors.

Pretesting a survey questionnaire is a vital stage in preparing for a self-

administered survey in order to identify and correct weaknesses, ambiguity,

and invalidity of questions. This research conducted a two-stage procedure

pretest because Converse and Presser (1986) recommend a minimum of two

pretests. The first procedure was a review of the questionnaire draft byfaculty and doctoral students for detecting content validity of measurement

items. After significant changes were made to the questionnaire based on the

critiques and suggestions, the second pretest with a new draft was conducted

with 29 executive MPA students and 17 MPA students.1 The final survey was

redrafted by dropping ambiguous and irrelevant questions in response to the

pretest subjects’ comments and the pretest findings.2

The sampling frame was selected from four geographical regions: Southern

(296 departments in 13 states); Northeast (211 departments in 12 states); North-Central (210 departments in 12 states); and Western (240 departments

in 11 states).3 Of the 957 questionnaires mailed twice to the survey subjects,

334 were returned, including 35 invalid responses.4 The total response rate

was about 34.9% (n = 334) and the valid response rate was 31.3% (n = 299),

with each region represented by a fairly equal number of respondents.

Measures

Public entrepreneurship. Public entrepreneurship is characterized by three

dimensions, which are used as the dependent variables for this study. Risk

taking was measured by computing the factor score of responses to four items

rated on a 7-point scale (1 = very low, 2 = low, 3 = somewhat low, 4 = neutral ,

5 = somewhat high, 6 = high, 7 = very high). The four items derived from




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Kim 795

Morris and Jones (1999) and Bozeman and Kingsley (1998) addressed the

following: the degree of risk-taking propensity, the degree of tolerance for

failure, the tendency for undertaking high-risk projects, and the employee’s

perception on risk taking. The measures of innovativeness evaluated by four

items (1 = very low to 7 = very high) derived from Morris and Jones (1999):

the degree of the overall organizational innovation, the intensity of searching

for new and innovative opportunities, the tendency of emphasizing innova-

tive changes, and the degree of fee-for-service operations. Proactiveness was

evaluated by three items (1 = very low to 7 = very high), which explored the

organization’s tendency to actions: the degree of implementation of new pro-

grams and services in the past 3 years, the tendency of implementing admin-

istrative procedural changes in the past 3 years, and the degree of initiatingnew and innovative opportunities in the past 3 years.

The Cronbach’s alpha coefficients for risk taking and proactiveness were .68

and .72, respectively, but the alpha level for innovativeness was .53. Because the

alpha level of .60 is the minimum acceptable standard (Nummally & Bernstein,

1994), the four items for innovativeness needed to be reconsidered. Within the

innovativeness structure, the inn4 item had a low item–rest correlation of .14,

which is below a minimum acceptable level of .20 (Helfrich et al., 2007), so that

item (the degree of fee-for-service operations) was excluded from the scale.After deleting the inn4 item, the Cronbach’s alpha value for innovativeness was

finalized at the .68 level. For extracting a feasible factor structure using observed

items, this study uses the principal component technique with varimax rotation

(Afifi et al., 2004). Each public entrepreneurial dimension was loaded on one

factor structure with an eigenvalue greater than 1. Although one of four items for

risk taking had a slightly higher unique variance value of .62, it was acceptable

as part of the risk-taking loading due to the acceptable levels of eigenvalues

greater than 1 and the item value greater than .40.Structural characteristics. Hierarchy as a layer of authority and communica-

tion is a common aspect, so the measures of hierarchy are characterized

by this boundary, derived from Morris and Jones (1999) and Rainey and

Bozeman (2000). The heads of state government departments were asked to

rate the degrees of hierarchy through four items (1 = very low to 7 = very

high) used for computing the factor score by varimax rotation: the degree of

multiple layers of authority, the extent of structured channels of communica-

tion, the degree of hierarchical processes for project approvals, and the degree

of required red tape. Formalization was evaluated by three items using a

7-point scale (1 = very low to 7 = very high) in order to investigate the degrees

of written forms derived from Bozeman and Kingsley (1998) and Rainey and

Bozeman (2000). Respondents were asked to identify as following: the extent

of existing organizational regulations and procedures, the level of internal




18/36


strictness by rules and regulations, and the degree of emphasis on written

rules and procedures. Perceived flexibility was evaluated through three items

(1 = very low to 7 = very high) measuring the level of organizational flexibil-

ity in decision making, the extent of organizational integration of new units

or services in the past 3 years, and the degree of experienced organizational

changes within the past 3 years. Organizational size was measured by the

number of full-time employees in each department.

The Cronbach’s alpha levels for hierarchy (α = .73) and formalization (α =

.78) were greater than .70, but the alpha coefficient for flexibility was .50. The

fle1 item (the level of organizational flexibility in decision making) was

excluded to increase the alpha level because fle1 had the low item–rest correla-

tion level of .22. After the fle1 item was deleted, the Cronbach’s alpha coeffi-cient for flexibility was increased to about .60. To verify a feasible factor

structure for structural characteristics, three factor loadings were extracted with

an eigenvalue greater than 1. Four items for hierarchy were loaded on Factor 2

with higher loadings of .50 and lower uniqueness of .50, except the hie4 item of

.57. Three items for formalization were loaded on Factor 3 with higher loadings

of .80 and lower uniqueness of .40. Two items for flexibility attained loadings

greater than .70 and uniqueness lower than .40 on Factor 3 (see Appendix B).

Managerial characteristics. The two levels of autonomy posited by Bozemanand Kingsley (1998) were rated by respondents in three items (1 = very low

to 7 = very high): the degree of organizational independence in determining

organizational strategies without any external approvals, the degree of employ-

ees’ self-rule in deciding resource allocation, and the level of employees’

authority to determine their job ranges. Participatory decision making was

measured by four items (1 = very low to 7 = very high) ranked for nonexecu-

tive employees’ participatory opportunities in decision-making processes: the

degree of organizational emphasis on encouraging nonexecutive employees’ participation in the decision-making process, the existence of formal institu-

tional devices for obtaining the opinions from nonexecutive employees, the

degree of nonexecutive employees’ participation in formulating new policies

and strategies, and the degree of nonexecutive employees’ participation in

budgetary decision processes. Furthermore, performance-based rewards

were measured by four items ranked on a 7-point scale. Respondents were

asked to rate the degree of financial and nonfinancial incentives as through

the following: the availability of financial incentives, the use of promotional

opportunities as rewards of high performance, the tendency to recognize

high-performing employees, and the offering of educational opportunities as

rewards for high performance. Finally, specialization was evaluated by three

items (1 = very low to 7 = very high): the degree of managed special tasks, the

level of specialized positions matched with specialized job requirements, and




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Kim 797

the level of specialization among employees with higher education degrees

or specialized licenses.

The Cronbach’s alpha values for participatory decision making (α = .80)

and specialization (α = .80) were greater than .80, and the alpha coefficients

for rewards (α = .66) and autonomy (α =. 61) were greater than .60, all of

which are acceptable as reliable instrument measures. In terms of verification

of a feasible factor structure for managerial characteristics, four factor struc-

tures were specified with an eigenvalue greater than 1. All 14 items were

loaded on appropriate factors with loadings higher than .60 and unique vari-

ance lower than .50 (see Appendix B).

Cultural characteristics. The variable of goal ambiguity and multiplicity indi-

cates a variety of organizational goals. Bozeman and Kingsley’s (1998) mea-sures for goal clarity were used for developing three items (1 = very low to

7 = very high) that measured the degree of the goal and mission clarity, the

level of employees’ awareness of organizational goals, and the tendency to

have multiple goals. Furthermore, accountability was evaluated through four

items for computing the factor score with varimax rotation: the degree of gen-

eral accountability to stakeholders and the public, the emphasis on organiza-

tional interaction with stakeholders and citizens, the importance of formalized

evaluations or citizen surveys, and the frequency of customer surveys or for-malized evaluations. Finally, the variable of performance objectives was mea-

sured with three items (1 = very low to 7 = very high) measuring the degree of

the development on performance objectives, the emphasis on setting measur-

able goals, and the emphasis on employee-performance evaluation.

The Cronbach’s alpha coefficients for performance objectives (α = .82)

and accountability (α = .76) were greater than .70, but goal multiplicity had

the low alpha value of .51. In the goal multiplicity structure, the mg3 item

(the tendency to have multiple goals) had a low item–test correlation of .14,so it was deleted because of lower correlation with other scales. By deleting

the mg3 item, the alpha level was raised to .78. For verifying a feasible factor

structure for cultural characteristics, three factors were extracted from the

cultural cluster with an eigenvalue greater than 1. One of four items for

accountability was loaded on the inappropriate factor, the goal multiplicity

variable. Because the acc1 item (the degree of general accountability to

stakeholders and the public) was developed for accountability, it was elimi-

nated from the accountability factor structure. All eight items were loaded

properly with satisfying cutoff standards (see Appendix B).

Environmental characteristics. Political influence was originally measured by

seven items (1 = very low to 7 = very high), but two items (pi3 and pi6) were

not loaded on the designated factor. As a result, both items with higher unique-

ness were eliminated from the political influences loading. The five items for




20/36


political influence are as follows: the degree of political support needed to

obtain authorization for actions, the degree of political intervention in organi-

zational decisions, the influence of changing organizational behaviors affected

by external interactions, the degree of external environments that change rap-

idly, and the influence of public sector reform. Legal liability was evaluated

through three items (1 = very low to 7 = very high) that measured the level of

rigid financial control in allocating resources to new projects, the tendency to

transfer funds to other projects, and the level of prohibition by law of transfer-

ring funds. Measures of perceived competition derived from Morris and Jones

(1999) formed three items (1 = very low to 7 = very high): the level of facing

competition with other government departments for partnering with private

and nonprivate entities, the degree of competition with other governmentdepartments in delivering public services, and the degree of competition with

other government departments in applying for grant projects.

The Cronbach’s alpha levels of political influence (α = .64) and perceived

competition (α = .70) were greater than .60, but the alpha value for legal liability

was lower than .60. Because the alpha coefficient was close to .60 with high

item–test correlation, it was acceptable for inclusion in the legal liability mea-

sures. In terms of verification of a feasible factor structure for environmental

characteristics, 11 items were loaded on three factor structures as proposed, withthe exception of two items addressing political influence (see Appendix B).

Results

Multiple regression analysis was conducted to test the hypotheses concern-

ing the relationships between organizational characteristics and public entre-

preneurship. Before performing the finalized three regression models, this

study carefully detected the underlying assumptions of regression and cor-rected the minor problem of homoscedasticity in the innovativeness model.

In testing for multicollinearity using the variance inflation factors, none of

the inflation factors between 1.11 and 1.37 in the three models have any

multicollinearity problems. All three models were quite successful in

explaining the impact of the organizational independent variables on risk-

taking, innovativeness, and proactiveness (Table 2).

In the risk-taking model ( R2 = .304), eight variables are statistically

significant at the 5% level on the risk-taking dimension: formalization,

hierarchy, flexibility, participatory decision making, autonomy, performance

objectives, accountability, and perceived external competition. Except for

formalization and hierarchy, which are negatively associated with a risk-taking

culture, the other six variables have positive effect on the risk-taking

propensity. These results imply that state government departments have




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Kim 799

been discouraged, through structural rigidity, from taking risky opportunities

for better outcomes (Bozeman & Kingsley, 1998). The risk-taking model

confirms that managerial effectiveness to allow more autonomy and partici-

patory decision making for government employees, a cultural setting that has

higher accountability and performance objectives, and an external environ-

ment that is more competitive with other organizations have led state govern-

ment departments to consider risk-taking opportunities. Although previous

research has suggested the negative impact of both performance-based rewards

and legal liability on risk taking (Moon, 1999), this study found nonsignifi-

cant effects for both variables on risk taking.

Table 2. Results of Regression Analysis

Risk-taking model

Innovativeness

model

Proactiveness

model

Coefficient p > |t| Coefficient p > |t| Coefficient p > |t|

Formalization

Hierarchy -.134** .019 -.063 .237 -.115** .020

Flexibility -.119** .027 -.095* .059 -.007 .874

Size .126** .020 .289*** .000 .545*** .000

Participatory

decision

.035 .501 -.032 .503 .026 .557

Specialization .192*** .001 .195*** .000 .031 .523

Rewards .078 .161 .028 .597 .160*** .001

Autonomy -.009 .867 .088* .083 .033 .481

Performance .142*** .009 .150*** .003 .014 .769

Objectives .141*** .011 .128** .013 .063 .183

Accountability .151*** .006 .187*** .000 .144*** .002

Goalmultiplicity

.021 .716 .050 .346 -.012 .800

Politicalinfluence

.081 .129 .155*** .002 .102** .027

Competition .161*** .002 .104** .034 .032 .479

Legal liability -.057 .284 .021 .673 -.015 .747

R2 .3015 .4014 .4915

Adjusted R2 .2665 .3715 .4664

F (p > F ) 8.63 (.0000) 13.41 (.0000) 19.33 (.0000)

No. ofobservations

295 295 295

*p


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The innovativeness model ( R2 = .402) identified the relationships between

seven organizational characteristics (flexibility, participatory decision mak-

ing, autonomy, performance objectives, accountability, political influence,

and perceived competition) and innovativeness that were statistically positive

associations at the 5% significance level. The study also found the statistical

significance of both hierarchy and performance-based rewards at the 10%

level. Furthermore, among those positive effects on innovativeness, this study

found that structural flexibility has the strongest effect on promoting innova-

tive behaviors in state governments; therefore, in order to respond to innova-

tive changes and opportunities, state governments need to incorporate feasible

flexibility into the structural settings (Moon, 1999). The results also imply that

a means of empowering public employees is one of the effective approachesto stimulating innovative behaviors in state governments. As this study pro-

posed, organizational size has no significant impact but indicates a negative

influence for innovative tendencies. The innovativeness model, however, does

not support the positive impact of goal multiplicity, legal liability, or special-

ization for improving the innovative tendency in state governments.

The proactiveness model ( R2 = .4916) found that flexibility ( p


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Kim 801

Discussion

In management and public administration literature, usually one or a com-

bination of the dimensions of risk-taking, innovativeness, and proactiveness

have been emphasized as feasible possibilities to improving performance

and serving citizens. Prior empirical research (e.g., Berman & West, 1998;

Bozeman & Kingsley, 1998) has verified that any entrepreneurial behaviors

could not be undermined simply because of the stereotype of government

characteristics and untested links with public values and other concerns.

Debatable issues addressing public entrepreneurship still exist, but the

search for new opportunities and efficiency does not preclude promoting

other worthy public values such as accountability, democracy, and respon-siveness. Entrepreneurial behaviors and activities, however, need to be

adjusted before being applied to public sector settings (Boyett, 1996;

Cornwall & Perlman, 1990) because the successful adoption of an entrepre-

neurial strategy relies on an appropriate fit for the organizational character-

istics in terms of structures and processes (Andrews et al., 2007; R. E. Miles

& Snow, 1978).

This study ascertained the most significant positive effects of both account-

ability and flexibility across the three dimensions of public entrepreneurship. Asmost empirical studies of entrepreneurship and public management have agreed,

the flexibility hypothesis may be the most significant requirement in making

more opportunities for stimulating entrepreneurial behaviors. The importance of

flexible organizational structures could be continuously emphasized as a means

for the effective structural settings to support public entrepreneurship.

Accountability does not offer a promise for improving organizational per-

formance in itself, but higher accountability would result in more communi-

cation between government and relevant stakeholders, so as to gain a betterunderstanding of the benefits and outcomes of entrepreneurial activities. As

Morris and Jones (1999) found, one of the leading comments offered when

respondents were asked to suggest the single most important thing for increas-

ing more public entrepreneurship is accountability. Being held accountable

by citizens and relevant stakeholders would allow state governments to take

on risky projects, search for new opportunities, and execute these efforts. In

addition, Berman and West (1998) indicated that taking well-defined risks

results in improved citizen trust. Developing well-defined entrepreneurial

strategies would help government to obtain more accountability from citizens

and political entities for entrepreneurial activities. As a result, government

should take action to advance accountability management in order to stimu-

late public entrepreneurial behaviors.




24/36


Analysis of this study confirms a connection between some of the mana-

gerial characteristics and public entrepreneurship. The findings suggest that

empowering employees by increasing autonomy and participatory decision

making is important in adopting risk-taking and innovative tendencies, as has

been suggested by prior research (Bozeman & Kingsley, 1998; Forster et al.,

1996; Lumpkin & Dess, 2001; Miller & Friesen, 1982); however, the same

does not hold true for proactive behaviors because the government boundaries

do not easily allow employees to exercise a full range of employee discretion

in implementing unguaranteed nontraditional government tasks. This study

also found that the use of performance-based rewards is not significantly related

to any of the entrepreneurial dimensions, but the performance-based rewards

factor is negatively associated with risk taking, as was originally proposed.This result could imply that emphasizing performance-based rewards may

hinder the performance of risk-taking behaviors in state governments.

Moreover, the results indicate that the existence of performance objectives

in outcomes-based management cultivates a risk-taking and innovative cul-

ture, but not proactive culture, in state government departments. Considering

the effect of performance objectives on public entrepreneurial culture, this

finding gives state governments an indication to develop performance objec-

tive strategies that may cultivate a risk-taking and innovative culture as ameans of pursuing public values effectively. The results of the effect of goal

ambiguity and multiplicity on entrepreneurial predictability do not support

any of the proposed hypotheses, but the expected directional impacts on each

of the entrepreneurial dimensions are consistent with the hypothesized rela-

tionships. Accordingly, these results still could not confirm the previous mixed

empirical arguments on either a positive effect (Chun & Rainey, 2005) or a

negative effect (Bozeman & Kingsley, 1998; Moon, 1999) of goal ambiguity

and multiplicity on entrepreneurial tendencies. This study, however, can support previous arguments that goal ambiguity and multiplicity are consistently

positive influences in developing risk-taking and innovative culture and prac-

tices (Begley & Boyd, 1987; Ramamurti, 1986; Sadler, 1999).

With regards to environmental characteristics, this study confirms the sig-

nificant positive effects of political influence supporting Borins’s (1998a)

argument on accelerating innovative and proactive behaviors in state govern-

ments. This finding implies that the successful entrepreneurial practices in the

public sector require strong political support as well as positive attitudes

toward innovative and proactive efforts. As expected, this study confirms that

perceived external competition has a significant association with pursuing

risky and innovative alternatives. Supporting the arguments of prior studies

(e.g., deLeon & Denhardt, 2000; Morris & Jones, 1999), this finding suggests




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Kim 803

that more perceived external competition with other organizations will stimu-

late more risk-taking and innovative behaviors in state government depart-

ments. Contrary to this study’s hypothesis, legal liability appears to have a

positive association with innovativeness although it had a nonsignificant

effect on the entrepreneurial characteristics. This result may indicate that legal

liability does not strongly restrict state governments from searching for inno-

vative opportunities rather than risk-taking and proactive options.

Limitations and Future Research

Although this study conducted a rigorous test to examine the impact of orga-

nizational factors on public entrepreneurial activities, possible limitationsstill exist. The major limitation is driven from its reliance on single, percep-

tual data. Using single-source data from the questionnaire method may raise

such validity problems as social desirability responses, response bias, and

less accurate instrumentation of variables, even though the heads of the state

government departments were in better positions to assess most of the aspects

of the variables widely because of having assistance from professional admin-

istrators. However, some empirical studies (e.g., Bozeman & Bretschneider,

1994; Rainey & Bozeman, 2000) have found that individual perceptions arenot too biased to make an actual evaluation about agencies’ work and condi-

tions. Because there is as yet no proper external measurement of the public

entrepreneurial tendencies of the state government departments, in order to

minimize the weakness in using the single questionnaire method, the ques-

tionnaire was designed carefully and tested rigorously.

In addition, like many other cross-sectional studies, this research has a

limitation on external validity for generalizing the results of the research,

although survey data for this study were randomly collected across the target population with a fairly equal number of regional respondents. Future longi-

tudinal research could provide a richer understanding of the public entre-

preneurial tendencies over time. Another limitation would be related to a

measurement issue. Because of lack of empirical research on examining orga-

nizational determinants to public sector entrepreneurship, some measure-

ments were not empirically proved, even though measures in this model

were reliable and valid for the empirical test. Future empirical inquiry may

take advantage of further measurements of exploratory factors based on more

fine-grained conceptualizations.

This study intended to focus on examining organizational determinants

for three public entrepreneurial dimensions independently, but there may be

possible relationships among the three dimensions independently (Dess,




26/36


Lumpkin, & McGee, 1999; Kreiser, Marino, & Weaver, 2002; Miller, 1983)

or dependently (Covin, Green, & Slevin, 2006). Based on further empirical

examination of the relationships among these dimensions, future research

may be able to investigate whether the concept of entrepreneurship in the

public sector should be set up as a unidimensional or multidimensional

construct. A sophisticated test such as structural equation analysis needs to

be used for evaluating these relational models. Another direction for future

research could be to examine the impact of entrepreneurial activities on orga-

nizational performance because organizational level entrepreneurship leads

to improved performance (Covin & Slevin, 1989; Lumpkin & Dess, 2001;

Zahra, 1995).

Conclusion

This study has explored the effects of organizational characteristics on risk

taking, innovativeness, and proactiveness. The major contribution of this

research to the growing literature on public entrepreneurship and innova-

tive management is the examination of the relationships of organizational

characteristics across three dimensions of public entrepreneurship by bridg-

ing the gap between existing conceptual arguments and empirical practiceson entrepreneurship. Most state government departments are aware that

the values of public entrepreneurship are generally considered one of the

core reinventing approaches, and the outcomes of entrepreneurial activi-

ties may be connected to improved performance and service delivery to

the public.

Governments at all levels have been diversifying their areas of service

activities in responding to the turbulent environmental changes and newly

emerging citizen demands. Although public organizations cannot select theirown markets and service provision on a large scale, they can search for new

markets on a narrow scale, such as changing service groups among citizens

or in different geographical areas (Boyne & Walker, 2004). Such change

requires public services to be ready to take risks, innovate, and engage in

action-oriented behaviors. However, public organizations have traditionally

been faced with particular obstacles to innovation (Ho, 2002) and other entre-

preneurial behaviors because of lack of incentives and funding, short-term

time pressures, and the need for political and public support (Damanpour &

Schneider, 2009).

State governments can increase entrepreneurial orientations by setting

appropriate organizational structures and strategies, supporting practical

managerial and cultural activities (e.g., participatory decision making,




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Kim 805

Appendix A

Summary of Hypothesized Relationships

Hypothesized relationship withentrepreneurial dimensions

Characteristics Variables Risk taking Innovativeness Proactiveness

Structural Hierarchy Negative Negative Negative

Formalization Negative Negative Negative

Flexibility Positive Positive PositiveSize Positive Negative Positive

Managerial Autonomy Positive Positive Positive

Participatorydecisionmaking

Positive Positive Positive

Performance-based rewards

Negative Positive Positive

Specialization Positive Positive Positive

Cultural Accountability Positive Positive Positive

Goal ambiguityandmultiplicity

Positive Positive Negative

Performanceobjectives


Environmental Legal liability Negative Negative Negative

Political

influence

Negative Positive Negative

Perceivedcompetition


employee’s empowerment approaches, professional development activities),

and responding to external changes and concerns promptly. As Osborne and

Plastrik (1997) argued, reinvention and transformation to public entrepre-

neurship should be achieved by structural and functional changes toward

more opportunity-driven approaches rather than resource-driven strategies.

Without the organizational characteristics examined in this study, entrepre-

neurial attempts and behaviors cannot be successfully transplanted to the

public sector.




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806

A p p e n d i x B

F a c t o r L o a d i n g s

S t r u c t u r a l f a c

t o r s

C u

l t u r a l f a c t o r s

F a c t o r

V a r i a n c e

D i f f e r e n c e

F a c t o r

V a r i a n c e

D i f f e r e n c e

F a c t o r 1

2 . 2

5 6 4 8

0 . 1

2 4 3 5

F a c t o r 1

2 . 3

8 5 5 1

0 . 1

6 3 6 5

F a c t o r 2

2 . 1

3 2 1 3

0 . 7

4 0 9 4

F a c t o r 2

2 . 2

2 1 8 6

0 . 3

6 0 7 0

F a c t o r 3

1 . 3

9 1 2 0

F a c t o r 3

1 . 8

6 1 1 6

R o t a t e d f a c t o

r l o a d i n g s ( o r t h o g o n a l v a r i

m a x )

R e v i s e d r o t a t e d f a c t o

r l o a d i n g s ( o r t h o g o n a l v a r i m a x )

I t e m

F a c t

o r 1

F a c t o r 2

F a c t o r 3

U n i q u e n e s s

I t e m

F a c t o r 1

F a c t o r 2

F a c t o r 3

U n

i q u e n e s s

h i e 1

. 1 4 1

. 8 2 9

. 0 8 0

. 2 8 7

m g 1

. 2 4 6

.

1 3 9

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. 2 2 8

h i e 2

. 3 9 4

. 5 9 0

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. 4 6 6

m g 2

. 1 7 0

.

1 3 4

. 8 7 1

. 1 9 9

h i e 3

. 1 6 0

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. 3 6 1

a c c 2

– . 0

7 0

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h i e 4

. 2 5 5

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– . 1

6 8

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a c c 3

. 1 9 9

. 8 9 0

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. 1 5 4

f l e 2

– . 0

4 6

– . 0

4 2

. 8 4 4

. 2 8 4

a c c 4

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. 8 4 4

. 0 3 7

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f l e 3

– . 0

0 8

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o b j 1

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f o r 1

. 8

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o b j 2

. 9 1 9

. 1 9 8

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f o r 2

. 8

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5 8

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f o r 3

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M a n a g e r i a l f a c t o r s

E n v i r o n m e n t a l f a c t o r s

F a c t o r

V a r i a n c e

D i f f e r e n c e

F a c t o r

V a r i a n c e

D i f f e r e n c e

F a c t o r 1

2 . 7

6 5 9 6

0 . 5

5 1 3 5

F a c t o r 1

2 . 3

5 3 4 1

0 . 4 1 5 8 1

F a c t o r 2

2 . 2

1 4 6 1

0 . 2

6 2 0 5

F a c t o r 2

1 . 9

3 7 6 0

0 . 3 6 5 0 4

( c o n t i n u e d )




29/36

807

M a n a g e r i a l f a c t o r s

E n v i r o n m e n t a l f a c t o r s

F a c t o r

V a r i a n c e

D i f f e r e n c e

F a c t o r

V a r i a n c e

D i f f e r e n c e

F a c t o r 3

1 . 9

5 2 5 5

0 . 2

6 4 1 7

F a c t o r 3

1 . 5

7 2 5 6

.

F a c t o r 4

1 . 6

8 8 3 8

.

R o t a t e d f a c t o

r l o a d i n g s ( o r t h o g o n a l v a r i

m a x )

R e v i �

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