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HowEntrepreneursBuildOrganizations

How Entrepreneurs Build Organizations

The skills that the entrepreneur possesses at the initiation of the venture, such as technical skills, new resource skills, etc., can only bring the entrepreneur to a certain point. At some point, life becomes difficult. The entrepreneur can’t do everything that needs to be done. He or she then has to enlist others into their venture.

Describing Organizational Growth

Most successful businesses must grow to handle the increased demands of their environments. This growth involves hiring new people, creation of processes, development of institutional knowledge and competencies, and so forth. [A citation here would be great. Update.] Can we describe these stages in a meaningful way?

Early Stages
Enlistment into the venture can take a variety of forms, including:

• Trade relationships – Suppliers, vendors
• Professional relationships – Lawyers, consultants, advisors
• Outsourced relationships – Graphical design and printing, customer service, software development
• Team membership – partnership, employee

Later Stages

Human Resource Issues

Formation of teams
Entrepreneurs often form teams to start their businesses. There has been a good deal of scholarship on TMT - Top Management Teams, generally showing that top management teams have a significant impact on the organization.

• How are these teams built? Instrumental vs. convenience.
• How are teams balanced in skills? Usually, they are not. Is there a study to support this?

The basis of the relationships can be:

• Direct exchange
• Co-venturing for equity
• Co-venturing for future income

Organizational Culture Issues
Organizations tend to share the values and personality of the leader. This is especially true if the leader is the founder of the organization (Giberson2005). It appears that factors including ASA and socialization affect the process, with socialization theoretically affecting values because personality is more enduring.

Who Gets Hired

• ASA

Entrepreneurial Leadership

Entrepreneurs are not always leaders of people. Some study shows that only certain entrepreneurs have leadership skills. What are the common trends in how entrepreneurs lead vs. others? What do we know about it? Entrepreneurial Culture The culture of an organization consists of [Schein] or [other dudes]. It comes from the top [cite]. Thus, the values of the entrepreneur and his or her specific goals affect the culture. [Study showing the impact of goals on culture, the impact of values on culture.]

An entrepreneur’s values have a strong impact on the organization’s culture.

Entrepreneurs are known for having a vision. Visions are powerful tools for aligning constituencies.

Organizational Evolutionary Theories

1. Institutional Theoretic - Venture survival is enhanced by activities to make new ventures appear reliable and accountable, thereby increasing legitimacy (Hannan and Freeman, 1984; Meyer and Rowan 1977)
2. Social Relationship - Venture survival is enhanced by activities to establish relationships with external stakeholders (Stinchcombe 1965, Stuart 1999)
3. Schumpeterian - Venture survival is enhanced by obtaining control over resources (Nelson and Winter, 1982;; Schumpeter 1934)