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The Impact of entrepreneurial behavior on the potential for growth and development of an organization

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Introduction

The Impact of entrepreneurial behavior on the potential for growth and development of an organization "Enterprising people translate what is possible into reality" (Kao, 1989) Entrepreneurship is commonly viewed as the process of establishing a new business firm. Thus the study of entrepreneurship relates to the individuals behind such formation. Many studies apply a trait theory approach to assess the personal characteristics of an entrepreneur (Casson, 1982, Caird, 1988, Timmons, 1994). These evaluations include some form of innovativeness and the will to act. Schumpeter (1934) defines innovativeness as the essence of entrepreneurship and Wickham (2001) describes it as the "exploitation of innovation". However, since a person does not become an entrepreneur by virtue of the possession of some combination of these characteristics, Littunen (2000) disregards of this notion and takes a contingency approach to entrepreneurship. Similar to the contingency models of leadership theory, where the leader is required to adapt his style to the structural moments of the leadership situation (Buelens, 2002, Bolden, 2004), Littunen views entrepreneurial activity as a reaction to environmental factors. Entrepreneurial activity is often related to the motivations behind such activity. Reynolds (2003) distinguishes between "opportunity entrepreneurship" that is based on the seizure of an opportunity and "necessity entrepreneurship" that originates from the lack of economic alternatives. ...read more.

Middle

Sometimes this growth is limited by the entrepreneur's deliberate decision (Irwin, 2000, Lau and Snell, 1996, Mochrie, Galloway and Donnelly, 2006) However, once the firm is established and has reached a certain size, other factors need to be considered. Primarily the set-up in a larger organization is different in that ownership and control are more dispersed. Wickham (2001) views entrepreneurship as a style of management, which considers entrepreneurial behavior of managers within an organization and thus already extends the previous definition. Further, in a large organization, management is removed from both the customer base and the processes. As argued above any change is preceded by the perception of either an opportunity or a need. Management is in a position to evaluate the organization as a whole and in context to developments in its market (Mullins, 2002). It is therefore able to identify inefficiencies, as well as the relative success of its products. If management acts upon these perceptions and finds ways to improve its output, then this can be viewed as entrepreneurial behavior. However, this is still limited to the actions of those in control of the organization. Perception is largely based on experiences (Littunen, 2000). Thus, it is people using certain processes on a daily basis that are most likely to identify any shortcomings of such processes. ...read more.

Conclusion

Where a change is based on opportunity it is more likely to lead to actual growth. As argued above, innovation and the willingness to take risks are the essential to entrepreneurship. Thus entrepreneurship within an organization has a positive impact on organizational growth and development. The extent of this impact depends on the extent the organization chooses to use its human capital and is influenced by the organizational structure. As there is no economic need for an employee to innovate, these innovations are likely to fall under the opportunity or lifestyle categories identified earlier. Thus they occur before developments in the organization's external environment put pressure on the organization to change. Thus, for a larger organization to grow, it is helpful if employees are able to communicate their ideas and these are not lost through communication barriers. Thus, for an established organization to remain entrepreneurial and thereby retain growth, not only the entrepreneurial behaviors of the person who initially started the company or the people who run the company is significant, but also the display of such behaviors by the people working within that organization. In order to access employees innovations, communication barriers need to be avoided. This is most likely where the organization has a flat or hybrid structure. This means that organizational structure and management style have a moderator effect on the impact of entrepreneurial behavior on organizational growth and development. ...read more.

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