In Search of Business Discipline

Togar M. Simatupang

School of Business and Management

Bandung Institute of Technology

Presented on the 7th Indonesia International Conferenceon Innovation, Entrepreneurship and Small Business

4-6 August 2015 – H Clarity Hotel - Bandung

Proposition…

The cluster of business discipline consits of four fields, namelyManagement

Administration

Entrepreneurship

Stewardship

Togar M. Simatupang in Pikiran Rakyat on Wednesday, 15 may 2013, p. 26

2

Overview

1. Introduction

2. Research Approach

3. Disputes

4. Business Discipline

5. Cluster of Business Discipline

6. Body of Knowledge of Business Fields

7. Concluding Remarks

3

Introduction

• The field of entrepreneurship has been organized to merely redefine the phenomenon of business creation not as a field of business.

• The question remains unanswered to look the posture of entrepreneurship as one of fields of scholarship within the discipline of business.

• This paper thus intends to contribute to the theoretical knowledge of entrepreneurship within the business discipline.

4

Disputes

5

Disputes

• Imperialism:– M > A = Management is greater than Administration

– A > M = Administration is greater than Management

• Annexation:

– E ∈ M = Entrepreneurship is an element of Management

– E ∈ A = Entrepreneurship is an element of Administration

• Equality:– M = A = Management is the same as Administration

• Which one is appropriate?– Non of them subject to uniqueness , co-existence, and evolutionary

– A new paradigm Complementary

6

Administration versus Management

Basis of Difference Administration Management

Nature of work It is concerned about the determination of objectives and major policies of an organization.

It puts into action the policies and plans laid down by the administration.

Type of function It is determinative fuction. It is an executive function.

Scope It takes major decisions of an enterprise as a whole.

It takes decisions within the frmework set by the administration.

Level of authority It is a top-level activity. It is a middle level activity.

Nature of status It consists of owners who invest captal in and receive profits from an entreprise.

It is agroup pf managerial personel who use their socialised knowledge to fulfil the objectives of an entreprise.

Nature of usage It is popular with government, military, educational, and religious organizations.

It is used in business entreprises.

Decision making Its decisions are infuenced by public opiniton, government policies, social, and religious factors.

Its decisions are influenced by the values, opinions, and beliefs of the managers.

Main functions Planning and organizing functions are involved in it.

Motivating and controlling functions involved in it.

Abilities It needs administrative rather than technicalabilities.

It requires technical activities.

7

Administration does not resemble Management

8

Top Management

Lower Management

Administration

Management

Entrepreneur and manager are different

Entrepreneur Manager

Owner: An entrepreneur is the owner of his own business.

Servant: A manager is a servant of his employer.

Profits: An entrepreneur earns profits from his business which is uncertain and unlimited.

Salary: A manager earns salary which is generally certain and limited.

Full risk bearing: An entrepreneur is a person who has to take high risks for starting and running venture.

Less or no risk bearing: A manager takes less or no risk while performing his job.

All functions: An entrepreneur has to look after all the functions of his organization.

Selective functions: A manager looks after selective functions of an organization.

Innovator: An entrepreneur is always an innovator, in the lookout for new products and services.

Executor: A manager is simply an executor who is responsible for executing the decisions of the owner and entrepreneur.

9

Entrepreneurship does not resemble Management

10

A manager is the person responsible for planning and directing the work of a group of individuals, monitoring their work, and taking corrective action when necessary.

An entrepreneur is a person who establishes business unit and utilizes the other factors of production like land, labor, and capital.

Basis of Differences ENTREPRENEURSHIP ADMINISTRATION

Strategic Orientation Driven by perception of opportunity

Driven by resources currently controlled

Commitment to opportunity

Revolutionary with short duration

Evolutionary of long duration

Commitment of resources Multi-staged with minimal exposure at each stage

Single-staged with complete commitment upon decision

Control of resources Episodic use of rent of required resources

Ownership or employment of required resources

Management structure Flat with multiple informal networks

Formalized hierarchy with clear authority

Reward philosophy Value-driven Performance-based Team-oriented

Security-driven Resource-based Promotion-oriented

11

Entrepreneurship and Administration are Different

Source: “The Heart of Entrepreneurship” by Howard H. Stevenson and David E. Gumpert (March 1985) at https://hbr.org/1985/03/the-heart-of-entrepreneurship

Literature Review

12

Previous Works

Miller, L.M. (1989), Barbarian to Bureaucrats: Corporate Life Cycle Strategies, Clarkson N. Potter, New York. 13

Four Workplace “Languages”

14

Adizes, I. (1979), How to Solve the Mismanagement Crisis, Dow Jones-Irwin, Homewood, Illinois.

Previous Works

15

Business Discipline

16

17

Source: http://www.column2.com/2006/10/proforma-conference-day-1-geary-rummler-x-2/

Business System

BUSINESS PROCESS

ORGANIZATIONAL STRUCTURE

MANAGERIAL PROCESS

RESOURCESSERVICES

AND GOODS

BUSINESS FUNCTIONS

CUSTOMERSVENDORS

Regulation, Competition, Trading,

Social, Culture

GOVERNANCE

KNOWLEDGE AND TECHNOLOGY

Scope of Business

Business Ecosytem

ORGANIZATIONAL FORMATION

STRATEGY

BUSINESS COMMUNICATION

19

Legal Aspect of Business as Applied Science

• Higher Education Act Number 12 on 10 August 2012• Clause 10 about Cluster of Science and Technology:

– Applied Science• Explanation Clause 10

– Letter f: The cluster of applied science constitutes of the branch of science and technology which studies and examines the application of sciences for human life including agriculture, architecture and planning,

business, education, engineering, forestry and environment, family and consumer, health, sport, journalism, mass media and communication, law, library and museum, military, public administration, social work, and transportation.

20

Business Discipline

A set of research, practice, education, and the scientific community about business

21

Body of Knowledge:Provides the core of

subject

Skills:training as a "disciple"

Practitioners

Scholars

The nature of Business

Business Science

Business Science

ECONOMICS

HUMAN SCIENCE ENGINEERING

Business Science

Business Process

Organizational Behavior

Productivity

TechnologyPsychology

Business Economics

Sociology Ergonomy

22

Business science is concerned with investigation, design, and improvement of a business system using technical and scientific business knowledge and human science for understanding, intervention, development, and evaluation of the business.

Business Skills

Note:• Technical skill is a skill to perform each single detailed tasks by applying specialized knowledge or expertise.• Human skill a skill to work with, understand and motivate other people (both individually and a group) to accomplish the company’s goals. • Conceptual skill is a skill to understand the business need and set directions for the company. This is an ability to critically analyze, diagnose a situation and forward a feasible solution. It requires creative thinking, generating options and choosingthe best available option. 23

Cluster of Business Discipline

24

Discipline: An academic category for business.Field: An area of study within business discipline.

Research Approach

25

Real Life of Business

Philosophy:Critical Realism

Key dimensions of Business

Frameworks for understanding

Reflection over totality of meaning of business

Focused abstraction

Clustering Business Discipline

• Offering a framework for generating scientific research and its application in the area of business studies, not only to optimize the performance of the enterprise at a given time but also overall performance of its life cycle activities.

• Identifying the types of business fields (business discipline cluster framework)

– Two underlying dimensions of Business Discipline

• Interpreting Types of Business Fields

26

Two Underlying Dimensions of Business Discipline

• Dimension 1: Concern for PurposeNature of mission orientation that represents mission achievement of an enterprise either to attain enterprise performance or lifecycle performance

1.1. Continuum stage (Enterprise Performance)

1.2. Lifecycle stage (Lifecycle Performance)

• Dimension 2: Concern for SpecificationStructural specification represents the degree to which an enterprise formulating and structuring the tasks and goals that enable and constraint an organization

2.1. Liberation

2.2. Regulation

27

Dimension 1: Concern for Purpose

Lifecycle Enterprise System

Ongoing Enterprise System

Responsibility for an organization

Value Added (better profit) to the economy

New venture (new enterprise) to the economy

Continuum Stage of Performance Responsibility

Lifecycle Stage of Performance Responsibility

28

1.1. Lifecycle stage of Performance Responsibility

29

TIME

PERFORMANCERejuvenate?

Responsibility for Lifecycle Performance

Ideas Start-up Growth Maturity Decline

Divest?

1.2. continuum stage of Performance Responsibility

30

TIME

PERFORMANCE

Responsibility for Enterprise Performance

Planning Implementation Evaluation

Dimension 2: Concern for Specification

Deliberated Structure

Regulated Structured

Concern for Structural

SpecificationThomas Hobbes: Leviathan

Adam Smith: The Wealth of Nations

31

ORDER FLEXIBILITY

LEGAL CONCENSUS

REGULATION LIBERATION

Formality

Formation

Fomulation

Business Discipline Clustering Framework:the Quadruple Fields of Business

Management Entrepreneurship

Administration Stewardship

Re

gulate

De

libe

rate

Continuum Stage Lifecycle Stage

Concern for Purpose

Structu

ral Spe

cification

32

Different Emphasis...

• Management:– A focus on enterprise performance

and deliberation for capability– Starts from an existing concept and

strategic planning – Ensures change and performance

achievement– Provides answers and solutions to

managerial problems

• Administration:– A focus on enterprise performance

and regulation for accountability– Dedication to apply good corporate

governance and credibility– Ensures consistency and stability– Provides answers and solutions to

administrative problems

• Entrepreneurship:– A focus on lifecycle performance

and deliberation for viability– Starts from a unique idea and

orientation for the future– Ensures development and

performance adaptability– Provides answers and solutions to

developmental problems

• Stewardship:– A focus on lifecycle performance

and regulation for sustainability– Willingness and dedication to help

people and the environment– Ensures inclusive growth – Provides answers and solutions to

sustainable problems

33

BOK of Management

34

BusinessStrategy

Process Functions

Capability

Managerial Activity:POAC

BOK of Administration

35

Business Policy

Procedures Governance

Accountability

Administrative Activity:PDCA

BOK of Entrepreneurship

36

Business Innovation

Business Models and

Risks

Ecosystem

Viability

Entrepreneurial Activity:Ideation, Initiation, Growing, and Maturity

BOK of Stewardship

37

Eco-Socio innovation

policy

Standarization and certification

Sustainable Governance

Sustainability

Stewarding Activity:Social, comercial, and environmental development

The development of social responsibility guideline ISO 26000

Examples of Stewardship

http://ucsdbioadvising.wordpress.com/2011/12/09/the-master-of-sustainable-forest-management-program-at-the-university-of-british-columbia/

Master of Environmental Management (MEM)

Master's of Natural Resources Stewardship

The MBA in Environmental Stewardship

http://www.wilmu.edu/business/mba_concentration_environmental.aspx

International Master in Sustainable Development

& Corporate Responsibility

39

Concluding Remarks

40

Concluding Remarks

• The task of this research was to further define the entrepreneurship field of business.

• The exposition of the claster of business is based on the epistemological foundations of critical realism that assumes knowledge of business as a social and historical product.

• The quadruple field model of business, with its emphasis on management, administration, entrepreneurship, and stewarship, represents a radical view to promote entrepreneurship as an independent business field.

• This also sets a challenge forfuture research of the quadruple fields of business.

41

Thank You

42