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Summary Burgers, J. H., & Covin, J. G. (2016). The contingent effects of differentiation and integration on corporate entrepreneurship. Strategic Management Journal, 37(3), 521–540. $6.95
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  3. Vrije Universiteit Amsterdam (VU)
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  5. Strategic Entrepreneurship & Organizational Renewal

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Summary Burgers, J. H., & Covin, J. G. (2016). The contingent effects of differentiation and integration on corporate entrepreneurship. Strategic Management Journal, 37(3), 521–540.

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  • Course
  • Strategic Entrepreneurship & Organizational Renewal
  • Institution
  • Vrije Universiteit Amsterdam (VU)

Full summary of Burgers, J. H., & Covin, J. G. (2016). The contingent effects of differentiation and integration on corporate entrepreneurship. Strategic Management Journal, 37(3), 521–540.

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Document information

  • October 7, 2021
  • 7
  • 2021/2022
  • Summary

Subjects

  • differentiation
  • integration
  • corporate entrepreneurship

Written for

  • Vrije Universiteit Amsterdam (VU)
  • M.Sc. Business Administration - Strategy & Organization
  • Strategic Entrepreneurship & Organizational Renewal
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Burgers & Covin (2016) – The contingent effects of differentiation and
integration on corporate entrepreneurship (CE)


Summary

 CE should be structurally differentiated (separate unit) but this unit needs to be integrated
 Question: when is integration beneficial? When do the benefits of integration outweigh its
costs?
 Integration measures include: shared vision, senior team social integration, cross-functional
interfaces

Results:

Small firms  Low levels of shared vision is best
 NO senior team integration is best
 Low level of cross-functional interfaces is best
Large firms  High levels of all 3 integration measures is best
Stable environment  High levels of all 3 integration measures is best
Dynamic  low levels of all 3 integration measures is best
environment




Introduction – costs and benefits of structural differentiation

 Key knowledge in CE practice: CE and mainstream activities require different organizing
principles
 CE = the sum of a firm’s innovation, venturing, and strategic renewal activities
 CE requires autonomy and therefore a differentiated structure will be beneficial
 However, structural differentiation can also bring some coordination & communication
problems as well as agency problems
 These coordination problems can be overcome by some integration mechanisms
 Integration can help to overcome coordination problems but also has some costs itself

 Question: when do the benefits of the interaction of structural differentiation and integration
outweigh the costs resulting from integration when it comes to promoting CE?

Theoretical background

Pro’s of structural differentiation Con’s
 Prevents intrusion of CE into  Members of CE find it hard to
mainstream activities understand members from other units
 Lack of interunit communication may
reduce the number / quality of ideas
 Agency problems: members of CE
pursue interests that do not align with
organizational objectives


 Differentiation & integration are both complementary and inconsistent

, There are 3 ways how senior teams can manage this contradiction:

Shared vision  Facilitates knowledge sharing across units
 Mitigates agency issues
 Con: some scholars suggest that strong identification with the org.
identity leads to reduced creativity
Senior team  Facilitates knowledge transfer across units, as top mgt oversees all
integration relevant connections
 Increased willingness to solve conflicts between units
 Positive effect on successful development of corporate ventures and
ambidexterity
 Con: some suggest that a more modest level of integration in the senior
team is best
Cross-  E.g. teams and task-forces
functional  Act as boundary-spanners that connect the different units
interfaces  Enhance knowledge in- and outflows
 Reduce agency conflicts
 Juxtapose different knowledge streams, leading to more creativity in CE
 Con: some warn that cross-functional interfaces in combination with
structural differentiation may interfere with the benefits of structural
differentiation as a driver of CE
Benefits & costs resulting from integration: a contingency view

Costs of integration:

1. Cost of organizing integration
2. Cost resulting from integration
a. Loss of autonomy
b. Slower decision-making
c. Reduced diversity of ideas
d. Groupthink & inertia

Contingencies

The effects of structural differentiation are contingent upon (influenced by):

 The level of integration
 The level of environmental uncertainty
 The organization size

Organizational size Environmental uncertainty
 Larger no of employees puts pressure  In high uncertainty, there is greater
on mgt to create more complex org. need to obtain knowledge from outside
structures the firm
 Small organizations are easier to  However, this is hard when there are
coordinate across units (mgt is closer to everchanging interdependencies
each other)  Costs associated with integration
(reduced flexibility, slower decision-
making…) diminish the ability to
develop CE in dynamic environments
 Integration measures might have more  In more dynamic environments,
positive effects on the relationship integration measures might have less
between structural diff. and CE in larger positive effects on the structural diff. –
organizations CE relationship

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