European Journal of Humanities and Social Sciences ISSN 2220-9425
Volume 1, No. 1 (2011)
http://www.journalsbank.com/ejhss.htm © JournalsBank® Publishing Inc. 2011
Entrepreneurship Development in the Organization and its Role in Entrepreneurship Strategy
Amin Reza Kamalian*
Nour-Mohammad Yaghoubi† Ashkan Elyaskordi‡
*
[University of Sistan and Baluchestan, School of Management and Accounting, Department of Management, Zahedan, Iran] † [University of Sistan and Baluchestan, School of Management and Accounting, Department of Management, Zahedan, Iran. P.O.Box: 98135/987], [
[email protected]] ‡ [.A. student of Entrepreneurship Management, University of Sistan and Baluchestan, Zahedan, Iran]
© JournalsBank.com (2011).
ISSN 2220-9425 50
European Journal of Humanities and Social Sciences Vol. 1, No.1 (2011)
Entrepreneurship Development in the Organization and its Role in Entrepreneurship Strategy§ Amin Reza Kamalian, Nour-Mohammad Yaghoubi, and Ashkan Elyaskordi
Abstract Using organizational entrepreneurs and innovative ideas that initiate from inter organizational roots are among strategies that some organizations make profit from them. Institutionalizing entrepreneurship within the organization, the employees not only get interested in creating change in their environment but also accept the organization’s intended innovations more easily. Hence, the organization will adapt to the current situation more quickly. In entrepreneurship strategy, wealth and value are gained by means of merging entrepreneurship and strategic management. Merging these two concepts leads to the economic growth and formation in business. The purpose of writing this article is to study the effective factors on entrepreneurship development and bringing up a model to implement entrepreneurship strategy. For this purpose, 115 questionnaires were distributed among the employees of Telecommunication Organization and the results were analyzed using SPSS. The results indicated that observing the influential indices on entrepreneurship development within the organization is considered as a fundamental condition in order to make profit from the entrepreneurship strategy in the organization.
Key words: strategy, entrepreneurship, institutionalization, organization
§
Acknowledgment
Nill
© JournalsBank.com (2011).
ISSN 2220-9425 51
European Journal of Humanities and Social Sciences Vol. 1, No.1 (2011) 1. Introduction According to the researches, an organization’s environmental conditions and extended demand from it, opportunities and threats, have changed the strategic decision making to a key element (Mazzarol and Reboud, 2006). Nowadays, different social systems face complicated and rising challenges. Changes occur quickly, people make new relation with each other, and different forms of competition are appearing.
Entrepreneurship is such a capability that can survive modern systems in this critical period and guarantees their survival. The importance of entrepreneurs is due to the value that they create in various forms. This value can be discovering a new knowledge, creating a new technology, improving current products or services, finding different ways to produce goods or services using less resources, etc. In fact, finding new ways in order to satisfy clients’ needs and creating such a new viewpoint toward the current products and services are among the most important entrepreneurs’ duties and entrepreneurship is one of the organization’s approaches for responding the rising challenges. Entrepreneurship means the process of identifying opportunities, the innovation for using opportunities, and the risky action to create value. Using the innovation capacity in organizational entrepreneurship, makes achieving more highly performance possible. Corporate entrepreneurship shows the company’s decision making activities which try to increase the company’s ability and competitive advantage in the external environment (Ireland, Covin and Kuratko, 2009: A. Zampetakis, beldekosand s. moustakis, 2009: J. Kelley, Petersand O'Connor: 2009 ). The corporate entrepreneurship is often used to help companies achieve objectives such as supporting the reconstruction of companies, redefining boundaries, and reconstructing business models (Covin and Miles, 1999: M. RomeroMartı´nez, Ferna´ndez-Rodrı´guezand Va´ zquez-Inchausti, 2010: A. Baron, Tang, 2009 ). while entrepreneurship and innovation are widely viewed as key drivers of economic growth, researchers have yet to document a robust relationship between entrepreneurial activity and economic
development
across
nation(Ankohinands.
schulze,
2009:
Hirata,
2009).
Entrepreneurship strategy is a significant way that is generally defined as the organizational entrepreneurship. In this way, the decisions are managed in a way that they could adapt the organization to the environmental changes in the uncertain conditions and the recovery of
© JournalsBank.com (2011).
ISSN 2220-9425 52
European Journal of Humanities and Social Sciences Vol. 1, No.1 (2011) resources. Researches indicate that, basically, there is a symbolic relation between the strategic and entrepreneurship management (Ireland, 2007).
Since early 1980s, in order to accelerate changes, organizations paid a great deal of attention to creativity and innovation. Nowadays, organizations should be innovative in order to survive, so the best way is to encourage the creative employees to become an entrepreneur in the organization structure. It will be fulfilled by allowing them to achieve freedom of action and different resources, for they can pursue their objectives. Organizational entrepreneurs may remove the distance between the innovators and the managers; they mention new ideas and change them to beneficial realities; they have such a strong perspective and dare to fulfill them; they can imagine the clients’ intended businesses and products; and finally they are able to draw the entrepreneurship process from idea into action.
2. Research Problem Pioneer organizations have been dropped out of the activity cycle due to not being able to adapt themselves to the environmental changes or make changes. The organization can achieve its current different objectives by means of strategies. Organizational strategies can be in the form of production and supply of products, reduction of expenditures, purchase of new technology, and selling fixed possessions. Moreover, in order to succeed in the competition in the modern world, management theories suggest that the entrepreneurship approach is vital for an organization to create the strategy (Gategory et al., 1997). In addition, the entrepreneurship process in companies plays an important role in formulation of strategies and innovation. Having such an approach and way of thinking among the organizational personnel leads to search for new opportunities in the market or satisfy clients by means of supplying their needs. Innovation is a multi-aspect concept that deals with products, processes, technologies, management, quick growth, or development. Innovation mostly emerges in new products or processes. However, it can be comprised of finding new ways for organizing and managing companies or identifying new markets for products and services (Mazzarol and Rebound, 2006). When an organization’s human resources are risk-takers, they always look for discovering the opportunities in order to improve the organization’s objectives, they search for a solution for the organizational problems
© JournalsBank.com (2011).
ISSN 2220-9425 53
European Journal of Humanities and Social Sciences Vol. 1, No.1 (2011) and difficulties by means of developing ideas, and welcome innovation into the organization, it is mentioned that entrepreneurship has been institutionalized within the organization. Institutionalization means providing such situations and conditions in the organization that causes consistency, stability, continuation, and predominance of favorable behaviors. Now this question arises: in which level of entrepreneurship strategy does the entrepreneurship institutionalization in the organization exist and in general, what conditions should be provided in the organization in order to make profit from the organization’s internal capitals, motivate employees towards entrepreneurship and searching for opportunities, and increase taking responsibility? In addition, what conditions should be provided in the organization to enable it to make profit from valuable resources of innovative ideas, implement its intended innovations and ideas more easily and quickly, and, at the end, provide an appropriate situation for organizational entrepreneurship activities and entrepreneurship institutionalization?
3. Theoretical Bases 3.1. Organizational Entrepreneurship Organizational entrepreneurship is a process in which the organization identifies the opportunities of growth and development, and creates new values for client by means of innovation and reallocation of resources. The entrepreneur organizations have such a high growth rate. The most important characteristics of these organizations are: organic structure, logical risk-taking, investing in researches and development, evaluating performances based on human resources decision making, high changeability and adaptability, intimacy with the clients, organizational culture supportive of learning, innovation, and change (Yadollahi farsi, 1384). In order to have creativity in organizations and create innovation, the personnel should be allowed to communicate with each other and there should be intimate mutual communications among different groups. These mutual communications lead to exchange some useful information among the organization’s personnel and new viewpoints about the organizational matters are transferred to the others (Yadollahi farsi et al., 1387). Solvin and Jennings argue that an organic, adaptable, based on open communications, decentralized and flexible structure stimulates entrepreneurship. In addition, organizations need the entrepreneurial management method; the entrepreneurial management method is beyond the traditional and bureaucratic management and
© JournalsBank.com (2011).
ISSN 2220-9425 54
European Journal of Humanities and Social Sciences Vol. 1, No.1 (2011) it provides innovation atmosphere within the organization. Among the effective factors, we can mention encouragement and reward systems. Balkin et al. have declared that in order to encourage innovation and risk-taking in the organization, some of the whole payments should be based on the level of innovation and risk-taking not the consequences of innovation, e.g. benefit increase (Haghshenas, Jamshidian et al., 1386).
3.2. Establishing Inter organizational Entrepreneurship in the Organization The first step in this process is the high-ranking and middle-ranking managers’ commitment to the entrepreneurship in the organization. After the senior management’s commitment to inter organizational entrepreneurship, this concept is mentioned in the organization. Then, the general ideas and fields that the senior management is interested in supporting them should be specified. The rate of the risk of money for developing this concept much more should be specified too. The comprehensive expectations program and the intended results in any fields of organizational entrepreneurial activities should be compiled. As far as possible, these should explain the period, beneficial amount and needs of these newly established entrepreneurial activities, and their effect on the organization. Then, in order to be more flexible, the organization should use technology. In the previous decade, the function of small companies that had used technology successfully had been the same as big ones (Feizbakhsh et al., 1385, P.70).
3.3. Entrepreneurship Strategy Beneficially, most of the researches do not separate the entrepreneurship strategy from other aspects of the company. According to different theories, in order to get results from an objective or a task, perspective of main resources, human resources, social capital, organizational learning, and creative thinking must be toward the same purpose. This integrity is very important because it shows how to merge a behavior that searches for opportunities with a behavior that tries to achieve competitive advantage and wealth creation. People, who tend to entrepreneurship, influence on getting results from competitive strategy effectively. Tendency to entrepreneurship is important both from personality and a social phenomenon view point, and paying attention to it is as important as paying attention to the management and employment in a newly built company. Identifying entrepreneurial opportunities is the output of the tendency to repreneurship
© JournalsBank.com (2011).
ISSN 2220-9425 55
European Journal of Humanities and Social Sciences Vol. 1, No.1 (2011) in the company (Figure 1) and it is the main key to value and wealth creation (Ireland, et al., 2003). The very important point of using this strategy successfully is to know that a balance should be achieved between searching for opportunities and identifying useful behaviors (Ketchen, Ireland and Snow, 2007).
Figure 1. A model of Entrepreneurship strategy (Ireland et al., 2003) Tendency to entrepreneurship
creativity creation, innovation development
strategic resource management
competitive advantage
wealth creation
entrepreneurship culture and conducting entrepreneurship
4. Model and Framework of Research Theoretical framework of this research is designed based on the following model. The considered model of this research is taken away from Kuratko‘s model that individual characteristics of tolerating ambiguity and creativity are also added to the examined factors.
Figure 2. Theoretical framework of research
organizational characteristics
-
formality suggestions system flexible structure control system reward system management support
-
individual characteristics creativity success seeking internal control center risk-taking tolerating ambiguity independence need
© JournalsBank.com (2011).
searching for opportunities in the organization accepting innovation in the organization risk-taking in the organization innovative ideas in the organization taking responsibilities for solving the problems by means of implementing innovative ideas
entrepreneurship institutionalization in the organization
ISSN 2220-9425 56
European Journal of Humanities and Social Sciences Vol. 1, No.1 (2011)
5. Hypotheses Hypothesis1: organizational characteristics have a positive relation with organizational entrepreneurship development. Hypothesis2: employee’s individual characteristics have a positive relationship with organizational entrepreneurship development.
6. Methodology A descriptive research includes a set of methods that aim to describe the examined conditions or phenomena. Implementing descriptive research can only be used to investigate the current conditions more effectively, or help the process of decision making. In other words, in this kind of research, the researcher tries to report whatever exists without any interference of subjective conclusion and get an actual report from the situation (Farhangi and Safarzadeh, 1385, P.275). Then, regarding the stated conditions, one can say that this research is descriptive, because it expresses and describes the current phenomena within the organization. However, from goal point of view of the research, it is a practical one since it looks for gaining a practical objective. If a practical research is performed correctly, it will bring useful information in the fields of marketing and plan, development and applied methods of executive activities (Delavar, 1382, P.50).
The area of this research is limited to Hamadan town and its population is the employees of Telecommunication Organization in Hamadan. The number of employees of this organization is 345 that 115 ones were chosen as the members of statistical sample, using the related formula. The data was analyzed using SPSS, version 16, by means of Pierson correlation method, linear regression, and factor analysis. For narrative measurement, the questionnaire was given to four professors. After confirmation, in order to demonstrate the rate of permanence, 15 questionnaires were distributed in the population, and then it was measured by means of Cronbach α coefficient that equaled 0.85.
© JournalsBank.com (2011).
ISSN 2220-9425 57
European Journal of Humanities and Social Sciences Vol. 1, No.1 (2011) 7. Results The questionnaires, which were distributed among the employees of the mentioned organization, were designed in a two-sided format. On one side of the questionnaire, the employees were asked to express their own evaluation of the present position of organization and on the other side of it; they were asked to express that to what extent the specified variables are related to the entrepreneurship development in the organization?
7.1. Hypothesis1: organizational characteristics have a positive relationship with organizational entrepreneurship development. Table 1. Test of hypothesis in confidence level of 95% No. Effective variables
Level of
Regression
Correlation
Ranking based on
significance for
coefficients
coefficients
influence rate
both analyses 1
Formality
0.00
0.136
0.753
Second priority
2
Management
0.00
0.139
0.820
First priority
support 3
suggestion system
0.00
0.126
0.771
Third priority
4
Flexible structure
0.00
0.125
0.819
Forth priority
5
Control system
0.00
0.120
0.630
Sixth priority
6
Reward system
0.00
0.111
0.845
Seventh priority
Since the level of regression significance and correlation is less than 0.05, positive significant correlation
between
organizational characteristics and
organizational
entrepreneurship
development is confirmed. According to the correlation coefficients from Table 1 and Table 2, management support has the highest rate of influence on entrepreneurship development in the organization.
© JournalsBank.com (2011).
ISSN 2220-9425 58
European Journal of Humanities and Social Sciences Vol. 1, No.1 (2011) 7.2. Hypothesis 2: individual characteristics have a positive relation with organizational entrepreneurship development. Table 2. Test of hypothesis in confidence level of 95% No. Effective variables
Level of significance
Regression
Correlation
Ranking based on
for both analyses
coefficients
coefficient
influence rate
1
Tolerating ambiguity 0.00
0.124
0.517
Fifth priority
2
Risk-taking
0.00
0.111
0.577
Eighth priority
3
Creativity
0.00
0.116
0.774
Ninth priority
4
Success seeking
0.00
0.107
0.744
Tenth priority
5
Independence need
0.00
0.108
0.683
Eleventh priority
6
Internal control
0.00
0.054
0.577
Twelfth priority
Since the level of regression significance and correlation is less than 0.01, positive significant correlation between individual characteristics and organizational entrepreneurship development is confirmed. According to the coefficients from Table 2, tolerating ambiguity, among the variables of individual characteristics, has the highest rate of influence on entrepreneurship development.
7.3. Factor Analysis of Effective Factors on Entrepreneurship Development in the Organization Effective factors on entrepreneurship development were evaluated based on Kuratko’s model in the specified company and the results can be seen from Table 3.
© JournalsBank.com (2011).
ISSN 2220-9425 59
European Journal of Humanities and Social Sciences Vol. 1, No.1 (2011) Table 3. Effective factors on entrepreneurship development in the organization Mean
Standard
Valid number
deviation Low formality
3.96
0.818
113
Suggestions
4.06
0.739
113
system
4.044
0.783
113
Flexibility
3.72
0.701
113
Control
4.11
0.741
113
Reward system
4.05
0.826
113
Management
3.83
0.637
113
support
4.11
0.649
113
Creativity
3.88
0.644
113
Success seeking
3.66
0.715
113
Risk-taking
3.83
0.622
113
Tolerating
4.018
0.789
113
ambiguity Independence need Internal control
The data from Table 3 shows that from the employees’ point of view, the examined factors are important. KMO coefficient and Bartlett statistics have been used to demonstrate the appropriateness of collected data for factor analysis. In this part, KMO equaled 0.889 that indicates that the correlation among the data is appropriate for the factor analysis. On the other hand, Bartlett test has been used to assure that the data is appropriate for the factor analysis. Bartlett’s statistic equaled 780.289, which was significant in 1% level. Hence, the data was appropriate for the factor analysis. Table 4 illustrates the number of extracted factors with the specific amount of each, variance percentage of each factor, and cumulative percentage of variance.
© JournalsBank.com (2011).
ISSN 2220-9425 60
European Journal of Humanities and Social Sciences Vol. 1, No.1 (2011) Table 4. Summary of factor analysis of effective factors on entrepreneurship development in the organization Factors
Specific amount Variance
percentage
of Cumulative
percentage
specific amount
specific amount
Factor 1
5.237
43.638
43.638
Factor 2
2.295
19.126
62.764
of
As it can be seen from table4, the two above factors altogether have managed to demonstrate 62.764% of the whole variance of the effective factors on entrepreneurship development. Vrimiax method was used for factor rotation. After rotation, the related variables to any factor were illustrated in columns. After processing the variables of the effective factors on entrepreneurship development, these factors were nominated. Each factor and its related variables with factor loading and their covering factors are shown in table5. The results of factor analysis indicated that 43.638% and 19.126% of variance has been allocated to the organizational innovation and support culture in the organization, and the organizational risk respectively. Table 5. Variables of the factors and factor loading from the rotated matrix Factor
Variables
Factor loading
Factor 1
Management support
0.866
Organizational
Reward system
0.843
innovation and culture Flexibility
0.813
of support
Suggestion system
0.802
Low formality
0.770
Creativity
0.719
Control
0.632
Success seeking
0.608
Independence need
0.579
Risk-taking
0.877
Factor 2 Organizational
risk- Tolerating ambiguity
0.831
taking
© JournalsBank.com (2011).
ISSN 2220-9425 61
European Journal of Humanities and Social Sciences Vol. 1, No.1 (2011) 8. Results Analysis a) Providing appropriate organizational conditions is so influential on the employees’ tendency to entrepreneurship. Organizational characteristics such as high formality, strict control, inappropriate reward system, and lack of management support are the factors that may remove the innovation form the organization and employees. It prevents the organization from reacting appropriately in front of environmental changes and new demands. Because, first, due to the conditions dominated in the organization climate, the organization’s personnel resist changes and innovation. Second, the organization cannot make profit from the valuable resources of ideas that initiate form internal roots. It is necessary to consider an organization’s human resources vital and valuable. Moreover, due to their communication with the external environment in addition to giving some valuable information to the organization, they can present appropriate ideas to the organization along with making profit from opportunities or resisting threats.
b) Providing the organization conditions along with the organizational entrepreneurship development, the organization’s personnel will tend to accept innovative responsibilities, mention innovative ideas, and express creativity much more.
c) Skills and entrepreneurship characteristics of human resources are effective in institutionalizing entrepreneurship in the organization (second hypothesis), and one can conclude that in order to get results from entrepreneurship strategy in the organization, entrepreneurial characteristics play such a vital and main role. Hence, in order to teach and grow creativity among the organization’s personnel and employ such individuals who have natural ability or entrepreneurial characteristics, it is necessary to pay attention to the human resources.
9. Conclusion With regard to the effects of individual characteristics on innovation development, increasing the organization’s creativity, the effect of its characteristics on institutionalizing entrepreneurship in the organization, and Figure 2, which Ireland presented it, we can present the process of entrepreneurship strategy in the organization in the following form, (Figure 4).
© JournalsBank.com (2011).
ISSN 2220-9425 62
European Journal of Humanities and Social Sciences Vol. 1, No.1 (2011) Figure 4. Entrepreneurship strategy model (authors’ proposed model)
organizational characteristics
-
formality suggestions system flexible structure control system reward system management support
tendency to entreprene urship
-
research, developme nt, and idea survey unit entrepreneur ship culture institutionali zation
individual characteristics creativity success seeking internal control center risk-taking tolerating ambiguity independence need
creativity develop ment
innovation selection
competitive advantage
innovation development
strategic resource management
Regarding human resources and supplying appropriate environmental conditions in the organization climate leads to an increase in the tendency of entrepreneurship in the organization, and institutionalization of creativity and changes. Moreover, resource management and provision can develop innovation in the organization. Creativity in the organization creates competitive advantage that finally leads to added value and wealth creation in the organization. Entrepreneurship strategy is the result of dominating entrepreneurship and change culture in the organization. At the time of choosing the method of executing a strategy, environmental surveys have an exclusive role. In addition, the developed innovations in the organization should be according to the internal and external environment of the organization in order to be influential in entrepreneurship strategy. Human resources in an organization, which the model of entrepreneurship strategy has been implemented in it, will be the entrepreneurs who suggest innovative ideas to the organization eagerly, with regard to the internal and external surveys.
© JournalsBank.com (2011).
ISSN 2220-9425 63
wealth creation
European Journal of Humanities and Social Sciences Vol. 1, No.1 (2011)
References [1]. Ankohin, sergey and s.schulze, William(2009), " entrepreneurship, innovation, and corruption", journal of business venturing, 24, 465-476 [2]. A. Baron, Robert And Tang(2009)," The role of entrepreneurs in firm-level innovation: Joint effects of positive', Journal of Business Venturing, JBV-05521,1-12 [3]. A. Zampetakis, leonidas and beldkos, panagiotis and S.Moustakis(2009)," day to day entrepreneurship within organization: The role of trait emotional intelligence and perceived organizational support", European management journal, 27, 165- 175 [4]. Covin, J. G., and Miles, M. P. (1999) , Corporate entrepreneurship and the pursuit of competitive advantage, Entrepreneurship Theory and Practice, 23(3), 47—63 [5]. Gregory .G. Dess, Lumpkin, G. T., COVIN. J. G. (1997) , Entrepreneurial Strategy Making and Firm Performance: Tests of Contigency and Configurational Models, Strategic Management Journal, Vol. 18:9, 677–695 [6]. Hirata, Mitsuko(2009)," Hidden Entreprenership in the organization of Japanese frims: the Dynamics of Founder Entrepreneurship, pacific Economic Review, 14, 717-729 [7]. Ireland,R.D., Covin, J.G., Kuratko, D.F. (2009) , Conceptualizing corporate entrepreneurship strategy. Entrepreneurship Theory and Practice, 33(1), 19—46 [8]. Ireland, R. D. (2007) , Strategy vs. entrepreneurship, Strategic Entrepreneurship Journal, 1(1), 7—10 [9]. Ireland. R. Duane, Michael. A. HittandG. Sirmon. David(2003), A Model of Strategic Entrepreneurship: The Construct and its Dimensions, Journal of Management 29(6) 963– 989 [10]. Ketchen, D., Ireland, R. D., and Snow, C. (2007). Strategic
entrepreneurship,
collaborative innovation, and wealth creation. Strategic Entrepreneurship Journal, 1(1), 371—385 [11]. J. Kelley, Donna and
Peters, Lois and O'Connor, Gina Colarelli(2009)," Intra-
organizational networking for innovation-based", corporate entrepreneurship, 24, 221235
© JournalsBank.com (2011).
ISSN 2220-9425 64
European Journal of Humanities and Social Sciences Vol. 1, No.1 (2011) [12]. Mazzarol, Timand Reboud. Soplie(2006), The strategic decision making of entrepreneurs within small high innovator firms, Int Entrep Manag J , 2:261 [13]. M. Romero-Martı´nez, Ana And
Ferna´ndez-Rodrı´guez, Zulima And Va´ zquez-
Inchausti, Elena(2010), " Exploring corporate entrepreneurship in privatized firms", Journal of World Business, 45 , 2–8 ا
© JournalsBank.com (2011).
ISSN 2220-9425 65
