An empirical study of desired versus actual compensation practices in determining intrapreneurial behaviour

Abstract

Orientation: Past research recognises that human resources management practices may influence innovative behaviour, particularly as compensation systems can be used as a tool to increase intrapreneurial activity.Research purpose: The aim of this study is to determine the relationship between actual versus desired compensation practices and elevated intrapreneurial behaviour. This is in line with research that focuses on how to promote business innovation, rather than merely research whether innovation is desirable for businesses or not.Motivation for the study: Recognising that entrepreneurial actions are the bedrock of intrapreneurial behaviour and that these behaviours may be critical to the long-term vitality of a firm and economy, it is important to facilitate the empirical study of them in an underresearched, emerging market environment. Moreover, compensation such as reward preferences and variable pay schemes remain controversial in terms of their costs versus contributions, and these constructs deserve more empirical research.Research approach, design and method: The study employed a quantitative research design, using a cross-sectional and empirical approach with primary data sources. A structured webbased instrument rendered a sample of 209 respondents from a diverse set of businesses. Canonical correlational analysis was carried out to test the hypotheses.Main findings: The results reveal that a gap exists between an employee’s perception of desired compensation practices and the actual compensation practices. The results further highlight that non-outcome-based measures like pay risk, job risk and expectations of success play a role in determining whether employees decide to be intrapreneurial or not.Practical/managerial implications: Due to the potential impact rewards have on intrapreneurial behaviour, it is necessary to design relevant compensation systems as part of organisational architecture in order to foster intrapreneurship.Contribution: In response to calls to unveil innovation practices in developing countries and in acknowledging a contingency relationship between compensation practices and intrapreneurship, this article is one of the first studies to test the relationship between actual versus desired compensation practices and elevated intrapreneurial behaviour in an emerging market context.

Fostering intrapreneurial behavior through human resource management system

“…At the same time, these practices can prevent employees from leaving the company to start their own business (Hayton, 2005;Shulman et al, 2011). Madu and Urban (2014) also suggested that economic compensation is not the only factor to promote intrapreneurship, given that noneconomic rewards, such as growth opportunities, promotions and flexibility are also considered relevant to promote intrapreneurship. Other studies included different HR practices such as recruitment and communication as being relevant to IPB.…”

“…Hayton et al, 2013;Tang et al, 2015;Zhang, and Jia, 2010;Zhang et al, 2008). However, as a response to the need to look further into the phenomenon of intrapreneurship, recent studies have focused their attention on analyzing the effect of HRM practices on intrapreneurship (see Christensen, 2005;Hayton, 2005, Madu andUrban, 2014). Some have placed the spotlight on single or specific practices (Castrogiovanni et al, 2011;Shulman et al, 2011;Madu and Urban, 2014;Teneau and Dufour, 2015) whilst others, like Hayton (2005), have conducted their analysis from a theoretical perspective, considering both the effect of isolated practices and the systemic effect of this bundle of HR practices.…”

The Role of Psychological Safety and Psychological Empowerment on Intrapreneurial Behavior towards Successful Individual Performance: A Conceptual Framework

“…Intrapreneurial Behavior is a voluntary and uncompelled behavior (Valsania et al, 2016), which is attendant to the individual level of analysis and a bottom-up technique for offering proactive initiatives by individual managers or employees (Åmo, 2010;Bosma et al, 2010). Intrapreneurial behavior could be crucial to the long-term survival of organizations and the economy at large, it is therefore essential to expedite the study of intrapreneurial behavior in the under-studied developing economies (Madu & Urban, 2014). Nonetheless studies on the intrapreneurial behavior of middle managers are scarce (Mustafa et al, 2016) in medium enterprises and particularly in the developing economies.…”

Antecedents of small business financial performance: the role of human resource management practices and strategy

“…This suggestion emerges due to a raft of arguments around the scant focus and attention often given in studying entrepreneurial pursuits and outcomes especially from a developing nation perspective (e.g. Molokwu et al , 2013; Madu and Urban, 2014; Urban, 2010).…”