Technological entrepreneurism characteristics related to the adoption of innovative technology.
A simple scoring system was used by Bracker et al to classify entrepreneurs as Craftsmen or Opportunistic. The characteristics of each type are given in the column labeled "Characteristic Variables." Descriptions of each type of entrepreneur, Craftsman and Opportunistic, are given in the next two columns respectively. A score of -1 was assigned if the entrepreneur exhibited characteristics defined as typical of the Craftsman type and a score of +1 if the entrepreneur exhibited the characteristics defined as typical of the Opportunistic type.
Typical Craftsman Characteristics
Craftsman entrepreneurial types typically come from a blue collar background, and many of the relatives of this type are in skilled trades. They grow up in a value-task or -oriented environment. This type of entrepreneur is exposed to the work world very early in life and prefers mastering the mechanics of machinery. They tend to become production-oriented early in their work lives. The Craftsman type of entrepreneur typically does not identify with management or unions and goes into business for himself or herself after some critical event occurs. These types of entrepreneurs are generally known for being "job hoppers." Typically, they do not like sports or games and do not burn their bridges when they change jobs.
Another significant characteristic of the Craftsman type is their lack of formal education other than possibly on-the-job training or technical school. They generally have no management sponsor, belong to professional associations, and have limited oral and written communication skills and ability. This type of entrepreneur does not delegate authority, is autocratic in style, and develops customers by personal contacts only. There is no evidence of plans for growth. This entrepreneur has a paternalistic attitude and tends to think of employees as part of the family. The Craftsman relationship to the external environment is unique: they fear outside control and have low external social involvement.
Typical Opportunistic Characteristics
In contrast to the Craftsman type, the Opportunistic entrepreneur comes from a background of predominately middle- to upper-economic status. Their fathers are typically skilled and professional workers and own small or family businesses. They are well rounded and have more formal education, probably some college. This type of entrepreneur has significantly more marketing, selling, general administration, and merchandising skills.
The Opportunistic entrepreneurs typically have management sponsors or have worked closely with an executive of the firm. They are involved in community associations and have effective oral and written communication ability. This entrepreneur delegates authority, develops customers using a variety of marketing skills and methods, and utilizes planning for greater growth. Employee relations are not paternalistic.
Referring to Table 1, Opportunistic type entrepreneurs are distinguished from the Craftsman type in that they identify with management and the union. Opportunistic types consciously plan for the future, tend to like games and competitive situations, and have a greater tendency to burn their bridges. They have a long-range plan to initiate their own business, and there is no critical event that decides when they should go into business. This type competes by implementing competitive product development and strategy. By contrast, the Craftsman type competes primarily on price and personal reputation.
Rate of Introduction and Integration of Innovative Technology
Entrepreneurial firms not only have to focus on the market success and profitability of each established products and services, but also must also ensure their capability to introduce product and or service offerings, and innovate technological advances (Bolwijn & Kumpe, 1990), products, and services that will sustain competitive advantage (Twiss, 1990). Such innovative technology is critical to growth and should be a major concern to entrepreneurs for two reasons (Eisenhardt & Brown, 1998). First, innovative technology is a vital contributor to ownership-specific competitive advantage. Second, the increasing rate of change in domestic and international competitive environments has led to greatly increased focus on the innovative process, and on product and information technology (See especially Quinn & Bailey, 1994).
Studies often show that significant innovative technology comes primarily from entrepreneurs and small businesses rather than larger business (for a number of examples, see (Hayes & Pisano, 1994), (Naisbitt & Aburdene, 1990), and (Roehm, et al., 1991). Since 1980, small entrepreneurial manufacturing firms have outperformed big businesses (Pavitt, 1990). This has resulted in increased profits, growth, and equity to the owners. Pavitt offers the following reasons for small entrepreneurship outstanding performance: the incentives to innovate are greater, mostly because small business has the potential to create or capture an entire industry, while big business often stands pat, protecting its market niche. Pavitt also observes that the motivation to innovate is greater, not only because of the prospect of generous financial rewards, but also because of the small businesses creative drive and need for peer recognition.
The study underlying this paper was conducted in small manufacturing firms using a questionnaire which included open-ended questions and questions using a Likert scale. The Small Business Administration defines small businesses and entrepreneurial firms as having less than 500 employees. Five years of data was collected from each firm. The firms surveyed were located within metropolitan Saint Louis, Missouri, as defined by the Saint Louis Regional Commerce and Growth Association. That area included five counties in western Illinois, six counties in eastern Missouri, and the City of Saint Louis. The five counties in Illinois were Saint Clair, Madison, Clinton, Monroe, and Jersey. The six counties in Missouri were Saint Charles, Saint Louis, Warren, Lincoln, Franklin, and Jefferson. Each firm selected had 500 or less employees. The survey instrument collected, among other things, information regarding entrepreneur type, management experience, formal education, degree of use of innovative technology, and number of employees for the last five years. There were 814 manufacturing firms in the metropolitan Saint Louis area included in the sample.
* The Survey Instrument
The survey was designed primarily to obtain five kinds of information: 1) formal education, 2) management experience, 3) number of employees over last five years, 4) number of innovative technologies used, maximum of nine, and 5) type of entrepreneur. The first, second, and fifth section of the survey was used to classify the entrepreneur type of owner-manager of the firm. The instrument itself was designed by Jeffrey S. Bracker and John N. Pearson for a study reported in 1986. It was used again in 1988 by Bracker, Keats, and Pearson in a study on planning and financial performance among small firms in a growth industry.
* Instrument Scoring
McCain's (1982) scoring guide for classifying entrepreneurial type codes was used to identify Opportunistic and Craftsman entrepreneurs. The guide has questions in five major areas: 1) breadth of education, 2) social awareness and involvement, 3) ability to deal with economic and social environment, 4) time orientation and the use of innovative technology. Each question was scored 1 and 0, depending on whether the response indicates positive or negative orientation toward the question. A positive or negative response is indicative of the Opportunistic and Craftsman entrepreneurs, respectively. The McCain's scoring guide is structured to deal with only one entrepreneurial type. The use of innovative technology question was scored yes or no, depending on whether the response indicated the use of nonuse of innovative technology. The survey was mailed to all 814 manufacturing firms in the metropolitan Saint Louis.
* Statistical Hypotheses
While the study underlying this paper was primarily concerned with the relationship between the use of technology and type of entrepreneur, other important questions associated with this concern were addressed. The hypotheses tested and the statistical tests associated with determining the significance of the results of the tests are given briefly below.
H1. There is no relationship between type of entrepreneur and the degree of use of innovative technology.
This hypothesis was first tested using the t-test for large samples (n = 136 for Opportunistic and n = 51 for Craftsman). If a significant difference results from testing the average number of technological innovations for Opportunistic versus Craftsman, one might conclude that there is a relationship between the degree of technology and the type of entrepreneur.
This same hypothesis was also tested using the Chi-Square test of independence. The idea underlying the use of this test was that if the Craftsman type was associated with low use of technological innovation and the Opportunistic type was associated with a higher use, as indicated by a significant Chi-Square test value (= .05) compared to the tabled value, then one might conclude that there is a relationship between type of entrepreneur and the degree of use of technological innovation.
Since this hypothesis was the major thrust of this study, the hypothesis was also considered using regression analysis, with the degree of use of innovative technology as the dependent variable and with the type of entrepreneur as a binary coded independent variable. One could therefore examine the difference between the two resulting equations (with the value of the variable equal to 0 and to 1, respectively) and determine the difference between the two types of entrepreneur regarding the use of innovative technology.
Other hypotheses tested using the Chi-Square test for independence using the (= .05) level of significance, are listed below.
Hypothesis 2. There is no relationship between amount of formal education and the type of entrepreneur.
The categories contrasted were Craftsman and Opportunistic versus College and No College. If a significant Chi-Square score was obtained from the test, one would conclude that there is a relationship between amount of formal education and type of entrepreneur.
H3. There is no relationship between amount of formal eduction and the level of management experience.
The categories of College and No College were contrasted with the categories of No Management Experience, i.e., less than one year of management experience. If a significant Chi-Square value resulted from the test, one would conclude that the amount of formal education and the level of management experienced were related.
H4. There is no relationship between level of management experience and type of entrepreneur.
In this test, the categories of No Management Experience and Management Experience were contrasted with the categories of Craftsman and Opportunistic. A significant Chi-Square test value would imply that there is a relationship between the levels of each of the variables.
H5. There is no relationship between level of management experience and the degree of use of innovative technology.
Similar to the above hypothesis, the categories of No. Management Experience and Management Experience were contrasted with the categories No Technological Innovations versus One or More Technological Innovations. A significant ( = .05) Chi-Square value would imply that the level of management experience is related to the degree of use of technological innovations.
H6. There is no relationship between amount of formal education and the degree of use of innovative technology.
In this Chi-Square test, the categories of No College and College were contrasted with No Technological Innovations and One or More Technological Innovations. A significant Chi-Square value would imply that the amount of formal education is related to the level of use of technological innovation.
Summary and Conclusions
Most of the firms surveyed had less than 100 employees during 1996, the most recent year surveyed. The study did establish that there is a statistically significant relationship between degree of use of innovative technology and entrepreneur type. The majority, 73% of the entrepreneurs, were identified as Opportunistic and only 27% were identified as Craftsman. The data indicated that the Opportunistic type utilized innovative technology more than twice that of the Craftsman type. Opportunistic types accounted for 85% of the usage of nine or more innovative technologies compared with 15% for the Craftsman type using nine or more innovative technologies. The Opportunistic type of entrepreneur had more formal education, management experience, larger number of employees and uses significantly more technological innovation.
The study also revealed statistically significant relationship between amount of formal education and entrepreneur type. The Opportunistic type had the greater amount of formal education. Turning to the question of whether there is a relationship between amount of formal education and the level of management experience, the survey revealed no significant relationship. Regarding the question of whether there is a relationship between level of management experience and type of entrepreneur, the results indicated a statistically significant relationship between the levels of each of the variables. The level of management experience and entrepreneur type were highly related. One of the major questions addressed in the study was whether there was a relationship between level of management experience and the degree of use of innovative technology. The conclusion drawn from the analyses was that there is a statistically significant relationship between these variables. The more management experience acquired by the entrepreneur, the greater the degree of use of technological innovation.
The final question addressed in the study was whether there is a relationship between amount of formal education and the degree of technological innovation. The conclusion drawn from the analyses was that there is a statistically significant relationship between amount of formal education and the entrepreneur's degree of use of technological innovation.
The statistical analyses support the conclusion that entrepreneurial firms are generally distinguished by their ability to use innovative technology, and that use of innovative technology has a major effect on the competitive advantage of the firm.
Table 1 Working Definitions for Classifying Type of Entrepreneur and Type of Firm Type of Entrepreneur Characteristic Variables Craftsman (-1) 1A. Breadth in education Formal education and training is technical only 1B. Breadth in type of Jobs are technical job held only 1C. Management reference Management not consider- group ed a reference group 1D. Management sponsor or No management sponsor role models and only single role model 2A. High social involvement Belongs to professional associations only 2B. Effective Limited oral and written communication ability communication ability evident in interview 3A. Delegation of Does not delegate authority and authority and respon- responsibility sibility to build the organization 3B. Universal criteria for Selects on a particular employee selection basis; wants a full member of the 'company family" 3C. Multiple sources No more then two capital of capital sources, typically savings and a loan from a friend 3D. Multiple methods of Customers developed by establishing customer personal contact only, based on long-term relationships 3E. Varied competitive Strategies limited to strategies price, quality, and company reputation 4A. Long-term planning No evidence of plans for company initiation more than one year prior to initiation phase 4B. Planning for future No plans for growth growth and change and change 4C. Employee relations Paternalistic-strong not paternalistic 'family type' involve- ment with employees Type of Entrepreneur Characteristic Variables Opportunistic (+1) 1A. Breadth in education Formal education and training includes some nontechnical areas 1B. Breadth in type of Jobs include activities job held other than the technical, practical, or machanical-managing 1C. Management reference Management is considered group a reference group 1D. Management sponsor or Worked closely with role models a top executive or influenced by different individuals at different points in life 2A. High social involvement Involved in community associations not directly related to profession, trade, or business 2B. Effective Evidence of effectivenes communication ability in oral and written communication 3A. Delegation of Delegates to the point authority and where the organization responsibility can itself or hires to relieve self of routine 3B. Universal criteria for Selects on a universal employee selection basis the kind of person who could work for any organization 3C. Multiple sources More than two sources of capital of capital 3D. Multiple methods of Customers developed establishing customer using a variety of marketing methods -- personal selling, advertising, direct mail etc. 3E. Varied competitive Strategies extend to new strategies products and marketing methods, different dist- ribution channels, etc. 4A. Long-term planning Initiation of business for company initiation planned more than one year prior to actual start 4B. Planning for future Initiation of business growth and change planned more than one year prior to actual start 4C. Employee relations Employee relations not not paternalistic paternalistic paternalistic Source: Type of entrepreneur, type of firm, and managerial motivation: Implications for organizational life cycle theory. Norman R. Smith; University of Oregon, Eugene, Oregon, USA. John B. Miner, College of Business Admin., Georgia State University, Atlanta, Georgia (Smith & Miner, 1983, 1985)
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Dr. Maxwell's teaching, research, business management consulting, and publishing are in the areas of entrepreneurship, strategic management and marketing, business policies, decision making, competitive intelligence, and information systems. He has conducted numerous seminars in his areas of expertise. Dr. Westerfield has written four books for Praeger Publishers, including War Powers: The President, The Congress, and the Question of War; National Health Care; Law, Policy Strategy; and Congressional Intent. He has published over 100 articles and papers.
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|Author:||Maxwell, James R.; Westerfield,, Donald L.|
|Publication:||SAM Advanced Management Journal|
|Date:||Jan 1, 2002|
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