Within a world of emerging global markets and rapid technological development, there is a strong demand for entrepreneurship within established companies in order to stay competitive. According to different studies, there is a positive linkage between Corporate Entrepreneurship (CE) and companies’ performance, which leads to a strong demand from organizations to foster their entrepreneurial culture. The recruitment and selection function within Human Resource Management (HRM) is an essential driver to attract, develop, and retain entrepreneurial people within corporations. The literature proposes that companies should match their selection criteria to the identified dimensions of Entrepreneurial Orientation (EO).
However, there is a lack of research if companies have specific HRM practices to select and retain entrepreneurial people. By investigating the recruitment requirements and development possibilities of Swedish-based companies, this study contributes empirical knowledge to the topic of how companies deal with HRM and CE. This information improves the understanding in the Corporate Entrepreneurship literature.
TABLE OF CONTENTS
ACKNOWLEDGEMENTS
ABSTRACT
LIST OF FIGURES
LIST OF TABLES
LIST OF ABBREVIATIONS
1.0 INTRODUCTION
1.1 Problem Statement
1.2 Purpose and Research Question
1.3 Outline of the Thesis
2.0 THE IMPORTANCE OF ENTREPRENEURSHIP
2.1 Corporate Entrepreneurship
2.2 The Role of Human Resource Management in Corporate Entrepreneurship
2.3 Entrepreneurship Orientation
2.3.1 Innovativeness
2.3.2 Risk-taking
2.3.3 Proactiveness
2.3.4 Soft Skills
2.3.5 Management Skills
2.4 Summary
3.0 RESEARCH METHODOLOGY
3.1 Literature Review
3.2 Research Design
3.3 Sample
3.4 Data Collection
3.4.1 Pilot Study
3.4.2 Interview Schedule
3.4.3 Main Study
3.4.4 Secondary Data
3.5 Data Analysis
3.6 Validity
3.7 Reliability
3.8 Limitations
4.0 EMPIRICAL RESULTS
4.1 Definition of Entrepreneurial Culture
4.2 Importance of Entrepreneurial Culture
4.3 Characteristics of Entrepreneurial People
4.3.1 Innovativeness
4.3.2 Risk-taking
4.3.3 Proactiveness
4.3.4 Soft Skills
4.3.5 Management Skills
4.4 Human Resource Management
4.4.1 Recruitment and Selection
4.4.2 Training and Development
4.5 Summary
5.0 DISCUSSION
5.1 Definition of Entrepreneurial Culture
5.2 Importance of Entrepreneurial Culture
5.3 Characteristics of Entrepreneurial People
5.3.1 Most Important Characteristics in General
5.3.2 Most Important Characteristics per Company Size
5.4 Human Resource Management
5.4.1 Recruitment and Selection
5.4.2 Training and Development
5.5 Summary
5.6 Universities enhance Company Performance
5.7 Other Findings and Observations
6.0 CONCLUSION
6.1 Contributions
6.1.1 Managerial and University Implications
6.2 Limitations and Future Research
7.0 LIST OF REFERENCES
8.0 APPENDIX
8.1 Development of the Interview Schedule: Version1-Version
8.2 Final Interview Schedule
8.3 Example Pilot Interview: ZEB
8.4 Example Interview: Ericsson
8.5 Responses Question 1
8.6 Responses Question 5
8.7 Responses Question 6
8.8 Responses Question 8
8.9 Responses Question 13
ACKNOWLEDGEMENTS
This thesis is the result of a fruitful collaboration with 26 Swedish-based companies. Thanks to their engagement, enthusiasm, and entrepreneurial interest, it was a pleasure to contribute to the research field of entrepreneurship.
Especially, we would like to thank our supervisor Ivo Zander, for his valuable input and his competent and humorous way of guidance.
Furthermore, we would like to take this opportunity to thank Maria, a wonderful person with the ability to put a smile on everybody’s face.
“If you can dream it, you can do it.”
- Walt Disney
ABSTRACT
Within a world of emerging global markets and rapid technological development, there is a strong demand for entrepreneurship within established companies in order to stay competitive. According to different studies, there is a positive linkage between Corporate Entrepreneurship (CE) and companies’ performance, which leads to a strong demand from organizations to foster their entrepreneurial culture. The recruitment and selection function within Human Resource Management (HRM) is an essential driver to attract, develop, and retain entrepreneurial people within corporations. The literature proposes that companies should match their selection criteria to the identified dimensions of Entrepreneurial Orientation (EO).
However, there is a lack of research if companies have specific HRM practices to select and retain entrepreneurial people. By investigating the recruitment requirements and development possibilities of Swedish-based companies, this study contributes empirical knowledge to the topic of how companies deal with HRM and CE. This information improves the understanding in the Corporate Entrepreneurship literature.
Key words: Entrepreneurship Education, Entrepreneurship Orientation, Corporate Entrepreneurship, Human Resource Management, Innovation
LIST OF FIGURES
Figure 1: Outline of the Thesis
Figure 2: The Five Dimensions of Entrepreneurship Orientation
Figure 3: The Dimension of Innovativeness in EO
Figure 4: The Dimension of Risk-taking in EO
Figure 5: The Dimension of Proactiveness in EO
Figure 6: The Dimension of Soft Skills in EO
Figure 7: The Dimension of Management Skills in EO
Figure 8: Definition of Entrepreneurial Culture (Q1)
Figure 9: The Importance of Entrepreneurial Culture (Q2)
Figure 10: The Importance of Entrepreneurial People (Q4)
Figure 11: The Need of Entrepreneurial People (Q5)
Figure 12: Most Important Characteristics for Entrepreneurial People (Q6)
Figure 13: Innovativeness: Important Characteristics
Figure 14: Risk-taking: Important Characteristics
Figure 15: Proactiveness: Important Characteristics
Figure 16: Soft Skills: Important Characteristics
Figure 17: Management Skills: Important Characteristics
Figure 18: Strategies for Entrepreneurial Branding (Q9)
Figure 19: No Strategy for Entrepreneurial Branding per Company Size (Q9)
Figure 20: Jobs and Departments for Entrepreneurial People (Q8)
Figure 21: Approaches to find Entrepreneurial People (Q11)
Figure 22: Evaluation of Entrepreneurial Skills (Q7)
Figure 23: The Importance of Entrepreneurship Education (Q12)
Figure 24: Training and Development Programs (Q13)
Figure 25: Entrepreneurial Development Programs (Q14)
LIST OF TABLES
Table 1: Overview of Pilot Interviews
Table 2: Overview of Main Study Interviews
Table 3: Structure of the Interview Schedule
Table 4: Structure of the Interview Schedule
Table 5: Most Important Characteristics of the Extended EO-model
Table 6: Innovativeness per Company Size
Table 7: Risk-taking per Company Size
Table 8: Proactiveness per Company Size
Table 9: Soft-Skills per Company Size
Table 10: Management Skills per Company Size
Table 11: Most Important Characteristics of the Extended EO-model
LIST OF ABBREVIATIONS
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1.0 INTRODUCTION
“As the 21st century unfolds, entrepreneurial actions are viewed as critical pathways to competitive advantage and improved performance” (Kuratko, Ireland & Hornsby, 2001,p. 60).
The phenomenon of entrepreneurship has lately experienced significant growth within different areas, reaching from Entrepreneurship Education to entrepreneurship within established companies (Carrier, 1996; Kuratko, 2005; Wakkee, Elfring & Monaghan, 2010; Valerio, Parton & Robb, 2014). Entrepreneurship has been described as a multifaceted endeavor, affected by a variety of social, cultural, environmental, demographic and economic factors (Stamboulis & Barlas, 2014). This involves the recognition of market opportunities within a process, by which individuals pursue possibilities without regarding resources they currently control, either outside or inside organizations (Guth & Ginsberg, 1990; Stevenson & Jarillo, 1990).
Within the broader phenomenon of entrepreneurship, Corporate Entrepreneurship (CE) refers to the development of new businesses within established firms and the transformation of companies through the implementation of new ideas (Guth & Ginsberg, 1990). It has been suggested by several studies that CE allows companies to improve organizational learning, creates new competencies and enhances financial performance (Zahra & Covin, 1995; Lumpkin & Dess, 1996; Zahra, Nielsen & Bogner, 1999). Consequently, CE is considered as a critical factor for a firms’ competitiveness (Carrier, 1996). An important driver of CE is the creation of a corporate entrepreneurial culture in order to accelerate growth and foster competitive effectiveness within organizations (Salama, 2012). Therefore, firms are looking for ways to enhance the entrepreneurial behavior of their employees (Kuratko et al., 2001).
Hereby, Human Resource Management (HRM) practices are an important driver of entrepreneurship within organizations (Kuratko et al., 2001; Hayton, 2003). Especially the recruitment and selection function of HRM is considered as essential to attract, develop, and retain entrepreneurial spirit within the company and consequently increase performance (Barney & Wright, 1998; Kaya, 2006). It becomes clear that HRM plays an important role, however, little is known about how HRM practices can actually be used to enhance CE.
Research indicates that the selection criteria for employees should match the dimensions of Entrepreneurial Orientation (EO) (Roberts, 1977; Kaya, 2006; Schmelter, Mauer, Börsch & Brettel, 2010). EO, as a core model within entrepreneurship, refers to different methods and practices that provide organizations with the basis for entrepreneurial actions (Lumpkin & Dess, 1996; Wiklund & Shepherd, 2003). Specifically, Miller (1983) identified the dimensions of 1) Innovativeness, 2) Risk-taking, and 3) Proactiveness, which have through the review of other literature in the course of this research been extended to 4) Communication Skills and 5) Management Skills.
However, little is known about the actual practices of how companies recruit and develop corporate entrepreneurs (Lumpkin & Dess, 1996; Wiklund & Shepherd, 2003). Through the investigation of the actual procedures the specific aim is to enhance the field of EO and to contribute to the research of Corporate Entrepreneurship.
1.1 Problem Statement
Based on the findings in the literature, it is vital for companies to implement appropriate HRM practices to enhance CE and as a result improve their performance. However, there is currently a lack of research what companies require from entrepreneurial people and if Human Resource (HR) managers are matching their selection criteria to the dimensions of EO. Hence, the question arises to what extend companies have developed special HRM practices to attract, retain, and develop entrepreneurial people.
It therefore seems inevitable to investigate companies’ practices and requirements when engaging in entrepreneurial activities and their will to improve performance through entrepreneurial drive.
1.2 Purpose and Research Question
To the best of our knowledge, this research is a first step to increase the understanding of the practical implementation of HRM practices to contribute to the topic of how companies deal with CE. The thesis seeks to answer the following research question:
- Which HRM recruitment and development practices do Swedish-based companies use to enhance Corporate Entrepreneurship?
The major purpose of this research is the identification of characteristics companies require when recruiting and developing entrepreneurial people.
1.3 Outline of the Thesis
The first section of the study includes the problem statement, the purpose and the research question (section 1). It is followed by a literature review about the general concept of CE (section 2). Different scholars are critically analyzed and discussed in order to understand the importance of CE. Hereby, companies’ HRM recruitment requirements are evaluated in particular. Drawing upon existing theory and further contributing to the development of the EO-model, different aspects of CE selection criteria are identified and explored in great detail. This includes the process of recruiting entrepreneurial people into different jobs and departments as well as developing and fostering an entrepreneurial culture.
Further, methodological considerations and the design of the research are examined in the methods section (section 3). Moreover, the empirical data gathered through in depth interviews is presented (section 4) and critically discussed (section 5). In order to improve the understanding of current HRM recruitment practices in terms of CE and additionally propose fields of action for universities, in-depth interviews evaluate several criteria. Hereby, the focus lies on different requirements of companies towards CE and explores the extent to which they entail entrepreneurial people within their organizations.
Finally, the concluding section highlights the main results of this study along with different contributions, limitations, and suggestions for future research (section 6).
Particular emphasis is placed on the identification of characteristics companies are looking for when recruiting entrepreneurial people. Additionally, the implications for universities, aspiring to best adapt their Entrepreneurship Education programs according to companies’ requirements, are taken into consideration. The following figure outlines the structure of this research:
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Figure 1: Outline of the Thesis
2.0 THE IMPORTANCE OF ENTREPRENEURSHIP
Emerging global markets and rapid technological development have strong demands on a firm´s ability to be innovative in order to compete effectively (Huse, Neubaum & Gabrielsson, 2005). Hence, new ideas, which challenge the current situation, are crucial drivers for an organizations’ change and improvement (Simon, 2009). Entrepreneurship has gained increased research attention within different areas, including the importance of enhancing entrepreneurial spirit within companies to improve their performance (Carrier, 1996; Valerio et al., 2014).
2.1 Corporate Entrepreneurship
As a stimulus of innovation, CE is a critical factor for firms to be successful in today’s business environment (Carrier, 1996; Zahra et al., 1999). Sharma and Chrisman (1999, p. 18) define CE as “the process whereby an individual or a group of individuals, in association with an existing organization, create new organization or instigate renewal or innovation within that organization”. Additionally to the two dimensions of new business venturing and innovativeness, CE also offers a strategic option to renew a firms´ business concept (Guth & Ginsberg, 1990). Therefore, CE is seen as a “set of company-wide activities that centers on the discovering and pursuing new opportunities through innovation, creating new business, or introducing new business models” (Schmelter et al., 2010, p. 717).
According to empirical studies, CE has positive impacts on the organizational performance (Zahra, 1991, 1993, Zahra & Covin, 1995; Lumpkin & Dess, 1996; Zahra et al., 1999; Özdemirci, 2011). For instance, Zahra and Covin (1995) state, that in order to enhance a company´s financial performance, managers should consider CE activities seriously. As these activities may take years to fully pay off, it is crucial that managers adopt a long-term perspective in developing, managing, and evaluating CE (Zahra & Covin, 1995). Another example of the positive impact on companies’ performance is that CE activities improve the overall organizational learning and drive the wide range of knowledge creation, which sets the foundation of new organizational competencies (Zahra et al., 1999).
Hence, CE demands that an organization constantly acquires and develops resources, which can be a source of sustainable competitive advantage when they are rare, have value, and provide barriers to duplication (Schmelter et al., 2010; Castrogiovanni, Urbano & Loras, 2011; Paauwe, Guest & Wright, 2013). These resources include physical, organizational, and human dimensions (Castrogiovanni et al., 2011). One major source of a sustained competitive advantage is a firms´ human capital (Wright, McMahan & McWilliams, 1994). The management of these resources refers to the organizational practices that are aimed at managing a companies´ employees and guaranteeing that these resources are employed towards the accomplishment of the organizational goals (Wright et al., 1994). Therefore, it is clear that the role of Human Resource Management is of critical importance in the process of establishing CE.
2.2 The Role of Human Resource Management in Corporate Entrepreneurship
HRM can build competitive advantages through creating and sustaining superior human resource contributions for firms by developing employees who are skilled and motivated to deliver high quality products and services (Lado & Wilson, 1994; Wright et al., 1994; Barney & Wright, 1998). Regarding HRM practices, most studies in the literature distinguish between four areas: 1) Recruitment and Selection, 2) Training and Development, 3) Compensation, and 4) Appraisal (Formbrun, Tichy & Devanna, 1984; Sanz-Valle, Sabater-Sánchez & Arragón-Sánchez, 1999; Van De Voorde & Paauwe, 2012).
HRM policies and the design of HRM practices also impact the level of entrepreneurship within an organization (Morris & Jones, 1993). According to Hayton (2003), HRM practices enhance knowledge creation and exchange, which promotes organizational learning and risk-taking. A vital role in the HRM system is dedicated to selective hiring, which should provide firms with skillful and talented employees, who can enhance entrepreneurial insights (Kaya, 2006). Companies that employ people, who can initiate and take appropriate decisions, can react quickly against unexpected opportunities and change (Kaya, 2006). Thus, several studies illustrate that the selection criteria should match the dimensions of Entrepreneurship Orientation (EO), namely 1) Innovativeness, 2) Risk-taking, and 3) Proactiveness (Roberts, 1977; Kaya, 2006; Schmelter et al., 2010).
In order to apply HRM practices in an effective and efficient way to foster CE, it is of high importance to understand the roots of Entrepreneurship and apply a systematic framework for identifying, recruiting, and retaining entrepreneurial employees. One fundamental model that has come to assume a central position in the field of entrepreneurial studies is the Entrepreneurship Orientation model (EO-model). This model provides a relevant framework to connect entrepreneurial characteristics and HRM practices.
2.3 Entrepreneurship Orientation
As HRM practices are important for organizational competitiveness, the following question arises: What are the characteristics HR-managers are looking for when recruiting entrepreneurial people?
One of the central concepts in this respect refers to EO, whereby a significant amount of both theoretical and empirical research developed this model into a core framework within entrepreneurship. The concept of EO reflects the methods, practices and decision-making activities that provide an organization with a basis for entrepreneurial actions (Lumpkin & Dess, 1996; Wiklund & Shepherd, 2003; Rauch, Wiklund, Lumpkin & Frese, 2009; Vij & Bedi, 2012). According to Wiklund & Shepherd (2003, p. 74), EO illustrates “how a firm operates rather than what it does” (Lumpkin & Dess, 1996; Covin, Green & Slevin, 2006).
The character of an entrepreneurial firm is summarized by Miller (1983, p. 771) as “one that engages in product-market innovation, undertakes somewhat risky ventures, and is first to come up with "proactive" innovations, beating competitors to the punch”. It has therefore been agreed by several researchers that EO focuses on three key dimensions, namely
1) Innovativeness, 2) Proactiveness, and 3) Risk-taking. Thus, EO implicates the motivation and willingness of an organization to innovate, the courage to take risks and test uncertain services, products and, markets as well as the behavior to act proactively. This enables a company to outperform competitors and obtain a competitive advantage (Miller, 1983; Covin & Slevin, 1989; Lumpkin & Dess, 1996; Wiklund & Shepherd, 2003; Vij & Bedi, 2012).
While research on EO has highlighted the three key parameters, there is also a body of literature that includes aspects of further important skills as being relevant for entrepreneurial people such as communicating, networking or the ability to execute new ideas (Baron & Tang, 2009; Barringer & Ireland 2012; Mortan, et al., 2014). In order to take those characteristics into consideration, this research has extended the EO-model to the dimensions of 4) Soft skills and 5) Management skills (Figure 2).
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Figure 2: The Five Dimensions of Entrepreneurship Orientation
Source: Based on Wiklund & Shepherd, 2003
A company that represents these highlighted characteristics within its practices is considered as having a high degree of EO, while organizations engaging in a relatively low level of EO present a rather conservative orientation. Thus, EO is a crucial indicator of the way a firm is organized in entrepreneurial terms (Covin & Slevin, 1991; Vij & Bedi, 2012).
According to Covin and Slevin (1991), EO can therefore be considerd as a strategic dimension, “which can be observed from the firms’ strategic posture running along a continuum from a fully conservative orientation to a completely entrepreneurial one” (Vij & Bedi, 2012, p. 18). As “entrepreneurial activity represents one of the major engines of economic growth” and “an essential feature of high-performing firms“ (Lumpkin & Dess, 1996, p. 1), it can be summarized that “EO is a key ingredient for organizational success” (Vij & Bedi, 2012, p. 19). In the following, each of the five dimensions will be examined in further detail.
2.3.1 Innovativeness
The role of innovation within the entrepreneurial process derived from Schumpeter (1934), who first emphasized the importance of the so called ‘creative destruction’ (Innovativeness). Hereby, wealth is created by disrupting existing market structures through the introduction of new products, services, or technological solutions. This predisposition to engage in creativity and experimentation through introducing new processes is referred to as innovativeness (Creativity) (Lumpkin & Dess, 1996; Rauch et al., 2009).
Moreover, according to Kimberly (1981), innovativeness requires a certain degree of being visionary in order to move the latest processes and technologies beyond the current state of art (Visionary) (Lumpkin & Dess, 1996). Discarding old beliefs and replacing them through actively exploring new alternatives is therefore of high importance. One approach in order to discover these potential opportunities is to identify the problem and find ways to solve it accordingly (Problem-solving) (Karagozoglu & Brown, 1988; Barringer & Ireland 2012). Hereby, critical thinking has been identified as a prerequisite with regards to investigating the frequency of changes in service or product lines as well as critically evaluating how to best adapt, explore and pursue new opportunities within the organization (Critical-thinking) (Lumpkin & Dess, 1996; Wiklund & Shepherd, 2005). The following five aspects have been identified as the most important ones regarding innovativeness.
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Figure 3: The Dimension of Innovativeness in EO
Source: Based on Lumpkin & Dess, 1996
2.3.2 Risk-taking
Cantillon (1734), who first used the term entrepreneurship in the early 18th century, argued that the main difference between entrepreneurs and hired employees is based on the uncertainty and riskiness of self-employment. The concept of risk-taking is therefore frequently used to illustrate entrepreneurship (Lumpkin & Dess, 1996).
Risk-taking in this context refers to making investment decisions and strategic actions, while faced with uncertainty as well as taking bold actions by pursuing opportunities and committing significant resources in uncertain environments (Risk-taking) (Miller, 1983; Covin & Slevin, 1991; Lumpkin & Dess, 1996). Miller (1983) framed the most accepted approach of risk-taking to EO, which measures the tendency to engage in risky projects to achieve the firms’ objectives. It can be summarized that organizations with “an entrepreneurial orientation are often typified by risk-taking behavior […] in the interest of obtaining high returns by seizing opportunities in the marketplace” (Lumpkin & Dess, 1996, p. 144).
With regards to strategy, Lumpkin & Dess (1996, p. 144), determine the risk of “committing a relatively large portion of assets", and the risk of "borrowing heavily". Additionally, Baird and Thomas (1985, p. 231-232) identified the risk of “venturing into the unknown”. This commitment to venture into the unknown requires not only an open mind to explore the situation in the first place but the active decision to agree to a risk (Open Mind). As risk-taking is therefore associated with a willingness to devote resources to various projects with an uncertain outcome and potential high costs of failure, the right amount of courage seems inevitable (Courage) (Miller & Friesen, 1982). According to Wiklund & Shepherd (2005, p. 75), taking a risk reflects the willingness to “break away from the tried-and-true”, which clearly reflects the need to adapt to new situations (Adaptability). As upcoming unexpected challenges are common, it is, beyond staying flexible, crucial to constantly stay persistent in order to succeed (Barringer & Ireland 2012). The following figure outlines the most important dimensions regarding risk-taking within entrepreneurship.
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Figure 4: The Dimension of Risk-taking in EO
Source: Based on Lumpkin & Dess, 1996
2.3.3 Proactiveness
Different scholars have emphasized the importance of acting proactively within entrepreneurship. Hereby, entrepreneurial managers play an important role to engage in opportunistic expansion through providing the necessary guidance, imagination and vision (Penrose, 1959; Lumpkin & Dess, 1996).
According to Rauch et al. (2009, p. 7), “proactiveness is an opportunity-seeking, forward-looking perspective characterized by the introduction of new products and services ahead of the competition and acting in anticipation of future demand” (Opportunity-seeking). This includes the ability to recognize these various opportunities and forecast trends within both the internal and external environment. Taking initiatives by pursuing upcoming chances and participating in emerging markets is also associated with the proactive dimension of entrepreneurship (Ability to take Initiatives) (Miller, 1983; Covin & Slevin, 1991; Lumpkin & Dess, 1996). Acting on future wants and needs in the marketplace requires a strong willingness to learn in the first place in order to create a first-mover advantage vis-à-vis the competition (Strong Willingness to Learn). Besides, as proactive firms have the desire to act as pioneers, the aspect of self-motivation has to be highlighted (Self-motivation) (Lumpkin & Dess, 1996; Wiklund & Shepherd, 2005). According to Lumpkin and Dess (1996, p. 146), “a proactive firm is a leader rather than a follower, because it has the will and foresight to seize new opportunities, even if it is not always the first to do so”. The overall prerequisite to lead the market and “shape the environment, that is, to influence trends and, perhaps, even create demand” has been identified as passion for the business (Passion for the Business) (Lumpkin & Dess, 1996, p. 147). As “building an entrepreneurial organization is fraught with challenges”, it is this passion, which “provides an entrepreneur the motivation to get through tough times” and serves as a driver to act proactively (Barringer & Ireland, 2012, p. 10). The following five characteristics have therefore been identified to best describe the dimension of proactiveness within entrepreneurship.
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Figure 5: The Dimension of Proactiveness in EO
Source: Based on Lumpkin & Dess, 1996
2.3.4 Soft Skills
In addition to the three key parameters of 1) Innovativeness, 2) Risk-taking, and 3) Proactiveness (Miller, 1983), the following two dimensions 4) Soft skills and 5) Management skills take additional significant entrepreneurial characteristics into consideration. The first dimensions, which was added elaborates specifically on the dimensions of 4) Soft Skills.
According to Kamin (2013, p. 12) soft skills “are interpersonal skills that demonstrate a person´s ability to communicate (Communication) effectively and build relationships with others in one-on-one interaction as well as in groups and teams”.Soft skills are very important for entrepreneurial people as they affect significant outcomes in both – new ventures and established organizations (Baron & Tang, 2009). This is due to the reason that entrepreneurs´ soft skills have an impact on their effectiveness in obtaining crucial resources, which in turn, influence new venture performance (Baron & Tang, 2009).
Besides the obvious factors of communication, networking (Networking) and team collaboration skills (Team Collaboration), also negotiation skills and emotional intelligence have been identified to cover the dimension of soft skills within entrepreneurship. Negotiation skills (Negotiation) are crucial for entrepreneurs as it helps them to increase social support by recruiting new network members, to facilitate access to resources, and enlist the help of new actors to solve a problem (Lamine, Mian & Fayolle, 2014).
Emotional intelligence (Emotional Intelligence) is defined by Goleman (1998) as having personal competence in the following areas: self-awareness, self-regulation, motivation, empathy, and social skills. In the literature emotional intelligence is identified as a key factor for success in the workplace (Cross & Travaglione, 2003). Furthermore in the field of entrepreneurship the study of Mortan, Ripoll, Carvalho, and Bernal (2014) indicate that entrepreneurs with the capacity to regulate and use emotions effectively are more prone to believe that they can be successful. The skill to appraise, manage, and use emotions in challenging situations can be a key success factor (Mortan, et al., 2014). The following graph provides an overview of the five identified characteristics within the soft skills dimension.
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Figure 6: The Dimension of Soft Skills in EO
2.3.5 Management Skills
The second dimensions, which was added to the additional three key parameters of the EO-model elaborates on the dimensions of 5) Management Skills.
Based on Rao & Kumar´s (2010, p. 3) review of several management definitions, management is described as “designing, providing and maintaining a conducive internal environment in tune with the opportunities and challenges of the external environment through planning, organizing, directing and controlling all resources and operations in order to achieve effective organizational strategies efficiently”.
Execution intelligence as one important management skill of successful entrepreneurs is the ability to transfer a solid idea into a viable business (Execution Intelligence) (Barringer & Ireland 2012). This entails a lot of other characteristics as executing an idea needs the abilities of developing a business model, putting together a new venture team, raising money, establishing partnerships, managing finance, and leading and motivating employees (Barringer & Ireland 2012). Hence, a lot of other management skills such as planning (Planning), decision-making (Decision-making), and financial knowledge (Financial Knowledge) are necessary for entrepreneurial people. This multifaceted skillset that is needed in order to run a business successfully is also highlighted by the theoretical model of Lazear (2005). According to Lazear (2005) entrepreneurs should be competent in many skills but do not need to excel in any one.
Another important characteristic of successful entrepreneurs is a product and customer focus (Product and Customer Focus) (Barringer & Ireland 2012). Functions such as management, marketing, and finance, will make no difference without having products and services that satisfy customers (Barringer & Ireland 2012). Based on these considerations, the following characteristics are significant within the dimensions of management skills.
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Figure 7: The Dimension of Management Skills in EO
2.4 Summary
The concept of entrepreneurship is gaining profound interest of companies to enhance their internal entrepreneurial spirit (Kuratko, 2005; Wakkee et al., 2010; Valerio et al., 2014). CE is especially important for companies as it positively influences the organizational performance and therefore has a direct impact on its bottom line (Zahra & Covin, 1995; Carrier, 1996; Zahra et al., 1999).
The review of various research and different theories demonstrates the positive effect of HRM practices on CE, whereby the recruitment and selection function is considered as an important issue to foster entrepreneurship within organizations. For this reason, the HR selection criteria should match the identified five dimensions of the extended EO-model (Entrepreneurship Orientation): 1) Innovativeness, 2) Risk-taking 3) Proactiveness, 4) Soft Skills, and 5) Management Skills (Roberts, 1977; Morris & Jones, 1993; Wright, McMahan & McWilliams, 1994; Kuratko et al., 2001; Hayton, 2003; Kaya, 2006; Schmelter et al., 2010).
However, there is currently no research about how and if companies apply EO and attract the right employees to improve their performance. Therefore, a clear empirical gap can be recognized. Thus, the aim of this research is to provide insights into this unexplored area by examining companies´ HRM recruitment requirements and processes according to EO.
3.0 RESEARCH METHODOLOGY
With the purpose to increase the understanding of how HRM deals with CE, an exploratory study was conducted. Hereby, the literature review served as a record of accumulated evidence and material and played an essential role in devising research questions (Brewerton & Millward, 2001; Hesse-Biber, 2010).
3.1 Literature Review
Based on the pre-understanding of the research topic, the literature on CE, HRM, and EE was critically analyzed and evaluated in order to develop an understanding of the field of CE and its link to performance. Various sources included libraries, databases, and online search engines such as Google Scholar, Summon, Emerald Insight, JSTOR, and Business Source Premier, among others. The detailed and critical literature review confirmed a gap about studies that investigate companies´ actual practices and requirements when engaging in entrepreneurial activities. The motivation of this research was to shed light on this field of research.
Several studies that proved the importance of CE for performance and identified HRM practices as an important driver of CE, which served as a starting point for the investigation. Hereby, researchers suggest that HRM managers should match their selection criteria to the dimensions of EO. The literature review identified the EO-model as a well-established concept to determine the degree of EO within a company. As further literature review outlined, the original three dimensions of the EO-model 1) Innovativeness, 2) Risk-taking, and 3) Proactiveness by Miller (1983), were extended to 4) Soft Skills and 5) Management Skills. The main reason for the extension of the EO-model was to emphasize that the literature also highlighted further important aspects, which should be taken into consideration for an entrepreneurial orientation.
Even if the extended EO-model is just taken into consideration five main dimensions within this study and therefore can be seen as a simplification, it needs to be stated that this model highlights a central concept within the literature. Therefore, the extended EO-model together with other relevant literature served as the foundation for the analysis and provided a profound basis for the research question (Miller, 1983; Covin & Slevin, 1989; Lumpkin & Dess, 1996; Wiklund & Shepherd, 2003; Vij & Bedi, 2012).
3.2 Research Design
Given the research questions to further gain insights about companies’ current recruitment and development practices for entrepreneurial people, an exploratory research was chosen as the most suitable approach. This design was used to clarify the uncertainty around the research field of HRM requirements within CE (Zikmund et al., 2010; Yin, 2009).
This study is based on a concurrent mixed-method research design, which means that both qualitative and quantitative data are collected simultaneously (Hesse-Biber, 2010). Hereby, one methodology can be embedded within the other during a single means of collecting data, specifically by including quantitative questions in an interview schedule (Saunders, Lewis & Thornhill, 2012). This mixed-method research design allows both sets of results to be interpreted together and therefore provides a richer and more comprehensive understanding in comparison to the use of a mono-method design (Saunders et al., 2012). Additionally, this approach also ensures that the study findings are valid by making it possible to compare and corroborate the aim of the study (Hesse-Biber, 2010).
For the purpose of data collection in this study, the form of semi-structured interviews was chosen, to incorporate elements of both quantifiable responding and the facility to explore certain areas of interest in more depth (Brewerton & Millward, 2001; Glenn, 2010; Krishnaswami & Satyaprasad, 2010; Saunders et al., 2012). Semi-structured interviews carry the advantages of being generally easy to analyze, quantify, and compare, but also allowing interviewees to elaborate on their responses by providing more in-depth information where necessary (Brewerton & Millward, 2001). The purpose of using semi-structured interviews was to increase the understanding of HRM practices and the way companies deal with CE.
3.3 Sample
For this research, a total number of 26 Swedish-based companies were identified, whereby a pilot study with four companies was conducted first to develop the interview schedule (Table 1). The identified companies were selected according to the criteria of operating in Sweden, being of different size and representing a broad range of various industries.
illustration not visible in this excerpt
Table 1: Overview of Pilot Interviews
The main sample consisted of 22 different sized companies (15 Large Companies, 5 SMEs, 2 Start-ups), which operated in a wide range of various industries in Sweden. The respondents were HR managers with the responsibility of recruitment and selection as well as training and development. The interview forms of face-to-face, telephone or Skype, and E-mail were used, according to the preferences of the respondents (Table 2):
illustration not visible in this excerpt
Table 2: Overview of Main Study Interviews[1]
3.4 Data Collection
The collection of data was conducted through various methods, including the collection of primary data through the usage of interviews as well as secondary data through the review of different literature. The main data collection process can be separated in three main steps:
3.4.1 Pilot Study
3.4.2 Development of the Interview Schedule
3.4.3 Primary Data
This combination served as a suitable approach to collect a significant and meaningful body of information in order to explore the complexity of this research.
3.4.1 Pilot Study
The pilot study included an initial selection of a limited number of companies and respondents. The main purpose of the pilot study was to develop the final interview schedule. Hereby, the accumulated data of the pilot study was not included in the results of the main study.
- Firm and Respondent Selection
In order to create a great variety of information in the pilot study, the four chosen companies had to: 1) operate in Sweden, 2) be of different size and 3) represent a broad range of various industries. Moreover, it was crucial, that the selected persons for the interviews were responsible for the HR department of the organization and therefore had suitable insights into the entire HR practices. The four selected companies applied to all of the criteria and consisted of a Start-up (Bragus Invest AB), two SMEs (Totalcom and Drivhuset) and one Large company (ZEB) (Table 1).
Bragus Invest AB is a Start-up that buys invoices and consults financial companies with regards to their product and business development. Drivhuset is a SME with 55 employees that supports student entrepreneurs to start and run a business. Also operating as a SME, Totalcom is established since six years and provides business class communication, working B2B. And with nearly 1000 employees, ZEB represents one of the leading consulting companies in the financial service sector.
The diversity of the firms in the pilot study allowed the researchers to get a first-hand understanding of HRM and CE and to test the interview schedule with respondents. Those had different point of views and hence provided a fruitful feedback to clarify the questions and fit the interview schedule in the best way to answer the research question.
- Interview Schedule Enlargement
In order to identify relevant questions and determine if these questions were interpreted in the intended manner, the method of in depth face-to-face interviews was chosen. During the interviews, respondents were asked about HRM practices, and also presented with a set of questions intended to be included in the questionnaire.
This method allowed to work closely together with the interviewees, to explore their responses, provide the opportunity to witness non-verbal behavior, and achieve a high level of interactivity and spontaneous communication (Saunders et al., 2012). With regards to the behavior of the respondents, special focus was put on their mimic and gestic as well as on the way how they answered the questions. Close attention was put on potential ambiguity within the questions and terms. Additionally, respondents were asked if questions were perceived as repetitive during the course of the interview. As all four interviews were conducted by both authors and active feedback from the respondents was taken into consideration, it was possible to improve the survey significantly during the development from version one to version four (Appendix 8.1).
One major improvement was achieved by asking the respondents for the most important characteristic of each dimensions of the extended EO-model. This step was taken, as it became obvious during the pilot interviews, that the majority of characteristics were rated on a high scale without comparing the aspects against each other. This means that the majority of the respondents were not able to differentiate between the importance of the different characteristics of each dimension, but instead rated all of them as highly important for their company. During the development process of the final interview schedule, wordings were changed, some questions were rephrased and certain aspects were discarded for a better understanding (Appendix 8.1).
In general, the chosen process and method provided both interviewers with a full understanding of how the respondents answered the questions and therefore allowed them to enhance the survey accordingly for the further upcoming interviews.
3.4.2 Interview Schedule
The literature review and especially the findings of the pilot study, served as the foundation for the development of the interview schedule. Through continuous testing and improvement of the interview schedule, the final structure and design of the interview questions developed as outlined in the following.
- Structure of the Interview Schedule
The structure of the interview schedule was based on the main identified aspects within the literature, including research around CE, HRM, and EE. This includes the EO-model as a major concept to measure EO within a company (section 2). The finalized interview schedule consisted of the following six main parts:
illustration not visible in this excerpt
Table 3: Structure of the Interview Schedule
The first question (Q1), served as an introduction to get the respondents familiar with the topic and their definition of entrepreneurial culture in general.
The following part (Q2-Q5) focused on the importance of an entrepreneurial culture within the interviewed company. Here, the interviewees were asked to identify the importance of an entrepreneurial culture and the need of entrepreneurial people at their company.
Part three critically evaluated the characteristics of entrepreneurial people both through an open question to get the direct view of the respondents as well as through provided characteristics. Those characteristics were based on the extended EO-model and were constructed around the dimensions of 1) Innovativeness, 2) Risk-taking, 3) Proactiveness,4) Soft Skills, and 5) Management Skills. This quantitative part of the interview schedule was developed into a standardized questionnaire, whereby respondents rated certain criteria of the EO-model with numerical values on a scale from one to five.
Furthermore, part four of the interview schedule focused on the HRM function within the interviewed company. Hereby, the part for recruitment and selection (Q7-Q12) considered various criteria in terms of how entrepreneurial people can be attracted and assessed and for which functions they add value for the companies. Moreover, it was evaluated whether the company perceives a background in EE as valuable. The training and development part (Q13-Q14), focused on internal development possibilities in general and with particular focus on entrepreneurship.
The last part of the schedule (Q17) considered further insights of the overall topic and gave the respondent the chance to add additional characteristics or to further elaborate on other aspects.
Based on the concurrent mixed-method design within this study, it can be concluded that the main part of the interview schedule referred to a qualitative method to get an understanding of how companies deal with CE (Q 1; 3; 5-14; 16-17), while a quantitative approach provided insights to identify the characteristics that companies are looking for regarding entrepreneurial people (Q 2; 4; 15) (Appendix 8.2) (Hesse-Biber, 2010).
- Design of the Interview Questions
Careful preparation is the key to a successful interview and therefore the interview schedule was planned precisely in order to obtain the confidence of the interviewees by demonstrating the researcher’s competence and credibility (Saunders et al., 2012).
As suggested by Saunders et al. (2012), the interview schedule was structured in a way that ensured appropriateness in the use of different types of questions. Furthermore, the questions were phrased in a manner that avoided emotional language. Both the structure and the wording are critical to achieve success in interviews (Saunders et al., 2012). Therefore open, probing, and closed questions were used.
Open questions (Q1; 16; 17) were applied in order to reveal attitudes and obtain facts by encouraging the interviewee to provide an extensive and developmental answer (Saunders et al., 2012).
To explore significant responses related to the research topic, probing questions were used in the main part of the interview schedule (Q5-10; 13-14) (Saunders et al., 2012).
Closed questions were utilized as introductory questions about a particular topic (Q3; 12) to obtain specific information and confirm opinions (Saunders et al., 2012).
3.4.3 Main Study
In order to achieve a rich set of primary data, the main study consisted of 22 semi-structured interviews with Swedish-based companies.
- Sampling Technique
The technique of heterogeneous sampling was used, which enables the collection of data to broadly define and explain the significant themes that can be observed (Saunders et al., 2012). To ensure the maximum variation possible in the data collected, companies from different industries and diverse size were chosen.
- Sample Size
By using a non-probability technique, the issue of sample size is ambiguous, meaning that there is no guideline how large the size of the sample should be (Saunders et al., 2012). In order to address this issue, interviews were conducted until data saturation was reached. This point was identified after 20 interviews, whereby patterns in the answers were recognized and the additional collected data provided few new insights. This is also in line with the suggested minimum sample size of 5-25 (Saunders et al., 2012).
- Data Collection Process
During the data collection process, the dominant challenge was to get access to HR managers, especially in Large firms. Therefore, a total number of 59 companies were contacted. Some of the firms had to be called up to ten times in order to reach someone who fulfilled the selection criteria. Eventually, 39 responsible HR-managers could be reached, of which a total number of 22 participants agreed to take part in the interviews. The majority of the participants, who refused to take part in the interview, were Large organizations with more than 1,000 employees. The main reason for not participating was a lack of time.
After securing access, potential respondents were provided with the interview guide and more detailed information about the research project via E-mail. This information included the main objective of the research, the purpose of the interview and organizational information such as date and time for the actual interview. Despite the fact, that all respondents received the interview guide in advance, some answered questions in a spontaneous way.
During all interviews, the entire conversation was audio recorded and notes were made additionally. This improved understandability and enabled follow-up probing questions by summarizing back to the interviewee (Saunders et al., 2012). Furthermore, as suggested by Saunders et al. (2012), after each interview, a full record was compiled to produce a set of contextual data and related memos. All the mentioned techniques are means to control bias and produce reliable data (Saunders et al., 2012). To further increase reliability, different interview forms were applied.
- Interview Forms
A total number of seven interviews were conducted in the form of face-to-face interviews, which increased the depth of information. Therefore the accuracy and dependability of the answers could be checked by observation and probing (Krishnaswami & Satyaprasad, 2010).
The majority of the interviews (12) were conducted by telephone or Skype. This provided the benefits of low cost as it did not involve travel time and expense, while however ensuring a good quality of response at the same time (Krishnaswami & Satyaprasad, 2010). Telephone and Skype interviews can also have the advantage of a reduced interviewer bias as there was no face-to-face contact and therefore no direct judgment occurred (Krishnaswami & Satyaprasad, 2010). Nevertheless, a disadvantage of telephone interviews is, that the respondents’ characteristics and environment cannot be observed (Krishnaswami & Satyaprasad, 2010). Furthermore, telephone interviews do not allow the establishment of the same position of trust as face-to-face interviews and thus participants can be less willing to engage in an exploratory discussion (Saunders et al., 2012).
Moreover, three participants of the study preferred to fill out the interview schedule via E-mail on their own. This was in contrast to all the other interviews, were the interview schedule was completed by the researchers. A major drawback of receiving the filled out interview schedules via E-mail was that it could contain unanswered questions and incomplete responses (Krishnaswami & Satyaprasad, 2010). In order to limit this disadvantage, respondents were contacted again by E-mail to elaborate on unclear responses further. This in turn, was advantageous as the time delay between a question being asked and it being answered allowed both the interviewer and the interviewee to reflect on the questions and responses prior to providing a considered response (Saunders et al., 2012).
3.4.4 Secondary Data
Additionally to primary data, secondary research was conducted to gain significant understanding about the research topic. Secondary data such as annual reports as well as newspaper or research institute analysis was further evaluated to complement the data from the interviews. Even if the process of collecting additional secondary data included extensive screening as not all information was relevant for the purpose of the thesis, the benefit clearly proved the assurance of verified data (Saunders et al., 2012). For the purpose of this research, secondary data was used to confirm various findings in the primary data collection process as well as to gain further insights into the topic of CE.
3.5 Data Analysis
The analysis of the collected primary data was structured according to the four main parts of the interview schedule (Table 3, section 3.4.2):
1) Definition of Entrepreneurial Culture
2) The Importance of Entrepreneurial Culture
3) Characteristics of Entrepreneurial People
4) HRM
With regards to the nature of the questions, qualitative answers were evaluated according to the most common characteristics within all responses. This means that by reviewing the answers, certain patterns became apparent and therefore they were grouped according to categories, which were chosen by the researchers during the evaluation process. Concerning the quantitative questions, the extended EO-model was used to devise a framework that helped to organize and direct the data analysis (Yin, 2009).
In a first step, the conclusions were compared with expectations from the literature and theory, followed by a second step that evaluated the findings against each other. The analysis revealed patterns both on an overall level and within the different categories of company size. Hereby, patterns which were either in line with existing theory or identified as new ones occurred. Both types of patterns were analyzed, discussed, and conclusions were drawn.
3.6 Validity
According to Saunders et al. (2012), a high level of validity in semi-structured interviews can be achieved by conducting the interviews carefully with the intention to clarify questions, probe meanings, and to be able to explore responses from a variety of angles. In order to reduce the scope of biases and ensure a high validity, an appropriate approach to questioning as suggested by Saunders et al. (2012) was applied. Pre-testing of questions resulted in unambiguous questions that could be understood. Furthermore, questions that could lead the interviewee or which indicate a certain bias were avoided. Additionally, validity was enhanced by using both a qualitative and quantitative sampling component throughout the entire interview schedule (Easterby-Smith, Thorpe, Jackson & Lowe, 2008; Hesse-Biber, 2010; Saunders et al., 2012). Therefore, it can be concluded that the research reflects a satisfactory validity.
3.7 Reliability
A major concern regarding the reliability of semi-structured interviews is that the findings are not necessarily replicable since they reflect reality at the time they were gathered, meaning in a situation which may be subject to alteration (Marshall & Rossman, 2006). To enhance the reliability, all interviews were recorded and transcribed (See examples in Appendix 8.3 & 8.4). This enables other researchers to refer to these records, comprehend the process and reanalyze the collected data (Saunders et al., 2012).
Besides that, Saunders et al. (2012) suggests that it is necessary to consider the following three types of potential bias: 1 ) Interviewer bias, 2) Response bias, and 3) Participants bias.
1) Interviewer bias means that the comments, tone or non-verbal behavior of the interviewer creates bias in the way that interviewees respond. In order to reduce this interviewer bias, all questions were summarized by the entire research team to avoid a biased or incomplete interpretation (Saunders et al., 2012).
2) Response bias refers to the inability of the interviewer to develop the trust of the interviewee and therefore the value of the given information may be limited. With regards to reducing this bias, participants were assured that confidential information was not being sought and their anonymity was guaranteed. Hence the level of confidence in the interviewers’ trustworthiness was increased (Saunders et al., 2012).
3) Participants bias is defined as a reduction in willingness to take part in the interview. To overcome this bias, relevant information about the research project and the interview were supplied beforehand as it provided participants with the opportunity to prepare for the interview. Furthermore, the appropriateness of location was ensured by conducting all face-to-face interviews at meeting rooms in the companies, to facilitate that the participants feel comfortable and the interview was unlikely to be disturbed (Saunders et al., 2012).
In general, the reliability could have been negatively affected, as respondents might have answered in an untruthful way to place the company in a better position. This means that respondents might have answered in favor for their company to place them in a better position than they actually are. For example stating that the company has an entrepreneurial training programs but in fact does not provide specific development possibilities for their employees. However, taken into consideration that certain aspects could have diminished the reliability of the research, overall it can be said that due to a good understanding of the researchers within the topic and of the interviewed partners, a satisfactory level of reliability of the research can be ensured.
3.8 Limitations
Due to the small sample size of 22 companies, one major limitation of this study is that the findings cannot be used to make statistical generalizations about an entire population (Saunders et al., 2012). Within this research, only Swedish-based companies were analyzed.
Another limiting factor is that the majority of the interviews were conducted through telephone, Skype or via E-mail. Although such interview forms come with certain advantages, they do not enable the establishment of the same position of trust as face-to-face interviews. Therefore, participants may have been less willing to engage in an exploratory discussion (Saunders et al., 2012). Moreover, the interviewers´ interpretation of the degree to pursue a particular line of questioning could have been adversely affected, as it was not possible to witness non-verbal behavior of the participants (Saunders et al., 2012).
A further limiting factors of this study is the exclusive focus on the EO-model, even if there may be other practices that concern the development of CE. However, the EO-model represents a major and established framework in the field of entrepreneurship studies and was therefore chosen as groundwork with a significant liability.
[...]
[1] Large companies are defined as having more than 250 employees, are operating in its industry for more than five years and have proven themselves as an established company. SMEs are defined as companies which are operating in its industry for more than three years and have up to 250 employees (European Commission, 2015). Start-ups are also defined as having up to 250 employees, however they are still in the first stage of their establishment for a time period between one and three years.
- Quote paper
- Kim Julian Nestel (Author), Elena Trost (Author), 2016, Corporate Entrepreneurship. What do Companies require from Entrepreneurs?, Munich, GRIN Verlag, https://www.grin.com/document/336180
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