Entrepreneurship in Medium-Size Companies: Exploring the Effects of Ownership and Governance Systems

Corporate entrepreneurship (CE), which embodies a company’s innovation and venturing activities, is necessary in today’s competitive markets. CE is important for organizational renewal, the creation of new business, and improved performance. CE, however, requires strong and continued support from the company’s top executives. Data from 231 medium-size manufacturing companies show that commitment to CE is high when: (1) executives own stock in their company; (2) the board chair and the chief executive officer are different individuals; (3) the board is medium in size; and, (4) outside directors own stock in the company. The relationships between the ratio of outside directors and CE, and institutional ownership and CE, are mixed. CE is also posi-tively associated with future company performance. © 2000 Elsevier Science Inc. All rights reserved. Rising global and domestic competition has increased the importance of corporate entrepreneurship (CE) for successful firm performance (Fujita, 1997b; Nakahara, 1997). CE, the sum of a company’s venturing and innovation activities (Guth & Ginsberg, 1990), can help the firm acquire new capabilities (Stopford & Baden–Fuller, 1994) and improve its performance (Lumpkin & Dess, 1996). It can also help the firm enter new businesses (Miller, 1983; Zahra, 1993) and develop new revenue streams in both domestic and foreign markets (Block & MacMillan, 1993). CE is also conducive to improved profitability (Covin &amp