It is an imperative in most developing countries to improve the performance of state-owned enterprises (SOEs) and increase the accessibility of government services. State-Owned Enterprises have failed to deliver public value rendering most public services inefficient and costly.
This study seeks to establish the influence of intrapreneurship on the efficacy of SOEs in developing countries, using the case of SOEs in Zimbabwe.
The study took place in Zimbabwe.
A mixed research approach was adopted and a cross-sectional survey was used to collect data from managers and employees of 39 parastatals in Zimbabwe. Data collection instruments were questionnaires and interviews. Data collected from questionnaires were analysed using STATA version 12, whilst data from interviews were analysed using thematic analysis.
The study revealed that most SOEs have a poor Intrapreneurship Orientation, which negatively impacts on the performance of SOEs. Most SOEs generally have low innovation levels and have not developed services in line with customer demands. However, SOEs anchored in an intrapreneurial architecture were able to achieve greater public value through innovations which led to better service delivery and cost effectiveness.
This study advances the notion of intrapreneurship and revealed that intrapreneurship is a strategic workplace activity which can be adopted to improve SOEs’ organisational performance.
This study provides empirical evidence of the use of intrapreneurship as a systematic mechanism that can improve organisational performance and assist SOEs in emerging economies to sustain their role as engines of economic growth.
The Fourth Industrial Revolution (4IR), as well as the effects of the unprecedented coronavirus disease 2019 (COVID-19) pandemic, has created profound and substantial changes in the business environment worldwide. These changes make it vital for businesses to re-examine their mandate and implement strategies in pursuit of greater levels of public value. State-owned enterprises (SOEs) are created to meet specific goals and mandates that the private sector would not usually find profitable. However, the situation in most developing countries is that these institutions are unable to provide services for which they have been established. Gaspar, Amaglobeli and Garcia-Escribano (
Intrapreneurship, defined as entrepreneurial activities within the existing organisation, is an essential component of organisational and economic growth and development (Antoncic & Hisrich
The concept of intrapreneurship has not been well embraced by SOEs as a way of creating value, and Taylor (
The phenomenon of intrapreneurship assists in rejuvenation and improvement of OP. It assumes the presence of organisations with an intrapreneurial spirit and considers intrapreneurship as a tool to regenerate firms (Taylor
The term ‘intrapreneurship’ was propounded by Pinchot in 1985 (Pinchot
Meynhardt and Diefenbach (
According to Kuratko and Hodgetts (2007), the need for intrapreneurship has risen from a variety of unrelenting challenges amongst big organisations, including unproductivity, decline in quality of services and the increased calls for improved service delivery. The authors outline that in response to dynamic changes in both the internal and external business environments, most organisations in the private and public sectors are turning to intrapreneurship because they are not experiencing the sustainable innovation, growth and value creation that they once had.
Organisational performance is a complex measure that includes variables such as financial indicators as well as non-financial measures such as growth and internal performance such as business process efficiency and productivity (Kearney, Hisrich & Roche
Taylor (
State-owned enterprises or parastatals are ‘enterprises where the state has significant control through full, majority, or significant minority ownership’ (Organisation for Economic Co-operation and Development 2015). Governments establish parastatals because of market failure as well as the imperative to provide critical societal needs such as health, education and infrastructure (Kearney & Meynhardt
State-owned enterprises have had a significant impact on the global economy over the past decade. Gasper, Medas and Raylea (2019) highlight that the number of SOEs amongst the Fortune Global 500 has risen from 9% in 2005 to 23% in 2018, including a more noteworthy presence in the top rankings. The contribution of SOEs to the global GDP has also increased significantly driven by SOEs in emerging markets and their net worth of $45 trillion that amounts to half of the global GDP. The heavy presence of SOEs in the Global 500 has been influenced by Chinese parastatals. This increase in SOEs worldwide, is, therefore, an indication that well-governed and financially sound SOEs are fundamental to any economy, as they generate both public value and economic value.
In terms of the Constitution of Zimbabwe, SOEs are expected to implement generally acknowledged standards of good corporate governance in their operations as well as retain commercial viability (Musanzikwa & Mandith
This is in tandem with the observation by Gasper et al. (2019) who state that SOEs are performing dismally in most developing countries where more than 2 billion people remain without access to water and 0.8 billion lack dependable electricity. Thus, SOEs in Zimbabwe are exhibiting poor performance and not generating the optimal public value desired by their citizens. This confirms the need to implement a strategic change option that ensures innovation, business process renewal and improved OP and this is intrapreneurship. Literature has revealed that SOEs face a dynamic environment and increased anticipations to enhance public value creation, and scholars and practitioners have recurrently advocated that SOEs should become more intrapreneurially focused to react to these challenges. Whilst in the private sector, the benefits of a firm’s IO have been researched on expansively, such studies are rare in the public sector. However, the public and private sectors differ immensely, which makes the transferability of concepts difficult. Hence, it is of paramount importance to understand the factors leading to the success of intrapreneurship in SOEs, and how intrapreneurship is related to OP and creation of public value, in order to improve efficacy of public sector organisations. This is the thrust of this article.
Research theory on the influence of intrapreneurship on OP is still in its infancy and is mostly situated in entrepreneurship. Additionally, theoretical foundations of public sector intrapreneurship have not been adequately studied ensuing a vital need for contributions to both theory and practice (Kearney, Hisrich & Roche
The study was influenced by the public value theory that was proposed by Moore (
The study was also influenced by the balanced score-card developed by Kaplan and Norton (1992), which integrates financial and non-financial measures to deliver a ‘balanced’ assessment of OP (Mbo
The study is influenced by the pragmatist paradigm. The underlying assumption of this philosophy is that collecting different types of data using a mixed methods design provides a better understanding of the research problem (Leech & Onwuegbuzie
In this research, the population comprises 78 SOEs spread across 13 sectors of the economy. The simple cluster sampling method was used to frame the SOEs population into groups (clusters) as per the sector of the economy. Teddlies and Tashakkori (
The key informants for interviews were senior management. Senior management is of particular importance as these do not only command intrapreneurship competencies of SOEs but also encourage and foster these amongst the employees. Hence, the researcher chose to interview the executives as these are the people behind strategy formulation and implementation in organisations. Senior management also influences IO, as well as the organisational culture of entities; thus, they provide a rich source of information regarding intrapreneurship within an organisation. Geographic location is another factor in considering interview participants. Because the researcher had preferred to have face-to-face interviews, there was a preference for parastatals located in the city of Harare; however, because of COVID-19 restrictions, most organisations did not permit visitors and as such interviews were held virtually via Zoom and Google Meet.
A questionnaire was the main data collection instrument for this study. A total of 150 questionnaires were distributed across the parastatals under study. The questionnaire contained closed-ended questions, because the study prioritised quantitative over qualitative data. The closed-ended questions generated quantitative data that the researcher easily analysed using statistical tools. (Saunders et al. 2016). Interviews were held with open-ended questions in order to collect detailed views from senior management. The qualitative data triangulated the quantitative data thereby helping verify data obtained through quantitative means.
Data collected from the questionnaires were captured on a Microsoft Excel Spreadsheet uploaded on STATA version 12 and analysed using descriptive statistics, whilst those from the interviews were analysed by the thematic network analysis. Stata stands for Statistical Software for data science, and it is a software package for data manipulation, visualisation, statistics and automatic reporting (StataCorp
Conceptual model of the study.
Response rate.
Respondents by gender.
Level of education of respondents.
Respondents by level of management.
Respondents by length of service.
Organisational profile.
Nature of operations.
Size of organisation.
The IO index of the SOEs is 18.9 out of 35, which is generally low. Interview results also confirm this, as most of the senior managers stated that their organisations were moderate on IC and were particularly low on risk-taking capabilities. Intrapreneurial activity has a 7.2 index, which is very low. Interviews substantiate this as the majority of executives highlighted a low set of intrapreneurial activities, with most producing one new product or service per year or over a 3-year period for the benefit of customers. The executives also cited a low introduction or renewal of organisational techniques. Only a few cited that their organisations had new Strategic Business Units (SBUs).
Financial index is 12.7 out of 30, which is also low when compared with other OP indicators such as customer satisfaction index measuring 13 out of 20 and social impact index with an average of 9 out of 15. From the interviews with senior management, most confirm that SOEs are encountering liquidity challenges, have low budget execution rates and high inter-parastatal debts. Most of the SOEs are failing to meet their financial obligations and rely on government to give them money so that they remain viable. The executives attribute this to low innovation performance, as the entities have no new ways of obtaining money from customers, compared with their counterparts in the private sector who are continuously innovating. The customer satisfaction index is nine, which is low. Most of the SOEs are not adequately meeting the expectations of their customers. Interview results confirm that public services are generally inaccessible, and the senior management admits that the transaction processes of obtaining goods or services are antiquated and generally not user-friendly. Most of the SOEs are still using old methods that do not resonate with current trends; most SOEs are still stuck in the physical realm when modern business operations are virtual or online. Most executives confirm that it is difficult to obtain their organisational services fully online, for most entities, the transaction has to be completed physically. The social impact index is seven that is satisfactory. Most SOEs seem to be performing satisfactorily on stakeholder involvement and corporate government compliance. However, most SOE executives confirm that corporate social responsibility is still at very low levels.
The study performed a factor analysis and the results are shown in
Descriptive analysis of intrapreneurial orientation, innovation and performance.
Variables | Mean | SD |
---|---|---|
Intrapreneurial orientation index [5–35] | 18.947 | 5.433 |
Intrapreneurial activity/innovation performance index [5–25] | 7.233 | 5.355 |
Financial index [5–30] | 12.740 | 5.524 |
Consumer satisfaction index [5–20] | 13.040 | 3.738 |
Social impact index [5–15] | 9.053 | 2.780 |
SD, standard deviation.
The results in
Structure loadings and cross loadings.
Variables | Intrapreneurial orientation | Intrapreneurial activity | Organisational performance |
---|---|---|---|
IO1 | 0.743 | 0.553 | 0.630 |
IO2 | 0.719 | 0.675 | 0.548 |
IO3 | 0.681 | 0.672 | 0.578 |
IO4 | 0.660 | 0.502 | 0.480 |
IO5 | 0.641 | 0.550 | 0.456 |
IO6 | 0.743 | 0.643 | 0.576 |
IO7 | 0.766 | 0.665 | 0.590 |
I1 | 0.635 | 0.879 | 0.620 |
I2 | 0.497 | 0.793 | 0.558 |
I3 | 0.543 | 0.822 | 0.547 |
I4 | 0.610 | 0.875 | 0.459 |
I5 | 0.572 | 0.857 | 0.575 |
F1 | 0.651 | 0.667 | 0.724 |
F2 | 0.581 | 0.520 | 0.605 |
F3 | 0.553 | 0.648 | 0.694 |
CSI-1 | 0.528 | 0.483 | 0.724 |
CSI-2 | 0.510 | 0.538 | 0.763 |
CSI-3 | 0.648 | 0.639 | 0.715 |
S1 | 0.642 | 0.563 | 0.777 |
S2 | 0.603 | 0.659 | 0.759 |
S3 | 0.656 | 0.668 | 0.796 |
IO, Intrapreneurial Orientation; I, Intrapreneurship; F, Finance; CSI, Corporate Social Responsibility; SI, Social Impact.
Reliability statistics.
Cronbach’s alpha | Number of items |
---|---|
0.965 | 65 |
Summary of significance testing results of the structural model path coefficients.
Variable | Path coefficients | Beta | Decision | |
---|---|---|---|---|
Intra > OP | 0.069 | 0.27 | 0.001 | Accept |
IO > Intra | 0.682 | 0.68 | 0.001 | Accept |
IO > OP | 0.236 | 0.14 | 0.019 | Accept |
IO, intrapreneurial orientation; OP, organisational performance.
The Cronbach’s alpha value is above 0.7 indicating acceptable reliability. The CR values are also 0.7 and above (Nunnally & Bernstein, 1994) (Nunnally & Bernstein 1994). These values indicate acceptable reliability measures. The study applied the CR tests in addition to the Cronbach’s alpha because the CR test is a more reliable test of reliability than the Cronbach’s alpha (Hair et al. 2019). According to (Fornell & Larcker 1981) Average Variance Extracted (AVE) values of 0.5 and above provides a good measure of convergent validity. In this study, all AVE values were above 0.5 indicating convergent validity. This means the constructs explain at least 50% of the variance of its items (Hair et al., 2019). Therefore, the study met discriminant validity. Discriminant validity is important because it explains the extent to which a construct is empirically different from other constructs in the structural model (Fornell & Larcker 1981).
The
These findings show that the practice of intrapreneurship has a positive influence on OP of SOEs and augments the public value theory. Through intrapreneurship, senior executives ensure that their organisations achieve increased customer satisfaction levels, increased social impact and improved financial performance, which are dimensions of public value. By ensuring that SOEs are constantly innovating to improve service delivery, managers assume their role in public value creation, as Moore (
The first objective of the study was to find out whether IO has a significant influence on intrapreneurial activity in parastatals. Hence, a positive significant result implies that an organisation’s IO increases the intrapreneurial activity performed by an organisation. The findings reveal that IO in public sector organisations helps them to implement intrapreneurial activities and concurs with observations by Taylor (
Interview results also confirm that organisations with a low IO, that is, which are low on the intrapreneurial dimensions of agility, risk-taking, proactiveness and industry competitiveness do not engage in many intrapreneurial activities. An interviewee highlighted that:
‘[
The findings reveal that the IO has a significant positive relationship with OP in parastatals (β = 0.6;
‘Our poor attitude towards intrapreneurship has resulted in our below average performance as we are not able to exploit opportunities in the business environment to make us competitive and organisations of excellence.’ (Participant 13, from Bulawayo, 18 January 2021)
The results point towards the fact that IO in public sector organisations determines OP. The results concur with the recent findings from Aslam et al. (2020) who assert the importance of IO in increasing and enhancing the overall OP in public sector organisations. The study results are indicative of the fact that intrapreneurial traits and activities are important for organisations to survive and grow (Semrau et al. 2016).
The second objective of the study was to establish the influence of intrapreneurship on organisational performance. The study findings (β = 0.27,
‘I have seen that our general lack of innovation and creativity has had a dent on our performance, we do not have anything new in our portfolio to create competitive advantage and also realise new revenue except for our old revenue lines which are diminishing because of competitors who are able to dish out new services and have crept into our market share.’ (Participant 6, from Gweru, 10 November 2021)
The research findings therefore confirm that intrapreneurship has a positive influence on OP and cements the argument by Rankumise (
This study demonstrated that intrapreneurship has a significant influence on OP of SOEs, which is an essential contribution to the theory and practice, (Kearney et al.
Intrapreneurship is heavily influenced by an organisation’s IO, which is measured by dimensions of agility, innovativeness, risk-taking capabilities, industry competitiveness, proactiveness and autonomy. Literature confirms that a strong IO results in social innovations that contribute to increased revenue, cost efficiency and higher budget execution rates, as well as customer experience and social impact in SOEs, hence the importance of intrapreneurship in the rejuvenation of OP (Rehman, Au Yong & Choong
Intrapreneurship is rarely achieved in SOEs in emerging economies such as Zimbabwe; hence, managers (top, middle and first-line) within SOEs have unique roles to play in supporting, expediting and fostering intrapreneurial actions and innovation in firms. Moore (
Intrapreneurship helps SOEs in achieving efficacy by ensuring efficient utilisation of resources and by also redirecting resources towards more productive activities (Bruton, Ahlstrom & Si 2015) Although the innovation system in SOEs has always been characterised as being patchy, managers in these entities may change this by being cognisant of the impact of intrapreneurship on the overall performance of an organisation and thereby building an intrapreneurial architecture in SOEs. Consequently, SOEs that have intrapreneurial leaders who have the capacity to develop strategies and ensure that their organisations proffer innovations will achieve efficacy by operating efficiently and effectively.
In light of the findings, the study recommends the following:
State-owned enterprises must be in a position to embrace a strategic planning culture, which embraces a long-term perspective of intrapreneurial objectives, regardless of the size of the organisation as well as the nature of operations. Furthermore, the strategic direction and readiness must be understood by different levels of management to align their tasks and activities with the innovation targets of the firm. This will foster an adequate change management strategy that sustains intrapreneurship.
State-owned enterprises must have systems in place to monitor and evaluate their level of intrapreneurship as this is critical to the sustainability of intrapreneurial outcomes, thereby ensuring that public value is continually generated effectively and efficiently.
Notwithstanding the resource constraint in most developing countries for intrapreneurship, SOEs must find an affordable alternative to carry out intrapreneurial activities for sustainable efficacy.
The policy-makers for SOEs should have an intrapreneurial framework or blue-print, against which to evaluate intrapreneurship initiatives in SOEs. This will assist in intrapreneurial performance appraisal of these entities.
The authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article.
L.C. is the principal author of the research article, and B.C. as the thesis supervisor, is the co-author.
All procedures performed in the study involving human participants were in accordance with the ethical standards of the Durban University of Technology, approved by the Faculty of Management Sciences, Research Ethics Committee (FREC), reference number: 18FREC. Informed consent was obtained from all individual participants involved in the study.
This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.
All data underlying the results are available as part of this article and no additional source data are required.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors.