Within the literature on both entrepreneurship and strategy, risk emerges in a number of contexts.
Specific to entrepreneurship literature is a focus on the deliberate acceptance of risk by entrepreneurs (Cantillon, 1755; Knight, 1921) and the level of risk assumed (Sonfield & Lussier, 1997). Such risk is often referred to as high level (Busenitz & Barney, 1997) and bold or reckless in nature (Mintzberg, 1973; Shapero, 1975). Carland et al. (1984) identify the type of risk adopted as a distinguishing feature between managers and entrepreneurs. Smircich and Stubbart (1985) highlight the importance of risk perception; Busenitz and Barney (1997) build on this by suggesting entrepreneurs use judgement, analysis, and intuition to determine risk as moderate rather than high.
Within strategy and strategic entrepreneurship, much of this literature continues to focus on the willingness to accept risk (Lumpkin & Dess, 1996), and the extent of that risk (Sonfield & Lussier, 1997). Few however, have specifically addressed the more poignant notion of risk perception (Busenitz & Barney, 1997; Smircich & Stubbart, 1985) and risk management in the context of strategic entrepreneurship. Within the case study findings, however, acceptance of risk repeatedly emerges as a concept fundamental to strategic entrepreneurship. The various aspects of this concept, both central and supporting, are considered below.
a) Perception of risk
The emphasis on risk from a theoretical perspective is well supported in a practical context, based on the case study data and findings. While risk was acknowledged as relevant to the activities examined within each of the organisations, essentially such risk was identified and evaluated before a conscious decision was made to accept that risk. Thus both perception (Smircich & Stubbart, 1985) and professional judgement (Busenitz & Barney, 1997) are important aspects within risk-acceptance.
b) Managing and mitigating risk
Another important and recurring feature associated with risk in each of the case studies, was the perception of such risk as manageable. This concept is significantly different from the literature which tends to classify or categorise risk as high, moderate, or low (Sonfield & Lussier, 1997).
Thus based on the case study findings, an important distinction is made between risk perceived
as manageable versus unmanageable. Specifically, conscious steps were taken within each of the organisations to actively manage or mitigate such risk (e.g. MetService operating within a low cost structure, NZ Post employing banking staff with the necessary skills and experience, Quotable Value monitoring changes in customer demand and revenue for its competing valuation services). Thus both perception and management of risk emerge as central to the issue of risk acceptance.
c) Additional themes
With in the process of cross-case comparison, a number of other themes also emerge as relevant to risk, but not necessarily fundamental to this concept. These themes are considered briefly below.
Confidence
Within both MetService and NZ Post, the notion of confidence also emerges as directly relevant to risk-acceptance; the confidence to assume new risks. Again, this concept may be viewed as a supporting one, which is not specifically fundamental to strategic entrepreneurship, but effectively operates to support risk-acceptance. While confidence is not specifically addressed within the literature on strategy, it is perhaps encompassed within the notion of a proactive organisation and is discussed further in Section 8.3.2. Further, the emergence of this concept may also be viewed as directly relevant to the type of organisations involved in this study. Given the context of the case studies being state-owned enterprises, the notion of confidence may be reflective of the change from government departments which did not necessarily have a commercial imperative, to commercially focused and accountable SOEs. Hence the shift in commercial focus may account for the subsequent emphasis on confidence to accept new risks, emerging as a separate concept within the culture of these organisations. This is consistent with Ramamurti’s (1986) view of public entrepreneurs.
Thus, while literature on strategy continues to emphasise a willingness to accept risk and the extent of that risk, arguably the issue more pertinent to strategic entrepreneurship is the evaluation of risk and perception of such risk as manageable. The distinction of perception is perhaps highlighted by Hogg (2004) through her comments on NZ Post: “we wouldn’t have done the project if it was high risk”; but referring to the views of others outside the organisation Hogg notes “they thought we were nuts”.
8.2.4 Flexibility
With respect to the literature on strategic entrepreneurship, an emphasis on flexibility emerges in the context of improvising, responding quickly to changes in the market, and establishing an appropriately unrestrained work environment (Eisenhardt et al., 2000). Ireland et al. (2003) also raise the issue of flexibility through freedom to use or access the appropriate resources. While such issues are important, arguably they remain only a small part of the multi-faceted concept of flexibility.
Consistent with the literature on both entrepreneurship and strategy, flexibility emerges as a central theme from the case study data and findings. The notion of flexibility seems closely tied to various core concepts, such as the flexibility to identify opportunity, flexibility to transfer and apply existing knowledge to new domains in order to create innovative, customer focused products and services, flexibility to identify multiple and diverse opportunities within the scope of a single vision. Within the case study findings specific examples of flexibility include a flexible work environment and attitude (e.g. MetService), flexibility of timeframes for implementation (NZ Post), and flexibility of vision (Quotable Value). The various aspects of flexibility are considered in further detail below.
a) Flexibility in operations
The nexus between flexibility, opportunity identification, innovation, and vision, is repeatedly reinforced within the data. As can be seen from the discussion thus far, it is often difficult to separate or isolate core concepts given their close relationship and interdependency. The importance of flexibility is perhaps highlighted through the comments of Hogg (2004) with respect to the implementation of various Kiwibank services sooner than expected. “As much as you can plan, you’ve still got to be flexible”. Thus a flexible approach within the operations and systems of a business, and responding to changes in the internal and external environment (Eisenhardt et al., 2000) are reinforced from a practical perspective.
b) Flexibility of perception
Another aspect of flexibility which emerges from the data is the flexibility associated with entrepreneurship and strategy, or what may be broadly referred to as entrepreneurial flexibility and strategic flexibility. Specifically this aspect of flexibility reflects the interrelated nature of
strategic entrepreneurship’s core elements and encompasses the notion of flexibility within opportunity identification, innovation, vision, and growth. It is perhaps characterised by a broader awareness or perception to recognise alternatives and multiple options within opportunity identification, innovation, vision, and growth.
Specifically flexibility within opportunity identification and innovation is reflected through the application of existing knowledge to new domains (e.g. NZ Post’s decision to establish a national bank, Quotable Value’s expansion into online valuation services), referred to by Bissell (1997) as knowledge brokering. Such initiatives may also be viewed as flexibility within the notion of vision:
to have a clear picture of activities the business plans to focus on, but at the same time identify diverse and viable opportunities within that vision. While the notion of a clear vision (Drucker, 1985) and the flexibility to allow that vision to change (Mintzberg & Waters, 1982) is detailed in the literature, existing theory does not extend beyond this to identify the broader importance of flexibility within vision. Such flexibility refers not simply to a change in vision, but rather to identify a range of options within a single vision. Thus this finding represents an important development with respect to both flexibility and vision within the understanding of strategic entrepreneurship.
Such notions are again supported by a strong customer focus and a breadth of vision (discussed further in Section 8.2.5), ultimately providing a pathway for growth.
c) Flexibility of resources
Flexibility of resources (Ireland et al., 2003) also emerges as central to strategic entrepreneurship based on the data and findings such that businesses establish a flexible work environment (Eisenhardt et al., 2000), encompassing the availability of both time and physical resources for staff to pursue ideas, thereby providing a freedom to innovate. Such flexibility also emerges within the human resources of a business: the “can-do” attitude of staff to take on new tasks, which may be viewed in part as a reflection of the organisation’s culture and confidence. It is this latter notion of a flexible attitude however which is touched upon by Ramamurti (1986) solely in the context of government organisations, which remains under explored within the literature.
Thus, it represents an important development in the understanding of strategic entrepreneurship for both government and non-government organisations.
In the context of the three case studies, flexibility is perhaps both deliberate and emergent (Mintzberg & Waters, 1982). Due to the commercial imperative imposed on each organisation, there was an awareness of the need to alter the business operations in some way, thereby
establishing flexibility within the scope and direction of the business. These modifications effectively resulted in flexibility emerging in various other aspects of the business such as flexibility within the work environment, and flexibility in the attitude of staff to take on new projects.
8.2.5 Vision
Within the literature, vision emerges as a central concept to both entrepreneurship and strategy.
Drucker (1985) refers to vision as one of the key characteristics of entrepreneurial activity. Morris and Kuratko (2002) note entrepreneurial organisations have a strong sense of both what they are and what they want to become. Collins and Porras (1994) elaborate on this notion, contending that great vision starts with core ideology, which they refer to as core purpose and values; an awareness of what direction the business should and shouldn’t take. Mintzberg and Waters (1982) refer to the entrepreneurial mode of strategy-making as one characterised by a clear and complete vision. Thus, within the literature, vision is often aligned with strategic direction. Within the case studies the notion of vision is a recurring theme within all three organisations studied, and emerges in a number of different contexts, as detailed below.
a) Vision of direction
One of the fundamental aspects of vision which emerges from the three case studies is a clear vision of the business’ direction. Specifically, MetService was conscious of markets in which it did not wish to compete (e.g. shipping forecasts), NZ Post showed confidence in its direction to establish a bank, and Quotable Value applied its vision of growth to emphasise its core business of property valuations through online valuation services. Thus vision is acknowledged as an important concept: a clear vision of what the business intends to focus on as well as areas it intends to avoid (Collins & Porras, 1994; MetService), a vision to see what is possible for the future (Mintzberg & Waters, 1982; NZ Post), and the importance of a breadth of vision (Fesser &
Willard, 1990; Quotable Value). It is this latter notion however, of a breadth of vision, which remains under explored in the literature.
b) Breadth of vision
While a breadth of vision is relevant to all three case studies, it is particularly relevant throughout the Quotable Value case study data and findings, as Langridge (2005a) gradually reveals the scope of Quotable Value’s vision not only for the organisation in the context of E-Valuer, but also