Internal venturing as a signal: How entrepreneurial employees gain career benefits in organizations

Abstract

Research SummaryDo employees benefit from acting entrepreneurially in a corporate environment? Drawing on signaling theory, we propose that entrepreneurial behaviors lead to tangible career benefits through the creation of new internal ventures, which serve as a credible signal of an employee's leadership potential. Using a time‐lagged design with a sample of 643 employees, we found in Study 1 that employees engaging in higher levels of entrepreneurial behaviors are more likely to create new internal ventures, which subsequently lead to more promotions and—in larger organizations—higher compensation. Study 2 employed a within‐subjects design to directly evaluate the signaling value of new internal venture creation. Together, our findings highlight internal venturing as a key mechanism through which entrepreneurial employees can gain career benefits within established organizations.Managerial SummaryEntrepreneurial employees are often seen as organizational misfits. Yet, our research shows that acting entrepreneurially in a corporate environment can enhance employees' career success through new internal venture creation. In two studies, we find that employees engaging in higher levels of entrepreneurial behaviors—asking questions to challenge the status quo, observing with fresh perspectives, exchanging ideas across diverse networks, and experimenting with new approaches—are more likely to launch new internal corporate ventures. The act of new internal venture creation, in turn, leads to more promotions and—in larger organizations—higher compensation, because it sends a positive signal of an employee's leadership potential. Our findings offer practical insights for both entrepreneurial employees and organizations seeking to foster entrepreneurial spirit.