Entrepreneurship is building a dream more than building a
business. A great sense of achievement is the reward which is dear to an
entrepreneur more than the financial reward which business gives. Family
managed business The micro, small and medium enterprise sector is crucial to
India's economy. MSME finance in India are 29.8 million enterprises in various
industries, employing 69 million people. This sector accounts for 45 per cent
of Indian industrial output and 40 per cent of exports. Although 94 per cent of
micro, small and medium firms are unregistered, the contribution of the sector
to India's GDP has been growing consistently at 11.5 per cent annually, which
is higher than the overall GDP growth of 8 per cent (this is 2013 data). MSME
sector is synonymous to family managed business in India but do you know only
less than four per cent of family businesses last up to the fifth generation, most
families are unable to sustain the entrepreneurial spirit of the first
generation promoter. So what is it that is important for sustainability of
family run business. To sustain the entrepreneurial spirit of the first
generation promoter is the most important task which a small business must
undertake. The first generation of business has the enthusiasm which sustain the
entrepreneurial spirit but the later generations are more involved in
operations and running of exiting business that the entrepreneurship
orientation.
Now, What is entrepreneurship orientation? And how important
is it for a family owned business? Simply - Entrepreneurial orientation (EO) is a firm-level strategic orientation which captures an organization's strategy-making practices, managerial
philosophies, and firm behaviors that are entrepreneurial in nature[i]. It
represents the policies and practices that provide a basis for entrepreneurial
decisions and actions. Thus, EO may be viewed as the entrepreneurial
strategy-making processes that key decision makers use to enact their firm’s
organizational purpose, sustain its vision, and create competitive advantage(s)[ii].
Sandra Schillo in article -
Entrepreneurial Orientation and Company Performance: Can the Academic
Literature Guide Managers?[iii] Explains
components of EO –
The most widely used definition of EO is
based on work by Miller[iv] (1983),
developed further by Covin and Slevin[v] (1989)
and many others, and augmented by Lumpkin and Dess[vi] (1996).
This conceptualization has been used in over 200 studies focusing not only on
entrepreneurship, but ranging from management and marketing to healthcare
(George and Marino, 2011)[vii]. The
five components of EO in this stream of research are:
1. Risk-taking was historically a key
characteristic associated with entrepreneurship. It originally referred to the
risks individuals take by working for themselves rather than being employed,
but has since been widely applied to companies, for example, when managers make
decisions that commit large amounts of resources to projects with uncertain
outcomes.
2. Proactiveness describes the
characteristic of entrepreneurial actions to anticipate future opportunities,
both in terms of products or technologies and in terms of markets and consumer
demand. This characteristic was at the centre of early economic thinking in
this field: the entrepreneur was thought of as someone who identifies
opportunities in the marketplace and proactively pursues them (Lumpkin and
Dess, 1996). Translated to the level of the firm, proactive companies are
leaders in the market, rather than followers.
3. Innovativeness relates to the types of
products and services a company has introduced to the market. For some
theorists, innovativeness is intrinsically linked to entrepreneurship in that
entrepreneurs create new combinations of resources by the very fact of their
entry into the market. In the context of EO, innovativeness is defined more
narrowly, emphasizing the importance of technological leadership to the
company, as well as changes in its product lines.
4. Competitive aggressiveness refers to
the company’s way of engaging with its competitors, distinguishing between
companies that shy away from direct competition with other companies and those
that aggressively pursue their competitors’ target markets.
5. Autonomy “refers to the independent
action of an individual or a team in bringing forth an idea or a vision and
carrying it through to completion” (Lumpkin and Dess, 1996) without being held
back by overly stringent organizational constraints. Although this component seems to primarily
have “face validity” in the context of large organizations, many researchers
have applied it to the context of small companies and obtained statistically
significant findings.
The components have typically been
measured using questionnaire items with Likert-type scales (i.e. from 1-5 or
1-7), as shown in Table 1. Some researchers have anchored the items of both
sides of the scale (i.e., they provided explanations of both the 1 and the 7),
while others have only provided a single statement to be ranked (e.g., as shown
in Table 1). There is some evidence (Miller, 2011) that suggests that the scale
remains robust even with slight variations in the wording of questions or other
minor measurement variations.
[ii] Rauch,
Wiklund, Lumpkin, Frese (2004) Entrepreneurial orientation and business
performance: an assessment of past research and suggestions for the future
[iii] http://timreview.ca/article/497
[iv] http://www.jstor.org/discover/10.2307/2630968?sid=21106375518283&uid=4&uid=2&uid=3737496
[v] http://onlinelibrary.wiley.com/doi/10.1002/smj.4250100107/abstract
[vi] http://www.jstor.org/discover/10.2307/258632?sid=21106375518283&uid=4&uid=3737496&uid=2
[vii] http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6520.2011.00455.x/abstract
