The entrepreneurial culture
studying this chapter you will be able to:
• Recognize the versatility of the concept of entrepreneurial culture.
• Characterize the different types of entrepreneurial cultures in the context of their ecosystems.
• Recognize that entrepreneurial culture is molded within entrepreneurship, throughout its course from the pre-launch stage to the established stages of the business.
• Acknowledge that an entrepreneurial culture is shaped and affected by different internal and external business factors.
• Describe the different facets through which entrepreneurial culture may present itself (e.g., the entrepreneur's behavior, the business idea, the business plan, the business atmosphere, the team's creativity, among others).
• Identify the most important factors in an entrepreneurial culture that lead to accomplishing a business's goals, and target a business toward adopting the cultural factors that are relevant to it.
• Implement the most relevant factors to the business in order to stimulate an entrepreneurial culture in the business.
WHAT IS ENTREPRENEURIAL CULTURE?
Entrepreneurial culture is a multifaceted concept. Broadly speaking, rather than a job or a •Ikhftiiood, entrepreneurship is a mindset and a lifestyle, and it is much more than just including we ire entrepreneurs' in a mission statement.The entrepreneurial culture is an inherent entity aftE'ei within and directly affected by the environment in which an entrepreneurial venture darts. It is based on values and norms that guide the general activities and processes of the venture, .«>d :t activates the development of new, entrepreneurial-oriented values and norms for use in ieta.1 same venture. As such, an entrepreneurial culture enables the business to be dynamic and »ttaf •lar-.e bv inventing and reinventing its internal activities and processes.
THE RESOURCE-BASED PERSPECTIVE
In addition to the more obvious effects, such as sociocultural environment, the presence of potential entrepreneurs, or the stage of development of the local economy, the development of an entrepreneurial culture is stimulated by several main sources (Figure 2.1): the industry's innovation culture, in terms of level of technological innovation, innovation spirit and tolerance toward innovative processes; the founder's spirit, including his or her drive to create, innovate, take risks; employees' innovative and entrepreneurial spirit — it is very difficult to manage a team toward innovation, creativity or opportunity identification when the team lacks entrepreneurial spirit. Both country and global cultures have significant, independent impacts on the business culture, in terms of inventions, new development and encouragement to develop products or services to satisfy current or potential needs; the local market's culture, which may differ from the country's or industry's culture, refers to the customers' willingness and preparedness to purchase innovation and to the suppliers' willingness to supply it.
Researchers of entrepreneurship (Kirzner 1997; Acs and Audretsch 2003) argue that an entrepreneurial culture develops when there is an absence or lack of knowledge and information in the environment on specific topics, there is room in the market economy for the growth or establishment of businesses, and there is demand for certain services and products. Such a phenomenon of environmental disequilibrium is conducive to the development of an entrepreneurial culture. One of the main signs of an entrepreneurial culture is the proliferation of startups in the business environment.
From a microperspective, the cultural characteristics of entrepreneurs that lead to entrepreneurial 'venture-ism', creativity, risk-taking, and independence are crucial in determining the entrepreneurial culture within the local environment.The entrepreneur's talents, accumulated and specific characteristics, which Leibenstein (1968) calls 'input-completing capacity', ir;;.r:_:u:es another layer in the development of the entrepreneurial culture. The entrepreneur iiipo-'t-j tnis capacity, extends the production function, and thus broadens the existing set of inputs. licit ; resence of spinoffs, different entrepreneurial projects, innovations and inventions developed inn ventures, represent, at least in part, the role that entrepreneurs play in the entrepreneurial ttiare and its outcomes.
In addition to the surrounding entrepreneurial culture, each business venture also creates, or <:.:>;. its own culture. This culture is affected not only by the particular characteristics of the 'ifflffltsririDreneur, but by the stage of the business: at the launching stage, it is characterized by a vague, lev icicused, restless and creative-innovative energy, while in the later stages of development it is laliaracterized by an emphasis on maintenance and quality, although at these stages as well, limmovative ideas are examined and implemented if considered worthy (Hofstede 1980a, b, c, 5a. b, 1984, 2001; Shane 1995; Rodriguez-Pose 1999).
te can distinguish four main types of entrepreneurial culture — all-inclusive, stable and balanced, ci. and width-wise — each of which highlights different characteristics that produce different es in the business and in the entrepreneurs' daily lifestyle
.1-I-inclusive entrepreneurial culture. An all-inclusive entrepreneurial culture is a way of life: the individual's entrepreneurial characteristics are adapted and applied to all spheres of life. In tils context, entrepreneurship is an ongoing adventure or exploitation, and the individual utilizes such major personal characteristics as creativity, innovation, risk-taking, autonomy and proactivity in making decisions and in carrying them out, not only in business-related matters but also in personal and family-related issues, such as choice of residence, children's schools, use of leisure time, etc.
S'jble and balanced entrepreneurial culture. Stable and balanced entrepreneurial culture addresses lie individual entrepreneurs' self- awareness of the areas in which they are qualified or not qualified, to use their entrepreneurial characteristics for their venture; it is thus called the ~r.atomy of an entrepreneur. In those areas in which entrepreneurs are aware of their limitations, nid perceive themselves as being non- or underqualified, or simply not suited (e.g. , impatience ivitli administrative tasks; non -conformity), they hire other people to carry out the tasks for "•vhich they are unfit. The consequential result of hiring persons that possess the complementary personal qualifications is a balanced and stable culture. When entrepreneurs are unaware of their weaknesses, and how these negatively affect their business's functioning, an unsteady, unpredictable culture may grow.
Pi^rional entrepreneurship. Building opportunities from ideas typifies entrepreneurship practices that evolve into a rational entrepreneurial culture; such a culture encourages careful assessments of each innovative idea, sometimes with the assistance of professionals and experts, in order to estimate its application to the market. As assessments of the feasibility jt the ideas are obtained, the rational-entrepreneurial culture encourages the people involved in the business of creating opportunities to implement their innovative ideas through exploitation. The 'spark' for many entrepreneurs, however, is seeing an opportunity that does not yet exist. By laying the foundation for the opportunity's feasibility, a rational-entrepreneurial culture may advance the business to the achievement of its goals (Boyd and \bzikis 1994).
~>'~idth-wise entrepreneurial culture. A width-wise entrepreneurial culture is typified by the entrepreneur's broader vision, and by 'thinking big'; the business or the entrepreneurial actions are not limited to a single place or product. In order to identify potential oppor-raruties, the entrepreneurs must be engaged in an ongoing process of learning about the local and global markets, tastes and new developments; they have to use multiple and varied means to acquire this information, such as the internet, attending social and/or professional conferences, acquiring relevant and useful networks, and more. Such entrepreneurs may seem constantly agitated and restless in their ongoing search for relevant information and knowledge. For most of the entrepreneurs who live in such an entrepreneurial culture, 'climbing the mountain of success' may appear to be only a stepping stone to reaching higher summits (Stewart and Roth 2001).
The business's entrepreneurial culture must be led, nurtured, constantly monitored and adjusted. Much like preparing a culinary dish, establishing an entrepreneurial culture requires a combination of die right ingredients and the right pace, to ensure that it develops and manifests itself in the business as expected and supports the business and entrepreneur's goals. Identifying the entrepreneurial culture that is best suited to one's intentions is thus crucial for the business's operation.
PROCESSES THAT STRUCTURE THE ENTREPRENEURIAL CULTURE
In a survey of seventy leading entrepreneurs from fortv-eight countries around the world conducted specifically for this book, the respondents vrere asked to rank me most important factors in die process that structures their entrepreneurial culture. As seen in Figure 2.2, identification of opportunities, differentiation, creative teams, stimulating partners and role models were considered the most important factors for a vivid, entrepreneurial culture.
Researchers have begun to stress that the identification of opportunities can lead to a competitive advantage; die individual entrepreneur's ability to recognize opportunities is thus a highly beneficial aptitude. Most opportunities do not appear 'out of the blue', but result from the entrepreneur's •
D Opportunity exploitation E3 Flexible management 9 Stimulating partners 0 Creative environment
IK Creative team
£3 Role models
D Differentiation 0 Creative partners • The best mentor
Figure 2.2 Ranking of the most important factors in an entrepreneurial culture
to possibilities and knowledge of how to exploit them, and from fine-tuning the sms needed to identify potential opportunities at an early stage. The types of exploitable "unities and the mechanisms available to look for them delineate the character of the rreneurial culture; for example, exploiting financial opportunities will generally develop Kit i rniance-oriented entrepreneurial culture. The exploitation of opportunities to introduce zraducts or develop new and different products and services will be discussed in the section with the marketing-related aspects of the entrepreneurial culture, etc.
This also play a major role in shaping the structure and character of the entrepreneurial .ati'.T.z'e; however, since visions are usually reflections of dreams, hopes or desires, they are often ifiiinc undefined, and do not necessarily match the presently accessible or potentially available «cs«c urces. The vision of a venture should be clearly defined by developing a mission statement; the fmrpcse of such a document is to put the spotlight on how the business should be established and •tie,''- order to realize a profit or a goal. Mission statements set practical goals and these underlie like }^::ness plan and the practical action plans. The business culture of the firm is derived from the miki'or: while the behavior, daily conduct and norms derive from the action plans.
Entrepreneurial culture evolves from the influence of several main sources: the sociocultural iewcr mmeiit, the stage of development of the local economy and the personal traits of the majority W ;:= entrepreneurs. Each type of entrepreneurial culture reflects one of the many possible iCBCG.~:riations of its sources. An entrepreneurial culture in which the business economy is open auc iranaged by people who are overall more creative and risk-taking would be considered a •MC-jre and developed one, while one operating under similar economic and resource conditions, llbioit managed by people who are overall less creative and less risk-taking might be considered more "jpiAT-r.ed' and less creative. Most important, the entrepreneurial culture is critical to the tdirs c-' 'i'Dment and evolution of the businesses operating within it, and is reflected throughout the BnrrerDreneurial process. The more dominant the entrepreneurial culture, the more transparent iiits -i_":uence, both within and outside the businesses, and in most of the businesses' processes.
CASE STUDY 2.1 Leonidas, Israel
Shlomi and Osnat Zingler, Israeli franchisors of Leonidas Belgian Chocolates, opened their chocolaterie in Israel in 2005. They hoped to break into the Israeli market with a very up-market, fine-quality product - high-priced artisan chocolates, produced in accordance with the demanding quality standards of the Leonidas head company in Belgium. To penetrate the market with such a luxury product, at a time when the Israeli economy was still coming out of a minor economic recession, was a very ambitious goal, and the potential clients' anticipation of 'something new' in the realm of chocolates was still unclear. A survey made prior to launching Leonidas, Israel produced mixed results regarding the maturity level of Israelis vis-a-vis their lifestyle as a whole and specifically with regard to fine chocolates. Some respondents stated that they would be willing to pay for high-quality chocolates, while others were unsure or were unfamiliar with Leonidas's reputation; and some were unwilling to pay 'high prices' for an unnecessary product such as fine chocolate. However, a small but nevertheless sufficiently 'arge proportion of the respondents were keen on being able to further satisfy their desire for luxury items, and quality chocolate was viewed as a desirable luxury item.
The Zinglers followed all of the predetermined steps of their very structured business plan, but they remained concerned with how to ascertain their Israeli clients' tastes, and especially with how to differentiate themselves from the other artisan chocolateries that had begun to spring up in well-to-do Israeli cities. Follow-up surveys ard in-depth individual interviews of the potential clientele indicated that there was an incipient tier-, a no: for products that are innovative rather than 'more of the same'; this clientele wanted things that were pleasurable, and that emphasized their high lifestyle. At this point, the Zingiers's creative thinking led them to change their mission statement from Ho sell high-quality chocolaies' :o 'to sell fine experiences', thus transforming their merchandise from 'a product' to ''sens^a anticipation'. They believed that this would differentiate them from other chocolateries.
The Zinglers decided to establish their choco:aiere ir a prosperous suburb of Tel Aviv, and to furnish it, with attractive elegance, around themes of sensual experiences. This was very risky, as the rental cost in a high-market location, as well as the cost of the planned decor, was very high. The Zinglers were also unsure as to whether their venture would succeed at all, and if so, how successful it might be. Osnat - who at the age of tv.eive had disobeyed her parents and secretly sold her own handicrafts - decided at this point that they should take a chance '. . . although Leonidas seemed too big for us: a hundred-year-o'd tradition of chocolate production, with more than ninety types of chocolates and a large number of other complementary products'. In addition, according to Osnat's husband Shlomi, 'it's difficult to penetrate the food market in Israel since a considerable part of the population is religiously observant and eats only foods that have kosher approval, and we had to take this central issue into consideration as well'.
The Zinglers decided that differentiating themselves by the quality of their products and decor was not enough. They decided to treat their clients as guests: 'We love to host friends and relatives in our home, so this was very natural for us,' says Osnat. 'In Belgium, where we spent three years working in an Israeli company, we always talked about the professional and personal service suppliers provided. We felt that we had to adopt this way of doing things, to bring it here,' reveals Shlomi. 'Our main guideline,' adds Osnat, 'is to always treat our clients as very welcome guests.'
1 Hofstede (2001) measured an aspect of entrepreneurial culture- individualism versus collectivism - in different countries and showed that entrepreneurship declines when collectivism is emphasized. Shane (1992) related cultural norms to levels of innovation and economic development.
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