Beginnings Of A Global Entrepreneurial Manager Commerce Essay

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The context, scale, and intensity of global competition demands that firms, in order to gain sustainable competitive advantages, adopt proactive, innovative strategies. Impact making and pioneering innovations require a global perspective, a scientific temper, and teamwork. Such path-breaking entrepreneurship is possible through high potential individuals who would need to have not only an ability to think through logically but also be innovative.

Entrepreneurship can be defined as an ability to discover, create or invent opportunities and exploit them to the benefit of the society, which, in turn, brings prosperity to the innovator and his organization. From the social and macro-economic perspective, it is held that the economic development of any nation is a direct function of the number of high quality innovators and entrepreneurs it supplies. This, in turn, is dependent upon the desire for new and better products that the society demands and accepts. A virtuous circle is thereby created resulting in all-round economic development and improved standard of life. With liberalization and global competition being the governing societal paradigm and with the acknowledgement that wealth creation is indeed of paramount importance, the concept of entrepreneurship is receiving closer attention than hitherto from business management scholars and social scientists (Stevenson and Jarillo, 1990). Articles on entrepreneurship are appearing with increasing frequency in respected journals such as Journal of Business Strategy, Strategic Management Journal, etc.

Unfortunately, the usual connotation of 'entrepreneurship' in India is small-scale and tiny sector, rather than the broader concept of innovation and creativity. Thus, even the post-graduate level courses are limited to studying small business issues (especially the entry and survival strategies), and description of the psycho- logical characteristics of entrepreneurs and their differences with professional managers (Vesper, 1988).

The social usefulness of income generating and self- employment potential of tiny and small business to the aggregate economy cannot be overemphasized, and, therefore, admittedly, entrepreneurship of this type needs to be encouraged, promoted, and supplemented with managerial competences. However, in the emerging international economic scenario, such a view of entrepreneurship is too narrow and restrictive and needs a fresh alignment with the new realities of increasing technological and informational intensity of industries and products in a global competition scenario where the small and large-scale sectors do not really matter for the consumers.

Entrepreneurship â€" A State of Being

A fresh academic and applied approach towards the concept of entrepreneurship is necessary. My basic stance in this paper is that entrepreneurship should be viewed as an indivisible process, which flourishes when the interlinked dimensions of individual psychological- entrepreneurial traits, societal encouragement, and business opportunities converge towards the common goal of opportunity creation and exploitation. From this perspective, entrepreneurship is a frame of mind and a continuous societal process. Therefore, it is obvious that one does not become an entrepreneur by the mere act of starting or owning an enterprise. More important is the nature, degree, and extent of innovations that the entrepreneur introduces and that too on a continuous basis. Logically, individuals, especially those in family businesses, who on inheritance fail to add value in terms of productivity increases, market-place innovations, or organizational creativity would not qualify as entrepreneurs. Conversely, it is held that any individual with an entrepreneurial frame of mind will always act as one irrespective of his time, place, and position. Such an individual will be expected to have a high internal locus of control. He would expect himself to be the master of time and space around him and feel responsible for his productivity and contribution to society. Thus, teachers who design new courses or devise new teaching methods, doctors who find newer and more cost-effective ways of treatment, music maestros who create new music, and intrapreneurs and champions who invent new products and design new processes inside large corporations are entrepreneurs.

Global Challenges as Windows of Opportunities

As Indian business globalizes and interlinks itself with the world, the nature and range of business opportunities as well as challenges for Indian entrepreneurs are extensive. Competition is no longer between local firms, competing either on output-efficiency governed behavior or price-reduction mechanisms. Instead, the present-day competition is predominantly in the classical Schumpeterian-type creative destruction mould (Schumpeter, 1934), which means that organizational and technological innovations, superior product quality, and customer satisfaction are major determinants of firm-level competitiveness in the global market place.

In a globally competitive environment, customers have a choice, and, therefore, look beyond buying commodities. They increasingly desire better value in tangible as well as intangible forms. Reflecting this paradigm shift, developed economies show increasing contribution of services in the GDP. Hong Kong had a ratio of 70:30 in the late 1970s as the share of manufacturing to services; in the mid-1990s, the trend had not only reversed but also increased to 20:80 in favor of services. Further, economic growth cannot be explained in purely factor input terms. A study by Solow showed that three-fourths of all residual economic development could be attributed to technological innovations. Conventional factor inputs such as capital and labor accounted for only 25 per cent of the growth. Boskin and Lau also found a similar relationship in their research on economic growth of five major industrialized countries. Their analysis showed that technical progress was responsible for as much as 50 per cent economic growth of USA, UK, Germany, France and Japan.

That technological and managerial innovations will shape up tomorrow's competition more intensely is under no doubt with the fusion of computer and telecommunications technology (Bradley, Hausman, and Nolan, 1993). Indian firms are realizing that heightened competition can be effectively managed only through more complex business strategies and more responsive organizational structures.

Substantiation of adopting globally competitive strategies:

Greater environmental uncertainty and hence lesser predictability

Higher-order competition (that is, firms are adopting increasingly complex and innovative strategies and structures to gain market share)

Increased networking (that is, firms are linked across the globe through wholly-owned or dedicated networks). This has resulted in firms being able to source and distribute information, products, and services across the globe with world-class competitiveness.

In the emerging 'hi-tech' environment, a superficial approach to business entrepreneurship categorized in small and large terms, or which views businessmen, managers, and professional education as separate domains is self-defeating. One has to search for a more comprehensive definition for an impact-making entrepreneur and innovator.

The Rise of an Entrepreneurial Manager

Given global-scale opportunities and shifts in the underlying basis of competition, the traditional role of brute muscle power, be it of political type or financial type, stands reduced. Given the 24-hour electronic financial markets and accompanying transparency, the normal arbitrage-type entrepreneurship wherein the entrepreneur undertakes profit on the basis of his superior information and by removing underlying inefficiencies in the system (Leibenstein, 1968) is extremely difficult. More sustainable and rewarding competitive advantage in the long run is the ability of the entrepreneur to constantly reorient his firm towards shifting consumer wants and preferences through a process of scientific market research blended with intuition. This would require sound management, scientific and technological skills, but also the ability to dream, imagine, and visualize uncommon patterns between seemingly disparate phenomena. In this paper, we argue that it is the society's (and thereby its institution's) responsibility that young individuals with such diverse skills are generated in large numbers. Our vision of the modern-day entrepreneurial manager (EM) thus is of a dynamic professional who combines risk-taking with risk- managing, infuses academic rigor to practice vigor, merges cold analysis with creative synthesis, learns from hindsight to build a distant foresight, and displays spontaneous verve with steely nerve.

Building the perfect Entrepreneurial â€" Managerial competences

Under the new paradigm, path breaking and impact making opportunities for an EM lie in his potential to:

a) Create globally competitive industries based on state- of-the-art technology, and sound business management principles; and,

b) Recreate and regenerate sick yet high potential organizations in which society has invested substantial resources. (The entrepreneurial character of decision-making necessary for bringing out turnarounds under severe BIFR-type crisis situations has been largely ignored in entrepreneurship and strategic management literature and business schools in India.) In other words, the two broad opportunity-segments for the envisaged EM are: undertaking innovations, which lead firm-level competences to become distinctive (i.e. the competences are unique to the firm â€" Core Competency concept); and, managing environmental, strategic, and technological discontinuities which destroy existing distinctive competences and, therefore, call for organizational renewals and recreations (Tushman and Anderson, 1986).

Capability to Create Innovative, Customer-recommended Products, Markets and Industries

The first broad opportunity for the EM lies in his ability to rapidly introduce new products, exploit new sources of raw materials (most often by new technologies), and reorganize the input and output inter-and intra-firm linkages. Daunting as the competitive environment may appear, yet, small and medium scale enterprises built on technological and marketing distinctive competences are leading the way through product and process innovations. The software industry in India, machine tool industry in Germany and Japan, and hosiery, leather garments and steel making in Italy are shining examples of increasing scale-irrelevance and globally spread entrepreneurial opportunities. The expectation here is that the EM will be able to pioneer new markets, develop new products, and innovate an entire industry, as Fred

Smith of Federal Express (overnight courier delivery service), Bill Gates of Microsoft (computer software, networking solutions, and operating systems), and Steve Wozniak and Steve Jobs of Apple Computers (Macintosh PC) did. Sun Microsystems revolutionized the selling psychology of the computer industry by offering open- ended workstations (thereby opening its proprietary technology to everyone interested) in the face of stiff internal and external resistance. Today, the company has graduated from a small supplier of workstations to a few universities to the largest supplier of RISC-based servers worldwide with a global market share of about 40 per cent. At more restricted local levels too, the EM would be able to introduce new managerial technologies and monopolize market niches, by making available customized’ low-cost products while providing high-value differentiated services.

Nurturing Entrepreneurship-Need for Redesigning Corporations

Having identified the broad opportunity areas, it is important to understand the context in which innovations and entrepreneurial behavior flourishes. ; Schumpeter in his later years opined that the intrapreneur (i.e. the entrepreneur inside a large corporation) was the ideal instrument for bringing about a stream of impact-making innovations. Increasingly, major product and process innovations are brought about by dedicated teams under large corporation settings (a new organizational realization termed as team entrepreneurship is shaping up). Even in academics, most worthwhile and impact-making research product (just like any other adventure) is largely a collective effort of many scholars and scientists. That intrapreneurship has not taken roots in most business organizations yet is more a reflection of response gap to the new competitive realities. Most family businesses are still organized on hierarchical, feudalist, and power- exercising lines. However, in a technology-driven societal paradigm, it is the knowledge worker and his knowledge products that command market premium.

In innovative organizations where the work philosophy is to introduce a steady stream of new products, the usual principal-agent structures (signifying the capitalist-promoter and his employee-manager) collapses. Organizations employing knowledge workers have to be necessarily flat and non-hierarchical, which means that information has to be shared universally and employees are to be empowered in decision-making.

Organizational Innovations

Hewlett-Packard (HP) is a global leader in laser printing systems and acknowledged as arguably amongst the most innovative firms in the world. The company realized that the system of committees, instead of speeding up, hampered creativity and innovation. It, therefore, restructured its decision-making processes replacing the committee system by a more entrepreneurial-oriented empowered team structure. These empowered teams comprising of volunteers possessing necessary, competences and skills perform the task of formulating and implementing decisions with their own budgeting, performance appraisals, and performance standards.

With the introduction of entrepreneurial autonomous teams, the hidden potential of the company soon became evident. For instance, the company policy was that the printer would be sold only as an accessory to the total computer package sold by the HP. In the early 1980s, Richard Hackborn, Vice President, and his team of engineers decided that there was a huge potential market for inexpensive laser printers compatible with PCs of all makes. Once the rulebook was kept aside, fresh insights and follow-up decisions started pouring in. The team made two important decisions. First, instead of making the 'engine' of a printer (the hardware) in- house, they decided to buy it from Canon Inc. of Japan, which could produce the expected volumes at much cheaper costs. Second, the team took a strategic decision that new products will be designed and marketed for the entire PC market and not be confined to HP customers exclusively.

Motivating Key Employees through Intrapreneurship

One of the major problems faced by large corporations in an intense-competition environment is retaining key, high profile independent-minded young executives.

The normal hierarchical reporting channels cannot bind such executives. Realization is dawning that only through an entrepreneurial management style would organizations be able to retain their innovative and knowledge-owning employees, who otherwise for want of space, would leave either to start their own enterprise or worse, would be lost to a rival organization (Jain, 1994 b). The emerging corporate rethinking, therefore, provides an opportunity for the EM to have access to several higher and lower order resources providing him, in the process, a chance to alter the existing rules of competition. (This type of structural arrangement also answers in part the common argument that high salaries are a deterrent to 'risky' entrepreneurial activities by management graduates.)

Challenges in the Making of the Entrepreneurial Manager

The text thus far suggests far-reaching challenges and implications at four levels at least, viz.: firm, industry, policy, and management and technological education.

Some of these implications can be summarized as follows:

At the Firm-level

Simple and of fundamental importance as the need for fostering entrepreneurial behavior inside corporations may seem, it has not taken roots yet in a substantial degree. A primary cause for this singular failure lies in the way business performance is defined and measured.

Most businesses rely on productivity and profitability measures such as return on investment or return on equity. These measures are necessarily ratios denoting on the topside the output function and on the bottom side the input function (Hamel and Prahalad, 1994). Obviously, it is far easier for the manager to work on the input functions since he has a tangible sense of control in the form of number of employees and units of raw materials. Hence, the emphasis on corporate shrinkages and employee lay-offs, though these choices (especially employee retrenchment) may be a reflection of one's own managerial incompetence in generating adequate quantum of additional business. Bringing about a shift from defensive organizational downsizing to aggressive business transformation is a major challenge for the EM.

The top management commitment is especially necessary in the following key areas:

Continuously provide an environment and structure where the EM gets the desired challenges and where he is able to stretch himself.

Upgrade skills by in-house training, preferably by cross-functional teams in which members train each other. This is how British Telecom organized its corporate renewal program.

Allow slack time to the manager to think through the problems and generate creative and innovative solutions. This calls for redesigning the performance appraisal systems to take into account individual innovativeness as well as contribution to team entrepreneurship.

Help and assist in starting own in-house ancillaries to high profile EMs. These are not mere profit centers and strategic business units but are also standalone ventures, which, if successful, become beacons for similar behavior by others, and in case of unlikely failures, become a huge learning experience for everyone in the organization.

At the Industry-level

Several Chambers of Commerce, Trade Associations, and representative industry groups will have to adopt a strategic approach in order to ensure that Indian firms benchmark beyond what exists. They should be able to set the standards for the rest of the world. A new mindset from the present reactive state to a more proactive state is suggested for Trade Associations and Chambers of Commerce. They will have to undertake the task of performing multi-dimensional role of exploring, seeking, and arranging latest technology, providing a databank for exporters and importers, representing the creative and innovative aspects of Indian industry in international for a, promoting and setting-up of pooled R&D institutions for collective product and process spin-offs, and disseminating the research back to individual firms.

Repercussions for Management and Technological Institutions

Here, we have laid down seemingly complex combination of human qualities for the making of an EM. The question is: who would, as the class of people, is expected to possess these qualities? Herein, the role for the national management and technology institutes becomes obvious. Their commitment to professionalism, excellence, and innovation assumes a critical dimension.

These institutions will have the responsibility to supply the requisite number of dynamic EMs who enjoy societal legitimacy. It is for such institutes to design courses and develop fresh teaching material for the making of a globally competitive manager. Management education, till now, has mostly emphasized a logical and techno- economic view towards resources allocation and risktaking. Strategic management literature suggests that decision-making is neither a wholly rational exercise nor the emergent outcomes of decisions always those that were intended in the first place (Mintzberg and Waters, 1985).

Courses on entrepreneurship, creativity, and innovation management are admittedly difficult to teach since there are no unique solutions and the knowledge is not easily modifiable (some would argue that the focus is on the creative right-side of the brain compared to the logical left-side). But, these are the areas, which will finally help create managers with a holistic entrepreneurial perspective.


In sum, the risk-rewards for the new EMs are unprecedented. This paper has outlined the why and how of these opportunities and, at the same time, emphasized the need for bringing about a new thinking on the meaning of entrepreneurship. The challenge for happening a dynamic, entrepreneurial manager and enabling him to perform lies as much on the society and firms as on the individual himself. Managers who can make the successful transition from a pure 'administrative, bounded rationality perspective to one which is entrepreneurial would be able earn a profit for themselves and for the firms and society which invests in them. Under free-market conditions, society will allocate its resources (in terms of capital, infrastructure, and skills) to individuals and organizations that in its opinion have delivered and become social change agents and architects.