An empirical study of desired versus actual compensation practices in determining intrapreneurial behaviour

Abstract

Orientation: Past research recognises that human resources management practices may influence innovative behaviour, particularly as compensation systems can be used as a tool to increase intrapreneurial activity.Research purpose: The aim of this study is to determine the relationship between actual versus desired compensation practices and elevated intrapreneurial behaviour. This is in line with research that focuses on how to promote business innovation, rather than merely research whether innovation is desirable for businesses or not.Motivation for the study: Recognising that entrepreneurial actions are the bedrock of intrapreneurial behaviour and that these behaviours may be critical to the long-term vitality of a firm and economy, it is important to facilitate the empirical study of them in an underresearched, emerging market environment. Moreover, compensation such as reward preferences and variable pay schemes remain controversial in terms of their costs versus contributions, and these constructs deserve more empirical research.Research approach, design and method: The study employed a quantitative research design, using a cross-sectional and empirical approach with primary data sources. A structured webbased instrument rendered a sample of 209 respondents from a diverse set of businesses. Canonical correlational analysis was carried out to test the hypotheses.Main findings: The results reveal that a gap exists between an employee’s perception of desired compensation practices and the actual compensation practices. The results further highlight that non-outcome-based measures like pay risk, job risk and expectations of success play a role in determining whether employees decide to be intrapreneurial or not.Practical/managerial implications: Due to the potential impact rewards have on intrapreneurial behaviour, it is necessary to design relevant compensation systems as part of organisational architecture in order to foster intrapreneurship.Contribution: In response to calls to unveil innovation practices in developing countries and in acknowledging a contingency relationship between compensation practices and intrapreneurship, this article is one of the first studies to test the relationship between actual versus desired compensation practices and elevated intrapreneurial behaviour in an emerging market context.