1.

1 Start-up and Growth in the Context of

Entrepreneurship
1.1.1 History of the Concepts of Entrepreneurship and
Entrepreneur
The roots of the words and concepts of entrepreneurship and entrepreneur lie in the
French language [Casson (2003); for the use of the term entrepreneur in 16th century
France and later see Freiling (2006) and below] A later rediscovery of the German
Unternehmer as entrepreneur took place in the works of the Austrian economist
Joseph Schumpeter (1911), who is seen as the pioneer for the present discipline of
entrepreneurship as an area of teaching and research. In the English edition of the
much-acclaimed work The Theory of Economic Development, Joseph Schumpeter
translated the German concept Unternehmer as entrepreneur. [There are, however,
authors who differentiate between the two, e.g., Drucker (2004).]
Entrepreneurship
Individual authors have found the first historic traces of the development of the concept
entrepreneurship as early as in the Middle Ages. According to them, the typical
entrepreneur of the Middle Ages was a cleric dealing with the building of large projects
such as churches and castles without, however, taking any personal risks. [Hisrich/
Peters (2002); Freiling (2006)] With regard to the discipline of entrepreneurship, general
reference is made to the theoretical studies of the Irish economist Richard Cantillon
(1680-1734), whose authoritative books were written between 1720 and his death in
1734. His posthumously published work, Essai sur la Nature du Commerce en
General [Cantillon (1755)], is often quoted as a source in entrepreneurship literature. In
his telling, entrepreneurship means independence, along with an ex-ante unknown
remuneration and return on the investment. According to Frank H. Knight (1885-1972),
entrepreneurs gain profits by taking and accepting insecurities (or uncer tainties) and
risks [Gifford (2003)]. While risks can be calculated, uncertainties generally cannot be
estimated. [For this and a comparison to Schumpeters perspective on the risks of
entrepreneurial activity and bank credit, see Brouwer (2000, 2002).] Joseph A.
Schumpeter (1883-1950) describes entrepreneurship as the implementation or
realization of new factor combinations in the form of new products or new qualities of a

known product, new production methods, the opening-up of new sales markets, new
organizational forms or new forms of procurement. These concepts of innovation and
novelty form an integral component of his definition.
On the basis of Schumpeters works, a multitude of different entrepreneurship
definitions have been subsequently generated. In this context, we limit ourselves to
consider

only

selected

exemplary

definitions

and

thereby

dispense

with

comprehensive and indepth presentation. Casson (1982) concentrates his definition on

the initial lack of resources available to the entrepreneur. According to Ronstadt (1984),
entrepreneurship is a dynamic process oriented towards the step-by-step creation of
property and prosperity. This prosperity is created by persons who are aware of their
perceived risks as regards their invested capital and time expenditure, and, in
accordance with their social position, feel bound to offer products or services in order to
meet specific consumer needs within society. From this point of view, the product or
service offered can be new or unique, but this is no must. However, the usefulness of
the product or service must be generated by the entrepreneur in a certain form and
should be protected and assigned to the product using all his/her necessary capabilities
and means.
In this concept, wealth creation through entrepreneurial action is brought to the fore,
which is also typical of American perspectives on entrepreneurship. A comprehensive
definition of entrepreneurship within the meaning of a new valuecreating entrepreneurial
process comes from Hisrich (1985). His definition takes into account typical
characteristics of entrepreneurial behaviour, which means that the entrepreneurial
process requires time and effort and that the entrepreneur takes on financial, personal
and social risks. However, the economic process hopefully results in the financial
success as well as the personal satisfaction and independence of the entrepreneur.
This definition illustrates that the concepts of entrepreneurship and entrepreneur cannot
be considered separately, but are mutually dependent. Hart/Stevenson/Dial (1995)
describe the entrepreneurial behaviour of founders as dependent on their competence
and industry-specific experience, with available resources representing a limiting factor.
Rather, entrepreneurship is a process by which individuals _ either on their own or

inside organizations _ pursue opportunities without regard to the resources they

currently control [Stevenson/Jarillo (1990), p. 23].
According to Timmons (1999), entrepreneurship is based on an integrated approach
within the meaning of an entrepreneurial value-creating process. Interpreted in this way,
entrepreneurship refers to methods of thinking, argumentation and acting, which are
characterized by the recognition and exploitation of entrepreneurial opportunities.In
addition, entrepreneurship is characterized by limited employment of resources and the
calculated taking of personal and financial risks, which are measured by the
entrepreneur as exactly as possible in relation to the chances of success [Timmons
(1999)]. In doing so, entrepreneurs are driven by commitment and perseverance.
In Table 1-1, some definitions of the entrepreneurship concept are listed as examples.
Table 1-1: Survey of definitions regarding entrepreneurship

Source

Definition of entrepreneurship

Cantillon (1755)

Self-employment with an uncertain return

Knight (1921)

Entrepreneurship means generating profits from

bearing uncertainty
and risks

Schumpeter (1934)

The realization of new factor combinations

new products, new
services,

new raw material sources, new

production methods,
new markets, new forms of organization

Casson (1982)

_ Entrepreneurship involves taking judgmental

decisions about the
coordination of scarce resources

Hisrich/Brush (1985)

original version]
[modified version in
Hisrich/Peters (2002)]
Entrepreneurship is the process of creating
something of value
by devoting the necessary time and effort,
assuming the accompanying
financial, psychic, and social risks, and receiving
the
resulting rewards of monetary and personal
satisfaction and
independence

Hart,

Stevenson

& Entrepreneurship

entails

Dial

opportunity without regard

(1995)

to

resources

the

currently

pursuit

controlled,

of

but

constrained by the
founders previous choices and industry-related
experience
Timmons (1999)

Entrepreneurship

is

way

of

thinking,

reasoning, and acting that

is opportunity obsessed, holistic in approach,
and leadership
balanced

Many definitions of the concept of entrepreneurship contain the following characteristic

elements:
_ Identification and exploitation of entrepreneurial opportunities
_ Innovation and novelty
_ Securing of resources and formation of an enterprise/an organization

_ Profit-orientation taking into account reasonable risks and uncertainties.

[Dollinger (2003)]
An essential factor for understanding the concept of entrepreneurship is the recognition
and exploitation of entrepreneurial opportunities, with innovation and novelty referring
especially to products or processes. Entrepreneurial activities are carried out target- and
profit-oriented using scarce resources, thus engaging in entrepreneurial activity is
associated with considerable risks for the entrepreneur, in particular the risk of newventure failure. Entrepreneurship can comprise personal, institutional as well as
procedural dimensions.
At the same time, the concept of entrepreneurship is by no means limited exclusively to
institutions of the private economy. On the contrary, state institutions, too, such as state
universities, can have an entrepreneurial orientation, for according to Peter F. Drucker,
entrepreneurship is a type of behaviour and not a personal characteristic [Drucker
(2004)]. In connection with the concept of entrepreneurship, the term entrepreneurial
spirit is often used. Within Anglo-Saxon cultures, entrepreneurial spirit refers to a
mental attitude, defined by entrepreneurial characteristics such as having innovative
powers, dynamism, creativity, energy and drive as well as persuasiveness.
A comprehensive representation of the theory of entrepreneurship as well as of the
research tendencies in this subject area is found, for example, in Fallgatter (2002) [see
also Ripsas (1998)].
One often used characteristic form of the entrepreneurship concept is corporate
entrepreneurship [for a detailed analysis of corporate entrepreneurship see Burgelman
(1983); Guth/Ginsberg (1990), Covin/Slevin (1991); Sharma/Chrisman (1999); Frank
(2006) etc.; also cf. chapter 1.1.4 below]. Corporate entrepreneurship includes all forms
of entrepreneurial thinking and acting in large established enterprises, i.e. in form of
intrapreneurship as well as internal corporate venturing and external corporate
venturing [Burgelman (1983); Guth/Ginsberg (1990); Covin/Miles (1999)]. Well-known
North- American enterprises practising corporate entrepreneurship are multi-national
enterprises like Hewlett-Packard, General Electric, 3M or Xerox. A well-known product
which is traced back to the idea of corporate entrepreneurship is the Post-It Note
developed by 3M [Fry (1987), Sathe (1989)].

Generally speaking, the concept of corporate entrepreneurship is used in many and

diverse ways and is not always uniformly distinguished from the term intrapreneurship.
Many definitions of corporate entrepreneurship focus on the aspects of innovation and
openness to change. Corporate entrepreneurship is also designed to promote financial
success, as it is assumed that there is a positive relationship between corporate
entrepreneurship and the financial success, which must be produced by innovations of
the enterprise [Covin/Slevin (1991); Morris/Kuratko (2002); Antoncic/Hisrich (2001)].
The innovation claim also implicates the associated recognition and exploitation of
entrepreneurial opportunities. At the same time, corporate entrepreneurship must be
culturally and structurally anchored, strategically required and supported by personal
and financial resources [Frank (2006)].
Entrepreneur
Similar to the concept of entrepreneurship, there is an equally broad spectrum of
definitions for the concept of entrepreneur. At this point, the diversity of the concept will
not be discussed in detail. [For more complete treatments of the term, see Schumpeter
(1934); Gartner (1988); Barreto (1989); Elkjaer (1991); Hebert/Link (1988); Carton/
Hofer/Meeks (1998); Hisrich/Peters (2002); Dollinger (2003); Drucker (2004); Hering/
Vincenti (2005); Luger/Koo (2005).] Here, we will give a short, historical description of
the

understanding

of

this

concept.

As

in

the

case

of

the

concept

entrepreneurship,theoretical discussions concerning the personality of the entrepreneur

are often retraced to Cantillon. In his 1775 work Essai sur la Nature du Commerce en
General, he calls landed property the source of prosperity and distinguishes between
three types of economic agents:
_ The land-owner who is financially independent
_ The entrepreneur who carries out the exchange of goods at his/her own risk and
_ The person who is employed and has a fixed income.
Typical characteristics of the entrepreneur are, according to Cantillon, the readiness to
take economic risks and the striving for profit. With Schumpeter (1911) the focus of
examination is enlarged by additional typical characteristics of the entrepreneur, in
particular, powers of innovation and dynamism. Within this meaning, the entrepreneur is
the driving force in the implementation and realization of new factor combinations.

However, Schumpeter separates the concepts of inventor, discoverer or technician on

the one hand from the entrepreneur on the other hand. These types are, in principle, to
be analysed independently from each other. It is however possible that these
development forms (inventor, discoverer, and also technician) can come together in the
person of the entrepreneur who is also a technical inventor [cf. Brouwer (2002)].
Innovations continue to develop dynamically through a process of the so called creative
destruction initiated by pioneering entrepreneurs; understood as the devaluation of still
technically functioning products or services which goes hand-in-hand with the
introduction of innovative products and production processes. This often occurs with
new technologies, for they are disruptive technologies, by making existing products or
technologies obsolete. In addition, creative destruction can refer to market structures or
competition positions which have been drifting into a dead-end. From a theoretical
perspective, this destruction is highly significant within a capitalist economic system, as
the destruction process may provide an improved resource allocation and competitive
activity in the end. [For possible exceptions because of technological lock-in effects,
e.g., the VHS vs. Beta video system fight, see Liebowitz/Margolis (2002).] Thus creative
destruction can also refer to the innovations of individual techniques or products as well
as to whole markets or market sectors. There are many examples for new products; in
the media sector, for instance, developments such as the CD and DVD have largely
driven out tape and video cassettes from the market because of their competitive
advantage. Accordingly, through discount super-market chains in the retailing and
grocery sector (as, for example, Aldi or Lidl in Germany and across Europe) dead-end
market structures and competitive positions have been challenged leading to a change
in the entire business sector.
The entrepreneur is also often considered as a pioneer who plays an important role in
the economy and society as a whole [for the socio-economic role of entrepreneurs see,
e.g., Granovetter (2000).] The pioneer entrepreneur is the first to appear when
innovations are required, and in the ideal case supports them in asserting themselves
on the market. Entrepreneurial activities consist in overcoming existing hurdles as well
as turning inventions into products through a combination of work and capital. Due to

his/her close connection with innovations, the pioneer entrepreneur appears on the
economic scene only intermittently. This characteristic is also part of Peter F. Druckers
succinct definition of the entrepreneur: [] the entrepreneur always searches for
change, responds to it, and exploits it as an opportunity. [Drucker (2004), p. 25]
In practice, a distinct type of entrepreneur can be found, who indeed appears to search
frequently for levers for change and novel business opportunities to exploit the
socalled serial entrepreneur. A serial entrepreneur is an entrepreneur who repeatedly
founds enterprises, i.e. a series of enterprises. The serial entrepreneur is above all
interested in the start-up, organization and (partially) also in the growth of enterprises
within a usually short period of time. Various motives may be involved, e.g., the
enjoyment of putting ideas into practice, being creative, possessing self-sufficiency at
the beginning of the enterprise development as well as correspondingly low enterprise
complexity and staff numbers. The latter is because with the growth of an enterprise,
business complexity will increase and a change occurs from an entrepreneurial to a
managerial perspective, with management activities (as well as administrative tasks)
moving into the foreground. These are also possible reasons for a serial entrepreneur to
sell the enterprise and to start again. In addition, financial interests can also play a role
with a serial entrepreneur, e.g., as in the situation of fielding a lucrative takeover offer
from a potential buyer. In this case, the decisive factor for success is the recognition
and quick realization of entrepreneurial chances or opportunities [see also chapter 2.2].
An example of a successful serial entrepreneur is the Dutch entrepreneur Bert
Twaalfhoven. By 2006, he had founded 54 enterprises in eleven countries over a period
of 40 years. Although he failed with 17 enterprises, he never gave up, but consistently
exploited the entrepreneurial chances available to him. The brothers Oliver, Alexander
and Marc Samwer can likewise be seen as being on their way towards becoming serial
entrepreneurs. The three men from Germany founded the internet auction platform
alando.de,which in 1999 was sold to eBay. Subsequently the brothers founded Jamba!,
offering ring-tones, pictures and videos for mobile telephones. In 2004, Jamba! was sold
to the North-American company VeriSign. The three brothers have then recognized and
exploited other entrepreneurial opportunities. Clearly, they are more interested in
theenterprising idea itself than in exercising control over enterprises. A craving for

managerial power within the enterprise was not their priority, as the founders handed
over the management of Jamba! in 2005 and withdrew from the enterprise
[Neubauer/Hogan (2006)].
These examples suggest that there may be differences between entrepreneurs and
(traditional) managers [Stevenson/Gumbert (1985); see Busenitz/Barney (1997) for
elaboration of these empirical differences; see also the discussion of the behavioural
approach to entrepreneurship below]. In particular, entrepreneurship research has
addressed the characteristics of entrepreneurs and the essence of entrepreneurship in
terms of differentiating it from other activities like management or business
administration, trying to understand the distinct role of entrepreneurs in the economy.
This is reflected in three genuine approaches towards entrepreneurship to be discussed
at the end of this section. All three approaches relate to the idea that being an
entrepreneur has to do with the recognition and exploitation of new venture
opportunities. This results in perspectives which (1) attribute distinct personality traits
typical for opportunity discovery and exploitation (traits approach), (2) consider the
entrepreneur to take on a specific role in society (i.e. entrepreneurs are the people who
see opportunities and allocate societal resources to their exploitation; functional
approach), and (3) distil out typical forms of behaviour relevant to capitalise on new
venture opportunities rather than administering or managing existing business
operations (behavioural approach).
Overall, the recognition and exploitation of an entrepreneurial opportunity is a process,
which is considered to be market- rather than enterprise-orientated. [Note though that
current effectuation research in entrepreneurship also addresses the possibility of
entrepreneurial opportunity recognition the other way around, i.e., asking what kind of
opportunities may exist on the basis of existing competences and capabilities of an
entrepreneur; Sarasvathy (2001).] Recognition and exploitation of an entrepreneurial
opportunity have been included in numerous definitions of entrepreneurs as a
characteristic feature since the middle of the 1980s. A rather pragmatic, short and
concise definition by Bygrave/Hofer (1991) shall serve as an example. The entrepreneur
is a person who recognizes an entrepreneurial opportunity and exploits and follows it up

with founding an enterprise. [For opportunity discovery, evaluation and exploitation as

the three core elements of the entrepreneurial process, see also Shane/Venkataraman
(2000).] This definition by Bygrave and Hofer illustrates that the entrepreneur and the
formation of an enterprise stand in an immediate and direct relationship to each other
within the process of entrepreneurship which, if successful, will involve enterprise
growth unfolding over time. Beyond this cardinal definition of the entrepreneur alongside
his or her role in discovering and exploiting opportunities, three different strands of
characterisations of who the entrepreneur is and what an entrepreneur does have
evolved in entrepreneurship research (see Samannshausen, 2009 for a detailed
discussion and comparison of the three generic approaches):
Traits approach (the psychology of entrepreneurs vs. other people in terms of
personal characteristics, attitudes, and motivation towards entrepreneurship)
(2) Functional approach (the role and output functions of entrepreneurs in the
economy)
(3) Behavioural approach (the actual behaviour of entrepreneurs defining the
nature of what constitutes entrepreneurship)
(1) Since the fundamental studies of David McClelland in the 1960s, entrepreneurship
researchers

have

concentrated

on

the

characterization

of

ideal

personality

characteristics of entrepreneurs. The research approach of McClelland is based mainly

on the socalled Traits Theory or Traits School, which deals with the study of specific
characteristics of entrepreneurs in particular. [See McClelland (1961); McClelland
(1965) and Kuratko/Hodgetts (2001) who put the traits school of thought in the context
of alternativeapproaches at the micro-level, namely the venture-opportunity and the
strategicformation

school.]

According

to

the

classical

traits

approach,

the

entrepreneurial personality can be seen as the embodiment of all traits, properties and
qualities of the entrepreneur as a human being. According to McClelland, entrepreneurs
have, for example, a pronounced need to perform well. According to Klandt (1984), the
following personal characteristics can be ascribed to an entrepreneur: striving for
independence (need of independence), performance motive (need of achievement),
readiness to take risks (need of risk), striving for social advancement, wish for
recognition (need of affiliation), general attitude of independence, general and job-

related value-priorities, striving for power (need of power) [also cf. Bhide (2000);
Timmons/ Spinelli (2004)]. Besides the typical characteristics of performance motivation
and the inclination towards calculable risks, the inner conviction to be in control, i.e., I
as the driving force, is a characteristic with good validity [Fueglistaller/Mller/Volery
(2004)]. It is important to note however that the traits approach has been criticized, in
particular as the search for a single psychological profile of the entrepreneur is bound
to fail [Stevenson et al. (1999), p. 5] and other competing approaches have come to the
fore (again), e.g., the functional and behavioural approach [see the summary below and
also cf. Hatten (1997) for a critical discussion of the traits approach].
Often entrepreneurs are also credited with an extraordinary readiness and capacity to
learn [cf. Minniti/Bygrave (2001)]: Effective entrepreneurs are exceptional learners.
They learn from everything. They learn from customers, suppliers, and especially
competitors. They learn from employees and associates. They learn from other
entrepreneurs. They learn from experience. They learn by doing. They learn from what
works, and more importantly, from what doesnt work. [Smilor (1997), p. 344]
A typical initial question for personality research is whether humans are born to be
entrepreneurs, that is, born with the qualities of an entrepreneur that can be developed
(or not). From here follows the important question whether humans can be educated to
be entrepreneurs [Koch (2003)]. The question also arises in how far entrepreneurial
characteristics can be influenced positively through education. In analysing such
research questions (and defining and measuring relevant variables), numerous models
have been developed on the basis of the traits approach, by which to measure
personalities. In this context, the 16-primary-factors-model according to Cattell, the BigFive model of McCrae and Costa and the Myers-Briggs-Type Indicators (MBTI) can be
cited as examples. However, these models are not to be discussed in more detail at this
point. [For more details Cattell (1973); Myers/McCaulley (1985); McCrae/Costa (1989);
Costa/McCrae (1992) etc.] These quoted models for identifying the personality
characteristics of entrepreneurs are, however, not undisputed in the scientific
discussion. A central aspect of the critique is that entrepreneurs are assumed to form a
heterogeneous group of persons. Consequently it is, in principle, not possible to

characterize the typical entrepreneur. [See Gartner (1988) arguing that asking who is an
entrepreneur is the wrong question.]
For this reason, the examination and search for person-related variables, with which to
identify a person as entrepreneur, is not meaningful. It is therefore also impossible to
describe the type of a successful entrepreneur. In essence, the critique aims at
examining not the personality characteristics of entrepreneurs but rather their behaviour
and actions. [For a detailed critique of the methods of studying personality
characteristics, see, for instance, Gartner (1985); Gartner (1989); Drucker (2004).] In
connection with such personality research, the question often arises which typical
characteristics of entrepreneurs determine the success of the enterprise. The aim is to
detect the success-producing, ideal features of an entrepreneur. A basic problem of this
research area is, however, how to prove a causal connection and the influence direction
between personality characteristics and the success of an enterprise. In this context,
diverse difficulties arise. In one view, often divergent approaches are applied when
measuring enterprise success within the success-factor research. One of the problems
is the direct assignment of the enterprise success to individual variables and sectors,
such as, for example, the personality of the entrepreneur. However, it is not always
possible to clarify the direction of effect. Thus, personality factors might well be
responsible for the success of an enterprise, while, on the other hand, it would also be
possible to explain that the success has an effect on the personality of the entrepreneur.
All-in-all, the research results concerning the characterization of an entrepreneur with
the help of individual properties, which have emerged in large numbers, to a degree
clearly contradict each other. For these reasons such research approaches and
research models are often subject to criticism [Stevenson/Roberts/Grousbeck (1994);
Brockhaus/ Horwitz (1986); Fallgatter (2005)].
(2) The functional approach reflects an economic perspective on entrepreneurship. As
such it zooms in on the role entrepreneurs take in market economies, namely within the
process of transforming resource inputs into (novel) product and service outputs. In
particular, entrepreneurs are tasked with bearing and furthering innovation in a variety
of forms. Schumpeters concept of the pioneer-entrepreneur belongs to the func tional
category and in terms of creating novelty Schumpeter allowed for many kinds of

innovation including process innovation, market innovation, product innovation, factor

innovation, and even organizational innovation. [Stevenson (2006, 2); also cf. the
discussion of Schumpeters concept of entrepreneurship above.] And Stevenson further
concludes (ibid.) that his [Schumpeters] work emphasized the role of the entrepreneur
in creating and responding to economic discontinuities in the system. Similarly,
Kirzners (1973) notion of entrepreneurs alertness to opportunities follows a functional
rationale. Here, the entrepreneur serves to detect price differences in the market and to
act as an arbitrageur. Note though that while Schumpeter considers the entrepreneur as
someone who drives the market system away from equilibrium (namely by creative
destruction in view of pioneer rents), Kirzners arbitrage entrepreneur has more of a
price signalling and balancing function contributing to market equilibrium. Building on
these concepts, the more contemporary definition of Shane and Venkataraman (2000)
stresses functional aspects too, consigning the entrepreneur with the tasks of
discovering, evaluating, and exploiting entrepreneurial opportunities. [See also chapter
2.2 on entrepreneurial opportunity recognition below.] The functional approach shares
some congruent aspects with the behavioural approach [cf. Samannshausen (2009)].
In a way the latter looks at the other side of the coin of entrepreneurship. [This is visible,
e.g., when considering typical outputs of entrepreneurial activity independence and
personal

wealth

creation

at

the

level

of

the

individual

entrepreneur

and,

correspondingly, value and wealth creation as well as contribution to economic

prosperity at the societal level; see again Ronstadt (1984), Hisrich (19985), and
Timmons (1999).]
(3) While the functional approach is concerned with the role of entrepreneurs in
aggregate for the wider economy, the behavioural approach concentrates on what
entrepreneurs actually do as individual actors. This approach is mainly related to the
works

and

efforts

of

Howard

Stevenson,

e.g.,

Stevenson/Gumpert

(1985),

Hart/Stevenson/Dial (1995), Stevenson (2006). In brief, this strand considers

entrepreneurship as an approach to management namely characterized by the fact
that business opportunities are pursued regardless of the possession of the necessary
resources [see, once more, Stevenson/Jarillo (1990)]. That is, entrepreneurship is not
defined by the characteristics and attitudes of the entrepreneur as a person as in the

traits approach which has been critically addressed above. Rather, within the
behavioural strand, entrepreneurship is demarcated by displaying a specific type of
behaviour as opposed to other forms of, e.g., administrative behaviour. More precisely,
entrepreneurship is viewed in a continuum of managerial behaviour with the two idealtypes of promoter (within the entrepreneurial domain) and trustee (leaning more towards
the administrative domain). In Stevensons view, this conception of a continuum or
spectrum of behavioural dimensions is necessary for defining entrepreneurship because
otherwise it will not be possible to properly describe entrepreneurial action within a
single behavioural pattern (nor in a single function or personality characteristic)
[Stevenson (2006)]. Originally, Stevenson had suggested six dimensions to differentiate
between

managerial-entrepreneurial

and

managerial-administrative

behavior

respectively to discriminate between promoter and trustee roles, with the descriptions of
these dimensions stemming from Stevenson (2006); the typical driving forces and
sources for action of the entrepreneurial promoter and the trustee are depicted in
Illustration 1-1
_ Strategic orientation (driven by perception of opportunity vs. resources currently
controlled)
_ Commitment to opportunity (revolutionary vs. evolutionary)
_ Commitment of resources (multi-staged vs. single-staged complete commitment)
_ Control of resources (episodic use or rent vs. ownership or employment of necessary
resources)
_ Management structure (flat with informal networks vs. formalized hierarchy)
_ Reward philosophy (value-driven and performance-based vs. security-driven and
resource-based)

Illustration 1-1: Entrepreneurial promoter and the trustee

Pressures toward

Promoter

this side

Key business

Trustee

dimension

Pressures toward
this side

Diminishing
opportunity streams
Rapidly changing:
Technology
Consumer
Economics
Social Values

Driven by
perception
of opportunity

Action orientation
Short decisions
windows
Risk management
Limited decision
constituencies

Revolutionary
with
short duration

COMMITMENT TO
OPPORTUNITY

Evolutionary of
long duration

Acknowledgement
of
multiple
constituencies
Negotiation of
strategy
Risk reduction
Management of fit

Lack of predictable
resource needs
Lack of long-term
control
Social need for
more
opportunity per
resource unit
Interpersonal
pressure for
more
efficient

Multi-staged
with
minimal
exposure at
each stage

COMMITMENT TO
RESOURCES

Single-staged
with
complete
commitment
upon
decision

Personal risk
reduction
Incentive
compensation
Managerial
turnover
Capital allocation
systems
Formal planning
systems

Ownership or
employment of
required

Power, status, and

financial rewards
Coordination
Efficiency
measures
Inertia and cost of
change
Industry structures

STRATEGIC
ORIENTATION

Driven by
resources
currently
controlled

Social contracts
Performance
measurement
criteria
Planning systems
and cycle

resource use
Increased resource
specialization
Long resource life
compared to need
Risk obsolescence
Risk inherent in
any new
venture
Inflexibility of
permanent
commitment to
resources

Episodic use or

CONTROL OF

rent of required

RESOURCES

Coordination
of key non-controlled
resources
Challenge to
legitimacy of owner's
control
Employees desire
for
independence

Flat

resourced

resources

with

multiple informal
networks

MANAGEMENT
STRUCTURE

Formalized
hierarchy

Need for clearly

defined authority
and
responsibility
Organizational
culture
Reward systems

Management

theory
Individual
expectations
Competition
Increased
perception of
personal wealth
creation possibility

Value-based
Team-based
Unlimited

COMPENSATION/
REWARD
POLICY

Resource-based
Driven by
shortterm
data
Promotion
Limited amount

Societal norms
IRS regulations
Impact information
Search for simple
solutions for
complex
problems
Demands of
public
shareholders

This taxonomy of entrepreneurial versus other forms of behaviour has been employed
in a number of contexts, in particular in exploring differences between the behavior of
entrepreneurs and managers. Note also that the behavioural approach is useful for
exploring entrepreneurial efforts in large, established organizations and is not limited to
the start-up context. This is because in this approach, entrepreneurship is anchored in
typical behavioural patterns of management rather than a specific institutional context of
self-employment or business ownership [cf. Samannshausen (2009)]. Overall, the
behavioural approach and its dimensions are not as prominent as the traits approach
and its personality characteristics in the literature. However, the behavioural approach
seems to hold substantial empirical validity as tested in a study by Brown, Davidsson,
and Wiklund (2001). Thus, for studying entrepreneurship at the level of the individual
business the behavioural approach may well hold more future potential than the traits
approach which as has been addressed above has attracted substantial criticism in
the past. In conclusion it should be noted that there are, of course, other definitional
perspectives unveiling the specific features of the entrepreneur and the essence of
entrepreneurial thinking. One example is the view of Fleischmann (2009), who has
developed ten programmatic theses to describe what constitutes entrepreneurial
thinking:.
Entrepreneurial thinking
_ is hopeful thinking
_ is melioristic thinking it wants to make or do something better
_ is holistic thinking in the sense of connective thinking
_ is action-oriented and team-oriented it has a multiplier effect
_ embraces possibility and enables leadership

_ is emancipatory thinking and may be an antidote to alienation

_ is social and ethical thinking
_ is creatively heuristic thinking
_ is utopian thinking
_ is about connective problem-solving.