Measurement of Success and Entrepreneurship

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Chapter 2 Literature Review

Introduction

A vast array of literature on venture growth and development exists (Baum, 2001; Welch, 2001) and an even larger amount of literature ascribing the company’s success to its Chief Executive Officer’s vision, strategy, management style, entrepreneurship and leadership (Burgelman, 2002; Baum, Locke and Smith, 2001) is available.
Whilst most of the early research on entrepreneurship focussed on a limited perspective of personality traits, management and social influences (Leff, 1978; Komives, 1972; Duffy and Stevenson, 1984; Bennis and Nanus, 1985; Brockhaus and Horwitz, 1986; Bird, 1989; Aldrich and Fiol, 1994), recent research into entrepreneurship, which is that also applied in this study, broadens the definition of entrepreneurship, to include:

• ..:”those who initiate, energize, and guide the process of organizational emergence” (Baum, 1994: 22);
• those who use available resources, such as experience and skill (Shane, 2000), and combine the latter with initiative to

1. find the additional resources, such as venture or family capital or even use a family–owned entity, to start their own ventures (Barber, 2001; Bamford and Burgelman, 1998; Neace, 1999; Palmer and Kirkpatrick and Baum, 2002);
2. maintain it through its growth cycle (Lovas and Ghoshal, 2002; Morley and Schockley–Zalak, 1991; Rosenbaum, Bonker and Wagener, 2000);
3. create, maintain and retain healthy competition for the business (Burgelman, 2002; Caroll and Hannan, 2000; Kirkpatrick and Baum, 2002; Palmer and Barber, 2001);
4. manage expectations and subculture development through strategic intervention (Hofstede, 1998; Roe, 1994; Sorenson, 2000; Venkataraman, 1997);
5. take reasonable risk (Brockhaus and Horwitz, 1986; Covin, Slevin and Heeley, 2000; Das and Bing–Sheng, 1997; Rotemberg and Saloner, 2000);

whilst promoting venture development and growth and fulfilling several roles in the business or company (Gartner, 2001; Hills, Schrader and Lumpkin, 1999; Palmer and Barber, 2001).
In following this line of thought and using the noted broad definition of entrepreneurship, the study found that many factors affect the inception, growth, development and maturity of a new venture. With particular reference to the factors that affect the success rate of a company, many researchers (Dess and Lumpkin, 1997; Kuratko, et al., 2001; Ropo and Hunt, 1995; Timmons, 1999; Chandler and Hanks, 1998) accept that control of essential venture development elements and attention to detailed delivery of a strategy are always paramount in the thought of the entrepreneur. They drive the thought processes that relate to a strategy for venture incubation and the inception, development and future growth of a company.

Measurement of Success and Entrepreneurship

Another key element that many researchers also emphasise is that entrepreneurs distinguish themselves from ordinary managers in that they often, in their interactions with others, act as both leaders and managers (Fama and Jensen, 1983; Gollwitzer, 1993; Honig, 2001; Lubin, 2001). In acting in dual or multiple roles, the entrepreneur’s success, which is often subtly down–played, is generally not measured in directly visible features. The measurement of such success is often interpreted in venture–relevant terms, which include, amongst others, measures of calibration which reflect:

• Financial outputs, revenue streams and profitability;
• Corporate control/visibility through corporate governance (Cf. King II Report on Corporate Governance for South Africa, 2002);
• Corporate Social Investment initiatives; and
• Alignment to the venture’s overall strategy and vision in order to set objectives as measured against the venture’s competition.

Vision inception, vision creation and its promotion and competition are never divorced from strategy. A further literature search shows that entrepreneurship is never divorced from being visionary. In this regard, Kuratko, et al. (2001:63) state, for example, that “An entrepreneurial vision indicates what a company expects to achieve. [In addition] Environmental opportunities and the patterns of competition between the firm and its rivals influence this vision…. Moreover, in the global economy, the most effective vision highlights a firm’s commitment to product, process, and market innovations.” (See also Baum, et al., 2001; Burgelmann, 2001(a); Lichtenstein and Brush, 2001.)
The latter point is critical to an understanding of why (throughout this study) the emphasis has also been placed on an understanding of

• the fact that a founder’s reliance on an agreed vision is critical;
• entrepreneurial resilience, commitment and persistence;
• the use of venture growth elements, which include amongst others, strategy, innovation in new venture creation, leadership skill and expertise deployment; and
• the fact that the prerequisite skill and technological know–how in an IT–related environment are critical.

Sociological Perspectives on Entrepreneurial Traits

Organisational Behaviour and Entrepreneurial Domains

In approaching the present study from the above sociological perspective, the study relied on research perspectives taken by, amongst others, Baum (1994), Thornton and Ocasio (1999) and Tiesen (1997).
As a starting and comparative platform in the literature review on entrepreneurship, the researcher investigated the likelihood that, irrespective of the woodcrafting context and geography in which Baum’s study was done, entrepreneurial CEOs of IT companies in South Africa acted similarly to their counterparts in the USA. More importantly, it was found, like Baum, that:
“A review of the entrepreneurship, strategic management, and organizational behaviour literature revealed five research domains that had identified [both qualitative and material/paradigm changing] variables that are associated with venture performance. Each research domain had tested performance relationships in isolation from the others…”
The recent research of other experts in entrepreneurship, such as Baum (1994); Baum (2001); Black and Boal (1994); Chandler and Jansen (1998); Herron and Robinson (1993); Kelly and Rice (2002); Sathe (1989) and Tiessen (1997) clearly also supports this position.
In this study, the researcher has also reviewed an entrepreneur’s traits including those of leadership and management, entrepreneurial competencies and capabilities, entrepreneurial behaviours, entrepreneurial actions and entrepreneurial empowerment (Baum, 2001; Baron, Hannan and Burton, 1999; Welch and Byrne, 2001; Whetten, Cameron and Woods, 1994). Whilst these are elaborated on elsewhere in this study, in this section of the chapter they a sociological position is emphasised as it relates to the title of the thesis.

Entrepreneurial Leaders as Managers in Intrapreneurial Environments

Whilst it is understood that roles and job definitions exist and that managers and leaders are also prevalent in most entrepreneurial activity (Baum, 1994), the study also reviewed literature which likewise suggests that the leader and manager roles are often inseparable in newly created ventures – where the entrepreneur needs to act in both capacities and uses resources (which includes people and delegation authority) to achieve his or her entrepreneurial objectives (Audia, Locke and Smith, 2000; Brudel, Priesendorfer and Ziegler, 1992; Herron and Robinson, 1993; Zahra, Kuratko and Jennings, 1999).
Jack Welsh’s flair at General Electric constitutes an example where an entrepreneur used resources, multi–tasked and diffused his role – between that of manager and leader to achieve entrepreneurial objectives. His entrepreneurial foresight and his fusion of both personality and capacity to meet corporate needs, especially in a changed environment, altered the dynamic and understanding of entrepreneurship and simultaneously resulted in the achievement of individual and business objectives at General Electric (Welch and Byrne, 2001).
In the case of Jack Welch’s entrepreneurial approach, he showed that it is not always necessary to fulfill all the roles in an organisation for entrepreneurship to be effective. Instead, it could be argued that one could relatively easily, depending on how one provides intra–corporate coaching and leadership guidance, deliver the entrepreneurial results expected from employees of the venture.
It is further argued in this thesis that such an inculcation of intra-corporate leadership becomes a corporate-wide initiation into entrepreneurship for everybody involved in the running of the venture, so that the thinking (of those so-involved) is focused on a particular element of entrepreneurship, which may be, for example, venture growth or performance. This guidance or coaching consequently involves imbuing all parties concerned with the organisation’s vision.

Management Orientations in Entrepreneurship

Baum (2001) has also illustrated that several other dynamics are prevalent in the development and promotion of entrepreneurship. In his earlier (1994:34) doctoral study he notes that in some cases entrepreneurs delegated the
“…operations of their growing organizations to growth competent managers, while they performed the entrepreneurial role that enabled the founding and initial survival of their firms” (Also see Alvarez and Barney, 2000; Beach, 1990; Chandler and Hanks, 1998; De Geus, A. 1997; Kreuger and Carsrud, 1993).
The literature review of management and leadership styles leads the researcher to believe that most entrepreneurs manage or lead, or even find substitutes, to achieve their objectives. As with Baum (1994), this study also adopts a similar view regarding entrepreneurial leadership, activity, traits, and management–related activity.

Acknowledgements
Abstract 
Chapter 1 Introduction to Study 
1.1. Research Context and Purpose
1.2. Research Objectives
1.3. Definition of Entrepreneurship For The Study
1.4. Linking the Study’s Objective, Definition of Entrepreneurship and Hypotheses
1.4.1 Propositions, Constructs and Hypotheses Evolution
1.4.2 Entrepreneurship Model Applied within the Eight Domain Context
1.5. Outline of the Study
1.6. Importance of the Study
1.7. Summary of the Study
Chapter 2 Literature Review 
2.1. Introduction
2.1.1 Measurement of Success and Entrepreneurship
2.1.2 Sociological Perspectives on Entrepreneurial Traits
2.1.2.1 Organisational Behaviour and Entrepreneurial Domains
2.1.2.2 Entrepreneurial Leaders as Managers in Intrepreneurial Environments
2.1.2.3 Management Orientations in Entrepreneurship
2.2. Literature Review of Entrepreneurship Contingency Theories
2.2.1 Supply and Demand-side Orientations in Entrepreneurship Studies
2.2.2 Historical Perspectives on Supply and Demand-side Orientations
2.2.3 Institutionalisation of Entrepreneurship and Macro – Culture
2.3. Motivation, Locus of Control and Risk Taking Propensity
2.3.1 Achievement Motivation
2.3.2 Locus of control
2.3.3 Risk Taking Propensity and Persistence
2.3.3.1 Risk Taking Propensity
2.3.3.2 Persistence/Tenacity
2.4. Leadership and Entrepreneurial Vision
2.5. Entrepreneurial Intent, Self-efficacy and Opportunity-Recognition and/or Formulation
2.5.1 Entrepreneurial Intent
2.5.2 Self-efficacy and Opportunity Recognition and/or Formulation
2.6. Entrepreneurial Empowerment
2.7. Approaches to Experiential Learning in Entrepreneurship
2.8. Literature Review Summary
Chapter 3 Propositions, Constraints and Hypotheses 
3.1. Introduction
3.2. Proposition Set Development
3.3. Proposition Set Refinement & Hypothesis Formulation
3.4. Designated Names For Variables Used In This Study
Chapter 4 Research Methodology 
4.1. Introduction
4.2. Further Overview of Statistical Tests Applied in this Thesis
4.3. Data Collection Process
4.4. Industry Choice and Participating Company Size
4.5. Market Participants and Population for the Study
4.6. Population Characteristics: Market Players and Dynamics of Entrepreneurial Founders versus Intrapreneurs
4.7. Population Characteristics: Market Players and Dynamics of Entrepreneurial Founders
4.8. Measures Relevant To The Thesis
Chapter 5 Research Analyses 
5.1. Introduction Research
5.2. Objectives and Proposition Frameworks
5.3. Demographics and Descriptive Statistics
Chapter 6 Conclusions on Analyses 
6.1. Introduction
6.2. Factor Analysis
6.3. Analysis Of Variance (ANOVA) And Results
6.4 Basic Statistical Measures for Variable 69 and F1 – F3)
6.5. Concept validity
6.6. Closing Commentary on Domains and Hypotheses
Chapter 7 Research Conclusions, Directions and Implications 
7.1. Introduction
7.2. Theoretical Frameworks To Be Addressed In Responding
7.3. Proposed Future Research Questions To Be Addressed
7.4. Concluding Remarks on Future Research
7.5. Implications for Future Research
Bibliography
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