Entrepreneurial Resources, Organizational Choices, and Competitive Outcomes

Abstract

This paper examines the link between a firm's resources and its efficient organization form with a focus on entrepreneurial resources. Entrepreneurial resources are defined as the propensity of an individual to behave creatively, act with foresight, use intuition, and be alert to new opportunities. This paper assumes that these entrepreneurial resources can be distributed in two ways throughout the firm: they can be held by one or a few individuals—“individual entrepreneurial resources”—or they can be dispersed among a team of individuals—“team entrepreneurial resources.” Agency theory is used to consider how various organizational characteristics—such as the assignment of decision responsibilities, incentives and risk bearing, the number of hierarchical levels, horizontal linking structures, mutual monitoring and bonding devices, and information systems—will differ in the individual and team entrepreneurial forms. Generally, the individual entrepreneurial form resembles the “classic entrepreneurial firm” (Fama and Jensen 1983) in which various decision making roles and risk bearing are performed by a single entrepreneur. The team entrepreneurial form is similar to what Bartlett and Ghoshal (1993) call “beyond the m-form.” Responsibility for steps in the decision process is dispersed in the team form, and monitoring the decision process will occur at the organization's apex. The CEO will not make operational or strategic decisions; instead, he manages the internal market for managers and develops an organization's cultural context and information systems. Below the CEO level, team entrepreneurs are responsible for ratifying innovative decisions, and below this team entrepreneurs are responsible for initiating innovative decisions. After presenting these two entrepreneurial forms, this paper relates them to extant research on corporate entrepreneurship and organizational forms.

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