IESE Insight
Middle Managers, Architects of Superior Performance
Mair, Johanna; Rata, Cristina
Editor: IESE
Artículo basado en: Corporate entrepreneurship: Linking strategic roles to multiple dimensions of performance
Año: 2004
Idioma: English

Corporate entrepreneurship (CE) is widely considered a vital means of stimulating and sustaining the overall competitiveness of an organization, with both practitioners and researchers recognizing the challenges of pursuing entrepreneurship within a corporation. CE is the result of the joint activities of an organization's members, activities that pursue strategic objectives and constitute strategic roles.

To face the challenges that CE poses for both theory and practice we need to advance our understanding of the activities and strategic roles involved in the CE process and their implications for performance. While most studies contemplate the top managers, little research focuses o­n the strategic role of middle managers and the contribution of the strategic roles played by middle managers to superior performance.

To fill this gap, in their paper "Corporate Entrepreneurship: Linking Strategic Roles to Multiple Dimensions of Performance" IESE Professor Johanna Mair and Researcher Cristina Rata explore the strategic role played by middle managers in the context of corporate entrepreneurship and its link to multiple dimensions of performance.

Mair and Rata base their analysis o­n data from the retail division of a large European financial institution, the ABN Amro Bank. Faced with increasingly demanding customers and growing competition, in 1997 the Dutch company engaged in an entrepreneurial initiative in order to enhance its competitiveness in the domestic market. It reshuffled its operations in the Netherlands, split the market into 207 areas and appointed a middle manager for each of these subunits. Of these, 119 middle managers are included in the final sample of the study. Both objective and subjective sources were used to gather data. Specifically, ABN Amro's archives were used to collect performance and satisfaction data and a context-specific instrument was developed in order to measure the activities constituting strategic roles in the context of CE.

Using factor analysis, Mair and Rata identify four reliable and stable dimensions of the middle manager's role in the context of CE, which are consistent with those suggested by the literature: leader, broker, businessman and architect. They learn that:

  • As businessmen, middle managers apply entrepreneurial approaches to implement strategy developed at the top aimed at building and sustaining a market presence and thus enhancing the overall competitiveness of the firm.
  • In their role as architects, middle managers focus o­n structure, systems and processes and aim at creating a "framework for action", which includes modifying the physical set-up of the unit, installing new processes and procedures, creating and realigning functions and services within the business unit and setting up new communication forums.
  • As leaders, middle managers focus o­n employees (involving them in idea generation and decision making, motivating and influencing their attitudes and behaviors etc.) and o­n creating a supportive working environment.
  • As brokers, middle managers facilitate the flow of know-how between business units, exchange ideas with sparring-partners in and outside the organization, transmit and take up best practices; and establish informal networks within the organization and with the outside world.

Further, Mair and Rata adopt a stakeholder approach to provide a multidimensional measure of bank subunit performance. Stakeholder theory suggests that the success of an organization will depend o­n its ability to integrate and balance the needs of all groups of stakeholders. The best way of evaluating the success of an organization is thus to ascertain and relate the levels of satisfaction it brings to its various stakeholders.

For an analysis at subunit level, Mair and Rata consider that the relevant stakeholders are the shareholders, employees and customers, and therefore argue that the success and performance of a subunit depends o­n its ability to satisfy these groups. Given this classification of stakeholders, the authors break the performance measure down into three dimensions: financial performance (to capture the satisfaction of the shareholders), customer satisfaction and employee satisfaction.

To evaluate the relationship between performance and strategic roles, the authors employ a powerful method called "canonical correlation analysis", which allows relations between multidimensional variables to be explored.

The results emphasize that the roles of middle managers as architects, leaders and brokers are positively associated with a measure of performance that includes financial aspects as well as customers' and employees' concerns. The dimension that contributes most to performance is the role of middle managers as architects, i.e. by shaping the processes and structures that enable entrepreneurial initiatives to flourish. The findings also show that acting as businessmen is not associated with the multiple dimensions of performance.

The study has significant managerial implications for the growing number of companies that initiate CE programs. For example, the strategic roles identified can be used to determine priorities in the activities middle managers should engage in while the company is embarking o­n an entrepreneurial initiative. Furthermore, the study suggests, while financial performance is an essential objective of any CE initiative, it is becoming increasingly important to have satisfied employees and customers.

© IESE Business School - University of Navarra