Entrepreneurial Leadership

Article # 8

Entrepreneurial leadership vision in non-profit vs. for-profit organizations

Summary

In this article the researcher explores the role that entrepreneurial leadership vision
plays in the entrepreneurial process of nonprofit and for-profit ventures. The results was
indicate significant differences in the meaning of vision articulated for each type of venture.
Differences between ventures were also found with regard to the relationship that vision has
with the ventures' strategies and performance. This study will examine the differences in EV
between nonprofit entrepreneurs in the educational sector and for-profit, service oriented
business entrepreneurs. The study will also test the differences in the effect of EV on the new
venture's strategy and performance. Consequently, the study will consider several questions. 

In the nonprofit organizations vision was associated with a wide-range strategy as

well as the ventures' performance and growth. In addition, wide-range strategy partially
mediated the relationship between the ventures' vision and its performance and growth. In
business enterprises, vision directly predicted only a differentiation strategy, which also
mediated the relationship between vision and the ventures' performance and growth. In
contrast, a wide-range strategy in these organizations actually reduced growth. These findings
contribute both to the literature on vision as well as to the literature on entrepreneurship.

Entrepreneurial Vision
Vision is a seminal concept in leadership literature and a key component in the
leadership style of all leaders; social, political or organizational. While the definition of
vision varies, it is generally an idealized goal to be achieved in the future  or an ideal and
unique image of the future that articulates the values, purposes, and identity of its followers
(Boal & Bryson, 1988). In the organizational arena, Shamir and colleagues (1993) define
vision as an ideal statement that reflects the shared values to which the organization should
aspire. Bennis and Nanus (1985) offer a more practical definition, regarding vision as the
projected mental image of the product, services, and organization that a business leader wants
to achieve. These definitions highlight the future-oriented nature of vision and its role in
motivating followers toward that future.

Study and Analysis

The authors subjected the 26-item list to an exploratory factor analysis. The
respondents' ratings form seven independent factors. The main ones are vision formulation,
indicating a strategic emphasis; implementation, stressing successful communication of the
vision; and innovative realism, focusing on tactical responsiveness to both internal and
external events. The four minor factors are general, reflecting the ambiguous side of vision;
detailed, the opposite of general; risk taking, emphasizing the risky and non-conservative
nature of vision; and profit oriented, assessing whether the vision is bottom line oriented. 

Data were collected in 1999 by questionnaires administered at the entrepreneurs'

premises. Each questionnaire took approximately one hour to complete. Initially, the study
used various data sources (higher education council publications, yellow pages, student
manuals, educational conferences, etc.), covering practically all the new educational
institutions established in Israel between 1994 and 1999 to identify the educational
entrepreneurs. They found that neither the firm's age nor its size was a significant predictor of
the vision's dimensions. The researchers extracted six factors with eigenvalues higher than 1
(a total explained variance of 60%): communicative, inspirational, realistic, conservative,
flexible, and general. All items' loadings exceeded 0.40.  

The study expects a relationship between the type of organization (nonprofit vs. for-
profit) and the method used to convey its mission. Nonprofit entrepreneurs will convey their
EV in more inspirational and communicative terms than for-profit entrepreneurs. For-profit
entrepreneurs will convey their EV in more practical terms than nonprofit entrepreneurs. EV
will be positively related with a differentiation strategy. EV will be negatively related with a
wide-ranging strategy. EV will be positively related with new venture performance.
Differentiation will affect the venture's performance positively. A wideranging strategy will
affect the venture's performance negatively. The study compares the vision of a sample of
Israeli entrepreneurs from various service sector businesses with that of leaders from the field
of higher education. The rationale for this sampling strategy is that education is part of the
service sector in Israel, and that stratifying the sample based on service would help to control
for major industry differences.

Conclusion

The findings also have implications for the uniformity of most training programs for
entrepreneurs. The study's results indicate that different types of entrepreneurs have different
perceptions of their venture and act accordingly. However, most training programs for
entrepreneurs do not consider these differences. These findings advance our knowledge
regarding cross-cultural aspects of leadership theory as well as entrepreneurial theory.
Numerous studies in the area of leadership suggest that vision varies across different types of
organizations as well as different types of leaders and is not a unified phenomenon. This
study implies that different people will emerge as leaders, and caution us about global
applications of leadership theory. This study examines the nature of EV in two groups of
entrepreneurs, nonprofit educational institutions and for-profit service organizations.