The article “Corporate Entrepreneurship and Human Resource Management” (2011) provides in-depth analysis of the corporate entrepreneurship and its capacity to renew and innovate. The article covers some theoretical issues of entrepreneurship and corporate entrepreneurship, and the role of human resource management. The case of Montalt-Valencia Company is used to analyze how the theoretical notions are applied in practice.
The topic of entrepreneurship has been given a lot of attention in the academic literature. Joseph Schumpeter and many other economists focused on the analysis of an entrepreneur in the role of a discoverer or exploiter of opportunities. Lee, Periz-Ortis and Fernández-Guerrero (2011) argue that discovery and exploitation of innovations can lead to the creative destruction within the company when old economic structures are replaced with the new ones. The research shows that innovative companies effectively strive for organizational renewal using their human resources that have become an important complement to the entrepreneurial activity carried out by the senior managers.
Nowadays the goal of large companies should be to achieve consistency in the activity of various segments in the ambiguous environment. In order to achieve this goal, there should be integration between senior management and human resource policies. Such integration can be achieved though top-down management or an integrative process. Senior management is responsible for development of the strategy. In turn, integrative process allows the company’s members to be empowered to participate in the entrepreneurial decisions.
The case of Montalt-Valencia provides an example of how the company’s senior management and employees contribute to the corporate entrepreneurship by means of the combination of top-down approach and integrative processes. The decisions that refer to the external relations are usually formalized and taken by three top managers: the president, the managing director and the assistant managing director. At the same time, the human resource policies lead to the socialization and commitment of employees within the Montalt –Valencia. Training and career development provide the opportunities for the employees to develop their skills in order to work more effectively and later to be promoted to a managerial post. Learning and innovation may guarantee minor improvements in the company on the continuous basis. Moreover, Montalt-Valencia is capable of transferring the improvements to the new divisions that are frequently acquired.
In the second part of the case study the authors focus on the approaches to the new car sales and operation of the workshops in the Montalt-Valencia. They show that different tasks require specific forms of management, levels of empowerment and commitment, etc. There is intensive hierarchical control of each salesperson. Sales procedures are formalized, but sales persons rely more on their experience. Daily sales meetings are important for the incentives and the discussion of the monthly sales targets. The rewards for each salesperson are the public knowledge and the top management believes that such transparency has a positive effect on the work of the whole sales team. Concerning the workshops, the procedures are also highly formalized and targeted at the high quality of the services. Mechanics work together with diagnosis officers and their wages depend on the productivity and efficiency of their work. They receive bonuses up to 10% as a reward. So the work of the sales persons and mechanics is based on the improvements in quality, productivity, transparency, and customer care.
Lee, S., Peris-Ortiz, M., Fernandez-Guerrero, R. (2011). Corporate entrepreneurship and
human resource management: theoretical background and a case study. p. 48-67