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In Kao, Kao, & Ling, 2008, it states that, a profit (or bottom line) driven corporation is an economic entity, which pursues profit through business transactions as it functions in society. Business people have always said, "profit is what we are in business for". A large number of people in business do not bother to make the distinction between short- and long-term profit, or question what it really is, and how it is to be measured. In fact, a profit-driven corporation is in effect a short-term (i.e. one year) accounting-profit-driven corporation. An owner and/or family business could manage a profit-driven corporation. Key decisions are made by a management group, which consists of people who are financially and emotionally involved in the operation of the business. These corporations, if not dependent on external financing, may have motivations other than profit, for instance, long-term growth. Profit is necessary and essential if the company is to survive and grow, but it is not an end in itself (Kao, Kao, & Ling, 2008). Corporations can desire to earn as much profit as possible, but they must know what the profit is, how it works and affects people. Such corporations need trained financial control specialists to perform staff control functions to improve their overall profit.
On the other hand, an entrepreneurial-driven corporation consists of a community of entrepreneurs combining corporate (collective) and individual efforts to create wealth and add value to society. In fact, all business entities can be entrepreneurial-driven corporations as long as the corporate culture is guided and directed to create wealth, and add value in the interest of the individuals in the firm, the corporation, and society.
In comparison, in terms of ownership, a profit-driven corporation is owned by a venture founder or family members, while an entrepreneurial-driven corporation could be owned by a venture founder, family members, and shareholders. Profit-driven corporations' values revolve around that of owners, manager's personal values, and/or family values, while entrepreneurial-driven corporations consists of a community of entrepreneurs working for the common good and creating wealth for the individual. Profit-driven corporations typically seek private, debt financing, while entrepreneurial-driven corporations seek private, debt, public financing, and equity. Business growth pattern is mostly vertical in profit-driven corporations while it could encompass both vertical growth and horizontal expansion in entrepreneurial-driven corporations. In profit-driven corporations, the managerial focus is on profitability, while in entrepreneurial-driven corporations, the managerial focus is on creativity, innovativeness for growth, and adding value to society. Lastly, in profit-driven corporations, managerial decision-making behavior covers both long-term and short-term profitability, while entrepreneurial-driven corporations result in both long-term and short-term profitability, including satisfying shareholders' ROI requirement, from wealth creation and value adding activities in the marketplace.
The entrepreneurial paradox is often between profit and power. In the real world, entrepreneurs often face conflicting rules, for instance, (i) to making more money or, (ii) to build on existing skills to add value to the society. This entrepreneurial paradox between profit and power is simply like the dilemma of being Rich vs. being a King. In order to be Rich, corporations are driven by profit and rewards. They would be more willing to give up power and control to venture capitalists since it could speed up their company's growth. Such corporations will "at best remain a Prince within the kingdom." On the other hand, corporations wanting to be King are more concerned about taking charge. They are willing to try new ideas even though it may not accelerate their company's growth.
Corporations strive for everything from creating a successful undertaking to remaining in control. For instance, when developing a new product or process, corporations require financing, where they seek someone who is able to market the product, sustain it, and administer finances. It would be tough for corporations to be both profit-driven and entrepreneurial-driven, while at the same time, doing well in only one area may lead to a high rate of turnover, or even be at the expense of our resources. Making a profit may be a value-adding process, but this process should not simply be for the individual, or for the corporation, but it should be for the society as well. Using resources limited in supply for any other purpose, will yield no profit since the use of such resources is at the expense and scarcity of whatever we have left. However, exceptions of corporations who have achieved both profits and entrepreneurial spirits include Microsoft's Bill Gates, Dell's Michael Dell, and Nike's Phil Knight (The Leading Edge, Summer 2009).
To conclude, whenever we talk about profits, we should also take into account the cost to our environment. Doing so reflects the value-adding process truly, which is what an entrepreneurial-driven corporation should be all about.
2a. As we have seen this definition many times before, a corporation is a community of entrepreneurs created for the purpose of creating wealth for the individual, and adding value to the society. "A community of entrepreneurs" would mean that every individual in the corporation has the ability to contribute to the value-adding process and create wealth for themselves. Table 10.1 in Kao, Kao, & Ling, 2008, summarizes the cultural differences between traditional corporate managers and entrepreneurial managers. Some points to highlight include the ability to take calculated risks, creativity, flexibility, profit orientation, management style, communication, and leadership. In managing a corporation, risk is to be avoided; creativity has to fit into the big picture; there are rules to follow; profit is key for existence; management reflects delegation style where there is a use of control system, procedures, and manuals; communication is closely monitored; and a position leadership exists where there is only one leader. In managing a community of entrepreneurs, risks equate to challenges worth pursuing; creativity helps face competition; change and flexibility in rules exist; profit is not key for existence, but adding value to the society is; there is an open communication system where anyone can speak to everyone; and it focuses on task leadership, whereby whoever has the ability to lead the task is the leader.
Managing a corporation is like the functional approach where it amplifies the idea of planning, organizing, staffing, directing, and controlling. On the other hand, managing a community of entrepreneurs would be a problem-solving approach, where I identify the problem, search for alternatives, evaluate them, and select the alternative that could be used to solve the problem.
If I were to manage a corporation, my job would revolve around processes and controls. The reward system that exists praises individuals for doing a good job, or providing input into a problem-solving process. Staging the role as a leader, facilitator, and decision maker, I would make individuals feel valued. I would also group them into teams so that they can develop their skill sets and learn from one another. At the same time, it is important to understand their abilities and their preferred mode of communication. I would also hold regular meetings to find out how individuals are performing. Through meetings, more ideas will be brainstormed and problems are solved with optimal solutions.
Managing a community of entrepreneurs would be a huge challenge, since it would be important to drop all my biases and judgments towards these individuals. What could appear to me as a character flaw could actually be the individual's strength and ability to identify an opportunity, which could be appreciated and applied in this community. I should not have the perception that this community of entrepreneurs are doing things out of greed, or ultimately, profit. In fact, these individuals are very focused on what they are doing and have a natural ability to see things that others do not see. They recognize a problem and picture the solution, coupled with their drive to see their ideas being executed. In managing this community of entrepreneurs, I should not question their drive to succeed, but instead, ask myself, "What does this individual see that I do not?" I could discuss with him/her about it, ask for his/her feedback, and learn from him/her. Also, I should give individuals the authority and encouragement to freely do what they want in the area of entrepreneurial and value-creating activities. During certain times, the entrepreneur may be too focused on their idea or a specific solution that they tend to miss out the bigger picture. Hence, as a manager, I should help them look at all the possible options and solutions, and assist them in gaining new insights and perspectives. In such a community, a manager is a leader who makes proprietary decisions and assumes stewardship responsibility at the same time (Kao, Kao, & Ling, 2008).
Competing for the Future by Gary Hamel and C.K. Prahalad stated that, "The challenges set before each employee must dare them to do more than they thought possible. You must link the individual employee's contribution to the overall challenge and grant the employees freedom to contribute in ways that range far beyond the boundaries of their roles or organizational level." Even though a community of entrepreneurs may seem to reflect freedom and lack of restricted control, still, it would be important to educate the entrepreneur about the boundaries and risks, and make them earn what they feel they are worth. Doing this would mean to offer to help them achieve their goals, and be willing to negotiate terms with them (e.g., intellectual property rights).
An illustration would be at Pinchot & Co., where managing is like self-organization, according to Ken Perry, its senior consultant. He states that control is illusory. It is important to show employees that they can create something groundbreaking - it lifts their spirits, boosts their productivity, and can create loyalty. Employees should interact regularly, and ideas should be voiced freely. Perry also says, "You'll be surprised by not only how re-energized your employees are once they're granted entrepreneurial responsibilities, but also the skills they'll learn. They're no longer just individual contributors, but with new management and business skills, they become candidates for leadership roles outside their specialty area."
In conclusion, managing a community of entrepreneurs is like creating networks for these individuals. It enables them to enlarge their knowledge of opportunities, gain access to critical resources, and deal with obstacles. They will also be able to develop more diversified skills and competence bases to draw upon. Creative and innovative ideas can come from anywhere, not just top management.
2b. Chapter 6 of Kao, Kao, & Ling, 2008 states that, "Capitalism facilitates accumulation giving ownership to the rich. Communism claims everything belongs to the people but gives ownership to the state. It is Entrepreneurism that satisfies people's inner need for creativity and innovativeness for the common good and gives ownership to the individual, an ideology well-positioned to bridge the gap of social injustice created by micro economic theory between the greed of the individual and common good of the societal need."
My preference would be Entrepreneurism, which is the ideological framework that encompasses elements of philosophy, an idea that can be implemented in the human environment. In its proper perspective, it is an ideology "based on the individual's need to create and/or innovate, and transform creativity and innovative desire into wealth-creation and value-adding undertakings for the individual's benefit and common good." Under entrepreneurism, the individual is creative and innovative, desires ownership, and has the right to make proprietary decisions. Whilst capitalism facilitates capital accumulation giving ownership to the rich, socialism claims everything belongs to the people, but give ownership to the state. It is entrepreneurism that satisfies people's inner need for creativity and innovativeness for the common good and gives ownership to the individual. Therefore, in our societal structure, entrepreneurism is the alternative to the two extreme ideologies, capitalism on the one hand, and socialism on the other (Kao, Kao, & Ling, 2008).
Table 6.4 in Kao, Kao, & Ling, 2008 also states that, through entrepreneurism, the individual has ownership, and is the manager of his/her own task. Sources of capital comes from investment plus sweat capital of individuals in the firm and/or through their share participating scheme. The investor's decision is based on the firm's performance in the marketplace plus individuals' commitment to the firm's long-term growth potential. Remuneration is a conciliatory process, with the possibility of workers' participation in the management, and that collective bargaining may not be necessary. Profit computation takes on a residual concept, taking into account opportunity cost and cost to the environment; residual profit goes to the shareholders. Lastly, the union is a partner of the firm's growth.
In my view, entrepreneurism and capitalism may come together, covering the concept of the free market. A free market system reflects private ownership and control over the means of production, and work far better over socialized ones. For many years, the Wall Street Journal and the Heritage Foundation have used multiple criteria to publish their "Index of Economic Freedom". The results are the same every year - countries that allow the freest economies create wealth for its people, which have resulted in our high standard of living. What drives the free market entrepreneur is the system of a free economy and reliable contracts, which permit individuals to produce more goods and services desired by the society, and thus create value for all.
Ultimately, there is still a difference between entrepreneurism and capitalism. Benjamin Franklin stated that, "A true capitalist would have devoted the time from printing to making money somewhere else, but he did not." For him, the getting of money was always a means to an end, not an end in itself. The other enterprises and inventions he created were designed for the public weal, not for his personal profit. To date, his idealistic 18th century version of entrepreneurship is inspirational. His concepts of service for the greater good of the community rather than for personal gain, and of creativity and innovation designed to improve the quality of life, are rarer than they should be in today's personal-wealth-driven, often greed, version of entrepreneurism.