Entrepreneurs are typically thought to start up small businesses that confront bigger and older business. For example, Virgin Air is a small specialist airline that attracts some customers away from more established airlines. But is this picture of entrepreneurs correct? The aim of this paper is to investigate whether the characteristics of an entrepreneur are irreconcilable with a corporate career and whether the bureaucratic nature of large organisations promotes an environment where the entrepreneur cannot survive. The paper has three sections. First, I will define entrepreneurship. Then I will assess the characteristics of entrepreneurs and their fit within a corporate management structure, and then analyse the concept of corporate entrepreneurship. The conclusion ties the arguments together into a final position about the place of entrepreneurship within some though not all corporate structures.
2. What is entrepreneurship?
To begin the discussion, entrepreneurship needs to be defined. Our textbook has this comprehensive definition that is not limited to small business ventures and so is appropriate for this general discussion: “An entrepreneur is an innovator or developer who recognises and seizes opportunities; converts those opportunities into workable/marketable ideas; adds value through time, effort, money or skills; assumes the risks of the competitive marketplace to implement these ideas; and realises the rewards from these efforts”. (Kuratko & Hodgetts 2007, p. 32). Note that this paper follows that definition’s emphasis on ‘marketable ideas’ and focuses on new ideas and creative solutions in business situations, to delimit the discussion to the word limit of the assignment. One disadvantage of adopting this rather general definition of entrepreneurship is that there are as many as six schools of thought that focus on just one of these many activities of entrepreneurs. (Kuratko & Hodgetts 2007, pp. 37-42). Most entrepreneurs and ©Australian Institute of Business 5 V5-11Sept2012 entrepreneurial activity must have regard for each of these six schools of thought. However, there are clear examples of individual entrepreneurs who are influenced more strongly by a particular school of thought.
For example, the displacement school helps explain why John Ilham was a driving force behind his Crazy John mobile phone retail business. (‘John Ilham Biography’ n.d.) He grew up in a struggling, migrant family and suffered racist taunts at school. He claimed that his commitment to focusing on opportunities was cemented when a primary school teacher told him: “As for you young man, you have not got much of a future”. In turn, Richard Branson appears to be a champion of the venture opportunity school of thought. Branson has taken his Virgin brand over enormous territory (music, airlines, mobile phones, financial services etc.) (‘Richard Branson Virgin Group’ n.d.) He has developed a business method he refers to as branded venture capital where-by the major thrust of his activities is to recognize opportunities, develop companies to realize those opportunities under the Virgin brand while partners provide most of the investment. In brief, entrepreneurship is a complex and wide-ranging set of activities.
3. The characteristics of an entrepreneur
Considerable research has been undertaken regarding common attributes of successful entrepreneurs (Timmons & Spinelli 2007, p. 7). In one study, high achieving entrepreneurs that there were three principle reasons behind their success: the ability to respond positively to challenges and learn from mistakes, personal initiative, and great perseverance and determination. In addition, Timmons and Spinnelli (2007, pp. 8-14) state that the many characteristics of entrepreneurs can be segmented into some core, desirable and non-entrepreneurial attributes. Core attributes include commitment and determination, leadership, opportunity obsession, risk tolerance, creativity and adaptability, and the motivation to succeed. Desirable attributes include the capacity to inspire, intelligence, appropriate values, and emotional stability. Non-entrepreneurial attributes include impulsiveness, perfectionist tendencies, authoritarianism and ‘machoism’.©Australian Institute of Business 6 V5-11Sept2012 Note that entrepreneurs do not seem to be driven intensely by financial benefits.
In fact, most entrepreneurs desire greater autonomy, broader skill utilization and the possibility to pursue their own ideas rather than financial rewards (Benz 2006). Having now established the skills, characteristics and attributes most likely to be found in entrepreneurs, we will now assess the compatibility of those skills with a corporate career. 4. Compatibility of entrepreneurial characteristics with a corporate career Most large organizations tend to be highly structured and hierarchical with a hierarchy that facilitates effective monitoring of performance and control. (Casson 1994) Job requirements are clearly defined, accountability is clear and the chain of command is known. However, this control system will block the wide-ranging and innovative nature of entrepreneurs described above.
They would be likely to find their commitment and determination restricted within their job specification. Their inclination to identify opportunity may be suppressed by conservative managers who hold more senior positions within the organization structure. Their motivation may be suppressed by the organization setting low, achievable and unchanging goals. For example, Ray Borda, proprietor of Macro Meats, is an entrepreneur who was not able to survive in the traditional organization structure. Borda established a chain of pet shops in South Australia in the 1980’s known as Petstop. Whilst the chain was popular, Borda rolled the stores out at a faster rate than company profits justified and he was eventually declared bankrupt. Borda returned to the salaried work force in a company that sold kangaroo meat for pet consumption throughout SA. However, Borda then identified an emerging opportunity to provide kangaroo meat for the human consumption market.
Despite his vision, Borda was unable to convince management of the company to change direction. Consequently, Borda took his vision outside of the company and successfully convinced some investors to purchase the ©Australian Institute of Business 7 V5-11Sept2012 company and change its direction. Today, Macro Meat is the largest wholesaler and retailer of human consumption kangaroo meat in Australia. Another frustration that may be encountered by those with entrepreneurial attributes would be to find themselves in an organization owned and/or controlled by an entrepreneur who does not require the organization to be entrepreneurial. He just needs the organization to support his creativity and innovation. For example, Kerry Packer built an empire on the back of his own capacity to sense opportunity.(‘Kerry Packer: Empire builder’ n.d.)
His recognition of the commercial potential of cricket, his affinity for knowing when to sell and buy, his intricate understanding of the television and media market and his recognition of the emerging power of the wagering and gaming market are all examples of his entrepreneurial capacity. But, for all of this, there is little evidence of entrepreneurial behavior being practiced below him in the organization structure. Instead, Packer tended to surround himself with skilled but loyal lieutenants who concentrated on the implementation of his vision. In brief, evidence seem to show that that those with entrepreneurial attributes are likely to find that traditional corporate organizations restrict their natural attributes and so detract from their job satisfaction level. But the budding entrepreneur may still have scope as the next section about corporate entrepreneurship shows
. 5. Corporate entrepreneurship
Nevertheless, there are some organizations where those with entrepreneurial tendencies are encouraged and are able to flourish. One of the world’s most successful advertising agencies, Crispin, Porter and Bogusky is an example. (‘Chuck Porter Crispin, Porter + Bogusky’ n.d.) Although employing 300 people at its Miami USA base, the company has a very flat organization structure. Chuck Porter, senior partner, has discouraged subservience and promotes creativity and interaction. Departments that work most with each other are located furthest apart so as to encourage people to move and develop large internal networks and relationships. Day to day management is kept to the minimum. Porter is quoted as stating: “We make sure we employ people as smart as us and don’t try ©Australian Institute of Business 8 V5-11Sept2012 to manage people; really good people are unmanageable anyway.” (‘Chuck Porter Crispin, Porter + Bogusky’, n.d.)
The emerging influence of this kind of corporate entrepreneurship is likely to intensify as the world’s economy continues to become more competitive and more demanding. More managers will be expected to develop the drive and enthusiasm of entrepreneurs and more entrepreneurs will be expected to learn the methodical disciplines of the manager. (Heller 2007). Thus corporate entrepreneurship is an attempt to take the mindset and the skill set of the start up entrepreneur and seed these characteristics into the culture and activities of a large company. Indeed, “corporate entrepreneurship is quickly becoming a weapon of choice for many large companies.” (Thornberry 2002, p. 201). Corporate entrepreneurship can offset large company staleness, lack of innovation and the inertia that often takes over large, mature organizations.
For example, Rupert Murdoch is a recognized entrepreneur who believes there is a relationship between change, competing and innovation. He also believes that organisations need to be structured and equipped to act innovatively. “The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow,” he says (‘Rupert Murdoch’, n.d.) Of course, not all big businesses are capable of corporate entrepreneurship. To do it, businesses must follow four steps: (1) set explicit goals, (2) establish a system of feedback and reinforcement, (3) place an emphasis on individual responsibility and (4) reward results. Thus the concept needs to be anchored in procedures, structures and systems. Recruitment, management development and flexible job content needs to complement the overall change. (Jansen & van Wees 1994)
From the evidence above, we can conclude that many entrepreneurs would find traditional corporate organizations stifling because of their creative and innovative inclinations. However, the emerging acceptance of corporate entrepreneurship as a ©Australian Institute of Business 9 V5-11Sept2012 management concept to deal with a fast changing and globalised economy provides considerable scope for those with entrepreneurial qualities. Properly developed, corporate entrepreneurship can incorporate entrepreneurs who will have management discipline as well as flair and innovation.
Benz, M 2006, The International Entrepreneurship and Management Journal, Springer, Boston., viewed 17 December 2007,