8/02/2010

Defining Firm Level Entrepreneurship | Cash Miller's Blog SmallBusinessDelivered.com

According to Zhara et al., (1999) different scholars use different expressions to describe entrepreneurship (e.g., Entrepreneurship , Corporate Entrepreneurship, Intrapreneurship, Entrepreneurship Posture, Entrepreneurial Orientation), but contrary to the variety of expressions used to describe entrepreneurship, there is consistency regarding entrepreneurship’s definition and measurement.

Generally speaking, entrepreneurship based research usually focus on either Traits or Behavior. Since the nineties, behavior underlie the vast majority of entrepreneurship’s research, the main reason for this is a limited success of scholars to reinforce the existence of common traits that characterize entrepreneurs (Smart and Conant, 1994). Gartner (1988) argues that the focus should be on “what the entrepreneur does” and not “who is the entrepreneur ”. Behavior based research focus on the entrepreneurship process through the entrepreneur activities, that instead of referring to personal specific traits (Smart and Conant, 1994). Behavior based entrepreneurship’s research is usually conducted at entrepreneur level; nonetheless, scholars claim that entrepreneurship is implemented at the firm level as well (Carland et. al., 1984; Naman and Slevin, 1993; Lumpkin and Dess, 1996; Wiklund, 1999).

This article tries to establish a common base for defining firm level entrepreneurship. Naman and Slevin (1993) states that organization can be characterized and measured based on the level of entrepreneurship demonstrate by the firm’s management. According to Covin and Slevin (1986), top managers at entrepreneurship’s firm possess an entrepreneurship style of management, which affect the firm’s strategic decisions and management philosophy.

In order to establish definition for the firm level entrepreneurship, it is necessary to present the characteristics of management behavior used by scholars for that matter. Schumpeter (1934) states that innovativeness is the only entrepreneurship behavior that separates between entrepreneurship’s activities to non-entrepreneurship’s activities. Innovation relates to the pursuit after creative solutions through the development and improvement of services and products as well as administrative and technological techniques (Davis et al., 1991). Innovation reflects the firm’s tendency to support new ideas and procedures, which can end as new products or services Lumpkin and Dess (1996).

In his book “Essai sur la Nature Commerce en General”, Richard Cantillon (1755) argues that the essence of entrepreneurship is a risk-taking behavior. According to Lumpkin and Dess (1996), risk-taking can range from relatively “safe” risk as deposit money to the bank to quite risky actions like investing in untested technologies or launching new product to the market. In their research, Miller and Friesen (1982) define an entrepreneurial model of innovativeness, this model regards firm that innovate audacity and regularly while taking substantial risks in their strategy.

Third dimension, which can be added to innovation and risk-taking, is Proactive. According to Davis et al., (1991) proactive associates with an aggressive posture, relatively to competitors, while trying to achieve firm’s objectives by all rational needed means. Lumpkin and Dess (2001) mention that proactive relate to the way the firm associates to business opportunities through acquisition of initiatives in the market it’s operate in.

Although other dimensions are used to define firm level entrepreneurship, the vast majority of scholars use these three dimensions – Innovation , Risk-taking and Proactive (e.g., Miller and Friesen, 1978; Covin and Slevin, 1986, 1989; Naman and Slevin, 1993; Knight, 1993; Wiklund, 1999).

Dr. Rami Schayek combining the academic world as a researcher and a lecturer at the ben gurion university with a fieldwork as the CEO of several small businesses coincident with coaching many other small and medium businesses. You can see more from his work at www.small-medium-business.blogspot.com

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