Entrepreneurial Behaviour

1. Entrepreneurial Behaviour Session 8 Entrepreneurship and Culture

2. Definitions of Culture • Human culture can be described, however loosely, as a set of commonly held beliefs, attitudes, dispositions and modes of behaviour. • The enduring set of values of a nation, a region, or an organisation (George and Zahra, 2002) • The collective programming of the mind, which distinguishes the members of one human group from another…. Culture, in this sense, includes systems of values; and values are among the building blocks of culture. (Hofstede)

3. Entrepreneurship and National Culture

4. Researches & Findings • Culture has a profound influence on the entrepreneurial capacity of a society • Societies usually do not have homogeneous cultural setting. • Loucks (1981) - entrepreneurship is culture embedded, and therefore researchers on the entrepreneurship should be more interested in the cultural distinctions of the entrepreneurship phenomena, and differences in how values, beliefs, attitudes, shared norms and particularity of conditions, influence what they do.

5. Researches & Findings • Davidsson and Wiklund (1995) - the most obvious source of the variations in the levels of entrepreneurship, are cultural values and cultural context • Morrison (1998) - significant relationship between entrepreneurship and cultural specificity, and if discipline of entrepreneurship has to flourish, researchers should search more about the differences, rather than concentrating on similarities. • Thomas and Muller ( 2000) - the potential for and frequency of entrepreneurship has been shown to be associated with the occurrence of certain culture specific variable

6. Hofstede’s Cultural Constructs • Individualism • extent to which people are concerned with their own well being and that of their immediate family • Power distance • extent to which the less powerful members of society accept that power is distributed unequally. • Masculinity • extent to which the dominant social values are achievement and success • Uncertainty avoidance • extent to which people feel threatened by uncertainty

7. Hofstede’s Findings • Societies, which score high on individualism and low on the power dimension, have a higher economic growth and a greater tendency to innovate. • High individualism combined with the low power distance and weak uncertainty avoidance would encourage pro-innovative culture and entrepreneurship. • Thomas and Muller (2000) - as cultures become less individualistic and more collectivist, people are more likely to identify with the group to which they belong, diminishing the degree of control that they feel over their environments, but not necessarily diminishing their entrepreneurial propensity

8. Several criticisms levelled against Hofstede’s cultural constructs and findings • Despite its weaknesses, Hofstede’s database is rare and valuable in that it captures cultural attitudes relevant to individuals’ economic activity at the national level and contains a relatively large number of observations.

9. World Values Survey • Authority • extent to which people feel authority is legitimated by rational, legal norms along with an emphasis on economic accumulation and individual achievement (secular authority), as opposed to attitudes of obedience to more traditional, typically religious, authority (traditional authority) and family and communal obligations and norms of sharing. • Well-being • extent to which people prioritise the quality of life – emphasizing self-expression, and the rights of minority groups as opposed to subsistence/survival values – such as hard work and self denial.

10. Research Conclusions

11. Entrepreneurship and Organisational Culture

12. Definitions • Organizational culture is a concept which is hard to describe

13. some evidence that links organizational culture with entrepreneurship, e.g. the model of Trompenaars and Woolliams (2003). • Their model of organisational culture is based on two main dimensions • one represents how egalitarian or hierarchical a culture is • the other represents to which extent the culture is oriented towards the person or towards the task.

14. Mapping cultures according to these two dimensions produces four culture types, the incubator, the guided missile, the family and the Eiffel tower. • Two of these culture types, the incubator and the guided missile have strong links with many aspects of entrepreneurship.

15. Defining Entrepreneurship • Johnson (2001) describes an entrepreneur as an individual who • takes agency and initiative • who assumes responsibility and ownership for making things happen • is both open to and able to create novelty • manages the risks attached to the process • has the persistence to see things through to some identified end-point, even when faced with obstacles and difficulties.

16. Johnson sees some kinds of attitudes and behaviour as a requirement for entrepreneurship. • The incubator: • individual’s self-realization, commitment to oneself and professional recognition, are all key goals • person-oriented culture -16 low degree of centralization and formalization which are both important for entrepreneurship.

17. The guided missile also has a strong relationship with entrepreneurship • task-oriented culture, with a low degree of centralization and in its ideal type is task and project-oriented • Organisational relationships are very results oriented, based on rational considerations and limited to the specific functional aspects of the people involved. • Key goals are achievement and effectiveness and rank above the demands of authority, procedures, or people.

18. Denison model • shows some evidence for the links between organizational culture and entrepreneurship • focuses on the effect of organisational culture on organizational effectiveness and performance. • divides organisational cultures into four dimensions and they are further divided into three sub-dimensions.

19. Denison model • Involvement • empowerment, team orientation and capability development • Consistency • core values, agreement, and coordination and integration. • Adaptability • creating change, customer focus and organizational learning. • Mission • vision, strategic direction and intent, and goals and objectives.

20. Denison and Mishra (1995) • the traits of involvement and adaptability were the best predictors of innovation which is strongly affected by entrepreneurship

21. Firm Performance &Entrepreneurial Orientation • Some research shows a strong link between firm performance and entrepreneurial orientation • Chow (2006) • In terms of organizational characteristics, entrepreneurial orientation shows significant negative correlation with ownership type, firm age, firm size and environment. • Non-state owned, smaller and younger firms tend to be associated with a higher level of entrepreneurial orientation

22. Montes and Verdú-Jover (2006) • Organisational learning and innovation, driven by entrepreneurship, are positively related to organizational performance. • Organizational innovation and organizational learning jointly promote organizational entrepreneurship and increase competitive advantage. • The research shows the need for strengthening different strategic capabilities to achieve an adequate level of both organisational issues and thus improving performance and encouraging entrepreneurship.