How companies motivate entrepreneurial employees

ORI GIN AL PA PER

How companies motivate entrepreneurial employees:the case of organizational spin-alongs

Patricia Klarner • Theresa Treffers • Arnold Picot

� Springer-Verlag Berlin Heidelberg 2013

Abstract This paper investigates how high-profile employees with entrepreneurial

abilities can be attracted, retained, and nurtured in order to foster companies’ cor-

porate entrepreneurship through innovations. We find that the spin-along design

provides entrepreneurial employees with a combination of flexibility and security

(flexicurity), corporate management, and control. Based on five in-depth case

studies within an innovative company, our results show that the organizational spin-

along structure supports and enhances entrepreneurial employees’ motivation and

leads to the attraction, nurturing, and retention of such employees. We also find that

senior management has a critical leadership role in enabling such an organization

design by balancing flexibility and security with control.

Keywords Entrepreneurial employees � Motivation � Organization design �Qualitative research � Spin-along

JEL Classification D01 � J01 � J24

P. Klarner (&)

Munich School of Management, Institute of Strategic Management,

University of Munich (LMU), Ludwigstr. 28, 80539 Munich, Germany

e-mail: [email protected]

T. Treffers � A. Picot

Munich School of Management, Institute for Information, Organisation and Management,

University of Munich (LMU), Ludwigstr. 28, 80539 Munich, Germany


A. Picot


123

J Bus Econ

DOI 10.1007/s11573-013-0657-5

1 Introduction

In order to survive and grow in increasingly dynamic markets, companies have to

continuously innovate (Ancona and Caldwell 1992; Daneels 2002). Generating

innovations is thus a strategic goal for organizations. Innovation implies that

companies gain new knowledge and transform it into new outcomes (Wineman

et al. 2009), expand existing competences, and build new ones over time (Daneels

2002). Since innovation results from individual ideas (Scott and Bruce 1994),

organizations have to attract, nurture, and retain employees with explorative

knowledge (March 1991) and novel ideas (Van de Ven 1986).

Such high-profile employees, i.e., employees with specific knowledge and

entrepreneurial abilities, convert new knowledge into new products, processes, or

services—a process called corporate entrepreneurship (Shane and Venkataraman

2000). However, there are few such employees in the labor market (Whitley 2002).

Since they can apply their abilities in different settings and pursue several

professional opportunities, the competition between companies to attract and retain

them is fierce. Assuming that labor market can formalize and compare the available

employees’ professional knowledge (Griliches 1997), employees with entrepre-

neurial abilities, i.e., innovative employees, are especially important for companies

faced with continuous pressures to innovate. Since access to such employees can

distinguish innovative firms from less innovative ones, it is important to understand

how companies can attract and retain them over time.

Prior innovation research has examined several contextual features, such as

organic structures characterized by high degrees of decentralization and autonomy,

that support organizational innovation (Burns and Stalker 1961). Scholars have also

studied other drivers of innovation, such as the competences required for innovation

(Daneels 2002; Leonard-Barton 1992), supportive leadership (Van de Ven 1986),

and a strong innovation culture (O’Reilly 1989). In addition, research has examined

employees’ innovative behavior, which is defined as developing, applying, and

implementing new ideas in the organization (Shalley et al. 2004; Yuan and

Woodman 2010; Zhou 2003). Employee innovation has been found to be affected

by job characteristics (Oldham and Cummings 1996), positive affect (Amabile et al.

2005), the relationship between employees and their supervisors (Janssen and Van

Yperen 2004), and employees’ social context (Munton and West 1995). Related

entrepreneurship research focusing on the individual skills required to become an

entrepreneur has found that entrepreneurs need the skills and experience to combine

tangible and intangible assets in new ways and to deploy them to better meet

customer needs (Amit et al. 1990). Entrepreneurial abilities therefore enable

individuals to demonstrate innovative, entrepreneurial behavior. Similarly, organi-

zations need employees with entrepreneurial abilities to innovate in the corporate

context (Shabana 2010). While prior research has examined how employees become

innovative in organizations, we lack insights into how companies can appeal to and

motivate entrepreneurial employees to foster corporate entrepreneurship through

innovation.

This paper addresses this gap by investigating how firms can attract, retain, andnurture entrepreneurial employees through organization design. Specifically, we

P. Klarner et al.

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are interested in how a company convinces high-profile employees to accept its

offering of a context in which they can best apply their entrepreneurial abilities, and

how it can prevent its current entrepreneurial employees from accepting opportu-

nities outside the company. Owing to the lack of prior research on this topic, we use

qualitative methods to explore the role of corporate structure in providing an

attractive environment for innovative employees.

We conducted in-depth case studies at a German biotech company. Previous

studies have shown that the spin-along approach—a specific organization design—

supports organizations’ innovative activities (Michl et al. 2012, 2013; Rohrbeck

et al. 2009). Findings from this paper reveal that such a spin-along approach may be

particularly supportive in motivating entrepreneurial, innovative employees to join

and remain in a company. Our findings show that spin-alongs—separate organi-

zational units—provide entrepreneurial employees with the necessary structural

flexibility and employment security (flexicurity) to use their abilities. Structural

flexibility offers entrepreneurial employees sufficient autonomy to experiment with

their ideas, while spin-alongs provide such employees with more employment

security than a start-up setting, due to the parent company’s financial backing, the

reduced danger of an uncertain business environment, and a lower risk of failure. At

the same time, spin-alongs provide the parent company with monitoring options that

help ensure that the units’ objectives are aligned with the parent company’s strategic

goals. We further find that senior management plays a critical role in balancing

employees’ flexicurity with control. With the strategic innovations generated in

spin-alongs, the company studied achieved its strategic long-term goal and secured

its strategic survival.

Our study contributes to the innovation and corporate entrepreneurship literature,

as well as to managerial practice in several ways. First, it highlights how

entrepreneurial employees can be attracted, retained, and nurtured by a specific

organization design, the spin-along approach, which combines elements of internal

and external venturing. This is the first study to show that the spin-along design is

strongly linked to employees’ entrepreneurial motivation, thereby fostering

corporate entrepreneurship through strategic innovations. Our findings support the

allegation that the company context has a critical role to play in motivating

entrepreneurial employees and should thus receive more attention in future research

(Latham and Pinder 2004). Using an expectancy theory lens, we specifically provide

insights into how companies contribute to entrepreneurial employees’ motivation

through the specific spin-along design. Second, in contrast to most previous studies

that mainly examine how current employees can become more innovative, this

study provides additional insights, since we also investigate how entrepreneurial

employees can be attracted. Third, this study uses an explorative design with the

spin-along as a process-oriented organization design in a dynamic context.

The studied company operates in a global context in the biotechnology industry,

which allows us to provide in-depth insights into a so-called ‘hidden champion’

(Simon 1990, 2009, 2012). Hidden champions are defined as global market players

with low public awareness. Simon (1990, 2009, 2012), one of the first scholars to

examine German hidden champions, described them as highly specialized

organizations that strongly and closely adapt their production to customer

How companies motivate entrepreneurial employees

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requirements. Therefore, one of these organizations’ biggest challenges lies in

attracting international and highly specialized professionals. At the same time, their

entrepreneurial culture and leadership style support their employees’ loyalty and

identification. Our in-depth study of a typical hidden champion allows us to offer

insights into the challenges that many other hidden champions face in attracting,

nurturing, and retaining valuable human capital.

This paper is structured as follows: We first review the theoretical background of

corporate entrepreneurship, the motivation theory, and the concept of entrepre-

neurial motivation. We then present the case study method, including the case

descriptions, followed by a presentation of the findings. After this, we discuss our

findings, and conclude with avenues for future research.

2 Theoretical background

2.1 Corporate entrepreneurship, corporate venturing, and spin-along

Corporate entrepreneurship—or intrapreneurship—is defined as the development of

a new venture in an organization, the exploitation of new opportunities, and the

creation of economic value (Parker 2011; Pinchot 1985). It describes a strategic set

of activities that center on ‘‘the discovery and pursuit of new opportunities through

innovation, new business creation, or the introduction of new business models’’

(Hayton and Kelley 2006, p 407). It is therefore a central element in firms’

revitalization and improved performance (Antonic and Hisrich 2001; Kuratko et al.

1990; Parker 2011). Prior research has provided insights into the nature,

antecedents, and consequences of corporate entrepreneurship (Burgelman 1983;

Pinchot 1985; Webster 1977; Zahra et al. 1999).

Some scholars have examined corporate venturing as part of corporate

entrepreneurship. Corporate venturing is defined as an activity that seeks to create

new businesses for a company by establishing external or internal corporate

ventures (von Hippel 1977). Internal corporate ventures are kept within the parent

organization, whereas external corporate ventures are created as semi-autonomous

or fully autonomous organizational entities that reside outside the organization (Keil

2002; Sharma and Chrisman 1999).

A spin-along is a dynamic organization design that combines elements of internal

and external venturing. Spin-alongs were initially described as semi-autonomous

organization units controlled by and with linkages to the parent firm in order to

support the parent’s innovation activities (Michl et al. 2012, 2013). They use the

parent company’s resources and enjoy its protection (Dushnitsky and Lenox 2006),

but simultaneously act independently of it in the market, which reduces their

dependence on the parent. From a corporate perspective, it generally takes several

years for a spin-along to produce valuable innovations for the parent firm.

Therefore, the spin-along approach should be considered from a process perspective

and managed with a long-term corporate focus.

Figure 1 illustrates the spin-along approach as a combination of spin-off and

spin-in/acquisition with two bold lines. The term spin-offs is used instead of spin-

P. Klarner et al.

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outs, because the parent firm retains shares in the venture when spinning off. The

term spin-ins is used when the spin-along has venture characteristics after the spin-

along phase, i.e., when it has been semi-autonomous from the parent firm for several

years. The term acquisitions is used when the spin-along has grown into a larger

organization with formalized structures and processes during the spin-along phase.

While spin-offs, spin-ins, and acquisitions can be mainly regarded as specific points

in time, spin-alongs combine these points over a period of several years. The spin-

along approach can therefore be regarded as a process that includes at least two

separate points in time. Furthermore, we extend previous definitions of the spin-

along approach (Michl et al. 2012, 2013) by arguing that a spin-along can start as

(1a) a spin-off or as (1b) a spin-in/acquisition, and terminate as (2a) a spin-in/

acquisition or as (2b) a spin-off. In Fig. 1, the internal and external boxes on the left

describe, from a corporate perspective, whether the spin-along originated internally

as a spin-off, or externally as a spin-in/acquisition. Depending on the spin-along’s

origin, the company can increase or decrease the spin-along’s internal or external

corporate venturing elements.

Similar to other corporate venturing activities, the organization’s goal with one or

more spin-alongs is to generate strategic innovations in order to secure its long-term

survival and success. Spin-alongs are created to serve this strategic goal by

engaging in innovation activities. These innovation activities can be more

(incremental) or less (radical) related to the company’s core business and can be

focused on geographical markets unrelated to the current core business (unrelated

diversification), or related to the core business (related diversification). The

organization’s overall goal to survive is a strategic goal that only employees who

are creative and have new ideas, i.e., entrepreneurial employees, can support.

Hence, attracting, retaining, and nurturing innovative and entrepreneurial, and

thus strategically relevant, employees for spin-alongs is another strategic company

goal. Entrepreneurial employees are very likely to unfold their skills in a more

spinning-along

(2a) spinning-in /acquisition

(1a) spinning-offInternal

External innovation process(external venturing)

Internal innovation process(internal venturing)

(1b) spinning-in /acquisition

(2b) spinning-off External

*adapted from Michl et al. (2012)

Fig. 1 The spin-along approach*


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flexible and open start-up structure rather than in a formalized and hierarchical

setting. Therefore, such employees should work in spin-alongs detached from the

corporate hierarchy to give them room to explore new ideas, experiment, and

produce innovative new products that may or may not be related to the current core

business. Attracting, retaining, and nurturing entrepreneurial employees are

therefore strategic company tasks and, as this study shows, spin-alongs are

particularly suitable for this task.

2.2 Spin-alongs: conceptualization and related concepts

To conceptualize the spin-along approach in more detail, it is important to elaborate

on spin-alongs’ benefits for a parent company. First, parent firms can change their

stakes in a spin-along over time, depending on its success. If a spin-along is

successful, i.e., if the parent company considers its innovations beneficial for its

future strategic direction, the parent is likely to buy all the spin-along shares and

reintegrate it into the parent. Depending on the contract between the parent and the

spin-along, the parent may have negotiated a first buyer right. However, a spin-

along’s success does not necessarily imply its full reintegration into the parent firm.

It can also be partly integrated, depending on which parts of the spin-along

contribute to the company’s long-term strategic goals and how specific the spin-

along assets are. Conversely, if the spin-along is not successful, i.e., if the parent

decides that the innovations generated in the spin-along are not strategically

important for the parent’s future direction, it may sell its shares in the spin-along.

Second, during the spin-along phase, the parent company can also benefit from

the spin-along’s real assets and employees in various ways. For instance, the parent

can hire spin-along employees for corporate projects when their expertise is needed.

Such job rotation is very valuable for the company’s knowledge base. Parent firms

can also benefit from a spin-along’s real assets—for example, its innovative

reputation, customer base, machines, patents, or stocks. While spin-alongs can be

valuable real assets for a company, this is not their initial goal. Instead, their main

goal is to generate strategic innovations through entrepreneurial employees to

secure the long-term organizational success.

Therefore, spin-alongs should rather be regarded as real options that provide the

parent firm with the strategic flexibility that is required when the parent seeks to

generate strategic innovations that often involve uncertainty. Real options (Myers

1977) describe the right, but not the obligation, to engage in certain business

initiatives related to a capital investment project, such as a spin-along. The

opportunity to invest, buy, or sell a spin-along can be described as the real call or

put option of the parent company. This option can also include the decision to delay

decisions and wait for future market developments. The extending, buying, or

selling of the spin-along are treated as real options. However, this option also makes

it difficult to determine a spin-along’s full value, which is similar to the difficulties

associated with determining the value of a potential innovation.

The notion of a spin-along as a real option is only valid for its innovations but not

for its entrepreneurial employees, who can decide to stay with the parent company

or to leave it after the parent company has made a decision regarding the spin-

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along’s innovations. Thus, the decision of a spin-along’s entrepreneurial employees

is largely independent of its innovation success or failure. In an ideal scenario, the

company gains the spin-along’s innovation and also retains its high-profile

employees.

In addition to this conceptualization, there are several commonalities and

differences between the spin-along design and related concepts, such as entrepre-

neurial universities and skunk works. Entrepreneurial universities—in which faculty,

staff, and students start entrepreneurial activities in the university context—generate

inventions in university labs, and subsequently create start-up firms to commer-

cialize their inventions (Kenney and Patton 2011; Mowery and Shane 2002).

Scholars have examined designs that support the commercialization of university

inventions, focusing on issues such as the location, experience, culture, and

incentive systems (Friedman and Silberman 2003; Jacob et al. 2003; Owen-Smith

and Powell 2001; Rothaermel et al. 2007). However, while this literature focuses on

entrepreneurial activities originating in university settings that allow start-up

ventures to emerge (Astebro et al. 2012; Rothaermel et al. 2007; Zucker et al. 2002),

research on spin-alongs examines how entrepreneurial employees and their

innovative activities are anchored in the context of established companies with

the goal of generating strategic innovations.

In theory, university start-ups could also become spin-alongs. The university may

function as an incubator for internal ventures, or may buy shares in an external

venture. These ventures are then supported by university resources, but it acts

independently from the university’s structures and processes. After keeping the

venture semi-autonomous for a few years, the university could fully or partly

(re-)integrate the spin-along and its employees into the university. However, in practice,

there is evidence that universities mainly engage in spin-offs (Astebro et al. 2012)

rather than in spin-ins or a combination of the two. Given that universities’ venture-

related goals differ from those of organizational ventures, this is intuitive.

Organizations conduct spin-alongs to secure their long-term survival through

strategic innovation, while universities may conduct spin-alongs for financial

reasons, or to generate new insights. Nevertheless, a corporate spin-along could be a

combined project between a university and a company. In such a combined case, the

spin-along may be started with a team made up of both university and company

employees. After a semi-autonomous phase, the university and the company may

decide to share the innovation and the financial benefits, or one of them can decide

to sell its shares to the other party.

Conversely, skunk works are specialized R&D teams within the organizational

setting that secretly work on projects detached from the corporate hierarchy and

often without explicit management orders and knowledge (Jostmeier 2009; Leitl

2006). The term skunk works emerged during World War II when the US military

asked the aircraft manufacturer Lockheed Martin to develop a fast jet fighter to

counter the threat that German jets posed (Martin 2012). A project team of highly

qualified developers quickly created a new jet fighter in a confidential skunk workproject. This approach—aimed at freeing inventive talent from the corporate

bureaucracy to develop radical innovation projects in a short time—has a similar

goal to spin-alongs, i.e., to foster entrepreneurial activities in large organizations.


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However, in contrast to skunk works, organizational spin-alongs are separate

organizational units (rather than teams) that operate transparently (instead of

working secretly) in a semi-autonomous organizational setting. In addition, spin-

alongs—contrary to skunk works—operate with management’s knowledge of their

projects and have official contracts for their projects.

Organizations with entrepreneurial capability tend to combine several innovative

activities over time and actively foster their employees’ entrepreneurial abilities

(Dess et al. 1999; Hornsby et al. 1993). Some of these companies set up an

organizational structure—such as the spin-along approach—to support entrepre-

neurial employees’ abilities (Kuratko et al. 1990; Shabana 2010). It is crucial to

have high-profile employees with entrepreneurial abilities, i.e., who are able to

create strategic innovations, for the spin-along approach. These corporate

entrepreneurs, who work in internal or external corporate ventures, need the same

skills and conviction as external entrepreneurs (Shabana 2010). They need to

demonstrate entrepreneurial abilities that foster innovative behavior and contribute

to organizational innovation (Covin and Slevin 1991). Companies need to support

employees with such abilities, allowing these entrepreneurs to succeed in the

corporate context and ensuring they do not leave to start their own companies

(Shabana 2010). However, employees’ entrepreneurial abilities are not the only

factor that may impact corporate innovation. Since employee performance is a joint

function of ability and motivation, companies also face the challenge of motivating

employees to use their entrepreneurial abilities as best as they can (Ambrose and

Kulik 1999; Moorhead and Griffin 1998).

In the following section, we therefore provide the theoretical foundation of

motivation and incentives in work environments, and of entrepreneurial motivation

in particular.

2.3 Motivation and expectancy-valence theory

Motivation has been described as the psychological processes that direct and sustain

individual action and that result from individuals’ interaction with their environment

(Grant 2008; Latham and Pinder 2005). A general assumption in motivation theories

is that instincts (motives) drive people’s specific behaviors (Locke 1997). Motives

are defined as ‘‘relatively stable individual characteristics (e.g., need for achieve-

ment, need for affiliation, need for power) that drive behavior’’ (Waldman and

Spangler 1989 p 34). Individuals apply motives either consciously or subcon-

sciously to each given situation and task (Latham and Pinder 2005). Both internal

and external motives can induce three aspects of individuals’ actions (Mitchell and

Daniels 2003): direction (choice), intensity (affect), and duration (persistence)

(Locke and Latham 2004; Pinder 1998 p 11).

While there is a set of theories on motivation, studies on the work context have

often focused on the expectancy (or expectancy-valence) theory (for comprehensive

reviews of motivation theories, see Pinder 1998; Porter et al. 2003; Steers et al.

2004). In this study, we too concentrate on expectancy theory, since it provides an

adequate framework to study entrepreneurial motivation in the context of businesses

(Wiklund et al. 2003; Wiklund and Shepherd 2005). The basic cognitive expectancy

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framework, which is grounded in the psychological literature on motivation,

assumes that individuals’ behaviors are goal-directed and largely based on

conscious intentions (Porter and Lawler 1968; Tolman 1959; Vroom 1964).

Individuals will engage in behavior that they believe will lead to desired end states

and the most valued rewards (Deci 1972; Vroom 1964). Thus, motivation to act in a

specific way is influenced by (a) the positive subjective reward value or ‘valence’ of

actions, and (b) the expectation or perceived probability that one is capable of

performing in a way that will result in earning the reward (Vroom 1964).

The literature typically contrasts two types of rewards or incentives that can

stimulate individual action (Barnard 1968): extrinsic and intrinsic ones. While

extrinsic rewards, such as money, recognition or advancement opportunities, were

originally believed to motivate individual behavior, later studies adopted a new view of

motivation that considered individual behavior as driven by inherently interesting and

enjoyable tasks (Grant 2008; Heath 1999; McGregor 1960). Thus, intrinsic rewards

relate to the satisfaction of curiosity, the joy of involvement, the opportunity to be

creative, or the sense of mastery (Harter 1978; Ryan and Deci 2000). Accordingly,

intrinsic motivation generally involves individuals engaging in an activity for its own

sake, since they find it interesting and derive spontaneous and enduring satisfaction

from it (Deci 1975; Deci and Ryan 1985; Gagne and Deci 2005). Conversely, extrinsicmotivation requires an instrumentality between the activity and separable conse-

quences, such as tangible or verbal rewards, while satisfaction results from the

extrinsic consequences to which the activity leads and is derived from outside the

person in question (Amabile 1993; Brief and Aldag 1977; Gagne and Deci 2005).

While extrinsic and intrinsic motivation are often considered opposites,

motivation crowding theory proposes a combination of these motivation types

(Frey and Jegen 2001; Frey and Oberholzer-Gee 1997). According to the self-

determination theory (Deci and Ryan 1985, 2000), external rewards may have a

detrimental effect on intrinsic motivation, thus crowding out’ intrinsic motivation.

In such a situation, individuals shift their attention from the activity to the reward,

and the activity itself becomes less important for them (Frey and Jegen 2001; Frey

and Osterloh 2005). A prerequisite for crowding out to occur is that individuals

should be intrinsically motivated from the outset. Prior studies supported the

crowding out effect if the study participants perceived the external rewards as

controlling (Frey 1997; Osterloh and Frey 2000; Wiersma 1992). However, the

other way round may also occur. An individual may be extrinsically induced to

fulfill a task but, on first performing this task for the sake of a reward, discovers the

value and attractiveness of this specific work content and continues to perform—

now intrinsically motivated—(relatively) regardless of the promised reward.

In the organizational context, understanding employees’ motivation helps one

better understand and explain their behavior in the work context (Mitchell and Daniels

2003). Work motivation is defined as a set of internal and external factors that

originates within and beyond an individual to initiate and affect work-related behavior

(Latham and Pinder 2004; Pinder 1998). Management scholars suggest that employee

motivation is a strategic issue (Huselid 1995; Osterloh and Frey 2000; Wright and

McMahan 1992). Smith (2009), however, mentions that recent management studies

do not sufficiently consider motivation theories from the field of psychology. As


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motivation is a context-dependent concept, prior studies have examined several

contextual variables of work motivation, such as the national culture (Steers and

Sanchez-Runde 2002; Sue-Chan and Ong 2002), job design (Ambrose and Kulik

1999), as well as the organization culture and leadership (Latham and Pinder 2004).

For example, job designs that include a high degree of employee autonomy, the

ability to apply their skills, as well as opportunities to obtain feedback to develop

professionally, affect work motivation positively (Dwivedula and Bredillet 2010).

While work motivation is a more general concept applicable to the work

environment, several scholars have narrowed this concept to specific corporate

settings, such as entrepreneurial firms. Using a motivation lens, entrepreneurship

researchers have explored the concept of entrepreneurial motivation, defined as

people’s willingness to engage in the entrepreneurial process (Shane et al. 2003),

and have related it to entrepreneurial intention as a predictor of subsequent behavior

(Fitzsimmons and Douglas 2011; Gatewood et al. 2002). Entrepreneurial motivation

can be intrinsic or extrinsic (Carsrud and Brannback 2011). Carsrud and Brannback

(2011) state that while most entrepreneurship research assumes that entrepreneurs

are motivated by external rewards (such as power, status, and money), extrinsic and

intrinsic motivation can co-exist. Thus, entrepreneurs can be motivated by their

internal desire to succeed and by external rewards (Naffziger et al. 1994).

Since entrepreneurs and intrapreneurs have similar characteristics, conviction,

passion, and skills (Shabana 2010), both demonstrate entrepreneurial motivation,

but in different settings. In the organizational context, employees with entrepre-

neurial motivation are particularly valuable to companies, since they may be more

committed to the entrepreneurial process than others. In this paper, we study

entrepreneurial employees’ motivation in the corporate entrepreneurship context by

applying the expectancy framework (Porter and Lawler 1968; Tolman 1959; Vroom

1964) to this context. Specifically, we examine the role of corporate structure in

enhancing employees’ entrepreneurial motivation, i.e., in having these employees

attribute a positive valence to entrepreneurial activities with the expectation that

they can perform these activities in such a way that it will result in them earning the

(intrinsic or extrinsic) reward (Vroom 1964). While scholars have argued that

motivation is context-dependent, we do not know enough about how unique

organizational structures enable entrepreneurs, enable companies to attract and

retain their employees, as well as foster entrepreneurial motivation (Carsrud and

Brannback 2011; Carsrud et al. 2009; Edelman et al. 2010). We argue that the

contextual impact on entrepreneurial motivation also requires further exploration in

the intrapreneurship context, and therefore examine how companies can foster their

high-profile employees’ entrepreneurial motivation through elements of structure.

3 Methods

3.1 Case study introduction

Owing to the lack of prior research on how companies can stimulate entrepreneurial

employees’ motivation through organization design, our chosen research design was

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an inductive, in-depth case study. The case study research method has already

provided many answers to management problems (Eisenhardt and Graebner

2007), and is especially recommended when the boundary between a phenom-

enon and a context is not clearly distinguishable (Yin 2008). Case study research

is also particularly suitable to answer how and why questions, and allows for

deeper insights into new research areas than quantitative methods (Siggelkow

2007).

The case studies in this paper can be classified according to the following

dimensions (Keil 2002; Yin 2008): First, they are instrumental case studies, since

they were selected to advance the understanding of entrepreneurial employees’

motivation in the organizational context of spin-alongs. Second, a multiple case

approach was chosen instead of a single case to allow for a reliable data analysis and

a general but thorough understanding of the overall case context. The choice of the

company was not intended to be representative or random in respect of theory

building, but to allow for theoretical sampling (Eisenhardt 1989). Cases should be

selected deliberately and should be easily accessible. Thus, we chose a company

that provided good access for unique insights and which successfully supported its

corporate entrepreneurship activities. The good access was due to one of the authors

serving on the company’s supervisory board; we used this access to identify a

gatekeeper in the company, who recommended individuals who were particularly

knowledgeable about our research topic without conveying the specifics of this

investigation’s subject or intent. The gatekeeper briefed these individuals about our

general research topic and the study prior to our interviews. This multistep process

allowed us to rule out potential response biases that may have occurred if the

authors had contacted the company’s employees directly. In addition, ‘purposeful

sampling’ strategy (Corley and Gioia 2004) allowed us to gain access to the most

qualified informants to discuss our research question. During the data collection, we

ensured that, as far as we knew, no relevant managers had been omitted (we would

have interviewed such individuals) and that interviewees had responded openly by

also addressing critical issues. Third, our case studies have an inductive purpose and

are based on theory building rather than theory testing. Fourth, this case study is

retrospective, since we collected past data at a single point in time. Fifth, we

employed an embedded design by analyzing multiple spin-alongs within the context

of the corporate company.

3.2 Research setting

The chosen company’s headquarters is located in Germany. It was founded more

than 100 years ago as a technology spin-off of a university and is currently a leading

international technology provider. In 2011, its sales exceeded €700 million and it

had more than 5,000 employees. The parent company’s two divisions—division A

and division B—are managed separately for strategic and operational reasons.

Division A is fully owned by the group and primarily manufactures equipment and

systems featuring specific application technologies. In 2011, this division had

revenues of approximately €260 million and more than 2,000 employees. Division

B is located in a publicly listed company specializing in specific industry


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equipment, in which the parent company has a major and dominating stake. In 2011,

this division had revenues of more than €480 million and had more than 2,500

employees.

Companies in this industry generally face global competitors, as well as rapid

changes in the industry and market structures, in the customer needs, and in the

technologies. It is therefore very important for these companies to attract, retain, and

nurture high-profile employees to support their innovation activities. As a highly

specialized, medium-sized company that has and maintains its global market

leadership positions, the case company is a typical ‘hidden champion’ (Simon 1990,

2009, 2012). It has achieved its goals of becoming a total solutions provider, of

defending its global market position, and of maintaining its competitive advantage.

In the process of covering the entire value chain and ensuring a high innovation rate,

the company has managed to attract, retain, and nurture a considerable number of

high-profile employees. Hence, we consider this an excellent case to explore our

research question.

3.3 Data collection

We collected qualitative and quantitative data from multiple sources in order to

ensure a triangulation of the findings (Yin 2008), which provides a stronger

foundation for emerging constructs and their relationships. The data sources

included interviews, internal and public reports and presentations, the company’s

website, and observations. In a phenomenological study, in-depth interviews are a

key means of probing individuals’ subjective experiences (Suddaby 2006).

However, searching and using multiple data sources and ensuring data triangulation

allow one to establish the qualitative research’s reliability and validity (Huberman

and Miles 1994).

The chosen case study is part of a larger research project on the spin-along

approach. Previous studies on different topics, and based on different data covering

a shorter time period, have therefore already been published (Michl et al. 2012,

2013). The first paper by Michl et al. (2012) presents, from a corporate management

perspective, a basic model for the spin-along approach. On the basis of four case

studies in four companies, Michl et al. (2012) argue that corporations conducting

spin-alongs are ambidextrous, i.e., they are able to exploit existing business while

exploring new opportunities. Furthermore, the paper addresses the organizational

prerequisites that are necessary to successfully conduct spin-alongs and highlights

the role of senior management in this context. This paper paved the way for the

second paper by Michl et al. (2013), which addresses the spin-along approach with a

deeper focus on strategic ambidexterity. This research was conducted from a

corporate perspective by means of an in-depth single case study that seeks to

combine the concepts of strategic management and organizational ambidexterity.

Both studies (Michl et al. 2012, 2013) are aimed at explaining the innovative

performance of corporations.

Conversely, the purpose of the paper at hand is to examine how the spin-along

design can support the motivation of entrepreneurial employees and lead to their

attraction, nurturing, and retention. Thus, this paper focuses on aspects related to

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human capital and, specifically, high-profile entrepreneurial employees. Further, it

examines the elements that are essential from a corporate perspective, as well as

from an employee perspective. The paper is based on a more extensive data

collection effort than the previous studies, with data collected at different points in

time. First, we collected data over a three-month period in 2009, using a wide focus

on organization design and innovative performance. This first data collection

enabled us to gain a broad understanding of the company. Certain parts of this data

collection were used for the two papers described above. Building on the general

insights from our first round of data collection, we collected additional data in 2011

and 2012, focusing specifically on organization design and entrepreneurial

employees’ motivation. Hence, the second data collection differed from the first

in terms of its time period, research topic, and scope.

We investigated five innovation ventures: one in the company’s division A

and four in division B (Table 1 provides an overview). The parent company

also engaged in several other innovation activities. These mainly include

incremental R&D projects, but also a few spin-outs and acquisitions, as well as

one reverse merger. Since these actions were not intended as spin-alongs, we

explored only the five ventures that the informants described as innovative

ventures and as a combination of internal and external organizational elements

aimed at supporting corporate entrepreneurship. Thus, these ventures allowed

us to explore how entrepreneurial employees were attracted, retained, and

nurtured.

Table 1 shows the duration of each spin-along process. In addition, the employee

numbers and revenues of each spin-along are given at the start of the spin-along and

in 2011. Success or failure cannot be derived from these numbers, which have a

solely informative purpose. Instead, each spin-along’s success or failure is

determined in terms of its strategic innovations for the parent company.

For the purpose of this study, we define spin-alongs’ success or failure in two

ways. While we follow established research (Gartner et al. 1999; Shepherd 1999;

Shepherd et al. 2000) to objectively describe venture success as survival and venture

failure as death, we also want to examine the innovation-related factors that

contribute to venture success or failure. Since the company’s goal with spin-alongs

is to generate innovations that serve its long-term development, we define spin-

alongs as successful if they generate innovations that serve the parent’s strategic

Table 1 Overview of spin-along cases

Epsilon Alpha Beta Gamma Delta

Company division Division A Division B Division B Division B Division B

Spin-along process 1998 to 1999 2000 to 2007 2006 to 2008 1999 to 2005 Since 2004

Employees at spin-along

start

151 124 31 20 16

Revenue at spin-along start €13 million €30 million €4 million €2 million €10 million

Employees in 2011 136 234 45 90 46

Revenue in 2011 €22 million €70 million €8 million €10 million €41 million


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goal. Given these considerations, our sample consists of three successful (Alpha,

Beta, and Delta) and two failed ventures (Epsilon, Gamma).

Figure 2 illustrates the individual spin-alongs from a process perspective. Four of

the five units were created externally, while one unit was founded internally. Of the

four external spin-alongs, two started as spin-ins and the other two after an

acquisition. One external spin-along can even be described as a double spin-along,

since it followed the spin-along process twice. The spin-along portfolio with its

different characteristics and success rates allowed us to explore how different types

of entrepreneurial employees, such as former venture founders and employees from

other major companies, were attracted by and retained in the company.

The spin-along in division A (Epsilon) was a 100 % acquisition by the parent

company in order to build specialized knowledge in a new market segment. This

venture failed after a year because it could not generate any strategic innovation

ideas. A spin-along (Alpha) in division B started with an acquisition of 90 % and,

after 7 years as a semi-autonomous unit, was gradually integrated into the parent

company. Another spin-along (Beta) was fully spun in after a two-year distribution

alliance with the parent company. The third spin-along (Gamma) was spun in by

division B buying 75 % of the shares in 1999. In 2001, the parent company

considered offering Gamma as an initial public offering (IPO). However, the new

organization failed and the project was terminated in 2005. Gamma was

subsequently fully reintegrated into the parent company and functions within the

parent’s structure, although it retains its independent work setting. Finally, another

spin-along (Delta) was founded in 2004 as an internal unit. The company recruited

an external CEO with special application knowledge for it, but its employees came

from the parent company. Delta is a current spin-along of the case company; it acts

independently from the parent company but is monitored by the corporate

structures.

We conducted 11 semi-structured interviews with informants from the parent

company and the spin-alongs to ensure an embedded view of the cases. Most of the

Internal

External innovation process(external venturing)

Internal innovation process(internal venturing)

Gamma

Delta

Epsilon

Alpha

Beta

External

Fig. 2 A process view of the individual spin-alongs

P. Klarner et al.

123

parent company informants could provide insights into all five spin-alongs. We

interviewed five people from the parent company. One informant sat on the

supervisory board. Three parent company informants held positions in the executive

board (marketing, sales, services, business development; research and development;

procurement, production, and supply chain management). Another informant

worked in an engineering position in division A of the company, but was a former

Epsilon employee. We interviewed six people from the spin-along units. The two

Alpha informants were managing directors with an engineering background. We

also interviewed Beta’s two managing directors, one of whom was its co-founder;

both had a biotechnology background. The Gamma informant was its founder and

managing director, and had strong biotechnology expertise. Finally, we interviewed

Delta’s managing director, who was hired externally as a biotechnology expert.

We personally conducted all interviews at the informants’ workplace for

additional observations and quantitative data collection at each site. We started all

interviews with a short introduction to the research project and questions. We then

asked the informants about the company structure and its entrepreneurial

employees’ motivations, but also gave the informants the opportunity to refer to

other topics. All the interviews, which were recorded, lasted between 1 and 2 h. The

tapes were all transcribed. Besides the recorded interviews, we also had unrecorded

conversations with informants. Since we mostly spent half a day at an informant’s

workplace, we also collected a broad range of informal information. Data was

collected until no new evidence appeared, i.e., category saturation was reached

(Eisenhardt 1989; Glaser and Strauss 1967; Suddaby 2006). We wrote short

summaries of approximately three pages about each interview and sent them to the

informants to double check for accuracy.

Since four of the five spin-along units were created after an acquisition, internal

company politics could have impacted the creation of these units. For example, the

parent firm could have sought to satisfy important employees, who might have

interfered with the transactions if the acquired companies had been fully integrated.

We therefore asked our informants about the role that internal politics had played in

the units’ creation. They told us that the company’s key players had explicitly

supported the acquisitions, because they had seen the potential for contributing to

the parent’s development and innovation strategy. They emphasized that internal

politics had not played a role in the creation of the units. The separate units had been

created to enable entrepreneurial employees to work on specific innovation projects

with a sufficient degree of autonomy. We are thus very certain that these spin-alongs

were solely created to support the parent’s strategic innovation activities.

Throughout the data collection, we took various steps to minimize informant

biases. We interviewed informants at multiple hierarchical levels, including the top

management responsible for the parent company’s innovation strategy, the board

chairman responsible for monitoring the parent’s innovation strategy, the senior

management responsible for the coordination between the spin-alongs and the

parent, as well as spin-along heads responsible for fostering and implementing

innovation projects. These people are all likely to have different views on how the

company supports entrepreneurial employees. Owing to the lack of differences in

these informants’ descriptions, we concluded that informant biases were not an issue


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(Graebner and Eisenhardt 2004; Seidler 1974). In addition, we interviewed

individuals closely involved in innovation, including highly influential and

knowledgeable informants, who could be reliably trusted to recall important events

(Graebner and Eisenhardt 2004; Huber and Power 1985; Seidler 1974). Finally, we

promised confidentiality to motivate all the participants to provide accurate data

(Huber and Power 1985; Miller et al. 1997).

3.4 Data analysis

In the corporate context, we conducted within-case analyses focused on developing

the constructs and relationships in the case company. Furthermore, we conducted

cross-case analyses on the basis of the five spin-alongs (Eisenhardt 1989), which

allowed us to compare our findings across these observations.

We first synthesized the information from all the interview transcripts and

archival data (Eisenhardt 1989), applying triangulation between the interview and

archival sources to create a richer account (Graebner and Eisenhardt 2004; Jick

1979). From these sources, we created summaries of each of the examined five spin-

alongs of about 15 pages per spin-along and one summary for the parent company.

We concurrently read and compared the original interviews with the interview

summaries and the case summaries. From these case summaries, we identified

similar statements and grouped them into concepts (open coding). Because we

focused on the inductive and interpretative processes, we allowed concepts to

emerge from this process instead of being guided by specific hypotheses (Graebner

and Eisenhardt 2004). We subsequently engaged in axial coding by searching for

relationships between these constructs (Corbin and Strauss 1990). We looked for

similar constructs and relationships across the five spin-alongs and developed

tentative propositions.

In this process, we followed a replication logic (Eisenhardt 1989) by often

revisiting our data to examine the similarities and differences between the spin-

along cases and, where necessary, to refine the emerging concepts and their

relationships. To further sharpen our concept definitions, we constantly compared

our emerging framework with our detailed venture summaries and other qualitative

and quantitative data (Eisenhardt 1989; Eisenhardt and Graebner 2007; Yin 2008).

Theory building from case study research requires simultaneous data collection and

analysis (Glaser and Strauss 1967). This supports flexible adjustments as new

concepts and relationships emerge from unique case features. We used charts and

tables to compare the spin-alongs cases (Miles and Huberman 1984).

To ensure data reliability during the entire data analysis process, two of the

authors coded the data separately into concepts and then discussed their emerging

results. The two raters fully agreed on the construct codings. We then had another

independent rater with management training code 20 % of our data (Mishina et al.

2004). This independent rater fully agreed with the two authors’ codings, indicating

that the cross-coder reliability was very high. Further, all the raters discussed their

conclusions about the relationships between the concepts. We placed these final

concepts and their emergent relationships in a conceptual framework.

P. Klarner et al.

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4 Results

4.1 Spin-alongs combine flexibility, security, and control

Prior research has found that organic organizational structures, defined by a high

degree of decentralization and autonomy, support flexibility and innovation (Burns

and Stalker 1961). Such an organization design is likely to foster employees’

innovative behavior. Nevertheless, we find that structural flexibility is not sufficient

to attract, nurture, and retain entrepreneurial employees. Instead, the case company

structures its ventures in the two divisions in a spin-along approach (Michl et al.

2012, 2013; Rohrbeck et al. 2009). Findings reveal that spin-alongs combine three

central elements that attract, nurture, and retain high-profile employees: they enable

companies to combine structural flexibility and employment security for such

employees with management’s control of the venture units.

4.1.1 The role of structural flexibility in spin-alongs

Structural flexibility is shown to be fostered by spin-alongs’ high autonomy.

Autonomy refers to employees’ freedom, independence, and discretion to carry out

their work assignment, including scheduling their work, making decisions, and

choosing work methods to perform their tasks (Breaugh 1985; Hackman and

Oldham 1975; Morgeson and Humphrey 2006). In the spin-along setting, this

includes employees’ freedom to define the work agenda and setting, to develop a

business and innovative projects on their own with the parent firm resources, and to

work under the general parent firm guidelines instead of specific work procedures.

We identify three major findings related to spin-along employees’ autonomy.

First, entrepreneurial employees require autonomy to experiment with new ideas

and to use and develop their entrepreneurial abilities. The founder, and current

managing director, of spin-along Gamma maintained that, ‘‘The parent company

gives us freedom. As long as we produce the numbers, they leave us alone.’’ It thus

seems that entrepreneurial employees are specifically motivated by the work

autonomy they enjoy in spin-alongs and because the parent company retains them if

a spin-along fails. A Beta manager mentioned that, ‘‘I need this entrepreneurial

environment. If this were to change, I wouldn’t continue working for this company.

However, if the freedom and autonomy that our parent company has provided so far

are maintained, I will stay here.’’ Beta was acquired by the parent company after its

first 9 years as a small and independent company, and Beta’s entrepreneurial

employees were retained in the spin-along during the acquisition process. The

highly decentralized spin-along context allowed these employees to explore their

entrepreneurial abilities and to contribute to the parent’s innovation.

Second, the high autonomy afforded to spin-along employees not only helps

companies retain such employees, but also attracts new entrepreneurial employees

from outside the company. The head of Delta, for example, recalled: ‘‘I joined the

parent company from my prior position at one of its clients. What really motivated

me to take this job was the far greater freedom to shape the business. There was no

material incentive.’’ He continued: ‘‘The parent company was known for its


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flexibility, innovativeness, and for being at the cutting edge of technology

development. Nevertheless, I could have stayed in my old job at [a major market

player]. I was a well-respected developer and could most probably have stayed in

this position until retirement. What really motivated me to take this job was the

opportunity to develop my own business. Resources are sometimes more limited

than in a large, established company, but I can do whatever I think is necessary with

these resources. In addition, the parent company gave me enough time to develop

this unit.’’

Third, autonomy supports the entrepreneurial employees’ identification with the

spin-along and the entrepreneurial culture. A Beta manager stated: ‘‘This company

is our baby—we have grown it from its founding year. We have seen it starting to

perform. It would be very sad to give all this up. I find doing what I am interested in

highly motivating.’’ The head of Delta recalled: ‘‘One of our credos is: Fail fast,

correct fast. You experiment and once you realize you made a wrong decision, you

do not invest in it any further.’’ Continued support for such a culture of

experimentation in the spin-alongs after the acquisition increased the entrepreneur-

ial employees’ intention to stay with the parent company. Their work setting

remained similar after the acquisition, although the spin-along now operated under

the corporate umbrella. The high degree of autonomy that continued in the spin-

alongs was a major element in retaining the entrepreneurial employees.

The parent company’s management also emphasized the need to ensure that the

entrepreneurial employees enjoy autonomy. When asked how the company retains

an acquired venture’s entrepreneurial employees such as its founders, an executive

board member said: ‘‘You need to provide them with freedom in their daily work

and a certain freedom to shape their work, and maintain a creative environment.

They have a strong entrepreneurial spirit, great ideas, and enjoy autonomy, and

these employees are very valuable. However, if we don’t give them enough

autonomy and freedom, this would be like putting a hamster in a cage—they would

then leave the company.’’ The parent company’s chairman underlined the

importance of creating a work context in which founder employees can flourish:

‘‘These employees are very interested in their work and show high intrinsic

motivation. They feel that their work is more valuable in the spin-along context than

in their prior work situation.’’

4.1.2 The role of employment security in spin-alongs

Providing greater employment security within corporate ventures than that found in

independent start-up ventures has been revealed as another motivating dimension

for entrepreneurial employees. Employment security can include a lower risk in

performance-based variable pay (pay risk) and a lower job loss risk (job risk)

(Monsen et al. 2009). In our case, the pay risk and job risk are lower for

entrepreneurial employees working in a spin-along than when working as

independent entrepreneurs. Both the pay risk and job risk of spin-along entrepre-

neurs are managed by regular work contracts with the parent company. These

contracts contain a fixed monthly salary; most are indefinite but not tenured working

contracts. For young employees, these contracts may also be definite for a certain

P. Klarner et al.

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probation period, and the salary is likely to be lower. However, spin-along

entrepreneurs can add a variable payment to their monthly salary by buying shares

in the spin-along; most spin-along founders or managers have shares in their spin-

along.

A parent company senior manager explained as follows: ‘‘Many of the

entrepreneurial employees working in spin-alongs feel that their leeway has been

extended, since they are less dependent on small changes than in [an independent

start-up]. A large company like ours leads to greater stability and employees enjoy

greater financial security.’’ This underscores that the security a larger company can

provide is a major motivating factor for employees, as they are given access to

financial resources, and setbacks in the entrepreneurial process are less likely to lead

to unemployment (Monsen et al. 2009) and a loss of income. In addition, a large

company with a strong financial resource base is better buffered against external

shocks in the industry environment than a small venture. This increased

employment security enhances the likelihood of employees choosing a corporate

spin-along setting. As a result, the founders of ventures acquired by a parent

company joined the parent’s spin-alongs rather than starting new external ventures,

which provided the parent company with valuable entrepreneurial abilities.

After a spin-along has been terminated, the spin-along employees have the option

to choose between an attractive corporate position and an exit strategy with an

appropriate payout. This choice is independent of the spin-along’s success or

failure. This differs crucially from independent entrepreneurs’ position at such a

point. While independent entrepreneurs lose their income and job when a venture

fails, spin-along entrepreneurs are not exposed to this risk, but instead have the

security of payment and employment. Spin-along employees can thus be described

as ‘‘protected entrepreneurs.’’

From a corporate perspective, it is beneficial in most spin-along cases to retain

the spin-along employees, although the company is likely to be mainly interested in

retaining high-profile employees with entrepreneurial abilities and highly specific

knowledge. To retain these employees, the parent company offers them corporate

positions with challenging tasks and management responsibilities. The case

company managed to retain such high-profile employees from the spin-alongs

Epsilon, Beta, and Gamma after these spin-alongs had been terminated. In the final

phase of the spin-along Alpha, one of the founders and managing directors and other

entrepreneurial employees left the company in 2007 due to irreconcilable

differences with the corporate management. This position was filled by an external

manager, who successfully supported the spin-along’s end phase. These examples

from previous spin-alongs indicate that spin-alongs’ entrepreneurial employees use

both options in their employment contract, i.e., staying with or leaving the company

after a spin-along has been successfully or unsuccessfully terminated. In our case,

the corporation retained some of the high-profile employees after Gamma failed,

while, in the case of Alpha, some high-profile employees left Alpha despite its

success.

However, to attract, retain, and nurture entrepreneurial employees, both

flexibility and security are needed; this was highlighted by a senior parent company

manager: ‘‘Entrepreneurial employees can explore new topics under the parent


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company’s umbrella and are offered interesting new areas in which they can work.

At the same time, they gain security in the corporate setting. This combination

makes them accept that they can no longer make all the decisions themselves.’’

Thus, both flexibility and security, which we term flexicurity, should be provided to

attract, retain, and nurture entrepreneurial employees.

4.1.3 The control role of the parent company

While flexicurity in spin-alongs is important for entrepreneurial employees’

motivation, from a management perspective, entrepreneurial activities should be

monitored over time to ensure that they contribute to the company’s innovation

targets and meet its strategic goals. Specifically, spin-alongs need to contribute to

the parent company’s goal in order to build new competencies, knowledge, and

technologies. Therefore, the parent company has to monitor spin-along activities

and their contribution to the overall knowledge extension. The company mainly

does so by means of financial metrics. Spin-alongs also provide the parent firm with

a monthly activity report, which enables quick adjustments.

Controlling requires the definition and constant monitoring of each spin-along’s

goals. A parent company senior manager explained, ‘‘It is important to define goals

very clearly right from the beginning in order to ensure that the parent company and

the spin-alongs share the same goals and direction. We ensure that the entrepre-

neurial employees working in the spin-alongs are aware of the autonomy that they

enjoy, but also make sure that they are working under the corporate context’s

guidelines, and that they accept this context.’’

Monitoring spin-alongs therefore also implies that those entrepreneurial

employees who are not ready to accept the corporate guidelines may be asked to

leave the company. If the multiple spin-alongs in the company are not controlled,

the parent company’s top and senior management may lose their oversight and may

spend financial resources on projects that do not contribute to the company’s

innovation strategy. This implies that only those entrepreneurial employees who can

flourish under the corporate umbrella should be attracted and retained. Another

senior parent company manager highlighted: ‘‘Some of the entrepreneurial

employees are not used to a large company’s strict structures and guidelines. This

may lead to tensions, since these employees are not used to following company

guidelines.’’

In addition, monitoring is important in order to identify which spin-along

employee competences can be used in the parent company, and vice versa, to

optimize the knowledge exchange between the parent and the spin-alongs and create

synergies. This also nurtures and extends the knowledge of entrepreneurial

employees. A senior manager exemplified: ‘‘If I see that an employee of one of

our spin-alongs has specific abilities that are needed in a specific geographical

location, this employee may be assigned a task in this location. Our worldwide

functional organization ensures that we identify which competences we have in

which locations and then control and use these competences. Today, our human

resources department also screens our knowledge resources and identifies which

employees should be trained and developed in specific areas. This screening is done

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123

in respect of spin-along and parent company employees.’’ Spin-alongs share

important knowledge, such as R&D or technology-related knowledge, with the

parent company, which can then be used to broaden innovative efforts or apply

knowledge to new business areas. Therefore, both the parent’s and the spin-along’s

knowledge needs to be constantly evaluated and monitored to optimize the transfer

of knowledge, and to ensure that entrepreneurial employees are continuously

nurtured and the company invests in the necessary knowledge extension.

Gamma’s history taught the case parent company that the controlling of ventures

should start in the early phase of acquiring a new venture and integrating it into the

company. When acquiring Gamma, the parent company selected outside managers

to build the business, but these managers had an insufficient understanding of the

business, and the company’s focus was lost, which led to the failure of Gamma.

A Gamma founder remembered: ‘‘This was a bad time for us. Some people left the

company because they didn’t agree with what was going on. The people brought in

from other companies were promised a great deal of money. They did not really

plan to stay with the company, but were just driven by the money. It was a bad

situation because management didn’t care about this place.’’ The parent subse-

quently dismissed Gamma’s management and reintegrated the venture into the

company. The head of the integrated Gamma mentioned that the company currently

has, ‘‘…a lot more control over what we do. They allow us to operate our business.

We work with them. They give us what we need to invest in the business.’’ The

entrepreneurial spirit was reinstated in Gamma by providing the employees with

more autonomy and opportunities to use their entrepreneurial abilities. The Gamma

case illustrates that the parent company needs to very carefully attract and select

appropriate managers for ventures and should constantly monitor their abilities to

manage the venture unit, as well as the employees’ entrepreneurial spirit and

abilities.

4.2 The senior management role

Our findings show that senior management has a crucial role in ensuring that spin-

alongs offer their entrepreneurial employees flexibility and security, while

simultaneously monitoring them. Thus, senior managers need to evaluate how

much autonomy entrepreneurial employees need in order to flourish, and how much

control is necessary for each spin-along. Senior management needs to control the

spin-alongs by clearly setting their goals, which should align with the parent

company’s strategic goals, and communicating these goals to the spin-along

employees. These goals are mainly formalized in a business plan, but additional

milestones are also defined. These goals and their achievements are discussed in

regular meetings that take place at least four times per year, and where all the

responsible managers are present. An executive board member explained: ‘‘Some

entrepreneurial employees are not used to working in a corporate structure with its

strict guidelines. This may lead to problems, and we therefore try to give them as

much leeway as possible.’’ Senior management has to balance this leeway with

sufficient control of the venture to ensure that the spin-alongs’ goals align with the

company’s innovation goals. The head of Delta explained: ‘‘On the one hand, senior


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management gave us the flexibility to work according to our principles. There was

no micromanagement by them, and we had enough autonomy in our unit. On the

other hand, there was much pressure to succeed. They had high expectations of our

work.’’

Our data indicates that senior management has a relatively high degree of

discretion in exercising their role. Some parent company informants provided hints

of this by mentioning: ‘‘we take the concerns of the spin-alongs employees’

seriously and openly and respectfully discuss them.’’ In the process, senior

managers need to demonstrate the same preferences for independence, risk, and

exchange that the spin-along entrepreneurs do in order to understand these

employees’ need for autonomy. At the same time, senior managers should also

understand the parent’s need for control and incorporate this into the spin-along goal

setting. A supervisory board member stated that. ‘‘senior managers ought to

demonstrate that they are prepared to accept and are capable of accepting that the

company has exchanges with the spin-alongs at a strategic innovation level and does

not only concentrate on its internal strategy. This understanding is conveyed to the

company.’’ Management should ‘‘constructively recognize and accept upcoming

projects and ideas,’’ as well as demonstrate ‘‘the ability to realistically evaluate them

and decide about them.’’ As a result, ‘‘spin-alongs need strong mentoring by senior

management and this cannot be delegated.’’

Importantly, the spin-alongs’ entrepreneurial employees often perceived senior

management as a neutral party. Senior managers could communicate clearly and

could take extreme measures when problems arose. A senior manager explained:

‘‘Senior management has an important role in communicating with the spin-alongs

and during joint projects [between the spin-alongs and the parent]. Responsibilities

must be made clear and the communication needs to work. Since we are a global

company, this implies a lot of travel. It is important to communicate to employees

that they are part of this family, and this communication cannot be relayed through

video-conferences. Intercultural management skills are very important.’’

To create the right working environment for entrepreneurial employees in spin-

alongs, senior management has to develop a trusting relationship with them. This

also requires strong communication skills and trustworthy individuals. Gamma’s

manager explained: ‘‘Senior management’s ability to leave us alone [in the spin-

along], to have trust in us, was very important.’’ Beta’s managers confirmed this:

‘‘Senior management had a major role in the acquisition and integration of Beta. We

always approached them with questions and problems. It was very important to

know we have a trusting relationship with the decision-makers. When we were

acquired, some of the parent company’s divisions felt they had to compete with us,

since we had previously taken market share from them, but then suddenly belonged

to the same company. We obviously didn’t only make friends during this time, but

senior management protected us, and this helped a lot.’’

Senior management also has an important role in integrating acquired ventures

into the parent company. An Alpha employee noted: ‘‘Senior management actively

implemented the integration of our acquired venture and had a major role in the

integration success. For example, it put spin-along employees in touch with parent

employees who were knowledgeable about specific issues. Senior managers

P. Klarner et al.

123

constantly tried to build these contacts. This was the most important step.’’ While

top management decides which venture to acquire, senior management has key

responsibilities in integrating these ventures and making them flourish in the

corporate setting. This includes choosing the right timing for the integration or, if

needed, to divest an unprofitable spin-along. The parent company chairman

explained: ‘‘Spin-alongs should, as far as possible, have the freedom to develop.

Senior management needs to be open to new projects but should at the same time

have a strong ability to judge projects, as well as a highly developed decision-

making ability. This is also necessary when projects do not deliver the expected

outcomes.’’

A parent company senior manager highlighted another senior manager role: ‘‘It is

very important to quickly build a new identity for the employees of an acquired

venture, and not to alienate key performers through too much change. We have

learned that, specifically in the case of acquired units, a senior manager needs to

channel contacts between the spin-along and the parent. He also needs to protect the

spin-along, since entrepreneurial employees work successfully with flexible

structures and we cannot overwhelm them with a large company’s bureaucracy.’’

Thus, senior management must balance the parent and the spin-along’s goals and

actions, and should sponsor the spin-alongs in the corporate setting, while

simultaneously ensuring that they are sufficiently controlled through adherence to

clear responsibilities and measurable goals.

Finally, the culture in a spin-along is often more entrepreneurial than that of the

parent company. Thus, senior management needs to foster the spin-along’s

entrepreneurial culture, while also following the overall corporate guidelines and

innovation goals. Overall, senior management needs a high degree of cultural

sensitivity, leadership, and management skills. A senior manager explained: ‘‘We

had to exchange people and divest units over time and integrate others. Integration

only worked because senior managers, who were culturally intelligent managers,

were made responsible for it. These people needed to clearly communicate the goals

of the integration, but also had the ability to make tough decisions, like laying off

employees who did not flourish in the corporate setting, and hiring others.’’ He also

mentioned that managers with strong social competence and understanding of the

company’s goals are needed to retain entrepreneurial employees who are willing to

work in the corporate setting.

5 Discussion

The case results indicate that the spin-along approach combines flexibility and

security (flexicurity) for entrepreneurial employees with control in the form of

management’s monitoring of spin-alongs. From the parent company’s perspective,

this organization design supports the attraction, retention, and nurturing of

entrepreneurial employees, who contribute to the overall corporate entrepreneurship

goal by generating strategic innovations. Senior management has a critical

leadership role to play in fostering entrepreneurial motivation through the spin-

along design and to balance the design features of flexibility and security with


123

control through loose-tight leadership. These contributions of our study are

illustrated in Fig. 3 and discussed below.

5.1 Flexicurity as a design element to support employee motivation

Our aim was to uncover structural elements that enable companies to motivate high-

profile employees to engage in entrepreneurial activities. Our study offers several

insights into how organization design can contribute to employee motivation. A first

insight is that entrepreneurial employees are motivated by an organizational

structure that combines flexibility and security, i.e., flexicurity. Organization theory

scholars have long discussed the importance of mechanistic structures that rely on

high autonomy and decentralization to support innovation (Burns and Stalker 1961;

Duncan 1976). In addition, it has been found that corporate entrepreneurship

enhances employees’ innovative abilities (Kuratko et al. 1990). Yet, the impact of

organizational structure in motivating entrepreneurial employees has received little

attention in prior research (Carsrud and Brannback 2011). Our study fills this gap by

revealing that spin-alongs’ flexicurity provides a corporate entrepreneurship

structure that fosters and enhances employees’ motivation to use their entrepre-

neurial abilities.

Parent companyFostering corporate entrepreneurship with innovations

• Attract entrepreneurial employees• Retain entrepreneurial employees• Nurture entrepreneurial employees

Spin-alongFlexicurity to enhance entrepreneurial employees` motivation

Flexibility• Autonomy• Experimentation• Creative environment

Security• Limited risk of failure in spin-along• Financial backing of parent company

Senior ManagementFostering entrepreneurial motivation with a loose-tight leadership: balance flexicurity of the spin-alongs and control by the parent company

Fig. 3 Emerging conceptual framework

P. Klarner et al.

123

From an expectancy theory perspective, employees engage in entrepreneurial

activities when they attribute a positive reward value to such activities and presume that

their performance will earn the reward (Deci 1972; Vroom 1964). The entrepreneurial

employees in our case company seemed to be motivated more by intrinsic than extrinsic

rewards (Atkinson 1964; Leonard et al. 1999; Porter and Lawler 1968). For them,

engaging in entrepreneurial activities and work content that interested them was very

rewarding. Several employees told us that they were motivated by the opportunity and

responsibility to ‘create something new’ in their spin-along units, such as developing a

new market or an innovative product. These employees were looking for ‘a personal

challenge’ to work on something new rather than an increase in their income. Hence,

extrinsic rewards such as money were less important to them. The employees attributed

a very high positive valence to entrepreneurial activities, and derived satisfaction from

the joy related to such activities, from exploring ideas, and creating new businesses.

Motivation theory posits that individuals’ valence of an activity has to be significant in

order to prompt action (Atkinson 1964; Vroom 1964). Since entrepreneurial activities

performed in the spin-along setting were nonroutine activities, its creative employees

seemed to attribute a significant positive valence to them.

The unique organization design of the spin-alongs, which combined flexibility

and security, enhanced these employees’ expectation of earning an intrinsic reward,

i.e., the satisfaction of working on entrepreneurial, innovative projects (Ryan and

Deci 2000). Structural flexibility gave these entrepreneurial employees sufficient

autonomy to experiment with their ideas in a similar setting to that of a start-up

structure. Working in a separate venture unit provided them with sufficient work

freedom to build and maintain a creative environment. These work conditions,

which are very similar to an entrepreneur start-up environment (Gemunden et al.

2005; Heller 1999), seemed to enhance the employees’ expectation of being able to

perform their activities in a way that leads to great satisfaction (e.g., Vroom 1964).

Thus, structural flexibility provided the entrepreneurial employees with a work

setting from which they expected to derive great satisfaction by being allowed to

explore their curiosity and ideas, and being involved in innovative activities.

Structural flexibility also seems to be a reason for these employees not leaving the

company to work for other large companies that may provide less flexibility, impose

more administrative hurdles to entrepreneurial activities, and thus lower entrepre-

neurial employees’ expectation of deriving satisfaction from their work. Overall,

such employees’ intrinsic motivation was strongly fostered in the spin-along setting.

In addition, the spin-alongs provided the entrepreneurial employees with higher

employment security than they would have in a start-up setting. Since these

employees enjoyed better access to financial resources for experimenting with their

ideas in the spin-along context, they faced fewer hurdles in the entrepreneurial

process than a start-up entrepreneur would (Heller 1999). If a project failed, the

entrepreneurial employees did not face immediate unemployment (Monsen et al.

2009), and temporal changes in their industry environment or changes during the

entrepreneurial process could be better handled by their established parent company

with its secure financial resources. Such security seems to enhance entrepreneurial

employees’ intrinsic motivation, since their expectation of deriving satisfaction

from being involved in entrepreneurial activities should be higher without the


123

potential frustration associated with the inability to secure sufficient resources and

with facing the high stakes of failure as in a start-up setting. In addition, since the

established parent company was working on larger, innovative projects than some of

the employees had in their prior start-up structure, these employees’ leeway had

been extended in the spin-alongs. They thus derived even greater satisfaction from

working on larger projects and potentially building entirely new, high-impact

businesses. This circumstance may have increased their positive reward value

attributed to entrepreneurial activities in the spin-along setting as opposed to their

own start-ups, therefore enhancing their motivation.

Overall, from a motivation theory lens, the corporate spin-along setting, with its

dimensions of flexibility and security, seems to provide a context in which

entrepreneurial employees’ motivation is enhanced. Such employees seem to be

confident that they can engage in entrepreneurial activities in the spin-alongs and

that such activities will lead to significant individual satisfaction (i.e., intrinsic

reward). Thus, their ‘‘effort-reward expectancy’’ (Atkinson 1964; Lawler and Porter

1967; Locke 1968; Vroom 1964) is enhanced in the spin-along context.

Our findings also contribute to organization design research by supporting the

importance of providing employees with autonomy to support their entrepreneurial

abilities (e.g., Burns and Stalker 1961; Duncan 1976). We extend prior findings on

organizational structure by identifying autonomy as a supportive element to attract,

nurture, and retain entrepreneurial employees in a larger company. Contrary to prior

research’s emphasis on flexibility, we find that entrepreneurial employees need both

flexibility and security to be motivated to join and remain with a company. While

autonomy allows them to continue working in small, flexible units with an

entrepreneurial spirit and culture, the parent company’s financial backing offers

them security, reducing the risk inherent in an uncertain business environment (Bull

and Willard 1995; Fabel 2004) and lowering the risk of failure inherent in an

entrepreneurial start-up setting (Campbell et al. 2012). Thus, companies that can

offer entrepreneurial employees both flexibility and security may be in a better

position to compete for innovative human capital in the workplace.

5.2 Spin-alongs as a design for intrinsically motivated high-profile employees

It should be noted that the entrepreneurial employees in our case company were all

intrinsically motivated, which does not rule out that these employees could have

been partly motivated by extrinsic rewards, such as money and a higher recognition

in the company after contributing to innovative outcomes. However, entrepreneurial

employees are motivated more by intrinsic rewards, and spin-alongs thus seem to be

an ideal design for intrinsically motivated high-profile employees, since it supports

and enhances intrinsic motivation (e.g., Carsrud and Brannback 2011; Deci and

Ryan 1985; Gagne and Deci 2005; Ryan and Deci 2000). For example, two of our

case company’s venture managers were hired from outside the company. Both

mentioned that their primary driving force for accepting the offer was the challenge

to become entrepreneurially active in a secure setting. Thus, spin-alongs provide a

good balance between flexibility and security, thereby combining the benefits of

alternative professional opportunities for high-profile employees in a single entity.

P. Klarner et al.

123

In addition, the challenges and responsibilities of the position (Gagne and Deci

2005; James and Jones 1980; Lawler and Hall 1970; Piccolo and Colquitt 2006) also

motivated the managers to accept it and, perhaps even more importantly, to remain

with the company. Given that the headquarters is not located in an area with

exceptionally high living standards, it is worth mentioning that not only these

managers, but also other high-profile employees, moved closer to their workplace.

This is surprising, since one would assume that high-profile employees are more

likely to be attracted by a workplace in an area with high living standards. In

addition, the parent company only offered salaries in line with market salaries rather

than excessive ones. It therefore seems that our case company managed to provide

positions that made high-profile employees trade the prospects of reaping extrinsic

rewards for the possibility to work on something more consistent with their intrinsic

motivation. Overall, our case results indicate that high-profile employees seem to

prefer companies that are global players, have an entrepreneurial and experimental

culture, but also offer security. These aspects may outweigh cutbacks in extrinsic

rewards. Consequently, despite prior literature stating that extrinsic rewards may

motivate employees to engage in intrapreneurship (Hornsby et al. 2002; Shabana

2010), we find that intrinsic motivation is important and needs to be considered

when setting up a context in which high-profile employees can flourish.

It is also questionable whether corporate entrepreneurs earn less than independent

entrepreneurs. Traditional entrepreneurship research assumed that individuals

become independent entrepreneurs owing to their higher earnings, but recent

studies show that independent entrepreneurship often offers few monetary benefits

(Hamilton 2000; Headd and Kirchhoff 2009; Moskowitz and Vissing-Jorgensen

2002). Hence, some studies (Benz and Frey 2008; Evans and Leighton 1989;

Polkovnichenko 2003) explain the fact that individuals become entrepreneurs

despite being substantially underpaid in terms of nonmonetary or intrinsic rewards.

Corporate entrepreneurs benefit from ‘‘entrepreneurial employment’’ in spin-alongs

in two ways: first, they have a safer workplace than independent entrepreneurs.

Second, they have a higher and more stable income than independent entrepreneurs.

In line with crowding theory (Frey 1997; Frey and Jegen 2001; Frey and

Oberholzer-Gee 1997), extrinsic rewards for entrepreneurial employees might even

undermine their intrinsic motivation. Since entrepreneurial employees demonstrate

high intrinsic motivation from the outset, rewarding them with very high salaries

may pose a threat to the organization, since such employees may shift their attention

from the entrepreneurial activity to the extrinsic reward, reducing the activity’s

importance for them (Frey and Jegen 2001; Frey and Osterloh 2005). Therefore, the

case company’s approach to refrain from excessive payment for their entrepre-

neurial employees may have proved beneficial in terms of avoiding the crowding

out effect (Deci et al. 1999; Frey 1997; Frey and Osterloh 2005).

5.3 Aligning employees’ intrinsic motivation with the parent’s goal: the role

of control

Another insight is that, from the parent company’s perspective, flexicurity needs to

be balanced with control to ensure effective corporate entrepreneurship. The spin-


123

along structure combines these elements to enhance the motivation of entrepre-

neurial employees, who require flexicurity, as well as management’s control of

venture units. While the parent firm needs entrepreneurial employees’ intrinsic

motivation for creative and innovative projects, their intrinsic motivation should

support the parent firm’s strategic goals concerning knowledge extension (Osterloh

and Frey 2000). Scholars have stated that the ‘empowerment’ of employees, which

can be achieved through employee participation, strengthens their intrinsic

motivation (Spreitzer 1995; Zhang and Bartol 2010). In the spin-along setting,

entrepreneurial employees participate in the entrepreneurial process through their

high degree of autonomy in the venture unit, which—as noted—further strengthens

their intrinsic motivation to engage in entrepreneurial activities. At the same time,

the parent company needs to control spin-along employees to prevent them from

pursuing projects that may be intrinsically motivated but do not correspond with the

company’s goals (Heller 1999). The parent company established controlling

structures that most of its entrepreneurial employees accepted, since they were

aware of the benefits of working in a corporate setting and the corresponding need

for them to accept some corporate monitoring policies. As long as these employees

benefitted from flexicurity in their daily work, they agreed to the controlling

structures.

In addition, entrepreneurial employees’ intrinsic motivation has two important

knowledge-related benefits: First, it enables entrepreneurial employees to generate

specific innovation-related and tacit knowledge. Second, it can foster the transfer of

such knowledge accumulated over time to the parent company’s employees (Gagne

2009; Osterloh and Frey 2000). As shown in our findings, the parent company seeks

to exchange knowledge between the spin-along and itself. In order to foster the

creation of strategically relevant entrepreneurial knowledge in the spin-alongs, the

parent company seems to support and enhance these employees’ intrinsic

motivation and to monitor the process of knowledge creation and transfer over time.

Finally, prior literature provides evidence that companies need to balance

innovation and control (Thompson 1967) in ambidextrous designs (Duncan 1976).

Ambidextrous designs combine organic structures to foster innovation and

mechanistic structures to implement these structures (Adler et al. 1999; Duncan

1976; Raisch and Birkinshaw 2008). Our findings support prior research (Michl

et al. 2012, 2013) that describes spin-alongs as a dynamic organization design and

an ambidextrous structural form that help companies manage multiple innovation

ventures and foster effective corporate entrepreneurship. The combination of

flexicurity for the innovation units and control by the parent company merges

elements of organic and mechanistic structures that allow management to motivate

entrepreneurial employees while, simultaneously, monitoring them over time.

5.4 Leadership’s role in balancing flexicurity and control

A final insight relates to how companies can balance flexicurity and control. First,

senior managers have a critical role in balancing these elements to ensure effective

corporate entrepreneurship. With regard to hidden champions, management is an

especially crucial component. Management development is therefore described as a

P. Klarner et al.

123

scarce resource (Simon 1990, 2009, 2012). Simon (1990) identifies the optimal

management style for hidden champions as open-minded and patriarchal.

Similar to this study, prior research has found that, in order to manage the tension

between innovation and efficiency, or exploration and exploitation, the managers

too need to be ambidextrous (Mom et al. 2009). Our findings show that this

statement also refers to the senior management level, although it previously referred

to the top management team level (Smith and Tushman 2005). Our results show that

senior managers should not only be sensitive to the spin-along employees’ goals and

ambitions, but also to those of the parent. Senior managers’ central role is to

communicate between the spin-along and the parent as a neutral mediator, to

manage tensions between the two, to sponsor a new spin-along in the corporate

setting, and to balance the spin-along employees’ entrepreneurial culture and

motivation with the parent company’s corporate culture and innovation goals

(Covin and Slevin 1991; Michl et al. 2012, 2013). Overall, senior management has a

critical role in nurturing high-profile employees’ abilities and retaining them, while

simultaneously deciding when to divest ventures that fail and to lay off employees

who do not accept the parent’s norms. Balancing entrepreneurial and managerial

goals, or innovation and efficiency, requires senior managers who (1) are

experienced at working in innovative settings and managerial responsibilities, (2)

are able to swiftly acquaint themselves with new and complex topics in the spin-

along units and adapt to required changes in the parent company’s strategy, and (3)

have the strong social skills and the intercultural sensitivity required to commu-

nicate with different colleagues in the spin-along and the parent.

Second, senior management’s role in balancing flexicurity and control requires a

combination of different leadership styles. A possible management approach could

be the loose-tight leadership model—a combination of central directive and

individual freedom (Sagie 1997). A directive leadership style is described as

providing subordinates with a framework for decision-making and action in

alignment with the leader’s vision, whereas a participative leadership style is a

process through which influence is shared between superiors and subordinates

(Sagie et al. 2002). While transformational leaders provide direction by commu-

nicating a vision and, at the same time, empowering employees, their leadership

style is often characterized as static. Conversely, loose-tight leadership is a more

dynamic leadership style, since it implies that, depending on the various situational

factors, either directive or participation dominates. Our findings suggest that, by

using the loose-tight leadership style, senior management can balance flexicurityand control. Thus, in times of strong performance by a spin-along, senior

management may foster entrepreneurial employees’ greater participation in the

innovation process, while they provide these employees with more guidelines when

a unit performs poorly, or when its innovative activities progress slowly.

5.5 Practical implications

According to Steers et al. (2004) pp 383–384), ‘‘…the past decade has witnessed

greater workplace changes than any other decade in memory […] and managing

knowledge workers continues to perplex experienced managers across divergent


123

industries. These changes can have a profound influence on how companies attempt

to attract, retain, and motivate their employees.’’ Our study expands on this

statement and has examined how companies support entrepreneurial employees’

motivation and convince these employees to join them and remain with them. This

study’s results have several implications for practice.

First, with only 4.2 % independent entrepreneurs, Germany has one of the lowest

start-up rates in Europe (Brixy et al. 2010), although many high-profile employees

are willing to found their own venture. Since this valuable human capital is set to

decrease for demographic reasons, companies need to shift the trend towards

corporate entrepreneurship. Thus, hidden champion companies (Simon 1990, 2009,

2012) that seek to foster corporate entrepreneurship need to create entrepreneurial

jobs in their organizational structure in order to attract, retain, and nurture

entrepreneurial employees. In this respect, spin-alongs are an adequate structure to

support these high-profile employees in the company while reinforcing account-

ability and control.

Second, companies need to actively communicate the flexible and safe working

environment in spin-alongs to better attract (potential) high-profile employees. This

may be done in two ways. On the one hand, existing high-profile employees are

likely to recommend their attractive work environment to other highly skilled

employees when, for example, attending professional and scientific conferences, or

other meetings in their professional networks. The labor market for high-profile

employees is far smaller than for other employees, which facilitates communication

between them in their social and professional networks. Thus, existing high-profile

employees’ social capital (Adler and Kwon 2002) can prove valuable regarding

attracting new entrepreneurial employees, as companies can benefit from their

word-of-mouth communication with others who share the company’s entrepreneur-

ial dynamics and have an intrinsic entrepreneurial motivation. Overall, in a labor

market with dense social networks between high-profile employees, these

networked employees may self-select themselves for an entrepreneurial spin-off

setting. While the process of attracting entrepreneurial employees through social

networks has been described in terms of founders of new ventures (Stuart and

Sorensen 2005), we argue that entrepreneurial employees can follow a similar

process and attract their high-profile peers to their company. In contrast, companies

may actively communicate the benefits of spin-alongs during scientific and industry

conferences that high-profile employees attend. For example, our case company

actively organizes such conferences to contact high-profile employees and

communicate with them. Companies may also communicate the secure environ-

ment, as well as flexibility and accountability in their recruitment strategy in order

to better attract high-profile employees.

Third, companies need to select and train senior managers to balance the

flexicurity in their spin-along units with the parent organization’s control. Senior

managers with some entrepreneurial experience may be well suited to understand

the value of flexicurity in ventures, as well as high-profile employees’ needs in such

settings. Such managers also need to demonstrate industry and managerial

experience in order to best evaluate their spin-alongs’ activities from the parent

company’s perspective. Senior managers with both entrepreneurial and managerial

P. Klarner et al.

123

experience may better counsel (Shabana 2010), sponsor (Kuratko et al. 1990), and

protect (Heller 1999) spin-alongs in the corporate setting, as well as communicate

better between the spin-along and the parent.

Finally, companies that use the spin-along approach need to carefully evaluate

their high-profile employees’ activities and performance over time. While

entrepreneurial employees are often intrinsically motivated, not all of them may

accept the corporate context and may perceive the parent’s control as constraining

(Campbell et al. 2012). High-profile employees who do not accept the corporate

setting may demonstrate decreased job satisfaction, higher frustration, and lower

motivation, which lead to reduced work efforts over time. Thus, companies need to

prevent these employees from creating a negative environment for their colleagues

and from convincing other high-profile employees to leave the company and join

them in new external projects (Campbell et al. 2012; Fost 2008). Overall, it is

important to evaluate which entrepreneurial employees to retain in the long run,

particularly if such employees are part of a company acquired by the parent

company.

5.6 Limitations and future research directions

Despite the in-depth data used in this study, the findings are drawn from a single

company. We therefore cannot generalize our results to other companies but can

offer specific insights for hidden champions faced with the challenge of attracting

and retaining valuable human capital. Future research may further explore spin-

alongs’ role in motivating entrepreneurial employees in other companies and

industries, and undertake a cross-case analysis of multiple case companies to

identify comprehensive patterns (Eisenhardt 1989). It would be particularly

interesting to compare spin-alongs’ role in industries in which there is high

pressure to innovate with their role in those with less pressure.

While our data is based on retrospective recalls of informants at the spin-along

and parent company levels (Shachar and Eckstein 2007), future longitudinal

research may explore how such ventures evolve in the corporate setting, and how

entrepreneurial employees are motivated throughout a spin-along’s different

development stages, in greater depth.

In addition, while we could not access specific company data about its success in

attracting, nurturing, and retaining high-profile employees, the success of most of

the spin-along units serves as an indicator that our case company fulfilled these

goals. Future researchers seeking to understand whether and how companies

succeed in attracting, nurturing, and retaining such employees are advised to attempt

to access companies’ internal documentation on human resource management.

Interesting data could include HR statistics on hiring employees with high-profiles,

high fluctuation rates that are far above the usual attrition rates regarding these

employees in a company and industry, as well as employee satisfaction surveys of

their development opportunities and responsibilities in the company. In addition,

researchers with long-term access to a company need to examine whether an

entrepreneurial mindset and culture were established in the company and its

entrepreneurial units some years after the creation of the spin-alongs. In turn, this


123

may serve as an indicator of whether companies have retained entrepreneurial

employees in the long run.

Based on inductive studies’ findings, quantitative research may test whether our

findings hold in a large-scale study of companies within and across industries. The

challenges in a quantitative investigation will certainly include the definition of

appropriate measures. Such studies would also need to only focus on a specific part

of the emerging theory on the spin-along approach and its motivating function.

Furthermore, it may be difficult to identify companies that create spin-alongs, since

this term is not commonly used or accepted among companies. However, if

quantitative approaches succeed, the interpretations would greatly benefit from

multilevel analyses. Consequently, more qualitative studies and quantitative studies

are needed to advance a theory of spin-alongs.

6 Conclusion

For most companies, attracting, retaining, and nurturing high-profile employees

could be one of the greatest present and future challenges. Hence, this study’s

results are especially relevant for companies in knowledge-intensive and rapidly

changing industries. Our results show how companies can attract, retain, and nurture

high-profile employees with an organization design, i.e., a spin-along, that offers

employees flexibility and security. The spin-along approach also offers the parent

company the opportunity to control its employees by means of its organizational

structure. By combining these three elements, the spin-along design can foster

corporate entrepreneurship, as well as secure an organization’s long-term survival

and success.

Acknowledgments We thank our interview informants for their time and insights, as well as the editor

and two anonymous reviewers for their excellent comments and suggestions.

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How companies motivate entrepreneurial employees

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