MANAGERIALVERSUS ENTREPRENEURIAL DECISIONMAKING

MANAGERIALVERSUS ENTREPRENEURIAL DECISIONMAKING

The difference between the entrepreneurial and managerial styles involves five business dimensions.

Strategic Orientation

The entrepreneur's strategic orientation depends on his or her perception of the opportunity. This orientation is most important when other opportunities have diminishing returns accompanied by rapid changes in technology, consumer economies, social values or political rules. When the use of planning systems is the strategic orientation, there is more pressure for the administrative domain to be operant.

Commitment to Opportunity

The entrepreneurial domain is pressured by the need for action and has a short time span in terms of opportunity commitment. The administrative domain (the ways mangers make decisions) is not only slow to act on an opportunity, but the commitment is usually for a longer time span.

Commitment of Resources

An entrepreneur is used to having resources committed at periodic intervals, often based on certain tasks or objectives being reached. In acquiring these resources the entrepreneur is forced to achieve significant milestones using very few resources. In the administrative domain, the commitment of resources is for the total amount needed. Administrative-oriented individuals receive personal rewards by effectively administering the resources under their control.

Control of Resources

The administrator is rewarded by effective resource administration and has a drive to own or accumulate as many resources as possible. The entrepreneur, under pressure of limited resources, strives to rent resources on an as-needed basis.

Managerial Structure

In the administrative domain, the organizational structure is formalized and hierarchical in nature. The entrepreneur employs a flat organizational structure with informal networks.

CAUSES FOR RECENT INTEREST IN ENTREPRENEURSHIP

Interest in entrepreneurship has resulted from events occurring on social, cultural, and business levels. There is an increasing interest in "doing your own thing." Individuals frequently desire to create something of their own. They want responsibility and want more freedom in their organizations. Frustration can develop and result in the employee becoming less productive or leaving the organization. This has recently caused more discontent in structured organizations. When meaning is not provided within the organization, individuals often search for an institution, such as entrepreneurship, that will provide it.

Entrepreneurship is one method for stimulating and capitalizing on those who think that something can be done differently and better, such as Xerox Corporation's commitment to Xerox Technology Ventures In large organization problems occur that thwart creativity and innovation. This growth and diversity that can result are critical, since large corporations are more efficient in a competitive market than are smaller firms. The resistance against flexibility, growth, and diversification can be overcome by developing a spirit of entrepreneurship, called Entrepreneurship, within the existing organization.

There are social, cultural, and business pressures for Entrepreneurship. Hyper competition has forced U.S. companies to focus on new product development and increased productivity. Reductions in large corporation's staff are being absorbed in the workforce, particularly in small businesses.

Entrepreneurial endeavors consist of four key elements.

1. New business venturing refers to the creation of new business within an existing organization.

2. Organizational innovativeness refers to product and service innovation with an emphasis on Development and innovation in technology.

3. Self-renewal reflects the transformation of organizations through the renewal of the key ideas on which they are built.

4. Proactiveness includes initiative and risk taking, as well as competitive aggressiveness

KEY TERMS

Administrative domain

The ways managers make decisions

Business plan

The description of the future direction of the business

Corporate culture

The environment of a particular organization

Entrepreneurial domain

The ways entrepreneurs make decisions

Entrepreneurial process

The process through which a new venture is created by an entrepreneur

Entrepreneurial culture

The environment of an entrepreneurial-oriented organization

Entrepreneurship

Entrepreneurship within an existing business organization

Opportunity identification

The process by which an entrepreneur comes up with the opportunity for a new venture

Opportunity parameters

Barriers to new product creation and development

Top management commitment

Managers in an organization strongly supporting entrepreneurship

Traditional managers

Managers in a non-entrepreneurial-oriented organization

Window of opportunity

The time period available for creating the new venture