STRATEGIC ENTREPRENEURSHIP

TOPIC 1DR ANIS AMIRA AB RAHMAN

FACULTY OF ENTREPRENEURSHIP AND BUSINESSUNIVERSITI MALAYSIA KELANTAN

anisamira@umk.edu.my

INTRODUCTION TO THE CONCEPT OF STRATEGIC

ENTREPRENEURSHIP

Table 1: The birth of strategic entrepreneurship

Name of Author Year Issues relate to strategic entrepreneurship

Mintzberg 1973 Introduce the notion of entrepreneurial strategy making

Schendel&Hofer 1979 Argued that the entrepreneurial choice is at the heart of the concept of strategic

Burgelman 1983 Empirically examine the interrelationship between strategic management and entrepreneurship

inside a large corporation

Covin&Slevin 1989 Posited the concept of entrepreneurial strategy posture examining a firms competitive

orientation on a spectrum from conservative to entrepreneurial

Chittipeddi&Wallett 1991 Reviewed macroscopic trend impacting business and argue that the ethos of entrepreneurship

would pervade winning firms and that ‘the organizational’ archetype of the future will be

entrepreneurial . Its leadership, strategies, and structure will reflect entrepreneurial thinking with

associated traits such as flexibility, innovativeness, and a problem solving actions orientation.

Day 1992 Examined the research linkages between entrepreneurship, strategy management, and

general management and offers one possible configuration of their interrelation.

Sandberg 1992 Investigated cross-fertilization opportunities between strategy management and

entrepreneurship and posited six fertile areas; innovation; new business creation; opportunities

seeking; risk assumption; top management teams; and group processes used in strategic

decisions.

Barringer&Bluedorn 1999 Studied the relationship between entrepreneurial intensity and five strategic management

practices finding statistically significant results for the impacts of scanning intensity, planning

flexibility, locus of planning and strategic controls.

Meyer & Heppard 2000 Edited the first scholarly book addressing the interface between entrepreneurship and strategy

to uncover the components of a firm’s entrepreneurial ‘dominant logic’ independent of firm size.

There are three perspectives on the marriage of strategic and entrepreneurship.

strategic management is “dominants” over entrepreneurship (Baker and Pollock, 2007 cited in Rensburg, 2013)

strategic management is itself a “subset” of entrepreneurship (Browne & Harms, 2003 cited in Rensburg, 2013)

Strategic management “intersection” with entrepreneurship (Rensburg, 2013).

The former indicates that the entrepreneurship concepts can be explained by the strategic management domains while the later argues that strategic management only the division of entrepreneurship field.

The “intersection” perspective agrees with the overlapping of research’s areas and suggests that the marriage should be created through combining the core advantages of each which are the strategic and entrepreneurship.

The Birth of Strategic Entrepreneurship

The term of ‘Strategic Entrepreneurship’ was first pointed out by Herbert & Brazeal (1998 cited in Rensburg, 2013).

Researchers in Strategic Entrepreneurship field, studies on board of directors’ roles, firm resources and capabilities, and financial implications (Rensburg,2013).

Other researchers study on the combination of opportunities seeking behaviour (exploration) and advantages seeking behaviour (exploitation) and relates it to wealth creation (Hitt et al. cited in (Rensburg, 2013)

The Birth of Strategic Entrepreneurship

The Implicit Strategy Model of the PastDecade

Sustainable Competitive Advantage

• One ideal competitive position in the industry

• Unique competitive position for the company

• Benchmarking of all activities and achieving best practice

• Activities tailored to strategy

• Aggressive outsourcing and partnering to gain efficiencies

• Clear trade offs and choices vis-à-viscompetitors

• Advantages rest on a few key success factors, critical resources and core competencies

• Competitive advantages arises from fit across activities

• Flexibility and rapid responses to all competitive and market changes

• Sustainability comes from the activity system, not the parts

• Operational effectiveness a given

What is Strategy?

Sources : Michael E.Porter, (1996 cited in Kuratko, D. F. & Hodgetts, R. M., 2004: 532)

Strategic Entrepreneurship and Strategic Management

Source : Wheelen, T. L. and Hunger, J. D. (2000 cited in Kuratko, D. F. & Hodgetts, R. M., 2004: 521).

Entrepreneurial actions

Strategic

actions

How strategic management relates to strategic entrepreneurship?

• Innovation• Networks• Internalization• Organizational

Learning• Top Management

Teams and governance

• Growth

Wealth CreationSource : R. Duane Ireland, Micheal A.Hitt, S. Michael Camp, and Donald L.Sexton, (2001 cited in in Kuratko, D. F. &

Hodgetts, R. M., 2004: 531)

Components of Strategic Entrepreneurship

Strategic Entrepreneurship

Growth

Resource Management

Dynamic capability

Opportunity identification

Innovation

vision

Flexibility

Acceptance of risk

Sources : Kyrgidou, L. P. And Mathew Hughes, M. (2009: 49)

Components of Strategic Entrepreneurship

Opportunity identification - suggested to be an importantsource of competitive advantage (Hitt et al., 2002), whichcan lead to entrepreneurial opportunity creation.

Innovation or the ability to innovate - one of the distinctivecompetencies of entrepreneurial firms (Kirby, 2003).Sonfield and Luccier (1997) expand on this conceptproposing that the most effective way to position anentrepreneurial firm is to use risk and innovation.

Risk - referring to perceived environment (Smircich andStubbart, 1985). The entrepreneur does not make aconscious decision to engage in highly risky projects, butrather their perception of that situation is of moderaterather than of high risk (Busenitz and Barney, 1997).

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Components of Strategic Entrepreneurship

Flexibility- firms should be able to respond to changequickly, independent of their current strategy (Eisenhardtet al., 2000). Flexibility refers to balancing structure withthe freedom to implement and change strategy(Eisenhardt et al., 2000), which in turn will facilitate quickresponse to change (Bhide, 1994).

Vision- Establishing a clear vision and developing strategythat focuses both on opportunity and advantage withinthat vision (Hitt et al., 2001) enhance opportunityidentification

Growth is related not only to innovative and creative ideas,but also to the structure and strategy to turn such ideasinto profitable ventures resources and dynamic capabilitiesappear

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Strategy entrepreneurship is the use and/or stimulation of entrepreneurial activity to achieve strategic goals, (Kuratko & Audretsch, 2009 cited in Rensburg, 2013).

In addition, strategic entrepreneurship is still mainly a rather loose amalgam of a number of insights from strategy and entrepreneurship (Foss & Lyngsie, 2011, p. 16).

Strategic entrepreneurship describing an input-process-output model that entails: organizational resources, individual knowledge, and skills, and environmental factors as inputs.

Definition of Strategic Entrepreneurship

Guth & Ginsberg (1990), they replace strategic renewal with strategic entrepreneurship relegating strategic renewal to sub strategy of strategic entrepreneurship. Moreover, strategic entrepreneurship can be enacted within small medium size enterprise as well as within large established corporations (Resburg, 2013).

The existences of entrepreneurial behaviour in large frim is either the result of a deliberate or an emergent strategy or as Burgelman (1993b) described it the result of induced strategy behaviour or autonomous strategy behaviour.

Definition of Strategic Entrepreneurship

Strategic Entrepreneurship Theory

Sources : Kyrgidou, L. P. And Mathew Hughes, M. (2009: 53)

Conclusion

Entrepreneurs do not use strategic planning for many reasonsbecause: scarcity of time

lack of knowledge about how to plan

lack of expertise in the planning process,

lack of trust in others.

Benefits to strategic entrepreneurs are: have better financial performance

more efficient resource allocation

improved competitive position

higher employee morale

more rapid decision making

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REFERENCES Rensburg, D.J.V. (2013). Is Strategic Entrepreneurship a Pleonasm?. Journal of Management and

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Kuratko, D. F., & Hodgetts, R. M. (2004). Entrepreneurship: Theory, process, practice. Mason,

Ohio: Thomson/South-Western

Kyrgidou, L. P., & Hughes, M. (2010). Strategic entrepreneurship: Origins, core elements and

research directions. European Business Review, 22, 1, 43-63

Dollinger, M, J. (2008). “ENTREPRENEURSHIP: Strategies and Resources Fourth Edition”, Kelley School

of Business, Indiana University. MARSH publications, pp. 33-40.

Hisrich, R. D., Peters, M. P., & Shepherd, D. A. (2009). Entrepreneurship. New York: McGraw-Hill Higher

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Zimmerer, T., Scarborough, N. M., & Wilson, D. (2002). Essentials of entrepreneurship and small business

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