Corporate entrepreneurship includes sustained regeneration, organizational rejuvenation, strategic renewal and domain redefinition. It has been increasingly recognized to be important to corporate vitality and wealth generation as well as it is considered a source of competitive advantage. While existing research has examined the role of ownership, corporate governance, and transformational leadership in shaping corporate entrepreneurship, little empirical work has been done to examine the question of how changes in the organizational context, like privatization, affects corporate entrepreneurship.

Using the framework of institution-based theory and agency theory, we examine the macro and micro effects of privatization on corporate entrepreneurship. Based on a sample of 437 Chinese privatized state-owned enterprises (SOEs) in five industries between 2001 and 2005, we find that the macro level factor of market-based deregulation positively affects the previous SOE to involve more corporate entrepreneurial activities. We also find a positive effect of some organizational level factors on corporate entrepreneurial activities, including the privatization level of ownership, equity value of top management team (TMT) and the compensation of TMT, and then we identify a significant interaction between ownership privatization and TMT equity value on corporate entrepreneurial activities. This study highlights the need for multiple-level analyses when investigating the causes of corporate entrepreneurship. Theoretical and practical implications are also discussed.