Does entrepreneurship help in implementing strategies?

by Sudam CHANDIMA KALUARACHCHI

Entrepreneurship is a young concept compared to its counterpart in management - leadership, and can be traced back to ancient times. It is an emerging and evolving field of inquiry. Since the 1980s, a huge growth is visible in studies on entrepreneurship across the globe.

A well defined and proactive strategy is central to an innovative and entrepreneurial organisation. Such an organisation needs internally focused strategies that propel growth and stimulate change within the organisation, as well as externally focused strategies that actively seek out new ventures, acquisitions, mergers or joint ventures to achieve commercial success through innovations. Entrepreneurship helps in setting up such strategies and allows innovative features which characterise entrepreneurial behaviour. These features can be found in unique individuals and within various business functions. Rather than the size of the organisation, cultural and structural elements play a crucial role in determining the extent of organisational capability in entrepreneurship. A staff with entrepreneurial skills to convert the insights into profitable business propositions and the style of management are key features which help implementing strategies successfully.

Entrepreneurship

Brockhaus (1976), as cited in Littunen (2000), says entrepreneurship means activities connected with owning and managing a business firm. It is about creating something that did not previously exist (Zhao, 2005). Stoner (2002) describes entrepreneurship as "the seemingly discontinuous process of combining resources to produce new goods or services". This concept facilitates the process of creating new organisations, more specifically 'small businesses'. Daft (2006) agrees that entrepreneurship is involved in the initial stage of a business.

"Entrepreneurship is the process of initiating a business venture, organising the necessary resources and assuming the associated risks and rewards" (Daft, 2006).

As cited in Cope (2003), Deakins and Freel (1998) have described entrepreneurship as a non-linear and discontinuous process that is characterised by significant and critical learning events. Their idea of non-linear and discontinuous nature of entrepreneurship is in line with Stoner et al. (2000)'s argument on entrepreneurship.

Schumpeter (1934) argues that entrepreneurship is a creative destruction in the sense that it reconfigures, reorganises and recombines. "It changes and through the change it destroys the mould and puts something new in place" he further elaborates. He also mentions that no one is an entrepreneur forever. They are only entrepreneurs when they are innovating. Therefore, it is a discontinuous process.

Entrepreneurship helps to synthesize the available information and clarify patterns which escape others. McGrath (1997; cited in Thompson, 1999) says that entrepreneurship is not a flash of inspiration or luck; it is the conscientious application of discipline to exploit resources. It is rooted in flexibility and a willingness to embrace and champion change.

However, it does not mean that entrepreneurship is a concept limited to the creation of a new business. It is a broad concept which can be categorised as but not limited to individual entrepreneurship, corporate entrepreneurship, institutional entrepreneurship, social entrepreneurship and environmental entrepreneurship. Corporate entrepreneurship often refers to the introduction of a new idea, new products, a new organisational structure, a new production process or the establishment of a new organisation by or within an existing organisation (Zhoa, 2005).

It is important to distinguish the meaning of leadership, entrepreneurship and management when discussing the concept of entrepreneurship.

It is also worth to establish the relationship between the entrepreneurship and entrepreneur, and explore how entrepreneurship stays in various levels of an organisational structure.

Entrepreneurship, Leadership and Management

It is not easy to define and distinguish these concepts as separate theories. Leadership would be described as a process of influencing others to work willingly in pursuant of another's goal or even a common goal. A leader influences others toward a goal (Hunt, 2004).

However, an entrepreneur is not only seeing opportunities but also organizing resources to carry out his or her vision (Gartner et al., 1992).

Accordingly, an overlap between leadership and entrepreneurship is quite possible and found in various theories on management.

Joerges & Wolff (1991) cited in Vecchio (2003); entrepreneurship is merely leadership in a special environmental situation or context.

Schumpeter (1934) has explained that entrepreneurship is a special case of leadership and distinguished it from other forms of leadership in terms of one who created a company rather than managing an existing one. Some other authors argue that leaders need to develop new and creative ideas and encourage creativity and innovation in others, though in many texts the innovation is only linked to entrepreneurship. For instance, Joseph Schumpeter (1883-1950) mentions that entrepreneurship is about making innovations rather than inventions where invention focuses upon the conception of an 'idea' and innovation converts the idea into a new product, practice or service.

According to Kotter (1990), management is "a set of processes that can keep a complicated system of people and technology running smoothly", while keeping the eye on the bottom line. Stoner et al.

(2002) argue that entrepreneurship is different from management. Paul Wilken, as cited in Stoner et al. (2002), distinguishes entrepreneurship from management as follows.

"Entrepreneurship involves initiating changes in production, whereas management involves in the ongoing coordination of the production process.

It is a discontinuous phenomenon, appearing to initiate changes in the production process and then disappearing until it reappears to initiate another change".

Entrepreneur and Entrepreneurship

Entrepreneurs are different from small business owners, if the latter is concentrating only on income generation to meet immediate liquidity needs without engaging in long-term strategic innovation.

Only a person who founds a new company on the basis of a new idea can be called as an entrepreneur (Zhao,2005). Daft (2006) defines an entrepreneur as someone who engages in entrepreneurship. "An entrepreneur recognises a variable idea for a business product or service and carries it out." Shane & Venkataraman (2000) argue that entrepreneurship focuses not only on the entrepreneur, but on the intersection of that enterprising person and his/ her ability to grasp lucrative or entrepreneurial opportunities.

As cited in Stoner et al. (2002), management writer Peter Drucker and popular Austrian economist Joseph Schumpeter have mentioned that entrepreneurship is about change and an entrepreneur sees change. However, an entrepreneur may not bring about the change himself like an inventor.

Invention itself is not sufficient for the growth and development of a firm. When there is an invention, the entrepreneur searches for change, responds to it and exploits it as an opportunity.

To be continued

The writer is a Chartered Marketer, and Director of the College of Banking and Finance, and the Institute of Bankers of Sri Lanka.