MANAGEMENT SCIENCE Vol 29, No. 7, July 1983 Printed in U S A THE CORRELATES OF ENTREPRENEURSHIP IN THREE TYPES OF FIRMS* DANNY MILLERt The objective of the research was to discover the chief determinants of entrepreneurship, the process by which organizations renew themselves and their markets by pioneering, innovation, and risk taking. Some authors have argued that personality factors of the leader are what determine entrepreneurship, others have highlighted the role played by the structure of the organization, while a final group have pointed to the importance of strategy making. We believed that the manner and extent to which entrepreneurship would be influenced by all of these factors would in large measure depend upon the nature of the organization. Based upon the work of a number of authors we derived a crude typology of firms: Simpte firms are small and their power is centralized at the top. Ptanning firms are bigger, their goal being smooth and efficient operation through the use of formal controls and plans. Organic firms strive to be adaptive to their environments, emphasizing expertise-based power and open communications. The predictiveness of the typology was established upon a sample of 52 firms using hypothe- sis-testing and analysis of variance techniques. We conjectured that in Simpte firms entrepre- neurship would be determined by the characteristics of the leader; in Ptanning firms it would be facilitated by explicit and well integrated product-market strategies, and in Organic firms it would be a function of environment and structure. These hypotheses were largely bome out by correlational and multiple regression analyses. Any programs which aim to stimulate entrepre- neurship would benefit greatly from tailoring recommendations to the nature of the target firms. (ENTREPRENEURSHIP; CONTINGENCY THEORY; PLANNING; ORGANIZA- TIONAL STUDIES) 1. Introduction Entrepreneurship can be defined and studied in a broader, less restrictive manner than tradition seems to dictate. There has been a strong tendency to identify entrepre- neurship with a dominant organizational personality, generally an independent- minded owner-manager who makes the strategic decisions for his firm (Cole [7], Redlich [39], Hartman [17], Collins and Moore [8], Shapero [46]). The emphasis has been upon the innovative abilities of this individual, and generally it is the entrepre- neur as actor who has been the focus of the research. This paper shifts the emphasis somewhat, looking at the entrepreneurial activity of the firm. With the growth and complexification of organizations, there is continually a need for organizational renewal, innovation, constructive risk-taking, and the conceptualization and pursuit of new opportunities, a pursuit that often goes beyond the efforts of one key manager. The entrepreneurial role stressed by Schumpeter [45] is socially vital but it can be performed by entire organizations which are decentralized. It can easily exceed or even circumvent the contributions of one central actor. In some firms, organizational renewal is performed by a traditional entrepreneur. In other firms, it is the province of a head office "planning" or "ventures" department. And in still other organizations it may be performed at lower levels of the hierarchy in R&D, engineering, marketing or even production departments. But what is most important is not who is the critical actor, but the process of entrepreneurship itself and the organizational factors which foster and impede it. These are the foci of the paper. • Accepte d by Ane Y. Lewin; received June 15. 1981. This paper has been with the author 2] months for 1 revision. ^ McGill University and Ecole des Hautes Etudes Commerciales, Montreal. 770 0025-1909/83/2907/'-7O$O1.25 Copyright © 1983, The Insutule of Manage' i Sciences