Entrepreneurship and Organisation

Entrepreneurship and study of organisations are topics that are studied extensively. Despite all analysis both disciplines continue to pose countless challenges in practising them, and especially in adopting basic principles. Some of us could argue that that is exactly how it should happen since broadly speaking social sciences make their usefulness within the context of a given stage of social development, maybe even a part of society, have a specific comprehension of a social phenomena that is applicable to a limited number of actors within a given frame of time and space. Within these limitations the meaning of Entrepreneurship and Organisation is applied differently. For the interest of this article the question evolves on the idea about the role of entrepreneurship within a large organisation. Does it mean that once an organisation reaches a stage when it can afford to hire specialists to manage various issues during the course of managing the firm it will result in diminishing the role of entrepreneurship within that organisation?

My approach in answering this question would be to extrapolate the process of decision making within a large organisation, not depending on the industry it is operating. How profit opportunities are identified, how risk is identified and measured, can all risk be measured, what about the risk that cannot be measured, how decision is made and who takes responsibility? These are some of the common questions that concerns the act of decision making in all firms. While in the smaller firms answers to these questions are known and well researched, in larger ones there are a number of units and working groups that actively work to provide answers and recommendations to these and many other concerns raised. Ultimately, one question remains; what is the job of senior management and specifically CEO? Considering the pace of development that society in general is undergoing, and effects that it is having in individual preferences to consume goods and services organisations of all sizes must constantly stay alert about the effect these changes will have on the firm. This is when the role of CEO starts to take effect! With changing circumstances for profit seeking firms there are potential opportunities. Also, changing habits very often means that certain goods and services may change in the way they are consumed, or stop being consumed altogether. As a consequence, CEO would offer a broad vision on the future of the firm or in some exceptional cases, a personal vision he or she wants to achieve.

Profit seeking activities bear in themselves a level of risk. In broad terms, the higher the risk the higher the potential for profit. Although in larger firms there are probably units who specialise in risk management, in reality there cannot be a situation when risk is eliminated entirely. It is worth mentioning that there are opportunities in the market for risk-free investments, however, typical investor expects much higher rates of return when they invest in a firm. Therefore, in reality risk cannot be eliminated even when it is identified and measured. Referring to the role of CEO, in relation to risk, he/she as well as senior management are there to manage unmeasurable risk. In fact, it is on that un-quantified risk that main part of the profit will come from, consequently, the larger the un-quantified risk the greater is the potential for profit.  It is also important to mention that risk, all types, can be external as well as internal, for example; managing workforce, re-inventing work processes, maintaining relationships with various stakeholders (institutional investors, worker’s unions, creditors). In some cases, re-establishing or streamlining communications between departments is of utmost importance for organisation which usually is achieved only with efforts from CEO.

From the viewpoint of utilisation, entrepreneurial approach extends also on utilisation of information. On the management accounting function this information utilisation will have an effect on the perspective of reporting. While accounting in general remains a methodology based on feedback reporting, especially financial branch, for management purposes, specifically decision-making, it must re-design its focus on a feedforward concept. Balancing feedback with feedforward requires a degree of qualitative interpretation of information, or what is already mentioned here as un-quantified risk. Fundamentally, traditional feedback method of accounting reporting will remain superior. However, for the use by CEO and the element of entrepreneurship in the firm, management accounting as a function must devise feedforward information centres with specific role to provide recommendations according to the request.

Entrepreneurship, therefore, is very much present in all profit seeking firms. Although it may differ according to the size as result of managerial layers, entrepreneurship will be concentrated in more specific areas, namely within senior management and CEO. Even though at first it may seem that because of existing specialised units may deal with the most of questions, despite complex production operations and scope of products that firm may market, the role of CEO in instilling an entrepreneurial spirit is crucial. For example, the impact that senior decisions will have on R&D activities. In the long term and as result of fast changing market circumstances R&D is crucial for the future well-being of any firm. Direction that R&D will explore will determine the direction that organisation will follow in the near future. The more resources are made available for R&D more options the firm will have. Taking into consideration that resources are always limited, entrepreneurial element of senior management and CEO is un-avoidable.