Since the emergence of the modern capitalist economy there is been a big debate about the roles that have surfaced and taking action within an organization. In 1977 when Chandler showed that industrial success depended on the separation of ownership and control, weight discussion about the desired form of the executive roles really began.
Many arguments and debates have been raised to separate the major "entities" that participate and influence operations and organizational behavior. Three main characters have emerged during this debate; all of them playing a different role but at the end of the day, all of them contributing, each one differently, to the success of an organization.
Leaders, managers and entrepreneurs are the key players in the whole process; participating in every decision and every change for the well-being of the organization. Although all of them have different characteristics, traits and approaches it is difficult to accurately define when the role of one stops and the other one begins.
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As the time goes by, attention has gradually shifted from one to the other and there are many articles, surveys and literature which have tried to differentiate the three roles. Although it is not hard to find similarities in the pattern of how leaders, managers and entrepreneurs work it is hard to establish whether a leader can be both a manager and an entrepreneur.
In this assignment I will try to answer a question that is troubling both the academic and the business community, if an entrepreneur is another manager- albeit a successful one, by conducting a research in the 'literature for managers' and the available surveys that try to identify what is pushing a person to be entrepreneurial.
In an organization structure there are 3 "entities" each playing significant role in the whole process: leaders, managers and entrepreneurs. These "entities" serve certain functions within a business in the executive positions.
Leaders have been in the debate since 1948, when Robert Stodgill attempted to make a list of traits responsible for their success. The main traits and characteristics a leader must possess in order to be successful are for starters a spirit of adventure, the ability to move forward, to break new ground and to question authority. Another very important trait that leaders have is the ability to influence; for example to be able to hold a logical argument and to convince others of their position.
More important is the ability to speak their mind without fretting about the risk of been rejected in order to make the world around them a better place and last but not least a leader does not wish to control people, rather, leave their own mark and differentiate themselves from others.
In the seventies the interest around the role of leaders had started to decline and shifted to the two other "entities" which had been making their appearance gradually to the business and organizational firmament; the managers and the entrepreneurs.
Entrepreneurs and managers are both particularly important in the progress of the economy, entrepreneurs are agents of change, they deal with uncertainty and they introduce new methods and avenues no one had ever explored. On the other hand, managers are agents of stability, handling risk and successfully maximizing the resources given to them in order to thrive in their field of expertise.
Both of these organizational "entities" play different roles in our economy, with contrasting personalities and differing impact. But are they so different? Many businessmen - particularly in their early days - had to undertake both of the roles. This leads me to pose the question are entrepreneurs the other side of the coin to managers or do they represent an entirely "new" economic "entity"?
Managers as seen in the Czarniawska and Wolff (1991) study are effective executives with no charisma, forced to focus on the basis of operational exigencies and dependent on what other people do or do not do. They seem to focus on problem solving capability and decision making rather than social skills and charisma.
Managers are the basic component of the business enterprise; every manager has two specific tasks to achieve. The first one is "the creation of a whole that is larger than the sum of its parts, a productive entity that turns on more than the sum of the resources put into it" (Drucker, P. Management, p.398).
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This task requires from the manager an ability to master effectively the given resources, exploit their strengths and neutralize their weaknesses. The main component for this task is to be able to balance and harmonize the functions of the enterprise such as manage other peoples work.
On the other hand, an entrepreneur is someone who is "instrumental to conception of the idea of an enterprise and its implementation" (Kets de Vries, 1996, p856) and as seen in the Sexton and Bowman (1985) study, they tend to be more tolerant of ambiguous situations, self reliant, independent, have a low need of comfort and are more at ease with a risk taking propensity. Sixty years ago, Schumpeter(1934,1965) defined the entrepreneur as an innovator and catalyst of change who continuously does things that have not have been done before and do not fit established patterns.
The second task that a manager needs to accomplish is to "harmonize in every decision and action the requirements of immediate and long-range future" (Drucker, P., Management, p399). This is why a manager's planning is based on accreted risk, so they can make decisions based on success factors. On the other hand entrepreneurs accept risk-taking more "lightly" due to their nature of decision making based on their intuition and vision.
So what characteristics should a good manager possess in order to be successful? To begin with a manager should have the ability to be aggressive and action oriented in order to meet the goals and requirements of the Head Office. Undoubtedly this characteristic fits well with entrepreneurs also; who need to be aggressive and action oriented so they can be competitive in their chosen market. Especially when the market is big, with many competitors.
Another characteristic found in managers is their ability to manage others, to motivate people and to be able to manage the resources given to them to accomplish a goal. Again all these characteristics also fit entrepreneurial profiles, such as Richard Branson and Michael Dell., It is clear that an entrepreneur needs to be able to manage resources effectively in order to make the most out of them and have the ability to motivate people, especially those working with them, giving them inspiration to get the best out of them.
Last but not least, they need to be able to self-manage; here lies a difference between managers and entrepreneurs. While managers need to be able to manage other people in order to get the "right person" for the "right job", entrepreneurs must be able to effectively manage themselves. This is mostly because the business itself it is the entrepreneur, so an entrepreneur must be able to manage him/herself in order to give 100%.
One of the main reasons why we might find it hard to distinguish managers and entrepreneurs is because both of these economic "entities" share common operations. The first and most important operation they share is the operation of setting objectives: determining what they want and what needs to be done to accomplish that objective.
Secondly both of them need to be able to 'organize'. By the term organize we mean an ability to organize a multitude of things from organizing their time effectively to analyzing the activities and decisions.
Another basic operation shared by both entrepreneurs and managers is the ability to motivate and communicate. This operation in particular , is very important mainly due to the impact it has on both work. If managers are unable to motivate and communicate with the team that they manage, they will not be able to get them to work effectively and the team will fail to deliver what is required of them. Whereas a lack of communication and motivation in an entrepreneur means that he/she is unable to get the "message" through either to the people that he or she works with or to the target market or audience.
Last but not least, a common operation shared by managers and entrepreneurs is to establish yardsticks. This operation is important in both entities so they can keep on track the performance of their organization. It is also essential because they can keep track of the performance and the changes for future observation and trend analysis.
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Entrepreneurs by definition are opportunistic and have a bigger "appetite" for profit than others. The main characteristic that distinguishes them is their ability to use this "appetite" and where others see a problem they see opportunities.
"I have always lived my life by thriving on opportunity and adventure. Some of the best ideas come out of the blue, and you have to keep an open mind to see their virtue" (Richard Branson) (Anderson,1995). Entrepreneurs make money by creating business with capital value but not necessarily income for themselves.
Their ability to innovate is what separates entrepreneurs from managers. Entrepreneurs try to find new venues to achieve their needs whereas managers prefer to do things in an established, well documented and low risk manner. Self-confidence is an entrepreneur's main characteristic: especially when he or she faces uncertainty, the ability to be confident in their own judgment, is what keeps them going.
At some point self-confidence can be turned to exaggeration and as some academics believe entrepreneurs can suffer from "delusions" about themselves. In 1997 two American academics, Busenitz and Barney, conducted a piece of research that was aiming to find out how managers and entrepreneurs differed in the process of decision making. The results of this research showed that entrepreneurs were more prone to delusion and opportunism than normal managers.
Another well defined difference between entrepreneurs and managers is that entrepreneurs have the tendency to be more proactive than reactive than managers. The main consequence of this is that entrepreneurs learn by doing, and it is for this reason that many of them have failed in their first ventures.
All these differences combined together constitute the real question - Is the entrepreneur just another manager-albeit a successful one? Despite their differences, managers and entrepreneurs look alike: they share characteristics, abilities and operations.
We cannot say that their educational history is what contributes to someone being one or the other because nowadays we can find managers and entrepreneurs from a bigger spectrum within our society.
So what is it that differentiates them? Firstly it is their character: for a manager to be successful he or she must be able to work with others, but not only to coordinate those below them but to follow decisions made higher up the management structure as well..
A manager is constantly subjected to supervision, by his or her manager. Entrepreneurs, on the other hand, due to their free spirit, would rather not take direction from anyone, and prefer to go against the flow, making their own rules and breaking the status-quo. Thus it is impossible to tell an entrepreneur what he or she can or cannot do.
Within an entrepreneur's strengths is the capability to work intensively, employing a high rate of energy for long periods of time. This is an essential characteristic for the entrepreneur due to the high amount of effort that is needed when they start a new organization.
Another aspect of the entrepreneur's motivation is the existence of dominance in them. There are two aspects of dominance: the first is dominance feelings which is "an awareness within the self and generalized approach to life" (Ostrand, 1981) and is enforced through the life experience; and the other one is dominance behavior which is related to control.
This compulsion towards controlling and directing everything is a major characteristic of the entrepreneur and one which can lead to problems when the organization they build starts to grow.
A more recent study done by Malach-Pines, Sadeh , Dvir and
Yafe-Yanaim (2002) focused on the psychoanalytic-existential framework and the differentiation of family background on both entrepreneurs and managers.
The study has been conducted with 20 Israeli entrepreneurs, 47 managers and a control group of 33 aspiring entrepreneurs. It showed that managers had a positive identification with their fathers, whereas entrepreneurs had a negative identification with their father and a greater identification with work.
Although the study involved a small sample, the results indicated that there were significant similarities between managers and entrepreneurs such as self-confidence and high level of commitment. It also reflected the differences between the two: the most notable of them being the entrepreneurial risk taking and love for challenges.
Another point that it is noticeable is that the managers had a better relationship with their parents than the entrepreneurs, "one could even go as far as to argue that entrepreneurs tend to be, or perceive themselves as being, psychological orphans" (Malach-Pines, Sadeh , Dvir ,Yafe-Yanaim, The International Journal of Organizational Analysis, Vol.10, No 2, 2002, p.184).
The study also suggests that the entrepreneurs' negative view of the father figure in their childhood is the main reason why entrepreneurs find a greater sense of significance in their work. On the other hand, the relationships positive father figures that managers tend to have had could be perceived as being someone that they want the approval of - which possibly explains the reason behind the seeking of organizational success.
Both of these findings suggests that there are unseen forces that may control and influence someone's choice and course in their career and it is due to unforeseen events during their lifetime that may make them drift from one position to the other, i.e. from being a manager to becoming an entrepreneur.
While a large and rapidly growing debate has been raging in order to understand the differences between the managerial and entrepreurial "entities" we still in the process of identifying the differences between leaders, managers and entrepreneurs.
After reviewing the available literature and exploring the articles in journals, there is no clear conclusion as to a definitive way to distinguish the manager and the entrepreneur. Although there are major differences in each of them it is not possible to get a clear view where the characteristics of one organizational entity stops and the other one begins.
Although while doing the research we came across significant differences such as the entrepreneurs' ability to dive into black water without knowing what is in there and the managers' ability to instrumentally master the resources, both human and economic, in order to achieve a certain goal.
On the other hand we came across big similarities, like for example the characteristic both have to inspire and motivate people around them or people that work with then in order to get the best out of them. In a sense we came to an understanding that in most cases an entrepreneur is someone who starts a new company and a manager is someone that works for an entrepreneur.
But there is still a grey area where the role of each stops and the role of the other begins. In part this is because when an entrepreneur starts a business they will operate as both entrepreneur and manager but at some stage, as the organization expands, the need to distinguish these roles becomes pertinent. At that moment, the entrepreneur's personality comes in play and conflicts may start because of the entrepreneur's need to retain control they find it difficult to hand over the responsibility to 'manage' to a dedicated manager.. Therefore, in most cases, there can be a lack perception that a change is needed in order to keep the expanding business moving forward.
The bottom line is, that after analyzing all the characteristics and traits of both entrepreneurs and mangers and understanding the psychoanalytic-existential framework that both of them have as a background, it is still not easy to arrive at a clear conclusion as to whether the entrepreneur is just another manager-albeit a successful one. This is mostly because both of these "entities" share so much in common and the roles that they perform in the organizational stage overlap so much at various points, it is hard to produce a clear organizational picture of them separately.
For that reason more research is needed in order at some point to get a clear view behind the scenes and understand fully why an entrepreneur cannot be delineated from a manager.
Anderson, J. (1995) Local Heroes, Scottish Enterprise, Glasgow
DRUCKER, F.P., 1974. Management Tasks, Responsibilities, Practices. 1st edn. London: Heinemann.
Kets de Vries, M. 1977. The entrepreneurial personality: A person at the crossroads. Journal of Management Studies 14:34-57
Malach-Pines, Sadeh , Dvir ,Yafe-Yanaim, The International Journal of Organizational Analysis, Vol.10, No 2, 2002
Ostrand, J.L. 1981. Dominance. Encyclopedia of Clinical Assessment, pp. 481-490, Robert Henley, ed. San Francisco: Jossy-Bass Publishers.