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Description of Entrepreneurial Organization. Explanation.


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Definition Entrepreneur. Description.

Entrepreneurs are innovative persons having a low level of risk avoidance. They even have an 'appetite' for risk:

  • Entrepreneurs start a new business. This is intrinsically a risky venture.
  • They look for opportunities, which are always uncertain.
  • A new company normally has a strong focus on being successful from a financial perspective. To be financially successful, risk has to be taken. On the other hand, if too much risk is taken (shareholder) value can also be destroyed.
  • Entrepreneurs need to find a trade-off between risk and return.

Three Theories to Characterize Entrepreneurs

  1. An entrepreneur is someone who starts and organizes a business or a company (functional theory).

  2. Typical attributes or orientation of such an individual are: innovative, initiative, creativity, assuming financial risk, problem solving, visionary / strategic, seeing a Strategic Window, strong belief in their idea, optimism, engaging uncertainty, achiever, hard worker, leadership, accepting responsibility (supply theory).

  3. The demand theory holds that entrepreneurs mostly emerge out of the combination of entrepreneurial opportunities and people who are well-positioned to take advantage of them. Thus, anyone who encounters the right conditions might become an entrepreneur, if they find themselves in a position where they find a valuable problem that they alone can solve.

Definition Entrepreneurial Organization. Description.

An entrepreneurial organization could therefore be described as a company or agency that:

  1. Has recently started. Compare: Business Incubator.

  2. Displays the same attributes or orientation as an entrepreneur. Can-do attitude, is proactive, engages heavily in product innovation, is Agile, undertakes risky ventures, keen on achieving First-mover Advantage and short Time to Market, has a Flat Organizational Structure. Compare: Organization Chart.

  3. Is in a Competitive Environment offering entrepreneurial opportunities.

Entrepreneurial behavior can be stimulated by Incentives. The philosophy that focuses on stimulating individual employees to act in an entrepreneurial way is referred to as Intrapreneurship.

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Compare with: Organizational Configurations  |  Virtual Business  |  First-mover Advantage  |  Second-mover Strategy  |  Feasibility Study  |  Blue Ocean Strategy  |  Competitive Environment  |  Competitive Position  |  Illusion of Control Bias  |  Loss Aversion Bias  |  Disruptive Innovation  |  Innovation Adoption Curve  |  Flat Organizational Structure  |  Entrepreneurial Government  |  PAEI  model  |  Stretch Goals

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