Entrepreneurial Leadership

Article # 2

Entrepreneurial leadership: developing and measuring a cross-cultural

construct

Summary
Entrepreneurship has been defined from various perspectives: pursuit of self-interest,
innovative combinations of available resources (Schumpeter, 1934), uncertainty and risk-
bearing activities, risk-avoiding- or -minimizing behavior, and proactive or opportunity-
seeking behavior (Miller, 1983; Stevenson, 1983). In this literature, entrepreneurship is
viewed as a discrete event based on the autonomous pursuit of innovative opportunities.

However, a more integrative perspective is required when examining entrepreneurial

thinking within existing organizations. McGrath and MacMillan (2000) recommend
incorporating an ‘‘entrepreneurial mind-set’’ as a core element of strategic management,
particularly in high-velocity environments of competition and change. Consequently, a focus
on the concept of ‘‘entrepreneurial leadership’’ is an important step in this direction.

The objective of this article is to clarify the concept and develop an empirical measure
of entrepreneurial leadership. Drawing from past research, we define entrepreneurial
leadership as ‘‘leadership that creates visionary scenarios that are used to assemble and
mobilize a ‘supporting cast’ of participants who become committed by the vision to the
discovery and exploitation of strategic value creation.’’

This definition emphasizes the challenge of mobilizing the resources and gaining the
commitment required for value creation that the entrepreneurial leader faces, which involves
creating a vision and a cast of supporters capable of enacting that vision. The two challenges
of forging a vision and building a cast of competent and committed supporters are
interdependent since the former is useless without the latter. Thus, entrepreneurial leaders
envision and enact a proactive transformation of the firm’s transaction set (Venkataraman and
Van de Ven, 1998)
Entrepreneurship And Intrapreneurship

Entrepreneurship has long been recognized as a leading driver of development in

local, regional, and national economies (Schumpeter, 1934) and can equally be considered an
important factor in the development of established firms increasingly beset by competition.
For intrapreneurship to flourish in such firms, an entrepreneurial orientation is critical—firms
with an entrepreneurial orientation adapt their capabilities to meet emergent competition
through flexible resource deployment, which allows the firm to ‘‘use or expand companies’
resources and thus raise long-term capacity (Kanter, 1982).’’

Entrepreneurially oriented firms are capable of corporate transformation (Ghoshal and

Bartlett, 1996) by effectively translating emergent options into platforms for continuous value
creation. This allows them to move fast to gain first-mover advantage in emerging new
products or markets (Kuratko and Hodgetts, 1989).

The basic challenge of entrepreneurial leaders (McGrath and MacMillan, 2000) is to

envision future possibilities and enable the organization to transform its current transaction
set (Venkataraman and Van de Ven, 1998). Moreover, such adaptation must be accomplished
without overstraining the unit’s resource endowments. In addition, this must often be done in
the face of conservative and risk-averse attitudes stemming from followers’ lack of
confidence in the gains from innovation in uncertain environments.

At its most general level, the vast literature on leadership literature focuses on the
ability of leaders to influence a group of followers and emphasizes the relations among three
key factors: the leader, the followers, and the landscape. While theories of leadership abound,
in this article, we focus on three cross-cultural, universal perspectives of leadership that have
emerged in recent years that are relevant to the context outlined above—leadership capable of
sustaining innovation and adaptation in high-velocity and uncertain environments.
Conclusions

In this article, we posited that entrepreneurial leadership involves two interlinked

enactment challenges accomplished through associated roles. Cast enactment involves
assembling a cast of individuals with the competence to accomplish required changes through
the roles of commitment building and specification of constraining limits, while scenario
enactment involves reorienting the business model through the roles of absorbing uncertainty,
framing the challenge, and path clearing.

Using data from the GLOBE project, we identified attributes of leadership associated
with these roles and demonstrated the validity of the construct of entrepreneurial leadership.
Our preliminary results confirm the universal and ‘‘etic’’ features of the entrepreneurial
leadership construct. That entrepreneurial leadership is universally endorsed and that there
are societal differences in its effectiveness suggest several promising areas of inquiry. Most
importantly, institutional support for entrepreneurial leadership may be lacking in some
societies, as in the erstwhile centrally planned economies of the Soviet Union. In addition, it
is possible that more strategic effort is needed for enacting entrepreneurial leadership in
stable, protected environments with limited competition, than in situations where hyper
competition and turbulence are the norm, because the perceived need for entrepreneurial
leadership in stable environments may be lower.

The entrepreneurial leader with a focus on mastering new models of value creation
through inquiry in action (Torbert, 2000) may be more effective in competitive, change-
oriented situations. The construct of entrepreneurial leadership developed in this article is a
preliminary step that attempts to initiate further research in these directions, and to contribute
to ongoing efforts to integrate the fields of strategy, leadership, and entrepreneurship.