Entrepreneurial archetypes
Danny Miller
Miller and Friesen (1984) defined archetypes as very commonly occurring configurations among organizational qualities. These types were richly characterized along numerous dimensions of strategy, structure, process, context, and performance, and each appeared to reflect a core theme, such as spry adaptiveness, constant in novation, determined efficiency, or relentless expansion. The authors used methods of numerical taxonomy to discover empirically the most common successful and unsuccessful types that emerged out of their broad sample of companies. The significance of the archetypes was that a rather few types could describe in a fine grained way a large fraction of the organizations that were studied. Therefore, a few variables could be used to categorize a firm into one of the types, and from that categorization numerous predictions could be made about other variables, their relationships, and financial performance.
Speaking more broadly, the notion of arche types also applies to a priori conceptually (as opposed to empirically) derived typologies of firms, again characterized by strategies, modes of organization, etc. Porter’s (1980) generic strategies, and Miles and Snow’s (1978) typologies, are prominent among these.
The utility of empirically and conceptually derived types is that they segment the complex world of organizations into more homogeneous and analytically tractable compartments. They allow researchers to make key distinctions among the different types, and more powerful generalizations and predictions within them. Meyer, Tsui, and Hinings (1993), Miller (1983, 1996), and Mintzberg, Ahlstrom, and Lampel (1997) have referred to this study of archetypes as the ‘‘configuration approach.’’
This approach has benefited the field of entrepreneurship in two major ways. First, it distinguishes among the varieties of entrepreneurship that can arise, as well as their determinants and performance drivers. Second, it identifies the contexts that give rise to, support, and benefit from the various types of entrepreneurship.
In their reviews, Miller (1983) and Covin and Slevin (1986) found that researchers tended to concentrate on three different dimensions of entrepreneurship: risk taking – a willingness to take chances in committing resources, innovation in processes and products, and proactiveness – a striving to ‘‘beat rivals to the punch’’ and be the first mover. Miller (1983) found these dimensions to correlate positively, collectively com posing an ‘‘entrepreneurship factor’’ or scale. He also found, however, that the nature and drivers of entrepreneurship varied greatly among organizational archetypes. The significance of entrepreneurial types thus became ap parent – it was important to distinguish among the forms of entrepreneurship, the organizational contexts in which these emerged, and the organizational determinants of entrepreneurial effectiveness within those contexts (see also Shane and Venkataraman, 2000).
Although much work remains to be done to isolate the most relevant and predictive entrepreneurial archetypes, it will be useful to show their potential power by discussing some representative types. What follows, therefore, are three entrepreneurial archetypes, conceptual composites of organizational qualities based on the work of Miller (1983, 1990), Mintzberg, Ahlstrom, and Lampel (1997), and others. These are chosen because of their recurrence in the literature, and because their striking differences illustrate (a) a diverse array of entrepreneurial objectives; (b) their different potential drivers, contexts, and organizational co requisites; and (c) their different challenges. And be cause they represent an amalgam of findings from different studies, the descriptions that follow should be taken as suggestive rather than factual. Table 1 summarizes the types.
Table 1 Proposed features of some common entrepreneurial archetypes
Business Creation: The Founding Entrepreneur
The organization of a founding entrepreneur is the type most often discussed in the traditional literature on entrepreneurship. The organization is characterized by owner management, ad ministrative simplicity, and usually, small size and youth. Entrepreneurship here takes the form of building a viable business. Owners do this by combining the factors of production in a way that adds value for the market. Strategy is driven primarily by the personality and objectives of the owner. The major strategic objective often is to do something distinctive well enough to command a price that will afford adequate returns to capital and allow for growth. Strategic priorities typically revolve around product development and identifying a niche of the market that is inadequately served. Critical functions are product service design, niche identification, business getting, financing, and infrastructure development (Kubicek and Isbester, 1983). Organizational requirements have mostly to do with ensuring that owners implement appropriate financial controls, delegate enough authority to others in the firm, and define tasks and accountabilities clearly. Major challenges are cash shortages and competition from larger, more powerful rivals. Common problems are a dearth of funds, inadequate functional capability or managerial talent, and poor controls.
Innovation: The Pioneering Enterprise
In highly innovative organizations, entrepreneurship takes quite a different form. Here it is not so much about creating a new business as about pioneering product, process, or techno logical innovations – the kind that can establish new niches, markets, and occasionally even industries. Firms are driven not by survival ob jectives so much as a desire to be first movers in accomplishing a substantive scientific or techno logical or even social mission. For many of today’s high technology companies, this pioneering type of entrepreneurship is central. Recent research has suggested that innovation is facilitated by deep investment in research and development, constant and cumulative core competency building within a focused know ledge domain, and an ability to leverage discov eries across different niches of the market (Yi Renko, Autio, and Sapienza, 2001; Zahra, Jen nings, and Kuratko, 1999). Alliances and net work formation, too, are key activities here (Lee, Lee, and Pennings, 2001). Organization designs are especially helpful to innovation when characterized by empowering cultures, organic and flexible organization structures, excellent liaison devices across functions, and selective recruit ment. Pioneering entrepreneurship is most frequently to be found in turbulent environments and industries. Its particular performance challenges are the idealistic pursuit of innovations that are overly ambitious, impractical, too far ahead of their time, or unattractive to the market (Miller, 1990). Excessive expenditure and difficulties with commercialization also tend to be important dangers.
Expansion: The Corporate Builder
In large, multi product firms, a ‘‘corporate expansion’’ mode of entrepreneurship often pre vails. Here, entrepreneurship takes the form mostly of product market diversification ventures, usually into established markets, with the primary objective being to grow the company. The strategy is supported by an explicit set of strategic plans, much of it the result of competitive market analysis. A good deal of the writing on ‘‘intrapreneurship’’ reflects this planning mode (Mintzberg, Ahlstrom, and Lampel 1997). Typically, the building mode is sup ported by a strong market scanning and intelligence gathering function, a bottom line and growth driven set of performance standards, and a divisionalized structure that makes much use of formal controls and information technologies. Expansion may take place by leveraging products and abilities across new markets and by mergers and acquisitions. Thus, the environ mental context of the organization is often a complex one, with the firm operating in many different markets, often across different countries, and even different businesses. Performance is apt to be governed by a disciplined approach to diversification, specifically, an ability to avoid over expansion and areas of ignorance (Miller, 1990), and an excellent post merger integration capability. Builders, too, must have a deep understanding of their core 68 entrepreneurial archetypes competencies in order to determine how these can be leveraged in the growth trajectory.
In short, configuration scholars argue it is useful to identify and make clear distinctions among such different types of entrepreneurship in order to better study their drivers, performance requirements, and common contexts (Meyer, Tsui, and Hinings, 1993; Miller, 1983, 1996; Mintzberg, Ahlstrom, and Lampel, 1997). They would also suggest that firms be studied holistically, believing it far more revealing to examine entrepreneurship within a rich human, organizational, and market context than to study it a few variables at a time. Only then, configurationists believe, will scholars begin to truly appreciate the range, drivers, and challenges of the vital economic engine that is entrepreneur ship.
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