Monday, June 6, 2011

Current Entrepreneurial Leadership

           One theory/philosophy of Entrepreneurial Leadership pointed out the difficulty in establishing a profile of an Entrepreneur, when reviewing successful individuals; however, it has become increasingly evident that there are some common characteristics among these people. According to Steve Case (2010), there are three important points in terms of success: People are the ones who will make it, Passion is belief in your idea, and Perseverance continues the innovation. Leadership is one of the skills common among successful entrepreneurs.           
According to Kouzes (2010), Leadership is not about position at all, he believes that those who are immediate leaders are the mature leader because they exact much more influence on people. The entrepreneurial leader is more apt to take calculated risks, enjoys working with people and the accompanying technological changes that appear at a dizzying speed. They develop their technical knowledge to a level that is both necessary and indispensable in the support of strategic decisions that he must take daily.  The leader lives every day with the diversity and complexity of systems, that is called “Dynamic Market” in the text Understanding Entrepreneurial Leadership in today’s Dynamic Markets. In these systems processes, technology and people mingle. In an environment of profound change, leaders must be entrepreneurial and a facilitator of processes in addition to combining the company's needs and individual needs of its employees. The new definition of entrepreneurial leadership in Understanding Entrepreneurial Leadership in today’s Dynamic Markets brings out a new vision, where the entrepreneur is not just that person who takes risks but is also transformational.
            Druker (1985:p.10-20) defined some entrepreneurial strategies contrary to most popular strategies which stated it was “The greatest gamble” instead he promotes lowest risk, highest ratio. Similarly in “Fustest with the Mostest” he outlined where newcomers have to make themselves distinct or “Creative Imitation” because the leaders are aware of competitive challenge or are worried about said challenge. Then with “Entrepreneurial judo” which states the requirement some degree of genuine innovation, but more than anything the "Hit Them Where They Ain't." quality. Thus Entrepreneurial Leadership, rather than taking risks, is actually about looking beyond the business and being able to transform the resources available into ideas and actions possible and profitable and they must have the ability to disseminate clearly such ideas to their organization in order to motivate employees to achieve the objective. Lastly, for The Theory/Philosophy of Entrepreneurial Leadership, it is important to understand that the market is Dynamic because of this it is necessary to have the right strategy. To drive this process, only a leading entrepreneur  will apply the necessary Perseverance and continued efforts to keep innovating a product or service that not only satisfies the company but also the entire environment into which  it is inserted.
To describe what type of organization transactional, transformational, and authentic leader would thrive in the most, first it is necessary to define the types of leaders. A transactional leadership, was defined as “the exchange relationship between leader and follower to meet their own self-interests” (Bass, 1999:p.10), or Burn (1978) characterized by a ”swapping” or ”trading” or ”bargaining” motive in an exchange process and lacks durable engagement between leader and the led. For SPOELSTRA (2009) the basic form to define transformational leadership refers to an alignment of goals between the leaders and led for the good of the organization. It is the virtue of the transformational leader to establish this alignment. In  Understanding Entrepreneurial Leadership in today’s Dynamic Markets, it states “Transformational leaders use power in a way that makes followers less dependent on the leader”. There is minimal empirical research concerning transformational and transactional leadership styles in a type of organization. But according to Burn (1978), the process by which leaders motivate followers or how leaders appeal to the followers’ values and emotions, can be considered the main distinction and the central feature of transformational and transactional leadership. If the motivation for a transactional leader is trading, and for a transformational  leader it is what is good for the organization, it is possible to say that the transactional  leader should be a leader for a profit organizations, and transformational a leader for a non-profit organizations. However, a transformational leader can also be effective at encouraging entrepreneurship. According to Kurtz (2010), many companies encourage the retention of the entrepreneurial spirit because in the process of promoting innovation within their organizational structure, transformational leaders will be able to promote and achieve higher performance .Mullin (2005) has defined that a transformational leader can develop a vision that is able to transform the organization and increase followers’ idealism and values. Thus it is possible to conclude that the transformational leader is a better leader for small businesses, because they are much better than large companies at developing new products or services (Druker,2010). Compared with large companies, small businesses are more likely to require a transformational leader in part by their limited budgets, Mullin (2005) added that the process of transformational leadership would result in highly motivated and committed followers, independent of financial rewards. Therefore the transactional leaders would fit better in a large company, where the budgets are bigger and the concept of “trading” is possible.
The type of leader who would thrive the least, would not be transactional or transformational because the styles are not mutually exclusive and some combination of both may enhance effective leadership (Bass & Avolio, 1990). A leader may exhibit varying degrees of both transformational and transactional leadership and companies may need more flexibility.
The government agency concerned with helping small US firms is the SBA (Small Business Administration) has provided resources that can benefit small business. With more than  2,100 employees in their Washington headquarters, regional and field offices, the resources and tools made available by the SBA are:
- Financial Assistance: They offer Loans and Surety Guarantees and Export Financing
- Small Business Community: They provide assistance for the minorities, Native Americans and women to develop a new business.
- Government Contracting: Aiding in a government matters, providing management training and consulting for the government contracting, size standards and technology;
- Advocacy, Law and regulations: They provide a consulting advocacy, hearing and appeals.
- Disaster Assistance: To assist home owners and businesses they offer disaster loans, and emergency preparedness.
- Counseling and Training: Consultant assistance that helps development of entrepreneurship, offer small business Centers, SCORE, and Women’s Business Centers.
The SCORE "Counselors to America's Small Business” (www. is a resource partner of SBA, who assist small business with more than 12,400 SCORE volunteers in 364 chapters operating in over 800 locations, and online resources.
The most useful resource to the greatest number of businesses, it is probably the Financial Assistance because according to Druker (2010) one of the leading causes of small-business problems is inadequate financing and at SBA, they not only provide the money but also the consultancy to manage the money in the most effective manner.
According to Kouzes (2010) there are five best practices that would apply to the greatest number of businesses “ Model the Way, Inspire a Shared Vision, Challenge the Process, Enable Others to Act, Encourage the Heart “ . The best practices would understand more about people, those people have to believe in the leader, as Kouzes said people work hard for the leader that they like it is all about people. The best practices for leadership would consider the people, and what is their motivation, their hopes, what they need to do their best and those questions are the same for all the business. So the list would be:
- Do what must be done rather than do the right thing.  The distinction must be understood.
- Call for dialogue.  Have conversations that convey security, interest, knowledge about the reality of the members, their expectations, ambitions, interests, grievances.
- Transfer knowledge.  Communicate organizational changes, objectives and goals but understand their work and what impacts the performance of the team and the organization.
- No threats, be honest, be cordial.
- Remove obstacles, Protect personnel. Create an environment where people feel secure and improvements are given credit.
- Inspire. Understand and motivate.
-  Recognize and praise. Congratulate and applaud the achievement of results.
- Enable rapport. There are countless Team clichés but it is proven to be the most constructive environment.
Bass, B. M. & Avolio, B. J.. (1990). The implication of transformational and transactional
leadership for individual, team, and organizational development. In: Woodman, R. W.
Pasmore, W. A. (Eds.). Research in organizational change and development.
Greenwich, CT: JAI Press.
Bass, B. M. 1999. Two decades of research and development in transformational leadership.
Burns, J.M. 1978. Leadership. New York. Harper & Row.
Drucker, Peter  F.,Entrepreneurial Strategies, California Management Review, Winter 85,
Vol. 27 Issue 2, p 9-25, (AN 4761590).
Kurtz, D. (2010 Update). Contemporary business: 2011 custom edition (13th ed.). Hoboken,
NJ:         John Wiley & Sons.
Mullins, L.J. 2005. Management and Organizational Behavior. 7 Ed. New York: Prentice
CONCEPT OR MANAGEMENT CONCEPT” Academy of Management Annual
Meeting Proceedings, 2009, p1-6, 6p
Case, Steve: Title: People, Passion, Perseverance: You’ve Got Entrepreneurship Podcast:
Kouzes, James podcast: Rising to the Leadership Challenge Podcast:
TEXT: Understanding Entrepreneurial Leadership in today’s Dynamic Markets. Access:
Additional resources:

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