The relationship between strategy, strategic management, and entrepreneurship is identified from the very early literature examining strategic decisions. In his book Corporate Strategy, Ansoff (1965) initially explains the term strategic decisions as those which appropriately match a firm to its environment. He then elaborates, however, by suggesting a better term for this notion may have been entrepreneurial decisions (p. 107).
As detailed in the previous sections, the development of both strategy and strategic management also reveal a clear relationship between entrepreneurship and the discipline of strategy. More recently research has begun to focus on identifying the specific relationship between the two.
Consequently, there are a number of differing views regarding the relationship between these two disciplines. Researchers such as Michael, Storey, and Thomas (2002) view entrepreneurial
management embedded in the broader topic of strategic management. Others such as Bird (1998) consider it important to distinguish the two, such that entrepreneurial activity and strategic management are viewed as entirely separate concepts. Hitt et al. (2002) take a similar but more moderate view, presenting the two fields as independent, but related.
Bhide (1994) highlights the importance of combining the two, and suggests one of the key strengths of entrepreneurs is their ability to identify and act on opportunities, without resorting to extensive research. Rather, a more efficient approach is typical, which involves a balance of analysis, judgment, and intuition. Entrepreneurs, however, cannot rely on innovation and market anticipation alone. Hence the need for both creativity and strong execution skills, something Bhide refers to as “the edge” (p. 149).
The notion of competing on the entrepreneurial edge is extended upon by Eisenhardt, Brown, and Neck (2000), who suggest strategic management within an entrepreneurial organisation is essentially a balancing act on the edge of chaos. The numerous demands on entrepreneurs and managers to identify and focus on multiple opportunities, address any staffing or financial issues often experienced by growing organisations, and maintain an increasing profile in the marketplace, represent the complex and often chaotic environment in which an entrepreneurial venture operates.
According to Eisenhardt et al. (2000), the alternative to the entrepreneurial venture is the structured, controlled, inflexible, and risk adverse organisation, which does not easily adapt to change. In contrast, the entrepreneurial venture operating in chaos, has neither the structure nor mechanisms to co-ordinate change. As such, Eisenhardt et al. suggest the ideal position lies between these extremes, which they refer to as the edge of chaos. Similarly, Eisenhardt et al.
identify a need for a comparable balance regarding the timeframe for decision-making, contrasting the slow, inflexible processes typically associated with bureaucratic organisations;
and the rushed, impulsive decision processes associated with entrepreneurial ventures, which often focus on the future without due regard for the past. Again, the ideal balance is a position between these two, which Eisenhardt et al. refer to as the edge of time. The balance between extremes is similar to the concepts put forward by Miller and Friesen (1982) where they contrast the entrepreneurial organisation with the conservative firm.
Bettis and Hitt (1995) also examine the concept of the environment, and in particular the notion of
on-going change in a competitive landscape. As such, they suggest the task of addressing this change requires an ongoing review of the factors which facilitate competitive advantage. New industries and markets, rapid changes in technology and consumer expectations, fundamental issues of increased efficiency, reduced product life cycles, and globalisation; all indicate that the elements which facilitated competitive advantage within the former landscape are no longer sufficient. Hitt and Reed (2000) reinforce the notion of rapid change and innovation as characteristic of the new competitive landscape, subsequently referring to it as an entrepreneurial landscape.
Meyer and Heppard (2000) further build on this concept, and introduce the notion of entrepreneurial strategy as the new dominant logic in organisations; the term dominant logic referring to the manner in which an organisation identifies and interprets information, and formulates strategy. With strategic entrepreneurship accepted as the dominant logic, firms are viewed as well placed to remain focused on opportunities, balance structure with flexibility, and establish and maintain competitive advantage in a landscape which continues to change. Thus the concept of combining strategic management and entrepreneurship, emerge as a key tool for organisational survival and success.
Venkataraman and Sarasvathy (2001) contend that while entrepreneurship and strategy are two fields which have developed largely independent of each other, they are closely related: “two sides of the same coin” (p. 651), effectively examining value creation and capture. Specifically Venkataraman and Sarasvathy compare entrepreneurship without strategy, to Romeo without a balcony. Hence an added emphasis emerges on innovation and opportunity through discovery, recognition, and creation. The association between strategy and entrepreneurship is what Meyer, Neck, and Meeks (2002) refer to as the creation-performance relationship.
Hitt et al. (2001) suggest strategic management involves the actions, decisions, and commitments, designed to achieve competitive advantage; earn above average returns. Stopford (2001) emphasises the aspect of decision-making within strategic management, noting that it requires choices to be made against competing objectives, and Ireland et al. (2001) extend and further broaden this concept to interpret strategic management as a context for entrepreneurial actions.
According to Hitt et al. (2002), entrepreneurs are essentially involved in the creation of goods and
services, and managers ultimately seek to establish a competitive advantage with the goods and services created. Thus the two roles are seen as complementary, particularly in the context of wealth creation. For this reason, then, the two concepts have been integrated to form the basis of strategic entrepreneurship.
Ireland et al. (2001) further develop the association between entrepreneurship and strategic management by identifying six domains which are relevant to both constructs. Activity in these areas, they contend, can be jointly classified as both entrepreneurial and strategic. Hence the intersection of strategic management and entrepreneurship, which is examined in further detail in the following section.
Thus a focus on entrepreneurship emerges within the discipline of strategy, and is further considered by examining the combination of the two, initially in the context of entrepreneurial organisations, and later as a concept for business organisations. An overview of the development of the literature on entrepreneurship in the context of strategy and strategic management is summarised in Figure 2.4 below.
Such examination highlights the gradual progression towards combining entrepreneurship and strategy, ultimately resulting in the intersection of the two. Again, the presentation of research on a timeline also highlights the increasing attention given to entrepreneurship and strategy over the past 10 years, revealing elements central to these concepts combined are essentially those common to both entrepreneurship and strategic management as separate disciplines.
Specifically these elements include innovation, acceptance of risk, proactivity, a focus on opportunity, vision, and flexibility. Returning to the discussion of entrepreneurship in Section 2.2, and strategic management in Section 2.3, it can be seen that these elements were previously identified as central to both constructs.
Figure 2.4 The development of entrepreneurship within the discipline of strategy
entrepreneurial orientation stimulating corporate entrepreneurship (Dess & Lumpkin, 2005) intersection (revised) of entrepreneurship and strategic management (Ireland et al., 2003) entrepreneurship and strategy as the "creation-performance" relationship (Meyer et al., 2002)
entrepreneurial intensity (Morris & Kuratko, 2002)
entrepreneurship and strategy as independent but related (Hitt et al., 2002) intersection (revised) of entrepreneurship and strategic management (Hitt et al., 2001) intersection of entrepreneurship and strategic management (Ireland et al., 2001)
entrepreneurship and strategy as two sides of the same coin (Venkataraman & Sarasvathy, 2001) 2000 entrepreneurial strategy as the new dominant logic (Meyer & Heppard, 2000)
entrepreneurial edge: strategic management within an entrepreneurial firm (Eisenhardt et al., 2000)
entrepreneurial orientation (Lyon et al., 2000 )
entrepreneurial strategy making (Dess et al., 1997)
entrepreneurial orientation: includes autonomy and competitive aggressiveness (Lumpkin & Dess, 1996)
1995
"the edge": combining creativity and strong execution skills (Bhide, 1994)
1990
entrepreneurial strategic posture: proactive, innovative, risk-taking (Covin & Slevin, 1989)
1985 entrepreneurial management (Drucker, 1985)
entrepreneurial process in different firms (Miller, 1983)
model of the strategic process of entrepreneurial activity (Burgelman, 1983) conservative versus entrepreneurial firm (Miller & Friesen, 1982) tracking strategy in a entrepreneurial firm, entrepreneurial strategy-making (Mintzberg & Waters, 1982)
1980
innovator and entrepreneurial firm within 10 firm archetypes (Miller & Friesen, 1977, 1978)
prospector firms (Miles & Snow, 1978)
1975
entrepreneurial strategy-making (Mintzberg, 1973)
entrepreneurship with a strategic intent (Frohlich, Oppenheimer, & Young, 1972)
Thus, based on the developments within strategy, the progression and extension of themes central to entrepreneurship, strategy, and strategic management, can be traced through to the development or emergence of strategic entrepreneurship, and is summarised in Table 2.1 below.
Specifically the first column of Table 2.1 highlights the themes central to entrepreneurship. The second and third columns indicate the broad scope of strategy and strategic management, while also highlighting specific areas within theses topics relevant to entrepreneurship in the lower half of each column (“theoretical extensions”). The final column identifies concepts common to entrepreneurship, strategy, and strategic management, revealing the relationship between these constructs and identifying the point of intersection. Thus, strategic entrepreneurship evolves as a
separate concept, and is examined as such in the following section.
Table 2.1 Evolution of strategic entrepreneurship
Entrepreneurship Strategy Strategic management Strategic entrepreneurship
Core concepts;
• focus on opportunity
• plans, objectives, long- term
goals • formulation, structure and
method of decision-making • focus on opportunity
• innovation, creativity • innovation • innovation
• risk accepting • risk accepting • risk accepting
• proactive, flexible • proactive • proactive, flexible
• vision • integrated vision • vision
• social and economic
change • effective management of
resources
• growth,
reward (personal, financial) • create and exploit
competitive advantage • earn above-average returns, create wealth