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Institutional entrepreneurship: managers ‘break away from scripted patterns of behavior’ to ‘develop strategies and shape institutions’.

Institutional entrepreneurs do not operate from a position of pre-existing power or authority, instead they have unique political and social skills that allow them to have collaborative relations. Through partnerships and coalitions, institutional entrepreneurs induce the cooperation of other actors. (Hardy and Maguire, 2008)

Change can be good and bad. The success of eliminating child labour in the soccer ball cluster in Sialkot, Pakistan (produces 60-80% of hand stitched soccer balls globally) where the majority of women stitchers dropped out of the workforce plunging into abject poverty. Institutional entrepreneurs / NGOs induced cooperation to end child labour after news reports in the mid-90s. The fact that the benefits for the children were questionable and their families sank deeper into poverty was never mentioned as the ‘success’ of the institutional entrepreneurship.

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Small entrepreneurial firms cope with change than better than large ones. Pace of change has become more abrupt, discontinuous, and turbulent. Bottom up and emergent strategy places greater value on individual managers than top-down, designed strategy. A source of competitive advantage, therefore, is through actions of individual managers, harnessing creativity

Many owners of small firms are not entrepreneurs, not looking for business that will grow, but a lifestyle they enjoy. True entrepreneurs ‘have freedom of spirit, creativity, vision, zeal…courage, self-belief and commitment to turn their dreams into realities. They are the catalysts for economic change…creating jobs from which the rest of society benefits’, and can own small firms or be managers in large ones. (Burns, 2005)

‘Entrepreneurs use innovation to exploit or create change and opportunity for the purpose of making profit. They do this by shifting economic resources from an area of lower productivity into an area of higher productivity and greater yield, accepting a high degree of risk and uncertainty in doing so.’ (Burns 2005)

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Characteristics of owner-managers and entrepreneurs:

The survival instinct: - need for independence - need for achievement - internal locus of control - ability to live with uncertainty and take measured risks

The growth instinct: - opportunistic - innovative - self-confident - proactive and decisive with high energy - self-motivated - vision and flair

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‘The guiding principles in a traditional corporate culture are: follow the instructions given; do not make any mistakes; do not fail; do not take initiatives but wait for instructions; stay within your turf; and protect your backside. The restrictive environment is of course not conducive to creativity, flexibility, independence, and risk taking – the jargon of intrapreneurs’. (Hisrich and Peters, 1992, quoted in Burns, 2005)

Corporate entrepreneurship describes entrepreneurial behaviour in an established, larger organization.

Large firms need to adapt to an ever-changing environment if they are to survive and to do so they need to adapt their structures and cultures to encourage entrepreneurial activity in individual employees (Burns, 2005; Ghoshal and Bartlett, 1997; Kanter, 1989; Tushman and O’Reilly, 1996)

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Implications for the entrepreneurial organization: Issues for management style – if individual members of the organization are entrepreneurial they will need to be managed with a ‘light touch’ and given independence of decision making Issues of culture – Will entrepreneurial members of the organization naturally want to leave, often to set up in competition? If so, can they be tied into the organization by sharing in its success through share ownership etc.? Can other psychological needs be met so as to compensate for this need for independence? They need to feel they belong to and even ‘own’ the organization. Issues for structure – Staff will need to feel independent to some extent but will an entrepreneurial unit or division have to be separate from the rest of the organization in order to satisfy the aspirations of its members? Can the separate identity be recognized in any way other than by structure? (Burns 2005)

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Incrementalism due to uncertainty – strategy emerges on a step-by-step basis. If one step works, then the second is taken. Entrepreneurs more opportunistic and adaptive rather than calculated and planning. Strategy emerges. Options – keep as many options open as possible because risk of failure is high on any one step. Frameworks – they do not know the jargon, they do not use the empirically proven frameworks, but arrive at the right decision through instinct and ‘gut feel’. Many great musicians and athletes were not taught. Luck – believe in luck, but not fate. Entrepreneurs hope to get lucky, but aren’t resigned to failure, believe they can shape their fate. Relationships and networks – great people skills, personal touch. You have to go out and win business, win people over…different than your average grey suited manager.

(Burns 2005)

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In a learning organization managers are both learners and doers, thriving in turbulent environments - organization continually transforms itself by: • encouraging systematic problem solving • encouraging experimentation and new approaches • learning from past experience and history • learning from best practice and outside experience • being skilled at transferring knowledge in the organization

Wheel of learning breaks cycle of rewarding conformity: • true learning requires acquisition of know-how (actual observation of what works and what doesn’t) and know-why (reflecting on the observations, diagnosing problems, setting solutions), thus identifying chains of causality • mental models are shaped by experience • learning occurs when individuals share, challenge mental models • most important learning occurs on the job and is social and active, not individual and passive • most important things to learn are tacit – intuition, judgment, expertise (Burns 2005)

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Entrepreneurial architecture must be constructed to overcome the barriers to corporate entrepreneurship. Examples of barriers to corporate entrepreneurship are as follows: - Focus on efficiency or return on investment is better for a mature company, a ‘cash cow’ - Long term planning and adherence to the plan – need goals, vision and some interim planning, but entrepreneurial companies need to nimble and adaptive, quickly reacting to market turbulence rather than sticking to a long-term plan - Enforce standard procedures, rules and regulations – blocks innovation, leads to missed opportunities. Entrepreneurial organization needs to be flexible, prepared to relax rules when circumstances change. Thus, rules should be challenged, and adopted only when proven to benefit the firm - Risk avoidance – leads to missed opportunities. Entrepreneurial firms embrace taking measured risks, taking small steps rather than huge bets - Make decisions based on past experience – instead, should take small steps, testing assumptions as it goes, learning from a changing reality - Manage functionally – clear hierarchy, rigid job descriptions can be a barrier to creativity. Instead, need holistic problem solving, multidisciplinary teams to develop entrepreneurial opportunities - Promote individuals who conform – this approach loses innovators. Instead, accommodate and promote those who do not conform. (Burns 2005)

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Entrepreneurial leader like leader of jazz band, bring out best of other’s creativity, encouraging solo performances. Leader should: 1. have vision for the organization; 2. communicate effectively, particularly the vision; 3. think strategically; 4. create an appropriate culture in the organization; 5. control and monitor performance. For learning organization, leader must also: 1. Design organizational architecture to encourage the learning process –

encouraging people to focus activity where change, with the minimum of effort leads to significant, lasting organizational improvements

2. be the keeper of the vision that inspires staff and is transmitted to others – crafting a larger vision that goes beyond leader’s own vision, borrowing and synthesizing with the vision of others. Avoid taking self-confidence to delusional lengths. Empower individuals to do the right thing, resolve problems by themselves

3. teaching learning or how to develop systematic understanding of how to approach and exploit change – avoid being authoritarian and intervening in every decision. Conceptualize strategic insights in a public way, open to challenge and improved by input from others. Restructure views of reality to better understand root problems and apply enduring solutions rather than addressing short term symptoms. See interrelationships, not static images, understand cause and effect over time, not static images. (Burns 2005)

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Organizational culture is the personality of the group. Even if management does not impose a culture, one will emerge, thus best not to ignore culture. Values – core values are stabilizing, change slowly over time, and peripheral values are less important and change more quickly. Right of free speech core in US, but being crime-free is core in Singapore. Organizational processes – leadership style signals appropriate behaviour, priorities for employees. Hierarchical structures discourage initiative, functional specialization can create parochialism and impression that certain skills more important than others, flat structure with broad spans of control encourage creativity, innovation and entrepreneurship. Controls and rewards signal what behaviour gets rewarded, what’s needed for promotions, status praise and recognition are powerful motivators. Routines, rituals and taboos are whether management offices have guards or are open, reserved parking spaces – need egalitarianism in entrepreneurial setting. Stories and symbols, what do staff talk about at lunch, are office size and cars important, how do staff talk about customers, the entrepreneur, other senior managers? Cognitive processes – beliefs, assumptions and attitudes taken for granted, often in firms with long history (Cadbury). Entrepreneurial firms often have ‘healthy discontent’, question everything, but don’t want to get too negative. Takes time to mold the company’s beliefs, doesn’t happen overnight. Behavior – what actually happens, are outcomes rational and transparent or result of politics. Northern Europeans more rational-analytic and controlling, Asians and Latin Europeans more adapting…less certain that external environment could be controlled. Change behavior and attitudes will follow.

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(Burns 2005)

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An intrapreneur is someone working in a larger organization who pushes through innovations in an entrepreneurial way. They work with teams to cut through bureaucracy and get products ready for market as quickly as possible. Their ideas often lead them to become Managing Directors of spin-off companies set up by the larger parent to exploit the idea. They work hard to create an entrepreneurial culture, simultaneously communicating with the more bureaucratic organization that employs them. (Burns 2005)

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An intrapreneur is someone working in a larger organization who pushes through innovations in an entrepreneurial way. They work with teams to cut through bureaucracy and get products ready for market as quickly as possible. Their ideas often lead them to become Managing Directors of spin-off companies set up by the larger parent to exploit the idea. They work hard to create an entrepreneurial culture, simultaneously communicating with the more bureaucratic organization that employs them. (Burns 2005)

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