**Entrepreneurship with Social Responsibility**

**Entrepreneurship with Social Responsibility**

DOI: 10.5772/intechopen.70609

Anna Križanová, Katarína Moravčíková and Jana Klieštiková Jana Klieštiková Additional information is available at the end of the chapter

Anna Križanová, Katarína Moravčíková and

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.70609

#### **Abstract**

[31] Roloff J. Learning from multi-stakeholder networks: Issue-focused stakeholder manage-

[32] Mikkilä M, Toppinen A. Corporate responsibility reporting by large pulp and paper

[33] Mikkilä M. The many faces of responsibility: Acceptability of the global pulp and paper industry in various societies, Dissertationes Forestales 25. Finland: Faculty of Forestry, University of Joensuu; 2006 http://www.metla.fi/dissertationes/df25.pdf [Accessed

[34] Stora Enso. Global Responsibility Report (Helsinki Libris Oy). 2011. http://www. storaenso.com/media-centre/publications/annual-report/Documents/Stora\_Enso\_

[35] Toppinen A, Li N, Tuppura A, Xiong Y. Corporate responsibility and strategic groups in the forest-based industry: Exploratory analysis based on the global reporting initiative (GRI) framework. Corporate Social Responsibility and Environmental Management.

[36] Clarke K. Hazardous ground-cluster munitions and UXO in the Lao PDR, UNDP Lao PDR, Vientiane. 2009. http://www.undplao.org/newsroom/publication/UNDP\_LAO\_

Hazardous%20Ground\_03June2009\_FINAL.pdf [Accessed 9 February, 2014]

Global\_Responsibility\_Report\_2011.pdf [Accessed 9 February 2014]

ment. Journal of Business Ethics. 2008;**82**:233-250

228 Entrepreneurship - Development Tendencies and Empirical Approach

9 February 2014]

2012;**19**:191-205

companies. Forest Policy and Economics. 2008;**10**:500-506

Since the second half of the twentieth century, the society's thinking about the behavior of companies has gradually begun to change. Companies are expected to use their power and finances to influence life around themselves, especially their quality. The corporate social responsibility (CSR) concept is a very progressive management approach that focuses on long-term goals and long-term returns. CSR seeks to harmonize relationships with stakeholders, which the company identifies and implements activities that go beyond legal and ethical standards. A socially responsible company performs something extra volunteer, conducts dialog with its stakeholders, and invests in improving relationships. The Department of Economics of the University of Žilina conducted a marketing survey entitled "Perceptions of Corporate Social Responsibility and its Communication by Companies". The survey was conducted to find out how companies in Slovakia use the CSR concept and what is the level of their communication about this concept in relation to the external environment. Anonymous questionnaire method was used to obtain this data. The method of induction and deduction was used to process the obtained data and the phenomena investigated and to generalize and produce conclusions. Mathematical and statistical methods were used to evaluate survey data, and the synthesis method was used to create recommendations for companies.

**Keywords:** entrepreneurship, corporate social responsibility, Slovak companies

### **1. Introduction**

The issue of corporate social responsibility (CSR) is becoming an increasingly important element of strategic business management under the conditions of today's globalized market. Society expectations of companies' performance are constantly rising. At present, companies have a competitive advantage, that are able to actively respond to ever-changing customer

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expectations and implement socially responsible aspects into their business, so that customers perceive the CSR concept as an added value of the company. Companies should feel a certain commitment to advocate for the society in which they operate, because the business sector is part of civil society and they need other members to successful operation. Socially responsible companies strive not only to meet their traditional economic goals but also to fulfill the social and environmental aspects of their activities, in practice, by voluntarily setting high ethical standards, avoiding corruption, trying to minimize the negative impacts of their business on the environment, striving to be good employer, supporting the region in which they operate. They strive to realize on the three main pillars – economic efficiency, environmental responsibility and social engagement – in the long term and as firmly as possible.

• *corporate engagement* – corporate socially responsible enterprises, that create new positive trends in society, have incorporated socially responsible business into their corporate strat-

Entrepreneurship with Social Responsibility http://dx.doi.org/10.5772/intechopen.70609 231

• *systematicity and long-term time horizon* – corporate social responsibility is a long-term issue. The CSR concept should be part of the strategic planning, ongoing monitoring and evaluation of companies. Socially responsible companies are not focused only on shortterm economic goals and profits, but they also focus on long-term goals and long-term

• *credibility –* only trusted social responsibility will enable the company to take full advantage of the benefits of CSR principles and also identifies the four main assumptions for achieving public confidence – individuality, authenticity, transparency, and consistency, • *company operation with respect to the so – "Triple-bottom-line business"* – corporate social responsibility is a modern concept of business that is on three pillars and therefore, as one of the basic ideas emphasizes, that companies should not only focus on maximizing profits and economic growth, but their attention must focus on addressing social and environ-

• *responsibility towards society and companies commitment to contribute to the development of life quality* – corporate responsibility is an ethical imperative to work for the benefit of society.

Corporate social responsibility is a modern business concept that leads to a wider view of business and is built on three basic pillars, so called "triple-bottom-line" – economic, social and environmental pillar [7]. A company that adopts the concept of social responsibility does not only try to achieve profits in its business but its approach is more complex because it takes into account all three pillars and applies voluntarily, over and above its legislative responsibilities, some principles in three basic areas, such as the economic, social, and environmental area [7]. The economic pillar of CSR focuses primarily on company transparency, establishing good relationships with interest groups that affect the economic activity of the company. These are investors, owners, customers, suppliers, business partners, and entities that are significant to a company in this area. Company activities in this area relate to corporate governance, responsible customer access, relationship with suppliers and other business partners, and marketing and advertising [7]. The social area should be divided into two areas – internal and external. The internal area is also called the social policy of the company, and the external area is primarily concerned with philanthropy, altruism, cooperation with the local community. Company social policy and its tools must work towards building a partnership with an employee about that an company thinks as a co-entrepreneur, giving him/her opportunities to exploit his/her active abilities, expanding his/her skills and skills, and achieving business goals by reaching his/her satisfaction. Activities within the framework of internal social policy concern engagement and communication with employees, remuneration for work, education and development, health and safety, work-life balance, outplacement, and equal complexity [8]. The external social area is mainly focused on philanthropy and cooperation with the local

egies and take them into account in creating business values or goals,

sustainability,

mental issues,

**2.1. Fields of corporate social responsibility**

### **2. Corporate social responsibility**

The modern history of corporate socially responsibility began to develop in the 1950s when the ideas of responsible entrepreneurship had fully penetrated the managers' professional literature. Howard R. Bowen, who wrote the book Social Responsibilities of the Businessman in 1953, is considered to be the first theorist of this concept. At the end of the 1960s and 1970s, under the influence of turbulent social change in the western society, and due to the boom of social sciences a number of definitions which were less emphasized by the manager's personality in the corporation, and more focused on the interaction between the company and the socio-economic system. In the 1980s, interest was transferred from the theoretical societal theories of corporate responsibility to empirical research of social responsible companies [1]. Also, due to the attempt to operationalize this concept, it has been fragmentized and various alternative concepts have begun to emerge [2]. At the turn of the millennium, voluntary associations of responsible companies, non-governmental organizations and the European Union contributed to the definition of CSR. The rapid development and wide range of this concept results in a very high terminological disunity, as there is currently no single global definition [3]. Bowen [4] defines social responsibility as "the commitment of entrepreneurs to strive for such strategies, to make such decisions or to perform activities that are desirable in terms of the goals and values of our society." According to the European Union [5], corporate responsibility is "the voluntary integration of social and environmental interests into day-to-day business activities and interactions with business stakeholders". Kotler and Lee [6] define social responsibility as "a commitment to improve the society's well-being through voluntary corporate activities and corporate resources".

Bussard et al. [1] set out the basic characteristics of this concept, highlighting in particular:


#### **2.1. Fields of corporate social responsibility**

expectations and implement socially responsible aspects into their business, so that customers perceive the CSR concept as an added value of the company. Companies should feel a certain commitment to advocate for the society in which they operate, because the business sector is part of civil society and they need other members to successful operation. Socially responsible companies strive not only to meet their traditional economic goals but also to fulfill the social and environmental aspects of their activities, in practice, by voluntarily setting high ethical standards, avoiding corruption, trying to minimize the negative impacts of their business on the environment, striving to be good employer, supporting the region in which they operate. They strive to realize on the three main pillars – economic efficiency, environmental responsi-

The modern history of corporate socially responsibility began to develop in the 1950s when the ideas of responsible entrepreneurship had fully penetrated the managers' professional literature. Howard R. Bowen, who wrote the book Social Responsibilities of the Businessman in 1953, is considered to be the first theorist of this concept. At the end of the 1960s and 1970s, under the influence of turbulent social change in the western society, and due to the boom of social sciences a number of definitions which were less emphasized by the manager's personality in the corporation, and more focused on the interaction between the company and the socio-economic system. In the 1980s, interest was transferred from the theoretical societal theories of corporate responsibility to empirical research of social responsible companies [1]. Also, due to the attempt to operationalize this concept, it has been fragmentized and various alternative concepts have begun to emerge [2]. At the turn of the millennium, voluntary associations of responsible companies, non-governmental organizations and the European Union contributed to the definition of CSR. The rapid development and wide range of this concept results in a very high terminological disunity, as there is currently no single global definition [3]. Bowen [4] defines social responsibility as "the commitment of entrepreneurs to strive for such strategies, to make such decisions or to perform activities that are desirable in terms of the goals and values of our society." According to the European Union [5], corporate responsibility is "the voluntary integration of social and environmental interests into day-to-day business activities and interactions with business stakeholders". Kotler and Lee [6] define social responsibility as "a commitment to improve the society's well-being through voluntary corporate activities and corpo-

Bussard et al. [1] set out the basic characteristics of this concept, highlighting in particular:

mitments that go beyond their obligations defined by the legislative provision,

• *willingness –* socially responsible companies voluntarily develop activities and accept com-

• *active collaboration and open dialog with all stakeholders –* this commitment goes beyond the obligation of companies to behave responsibly towards their shareholders, but also applies to other stakeholders, whether employees, customers, suppliers or local communities,

bility and social engagement – in the long term and as firmly as possible.

**2. Corporate social responsibility**

230 Entrepreneurship - Development Tendencies and Empirical Approach

rate resources".

Corporate social responsibility is a modern business concept that leads to a wider view of business and is built on three basic pillars, so called "triple-bottom-line" – economic, social and environmental pillar [7]. A company that adopts the concept of social responsibility does not only try to achieve profits in its business but its approach is more complex because it takes into account all three pillars and applies voluntarily, over and above its legislative responsibilities, some principles in three basic areas, such as the economic, social, and environmental area [7]. The economic pillar of CSR focuses primarily on company transparency, establishing good relationships with interest groups that affect the economic activity of the company. These are investors, owners, customers, suppliers, business partners, and entities that are significant to a company in this area. Company activities in this area relate to corporate governance, responsible customer access, relationship with suppliers and other business partners, and marketing and advertising [7]. The social area should be divided into two areas – internal and external. The internal area is also called the social policy of the company, and the external area is primarily concerned with philanthropy, altruism, cooperation with the local community. Company social policy and its tools must work towards building a partnership with an employee about that an company thinks as a co-entrepreneur, giving him/her opportunities to exploit his/her active abilities, expanding his/her skills and skills, and achieving business goals by reaching his/her satisfaction. Activities within the framework of internal social policy concern engagement and communication with employees, remuneration for work, education and development, health and safety, work-life balance, outplacement, and equal complexity [8]. The external social area is mainly focused on philanthropy and cooperation with the local community. Philanthropy is understood as a summary of activities that lead to the conscious support of others (individuals, groups, and organizations). It differs from altruism, which is an individual initiative and mostly focuses on the immediate surroundings. Philanthropy tries to solve the problems of the weaker or the handicapped people in a broader context, conceptually and tends to organize itself into the whole care system for these problematic groups. Possible tools for working with the local community can include community support, collaboration with schools, or stakeholder engagement [9]. Environmental issues have become more and more important in recent years. Business leaders should be aware that corporate responsibility in this area is to be applied within the company itself as well as towards the external environment that the company affects in some way, whether it is landscape, noise, resource use, emissions, waste or traffic load. Company activities in the environmental field concern environmental policy, energy and water, waste and recycling, products and packaging and shopping [7].

promote a good idea across the society or in a particular community. A company can realize

Entrepreneurship with Social Responsibility http://dx.doi.org/10.5772/intechopen.70609 233

**Corporate volunteering –** an initiative where a company supports employees, business partners and franchise members to volunteer their time to support local organizations and address social issues. Employees have support from the company to work as volunteers for some time on projects and activities created by company or a non-profit organization with which a company collaborates [11]. Alternatively, they have the opportunity to choose what volunteer initiative they are involved in. Volunteers can provide physical work, training,

**Corporate social responsibility practices –** a company voluntarily carries out business activities and investments that improve the conditions in the local community, whether socially or environmentally. These activities take place mainly within the company and relate to manu-

**Fair trade** – the objective of this partnership between producer and buyer is to support disadvantaged producers in developing countries by controlling fair trade conditions, respecting labor law, not using child labor in production, protecting the environment, but also spreading awareness of the situation of these manufacturers in developed countries. The manufacturer is guaranteed a minimum subscription and the minimum purchase price increased by the so called a social surcharge, which will ensure a fair price that could otherwise not be

**Outplacement** – support and assistance in placement of redundant workers on the labor mar-

For many companies, CSR is a means to improve the image, competitive advantage, or differentiation. CSR is participated to creating value for the company as well as branding and builds customer loyalty and behavior after purchase. According to Hansen company, it is the reward for a company to stimulate customer buying behavior. The customer is the central determinant of who will be "rewarded" and who will be "punished". Through his/her purchasing decisions influences the profit of companies which compete on the market and indirectly also the direction the economy is taking are affected. Not only companies get benefits from CSR. Stakeholders also became the profit parties [12]. The most important benefits for companies implementing CSR concept ideas in their day-to-day practice are cited by several

*CSR contributes to creating a good business environment –* employees feel more involved with the company, increase their confidence in decision-making, motivation and productivity [13]. *CSR increases attraction for investors –* investors are interested in corporate CSR performance

indicators that would support their decision to provide financial assistance [14].

activities related to corporate philanthropy along with nonprofit organizations.

facturing processes, employee development and behavior. Kuldova [3] assigns two other tools to these tools, namely:

ket. The aim is to mitigate the negative effects of redundancies.

**2.3. Benefits and deficiencies of corporate social responsibility**

teaching or counseling.

achieved.

authors:

#### **2.2. Tools of corporate social responsibility**

Kotler and Lee [6] outline six CSR tools that can help society to promote society's health, security, education and employment, improve the environment, social and economic development, and other basic human needs and desires. Support can take place in a variety of forms – from grants, paid advertising, through sponsorship, technical expertise, material contributions, business volunteers to access to distribution channels. These tools include:

**Campaigns expanding awareness about social issue –** the company develop an initiative to raise awareness and, above all, the public's interest in social issue through campaigns, and to persuade it to support them by donating time, volunteering, financial or non-financial gifts. It uses research publishing, statistics, encourages proactive access, and effort to learn about the issue additional information in brochures or websites. This activity is carried out by the enterprise itself or cooperates with nonprofit organizations that address this issue.

**Cause-related marketing –** marketing activities associated with a publicly beneficial project. A company spends a certain amount of revenue from a particular product on a social or nonprofit organization. At the same time, it tries to wake up the buyer's interest, which increases the revenues of the company and also the non-profit organization. Campaigns of this type are usually conducted only for a short period of time [10]. A company should try to make its behavior and initiatives as authentic and trustworthy as possible.

**Social marketing –** represents the development and implementation of a behavioral change campaign that aims to improve public health, safety, the environment, or the welfare of society. These campaigns mostly focus on health issues (breast cancer, prostate cancer, and eating disorders), accident prevention (traffic safety), environmental problems (electricity savings and air pollution) and public involvement issues (blood donation and animal rights).

**Corporate philanthropy –** direct contribution by a company to charity or a social problem, most often in the form of cash grants, subsidies, or contributions in kind. Corporate philanthropy is the promotion of publicly beneficial projects beyond the company activity to promote a good idea across the society or in a particular community. A company can realize activities related to corporate philanthropy along with nonprofit organizations.

**Corporate volunteering –** an initiative where a company supports employees, business partners and franchise members to volunteer their time to support local organizations and address social issues. Employees have support from the company to work as volunteers for some time on projects and activities created by company or a non-profit organization with which a company collaborates [11]. Alternatively, they have the opportunity to choose what volunteer initiative they are involved in. Volunteers can provide physical work, training, teaching or counseling.

**Corporate social responsibility practices –** a company voluntarily carries out business activities and investments that improve the conditions in the local community, whether socially or environmentally. These activities take place mainly within the company and relate to manufacturing processes, employee development and behavior.

Kuldova [3] assigns two other tools to these tools, namely:

community. Philanthropy is understood as a summary of activities that lead to the conscious support of others (individuals, groups, and organizations). It differs from altruism, which is an individual initiative and mostly focuses on the immediate surroundings. Philanthropy tries to solve the problems of the weaker or the handicapped people in a broader context, conceptually and tends to organize itself into the whole care system for these problematic groups. Possible tools for working with the local community can include community support, collaboration with schools, or stakeholder engagement [9]. Environmental issues have become more and more important in recent years. Business leaders should be aware that corporate responsibility in this area is to be applied within the company itself as well as towards the external environment that the company affects in some way, whether it is landscape, noise, resource use, emissions, waste or traffic load. Company activities in the environmental field concern environmental policy, energy and water, waste and recycling, products and packag-

Kotler and Lee [6] outline six CSR tools that can help society to promote society's health, security, education and employment, improve the environment, social and economic development, and other basic human needs and desires. Support can take place in a variety of forms – from grants, paid advertising, through sponsorship, technical expertise, material contribu-

**Campaigns expanding awareness about social issue –** the company develop an initiative to raise awareness and, above all, the public's interest in social issue through campaigns, and to persuade it to support them by donating time, volunteering, financial or non-financial gifts. It uses research publishing, statistics, encourages proactive access, and effort to learn about the issue additional information in brochures or websites. This activity is carried out by the enterprise itself or cooperates with nonprofit organizations that address

**Cause-related marketing –** marketing activities associated with a publicly beneficial project. A company spends a certain amount of revenue from a particular product on a social or nonprofit organization. At the same time, it tries to wake up the buyer's interest, which increases the revenues of the company and also the non-profit organization. Campaigns of this type are usually conducted only for a short period of time [10]. A company should try to make its

**Social marketing –** represents the development and implementation of a behavioral change campaign that aims to improve public health, safety, the environment, or the welfare of society. These campaigns mostly focus on health issues (breast cancer, prostate cancer, and eating disorders), accident prevention (traffic safety), environmental problems (electricity savings

**Corporate philanthropy –** direct contribution by a company to charity or a social problem, most often in the form of cash grants, subsidies, or contributions in kind. Corporate philanthropy is the promotion of publicly beneficial projects beyond the company activity to

and air pollution) and public involvement issues (blood donation and animal rights).

tions, business volunteers to access to distribution channels. These tools include:

behavior and initiatives as authentic and trustworthy as possible.

ing and shopping [7].

this issue.

**2.2. Tools of corporate social responsibility**

232 Entrepreneurship - Development Tendencies and Empirical Approach

**Fair trade** – the objective of this partnership between producer and buyer is to support disadvantaged producers in developing countries by controlling fair trade conditions, respecting labor law, not using child labor in production, protecting the environment, but also spreading awareness of the situation of these manufacturers in developed countries. The manufacturer is guaranteed a minimum subscription and the minimum purchase price increased by the so called a social surcharge, which will ensure a fair price that could otherwise not be achieved.

**Outplacement** – support and assistance in placement of redundant workers on the labor market. The aim is to mitigate the negative effects of redundancies.

#### **2.3. Benefits and deficiencies of corporate social responsibility**

For many companies, CSR is a means to improve the image, competitive advantage, or differentiation. CSR is participated to creating value for the company as well as branding and builds customer loyalty and behavior after purchase. According to Hansen company, it is the reward for a company to stimulate customer buying behavior. The customer is the central determinant of who will be "rewarded" and who will be "punished". Through his/her purchasing decisions influences the profit of companies which compete on the market and indirectly also the direction the economy is taking are affected. Not only companies get benefits from CSR. Stakeholders also became the profit parties [12]. The most important benefits for companies implementing CSR concept ideas in their day-to-day practice are cited by several authors:

*CSR contributes to creating a good business environment –* employees feel more involved with the company, increase their confidence in decision-making, motivation and productivity [13].

*CSR increases attraction for investors –* investors are interested in corporate CSR performance indicators that would support their decision to provide financial assistance [14].

*CSR builds trust and good name of company as well as brands from the perspective of the customers –* the resulting image that the public creates about a company is emerging as a mosaic of many features and attributes, including engagement in individual areas of CSR [14].

to support corporate activities in their community. The goal is to communicate CSR progress in a meaningful way that will have a positive impact on the company and will attract stakeholders. CSR communication can provide additional benefits to a company, namely a higher level of customer satisfaction and loyalty, a better reputation for the company, brand and product, more motivated and productive employees, better relationships with the community and public authorities, or better access to finance [15]. CSR communication can include information on the production of safe and quality products/services, on keeping customer satisfaction, early invoicing, local supplier support, information beyond the company's core business, honest price information, adherence to marketing and advertising ethics, and consumer rights beyond the purchasing contract, hard criteria for the selection of business partners or information on working and living conditions [14]. The tools, means, channels and media through which the company can communicate its CSR initiatives and activities with external stakeholders include the CSR report, information packages, POS materials, vendor training, events, website, social media, brochures, newsletters, mailing lists, and advertising

Entrepreneurship with Social Responsibility http://dx.doi.org/10.5772/intechopen.70609 235

**3. Entrepreneurship with social responsibility in Slovakia**

Corporate social responsibility has been actively promoted in Slovakia since 2000, especially by non-governmental organizations that have since remained the main advocates of this concept at national level. The key carriers of the CSR concept with the largest commitment to promoting CSR in practice are multinational corporations in the Slovak business sector.

The Department of Economics of the University of Žilina conducted a survey among the representatives of companies in Slovakia entitled "Perceptions of Corporate Social Responsibility from the perspective of companies in Slovakia". The survey was conducted electronically via e-mail between October and December 2016 on a total sample of 434 companies randomly selected from a database of companies operating in Slovakia. Respondents were business owners, business executives, CSR employees, marketing department staff, and PR department staff. Most micro-companies participated in the survey, i.e. enterprises with fewer than 10 employees, namely 63.4%, followed by small companies (22.4%), large companies (8.1%) and medium-sized companies (6.2%). In terms of existence, most companies was category 6–10 years old (29.3%) and 21 and more years old (27.2%). Within the legal form, the largest representation had the commercial corporation (82.7%), of which 93% were limited companies. In terms of industry, retail and wholesale (21%) and information and communications

The results of the survey show that the concept of Corporate Social Responsibility is known to Slovak companies, as 68.7% of respondents stated this fact. Companies in Slovakia also know economic, environmental and social responsibility terms, as 75.6% of the companies surveyed expressed their positive opinion. Most Slovak companies are socially responsibly. In our survey, 83.9% of the respondents expressed a positive opinion from the total number of companies, with 39.4% of respondents saying "definitely yes" and 44.5% of answers "probably yes" (**Figure 1**).

media [12, 15, 16].

(14.7%) had the largest representation.

*CSR allows to gain a competitive advantage and increase customer loyalty –* CSR activities can be seen as a distinctive element from the competition through which the company can reach a potentially interesting group of people who appreciate these activities and they are willing to pay more for a socially responsible product [6].

*CSR reduces costs –* most CSR activities require company funding. On the other hand, CSR activities are linked to innovations that can help the company reduce costs and increase efficiency [13].

*CSR improves risk management and reduces the cost of risk management –* applying CSR to day-today company practices brings to companies better risk management, reducing the risks in the environmental, economic or even media field [14].

*CSR can attract new partners –* potential business partners consider for long-term cooperation not only prices but also other factors such as product quality, ability to deliver goods on time and in the right place, solvency and payment terms in business [13].

*CSR allows to become a "preferred supplier" –* companies can become required suppliers through active access to responsible business [13].

*CSR allows to increase the performance of the supplier-customer relationship –* responsible access to partners contributes to building mutual trust, improving the quality of products and services and, ultimately, to achieving higher profits within the framework of business cooperation [6].

In spite of all the benefits, however, a company must also take into account the obstacles that may prevent it from putting the CSR concept into practice. The most common obstacles include [1]:


#### **2.4. CSR communication**

Communication about CSR initiatives and performance is a critical factor for successful companies. This type of communication provides information to interest groups who are interested in buying the products of this company, want to invest into this company, or want to support corporate activities in their community. The goal is to communicate CSR progress in a meaningful way that will have a positive impact on the company and will attract stakeholders. CSR communication can provide additional benefits to a company, namely a higher level of customer satisfaction and loyalty, a better reputation for the company, brand and product, more motivated and productive employees, better relationships with the community and public authorities, or better access to finance [15]. CSR communication can include information on the production of safe and quality products/services, on keeping customer satisfaction, early invoicing, local supplier support, information beyond the company's core business, honest price information, adherence to marketing and advertising ethics, and consumer rights beyond the purchasing contract, hard criteria for the selection of business partners or information on working and living conditions [14]. The tools, means, channels and media through which the company can communicate its CSR initiatives and activities with external stakeholders include the CSR report, information packages, POS materials, vendor training, events, website, social media, brochures, newsletters, mailing lists, and advertising media [12, 15, 16].

### **3. Entrepreneurship with social responsibility in Slovakia**

*CSR builds trust and good name of company as well as brands from the perspective of the customers –* the resulting image that the public creates about a company is emerging as a mosaic of many

*CSR allows to gain a competitive advantage and increase customer loyalty –* CSR activities can be seen as a distinctive element from the competition through which the company can reach a potentially interesting group of people who appreciate these activities and they are willing to

*CSR reduces costs –* most CSR activities require company funding. On the other hand, CSR activities are linked to innovations that can help the company reduce costs and increase effi-

*CSR improves risk management and reduces the cost of risk management –* applying CSR to day-today company practices brings to companies better risk management, reducing the risks in the

*CSR can attract new partners –* potential business partners consider for long-term cooperation not only prices but also other factors such as product quality, ability to deliver goods on time

*CSR allows to become a "preferred supplier" –* companies can become required suppliers through

*CSR allows to increase the performance of the supplier-customer relationship –* responsible access to partners contributes to building mutual trust, improving the quality of products and services and, ultimately, to achieving higher profits within the framework of business cooperation [6].

In spite of all the benefits, however, a company must also take into account the obstacles that may prevent it from putting the CSR concept into practice. The most common obstacles

• adopting a corporate socially responsibility into a company strategy is a costly entry

• CSR is characterized by its own language and covers all areas of company, from product design through management of all components of the company to external communication, • CSR is based on the mutual cooperation of all three sectors of society. Some companies may

• unclear standards and tangles of codes applicable to different areas of activity may result in a conflict of priorities in meeting the objectives of a responsible business strategy.

Communication about CSR initiatives and performance is a critical factor for successful companies. This type of communication provides information to interest groups who are interested in buying the products of this company, want to invest into this company, or want

features and attributes, including engagement in individual areas of CSR [14].

pay more for a socially responsible product [6].

234 Entrepreneurship - Development Tendencies and Empirical Approach

environmental, economic or even media field [14].

active access to responsible business [13].

and in the right place, solvency and payment terms in business [13].

be afraid to find trusted and proportionate partners to work with.

ciency [13].

include [1]:

investment,

**2.4. CSR communication**

Corporate social responsibility has been actively promoted in Slovakia since 2000, especially by non-governmental organizations that have since remained the main advocates of this concept at national level. The key carriers of the CSR concept with the largest commitment to promoting CSR in practice are multinational corporations in the Slovak business sector.

The Department of Economics of the University of Žilina conducted a survey among the representatives of companies in Slovakia entitled "Perceptions of Corporate Social Responsibility from the perspective of companies in Slovakia". The survey was conducted electronically via e-mail between October and December 2016 on a total sample of 434 companies randomly selected from a database of companies operating in Slovakia. Respondents were business owners, business executives, CSR employees, marketing department staff, and PR department staff. Most micro-companies participated in the survey, i.e. enterprises with fewer than 10 employees, namely 63.4%, followed by small companies (22.4%), large companies (8.1%) and medium-sized companies (6.2%). In terms of existence, most companies was category 6–10 years old (29.3%) and 21 and more years old (27.2%). Within the legal form, the largest representation had the commercial corporation (82.7%), of which 93% were limited companies. In terms of industry, retail and wholesale (21%) and information and communications (14.7%) had the largest representation.

The results of the survey show that the concept of Corporate Social Responsibility is known to Slovak companies, as 68.7% of respondents stated this fact. Companies in Slovakia also know economic, environmental and social responsibility terms, as 75.6% of the companies surveyed expressed their positive opinion. Most Slovak companies are socially responsibly. In our survey, 83.9% of the respondents expressed a positive opinion from the total number of companies, with 39.4% of respondents saying "definitely yes" and 44.5% of answers "probably yes" (**Figure 1**).

has five phases: defensive, charitable, promotional, strategic and system phase. A large number of respondents (45.6%) could not determine the phase of their company. Of the companies that could identify it, 15% said the charity phase, 13.4% promotional phase, 10.1% strategic phase, 9% system phase and 6.9% defensive phase. The respondents were also asked to determine the impact of CSR implementation on their customer relationships. Two-fifths of them said that CSR had a positive impact on customer relationships, with 4.6% of respondents reporting a significant impact. More than two-fifths were unable to determine the impact of CSR on their customer relationships and the negative impact did not come from any respon-

Entrepreneurship with Social Responsibility http://dx.doi.org/10.5772/intechopen.70609 237

Companies in Slovakia (26.5%) inform their external environment about their CSR activities and projects in very small extend. These companies use mainly the Internet (18.7%) and social networks (14.7%) to communicate with their external environment. The least used tool for

In the case of changing or expanding the information tools for external environment about CSR activities and projects, the respondent stated in particular an internet site (28.6%) and social networks (15%). In this case, the least considered tool is the CSR report (3.7%) and newspaper articles (4.6%). Nearly two-fifths respondent do not consider about changing or

On the basis of the above, it is possible to state that the companies in Slovakia know the CSR concept and the majority of companies are involved in activities related to the CSR concept, but they do not pay more attention to it because a large part of the companies cannot determine the phase of CSR in which they are located and they do not know the impact of this concept for relationships with their customers. They cannot make full use of the benefits of the CSR concept, because only a very small part of Slovak companies communicate information

Based on the survey results, we wanted to determine whether socially responsible behavior

*Hypothesis 1:* There is no statistically significant dependence between the size of the company

depended on selected company dentification data. We have set three hypotheses:

**Figure 3.** Impact of CSR company strategy in Slovakia on customer relationships. Source: authors.

in the Slovak Republic and its socially responsible behavior.

informing about CSR activities and projects is the CSR report (**Figure 4**).

dent (**Figure 3**).

expanding of tools (39.9%).

about their CSR activities and projects.

**Figure 1.** Expressions of Slovakia companies, whether they are socially responsible. Source: authors.

The survey also shows that almost half (43.5%) of surveyed companies are involved in all three areas of corporate social responsibility. In two areas are 25.8% of companies and only 19.8% of companies are involved in one. Although the elaboration of the CSR strategy is a crucial step, because it analyzes the stakeholders and identifies the key areas of CSR, only 11.1% of the companies addressed have a written CSR strategy and up to 82.3% do not have this strategy. Respondents consider the most important manifestation of their corporate social responsibility, in particular achieving the profits in an honest and ethical manner, namely 38.7%. Other important manifestations include employee care (18.4%), compliance with statutory standards and tax payments (13.6%) and the provision of quality products at a reasonable price (13.4%) (**Figure 2**).

The reason, why companies behave in a socially responsible way, the management's internal conviction was most often mentioned (50%), followed by efforts to improve relations with interested groups (7.6%) or better customer relations (7.8%). Corporate social responsibility

**Figure 2.** Reasons why companies in Slovakia behave socially responsible. Source: authors.

has five phases: defensive, charitable, promotional, strategic and system phase. A large number of respondents (45.6%) could not determine the phase of their company. Of the companies that could identify it, 15% said the charity phase, 13.4% promotional phase, 10.1% strategic phase, 9% system phase and 6.9% defensive phase. The respondents were also asked to determine the impact of CSR implementation on their customer relationships. Two-fifths of them said that CSR had a positive impact on customer relationships, with 4.6% of respondents reporting a significant impact. More than two-fifths were unable to determine the impact of CSR on their customer relationships and the negative impact did not come from any respondent (**Figure 3**).

Companies in Slovakia (26.5%) inform their external environment about their CSR activities and projects in very small extend. These companies use mainly the Internet (18.7%) and social networks (14.7%) to communicate with their external environment. The least used tool for informing about CSR activities and projects is the CSR report (**Figure 4**).

In the case of changing or expanding the information tools for external environment about CSR activities and projects, the respondent stated in particular an internet site (28.6%) and social networks (15%). In this case, the least considered tool is the CSR report (3.7%) and newspaper articles (4.6%). Nearly two-fifths respondent do not consider about changing or expanding of tools (39.9%).

The survey also shows that almost half (43.5%) of surveyed companies are involved in all three areas of corporate social responsibility. In two areas are 25.8% of companies and only 19.8% of companies are involved in one. Although the elaboration of the CSR strategy is a crucial step, because it analyzes the stakeholders and identifies the key areas of CSR, only 11.1% of the companies addressed have a written CSR strategy and up to 82.3% do not have this strategy. Respondents consider the most important manifestation of their corporate social responsibility, in particular achieving the profits in an honest and ethical manner, namely 38.7%. Other important manifestations include employee care (18.4%), compliance with statutory standards and tax payments (13.6%) and the provision of quality products at a reason-

**Figure 1.** Expressions of Slovakia companies, whether they are socially responsible. Source: authors.

236 Entrepreneurship - Development Tendencies and Empirical Approach

**Figure 2.** Reasons why companies in Slovakia behave socially responsible. Source: authors.

The reason, why companies behave in a socially responsible way, the management's internal conviction was most often mentioned (50%), followed by efforts to improve relations with interested groups (7.6%) or better customer relations (7.8%). Corporate social responsibility

able price (13.4%) (**Figure 2**).

On the basis of the above, it is possible to state that the companies in Slovakia know the CSR concept and the majority of companies are involved in activities related to the CSR concept, but they do not pay more attention to it because a large part of the companies cannot determine the phase of CSR in which they are located and they do not know the impact of this concept for relationships with their customers. They cannot make full use of the benefits of the CSR concept, because only a very small part of Slovak companies communicate information about their CSR activities and projects.

Based on the survey results, we wanted to determine whether socially responsible behavior depended on selected company dentification data. We have set three hypotheses:

*Hypothesis 1:* There is no statistically significant dependence between the size of the company in the Slovak Republic and its socially responsible behavior.

**Figure 3.** Impact of CSR company strategy in Slovakia on customer relationships. Source: authors.

**Figure 4.** Communication channels by which companies in Slovakia inform about CSR. Source: authors.

*Hypothesis 2:* There is no statistically significant dependence between the existence of the company in the Slovak Republic and its socially responsible behavior.

be argued that there is no statistically significant dependence between the legal form of the company and whether the company is socially responsible in the Slovak Republic (**Figure 7**).

Entrepreneurship with Social Responsibility http://dx.doi.org/10.5772/intechopen.70609 239

With regard to the results of the verification of statistical hypotheses, it can be stated that company identification data such as size, existence and legal form of an company do not affect whether the company is social responsible. In this case, the company's decision on whether to be or not to be socially responsible depends on the internal conviction of management.

Unlike Slovak companies most companies in Malta have developed a CSR strategy and identified the brand's reputation as a keynote. The concept of CSR has a relatively large impact on the economy and society in Central European countries, where CSR concept will become a more mature in the future and more and more companies will be implementing it according to corporate representatives. They also identified the main issues and the most useful tools in

**4. Entrepreneurship with social responsibility in abroad**

**Figure 5.** Calculation of hypothesis testing 1. Source: authors.

**Figure 6.** Calculation of hypothesis testing 2. Source: authors.

**Figure 7.** Calculation of hypothesis testing 3. Source: authors.

implementing CSR and the most important benefits of the concept.

*Hypothesis 3:* There is no statistically significant dependence between the legal form of the company in the Slovak Republic and its socially responsible behavior.

To verify the statistical hypotheses, the x2-independent test was used and we used the SPSS software 16.0 to calculate it. At the chosen x2 – independence test, the zero hypothesis is rejected if the P-value is below the significance level. If the P-value is equal or higher than the significance level, we cannot reject the zero hypothesis. The difference can only be the result of choice and there is no relationship between the variables. We determined the level of significance of the test α = 0.05. We take into account the Pearson Chi-square value when verifying the hypotheses through the x2 – independence test and the p-value of the test is in the tables labeled Asymp. Sig.

We found that the P-value is higher than the chosen significance level when testing the first hypothesis. It means that H0 is not objectionable. We can argue that there is no statistically significant dependence between the size of the enterprise and whether the company is socially responsible in the Slovak Republic (**Figure 5**).

In the second hypothesis we found in the test that the P-value is higher than the chosen significance level. It means that H0 is not objectionable. We can argue that there is no statistically significant dependence between the existence of the company and whether the company is socially responsible in the Slovak Republic (**Figure 6**).

Based on the results of x2 – the independence test we found in the third hypothesis that the P-value is higher than the chosen significance level. It means that H0 is not objectionable. It can


**Figure 5.** Calculation of hypothesis testing 1. Source: authors.


**Figure 6.** Calculation of hypothesis testing 2. Source: authors.

*Hypothesis 2:* There is no statistically significant dependence between the existence of the com-

**Figure 4.** Communication channels by which companies in Slovakia inform about CSR. Source: authors.

*Hypothesis 3:* There is no statistically significant dependence between the legal form of the

To verify the statistical hypotheses, the x2-independent test was used and we used the SPSS software 16.0 to calculate it. At the chosen x2 – independence test, the zero hypothesis is rejected if the P-value is below the significance level. If the P-value is equal or higher than the significance level, we cannot reject the zero hypothesis. The difference can only be the result of choice and there is no relationship between the variables. We determined the level of significance of the test α = 0.05. We take into account the Pearson Chi-square value when verifying the hypotheses through the x2 – independence test and the p-value of the test is in

We found that the P-value is higher than the chosen significance level when testing the first hypothesis. It means that H0 is not objectionable. We can argue that there is no statistically significant dependence between the size of the enterprise and whether the company is socially

In the second hypothesis we found in the test that the P-value is higher than the chosen significance level. It means that H0 is not objectionable. We can argue that there is no statistically significant dependence between the existence of the company and whether the company is

Based on the results of x2 – the independence test we found in the third hypothesis that the P-value is higher than the chosen significance level. It means that H0 is not objectionable. It can

pany in the Slovak Republic and its socially responsible behavior.

238 Entrepreneurship - Development Tendencies and Empirical Approach

the tables labeled Asymp. Sig.

responsible in the Slovak Republic (**Figure 5**).

socially responsible in the Slovak Republic (**Figure 6**).

company in the Slovak Republic and its socially responsible behavior.

be argued that there is no statistically significant dependence between the legal form of the company and whether the company is socially responsible in the Slovak Republic (**Figure 7**).

With regard to the results of the verification of statistical hypotheses, it can be stated that company identification data such as size, existence and legal form of an company do not affect whether the company is social responsible. In this case, the company's decision on whether to be or not to be socially responsible depends on the internal conviction of management.


**Figure 7.** Calculation of hypothesis testing 3. Source: authors.

### **4. Entrepreneurship with social responsibility in abroad**

Unlike Slovak companies most companies in Malta have developed a CSR strategy and identified the brand's reputation as a keynote. The concept of CSR has a relatively large impact on the economy and society in Central European countries, where CSR concept will become a more mature in the future and more and more companies will be implementing it according to corporate representatives. They also identified the main issues and the most useful tools in implementing CSR and the most important benefits of the concept.

PWC company [17] has launched a survey called "Corporate Responsibility Practices Survey" in Malta in the first quarter to find out how companies in Malta have a sense of CSR and how they evaluate its practices. The survey included 45 questions and assesses: internal and external awareness, social responsibility and regulation, compliance and disclosures. Participation in this survey was open to all companies in Malta. The survey covered a wide range of sectors. The financial and insurance sector was actively involved in this survey, followed by manufacturing and information and communication sectors. In terms of size, a large part of companies was with a staff of 10–50 (26%) and a staff of 100–250 (26%) and the smallest part of companies was with a staff of 300–500 (4%). In terms of turnover, the most involved companies most had annual turnover of 0–2 mil. € (28%) and companies with a turnover of 10–20 mil. € (14%). Companies with an annual turnover of 2–5 mil. €, 5–10 mil. €, 50–100 mil. €, 100 and more had a similar 12%. The smallest representation had companies with a turnover of 20–50 mil. € [17].

The survey results show that 60% of companies have a CSR strategy or program, 38% expressed negative, and 2% have not been able to comment. Nearly half of the participants (48%) claim to have a department identified as responsible for corporate responsibility. This function appears to be the most common within the Public Relations/Marketing Department or the responsibility of a dedicated CSR team established for this purpose [17].

Participant companies feel strongly about the impact of corporate behavior on their image and brand reputation (70%). Companies state that this is not motivated by their stakeholders (18%). It is clear that stakeholders are not yet as influential as in other countries when it comes to expectations of responsible behavior. The drivers for action on corporate responsibility are mostly internal forces arising from the company's corporate values (58%) and the belief that they should do their part for the environment and the community (68%) [17] (**Figure 8**).

respondents did not agree and 2% did not comment on this issue. The results of the survey showed how the position of the CSR will develop from the point of view of the representatives of the addressed companies. The possibility that the concept will become more ripe, as the business model will include social and environmental problems, was highlighted by company representatives from Romania (50%), Serbia (41%) and Lithuania (41%). The possibility that the concept will go ahead and more and more companies will implement it, officials from Bulgaria (60%), Lithuania (59%) and Slovakia (58%) said. The possibility that the concept of CSR will have the same position was highlighted by representatives from Czech (42%), Hungarian (35%) and Slovak (32%) companies. The question was not answered in particular by Hungarians (10%), Romanians (8%) and Slovenia (8%). As the main problem that will hinder the implementation of CSR in individual countries over the next 15 years, corporate representatives have identified "perceptions of CSR as sponsorship", which has been identified by 59% of representatives. Other problems include "lack of government incentives" (52%), "company reluctance to invest" (46%), "lack of communication with the public" (35%) or "insufficient consumer pressure" (24%). In the opinion of the CSR managers polled, the most useful in CSR implementation are tools and methods enabling employee involvement such as corporate volunteering (36%), ethical programmes for employees (29%) or dialog with stakeholders (35%). Respondents also named social campaigns (29%) and pro-ecological programmes (29%) as useful initiatives. Managers pointed to socially responsible investing (40%) and inter-sectorial cooperation (32%) as tools that are underused and worth popularizing. Sustainability and CSR activities bring internal and external benefits to companies. According to the respondents, internally they ensure a stronger employee involvement (65%) and a better ethical awareness (46%). Externally, they improve the companies' reputation (65%) and recognition of the brand as socially respon-

Entrepreneurship with Social Responsibility http://dx.doi.org/10.5772/intechopen.70609 241

**Figure 8.** Main driving forces behind Malta companies' CSR efforts. Source: PWC company [17].

sible (51%) [18] (**Figure 9**).

At present, for 58% of companies the implementation of the CSR concept in their company is very important and 2% is even extremely important. In the next 5 years, this state of affairs will change and for 56% will be very important and for even 20% of companies will be extremely important. By contrast, 34% of companies said that CSR for their company is neither important nor unimportant and for 6% is very unimportant. In the next 5 years, this situation should change, as for 20% of companies CSR will be neither important nor unimportant and very unimportant for just 4% of businesses [17].

In 2015, Deloitte company [18] conducted a survey called "CSR managers in Central Europe" to find out how the CSR concept has an impact on the economy and society in the Central European countries. This is the first survey to uncover CSR practices in 10 Central European countries, namely Bulgaria, the Czech Republic, Kosovo, Lithuania, Latvia, Romania, Serbia, Slovakia, Slovenia and Hungary. The survey was conducted from July to September 2015 and 179 company representatives from 10 Central European countries expressed views on it. In terms of size, most enterprises with a total of 250 or more employees (63.1%) were involved in the survey. The majority of companies surveyed have a CSR concept implemented within 5 years (60.9%), almost a third (27.9%) from 5 to 10 years and 10.6% of companies over 10 years.

According to this survey, 84% of respondents think that their business has contributed to addressing the country's social problems in recent years. Thirty-six percent of respondents definitely agree with this argument and 48% rather agree. On the other hand, 13% of the

**Figure 8.** Main driving forces behind Malta companies' CSR efforts. Source: PWC company [17].

PWC company [17] has launched a survey called "Corporate Responsibility Practices Survey" in Malta in the first quarter to find out how companies in Malta have a sense of CSR and how they evaluate its practices. The survey included 45 questions and assesses: internal and external awareness, social responsibility and regulation, compliance and disclosures. Participation in this survey was open to all companies in Malta. The survey covered a wide range of sectors. The financial and insurance sector was actively involved in this survey, followed by manufacturing and information and communication sectors. In terms of size, a large part of companies was with a staff of 10–50 (26%) and a staff of 100–250 (26%) and the smallest part of companies was with a staff of 300–500 (4%). In terms of turnover, the most involved companies most had annual turnover of 0–2 mil. € (28%) and companies with a turnover of 10–20 mil. € (14%). Companies with an annual turnover of 2–5 mil. €, 5–10 mil. €, 50–100 mil. €, 100 and more had a similar 12%. The smallest representation had companies with a turnover of 20–50 mil. € [17]. The survey results show that 60% of companies have a CSR strategy or program, 38% expressed negative, and 2% have not been able to comment. Nearly half of the participants (48%) claim to have a department identified as responsible for corporate responsibility. This function appears to be the most common within the Public Relations/Marketing Department

240 Entrepreneurship - Development Tendencies and Empirical Approach

or the responsibility of a dedicated CSR team established for this purpose [17].

unimportant for just 4% of businesses [17].

Participant companies feel strongly about the impact of corporate behavior on their image and brand reputation (70%). Companies state that this is not motivated by their stakeholders (18%). It is clear that stakeholders are not yet as influential as in other countries when it comes to expectations of responsible behavior. The drivers for action on corporate responsibility are mostly internal forces arising from the company's corporate values (58%) and the belief that they should do their part for the environment and the community (68%) [17] (**Figure 8**).

At present, for 58% of companies the implementation of the CSR concept in their company is very important and 2% is even extremely important. In the next 5 years, this state of affairs will change and for 56% will be very important and for even 20% of companies will be extremely important. By contrast, 34% of companies said that CSR for their company is neither important nor unimportant and for 6% is very unimportant. In the next 5 years, this situation should change, as for 20% of companies CSR will be neither important nor unimportant and very

In 2015, Deloitte company [18] conducted a survey called "CSR managers in Central Europe" to find out how the CSR concept has an impact on the economy and society in the Central European countries. This is the first survey to uncover CSR practices in 10 Central European countries, namely Bulgaria, the Czech Republic, Kosovo, Lithuania, Latvia, Romania, Serbia, Slovakia, Slovenia and Hungary. The survey was conducted from July to September 2015 and 179 company representatives from 10 Central European countries expressed views on it. In terms of size, most enterprises with a total of 250 or more employees (63.1%) were involved in the survey. The majority of companies surveyed have a CSR concept implemented within 5 years (60.9%), almost a third (27.9%) from 5 to 10 years and 10.6% of companies over 10 years. According to this survey, 84% of respondents think that their business has contributed to addressing the country's social problems in recent years. Thirty-six percent of respondents definitely agree with this argument and 48% rather agree. On the other hand, 13% of the respondents did not agree and 2% did not comment on this issue. The results of the survey showed how the position of the CSR will develop from the point of view of the representatives of the addressed companies. The possibility that the concept will become more ripe, as the business model will include social and environmental problems, was highlighted by company representatives from Romania (50%), Serbia (41%) and Lithuania (41%). The possibility that the concept will go ahead and more and more companies will implement it, officials from Bulgaria (60%), Lithuania (59%) and Slovakia (58%) said. The possibility that the concept of CSR will have the same position was highlighted by representatives from Czech (42%), Hungarian (35%) and Slovak (32%) companies. The question was not answered in particular by Hungarians (10%), Romanians (8%) and Slovenia (8%). As the main problem that will hinder the implementation of CSR in individual countries over the next 15 years, corporate representatives have identified "perceptions of CSR as sponsorship", which has been identified by 59% of representatives. Other problems include "lack of government incentives" (52%), "company reluctance to invest" (46%), "lack of communication with the public" (35%) or "insufficient consumer pressure" (24%). In the opinion of the CSR managers polled, the most useful in CSR implementation are tools and methods enabling employee involvement such as corporate volunteering (36%), ethical programmes for employees (29%) or dialog with stakeholders (35%). Respondents also named social campaigns (29%) and pro-ecological programmes (29%) as useful initiatives. Managers pointed to socially responsible investing (40%) and inter-sectorial cooperation (32%) as tools that are underused and worth popularizing. Sustainability and CSR activities bring internal and external benefits to companies. According to the respondents, internally they ensure a stronger employee involvement (65%) and a better ethical awareness (46%). Externally, they improve the companies' reputation (65%) and recognition of the brand as socially responsible (51%) [18] (**Figure 9**).

company do not influence whether the company is socially responsible. This is confirmed by the fact that the main reason for the implementation of CSR by companies is the internal conviction of management. On the other hand, however, companies do not develop further activities aimed at improving this concept, because a large part of companies do not have a CSR strategy, cannot determine the impact of CSR implementation on customer relationships and also do not know the CSR phase of an company. Despite the fact that companies carry out social, economic and environmental social responsibility activities, a small part of the company inform their external environment about these activities and projects. A recommendation for companies in Slovakia, based on this information, is to develop a CSR strategy that analyzes company stakeholders, identifies key CSR areas, and defines main objectives for these areas. Another recommendation is to measure the success of CSR activities, to which companies can use the SROI approach that measures change in relation to social, environmental and economic results. The last recommendation is to implement CSR communication. The companies should focus on means of communication such as websites, social networks or the product and its packaging. Unlike the Slovak companies, most companies in Malta have a developed CSR strategy and a department dedicated to activities and projects within this area. The concept of CSR is important for companies in Malta and will be of even greater importance in the future. Central European companies have said the CSR concept has helped solve social problems and, in their view, the concept will become more mature in the future and more and more companies will implement it. The biggest benefit of the CSR concept is improving the company's reputation for the companies in Slovakia, Malta and Central Europe. Based on the above, it can be said that companies perceive the CSR concept positively, its implementation is important to them as well

Entrepreneurship with Social Responsibility http://dx.doi.org/10.5772/intechopen.70609 243

as to society, and in the future its importance will grow and become more developed.

Research Perception of Corporate Social Responsibility as a Value for Customer.

Department of Economics, Faculty of Operation and Economics of Transport and

Anna Križanová\*, Katarína Moravčíková and Jana Klieštiková \*Address all correspondence to: anna.krizanova@fpedas.uniza.sk

Communications, University of Zilina, Zilina, Slovak Republic

This contribution is a partial output of scientific grant VEGA no. 1/0024/15 The Fundamental

[1] Bussard A, Marcek E, Mikus M, Buncak, M. Spolocensky zodpovedne podnikanie [Internet]. 2005. Available from: https://www.employment.gov.sk/files/slovensky/ministerstvo/spo-

locenska-zodpovednost/csr-nahlad-vseobec.-dobry.pdf [Accessed: June 28, 2017]

**Acknowledgements**

**Author details**

**References**

**Figure 9.** CSR implementation benefits by companies in Central European countries. Source: Deloitte company [18].

Based on the information from these surveys, it can be said that the concept of CSR is perceived positively by companies in Malta, as evidenced by the fact that a large part of companies have a CSR strategy and almost half of them have a CSR department. For almost a third of companies, the implementation of the CSR concept is very important, and considers the improvement in brand reputation as the most important asset. For most companies in Central Europe, the CSR concept is important, because according to them, have contributed to solving social problems. According to the respondents, the concept will become more mature in the future and more and more companies will implement it. As well as companies in Malta, Central European companies have also identified as the most important external benefit of the concept the improving reputation of companies. A significant internal benefit is to increase employee involvement.

### **5. Conclusion**

The issue of corporate social responsibility is becoming an increasingly important element of strategic business management under the conditions of today's globalized market. Society expectations of business performance are constantly rising. One of the twenty-first century trends in company competitiveness is the management style that is associated with the so called the fight for a good thing. Currently the companies have the competitive advantage that are capable of actively responding to the ever-changing customer expectations and involving socially responsible aspects in their business.

A relatively large number of companies in Slovakia know the concept of CSR and most companies in Slovakia are socially responsible. Factors such as size, existence and legal form of company do not influence whether the company is socially responsible. This is confirmed by the fact that the main reason for the implementation of CSR by companies is the internal conviction of management. On the other hand, however, companies do not develop further activities aimed at improving this concept, because a large part of companies do not have a CSR strategy, cannot determine the impact of CSR implementation on customer relationships and also do not know the CSR phase of an company. Despite the fact that companies carry out social, economic and environmental social responsibility activities, a small part of the company inform their external environment about these activities and projects. A recommendation for companies in Slovakia, based on this information, is to develop a CSR strategy that analyzes company stakeholders, identifies key CSR areas, and defines main objectives for these areas. Another recommendation is to measure the success of CSR activities, to which companies can use the SROI approach that measures change in relation to social, environmental and economic results. The last recommendation is to implement CSR communication. The companies should focus on means of communication such as websites, social networks or the product and its packaging. Unlike the Slovak companies, most companies in Malta have a developed CSR strategy and a department dedicated to activities and projects within this area. The concept of CSR is important for companies in Malta and will be of even greater importance in the future. Central European companies have said the CSR concept has helped solve social problems and, in their view, the concept will become more mature in the future and more and more companies will implement it. The biggest benefit of the CSR concept is improving the company's reputation for the companies in Slovakia, Malta and Central Europe. Based on the above, it can be said that companies perceive the CSR concept positively, its implementation is important to them as well as to society, and in the future its importance will grow and become more developed.

### **Acknowledgements**

Based on the information from these surveys, it can be said that the concept of CSR is perceived positively by companies in Malta, as evidenced by the fact that a large part of companies have a CSR strategy and almost half of them have a CSR department. For almost a third of companies, the implementation of the CSR concept is very important, and considers the improvement in brand reputation as the most important asset. For most companies in Central Europe, the CSR concept is important, because according to them, have contributed to solving social problems. According to the respondents, the concept will become more mature in the future and more and more companies will implement it. As well as companies in Malta, Central European companies have also identified as the most important external benefit of the concept the improving reputation of companies. A significant internal benefit is to increase employee involvement.

**Figure 9.** CSR implementation benefits by companies in Central European countries. Source: Deloitte company [18].

The issue of corporate social responsibility is becoming an increasingly important element of strategic business management under the conditions of today's globalized market. Society expectations of business performance are constantly rising. One of the twenty-first century trends in company competitiveness is the management style that is associated with the so called the fight for a good thing. Currently the companies have the competitive advantage that are capable of actively responding to the ever-changing customer expectations and involving

A relatively large number of companies in Slovakia know the concept of CSR and most companies in Slovakia are socially responsible. Factors such as size, existence and legal form of

**5. Conclusion**

socially responsible aspects in their business.

242 Entrepreneurship - Development Tendencies and Empirical Approach

This contribution is a partial output of scientific grant VEGA no. 1/0024/15 The Fundamental Research Perception of Corporate Social Responsibility as a Value for Customer.

### **Author details**

Anna Križanová\*, Katarína Moravčíková and Jana Klieštiková

\*Address all correspondence to: anna.krizanova@fpedas.uniza.sk

Department of Economics, Faculty of Operation and Economics of Transport and Communications, University of Zilina, Zilina, Slovak Republic

### **References**

[1] Bussard A, Marcek E, Mikus M, Buncak, M. Spolocensky zodpovedne podnikanie [Internet]. 2005. Available from: https://www.employment.gov.sk/files/slovensky/ministerstvo/spolocenska-zodpovednost/csr-nahlad-vseobec.-dobry.pdf [Accessed: June 28, 2017]

[2] Caroll AB. Corporate social responsibility evolution of definitional construct. Business and Society. 1999;**38**(3):268-295. DOI: 10.1177/000765039903800303

[16] Tehemar SAZ. Communication in CSR. 1st ed. The eBook Company; 2014. 61 p. ISBN:

Entrepreneurship with Social Responsibility http://dx.doi.org/10.5772/intechopen.70609 245

[17] PWC. Corporate Social Responsibility Practices Survey [Internet]. 2013. Available from: https://www.pwc.com/mt/en/publications/assets/csr\_survey\_2013.pdf [Accessed: June

[18] Deloitte. How CSR Has Influenced Central European Societies and Economies [Internet]. 2015. Available from: https://www2.deloitte.com/content/dam/Deloitte/lt/Documents/

strategy/LT\_CSR\_Managers\_Report.pdf [Accessed: June 25, 2017]

978-87-403-0640-8

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[6] Kotler P, Lee N. Corporate Social Responsibility. USA: John Wiley & Sons; 2005. 307 p.

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[8] Prskavcova M. Spolecenska odpovednost firem, lidsky kapital, rovne prilezitosti a environmentalni management s vyuzitim zahranicnich zkusenosti. 1st ed. Liberec: Technicka

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[12] Du S, Bhattacharya CB, Sen S. Maximizing business returns to corporate social responsibility (CSR): The role of CSR communication. International Journal of Management

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**Chapter 13**

Provisional chapter

**Importance of Corporate Governance in Socially**

DOI: 10.5772/intechopen.70536

Importance of Corporate Governance in Socially

Many organisations have already realised that if they want to be successful, they must have a sense of responsibility not only for their business activities, but also for the whole society. That approach is entirely consistent with the basic idea of the concept of corporate social responsibility (CSR). In the economic area of the CSR concept, corporate governance plays an important role. Based on the OECD definition, corporate governance (CG) is a system by which business corporations are directed and controlled. The chapter provides the first comprehensive survey of corporate governance, the way to estimate the level of CG to individual companies on the Slovak capital market through our own corporate governance index. In analytical part of this chapter, we investigate disclosure of corporate governance in selected enterprises in Slovakia for the period 2011–2015 and on the basis of this information we prepare a corporate governance index. The corporate governance index helps assess the level of compliance with CG principles in companies whose securities are listed on the Bratislava Stock Exchange. The chapter fulfils a need for advancing knowledge on corporate governance and provides a practical framework for responsible behaviour of shareholders and managers in

Keywords: corporate social responsibility, corporate governance, corporate governance

Responsibility in business again come to the fore and the current period is one of the factors that can significantly contribute to achieving stability and sustainable growth in the global economic environment. Enterprises should build their position on the principles of transparency and

> © The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and eproduction in any medium, provided the original work is properly cited.

© 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

**Responsible Behaviour of Enterprises**

Responsible Behaviour of Enterprises

Hussam Musa, Zdenka Musová and

Hussam Musa, Zdenka Musová and

http://dx.doi.org/10.5772/intechopen.70536

socially responsible enterprises.

1. Theoretical background

index, Bratislava Stock Exchange, Slovakia, survey

Additional information is available at the end of the chapter

Additional information is available at the end of the chapter

Lenka Debnárová

Lenka Debnárová

Abstract

Provisional chapter

### **Importance of Corporate Governance in Socially Responsible Behaviour of Enterprises** Importance of Corporate Governance in Socially

DOI: 10.5772/intechopen.70536

Hussam Musa, Zdenka Musová and Lenka Debnárová Hussam Musa, Zdenka Musová and

Additional information is available at the end of the chapter Lenka Debnárová

Responsible Behaviour of Enterprises

http://dx.doi.org/10.5772/intechopen.70536 Additional information is available at the end of the chapter

#### Abstract

Many organisations have already realised that if they want to be successful, they must have a sense of responsibility not only for their business activities, but also for the whole society. That approach is entirely consistent with the basic idea of the concept of corporate social responsibility (CSR). In the economic area of the CSR concept, corporate governance plays an important role. Based on the OECD definition, corporate governance (CG) is a system by which business corporations are directed and controlled. The chapter provides the first comprehensive survey of corporate governance, the way to estimate the level of CG to individual companies on the Slovak capital market through our own corporate governance index. In analytical part of this chapter, we investigate disclosure of corporate governance in selected enterprises in Slovakia for the period 2011–2015 and on the basis of this information we prepare a corporate governance index. The corporate governance index helps assess the level of compliance with CG principles in companies whose securities are listed on the Bratislava Stock Exchange. The chapter fulfils a need for advancing knowledge on corporate governance and provides a practical framework for responsible behaviour of shareholders and managers in socially responsible enterprises.

Keywords: corporate social responsibility, corporate governance, corporate governance index, Bratislava Stock Exchange, Slovakia, survey

### 1. Theoretical background

Responsibility in business again come to the fore and the current period is one of the factors that can significantly contribute to achieving stability and sustainable growth in the global economic environment. Enterprises should build their position on the principles of transparency and

© The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and eproduction in any medium, provided the original work is properly cited.

integrated approach to sustainable products and services, and the active cooperation of all stakeholders contribute to the overall well-being of society and the entire planet.

management. According to Mallin [19] optimal management of a trading company means protecting its creativity, freedom and flexibility and ensuring its continuous ability to create wealth and welfare which is essential to the civil society. Authority is the brain of the company cultivating executive to share the values with all shareholders and other parties involved. Klírová [20] considers the assessment of business performance the main function of CG from wider perspective than executive, that is, taking into consideration interests of all parties legitimately involved, and in this way influencing the creation of business strategy by its activity and its implementation with the aim of satisfying these interests. OECD's [21] definition characterises the basis of CG very well – the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as the board, managers, shareholders and other stakeholders and spells out the rules and procedures for making decisions in corporate affairs. Monks and Minow [22] also support this idea and define corporate governance as relations between different parties during influencing the governance and performance of companies, while shareholders and management are the primary parties and employees, customers, suppliers, creditors and other interest groups are the secondary. According to Mallin [19], the objective of corporate governance is to ensure that the firm is managed in the best interest of shareholders and other stakeholders of the company. CG supports transparency and accountability, which are key attributes for investors for the proper

Importance of Corporate Governance in Socially Responsible Behaviour of Enterprises

http://dx.doi.org/10.5772/intechopen.70536

249

The objective of creating and improving the corporate governance of companies is the development of best practice based on the principles of good processed into a wide variety of policies and codes. The first formulation of the CG principles was in 1992, when Sir Adrian Cadbury, a member of the Institute of Directors, wrote the Cadbury Code of Best Practice of Great Britain, in which he emphasises the principles of information openness, fairness and responsibility in the terms of CG [23]. Later, in 1999 OECD composed basic principles of management and governance. As a result of various accounting scandals at the end of the millennium, European Commission issued Action Plan: European company law and corporate governance – a modern legal framework for more engaged shareholders and sustainable companies in 2003. At the same time The US Government accepted Sarbanes-Oxley Act with the aim to increase investors' protection by enhancing demands on the accuracy and correctness of published financial documents. OECD has updated the original principles in 2004 and added a separated principle laid down by the national regulator, which should promote transparent and efficient market, comply with the laws and clearly define the division of responsibilities among different supervisory, regulatory and law enforcement institutions. OECD principles became the basis for the creation of national codes of corporate governance in the most developed countries of the world. OECD updated and composed new G20/OECD principles of corporate governance with the aim to increase the confidence of companies and

In Slovakia, Central European Corporate Governance Association (CECGA) has yet again initiated and achieved the revision of the National Code of Corporate Governance in cooperation with the representatives of Public Administration (the respective ministries) and the Bratislava Stock Exchange in 2016 [25]. The foundation for this revision was, besides the new

investors in the capital market in September 2015 in Ankara [24].

management of the company.

Responsible behaviour is not a one-off or short-term matter; it has to be a long-term consistent business philosophy. It often involves radical changes in the thinking of owners, managers and employees of companies, who apart from their own corporate interests and needs and wishes of customers also factor in long-term interests of the society.

Modern history of corporate social responsibility (CSR) began in the 1950s with the first definition by CSR theorists Bowen [1] who perceived it as obligations of businessmen to pursue those policies, to make those decisions or to follow those lines of action which are desirable in terms of the objectives and values of our society. Other authors supported this idea, elaborated it and supplemented it with additional dimensions [2–6]. In the 1980s, various alternative conceptions of social responsibility developed and commitments of companies widened in relation to all stakeholders [7–9].

Social responsibility is based on the triple-bottom-line which comprises '3P': profit–people– planet. It is a philosophy in business which says that overall performance of a company should be measured by its combined contribution (1) to the economic prosperity, (2) to the quality of the environment and (3) to the social capital [10–13]. Based on the triple-bottom-line, there are three basic areas of the responsible behaviour of companies – economic, social and environmental. Each of them includes various activities from which company can choose based on its specialisation and stakeholders' requirements. In the economic field, CSR emphasis on transparency in the business and building good relations with stakeholders who can influence economic activity of the company, especially with the customers, suppliers, shareholders, investors and business partners [14].

Corporate governance (CG) also plays an important role in the economic area of the CSR concept, particularly in relation to shareholders and employees. Corporate governance has become a significant factor in managing organisations in the current global and complex environment. In order to understand CG, it is important to highlight its definition. There is no single accepted definition for corporate governance but it can be defined as a set of processes and structures for controlling and directing an organisation. It constitutes a set of rules, which governs the relationships between management, shareholders and stakeholders [15]. The term "corporate governance" has a clear origin from a Greek word "kyberman" meaning to steer, guide or govern. From a Greek word, it moved to Latin, where it was known as "gubernare" and the French version of "governor". It could also mean the process of decision-making and the process by which decisions may be implemented [16].

Corporate governance includes all types of firms and its definitions could extend to cover all of the economic and non-economic activities. Literatures in CG provide some form of meaning on governance, but fall short in its precise meaning of governance. Corporate governance deals with the ways in which suppliers of finance to corporations assure themselves of getting a return to their investment [17]. Roubíček [18] states that the term corporate governance can also be understood as an inner organisation of a company, that is, the structure of competency of the advisory board and the board of directors and relations between shareholders and the management. According to Mallin [19] optimal management of a trading company means protecting its creativity, freedom and flexibility and ensuring its continuous ability to create wealth and welfare which is essential to the civil society. Authority is the brain of the company cultivating executive to share the values with all shareholders and other parties involved. Klírová [20] considers the assessment of business performance the main function of CG from wider perspective than executive, that is, taking into consideration interests of all parties legitimately involved, and in this way influencing the creation of business strategy by its activity and its implementation with the aim of satisfying these interests. OECD's [21] definition characterises the basis of CG very well – the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as the board, managers, shareholders and other stakeholders and spells out the rules and procedures for making decisions in corporate affairs. Monks and Minow [22] also support this idea and define corporate governance as relations between different parties during influencing the governance and performance of companies, while shareholders and management are the primary parties and employees, customers, suppliers, creditors and other interest groups are the secondary. According to Mallin [19], the objective of corporate governance is to ensure that the firm is managed in the best interest of shareholders and other stakeholders of the company. CG supports transparency and accountability, which are key attributes for investors for the proper management of the company.

integrated approach to sustainable products and services, and the active cooperation of all

Responsible behaviour is not a one-off or short-term matter; it has to be a long-term consistent business philosophy. It often involves radical changes in the thinking of owners, managers and employees of companies, who apart from their own corporate interests and needs and wishes

Modern history of corporate social responsibility (CSR) began in the 1950s with the first definition by CSR theorists Bowen [1] who perceived it as obligations of businessmen to pursue those policies, to make those decisions or to follow those lines of action which are desirable in terms of the objectives and values of our society. Other authors supported this idea, elaborated it and supplemented it with additional dimensions [2–6]. In the 1980s, various alternative conceptions of social responsibility developed and commitments of companies

Social responsibility is based on the triple-bottom-line which comprises '3P': profit–people– planet. It is a philosophy in business which says that overall performance of a company should be measured by its combined contribution (1) to the economic prosperity, (2) to the quality of the environment and (3) to the social capital [10–13]. Based on the triple-bottom-line, there are three basic areas of the responsible behaviour of companies – economic, social and environmental. Each of them includes various activities from which company can choose based on its specialisation and stakeholders' requirements. In the economic field, CSR emphasis on transparency in the business and building good relations with stakeholders who can influence economic activity of the company, especially with the customers, suppliers, shareholders,

Corporate governance (CG) also plays an important role in the economic area of the CSR concept, particularly in relation to shareholders and employees. Corporate governance has become a significant factor in managing organisations in the current global and complex environment. In order to understand CG, it is important to highlight its definition. There is no single accepted definition for corporate governance but it can be defined as a set of processes and structures for controlling and directing an organisation. It constitutes a set of rules, which governs the relationships between management, shareholders and stakeholders [15]. The term "corporate governance" has a clear origin from a Greek word "kyberman" meaning to steer, guide or govern. From a Greek word, it moved to Latin, where it was known as "gubernare" and the French version of "governor". It could also mean the process of decision-making and

Corporate governance includes all types of firms and its definitions could extend to cover all of the economic and non-economic activities. Literatures in CG provide some form of meaning on governance, but fall short in its precise meaning of governance. Corporate governance deals with the ways in which suppliers of finance to corporations assure themselves of getting a return to their investment [17]. Roubíček [18] states that the term corporate governance can also be understood as an inner organisation of a company, that is, the structure of competency of the advisory board and the board of directors and relations between shareholders and the

stakeholders contribute to the overall well-being of society and the entire planet.

of customers also factor in long-term interests of the society.

248 Entrepreneurship - Development Tendencies and Empirical Approach

widened in relation to all stakeholders [7–9].

investors and business partners [14].

the process by which decisions may be implemented [16].

The objective of creating and improving the corporate governance of companies is the development of best practice based on the principles of good processed into a wide variety of policies and codes. The first formulation of the CG principles was in 1992, when Sir Adrian Cadbury, a member of the Institute of Directors, wrote the Cadbury Code of Best Practice of Great Britain, in which he emphasises the principles of information openness, fairness and responsibility in the terms of CG [23]. Later, in 1999 OECD composed basic principles of management and governance. As a result of various accounting scandals at the end of the millennium, European Commission issued Action Plan: European company law and corporate governance – a modern legal framework for more engaged shareholders and sustainable companies in 2003. At the same time The US Government accepted Sarbanes-Oxley Act with the aim to increase investors' protection by enhancing demands on the accuracy and correctness of published financial documents. OECD has updated the original principles in 2004 and added a separated principle laid down by the national regulator, which should promote transparent and efficient market, comply with the laws and clearly define the division of responsibilities among different supervisory, regulatory and law enforcement institutions. OECD principles became the basis for the creation of national codes of corporate governance in the most developed countries of the world. OECD updated and composed new G20/OECD principles of corporate governance with the aim to increase the confidence of companies and investors in the capital market in September 2015 in Ankara [24].

In Slovakia, Central European Corporate Governance Association (CECGA) has yet again initiated and achieved the revision of the National Code of Corporate Governance in cooperation with the representatives of Public Administration (the respective ministries) and the Bratislava Stock Exchange in 2016 [25]. The foundation for this revision was, besides the new G20/OECD principles, the recommendations of the European Commission for the area of corporate governance (CG) related to independent members of the organisations' bodies, remuneration and reporting (recommendations No. 2004/913/ES, 2005/162/ES, 2009/385/ES and 2014/208/ EU). The Guidelines of the UNO on human rights of 2011 were also taken into consideration.

Corporate governance is becoming more difficult with the growing globalisation. Results of inappropriate governance in (not only multinational) companies came out mainly during the crisis and fully influenced not only companies themselves, but also the global economy. The failure of using CG principles, insufficient transparency and information asymmetry were also the reasons for the negative development. Information asymmetry or the imperfection of information is considered as one of the reasons for the failure of the market mechanism and the price system in allocating production sources. Stiglitz [26] defines it as a situation in which various information are available for different people (or market entities). In this context the information asymmetry emerges not only between managers and shareholders, but also between investors and all stakeholders of the company. Each group follows its own interests with the aim to maximise its own benefit which is the main motive for the information asymmetry formation. One of the ways to eliminate information asymmetry is responsible implementation of corporate governance principles, which many authors of foreign studies confirm [27–29].

The subject of our research was companies whose securities are listed on the Bratislava Stock Exchange over the period 2011–2015. There were registered 87 share issuers and 11 issuers of bonds in 2011, according to data from the National Bank of Slovakia. The total number of companies in 2011 was 104 due to the fact that some companies issue shares and also bonds. The total number of issuers in 2012 was 109 companies and in 2013 was 102 companies. The issuer on the Bratislava Stock Exchange does not have information disclosure obligations to receive a security for trading on a multilateral trading system. For this reason, we have excluded companies on the Multilateral Trading Facility. There were 66 companies in 2014 and 65 companies in 2015. The number of companies which quote their shares and bonds is

The issuer does not have information disclosure obligations to receive a security for trading on a multilateral trading

system. For this reason, we have excluded companies in the multilateral trading system.

Table 1. The number of shares issuers and bonds issuers.

The number of shares issuers 87 92 84 47 48 The number of bonds issuers 11 11 11 13 11 The number of issuers of shares and also bonds 6 6 7 6 6 Total number of issuers 104 109 102 66\* 65\*

2011 2012 2013 2014 2015

http://dx.doi.org/10.5772/intechopen.70536

251

Importance of Corporate Governance in Socially Responsible Behaviour of Enterprises

We obtained the information from the companies´ annual financial reports which are available in the Central Register of Regulated Information (hereinafter "CERI"), the Register of Financial Statements (hereinafter "RUZ") and on the companies' websites. We researched the disclosure in the Register of Financial Statements for 2013. The amendment to the Accounting Act No. 431/2002, as subsequently amended (hereinafter "Accounting Act"), which entered into force on 1 January 2014, introduces a new obligation for issuers to publish the annual financial report in RUZ pursuant to § 23, paragraph 2 of this Act. The Act on Stock Exchange No. 429/2002, as subsequently amended (hereinafter "the Act on Stock Exchange"), has been amended as well. According to § 45, paragraph 1 of this Act, the issuer is required to provide regulated information in CERI of the National Bank of Slovakia. This legal obligation is fulfilled when the issuer has entered regulated information in RUZ. For this reason, we have extended our evaluation to include information

We have compiled our own corporate governance index in order to complete for an overall assessment of the level of corporate governance in individual companies. Authors of foreign studies [27–30] also used a corporate governance index in determining the level of corporate governance, but often without specifically indicating its method. In our case, we could not take over one of the models, but we have compiled own index suited to the Slovak capital market standards and disclosure by companies. This index uses ordinal measures of various evalua-

in Table 1.

\*

disclosure in RUZ.

tive criteria. The criteria were as follows:

Level of adherence to corporate governance principles can also indicate the development of capital market and business environment of a country. Implementation of CG principles has probably positive impact on a variety of corporate management's areas [9, 16–17, 31]. Mallin [19] and Claessens and Yurtoglu [32] summarise these positive impacts as follows:


### 2. Data and methods

The chapter aims to investigate disclosure of information on corporate governance in companies whose securities are listed on the Bratislava Stock Exchange and on the basis on this information to compile own corporate governance index, through which it is possible to assess the level of compliance with corporate governance principles in these companies in Slovakia for the period 2011–2015.


\* The issuer does not have information disclosure obligations to receive a security for trading on a multilateral trading system. For this reason, we have excluded companies in the multilateral trading system.

Table 1. The number of shares issuers and bonds issuers.

G20/OECD principles, the recommendations of the European Commission for the area of corporate governance (CG) related to independent members of the organisations' bodies, remuneration and reporting (recommendations No. 2004/913/ES, 2005/162/ES, 2009/385/ES and 2014/208/ EU). The Guidelines of the UNO on human rights of 2011 were also taken into consideration.

250 Entrepreneurship - Development Tendencies and Empirical Approach

Corporate governance is becoming more difficult with the growing globalisation. Results of inappropriate governance in (not only multinational) companies came out mainly during the crisis and fully influenced not only companies themselves, but also the global economy. The failure of using CG principles, insufficient transparency and information asymmetry were also the reasons for the negative development. Information asymmetry or the imperfection of information is considered as one of the reasons for the failure of the market mechanism and the price system in allocating production sources. Stiglitz [26] defines it as a situation in which various information are available for different people (or market entities). In this context the information asymmetry emerges not only between managers and shareholders, but also between investors and all stakeholders of the company. Each group follows its own interests with the aim to maximise its own benefit which is the main motive for the information asymmetry formation. One of the ways to eliminate information asymmetry is responsible implementation of corporate

Level of adherence to corporate governance principles can also indicate the development of capital market and business environment of a country. Implementation of CG principles has probably positive impact on a variety of corporate management's areas [9, 16–17, 31]. Mallin

• better access of the company to the external funding sources. Access to the funding sources stimulates higher investments, higher growth and the creation of new jobs; • lowering the costs of capital and related higher company valuation; company's attractiveness for investors will increase which leads to growth and higher employment;

• improvement of operational performance thanks to better source allocation and more

• better relations with all company's stakeholders – responsible implementation of CG principles can generally minimise the occurrence of financial crises which imply economic

The chapter aims to investigate disclosure of information on corporate governance in companies whose securities are listed on the Bratislava Stock Exchange and on the basis on this information to compile own corporate governance index, through which it is possible to assess the level of compliance with corporate governance principles in these companies in Slovakia

governance principles, which many authors of foreign studies confirm [27–29].

[19] and Claessens and Yurtoglu [32] summarise these positive impacts as follows:

effective governance which creates wealth in general;

and social costs.

2. Data and methods

for the period 2011–2015.

The subject of our research was companies whose securities are listed on the Bratislava Stock Exchange over the period 2011–2015. There were registered 87 share issuers and 11 issuers of bonds in 2011, according to data from the National Bank of Slovakia. The total number of companies in 2011 was 104 due to the fact that some companies issue shares and also bonds. The total number of issuers in 2012 was 109 companies and in 2013 was 102 companies. The issuer on the Bratislava Stock Exchange does not have information disclosure obligations to receive a security for trading on a multilateral trading system. For this reason, we have excluded companies on the Multilateral Trading Facility. There were 66 companies in 2014 and 65 companies in 2015. The number of companies which quote their shares and bonds is in Table 1.

We obtained the information from the companies´ annual financial reports which are available in the Central Register of Regulated Information (hereinafter "CERI"), the Register of Financial Statements (hereinafter "RUZ") and on the companies' websites. We researched the disclosure in the Register of Financial Statements for 2013. The amendment to the Accounting Act No. 431/2002, as subsequently amended (hereinafter "Accounting Act"), which entered into force on 1 January 2014, introduces a new obligation for issuers to publish the annual financial report in RUZ pursuant to § 23, paragraph 2 of this Act. The Act on Stock Exchange No. 429/2002, as subsequently amended (hereinafter "the Act on Stock Exchange"), has been amended as well. According to § 45, paragraph 1 of this Act, the issuer is required to provide regulated information in CERI of the National Bank of Slovakia. This legal obligation is fulfilled when the issuer has entered regulated information in RUZ. For this reason, we have extended our evaluation to include information disclosure in RUZ.

We have compiled our own corporate governance index in order to complete for an overall assessment of the level of corporate governance in individual companies. Authors of foreign studies [27–30] also used a corporate governance index in determining the level of corporate governance, but often without specifically indicating its method. In our case, we could not take over one of the models, but we have compiled own index suited to the Slovak capital market standards and disclosure by companies. This index uses ordinal measures of various evaluative criteria. The criteria were as follows:

a. disclosure of the current annual report in Central Register of Regulated Information,

disclosure of the audit committee – information on the establishment of the Committee, the explanation if the committee is not established, description of activities and results of the work of the committee during the reporting period. We did the same with the other two committees. We have compiled corporate governance index for each reporting company with aim to estimate levels of corporate governance. The corporate governance index consists of the criteria, which are to be assessed by ordinal character based on their importance. Weightings are assigned to each criterion and are determined on the basis the expert estimation and theoretically supported by Saaty´s method of determining the weights. The Saaty´s method

Importance of Corporate Governance in Socially Responsible Behaviour of Enterprises

http://dx.doi.org/10.5772/intechopen.70536

compares pairs and evaluation is entered into a matrix S = (sij) in the following way:

1 – i and j are equivalent

 – i is slightly preferred over j – i is strongly preferred over j – i is very strongly preferred over j – i is absolutely preferred over j

The values 2, 4, 6 and 8 are the intermediate stage evaluation. For ease of calculation used

ln sij � ln vi � ln vj

Q k j¼1 sij " #<sup>1</sup>=<sup>k</sup>

> Q k j¼1

To an objective assessment of the importance of each criterion in corporate governance index

CG index <sup>¼</sup> <sup>0</sup>:095<sup>∗</sup>ð Þþ <sup>a</sup> <sup>þ</sup> <sup>b</sup> <sup>þ</sup> <sup>c</sup> <sup>0</sup>:079<sup>∗</sup><sup>d</sup> <sup>þ</sup> <sup>0</sup>:159<sup>∗</sup><sup>e</sup> <sup>þ</sup> <sup>0</sup>:079<sup>∗</sup><sup>f</sup> <sup>þ</sup> <sup>0</sup>:079<sup>∗</sup><sup>g</sup> <sup>þ</sup> <sup>0</sup>:079<sup>∗</sup><sup>h</sup>

Individual assessment criteria were given a score and assigned a weight according to their degree of importance. We set the value of coefficients based on expert estimation and supported by Saaty´s method of determining the weights. We identified through expert estimation that

P k i¼1

� � � � <sup>2</sup> ! min (2)

sij " #<sup>1</sup>=<sup>k</sup> (3)

<sup>j</sup> <sup>þ</sup> <sup>0</sup>:079<sup>∗</sup><sup>k</sup> (4)

(1)

253

ðsijÞ ¼

method of least squares logarithmic:

Conditions for validity: P

where i = 1, …, k.

8 >>>>>><

>>>>>>:

<sup>F</sup> <sup>¼</sup> <sup>X</sup> k

vi ¼ 1.

The solution is the geometric mean of the row of the matrix S:

criteria, we assigned weights by expert estimate that are as follows:

<sup>i</sup> <sup>þ</sup> <sup>0</sup>:079<sup>∗</sup>

k i¼1

<sup>þ</sup> <sup>0</sup>:079<sup>∗</sup>

i¼1

X j>i

vi ¼


During the evaluation of corporate governance criteria there were several problems and limitations. Legislation in force does not require the company to disclose information on the website of the company. Obligations for companies that were the subject of the survey are to disclose information for the current accounting period in CERI or RUZ. In order to appreciate the efforts of the company to inform stakeholders through the website, corporate governance index also took account of this fact. The company, which released information in CERI, RUZ and on its website also, reached the highest score in that category. Assessment of the level and quality of information in the Statement on Corporate Governance was another criterion. Particular of the Statement on Corporate Governance are specified in § 20 of the Accounting Act. Some companies in structuring the Statement on Corporate Governance followed the legal requirements, but the content of the information was insufficient. Other companies used the statement forms prepared by Central European Corporate Governance Association (CECGA). Due to the objective assessment of the quality of information in the statement we did not evaluate the structure of statements on corporate governance, but the quality of the information, that is, whether the company said only general information or comprehensively and concisely explain each point of statement, together with deviations from the Code. The obligation to establish an audit committee is required by § 19 of the Accounting Act. Based on this legal requirement, the entity does not have an audit committee if its supervisory board performs the activities of the audit committee or the parent company has established a committee. The assessment of whether the company has established or has not established audit committee would not provide us an objective assessment. Therefore, we evaluated a comprehensive disclosure of the audit committee – information on the establishment of the Committee, the explanation if the committee is not established, description of activities and results of the work of the committee during the reporting period. We did the same with the other two committees.

We have compiled corporate governance index for each reporting company with aim to estimate levels of corporate governance. The corporate governance index consists of the criteria, which are to be assessed by ordinal character based on their importance. Weightings are assigned to each criterion and are determined on the basis the expert estimation and theoretically supported by Saaty´s method of determining the weights. The Saaty´s method compares pairs and evaluation is entered into a matrix S = (sij) in the following way:

$$\mathbf{r}(s\_{ij}) = \begin{cases} 1 - \text{i and j are equivalent} \\ 2 - \text{i is slightly preferred over j} \\ 5 - \text{i is strongly preferred over j} \\ 7 - \text{i is very strongly preferred over j} \\ 9 - \text{i is absolutely preferred over j} \end{cases} \tag{1}$$

The values 2, 4, 6 and 8 are the intermediate stage evaluation. For ease of calculation used method of least squares logarithmic:

$$F = \sum\_{i=1}^{k} \sum\_{j>i} \left( \ln s\_{\vec{\eta}} - \left( \ln v\_i - \ln v\_j \right) \right)^2 \to \min \tag{2}$$

Conditions for validity: P k i¼1 vi ¼ 1.

The solution is the geometric mean of the row of the matrix S:

$$\upsilon\_i = \frac{\left[\prod\_{j=1}^k s\_{ij}\right]^{1/k}}{\sum\_{i=1}^k \left[\prod\_{j=1}^k s\_{ij}\right]^{1/k}} \tag{3}$$

where i = 1, …, k.

a. disclosure of the current annual report in Central Register of Regulated Information,

d. the scope and clarity of the information about corporate governance in annual report

f. information about board members, such as names, experience, responsibility and

g. information about the structure and amount of remuneration for individual members of

i. information about the establishment and activities of an Audit Committee, or the failure

j. information about the establishment and activities of a Remuneration Committee or the

k. information about the establishment and activities of a Nomination Committee or the

During the evaluation of corporate governance criteria there were several problems and limitations. Legislation in force does not require the company to disclose information on the website of the company. Obligations for companies that were the subject of the survey are to disclose information for the current accounting period in CERI or RUZ. In order to appreciate the efforts of the company to inform stakeholders through the website, corporate governance index also took account of this fact. The company, which released information in CERI, RUZ and on its website also, reached the highest score in that category. Assessment of the level and quality of information in the Statement on Corporate Governance was another criterion. Particular of the Statement on Corporate Governance are specified in § 20 of the Accounting Act. Some companies in structuring the Statement on Corporate Governance followed the legal requirements, but the content of the information was insufficient. Other companies used the statement forms prepared by Central European Corporate Governance Association (CECGA). Due to the objective assessment of the quality of information in the statement we did not evaluate the structure of statements on corporate governance, but the quality of the information, that is, whether the company said only general information or comprehensively and concisely explain each point of statement, together with deviations from the Code. The obligation to establish an audit committee is required by § 19 of the Accounting Act. Based on this legal requirement, the entity does not have an audit committee if its supervisory board performs the activities of the audit committee or the parent company has established a committee. The assessment of whether the company has established or has not established audit committee would not provide us an objective assessment. Therefore, we evaluated a comprehensive

h. information about risk management, defined predictable risks and risk quantification,

e. the scope, clarity and quality of information in the corporate governance statement,

b. disclosure of the current annual report in Register of Financial Statements,

c. disclosure of the current annual report on the companies´ websites,

according to § 20 of the Accounting Act,

252 Entrepreneurship - Development Tendencies and Empirical Approach

functions,

the board,

to establish one,

failure to establish one and

failure to establish one.

To an objective assessment of the importance of each criterion in corporate governance index criteria, we assigned weights by expert estimate that are as follows:

$$\begin{aligned} \text{CG index} &= 0.095^\*(\mathbf{a} + \mathbf{b} + \mathbf{c}) + 0.079^\*\mathbf{d} + 0.159^\*\mathbf{e} + 0.079^\*\mathbf{f} + 0.079^\*\mathbf{g} + 0.079^\*\mathbf{h} \\ &+ 0.079^\*\mathbf{i} + 0.079^\*\mathbf{j} + 0.079^\*\mathbf{k} \end{aligned} \tag{4}$$

Individual assessment criteria were given a score and assigned a weight according to their degree of importance. We set the value of coefficients based on expert estimation and supported by Saaty´s method of determining the weights. We identified through expert estimation that criterion "the scope, clarity and quality of information in corporate governance statement" as the most important criterion in the index. Other important criteria with lower value of the coefficient were: "disclosure of the current annual report in CERI", "disclosure of the current annual report in RUZ" and "disclosure of the current annual report on the companies´ websites". Other criteria were the same coefficients with respect to their significance in comparison with the mentioned higher ranked criteria in the index. Each monitored company was scored using a weighted sum of the evaluated criteria. This allowed corporate governance comparisons across companies. We have compiled Saaty´s matrix, which is shown in Tables 2 and 3, which is evaluated 11 criteria in the index and their importance in pairwise comparisons.

Corporate governance index with weights set through Saaty´s method is as follows:

CG index <sup>¼</sup> <sup>0</sup>:115<sup>∗</sup>ð Þþ <sup>a</sup> <sup>þ</sup> <sup>b</sup> <sup>þ</sup> <sup>c</sup> <sup>0</sup>:061<sup>∗</sup><sup>d</sup> <sup>þ</sup> <sup>0</sup>:229<sup>∗</sup><sup>e</sup> <sup>þ</sup> <sup>0</sup>:061<sup>∗</sup><sup>f</sup> <sup>þ</sup> <sup>0</sup>:061<sup>∗</sup>

3.1. Disclosure of information in the context of corporate governance

ment of transparency in the Slovak capital market.

Aiming to emphasise the importance of applying the principles of corporate governance also in the regulated Slovak market, we carried out a research in the period of 2011–2015 in companies, whose securities are listed on the Bratislava Stock Exchange. Outcomes of the research then became the foundation for creating corporate governance index which is the determining indicator of the level of adherence to corporate governance principles in Slovakia.

One of the basic governance framework in Slovakia is the framework on disclosure and transparency. It is in the interest of the companies eliminate information asymmetry, which

According to § 34 of the Act on Stock Exchange, as subsequently amended, the companies that issue securities are required to publish the Annual Financial Report, which shall include information on corporate governance, no later than 4 months after the end of the financial year. During the reporting period, there were companies that failed to meet this legal obligation and did not publish the information in CERI, RUZ and even on their website. In annual comparison 2011–2013, the proportion of these companies remained almost unchanged (25 companies) and in 2013 the number dropped by only one company. After the exclusion of companies without information obligations, we noticed a significant decreased in the number of companies that did not disclose information in CERI, in RUZ and on company´s website

In 2011 there were 23 companies (about 22%) that disclosed the current annual financial report in CERI or on the website. In 2011 and 2013, researched companies preferred disclosure in CERI. Inverse trend was recorded in 2012, which was dominated by disclosure of documents on the company website. We appreciate the on-year increase in the proportion of companies that published documents in CERI and on their website also. This share decreased from 53.8% in 2011 to 24.6% companies in 2015. This fact indicates the effort to inform all stakeholders on the part of most companies in Slovakia, which in the long term can contribute to the improve-

During the evaluation of the transparency in 2013 we took into account the disclosure in RUZ, for example, companies can disclose information in CERI, on their website and in RUZ. The share of companies, that disclose documents in 2 of 3 options, was at 67.6/%, that is, 69 companies. The companies preferred to publish documents in CERI before in RUZ. In the year 2013, only eight companies published annual reports in RUZ. For the mentioned period, we noticed only one company that published the documents in CERI, on the website and in RUZ.

occurs mainly between managers, shareholders, investors and other stakeholders.

3. Results

either.

<sup>þ</sup> <sup>0</sup>:061<sup>∗</sup><sup>i</sup> <sup>þ</sup> <sup>0</sup>:061<sup>∗</sup><sup>j</sup> <sup>þ</sup> <sup>0</sup>:061<sup>∗</sup>k: (5)

Importance of Corporate Governance in Socially Responsible Behaviour of Enterprises

<sup>g</sup> <sup>þ</sup> <sup>0</sup>:061<sup>∗</sup><sup>h</sup>

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Table 2. Saaty´s matrix.


Table 3. Weighting of each index criteria based on Saaty´s method.

Corporate governance index with weights set through Saaty´s method is as follows:

$$\begin{aligned} \text{CG index} &= 0.115^\circ (\text{a} + \text{b} + \text{c}) + 0.061^\circ \text{d} + 0.229^\circ \text{e} + 0.061^\circ \text{f} + 0.061^\circ \text{g} + 0.061^\circ \text{h} \\ &+ 0.061^\circ \text{i} + 0.061^\circ \text{j} + 0.061^\circ \text{k}. \end{aligned} \tag{5}$$

### 3. Results

criterion "the scope, clarity and quality of information in corporate governance statement" as the most important criterion in the index. Other important criteria with lower value of the coefficient were: "disclosure of the current annual report in CERI", "disclosure of the current annual report in RUZ" and "disclosure of the current annual report on the companies´ websites". Other criteria were the same coefficients with respect to their significance in comparison with the mentioned higher ranked criteria in the index. Each monitored company was scored using a weighted sum of the evaluated criteria. This allowed corporate governance comparisons across companies. We have compiled Saaty´s matrix, which is shown in Tables 2 and 3, which is evaluated 11 criteria in

a b c de fghi j k

A 1 1 1 2 0.33 2 2 2 2 2 2 B 1 1 1 2 0.33 2 2 2 2 2 2 C 1 1 1 2 0.33 2 2 2 2 2 2 D 0.5 0.5 0.5 1 0.33 1 1 1 1 1 1 E 3 3 3 3 1 333 333 F 0.5 0.5 0.5 1 0.33 1 1 1 1 1 1 G 0.5 0.5 0.5 1 0.33 1 1 1 1 1 1 H 0.5 0.5 0.5 1 0.33 1 1 1 1 1 1 I 0.5 0.5 0.5 1 0.33 1 1 1 1 1 1 J 0.5 0.5 0.5 1 0.33 1 1 1 1 1 1 K 0.5 0.5 0.5 1 0.33 1 1 1 1 1 1

Category Percentage Rank Disclosure of the current annual report in CERI 11.5 2 Disclosure of the current annual report in RUZ 11.5 2 Disclosure of the current annual report on the companies´ websites 11.5 2 Quality of information in the corporate governance statement 6.1 5 Information about board members 22.9 1 Information about the structure and amount of remuneration 6.1 5 Audit Committee 6.1 5 Nomination Committee 6.1 5 Remuneration Committee 6.1 5 Information about risk management 6.1 5

the index and their importance in pairwise comparisons.

254 Entrepreneurship - Development Tendencies and Empirical Approach

Table 3. Weighting of each index criteria based on Saaty´s method.

Table 2. Saaty´s matrix.

Aiming to emphasise the importance of applying the principles of corporate governance also in the regulated Slovak market, we carried out a research in the period of 2011–2015 in companies, whose securities are listed on the Bratislava Stock Exchange. Outcomes of the research then became the foundation for creating corporate governance index which is the determining indicator of the level of adherence to corporate governance principles in Slovakia.

#### 3.1. Disclosure of information in the context of corporate governance

One of the basic governance framework in Slovakia is the framework on disclosure and transparency. It is in the interest of the companies eliminate information asymmetry, which occurs mainly between managers, shareholders, investors and other stakeholders.

According to § 34 of the Act on Stock Exchange, as subsequently amended, the companies that issue securities are required to publish the Annual Financial Report, which shall include information on corporate governance, no later than 4 months after the end of the financial year. During the reporting period, there were companies that failed to meet this legal obligation and did not publish the information in CERI, RUZ and even on their website. In annual comparison 2011–2013, the proportion of these companies remained almost unchanged (25 companies) and in 2013 the number dropped by only one company. After the exclusion of companies without information obligations, we noticed a significant decreased in the number of companies that did not disclose information in CERI, in RUZ and on company´s website either.

In 2011 there were 23 companies (about 22%) that disclosed the current annual financial report in CERI or on the website. In 2011 and 2013, researched companies preferred disclosure in CERI. Inverse trend was recorded in 2012, which was dominated by disclosure of documents on the company website. We appreciate the on-year increase in the proportion of companies that published documents in CERI and on their website also. This share decreased from 53.8% in 2011 to 24.6% companies in 2015. This fact indicates the effort to inform all stakeholders on the part of most companies in Slovakia, which in the long term can contribute to the improvement of transparency in the Slovak capital market.

During the evaluation of the transparency in 2013 we took into account the disclosure in RUZ, for example, companies can disclose information in CERI, on their website and in RUZ. The share of companies, that disclose documents in 2 of 3 options, was at 67.6/%, that is, 69 companies. The companies preferred to publish documents in CERI before in RUZ. In the year 2013, only eight companies published annual reports in RUZ. For the mentioned period, we noticed only one company that published the documents in CERI, on the website and in RUZ.


Table 4. Disclosure of information (the annual report).

During the monitored years 2014–2015, we did not list companies that do not have the information obligation (Multilateral Trading Facility). Interesting is the growing trend of companies that have published information in CERI, RUZ and even on their website. The number of companies mentioned was 43 (66.2%) for 2015 (Table 4).

3.3. Composition and remuneration of board members

The statement contains an explanation of each item and the reason for deviation form

information on the remuneration of board members.

Published the names of board members, together with the qualifications, roles and

Disclosed the amount of remuneration of board members and managers of the company

or remuneration disclosed for individual boards of the company

nies were only 10 (Table 7).

responsibilities and managerial posts

Table 7. Composition of board members.

Table 8. Remuneration of board members.

compliance with the Code

Table 6. Statement on corporate governance.

According to the Code, Principle IV, paragraph 5, the company discloses information about its board members, including their qualifications, selection process and their independence. This obligation is also imposed by the Accounting Act, § 20, paragraph 6. Based on the recommendations of the Code and the Accounting Act, we evaluated the disclosure of information about the board members. The negative fact is that there are still companies which do not even publish basic information on the composition of their boards. The number of these companies was at 27 in 2011, increased to 33 companies in 2013 and then in 2015 the mentioned compa-

No specific information on CG 57 61 68 28 30 The statement contains a brief explanation of each item 40 28 12 25 25

Importance of Corporate Governance in Socially Responsible Behaviour of Enterprises

2011 2012 2013 2014 2015

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7 20 22 13 10

2011 2012 2013 2014 2015

13 14 12 11 12

2011 2012 2013 2014 2015

97544

In context with the identified failures in corporate governance we also included in the survey information on the remuneration of board members. The disclosure on remuneration of board members is still an area that most companies have carefully protected. As can be seen from Table 8, about 60% of companies did not disclose at least cumulative data and no further

Some companies paid remuneration to board members despite losses shown during the reporting period. This may encourage managers to take a higher risk and thus adversely affect the performance of the company. The risk of moral hazard for a member of a board who is not punished for their failure is very high. The method of adjustment of remuneration

No information 27 31 33 9 10 Only the names of board members 64 64 57 46 43

No information 61 63 65 47 51 Cumulative data about remuneration 34 39 32 15 10

#### 3.2. Content of the annual report and the statement of compliance with corporate governance

The annual financial report includes the annual report, financial statements and the statement of the financial statements' fairness made by the issuer's executives. According to § 20 of the Accounting Act, the annual report includes the Statement on Corporate Governance as well. Nevertheless, there are still a large percentage of companies that in their annual report did not mention any information about corporate governance. As shown in Table 5, trying to inform shareholders and investors was apparent mainly in 2012, when 64 companies disclose basic information on corporate governance through their annual reports and companies also provided comprehensive information. The share of companies reporting minimum basic information in their annual report was 54.8% in 2011 and increased to 61.5% in 2015.

The most important area of our research was to evaluate the content of the Statement on Corporate Governance. Companies can write their statement based on the requirements of the Accounting Act or use the statement form for the Statement on Corporal Governance Code drafted by CECGA, which allows companies to comprehensively inform on the level of implementation of the corporate governance principles. Some companies wrote the statement, which contained only a reference to the internal company materials, the laws or information were general. We conclude that these companies consider drafting the statement on corporate governance as a formal matter (Table 6).


Table 5. Content of the annual report.


Table 6. Statement on corporate governance.

During the monitored years 2014–2015, we did not list companies that do not have the information obligation (Multilateral Trading Facility). Interesting is the growing trend of companies that have published information in CERI, RUZ and even on their website. The

No information is published in CERI, in RUZ and on company´s website either 25 25 24 0 2 Annual report is published in one of the three options (CERI, RUZ, company´s website) 23 8864 Annual report is published in two of the three options (CERI, RUZ, company´s website) 56 76 69 21 16 Annual report is published in CERI, RUZ, company´s website 0\* 0\* 1 39 43

2011 2012 2013 2014 2015

2011 2012 2013 2014 2015

The annual financial report includes the annual report, financial statements and the statement of the financial statements' fairness made by the issuer's executives. According to § 20 of the Accounting Act, the annual report includes the Statement on Corporate Governance as well. Nevertheless, there are still a large percentage of companies that in their annual report did not mention any information about corporate governance. As shown in Table 5, trying to inform shareholders and investors was apparent mainly in 2012, when 64 companies disclose basic information on corporate governance through their annual reports and companies also provided comprehensive information. The share of companies reporting minimum basic informa-

The most important area of our research was to evaluate the content of the Statement on Corporate Governance. Companies can write their statement based on the requirements of the Accounting Act or use the statement form for the Statement on Corporal Governance Code drafted by CECGA, which allows companies to comprehensively inform on the level of implementation of the corporate governance principles. Some companies wrote the statement, which contained only a reference to the internal company materials, the laws or information were general. We conclude that these companies consider drafting the statement on corporate

No information about CG 47 39 53 31 25 It contains partial information on CG 43 64 27 20 22 It contains information on CG and compliance with the Code 14 6 22 15 18

3.2. Content of the annual report and the statement of compliance with corporate

tion in their annual report was 54.8% in 2011 and increased to 61.5% in 2015.

governance as a formal matter (Table 6).

Table 5. Content of the annual report.

number of companies mentioned was 43 (66.2%) for 2015 (Table 4).

Companies have an obligation to publish information in RUZ since 2015.

256 Entrepreneurship - Development Tendencies and Empirical Approach

Table 4. Disclosure of information (the annual report).

governance

\*

#### 3.3. Composition and remuneration of board members

According to the Code, Principle IV, paragraph 5, the company discloses information about its board members, including their qualifications, selection process and their independence. This obligation is also imposed by the Accounting Act, § 20, paragraph 6. Based on the recommendations of the Code and the Accounting Act, we evaluated the disclosure of information about the board members. The negative fact is that there are still companies which do not even publish basic information on the composition of their boards. The number of these companies was at 27 in 2011, increased to 33 companies in 2013 and then in 2015 the mentioned companies were only 10 (Table 7).

In context with the identified failures in corporate governance we also included in the survey information on the remuneration of board members. The disclosure on remuneration of board members is still an area that most companies have carefully protected. As can be seen from Table 8, about 60% of companies did not disclose at least cumulative data and no further information on the remuneration of board members.

Some companies paid remuneration to board members despite losses shown during the reporting period. This may encourage managers to take a higher risk and thus adversely affect the performance of the company. The risk of moral hazard for a member of a board who is not punished for their failure is very high. The method of adjustment of remuneration


Table 7. Composition of board members.


Table 8. Remuneration of board members.


Table 9. Information on risk management.

and incentive system in companies has a significant impact on risk management and for this reason we took into account information about risk management in the survey. Risk management methods, defined predictable risks and in some cases the quantification of risks is very valuable information for shareholders and potential investors. The Code, Principle IV, also recommends disclosure of information on ex-ante risks to the extent that is necessary to fully inform investors about serious and predictable risks associated with the company. Favourable results were observed in the proportion of companies providing sufficient information about risk management as well as predictable risks. The proportion of companies increased from 15.38% (16 companies) in 2011 to 29.23% (19 companies) in 2015. According to the Accounting Act § 20, the company has to describe the risk management systems in its annual report. However, the most of monitored companies did not state any or insufficient information on risk management. The number of the companies is shown in Table 9.

According to principle V of the Code, it is recommended to establish other committees in companies as well: The Remuneration and Nomination Committees. In general, the survey results in evaluation of these two committees are not favourable but after considering the

No information 91 92 85 58 56

No information 88 87 80 53 51

Importance of Corporate Governance in Socially Responsible Behaviour of Enterprises

Information on whether the committee was or was not established (reasons why it was

Information on whether the committee was or was not established (reasons why it was

It is established, a description of the activities of the committee and the results of its

It is established, a description of the activities of the committee and the results of its

2011 2012 2013 2014 2015

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12 18 17 10 10

44534

2011 2012 2013 2014 2015

12 16 16 8 7

11102

Approximately four (modus) of the companies did not provide any information on the Remuneration Committee, whose main role is to propose and make recommendations on the remuneration of board members and management. The Remuneration Committee was set up in 8 banking and insurance companies. Approximately 80% of companies do not disclosure infor-

Even less attention is paid to the Nomination committee. Most of the companies (approximately 85% of the companies) do not report on whether the Nomination Committee was or was not established. Over the period 2011–2013, only one company set up the Nomination Committee and two companies in 2015. The number of the companies is shown in Table 12.

3.5. The number of board member, proportion of women and employees on Companies'

One of the principles of corporate governance, the responsibilities of the board, is closely related to the issue of gender equality. According to this principle the board should ensure the strategic management of the company, the effective monitoring of management and should act responsibly towards both society and shareholders. These activities may be determined by many factors and one of them is gender equality. European Commission claims that the

• improved company performance: companies with higher share of women at top levels can

annual comparison, slight tendency to improve the disclosure was noted.

progress in gender equality can have the following positive impacts [33]:

deliver strong organisational and financial performance;

mation about the Remuneration Committee (Table 11).

boards

not established)

not established)

activities

Table 11. Remuneration committee.

Table 12. Nomination committee.

activities

#### 3.4. Audit, remuneration and nomination committees

Other criteria that were included in the survey related to the area of establishment of committees as recommended by the Code. The Audit Committee should make proposals and recommendations on the performance of internal control and external audit. According to § 19 of the Accounting Act, an audit committee is mandatory for companies that issue securities on a regulated market. The Audit Committee does not have to be set up separately if the supervisory board carries out activities normally done by this committee. It is surprising, that despite the legal obligation, approximately 50% of companies did not provide information on the Audit Committee in its annual report during the years 2011–2013. On the positive side, the share of these companies fell to 38.46% in 2015. Clearly disclosed information on the establishment and functioning of an Audit Committee during the reporting period had only 19, 13, 17 and 8 companies (Table 10).


Table 10. Audit committee.


Table 11. Remuneration committee.

and incentive system in companies has a significant impact on risk management and for this reason we took into account information about risk management in the survey. Risk management methods, defined predictable risks and in some cases the quantification of risks is very valuable information for shareholders and potential investors. The Code, Principle IV, also recommends disclosure of information on ex-ante risks to the extent that is necessary to fully inform investors about serious and predictable risks associated with the company. Favourable results were observed in the proportion of companies providing sufficient information about risk management as well as predictable risks. The proportion of companies increased from 15.38% (16 companies) in 2011 to 29.23% (19 companies) in 2015. According to the Accounting Act § 20, the company has to describe the risk management systems in its annual report. However, the most of monitored companies did not state any or insufficient

No specific information 72 82 69 43 38 Basic information about risk management and defined predictable risks 16 10 11 8 8 Comprehensive information about risk management and risk quantification 16 17 22 15 19

2011 2012 2013 2014 2015

2011 2012 2013 2014 2015

34 41 35 27 32

19 13 17 8 8

information on risk management. The number of the companies is shown in Table 9.

Other criteria that were included in the survey related to the area of establishment of committees as recommended by the Code. The Audit Committee should make proposals and recommendations on the performance of internal control and external audit. According to § 19 of the Accounting Act, an audit committee is mandatory for companies that issue securities on a regulated market. The Audit Committee does not have to be set up separately if the supervisory board carries out activities normally done by this committee. It is surprising, that despite the legal obligation, approximately 50% of companies did not provide information on the Audit Committee in its annual report during the years 2011–2013. On the positive side, the share of these companies fell to 38.46% in 2015. Clearly disclosed information on the establishment and functioning of an Audit Committee during the reporting period had only 19, 13, 17

No information 51 55 50 31 25

Information on whether the committee was or was not established (reasons why it was

It is established, a description of the activities of the committee and the results of its

3.4. Audit, remuneration and nomination committees

and 8 companies (Table 10).

not established)

Table 10. Audit committee.

activities

Table 9. Information on risk management.

258 Entrepreneurship - Development Tendencies and Empirical Approach


Table 12. Nomination committee.

According to principle V of the Code, it is recommended to establish other committees in companies as well: The Remuneration and Nomination Committees. In general, the survey results in evaluation of these two committees are not favourable but after considering the annual comparison, slight tendency to improve the disclosure was noted.

Approximately four (modus) of the companies did not provide any information on the Remuneration Committee, whose main role is to propose and make recommendations on the remuneration of board members and management. The Remuneration Committee was set up in 8 banking and insurance companies. Approximately 80% of companies do not disclosure information about the Remuneration Committee (Table 11).

Even less attention is paid to the Nomination committee. Most of the companies (approximately 85% of the companies) do not report on whether the Nomination Committee was or was not established. Over the period 2011–2013, only one company set up the Nomination Committee and two companies in 2015. The number of the companies is shown in Table 12.

#### 3.5. The number of board member, proportion of women and employees on Companies' boards

One of the principles of corporate governance, the responsibilities of the board, is closely related to the issue of gender equality. According to this principle the board should ensure the strategic management of the company, the effective monitoring of management and should act responsibly towards both society and shareholders. These activities may be determined by many factors and one of them is gender equality. European Commission claims that the progress in gender equality can have the following positive impacts [33]:

• improved company performance: companies with higher share of women at top levels can deliver strong organisational and financial performance;


Due to the last argument of the European Commission, we decided to assess what the percentage of women directors and supervisory boards of companies on the Slovak regulated market for the period 2011–2015. Table 13 presents the percentage of the share of women in the total number of directors and the supervisory board.

We appreciate the rising median value, which was in 2011 at 17%, increased at 22% in 2013 and in the last surveyed year 2015 was at 17%. The average representation of women increased year on year 2012/2013 from 23 to 24%, while the average in the EU-28 was lower at 18%. Among the companies were some that did not have any woman on the board or supervisory board. The percentage of these companies decreased from 62.5% in 2011 to 55.4% in 2015. Women on board of directors were not represented in 65 companies in 2011 and 2013 and in 70 companies in 2012. The number of these companies was twice more compared with companies without the representation of women on the supervisory boards. The number of companies which did not have representation of women on the supervisory board was 36 in 2011, 32 in 2013 and 29 in 2015. The percentage of these companies increased from 34.6% in 2011 to 44.6% in 2015. The average number of women on boards of directors was around 0.44 and average number of women on supervisory board oscillated around one women. Women were represented on the supervisory boards more frequently than on boards of directors.

legal obligation (the Commercial Code no. 513/1991, § 200) about a minimum number of

Median 3 3 3 3 3 Modus 3 3 3 3 3 Average 3.5 3.34 3.38 3.53 3.22 Standard deviation 1.4 1.48 1.56 1.59 1.52

Median 3 3 3 3 3 Modus 3 3 3 3 3 Average 3.81 3.72 3.57 3.91 3.63 Standard deviation 1.56 1.43 1.57 2.93 1.1

2011 2012 2013 2014 2015

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2011 2012 2013 2014 2015

We evaluated the level of corporate governance using the corporate governance index. Table 16 shows the basic characteristics of corporate governance index for the period 2011–2015. Corporate governance index reached a minimum value at 0 and maximum at 1.63 for whole reporting period. Companies achieved an average value of the index from 0.48 points to 0.66 points. Standard deviation of the mean had a growing tendency, from 0.38 in 2011 to 0.42 points in 2013 and then the value dropped to 0.46 points in 2015. Distribution asymmetry is evident from the value of skewness and kurtosis parameters. A positive value of skewness indicates to us that the mean is greater than the median – most of the values of the index are lower than the mean. We found out that there were higher proportions of companies with

N Min Max Median Modus Mean Std. Deviation Skewness Kurtosis

CG Index 2011 104 0.00 1.38 0.4275 0.00 0.4847 0.38007 0.405 0.237 0.738 0.469 CG Index 2012 109 0.00 1.38 0.4270 0.00 0.5094 0.39455 0.332 0.231 0.838 0.459 CG Index 2013 102 0.00 1.38 0.4270 0.00 0.5072 0.42421 0.420 0.239 1.01 0.474 CG Index 2014 66 0.10 1.47 0.6335 0.348 0.6548 0.33109 0.357 0.295 0.721 0.582 CG Index 2015 65 0.00 1.63 0.5230 0.443 0.6624 0.34098 0.604 0.297 0.127 0.586

Stat. Std. E Stat. Std. E

members of the supervisory board.

Table 15. The number of members of the supervisory board.

Table 16. Descriptive statistics of corporate governance index.

Table 14. The number of members of the board.

3.6. Corporate governance index

The number of members of the boards and supervisory board has an impact on the effectiveness of these authorities, the company's performance and the degree of information asymmetry [29]. For the years 2011–2015, we found out how many members were in the board and the supervisory board of the companies on the Slovak regulated market. The results are available in Tables 14 and 15.

Median and mode number of directors for the whole period was three members and the same conclusion was also in the number of supervisory boards members. Companies thus meet the


Table 13. Proportion of women on companies' boards.


Table 14. The number of members of the board.

• better quality of decision-making: a more diverse board of directors can contribute to better performance because decisions are based on evaluating more alternatives;

• improved corporate governance and ethics: the quality of corporate governance and ethical behaviour can be higher in companies with a high share of women on boards; • better use of the talent pool: 60% of university graduates in Europe are women. Systematically including suitable candidates of both sex ensures that new board members are

Due to the last argument of the European Commission, we decided to assess what the percentage of women directors and supervisory boards of companies on the Slovak regulated market for the period 2011–2015. Table 13 presents the percentage of the share of women in the total

We appreciate the rising median value, which was in 2011 at 17%, increased at 22% in 2013 and in the last surveyed year 2015 was at 17%. The average representation of women increased year on year 2012/2013 from 23 to 24%, while the average in the EU-28 was lower at 18%. Among the companies were some that did not have any woman on the board or supervisory board. The percentage of these companies decreased from 62.5% in 2011 to 55.4% in 2015. Women on board of directors were not represented in 65 companies in 2011 and 2013 and in 70 companies in 2012. The number of these companies was twice more compared with companies without the representation of women on the supervisory boards. The number of companies which did not have representation of women on the supervisory board was 36 in 2011, 32 in 2013 and 29 in 2015. The percentage of these companies increased from 34.6% in 2011 to 44.6% in 2015. The average number of women on boards of directors was around 0.44 and average number of women on supervisory board oscillated around one women. Women were

represented on the supervisory boards more frequently than on boards of directors.

The number of members of the boards and supervisory board has an impact on the effectiveness of these authorities, the company's performance and the degree of information asymmetry [29]. For the years 2011–2015, we found out how many members were in the board and the supervisory board of the companies on the Slovak regulated market. The results are available

Median and mode number of directors for the whole period was three members and the same conclusion was also in the number of supervisory boards members. Companies thus meet the

Median 17% 20% 22% 16.67% 16.67% Modus 0% 0% 0% 0% 0% Average 23% 23% 24% 20.74% 22.55% Standard deviation 20.02% 21% 21.05% 19.56% 21.24% The number of companies with no female representation 24 29 26 19 19

2011 2012 2013 2014 2015

selected from the very best candidates, both male and female.

number of directors and the supervisory board.

260 Entrepreneurship - Development Tendencies and Empirical Approach

in Tables 14 and 15.

Table 13. Proportion of women on companies' boards.


Table 15. The number of members of the supervisory board.

legal obligation (the Commercial Code no. 513/1991, § 200) about a minimum number of members of the supervisory board.

#### 3.6. Corporate governance index

We evaluated the level of corporate governance using the corporate governance index. Table 16 shows the basic characteristics of corporate governance index for the period 2011–2015. Corporate governance index reached a minimum value at 0 and maximum at 1.63 for whole reporting period. Companies achieved an average value of the index from 0.48 points to 0.66 points. Standard deviation of the mean had a growing tendency, from 0.38 in 2011 to 0.42 points in 2013 and then the value dropped to 0.46 points in 2015. Distribution asymmetry is evident from the value of skewness and kurtosis parameters. A positive value of skewness indicates to us that the mean is greater than the median – most of the values of the index are lower than the mean. We found out that there were higher proportions of companies with


Table 16. Descriptive statistics of corporate governance index.

below-average value of corporate governance index. Approximately 20% of companies in each reference year did not disclose information in the right form or information not disclosed at all. Therefore, we could not prepare corporate governance index for these companies. Based on the negative values of the kurtosis there were confirmed a platykurtic distribution. We can conclude that the incidence of extreme value is less frequent compared to the normal distribution for the period 2011–2015.

Outputs of the survey have expanded our knowledge of corporate governance in Slovakia and showed significant weaknesses in compliance with fundamental legal obligations by companies. A positive fact is we indicate the efforts by companies of at least some disclosure of information on corporate governance. We expect that the activities of the CECGA and annual awarding the best companies based on our compiled index, will increase interest in the topic of corporate governance, help to raise awareness and attract the attention of a wider audience.

Importance of Corporate Governance in Socially Responsible Behaviour of Enterprises

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263

Faculty of Economics, Matej Bel University in Banská Bystrica, Banská Bystrica, Slovakia

[1] Bowen HR. Social Responsibilities of the Businessman. New York: Harper; 1953. 276p

[2] Elibert H, Parket RI. The practice of business: The current status of corporate social

[3] Carroll AB. Corporate social responsibility: Evolution of a definitional construct. Business

[4] D'Amato A, Henderson S, Florence S. Corporate Social Responsibility and Sustainable Business. A Guide to Leadership Tasks and Functions. Greensboro, North Carolina:

[5] Coombs T, Holladay S. Managing Corporate Social Responsibility: A Communication

[6] Hroncová Vicianová J. Uplatňovanie koncepcie spoločensky zodpovedného podnikania vo vybraných odvetviach národného hospodárstva na Slovensku. Banská Bystrica: Vydavateľstvo Univerzity Mateja Bela - Belianum, Ekonomická fakulta; 2014. 168p [7] Carroll AB. The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons. 1991;34(4):39-48. DOI: 10.1016/

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Author details

References

Hussam Musa, Zdenka Musová\* and Lenka Debnárová \*Address all correspondence to: zdenka.musova@umb.sk

responsibility. Business Horizons. 1973;16:5-14

Approach. Oxford: Wiley-Blackwell; 2012. p. 200

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The main benefit of CG index creation is seen in the fact that on the basis of our proposed procedure, the level of corporate governance in selected companies in Slovakia has been estimated for the very first time. With our help, the CECGA thus achieved a detailed picture of the level of information which is available for public in these enterprises, and at the same time it obtained an overview of which enterprises appear to be the best in this field. This enables a year-to-year comparison, or an estimate, of how the trend develops in time. Awarding the best companies by Central European Corporate Governance Association for 2012, 2013, 2014 and 2015 based on our index have an impact on the visibility of corporate governance topics in Slovakia and increase the motivation of companies to report quality information on compliance with corporate governance principles.

### 4. Conclusions

Adverse long-term development in the Slovak capital market has significantly strengthened the position of commercial banks in the financial market. Companies tend to preferentially provide information to commercial banks as opposed to publicly inform potential investors about the company. From on-year comparison it was apparent slight increase in awareness and the quality of the reported information on corporate governance. The most significant changes were observed in evaluating the disclosure of information in the share of companies that their annual report is published in CERI, RUZ and on company´s website.

Positive changes occurred also in the establishment of committees and availability of information on their activities, as well as in the evaluation of risk management. The survey has revealed us areas where there was a decrease in the level of reporting. We evaluated negatively disclosure the Statement on Corporate Governance and content of the information in this statement. The share of companies that did not have the Statement on Corporate Governance or information in the Statement was not sufficient exceeded approximately 50% during selected years. The negative trend was also identified in the increase of the share of companies that not disclosed enough information about board members and their remuneration. The percentage of these companies increased from 58.7 in 2011 to 78.5 in 2015. It is important to notice that there are still companies that rely on outdated Unified Code or develop their own code. The positive finding is that the number of such companies decreased.

Based on the presented results of the survey, we compiled the corporate governance index for each company which securities are listed on the Bratislava Stock Exchange. The Central Europe Corporate Governance Association now uses our proposed methodology and compile and publish the ranking of the companies in context their CG principles implementation every year. Outputs of the survey have expanded our knowledge of corporate governance in Slovakia and showed significant weaknesses in compliance with fundamental legal obligations by companies. A positive fact is we indicate the efforts by companies of at least some disclosure of information on corporate governance. We expect that the activities of the CECGA and annual awarding the best companies based on our compiled index, will increase interest in the topic of corporate governance, help to raise awareness and attract the attention of a wider audience.

### Author details

below-average value of corporate governance index. Approximately 20% of companies in each reference year did not disclose information in the right form or information not disclosed at all. Therefore, we could not prepare corporate governance index for these companies. Based on the negative values of the kurtosis there were confirmed a platykurtic distribution. We can conclude that the incidence of extreme value is less frequent compared to the normal distribution

The main benefit of CG index creation is seen in the fact that on the basis of our proposed procedure, the level of corporate governance in selected companies in Slovakia has been estimated for the very first time. With our help, the CECGA thus achieved a detailed picture of the level of information which is available for public in these enterprises, and at the same time it obtained an overview of which enterprises appear to be the best in this field. This enables a year-to-year comparison, or an estimate, of how the trend develops in time. Awarding the best companies by Central European Corporate Governance Association for 2012, 2013, 2014 and 2015 based on our index have an impact on the visibility of corporate governance topics in Slovakia and increase the motivation of companies to report quality

Adverse long-term development in the Slovak capital market has significantly strengthened the position of commercial banks in the financial market. Companies tend to preferentially provide information to commercial banks as opposed to publicly inform potential investors about the company. From on-year comparison it was apparent slight increase in awareness and the quality of the reported information on corporate governance. The most significant changes were observed in evaluating the disclosure of information in the share of companies that their

Positive changes occurred also in the establishment of committees and availability of information on their activities, as well as in the evaluation of risk management. The survey has revealed us areas where there was a decrease in the level of reporting. We evaluated negatively disclosure the Statement on Corporate Governance and content of the information in this statement. The share of companies that did not have the Statement on Corporate Governance or information in the Statement was not sufficient exceeded approximately 50% during selected years. The negative trend was also identified in the increase of the share of companies that not disclosed enough information about board members and their remuneration. The percentage of these companies increased from 58.7 in 2011 to 78.5 in 2015. It is important to notice that there are still companies that rely on outdated Unified Code or develop their own

Based on the presented results of the survey, we compiled the corporate governance index for each company which securities are listed on the Bratislava Stock Exchange. The Central Europe Corporate Governance Association now uses our proposed methodology and compile and publish the ranking of the companies in context their CG principles implementation every year.

information on compliance with corporate governance principles.

annual report is published in CERI, RUZ and on company´s website.

code. The positive finding is that the number of such companies decreased.

for the period 2011–2015.

262 Entrepreneurship - Development Tendencies and Empirical Approach

4. Conclusions

Hussam Musa, Zdenka Musová\* and Lenka Debnárová

\*Address all correspondence to: zdenka.musova@umb.sk

Faculty of Economics, Matej Bel University in Banská Bystrica, Banská Bystrica, Slovakia

### References


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**Section 4**

**The Role of Human Resources, Education and**

**Gender in Entrepreneurship**

**The Role of Human Resources, Education and Gender in Entrepreneurship**

**Chapter 14**

**Provisional chapter**

**Management of Human Resource in Small and**

**Management of Human Resource in Small and** 

DOI: 10.5772/intechopen.70294

Strategic management is a current direction of management types. It is applied in all types of businesses, including small and medium-sized enterprises. However, the use of its principles is limited in SMEs. The limits are caused by the size of these enterprises related to greater focus on operational management. For SMEs, cumulating of functions is also typical; oral communication is more common than written, etc. Despite those limitations, implementation of strategic principles in the management of SMEs is able to increase their competitiveness, reduce costs, improve decision-making, facilitate the introduction of employee motivation, shorten delivery times, provide better customer care, etc. The paper discusses whether and to what extent SMEs implement the principles of strategic management and whether its use is effective. The basic principle of strategic management is the formulation and selection of a strategy. Most of the SMEs in the sample formulated a strategy. However, a written strategy was designed mostly by enterprises with more than 25 employees; enterprises with fewer employees designed a written strategy only exceptionally. Classified by the type of activity, a strategy is seen less frequently in wood-work enterprises. On the other hand, enterprises operating in trade and services, including transport, designed a strategy, or even a written strategy, the most often. Quality and stabilisation were the most monitored characteristics, regardless of the number of employees or business type. Profit was the least monitored strategy in the sample. Positive effects after the introduction of strategic management principles were rated as significant by 27% of the subjects analysed and by 36% as moderate, and 38% of enterprises had no positive effects. The most striking positive effect, after the introduction of strategic management principles, was achieved by 44% in decision-making and costs. The smallest number of enterprises, only 8%, had a positive effect of the introduction of strategic management principles in the area of internal communication. The results show that the introduction of strategic management has a positive impact on small and medium enterprises, and it is highly desirable that its principles were intro-

> © 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution,

© 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

and reproduction in any medium, provided the original work is properly cited.

**Keywords:** management, enterprise, SME, strategy, stability, development, profit

**Medium-Sized Enterprises: Case Study**

**Medium-Sized Enterprises: Case Study**

Darja Holátová and Monika Březinová

Darja Holátová and Monika Březinová

http://dx.doi.org/10.5772/intechopen.70294

duced into these entities.

**Abstract**

Additional information is available at the end of the chapter

Additional information is available at the end of the chapter

**Chapter 14**

**Provisional chapter**

### **Management of Human Resource in Small and Medium-Sized Enterprises: Case Study Medium-Sized Enterprises: Case Study**

**Management of Human Resource in Small and** 

DOI: 10.5772/intechopen.70294

Darja Holátová and Monika Březinová Additional information is available at the end of the chapter

Darja Holátová and Monika Březinová

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.70294

#### **Abstract**

Strategic management is a current direction of management types. It is applied in all types of businesses, including small and medium-sized enterprises. However, the use of its principles is limited in SMEs. The limits are caused by the size of these enterprises related to greater focus on operational management. For SMEs, cumulating of functions is also typical; oral communication is more common than written, etc. Despite those limitations, implementation of strategic principles in the management of SMEs is able to increase their competitiveness, reduce costs, improve decision-making, facilitate the introduction of employee motivation, shorten delivery times, provide better customer care, etc. The paper discusses whether and to what extent SMEs implement the principles of strategic management and whether its use is effective. The basic principle of strategic management is the formulation and selection of a strategy. Most of the SMEs in the sample formulated a strategy. However, a written strategy was designed mostly by enterprises with more than 25 employees; enterprises with fewer employees designed a written strategy only exceptionally. Classified by the type of activity, a strategy is seen less frequently in wood-work enterprises. On the other hand, enterprises operating in trade and services, including transport, designed a strategy, or even a written strategy, the most often. Quality and stabilisation were the most monitored characteristics, regardless of the number of employees or business type. Profit was the least monitored strategy in the sample. Positive effects after the introduction of strategic management principles were rated as significant by 27% of the subjects analysed and by 36% as moderate, and 38% of enterprises had no positive effects. The most striking positive effect, after the introduction of strategic management principles, was achieved by 44% in decision-making and costs. The smallest number of enterprises, only 8%, had a positive effect of the introduction of strategic management principles in the area of internal communication. The results show that the introduction of strategic management has a positive impact on small and medium enterprises, and it is highly desirable that its principles were introduced into these entities.

**Keywords:** management, enterprise, SME, strategy, stability, development, profit

Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons

### **1. Introduction**

Development of small and medium-sized enterprises reduces unemployment rates. This group of companies more quickly and more readily responds to demand changes [1]. Disadvantages in comparison to large enterprises are represented by situations when insufficient use of capacities leads to increased manufacturing costs, which may be seen as a barrier to further development including management development [2] or, in extreme cases, as the cause of the company wind up. Another disadvantage is represented by prevailing orientation of small and mediumsized enterprises to local markets and limited ability to enter international markets. Another frequent problem is represented by insufficient funds for research, development, orientation and further education of employees and the facilitators and barriers to workplace learning [3].

• They are free to invest in activities directly connected with the local environment and tar-

Management of Human Resource in Small and Medium-Sized Enterprises: Case Study

http://dx.doi.org/10.5772/intechopen.70294

271

• Their planning horizon is shorter, and advantages of investment show early in obtaining of more orders. SME stability then retrospectively strongly affects their commercial success

• SME administration is relatively noncomplex, allowing for quicker and not so cost-inten-

Results of research dealing with processes implemented in SME with an emphasis on the human resource management process have shown that only 37.09% of businesses out of the total research population (188 companies) have a human resource management strategy, with just 5.96% having the strategy in written form. The same research has also shown that the order of preference of individual processes on the part of SMEs (evaluated by managers or manager-authorised respondents) differs from the generally declared statements and knowledge. In the context of relevance of the examined processes, the human resource management area is ranked sixth (in the opinion of managers of the addressed

These point to the fact that human resource management is not yet understood by company managers as one of the key factors of business success, even though authors of theoretical publications [15, 16] and managers in general speak about HR management as a crucial factor. Human capital is accumulated knowledge and skills existing within the company and representing employee capital [17]. Human capital can be measured by employee acquisition and maintenance (employee fluctuation), costs of employee training and development and ability to innovate. Management of human and intellectual capital is more than just attracting and attaining employees. It also means giving the employees a chance to develop as that will increase the corporate knowledge base, both for the individuals and for the company as a whole [18]. Good working conditions and a good reputation help the company to be attractive

Another outcome of the present research is the extent to which the HR management process works in SMEs. **Table 1** shows that according to the company managers' opinion, this process works at 69.09%, which makes it rank fifth among the other corporate processes. So much for HR management as a whole, the following chapters will focus on selected aspects of HR

External communications. External communications in the context of strategic decisionmaking are highly relevant for increased performance of SMEs and optimisation of their governance. Effective communication link setting is important not only for harmonisation of all work activities but also for encouraging performance, work conduct, employee loyalty

geting the given local conditions.

sive introduction of changes.

companies).

management, in particular:

and motivation [20].

and is beneficial for the local area (taxes, employment, etc.).

• Sponsoring is often detached from corporate strategy.

and maintain and develop its human capital further [19].

• Reports on their activities are disseminated with merciless impact.

• SMEs find it harder to seek ways towards unifying and sharing information.

As asserted by Srpová [4], SME management has a number of specifics. In a small company with a low staff and managerial staff numbers, many functions are cumulated in a few employees. Small enterprises are also characterised by prevalence of oral overwritten internal communication [5].

SMEs target at effective governance leading to competitive edge. For an enterprise to successfully stand up to its challenges, compliance between company goals and human resource management is desirable [6]. In a hierarchically managed company, people mainly do what they are evaluated by. That is why performance indicator setting is so important as a measurable target in compliance with corporate strategic objectives [7]. Achievement of strategic objectives is conditioned by the ability of company managers to choose the right direction of investment in human resources and assess return of such an investment on the basis of cost analysis, gains and expected risks like in other areas of corporate governance [8].

Today, quality of their human capital is one of the key factors of success for more and more SMEs [9]. In the past human work could be assessed by methods exactly specifying individual performance or operations, such as work standardisation [10]. At present the demand for human work and its quality is much higher, and in addition human capital quality is understood in a much broader context [11]. With the increasing proportion of services in economy, the work is more and more often based on mental abilities and skills of the worker which cannot be measured and assessed with indicators like standard quantity and quality [12]. Therefore the benchmarks today must correspond to the current requirements for human resource management and evaluation [13].

The area of human resource management includes all activities focused on increase of professional competences of employees, their lifelong education, high-standard internal communications within the company, harmonisation of professional and private life and implementation of tools against all kinds of discrimination [10]. This also includes an active approach of the company to employment of disabled employees, activities against all kinds of social exclusion, etc. Human resource management, like other processes implemented in SMEs, has its specifics making it different from processes applied in large corporations. Bateman [14] states:


**1. Introduction**

270 Entrepreneurship - Development Tendencies and Empirical Approach

communication [5].

resource management and evaluation [13].

• Their markets are usually much more local and compact.

Most employees come from the area as well as most customers.

Development of small and medium-sized enterprises reduces unemployment rates. This group of companies more quickly and more readily responds to demand changes [1]. Disadvantages in comparison to large enterprises are represented by situations when insufficient use of capacities leads to increased manufacturing costs, which may be seen as a barrier to further development including management development [2] or, in extreme cases, as the cause of the company wind up. Another disadvantage is represented by prevailing orientation of small and mediumsized enterprises to local markets and limited ability to enter international markets. Another frequent problem is represented by insufficient funds for research, development, orientation and further education of employees and the facilitators and barriers to workplace learning [3]. As asserted by Srpová [4], SME management has a number of specifics. In a small company with a low staff and managerial staff numbers, many functions are cumulated in a few employees. Small enterprises are also characterised by prevalence of oral overwritten internal

SMEs target at effective governance leading to competitive edge. For an enterprise to successfully stand up to its challenges, compliance between company goals and human resource management is desirable [6]. In a hierarchically managed company, people mainly do what they are evaluated by. That is why performance indicator setting is so important as a measurable target in compliance with corporate strategic objectives [7]. Achievement of strategic objectives is conditioned by the ability of company managers to choose the right direction of investment in human resources and assess return of such an investment on the basis of cost

Today, quality of their human capital is one of the key factors of success for more and more SMEs [9]. In the past human work could be assessed by methods exactly specifying individual performance or operations, such as work standardisation [10]. At present the demand for human work and its quality is much higher, and in addition human capital quality is understood in a much broader context [11]. With the increasing proportion of services in economy, the work is more and more often based on mental abilities and skills of the worker which cannot be measured and assessed with indicators like standard quantity and quality [12]. Therefore the benchmarks today must correspond to the current requirements for human

The area of human resource management includes all activities focused on increase of professional competences of employees, their lifelong education, high-standard internal communications within the company, harmonisation of professional and private life and implementation of tools against all kinds of discrimination [10]. This also includes an active approach of the company to employment of disabled employees, activities against all kinds of social exclusion, etc. Human resource management, like other processes implemented in SMEs, has its specifics making it different from processes applied in large corporations. Bateman [14] states:

• They operate in many small areas with significant dependence on the local environment.

analysis, gains and expected risks like in other areas of corporate governance [8].

• SME administration is relatively noncomplex, allowing for quicker and not so cost-intensive introduction of changes.

Results of research dealing with processes implemented in SME with an emphasis on the human resource management process have shown that only 37.09% of businesses out of the total research population (188 companies) have a human resource management strategy, with just 5.96% having the strategy in written form. The same research has also shown that the order of preference of individual processes on the part of SMEs (evaluated by managers or manager-authorised respondents) differs from the generally declared statements and knowledge. In the context of relevance of the examined processes, the human resource management area is ranked sixth (in the opinion of managers of the addressed companies).

These point to the fact that human resource management is not yet understood by company managers as one of the key factors of business success, even though authors of theoretical publications [15, 16] and managers in general speak about HR management as a crucial factor. Human capital is accumulated knowledge and skills existing within the company and representing employee capital [17]. Human capital can be measured by employee acquisition and maintenance (employee fluctuation), costs of employee training and development and ability to innovate. Management of human and intellectual capital is more than just attracting and attaining employees. It also means giving the employees a chance to develop as that will increase the corporate knowledge base, both for the individuals and for the company as a whole [18]. Good working conditions and a good reputation help the company to be attractive and maintain and develop its human capital further [19].

Another outcome of the present research is the extent to which the HR management process works in SMEs. **Table 1** shows that according to the company managers' opinion, this process works at 69.09%, which makes it rank fifth among the other corporate processes. So much for HR management as a whole, the following chapters will focus on selected aspects of HR management, in particular:

External communications. External communications in the context of strategic decisionmaking are highly relevant for increased performance of SMEs and optimisation of their governance. Effective communication link setting is important not only for harmonisation of all work activities but also for encouraging performance, work conduct, employee loyalty and motivation [20].


i.e. PR or communication with media (for the sake of simplicity, further text uses the summary term external communication for this purpose) and channels used in this type of communication (oral, written and electronic). And last but not least, the authors also asked about the importance of external communications for managers of the studied companies in the South Bohemia

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In the context of this query, the managers were given a chance to evaluate functioning of the external communication process on a scale from 0% (nonexistence of the external communication process) to 100% (faultless functioning of the process). Mean evaluation by SME managers involved in this research reached 52% for the process of external communication. This also supports the fact that SMEs never implement all components of external communication listed in theory, which is an area for improvement within SMEs. In the studied population of respondents, 19% of managers assessed this process as unsatisfactory (0–20%), 12% as below average (21–40%), 22% as average (41–60%) and 47% as satisfactory to excellent (61–100%). More than half of the studied companies assessed their process of external communication as unsatisfactory, below average or average. This result is supported by the fact often mentioned in professional literature that SMEs suffer from lack of resources, both financial and human, with the required level of experience. In this case, the authors are allowed to conclude that SMEs often lack finance and employees with the required qualifications and experience for positive procurement and use of information from the external and the internal environment of the company, by means of project preset formal communication networks. On the other hand, the research results show that about a half of all SMEs (48%) are able to implement external communication from in-house resources on an excellent or at least satisfactory level

region in the course of the years 2013 and 2014.

**Figure 1.** Evaluation of external media communication process in SMEs (own survey).

(**Figure 1**).

**Table 1.** Order of preference of individual processes in the opinion of respondents (own survey).

Social responsibility. Corporate social responsibility (CSR) is a policy every company can incorporate in its business activity voluntarily. This is a policy formerly reserved for big companies, but now it is expanding to the SME area as well. Its basic strategy may consider moral and ethical aspects in excess of standard business and managerial activities. This means consideration of sustainable development, environment-friendliness, employee and stakeholder relation fostering and transparent business conduct. In the area of human resource management, this tightly corresponds to employee education and career development, motivation, stabilisation and fluctuation.

Employee motivation and stabilisation. Employment with a SME has its advantages in comparison to being an employee of a big company. These include a personal approach to employees and their motivation. Employee motivation has recently been increasingly supported by more demanding work requiring more time, flexibility and independence. SMEs usually do not offer career development, promotion, or a secured job, which on the other hand worsens the employee relationship to their company. That is why correct employee motivation is a vital part of managerial work. Good employment relationships, involvement of employees in the governance process, acceptance of their proposals for improvement of corporate processes and quality of their work, whether in the form of continuous or radical innovation, may contribute to employee loyalty and stabilisation and reduction of voluntary fluctuations.

### **2. Main focus of the chapter**

#### **2.1. Evaluation of external communication process functioning in SMEs**

The process of external communications in SMEs focuses on communication with suppliers and customers. This chapter, however, deals with the third component of external communication, i.e. PR or communication with media (for the sake of simplicity, further text uses the summary term external communication for this purpose) and channels used in this type of communication (oral, written and electronic). And last but not least, the authors also asked about the importance of external communications for managers of the studied companies in the South Bohemia region in the course of the years 2013 and 2014.

In the context of this query, the managers were given a chance to evaluate functioning of the external communication process on a scale from 0% (nonexistence of the external communication process) to 100% (faultless functioning of the process). Mean evaluation by SME managers involved in this research reached 52% for the process of external communication. This also supports the fact that SMEs never implement all components of external communication listed in theory, which is an area for improvement within SMEs. In the studied population of respondents, 19% of managers assessed this process as unsatisfactory (0–20%), 12% as below average (21–40%), 22% as average (41–60%) and 47% as satisfactory to excellent (61–100%). More than half of the studied companies assessed their process of external communication as unsatisfactory, below average or average. This result is supported by the fact often mentioned in professional literature that SMEs suffer from lack of resources, both financial and human, with the required level of experience. In this case, the authors are allowed to conclude that SMEs often lack finance and employees with the required qualifications and experience for positive procurement and use of information from the external and the internal environment of the company, by means of project preset formal communication networks. On the other hand, the research results show that about a half of all SMEs (48%) are able to implement external communication from in-house resources on an excellent or at least satisfactory level (**Figure 1**).

Social responsibility. Corporate social responsibility (CSR) is a policy every company can incorporate in its business activity voluntarily. This is a policy formerly reserved for big companies, but now it is expanding to the SME area as well. Its basic strategy may consider moral and ethical aspects in excess of standard business and managerial activities. This means consideration of sustainable development, environment-friendliness, employee and stakeholder relation fostering and transparent business conduct. In the area of human resource management, this tightly corresponds to employee education and career development, motivation,

**9—least important**

**Rank of preferences**

**Types of processes 1—most important**

272 Entrepreneurship - Development Tendencies and Empirical Approach

Production process and services 1.80 1 Business activity and sales 2.25 2 Financial management 3.01 3 Quality management 3.08 4 Marketing 4.41 5 Human resource management 4.48 6 Internal communications 5.28 7 Social responsibility 6.04 8 Communication with the public, media 6.26 9

**Table 1.** Order of preference of individual processes in the opinion of respondents (own survey).

Employee motivation and stabilisation. Employment with a SME has its advantages in comparison to being an employee of a big company. These include a personal approach to employees and their motivation. Employee motivation has recently been increasingly supported by more demanding work requiring more time, flexibility and independence. SMEs usually do not offer career development, promotion, or a secured job, which on the other hand worsens the employee relationship to their company. That is why correct employee motivation is a vital part of managerial work. Good employment relationships, involvement of employees in the governance process, acceptance of their proposals for improvement of corporate processes and quality of their work, whether in the form of continuous or radical innovation, may contribute to employee loyalty and stabilisation and reduction of voluntary

The process of external communications in SMEs focuses on communication with suppliers and customers. This chapter, however, deals with the third component of external communication,

**2.1. Evaluation of external communication process functioning in SMEs**

stabilisation and fluctuation.

**2. Main focus of the chapter**

fluctuations.

**Figure 1.** Evaluation of external media communication process in SMEs (own survey).

Classification of the inquired companies by size revealed that managers of small enterprises were least satisfied with their external communication process. The lowest level of satisfaction should in theory be expected from managers of micro-companies with the assumption of the lowest resources for this type of external communication. The results show rather the opposite, as shown by **Table 2** and **Figure 2**, where this process is assessed as excellent by the highest percentage (27%) of micro-company managers and only 19% of managers of mediumsized enterprises, where the size classification was expected to reveal the best prerequisites for existence of all necessary resources for high-standard external communication. Small enterprises assessed this process as excellent in 23% of cases. This process was assessed as unsatisfactory or below average by an identical 30% of managers of micro- and medium-sized enterprises and 31% of managers of small enterprises.

#### **2.2. Channels used for external communication of SMEs in the South Bohemia region**

External communication takes oral, written as well as electronic form. Taking the process of external communication as a whole, this chapter will show the use of the individual channels for fulfilment of this task. Managers are asked to specify the percentage of the use of the selected channel type (oral, written, electronic) for external communication. These results were further grouped into the below percentage intervals (**Figure 3**).

**Figure 2.** Evaluation of external communication process by enterprise size (own survey).

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**Figure 3.** Percentage of the use of individual channels for external communication by small and medium-sized

enterprises (own survey).

Across the inquired population, the interval of 0–20% usage was reported for written communication, used within this scope by 62% of companies, 45% of companies used oral communication within this interval (0–20% usage) and 33% used electronic communication within this scope. Maximum usage (81–100%) of the individual channels for external communication was only reported by 3% of the inquired companies in the case of oral communication, 5% in the case of electronic communication and 1% in the case of written communication. All available channels were reported to be used for external communication, which is also confirmed by the results


**Table 2.** Evaluation of how individual processes work in the opinion of respondents (own survey).

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**Figure 2.** Evaluation of external communication process by enterprise size (own survey).

Classification of the inquired companies by size revealed that managers of small enterprises were least satisfied with their external communication process. The lowest level of satisfaction should in theory be expected from managers of micro-companies with the assumption of the lowest resources for this type of external communication. The results show rather the opposite, as shown by **Table 2** and **Figure 2**, where this process is assessed as excellent by the highest percentage (27%) of micro-company managers and only 19% of managers of mediumsized enterprises, where the size classification was expected to reveal the best prerequisites for existence of all necessary resources for high-standard external communication. Small enterprises assessed this process as excellent in 23% of cases. This process was assessed as unsatisfactory or below average by an identical 30% of managers of micro- and medium-sized

**2.2. Channels used for external communication of SMEs in the South Bohemia region**

External communication takes oral, written as well as electronic form. Taking the process of external communication as a whole, this chapter will show the use of the individual channels for fulfilment of this task. Managers are asked to specify the percentage of the use of the selected channel type (oral, written, electronic) for external communication. These results

Across the inquired population, the interval of 0–20% usage was reported for written communication, used within this scope by 62% of companies, 45% of companies used oral communication within this interval (0–20% usage) and 33% used electronic communication within this scope. Maximum usage (81–100%) of the individual channels for external communication was only reported by 3% of the inquired companies in the case of oral communication, 5% in the case of electronic communication and 1% in the case of written communication. All available channels were reported to be used for external communication, which is also confirmed by the results

**Types of processes Evaluation of the functioning (%) Rank** Production process and services 87.99 1 Quality management 81.39 2 Business activity and sales 80.60 3 Financial management 79.07 4 Human resource management 69.09 5 Internal communications 65.25 6 Social responsibility 61.82 7 Marketing 61.32 8 Communication with the public, media 52.18 9

**Table 2.** Evaluation of how individual processes work in the opinion of respondents (own survey).

enterprises and 31% of managers of small enterprises.

274 Entrepreneurship - Development Tendencies and Empirical Approach

were further grouped into the below percentage intervals (**Figure 3**).

**Figure 3.** Percentage of the use of individual channels for external communication by small and medium-sized enterprises (own survey).

shown in **Figure 4**, with just a small percentage of companies using just one of the channels for their external communication and even here the percentage of usage was between 81 and 100%. An extreme case of usage of just a single communication channel for external communication was not reported by any of the inquired companies. On average for the whole population of respondents, oral communication is used in 36%, written in 26% and electronic in 38%.

In terms of a conclusion, SMEs, regardless of their size, mainly use oral and electronic communication, value functioning of external media communication with 47–57%, and rank this process in the relevance hierarchy seventh to eighth of nine, above intracompany information

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There is a big area of improvement for SMEs in the field of external media communication, and for the reason of limited resources, these companies should choose a single technique for every group of external recipients they want to address or inform or even influence with truthful information and use the chosen technique for long term. It is recommended as most beneficial for these companies to join their economic and human resources and experience and proceed jointly in this area according to their connection by one of the logical links (field

Comparing our results with results of similar inquiries 10 or 15 years ago, a huge step forward can be seen in SMEs in this field. But despite that further improvement of this process by SMEs is still needed, as a way towards increasing their competitive edge on the market.

CSR increasingly becomes part of corporate practices of SMEs as a way of sustainable

Obstacles to progress, declared by SMEs [14], correspond to obstacles to development of corporate social responsibility. Identification with these activities and their practicing causes concern in SME representatives. The declared obstacles to involvement of SMEs in CSR activi-

• Lack of knowledge of CSR activities and how to get involved in them and become benefi-

However, the authors of the present essay point out that effective and successful engagement in CSR brings benefit to companies. A company that is ready to invest in CSR will be interested in the effect of its investment in these activities, the effect of the investment on its image, goodwill, perception of its engagement by its customers and employees, reactions of other stakeholders, whether employee loyalty has increased due to it and whether responsible

Practicing of corporate social responsibility in the area of human resources inside and outside the company shows how this policy manifests itself in the internal and the external dimension: Social engagement of employees is less visible but not less important. Helping employees develop their skills and increase their motivation may enhance their innovation activity and

processes and corporate social responsibility. CSR ranks lowest for most SMEs.

**2.3. Corporate social responsibility and small and medium-sized enterprises**

of activity, geographic region, etc.).

development.

ties are as follows:

• Increased cost concern

• Bureaucracy concern

cial to the society

creative approach to work.

• Lack of internal motivation

• Lack of time and human resources

conduct increases sales and number of orders.

In classification of the companies by size, usage of individual channels for external communication showed a similar pattern. All communication channels were reported to be used by the companies mostly within the interval of 0–20%. Just small enterprises mentioned the use of electronic communication within the scope of 21–40% in the largest group of respondents (30%), and 28% of companies reported the interval of 0–20%. This category included one example when none of the inquired medium-sized companies used written communication for its corporate external communications within the scope of 81–100%.

Most companies therefore use all types of communication most often within the scope of 0–20%, but none of these companies mentioned 0 with any communication type.

The above text presents results for the individual SME sizes. The authors focused on a couple of basic questions to characterise the relationship of SMEs to external media communication. Functioning of this process was evaluated by individual company sizes in a very similar manner, with micro-companies evaluating the process functioning with 52%, small companies with 53% and medium-sized companies with 53%.

The individual communication methods are used as follows by the individual SME size groups. Micro-companies use for their external media communication oral communication in 48% of cases, written communication in 18% and electronic communication in 34%. Small companies use oral communication in 37%, written communication in 21% and electronic communication in 42%, and medium-sized companies used oral communication in 38%, written communication in 25% and electronic communication in 37%. Oral communication is mainly used by micro- and medium-sized companies, while small companies mostly use an electronic form of communication.

**Figure 4.** Percentage of the use of individual channels for external communication by small and medium-sized enterprises by company size (own survey).

In terms of a conclusion, SMEs, regardless of their size, mainly use oral and electronic communication, value functioning of external media communication with 47–57%, and rank this process in the relevance hierarchy seventh to eighth of nine, above intracompany information processes and corporate social responsibility. CSR ranks lowest for most SMEs.

There is a big area of improvement for SMEs in the field of external media communication, and for the reason of limited resources, these companies should choose a single technique for every group of external recipients they want to address or inform or even influence with truthful information and use the chosen technique for long term. It is recommended as most beneficial for these companies to join their economic and human resources and experience and proceed jointly in this area according to their connection by one of the logical links (field of activity, geographic region, etc.).

Comparing our results with results of similar inquiries 10 or 15 years ago, a huge step forward can be seen in SMEs in this field. But despite that further improvement of this process by SMEs is still needed, as a way towards increasing their competitive edge on the market.

#### **2.3. Corporate social responsibility and small and medium-sized enterprises**

CSR increasingly becomes part of corporate practices of SMEs as a way of sustainable development.

Obstacles to progress, declared by SMEs [14], correspond to obstacles to development of corporate social responsibility. Identification with these activities and their practicing causes concern in SME representatives. The declared obstacles to involvement of SMEs in CSR activities are as follows:

• Increased cost concern

shown in **Figure 4**, with just a small percentage of companies using just one of the channels for their external communication and even here the percentage of usage was between 81 and 100%. An extreme case of usage of just a single communication channel for external communication was not reported by any of the inquired companies. On average for the whole population of

In classification of the companies by size, usage of individual channels for external communication showed a similar pattern. All communication channels were reported to be used by the companies mostly within the interval of 0–20%. Just small enterprises mentioned the use of electronic communication within the scope of 21–40% in the largest group of respondents (30%), and 28% of companies reported the interval of 0–20%. This category included one example when none of the inquired medium-sized companies used written communication for its corporate external communications within the scope of 81–100%.

Most companies therefore use all types of communication most often within the scope of

The above text presents results for the individual SME sizes. The authors focused on a couple of basic questions to characterise the relationship of SMEs to external media communication. Functioning of this process was evaluated by individual company sizes in a very similar manner, with micro-companies evaluating the process functioning with 52%, small companies

The individual communication methods are used as follows by the individual SME size groups. Micro-companies use for their external media communication oral communication in 48% of cases, written communication in 18% and electronic communication in 34%. Small companies use oral communication in 37%, written communication in 21% and electronic communication in 42%, and medium-sized companies used oral communication in 38%, written communication in 25% and electronic communication in 37%. Oral communication is mainly used by micro- and medium-sized companies, while small companies mostly use an

64%

non-sasfactory (0-20%) below-average (21-40%) average (41-60%)

22%

11%

1%

ORAL W R ITEN ELECTRONI C OR A L W RITEN E LECTRONI C OR A L W RITEN E LECTRONI C MICRO- ENTERPRISE SMALL-ENTERPRISE MEDIUM - ENTERPRIS E

**Figure 4.** Percentage of the use of individual channels for external communication by small and medium-sized

1%

28%

30%

19%

17%

7%

53%

20%

21%

3%

3%

53%

27%

14%

6%

0%

40%

14%

25%

16%

5%

0–20%, but none of these companies mentioned 0 with any communication type.

with 53% and medium-sized companies with 53%.

276 Entrepreneurship - Development Tendencies and Empirical Approach

electronic form of communication.

33%

11%

19%

14%

2%

45%

24%

sasfactory (61-80%) excellent (81-100%)

19%

10%

1%

72%

14%

11%

2%

enterprises by company size (own survey).

2%

33%

25%

18%

19%

5%

respondents, oral communication is used in 36%, written in 26% and electronic in 38%.


However, the authors of the present essay point out that effective and successful engagement in CSR brings benefit to companies. A company that is ready to invest in CSR will be interested in the effect of its investment in these activities, the effect of the investment on its image, goodwill, perception of its engagement by its customers and employees, reactions of other stakeholders, whether employee loyalty has increased due to it and whether responsible conduct increases sales and number of orders.

Practicing of corporate social responsibility in the area of human resources inside and outside the company shows how this policy manifests itself in the internal and the external dimension:

Social engagement of employees is less visible but not less important. Helping employees develop their skills and increase their motivation may enhance their innovation activity and creative approach to work.

The inquiry in the South Bohemia region further revealed areas of corporate responsibility in which the inquired companies were engaged. The respondents speaking for their companies reported most activities within the corporate social responsibility scope in the areas of donations, voluntary work and sponsorship in 62.70%. Further CSR engagement included minimisation of negative impact on the environment: in 43.32%. 13.20% of companies are engaged in super-standard employment policy, and 20.79% report engagement in other further unspecified activities, and 17.16% reported no CSR engagement. The research further revealed that engagement in CSR in the areas of human resources and employment policy was on a low level in SMEs, with percentage of engagement in these activities reaching only up to 13.20% of the companies (**Table 3**).

**Table 4** shows that this indicator was most often followed by medium-sized companies (75.3%), followed by small enterprises (70.5%), with micro-companies ranking lowest, with a relatively balanced proportion of answers (while 43.9% of respondents reported that they did

**Size of enterprises Indicator is monitored Indicator is not monitored Not specified**

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Micro-enterprises (%) 43.9 40.3 15.8 Small enterprises (%) 70.5 24.8 4.7 Medium-sized enterprises (%) 75.3 19.1 5.6

In addition to the actual monitoring of the number of employees that left your company in 2012 and its value, further questions concerned the long-term trend of this indicator development and satisfaction with the informative value of this indicator. Although some respondents answered that they did not monitor the number of employees that left your company in 2012, they subsequently specified the actual number, trend or satisfaction with the indicator value. **Figure 5** shows a summary of all answers to the question concerning the long-term trend of development of the indicator of the number of employees that left your company in

The most frequently reported trend was a constant situation, and this applied to all company size categories based on staff numbers (as for the percentage the constant trend was

**Figure 5.** Long-term trend of the number of employees that left your company in 2012 indicator (own survey).

monitor this indicator; 40.3% of respondents did not follow it).

**Table 4.** Indicator: number of employees that left your company in 2012 (own survey).

2012, given by 70.5% of the analysed companies.

The question is whether SME managers include all activities in their social and employment policies. ISO 26000 lays down that the organisation should be interested in facilitation of educational courses, vocational training and lifelong education of its employees as these activities substantially contribute to assertion of interests of the organisation as such.

What this means for SMEs [21] is that they are not likely to implement corporate social responsibility policies as their rate of return is slow. Social and environmental responsibility is vital, though, for financial performance in relation to its impact strengthening. Most companies should take introduction of the corporate social responsibility concept as an investment and not as a cost. There is a general assumption that consumers will appreciate responsible conduct and will prefer suppliers behaving responsibly. In reality consumers rather prefer suppliers behaving responsibly in relation to not the society but the consumers alone, though.

#### **2.4. Employee stabilisation**

This chapter presents results of selected factors affecting employee stabilisation.

A questionnaire inquiry was used to find out whether companies follow the indicator of the number of employees that left your company in 2012, which should be measured to calculate fluctuation rate. Out of the analysed sample, 66.8% respondents answered that they followed this indicator, 26.1% of them did not follow it, and 7.1% did not answer this question. The results within the defined company size categories based on the reported staff numbers are shown in **Table 4**.


**Table 3.** Engagement of companies in individual CSR activities in per cent (own survey).


**Table 4.** Indicator: number of employees that left your company in 2012 (own survey).

The inquiry in the South Bohemia region further revealed areas of corporate responsibility in which the inquired companies were engaged. The respondents speaking for their companies reported most activities within the corporate social responsibility scope in the areas of donations, voluntary work and sponsorship in 62.70%. Further CSR engagement included minimisation of negative impact on the environment: in 43.32%. 13.20% of companies are engaged in super-standard employment policy, and 20.79% report engagement in other further unspecified activities, and 17.16% reported no CSR engagement. The research further revealed that engagement in CSR in the areas of human resources and employment policy was on a low level in SMEs, with percentage of engagement in these activities reaching only up to 13.20% of the

The question is whether SME managers include all activities in their social and employment policies. ISO 26000 lays down that the organisation should be interested in facilitation of educational courses, vocational training and lifelong education of its employees as these activities substantially contribute to assertion of interests of the organisation as

What this means for SMEs [21] is that they are not likely to implement corporate social responsibility policies as their rate of return is slow. Social and environmental responsibility is vital, though, for financial performance in relation to its impact strengthening. Most companies should take introduction of the corporate social responsibility concept as an investment and not as a cost. There is a general assumption that consumers will appreciate responsible conduct and will prefer suppliers behaving responsibly. In reality consumers rather prefer suppliers behaving responsibly in relation to not the society but the consum-

A questionnaire inquiry was used to find out whether companies follow the indicator of the number of employees that left your company in 2012, which should be measured to calculate fluctuation rate. Out of the analysed sample, 66.8% respondents answered that they followed this indicator, 26.1% of them did not follow it, and 7.1% did not answer this question. The results within the defined company size categories based on the reported staff numbers are

This chapter presents results of selected factors affecting employee stabilisation.

**Engagement of companies in CSR activities Engagement of companies (%)**

Donations, volunteer work, sponsorship 62.70 Minimisation of environmental impact of business 43.23 Super-standard employment policy 13.20 Other activities 20.79 No CSR activities 17.16

**Table 3.** Engagement of companies in individual CSR activities in per cent (own survey).

companies (**Table 3**).

278 Entrepreneurship - Development Tendencies and Empirical Approach

ers alone, though.

shown in **Table 4**.

**2.4. Employee stabilisation**

such.

**Table 4** shows that this indicator was most often followed by medium-sized companies (75.3%), followed by small enterprises (70.5%), with micro-companies ranking lowest, with a relatively balanced proportion of answers (while 43.9% of respondents reported that they did monitor this indicator; 40.3% of respondents did not follow it).

In addition to the actual monitoring of the number of employees that left your company in 2012 and its value, further questions concerned the long-term trend of this indicator development and satisfaction with the informative value of this indicator. Although some respondents answered that they did not monitor the number of employees that left your company in 2012, they subsequently specified the actual number, trend or satisfaction with the indicator value. **Figure 5** shows a summary of all answers to the question concerning the long-term trend of development of the indicator of the number of employees that left your company in 2012, given by 70.5% of the analysed companies.

The most frequently reported trend was a constant situation, and this applied to all company size categories based on staff numbers (as for the percentage the constant trend was

**Figure 5.** Long-term trend of the number of employees that left your company in 2012 indicator (own survey).

mentioned in 55.3% of all provided answers regardless of the company size). Another reported trend was decreasing (22.1% of all companies). The growing trend percentage increased with the company size based on staff number, amounting to 3.5% in the case of micro-companies, 11.1% in the case of small enterprises and 15.5% in the case of the medium-sized enterprise category based on staff numbers. Satisfaction with the value of the indicator differed and was connected with the reported long-term trend of the indicator: the value of the number of employees that left your company in 2012 indicator was satisfactory or completely satisfactory in the case of 88.6% of answers who reported constant long-term development of this indicator, while exactly 50% of respondents reporting a growing trend of this indicator were dissatisfied or absolutely dissatisfied with the value of this indicator. **Table 5** shows results reflecting relative frequencies of answers concerning the trend related to the discussed indicator and satisfaction with its value. These results were correlated where the respondents answered both questions.

#### **2.5. Fluctuation rate**

The fluctuation rate could only be calculated where the respondents filled out both data needed for the fluctuation calculation formula.

Most companies (39.9%) fell within the interval of fluctuation rate higher than 10%. The second biggest group included companies with calculated zero employee fluctuation (23.0% of the companies). This category was tightly followed by companies with calculated fluctuation rate falling within the defined interval of 5.01–10%, whose percentage was 22.4%.

The companies were then again classified by staff number to micro-companies, small and medium-sized enterprises with the fluctuation rate values again sorted by the predefined intervals. The results of this classification are shown in **Figure 6** (micro-companies), **Figure 7** (small enterprises) and **Figure 8** (medium-sized enterprises).

The calculated fluctuation rates in micro-companies based on their reported data only covered the two marginal categories, i.e. the interval with fluctuation rates exceeding 10% (represented by more than two-thirds of all inquired micro-companies) and the interval with zero fluctuation rate (met by nearly one-third of the micro-companies).


Fluctuation rates in small enterprises showed a different pattern than micro-companies when divided among the defined intervals. The strongest category in the case of small enterprises was again the category with fluctuation rates higher than 10%, but with the actual percentage much lower (36.8%) in comparison to micro-companies. The next ranking category with a similar percentage of represented companies was fluctuation rate range 5.01–10% (reached by 28.4% of the respondent companies), followed by the zero

**Figure 7.** Fluctuation rate in small enterprises in classification based on staff number (own survey).

**Figure 6.** Fluctuation rate in micro-companies in classification based on staff number (own survey).

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Fluctuation rate calculation classification in the category of medium-sized enterprises based on staff number again showed the fluctuation rates over 10% as the most frequently represented

fluctuation category (23.2%).

**Table 5.** Satisfaction with indicator value: number of employees that left your company in 2012 indicator and its longterm trend (own survey).

Management of Human Resource in Small and Medium-Sized Enterprises: Case Study http://dx.doi.org/10.5772/intechopen.70294 281

**Figure 6.** Fluctuation rate in micro-companies in classification based on staff number (own survey).

mentioned in 55.3% of all provided answers regardless of the company size). Another reported trend was decreasing (22.1% of all companies). The growing trend percentage increased with the company size based on staff number, amounting to 3.5% in the case of micro-companies, 11.1% in the case of small enterprises and 15.5% in the case of the medium-sized enterprise category based on staff numbers. Satisfaction with the value of the indicator differed and was connected with the reported long-term trend of the indicator: the value of the number of employees that left your company in 2012 indicator was satisfactory or completely satisfactory in the case of 88.6% of answers who reported constant long-term development of this indicator, while exactly 50% of respondents reporting a growing trend of this indicator were dissatisfied or absolutely dissatisfied with the value of this indicator. **Table 5** shows results reflecting relative frequencies of answers concerning the trend related to the discussed indicator and satisfaction with its value. These results

The fluctuation rate could only be calculated where the respondents filled out both data

Most companies (39.9%) fell within the interval of fluctuation rate higher than 10%. The second biggest group included companies with calculated zero employee fluctuation (23.0% of the companies). This category was tightly followed by companies with calculated fluctuation

The companies were then again classified by staff number to micro-companies, small and medium-sized enterprises with the fluctuation rate values again sorted by the predefined intervals. The results of this classification are shown in **Figure 6** (micro-companies), **Figure 7**

The calculated fluctuation rates in micro-companies based on their reported data only covered the two marginal categories, i.e. the interval with fluctuation rates exceeding 10% (represented by more than two-thirds of all inquired micro-companies) and the interval with zero

**Table 5.** Satisfaction with indicator value: number of employees that left your company in 2012 indicator and its long-

**Increasing Constant Decreasing**

rate falling within the defined interval of 5.01–10%, whose percentage was 22.4%.

were correlated where the respondents answered both questions.

(small enterprises) and **Figure 8** (medium-sized enterprises).

fluctuation rate (met by nearly one-third of the micro-companies).

**Satisfaction indicator Long-term trend indicator satisfaction (%)**

Completely satisfied 16.7 26.3 46.7 Satisfied 33.3 62.3 378 Dissatisfied 45.8 7.9 13.3 Completely dissatisfied 4.2 0.0 0.0 Unknown 0.0 3.5 2.2

needed for the fluctuation calculation formula.

280 Entrepreneurship - Development Tendencies and Empirical Approach

**2.5. Fluctuation rate**

term trend (own survey).

**Figure 7.** Fluctuation rate in small enterprises in classification based on staff number (own survey).

Fluctuation rates in small enterprises showed a different pattern than micro-companies when divided among the defined intervals. The strongest category in the case of small enterprises was again the category with fluctuation rates higher than 10%, but with the actual percentage much lower (36.8%) in comparison to micro-companies. The next ranking category with a similar percentage of represented companies was fluctuation rate range 5.01–10% (reached by 28.4% of the respondent companies), followed by the zero fluctuation category (23.2%).

Fluctuation rate calculation classification in the category of medium-sized enterprises based on staff number again showed the fluctuation rates over 10% as the most frequently represented

"meal vouchers" or company canteens, or all sorts of refreshments provided at workplaces or drink offer. The second ranking benefit was represented by "pension schemes". Although some respondents mentioned other insurance types (such as life or all-risk insurance) among the provided employee benefits, pension schemes were so much more frequent that we decided to make them a separate category. Respondents further mentioned various types of bonuses which may be said to represent a material (financial) stimulator. Bonuses are generally represented here by the category called "unspecified bonuses". Other also relatively frequently mentioned benefits included "paid leave" or "sports and culture". Benefits falling within the "paid leave" category often included extra paid leaves (such as 1 extra week of summer holiday but also longer time periods) or contributions to holiday stays. "Sports and culture" represented a wide spectrum of benefits including various contributions to sports, relaxation or cultural events, free admission tickets to various sports facilities, tickets to cultural events, etc. Another often offered benefit was also connected with telephones. This last benefit concerned provision of a mobile phone for private purposes or contributions to the toll or its full coverage by the employer. "Education" as a category of benefit included various training courses, language courses or team-building events. These benefits were defined as subcategories ("education, other"; "Education, languages"; and "education, team building") and were left separate. There is one more frequently mentioned benefit category, and that is represented by "discounts", including discounted sales of in-house goods produced or services provided by the company to its employees or various other types of discounts. The "performance award" category mentioned by the respondents included various financial rewards for work done, completed projects, plan fulfilment, etc. as well as contributions for "zero sickness leave" or various performance bonuses. The "Christmas" category then represented a wide range of different benefits related in one way or another to the holiday (season): such as financial bonuses as Christmas presents, provisions of various Christmas vouchers as well as material Christmas gifts. Some respondents also mentioned jubilee benefits: such as

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**Ranking Micro-enterprises Small enterprises Medium-sized enterprises**

1. Catering Catering Catering

3. Unspecified bonuses Unspecified bonuses Vacation

5. Sports and culture Telephone use Education

8. Clothing Automobile use Insurance

**Table 7.** Employee benefits in SME, in order of frequency (own survey).

2. Discounts Pension schemes Pension schemes

4. Telephone use Sports and culture Unspecified bonuses

6. Pension schemes Christmas contributions Sports and culture 7. Christmas contributions Vacation Bonus at anniversary

9. Vacation Performance rewards Performance rewards 10. Performance rewards Education Telephone use 11. Automobile use Discounts Discounts 12. Insurance Enterprise products Automobile use

financial vouchers or gift packs (**Table 7**).

**Figure 8.** Fluctuation rate in medium-sized enterprises in classification based on staff number (own survey).

interval, covered by nearly half of all companies of this size (47.7%). The second ranking interval was fluctuation rates between 5.01 and 10% (represented by 21.5% of medium-sized companies), closely followed by companies with calculated fluctuation rates between 3.01 and 5% (18.4% of companies).

The comparison of fluctuation rate intervals in companies classified by size shown in **Table 6** reveals that the number of companies falling within the category of fluctuation rate above 10% increases in direct proportion to the company size defined by staff number (with the lowest percentage in the micro-company category and the highest in the medium-sized enterprise category). The same trend then appears in the fluctuation rate intervals of 0.1–3% and 3.01–5%. The opposite trend can be traced in the category with zero fluctuation (0%), where the number of represented companies decreases as the company size increases (with the highest number of micro-companies and the lowest number of medium-sized enterprises).

The median calculated fluctuation rate in the assessed population of companies was 8.0. The median values were then also calculated for all company size categories.

#### **2.6. Employee benefits in SMEs**

The benefits most frequently reported by employees of SMEs included "catering", which in the summary of all results highly out-ranked all other mentioned categories. The "catering" benefit definition included all sorts of contributions to meals at work, including but not limited to the


**Table 6.** Median rates of employee fluctuations in companies (own survey).

"meal vouchers" or company canteens, or all sorts of refreshments provided at workplaces or drink offer. The second ranking benefit was represented by "pension schemes". Although some respondents mentioned other insurance types (such as life or all-risk insurance) among the provided employee benefits, pension schemes were so much more frequent that we decided to make them a separate category. Respondents further mentioned various types of bonuses which may be said to represent a material (financial) stimulator. Bonuses are generally represented here by the category called "unspecified bonuses". Other also relatively frequently mentioned benefits included "paid leave" or "sports and culture". Benefits falling within the "paid leave" category often included extra paid leaves (such as 1 extra week of summer holiday but also longer time periods) or contributions to holiday stays. "Sports and culture" represented a wide spectrum of benefits including various contributions to sports, relaxation or cultural events, free admission tickets to various sports facilities, tickets to cultural events, etc. Another often offered benefit was also connected with telephones. This last benefit concerned provision of a mobile phone for private purposes or contributions to the toll or its full coverage by the employer. "Education" as a category of benefit included various training courses, language courses or team-building events. These benefits were defined as subcategories ("education, other"; "Education, languages"; and "education, team building") and were left separate. There is one more frequently mentioned benefit category, and that is represented by "discounts", including discounted sales of in-house goods produced or services provided by the company to its employees or various other types of discounts. The "performance award" category mentioned by the respondents included various financial rewards for work done, completed projects, plan fulfilment, etc. as well as contributions for "zero sickness leave" or various performance bonuses. The "Christmas" category then represented a wide range of different benefits related in one way or another to the holiday (season): such as financial bonuses as Christmas presents, provisions of various Christmas vouchers as well as material Christmas gifts. Some respondents also mentioned jubilee benefits: such as financial vouchers or gift packs (**Table 7**).


**Table 7.** Employee benefits in SME, in order of frequency (own survey).

interval, covered by nearly half of all companies of this size (47.7%). The second ranking interval was fluctuation rates between 5.01 and 10% (represented by 21.5% of medium-sized companies), closely followed by companies with calculated fluctuation rates between 3.01 and 5%

**Figure 8.** Fluctuation rate in medium-sized enterprises in classification based on staff number (own survey).

The comparison of fluctuation rate intervals in companies classified by size shown in **Table 6** reveals that the number of companies falling within the category of fluctuation rate above 10% increases in direct proportion to the company size defined by staff number (with the lowest percentage in the micro-company category and the highest in the medium-sized enterprise category). The same trend then appears in the fluctuation rate intervals of 0.1–3% and 3.01–5%. The opposite trend can be traced in the category with zero fluctuation (0%), where the number of represented companies decreases as the company size increases (with the highest number of micro-companies and the lowest number of medium-sized enterprises). The median calculated fluctuation rate in the assessed population of companies was 8.0. The

The benefits most frequently reported by employees of SMEs included "catering", which in the summary of all results highly out-ranked all other mentioned categories. The "catering" benefit definition included all sorts of contributions to meals at work, including but not limited to the

**Micro-enterprises Small enterprises Medium-sized enterprises All enterprises**

median values were then also calculated for all company size categories.

Median 0 8.3 9.3 8.0

**The size of the enterprise according to the given number of employees**

**Table 6.** Median rates of employee fluctuations in companies (own survey).

(18.4% of companies).

282 Entrepreneurship - Development Tendencies and Empirical Approach

**2.6. Employee benefits in SMEs**

The comparison allows for the conclusion that there were differences in the provided benefit structure among companies of different size categories, with the exception of "catering", which was the most frequently provided benefit in all three size categories. The pension scheme category ranked second in frequency in small and medium-sized enterprises based on staff numbers, while micro-companies mentioned this benefit as sixth ranking in the order of frequency. Employee benefits related to summer holiday were accentuated in mediumsized companies and decreasing staff number correlated to decreasing frequency of mentioning this benefit. Discounts in the discussion about employee benefits were most relevant for micro-companies where the discounts category ranked second while small and mediumsized enterprises based on staff numbers ranked this discount category as low as 11th as concerns frequency of its mentioning.

For a company to be able to see the advantages brought to it by CSR, its corporate social responsibility must be trusted. Its uniqueness is one of the prerequisites of its trustworthiness: the general public is attracted by an individual approach to CSR, by its difference from others; authenticity, the company management as well as employees is convinced about correctness of CSR; by its transparency, willingness of the company to provide information about itself and allow for independent assessment; and by its consistency, consistent observance of CSR

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The policy of education of company employees develops qualified, educated and skilled employees needed for satisfaction of present and future needs of the organisation. To achieve this it is necessary that the employees are ready and willing to be educated, understand what they need to know and do and are prepared to take up responsibility for their qualification increase by making the active use of existing education resources including assistance of their superiors. For these reasons education gains importance in companies that understand the huge value of human resources they possess. If a company is to maintain its competitiveness, it must be able to flexibly adapt to the changing conditions. An important remark in this context is that people should be aware that the area of education and development does not only include education of individuals or groups alone but also motivation of individual or groups for education, i.e. employees themselves must be prepared and willing to get educated in

Small and medium-sized enterprises are considered the backbone of the national economy. In addition to employment and social cohesion, innovation as a process of continuous development is often mentioned in connection with the contribution of SMEs to the national economy. The purpose of innovation is assurance of development, competitiveness and process and manufacturing effectiveness. In practice there is a connection between research and education (or the system of education), both contributing to development of the knowledge of society [23, 24]. Knowledgeable society is able to innovate or continuously improve its procedures,

Further research should focus on other regions of the Czech Republic, or comparable European regions, and find out differences in approaches to human resource management

Utilisation of human resource management principles in small and medium-sized enterprises has its limitations. This is mainly caused by the size of these enterprises and the related increased focus on assurance of their very existence. There is also the accumulation of functions in SMEs, with prevalence of informal management, preference of oral communication

principles.

areas where they sense their shortcomings [22].

which is necessary for its future.

**4. Future research directions**

in SMEs.

**5. Conclusion**

to written, etc.

### **3. Solution and recommendations**

The theme of human resource management in small and medium-sized enterprises is relatively complex. This is confirmed both by theories and by conclusions drawn on the basis of the present inquiry. The present publication maps selected aspects of human resource management in SMEs. The submitted conclusions and recommendations may contribute to improvement of human resource management quality in SMEs and subsequently to increase of their competitiveness.

There is a big area of improvement for SMEs in the field of external media communication, and for the reason of limited resources, these companies should choose a single technique for every group of external recipients they want to address or inform or even influence with truthful information and use the chosen technique for long term. It is recommended as most beneficial for these companies to join their economic and human resources and experience and proceed jointly in this area according to their connection by one of the logical links (field of activity, geographic region, etc.).

Involvement of corporate social responsibility in the business strategies and in this context development of strategies of human potential management and employee management becomes inevitable considering global development factors. Every company must watch not only its financial health and regulatory obligations but also wider social and economic relations. Every company should behave responsibly, whatever its field of business, inland or international domicile or size of a small, medium or large company. There is a legitimate effort to teach organisations to respect unwritten standards, whether in the form of codes of conduct or the ever more widespread "social marks". Companies and organisations should increase their involvement in and identification with the philosophy of CSR, integrate CSR in their strategies and also actually apply it. They should declare their activities within the framework of CSR and their CSR policy.

Open dialogue of SMEs with interest groups and mainly with employees may help companies better control trends and expectations. Open dialogue helps businesses to notice opportunities by means of better understanding of expectations of the society and risk minimisation by assuring good relationships with their employees and the society in which they operate.

For a company to be able to see the advantages brought to it by CSR, its corporate social responsibility must be trusted. Its uniqueness is one of the prerequisites of its trustworthiness: the general public is attracted by an individual approach to CSR, by its difference from others; authenticity, the company management as well as employees is convinced about correctness of CSR; by its transparency, willingness of the company to provide information about itself and allow for independent assessment; and by its consistency, consistent observance of CSR principles.

The policy of education of company employees develops qualified, educated and skilled employees needed for satisfaction of present and future needs of the organisation. To achieve this it is necessary that the employees are ready and willing to be educated, understand what they need to know and do and are prepared to take up responsibility for their qualification increase by making the active use of existing education resources including assistance of their superiors. For these reasons education gains importance in companies that understand the huge value of human resources they possess. If a company is to maintain its competitiveness, it must be able to flexibly adapt to the changing conditions. An important remark in this context is that people should be aware that the area of education and development does not only include education of individuals or groups alone but also motivation of individual or groups for education, i.e. employees themselves must be prepared and willing to get educated in areas where they sense their shortcomings [22].

Small and medium-sized enterprises are considered the backbone of the national economy. In addition to employment and social cohesion, innovation as a process of continuous development is often mentioned in connection with the contribution of SMEs to the national economy. The purpose of innovation is assurance of development, competitiveness and process and manufacturing effectiveness. In practice there is a connection between research and education (or the system of education), both contributing to development of the knowledge of society [23, 24]. Knowledgeable society is able to innovate or continuously improve its procedures, which is necessary for its future.

### **4. Future research directions**

Further research should focus on other regions of the Czech Republic, or comparable European regions, and find out differences in approaches to human resource management in SMEs.

### **5. Conclusion**

The comparison allows for the conclusion that there were differences in the provided benefit structure among companies of different size categories, with the exception of "catering", which was the most frequently provided benefit in all three size categories. The pension scheme category ranked second in frequency in small and medium-sized enterprises based on staff numbers, while micro-companies mentioned this benefit as sixth ranking in the order of frequency. Employee benefits related to summer holiday were accentuated in mediumsized companies and decreasing staff number correlated to decreasing frequency of mentioning this benefit. Discounts in the discussion about employee benefits were most relevant for micro-companies where the discounts category ranked second while small and mediumsized enterprises based on staff numbers ranked this discount category as low as 11th as

The theme of human resource management in small and medium-sized enterprises is relatively complex. This is confirmed both by theories and by conclusions drawn on the basis of the present inquiry. The present publication maps selected aspects of human resource management in SMEs. The submitted conclusions and recommendations may contribute to improvement of human resource management quality in SMEs and subsequently to increase of their competitiveness.

There is a big area of improvement for SMEs in the field of external media communication, and for the reason of limited resources, these companies should choose a single technique for every group of external recipients they want to address or inform or even influence with truthful information and use the chosen technique for long term. It is recommended as most beneficial for these companies to join their economic and human resources and experience and proceed jointly in this area according to their connection by one of the logical links (field

Involvement of corporate social responsibility in the business strategies and in this context development of strategies of human potential management and employee management becomes inevitable considering global development factors. Every company must watch not only its financial health and regulatory obligations but also wider social and economic relations. Every company should behave responsibly, whatever its field of business, inland or international domicile or size of a small, medium or large company. There is a legitimate effort to teach organisations to respect unwritten standards, whether in the form of codes of conduct or the ever more widespread "social marks". Companies and organisations should increase their involvement in and identification with the philosophy of CSR, integrate CSR in their strategies and also actually apply it. They should declare their activities within the

Open dialogue of SMEs with interest groups and mainly with employees may help companies better control trends and expectations. Open dialogue helps businesses to notice opportunities by means of better understanding of expectations of the society and risk minimisation by assuring good relationships with their employees and the society in which they operate.

concerns frequency of its mentioning.

of activity, geographic region, etc.).

framework of CSR and their CSR policy.

**3. Solution and recommendations**

284 Entrepreneurship - Development Tendencies and Empirical Approach

Utilisation of human resource management principles in small and medium-sized enterprises has its limitations. This is mainly caused by the size of these enterprises and the related increased focus on assurance of their very existence. There is also the accumulation of functions in SMEs, with prevalence of informal management, preference of oral communication to written, etc.

The present publication introduces results of a research aimed at specification of factors and tools that might support decision-making of managers in the area of human resource management in small and medium-sized enterprises.

**Key terms and definitions**

synchronous and asynchronous.

\* and Monika Březinová<sup>2</sup>

and Management Journal. 2016;**12**(4):1165-1207

Management Reviews. 2006;**8**:175-190

\*Address all correspondence to: brezina@zf.jcu.cz

of time.

€ 50 million.

**Author details**

Darja Holátová<sup>1</sup>

**References**

2008;**35**:79-93

Fluctuation: Employee turnover in the company or organisation. Fluctuation rate is expressed in per cent as the ratio of terminated employment contracts to the mean staff number per unit

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External communications: By means of external communication, the institution influences its

Motivation: Internal or external factor or group of factors leading to energising the organism.

Social responsibility: A policy every company can incorporate in its business activity voluntarily. Small and medium-sized enterprises: A business is a small or medium-sized enterprise (SME) if:(a) its staff number is up to 250 employees; (b) its assets do not exceed the crown equivalent of € 43 million, or its turnover/income does not exceed the crown equivalent of

Employee benefits: Benefits provided by the employer to its employees in addition to wages. Electronic communications: Communication between users of the Internet and other modern communication means (cell phones, pagers, etc.). There are two forms of e-communication:

1 Faculty of Economic, University of South Bohemia in České Budějovice, Czech Republic 2 Faculty of Agriculture, University of South Bohemia in České Budějovice, Czech Republic

[1] Krasniqi BA, Mustafa M.Small firm growth in a post-conflict environment: the role of human capital, institutional quality, and managerial capacities. International Entrepreneurship

[2] Fuller-Love N. Management development in small firms. International Journal of

[3] Doyle W, Reid JG, Young JD. Barriers to and Facilitators of Managers' workplace learning in small and large knowledge-based firms. Small Business Institute Research Review.

clients and assures information flows to wide surroundings of the organisation.

Motivation directs our conduct towards achievement of a certain goal.

This chapter describes the current status in selected areas of human resource management focusing on the soft factors.

The main conclusions of this chapter include:

While most of the analysed SMEs do not develop strategies for human resource management at all (62%), 32% do create these strategies, and 18% even prepare them in writing. Written human resource management strategies were mainly reported by small and medium-sized companies.

The analysed small and medium-sized companies considered as their strong points internal communication, employee education and development and remuneration.

As for problem areas in human resource management in SMEs, about 20% of the respondents mentioned employee recruitment, 16% mentioned communication and some respondents also mentioned qualifications, expertise and employee development.

In the opinion of the respondents, the most important process out of the selected corporate processes included product manufacture and service provision, with 134 companies allocating the top rank to this process in the importance ranking, 96 companies ranking sales and trade first, 19 respondents mentioned quality management, 16 respondents considered as most important finance management, 15 respondents mentioned marketing, 9 human resource management, 7 corporate social responsibility and 4 companies placed in-house information systems at the top of the importance ranking.

Key human resource management areas whose monitoring was most emphasised by small and medium-sized companies were productivity of work and an effective recruitment process.

The process of communication (internal as well as external) was assessed by managers of the analysed SMEs in the South Bohemia region as less important and more poorly functioning at the same time.

Small and medium-sized companies of the studied sample, regardless of their size or orientation, mostly reported the use of oral and electronic communication.

The analysed SMEs valued functioning of external media communication with 47 to 57% and ranked this process in the relevance hierarchy seventh to eighth of nine, above intracompany information processes and corporate social responsibility. CSR ranks lowest for most SMEs.

Most representatives of the analysed small and medium-sized enterprises gave preference to cohesion (small power detachment) to respect (large power detachment), team spirit (collectivism) to individual liabilities (individualism) and investment (long-term benefit) to immediate profit (short-term benefit).

### **Key terms and definitions**

The present publication introduces results of a research aimed at specification of factors and tools that might support decision-making of managers in the area of human resource manage-

This chapter describes the current status in selected areas of human resource management

While most of the analysed SMEs do not develop strategies for human resource management at all (62%), 32% do create these strategies, and 18% even prepare them in writing. Written human resource management strategies were mainly reported by small and medium-sized

The analysed small and medium-sized companies considered as their strong points internal

As for problem areas in human resource management in SMEs, about 20% of the respondents mentioned employee recruitment, 16% mentioned communication and some respondents

In the opinion of the respondents, the most important process out of the selected corporate processes included product manufacture and service provision, with 134 companies allocating the top rank to this process in the importance ranking, 96 companies ranking sales and trade first, 19 respondents mentioned quality management, 16 respondents considered as most important finance management, 15 respondents mentioned marketing, 9 human resource management, 7 corporate social responsibility and 4 companies placed in-house information

Key human resource management areas whose monitoring was most emphasised by small and medium-sized companies were productivity of work and an effective recruitment

The process of communication (internal as well as external) was assessed by managers of the analysed SMEs in the South Bohemia region as less important and more poorly functioning

Small and medium-sized companies of the studied sample, regardless of their size or orienta-

The analysed SMEs valued functioning of external media communication with 47 to 57% and ranked this process in the relevance hierarchy seventh to eighth of nine, above intracompany information processes and corporate social responsibility. CSR ranks lowest for

Most representatives of the analysed small and medium-sized enterprises gave preference to cohesion (small power detachment) to respect (large power detachment), team spirit (collectivism) to individual liabilities (individualism) and investment (long-term benefit) to immedi-

communication, employee education and development and remuneration.

also mentioned qualifications, expertise and employee development.

tion, mostly reported the use of oral and electronic communication.

ment in small and medium-sized enterprises.

286 Entrepreneurship - Development Tendencies and Empirical Approach

The main conclusions of this chapter include:

systems at the top of the importance ranking.

focusing on the soft factors.

companies.

process.

at the same time.

most SMEs.

ate profit (short-term benefit).

Fluctuation: Employee turnover in the company or organisation. Fluctuation rate is expressed in per cent as the ratio of terminated employment contracts to the mean staff number per unit of time.

External communications: By means of external communication, the institution influences its clients and assures information flows to wide surroundings of the organisation.

Motivation: Internal or external factor or group of factors leading to energising the organism. Motivation directs our conduct towards achievement of a certain goal.

Social responsibility: A policy every company can incorporate in its business activity voluntarily.

Small and medium-sized enterprises: A business is a small or medium-sized enterprise (SME) if:(a) its staff number is up to 250 employees; (b) its assets do not exceed the crown equivalent of € 43 million, or its turnover/income does not exceed the crown equivalent of € 50 million.

Employee benefits: Benefits provided by the employer to its employees in addition to wages.

Electronic communications: Communication between users of the Internet and other modern communication means (cell phones, pagers, etc.). There are two forms of e-communication: synchronous and asynchronous.

### **Author details**

Darja Holátová<sup>1</sup> \* and Monika Březinová<sup>2</sup>

\*Address all correspondence to: brezina@zf.jcu.cz

1 Faculty of Economic, University of South Bohemia in České Budějovice, Czech Republic

2 Faculty of Agriculture, University of South Bohemia in České Budějovice, Czech Republic

### **References**


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[18] Kyndt E, Baert H. Antecedents of employees' involvement in work-related learning: A

[19] Marlow S, Taylor S, Thompson A. Informality and formality in medium-sized companies: Contestation and synchronization. British Journal of Management. 2010;**21**:944-966

[20] Medek M. Internal and external communication like necessary factor of survival. E + M

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**Chapter 15**

**Provisional chapter**

**Understanding the Motivation that Shapes**

**Understanding the Motivation that Shapes** 

DOI: 10.5772/intechopen.70786

Entrepreneurship intention for graduate students like many other job and work career options depends on other considerations. Individuals who pursue their intentions are most likely to implement their intention. Interest in entrepreneurship as career appears to be growing. Reviews show the need in investigating the determinants of entrepreneurship as a career intention of students and it has remains the focus of most of the recent studies. This is due to the facts that entrepreneurs are creating jobs and driving economic development of a nation. In this study, the Theory of Planned Behaviour is applied to investigate students' entrepreneurial motivation and entrepreneurship intention. A total of 413 sets of completed questionnaire collected using the structured sampling methodology from the various faculties, races and student seniority at a University located in Batu Pahat, Johor, Malaysia were used in the analyses. The factors of entrepreneurial motivation affecting career entrepreneurship intention were found to be behavioural control, subjective norm, and attitude towards entrepreneurship. Behavioural control is found to be at a very good level while subjective norm and attitude towards entrepreneurship are both at a good level. Multiple regression analyses indicated that subjective norm and attitude of self-employment are both significantly related to student immediate and future entrepreneurship intentions. The behavioural control entrepreneurial motivation indicated significant relationship with student immediate career intention. However it was found that it is not related to entrepreneurship career intention. This study implies that young aspirant entrepreneur can be identified and targeted for development via the Planned Behaviour model for entrepreneurial

> © 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution,

© 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

and reproduction in any medium, provided the original work is properly cited.

**Keywords:** entrepreneur, entrepreneurial motivation, planned behaviour model

**Entrepreneurship Career Intention**

**Entrepreneurship Career Intention**

Ng Kim-Soon, Abdul Rahman Ahmad and

Ng Kim-Soon, Abdul Rahman Ahmad and

Additional information is available at the end of the chapter

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.70786

interventions initiatives.

Nurul Nadia Ibrahim

**Abstract**

Nurul Nadia Ibrahim

**Provisional chapter**

### **Understanding the Motivation that Shapes Entrepreneurship Career Intention Entrepreneurship Career Intention**

**Understanding the Motivation that Shapes** 

DOI: 10.5772/intechopen.70786

Ng Kim-Soon, Abdul Rahman Ahmad and Nurul Nadia Ibrahim Nurul Nadia Ibrahim Additional information is available at the end of the chapter

Ng Kim-Soon, Abdul Rahman Ahmad and

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.70786

#### **Abstract**

Entrepreneurship intention for graduate students like many other job and work career options depends on other considerations. Individuals who pursue their intentions are most likely to implement their intention. Interest in entrepreneurship as career appears to be growing. Reviews show the need in investigating the determinants of entrepreneurship as a career intention of students and it has remains the focus of most of the recent studies. This is due to the facts that entrepreneurs are creating jobs and driving economic development of a nation. In this study, the Theory of Planned Behaviour is applied to investigate students' entrepreneurial motivation and entrepreneurship intention. A total of 413 sets of completed questionnaire collected using the structured sampling methodology from the various faculties, races and student seniority at a University located in Batu Pahat, Johor, Malaysia were used in the analyses. The factors of entrepreneurial motivation affecting career entrepreneurship intention were found to be behavioural control, subjective norm, and attitude towards entrepreneurship. Behavioural control is found to be at a very good level while subjective norm and attitude towards entrepreneurship are both at a good level. Multiple regression analyses indicated that subjective norm and attitude of self-employment are both significantly related to student immediate and future entrepreneurship intentions. The behavioural control entrepreneurial motivation indicated significant relationship with student immediate career intention. However it was found that it is not related to entrepreneurship career intention. This study implies that young aspirant entrepreneur can be identified and targeted for development via the Planned Behaviour model for entrepreneurial interventions initiatives.

**Keywords:** entrepreneur, entrepreneurial motivation, planned behaviour model

Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons

### **1. Introduction**

Entrepreneurship creates jobs, economic growth and development of a nation. It is crucial to drive a nation's economy. An entrepreneur setup a new business, take risk and faces uncertainty to make profit and grow the business by identifying available opportunities, gather the necessary resources to exploit those opportunities that were identified [1]. Entrepreneurs prefer to be in control of their own resources, prefer to take calculated risk, and possesses attributes of confidence and belief in self, self-reliance, perseverance, traits for immediate feedback, with higher level of energy which are usually higher than the average person. They dream big and are achievement motivated. Karimi et al. [2] and Souitaris et al. [3] reviewed that literature revealed that more research works are needed to investigate the determinants of entrepreneurship intentions of students. Entrepreneurial motivation is not the same as "uniquely entrepreneurial personality traits". Carsrud and Brännback [4] further reiterated that entrepreneurship motivation is a crucial topic and there is a need for more entrepreneur research work. Carsrud et al. [5] and Edelman et al. [6] reported that it is a much neglected area of research. This is most previous researchers assumed that entrepreneur can be adequately defined by identifying the unique personality traits [4]. Nevertheless, due to its significant thrust to the economic growth and development to a nation, investigating the determinants of entrepreneurship intentions as a career intention of students has remains the focus of most of the recent studies. This study investigated the levels of student's entrepreneurial motivation and entrepreneurship intention at a public University and the relationship between these two factors using the Planned Behaviour Model.

on behaviour beliefs. An individual with a higher attitude towards the behaviour is expected to be more likely to take the action that is being monitored [11]. The individuals' perceptions of values, beliefs and norms of influential individuals including family members, teachers, other entrepreneurs, friends etc. are subjective norms which are important to the individual's desire to conform to those norms. Thus, it follows that an individual intention towards entrepreneurship can be moulded. Cieślik and Stel [12] found significant relationship between those students who are actively involved in their parents' business are more likely to join their family business rather than starting their own business. Conversely, Krueger et al. [10] claimed that an individual having high internal locus of control, social norms are less predictive of intentions. [8] contended that behavioural control influences an individual's intention to act basing perceived degree of effort of that specific behaviour which conceptually is alike to the Social Cognitive Theory [13] of an individual's belief in their capability to perform a

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293

Motivation is a potent driver behind goal pursuit in daily lives. According to Ryan and Deci [14], it's the core of biological, cognitive, and social regulation [14]. It channels energy, direction, determination, persistence and intention behind daily lives pursuits. Goals and motives are able to predict human behaviour. Thus, the linkage between intentions, motivations, and behaviour. Motivation drives actions and the reason behind actions is the orientation of the motivation. Krueger and Carsrud [9] reported that there is a lack of basis to support on intention-action linkage although intentions have been centred as predictors of future action. The link has been used loosely as implied or assumed. They then argued that motivation provides the link between intension-action. According to Edelman et al. [6], motivations stimulus could transform a latent intention to drive entrepreneurship. They reiterated that it could be the link between intentions and action. It thus suggests that the causal attitudes and goal of entrepreneurial motivation is able to generate entrepreneurship intention. Edelman et al. [6] reiterated

Higher education institutions are actively promoting entrepreneurship as an attractive and worthwhile career option among graduate students. Entrepreneurship offers graduate student self-employment opportunity. Literature has frequently states that it is a career option for the youth and graduates [15, 16]. It lessens social ills and improve employability. Public policy makers are encouraging and engaging graduates from higher learning institutions to choose entrepreneurship to address employability [7]. It has thus resulted in the focus of research works on entrepreneurship career intention especially in how attract graduate students to engage in entrepreneurship. Entrepreneurial career intention is the conscious state of mind. It precedes the action of an individual and directs the attention towards an entrepreneurial career goal to start a new business ([10, 17, 18]). Krueger et al. [10] envisaged that entrepreneurial inclination can be better determined through entrepreneurship intention rather than personality traits, demographic characteristics, or situational factors. Individuals

specified action.

**2.2. Entrepreneurial motivation**

that more research work in this area is needed.

**2.3. Entrepreneurship career intention**

### **2. Literature review**

Policy makers are emphasising the importance entrepreneurship education to groom and nurture entrepreneurship among students for career employability in the drive for economic growth [7]. Entrepreneurial process emphasises on the behavioural linkage of entrepreneurship intentions, ideas and action [8, 9]. The theory of planned behaviour set that an individual's intention towards an activity with perceived behavioural control will be able to predict the behaviour accurately [8]. According to Krueger et al. [10], intention is a single best predictor of planned behaviour.

#### **2.1. Behavioural theory**

Expectancy Theory has instituted a common line in relating the various process-oriented explanations of entrepreneurial motivation (Vroom, 1964). Vroom (1964) theorised that an individual will make the best choice through the behaviour that will lead to the most anticipated outcome. The underlying factors that influence such a behaviour are the motivation factors [8]. These motivational factors comprise of individual's attitude towards the behaviour, subjective norm and perceived control are the factors of the planned behaviour (TPB) model and are assumed to influence and shape the behavioural intention. Attitude impacts on behaviour beliefs. An individual with a higher attitude towards the behaviour is expected to be more likely to take the action that is being monitored [11]. The individuals' perceptions of values, beliefs and norms of influential individuals including family members, teachers, other entrepreneurs, friends etc. are subjective norms which are important to the individual's desire to conform to those norms. Thus, it follows that an individual intention towards entrepreneurship can be moulded. Cieślik and Stel [12] found significant relationship between those students who are actively involved in their parents' business are more likely to join their family business rather than starting their own business. Conversely, Krueger et al. [10] claimed that an individual having high internal locus of control, social norms are less predictive of intentions. [8] contended that behavioural control influences an individual's intention to act basing perceived degree of effort of that specific behaviour which conceptually is alike to the Social Cognitive Theory [13] of an individual's belief in their capability to perform a specified action.

#### **2.2. Entrepreneurial motivation**

**1. Introduction**

292 Entrepreneurship - Development Tendencies and Empirical Approach

factors using the Planned Behaviour Model.

**2. Literature review**

tor of planned behaviour.

**2.1. Behavioural theory**

Entrepreneurship creates jobs, economic growth and development of a nation. It is crucial to drive a nation's economy. An entrepreneur setup a new business, take risk and faces uncertainty to make profit and grow the business by identifying available opportunities, gather the necessary resources to exploit those opportunities that were identified [1]. Entrepreneurs prefer to be in control of their own resources, prefer to take calculated risk, and possesses attributes of confidence and belief in self, self-reliance, perseverance, traits for immediate feedback, with higher level of energy which are usually higher than the average person. They dream big and are achievement motivated. Karimi et al. [2] and Souitaris et al. [3] reviewed that literature revealed that more research works are needed to investigate the determinants of entrepreneurship intentions of students. Entrepreneurial motivation is not the same as "uniquely entrepreneurial personality traits". Carsrud and Brännback [4] further reiterated that entrepreneurship motivation is a crucial topic and there is a need for more entrepreneur research work. Carsrud et al. [5] and Edelman et al. [6] reported that it is a much neglected area of research. This is most previous researchers assumed that entrepreneur can be adequately defined by identifying the unique personality traits [4]. Nevertheless, due to its significant thrust to the economic growth and development to a nation, investigating the determinants of entrepreneurship intentions as a career intention of students has remains the focus of most of the recent studies. This study investigated the levels of student's entrepreneurial motivation and entrepreneurship intention at a public University and the relationship between these two

Policy makers are emphasising the importance entrepreneurship education to groom and nurture entrepreneurship among students for career employability in the drive for economic growth [7]. Entrepreneurial process emphasises on the behavioural linkage of entrepreneurship intentions, ideas and action [8, 9]. The theory of planned behaviour set that an individual's intention towards an activity with perceived behavioural control will be able to predict the behaviour accurately [8]. According to Krueger et al. [10], intention is a single best predic-

Expectancy Theory has instituted a common line in relating the various process-oriented explanations of entrepreneurial motivation (Vroom, 1964). Vroom (1964) theorised that an individual will make the best choice through the behaviour that will lead to the most anticipated outcome. The underlying factors that influence such a behaviour are the motivation factors [8]. These motivational factors comprise of individual's attitude towards the behaviour, subjective norm and perceived control are the factors of the planned behaviour (TPB) model and are assumed to influence and shape the behavioural intention. Attitude impacts Motivation is a potent driver behind goal pursuit in daily lives. According to Ryan and Deci [14], it's the core of biological, cognitive, and social regulation [14]. It channels energy, direction, determination, persistence and intention behind daily lives pursuits. Goals and motives are able to predict human behaviour. Thus, the linkage between intentions, motivations, and behaviour. Motivation drives actions and the reason behind actions is the orientation of the motivation. Krueger and Carsrud [9] reported that there is a lack of basis to support on intention-action linkage although intentions have been centred as predictors of future action. The link has been used loosely as implied or assumed. They then argued that motivation provides the link between intension-action. According to Edelman et al. [6], motivations stimulus could transform a latent intention to drive entrepreneurship. They reiterated that it could be the link between intentions and action. It thus suggests that the causal attitudes and goal of entrepreneurial motivation is able to generate entrepreneurship intention. Edelman et al. [6] reiterated that more research work in this area is needed.

#### **2.3. Entrepreneurship career intention**

Higher education institutions are actively promoting entrepreneurship as an attractive and worthwhile career option among graduate students. Entrepreneurship offers graduate student self-employment opportunity. Literature has frequently states that it is a career option for the youth and graduates [15, 16]. It lessens social ills and improve employability. Public policy makers are encouraging and engaging graduates from higher learning institutions to choose entrepreneurship to address employability [7]. It has thus resulted in the focus of research works on entrepreneurship career intention especially in how attract graduate students to engage in entrepreneurship. Entrepreneurial career intention is the conscious state of mind. It precedes the action of an individual and directs the attention towards an entrepreneurial career goal to start a new business ([10, 17, 18]). Krueger et al. [10] envisaged that entrepreneurial inclination can be better determined through entrepreneurship intention rather than personality traits, demographic characteristics, or situational factors. Individuals who pursue their intentions are most likely to implement their intention [19]. Intension such as desire to gain status, to be success and ability to influence economic growth which Geri (2013) elaborated has a positive relation between risk taking tendencies and entrepreneurial motives (Artess et al. [20]).

**3.2. Questionnaire design, measurement and sample size**

the research data collection process.

**3.3. Scope of study and profile of respondents**

of the population of the respective demographic categories.

analysis.

**3.4. Factor analysis**

above one were accepted [35].

entrepreneurship intention.

The survey questionnaire used in this research comprised of three parts. Part A is questions that require the respondents to provide their background. Part B is on entrepreneurial motivational factors comprises of questions about attitude towards self-employment, subjective norm, and behavioural control. The respondents were required to mark the level of their agreement of the statements about their motivation to choose entrepreneurship as their career by circling on a scale 1 to 5 where 1 = Strongly disagree 2 = Disagree 3 = Not Sure 4 = Agree 5 = Strongly agree for each of the respective statements. Part C requires the respondent to mark their degree of entrepreneurship intention by rating the level of agreement on scale 1 to 5 (1 = Strongly disagree 2 = Disagree 3 = Not Sure 4 = Agree 5 = Strongly agree) through circling the number for each of the respective statements. The statements in Section B and Section C were adapted from the questionnaire used by Fatoki [32]. A pilot study was conducted to test the developed questionnaire with a sample of 30 respondents for factor reduction and reliability of the measures of items in Part B and Part C of the questionnaire prior to

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295

The sample size of this research is 450. This is based on the population size of 14,000 students pursuing the degree course at the selected inside the campus of a Public University. With reference to the Krejcie and Morgan [33] table, the sample size is slightly larger. The convenient and structured random sampling method has been used to collect the data the respondents from the various faculties, the different races and genders, years of studies and seniority. Upon cleaning the dataset, a total of 413 (92%) duly completed questionnaires conforming to the requirements of more than 70 to 80% return of the questionnaire [34] were used for the

**Table 1** tabulates the demographic profile of the respondents. The estimated number of students in the table is based on the random sample structure proportionately to the distribution

The results of factor analysis using Principle Component Analysis with Varimax Rotation tabulated in **Tables 2** and **3**. KMO (Measure of Sampling Adequacy) with outliers of loading of less than 0.5 were removed to achieve clearer separation of factors, and only Eigenvalues

The dimensions on student's motivation to choose entrepreneur are comprise of behavioural control, subjective norm and attitude towards self-employment while dimensions measuring student's entrepreneur career intention are comprise of immediate intention and future

Empirical research works by Kim-Soon et al. [21] on motivators and obstacles to youth entrepreneurship with entrepreneurial intention of young entrepreneurs reported that youths who are serious as would be entrepreneur to start and own a new business can be identified and targeted to develop via government entrepreneurship intervention initiatives. Ajzen's model of planned behaviour and Engle et al. [22] found that social norm is a strong and consistent predictor of intentions. They reported that the attitude towards the behaviour, subjective norm, and perceived behavioural control significantly increased the likelihood of students that are inclined towards the formation of entrepreneurial intentions. Ummah [23] recommended that decision makers in higher education and nation policy makers should use the factors influencing the desirability of self-employment to channel and energise an individual intention towards self-employment. Fitzsimmons and Douglas [24] reported that a person's perceived desirability and perceived feasibility had a negative interaction effect in the formation of entrepreneurial intentions. In line with a prevention-focused orientation, they suggest that situational factors may induce individuals involved in the process of forming entrepreneurial intentions to adopt a prevention focus.

#### **2.4. Entrepreneurial motivation and entrepreneurship career intentions**

TPB model has been used by Malebana [25] to investigate entrepreneurship intention of students study in a South African rural university and reported that most of the students would start a business in the future. Most researchers are in consensus that the relevant embedded theory underlying the research work on entrepreneurship intention is the planned behaviour [10, 26, 27]. TPB model is useful for instituting and guiding behavioural changes by evaluating the behavioural performance [28, 29]. In recent years, researchers have popularly used the theory of planned behaviour under various contexts to investigate and research on motivation and predicting entrepreneurial intentions ([16, 25, 30, 31]; Ritzsimmons and Douglas, 2011; [22, 32]).

### **3. Research methodology and findings**

#### **3.1. Research framework**

The research framework of this study is modelled on the Theory of Planned Behaviour which is frequently been used in the prediction of behavioural intention. The independent variables are the entrepreneurial motivational factors which are comprised of attitude towards self-employment, subjective norm, and behavioural control while the dependent variable is entrepreneurial intention.

#### **3.2. Questionnaire design, measurement and sample size**

The survey questionnaire used in this research comprised of three parts. Part A is questions that require the respondents to provide their background. Part B is on entrepreneurial motivational factors comprises of questions about attitude towards self-employment, subjective norm, and behavioural control. The respondents were required to mark the level of their agreement of the statements about their motivation to choose entrepreneurship as their career by circling on a scale 1 to 5 where 1 = Strongly disagree 2 = Disagree 3 = Not Sure 4 = Agree 5 = Strongly agree for each of the respective statements. Part C requires the respondent to mark their degree of entrepreneurship intention by rating the level of agreement on scale 1 to 5 (1 = Strongly disagree 2 = Disagree 3 = Not Sure 4 = Agree 5 = Strongly agree) through circling the number for each of the respective statements. The statements in Section B and Section C were adapted from the questionnaire used by Fatoki [32]. A pilot study was conducted to test the developed questionnaire with a sample of 30 respondents for factor reduction and reliability of the measures of items in Part B and Part C of the questionnaire prior to the research data collection process.

The sample size of this research is 450. This is based on the population size of 14,000 students pursuing the degree course at the selected inside the campus of a Public University. With reference to the Krejcie and Morgan [33] table, the sample size is slightly larger. The convenient and structured random sampling method has been used to collect the data the respondents from the various faculties, the different races and genders, years of studies and seniority. Upon cleaning the dataset, a total of 413 (92%) duly completed questionnaires conforming to the requirements of more than 70 to 80% return of the questionnaire [34] were used for the analysis.

#### **3.3. Scope of study and profile of respondents**

**Table 1** tabulates the demographic profile of the respondents. The estimated number of students in the table is based on the random sample structure proportionately to the distribution of the population of the respective demographic categories.

#### **3.4. Factor analysis**

who pursue their intentions are most likely to implement their intention [19]. Intension such as desire to gain status, to be success and ability to influence economic growth which Geri (2013) elaborated has a positive relation between risk taking tendencies and entrepreneurial

Empirical research works by Kim-Soon et al. [21] on motivators and obstacles to youth entrepreneurship with entrepreneurial intention of young entrepreneurs reported that youths who are serious as would be entrepreneur to start and own a new business can be identified and targeted to develop via government entrepreneurship intervention initiatives. Ajzen's model of planned behaviour and Engle et al. [22] found that social norm is a strong and consistent predictor of intentions. They reported that the attitude towards the behaviour, subjective norm, and perceived behavioural control significantly increased the likelihood of students that are inclined towards the formation of entrepreneurial intentions. Ummah [23] recommended that decision makers in higher education and nation policy makers should use the factors influencing the desirability of self-employment to channel and energise an individual intention towards self-employment. Fitzsimmons and Douglas [24] reported that a person's perceived desirability and perceived feasibility had a negative interaction effect in the formation of entrepreneurial intentions. In line with a prevention-focused orientation, they suggest that situational factors may induce individuals involved in the process of forming entrepre-

motives (Artess et al. [20]).

2011; [22, 32]).

**3.1. Research framework**

entrepreneurial intention.

neurial intentions to adopt a prevention focus.

294 Entrepreneurship - Development Tendencies and Empirical Approach

**3. Research methodology and findings**

**2.4. Entrepreneurial motivation and entrepreneurship career intentions**

TPB model has been used by Malebana [25] to investigate entrepreneurship intention of students study in a South African rural university and reported that most of the students would start a business in the future. Most researchers are in consensus that the relevant embedded theory underlying the research work on entrepreneurship intention is the planned behaviour [10, 26, 27]. TPB model is useful for instituting and guiding behavioural changes by evaluating the behavioural performance [28, 29]. In recent years, researchers have popularly used the theory of planned behaviour under various contexts to investigate and research on motivation and predicting entrepreneurial intentions ([16, 25, 30, 31]; Ritzsimmons and Douglas,

The research framework of this study is modelled on the Theory of Planned Behaviour which is frequently been used in the prediction of behavioural intention. The independent variables are the entrepreneurial motivational factors which are comprised of attitude towards self-employment, subjective norm, and behavioural control while the dependent variable is The results of factor analysis using Principle Component Analysis with Varimax Rotation tabulated in **Tables 2** and **3**. KMO (Measure of Sampling Adequacy) with outliers of loading of less than 0.5 were removed to achieve clearer separation of factors, and only Eigenvalues above one were accepted [35].

The dimensions on student's motivation to choose entrepreneur are comprise of behavioural control, subjective norm and attitude towards self-employment while dimensions measuring student's entrepreneur career intention are comprise of immediate intention and future entrepreneurship intention.


**Table 1.** Profile of the respondents (N = 413).

#### **3.5. Levels of attitude towards self-employment, subjective norm and behavioural control motivations, and entrepreneurial intention**

**Table 4** tabulates results on the levels of attitude towards self-employment, subjective norm and behavioural control motivations, and entrepreneurial intention. The level of behavioural control entrepreneurial motivation indicates that it is very good level while subjective norm and attitude on self-employment entrepreneurial motivations are at good level. Entrepreneurship intention for both immediate term and future intention to be an entrepreneur are all rated as good level.

#### **3.6. Relationships of entrepreneurial motivation and entrepreneurship intension**

#### *3.6.1. Correlations analysis*

The results the correlations results among the variables is tabulated in **Table 5**. It shows that correlation (p < .01) exist between the factors of entrepreneurial motivation with both

immediate and future entrepreneurship among the students. The Correlation Coefficient with r = +.70 or higher between the two variables indicates very strong positive relationship,

Note: extraction method: principal component analysis. Rotation method: Varimax with Kaiser normalisation. Bartlett's

**Dimension on motivation to choose entrepreneur as a career Factor loading**

1.To be my own boss **.821** .226 .152 2.To realise my dream **.697** .266 .204 3.Increase my prestige and status **.696** .300 .151 4.For my personal freedom **.694** .099 .356 5.Enjoy myself **.638** .306 .147 6.Good economic environment **.618** .368 .240 7.To challenge myself **.616** .337 .316 8.For my own satisfaction and growth **.577** .346 .295

1.To use the skill learned in the university .136 **.755** .332 2.Entrepreneurial family culture .349 **.750** −.010 3.Follow the example of someone that I admired .410 **.690** .084 4.To invest personal savings .171 **.671** .377 5.To maintain my family .484 **.655** .102 6.I enjoy taking risk .212 **.637** .195

1.To provide job security −.029 .381 **.762** 2.To provide employment .196 .228 **.735** 3.To take advantage of my creative talent .396 .054 **.703** 4.Earn a reasonable living .476 .104 **.683** 5.Opportunities in the market .462 .177 **.613 Reliability (alpha)** 0.90 0.87 0.85 **Eigen value** 4.60 4.05 3.39 **Percentage variance explained** 46.96 7.90 7.12

**Total variance explained** 61.98 Kaiser-Meyer-Olkin measure of sampling adequacy 0.92

**Table 2.** Factor and reliability analyses on motivation to choose entrepreneur as a career.

**Behavioural control (Self-efficacy beliefs)**

**Subjective norm (Tolerance for risk)**

**Attitude (desirability) towards self-employment**

test of Sphericity Sig. at p < 0.001.

**Factor 1 Factor 2 Factor 3**

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297

Understanding the Motivation that Shapes Entrepreneurship Career Intention


Note: extraction method: principal component analysis. Rotation method: Varimax with Kaiser normalisation. Bartlett's test of Sphericity Sig. at p < 0.001.

**Table 2.** Factor and reliability analyses on motivation to choose entrepreneur as a career.

**3.5. Levels of attitude towards self-employment, subjective norm and behavioural** 

**Demographic Categories Frequency (%)** Gender a. Male 206 49.9

296 Entrepreneurship - Development Tendencies and Empirical Approach

Age (years) a. 19 to 20 180 43.6

Faculty a. FPTPK 85 20.6

Seniority at UTHM a. Degree year 1 121 29.6

Race a. Malay 231 55.9

b. Female 207 50.1

b. 21 to 22 109 26.4 c. 23 to 27 124 30.0

b. FSKTM 58 14.0 c. FKMP 82 19.9 d. FKEE 78 18.9 e. FKAAS 89 21.5 f. FTE 21 5.1

b. Degree year 2 100 24.2 c. Degree year 3 103 24.9 d. Degree year 4 83 21.5

b. Chinese 100 24.2 c. Indian 45 10.9 d. International student 37 9.0

**3.6. Relationships of entrepreneurial motivation and entrepreneurship intension**

**Table 4** tabulates results on the levels of attitude towards self-employment, subjective norm and behavioural control motivations, and entrepreneurial intention. The level of behavioural control entrepreneurial motivation indicates that it is very good level while subjective norm and attitude on self-employment entrepreneurial motivations are at good level. Entrepreneurship intention for both immediate term and future intention to be an entrepre-

The results the correlations results among the variables is tabulated in **Table 5**. It shows that correlation (p < .01) exist between the factors of entrepreneurial motivation with both

**control motivations, and entrepreneurial intention**

neur are all rated as good level.

**Table 1.** Profile of the respondents (N = 413).

*3.6.1. Correlations analysis*

immediate and future entrepreneurship among the students. The Correlation Coefficient with r = +.70 or higher between the two variables indicates very strong positive relationship,


while a value of +.40 to +.69 indicates strong positive relationship and value of +.30 to +.39 shows moderate positive relationship. Thus, all the relationships between the respective

**Figures 1**–**5** illustrate the how the variation of entrepreneurial motivation factors influences on students' entrepreneurship career intentions. In **Figure 1**, it shows that when the value of motivation is low then the entrepreneurship career intention is also low, when the motivation is moderate, the intention of entrepreneurship career is also moderate and when the

variables indicated very strongly positive relationship at significant level of p < 0.01.

**Dimension Entrepreneurial motivation Entrepreneurship** 

1a Behavioural control 1 .714\*\* .665\*\* .549\*\* .490\*\* 1b Subjective norm .714\*\* 1 .564\*\* .552\*\* .652\*\*

2b Future intention .490\*\* .652\*\* .498\*\* .616\*\* 1

1b. Subjective norm 1c. Attitude

on selfemployment

Understanding the Motivation that Shapes Entrepreneurship Career Intention

.665\*\* .564\*\* 1 .576\*\* .498\*\*

.549\*\* .552\*\* .576\*\* 1 .616\*\*

Behavioural control

Factors 1a.

self-employment

Note: \*\*. Correlation is significant at the 0.01 level (2-tailed).

**Table 5.** Pearson correlations (N = 413) among variables.

1c Attitude on

2a Immediate intention

**intention**

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2b. Immediate intention

2b. Future intention 299

*3.6.2. The variations between entrepreneurial motivational factors and entrepreneurial intention*

**Figure 1.** The variation between motivations with entrepreneurship career intention.

Note: extraction method: principal component analysis. Rotation method: Varimax with Kaiser normalisation. Bartlett's test of Sphericity Sig. at p < 0.001.

**Table 3.** Factor and reliability analyses on entrepreneurship career intention.


Note: (N = 413); Range is based on Likert Scale of 1 to 5 where 1.00–2.33 = Low; 2.34–3.66 Good and 3.67–5.00 = Very Good).

**Table 4.** Mean of variables and levels of motivational factors (attitude towards self-employment, subjective norm, behavioural control) and entrepreneurship intention with their standard deviation.


**Table 5.** Pearson correlations (N = 413) among variables.

**Variable Dimension No. of** 

**Table 3.** Factor and reliability analyses on entrepreneurship career intention.

risk)

b. Subjective norm (Tolerance for

Total variance explained 62.57 Kaiser-Meyer-Olkin measure of sampling adequacy. 0.91

Note: extraction method: principal component analysis. Rotation method: Varimax with Kaiser normalisation. Bartlett's

**Dimension of entrepreneurship career intention Factor loading**

298 Entrepreneurship - Development Tendencies and Empirical Approach

1. I prefer to be an entrepreneur rather than to be an employee in a company .850 .057 2. I am prepared to do anything to be an entrepreneur .793 .263 3. I am very interested to be an entrepreneur .777 .245 4. I shall work very hard at becoming an entrepreneur .717 .243 5. I have already prepared myself to become an entrepreneur .707 .364 6. My professional goal is to become an entrepreneur .704 .209 7. I'll put every effort to start and run my own business .659 .336 8. I have thought seriously to start my own business after completing my study .652 .479 9. I want to be my own boss .538 .399

1. I'm determined to create a firm in the future .292 .833 2. I will start my business in the next 10 years .076 .787 3. I have strong intention to start a business someday .340 .713 Reliability (alpha) 0.92 0.78 Eigenvalue 5.14 2.99 Percentage variance explained 53.11 9.41

**Immediate term intention**

**Future intention**

c. Attitude on self-employment (Desirability)

a. Entrepreneur immediate term career intention

b. Entrepreneur career intention in

Note: (N = 413); Range is based on Likert Scale of 1 to 5 where 1.00–2.33 = Low; 2.34–3.66 Good and 3.67–5.00 = Very

**Table 4.** Mean of variables and levels of motivational factors (attitude towards self-employment, subjective norm,

the future

behavioural control) and entrepreneurship intention with their standard deviation.

1 Entrepreneurial motivational factors

test of Sphericity Sig. at p < 0.001.

2 Entrepreneurship career intention

Good).

**items**

a. Behavioural control 8 3.81 0.72 Very good

**Mean Std. Dev. Level**

**Factor1 Factor2**

6 3.62 0.77 Good

5 3.66 0.68 Good

9 3.34 0.77 Good

3 3.34 0.81 Good

while a value of +.40 to +.69 indicates strong positive relationship and value of +.30 to +.39 shows moderate positive relationship. Thus, all the relationships between the respective variables indicated very strongly positive relationship at significant level of p < 0.01.

#### *3.6.2. The variations between entrepreneurial motivational factors and entrepreneurial intention*

**Figures 1**–**5** illustrate the how the variation of entrepreneurial motivation factors influences on students' entrepreneurship career intentions. In **Figure 1**, it shows that when the value of motivation is low then the entrepreneurship career intention is also low, when the motivation is moderate, the intention of entrepreneurship career is also moderate and when the

**Figure 1.** The variation between motivations with entrepreneurship career intention.

entrepreneurial motivation is high, the entrepreneurship career intention is also at a high level too. This trends are also illustrated for all the other factors of entrepreneurial motivation as in **Figure 2** for education levels with entrepreneurship career intention, **Figure 3** for entrepreneurial personal characteristic on entrepreneurship career intentions, **Figure 4** for personality with entrepreneurship career intention and in **Figure 5**, the variation of personal satisfaction with entrepreneurship career intention. It thus indicate that higher level of factors of entrepreneurial motivation influences entrepreneurship career intention.

**Figure 2.** The variation between educational levels with entrepreneurship career intention.

*3.6.3. Regression of entrepreneurial motivation and entrepreneurship career intension*

**Figure 5.** The variation of personal satisfaction with entrepreneurial intention.

**Figure 4.** The variation of personality with entrepreneurial intention.

The model summary of predicting the statistical relationships and explains the underlying relationships between entrepreneurial motivation with immediate entrepreneurship career intension is presented in **Table 6**. The coefficient of determination is .42 indicates that 42%

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301

**Figure 3.** The variation of entrepreneurship personal characteristic on entrepreneurial intention.

**Figure 4.** The variation of personality with entrepreneurial intention.

entrepreneurial motivation is high, the entrepreneurship career intention is also at a high level too. This trends are also illustrated for all the other factors of entrepreneurial motivation as in **Figure 2** for education levels with entrepreneurship career intention, **Figure 3** for entrepreneurial personal characteristic on entrepreneurship career intentions, **Figure 4** for personality with entrepreneurship career intention and in **Figure 5**, the variation of personal satisfaction with entrepreneurship career intention. It thus indicate that higher level of factors

of entrepreneurial motivation influences entrepreneurship career intention.

300 Entrepreneurship - Development Tendencies and Empirical Approach

**Figure 2.** The variation between educational levels with entrepreneurship career intention.

**Figure 3.** The variation of entrepreneurship personal characteristic on entrepreneurial intention.

**Figure 5.** The variation of personal satisfaction with entrepreneurial intention.

#### *3.6.3. Regression of entrepreneurial motivation and entrepreneurship career intension*

The model summary of predicting the statistical relationships and explains the underlying relationships between entrepreneurial motivation with immediate entrepreneurship career intension is presented in **Table 6**. The coefficient of determination is .42 indicates that 42%


variance explained at p < .001 level. However, the behavioural control motivational factor is not significant. The significant F change value at p < 0.001 indicates that variance was significantly explained by the model. The Durbin Watson value of 1.77 shows that the result of

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303

Demographic elements including gender, age, and religion affect entrepreneurship intention [36]. Thus, in the present study, data on the gender, age, seniority at the University, faculty and race are being controlled to reduce its influences the results. Entrepreneurship education has been found to be able reduce reducing graduate unemployment [37]. Thus, entrepreneurial education should be introduced into the tertiary institutions that are not currently offering entrepreneurship courses (Samuel et al. [36] to equip students that possess competencies for job creation and self-employment. Thus, universities should explore the offering a wide range of entrepreneurship development activities to groom and nurture entrepreneur, seek practices that train and re-orientate students to embrace a more clearly defined element of personal and career development, human resource capacity building and academia development of the university. This will also create the opportunity to mould key entrepreneurial behaviours and practices through Centre of Excellence, the engagement of corporate entrepreneurship development, entrepreneurship curriculum besides the requirement that all undergraduates need

to take at least a subject on entrepreneurship in their respective degree programme.

In this study, the levels of motivational factors which are attitude towards self-employment, subjective norm and behavioural control, and entrepreneurial intention are all rated good. This is in effect different from the finding by Fatoki [32] which reported weak results. The current research found that the variance of future entrepreneurship career intension (dependent variable) is explained by only the 2 motivational factors, the subjective norm and attitude motivational factors with the non-significant factor of behavioural control motivation. Nevertheless, all the three factors of entrepreneurial motivation are related to the immediate entrepreneurship career intension significantly. Biraglia and Kadile [38] found that an individual must feel self-efficacious enough to pursue entrepreneurial career. Universities entrepreneurship and curricular development programmes are crucial to assist students to acquire increased understanding of entrepreneurship. Thus, in elevating low entrepreneurial intention among African students, Fatoki [32] suggested that motivators must be reinforced and the organising practical trainings for students involved in entrepreneurship education or who would like to be involved in entrepreneurial practices, non-governmental organisations should be well funded through local and international grants to help with the training need of graduate entrepreneurship, training seminars can also be organised regularly to students as well as a "learning from peers" or mentorship approach can be instituted by government agencies to help students to get involved in entrepreneurship trainings at tertiary institutions. There are other research works that reported entrepreneurship education programs are not successful to develop students' entrepreneurial capabilities as an entrepreneur [39–41]. In this sense, this study has reiterated and supported the argument by Linan et al. [42] that

regression model is valid.

**4. Discussion**

**Table 6.** The effect of entrepreneurial motivation on immediate entrepreneurship career intention.

of the variance in the immediate entrepreneurship career intension (dependent variable) is explained by the 3 motivational factors. The standardised coefficient behavioural control is . 137 at p<.05, subjective control is .226 and attitude is .335 contributed significantly to the variance explained. The F change (p < 0.001) indicates that variance was significantly explained by the model. The Durbin Watson value of 1.76 shows that the result of regression model is valid.

**Table 7** shows that the 2 motivational factors explain 45% of the variance of future entrepreneurship career intension. Subjective norm motivational factor with a standardised coefficient of .577 is significant at p < .001, and attitude with .216 is significantly contributing to the


**Table 7.** The effect of entrepreneurial motivation on future entrepreneurship career intention.

variance explained at p < .001 level. However, the behavioural control motivational factor is not significant. The significant F change value at p < 0.001 indicates that variance was significantly explained by the model. The Durbin Watson value of 1.77 shows that the result of regression model is valid.

### **4. Discussion**

of the variance in the immediate entrepreneurship career intension (dependent variable) is explained by the 3 motivational factors. The standardised coefficient behavioural control is . 137 at p<.05, subjective control is .226 and attitude is .335 contributed significantly to the variance explained. The F change (p < 0.001) indicates that variance was significantly explained by the model. The Durbin Watson value of 1.76 shows that the result of regression model is valid.

**Independent Variables Beta standardised**

Behavioural control (self-efficacy beliefs) .137\*\* Subjective norm (Tolerance for risk) .266\*\*\* Attitude (Desirability) of self-employment .335\*\*\* R2 .42 Adj. R2 .41

302 Entrepreneurship - Development Tendencies and Empirical Approach

 change .42 F change 96.68\*\*\* Durbin-Watson 1.76

**Table 6.** The effect of entrepreneurial motivation on immediate entrepreneurship career intention.

**Model variables**

Note: \*\*\*Sig. at .001 \*\*Sig. at .05.

**Model variables**

Note: \*\*\***s**ig. **A**t .001**.**

R2

R2

**Model**

**Model**

**Table 7** shows that the 2 motivational factors explain 45% of the variance of future entrepreneurship career intension. Subjective norm motivational factor with a standardised coefficient of .577 is significant at p < .001, and attitude with .216 is significantly contributing to the

**Independent Variables Beta standardised**

Behavioural control (self-efficacy beliefs) −.066 Subjective norm (Tolerance for risk) .577\*\*\* Attitude (Desirability) of self-employment .216\*\*\* R2 .45 Adj. R2 .45

 change .45 F change 112.14\*\*\* Durbin-Watson 1.77

**Table 7.** The effect of entrepreneurial motivation on future entrepreneurship career intention.

Demographic elements including gender, age, and religion affect entrepreneurship intention [36]. Thus, in the present study, data on the gender, age, seniority at the University, faculty and race are being controlled to reduce its influences the results. Entrepreneurship education has been found to be able reduce reducing graduate unemployment [37]. Thus, entrepreneurial education should be introduced into the tertiary institutions that are not currently offering entrepreneurship courses (Samuel et al. [36] to equip students that possess competencies for job creation and self-employment. Thus, universities should explore the offering a wide range of entrepreneurship development activities to groom and nurture entrepreneur, seek practices that train and re-orientate students to embrace a more clearly defined element of personal and career development, human resource capacity building and academia development of the university. This will also create the opportunity to mould key entrepreneurial behaviours and practices through Centre of Excellence, the engagement of corporate entrepreneurship development, entrepreneurship curriculum besides the requirement that all undergraduates need to take at least a subject on entrepreneurship in their respective degree programme.

In this study, the levels of motivational factors which are attitude towards self-employment, subjective norm and behavioural control, and entrepreneurial intention are all rated good. This is in effect different from the finding by Fatoki [32] which reported weak results. The current research found that the variance of future entrepreneurship career intension (dependent variable) is explained by only the 2 motivational factors, the subjective norm and attitude motivational factors with the non-significant factor of behavioural control motivation. Nevertheless, all the three factors of entrepreneurial motivation are related to the immediate entrepreneurship career intension significantly. Biraglia and Kadile [38] found that an individual must feel self-efficacious enough to pursue entrepreneurial career. Universities entrepreneurship and curricular development programmes are crucial to assist students to acquire increased understanding of entrepreneurship. Thus, in elevating low entrepreneurial intention among African students, Fatoki [32] suggested that motivators must be reinforced and the organising practical trainings for students involved in entrepreneurship education or who would like to be involved in entrepreneurial practices, non-governmental organisations should be well funded through local and international grants to help with the training need of graduate entrepreneurship, training seminars can also be organised regularly to students as well as a "learning from peers" or mentorship approach can be instituted by government agencies to help students to get involved in entrepreneurship trainings at tertiary institutions. There are other research works that reported entrepreneurship education programs are not successful to develop students' entrepreneurial capabilities as an entrepreneur [39–41]. In this sense, this study has reiterated and supported the argument by Linan et al. [42] that individuals having the necessary entrepreneurial competencies will favour entrepreneurial behaviour if those close to them are supportive and valued entrepreneurship positively. This has thus supported the call by Kim-Soon et al. [21] that authorities should identify and target those youths who are really serious to venture into entrepreneurship and own a business to be developed through entrepreneurship interventions initiatives.

**Author details**

**References**

Ng Kim-Soon\*, Abdul Rahman Ahmad and Nurul Nadia Ibrahim

Universiti Tun Hussein Onn Malaysia, Batu Pahat, Johor, Malaysia

10th ed. New Jersey, HD62.7.S27: Prentice Hall; 2012

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### **5. Conclusion**

Entrepreneurship is crucial to new business start-ups, developing existing businesses, job creation and economic growth. At the higher learning institutions entrepreneurship skills, knowledge and behaviours are integrated across its curriculum. The level of behavioural control of entrepreneurial motivation at in this study conducted at a public university has been rated very good, subjective norm and attitude towards entrepreneurship are both at good level.

The result of regression analysis indicated that the motivation in choosing entrepreneurship as a career option among the students is positively and significantly related with entrepreneurship intention statistically. The entrepreneurial motivation factors affecting career intention to be an entrepreneur are the social norms comprising of individual perception of the significance of how others value and support the establishment of a new business), subjective norm (individual perceptions of their abilities and tolerance to perform entrepreneurial tasks), and attitude towards behaviour (individual awareness of the importance and value of entrepreneurship) entrepreneurial motivations. Subjective norm (tolerance for risk) and attitude (desirability) of self-employment are significantly related to the student's immediate and future intention to be an entrepreneur. However, behavioural control entrepreneurial motivation is found to be significantly related to the student's immediate career intention but not significantly related to the student's future entrepreneurship career intention in this study. This could be argued using Krueger et al. [10] argument that individuals with high internal locus of control, social norms are less predictive of intentions. Behavioural control influences an individual's intention of action basing perception of degree of difficulty of performance of that specific behaviour [8]. This conceptually is similar Bandura's [13] Social Cognitive Theory explaining how an individual's belief in their abilities to perform a specified action.

Universities have put much effort to raise the profile of graduate entrepreneurship and to attract graduate students to seriously engage in entrepreneurship. Whether it is technical engineering or the non-engineering programmes, the antecedents of entrepreneurship intention should be embedded into entrepreneurship curriculum and pedagogical strategy and be a component to the main programme. Entrepreneurship is crucial to the future career, economy and social development necessary for nation building. Creating opportunity for practice of key entrepreneurial behaviours is seen as being crucial in cultivating entrepreneurial behaviours. This study supported the This has thus supported the call that authorities should identify and target those youths who are really serious to venture into entrepreneurship and own a business to be developed through entrepreneurship interventions initiatives.

### **Author details**

individuals having the necessary entrepreneurial competencies will favour entrepreneurial behaviour if those close to them are supportive and valued entrepreneurship positively. This has thus supported the call by Kim-Soon et al. [21] that authorities should identify and target those youths who are really serious to venture into entrepreneurship and own a business to

Entrepreneurship is crucial to new business start-ups, developing existing businesses, job creation and economic growth. At the higher learning institutions entrepreneurship skills, knowledge and behaviours are integrated across its curriculum. The level of behavioural control of entrepreneurial motivation at in this study conducted at a public university has been rated very good, subjective norm and attitude towards entrepreneurship are both at good

The result of regression analysis indicated that the motivation in choosing entrepreneurship as a career option among the students is positively and significantly related with entrepreneurship intention statistically. The entrepreneurial motivation factors affecting career intention to be an entrepreneur are the social norms comprising of individual perception of the significance of how others value and support the establishment of a new business), subjective norm (individual perceptions of their abilities and tolerance to perform entrepreneurial tasks), and attitude towards behaviour (individual awareness of the importance and value of entrepreneurship) entrepreneurial motivations. Subjective norm (tolerance for risk) and attitude (desirability) of self-employment are significantly related to the student's immediate and future intention to be an entrepreneur. However, behavioural control entrepreneurial motivation is found to be significantly related to the student's immediate career intention but not significantly related to the student's future entrepreneurship career intention in this study. This could be argued using Krueger et al. [10] argument that individuals with high internal locus of control, social norms are less predictive of intentions. Behavioural control influences an individual's intention of action basing perception of degree of difficulty of performance of that specific behaviour [8]. This conceptually is similar Bandura's [13] Social Cognitive Theory explaining how an individual's belief in their abilities to perform a specified action.

Universities have put much effort to raise the profile of graduate entrepreneurship and to attract graduate students to seriously engage in entrepreneurship. Whether it is technical engineering or the non-engineering programmes, the antecedents of entrepreneurship intention should be embedded into entrepreneurship curriculum and pedagogical strategy and be a component to the main programme. Entrepreneurship is crucial to the future career, economy and social development necessary for nation building. Creating opportunity for practice of key entrepreneurial behaviours is seen as being crucial in cultivating entrepreneurial behaviours. This study supported the This has thus supported the call that authorities should identify and target those youths who are really serious to venture into entrepreneurship and own a business to be developed through entrepreneurship interventions initiatives.

be developed through entrepreneurship interventions initiatives.

304 Entrepreneurship - Development Tendencies and Empirical Approach

**5. Conclusion**

level.

Ng Kim-Soon\*, Abdul Rahman Ahmad and Nurul Nadia Ibrahim

\*Address all correspondence to: ksng@uthm.edu.my

Universiti Tun Hussein Onn Malaysia, Batu Pahat, Johor, Malaysia

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**Chapter 16**

**Provisional chapter**

**Entrepreneurship, Leadership and Charisma: Which Are**

Leadership ethics tend to emphasise the benefits of implementing ethical practices within organisations, focussing on the importance of a leader's values and virtues and the positive effects of a leader's behaviour on employees' satisfaction, the organisational culture and stakeholders' relationships. Drawing from this premise, the work addresses entrepreneurial and managerial leadership model, such as charismatic and virtues-based leadership, and its contribution in developing sustainability-oriented strategy. Using a methodological approach which merges the inductive and deductive perspective, a critical review of leadership approaches is followed by the empirical analysis based on a case study relative to a large Italian public company—Brunello Cucinelli Spa—driving attention to the effectiveness of sustainable business models which require managers and entrepreneurs to govern the internal and external complexity and actively contribute to both the sustainability of the company and the local

**Keywords:** entrepreneurship, business model, charisma, case-study, leadership,

**Entrepreneurship, Leadership and Charisma: Which Are** 

DOI: 10.5772/intechopen.70535

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution,

© 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

and reproduction in any medium, provided the original work is properly cited.

Since the 1950s, numerous theoretical frameworks that posit leadership at the core have been

Recently, several studies—which are part of the theoretical framework of corporate social responsibility (CSR)—have underlined how entrepreneurial behaviours and values lie at the base of CSR-oriented strategies and actions [1]. The business ethics literature emphasises the values dimension of entrepreneurial and managerial activity. Within this theoretical construct,

developed and extensive research has been undertaken on leadership behaviour.

**the Links with Business Models Sustainability?**

**the Links with Business Models Sustainability?**

Additional information is available at the end of the chapter

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.70535

and global environment.

sustainability

**1. Introduction**

Mara Del Baldo

**Abstract**

Mara Del Baldo


**Provisional chapter**

### **Entrepreneurship, Leadership and Charisma: Which Are the Links with Business Models Sustainability? the Links with Business Models Sustainability?**

**Entrepreneurship, Leadership and Charisma: Which Are** 

DOI: 10.5772/intechopen.70535

Mara Del Baldo Additional information is available at the end of the chapter

Mara Del Baldo

[40] Cheng MY, Chan WS, Mahmood A. The effectiveness of entrepreneurship education in

[41] Jaafar M, Aziz ARA. Entrepreneurship education in developing country: Exploration on its necessity in the construction program. Journal of Engineering, Design and

[42] Linan F, Nabi G, Krueger N. British and Spanish entrepreneurial intentions: A compara-

Malaysia. Education and Training. 2009;**51**(7):555-566

tive study. Revista De Economia Mundial. 2013;**33**:73-103

Technology. 2008;**6**(2):178-189

308 Entrepreneurship - Development Tendencies and Empirical Approach

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.70535

#### **Abstract**

Leadership ethics tend to emphasise the benefits of implementing ethical practices within organisations, focussing on the importance of a leader's values and virtues and the positive effects of a leader's behaviour on employees' satisfaction, the organisational culture and stakeholders' relationships. Drawing from this premise, the work addresses entrepreneurial and managerial leadership model, such as charismatic and virtues-based leadership, and its contribution in developing sustainability-oriented strategy. Using a methodological approach which merges the inductive and deductive perspective, a critical review of leadership approaches is followed by the empirical analysis based on a case study relative to a large Italian public company—Brunello Cucinelli Spa—driving attention to the effectiveness of sustainable business models which require managers and entrepreneurs to govern the internal and external complexity and actively contribute to both the sustainability of the company and the local and global environment.

**Keywords:** entrepreneurship, business model, charisma, case-study, leadership, sustainability

### **1. Introduction**

Since the 1950s, numerous theoretical frameworks that posit leadership at the core have been developed and extensive research has been undertaken on leadership behaviour.

Recently, several studies—which are part of the theoretical framework of corporate social responsibility (CSR)—have underlined how entrepreneurial behaviours and values lie at the base of CSR-oriented strategies and actions [1]. The business ethics literature emphasises the values dimension of entrepreneurial and managerial activity. Within this theoretical construct,

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons

concepts such as management integrity, authenticity and virtues have been introduced, becoming widespread in the corporate context and giving rise to sustainable business models [2] and models of good governance aimed at constructing a civil economy [3, 4]. Leadership ethics tend to emphasise the benefits of implementing ethical practices within organisations, the importance of a leader's values and virtues [5–7] and the positive effects of a leader's behaviour on employees' satisfaction, the organisational culture and stakeholders' relationships [8, 9].

selection/promotions, evaluation processes and monitoring, ethical training programs, applying ethical values to decision making, daily routine and in intra-organisation procedures and structures [16]. Leadership behaviour ethics tend to emphasise the leaders'

Entrepreneurship, Leadership and Charisma: Which Are the Links with Business Models…

http://dx.doi.org/10.5772/intechopen.70535

311

The benefits of implementing ethical practices have been demonstrated by focusing on personal virtues held by leaders [6, 7, 13]. A fundamental pillar for the effectiveness of ethical commitments and the development of internal and external trust lies in a strong 'steer' from the top [18, 19]. Ethical leadership requires personal attributes (honesty, ability to listen, allowing others autonomy of choice, openness, willingness to consult and to learn) and manifests itself in a series of executive behaviours (i.e., gaining a real understanding of the culture; building ethics and values into 'hearts and minds' by means of ethics training programs; building ethical achievement into performance evaluation, creating channels of communication between the company and stakeholder groups, starting with employees) [20]. There are leaders who freely admit that they are driven by an intrinsic and contagious commitment to values. Leadership is not possible without ethics, because "being a moral leader and doing, acting with moral leadership are one" [21], p. 4 as shown

Moral behaviour and leadership are interrelated: on one hand, moral behaviour is influenced by situational factors such as role modelling, diffusion of responsibility, conformity, etc.; on the other hand, individual differences (i.e., personality and values) act as an antecedent of

Moral leadership is inspired by constitutive moral elements: innovation, intuition and imagination [21]. Moral imagination entails perceiving norms, social roles and relationships entwined in managerial decision-making. Moreover, it involves the ability to envision and evaluate new models that create new possibilities to reframe problems and create new solutions in ways that are economically viable and morally justifiable [23], p.93. Creative value management depends on the attention paid to all values that are at stake. Moral creativity fosters dynamic and innovative CSR strategies and actions and is linked to responsible and sustainable leadership [24, 25]. The organisational culture imbued with

> Relational Affective Being there (crisis)

Caring Communicating Involving others Responsive

*Doing* **informed by relationships with all stakeholders, wanting to achieve the best for all and the common good**

behaviour and their values [8, 17].

in **Table 1**.

**and innovative**

Vision Passionate

Reason and emotions Integer (integrity)

Responsible (ethical) Trustworthy

moral behaviour [22].

*Being* **informed by values, emotional and reasoning capability, caring, visionary, proactive** 

Balanced/in harmony with yourself

Source: Our adaptation of Ref. [21].

**Table 1.** Doing and being a moral leader.

At the same time, the relevance of leadership has been growing in regard to innovative forms of social, environmental and integrated reporting, which place a strong emphasis both on the business model and the quality of leadership that directly or indirectly affects it. However, at present, the relationship between CSR and leadership has not been adequately amplified. Although some innovative topics, such as responsible leadership, have been emerging [10, 11], Du et al. [12] clearly highlight the persistence of certain deficiencies with regard to the interface between leadership and CSR: "despite a growing body of research documenting the business case of CSR, our knowledge of organisational antecedents to CSR remains embryonic" [12], p. 156. Addressing this gap, they investigate the roles of transformational and transactional leadership and the influence on the effectiveness of CSR in generating positive organisational outcomes.

Lack of research calls for further studies aimed to consider leadership components and practices. In particular, among the fields that are still underdeveloped, the relationship between CSR orientation and entrepreneurial/managerial virtues has not been adequately investigated or only partly addressed [6, 13], nor have previous studies expressively analysed entrepreneurial virtues intended as a transcendental perspective and virtues-based leadership and how they are reflected on the business model.

Drawing from these premises, the work aims to focus on entrepreneurial and managerial leadership models, such as charismatic and virtues-based leadership, and their contribution in developing sustainability-oriented strategies, capable of leading companies toward effective models of sustainable development [14]. The research question that orients the study can be summarized as follows: How does leadership affect the business model and its orientation toward sustainability?

Using a methodological approach, which merges the inductive and deductive perspective, this question orients a critical review of ethical-based leadership approaches, followed by the empirical analysis focused on a single case study [15] relative to a large Italian public company—Brunello Cucinelli Spa—driving attention to the models that are more coherent with the actual socio-economic context which require managers and entrepreneurs to govern the internal and external complexity and actively contribute to both the sustainability of the company and the local and global environment.

### **2. Leadership ethics: ethical and moral-based leadership**

Leadership has a crucial role in shaping ethical organisational culture through leaders' moral behaviour, corporate mission, vision and values, ethical criteria for recruiting/

selection/promotions, evaluation processes and monitoring, ethical training programs, applying ethical values to decision making, daily routine and in intra-organisation procedures and structures [16]. Leadership behaviour ethics tend to emphasise the leaders' behaviour and their values [8, 17].

The benefits of implementing ethical practices have been demonstrated by focusing on personal virtues held by leaders [6, 7, 13]. A fundamental pillar for the effectiveness of ethical commitments and the development of internal and external trust lies in a strong 'steer' from the top [18, 19]. Ethical leadership requires personal attributes (honesty, ability to listen, allowing others autonomy of choice, openness, willingness to consult and to learn) and manifests itself in a series of executive behaviours (i.e., gaining a real understanding of the culture; building ethics and values into 'hearts and minds' by means of ethics training programs; building ethical achievement into performance evaluation, creating channels of communication between the company and stakeholder groups, starting with employees) [20]. There are leaders who freely admit that they are driven by an intrinsic and contagious commitment to values. Leadership is not possible without ethics, because "being a moral leader and doing, acting with moral leadership are one" [21], p. 4 as shown in **Table 1**.

Moral behaviour and leadership are interrelated: on one hand, moral behaviour is influenced by situational factors such as role modelling, diffusion of responsibility, conformity, etc.; on the other hand, individual differences (i.e., personality and values) act as an antecedent of moral behaviour [22].

Moral leadership is inspired by constitutive moral elements: innovation, intuition and imagination [21]. Moral imagination entails perceiving norms, social roles and relationships entwined in managerial decision-making. Moreover, it involves the ability to envision and evaluate new models that create new possibilities to reframe problems and create new solutions in ways that are economically viable and morally justifiable [23], p.93. Creative value management depends on the attention paid to all values that are at stake. Moral creativity fosters dynamic and innovative CSR strategies and actions and is linked to responsible and sustainable leadership [24, 25]. The organisational culture imbued with


**Table 1.** Doing and being a moral leader.

concepts such as management integrity, authenticity and virtues have been introduced, becoming widespread in the corporate context and giving rise to sustainable business models [2] and models of good governance aimed at constructing a civil economy [3, 4]. Leadership ethics tend to emphasise the benefits of implementing ethical practices within organisations, the importance of a leader's values and virtues [5–7] and the positive effects of a leader's behaviour on employees' satisfaction, the organisational culture and stakeholders' relationships [8, 9].

At the same time, the relevance of leadership has been growing in regard to innovative forms of social, environmental and integrated reporting, which place a strong emphasis both on the business model and the quality of leadership that directly or indirectly affects it. However, at present, the relationship between CSR and leadership has not been adequately amplified. Although some innovative topics, such as responsible leadership, have been emerging [10, 11], Du et al. [12] clearly highlight the persistence of certain deficiencies with regard to the interface between leadership and CSR: "despite a growing body of research documenting the business case of CSR, our knowledge of organisational antecedents to CSR remains embryonic" [12], p. 156. Addressing this gap, they investigate the roles of transformational and transactional leadership and the influence on the effectiveness of CSR in generating

Lack of research calls for further studies aimed to consider leadership components and practices. In particular, among the fields that are still underdeveloped, the relationship between CSR orientation and entrepreneurial/managerial virtues has not been adequately investigated or only partly addressed [6, 13], nor have previous studies expressively analysed entrepreneurial virtues intended as a transcendental perspective and virtues-based leadership and

Drawing from these premises, the work aims to focus on entrepreneurial and managerial leadership models, such as charismatic and virtues-based leadership, and their contribution in developing sustainability-oriented strategies, capable of leading companies toward effective models of sustainable development [14]. The research question that orients the study can be summarized as follows: How does leadership affect the business model and its orientation

Using a methodological approach, which merges the inductive and deductive perspective, this question orients a critical review of ethical-based leadership approaches, followed by the empirical analysis focused on a single case study [15] relative to a large Italian public company—Brunello Cucinelli Spa—driving attention to the models that are more coherent with the actual socio-economic context which require managers and entrepreneurs to govern the internal and external complexity and actively contribute to both the sustainability of the

Leadership has a crucial role in shaping ethical organisational culture through leaders' moral behaviour, corporate mission, vision and values, ethical criteria for recruiting/

positive organisational outcomes.

toward sustainability?

how they are reflected on the business model.

310 Entrepreneurship - Development Tendencies and Empirical Approach

company and the local and global environment.

**2. Leadership ethics: ethical and moral-based leadership**

moral leadership enjoys several benefits: understanding of the interdependence between stakeholders; learning environment; respect and trust; cooperation; responsibility and accountability. This is not an idealistic approach, being that it is possible to find companies (i.e., the Norwegian company Stormberg A/S, see [26]; The Loccioni Group, see [27]) that apply it.

goals "have dominated economic thinking both in theory and practice" [21], p. 9. However, literature comprising spirituality at work and spiritual leadership theory has become highly influential, especially in the USA. At the same time, this research strand has also attracted

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Virtue ethics represent a developing approach within business, following with the recovery of the idea of virtue in mainstream philosophical ethics in the second half of the twentieth century [40, 41]. Among the virtue ethics there is a Neo-Aristotelian approach, which is applied to business ethics by several authors [42, 43]. Virtue ethics contribute to an environment for business that fosters the best practices [13] and allows us to understand the authentic "roots" of CSR. Flores and Green [6] used the "Leadership Virtues Questionnaire" to measure four leader virtues (cardinal virtues): prudence, fortitude, temperance and justice, which were positively related to assessments of authentic leadership, ethical leadership and transformational leadership. A stakeholder dialogue and engagement based on virtue ethics is concerned about the development of a virtuous corporate culture that takes a long-term

As mentioned in the previous sections, Bastons [45] points out that such virtues intervene in the structuring of the decision-making processes and allow the integral development of a

Bertland [41] states that one can better understand the action of a leader when viewed from the perspective of the capabilities approach. This perspective reflects on the role of organisations in developing individual abilities and enriching the setting of the virtues ethics. Virtuous managers will be able to encourage employees and strengthen their talent, enhancing dignity, promoting positive relationships with customers and involving shareholders in

Virtuous leadership goes beyond the debate on effectiveness, shifting the discourse to the concern of values, attitudes and behaviours that encourage transcendental development of leaders and followers [46]. Fry [38] defines transcendental leadership as a holistic model that concerns the whole person as it integrates the four essences of human existence: the body (physical essence), the mind (logical/rational thought), the heart (emotions and feelings) and

The diffusion and growth of virtues in a company, however, oppose the barriers that Martin

The theoretical construct of responsible leadership derives from the intersection of the moralbased leadership concepts with those of social responsibility and sustainability. It is characterised by a multilevel approach that places the leader, his behaviour, attitudes and choices in the centre of the management of a company, a division or a team [48]. "A responsible leadership theory broadens the notion of leadership from a traditional leader-subordinate

[47] identifies, primarily lacking, among the business leaders of today, a vision.

**2.2. Responsible and sustainable leadership for a sustainable business model**

significant criticism [39].

company and its stakeholders.

social commitment.

the spirit.

view [44].

#### **2.1. Charismatic, transcendental and virtues-based leadership**

The ability to "walk the talk of morals" is emphasised when maintaining trustworthiness and model attractiveness [28, 29] and is positively related to charismatic and transformational leadership [7, 30, 31]. Charismatic leaders are capable of turning problems into opportunities and resources thanks to their ability "to see the world" differently [32] and to create and maintain a work environment where people are emotionally and intellectually committed to the organisation's goals. They build an energetic and positive attitude in others and inspire them to do their very best by creating a common sense of purpose [31]. Personal responsibility, vision, moral virtues, integrity, faith in personal commitment, shared social responsibility and solidarity are typical attributes of charismatic leaders [32], which leverage a virtuous corporate culture in an organisation [33].

The Globe research [34] identified several leadership dimensions, among which are ranked: charisma and ability to motivate members of the organisation by leveraging the transmission of corporate values; ability to create and manage working groups, orienting them toward common goals; level of members involvement in the decision-making process; level of compassion and generosity and the ability to provide human support to the members of the organisation.

When linked to spirituality, moral leadership has been viewed as the means by which religious beliefs impact leaders, the workplace and the society [32]. Ethical standards in business settings, levels of corporate responsibility and the role of religion in business ethics are the interrelated concepts that support the idea of business "as a calling," which leads to creating an ethical organisational culture, developing CSR and providing servant leadership [35–37].

Although the world of business is dominated by rationality, efficiency and the pursuit of material goals, spiritual leadership assumes that leaders create a sense of spiritual meaning in followers through values such as honesty, wisdom and humility [38]. Malloch [19] provides several examples of "spiritual enterprises" in which virtues are daily applied in the operative, organisational and strategic management. These companies—also called visionary companies—possess a high level of social and spiritual capital, are characterised by different religious faiths and are diffused both in developed and emerging countries. Managers who hold a spiritual perspective on life are more ethical in their business conduct than those who do not hold a spiritual perspective [39]. In the Western world, the link to religion has often placed morality and wisdom into the private sphere, excluding it from being discussed openly as relevant to management and business altogether [18, 20]. The pursuit of material goals "have dominated economic thinking both in theory and practice" [21], p. 9. However, literature comprising spirituality at work and spiritual leadership theory has become highly influential, especially in the USA. At the same time, this research strand has also attracted significant criticism [39].

moral leadership enjoys several benefits: understanding of the interdependence between stakeholders; learning environment; respect and trust; cooperation; responsibility and accountability. This is not an idealistic approach, being that it is possible to find companies (i.e., the Norwegian company Stormberg A/S, see [26]; The Loccioni Group, see [27]) that

The ability to "walk the talk of morals" is emphasised when maintaining trustworthiness and model attractiveness [28, 29] and is positively related to charismatic and transformational leadership [7, 30, 31]. Charismatic leaders are capable of turning problems into opportunities and resources thanks to their ability "to see the world" differently [32] and to create and maintain a work environment where people are emotionally and intellectually committed to the organisation's goals. They build an energetic and positive attitude in others and inspire them to do their very best by creating a common sense of purpose [31]. Personal responsibility, vision, moral virtues, integrity, faith in personal commitment, shared social responsibility and solidarity are typical attributes of charismatic leaders [32], which leverage a virtuous

The Globe research [34] identified several leadership dimensions, among which are ranked: charisma and ability to motivate members of the organisation by leveraging the transmission of corporate values; ability to create and manage working groups, orienting them toward common goals; level of members involvement in the decision-making process; level of compassion and generosity and the ability to provide human support to the members

When linked to spirituality, moral leadership has been viewed as the means by which religious beliefs impact leaders, the workplace and the society [32]. Ethical standards in business settings, levels of corporate responsibility and the role of religion in business ethics are the interrelated concepts that support the idea of business "as a calling," which leads to creating an ethical organisational culture, developing CSR and providing servant leader-

Although the world of business is dominated by rationality, efficiency and the pursuit of material goals, spiritual leadership assumes that leaders create a sense of spiritual meaning in followers through values such as honesty, wisdom and humility [38]. Malloch [19] provides several examples of "spiritual enterprises" in which virtues are daily applied in the operative, organisational and strategic management. These companies—also called visionary companies—possess a high level of social and spiritual capital, are characterised by different religious faiths and are diffused both in developed and emerging countries. Managers who hold a spiritual perspective on life are more ethical in their business conduct than those who do not hold a spiritual perspective [39]. In the Western world, the link to religion has often placed morality and wisdom into the private sphere, excluding it from being discussed openly as relevant to management and business altogether [18, 20]. The pursuit of material

**2.1. Charismatic, transcendental and virtues-based leadership**

312 Entrepreneurship - Development Tendencies and Empirical Approach

corporate culture in an organisation [33].

of the organisation.

ship [35–37].

apply it.

Virtue ethics represent a developing approach within business, following with the recovery of the idea of virtue in mainstream philosophical ethics in the second half of the twentieth century [40, 41]. Among the virtue ethics there is a Neo-Aristotelian approach, which is applied to business ethics by several authors [42, 43]. Virtue ethics contribute to an environment for business that fosters the best practices [13] and allows us to understand the authentic "roots" of CSR. Flores and Green [6] used the "Leadership Virtues Questionnaire" to measure four leader virtues (cardinal virtues): prudence, fortitude, temperance and justice, which were positively related to assessments of authentic leadership, ethical leadership and transformational leadership. A stakeholder dialogue and engagement based on virtue ethics is concerned about the development of a virtuous corporate culture that takes a long-term view [44].

As mentioned in the previous sections, Bastons [45] points out that such virtues intervene in the structuring of the decision-making processes and allow the integral development of a company and its stakeholders.

Bertland [41] states that one can better understand the action of a leader when viewed from the perspective of the capabilities approach. This perspective reflects on the role of organisations in developing individual abilities and enriching the setting of the virtues ethics. Virtuous managers will be able to encourage employees and strengthen their talent, enhancing dignity, promoting positive relationships with customers and involving shareholders in social commitment.

Virtuous leadership goes beyond the debate on effectiveness, shifting the discourse to the concern of values, attitudes and behaviours that encourage transcendental development of leaders and followers [46]. Fry [38] defines transcendental leadership as a holistic model that concerns the whole person as it integrates the four essences of human existence: the body (physical essence), the mind (logical/rational thought), the heart (emotions and feelings) and the spirit.

The diffusion and growth of virtues in a company, however, oppose the barriers that Martin [47] identifies, primarily lacking, among the business leaders of today, a vision.

### **2.2. Responsible and sustainable leadership for a sustainable business model**

The theoretical construct of responsible leadership derives from the intersection of the moralbased leadership concepts with those of social responsibility and sustainability. It is characterised by a multilevel approach that places the leader, his behaviour, attitudes and choices in the centre of the management of a company, a division or a team [48]. "A responsible leadership theory broadens the notion of leadership from a traditional leader-subordinate relationship to a leader-stakeholder relationships" [12], p. 156. Responsible leadership is in fact described as "an ethical and socio-relational phenomenon that occurs in social interaction processes" [10], p. 99. Accordingly, "building and cultivating ethically sound relations toward different stakeholders is an important responsibility of leaders in an interconnected stakeholder society" [10], p. 101.

by individuals tackling sustainability issues includes: systemic understanding, emotional intelligence, values orientation to shape culture, compelling vision, inclusive style, innova-

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The theoretical constructs of sustainable leadership is thus closely linked to that of responsible and CSR leadership. It shares the same theoretical setting and differs from the latter only because of a greater focus on the three dimensions of sustainable development (people, planet and profits) and the creation of a social capital necessary to face times of difficulty and crisis [49]. Namely, three main elements characterise sustainable leadership [57]: (1) the need to cultivate a way of being and acting immersed in sustainability values; (2) the rootedness to the life processes and (3) being a dynamic, inclusive and collaborative process. Therefore, the leader's role does not rest in guiding others, but in guiding with the others as a result of sharing the values and the vision of sustainability inside and outside of the

A possible "missing link" between theory and practice of sustainability in the daily life of companies can thus be attributed to the lack of attention toward a key factor for concretely implementing a sustainable business model, which is an authentic leadership model consistent to the sustainability orientation and based on a moral and ethical construct. Sustainable leaders should be innovative and proactive in driving the change inside and outside the company toward sustainability. They should be capable to take the initiative without waiting for political decisions or forced by norms and laws. They should not be oriented to a short-term financial and competitive success and to an opportunistic use of CSR, merely aimed to increase the company (and their own) legitimacy [58]. In other words, they should

The word authentic derives from *authento*, "to have full power" [59]. Aristotle's view of ethics focused on one's pursuit of the "higher good" achieved through self-realisation when the activity of the soul is aligned with virtue to produce a complete life. Such self-realisation is tied to one's well-being or *eudaemonia*, a form of happiness that, in contrast to hedonism, arises from successfully performing activities that reflect one's true calling. Departing from ancient Greek philosophy, a variety of leader authenticity definitions have advanced over the years and several theoretical, empirical and practitioner publications have been produced [60]. Authenticity encompasses four key components: (1) awareness (i.e., knowledge and trust in one's thoughts, feelings, motives and values); (2) unbiased processing (i.e., objectivity in regard to the acceptance of one's positive and negative attributes); (3) behaviour (i.e., acting based on one's true preferences, values and needs rather than merely acting to please others, secure rewards or avoid punishments) and (4) relational orientation (i.e., achieving and valuing truthfulness and openness in one's close relationships [61]. This multi-component conceptualisation of authenticity has provided the theoretical foundation for several theories

Authenticity as a driver of entrepreneurial and managerial behaviour relates to the expression of integrity [9]. Entrepreneurial and managerial authenticity influences the nature and

tive approach and a long-term perspective.

company.

be authentic.

of authentic leadership [62].

Theories on responsible leadership thus emphasise the importance of approaching leadership in the context of stakeholder theory [28, 49]. Responsible leadership requires leader to also engage in involving stakeholders with virtue and integrity to build the best community and workplace [50]. Therefore, it enables the integration of the leaders within the stakeholder community.

Magni and Pennarola [48] point out that the competencies of responsible leadership are centred on communication, involvement of people and the importance attributed to the development of a new corporate culture based on values and moral convictions. The responsible leadership model they developed rests on five pillars: stakeholder consideration and ethical climate; integrity and climate oriented toward justice; role modelling and empowerment; climate geared toward diversity and inclusion and long-term orientation. Through this model, the responsible leader triggers a resilience path that guides the company toward sustainable development. Coherently, key factors of leadership style are the people strategy (the human resources management) and the culture (which enhances the basic values, such as accountability and transparency).The people strategy must be based on the enterprise conceived as a community of people. Therefore, its value is measured based on the commitment in bringing out the skills of its employees and this leads to the virtue of humility [51].

Responsible leadership rests on the idea that the responsible person must have flexible thinking (i.e., strategic and systematic), which includes the dimensions of logic (to sort, select and plan), ethics (foresight, transparency and perseverance) and aesthetic. Therefore, it requires specific cardinal virtues, such as prudence and perseverance.

Many approaches used for implementing CSR and sustainability have been predominantly inward-oriented and incapable of linking firms' social responsibilities to the core business and the value creation processes [25]. The need for more outward-oriented approaches has been pointed out, claiming the relevance of a sustainable business model with regard to the firms' value creation processes as a starting point [52, 53]. A sustainable business model is built upon the creation of value for all stakeholders and the natural environment, encompassing a wide range of changes that affect the company culture and values, translated into business practices and strategies, skills and knowledge, the leadership model and the internal and external relationship [54]. The sustainable business models are constructed through the interactions between individuals and groups inside and outside of companies [53, 55, 56]. Inquiring the nature of CSR leadership, Visser [25] observed that many characteristics (traits, styles, skills and knowledge) were associated with CSR leaders. Namely, a set of key characteristics that distinguishes the leadership approach taken by individuals tackling sustainability issues includes: systemic understanding, emotional intelligence, values orientation to shape culture, compelling vision, inclusive style, innovative approach and a long-term perspective.

relationship to a leader-stakeholder relationships" [12], p. 156. Responsible leadership is in fact described as "an ethical and socio-relational phenomenon that occurs in social interaction processes" [10], p. 99. Accordingly, "building and cultivating ethically sound relations toward different stakeholders is an important responsibility of leaders in an interconnected

Theories on responsible leadership thus emphasise the importance of approaching leadership in the context of stakeholder theory [28, 49]. Responsible leadership requires leader to also engage in involving stakeholders with virtue and integrity to build the best community and workplace [50]. Therefore, it enables the integration of the leaders within the stakeholder

Magni and Pennarola [48] point out that the competencies of responsible leadership are centred on communication, involvement of people and the importance attributed to the development of a new corporate culture based on values and moral convictions. The responsible leadership model they developed rests on five pillars: stakeholder consideration and ethical climate; integrity and climate oriented toward justice; role modelling and empowerment; climate geared toward diversity and inclusion and long-term orientation. Through this model, the responsible leader triggers a resilience path that guides the company toward sustainable development. Coherently, key factors of leadership style are the people strategy (the human resources management) and the culture (which enhances the basic values, such as accountability and transparency).The people strategy must be based on the enterprise conceived as a community of people. Therefore, its value is measured based on the commitment in bringing out the skills of its employees and this leads to the

Responsible leadership rests on the idea that the responsible person must have flexible thinking (i.e., strategic and systematic), which includes the dimensions of logic (to sort, select and plan), ethics (foresight, transparency and perseverance) and aesthetic. Therefore, it requires

Many approaches used for implementing CSR and sustainability have been predominantly inward-oriented and incapable of linking firms' social responsibilities to the core business and the value creation processes [25]. The need for more outward-oriented approaches has been pointed out, claiming the relevance of a sustainable business model with regard to the firms' value creation processes as a starting point [52, 53]. A sustainable business model is built upon the creation of value for all stakeholders and the natural environment, encompassing a wide range of changes that affect the company culture and values, translated into business practices and strategies, skills and knowledge, the leadership model and the internal and external relationship [54]. The sustainable business models are constructed through the interactions between individuals and groups inside and outside of companies [53, 55, 56]. Inquiring the nature of CSR leadership, Visser [25] observed that many characteristics (traits, styles, skills and knowledge) were associated with CSR leaders. Namely, a set of key characteristics that distinguishes the leadership approach taken

specific cardinal virtues, such as prudence and perseverance.

stakeholder society" [10], p. 101.

314 Entrepreneurship - Development Tendencies and Empirical Approach

community.

virtue of humility [51].

The theoretical constructs of sustainable leadership is thus closely linked to that of responsible and CSR leadership. It shares the same theoretical setting and differs from the latter only because of a greater focus on the three dimensions of sustainable development (people, planet and profits) and the creation of a social capital necessary to face times of difficulty and crisis [49]. Namely, three main elements characterise sustainable leadership [57]: (1) the need to cultivate a way of being and acting immersed in sustainability values; (2) the rootedness to the life processes and (3) being a dynamic, inclusive and collaborative process. Therefore, the leader's role does not rest in guiding others, but in guiding with the others as a result of sharing the values and the vision of sustainability inside and outside of the company.

A possible "missing link" between theory and practice of sustainability in the daily life of companies can thus be attributed to the lack of attention toward a key factor for concretely implementing a sustainable business model, which is an authentic leadership model consistent to the sustainability orientation and based on a moral and ethical construct. Sustainable leaders should be innovative and proactive in driving the change inside and outside the company toward sustainability. They should be capable to take the initiative without waiting for political decisions or forced by norms and laws. They should not be oriented to a short-term financial and competitive success and to an opportunistic use of CSR, merely aimed to increase the company (and their own) legitimacy [58]. In other words, they should be authentic.

The word authentic derives from *authento*, "to have full power" [59]. Aristotle's view of ethics focused on one's pursuit of the "higher good" achieved through self-realisation when the activity of the soul is aligned with virtue to produce a complete life. Such self-realisation is tied to one's well-being or *eudaemonia*, a form of happiness that, in contrast to hedonism, arises from successfully performing activities that reflect one's true calling. Departing from ancient Greek philosophy, a variety of leader authenticity definitions have advanced over the years and several theoretical, empirical and practitioner publications have been produced [60]. Authenticity encompasses four key components: (1) awareness (i.e., knowledge and trust in one's thoughts, feelings, motives and values); (2) unbiased processing (i.e., objectivity in regard to the acceptance of one's positive and negative attributes); (3) behaviour (i.e., acting based on one's true preferences, values and needs rather than merely acting to please others, secure rewards or avoid punishments) and (4) relational orientation (i.e., achieving and valuing truthfulness and openness in one's close relationships [61]. This multi-component conceptualisation of authenticity has provided the theoretical foundation for several theories of authentic leadership [62].

Authenticity as a driver of entrepreneurial and managerial behaviour relates to the expression of integrity [9]. Entrepreneurial and managerial authenticity influences the nature and extent of CSR approaches and explains the tendency toward a genuine and intrinsically based orientation to CSR and sustainability [25]. A lack of integrity in the organisation's functioning, as well as in organisational practices, constitutes "companies' vices," which are often diffused in large public companies [20]. In the framework of leadership studies, authenticity emerges as a key factor. Fundamental pillars of authentic leadership include: the goal, the values, the heart, the relationships and self-discipline [63]. An authentic leader possesses a positive psychological capital (confidence, optimism, hope and resilience) and an elevated level of morality. He/she develops authentic relationships with followers, increments confidence and builds a work environment and a pleasant organisational climate, oriented toward sustainability. The mission-driven companies, which are guided by an authentic leader, are able to generate a much higher value (in economic, social and environmental terms) than those who exclusively research profit results [63], such as the following case study demonstrates.

initiatives (stakeholder engagement). A manual coding of the texts and statements/speeches

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Brunello Cucinelli Spa is an Italian couture house of approximately 1400 employees listed on the Italian electronic stock exchange (MTA). The company was founded in 1978 by Brunello Cucinelli, stylist and entrepreneur, in the medieval hamlet of Solomeo, a small hilltop village located on the outskirts of Perugia (Umbria, Italy). Currently, it represents one of the most exclusive brands and testimonials of Italian lifestyle worldwide in the international luxury prêt-à-porter sector, specialised in cashmere. Brunello Cucinelli Spa's success, whose financial results are briefly shown in **Table 2**, is rooted in the history and legacy of great craftsmanship as well as in modern design: a quality strategy founded on a combination of high quality

Brunello Cucinelli, Chairman and CEO of the company, commented on this data: "*Another splendid year for our industry has just ended with double digit revenue growth and a very agreeable image of our brand at a universal level. To all our esteemed employees, co-workers, clients and shareholders, who help us feel like custodians of creation, we would like to express our most heartfelt thank* 

Brunello Cucinelli brand is an expression of a sophisticated concept of a contemporary lifestyle. The brand is firmly rooted in quality excellence, Italian craftsmanship and creativity, which are the foundations on which the company's growth can be built in the long run. The positive results that have been achieved confirm the sustainability of the business model and mark the company's long-term growth project, which together with the development of human resources falls in with the concept of "humanistic capitalism," an integral part of the

Net revenues €456.0 million, +10.1% at current exchange rates compared to December 31, 2015

Net debt Approximately €51 million on December 31, 2016, a decrease on the figure of €56.4

brand +4.2%

2015 EBITDA € 69.1 million (up by 11.0% compared to 2014)

Investment Approximately €30 million in 2016

Source: Corporate website: www.brunellocucinelli.com

**Table 2.** Brunello Cucinelli Spa's preliminary results (2016).

million on December 31, 2015

Retail mono-brand +17.1%, wholesale mono-brand +2.4% and wholesale multi-

of managers/entrepreneurs has been performed.

material, innovation, creativity and artisan skill.

**4. Brunello Cucinelli Spa**

**4.1. Company profile**

*you, thank you, thank you.*"

Group's DNA.

channels

Growth in all distribution

### **3. Methodology**

The empirical research design has been developed using a qualitative approach [64] based on a single case study method [15, 65]. As a research strategy, the distinguishing characteristic of the case study is that it attempts to examine: (a) a contemporary phenomenon in its real-life context, especially when (b) the boundaries between phenomenon and context are not clearly evident [66]. The ability of a case study researcher to portray a comprehensive analysis of phenomenon becomes important to capture the original vantage points from both sides [66], p. 260.

The case study is relative to an Italian company, namely Brunello Cucinelli, belonging to the fashion industry and based in the Umbria region. The company has been selected for its traits of excellence, both relative to the business model and the leadership model, which makes it an interesting laboratory on a scientific and managerial level. Brunello Cucinelli (the founding entrepreneur) has been collaborating for years with different universities and national and international research centres.

Data have been collected from two main sources. First, a document analysis of materials downloaded from the Internet site in a period of 3 months (Dec 2016–Feb 2017) have been carried out. The documents include: annual and infra-annual reports, press releases and information on the company's principles posted on the website [67].

Secondly, a document analysis of books and articles relating to the company and their entrepreneurs/managers published in newspapers in the last 5 years (2012–2016) (national and international newspapers downloaded by the company corporate website) has been carried out [68].

Information have been selected in order to cover the following topics: mission and basic values of the companies; business models; leadership model; strategies and stakeholder initiatives (stakeholder engagement). A manual coding of the texts and statements/speeches of managers/entrepreneurs has been performed.

### **4. Brunello Cucinelli Spa**

#### **4.1. Company profile**

extent of CSR approaches and explains the tendency toward a genuine and intrinsically based orientation to CSR and sustainability [25]. A lack of integrity in the organisation's functioning, as well as in organisational practices, constitutes "companies' vices," which are often diffused in large public companies [20]. In the framework of leadership studies, authenticity emerges as a key factor. Fundamental pillars of authentic leadership include: the goal, the values, the heart, the relationships and self-discipline [63]. An authentic leader possesses a positive psychological capital (confidence, optimism, hope and resilience) and an elevated level of morality. He/she develops authentic relationships with followers, increments confidence and builds a work environment and a pleasant organisational climate, oriented toward sustainability. The mission-driven companies, which are guided by an authentic leader, are able to generate a much higher value (in economic, social and environmental terms) than those who exclusively research profit results [63], such as the following

The empirical research design has been developed using a qualitative approach [64] based on a single case study method [15, 65]. As a research strategy, the distinguishing characteristic of the case study is that it attempts to examine: (a) a contemporary phenomenon in its real-life context, especially when (b) the boundaries between phenomenon and context are not clearly evident [66]. The ability of a case study researcher to portray a comprehensive analysis of phenomenon becomes important to capture the original vantage points from both

The case study is relative to an Italian company, namely Brunello Cucinelli, belonging to the fashion industry and based in the Umbria region. The company has been selected for its traits of excellence, both relative to the business model and the leadership model, which makes it an interesting laboratory on a scientific and managerial level. Brunello Cucinelli (the founding entrepreneur) has been collaborating for years with different universities and national and

Data have been collected from two main sources. First, a document analysis of materials downloaded from the Internet site in a period of 3 months (Dec 2016–Feb 2017) have been carried out. The documents include: annual and infra-annual reports, press releases and infor-

Secondly, a document analysis of books and articles relating to the company and their entrepreneurs/managers published in newspapers in the last 5 years (2012–2016) (national and international newspapers downloaded by the company corporate website) has been carried

Information have been selected in order to cover the following topics: mission and basic values of the companies; business models; leadership model; strategies and stakeholder

mation on the company's principles posted on the website [67].

case study demonstrates.

316 Entrepreneurship - Development Tendencies and Empirical Approach

**3. Methodology**

sides [66], p. 260.

out [68].

international research centres.

Brunello Cucinelli Spa is an Italian couture house of approximately 1400 employees listed on the Italian electronic stock exchange (MTA). The company was founded in 1978 by Brunello Cucinelli, stylist and entrepreneur, in the medieval hamlet of Solomeo, a small hilltop village located on the outskirts of Perugia (Umbria, Italy). Currently, it represents one of the most exclusive brands and testimonials of Italian lifestyle worldwide in the international luxury prêt-à-porter sector, specialised in cashmere. Brunello Cucinelli Spa's success, whose financial results are briefly shown in **Table 2**, is rooted in the history and legacy of great craftsmanship as well as in modern design: a quality strategy founded on a combination of high quality material, innovation, creativity and artisan skill.

Brunello Cucinelli, Chairman and CEO of the company, commented on this data: "*Another splendid year for our industry has just ended with double digit revenue growth and a very agreeable image of our brand at a universal level. To all our esteemed employees, co-workers, clients and shareholders, who help us feel like custodians of creation, we would like to express our most heartfelt thank you, thank you, thank you.*"

Brunello Cucinelli brand is an expression of a sophisticated concept of a contemporary lifestyle. The brand is firmly rooted in quality excellence, Italian craftsmanship and creativity, which are the foundations on which the company's growth can be built in the long run. The positive results that have been achieved confirm the sustainability of the business model and mark the company's long-term growth project, which together with the development of human resources falls in with the concept of "humanistic capitalism," an integral part of the Group's DNA.


**Table 2.** Brunello Cucinelli Spa's preliminary results (2016).

#### **4.2. The leader's philosophy and the business model**

The humanistic enterprise model trigged by the so-called Prince of Solomeo [68] derives from the vision and charisma of the founder, Brunello Cucinelli, born in 1953 in a peasant family in Castel Rigone, a fifteenth century little hamlet near Perugia. After obtaining a diploma as surveyor, he enrolled in the faculty of Engineering. However, he dropped out in 1978 to set up a small company and implement his basic intuition. The business idea was to dye cashmere, which at that point had mainly come in natural or more basic colours. In 1982, after getting married, Brunello moved to Solomeo, a small, ancient town in Umbria, where, in 1985, he purchased the fourteenth century tumbledown castle that became the corporate headquarters and venue, making his dreams come true.

Agricultural Park, the Secular Youth Club Park and the Industry Park), recovering part of the property occupied by old abandoned factories and using it to grow trees, orchards and lawns. This initiative symbolises the crucial value of earth, "from which all things are" and highlights the duty to restore the dignity of the land and to act as a guardian of creation. Excellent quality, Italian craftsmanship, creativity and exclusive distribution are the pillars and foundations of corporate identity and philosophy, which nurture the

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The foundations of the business model are (1) search for top-notch quality, excellence in craftsmanship and manual work and skills; (2) exclusive products, which are expressions of authentic Made in Italy and (3) the preservation of values that make up the company's DNA: dignity of work, profit and a special relationship with the surrounding territory, in a "gracious" and constant long-term development plan (**Tables 3** and **4**). Brunello Cucinelli has set up an innovative business dimension, that is, a reality in which the human being lies at the core of the company and work is seen as an expression of human value, where profit becomes a means to achieve the higher end of the ultimate good to improve the workers' lives. Besides the fundamental values and general principles of compliance with the law, honesty, transparency, fairness and good faith (as per the company's Code of Ethics), strategic priority is given to sustainable development objectives, including the well-being of all those working for and cooperating with the company as well as the company's responsibility *vis-a-vis* humanity. This orientation represents a value proposition for customers who are always receptive to

**Figure 1.** Brunello Cucinelli Spa's business model. Source: Brunello Cucinelli Annual report (2016).

business model (**Figure 1**).

ethics and sustainability.

Indeed, Solomeo became a great workshop for him to build his success as an entrepreneur capable of putting a contemporary form of "neo-humanistic capitalism" into practice, which is a different way of doing business in the twenty-first century, where profit can be sought without damaging mankind. This concept of contemporary capitalism has been defined by the press as an innovative example of "humanistic capitalism." This vision was rooted in Brunello as a boy, when he witnessed his father working in an unwelcoming environment. He became a close observer of the world, thus developing his dream to promote a concept of work that ensured respect for the moral and economic dignity of human beings. This is the key element to understanding Brunello's personality and the success of his business, which is intended not only as a wealth-generating entity but also as a driver to develop capitalism that enhances human beings. Brunello's philosophy can be summarised in his words: "*During my lifetime, I have always nurtured a dream: useful work to achieve an important goal. I have always felt that business profit alone was not enough to fulfil my dream and a higher purpose was to be found.*" Over the years, Brunello has been acknowledged by national and international honours, such as the "Knight of Industry" nomination assigned by the President of the Italian Republic and an honorary degree in Philosophy and Ethics of Human Relations from the University of Perugia.

In 2012, the company was listed in the Stock Exchange market, not only for financial reason but also because the wider participation in his business activity represented an opportunity to spread Brunello's ideals of capitalism, conceived as a new Renaissance in its infancy, a golden century resting on the great values of humanity. Sustainability of growth and healthy profitability are distinctive features of the company.

Accordingly, many projects were triggered to make these ideals come true. In 2013, the Solomeo School of Arts and Crafts was established and is located in the Forum of Art, built exclusively by Umbrian master craftsmen. It also includes the Neo-humanistic Aurelian Library, the Gymnasium, the Amphitheatre and the Theatre, because Brunello's vision requires that the memory of an important humanistic factor such as craftsmanship is preserved and passed on to future generations. Moreover, the Project for Beauty presented in 2014 and supported by the Brunello and Federica Cucinelli Foundation entails the creation of three huge parks in the valley at the foot of the Solomeo hill (the Agricultural Park, the Secular Youth Club Park and the Industry Park), recovering part of the property occupied by old abandoned factories and using it to grow trees, orchards and lawns. This initiative symbolises the crucial value of earth, "from which all things are" and highlights the duty to restore the dignity of the land and to act as a guardian of creation. Excellent quality, Italian craftsmanship, creativity and exclusive distribution are the pillars and foundations of corporate identity and philosophy, which nurture the business model (**Figure 1**).

**4.2. The leader's philosophy and the business model**

318 Entrepreneurship - Development Tendencies and Empirical Approach

and venue, making his dreams come true.

ability are distinctive features of the company.

Perugia.

The humanistic enterprise model trigged by the so-called Prince of Solomeo [68] derives from the vision and charisma of the founder, Brunello Cucinelli, born in 1953 in a peasant family in Castel Rigone, a fifteenth century little hamlet near Perugia. After obtaining a diploma as surveyor, he enrolled in the faculty of Engineering. However, he dropped out in 1978 to set up a small company and implement his basic intuition. The business idea was to dye cashmere, which at that point had mainly come in natural or more basic colours. In 1982, after getting married, Brunello moved to Solomeo, a small, ancient town in Umbria, where, in 1985, he purchased the fourteenth century tumbledown castle that became the corporate headquarters

Indeed, Solomeo became a great workshop for him to build his success as an entrepreneur capable of putting a contemporary form of "neo-humanistic capitalism" into practice, which is a different way of doing business in the twenty-first century, where profit can be sought without damaging mankind. This concept of contemporary capitalism has been defined by the press as an innovative example of "humanistic capitalism." This vision was rooted in Brunello as a boy, when he witnessed his father working in an unwelcoming environment. He became a close observer of the world, thus developing his dream to promote a concept of work that ensured respect for the moral and economic dignity of human beings. This is the key element to understanding Brunello's personality and the success of his business, which is intended not only as a wealth-generating entity but also as a driver to develop capitalism that enhances human beings. Brunello's philosophy can be summarised in his words: "*During my lifetime, I have always nurtured a dream: useful work to achieve an important goal. I have always felt that business profit alone was not enough to fulfil my dream and a higher purpose was to be found.*" Over the years, Brunello has been acknowledged by national and international honours, such as the "Knight of Industry" nomination assigned by the President of the Italian Republic and an honorary degree in Philosophy and Ethics of Human Relations from the University of

In 2012, the company was listed in the Stock Exchange market, not only for financial reason but also because the wider participation in his business activity represented an opportunity to spread Brunello's ideals of capitalism, conceived as a new Renaissance in its infancy, a golden century resting on the great values of humanity. Sustainability of growth and healthy profit-

Accordingly, many projects were triggered to make these ideals come true. In 2013, the Solomeo School of Arts and Crafts was established and is located in the Forum of Art, built exclusively by Umbrian master craftsmen. It also includes the Neo-humanistic Aurelian Library, the Gymnasium, the Amphitheatre and the Theatre, because Brunello's vision requires that the memory of an important humanistic factor such as craftsmanship is preserved and passed on to future generations. Moreover, the Project for Beauty presented in 2014 and supported by the Brunello and Federica Cucinelli Foundation entails the creation of three huge parks in the valley at the foot of the Solomeo hill (the The foundations of the business model are (1) search for top-notch quality, excellence in craftsmanship and manual work and skills; (2) exclusive products, which are expressions of authentic Made in Italy and (3) the preservation of values that make up the company's DNA: dignity of work, profit and a special relationship with the surrounding territory, in a "gracious" and constant long-term development plan (**Tables 3** and **4**). Brunello Cucinelli has set up an innovative business dimension, that is, a reality in which the human being lies at the core of the company and work is seen as an expression of human value, where profit becomes a means to achieve the higher end of the ultimate good to improve the workers' lives. Besides the fundamental values and general principles of compliance with the law, honesty, transparency, fairness and good faith (as per the company's Code of Ethics), strategic priority is given to sustainable development objectives, including the well-being of all those working for and cooperating with the company as well as the company's responsibility *vis-a-vis* humanity. This orientation represents a value proposition for customers who are always receptive to ethics and sustainability.

**Figure 1.** Brunello Cucinelli Spa's business model. Source: Brunello Cucinelli Annual report (2016).


**Principle/pillar Practice**

The design of collections and development of samples are carried out in-house by a team of over 100 people striving to combine innovation, creativity and manual skills and are entrusted to over 300 independent highly specialised artisan workshops mostly

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Brunello Cucinelli calls the employees "thinking souls," thus revealing the people-centred approach, the concept of work as a full expression of the human being and the philosophical inquiry

"*Our comprehensive quality is the result of the inner quality of each* 

Dignity and guardianship: Brunello Cucinelli is a humanistic company, based on ethics and production. "*I found it increasingly difficult not to adopt a concept of work and human action based on* 

The entrepreneur is a genuine expression of the Umbrian region. He carefully safeguards the sensitivity and values of this land "*We must listen to the genius loci, the spirit of place: for centuries, Solomeo has produced olive oil and wine, and now it produces* 

The humanistic vision, the search for the beauty and the passion for original handcrafted products are generated by a spiritual tension, that has its roots in the medieval and Renaissance history and culture, enlightened by the religious experiences of Saint Francis of Assisi and Saint Benedict of Norcia, by Giotto's and Perugino

"Beauty generates value. We feel responsible for the beauty in the

The School of Arts and Crafts in Solomeo aims to train human beings and strives to dignify work focusing on "Art, culture and spirituality, which meet in absolute freedom to enhance human awareness" (B. Cucinelli). Culture and beauty emphasise human creativity; they are a treasure to be safeguarded which enable Brunello Cucinelli to blend tradition and modernity and work in

In their pursuit of the "humanistic enterprise," people work to achieve a shared objective, a system of non-material values that

"*We believe that success is something to be shared*" (B. Cucinelli)

harmony with the local and global dimensions

represent the living core of the company

The corporate communication strategy hinges on: - communicating the values embodied in the company's

Entrepreneurship, Leadership and Charisma: Which Are the Links with Business Models…

universe and his way of interpreting humanity

based in Umbria

philosophy

and care of workers

*cashmere*" (B. Cucinelli)

world" (B. Cucinelli).

*and every one of us*" (B. Cucinelli)

*positivity and belief in the future*" (B. Cucinelli)

Italian *craftsmanship and manual skills* "*passion for beauty and the recognition of talented people who can make items that are sought after across* 

*value that is maintained over time"*

of the company's true value

outside the organisation

socio-economic environment

Displaying authenticity

professional choices

Sharing leadership

organisation's future

Source: Our elaboration.

*Building community*

as a person, not just as a resource

"*Italian craftsmanship and manual skills epitomise the beauty of our products, our culture, our identity. Being acknowledged as "artisanal industrialists" is a* 

Centrality of *communication* (transparency): the corporate philosophy is strongly rooted in the humanistic culture and in the teachings of ancient figures (such as Socrates, Aristotle, Seneca, Saint Benedict, Saint Francis and Saint Augustine) targeting social and existential "wellbeing" that goes hand-in-hand with the growth

*Valuing people*: to take interest in each employee

*Developing people*: to treat everyone (employees and collaborators) with great respect, favouring opportunities for personal and professional growth and promoting change inside and

Brunello Cucinelli built a sense of community within the organisation by always nurturing the growth of personal and community culture and

The leader displays authenticity in personal and

The entrepreneur puts trust in employees and leads by example inspiring vision of the

**Table 4.** Business and leadership model features in theory and practice.

*the globe."*

Source: Our elaboration from the Brunello Cucinelli website.

**Table 3.** Some pillars of Brunello's philosophy and sustainable business model.

Gracious growth and healthy profitability, deriving from the attention that Brunello Cucinelli shows unconditionally and consistently to the surrounding community and all stakeholders, are the key to long-term development.

In the annual report section devoted to Shareholders and Values, we can read his statement: "I would like our products to speak of our land and place of origin, while we strive to work with dignity, tolerance and respect". Being shareholders of Brunello Cucinelli means: supporting and sharing a value system and philosophy that places the human being at the core of every business project; sharing a very long-term project of sustainable and ethical profit growth, according to a business model that has enabled the brand to become a world-class member of the "absolute luxury" segment thanks to craftsmanship, top-notch quality and exclusive distribution and investing in a sound company whose balance sheets report positive results year in and year out, with sustainable growth that enables the brand to safeguard its exclusivity and positioning in the absolute luxury category, seizing long-term development opportunities.


**Table 4.** Business and leadership model features in theory and practice.

Gracious growth and healthy profitability, deriving from the attention that Brunello Cucinelli shows unconditionally and consistently to the surrounding community and all stakeholders,

"Consuming means impoverishing and depleting, whereas if we use our resources reasonably, they have the time to grow back. The well-being of society coincides with a fair use of things, therefore a gracious, sustainable and healthy growth turns out to be perhaps more human. We need agracious

human relations and the circulation of ideas can reverberate with new exciting energy, a deeply ethical and social one. The quality of knowledge and therefore of life improves only if critical thinking progresses along with innovation. The

as Solomeo, are beautiful places when their humanity and the dignity of the people living there can express themselves fully. We must be able to envisage and imagine a new concept of periphery, a place that respects the dignity of

"In ancient Greek the word 'periphery' signified circumference, a circle, namely the most perfect of all shapes. Peripheries must be pleasant places, where people acknowledge their identity and find meaning in their existence. "The Project of beauty carried out in Solomeo means giving back to nature and to the wonderful landscape of the Umbrian hills covering over 80 hectares of

Work, regardless of its nature and kind, should never encroach upon people's life, their rest, the time they need to find a balance between their soul and their body. In our company, it is forbidden to work past the agreed working time. Employers should never steal the soul of their workers by depriving them of the time they need to lead a healthy life. In this regard, it is worth recalling a suitable statement by Saint Benedict who warned that every day we should 'look after our mind through study and our soul through prayer and work' (*La Repubblica*: Capitalism must keep step with mankind," June 21,

growth" (*La Repubblica*, September 20, 2014).

time has come to humanise the web" (*QN*, June 22, 2016).

Humanist artisans of the web "Thanks to new technological horizons our tradition of seeking knowledge,

Pleasant peripheries "Peripheries are often seen in a negative fashion. However, city outskirts, such

land" (*La Repubblica*, November 27, 2014). A fair working life "A fair working life rests on the same ideal principles as a fair use of things.

human beings and things alike."

In the annual report section devoted to Shareholders and Values, we can read his statement: "I would like our products to speak of our land and place of origin, while we strive to work with dignity, tolerance and respect". Being shareholders of Brunello Cucinelli means: supporting and sharing a value system and philosophy that places the human being at the core of every business project; sharing a very long-term project of sustainable and ethical profit growth, according to a business model that has enabled the brand to become a world-class member of the "absolute luxury" segment thanks to craftsmanship, top-notch quality and exclusive distribution and investing in a sound company whose balance sheets report positive results year in and year out, with sustainable growth that enables the brand to safeguard its exclusivity and positioning in the absolute luxury category, seizing long-term development

are the key to long-term development.

Source: Our elaboration from the Brunello Cucinelli website.

2016).

**Table 3.** Some pillars of Brunello's philosophy and sustainable business model.

The decline of consumerism in favour of a fair use of things

320 Entrepreneurship - Development Tendencies and Empirical Approach

opportunities.

### **5. Discussion and concluding remarks**

Drawing from the case analysis, several traits characterise the ethical-based and charismatic leadership model emerged [31–33, 36, 37]. Since its foundation, the company pursues a sustainable-oriented business model that is positively affected by a leadership style tied to a moral-based and servant leadership and is founded on integrity [27]. The latter is coherent and consistent to the business strategy, its mission, goals and organisational culture.

outcomes of the ethical-based and charismatic leadership model. Moreover, further empirical studies could provide rich descriptions of this observation in a variety of organisational sectors [53, 56]. Despite its limitations, due to the fact that results cannot be generalised, being based on a single case study, the work has both scientific and managerial implications. On the one hand, it contributes to understand the relationship between leadership and the business model, which is still under-investigated. On the other hand, it exemplifies resilience derived from a sustainable business model, activated through relationships among internal and external stakeholders and supported by a coherent leadership approach. As such, the research project helps to improve the education of the sustainability-oriented process and sustainable leadership in the real business context, thus opening new trajectories for a fruitful

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Department of Economics, Society and Politics, University of Urbino Carlo Bo, Urbino, Italy

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Address all correspondence to: mara.delbaldo@uniurb.it

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**Author details**

Mara Del Baldo

**References**

A leadership model imbued with a moral foundation rests on values and virtues. Accordingly, at the centre, the entrepreneur/manager puts people, their lives and well-being. Valuing people, respecting and protecting the environment, preserving the social and cultural framework and sharing ideas and objectives with stakeholders are the pillars of the company's success [25].

Even if the results of the empirical analysis cannot be generalised, the explorative study contributes to grasp some important traits of the leadership model, which are positively connected to a multidimensional and long-term growth, oriented to pursue economic, social and environmental objectives.

First, responsible leadership may be widespread within businesses, affecting the different levels: individual (favouring the passage from "me to us" through collaboration and shared responsibility); team (through the development of mutual relations of trust and open communication) and organisation (structuring a coherent vision and a mission). It rests on the idea that the responsible person must have flexible thinking (i.e., strategic and systematic), which includes the dimensions of logic (to sort, select and plan), ethics (foresight, transparency and perseverance) and aesthetic. Therefore, it requires specific cardinal virtues, such as prudence and perseverance [44].

Second, entrepreneurial and managerial leadership styles and models play a crucial role in shaping organisational culture, especially through leaders' moral behaviour and values and the ethical criteria applied to decision-making, which affect daily routine and intra-organisation procedures and structures [16]. Namely, a set of key characteristics that distinguishes the leadership approach taken by individuals tackling sustainability issues includes [25]: systemic understanding (a responsible leadership results from the interaction between an organisation's social, environmental and economic context and the characteristics of individual leaders); emotional intelligence (the ability and the real inspiration to unlock human potential and motivate people); values orientation to shape culture (a values-based approach nurtured by morality and spirituality is critical); compelling vision (the ability to effectively communicate a compelling narrative on how their organisations can contribute to creating a better world); inclusive style (the leader and the followers working together to get to certain outcomes); innovative approach (a willingness to innovate and be radical, stimulating lateral thinking and cross-functional, collaborative problem solving since complex problems require creative solutions) and a long-term perspective (long-term thinking on impacts in terms of sustainability).

In light of these preliminary results, additional research should deepen the link and coherence between sustainable business models and leadership models as well as the benefits and outcomes of the ethical-based and charismatic leadership model. Moreover, further empirical studies could provide rich descriptions of this observation in a variety of organisational sectors [53, 56]. Despite its limitations, due to the fact that results cannot be generalised, being based on a single case study, the work has both scientific and managerial implications. On the one hand, it contributes to understand the relationship between leadership and the business model, which is still under-investigated. On the other hand, it exemplifies resilience derived from a sustainable business model, activated through relationships among internal and external stakeholders and supported by a coherent leadership approach. As such, the research project helps to improve the education of the sustainability-oriented process and sustainable leadership in the real business context, thus opening new trajectories for a fruitful convergence of theory and practice.

### **Author details**

**5. Discussion and concluding remarks**

322 Entrepreneurship - Development Tendencies and Empirical Approach

environmental objectives.

and perseverance [44].

Drawing from the case analysis, several traits characterise the ethical-based and charismatic leadership model emerged [31–33, 36, 37]. Since its foundation, the company pursues a sustainable-oriented business model that is positively affected by a leadership style tied to a moral-based and servant leadership and is founded on integrity [27]. The latter is coherent

A leadership model imbued with a moral foundation rests on values and virtues. Accordingly, at the centre, the entrepreneur/manager puts people, their lives and well-being. Valuing people, respecting and protecting the environment, preserving the social and cultural framework and sharing ideas and objectives with stakeholders are the pillars of the company's success [25].

Even if the results of the empirical analysis cannot be generalised, the explorative study contributes to grasp some important traits of the leadership model, which are positively connected to a multidimensional and long-term growth, oriented to pursue economic, social and

First, responsible leadership may be widespread within businesses, affecting the different levels: individual (favouring the passage from "me to us" through collaboration and shared responsibility); team (through the development of mutual relations of trust and open communication) and organisation (structuring a coherent vision and a mission). It rests on the idea that the responsible person must have flexible thinking (i.e., strategic and systematic), which includes the dimensions of logic (to sort, select and plan), ethics (foresight, transparency and perseverance) and aesthetic. Therefore, it requires specific cardinal virtues, such as prudence

Second, entrepreneurial and managerial leadership styles and models play a crucial role in shaping organisational culture, especially through leaders' moral behaviour and values and the ethical criteria applied to decision-making, which affect daily routine and intra-organisation procedures and structures [16]. Namely, a set of key characteristics that distinguishes the leadership approach taken by individuals tackling sustainability issues includes [25]: systemic understanding (a responsible leadership results from the interaction between an organisation's social, environmental and economic context and the characteristics of individual leaders); emotional intelligence (the ability and the real inspiration to unlock human potential and motivate people); values orientation to shape culture (a values-based approach nurtured by morality and spirituality is critical); compelling vision (the ability to effectively communicate a compelling narrative on how their organisations can contribute to creating a better world); inclusive style (the leader and the followers working together to get to certain outcomes); innovative approach (a willingness to innovate and be radical, stimulating lateral thinking and cross-functional, collaborative problem solving since complex problems require creative solutions) and a long-term per-

In light of these preliminary results, additional research should deepen the link and coherence between sustainable business models and leadership models as well as the benefits and

spective (long-term thinking on impacts in terms of sustainability).

and consistent to the business strategy, its mission, goals and organisational culture.

Mara Del Baldo

Address all correspondence to: mara.delbaldo@uniurb.it

Department of Economics, Society and Politics, University of Urbino Carlo Bo, Urbino, Italy

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**Chapter 17**

**Provisional chapter**

**Entrepreneurship in Higher Education: The Effect of**

**Academy, Motivation, Resources, Incentives, and** 

**Self-Efficacy in the Entrepreneurship Potential**

**Entrepreneurship in Higher Education: The Effect of** 

**Efficacy in the Entrepreneurship Potential**

Pedro Miguel Dinis Santos Parreira,

Carla Maria Santos de Carvalho and Alexandra Cristina Riscado da Silva

Pedro Miguel Dinis Santos Parreira,

Carla Maria Santos de Carvalho and Alexandra Cristina Riscado da Silva

http://dx.doi.org/10.5772/intechopen.71695

Additional information is available at the end of the chapter

importance of the academic preparation to undertake.

**Keywords:** entrepreneurship in higher education, entrepreneurial potential,

entrepreneurial motivations, opportunities and resources to undertake, incentives for

Additional information is available at the end of the chapter

Lisete dos Santos Mónico,

**Abstract**

entrepreneurship

Lisete dos Santos Mónico,

**Academy, Motivation, Resources, Incentives, and Self-**

Entrepreneurship in higher education is a current and relevant topic. The objective of this study is to analyze to what extent the entrepreneurial potential of polytechnic higher education students can be predicted from entrepreneurial motivations, opportunities, and resources to undertake, incentives to entrepreneurship, and self-perception of student efficacy, controlling for academic preparation and desire to undertake. Body—Research methods: Through the analysis of the reasons that encourage higher education students to undertake, a survey was carried out to 6532 students of Portuguese Polytechnic Institutes, who answered to the following measures: scale of opportunities and resources to undertake, scale of entrepreneurial motivations, scale of incentives to entrepreneurship, entrepreneurial potential, academic preparation to undertake, and desire to undertake. Conclusion—Key results: Hierarchical multiple regression analysis showed that academic preparation to undertake explained *R2* = 5% of entrepreneurial potential, followed by motivations to undertake (Δ*R2* = 11.5%), opportunities and resources to undertake (Δ*R2* = 1.4%), incentives to undertake (Δ*R2* = 0.7%), and self-efficacy (Δ*R2* = 3.6%). The results are discussed taking into account the models of entrepreneurship and the

DOI: 10.5772/intechopen.71695

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution,

© 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

and reproduction in any medium, provided the original work is properly cited.

**Provisional chapter**

### **Entrepreneurship in Higher Education: The Effect of Academy, Motivation, Resources, Incentives, and Self-Efficacy in the Entrepreneurship Potential Academy, Motivation, Resources, Incentives, and Self-Efficacy in the Entrepreneurship Potential**

**Entrepreneurship in Higher Education: The Effect of** 

DOI: 10.5772/intechopen.71695

Pedro Miguel Dinis Santos Parreira, Lisete dos Santos Mónico, Carla Maria Santos de Carvalho and Alexandra Cristina Riscado da Silva Lisete dos Santos Mónico, Carla Maria Santos de Carvalho and Alexandra Cristina Riscado da Silva Additional information is available at the end of the chapter

Pedro Miguel Dinis Santos Parreira,

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.71695

#### **Abstract**

Entrepreneurship in higher education is a current and relevant topic. The objective of this study is to analyze to what extent the entrepreneurial potential of polytechnic higher education students can be predicted from entrepreneurial motivations, opportunities, and resources to undertake, incentives to entrepreneurship, and self-perception of student efficacy, controlling for academic preparation and desire to undertake. Body—Research methods: Through the analysis of the reasons that encourage higher education students to undertake, a survey was carried out to 6532 students of Portuguese Polytechnic Institutes, who answered to the following measures: scale of opportunities and resources to undertake, scale of entrepreneurial motivations, scale of incentives to entrepreneurship, entrepreneurial potential, academic preparation to undertake, and desire to undertake. Conclusion—Key results: Hierarchical multiple regression analysis showed that academic preparation to undertake explained *R2* = 5% of entrepreneurial potential, followed by motivations to undertake (Δ*R2* = 11.5%), opportunities and resources to undertake (Δ*R2* = 1.4%), incentives to undertake (Δ*R2* = 0.7%), and self-efficacy (Δ*R2* = 3.6%). The results are discussed taking into account the models of entrepreneurship and the importance of the academic preparation to undertake.

**Keywords:** entrepreneurship in higher education, entrepreneurial potential, entrepreneurial motivations, opportunities and resources to undertake, incentives for entrepreneurship

Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons

### **1. Introduction**

Entrepreneurship can be seen today as the engine for economic growth and one of the most important factors of competitiveness. In a world of constant change, this process is associated with the individuals' ability to adapt successfully to the constant transformations in society. Therefore, it is imperative to promote and enhance entrepreneurship and foster an "entrepreneurial culture" in society with a view to achieving social, economic, technological, and organizational development [1, 2].

the consumer. In other words, the entrepreneur acts as an "intermediary," as someone who facilitates the exchange process between the supplier and the market. According to Saraiva [11], entrepreneurship "corresponds to an articulated set of cultural aspects, attitudes, methodologies, stimuli mechanisms, and environments that aim to promote an integrated implementation of cycles of dream, design, implementation, and acceleration of new organizational

Entrepreneurship in Higher Education: The Effect of Academy, Motivation, Resources, Incentives…

http://dx.doi.org/10.5772/intechopen.71695

331

In the twentieth century, this concept changed profoundly when Schumpeter [12] rejected the prevailing terminological definition and argued that the entrepreneur should be the driving force of the economic system, simultaneously playing the role of leader and agent of innovation. In this sense, entrepreneurship can be defined as an innovative act that leads to a new capacity to create wealth [13], or the creation of a new organization [14]. There are many definitions of entrepreneurship in the literature, but the definition of its constitutive elements is not consensual. However, several authors have proposed different definitions with elements

The entrepreneurship movement expanded the most in the 1980s [1], particularly in some countries. In fact, in countries where the academy invested in entrepreneurship education, the increasingly recognized value of entrepreneurship as an engine for development and fight against unemployment has led to an increase in the number of jobs available and the reduction of unemployment rates [1, 15]. According to these authors, these results suggest that entrepreneurs are the real drivers of the market economy. As previously mentioned, if entrepreneurship is considered as the discovery, exploration, and evaluation of opportunities to create goods and services, by creating conditions for the development of an entrepreneurial culture, we are supporting the economic, social, and/or technological development and growth of societies. Therefore, entrepreneurship is very likely to have a positive impact on value creation, as a powerful engine for economic and social development, in which the entrepreneur plays a crucial role [2]. The agents of entrepreneurship are able to take risks and transform ambiguous situations into business opportunities in order to achieve success [16, 17]. Entrepreneurs can then be seen as individuals with the ability to take risks by facing ambiguous situations from an optimistic perspective, seeing them as an opportunity or possibility for business or value creation, who are capable of designing and implementing projects, and encouraging those who collaborate with them, with an attitude of constant challenge and

According to Volkmann [18], entrepreneurship education began in American universities. The Harvard Business School was the first institution to design and implement a program in this area in 1947. Since then, several business schools and universities have started to offer entrepreneurship education and promoting academic paths in this area based on the premise that entrepreneurship can be taught and learned [19]. In this respect, Gerba [20] sees entrepreneurship education as an educational program that aims to provide students with knowledge, skills, and motivation to boost business success. It is also seen as a means to develop entrepreneurial intentions by raising students' interest for entrepreneurship. In this way,

realities, creating added value" (op. cit., p. 34).

in common. These elements will be described later on.

desire to overcome indifference.

**2.2. Education in higher education and incentives**

Everyone can be an entrepreneur, as long as the context provides the necessary stimuli; education is an example par excellence of one way of achieving this goal, while leveraging business and job creation. The teaching-learning process allows combining the acquisition of knowledge and skills, which are of utmost importance for the active integration of young people into society [3]. Hence, the role and importance of entrepreneurship in the academic arena becomes essential in terms of groundwork for skills development, a process that can best prepare students for the job market. To corroborate this statement, the European Commission believes that the increased investment in entrepreneurship must be carried out preferably through education, namely entrepreneurship education, which may contribute to increasing the levels of innovation and economic growth of a nation or country (Comissão das Comunidades [4]). Although structural conditions play a key role in the moment to undertake, individuals' perception of themselves and their skills is equally important [5].

In this study, we analyzed the role of the predictor variables *entrepreneurial motivations* (scale validated by Parreira et al. [6]), *opportunities and resources to undertake* (scale validated by Parreira et al. [7]), *incentives for entrepreneurship* (scale validated by Parreira et al. [8]), and *selfefficacy* [9] on students' *entrepreneurial potential,* while controlling for the *academic preparation* and *desire to undertake* variables.

In order to provide a framework for this research, a literature review was performed on the concepts and factors associated with the topic. Afterward, data were collected using questionnaires that were designed and validated by the research team for this purpose. Data were analyzed and processed, and the results were interpreted based on the perspectives found in the literature review and the model underlying the Poliempreende project. This study describes these steps, the study limitations, and proposals for future research.

### **2. Development**

#### **2.1. Entrepreneurship**

According to Sarkar [10], entrepreneurship is not a recent phenomenon, although it has been used in different contexts throughout history. Nevertheless, the literature suggests that its popularity has been revived, emerging as a "sudden discovery" for economic development, especially in times of crisis. The term *entrepreneur* derives from the French words *entre* (between) and *prendre* (to take), and means being in the market between the supplier and the consumer. In other words, the entrepreneur acts as an "intermediary," as someone who facilitates the exchange process between the supplier and the market. According to Saraiva [11], entrepreneurship "corresponds to an articulated set of cultural aspects, attitudes, methodologies, stimuli mechanisms, and environments that aim to promote an integrated implementation of cycles of dream, design, implementation, and acceleration of new organizational realities, creating added value" (op. cit., p. 34).

In the twentieth century, this concept changed profoundly when Schumpeter [12] rejected the prevailing terminological definition and argued that the entrepreneur should be the driving force of the economic system, simultaneously playing the role of leader and agent of innovation. In this sense, entrepreneurship can be defined as an innovative act that leads to a new capacity to create wealth [13], or the creation of a new organization [14]. There are many definitions of entrepreneurship in the literature, but the definition of its constitutive elements is not consensual. However, several authors have proposed different definitions with elements in common. These elements will be described later on.

The entrepreneurship movement expanded the most in the 1980s [1], particularly in some countries. In fact, in countries where the academy invested in entrepreneurship education, the increasingly recognized value of entrepreneurship as an engine for development and fight against unemployment has led to an increase in the number of jobs available and the reduction of unemployment rates [1, 15]. According to these authors, these results suggest that entrepreneurs are the real drivers of the market economy. As previously mentioned, if entrepreneurship is considered as the discovery, exploration, and evaluation of opportunities to create goods and services, by creating conditions for the development of an entrepreneurial culture, we are supporting the economic, social, and/or technological development and growth of societies. Therefore, entrepreneurship is very likely to have a positive impact on value creation, as a powerful engine for economic and social development, in which the entrepreneur plays a crucial role [2]. The agents of entrepreneurship are able to take risks and transform ambiguous situations into business opportunities in order to achieve success [16, 17]. Entrepreneurs can then be seen as individuals with the ability to take risks by facing ambiguous situations from an optimistic perspective, seeing them as an opportunity or possibility for business or value creation, who are capable of designing and implementing projects, and encouraging those who collaborate with them, with an attitude of constant challenge and desire to overcome indifference.

#### **2.2. Education in higher education and incentives**

**1. Introduction**

organizational development [1, 2].

330 Entrepreneurship - Development Tendencies and Empirical Approach

and *desire to undertake* variables.

**2. Development**

**2.1. Entrepreneurship**

Entrepreneurship can be seen today as the engine for economic growth and one of the most important factors of competitiveness. In a world of constant change, this process is associated with the individuals' ability to adapt successfully to the constant transformations in society. Therefore, it is imperative to promote and enhance entrepreneurship and foster an "entrepreneurial culture" in society with a view to achieving social, economic, technological, and

Everyone can be an entrepreneur, as long as the context provides the necessary stimuli; education is an example par excellence of one way of achieving this goal, while leveraging business and job creation. The teaching-learning process allows combining the acquisition of knowledge and skills, which are of utmost importance for the active integration of young people into society [3]. Hence, the role and importance of entrepreneurship in the academic arena becomes essential in terms of groundwork for skills development, a process that can best prepare students for the job market. To corroborate this statement, the European Commission believes that the increased investment in entrepreneurship must be carried out preferably through education, namely entrepreneurship education, which may contribute to increasing the levels of innovation and economic growth of a nation or country (Comissão das Comunidades [4]). Although structural conditions play a key role in the moment to under-

take, individuals' perception of themselves and their skills is equally important [5].

these steps, the study limitations, and proposals for future research.

In this study, we analyzed the role of the predictor variables *entrepreneurial motivations* (scale validated by Parreira et al. [6]), *opportunities and resources to undertake* (scale validated by Parreira et al. [7]), *incentives for entrepreneurship* (scale validated by Parreira et al. [8]), and *selfefficacy* [9] on students' *entrepreneurial potential,* while controlling for the *academic preparation*

In order to provide a framework for this research, a literature review was performed on the concepts and factors associated with the topic. Afterward, data were collected using questionnaires that were designed and validated by the research team for this purpose. Data were analyzed and processed, and the results were interpreted based on the perspectives found in the literature review and the model underlying the Poliempreende project. This study describes

According to Sarkar [10], entrepreneurship is not a recent phenomenon, although it has been used in different contexts throughout history. Nevertheless, the literature suggests that its popularity has been revived, emerging as a "sudden discovery" for economic development, especially in times of crisis. The term *entrepreneur* derives from the French words *entre* (between) and *prendre* (to take), and means being in the market between the supplier and According to Volkmann [18], entrepreneurship education began in American universities. The Harvard Business School was the first institution to design and implement a program in this area in 1947. Since then, several business schools and universities have started to offer entrepreneurship education and promoting academic paths in this area based on the premise that entrepreneurship can be taught and learned [19]. In this respect, Gerba [20] sees entrepreneurship education as an educational program that aims to provide students with knowledge, skills, and motivation to boost business success. It is also seen as a means to develop entrepreneurial intentions by raising students' interest for entrepreneurship. In this way, education on this topic has become increasingly relevant, and some authors even believe that entrepreneurship education goes beyond the mere training for the creation of a new business. For example, Ramayah et al. [21] consider that entrepreneurship allows individuals to learn to be innovative, to have the ability to integrate experiences, to easily improve knowledge, attitudes, and behaviors, which, in turn, will help them to create, innovate, and evaluate business opportunities. In addition, according to the Commission of the European Communities [22], entrepreneurship education has clear benefits, helping students to become more creative and self-confident in their tasks and to act in a socially responsible way toward success.

among entrepreneurs than among the general population [32]. This motivator is also found among academic communities [14, 33], although it characterizes most entrepreneurs rather than being restricted to these communities [31]. Another motivator for most entrepreneurs is the accomplishment of a business opportunity as a real possibility, with an effective potential for achievement [2]. According to Shane and Venkataraman [34], opportunities allow introducing new services, goods, and organizing methods into the market in a profitable way. This is why opportunity is seen as one of the best motivators that guide entrepreneurial behaviors. Although the need for admiration and recognition is a human trait, we live in a "harmfully" competitive society, where recognition and acceptance from others become a necessity early in life [35]. Notoriety and social status can also motivate most entrepreneurs to establish their own businesses [2]. Finally, the family's role is also a motivator to undertake to the extent that family plays a key social and economic role in business creation and development. Family

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businesses are among the main sources of job creation in market economies [36].

neur, team, opportunity, idea, and available resources [40].

The influence of the environment in entrepreneurial behaviors has been extensively investigated. Several studies have provided relevant information to create favorable conditions for the development of entrepreneurship ([37]; Taylor, [38]). According to these authors, the environment consists of a set of exogenous factors that create conditions for the development of entrepreneurial activities. Thus, institutions, regulations, laws, policies, knowledge, and networks influence the entrepreneurial activity. According to Kuratko and Hodgetts [39], the environment consists of external opportunities that influence the organization. Entrepreneurship, as a social dynamic process, results from the interaction between entrepre-

According to Gartner [41], the discussion about the environment should refer to the availability of resources, the existence of skilled labor force, the accessibility of suppliers, markets, and customers, the governmental influences, the purchasing power, the conditions of the implementation area, and the level of industrialization. In addition to the environment, other authors emphasize the importance of culture as a factor capable of promoting or restricting entrepreneurial behaviors. Therefore, the environmental analysis should encompass economic, infrastructural, and political aspects [37]. According to Nayab [42], the major environmental influences are cultural and social variables, such as governmental and economic policies, and resource availability. Social and cultural influences relate to social organization, the social attitudes toward the business and its beginning [43], and the beliefs that have an impact on individuals' behaviors and attitudes [2]. Demographic changes and changes resulting from more consumerist lifestyles are also environmental influences, with an emphasis on social networks since they influence individuals' entrepre-

Carsud and Johnson [44] advocate that, with regard to the governmental influences expressed in the State ideologies, there is a tendency for more liberal governments to have a more positive perspective of entrepreneurship as a strategic and development area of society. However, these policies tend to be unstable and temporary, which can encourage or discourage entrepreneurship.

**2.4. Environmental influences**

neurial behaviors [2, 44].

According to Testas and Moreira [19], there are few entrepreneurs in Portugal, which means that the educational system needs to be restructured to respond to the current crisis and high level of unemployment. According to Duarte and Esperança [17], entrepreneurship in Portuguese higher education faces some barriers, both in relation to students and teachers/researchers: students lack entrepreneurial skills and motivation to undertake and have difficulty in obtaining financial support; teachers and researchers face a clearly weak link between academic/teaching environment, the business world, and the real market needs, as well as difficulties in obtaining funding for projects with the consequent lack of motivation and little investment in this area. Therefore, the financial and governmental support is insufficient to promote entrepreneurship, and the incentives are still poorly and ineffectively managed. In this way, opportunities to support valuable projects are often lost, with an impact on economy and society. As previously said, in the fulfillment of their role to train students, higher education institutions should empower and motivate them for entrepreneurial initiatives, stimulating the creation of companies that simultaneously generate jobs and develop the economy [2, 23].

#### **2.3. Entrepreneurial motivations**

Many authors believe that there are motivational factors that guide the individual to undertake, making the entrepreneurial process clearer and more understandable [24–26]. Motivation helps to describe the process that impels individuals to engage in entrepreneurial behaviors (Hornsby & Kuratko, [27]). In addition, it is essential to identify the entrepreneurial motivations so that policy-makers, within their sphere of influence, can suggest more effective programs to support and promote a successful entrepreneurship [28]. Entrepreneurial motivations have been widely discussed, largely due to the wide range of influencing factors. In recent years, several authors have been investigating the influences of the environment and the characteristics of the opportunities to create businesses. In addition to these factors, individuals' characteristics and specificities should be taken into account given their key role in decision-making [29]. Therefore, understanding what motivates individuals to undertake, as well as identifying entrepreneurs' typical personality traits, is important for both researchers and academics [1].

The need for achievement is one of the most extensively studied motivator and is derived from McClelland's human motivation theory [30]. The achievement drive translates into the individual's ambition to start new businesses and guide their growth. This motivator helps to understand the entrepreneurial activity [30, 31] and may be associated with knowledge acquisition, motivating students to create their businesses based on their own analyses [2]. A study on the characteristics of entrepreneurs found higher scores in the need for independence among entrepreneurs than among the general population [32]. This motivator is also found among academic communities [14, 33], although it characterizes most entrepreneurs rather than being restricted to these communities [31]. Another motivator for most entrepreneurs is the accomplishment of a business opportunity as a real possibility, with an effective potential for achievement [2]. According to Shane and Venkataraman [34], opportunities allow introducing new services, goods, and organizing methods into the market in a profitable way. This is why opportunity is seen as one of the best motivators that guide entrepreneurial behaviors. Although the need for admiration and recognition is a human trait, we live in a "harmfully" competitive society, where recognition and acceptance from others become a necessity early in life [35]. Notoriety and social status can also motivate most entrepreneurs to establish their own businesses [2]. Finally, the family's role is also a motivator to undertake to the extent that family plays a key social and economic role in business creation and development. Family businesses are among the main sources of job creation in market economies [36].

#### **2.4. Environmental influences**

education on this topic has become increasingly relevant, and some authors even believe that entrepreneurship education goes beyond the mere training for the creation of a new business. For example, Ramayah et al. [21] consider that entrepreneurship allows individuals to learn to be innovative, to have the ability to integrate experiences, to easily improve knowledge, attitudes, and behaviors, which, in turn, will help them to create, innovate, and evaluate business opportunities. In addition, according to the Commission of the European Communities [22], entrepreneurship education has clear benefits, helping students to become more creative and

According to Testas and Moreira [19], there are few entrepreneurs in Portugal, which means that the educational system needs to be restructured to respond to the current crisis and high level of unemployment. According to Duarte and Esperança [17], entrepreneurship in Portuguese higher education faces some barriers, both in relation to students and teachers/researchers: students lack entrepreneurial skills and motivation to undertake and have difficulty in obtaining financial support; teachers and researchers face a clearly weak link between academic/teaching environment, the business world, and the real market needs, as well as difficulties in obtaining funding for projects with the consequent lack of motivation and little investment in this area. Therefore, the financial and governmental support is insufficient to promote entrepreneurship, and the incentives are still poorly and ineffectively managed. In this way, opportunities to support valuable projects are often lost, with an impact on economy and society. As previously said, in the fulfillment of their role to train students, higher education institutions should empower and motivate them for entrepreneurial initiatives, stimulating the creation of compa-

Many authors believe that there are motivational factors that guide the individual to undertake, making the entrepreneurial process clearer and more understandable [24–26]. Motivation helps to describe the process that impels individuals to engage in entrepreneurial behaviors (Hornsby & Kuratko, [27]). In addition, it is essential to identify the entrepreneurial motivations so that policy-makers, within their sphere of influence, can suggest more effective programs to support and promote a successful entrepreneurship [28]. Entrepreneurial motivations have been widely discussed, largely due to the wide range of influencing factors. In recent years, several authors have been investigating the influences of the environment and the characteristics of the opportunities to create businesses. In addition to these factors, individuals' characteristics and specificities should be taken into account given their key role in decision-making [29]. Therefore, understanding what motivates individuals to undertake, as well as identifying entrepreneurs' typical personality traits, is important for both researchers and academics [1].

The need for achievement is one of the most extensively studied motivator and is derived from McClelland's human motivation theory [30]. The achievement drive translates into the individual's ambition to start new businesses and guide their growth. This motivator helps to understand the entrepreneurial activity [30, 31] and may be associated with knowledge acquisition, motivating students to create their businesses based on their own analyses [2]. A study on the characteristics of entrepreneurs found higher scores in the need for independence

self-confident in their tasks and to act in a socially responsible way toward success.

332 Entrepreneurship - Development Tendencies and Empirical Approach

nies that simultaneously generate jobs and develop the economy [2, 23].

**2.3. Entrepreneurial motivations**

The influence of the environment in entrepreneurial behaviors has been extensively investigated. Several studies have provided relevant information to create favorable conditions for the development of entrepreneurship ([37]; Taylor, [38]). According to these authors, the environment consists of a set of exogenous factors that create conditions for the development of entrepreneurial activities. Thus, institutions, regulations, laws, policies, knowledge, and networks influence the entrepreneurial activity. According to Kuratko and Hodgetts [39], the environment consists of external opportunities that influence the organization. Entrepreneurship, as a social dynamic process, results from the interaction between entrepreneur, team, opportunity, idea, and available resources [40].

According to Gartner [41], the discussion about the environment should refer to the availability of resources, the existence of skilled labor force, the accessibility of suppliers, markets, and customers, the governmental influences, the purchasing power, the conditions of the implementation area, and the level of industrialization. In addition to the environment, other authors emphasize the importance of culture as a factor capable of promoting or restricting entrepreneurial behaviors. Therefore, the environmental analysis should encompass economic, infrastructural, and political aspects [37]. According to Nayab [42], the major environmental influences are cultural and social variables, such as governmental and economic policies, and resource availability. Social and cultural influences relate to social organization, the social attitudes toward the business and its beginning [43], and the beliefs that have an impact on individuals' behaviors and attitudes [2]. Demographic changes and changes resulting from more consumerist lifestyles are also environmental influences, with an emphasis on social networks since they influence individuals' entrepreneurial behaviors [2, 44].

Carsud and Johnson [44] advocate that, with regard to the governmental influences expressed in the State ideologies, there is a tendency for more liberal governments to have a more positive perspective of entrepreneurship as a strategic and development area of society. However, these policies tend to be unstable and temporary, which can encourage or discourage entrepreneurship. Therefore, other types of support are necessary, such as more funding, less bureaucracy, and the creation of infrastructures to facilitate entrepreneurship.

source of influence is *physiological feedback (emotional arousal)*, through which people experience sensations from their body and the way they perceive this emotional arousal influences their beliefs of efficacy; thus, individuals are more likely to experience success if they do not feel anxious about a social object or situation. According to Marakas et al. [52], two assumptions are particularly important in Bandura's proposal [50]: self-efficacy is a strong predictor of task performance, and all the definitions of the construct refer to how people perceive their

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In this way, self-efficacy and self-perception can be considered essential in entrepreneurship since individuals with higher self-efficacy are able to invest more effort and persist longer

The sample is composed of students from 17 Portuguese higher education polytechnic institutions that integrate the Poliempreende project. The sample was divided by polytechnic institute, study area (health, management, technology, and social sciences), and degree year, as well as by gender, student status, marital status, and the existence of entrepreneurs in the family. A total of 40 questionnaires were applied to each degree year of each of the abovementioned areas. The final sample included 6532 students with a mean age of 22 years (minimum age of 17 and maximum age of 59 years), and was mostly composed of female students

Data were collected using a self-administered questionnaire entitled *Personal Motivations and Facilitating Factors of Entrepreneurship*. The questionnaire was designed by a team of five experts from different areas [2] based on scales about the reasons for creating a business, the social and environmental influences, and the support for business creation. These scales took into account the work done by the Society for Associated Researchers on International Entrepreneurship (SARIE) to which several renowned theorists contributed (e.g., [53]; Baumal, [54]), as well as McClelland's achievement motivators [30], the work of Pereira [31] on entrepreneurs' social representations, and the relevant issues arising from the reality of the

The scale was composed of 22 items rated on a 5-point Likert scale (1—of little importance to 5—very important). Respondents rated each item based on the degree of importance that they assigned to the opportunities and resources to undertake. An exploratory factor analysis (EFA) was performed with half of the sample (randomly divided), from which four factors emerged: *resource availability*, *business stability*, *economic and political instability*, and *business* 

capabilities to successfully perform a specific task.

than those with low self-efficacy [49].

(64%). **Table 1** describes the sample in detail.

institutions or the Poliempreende project.

*3.2.1. Scale of opportunities and resources to undertake*

**3. Method**

**3.1. Sample**

**3.2. Instruments**

The economic factors that influence entrepreneurship encompass the organization of the economy, the purchasing power, and the levels of confidence in the economy of a given society. Although the economic development of a society impacts the creation of opportunities, these tend to emerge in times of recession [1, 2].

Despite this, resource availability is regarded as another important factor, namely the availability of financial, human, material, and physical resources; human resources allow for business accomplishment and the creation of a reliable team, while material and physical resources influence the productive processes [2]. According to these authors, Portuguese entrepreneurs highlight eight environmental factors: profit expectation, predisposition to seek incentives, easy supply, easy creation of structure, taking advantage of other companies' lack of success, easy identification of customers, family support and easy creation of a business, and, finally, easy identification and understanding of the competition. In parallel, it is important to understand these environmental influences and factors to raise awareness about entrepreneurship, and, consequently, boost the economy.

#### **2.5. Self-efficacy**

Self-efficacy can be defined as a personality trait that is easily associated with various desirable characteristics in the modern world, such as the motivation to learn or persistence, rather than a professional goal or performance [45–47]. Its analysis can provide important guidance and selfknowledge tools since perceived self-efficacy is positively correlated with an individual's success in specific activities [48]. According to Bandura [49, 50], self-efficacy beliefs are among the factors that comprise the psychological mechanisms governing motivation. In fact, this author was a pioneer in the conceptual definition of self-efficacy and proposed a "Social Learning Theory," which suggests that learning happens through behavioral modeling. Self-efficacy enables individuals to shape their perceptions about their own ability to perform a certain task successfully (or not). According to Bandura [5], perceived self-efficacy is defined as people's beliefs about their capabilities to produce designated levels of performance that exercise influence over events that affect their lives. According to this theory, individuals' self-efficacy can influence their feelings, thoughts, behaviors, or motivation in a given activity or situation.

Bandura [5, 50, 51] argues that self-efficacy is a dynamic construct that changes as new information and experiences are acquired. The author proposes four sources that may affect the level of perceived self-efficacy. The first source relates *performance outcomes,* suggesting that people's perception of their capabilities tend to improve if their prior experience provided them with positive information. The second source—*vicarious experiences*—relates to the possibility of the individual observing others experiencing situations of success and/or failure. According to Bandura [5], seeing similar people succeed through personal effort raises the observers' belief that they too have the skills to perform and succeed in comparable situations. The third source of influence on the individual' self-efficacy is *verbal persuasion*, which suggests that a person can influence the level of self-efficacy of another person by providing verbal information about the task and the person's ability to perform it. Finally, the fourth source of influence is *physiological feedback (emotional arousal)*, through which people experience sensations from their body and the way they perceive this emotional arousal influences their beliefs of efficacy; thus, individuals are more likely to experience success if they do not feel anxious about a social object or situation. According to Marakas et al. [52], two assumptions are particularly important in Bandura's proposal [50]: self-efficacy is a strong predictor of task performance, and all the definitions of the construct refer to how people perceive their capabilities to successfully perform a specific task.

In this way, self-efficacy and self-perception can be considered essential in entrepreneurship since individuals with higher self-efficacy are able to invest more effort and persist longer than those with low self-efficacy [49].

### **3. Method**

Therefore, other types of support are necessary, such as more funding, less bureaucracy, and the

The economic factors that influence entrepreneurship encompass the organization of the economy, the purchasing power, and the levels of confidence in the economy of a given society. Although the economic development of a society impacts the creation of opportunities,

Despite this, resource availability is regarded as another important factor, namely the availability of financial, human, material, and physical resources; human resources allow for business accomplishment and the creation of a reliable team, while material and physical resources influence the productive processes [2]. According to these authors, Portuguese entrepreneurs highlight eight environmental factors: profit expectation, predisposition to seek incentives, easy supply, easy creation of structure, taking advantage of other companies' lack of success, easy identification of customers, family support and easy creation of a business, and, finally, easy identification and understanding of the competition. In parallel, it is important to understand these environmental influences and factors to raise awareness about entrepreneurship, and,

Self-efficacy can be defined as a personality trait that is easily associated with various desirable characteristics in the modern world, such as the motivation to learn or persistence, rather than a professional goal or performance [45–47]. Its analysis can provide important guidance and selfknowledge tools since perceived self-efficacy is positively correlated with an individual's success in specific activities [48]. According to Bandura [49, 50], self-efficacy beliefs are among the factors that comprise the psychological mechanisms governing motivation. In fact, this author was a pioneer in the conceptual definition of self-efficacy and proposed a "Social Learning Theory," which suggests that learning happens through behavioral modeling. Self-efficacy enables individuals to shape their perceptions about their own ability to perform a certain task successfully (or not). According to Bandura [5], perceived self-efficacy is defined as people's beliefs about their capabilities to produce designated levels of performance that exercise influence over events that affect their lives. According to this theory, individuals' self-efficacy can influence their feelings, thoughts, behaviors, or motivation in a given activity or situation.

Bandura [5, 50, 51] argues that self-efficacy is a dynamic construct that changes as new information and experiences are acquired. The author proposes four sources that may affect the level of perceived self-efficacy. The first source relates *performance outcomes,* suggesting that people's perception of their capabilities tend to improve if their prior experience provided them with positive information. The second source—*vicarious experiences*—relates to the possibility of the individual observing others experiencing situations of success and/or failure. According to Bandura [5], seeing similar people succeed through personal effort raises the observers' belief that they too have the skills to perform and succeed in comparable situations. The third source of influence on the individual' self-efficacy is *verbal persuasion*, which suggests that a person can influence the level of self-efficacy of another person by providing verbal information about the task and the person's ability to perform it. Finally, the fourth

creation of infrastructures to facilitate entrepreneurship.

334 Entrepreneurship - Development Tendencies and Empirical Approach

these tend to emerge in times of recession [1, 2].

consequently, boost the economy.

**2.5. Self-efficacy**

### **3.1. Sample**

The sample is composed of students from 17 Portuguese higher education polytechnic institutions that integrate the Poliempreende project. The sample was divided by polytechnic institute, study area (health, management, technology, and social sciences), and degree year, as well as by gender, student status, marital status, and the existence of entrepreneurs in the family. A total of 40 questionnaires were applied to each degree year of each of the abovementioned areas. The final sample included 6532 students with a mean age of 22 years (minimum age of 17 and maximum age of 59 years), and was mostly composed of female students (64%). **Table 1** describes the sample in detail.

#### **3.2. Instruments**

Data were collected using a self-administered questionnaire entitled *Personal Motivations and Facilitating Factors of Entrepreneurship*. The questionnaire was designed by a team of five experts from different areas [2] based on scales about the reasons for creating a business, the social and environmental influences, and the support for business creation. These scales took into account the work done by the Society for Associated Researchers on International Entrepreneurship (SARIE) to which several renowned theorists contributed (e.g., [53]; Baumal, [54]), as well as McClelland's achievement motivators [30], the work of Pereira [31] on entrepreneurs' social representations, and the relevant issues arising from the reality of the institutions or the Poliempreende project.

#### *3.2.1. Scale of opportunities and resources to undertake*

The scale was composed of 22 items rated on a 5-point Likert scale (1—of little importance to 5—very important). Respondents rated each item based on the degree of importance that they assigned to the opportunities and resources to undertake. An exploratory factor analysis (EFA) was performed with half of the sample (randomly divided), from which four factors emerged: *resource availability*, *business stability*, *economic and political instability*, and *business* 


*opportunities*, which are responsible for 60.37% of total variance. A confirmatory factor analysis (CFA) was performed with the other half of the sample, which showed good indices of fit, namely normed fit index (NFI) = .949 [55] and standardized root mean square residual (SRMR) = .045 [56], and acceptable indices of fit, namely tucker-lewis index (TLI) = .945 [56], comparative fit index (CFI) = .954 [57], and root mean square of approximation (RMSEA) = .050 [55, 58], thus confirming the dimensional structure previously found in the principal component analysis (PCA). Cronbach's alpha coefficient showed an excellent reliability, α = .903,

**Total** (*N* **= 6532**)

PI Leiria 492 7.5 PI Lisboa 276 4.2 PI Portalegre 150 2.3 PI Porto 448 6.9 PI Santarém 500 7.7 PI Setúbal 405 6.2 PI Viana Castelo 477 7.3 PI Viseu 549 8.4 PI Tomar 187 2.9 ESEnfC 185 2.8 EST-UAlgarve 454 7.0

*n % M SD*

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Entrepreneurship in Higher Education: The Effect of Academy, Motivation, Resources, Incentives…

The scale was composed of 17 items measured on a 5-point Likert scale (1—of little importance to 5—very important). Respondents rated each item based on the degree of importance that they assigned to the motivations to undertake. An EFA was performed with half of the sample (randomly divided), from which four factors emerged: *motivation—family and social achievement, motivation—resources and income, motivation—prestige*, and *motivation—learning and development.* A CFA was performed with the other half of the sample, which showed good indices of fit (NFI = .906, CFI = .911, TLI = .887, and RMSEA = .070). The scale showed discriminant validity and reliability. In both samples, Cronbach's alpha coefficients were greater than .70,

The final version of this scale was composed of 15 items measured on a 5-point Likert scale (1—of little importance to 5—very important). Respondents rated each item based on the

degree of importance that they assigned to the incentives to create a business.

since it is greater than .80 [59].

*3.2.2. Scale of entrepreneurial motivations*

**Table 1.** Sociodemographic characteristics of the sample.

indicating an adequate internal consistency.

*3.2.3. Scale of incentives to entrepreneurship*


**Table 1.** Sociodemographic characteristics of the sample.

**Total** (*N* **= 6532**)

*Age (years)* 22.28 5.34

Male 2252 34.5 Female 4194 64.2 *No answer* 86 1.3

336 Entrepreneurship - Development Tendencies and Empirical Approach

Health 1816 27.8 Technology 1647 25.2 Social sciences 1336 20.5 Management 1500 23.0 *No answer* 233 3.6

1st year 2055 31.5 2nd year 2218 34.0 3rd year 1706 26.1 4th year 462 7.1 *No answer* 91 1.4

Students 5359 82.0 Working students 1077 16.5 *No answer* 96 1.5

Single 5836 89.3 Divorced 89 1.4 Married 409 6.3 Co-habiting 108 1.7 *No answer* 90 1.4

PI Beja 469 7.2 PI Bragança 255 3.9 PI Castelo Branco 387 5.9 PI Cávado e Vale do Ave 322 4.9 PI Coimbra 513 7.9 PI Guarda 463 7.1

*Gender*

*Degree area*

*Degree year*

*Student status*

*Marital status*

*Polytechnic Institute* (PI)

*n % M SD*

*opportunities*, which are responsible for 60.37% of total variance. A confirmatory factor analysis (CFA) was performed with the other half of the sample, which showed good indices of fit, namely normed fit index (NFI) = .949 [55] and standardized root mean square residual (SRMR) = .045 [56], and acceptable indices of fit, namely tucker-lewis index (TLI) = .945 [56], comparative fit index (CFI) = .954 [57], and root mean square of approximation (RMSEA) = .050 [55, 58], thus confirming the dimensional structure previously found in the principal component analysis (PCA). Cronbach's alpha coefficient showed an excellent reliability, α = .903, since it is greater than .80 [59].

#### *3.2.2. Scale of entrepreneurial motivations*

The scale was composed of 17 items measured on a 5-point Likert scale (1—of little importance to 5—very important). Respondents rated each item based on the degree of importance that they assigned to the motivations to undertake. An EFA was performed with half of the sample (randomly divided), from which four factors emerged: *motivation—family and social achievement, motivation—resources and income, motivation—prestige*, and *motivation—learning and development.* A CFA was performed with the other half of the sample, which showed good indices of fit (NFI = .906, CFI = .911, TLI = .887, and RMSEA = .070). The scale showed discriminant validity and reliability. In both samples, Cronbach's alpha coefficients were greater than .70, indicating an adequate internal consistency.

#### *3.2.3. Scale of incentives to entrepreneurship*

The final version of this scale was composed of 15 items measured on a 5-point Likert scale (1—of little importance to 5—very important). Respondents rated each item based on the degree of importance that they assigned to the incentives to create a business.

An EFA was performed with half of the sample (randomly divided), from which two factors emerged: *financial and governmental incentives*, and *educational and consultancy incentives*, which account for 58.87% of the variance.

**4. Results**

presented in **Table 2**.

are shown in **Table 4**.

In the scale of entrepreneurial motivations, the highest scores were obtained in the factors *motivation—family and social achievement* (*M* = 4.11, *SD* = .69) and *motivation—learning and development* (*M* = 4.01, *SD* = .59). In relation to the scale of opportunities and resources to undertake, the highest mean scores were obtained in the factors *resource availability* (*M* = 3.86, *SD* = .68) and *business stability* (*M* = 3.82, *SD* = .59). In the scale of incentives to entrepreneurship, the factors *financial and governmental incentives* (*M* = 3.94, *SD* = .69) and *educational and consultancy* 

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The *entrepreneurial potential* score showed the higher mean score (*M* = 11.17), standing above the midpoint of the score (9 points). Taking into account that the reference values are the same, students' *entrepreneurial potential* is higher than their *desire to undertake*, *t*(6429) = 146.12, *p* < .001. The *academic preparation to undertake* score, composed of two items, showed a mean score above the midpoint of the score (5.6). The same is not true for the *desire to undertake* score, whose mean score is significantly below the mid-point of the score. These results are

The *entrepreneurial potential* has only a moderate correlation (values between .30 and .50) with the factor *motivation—learning and development* from the scale of entrepreneurial motivations (*r =* .36). Most of the correlations between the *entrepreneurial potential* and the remaining factors are low (values between .10 and .30). Therefore, in the scale of entrepreneurial motivations, the factors *motivation—family and social achievement* (*r =* .21), *motivation—resources and income* (*r =* .18), and *motivation—prestige* (*r =* .17) show a low correlation with the *entrepreneurial potential*. In this scale, *motivation—learning and development* is the only factor that shows no correlation with the *entrepreneurial potential*. In the scale of opportunities and resources to undertake, the factors *resource availability* (*r =* .27), *business stability* (*r =* .29), and *business opportunities* (*r =* .12) show a low correlation with the *entrepreneurial potential*. In this scale, *economic and political instability* is the only factor that shows no correlation (*r =* .08) with the *entrepreneurial potential*. Finally, in the scale of incentives to Entrepreneurship, both factors have a low correlation with the *entrepreneurial potential*: the first factor, *financial and governmental incentives*, shows a correlation of *r =* .27, and the second factor, *education and consultancy incentives*, shows a correlation of *r =* .26. The *academic preparation* also shows a low correlation with the *entrepre-*

Based on the results obtained in Model 1, the *academic preparation* explained 4.7% (*R2* = .047) of the *entrepreneurial potential*. From Model 1 to Model 2, the delta is equal to .115, which means that students' *entrepreneurial motivations* increased by 11.5% the predictive ability of the *entrepreneurial potential*. In Model 3 (*R2* = .175), the introduction of predictors related to *opportunities and resources to undertake* only increased by 1.4% (=.014) the explained variance of the *entrepreneurial potential*. In Model 4 (*R2* = .182), the introduction of the *incentives to entrepreneurship* only increased the *entrepreneurial potential* by 0.7% (Δ*R2* = .007). Finally, the introduction of the *self-efficacy* measure, in Model 5, contributed to a 3.6% increase (Δ*R2* = .036) of the variance in the *entrepreneurial potential* in relation to the previous models. In total, all of the predictors accounted for 21.8% of the *entrepreneurial potential*. These results

*incentives* obtained the same mean score (*M* = 3.94, *SD* = .68).

*neurial potential* (*r =* .22). These results are shown in **Table 3**.

The CFA performed with the other half of the sample confirmed the two-factor structure obtained, showing good indices of fit (NFI = .888, SRMR = .049, CFI = .890, TLI = .868, and RMSEA = .06). In both samples, Cronbach's alpha coefficients were greater than .85, indicating a good internal consistency.

#### *3.2.4. Composite scores*

Three composite scores were derived for this research: *entrepreneurial potential*, *academic preparation to undertake*, and *desire to undertake*. All three composites were rated on a scale from 1 to 5, in which 1 is of little importance and 5 is very Important.

The composite score for the *entrepreneurial potential* resulted from the score sum obtained in the following items: *I find* e*ntrepreneurship attractive*; *As an entrepreneur I would achieve my life goals,* and *As an entrepreneur I would feel satisfied with my job*. The composite score for *academic preparation to undertake*, was obtained through the following items: *My degree prepares me to be self-employed (autonomous)*, and *My degree prepares me to create my own business*. Finally, the composite score for the *desire to undertake* was calculated based on the following items: *My desire to be self-employed (autonomous)* and *My desire to create my own business*.

All scores showed a Cronbach's alpha coefficient greater than .80, thus revealing a good internal consistency (Nunnally, [60]): α = .819 in *entrepreneurial potential*, α = .841 in *academic preparation*, and α = .861 in *desire to undertake*.

#### *3.2.5. Self-efficacy*

Finally, self-efficacy was measured based on the mean scores of the following items to assess the self-efficacy dimension of the Self-Concept Clinical Inventory [9], measured on a 5-point Likert scale (from 1—strongly disagree to 5—strongly agree): *I am capable of assuming responsibility for something until the end, even though it may have unpleasant consequences*; *Generally speaking, I usually face my problems and solve them*; *When I have an idea that seems to be good, I like to put make it work*; *As a rule, I am persistent in solving my problems*; *I consider myself competent in what I do*; I like to succeed in the things I undertake; and *I always find energy to overcome my problems*. PCA indicated the unidimensionality of the self-efficacy measure: *eigenvalue* = 3.28, 18.25% of explained variance, with *s* > .653, for an adequate sample, *kaiser-meyer-olkin measure of sampling adequac (KMO)* = .864, Bartlett's test with *X2* (21) = 11585.38, *p* < .001. It showed a Cronbach's alpha coefficient of *α* = .809, indicating a good internal consistency (Nunnally [60]).

#### **3.3. Procedures**

The questionnaires were distributed and applied to the students of the higher education polytechnic institutes by the Poliempreende project coordinators, who were also responsible for collecting them after completion in their respective institution. All ethical principles of a research study were complied with the researchers explained the study purposes, participants gave their informed consent, and anonymity was ensured at all times.

### **4. Results**

An EFA was performed with half of the sample (randomly divided), from which two factors emerged: *financial and governmental incentives*, and *educational and consultancy incentives*, which

The CFA performed with the other half of the sample confirmed the two-factor structure obtained, showing good indices of fit (NFI = .888, SRMR = .049, CFI = .890, TLI = .868, and RMSEA = .06). In both samples, Cronbach's alpha coefficients were greater than .85, indicating

Three composite scores were derived for this research: *entrepreneurial potential*, *academic preparation to undertake*, and *desire to undertake*. All three composites were rated on a scale from 1 to

The composite score for the *entrepreneurial potential* resulted from the score sum obtained in the following items: *I find* e*ntrepreneurship attractive*; *As an entrepreneur I would achieve my life goals,* and *As an entrepreneur I would feel satisfied with my job*. The composite score for *academic preparation to undertake*, was obtained through the following items: *My degree prepares me to be self-employed (autonomous)*, and *My degree prepares me to create my own business*. Finally, the composite score for the *desire to undertake* was calculated based on the following items: *My* 

All scores showed a Cronbach's alpha coefficient greater than .80, thus revealing a good internal consistency (Nunnally, [60]): α = .819 in *entrepreneurial potential*, α = .841 in *academic prepa-*

Finally, self-efficacy was measured based on the mean scores of the following items to assess the self-efficacy dimension of the Self-Concept Clinical Inventory [9], measured on a 5-point Likert scale (from 1—strongly disagree to 5—strongly agree): *I am capable of assuming responsibility for something until the end, even though it may have unpleasant consequences*; *Generally speaking, I usually face my problems and solve them*; *When I have an idea that seems to be good, I like to put make it work*; *As a rule, I am persistent in solving my problems*; *I consider myself competent in what I do*; I like to succeed in the things I undertake; and *I always find energy to overcome my problems*. PCA indicated the unidimensionality of the self-efficacy measure: *eigenvalue* = 3.28, 18.25% of explained variance, with *s* > .653, for an adequate sample, *kaiser-meyer-olkin measure of sampling* 

alpha coefficient of *α* = .809, indicating a good internal consistency (Nunnally [60]).

pants gave their informed consent, and anonymity was ensured at all times.

The questionnaires were distributed and applied to the students of the higher education polytechnic institutes by the Poliempreende project coordinators, who were also responsible for collecting them after completion in their respective institution. All ethical principles of a research study were complied with the researchers explained the study purposes, partici-

(21) = 11585.38, *p* < .001. It showed a Cronbach's

5, in which 1 is of little importance and 5 is very Important.

*desire to be self-employed (autonomous)* and *My desire to create my own business*.

account for 58.87% of the variance.

338 Entrepreneurship - Development Tendencies and Empirical Approach

*ration*, and α = .861 in *desire to undertake*.

*adequac (KMO)* = .864, Bartlett's test with *X2*

a good internal consistency.

*3.2.4. Composite scores*

*3.2.5. Self-efficacy*

**3.3. Procedures**

In the scale of entrepreneurial motivations, the highest scores were obtained in the factors *motivation—family and social achievement* (*M* = 4.11, *SD* = .69) and *motivation—learning and development* (*M* = 4.01, *SD* = .59). In relation to the scale of opportunities and resources to undertake, the highest mean scores were obtained in the factors *resource availability* (*M* = 3.86, *SD* = .68) and *business stability* (*M* = 3.82, *SD* = .59). In the scale of incentives to entrepreneurship, the factors *financial and governmental incentives* (*M* = 3.94, *SD* = .69) and *educational and consultancy incentives* obtained the same mean score (*M* = 3.94, *SD* = .68).

The *entrepreneurial potential* score showed the higher mean score (*M* = 11.17), standing above the midpoint of the score (9 points). Taking into account that the reference values are the same, students' *entrepreneurial potential* is higher than their *desire to undertake*, *t*(6429) = 146.12, *p* < .001. The *academic preparation to undertake* score, composed of two items, showed a mean score above the midpoint of the score (5.6). The same is not true for the *desire to undertake* score, whose mean score is significantly below the mid-point of the score. These results are presented in **Table 2**.

The *entrepreneurial potential* has only a moderate correlation (values between .30 and .50) with the factor *motivation—learning and development* from the scale of entrepreneurial motivations (*r =* .36). Most of the correlations between the *entrepreneurial potential* and the remaining factors are low (values between .10 and .30). Therefore, in the scale of entrepreneurial motivations, the factors *motivation—family and social achievement* (*r =* .21), *motivation—resources and income* (*r =* .18), and *motivation—prestige* (*r =* .17) show a low correlation with the *entrepreneurial potential*. In this scale, *motivation—learning and development* is the only factor that shows no correlation with the *entrepreneurial potential*. In the scale of opportunities and resources to undertake, the factors *resource availability* (*r =* .27), *business stability* (*r =* .29), and *business opportunities* (*r =* .12) show a low correlation with the *entrepreneurial potential*. In this scale, *economic and political instability* is the only factor that shows no correlation (*r =* .08) with the *entrepreneurial potential*. Finally, in the scale of incentives to Entrepreneurship, both factors have a low correlation with the *entrepreneurial potential*: the first factor, *financial and governmental incentives*, shows a correlation of *r =* .27, and the second factor, *education and consultancy incentives*, shows a correlation of *r =* .26. The *academic preparation* also shows a low correlation with the *entrepreneurial potential* (*r =* .22). These results are shown in **Table 3**.

Based on the results obtained in Model 1, the *academic preparation* explained 4.7% (*R2* = .047) of the *entrepreneurial potential*. From Model 1 to Model 2, the delta is equal to .115, which means that students' *entrepreneurial motivations* increased by 11.5% the predictive ability of the *entrepreneurial potential*. In Model 3 (*R2* = .175), the introduction of predictors related to *opportunities and resources to undertake* only increased by 1.4% (=.014) the explained variance of the *entrepreneurial potential*. In Model 4 (*R2* = .182), the introduction of the *incentives to entrepreneurship* only increased the *entrepreneurial potential* by 0.7% (Δ*R2* = .007). Finally, the introduction of the *self-efficacy* measure, in Model 5, contributed to a 3.6% increase (Δ*R2* = .036) of the variance in the *entrepreneurial potential* in relation to the previous models. In total, all of the predictors accounted for 21.8% of the *entrepreneurial potential*. These results are shown in **Table 4**.


**Table 2.** Reference values, minimum, maximum, and standard deviations for the measures under analysis.

Model 1 shows that the *academic preparation* significantly predicts the *entrepreneurial potential* (*β* = .217). In Model 2, after the introduction of variables from the scale of entrepreneurial motivations, the *academic preparation* (*β* = .149) and *motivation—learning and development* (*β* = .303) were the most predictive variables of the *entrepreneurial potential*. In Model 3, after the introduction of the variables from the scale of opportunities and resources to undertake, the predictive variables were *academic preparation* (*β* = .147), *motivation—learning and development* (*β* = .253) from the scale of entrepreneurial motivations, and the variable *business stability* from the scale inserted in this model (*β* = .115). After the introduction of the scale of incentives to entrepreneurship to Model 4, the predictive variables of the *entrepreneurial potential* were the *academic preparation* (*β* = .151), and *motivation—learning and development* (*β* = .239) from the scale of entrepreneurial motivations. In this model, the predictive variable of the scale of incentives to entrepreneurship, although with a low predictive value, was the *financial and governmental incentives* (*β* = .076). Finally, after the introduction of the *self-efficacy* to Model 5, the *academic preparation* (*β* = .135), *motivation—learning and development* (*β* = .181) from the scale of entrepreneurial motivations, and the variable *self-efficacy* (*β* = .216) inserted in this model were the most predictive variables of the *entrepreneurial potential*.

**(1) (2)**

Entrepreneurial motivations:

Family and social achievement(1)

Resources and income (2)

Prestige (3) Learning and development (4)

Global scale(5)

Opportunities and resources to undertake

Resource availability (6)

Business stability (7)

Economic and political instability(8)

Business opportunities (9)

Global scale (10)

Incentives to entrepreneurship

Financial and governmental incentives (11)

Educational and consultancy incentives (12)

Global scale (13)

Academic preparation to undertake (14)

Entrepreneurial potential (15)

Desire to undertake (16)

Self-efficacy (17)

\*\**p* < .001.

**Table 3.**

Intercorrelation matrix for the measures under analysis.

1

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1

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1

.29\*\*

1

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1

.22\*\*

1

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1

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1

.69\*\*

1

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1

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1

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1

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1

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341

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.14\*\*

.28\*\*

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Entrepreneurship in Higher Education: The Effect of Academy, Motivation, Resources, Incentives…

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**(3)**

**(4)**

**(5)**

**(6)**

**(7)**

**(8)**

**(9)**

**(10)**

**(11)**

**(12)**

**(13)**

**(14)**

**(15)**

**(16)**

**(17)**


Model 1 shows that the *academic preparation* significantly predicts the *entrepreneurial potential* (*β* = .217). In Model 2, after the introduction of variables from the scale of entrepreneurial motivations, the *academic preparation* (*β* = .149) and *motivation—learning and development* (*β* = .303) were the most predictive variables of the *entrepreneurial potential*. In Model 3, after the introduction of the variables from the scale of opportunities and resources to undertake, the predictive variables were *academic preparation* (*β* = .147), *motivation—learning and development* (*β* = .253) from the scale of entrepreneurial motivations, and the variable *business stability* from the scale inserted in this model (*β* = .115). After the introduction of the scale of incentives to entrepreneurship to Model 4, the predictive variables of the *entrepreneurial potential* were the *academic preparation* (*β* = .151), and *motivation—learning and development* (*β* = .239) from the scale of entrepreneurial motivations. In this model, the predictive variable of the scale of incentives to entrepreneurship, although with a low predictive value, was the *financial and governmental incentives* (*β* = .076). Finally, after the introduction of the *self-efficacy* to Model 5, the *academic preparation* (*β* = .135), *motivation—learning and development* (*β* = .181) from the scale of entrepreneurial motivations, and the variable *self-efficacy* (*β* = .216) inserted in this model

**Table 2.** Reference values, minimum, maximum, and standard deviations for the measures under analysis.

**Reference** 

F2. Resources and income 1–5 1 5 3.26 0.81 F3. Prestige 1–5 1 5 3.45 0.82 F4. Learning and development 1–5 1 5 4.01 0.59 Total scale 1–5 1 5 3.75 0.55

F2. Business stability 1–5 1 5 3.82 0.59 F3. Economic and political instability 1–5 1 5 2.96 1.06 F4. Economic and political instability 1–5 1 5 3.28 0.95 Total scale 1–5 1 5 3.67 0.54

F2. Educational and consultancy incentives 1–5 1 5 3.94 0.68 Total scale 1–5 1 5 3.93 0.64 Academic preparation to undertake 2–10 2 10 6.11 1.97 Entrepreneurial potential 3–15 3 15 11.17 2.11 Desire to undertake 2–10 2 10 6.63 2.71 Self-efficacy 1–5 1 5 4.04 0.52

Entrepreneurial motivations F1. Family and social achievement

F1. Resource availability

Incentives to entrepreneurship

Opportunities and resources to undertake

340 Entrepreneurship - Development Tendencies and Empirical Approach

F1. Financial and governmental incentives

**values** *Min. Max. <sup>M</sup> SD*

1–5 1 5 4.11 0.69

1–5 1 5 3.86 0.68

1–5 1 5 3.94 0.69

were the most predictive variables of the *entrepreneurial potential*.

**Table 3.**

Intercorrelation matrix for the measures under analysis.


*Predictor variables Dependent variable: entrepreneurial* 

Resources and income .080 .038 .031 2.09\*

motivations—Prestige .054 .037 .021 1.45\*

Learning and development .856 .051 .239 16.88\*\*\*

undertake—Resource availability .015 .051 .005 .29\*

undertake—Business stability .270 .061 .077 4.42\*\*\*

undertake—Business opportunities −.018 .030 −.008 −.61\*

Academic preparation to undertake .145 .012 .135 11.91\*\*\*

Family and social achievement −.081 .043 −.027 1.89\*

Resources and income .126 .037 .048 3.38\*\*

motivations—Prestige .042 .036 .016 1.15\*

Learning and development .647 .051 .181 12.69\*\*\*

Resource availability .015 .050 .005 .29\* Business stability .232 .060 .066 3.88\*\*\* Economic and political instability .026 .025 .013 1.07\* Business opportunities −.020 .029 −.009 −.68\*

Entrepreneurial motivations—

Entrepreneurial motivations—

Opportunities and resources to

Opportunities and resources to

Opportunities and resources to undertake—Economic and political

Opportunities and resources to

Incentives to entrepreneurship— Financial and governmental

Incentives to entrepreneurship— Educational and consultancy

Entrepreneurial motivations—

Entrepreneurial motivations—

Entrepreneurial motivations—

Incentives to entrepreneurship— Financial and governmental

Entrepreneurial

incentives

*Model 5* .467 .218 .036

Entrepreneurial

instability

incentives

incentives

*potential*

.013 .025 .007 .53\*

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343

.232 .051 .076 4.54\*\*\*

.136 .052 .044 2.64\*\*

.165 .050 .054 3.31\*\*

*r R2 ΔR<sup>2</sup> F(df1, df2) b EP β t*

Entrepreneurship in Higher Education: The Effect of Academy, Motivation, Resources, Incentives…


*Predictor variables Dependent variable: entrepreneurial* 

undertake .233 .013 .217 17.83\*\*\*

Family and social achievement .093 .043 .030 2.15\*

Resources and income .132 .038 .050 3.51\*\*\*

motivations—Prestige .060 .037 .023 1.59\*

Learning and development 1.08 .046 .303 23.42\*\*\*

undertake .158 .012 .147 12.69\*\*\*

Family and social achievement .019 .044 .006 0.44\*

Resources and income .074 .038 .028 1.94\*

motivations—Prestige .049 .037 .019 1.33\*

Learning and development .905 .050 .253 17.98\*\*\*

undertake—Resource availability .100 .050 .032 2.01\*

undertake—Business stability .406 .058 .115 6.95\*\*\*

undertake—Business opportunities −.016 .030 −.007 −.54\*

Academic preparation to undertake .162 .012 .151 13.04\*\*\*

Family and social achievement *−.*<sup>011</sup> *.*<sup>044</sup> *−.*<sup>004</sup> *−.*249*\**

*Model 1* .217 .047 — 317.76 (1, 64)

342 Entrepreneurship - Development Tendencies and Empirical Approach

*Model 2* .402 .162 .115 219.74 (4, 64)

*Model 3* .419 .175 .014 26.36 (4, 64)

*Model 4* .427 .182 .007 26.48 (2, 64)

Academic preparation to

Academic preparation for

Entrepreneurial motivations—

Entrepreneurial motivations—

Entrepreneurial motivations—

Academic preparation to

Entrepreneurial motivations—

Entrepreneurial motivations—

Entrepreneurial motivations—

Opportunities and resources to

Opportunities and resources to

Opportunities and resources to undertake—Economic and political

Opportunities and resources to

Entrepreneurial motivations—

Entrepreneurial

instability

entrepreneur

Entrepreneurial

*potential*

.160 .013 .149 12.74\*\*\*

.031 .025 .016 1.23\*

*r R2 ΔR<sup>2</sup> F(df1, df2) b EP β t*


the moment in which individuals intend to undertake influence their perception of entrepreneurship as a positive or negative process. With regard to incentives [8], the surveyed students value financial and governmental incentives the most. In fact, although educational and consultancy incentives are essential for students to become familiar with entrepreneurship, they seem to assign greater importance to financial incentives. With regard to correlations, the results on the *entrepreneurial potential* should be highlighted. This predictor was only moderately correlated with the variable *motivation—learning and development*. Such evidence shows that the more educated students are about entrepreneurship, the greater is their *entrepreneurial potential*. To this end, students should be trained and informed about this topic so that entrepreneurship is no longer seen as an unknown and foreign idea coming from abroad. To a lower extent, the *entrepreneurial potential* was also correlated with several variables of the three scales used in this study. Among these correlations, the most significant variables were related to the environmental influences and incentives for entrepreneurship. The results obtained in this study corroborate the need to take into account the availability of resources, the existence of a skilled labor force, the accessibility of suppliers, markets and customers, the governmental influences, and the purchasing power [41]. Among the variables related to environmental influences and opportunities and resources to undertake, *resource availability* and *business stability* showed a low correlation with the *entrepreneurial potential*, as well as both variables related to the incentives for entrepreneurship—*financial and governmental incentives*

Entrepreneurship in Higher Education: The Effect of Academy, Motivation, Resources, Incentives…

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345

To enhance these results, we need to focus again on the key relationship between higher education institutions, the state, and students. According to Parreira et al. [6], the academia occupies, for various reasons, a privileged position to encourage, promote, motivate, and develop students' entrepreneurial skills, contributing to the general development of society and sustaining the Triple Helix model [62–68]. The authors of this model assign a key role to the academia in the creation of knowledge-based societies. In recent years, the academia has become part of the social, business, and economic development, thus asserting itself as an *Entrepreneurial University*, with an emphasis on the triangulation of strategies that support the needs of the industry and public sectors. This *Entrepreneurial University* is able to offer responses supported by the academia and based on governmental policies aimed at

Individuals who are more educated and trained on this specific area and have more financial and governmental support are more likely to undertake following their desire to "take risks." In addition, if they have more resources at their disposal, individuals will feel more stable toward their business and will be more likely to undertake based on their income. In this way, these individuals will be seen as someone of trust and prestige. At the same time, self-efficacy seems to play a key role in entrepreneurship. According to the results obtained, this measure is moderately correlated with several variables such as learning and development, business stability, financial, governmental, educational and consultancy incentives, and entrepreneurial potential. As previously mentioned, these results suggest that individuals who are more educated and prepared on this topic will search for new learning experiences in this area and have a greater ability to undertake. Self-efficacy [57] tends to drive individuals in their decision to undertake. A greater self-perception brings a greater entrepreneurial

and *educational and consultancy incentives*.

the development of such entrepreneurial skills.

**Table 4.** Hierarchical regression analysis of the expected entrepreneurial potential based on the motivations related to family and social achievement, resources and income, prestige, learning and development, resource availability, business stability, economic and political instability, business opportunities, financial and governmental incentives, and educational and consultancy incentives.

#### **5. Discussion**

The literature review conducted on the topic underlying this study highlighted the importance of entrepreneurship as an engine for a country's economic, social, and technological growth and development. According to the results obtained, Portuguese polytechnic higher education students believe that *academic preparation* is essential to undertake. Taking into account that a*cademic preparation* explained approximately 5% of the *entrepreneurial potential* and that it remained significant in all hierarchical regression models, even in the presence of other significant predictors, we believe that this students' academic preparation to undertake should be further explored. Universities and polytechnics must intervene and prepare students for entrepreneurship, regardless of their training area [19]. Although 5% of explained variance of the *entrepreneurial potential* based on academic preparation may seem a low percentage, we believe the opposite in comparison with the percentage of variance explained by *self-efficacy*, which was around 3%. Nevertheless, *selfefficacy* is also an equally important predictor, since it is an individual's self-perception that helps him/her in the decision to undertake or not. Individuals with higher self-efficacy are able to invest more effort and persist longer in a task than those with low selfefficacy [61].

According to Parreira et al. [6], entrepreneurial motivations are important to undertake. The results of this study show that the main driving factor for entrepreneurship seems to be students' motivation for learning and development, rather than a desire for prestige or notoriety. As already pointed out in McClelland's human motivation theory [30], individuals feel the need to develop themselves to satisfy their various needs, such as the need for fulfillment, independence, and business opportunities. With respect to environmental influences and based on the results obtained [7], individuals tend to seek or create a stable business. This is probably due to the fact that entrepreneurship, as a dynamic social process, results from the interaction between entrepreneur, team, opportunity, idea, and available resources [40]. In addition, governmental and economic policies, resource availability, and the culture of the moment in which individuals intend to undertake influence their perception of entrepreneurship as a positive or negative process. With regard to incentives [8], the surveyed students value financial and governmental incentives the most. In fact, although educational and consultancy incentives are essential for students to become familiar with entrepreneurship, they seem to assign greater importance to financial incentives. With regard to correlations, the results on the *entrepreneurial potential* should be highlighted. This predictor was only moderately correlated with the variable *motivation—learning and development*. Such evidence shows that the more educated students are about entrepreneurship, the greater is their *entrepreneurial potential*. To this end, students should be trained and informed about this topic so that entrepreneurship is no longer seen as an unknown and foreign idea coming from abroad. To a lower extent, the *entrepreneurial potential* was also correlated with several variables of the three scales used in this study. Among these correlations, the most significant variables were related to the environmental influences and incentives for entrepreneurship. The results obtained in this study corroborate the need to take into account the availability of resources, the existence of a skilled labor force, the accessibility of suppliers, markets and customers, the governmental influences, and the purchasing power [41]. Among the variables related to environmental influences and opportunities and resources to undertake, *resource availability* and *business stability* showed a low correlation with the *entrepreneurial potential*, as well as both variables related to the incentives for entrepreneurship—*financial and governmental incentives* and *educational and consultancy incentives*.

**5. Discussion**

Incentives to entrepreneurship— Educational and consultancy

344 Entrepreneurship - Development Tendencies and Empirical Approach

educational and consultancy incentives.

incentives

*\*p* ≤ .05 *\*\*p* ≤ .01 *\*\*\*p* < .001.

efficacy [61].

The literature review conducted on the topic underlying this study highlighted the importance of entrepreneurship as an engine for a country's economic, social, and technological growth and development. According to the results obtained, Portuguese polytechnic higher education students believe that *academic preparation* is essential to undertake. Taking into account that a*cademic preparation* explained approximately 5% of the *entrepreneurial potential* and that it remained significant in all hierarchical regression models, even in the presence of other significant predictors, we believe that this students' academic preparation to undertake should be further explored. Universities and polytechnics must intervene and prepare students for entrepreneurship, regardless of their training area [19]. Although 5% of explained variance of the *entrepreneurial potential* based on academic preparation may seem a low percentage, we believe the opposite in comparison with the percentage of variance explained by *self-efficacy*, which was around 3%. Nevertheless, *selfefficacy* is also an equally important predictor, since it is an individual's self-perception that helps him/her in the decision to undertake or not. Individuals with higher self-efficacy are able to invest more effort and persist longer in a task than those with low self-

**Table 4.** Hierarchical regression analysis of the expected entrepreneurial potential based on the motivations related to family and social achievement, resources and income, prestige, learning and development, resource availability, business stability, economic and political instability, business opportunities, financial and governmental incentives, and

*Predictor variables Dependent variable: entrepreneurial* 

Self-efficacy .878 .051 .216 17.22\*\*\*

*potential*

.071 .051 .023 1.39\*

*r R2 ΔR<sup>2</sup> F(df1, df2) b EP β t*

According to Parreira et al. [6], entrepreneurial motivations are important to undertake. The results of this study show that the main driving factor for entrepreneurship seems to be students' motivation for learning and development, rather than a desire for prestige or notoriety. As already pointed out in McClelland's human motivation theory [30], individuals feel the need to develop themselves to satisfy their various needs, such as the need for fulfillment, independence, and business opportunities. With respect to environmental influences and based on the results obtained [7], individuals tend to seek or create a stable business. This is probably due to the fact that entrepreneurship, as a dynamic social process, results from the interaction between entrepreneur, team, opportunity, idea, and available resources [40]. In addition, governmental and economic policies, resource availability, and the culture of To enhance these results, we need to focus again on the key relationship between higher education institutions, the state, and students. According to Parreira et al. [6], the academia occupies, for various reasons, a privileged position to encourage, promote, motivate, and develop students' entrepreneurial skills, contributing to the general development of society and sustaining the Triple Helix model [62–68]. The authors of this model assign a key role to the academia in the creation of knowledge-based societies. In recent years, the academia has become part of the social, business, and economic development, thus asserting itself as an *Entrepreneurial University*, with an emphasis on the triangulation of strategies that support the needs of the industry and public sectors. This *Entrepreneurial University* is able to offer responses supported by the academia and based on governmental policies aimed at the development of such entrepreneurial skills.

Individuals who are more educated and trained on this specific area and have more financial and governmental support are more likely to undertake following their desire to "take risks." In addition, if they have more resources at their disposal, individuals will feel more stable toward their business and will be more likely to undertake based on their income. In this way, these individuals will be seen as someone of trust and prestige. At the same time, self-efficacy seems to play a key role in entrepreneurship. According to the results obtained, this measure is moderately correlated with several variables such as learning and development, business stability, financial, governmental, educational and consultancy incentives, and entrepreneurial potential. As previously mentioned, these results suggest that individuals who are more educated and prepared on this topic will search for new learning experiences in this area and have a greater ability to undertake. Self-efficacy [57] tends to drive individuals in their decision to undertake. A greater self-perception brings a greater entrepreneurial potential to the extent that the entrepreneurship process is strongly associated with the characteristics of the individual, who is the main agent of decision-making and the main responsible for performing the associated tasks [69]. Individuals will also experience greater stability in their business. Furthermore, the level of incentives offered by the State and Educational Institutions will make individuals feel more comfortable to learn and invest, which will, consequently, lead to a higher perceived self-efficacy.

[8] Parreira PM, Ribeiro AS, Mónico LS, Carvalho C. (submitted). Empreendedorismo no ensino superior: Estudo psicométrico da Escala dos Incentivos ao Empreendedorismo.

Entrepreneurship in Higher Education: The Effect of Academy, Motivation, Resources, Incentives…

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347

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### **Author details**

Pedro Miguel Dinis Santos Parreira1 , Lisete dos Santos Mónico<sup>2</sup> \*, Carla Maria Santos de Carvalho2 and Alexandra Cristina Riscado da Silva<sup>2</sup>

\*Address all correspondence to: lisete.monico@fpce.uc.pt

1 Nursing School of Coimbra, Coimbra, Portugal

2 University of Coimbra, Coimbra, Portugal

### **References**


potential to the extent that the entrepreneurship process is strongly associated with the characteristics of the individual, who is the main agent of decision-making and the main responsible for performing the associated tasks [69]. Individuals will also experience greater stability in their business. Furthermore, the level of incentives offered by the State and Educational Institutions will make individuals feel more comfortable to learn and invest, which will, con-

, Lisete dos Santos Mónico<sup>2</sup>

[1] Parreira PM, Pereira FC, Arreguy-Sena C, Gomes AM, Marques SC, Melo RC, Oliveira DC, Fonseca C, Carvalho C, Mónico LS. Representações sociais do empreendedorismo: o papel da formação na aquisição de competências empreendedoras. Revista Ibero-Americana de

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[4] Comissão das Comunidades Europeias Aplicar o Programa Comunitário de Lisboa: Promover o espírito empreendedor através do ensino e da aprendizagem. In: Retrieved from 2006. http://eur-lex.europa.eu/legal-content/PT/TXT/?uri=CELEX%3A52006DC0033

[5] Bandura A. Self-efficacy. In: Ramachaudran VS, editor. Encyclopedia of Human Behavior.

[6] Parreira PM, Silva SD, Carvalho C, Mónico LS. (submitted). Empreendedorismo no ensino superior: Estudo psicométrico da Escala de Motivações Empreendedoras. Análise

[7] Parreira PM, Santos AS, Carvalho C, Mónico LS. Empreendedorismo no ensino superior: Estudo psicométrico da escala Oportunidades e Recursos para Empreender. Revista Psicologia: Organizações e Trabalho. 2017;**17**(4):1-11. DOI: 10.17652/rpot/2017.4.13736

and Alexandra Cristina Riscado da Silva<sup>2</sup>

\*,

sequently, lead to a higher perceived self-efficacy.

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\*Address all correspondence to: lisete.monico@fpce.uc.pt

1 Nursing School of Coimbra, Coimbra, Portugal

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2 University of Coimbra, Coimbra, Portugal

Pedro Miguel Dinis Santos Parreira1

Carla Maria Santos de Carvalho2

de Coimbra; 2015

Psicológica

**Author details**

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**Chapter 18**

**Provisional chapter**

**Higher Education, Entrepreneurship and Learning by**

**Practice: Collaborative Work from the Stakeholders'** 

**Higher Education, Entrepreneurship and Learning by** 

DOI: 10.5772/intechopen.70539

**Practice: Collaborative Work from the Stakeholders'**

The involvement of different stakeholders has created a positive dynamics in the context of higher education, on the one hand by the reinforcement of entrepreneurship linked to innovation, the transference of technology, and the creation of companies and on the other hand by offering extracurricular activities in the formal curricular plans involving different academic stakeholders. Although there are countless initiatives and entrepreneurship programmes, in Portugal there are no (or, at least, no known) studies that analyse the non-formal and informal apprenticeships conceived and implemented by the stakeholders in order to clarify the potential development of entrepreneurial competences. Our results gathered from the research project: "Entrepreneurial learnings, cooperation and labour market: good practices in higher education (POAT-FSE)" show which are the main stakeholders or interface institutions between the university and the surrounding community in the process of technological and knowledge transfer. Our analysis proceeds to a report of the profiles, fields of work, advantages and factors of marked obstacles. By highlighting the contributions of these results, used for the innovation and revitalisation of the partnership networks in the field of science, technology and knowledge transfer, we intend to anchor the discussion about the relevance of the

> © 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution,

© 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

and reproduction in any medium, provided the original work is properly cited.

The involvement of different stakeholders has created a positive dynamics in the context of higher education [1–3] at two main levels. The first level can be seen in the reinforcement

**Keywords:** Portugal, higher education, entrepreneurship, stakeholder, non-formal learning

**Point of View**

**Point of View**

Ana Paula Marques

**Abstract**

**1. Introduction**

Ana Paula Marques

Additional information is available at the end of the chapter

stakeholders in European Higher Education governance.

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.70539


**Provisional chapter**

### **Higher Education, Entrepreneurship and Learning by Practice: Collaborative Work from the Stakeholders' Point of View Practice: Collaborative Work from the Stakeholders' Point of View**

**Higher Education, Entrepreneurship and Learning by** 

DOI: 10.5772/intechopen.70539

Ana Paula Marques Additional information is available at the end of the chapter

Ana Paula Marques

[57] Bentler P. Quantitative methods in psychology: Comparative fit indexes in structural

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Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.70539

#### **Abstract**

The involvement of different stakeholders has created a positive dynamics in the context of higher education, on the one hand by the reinforcement of entrepreneurship linked to innovation, the transference of technology, and the creation of companies and on the other hand by offering extracurricular activities in the formal curricular plans involving different academic stakeholders. Although there are countless initiatives and entrepreneurship programmes, in Portugal there are no (or, at least, no known) studies that analyse the non-formal and informal apprenticeships conceived and implemented by the stakeholders in order to clarify the potential development of entrepreneurial competences. Our results gathered from the research project: "Entrepreneurial learnings, cooperation and labour market: good practices in higher education (POAT-FSE)" show which are the main stakeholders or interface institutions between the university and the surrounding community in the process of technological and knowledge transfer. Our analysis proceeds to a report of the profiles, fields of work, advantages and factors of marked obstacles. By highlighting the contributions of these results, used for the innovation and revitalisation of the partnership networks in the field of science, technology and knowledge transfer, we intend to anchor the discussion about the relevance of the stakeholders in European Higher Education governance.

**Keywords:** Portugal, higher education, entrepreneurship, stakeholder, non-formal learning

### **1. Introduction**

The involvement of different stakeholders has created a positive dynamics in the context of higher education [1–3] at two main levels. The first level can be seen in the reinforcement

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons

of entrepreneurship linked to innovation, the transference of technology and the creation of companies. This direct stimulus has substantiated in the constitution of new academic structures and interfaces in the entrepreneurship/employment area; a second one, which results from this momentum is reflected in an increasing offer of extracurricular activities in the formal curricular plans on the one hand and on the increase of aids and measures that enable skills arising from the practical experience and of the networks of expertise of different stakeholders on the other hand.

**2. "Third mission", entrepreneurship and stakeholders**

Over the last few years, Higher Education Institutions (HEI) perform an essential task in contemporary societies, since they create strategies to face citizens' challenges and expectations. In order to improve the quality of higher education, institutions look for answers in three directions or missions: (i) teach and educate, (ii) research and innovate and (iii) transfer knowledge and serve the community. This last dimension, called "third mission", encompasses knowledge management and the cooperation with different community entities, besides questioning the place the HEI occupy in the development of societies. With the growing internationalisation of the HEI, we witness the promotion of cooperation and critical dialogue among several partners and/or stakeholders. This dynamics presupposes a particular focus on the field of entrepreneurship, reinforced in the Europa 2020 framework, in which universities and R&D centres are summoned to participate more actively in consortium networks and multidisciplinary teams, contributing to increase the competitive advantages of each country and region.

Higher Education, Entrepreneurship and Learning by Practice: Collaborative Work…

http://dx.doi.org/10.5772/intechopen.70539

353

This enhancement of the "third mission" presupposes a "new" focus, not only on the research and development areas, but mainly on the models of governance, autonomy and flexibility models of these institutions through the presence of "external entities", namely of stakeholders defined as "third parties that act between the two main partners – the academic community and the interests of society" [7, 16]. Likewise, Freeman [8, 46] defines stakeholder as "any group or individual that may affect or be affected by the organisational goals." In this case, the concept widens to include any internal or external group, which may simultaneously influence and be influenced by the decisions of the organisation. Moreover, in the context of growing interdependence, it is no longer expectable that the HEI are single actors, since they interact with industry, community and government, thus being a part of national and/or regional systems of innovation, constituting in the critical component of the "triple helix" principle" [9].

It is true that no consensus has yet been reached in literature, regarding the roles and senses assigned to these "third parties", mainly because they referred to the trend towards the mer-

Notwithstanding the existing controversies in literature on this subject, both the national governments and the local public universities have aimed to offer a wide array of programmes that envisage promoting entrepreneurship at different levels: financial aid, technical support and specific formatting and qualification programmes geared towards the creation of own business/self-employment. Through diverse empirical evidences [9], many of the HEI have been adopting an enterprising and entrepreneurial attitude, creating goals for the establishment and commercialisation of knowledge and intellectual property. According to the authors, the entrepreneurial activities developed by the HEI promote the regional and national development and enhance, specifically, the performance of the institution itself and of its academic staff.

In a more specific way, it is important to have entities and experiences that promote the creation and maintenance of an ecosystem among the different stakeholders involved in the HEI. This presupposes diversified strategies to foster the entrepreneurial culture/spirit,

chandising of scientific knowledge or the corporatisation of university [10, 7].

In this context, one of the main aspects of privileged action higher education level is geared towards the promotion of a "culture" of entrepreneurship among the students and the graduates, which contemplates the "ability to identify opportunities in the marketplace and to create new businesses", but also "the attitudes and behaviours associated with creativity, innovation and risk" [4–6] Although there are countless initiatives and entrepreneurship programmes, in Portugal there are no (or, at least, no known) studies that analyse the non-formal and informal apprenticeships conceived and implemented by the stakeholders in order to clarify the development potential of the entrepreneurial competences. The non-formal and informal apprenticeships embrace, on the one hand, a wide array of initiatives that enable the personal and professional development of students/graduates (e.g., participation in internships or professional experiences, extracurricular activities, youth associations, mobility programmes, organisation of events, volunteering); and conversely, actions and initiatives, which are more guided towards the creation of graduates' own businesses/self-employment (e.g., specific training and modules or courses), as well as mentoring and follow-up activities set up in order to implement projects (e.g., incubation, tutorials, specialised technical consulting).

Bearing in mind these suppositions, we will use the main results of the research project: "Entrepreneurial learnings, cooperation and labour market: good practices in higher education (POAT-FSE)", which aimed to identify fundamental entrepreneurship programmes and support existing infrastructures and their capacity to generate relevant entrepreneurial competences for the labour market; in addition, our goal is to analyse critically the collaborative dynamics of the different stakeholders and their engagement in the initiatives and entrepreneurship programmes.

In this chapter, we focus on the contributions of these stakeholders or interface institutions between the university and the surrounding community in the process of technology and knowledge transfer. We will begin by discussing both "third mission" and the relevance of the stakeholders in European Higher Education governance. Next, the goals and the research design that sustained this study will be presented. Our analysis will then proceed to display a report of the profiles, fields of work, advantages and factors of marked obstacles. We will conclude with a review and assessment provided to the set of initiatives implemented in the period between 2007 and 2013. By highlighting the contributions of these results, used for the innovation and revitalisation of the partnership networks in the field of science, technology and knowledge transfer, we intend to anchor the discussion about the relevance of the stakeholders in European Higher Education governance [7].

### **2. "Third mission", entrepreneurship and stakeholders**

of entrepreneurship linked to innovation, the transference of technology and the creation of companies. This direct stimulus has substantiated in the constitution of new academic structures and interfaces in the entrepreneurship/employment area; a second one, which results from this momentum is reflected in an increasing offer of extracurricular activities in the formal curricular plans on the one hand and on the increase of aids and measures that enable skills arising from the practical experience and of the networks of expertise of different stake-

In this context, one of the main aspects of privileged action higher education level is geared towards the promotion of a "culture" of entrepreneurship among the students and the graduates, which contemplates the "ability to identify opportunities in the marketplace and to create new businesses", but also "the attitudes and behaviours associated with creativity, innovation and risk" [4–6] Although there are countless initiatives and entrepreneurship programmes, in Portugal there are no (or, at least, no known) studies that analyse the non-formal and informal apprenticeships conceived and implemented by the stakeholders in order to clarify the development potential of the entrepreneurial competences. The non-formal and informal apprenticeships embrace, on the one hand, a wide array of initiatives that enable the personal and professional development of students/graduates (e.g., participation in internships or professional experiences, extracurricular activities, youth associations, mobility programmes, organisation of events, volunteering); and conversely, actions and initiatives, which are more guided towards the creation of graduates' own businesses/self-employment (e.g., specific training and modules or courses), as well as mentoring and follow-up activities set up in order to implement projects (e.g., incubation, tutorials, specialised technical

Bearing in mind these suppositions, we will use the main results of the research project: "Entrepreneurial learnings, cooperation and labour market: good practices in higher education (POAT-FSE)", which aimed to identify fundamental entrepreneurship programmes and support existing infrastructures and their capacity to generate relevant entrepreneurial competences for the labour market; in addition, our goal is to analyse critically the collaborative dynamics of the different stakeholders and their engagement in the initiatives and entrepre-

In this chapter, we focus on the contributions of these stakeholders or interface institutions between the university and the surrounding community in the process of technology and knowledge transfer. We will begin by discussing both "third mission" and the relevance of the stakeholders in European Higher Education governance. Next, the goals and the research design that sustained this study will be presented. Our analysis will then proceed to display a report of the profiles, fields of work, advantages and factors of marked obstacles. We will conclude with a review and assessment provided to the set of initiatives implemented in the period between 2007 and 2013. By highlighting the contributions of these results, used for the innovation and revitalisation of the partnership networks in the field of science, technology and knowledge transfer, we intend to anchor the discussion about the relevance of the stake-

holders on the other hand.

352 Entrepreneurship - Development Tendencies and Empirical Approach

consulting).

neurship programmes.

holders in European Higher Education governance [7].

Over the last few years, Higher Education Institutions (HEI) perform an essential task in contemporary societies, since they create strategies to face citizens' challenges and expectations. In order to improve the quality of higher education, institutions look for answers in three directions or missions: (i) teach and educate, (ii) research and innovate and (iii) transfer knowledge and serve the community. This last dimension, called "third mission", encompasses knowledge management and the cooperation with different community entities, besides questioning the place the HEI occupy in the development of societies. With the growing internationalisation of the HEI, we witness the promotion of cooperation and critical dialogue among several partners and/or stakeholders. This dynamics presupposes a particular focus on the field of entrepreneurship, reinforced in the Europa 2020 framework, in which universities and R&D centres are summoned to participate more actively in consortium networks and multidisciplinary teams, contributing to increase the competitive advantages of each country and region.

This enhancement of the "third mission" presupposes a "new" focus, not only on the research and development areas, but mainly on the models of governance, autonomy and flexibility models of these institutions through the presence of "external entities", namely of stakeholders defined as "third parties that act between the two main partners – the academic community and the interests of society" [7, 16]. Likewise, Freeman [8, 46] defines stakeholder as "any group or individual that may affect or be affected by the organisational goals." In this case, the concept widens to include any internal or external group, which may simultaneously influence and be influenced by the decisions of the organisation. Moreover, in the context of growing interdependence, it is no longer expectable that the HEI are single actors, since they interact with industry, community and government, thus being a part of national and/or regional systems of innovation, constituting in the critical component of the "triple helix" principle" [9].

It is true that no consensus has yet been reached in literature, regarding the roles and senses assigned to these "third parties", mainly because they referred to the trend towards the merchandising of scientific knowledge or the corporatisation of university [10, 7].

Notwithstanding the existing controversies in literature on this subject, both the national governments and the local public universities have aimed to offer a wide array of programmes that envisage promoting entrepreneurship at different levels: financial aid, technical support and specific formatting and qualification programmes geared towards the creation of own business/self-employment. Through diverse empirical evidences [9], many of the HEI have been adopting an enterprising and entrepreneurial attitude, creating goals for the establishment and commercialisation of knowledge and intellectual property. According to the authors, the entrepreneurial activities developed by the HEI promote the regional and national development and enhance, specifically, the performance of the institution itself and of its academic staff.

In a more specific way, it is important to have entities and experiences that promote the creation and maintenance of an ecosystem among the different stakeholders involved in the HEI. This presupposes diversified strategies to foster the entrepreneurial culture/spirit, namely: (i) curricular units present in the formal academic courses and trainings, (ii) programmes of extracurricular activities at the regional, national and international levels, which involve several stakeholders and aim to improve the corporate culture and (iii) structures that support entrepreneurial initiatives with the goal of transferring knowledge to the market and to promote the local/national development.

infrastructures in the Higher Education Institutions (HEI) and (ii) contribute to the understanding of the collaborative dynamics of the different key actors and stakeholders, with the purpose of knowing the main constraint factors and potentialities of inter-organisational

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The non-formal and informal initiatives and programmes that, in parallel with the formal learning projects, take place in the context of higher education, are relatively unknown, such as innovation and knowledge and technology transfer centres, business incubators, integration/entrepreneurship offices and intellectual property offices. These learning tend to report to a set of initiatives that enable the personal and professional development of the students/ graduates through the participation in internships or professional experiences, extracurricular activities, youth associations, mobility programmes, event organisation, volunteering, among others; and, on the other hand, actions and initiatives, which are more directed towards the setting up of their own business/self-employment, namely specific training and training courses or modules. Besides these activities, others are included such as mentoring and monitoring for project implementation, in particular, incubation, tutorials and technical-specialised consultancy. Above all, we are not aware of the importance of the latter as regards their impact in the qualification of the graduates and the development potential of their entrepreneurial competences that may make a difference in the daily life of the youths. Still, we do not know the importance of these stakeholders among graduates when these opt to build, alternatively, a professional career set on a relationship of hierarchical and organisational autonomy to set up their own business. Regardless of the controversies and contentious issues associated with the distinctions between formal, non-formal and informal learnings, it is important to analyse the latter and better understand the role of the stakeholders in their

In that sense, the current study pursued more specific goals anchored in three key axes: (1) it aimed at accomplishing a comprehensive mapping of the main experiences of non-formal and informal entrepreneurial learnings developed in public higher education in Portugal (2007– 2013) directed towards the promotion of employability and/or entrepreneurship, (2) identifying a set of "good practices" in higher education, that is, projects/initiatives of promotion of non-formal and informal entrepreneurship learnings and (3) and proposing a repertoire of cross-sectional and entrepreneurial competences, from the perspective of the stakeholders

In terms of research design, this was focused on the triangulation of sources, observational plans and research instruments and with the presentation of three distinct stages, namely: stage 1—application of an online survey to 41 stakeholders from a universe of 57, which enabled the collection of detailed and consistent information about the profiles of these stakeholders that belong to the Portuguese public higher education system. Subsequently, we proceeded to the drafting of the survey via an online survey, taking into account the goals ranked in the stage of the study design. In this respect, the online survey tried to obtain information and data on the following points: (i) characterisation of the stakeholders and their operating

collaboration.

revitalisation [6].

involved in the study.

**3.2. Research design**

Also, Pinho and Sá [11] corroborate these strategies and consider that entrepreneurship has been considered as one of the key factors in increasing employment, growth and competitiveness by the countries of the European Union. The connection between education and entrepreneurship takes on particular prominence, especially the relation that is directed towards the discussion of pedagogical strategies of experiential learning, with the direct involvement of different academic stakeholders. Research related to this subject is vast [1, 12–15]. These studies comprise a substantial body of research on topics such as pedagogy in the curriculum, mapping of educational offer in entrepreneurship and extracurricular activities.

This redefinition of the role of the HEI does not only arise from the needs of internal evolution, but also from external influences, namely financial constraints (continuous cuts in the transfers of the state budgets to the HEI), significant socio-economic mutations and the reassertion of the society based on knowledge [16–19]. Particularly visible are the demands related with the integrated quality systems and accountability (production of relevant indicators for the public exercise of provision of accounts), and more recently, the positioning of the HEI in the international rankings.

These governance, transparency and social responsibility demands on the part of the HEI are mutually reinforcing because we recognise that the HEI have a public mission: that is, they produce services with benefits for a broader society and for that reason, at least partially, they are financed by the State. The importance of building trust and being socially responsible is particularly relevant in the context of commodification, deregulation and decentralisation. In this new era, it does not suffice to show excellence in the traditional sense. On the contrary, the demand for this excellence has been complemented—in many cases overlapped—by its relevance, that is, universities have proved that they have contributed to the society of knowledge. This implies that in the same way that companies aim to develop the surrounding environment economic and socially, the HEI have to be intervening agents in the resolution of important problems that society faces, problems which require several types of innovation: social, economic and cultural.

### **3. Methodology**

#### **3.1. Project Link.EES**

Link.EES is the acronym for the project "Entrepreneurial learnings, cooperation and labour market: good practices in higher education (POAT-FSE)", which has been structured on the basis of a dual approach: (i) identify and analyse the entrepreneurial non-formal and informal learnings within the scope of entrepreneurship programmes and existing support infrastructures in the Higher Education Institutions (HEI) and (ii) contribute to the understanding of the collaborative dynamics of the different key actors and stakeholders, with the purpose of knowing the main constraint factors and potentialities of inter-organisational collaboration.

The non-formal and informal initiatives and programmes that, in parallel with the formal learning projects, take place in the context of higher education, are relatively unknown, such as innovation and knowledge and technology transfer centres, business incubators, integration/entrepreneurship offices and intellectual property offices. These learning tend to report to a set of initiatives that enable the personal and professional development of the students/ graduates through the participation in internships or professional experiences, extracurricular activities, youth associations, mobility programmes, event organisation, volunteering, among others; and, on the other hand, actions and initiatives, which are more directed towards the setting up of their own business/self-employment, namely specific training and training courses or modules. Besides these activities, others are included such as mentoring and monitoring for project implementation, in particular, incubation, tutorials and technical-specialised consultancy. Above all, we are not aware of the importance of the latter as regards their impact in the qualification of the graduates and the development potential of their entrepreneurial competences that may make a difference in the daily life of the youths. Still, we do not know the importance of these stakeholders among graduates when these opt to build, alternatively, a professional career set on a relationship of hierarchical and organisational autonomy to set up their own business. Regardless of the controversies and contentious issues associated with the distinctions between formal, non-formal and informal learnings, it is important to analyse the latter and better understand the role of the stakeholders in their revitalisation [6].

In that sense, the current study pursued more specific goals anchored in three key axes: (1) it aimed at accomplishing a comprehensive mapping of the main experiences of non-formal and informal entrepreneurial learnings developed in public higher education in Portugal (2007– 2013) directed towards the promotion of employability and/or entrepreneurship, (2) identifying a set of "good practices" in higher education, that is, projects/initiatives of promotion of non-formal and informal entrepreneurship learnings and (3) and proposing a repertoire of cross-sectional and entrepreneurial competences, from the perspective of the stakeholders involved in the study.

#### **3.2. Research design**

namely: (i) curricular units present in the formal academic courses and trainings, (ii) programmes of extracurricular activities at the regional, national and international levels, which involve several stakeholders and aim to improve the corporate culture and (iii) structures that support entrepreneurial initiatives with the goal of transferring knowledge to the market and

Also, Pinho and Sá [11] corroborate these strategies and consider that entrepreneurship has been considered as one of the key factors in increasing employment, growth and competitiveness by the countries of the European Union. The connection between education and entrepreneurship takes on particular prominence, especially the relation that is directed towards the discussion of pedagogical strategies of experiential learning, with the direct involvement of different academic stakeholders. Research related to this subject is vast [1, 12–15]. These studies comprise a substantial body of research on topics such as pedagogy in the curriculum,

This redefinition of the role of the HEI does not only arise from the needs of internal evolution, but also from external influences, namely financial constraints (continuous cuts in the transfers of the state budgets to the HEI), significant socio-economic mutations and the reassertion of the society based on knowledge [16–19]. Particularly visible are the demands related with the integrated quality systems and accountability (production of relevant indicators for the public exercise of provision of accounts), and more recently, the positioning of the

These governance, transparency and social responsibility demands on the part of the HEI are mutually reinforcing because we recognise that the HEI have a public mission: that is, they produce services with benefits for a broader society and for that reason, at least partially, they are financed by the State. The importance of building trust and being socially responsible is particularly relevant in the context of commodification, deregulation and decentralisation. In this new era, it does not suffice to show excellence in the traditional sense. On the contrary, the demand for this excellence has been complemented—in many cases overlapped—by its relevance, that is, universities have proved that they have contributed to the society of knowledge. This implies that in the same way that companies aim to develop the surrounding environment economic and socially, the HEI have to be intervening agents in the resolution of important problems that society faces, problems which require several types of innovation:

Link.EES is the acronym for the project "Entrepreneurial learnings, cooperation and labour market: good practices in higher education (POAT-FSE)", which has been structured on the basis of a dual approach: (i) identify and analyse the entrepreneurial non-formal and informal learnings within the scope of entrepreneurship programmes and existing support

mapping of educational offer in entrepreneurship and extracurricular activities.

to promote the local/national development.

354 Entrepreneurship - Development Tendencies and Empirical Approach

HEI in the international rankings.

social, economic and cultural.

**3. Methodology**

**3.1. Project Link.EES**

In terms of research design, this was focused on the triangulation of sources, observational plans and research instruments and with the presentation of three distinct stages, namely: stage 1—application of an online survey to 41 stakeholders from a universe of 57, which enabled the collection of detailed and consistent information about the profiles of these stakeholders that belong to the Portuguese public higher education system. Subsequently, we proceeded to the drafting of the survey via an online survey, taking into account the goals ranked in the stage of the study design. In this respect, the online survey tried to obtain information and data on the following points: (i) characterisation of the stakeholders and their operating modalities (designation, legal status, scope of action, number of collaborators); (ii) forms of inter-organisational collaboration and work networks/partnerships; (iii) entrepreneurial initiatives developed by each entity in the period between 2007 and 2013 and overall balance of the aforementioned initiatives; (iv) cross-sectional competences that facilitate the process of work integration and the creation of own employment/self-employment; and (v) opinion of the survey respondents concerning general aspects of entrepreneurship in higher education .

autonomy (12.2%) in terms of performance and operating mode when compared to the HEI to which they are affiliated. This more restricted organisational autonomy is in line with the high degree of commitment of these entities in the development of their activities regarding the mission of the university/polytechnic where they are based and 70.7% referred to that degree

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It is important to consider the diversity of the services rendered and it matters even to consider their diversity. In effect, these stakeholders reveal they make the following services available: information about aids, programmes and initiatives; training activities in entrepreneurship (courses, workshops, e-learning); support at the stage of submitting applications to projects and preparation/drafting of business plans; accomplishment of information and awareness-building sessions (seminars and conferences), mentoring/monitoring of projects or business ideas and the organisation of idea contests of business plans. To a lesser extent, on balance in these services we should refer to the technical consultancy, specialisation in management of companies and the participation in academic training, in the formal component of the curricular plan. Lastly, the results also reveal that the geographic scope with major relevance among these key actors is the local or regional (42%), followed by the national one (32%). The international dimension assumes a minor relevance in the operational area framework of these entities,

In the current context of growing uncertainty and competiveness, it matters that the different stakeholders and entities involved in the initiatives and projects of non-formal and informal learnings find new and better ways of getting organised, since the revitalisation of interorganisational networks as one of the most relevant modalities in this area of intervention. In this case, the relation of cooperation established with other entities inside and outside the

Effectively, the majority of the respondents establish collaborative dynamics with other institutions/organic units of higher education, with business/commercial/industrial associations and with public entities of entrepreneurial promotion, as well as with businessmen agents.

The main advantages perceived by the actors of these collaborative dynamics are related to the access to a broader and diversified volume of information, to a greater projection/dissemination of the activities developed by the entities, the confirmation of knowledge of new practices and work methods and with the enhancement of resources available. Despite the acknowledgement of the existence of benefits deriving from the established collaborative dynamics, it was equally possible to detect the occurrence of difficulties and obstacles in the range of the cooperation activities. Effectively, 48.8% of the respondent academic stakeholders stated they faced difficulties in the framework of the cooperation activities developed, namely: communication problems, management of industrial property, peer competition, different work methodologies, different financial resources, different organisational models (time management, timetables, scheduling of the activities, objectives and mission of the entities, administrative and bureaucratic procedures) and other cultural differences, as is the case

of commitment as being total.

gathering 26% of the answers.

academic scope should be noted.

of international scope partnerships.

**4.2. Networks and partnership advantages**

In stage 2, 12 case studies were accomplished from a selection of entities/initiatives considered paradigmatic in the promotion of entrepreneurial apprenticeships with a non-formal and informal nature and accomplishment of in-depth interviews to the respective key-actors. Finally, in the stage 3, a report of entrepreneurial skills was elaborated and subsequently submitted to validation with the key actors, mobilising the Delphi technique with the achievement of two rounds among the key actors involved in stage 1.

### **4. Academic stakeholders, employability and entrepreneurship**

#### **4.1. Profile of the academic stakeholders**

The 41 stakeholders that participated in this national study—representing 72% of the target universe of entities was previously selected by us—take up functions that have direct responsibility in the programmes or existing infrastructures in public higher education (university and polytechnic), located preferably in the regions of Lisbon (22), North (17) and Centre (13). Such geographic distribution coincides with the greater population concentration, location of HEI and business revitalisation. In terms of legal status and self-denomination, more than half state assume the regime of organic unit or sub-unit of higher education university/polytechnic (51.2%), followed by non-profit private law associations (31.7%). Regarding the ways, the actors designate themselves, it was possible to conclude that nearly half define themselves as an interface/transfer unit of S&T (Science and Technology) (24.4%) and the centre/innovation office and/or entrepreneurship (24.4%). On the contrary, only a minority defines itself as an incubator of companies, or as an office of professional integration, both with residual values of 2.4%. These results allow us immediately to reinforce the idea, on the one hand, about the greater visibility of the activities of knowledge transfer with a technological basis and the identification of "patterns" supported in the rapport between university-industry, and on the other hand, a minor visibility of the transition activities.

These entities are mainly small scale ones, in other words, micro-organisations, 73.2% of which are constituted by up to nine workers and were created in the first decade of the twenty-first century. The entities that emerged in the 1980s are only residual (4.9%), which allows us to reinforce the argument about the importance of public policies in the national framework and above all European, related with the initiatives of knowledge transfer, entrepreneurship and employability of both students and graduates.

When questioned about the operating mode and the performance of the HEI to which they are linked, the respondents evaluate their degree of autonomy with the university or polytechnic as being predominantly partial (56.1%). Even so, 31.7% state that they have little (19.5%), or no autonomy (12.2%) in terms of performance and operating mode when compared to the HEI to which they are affiliated. This more restricted organisational autonomy is in line with the high degree of commitment of these entities in the development of their activities regarding the mission of the university/polytechnic where they are based and 70.7% referred to that degree of commitment as being total.

It is important to consider the diversity of the services rendered and it matters even to consider their diversity. In effect, these stakeholders reveal they make the following services available: information about aids, programmes and initiatives; training activities in entrepreneurship (courses, workshops, e-learning); support at the stage of submitting applications to projects and preparation/drafting of business plans; accomplishment of information and awareness-building sessions (seminars and conferences), mentoring/monitoring of projects or business ideas and the organisation of idea contests of business plans. To a lesser extent, on balance in these services we should refer to the technical consultancy, specialisation in management of companies and the participation in academic training, in the formal component of the curricular plan.

Lastly, the results also reveal that the geographic scope with major relevance among these key actors is the local or regional (42%), followed by the national one (32%). The international dimension assumes a minor relevance in the operational area framework of these entities, gathering 26% of the answers.

#### **4.2. Networks and partnership advantages**

modalities (designation, legal status, scope of action, number of collaborators); (ii) forms of inter-organisational collaboration and work networks/partnerships; (iii) entrepreneurial initiatives developed by each entity in the period between 2007 and 2013 and overall balance of the aforementioned initiatives; (iv) cross-sectional competences that facilitate the process of work integration and the creation of own employment/self-employment; and (v) opinion of the survey respondents concerning general aspects of entrepreneurship in higher education . In stage 2, 12 case studies were accomplished from a selection of entities/initiatives considered paradigmatic in the promotion of entrepreneurial apprenticeships with a non-formal and informal nature and accomplishment of in-depth interviews to the respective key-actors. Finally, in the stage 3, a report of entrepreneurial skills was elaborated and subsequently submitted to validation with the key actors, mobilising the Delphi technique with the achieve-

ment of two rounds among the key actors involved in stage 1.

356 Entrepreneurship - Development Tendencies and Empirical Approach

other hand, a minor visibility of the transition activities.

employability of both students and graduates.

**4.1. Profile of the academic stakeholders**

**4. Academic stakeholders, employability and entrepreneurship**

The 41 stakeholders that participated in this national study—representing 72% of the target universe of entities was previously selected by us—take up functions that have direct responsibility in the programmes or existing infrastructures in public higher education (university and polytechnic), located preferably in the regions of Lisbon (22), North (17) and Centre (13). Such geographic distribution coincides with the greater population concentration, location of HEI and business revitalisation. In terms of legal status and self-denomination, more than half state assume the regime of organic unit or sub-unit of higher education university/polytechnic (51.2%), followed by non-profit private law associations (31.7%). Regarding the ways, the actors designate themselves, it was possible to conclude that nearly half define themselves as an interface/transfer unit of S&T (Science and Technology) (24.4%) and the centre/innovation office and/or entrepreneurship (24.4%). On the contrary, only a minority defines itself as an incubator of companies, or as an office of professional integration, both with residual values of 2.4%. These results allow us immediately to reinforce the idea, on the one hand, about the greater visibility of the activities of knowledge transfer with a technological basis and the identification of "patterns" supported in the rapport between university-industry, and on the

These entities are mainly small scale ones, in other words, micro-organisations, 73.2% of which are constituted by up to nine workers and were created in the first decade of the twenty-first century. The entities that emerged in the 1980s are only residual (4.9%), which allows us to reinforce the argument about the importance of public policies in the national framework and above all European, related with the initiatives of knowledge transfer, entrepreneurship and

When questioned about the operating mode and the performance of the HEI to which they are linked, the respondents evaluate their degree of autonomy with the university or polytechnic as being predominantly partial (56.1%). Even so, 31.7% state that they have little (19.5%), or no In the current context of growing uncertainty and competiveness, it matters that the different stakeholders and entities involved in the initiatives and projects of non-formal and informal learnings find new and better ways of getting organised, since the revitalisation of interorganisational networks as one of the most relevant modalities in this area of intervention. In this case, the relation of cooperation established with other entities inside and outside the academic scope should be noted.

Effectively, the majority of the respondents establish collaborative dynamics with other institutions/organic units of higher education, with business/commercial/industrial associations and with public entities of entrepreneurial promotion, as well as with businessmen agents.

The main advantages perceived by the actors of these collaborative dynamics are related to the access to a broader and diversified volume of information, to a greater projection/dissemination of the activities developed by the entities, the confirmation of knowledge of new practices and work methods and with the enhancement of resources available. Despite the acknowledgement of the existence of benefits deriving from the established collaborative dynamics, it was equally possible to detect the occurrence of difficulties and obstacles in the range of the cooperation activities. Effectively, 48.8% of the respondent academic stakeholders stated they faced difficulties in the framework of the cooperation activities developed, namely: communication problems, management of industrial property, peer competition, different work methodologies, different financial resources, different organisational models (time management, timetables, scheduling of the activities, objectives and mission of the entities, administrative and bureaucratic procedures) and other cultural differences, as is the case of international scope partnerships.

#### **4.3. Balance and assessment of the accomplished initiatives**

First and foremost, we would like to highlight the non-linearity in the performance of the stakeholders, by taking into account the three sequential stages of the process of entrepreneurial learning. Moreover, we can confirm the difficulty in distinguishing the different entities through the operating focus, which is why it is expectable that there should be some overlapping in the collaboration or network in the scope of higher education. As one can observe from **Table 1**, the entities are positioned in the three stages of the learning process, namely: (i) awareness, (ii) training, (iii) mentoring and follow-up. Nonetheless, it was possible to observe a higher concentration of answers in activities such as (i) organisation of clarification sessions and awareness devoted to the topic of entrepreneurship (92.7%), (ii) organisation of training sessions in entrepreneurship (e.g., courses, workshops, e-learning) (87.8%) and (iii) promotion and/or participation in the organisation of idea contests (85.4%). In other words, a large part of these entities focuses their activity on the awareness and training stage and a smaller percentage focuses exclusively on the activities related to mentoring and monitoring. Effectively, this observation does not create perplexity since the activities framed in this last stage demand a greater organisational and financial complexity and complexity of services rendered that these entities still do not hold, partly due to their reduced seniority.

As for the training area of the participants, we noticed a clear predominance of participants whose training areas are engineering, information technology and similar technical areas (30.5%) and also economics and entrepreneurial sciences (19.0%). In other words, we are witnessing training areas that are apparently more aware about the issue of entrepreneurship

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Regarding organisational issues related with the initiatives, overall, the respondent entities consider the resources mobilised (human, financial, logistic/material, of the infrastructures and of the means of dissemination/promotion) as "adequate" or "very adequate". Even so, it was possible to detect a less favourable evaluation with regard to the adequacy of the financial resources and of the means of dissemination. Stipulating the area of the financial resources, the main sources of funding of the initiatives developed referred are their own revenues (32.9%) and the patronage or the sponsorship of private entities (22.0%). Only 7.3% of the respondent entities mentioned as main source of funding, the "transfer of funds from

The critical aspects identified in their activity report to aspects such as: (i) the management of large teams, (ii) the coordination of timings and agendas in the scope of the partnerships and collaborations with other entities, (iii) the lack of motivation of the students and of the academic staff towards the topic of entrepreneurship, (iv) the low adhesion of the students to the extracurricular activities (partly due to the already high hourly load of the students), (v) the difficulty in mobilising/involving other entities, (vi) the difficulty in the promotion of the activities, (vii) the scarcity of resources, namely human, financial and material, (viii) the complexity of the financing processes associated with the revitalisation of the initiatives, as

In broad terms, the perceived assessment of the impact of the initiatives developed with greater importance derive from the stimulus of the creative capacity and entrepreneurial spirit (51.2%), of the development of entrepreneurial competences (48.8%) and of the increase of the information about supports to entrepreneurship and funding (46.3%). On the contrary, they consider that there is a minor impact in aspects such as: (i) the emergency of entrepreneurship with a social nature/third sector (56.1%), (ii) the revitalisation of the R&D activities

Entrepreneurial education challenges universities to draw new collaborative training strategies focused on the students, involving the whole academic community and diversified stakeholders in the learning process. This perspective is anchored on the concepts of "Apprenticeship Society" and "Lifelong Education Learning", wagering on the complementarity between for-

It is in this broader framework that we intended to understand the importance of entrepreneurial learnings via the intervention of the stakeholders and reflect upon the importance that

well as (ix) the existence of some resistance towards the issue of entrepreneurship.

(36.6%) and (iii) the creation of networks to support entrepreneurship (19.5%).

and which are traditionally associated with more "entrepreneurially-prone" areas.

the Higher Education Institution" they are linked to.

**5. Final remarks**

mal, non-formal and informal learnings.

From the assessment of the profile of the participants in these initiatives, we mainly highlight the participation of students, graduates and academic staff, the elements who are directly linked to the HEI. We observe that there is a reduced expression of participants outside the academic community, in particular, those that are framed in the "professional" category. However, even if this larger presence of these elements is obvious, the assessment that the stakeholders make of their participation is moderate, since 58.5% recognise a partial adhesion and 19.5% point to "low" involvement in the stimulated initiatives. This moderate evaluation may point out that there is the need to invest in this domain, in a way to boost the levels of participation of the individuals involved in these initiatives.


**Table 1.** Initiatives to promote entrepreneurship/employability (2007–2013).

As for the training area of the participants, we noticed a clear predominance of participants whose training areas are engineering, information technology and similar technical areas (30.5%) and also economics and entrepreneurial sciences (19.0%). In other words, we are witnessing training areas that are apparently more aware about the issue of entrepreneurship and which are traditionally associated with more "entrepreneurially-prone" areas.

Regarding organisational issues related with the initiatives, overall, the respondent entities consider the resources mobilised (human, financial, logistic/material, of the infrastructures and of the means of dissemination/promotion) as "adequate" or "very adequate". Even so, it was possible to detect a less favourable evaluation with regard to the adequacy of the financial resources and of the means of dissemination. Stipulating the area of the financial resources, the main sources of funding of the initiatives developed referred are their own revenues (32.9%) and the patronage or the sponsorship of private entities (22.0%). Only 7.3% of the respondent entities mentioned as main source of funding, the "transfer of funds from the Higher Education Institution" they are linked to.

The critical aspects identified in their activity report to aspects such as: (i) the management of large teams, (ii) the coordination of timings and agendas in the scope of the partnerships and collaborations with other entities, (iii) the lack of motivation of the students and of the academic staff towards the topic of entrepreneurship, (iv) the low adhesion of the students to the extracurricular activities (partly due to the already high hourly load of the students), (v) the difficulty in mobilising/involving other entities, (vi) the difficulty in the promotion of the activities, (vii) the scarcity of resources, namely human, financial and material, (viii) the complexity of the financing processes associated with the revitalisation of the initiatives, as well as (ix) the existence of some resistance towards the issue of entrepreneurship.

In broad terms, the perceived assessment of the impact of the initiatives developed with greater importance derive from the stimulus of the creative capacity and entrepreneurial spirit (51.2%), of the development of entrepreneurial competences (48.8%) and of the increase of the information about supports to entrepreneurship and funding (46.3%). On the contrary, they consider that there is a minor impact in aspects such as: (i) the emergency of entrepreneurship with a social nature/third sector (56.1%), (ii) the revitalisation of the R&D activities (36.6%) and (iii) the creation of networks to support entrepreneurship (19.5%).

### **5. Final remarks**

**4.3. Balance and assessment of the accomplished initiatives**

358 Entrepreneurship - Development Tendencies and Empirical Approach

participation of the individuals involved in these initiatives.

of entrepreneurship

workshops, e-learning)

projects/business ideas

rights

**Table 1.** Initiatives to promote entrepreneurship/employability (2007–2013).

First and foremost, we would like to highlight the non-linearity in the performance of the stakeholders, by taking into account the three sequential stages of the process of entrepreneurial learning. Moreover, we can confirm the difficulty in distinguishing the different entities through the operating focus, which is why it is expectable that there should be some overlapping in the collaboration or network in the scope of higher education. As one can observe from **Table 1**, the entities are positioned in the three stages of the learning process, namely: (i) awareness, (ii) training, (iii) mentoring and follow-up. Nonetheless, it was possible to observe a higher concentration of answers in activities such as (i) organisation of clarification sessions and awareness devoted to the topic of entrepreneurship (92.7%), (ii) organisation of training sessions in entrepreneurship (e.g., courses, workshops, e-learning) (87.8%) and (iii) promotion and/or participation in the organisation of idea contests (85.4%). In other words, a large part of these entities focuses their activity on the awareness and training stage and a smaller percentage focuses exclusively on the activities related to mentoring and monitoring. Effectively, this observation does not create perplexity since the activities framed in this last stage demand a greater organisational and financial complexity and complexity of services rendered that these entities still do not hold, partly due to their reduced seniority.

From the assessment of the profile of the participants in these initiatives, we mainly highlight the participation of students, graduates and academic staff, the elements who are directly linked to the HEI. We observe that there is a reduced expression of participants outside the academic community, in particular, those that are framed in the "professional" category. However, even if this larger presence of these elements is obvious, the assessment that the stakeholders make of their participation is moderate, since 58.5% recognise a partial adhesion and 19.5% point to "low" involvement in the stimulated initiatives. This moderate evaluation may point out that there is the need to invest in this domain, in a way to boost the levels of

**Initiatives accomplished in the different acting stages of the stakeholders (%)** Awareness Organisation of clarification sessions and awareness dedicated to the issue

Training Organisation of training sessions on entrepreneurship (e.g., courses,

Mentoring and monitoring Concession of physical spaces for incubation and speeding-up of entrepreneurship ideas/projects

Promotion and/or participation in the organisation of idea contests 85.4 Production of information materials on the topic of entrepreneurship 65.9

Support to patent registration and/or protection of intellectual property

Development of mentoring and monitoring activities of entrepreneurial

92.7

87.8

51.2

53.7

80.5

Entrepreneurial education challenges universities to draw new collaborative training strategies focused on the students, involving the whole academic community and diversified stakeholders in the learning process. This perspective is anchored on the concepts of "Apprenticeship Society" and "Lifelong Education Learning", wagering on the complementarity between formal, non-formal and informal learnings.

It is in this broader framework that we intended to understand the importance of entrepreneurial learnings via the intervention of the stakeholders and reflect upon the importance that these hold in the development of approaches, which are more integrated of their performance in the academic context. The results of the study evince the need to: (i) accomplish territorialised diagnoses about the conditions and usage of support infrastructures to these learnings; (ii) acknowledge the entities bearing a relevant role in the "preparation for work"; (iii) promote greater articulation of the performance of the entities in the different learning stages; (iv) recognise the tension between "informalisation" of the initiatives and the demand for formalisation of the learnings through their integration in the curricular plans and (v) promote the integration of a cross-sectional approach based on gender equality and opportunities in the design of programmes in this area.

[4] EC (European Commission). Entrepreneurship 2020 Action Plan—Reigniting the Entrepreneurial Spirit in Europe. 2012; COM(2012)795. Available from: http://eur-lex.europa.

Higher Education, Entrepreneurship and Learning by Practice: Collaborative Work…

http://dx.doi.org/10.5772/intechopen.70539

361

[5] EC (European Commission). Effects and Impact of Entrepreneurship Programs in

[6] Marques AP.Aprendizagens empreendedoras no Ensino Superior. Redes, Competências

[7] Amaral A, Magalhães A. The emergent role of external role of stakeholders in european higher education governance. In: Amaral A, Jones Glen A, Karseth B, editors. Governing Higher Education: National Perspectives on Institutional Governance. Netherlands:

[8] Freeman ER. Strategic Management: A Stakeholder Approach. Boston: Pitman; 1984

[9] Etzkowitz H, Leydesforff L. The dynamics of innovation: From National Systems and "Mode 2" to a Triple Helix of university–industry–government relations. Research

[10] Jongbloed B, Enders J, Salerno C.Higher education and its communities: Interconnections, interdependencies and a research agenda. Higher Education. 2008;**56**:303-324

[11] Pinho JC, Sá E. Entrepreneurial performance and stakeholders' relationships: A social network analysis perspective. International Journal of Entrepreneurship. 2013;**17**:1-19 [12] Redford D. (Org.) Handbook de Educação em Empreendedorismo no Contexto

[13] Pittaway L, Cope J. Entrepreneurship education—A systematic review of the evidence.

[14] Matlay H, Carey C. Entrepreneurship education in the UK: A longitudinal perspective.

[15] Gorman G, et al. Some research perspectives on entrepreneurship education, enterprise education and education for small business management: A ten-year literature review.

[16] Martins ML. A liberdade académica e os seus inimigos. Comunicação e Sociedade.

[17] Tomlison M. Graduate employability: A review of conceptual ad empirical themes.

[18] Santos BV. A Universidade no século XXI: para uma reforma democrática e emanci-

[19] Teicher U. Higher Education and the World of Work: Conceptural Frameworks, Comparative Perspectives, Empirical Findings. Rotterdan: Sense Publishers; 2009

patória da Universidade. Educação, Sociedade & Cultura. 2005;**23**:137-202

Journal of Small Business and Enterprise Development. 2007;**14**(2):252-263

eu/LexUriServ/LexUriServ.do?uri=COM:2012:0795:FIN:en:PDF

Higher Education. Brussels: European Commission; 2012b

e Mercado de TrabalhoV.N Famalicão: Editor Húmus; 2016

Português. Porto: Universidade Católica Editora; 2013

International Small Business Journal. 2007;**25**(5):477-506

International Small Business Journal. 1997;**15**(3):56-77

Higher Education Policy. 2012;**25**:407-431

Kluwer Academic Publishers; 2002. p. 1-21

Policy. 2000;**29**(2):109-123

2015;**27**:405-420

It should be highlighted that the emergency of the entrepreneurial HEI constitutes an answer, both to the social and economic challenges and to the growing importance of knowledge in the regional/national development through innovative systems. The inter-institutional dynamics may be renamed as network, because they act in a dynamic environment, of cooperation, operationalised through a multiplicity of regular connections and between different key actors. To sum up, the countries which encourage the creation of cooperation networks and of strategic alliances between the different key actors tend to obtain a competitive advantage, and especially, to divulge the knowledge produces local and nationally.

This study may have an enormous impact among the different political, academic, business agents, for it is constituted as a pilot example of the mapping and evaluation of initiatives to promote entrepreneurship in the academic context.

### **Author details**

Ana Paula Marques

Address all correspondence to: amarques@ics.uminho.pt

Interdisciplinary Centre of Social Sciences, University of Minho, Braga, Portugal

### **References**


[4] EC (European Commission). Entrepreneurship 2020 Action Plan—Reigniting the Entrepreneurial Spirit in Europe. 2012; COM(2012)795. Available from: http://eur-lex.europa. eu/LexUriServ/LexUriServ.do?uri=COM:2012:0795:FIN:en:PDF

these hold in the development of approaches, which are more integrated of their performance in the academic context. The results of the study evince the need to: (i) accomplish territorialised diagnoses about the conditions and usage of support infrastructures to these learnings; (ii) acknowledge the entities bearing a relevant role in the "preparation for work"; (iii) promote greater articulation of the performance of the entities in the different learning stages; (iv) recognise the tension between "informalisation" of the initiatives and the demand for formalisation of the learnings through their integration in the curricular plans and (v) promote the integration of a cross-sectional approach based on gender equality and opportunities in

It should be highlighted that the emergency of the entrepreneurial HEI constitutes an answer, both to the social and economic challenges and to the growing importance of knowledge in the regional/national development through innovative systems. The inter-institutional dynamics may be renamed as network, because they act in a dynamic environment, of cooperation, operationalised through a multiplicity of regular connections and between different key actors. To sum up, the countries which encourage the creation of cooperation networks and of strategic alliances between the different key actors tend to obtain a competitive advan-

This study may have an enormous impact among the different political, academic, business agents, for it is constituted as a pilot example of the mapping and evaluation of initiatives to

[1] Gibb AA. In pursuit of a new entrepreneurship paradigm for learning: Creative destruction, new values, new ways of doing things and new combinations of knowledge.

[2] Matlay H. The impact of entrepreneurship education on entrepreneurial outcomes. Journal of Small Business and Enterprise Development. 2008;**15**(2):382-396 [cited 20 June 2017]; Available from: http://www.emeraldinsight.com/doi/pdfplus/10.1108/14626000810871745

[3] Blenker P, et al. The questions we care about: Paradigms and progression in entrepre-

tage, and especially, to divulge the knowledge produces local and nationally.

Interdisciplinary Centre of Social Sciences, University of Minho, Braga, Portugal

International Journal of Management Reviews. 2002;**4**(3):233-269

neurship education. Industry & Higher Education. 2011;**25**(6):417-428

the design of programmes in this area.

360 Entrepreneurship - Development Tendencies and Empirical Approach

promote entrepreneurship in the academic context.

Address all correspondence to: amarques@ics.uminho.pt

**Author details**

Ana Paula Marques

**References**


**Chapter 19**

**Provisional chapter**

**The Entrepreneurship in Communication as an**

**The Entrepreneurship in Communication as an** 

Gloria Jiménez-Marín, Rodrigo Elías Zambrano and

Gloria Jiménez-Marín, Rodrigo Elías Zambrano and

Additional information is available at the end of the chapter

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.71369

**Educommunication**

**Educommunication**

Elena Bellido-Pérez

**Abstract**

methodologies.

communication

Elena Bellido-Pérez

**Educational-Learning Method: University Teaching and**

This text is based on a study that was done with the aim of analysing the development of university training processes through real entrepreneurship projects. The research was carried out using the study case modality, and it was focused on observing the teaching methodology variations according to the implementation—or not—of a real entrepreneurship project as a method in a certain subject, collecting data of both the faculty and the students. Departing from the current situation of economic crisis and unemployment in Spain and from the despondency and discouragement situation of the students in their latest years of university studies, the self-employment is set up as a new job opportunity for the training projects of these university students. This study departs from the inclusion of an entrepreneurship plan as a method of evaluation and teaching in several subjects belonging to Advertising and Public Relations studies. With this entrepreneurship model, we study the formative consequences for the students and the impact on the society. Results showed a common methodological pattern regardless of the training model of the subject—obligatory entrepreneurship versus optional entrepreneurship—and a faculty interest in alternating several

**Educational-Learning Method: University Teaching and** 

DOI: 10.5772/intechopen.71369

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution,

© 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

and reproduction in any medium, provided the original work is properly cited.

**Keywords:** entrepreneurship, teaching methods, university teaching, OTRI,

**Provisional chapter**

### **The Entrepreneurship in Communication as an Educational-Learning Method: University Teaching and Educommunication Educational-Learning Method: University Teaching and Educommunication**

**The Entrepreneurship in Communication as an** 

DOI: 10.5772/intechopen.71369

Gloria Jiménez-Marín, Rodrigo Elías Zambrano and Elena Bellido-Pérez Elena Bellido-Pérez Additional information is available at the end of the chapter

Gloria Jiménez-Marín, Rodrigo Elías Zambrano and

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.71369

#### **Abstract**

This text is based on a study that was done with the aim of analysing the development of university training processes through real entrepreneurship projects. The research was carried out using the study case modality, and it was focused on observing the teaching methodology variations according to the implementation—or not—of a real entrepreneurship project as a method in a certain subject, collecting data of both the faculty and the students. Departing from the current situation of economic crisis and unemployment in Spain and from the despondency and discouragement situation of the students in their latest years of university studies, the self-employment is set up as a new job opportunity for the training projects of these university students. This study departs from the inclusion of an entrepreneurship plan as a method of evaluation and teaching in several subjects belonging to Advertising and Public Relations studies. With this entrepreneurship model, we study the formative consequences for the students and the impact on the society. Results showed a common methodological pattern regardless of the training model of the subject—obligatory entrepreneurship versus optional entrepreneurship—and a faculty interest in alternating several methodologies.

**Keywords:** entrepreneurship, teaching methods, university teaching, OTRI, communication

Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons

### **1. Introduction**

#### **1.1. Being an entrepreneur**

Being an entrepreneur requires to have—or to acquire—a series of skills at either ways, individual and collective. Because the entrepreneurship is a human being's ability for going forward, moving on and growing in a creative and different way, with renewed ideas—and actions.

called to participate actively as a training centre par excellence, generating new knowledge [8]. In this last point, the role of the university becomes a great source of innovation and tech-

*The transformation of the university as part of the national system of science and technology makes it not only a centre for basic research but also the incubator of new industries in a science and technology dominated economy. The creation of an entrepreneurial culture, of a favourable attitude in young people* 

In this way, most Spanish universities have taken on the challenge of fostering the entrepreneurial spirit among their students and of supporting the creation of new companies, as [10] affirms. That is why, in Spain, a series of entrepreneurship initiatives have emerged within

• The first initiative to promote entrepreneurship from a Spanish university was in 1992.

opment of new companies (IDEAS)" with the aim of stimulating the entrepreneurs of the UPV to create technology-based companies, becoming the only program of this nature in

• On this date, three other business creation programmes were established at the *Universi-*

• In 2004, 55% of the 68 Spanish universities already had a programme to create companies. These programmes have contributed to the creation of about 900 new companies technologically and innovative based as well as conventional. Despite these important achievements, there is still a long way to go since, unlike what has been happening for years in universities in more advanced countries, the formation of new entrepreneurs remains a residual and methodologically poor subject to which it is provided little attention in most

The training and education in a high level, in a university level, has as its goal to educate the individual in a wide, relevant and qualitative way, that is, not only teaching the individual a profession but also making him or her grow as a person, as an adult, and making him or her

Translated from the original text in Spanish: "La transformación de la Universidad es parte del sistema nacional de ciencia y tecnología, la convierte no sólo en centro de investigación básica, sino también en la incubadora de nuevas industrias en una economía dominada por la ciencia y la tecnología. La creación de una cultura emprendedora, de una

actitud favourable en los jóvenes ante la creación empresarial es la base de nuevos proyectos."

(UCM), the *Universidad Pública de Navarra*<sup>5</sup>

starting a growing trend that had its highest level in 2000 with the creation of 10

(UPV), along with *Instituto Valenciano de la Mediana* 

http://dx.doi.org/10.5772/intechopen.71369

365

, and *Universidad de* 

(IMPIVA), carried out the project "Program of initiatives for the devel-

The Entrepreneurship in Communication as an Educational-Learning Method: University…

nological development, as [9] points out:

The *Universidad Politécnica de Valencia*<sup>2</sup>

the University:

*y Pequeña Empresa*<sup>3</sup>

Spain until 1997.

new programmes.

*Euskadi*, 6

1

2

3

4

5

6

*dad Complutense de Madrid*<sup>4</sup>

Spanish universities [11].

Polytechnic University of Valencia.

Complutense University of Madrid.

Public University of Navarra.

University of Euskadi.

Valencian Institute of Small and Medium-sized Enterprises.

**1.3. The teacher as entrepreneur in the knowledge society**

*before the creation of business is the basis of new projects.*<sup>1</sup>

For most people, entrepreneurship is a relatively modern and novel concept, but this feature itself has always been present throughout the history of humanity. Nevertheless, it is important to emphasise why this term has become so relevant in the last decade: because of the resurgence of the way in which economic situations have been managed, being led with new ideas. That is, because of the current economic movements and the way to overcome the financial crisis.

The word "entrepreneurship", from the French word "entrepreneur", means pioneer: it is the person's ability of making an extra effort in order to reach a goal. The term is also used for referring to a person who starts a new business or project, as well as people who add a value to an already existing product.

We depart from the definition that considers the entrepreneur as a person with inquisitiveness to learn and improve, that is, the definition related to the aptitude and attitude of the person, which allows him or her to undertake new challenges and new projects. If we focus on the well-known strengths, weaknesses, opportunities and threats (SWOT) matrix, an entrepreneur person is able to take advantage of threats, weaknesses, or dissatisfaction situations in order to reverse that condition and give rise to a beneficial and helpful situation. Because the constant search for changes and solutions for problems is a basic feature of the entrepreneur.

In that sense, the university plays an important role in providing a basic and appropriate training to their students, a training that qualifies them to reach their vital or business goals [1–5]. Entrepreneurs are people generating ideas who, at the same time, develop the required competences to be better business people and better citizens.

Nevertheless, Europe is the continent who concedes less importance to the education in entrepreneurship: 25% of EU citizens regard this kind of education as important, a low number if we compare it with the 51% existent in the USA [6]. According to [7], "this gap is not necessarily caused by the EU citizens' rejection of entrepreneurship, but rather the result of a combination of structural, administrative and cultural factors that inhibit entrepreneurial spirit". In fact, these kinds of barriers were highlighted in the results of this study.

#### **1.2. The Spanish universities' role in entrepreneurship**

If we focus on Spain, there is a clear need to foster an entrepreneurial spirit among young university graduates in order to improve the rates of start-ups in the medium and long term, thereby boosting the country's competitiveness and productivity. In this task, universities are called to participate actively as a training centre par excellence, generating new knowledge [8]. In this last point, the role of the university becomes a great source of innovation and technological development, as [9] points out:

*The transformation of the university as part of the national system of science and technology makes it not only a centre for basic research but also the incubator of new industries in a science and technology dominated economy. The creation of an entrepreneurial culture, of a favourable attitude in young people before the creation of business is the basis of new projects.*<sup>1</sup>

In this way, most Spanish universities have taken on the challenge of fostering the entrepreneurial spirit among their students and of supporting the creation of new companies, as [10] affirms. That is why, in Spain, a series of entrepreneurship initiatives have emerged within the University:


#### **1.3. The teacher as entrepreneur in the knowledge society**

The training and education in a high level, in a university level, has as its goal to educate the individual in a wide, relevant and qualitative way, that is, not only teaching the individual a profession but also making him or her grow as a person, as an adult, and making him or her

**1. Introduction**

actions.

financial crisis.

to an already existing product.

**1.1. Being an entrepreneur**

364 Entrepreneurship - Development Tendencies and Empirical Approach

Being an entrepreneur requires to have—or to acquire—a series of skills at either ways, individual and collective. Because the entrepreneurship is a human being's ability for going forward, moving on and growing in a creative and different way, with renewed ideas—and

For most people, entrepreneurship is a relatively modern and novel concept, but this feature itself has always been present throughout the history of humanity. Nevertheless, it is important to emphasise why this term has become so relevant in the last decade: because of the resurgence of the way in which economic situations have been managed, being led with new ideas. That is, because of the current economic movements and the way to overcome the

The word "entrepreneurship", from the French word "entrepreneur", means pioneer: it is the person's ability of making an extra effort in order to reach a goal. The term is also used for referring to a person who starts a new business or project, as well as people who add a value

We depart from the definition that considers the entrepreneur as a person with inquisitiveness to learn and improve, that is, the definition related to the aptitude and attitude of the person, which allows him or her to undertake new challenges and new projects. If we focus on the well-known strengths, weaknesses, opportunities and threats (SWOT) matrix, an entrepreneur person is able to take advantage of threats, weaknesses, or dissatisfaction situations in order to reverse that condition and give rise to a beneficial and helpful situation. Because the constant search for changes and solutions for problems is a basic feature of the entrepreneur.

In that sense, the university plays an important role in providing a basic and appropriate training to their students, a training that qualifies them to reach their vital or business goals [1–5]. Entrepreneurs are people generating ideas who, at the same time, develop the required

Nevertheless, Europe is the continent who concedes less importance to the education in entrepreneurship: 25% of EU citizens regard this kind of education as important, a low number if we compare it with the 51% existent in the USA [6]. According to [7], "this gap is not necessarily caused by the EU citizens' rejection of entrepreneurship, but rather the result of a combination of structural, administrative and cultural factors that inhibit entrepreneurial spirit".

If we focus on Spain, there is a clear need to foster an entrepreneurial spirit among young university graduates in order to improve the rates of start-ups in the medium and long term, thereby boosting the country's competitiveness and productivity. In this task, universities are

competences to be better business people and better citizens.

**1.2. The Spanish universities' role in entrepreneurship**

In fact, these kinds of barriers were highlighted in the results of this study.

<sup>1</sup> Translated from the original text in Spanish: "La transformación de la Universidad es parte del sistema nacional de ciencia y tecnología, la convierte no sólo en centro de investigación básica, sino también en la incubadora de nuevas industrias en una economía dominada por la ciencia y la tecnología. La creación de una cultura emprendedora, de una actitud favourable en los jóvenes ante la creación empresarial es la base de nuevos proyectos."

<sup>2</sup> Polytechnic University of Valencia.

<sup>3</sup> Valencian Institute of Small and Medium-sized Enterprises.

<sup>4</sup> Complutense University of Madrid.

<sup>5</sup> Public University of Navarra.

<sup>6</sup> University of Euskadi.

think. That is why higher education must not only be contemplated with a sole external vision about the teaching-learning process, but also as an internal condition of the teacher. For that reason, education is almost seen in the duty of facilitating the development of new personal abilities, as the abilities of innovating, finding creative solutions or adapting to changes and new realities. This is not an easy task, and that is why "creating an entrepreneurial university requires a multi-dimensional, multi-layered, complex, and long-term focused perspective from policymakers and university administrators" [1].

*integrates the theory with the practice in different activities; it promotes the continuity between all educative levels and between them and the labour and cohabitation processes; it encourages the building of the autonomous learning, orients the training and the strengthening of the ethical life project; it looks for the entrepreneur spirit development as the base of personal growth and socioeconomic development, and it settles on the curricular organization with base in projects and problems, transcending hence the* 

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367

This kind of training insists on a different teacher's role from the traditional one, because now the teacher is not the epicentre of the process, but the student—the teacher has as a role of coordinator, companion, guide, advisory and guiding, being the student the true protagonist. In that sense, according to [16], "to promote entrepreneurial awareness and mind-set, we need to move away from entrepreneurship education as being teacher-led to being more student-centred and focused on lifelong learning practices". This brings a radical change in the teacher's pedagogical task, in the dominant mentality, in the evaluation system, etc. The reason is that, in order to get this kind of training, the teacher should generate places in his or her classes which contribute to reflection, critique, teamwork and self-training, leaving apart

Thus, a good strategy to support and make easier the student's self-training would be the delimitation and definition of the autonomous work in the diverse curricular design using

• Therefore, we have to guide the student's work encouraging the competences training in

• Guiding the student in the achievement of sources to the execution of activities suggested

• Orienting the students so that they can build the strategies of each competence's knowledge. • Agreeing with the students what competences they are going to develop, considering the

If, as we have made clear, we depart from an idea in which the student is now the centre of the educational process, moving from being a passive subject in the lecture room to a much more committed student in the learning process, we can also affirm that the student is the

Translated from the original text in Spanish: "La formación basada en competencias constituye una propuesta que parte del aprendizaje significativo y se orienta a la formación humana integral como condición esencial de todo proyecto pedagógico; integra la teoría con la práctica en las diversas actividades; promueve la continuidad entre todos los niveles educativos y entre estos y los procesos laborales y de convivencia; fomenta la construcción del aprendizaje autónomo, orienta la formación y el afianzamiento del proyecto ético de vida; busca el desarrollo del espíritu emprendedor como base del crecimiento personal y del desarrollo socioeconómico y fundamenta la organización curricular con base en proyectos y problemas, trascendiendo de esta manera el currículo basado en asignaturas compartimentadas."

• Focusing the learning on the students and not on the teaching or the teacher. • Setting up the pedagogical strategies with the own students' participation.

expectations and the social-environmental and labour requirements.

*curriculum based on compartmentalized subjects.*<sup>8</sup>

the master class as an only tool—an important tool, anyway.

ECTS credits.

this way:

by the teacher.

**2. Objectives**

8

However, in the latest years, the educative planning is changing. Authors like [12] or [13, 14] support theories that pursue a revolution since their initial idea. These researchers consider that not only the study organisation should be changed, but also its purpose and the dedication time, which should move from being a one-time training and with pre-established times to a lifelong training.

For that reason, we can affirm that a university teacher is a citizen of the knowledge society who faces the challenge in the presence of changes, responding in a positive way with new ideas and new ways of doing things, with initiative and determination when facing several circumstances. This person is an entrepreneur teacher who has developed certain competences to the citizen performance, who is competent and knows what should be done, allowing the so-called "Lifelong learning"7 in order to develop specific abilities. First, it is necessary to develop oneself as a person so that you can be able to acquire professional of specific human competences, and later that could be transmitted afterwards.

The development of these competences should take place in a contextualised frame in university environments. In this frame, students are adolescents who are becoming adults and, for that reason, they should experience an active and relevant learning, because it will let them use their acquired competences in others places and context. Thus, they will be able to transmit what they have learned. Besides, this fact becomes even more important if we take into account studies as the one of [15], which has showed that "entrepreneurial characteristics that predict entrepreneurial careers appear early in life".

The quality of the university education has to be in harmony with the training that prospective graduates are receiving. In that sense, the teacher should think about his or her pedagogical and methodological work, about the appropriateness and applicability of what he or she is teaching. Hence, the teacher will conclude that he or she has to unlearn and learn new techniques and to increase his or her abilities' borders in order to provide the students the training that they need. In that point is where the entrepreneurship appears as a suitable evaluating and teaching technique. As [16] expresses, "as educators it is valuable to understand the effect of one's teaching particularly because this has far-reaching impact not only on students but also on social praxis in terms of fostering new, sustainable entrepreneurs".

Therefore, the standpoint that belongs to this new paradigm of higher education is focused on a training based on competences. In that way, as [17] explains:

*The training based on competences constitutes a proposal that departs from the significant learning and is focused on comprehensive human training as essential condition of all pedagogical project; it* 

<sup>7&</sup>quot;Lifelong learning" is used to describe a permanent education. This concept refers to a movement that expects to bring the education to all levels and human states—it wants not only to focus on adults training, but on every level of training.

*integrates the theory with the practice in different activities; it promotes the continuity between all educative levels and between them and the labour and cohabitation processes; it encourages the building of the autonomous learning, orients the training and the strengthening of the ethical life project; it looks for the entrepreneur spirit development as the base of personal growth and socioeconomic development, and it settles on the curricular organization with base in projects and problems, transcending hence the curriculum based on compartmentalized subjects.*<sup>8</sup>

This kind of training insists on a different teacher's role from the traditional one, because now the teacher is not the epicentre of the process, but the student—the teacher has as a role of coordinator, companion, guide, advisory and guiding, being the student the true protagonist. In that sense, according to [16], "to promote entrepreneurial awareness and mind-set, we need to move away from entrepreneurship education as being teacher-led to being more student-centred and focused on lifelong learning practices". This brings a radical change in the teacher's pedagogical task, in the dominant mentality, in the evaluation system, etc. The reason is that, in order to get this kind of training, the teacher should generate places in his or her classes which contribute to reflection, critique, teamwork and self-training, leaving apart the master class as an only tool—an important tool, anyway.

Thus, a good strategy to support and make easier the student's self-training would be the delimitation and definition of the autonomous work in the diverse curricular design using ECTS credits.


### **2. Objectives**

think. That is why higher education must not only be contemplated with a sole external vision about the teaching-learning process, but also as an internal condition of the teacher. For that reason, education is almost seen in the duty of facilitating the development of new personal abilities, as the abilities of innovating, finding creative solutions or adapting to changes and new realities. This is not an easy task, and that is why "creating an entrepreneurial university requires a multi-dimensional, multi-layered, complex, and long-term focused perspective

However, in the latest years, the educative planning is changing. Authors like [12] or [13, 14] support theories that pursue a revolution since their initial idea. These researchers consider that not only the study organisation should be changed, but also its purpose and the dedication time, which should move from being a one-time training and with pre-established times

For that reason, we can affirm that a university teacher is a citizen of the knowledge society who faces the challenge in the presence of changes, responding in a positive way with new ideas and new ways of doing things, with initiative and determination when facing several circumstances. This person is an entrepreneur teacher who has developed certain competences to the citizen performance, who is competent and knows what should be done, allow-

to develop oneself as a person so that you can be able to acquire professional of specific human

The development of these competences should take place in a contextualised frame in university environments. In this frame, students are adolescents who are becoming adults and, for that reason, they should experience an active and relevant learning, because it will let them use their acquired competences in others places and context. Thus, they will be able to transmit what they have learned. Besides, this fact becomes even more important if we take into account studies as the one of [15], which has showed that "entrepreneurial characteristics that

The quality of the university education has to be in harmony with the training that prospective graduates are receiving. In that sense, the teacher should think about his or her pedagogical and methodological work, about the appropriateness and applicability of what he or she is teaching. Hence, the teacher will conclude that he or she has to unlearn and learn new techniques and to increase his or her abilities' borders in order to provide the students the training that they need. In that point is where the entrepreneurship appears as a suitable evaluating and teaching technique. As [16] expresses, "as educators it is valuable to understand the effect of one's teaching particularly because this has far-reaching impact not only on students but

Therefore, the standpoint that belongs to this new paradigm of higher education is focused on

*The training based on competences constitutes a proposal that departs from the significant learning and is focused on comprehensive human training as essential condition of all pedagogical project; it* 

7"Lifelong learning" is used to describe a permanent education. This concept refers to a movement that expects to bring the education to all levels and human states—it wants not only to focus on adults training, but on every level of training.

also on social praxis in terms of fostering new, sustainable entrepreneurs".

a training based on competences. In that way, as [17] explains:

in order to develop specific abilities. First, it is necessary

from policymakers and university administrators" [1].

366 Entrepreneurship - Development Tendencies and Empirical Approach

competences, and later that could be transmitted afterwards.

predict entrepreneurial careers appear early in life".

to a lifelong training.

ing the so-called "Lifelong learning"7

If, as we have made clear, we depart from an idea in which the student is now the centre of the educational process, moving from being a passive subject in the lecture room to a much more committed student in the learning process, we can also affirm that the student is the

<sup>8</sup> Translated from the original text in Spanish: "La formación basada en competencias constituye una propuesta que parte del aprendizaje significativo y se orienta a la formación humana integral como condición esencial de todo proyecto pedagógico; integra la teoría con la práctica en las diversas actividades; promueve la continuidad entre todos los niveles educativos y entre estos y los procesos laborales y de convivencia; fomenta la construcción del aprendizaje autónomo, orienta la formación y el afianzamiento del proyecto ético de vida; busca el desarrollo del espíritu emprendedor como base del crecimiento personal y del desarrollo socioeconómico y fundamenta la organización curricular con base en proyectos y problemas, trascendiendo de esta manera el currículo basado en asignaturas compartimentadas."

responsible one of his or her own help relationships with the teacher and the outdoor world, even more when the student is approaching to the latest years of the University.

**3. Method**

in Section 6.

**4. Results**

emphasised in results.

the business tenders initiatives.

university teachers were conducted.

Through an empirical work, we try to delimit the most relevant factors from the standpoint of the several groups that define the university context. Hence, this analysis has been carried out from a double perspective—on the one hand, from the demand perspective, that is, people who show interest in entrepreneurship; and, on the other hand, from the offer perspective, taking into account the available information and existing sources for the business creation, besides the from the Spanish translation of Research Results Transference Office (OTRI's) and

The Entrepreneurship in Communication as an Educational-Learning Method: University…

http://dx.doi.org/10.5772/intechopen.71369

369

Therefore, we can point out two main phases in this study. First, there is a phase related to the data collection, in which in-depth interviews with students, university entrepreneurs and

The students sample is composed by students from the Cartuja Campus in the University of Seville, and from the Jerez de la Frontera Campus in the University of Cadiz. At the same time, these samples were subdivided in encouraged students—that means: students with some previous thoughts about becoming an entrepreneur, and non-encouraged students,

In relation to the entrepreneurs, they were graduates in Advertising and Public Relations and graduates in Audiovisual Communication from one of the two Universities that we had chosen. Besides, we interviewed several university teachers who had, as a feature, some kind of link with the business or entrepreneurship world, being interviewed six teachers in total.

Once interviews were conducted, recorded and transcribed, we systematically proceeded to collect the information of the main institutions—in Seville and Cadiz—that have programmes to encourage and promote the entrepreneurs or that give students information and personalised advice. The collection of this information was selected according to the university students' interest.

In order to analyse the collected information, and due to the use of the in-depth interview as a qualitative technique, the content analysis was used. In that way, transcribed interviews were analysed and classified according to information groups, in which answers were organised following interviewees' comments. These comments defined the final model that we propose

Hence, the interviewee's own verbalisations were used as qualitative data to support the idea

Obtained results were analysed taking into account three wide thematic groups that were

defined according to the several themes that appear in the interviews:

• Factors that can motivate or obstruct the own business creation.

being interviewed 26 students in total—13 encouraged and 13 non-encouraged.

Our aim with this implementation of the learning based on entrepreneurship projects pursues several purposes:

	- Bringing the business reality closer to the student.
	- Searching for creativity.
	- Encouraging teamwork.
	- Making the student emphatic with the environment.
	- Working for the ability of adaptation.
	- Introducing the student to the participation in public and private tenders.
	- Identifying the contributions that the "Learning based on Projects" introduces in the graduate's training.
	- Identifying the specific strategies that could get the teaching-learning process better and assigning them to the ECTS credits concept.
	- Instilling in the students the responsibility and cooperation sense in a real-case scenario.

With this method, we find a different option from the current docent assignment models. Moreover, this option is gaining popularity, circumscribed to the economic and social situation in which we are.

Reference [18] affirms that "nothing is educative per se and, at the same time; all in life is liable of promoting an educative situation". Besides, [19] claims:

*The education is not a neutral action. Ethical values are in the reason and in the objective of the educative action. Learning is, above all, educating, training the own human being. And this is a process that is developed in a permanent way during all our lives.9*

For these reasons, from the conception of this research, we are going to study the education in a different way, applying the entrepreneurship principles to the degree in Advertising and Public Relation and to the degree in Audiovisual Communication.

<sup>9</sup> Translated from the original text in Spanish: "La educación no es una acción neutra. Los valores éticos se encuentran en la razón y el objetivo de la acción educativa. Aprender es ante todo educarse, formar el propio ser. Y este es un proceso que se desarrolla de forma permanente a lo largo de nuestras vidas."

### **3. Method**

responsible one of his or her own help relationships with the teacher and the outdoor world,

Our aim with this implementation of the learning based on entrepreneurship projects pursues

• The creation of a possible profitable business idea, so, at the same time, we pursue others

even more when the student is approaching to the latest years of the University.

• Introducing the student to the participation in public and private tenders.

• Identifying the contributions that the "Learning based on Projects" introduces in the

• Identifying the specific strategies that could get the teaching-learning process better and

• Instilling in the students the responsibility and cooperation sense in a real-case scenario.

• The improvement of the students' personal CV in those students who are about to become

• The orientation of the students in their solvency at the time to face the job search problem. With this method, we find a different option from the current docent assignment models. Moreover, this option is gaining popularity, circumscribed to the economic and social situa-

Reference [18] affirms that "nothing is educative per se and, at the same time; all in life is liable

*The education is not a neutral action. Ethical values are in the reason and in the objective of the educative action. Learning is, above all, educating, training the own human being. And this is a process that* 

For these reasons, from the conception of this research, we are going to study the education in a different way, applying the entrepreneurship principles to the degree in Advertising and

Translated from the original text in Spanish: "La educación no es una acción neutra. Los valores éticos se encuentran en la razón y el objetivo de la acción educativa. Aprender es ante todo educarse, formar el propio ser. Y este es un proceso

• Bringing the business reality closer to the student.

368 Entrepreneurship - Development Tendencies and Empirical Approach

• Making the student emphatic with the environment.

assigning them to the ECTS credits concept.

of promoting an educative situation". Besides, [19] claims:

Public Relation and to the degree in Audiovisual Communication.

*is developed in a permanent way during all our lives.9*

que se desarrolla de forma permanente a lo largo de nuestras vidas."

• Working for the ability of adaptation.

several purposes:

objectives:

• Searching for creativity. • Encouraging teamwork.

graduate's training.

• The self-employment search.

graduates.

tion in which we are.

9

Through an empirical work, we try to delimit the most relevant factors from the standpoint of the several groups that define the university context. Hence, this analysis has been carried out from a double perspective—on the one hand, from the demand perspective, that is, people who show interest in entrepreneurship; and, on the other hand, from the offer perspective, taking into account the available information and existing sources for the business creation, besides the from the Spanish translation of Research Results Transference Office (OTRI's) and the business tenders initiatives.

Therefore, we can point out two main phases in this study. First, there is a phase related to the data collection, in which in-depth interviews with students, university entrepreneurs and university teachers were conducted.

The students sample is composed by students from the Cartuja Campus in the University of Seville, and from the Jerez de la Frontera Campus in the University of Cadiz. At the same time, these samples were subdivided in encouraged students—that means: students with some previous thoughts about becoming an entrepreneur, and non-encouraged students, being interviewed 26 students in total—13 encouraged and 13 non-encouraged.

In relation to the entrepreneurs, they were graduates in Advertising and Public Relations and graduates in Audiovisual Communication from one of the two Universities that we had chosen. Besides, we interviewed several university teachers who had, as a feature, some kind of link with the business or entrepreneurship world, being interviewed six teachers in total.

Once interviews were conducted, recorded and transcribed, we systematically proceeded to collect the information of the main institutions—in Seville and Cadiz—that have programmes to encourage and promote the entrepreneurs or that give students information and personalised advice. The collection of this information was selected according to the university students' interest.

In order to analyse the collected information, and due to the use of the in-depth interview as a qualitative technique, the content analysis was used. In that way, transcribed interviews were analysed and classified according to information groups, in which answers were organised following interviewees' comments. These comments defined the final model that we propose in Section 6.

Hence, the interviewee's own verbalisations were used as qualitative data to support the idea emphasised in results.

### **4. Results**

Obtained results were analysed taking into account three wide thematic groups that were defined according to the several themes that appear in the interviews:

• Factors that can motivate or obstruct the own business creation.


The main obtained results were the following.

#### **4.1. University students' interviews**

We depart from the huge difference between students in relation to the information about entrepreneurship, grants or tenders that they have. And we also depart from the fact that students, on their own, have low entrepreneurship attitude—besides, this is increased in humanistic degrees.

*4.1.3. The entrepreneur's and non-entrepreneur's profile*

executes in the current society:

• Social sacrifice.

• Social advance.

• Generation of wealth.

static, and passive elements.

gested as an evaluation method.

**4.2. Entrepreneur's interviews**

*4.2.1. Factors that help the entrepreneurship*

students.

*4.1.4. The university's role in the training of entrepreneurs*

tiatives demanded by university students can be strengthened.

The psychological aspects of the personal profile of both, the entrepreneur and non-entrepreneur, have been emphasised. On the one hand, the creative and independent personality, besides the individuals' business spirit, strengthens that entrepreneur's profile. From a social point of view, three relevant elements are perceived regarding the role that the entrepreneur

The Entrepreneurship in Communication as an Educational-Learning Method: University…

http://dx.doi.org/10.5772/intechopen.71369

371

In addition, from a general perspective, an allusion to the entrepreneur's training or experience is made. As an entrepreneur's feature, it is appreciated his or her ability to face unstructured situations and, even, it is appreciated a preference for the dynamism and changes for getting away from the monotony. This tendency is observed in motivated students, and its cultivation during their stay in the university will make easier their future entrepreneur task.

However, on the other hand, we also analyse and observe the non-entrepreneur's profile. That is because the students pointed out, basically, psychological factors inside of another kind of factors. In that way, students, basing on the lack of creativity between other features, noted that the non-entrepreneur is associated to certain personality characteristics or to innate,

We also collected students' opinions about the business projects proposed by teachers in several subjects related to entrepreneurship and business creation. In that sense, we need to highlight that encouraged students clearly show a bigger knowledge than non-encouraged

In a psychological level, the only factor that we have found is the university's role as a motivation source when there are classes or informative talks, or when business projects are sug-

In a sociocultural level, we can emphasise the lack of coherent, responsible, and ethical models to follow. Students bring up the necessity of sessions that are more informative and, above all, specific training about the creation of a business as a real project. The opening of a student attention service also was suggested by the students; that is, a place where entrepreneur ini-

The entrepreneurs interviewed stressed the business idea as the basic motor. From a psychological point of view, entrepreneurs who were consulted commented as the main element the

#### *4.1.1. Factors that help become an entrepreneur*

In that sense, which are the factors that stimulate the fact of becoming an entrepreneur? Many factors can favour the student's intention of creating his or her own business.

Between psychological factors, we can underline the following:


Between the sociocultural factors, we can point:


#### *4.1.2. Factors that complicate becoming an entrepreneur*

Like the last case, factors that prevent students from becoming entrepreneurs are several kinds of factors.

Psychological:


Sociocultural and institutional:


#### *4.1.3. The entrepreneur's and non-entrepreneur's profile*

The psychological aspects of the personal profile of both, the entrepreneur and non-entrepreneur, have been emphasised. On the one hand, the creative and independent personality, besides the individuals' business spirit, strengthens that entrepreneur's profile. From a social point of view, three relevant elements are perceived regarding the role that the entrepreneur executes in the current society:

• Social sacrifice.

• Factors that define entrepreneur and non-entrepreneur subjects.

We depart from the huge difference between students in relation to the information about entrepreneurship, grants or tenders that they have. And we also depart from the fact that students, on their own, have low entrepreneurship attitude—besides, this is increased in humanistic degrees.

In that sense, which are the factors that stimulate the fact of becoming an entrepreneur? Many

• Having the "entrepreneur's spirit": Students who see themselves as entrepreneurs comment that this is something that it is written on their daily task, on the way of organising and focusing everything that surrounded them. In the same way, non-entrepreneurs seem

• Self-fulfilment desire: Students consider that subjects who actually have a project and who link themselves to it as a personal development project are the subjects that will find the

Like the last case, factors that prevent students from becoming entrepreneurs are several

factors can favour the student's intention of creating his or her own business.

that they attribute this spirit to a character or a certain personality.

Between psychological factors, we can underline the following:

• The university role in the learning process for entrepreneurs.

The main obtained results were the following.

370 Entrepreneurship - Development Tendencies and Empirical Approach

*4.1.1. Factors that help become an entrepreneur*

motivation to become entrepreneurs.

• Independence and being their own bosses sensation.

Between the sociocultural factors, we can point:

*4.1.2. Factors that complicate becoming an entrepreneur*

• A fear of taking risks—economic, personal, or social risks-.

• A self-perception of immaturity and lack of qualification and experience.

• Economic problems and the inability of getting the necessary initial funding.

• Possible appearance of an idea.

• Job searching.

kinds of factors. Psychological:

Sociocultural and institutional:

• Excessive bureaucracy.

• Familiar tradition.

**4.1. University students' interviews**


In addition, from a general perspective, an allusion to the entrepreneur's training or experience is made. As an entrepreneur's feature, it is appreciated his or her ability to face unstructured situations and, even, it is appreciated a preference for the dynamism and changes for getting away from the monotony. This tendency is observed in motivated students, and its cultivation during their stay in the university will make easier their future entrepreneur task.

However, on the other hand, we also analyse and observe the non-entrepreneur's profile. That is because the students pointed out, basically, psychological factors inside of another kind of factors. In that way, students, basing on the lack of creativity between other features, noted that the non-entrepreneur is associated to certain personality characteristics or to innate, static, and passive elements.

#### *4.1.4. The university's role in the training of entrepreneurs*

We also collected students' opinions about the business projects proposed by teachers in several subjects related to entrepreneurship and business creation. In that sense, we need to highlight that encouraged students clearly show a bigger knowledge than non-encouraged students.

In a psychological level, the only factor that we have found is the university's role as a motivation source when there are classes or informative talks, or when business projects are suggested as an evaluation method.

In a sociocultural level, we can emphasise the lack of coherent, responsible, and ethical models to follow. Students bring up the necessity of sessions that are more informative and, above all, specific training about the creation of a business as a real project. The opening of a student attention service also was suggested by the students; that is, a place where entrepreneur initiatives demanded by university students can be strengthened.

#### **4.2. Entrepreneur's interviews**

#### *4.2.1. Factors that help the entrepreneurship*

The entrepreneurs interviewed stressed the business idea as the basic motor. From a psychological point of view, entrepreneurs who were consulted commented as the main element the knowledge and work experience before the creation and launch of a business. Nevertheless, it is interesting that a certain number of entrepreneurs who did not have any work experience considered the possibility of the entrepreneurship due to internal and innate motivations.

*4.3.2. Factors that complicate becoming an entrepreneur*

*4.3.3. The entrepreneur's and non-entrepreneur's profile*

• Entrepreneur spirit vs. non-entrepreneur spirit.

• Observation ability vs. observation inability.

*4.3.4. The university's role in the training of entrepreneurs*

the following were pointed out from the psychological point of view:

were interviewed mentioned: • Politicization of institutions.

• Uncertainty and fear of risk.

• Enthusiasm vs. passivity.

• Excitement vs. pusillanimity.

**5. Discussion and conclusion**

• Non-entrepreneur's passive profile.

As barriers or obstacles that complicate the entrepreneurship, the university teachers who

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373

In relation to what aspects distinguish an entrepreneur from a non-entrepreneur individual,

In general, these university teachers noticed a lack of information about entrepreneurship in their universities. They were convinced that the student would consider being an entrepreneur as a real option if he or she received more motivation for that from the class. In this line, they subsequently talked about an ideal education model in which the entrepreneurship is taken into account as a job opportunity, encouraging student's entrepreneurship abilities.

Nevertheless, the university teachers also valued and were aware of the emerging tasks

This research helped us to define the scarcity and the improvements in relation with entrepreneurship in both campuses of these Spanish universities. With in-depth interviews we could be aware of the importance of the university's role in providing entrepreneurial education to the students; not only to those who already have the "entrepreneur's spirit", but also to those who do not know yet what to do after finishing their university studies. Therefore, entrepre-

From a general perspective, the most relevant and repeated factors that can motivate the own business creation were the internal motivation of the subject, a favourable familiar environment and the Spanish current economic situation. On the other hand, the most powerful factors that obstruct becoming an entrepreneur were the fear of taking risks and, above all, the initial barriers—economic and bureaucratic—that the entrepreneur can face when dealing

related to entrepreneurship that are carrying out several Spanish universities.

neurship is a job alternative that needs to be encouraged at the University.

From a sociocultural focus, entrepreneurs point out the Spanish current labour situation and the models and familiar values as elements that can favour the appearance of new entrepreneurs. Besides, they emphasise that in the first moments the institutions role is essential.

#### *4.2.2. Factors that complicate the entrepreneurship*

The barriers that prospective entrepreneurs find are, basically, institutional barriers. Entrepreneurs complained about the initial problems that they find when they want to develop their idea, as the lack of funding, the lack of reliable information sources, or the excessive bureaucracy in the moment of the business launch—with the resulting lack of time and efforts.

#### *4.2.3. The entrepreneur's and non-entrepreneur's profile*

When the own entrepreneurs were asked which ones of their main features were more suitable to define them and distinguish them from non-entrepreneurs individual, they suggest psychological features: projects implication, entrepreneurship attitudes, creativity, ambition, labour ability, decision-making attitude, autonomy, etc.

In relation to non-entrepreneurs' features, the most used terms were "stereotypical employee", "conformity", "low efficiency", "passivity", etc.

#### *4.2.4. The university's role in the training of entrepreneurs*

In a psychological level, some of the more repeated comments were "the university should promote more conferences, activities, or seminars" or even "the student should be guided from the university".

At an institutional level, the interviewees commented the university's role from a positive point of view, through the diverse foundations that link the university with the business, making easy to get the contact with other institutions. However, they also criticized the university when they were referring to it saying that "sometimes it is excessively theoretical, there is a lack of real world".

#### **4.3. University teachers' interviews**

#### *4.3.1. Factors that help become an entrepreneur*

Between the psychological factors that incite to be an entrepreneur, from the university teachers' perspective, it is highlighted in the interviews the existence of an internal motivation, a personal necessity, an inquisitiveness, or a familiar heritage. Other elements that encourage the entrepreneurship were sociocultural ones, more than other kind of elements:


#### *4.3.2. Factors that complicate becoming an entrepreneur*

As barriers or obstacles that complicate the entrepreneurship, the university teachers who were interviewed mentioned:

• Politicization of institutions.

knowledge and work experience before the creation and launch of a business. Nevertheless, it is interesting that a certain number of entrepreneurs who did not have any work experience considered the possibility of the entrepreneurship due to internal and innate motivations. From a sociocultural focus, entrepreneurs point out the Spanish current labour situation and the models and familiar values as elements that can favour the appearance of new entrepreneurs. Besides, they emphasise that in the first moments the institutions role is essential.

The barriers that prospective entrepreneurs find are, basically, institutional barriers. Entrepreneurs complained about the initial problems that they find when they want to develop their idea, as the lack of funding, the lack of reliable information sources, or the excessive bureaucracy in the moment of the business launch—with the resulting lack of time and efforts.

When the own entrepreneurs were asked which ones of their main features were more suitable to define them and distinguish them from non-entrepreneurs individual, they suggest psychological features: projects implication, entrepreneurship attitudes, creativity, ambition,

In relation to non-entrepreneurs' features, the most used terms were "stereotypical employee",

In a psychological level, some of the more repeated comments were "the university should promote more conferences, activities, or seminars" or even "the student should be guided

At an institutional level, the interviewees commented the university's role from a positive point of view, through the diverse foundations that link the university with the business, making easy to get the contact with other institutions. However, they also criticized the university when they were referring to it saying that "sometimes it is excessively theoretical,

Between the psychological factors that incite to be an entrepreneur, from the university teachers' perspective, it is highlighted in the interviews the existence of an internal motivation, a personal necessity, an inquisitiveness, or a familiar heritage. Other elements that encourage

the entrepreneurship were sociocultural ones, more than other kind of elements:

• Business contacts that encourage the creation of a business idea.

*4.2.2. Factors that complicate the entrepreneurship*

372 Entrepreneurship - Development Tendencies and Empirical Approach

*4.2.3. The entrepreneur's and non-entrepreneur's profile*

labour ability, decision-making attitude, autonomy, etc.

*4.2.4. The university's role in the training of entrepreneurs*

"conformity", "low efficiency", "passivity", etc.

from the university".

there is a lack of real world".

• Economic-labour necessity.

• Favourable familiar environment.

**4.3. University teachers' interviews**

*4.3.1. Factors that help become an entrepreneur*


#### *4.3.3. The entrepreneur's and non-entrepreneur's profile*

In relation to what aspects distinguish an entrepreneur from a non-entrepreneur individual, the following were pointed out from the psychological point of view:


#### *4.3.4. The university's role in the training of entrepreneurs*

In general, these university teachers noticed a lack of information about entrepreneurship in their universities. They were convinced that the student would consider being an entrepreneur as a real option if he or she received more motivation for that from the class. In this line, they subsequently talked about an ideal education model in which the entrepreneurship is taken into account as a job opportunity, encouraging student's entrepreneurship abilities.

Nevertheless, the university teachers also valued and were aware of the emerging tasks related to entrepreneurship that are carrying out several Spanish universities.

### **5. Discussion and conclusion**

This research helped us to define the scarcity and the improvements in relation with entrepreneurship in both campuses of these Spanish universities. With in-depth interviews we could be aware of the importance of the university's role in providing entrepreneurial education to the students; not only to those who already have the "entrepreneur's spirit", but also to those who do not know yet what to do after finishing their university studies. Therefore, entrepreneurship is a job alternative that needs to be encouraged at the University.

From a general perspective, the most relevant and repeated factors that can motivate the own business creation were the internal motivation of the subject, a favourable familiar environment and the Spanish current economic situation. On the other hand, the most powerful factors that obstruct becoming an entrepreneur were the fear of taking risks and, above all, the initial barriers—economic and bureaucratic—that the entrepreneur can face when dealing with institutions. The university can intercede in these circumstances, in the first place, by encouraging the "entrepreneur's spirit" of students through an educational model centred on the students, and, in the second place, by providing them support so that they can easily face the bureaucratic obstacles.

Because supporting the entrepreneur implies wealth generation in both an economic and social sense, and, in a labour environment of uncertainty as the one in which we are currently involved, the researchers of this project firmly believe in the power of business creation as

[1] Beyhan B, Findik D. Student and graduate entrepreneurship: Ambidextrous universities create more nascent entrepreneurs. Journal of Technology Transfer. 2017;[**Online** 

[2] Castro OAP, Arias CLR, Ibáñez JEJ, Bulla FJM. Universities fostering business development: The role of education in entrepreneurship. In: Information Resources Management Association, editor. Entrepreneurship: Concepts, Methodologies, Tools, and Applications.

[3] Gallardo-Vázquez D, Pajuelo-Moreno ML. How Spanish universities are promoting entrepreneurship through your own lines of teaching and research. In: Information Resources Management Association, editor. Entrepreneurship: Concepts, Methodologies, Tools, and Applications. Hershey: IGI Global; 2017. p. 1344-1368. DOI: 10.4018/978-1-5225-1923-2

[4] Miranda FJ, Chamorro-Mera A, Rubio S. Academic entrepreneurship in Spanish universities: An analysis of the determinants of entrepreneurial intention. European Research on Management and Business Economics. 2017;**23**(3):113-122. DOI: 10.1016/j.

[5] Roach M. Encouraging entrepreneurship in university labs: Research activities, research outputs, and early doctorate careers. PLoS One. 2017;**12**(2):e0170444. DOI: 10.1371/jour-

[6] Eurobarometer. Entrepreneurship in the EU and Beyond. Analytical Report [Internet]. 2009. Available from: http://www.data.europa.eu/euodp/data/dataset/S765\_283 [Accessed:

[7] Roman T, Maxim A. National culture and higher education as pre-determining factors of student entrepreneurship. Studies in Higher Education. 2017;**42**(6):993-1014. DOI:

Hershey: IGI Global; 2017. p. 466-496. DOI: 10.4018/978-1-5225-1923-2

and Elena Bellido-Pérez<sup>1</sup>

The Entrepreneurship in Communication as an Educational-Learning Method: University…

http://dx.doi.org/10.5772/intechopen.71369

375

both: personal self-fulfilment and job generation and social and community welfare.

\*, Rodrigo Elías Zambrano2

\*Address all correspondence to: gloria\_jimenez@us.es

**First**]:1-29. DOI: 10.1007/s10961-017-9590-z

**Author details**

**References**

Gloria Jiménez-Marín<sup>1</sup>

1 University of Seville, Seville, Spain 2 University of Cadiz, Cádiz, Spain

iedeen.2017.01.001

nal.pone.0170444

10.1080/03075079.2015.1074671

2017-07-06]

Besides, results also show that the entrepreneur is a well-considered person in the society, always related to creativity and ambition, just the opposite of the non-entrepreneur person, who is seen as a passive and conformist individual. In that sense, the university has to take advantage of that thinking adapting the commented entrepreneur's characteristics to the objectives to reach in subjects. In that way, even if students do not consider themselves to carry the "entrepreneur's spirit", at least they see themselves with the ability of searching new solutions to same problems.

Finally, in relation to the university's role in the training of entrepreneurs, it is clear that all groups that were interviewed agreed with the need of more activities focused on the entrepreneurship, as informative talks or projects about creating your own business. At this point, the pressing needs of carrying out entrepreneurship projects in the bosom of the university are confirmed, introducing new focus on the subjects, new ways of teaching, and new places where the student can be informed and oriented.

In general, the growing consciousness about entrepreneurship can be highlighted from this study. People are looking at the option of becoming an entrepreneur as a real job opportunity. Besides, it can be appreciated that this fact is mostly encouraged by the current Spanish economic context, in which graduates are having their expectations of working in something related to their field frustrated. Thus, the university's role is essential. The university needs to set methods of teaching focused on students, trying to make them discover the potential of their entrepreneur's abilities. Moreover, there are certain competences that students normally relate to the entrepreneur—as it has been observed in the study—and these competences can be learned and developed at the university, as a useful tool in their daily life.

As a result of this study, fruit of the *II Plan Propio de Docencia de la Universidad de Sevilla*10 and done in collaboration with a call of *Proyectos de Innovación Docente de la Universidad de Cádiz*, 11 we find ourselves deep into the creation of an office of entrepreneur's attention. It is being established in the Campus Cartuja of the University of Seville and in the Campus Jerez of the University of Cadiz. This project, which is currently in the height of its development, has had a specific funding in order to support the entrepreneur through:


<sup>10</sup>II Own Plan of University Teaching of the University of Seville.

<sup>11</sup>Projects of University Teaching Innovation of the University of Cadiz.

Because supporting the entrepreneur implies wealth generation in both an economic and social sense, and, in a labour environment of uncertainty as the one in which we are currently involved, the researchers of this project firmly believe in the power of business creation as both: personal self-fulfilment and job generation and social and community welfare.

### **Author details**

with institutions. The university can intercede in these circumstances, in the first place, by encouraging the "entrepreneur's spirit" of students through an educational model centred on the students, and, in the second place, by providing them support so that they can easily face

Besides, results also show that the entrepreneur is a well-considered person in the society, always related to creativity and ambition, just the opposite of the non-entrepreneur person, who is seen as a passive and conformist individual. In that sense, the university has to take advantage of that thinking adapting the commented entrepreneur's characteristics to the objectives to reach in subjects. In that way, even if students do not consider themselves to carry the "entrepreneur's spirit", at least they see themselves with the ability of searching new

Finally, in relation to the university's role in the training of entrepreneurs, it is clear that all groups that were interviewed agreed with the need of more activities focused on the entrepreneurship, as informative talks or projects about creating your own business. At this point, the pressing needs of carrying out entrepreneurship projects in the bosom of the university are confirmed, introducing new focus on the subjects, new ways of teaching, and new places

In general, the growing consciousness about entrepreneurship can be highlighted from this study. People are looking at the option of becoming an entrepreneur as a real job opportunity. Besides, it can be appreciated that this fact is mostly encouraged by the current Spanish economic context, in which graduates are having their expectations of working in something related to their field frustrated. Thus, the university's role is essential. The university needs to set methods of teaching focused on students, trying to make them discover the potential of their entrepreneur's abilities. Moreover, there are certain competences that students normally relate to the entrepreneur—as it has been observed in the study—and these competences can be learned and developed at the university, as a useful

As a result of this study, fruit of the *II Plan Propio de Docencia de la Universidad de Sevilla*10 and done in collaboration with a call of *Proyectos de Innovación Docente de la Universidad de Cádiz*,

we find ourselves deep into the creation of an office of entrepreneur's attention. It is being established in the Campus Cartuja of the University of Seville and in the Campus Jerez of the University of Cadiz. This project, which is currently in the height of its development, has had

a specific funding in order to support the entrepreneur through:

• Organisation of conferences and seminars. • Creation of a prize to the best business idea.

• Bureaucracy information for the business launch.

<sup>10</sup>II Own Plan of University Teaching of the University of Seville. 11Projects of University Teaching Innovation of the University of Cadiz.

• Tutorship of a business project.

the bureaucratic obstacles.

solutions to same problems.

tool in their daily life.

where the student can be informed and oriented.

374 Entrepreneurship - Development Tendencies and Empirical Approach

Gloria Jiménez-Marín<sup>1</sup> \*, Rodrigo Elías Zambrano2 and Elena Bellido-Pérez<sup>1</sup>

\*Address all correspondence to: gloria\_jimenez@us.es

1 University of Seville, Seville, Spain

2 University of Cadiz, Cádiz, Spain

### **References**

11


[8] Pleitner HJ. Entrepreneurship- fashion or driving force? In: Genescá E, Urbano D, Cabelleras JL, Guallarte C, Vergés J, editors. Creación de Empresas. Entrepreneurship. Homenaje al Profesor José María Veciana Vergés. Bellaterra: Universitat Autònoma de Barcelona; 2003. p. 33-47

**Chapter 20**

Provisional chapter

**Business Plan: In or Out? A Holistic View of the**

Business Plan: In or Out? A Holistic View of the

**Evaluating Business Opportunities**

Evaluating Business Opportunities

Amélia Maria Pinto da Cunha Brandão and Carlos Henrique Figueiredo e Melo de Brito

Amélia Maria Pinto da Cunha Brandão and Carlos Henrique Figueiredo e Melo de Brito

Additional information is available at the end of the chapter

Additional information is available at the end of the chapter

Sandra Filipa Moreira Fernandes,

Sandra Filipa Moreira Fernandes,

http://dx.doi.org/10.5772/intechopen.71844

that do not survive in the market.

planning, lean start-up, new ventures

Abstract

**Combination of Planning and Learning Processes when**

DOI: 10.5772/intechopen.71844

Combination of Planning and Learning Processes when

Entrepreneurship is an important driver of innovation that is a critical factor to boost the competitiveness of modern economies. However, the rate of failure of start-ups tends to be quite significant. This chapter offers a new understanding of entrepreneurship inasmuch as a particular attention is given to different insights on the business plan in the creation of start-ups. In this context, we propose a broader understanding of the business plan integrating it in a holistic understanding of the business planning process. This investigation project results from the merits associated with the concomitant approach that combines planning and learning when creating new businesses. We support the adoption of this approach by developing a scheme that combines two processes that seem to be opposite. One focuses on the business planning and the other on the information collected from customers and other stakeholders. This scheme is likely to guide entrepreneurs and managers when they choose the concomitant approach that combines planning and learning over the other approaches previously studied. Furthermore, we also establish the foundation for future scientific research to develop a framework that can be used to help decrease the number of new businesses

Keywords: nascent entrepreneurship, business opportunity, business plan, business

© The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and eproduction in any medium, provided the original work is properly cited.

© 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


Provisional chapter

### **Business Plan: In or Out? A Holistic View of the Combination of Planning and Learning Processes when Evaluating Business Opportunities** Business Plan: In or Out? A Holistic View of the Combination of Planning and Learning Processes when

DOI: 10.5772/intechopen.71844

Sandra Filipa Moreira Fernandes, Amélia Maria Pinto da Cunha Brandão and Carlos Henrique Figueiredo e Melo de Brito Sandra Filipa Moreira Fernandes, Amélia Maria Pinto da Cunha Brandão and

Evaluating Business Opportunities

Additional information is available at the end of the chapter Carlos Henrique Figueiredo e Melo de Brito

http://dx.doi.org/10.5772/intechopen.71844 Additional information is available at the end of the chapter

#### Abstract

[8] Pleitner HJ. Entrepreneurship- fashion or driving force? In: Genescá E, Urbano D, Cabelleras JL, Guallarte C, Vergés J, editors. Creación de Empresas. Entrepreneurship. Homenaje al Profesor José María Veciana Vergés. Bellaterra: Universitat Autònoma de

[9] Cuervo A. La creación empresarial. De empresarios a directivos. In: Genescá E, Urbano D, Cabelleras JL, Guallarte C, Vergés J, editors. Creación de Empresas. Entrepreneurship. Homenaje al Profesor Jose María Veciana Vergés. Bellaterra: Universitat Autònoma de

[10] Jiménez-Marín G, Silva Robles C, Elías Zambrano R. Docencia universitaria y proyectos de evaluación aplicados. El emprendimiento como modelo de evaluación y aprendizaje. In: Rodríguez Terceño J, editor. Nuevas Perspectivas Modales Para la Enseñanza

[11] Dalmau JI, Alonso JL, Colomer J. Programa IDEAS. In: Un Modelo de Éxito Para Fomentar la Creación de Empresas Desde las Universidades. Valencia: Universidad

[12] Gerver R. Creando hoy las Escuelas del Mañana: La Educación y el Futuro de Nuestros

[13] Robinson KR. El blog de Eduard Punset [Internet]. 2011. Available from: http://www. redesparalaciencia.com/wp-content/uploads/2011/03/entrev87.pdf [Accessed: Jul 6, 2017]

[14] Robinson K. The Element: How Finding Your Passion Changes Everything. Grijalbo:

[15] Viinikainen J, Heineck G, Böckerman P, Hintsanen M, Raitakari O, Pehkonen J. Born entrepreneurs? Adolescents' personality characteristics and entrepreneurship in adulthood. Journal of Business Venturing Insights. 2017;**8**:9-12. DOI: 10.1016/J.JBVI.2017.05.001

[16] Robinson S, Neergaard H, Tanggaard L, Krueger N. New horizons in entrepreneurship: From teacher-led to student-centered learning. Education and Training. 2016;**58**(7-8):

[17] Sáenz Garza M, Zambrano Chávez N, Torres Muñoz O, Pereyra Luna M, Hernández Contreras E. Sistematización de la enseñanza: formación basada en competencias [Internet]. 2008. Available from: http://www.slideshare.net/guest7be72d/formacin-

[18] Lagardera F. Sobre aquello que puede educar la Educación Física. Revista Interuni-

Barcelona; 2003. p. 33-47

376 Entrepreneurship - Development Tendencies and Empirical Approach

Barcelona; 2003. p. 49-73

Politécnica de Valencia; 2003

Hijos. Madrid: SM; 2010. p. 176

661-683. DOI: 10.108/ET-03-2016-0048

basada-en-competencias-447490 [Accessed: Jul 6, 2017]

versitaria de Formación del Profesorado. 1992;**15**:55-72

[19] Duart JM. Aprender en la Virtualidad. Gedisa: Barcelona; 2000

Barcelona; 2009. p. 288

Superior. Visión Libros: Madrid; 2014. p. 77-94

Entrepreneurship is an important driver of innovation that is a critical factor to boost the competitiveness of modern economies. However, the rate of failure of start-ups tends to be quite significant. This chapter offers a new understanding of entrepreneurship inasmuch as a particular attention is given to different insights on the business plan in the creation of start-ups. In this context, we propose a broader understanding of the business plan integrating it in a holistic understanding of the business planning process. This investigation project results from the merits associated with the concomitant approach that combines planning and learning when creating new businesses. We support the adoption of this approach by developing a scheme that combines two processes that seem to be opposite. One focuses on the business planning and the other on the information collected from customers and other stakeholders. This scheme is likely to guide entrepreneurs and managers when they choose the concomitant approach that combines planning and learning over the other approaches previously studied. Furthermore, we also establish the foundation for future scientific research to develop a framework that can be used to help decrease the number of new businesses that do not survive in the market.

Keywords: nascent entrepreneurship, business opportunity, business plan, business planning, lean start-up, new ventures

© 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

© The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and eproduction in any medium, provided the original work is properly cited.

### 1. Introduction

With the economic and financial recession in Europe, entrepreneurship has gained greater importance as a driver of innovation and competitiveness, both critical to boosting the economy in a global world [1]. The growing importance of entrepreneurship raises two critical questions:

From a methodological point of view, we explore the pluses of two approaches perceived as opposing, combining the stages of a process that is concentrated in business planning and the stages of a process that involves collecting information from potential clients and other business partners. This results in the creation of a scheme that, taking into account the merits associated with the adoption of the concomitant approach that combines planning and learning—studying the various business constraints—helps us understand the path that entrepreneurs take with the objective of developing business ideas and assessing their viability.

Business Plan: In or Out? A Holistic View of the Combination of Planning and Learning Processes when…

http://dx.doi.org/10.5772/intechopen.71844

379

Quite distinctive actors have used the term entrepreneurship in different contexts. This con-

While reviewing the existing literature, we observed the coexistence of different definitions for this concept. Some authors [1, 10] suggest that we should group definitions based on the actions we perceive as entrepreneurial or based on the individual who performs them—the entrepreneur. Following our analysis of the definitions of entrepreneurship based on entrepreneurial actions, we propose subdividing those definitions depending on the extent of initiatives included. Narrowly speaking, entrepreneurship relates to the creation of new businesses [11] with the goal of benefiting from a business opportunity or as an answer to an unemployment situation [12, 13]. From a broader perspective, entrepreneurship is associated with the exploitation of opportunities, namely, business opportunities [10]. In the case of new or existing businesses implementing diversification strategies—they aim to obtain profit. On the other hand, entrepreneurs, in general, can explore opportunities only with the social well-being in mind [10].

The definitions on entrepreneurship based on the entrepreneur itself are related mainly to the entrepreneur's characteristics. For example, entrepreneurship can be perceived as a predispo-

So far, definitions of entrepreneurship present the entrepreneur as an individual, a company, or a nonprofit organization—this gives sense to the expression "entrepreneurial thinking" used by some authors [1, 11] and to the definition of entrepreneurship as a lifestyle [15]. However, none of the previously presented categories or definitions reflect this view on entrepreneurship. Thus, we suggest the addition of a new definition group that perceives

Table 1 summarizes the specific aspects of the several mentioned definitions of entrepreneur-

In our study, we use the term entrepreneurship to designate the exploitation of opportunities not necessarily business opportunities—by some individuals that act alone or as formal or informal working groups. This is a holistic understanding of the concept that has its origin in

the specific aspects of the definitions of entrepreneurship summarized in Table 1.

sition to innovate [14] or to pursuit profit or a social change [10].

entrepreneurship as a social denominator from a societal perspective.

ship based on the categories and subcategories created.

trasts with the attempts to define it made by researchers in the field of management.

3. Literature review

3.1. Concepts of entrepreneurship


We agree that the high number of new businesses that do not survive is a concern [2]. One of the reasons seems to be the process that is traditionally adopted by individuals to transform an idea into a business [2, 3], and the writing of business plans seems to be the main source of controversy [4]. Some authors contend this practice [5, 6], emphasizing its advantages; others present some arguments against it [7, 8], while, in some cases, alternatives are presented [2].

This chapter addresses nascent entrepreneurship and the approach to creating new businesses. We specifically analyze the importance of the business plan and the business planning process itself to entrepreneurs by researching and going through several interpretations of those concepts. As concluded during our previous research work, the existing literature is missing a broader understanding of the business plan concept and its objectives and effects [5].

The structure of this chapter is as follows. After this introductory section, we put in evidence the main goal of the chapter as well as the methodological approach adopted in our research. Then, we share the ideas that resulted from our review of the existing literature as far as approaches to creating new businesses are concerned and the importance of the business plan nowadays. The chapter finishes with a section dedicated to the conclusions that summarizes the main contributions and suggests lines for further research.

### 2. Aims and methodology

To answer the questions raised in the beginning of the introductory section, the chapter conducts an in-depth literature review. This begins with a comprehensive view of the different concepts of entrepreneurship, followed by an analysis of the approaches to creating new businesses. Then, we elaborate on the more holistic perspectives of the business plan and the correlation between business plan and business planning as a process. Based on the strengths and weaknesses of these two practices, we put in evidence the advantages of adopting an approach that combines planning and learning principles.

The research aims at understanding the several approaches to creating new businesses in the existing literature—which differ mainly as far as the business plan and the business planning process are concerned—and how these affect the success of business initiatives [9]. Another objective is to establish the foundation for future scientific research to develop a framework that can combine the planning and learning processes when evaluating business opportunities —together with public organizations—to reduce the number of start-ups that do not survive.

From a methodological point of view, we explore the pluses of two approaches perceived as opposing, combining the stages of a process that is concentrated in business planning and the stages of a process that involves collecting information from potential clients and other business partners. This results in the creation of a scheme that, taking into account the merits associated with the adoption of the concomitant approach that combines planning and learning—studying the various business constraints—helps us understand the path that entrepreneurs take with the objective of developing business ideas and assessing their viability.

### 3. Literature review

1. Introduction

• Who is an entrepreneur?

2. Aims and methodology

• Which initiatives are entrepreneurial in nature?

378 Entrepreneurship - Development Tendencies and Empirical Approach

With the economic and financial recession in Europe, entrepreneurship has gained greater importance as a driver of innovation and competitiveness, both critical to boosting the economy in a global world [1]. The growing importance of entrepreneurship raises two critical questions:

We agree that the high number of new businesses that do not survive is a concern [2]. One of the reasons seems to be the process that is traditionally adopted by individuals to transform an idea into a business [2, 3], and the writing of business plans seems to be the main source of controversy [4]. Some authors contend this practice [5, 6], emphasizing its advantages; others present some arguments against it [7, 8], while, in some cases, alternatives are presented [2].

This chapter addresses nascent entrepreneurship and the approach to creating new businesses. We specifically analyze the importance of the business plan and the business planning process itself to entrepreneurs by researching and going through several interpretations of those concepts. As concluded during our previous research work, the existing literature is missing a

The structure of this chapter is as follows. After this introductory section, we put in evidence the main goal of the chapter as well as the methodological approach adopted in our research. Then, we share the ideas that resulted from our review of the existing literature as far as approaches to creating new businesses are concerned and the importance of the business plan nowadays. The chapter finishes with a section dedicated to the conclusions that summarizes

To answer the questions raised in the beginning of the introductory section, the chapter conducts an in-depth literature review. This begins with a comprehensive view of the different concepts of entrepreneurship, followed by an analysis of the approaches to creating new businesses. Then, we elaborate on the more holistic perspectives of the business plan and the correlation between business plan and business planning as a process. Based on the strengths and weaknesses of these two practices, we put in evidence the advantages of adopting an

The research aims at understanding the several approaches to creating new businesses in the existing literature—which differ mainly as far as the business plan and the business planning process are concerned—and how these affect the success of business initiatives [9]. Another objective is to establish the foundation for future scientific research to develop a framework that can combine the planning and learning processes when evaluating business opportunities —together with public organizations—to reduce the number of start-ups that do not survive.

broader understanding of the business plan concept and its objectives and effects [5].

the main contributions and suggests lines for further research.

approach that combines planning and learning principles.

#### 3.1. Concepts of entrepreneurship

Quite distinctive actors have used the term entrepreneurship in different contexts. This contrasts with the attempts to define it made by researchers in the field of management.

While reviewing the existing literature, we observed the coexistence of different definitions for this concept. Some authors [1, 10] suggest that we should group definitions based on the actions we perceive as entrepreneurial or based on the individual who performs them—the entrepreneur.

Following our analysis of the definitions of entrepreneurship based on entrepreneurial actions, we propose subdividing those definitions depending on the extent of initiatives included. Narrowly speaking, entrepreneurship relates to the creation of new businesses [11] with the goal of benefiting from a business opportunity or as an answer to an unemployment situation [12, 13]. From a broader perspective, entrepreneurship is associated with the exploitation of opportunities, namely, business opportunities [10]. In the case of new or existing businesses implementing diversification strategies—they aim to obtain profit. On the other hand, entrepreneurs, in general, can explore opportunities only with the social well-being in mind [10].

The definitions on entrepreneurship based on the entrepreneur itself are related mainly to the entrepreneur's characteristics. For example, entrepreneurship can be perceived as a predisposition to innovate [14] or to pursuit profit or a social change [10].

So far, definitions of entrepreneurship present the entrepreneur as an individual, a company, or a nonprofit organization—this gives sense to the expression "entrepreneurial thinking" used by some authors [1, 11] and to the definition of entrepreneurship as a lifestyle [15]. However, none of the previously presented categories or definitions reflect this view on entrepreneurship. Thus, we suggest the addition of a new definition group that perceives entrepreneurship as a social denominator from a societal perspective.

Table 1 summarizes the specific aspects of the several mentioned definitions of entrepreneurship based on the categories and subcategories created.

In our study, we use the term entrepreneurship to designate the exploitation of opportunities not necessarily business opportunities—by some individuals that act alone or as formal or informal working groups. This is a holistic understanding of the concept that has its origin in the specific aspects of the definitions of entrepreneurship summarized in Table 1.




Table 1. Interpretive summary of the various definitions of entrepreneurship.

Nonetheless, we agree to the use of the term entrepreneurship in a context of one or more expressions to refer to specific situations. This relates to the affirmation of entrepreneurship as an independent field of study [16], in which the rising of subareas of study in both the literature and the syllabuses defines the nuances between the several definitions of entrepreneurship [10].

One of the challenges that entrepreneurs face is deciding on the right approach to transform an idea into a business, as there is not a consensus regarding that matter in the existing literature [9, 18].

Business Plan: In or Out? A Holistic View of the Combination of Planning and Learning Processes when…

http://dx.doi.org/10.5772/intechopen.71844

381

Entrepreneurs have been using two different approaches when transforming an idea into a business—a traditional approach and a lean start-up approach. The traditional approach lies on entrepreneurs following a sequence of stages [2]. There are five stages: writing a business plan, pitching to potential investors, creating the working team, make the new product/service available in the market, and an aggressive sales force strategy to sell to the target clients [2].

This approach is not widely accepted. Some authors [2, 3] find this approach to be responsible

The most frequent criticism lies on the disengagement with potential clients throughout most of the process [2, 19]. Sure enough, these are only engaged during the selling attempt actions [2, 19]. This leads to a second criticism related to wasting resources on the development of a product/service that customers do not wish or whose features are not valued by them [2, 3, 20]. Additionally, the use of the business plan as a tool of self-management for existing businesses is questioned [2], since these companies are the only ones with the necessary precise and broad

3.2. Approaches to creating new businesses

Table 2. Categorization of subfields within entrepreneurial studies.

for the significant rate of new businesses that do not succeed.

information to create certain assumptions [9, 18].

According to some researchers [10], to establish a new subfield, it is necessary to point out in which dimension this subfield differentiates itself from the existing ones within entrepreneurial studies. Table 2 encompasses the dimensions and criteria used to define the subfields within entrepreneurial studies, as well as a summary of the current subfields and the unique characteristics of each one of them.

We also propose the addition of a subfield named "nascent entrepreneurship" to the preexisting subfields within entrepreneurial studies. This expression is used to name the process of creating new businesses [17].

In the previous group, the new businesses were part of a subfield named "small business entrepreneurship" [10], probably since usually new businesses are small at the time they enter the market and face the same pros and cons that small businesses do. However, they face their unique challenges in the life cycle stage they are in [18]—and their small dimension may be just one of the challenges and not one of the most important ones.


One of the challenges that entrepreneurs face is deciding on the right approach to transform an idea into a business, as there is not a consensus regarding that matter in the existing literature [9, 18].

#### 3.2. Approaches to creating new businesses

Nonetheless, we agree to the use of the term entrepreneurship in a context of one or more expressions to refer to specific situations. This relates to the affirmation of entrepreneurship as an independent field of study [16], in which the rising of subareas of study in both the literature and the syllabuses defines the nuances between the several definitions of entrepre-

According to some researchers [10], to establish a new subfield, it is necessary to point out in which dimension this subfield differentiates itself from the existing ones within entrepreneurial studies. Table 2 encompasses the dimensions and criteria used to define the subfields within entrepreneurial studies, as well as a summary of the current subfields and the unique

We also propose the addition of a subfield named "nascent entrepreneurship" to the preexisting subfields within entrepreneurial studies. This expression is used to name the

In the previous group, the new businesses were part of a subfield named "small business entrepreneurship" [10], probably since usually new businesses are small at the time they enter the market and face the same pros and cons that small businesses do. However, they face their unique challenges in the life cycle stage they are in [18]—and their small dimension may be just

neurship [10].

characteristics of each one of them.

process of creating new businesses [17].

one of the challenges and not one of the most important ones.

Table 1. Interpretive summary of the various definitions of entrepreneurship.

380 Entrepreneurship - Development Tendencies and Empirical Approach

Entrepreneurs have been using two different approaches when transforming an idea into a business—a traditional approach and a lean start-up approach. The traditional approach lies on entrepreneurs following a sequence of stages [2]. There are five stages: writing a business plan, pitching to potential investors, creating the working team, make the new product/service available in the market, and an aggressive sales force strategy to sell to the target clients [2].

This approach is not widely accepted. Some authors [2, 3] find this approach to be responsible for the significant rate of new businesses that do not succeed.

The most frequent criticism lies on the disengagement with potential clients throughout most of the process [2, 19]. Sure enough, these are only engaged during the selling attempt actions [2, 19]. This leads to a second criticism related to wasting resources on the development of a product/service that customers do not wish or whose features are not valued by them [2, 3, 20].

Additionally, the use of the business plan as a tool of self-management for existing businesses is questioned [2], since these companies are the only ones with the necessary precise and broad information to create certain assumptions [9, 18].

The lean start-up approach is an alternative to the traditional methods which enables to mitigate failure episodes when entrepreneurs follow this approach [2]. This approach involves three stages or techniques—the last two are simultaneous: sketch out hypotheses regarding the business model, customer development, and agile product development [2].

The main difference regarding the traditional approach lies in the importance given to the business model. According to the lean start-up approach, a new company should start by searching for a business model and validate it together with potential clients, instead of creating a business plan presuming its execution [2].

Table 3 shows this and other points of conflict between the traditional and lean start-up approaches when creating new businesses.

There is also a third approach—opposite to the lean start-up approach—the concomitant approach that combines planning and learning. Instead of abandoning the planning activity, this approach combines it with another practice that targets a trial-and-error learning process.

In the context of the concomitant approach, the sequence of planning-executing—associated with the traditional approach—is replaced by the trilogy planning-learning-doing [18]. This overcomes the weaknesses related to the business planning process, the specific context in which new businesses operate, and the existing assumptions regarding the business model that needs testing [18].

We also recognize the merits of combining more than one approach or process when considering the business plan, which some researchers advocate to be an advantage to entrepreneurs [5, 6] when evaluating business opportunities with the goal of creating new ventures.

The next section addresses the various interpretations of the business plan concept through a holistic understanding that is integrated with the business planning process.

#### 3.3. Holistic understanding of the business plan

As far as the traditional approach is concerned, the business plan has been the subject of increased scrutiny [4]. There are published papers entirely dedicated to the discussion of the business plan, whether analyzing the best practices for writing a business plan [4, 21] or its importance in the creation of new businesses [5, 8, 22].

As far as the last is concerned, some researchers defend that entrepreneurs should write a business plan [5, 6] as a complement to other managerial tools [18, 22]; other researchers argument against writing a business plan [7, 8], and others suggest alternatives [2].

With this study, we realize that the previously observed rising interest of researchers on the business planning process and not on the business plan [23] can turn this discussion into a more complex one and one that revolves around the importance of the business plan, since it creates a different interpretation and gives it a relative importance.

The existence of different opinions regarding the importance of the business plan when creating new businesses seems to be justified by the lack of a wider understanding of this concept and its objectives and effects [5].

Before specifying the merits associated with the business planning activity and business plan that justify the adoption of the concomitant approach, we want to focus our attention on the several definitions of business plan we can find in the existing literature and how these affect

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the objectives associated with it and its format and content.

Table 3. Differences between approaches when creating new businesses.


Table 3. Differences between approaches when creating new businesses.

The lean start-up approach is an alternative to the traditional methods which enables to mitigate failure episodes when entrepreneurs follow this approach [2]. This approach involves three stages or techniques—the last two are simultaneous: sketch out hypotheses regarding the business model, customer development, and agile product development [2].

The main difference regarding the traditional approach lies in the importance given to the business model. According to the lean start-up approach, a new company should start by searching for a business model and validate it together with potential clients, instead of

Table 3 shows this and other points of conflict between the traditional and lean start-up

There is also a third approach—opposite to the lean start-up approach—the concomitant approach that combines planning and learning. Instead of abandoning the planning activity, this approach combines it with another practice that targets a trial-and-error learning process. In the context of the concomitant approach, the sequence of planning-executing—associated with the traditional approach—is replaced by the trilogy planning-learning-doing [18]. This overcomes the weaknesses related to the business planning process, the specific context in which new businesses operate, and the existing assumptions regarding the business model

We also recognize the merits of combining more than one approach or process when considering the business plan, which some researchers advocate to be an advantage to entrepreneurs

The next section addresses the various interpretations of the business plan concept through a

As far as the traditional approach is concerned, the business plan has been the subject of increased scrutiny [4]. There are published papers entirely dedicated to the discussion of the business plan, whether analyzing the best practices for writing a business plan [4, 21] or its

As far as the last is concerned, some researchers defend that entrepreneurs should write a business plan [5, 6] as a complement to other managerial tools [18, 22]; other researchers

With this study, we realize that the previously observed rising interest of researchers on the business planning process and not on the business plan [23] can turn this discussion into a more complex one and one that revolves around the importance of the business plan, since it

The existence of different opinions regarding the importance of the business plan when creating new businesses seems to be justified by the lack of a wider understanding of this concept

argument against writing a business plan [7, 8], and others suggest alternatives [2].

creates a different interpretation and gives it a relative importance.

[5, 6] when evaluating business opportunities with the goal of creating new ventures.

holistic understanding that is integrated with the business planning process.

creating a business plan presuming its execution [2].

382 Entrepreneurship - Development Tendencies and Empirical Approach

3.3. Holistic understanding of the business plan

importance in the creation of new businesses [5, 8, 22].

and its objectives and effects [5].

approaches when creating new businesses.

that needs testing [18].

Before specifying the merits associated with the business planning activity and business plan that justify the adoption of the concomitant approach, we want to focus our attention on the several definitions of business plan we can find in the existing literature and how these affect the objectives associated with it and its format and content.

One of the definitions refers to the business plan as a managerial tool [7] that allows the assessment of opportunities [5]. For that matter, the business plan assumes two main functions: the distinction between opportunities and ideas and the development of opportunities [5].

The authors that adopted the ex ante perspective believe that the main goal of the business planning process is to avoid flops, i.e., the transposition of bad business ideas to the market [23]. In consequence, both the importance and the effectiveness of the business planning process should be evaluated not only based on successful projects but also mainly based on

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Having the goal mentioned above in mind, we suggest adding two functions to the business planning process considering this ex ante perspective: the evaluation of the business components and the support in the entrepreneur's decision-making process. Both functions are underpinned by the learning and information values associated with the business planning process in the literature related to the creation of new businesses [18, 23]. The first value refers to how the things entrepreneurs take into account when making subsequent decisions influence the process [23]; the second value is related to the received inputs that encourage or discourage the will to

The ex post perspective of business planning considers the performance of new businesses to be the main goal of the business planning process [23]. It can be measured after a new business enters the market through the analysis of the positive effects the business planning process has

We would like to point out the following positive effects of business planning process in business development as the most significant one: reduction of the risk to stop the project and simplification of product/service development activities and structuring activities related to the creation of new businesses [25, 28]. In short, we propose an association of the business planning process with an orientation function to action—in the light of the ex post perspective.

Although both perspectives recognize the merits of the business planning process, these seem to be constrained by some factors. The ex ante perspective highlights how the practice importance depends on its quality and the cost-benefit ratio [23]. Researchers that advocate the ex post perspective, as well as the subsequent implementation of the business plan [25] and the

Now that the different definitions of business plan and its connection to the business planning process are clear, we would like to present our own holistic and integrated view of the several concepts. We have mentioned that the business plan was simultaneously a managerial tool or a supporting document and the result of the process on which it was based—the business planning process. As opposed to this last definition, business planning was the process that

Following this view, we propose a connection and correlation between the various definitions of business plan and business planning process, as stated in Figure 1. We suggest that the business planning process provides the necessary information for business plan writing and the business plan guides the research conducted during the business planning process by

Considering only the interest in the business planning process because of its advantages before a new business enters the market—which is justified by the ex ante perspective on business

create a new business and launch a new product/service in the market [23].

in its development [9, 25, 26, 28] and financial performance [27].

context-related factors [9, 18], also mention the quality factor.

led to the writing of a business plan.

indicating its core goal.

the reduction of unsuccessful cases [23].

The business plan is also perceived as a document that provides information on the choices of the new company regarding the target market, the products/services that will be available in that market, the necessary resources to make the project viable, and the forecasted growth [6] —looking to get funding from potential investors [21]. Given this context, we highlight the following business plan functions: establishing the new business and entrepreneur characteristics and legitimizing the new company [6]. The first one has to do with how the information contained in the business plan can persuade potential investors about the business attractiveness [21] and the entrepreneur's capacity to manage it [20]. The second one is related to the less risky approach of observing a standard practice [8].

Finally, the business plan is described as a result [23] or a component [18] of the business planning process. In consequence, business planning is the process that results in a business plan [18] or that integrates a series of activities with the purpose of writing a business plan [24]. We compare these interpretations of the business planning process, although some authors do not [18], since these express different importance levels as far as the business planning process and the business plan are concerned, and regarding the reasons for the business planning process, "is it worthy on its own or only if it results in a Business Plan?" In the light of the first interpretation, some researchers [23] advocate that a business plan may not be written, namely, if entrepreneurs decide not to move forward with the creation of a new company at the end of the business planning process.

As a result of the business planning process, the business plan acts as a tool for internal coordination and control [8], and we believe that its main objective is to support the entrance in the market.

Based on the analysis of the several interpretations, we conclude that the business plan is both a managerial tool and a supporting document and it results from a process that substantiates it. Its assumption as a managerial tool or supporting document depends on the adopted perspective: internal or external to the businesses.

#### 3.4. Correlation between business plan and business planning process

The last definition of business plan refers to the necessity of understanding the business planning process independently, as well as its advantages when creating new businesses. In fact, business planning as a process that results in writing a business plan has been discussed over the last years [6, 23]. Some researchers validate this practice through empirical studies [6, 9, 25, 26] and theoretical frameworks [23], while others question it [8, 27] based on the particular aspects of new business creation [18].

We will start by presenting the arguments in favor of the business planning process, which can be grouped according to the ex ante or ex post perspectives on business planning [18, 23]. The first perspective advocates that its effects are visible before a new business enters the market [23]; the second one claims that those effects are noticeable after a new business enters the market.

The authors that adopted the ex ante perspective believe that the main goal of the business planning process is to avoid flops, i.e., the transposition of bad business ideas to the market [23]. In consequence, both the importance and the effectiveness of the business planning process should be evaluated not only based on successful projects but also mainly based on the reduction of unsuccessful cases [23].

One of the definitions refers to the business plan as a managerial tool [7] that allows the assessment of opportunities [5]. For that matter, the business plan assumes two main functions: the distinction between opportunities and ideas and the development of opportunities [5].

The business plan is also perceived as a document that provides information on the choices of the new company regarding the target market, the products/services that will be available in that market, the necessary resources to make the project viable, and the forecasted growth [6] —looking to get funding from potential investors [21]. Given this context, we highlight the following business plan functions: establishing the new business and entrepreneur characteristics and legitimizing the new company [6]. The first one has to do with how the information contained in the business plan can persuade potential investors about the business attractiveness [21] and the entrepreneur's capacity to manage it [20]. The second one is related to the less

Finally, the business plan is described as a result [23] or a component [18] of the business planning process. In consequence, business planning is the process that results in a business plan [18] or that integrates a series of activities with the purpose of writing a business plan [24]. We compare these interpretations of the business planning process, although some authors do not [18], since these express different importance levels as far as the business planning process and the business plan are concerned, and regarding the reasons for the business planning process, "is it worthy on its own or only if it results in a Business Plan?" In the light of the first interpretation, some researchers [23] advocate that a business plan may not be written, namely, if entrepreneurs decide not to move forward with the creation of a new company at the end of

As a result of the business planning process, the business plan acts as a tool for internal coordination and control [8], and we believe that its main objective is to support the entrance

Based on the analysis of the several interpretations, we conclude that the business plan is both a managerial tool and a supporting document and it results from a process that substantiates it. Its assumption as a managerial tool or supporting document depends on the adopted

The last definition of business plan refers to the necessity of understanding the business planning process independently, as well as its advantages when creating new businesses. In fact, business planning as a process that results in writing a business plan has been discussed over the last years [6, 23]. Some researchers validate this practice through empirical studies [6, 9, 25, 26] and theoretical frameworks [23], while others question it [8, 27] based on the particular aspects of

We will start by presenting the arguments in favor of the business planning process, which can be grouped according to the ex ante or ex post perspectives on business planning [18, 23]. The first perspective advocates that its effects are visible before a new business enters the market [23]; the second one claims that those effects are noticeable after a new business enters the market.

risky approach of observing a standard practice [8].

384 Entrepreneurship - Development Tendencies and Empirical Approach

perspective: internal or external to the businesses.

3.4. Correlation between business plan and business planning process

the business planning process.

new business creation [18].

in the market.

Having the goal mentioned above in mind, we suggest adding two functions to the business planning process considering this ex ante perspective: the evaluation of the business components and the support in the entrepreneur's decision-making process. Both functions are underpinned by the learning and information values associated with the business planning process in the literature related to the creation of new businesses [18, 23]. The first value refers to how the things entrepreneurs take into account when making subsequent decisions influence the process [23]; the second value is related to the received inputs that encourage or discourage the will to create a new business and launch a new product/service in the market [23].

The ex post perspective of business planning considers the performance of new businesses to be the main goal of the business planning process [23]. It can be measured after a new business enters the market through the analysis of the positive effects the business planning process has in its development [9, 25, 26, 28] and financial performance [27].

We would like to point out the following positive effects of business planning process in business development as the most significant one: reduction of the risk to stop the project and simplification of product/service development activities and structuring activities related to the creation of new businesses [25, 28]. In short, we propose an association of the business planning process with an orientation function to action—in the light of the ex post perspective.

Although both perspectives recognize the merits of the business planning process, these seem to be constrained by some factors. The ex ante perspective highlights how the practice importance depends on its quality and the cost-benefit ratio [23]. Researchers that advocate the ex post perspective, as well as the subsequent implementation of the business plan [25] and the context-related factors [9, 18], also mention the quality factor.

Now that the different definitions of business plan and its connection to the business planning process are clear, we would like to present our own holistic and integrated view of the several concepts. We have mentioned that the business plan was simultaneously a managerial tool or a supporting document and the result of the process on which it was based—the business planning process. As opposed to this last definition, business planning was the process that led to the writing of a business plan.

Following this view, we propose a connection and correlation between the various definitions of business plan and business planning process, as stated in Figure 1. We suggest that the business planning process provides the necessary information for business plan writing and the business plan guides the research conducted during the business planning process by indicating its core goal.

Considering only the interest in the business planning process because of its advantages before a new business enters the market—which is justified by the ex ante perspective on business

and support the extensive development of this theme that results mainly from such a keen

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The previous research shows that there are some weaknesses inherent to the business plan and business planning process. In recent years, researchers have been questioning whether entrepreneurs should write a business plan [2, 7, 8] or follow the business planning process [27] when creating new businesses. There is even some evidence against this practice [25]. Next, we present the criticism related to the business plan and business planning process we found in the existing research, as well as the counterarguments used by the authors in favor of entre-

As far as the business plan is concerned, the areas of criticism have to do with its role as a managerial tool and a supporting document. Some authors advocate that entrepreneurs do not actually implement business plans—these seem to be just a standard practice that is motivated

Those who support the practice of writing business plans argue that it assumes an important role when creating new businesses since it is a way of evaluating opportunities [23] valued by entrepreneurs [5]. They also argue that entrepreneurs who write business plans are able to get

There is also some criticism related to the business planning process. Ex ante perspective critics are based on the resources that are necessary for this practice [25]. Researchers challenging this point of view argue that the business planning process should be understood as a group of competencies that can be acquired, namely, the competence to analyze business opportunities

The relationship between the business planning process and the performance of new businesses, supported in the ex post perspective, is questioned due to the uncertain environment and lack of quantitative and qualitative information available that new businesses face [18]. Some authors even deny it, advocating that the business planning process does not influence

Researchers who defend the ex post perspective, on the other hand, present reasons that justify the business planning process importance for new business, such as more accurate assumptions regarding the business through the assessment of the coherence between those assumptions during the business planning process [25]. Additionally, these authors advocate that the goals set for a new business are milestones and not financial goals—entrepreneurs usually do

From the analysis of pro and con arguments, it is clear that discussions related to the business plan and business planning process are not conclusive [5, 9, 23]. This supports the choice of a concomitant approach that combines planning and learning resulting from the various existing approaches regarding the creation of new businesses. On the one hand, we cannot ignore the weaknesses identified in the business planning process and business plan that are presented in the

by external pressures, and they lose their importance for external investors [8].

interest from researchers.

preneurs adopting them.

to avoid flops [23].

3.5. Advantages of a planning and learning-based process

more financial support than those who do not [6].

the financial performance of businesses [27].

not expect positive cash flows in the first months of activity [25].

Figure 1. Correlation between business planning process and business plan.

planning—the business plan as a managerial tool would guide the information search in the business planning process, making it easy to distinguish between ideas and business opportunities. On the other hand, the business planning process would make it easy to understand the nature of the opportunity and obtain the necessary data to write the business plan. Writing a business plan would be the result of the business planning process—taking place only in cases in which a business opportunity was worth exploiting. The business plan would be written as a supporting document in cases in which the entrepreneur needed funding.

Considering the ex post perspective, we also suggest linking the concepts of business planning process and business plan—this last one is intended as a managerial tool and a result. Thus, the business plan would guide entrepreneurs in search of information during the business planning process. The business planning process would allow the entrepreneurs to make improvements to the initial business idea and in the business operationalization, providing the necessary information for writing a business plan. Writing a business plan would be the result of the business planning process, guiding the team in the several tasks to be made and alerting to possible deviations.

Concludingly, we recognize the existence of several interpretations in the existing business plan literature. They all have an influence on the objectives associated with the business plan and, coherently, in its format and content. We perceive the business planning process in the same way. However, we assume that these definitions are not mutually exclusive, and the lack of a broader understanding regarding the business plan concept does not justify its exclusion by entrepreneurs, when these are creating new businesses. On the contrary, we find that we should use the terms business plan and business planning process accurately and support the extensive development of this theme that results mainly from such a keen interest from researchers.

#### 3.5. Advantages of a planning and learning-based process

planning—the business plan as a managerial tool would guide the information search in the business planning process, making it easy to distinguish between ideas and business opportunities. On the other hand, the business planning process would make it easy to understand the nature of the opportunity and obtain the necessary data to write the business plan. Writing a business plan would be the result of the business planning process—taking place only in cases in which a business opportunity was worth exploiting. The business plan would be written as

Considering the ex post perspective, we also suggest linking the concepts of business planning process and business plan—this last one is intended as a managerial tool and a result. Thus, the business plan would guide entrepreneurs in search of information during the business planning process. The business planning process would allow the entrepreneurs to make improvements to the initial business idea and in the business operationalization, providing the necessary information for writing a business plan. Writing a business plan would be the result of the business planning process, guiding the team in the several tasks to be made and

Concludingly, we recognize the existence of several interpretations in the existing business plan literature. They all have an influence on the objectives associated with the business plan and, coherently, in its format and content. We perceive the business planning process in the same way. However, we assume that these definitions are not mutually exclusive, and the lack of a broader understanding regarding the business plan concept does not justify its exclusion by entrepreneurs, when these are creating new businesses. On the contrary, we find that we should use the terms business plan and business planning process accurately

a supporting document in cases in which the entrepreneur needed funding.

Figure 1. Correlation between business planning process and business plan.

386 Entrepreneurship - Development Tendencies and Empirical Approach

alerting to possible deviations.

The previous research shows that there are some weaknesses inherent to the business plan and business planning process. In recent years, researchers have been questioning whether entrepreneurs should write a business plan [2, 7, 8] or follow the business planning process [27] when creating new businesses. There is even some evidence against this practice [25]. Next, we present the criticism related to the business plan and business planning process we found in the existing research, as well as the counterarguments used by the authors in favor of entrepreneurs adopting them.

As far as the business plan is concerned, the areas of criticism have to do with its role as a managerial tool and a supporting document. Some authors advocate that entrepreneurs do not actually implement business plans—these seem to be just a standard practice that is motivated by external pressures, and they lose their importance for external investors [8].

Those who support the practice of writing business plans argue that it assumes an important role when creating new businesses since it is a way of evaluating opportunities [23] valued by entrepreneurs [5]. They also argue that entrepreneurs who write business plans are able to get more financial support than those who do not [6].

There is also some criticism related to the business planning process. Ex ante perspective critics are based on the resources that are necessary for this practice [25]. Researchers challenging this point of view argue that the business planning process should be understood as a group of competencies that can be acquired, namely, the competence to analyze business opportunities to avoid flops [23].

The relationship between the business planning process and the performance of new businesses, supported in the ex post perspective, is questioned due to the uncertain environment and lack of quantitative and qualitative information available that new businesses face [18]. Some authors even deny it, advocating that the business planning process does not influence the financial performance of businesses [27].

Researchers who defend the ex post perspective, on the other hand, present reasons that justify the business planning process importance for new business, such as more accurate assumptions regarding the business through the assessment of the coherence between those assumptions during the business planning process [25]. Additionally, these authors advocate that the goals set for a new business are milestones and not financial goals—entrepreneurs usually do not expect positive cash flows in the first months of activity [25].

From the analysis of pro and con arguments, it is clear that discussions related to the business plan and business planning process are not conclusive [5, 9, 23]. This supports the choice of a concomitant approach that combines planning and learning resulting from the various existing approaches regarding the creation of new businesses. On the one hand, we cannot ignore the weaknesses identified in the business planning process and business plan that are presented in the traditional approach, but on the other hand, we have to consider their proven advantages and not just replace them with the learning techniques of trial-and-error, as suggested by the lean start-up approach. Thus, we believe that entrepreneurs should use the concomitant approach that combines planning and learning, benefiting from the advantages identified in each of the processes.

Figure 2 shows that the path entrepreneurs can follow when adopting the concomitant approach that combines planning and learning.

In the starting phase, the business plan acts as a managerial tool that guides the search for the information that will allow entrepreneurs to evaluate a business opportunity during the business planning process, by going through all the steps of the business plan.

The writing of the business plan must be based only on preexisting data. However, it is also important to highlight the use of primary data—collected in the light of the lean start-up

approach, which favors the opinion of potential clients and business partners when making

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The results of the data analysis, especially as far as the economic and financial viability of the business idea is concerned, will determine the further continuity of the project—with the implementation of the subsequent stages of the traditional approach and the formal creation

However, the indicated path must be further studied, so a new framework that clearly guides entrepreneurs through the process of applying the concomitant approach that combines plan-

As far as entrepreneurship is concerned, there are several initiatives we understand as entrepreneurial, such as the exploitation of business opportunities by new companies [10]. However, these opportunities do not always result in positive outcomes, undermining the contribution of

One of the main reasons pointed out by previous researchers on the high number of new businesses that do not survive is related to the approach traditionally adopted for the activity

At the same time, some researchers defend this practice based on its advantages before [5] and after creating a new business [6], while other researchers present some arguments against it [7, 8], and in some cases, alternatives are also presented [2]. One of the alternatives presented is replacing the traditional approach and the business plan by the lean startup approach and its techniques—and replacing the planning principle by the learning

This lack of consensus in the previous research is more serious when there is a need to develop and assess the viability of a business idea, but there is little knowledge on how to proceed to boost the chances of success. Additionally, it does not seem wise to abandon a managerial tool that is proven effective. Thus, we present a scheme that crosses both the planning and learning

This is a result of adopting the concomitant approach that combines planning and learning an approach that combines both processes when evaluating business opportunities with the goal to create new companies. These processes are advocated separately by different, and sometimes opposite, research approaches—the traditional and the lean start-up approaches. For that matter, we have explored the various definitions of business plan, showing how they influence the goals associated with the writing of those business plans and, at a later stage, their format and content. We also developed a link between these definitions and the concept of business planning process to contribute to a holistic understanding of the business plan and an integrated understanding of the directly associated business planning process. We gave

ning and learning can be created—promoting the success of business initiatives.

[2, 3], the business plan being the most popular and widely studied stage [4].

processes when developing and evaluating the viability of business ideas.

entrepreneurship to the competitiveness of a country.

strategic business decisions.

of a company.

4. Conclusions

principle [2].

Figure 2. Layout of the planning and learning processes.

approach, which favors the opinion of potential clients and business partners when making strategic business decisions.

The results of the data analysis, especially as far as the economic and financial viability of the business idea is concerned, will determine the further continuity of the project—with the implementation of the subsequent stages of the traditional approach and the formal creation of a company.

However, the indicated path must be further studied, so a new framework that clearly guides entrepreneurs through the process of applying the concomitant approach that combines planning and learning can be created—promoting the success of business initiatives.

### 4. Conclusions

traditional approach, but on the other hand, we have to consider their proven advantages and not just replace them with the learning techniques of trial-and-error, as suggested by the lean start-up approach. Thus, we believe that entrepreneurs should use the concomitant approach that combines planning and learning, benefiting from the advantages identified in each of the processes. Figure 2 shows that the path entrepreneurs can follow when adopting the concomitant

In the starting phase, the business plan acts as a managerial tool that guides the search for the information that will allow entrepreneurs to evaluate a business opportunity during the

The writing of the business plan must be based only on preexisting data. However, it is also important to highlight the use of primary data—collected in the light of the lean start-up

business planning process, by going through all the steps of the business plan.

approach that combines planning and learning.

388 Entrepreneurship - Development Tendencies and Empirical Approach

Figure 2. Layout of the planning and learning processes.

As far as entrepreneurship is concerned, there are several initiatives we understand as entrepreneurial, such as the exploitation of business opportunities by new companies [10]. However, these opportunities do not always result in positive outcomes, undermining the contribution of entrepreneurship to the competitiveness of a country.

One of the main reasons pointed out by previous researchers on the high number of new businesses that do not survive is related to the approach traditionally adopted for the activity [2, 3], the business plan being the most popular and widely studied stage [4].

At the same time, some researchers defend this practice based on its advantages before [5] and after creating a new business [6], while other researchers present some arguments against it [7, 8], and in some cases, alternatives are also presented [2]. One of the alternatives presented is replacing the traditional approach and the business plan by the lean startup approach and its techniques—and replacing the planning principle by the learning principle [2].

This lack of consensus in the previous research is more serious when there is a need to develop and assess the viability of a business idea, but there is little knowledge on how to proceed to boost the chances of success. Additionally, it does not seem wise to abandon a managerial tool that is proven effective. Thus, we present a scheme that crosses both the planning and learning processes when developing and evaluating the viability of business ideas.

This is a result of adopting the concomitant approach that combines planning and learning an approach that combines both processes when evaluating business opportunities with the goal to create new companies. These processes are advocated separately by different, and sometimes opposite, research approaches—the traditional and the lean start-up approaches.

For that matter, we have explored the various definitions of business plan, showing how they influence the goals associated with the writing of those business plans and, at a later stage, their format and content. We also developed a link between these definitions and the concept of business planning process to contribute to a holistic understanding of the business plan and an integrated understanding of the directly associated business planning process. We gave meaning to a body of knowledge that does not present reasons to abandon these practices. On the contrary, it reinforces the richness of the previous research on this subject.

[4] Sahlman WA. How to write a great business plan. Harvard Business Review. 1997;75(4):

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[5] Botha M, Robertson CL. Potential entrepreneurs' assessment of opportunities through the rendering of a business plan. South African Journal of Economic and Management

[6] Hopp C. Does the presence of a formal business plan increase formal financial support? Empirical evidence from the PSED II on the signalling and mimetic nature of formal business planning. Applied Economics Letters. 2015;22(9):673-678. DOI: 10.1080/13504851.

[7] Honig B, Karlsson T. Institutional forces and the written business plan. Journal of Man-

[8] Karlsson T, Honig B. Judging a business by its cover: An institutional perspective on new ventures and the business plan. Journal of Business Venturing. 2009;24(1):27-45. DOI:

[9] Gruber M. Uncovering the value of planning in new venture creation: A process and contingency perspective. Journal of Business Venturing. 2007;22(6):782-807. DOI: 10.1016/

[10] Osiri JK, McCarty MM, Davis J, Osiri JE. Entrepreneurship mix and classifying emerging sub-fields. Academy of Entrepreneurship Journal. 2015;21(1):1-12. DOI: 10.1590/S1517-

[11] Czaplewski AJ, Duening TN, Olson EM. The rise of entrepreneurial thinking. Marketing

[12] Amorós JE, Bosma N. Global entrepreneurship monitor 2013 global report fifteen years of assessing entrepreneurship across the globe [Internet]. 2014-01-20 [Updated: 2015-03-27]

[13] Quatraro F, Vivarelli M. Drivers of entrepreneurship and post-entry performance of newborn firms in developing countries. World Bank Research Observer. 2015;30(2):277-

[14] Srivastava N, Agrawal A. Factors supporting corporate entrepreneurship: an exploratory

[15] Llopis G. The 12 Things That Successfully Convert a Great Idea Into a Reality [Internet]. 2013. Available from: http://www.forbes.com/sites/glennllopis/2013/04/01/12-things-

[16] Katz JA. The chronology and intellectual trajectory of American entrepreneurship education: 1876–1999. Journal of Business Venturing. 2003;18(2):283-300. DOI: 10.1016/S0883-

[17] Gartner WB, Shaver KG. Nascent entrepreneurship panel studies: Progress and challenges. Small Business Economics. 2012;39(3):659-665. DOI: 10.1007/s11187-011-9353-4

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98-108

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j.jbusvent.2006.07.001

97022015041779

9026(02)00098-8

News. 2015;49(2):38

305. DOI: 10.1093/wbro/lku012

study. Vision. 2010;14(3):163-171

We highlight that the merits associated with the developed scheme to combine the planning and learning processes are independent of the results. In cases in which the application of the concomitant approach that combines planning and learning results in the decision of abandoning the business idea, entrepreneurs should consider the resources saved and how these can be applied to other projects that present greater chances of success.

We hope our study can help elucidate and guide entrepreneurs and professionals in the field of management and other similar fields when they choose the concomitant approach that combines planning and learning over the other existing approaches. We also hope to have established the foundation for future scientific research to develop a framework that can be used to decrease the number of new businesses that do not survive in the market.

Finally, we would like to point out the limitations of this chapter so that future projects can enrich or even change the body of knowledge presented here. First, we have to recognize the absence of scientific nature in the presented scheme to combine both planning and learning processes that result from the traditional and lean start-up approaches. Future research could benefit from validating a framework with the same principles to promote the success of business initiatives. The scheme also misses detail regarding the information that should be collected to fulfill each of the subsections accurately. In this regard, future research is needed to assess the contents to be included.

### Author details

Sandra Filipa Moreira Fernandes\*, Amélia Maria Pinto da Cunha Brandão and Carlos Henrique Figueiredo e Melo de Brito

\*Address all correspondence to: 201300139@fep.up.pt

University of Porto, School of Economics, Porto, Portugal

### References


[4] Sahlman WA. How to write a great business plan. Harvard Business Review. 1997;75(4): 98-108

meaning to a body of knowledge that does not present reasons to abandon these practices. On

We highlight that the merits associated with the developed scheme to combine the planning and learning processes are independent of the results. In cases in which the application of the concomitant approach that combines planning and learning results in the decision of abandoning the business idea, entrepreneurs should consider the resources saved and how

We hope our study can help elucidate and guide entrepreneurs and professionals in the field of management and other similar fields when they choose the concomitant approach that combines planning and learning over the other existing approaches. We also hope to have established the foundation for future scientific research to develop a framework that can be

Finally, we would like to point out the limitations of this chapter so that future projects can enrich or even change the body of knowledge presented here. First, we have to recognize the absence of scientific nature in the presented scheme to combine both planning and learning processes that result from the traditional and lean start-up approaches. Future research could benefit from validating a framework with the same principles to promote the success of business initiatives. The scheme also misses detail regarding the information that should be collected to fulfill each of the subsections accurately. In this regard, future research is needed to

the contrary, it reinforces the richness of the previous research on this subject.

390 Entrepreneurship - Development Tendencies and Empirical Approach

these can be applied to other projects that present greater chances of success.

used to decrease the number of new businesses that do not survive in the market.

Sandra Filipa Moreira Fernandes\*, Amélia Maria Pinto da Cunha Brandão and

[1] Almeida RDC, Chaves M. Empreendedorismo como escopo de diretrizes políticas da União Europeia no âmbito do ensino superior. Educação e Pesquisa. 2015;41(2):513-526.

[2] Blank S. Why the lean start-up changes everything. Harvard Business Review. 2013;91(5):

[3] Maurya A. Running Lean: Iterate from Plan A to a Plan That Works. 2nd ed. O'Reilly

assess the contents to be included.

Carlos Henrique Figueiredo e Melo de Brito

DOI: 10.1590/s1517-97022015041779

Media: Sebastopol; 2012. 207 p

\*Address all correspondence to: 201300139@fep.up.pt

University of Porto, School of Economics, Porto, Portugal

Author details

References

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[18] Brinckmann J, Grichnik D, Kapsa D. Should entrepreneurs plan or just storm the castle? A meta-analysis on contextual factors impacting the business planning–performance relationship in small firms. Journal of Business Venturing. 2010;25(1):24-40. DOI: 10.1016/j. jbusvent.2008.10.007

**Chapter 21**

**Provisional chapter**

**Does Gender Matter in Strategies Adopted to Face the**

The purpose of this paper is to understand how Italian micro-entrepreneurs responded to the economic crisis and strategies they adopted to deal with it. A comparison between male and female entrepreneurs is presented, in order to understand if they adopted similar or different strategies. The paper also aims to understand if variables, other than gender, influenced strategies adopted to face the economic crisis. Drawing from a telephone questionnaire survey involving a sample of 300 (150 male and 150 female) owners of Italian micro-enterprises, located in Marche Region, findings suggest that entrepreneurs mostly dealt with the crisis through a defensive approach (restructuring and resizing strategies). Compared to men, female entrepreneurs had a lower propensity towards offensive strategies (innovation, development and growth). Differences in the approach towards the crisis were also identified with respect to company's age, industry and impact of the crisis. These findings contribute to the debate on gender-based differences in behaviors, attitudes and preferences. Moreover, they can help to identify economic policy measures useful to help men and women entrepreneurs to address the crisis. Policy-makers who want to support female entrepreneurship should consider these aspects, in order to identify tools and policies that can help female firms to resist the crisis more effectively in the short-term and to seize new market opportunities in the recovery phase. The sample is restricted to sole proprietors and to a limited geographical context. So further analysis should involve companies of different sizes and located in

**the Economic Crisis? A Comparison Between Men and** 

DOI: 10.5772/intechopen.70292

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution,

© 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

and reproduction in any medium, provided the original work is properly cited.

**Keywords:** economic crisis, micro-entrepreneurs, strategies, gender, women entrepreneurs

**Economic Crisis? A Comparison Between Men and**

**Does Gender Matter in Strategies Adopted to Face** 

**Women Entrepreneurs**

**Women Entrepreneurs**

http://dx.doi.org/10.5772/intechopen.70292

Annalisa Sentuti

**Abstract**

and Annalisa Sentuti

Andrea Buratti, Francesca Maria Cesaroni and

Andrea Buratti, Francesca Maria Cesaroni

Additional information is available at the end of the chapter

different geographical contexts, both in Italy and abroad.

**Jel classification**: L10; L26

Additional information is available at the end of the chapter


**Provisional chapter**

### **Does Gender Matter in Strategies Adopted to Face the Economic Crisis? A Comparison Between Men and Women Entrepreneurs the Economic Crisis? A Comparison Between Men and Women Entrepreneurs**

**Does Gender Matter in Strategies Adopted to Face** 

DOI: 10.5772/intechopen.70292

Andrea Buratti, Francesca Maria Cesaroni and Annalisa Sentuti and Annalisa Sentuti Additional information is available at the end of the chapter

Andrea Buratti, Francesca Maria Cesaroni

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.70292

#### **Abstract**

[18] Brinckmann J, Grichnik D, Kapsa D. Should entrepreneurs plan or just storm the castle? A meta-analysis on contextual factors impacting the business planning–performance relationship in small firms. Journal of Business Venturing. 2010;25(1):24-40. DOI: 10.1016/j.

[19] Onyemah V, Pesquera MR, Ali A. What entrepreneurs get wrong. Harvard Business

[21] Schneider JE. The way to a powerful business plan. Drug Discovery Today. 2002;7(6):342-

[22] Ghezzi A, Cavallaro A, Rangone A, Balocco R. A comparative study on the impact of business model design & lean startup approach versus traditional business plan on mobile startups performance. In: ICEIS 2015—17th International Conference on Enterprise Information Systems, Proceedings; 27-30 April 2015; Barcelona. SciTePress; 2015. p. 196-203 [23] Chwolka A, Raith MG. The value of business planning before start-up—A decisiontheoretical perspective. Journal of Business Venturing. 2012;27(3):385-399. DOI: 10.1016/

[24] Gibson B, Cassar G. Longitudinal analysis of relationships between planning and performance in small firms. Small Business Economics. 2005;25(3):207-222. DOI: 10.1007/

[25] Delmar F, Shane S. Does business planning facilitate the development of new ventures?

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[27] Honig B, Samuelsson M. Data replication and extension: A study of business planning and venture-level performance. Journal of Business Venturing Insights. 2014;1(1-2):18-25.

[28] Delmar F. A response to Honig and Samuelsson (2014). Journal of Business Venturing

Strategic Management Journal. 2003;24(12):1165-1185. DOI: 10.1002/smj.349

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345. DOI: 10.1016/S1359-6446(01)02154-7

392 Entrepreneurship - Development Tendencies and Empirical Approach

The purpose of this paper is to understand how Italian micro-entrepreneurs responded to the economic crisis and strategies they adopted to deal with it. A comparison between male and female entrepreneurs is presented, in order to understand if they adopted similar or different strategies. The paper also aims to understand if variables, other than gender, influenced strategies adopted to face the economic crisis. Drawing from a telephone questionnaire survey involving a sample of 300 (150 male and 150 female) owners of Italian micro-enterprises, located in Marche Region, findings suggest that entrepreneurs mostly dealt with the crisis through a defensive approach (restructuring and resizing strategies). Compared to men, female entrepreneurs had a lower propensity towards offensive strategies (innovation, development and growth). Differences in the approach towards the crisis were also identified with respect to company's age, industry and impact of the crisis. These findings contribute to the debate on gender-based differences in behaviors, attitudes and preferences. Moreover, they can help to identify economic policy measures useful to help men and women entrepreneurs to address the crisis. Policy-makers who want to support female entrepreneurship should consider these aspects, in order to identify tools and policies that can help female firms to resist the crisis more effectively in the short-term and to seize new market opportunities in the recovery phase. The sample is restricted to sole proprietors and to a limited geographical context. So further analysis should involve companies of different sizes and located in different geographical contexts, both in Italy and abroad.

**Jel classification**: L10; L26

**Keywords:** economic crisis, micro-entrepreneurs, strategies, gender, women entrepreneurs

Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons

### **1. Introduction**

The recent economic and financial crisis has had a strong impact on the Italian economy, and has put Italian companies into great difficulty. The number of bankruptcies and non-bankruptcy insolvency procedures has continued growing relentlessly [1]. However, in Italy, statistical data show that female enterprises have fared better and have resisted the economic crisis more effectively than male ones. For instance, in the period 2011–2012 the stock of Italian enterprises decreased by 0.49% (29.911 enterprises), while the number of female businesses showed only a very slight reduction (−0.04%, 593 enterprises). In the period December 2012–December 2013, moreover, the number of female businesses increased by 0.75% (+10,713 units), a value higher than that reported in all Italian companies, equal to 0.56%. More recently, using data available as on March 31, 2014, female businesses increased by 6605 units over the past 12 months, thus achieving a growth rate of 0.51%, more than twice that in the total enterprises (0.2%) [2].

**3.** Did variables, other than gender (industry, age of the business, performance and entrepre-

Does Gender Matter in Strategies Adopted to Face the Economic Crisis? A Comparison…

http://dx.doi.org/10.5772/intechopen.70292

395

In order to answer these questions, a survey research was carried out and a questionnaire was

Results from this research contribute to the debate on gender's influence in explaining behaviors of men and women entrepreneurs. This analysis in fact shows that, under the same external conditions, men adopted offensive strategies more often than women. Differences in the approach to face the crisis were also identified with respect to company's age, industry and

The paper is structured into four parts. In the first part, a literature review on strategic responses to economic crises and on factors influencing strategic choice is presented. Next, methodology employed in the empirical research is described. Finally, key results from the

It is generally accepted that companies can adopt two types of strategies when they face an economic downturn: the first is the adoption of measures aimed at maintaining efficiency through cost-cutting, selling of non-strategic assets and reducing personnel costs; the second is realized through new investments, organizational/technological innovations, introduction of new products and processes, research for new markets and new customers. The first is a defensive choice, intended to guarantee business survival in the short-term, whereas the second is an offensive choice, aimed at creating opportunities for long-term value creation. According to Miles and Snow [23], the first corresponds to the *defenders's* approach, while the

From another perspective, firms may face an economic crisis by adopting externally or internally directed strategies. The former requires actions directed towards the market and aimed to change marketing strategies, pricing strategies, international orientation, etc. The latter involve actions directed towards the firm in order to change structures, processes, systems or

In this wide range of possibilities, and combining both perspectives, four main strategies may be identified to explain how firms may respond to an economic crisis: restructuring strategies;

Restructuring strategies are internally directed actions that involve cutting costs in order to improve efficiency. Such strategies relate to traditional product/market combinations and do not involve significant dimensional variations. Firms try to improve efficiency by improving productivity and reducing expenses on a wide range of activities. Resizing strategies are external-directed actions oriented to refocusing the core business and disinvesting non-core

resizing strategies; reorganization strategies and innovation strategies [5, 9, 25].

neurs' age), influenced strategies adopted to face the economic crisis?

research are discussed and the main conclusions are drawn.

**2.1. Defensive or offensive strategies to face economic crises?**

second characterizes the behavior of firms labeled as *prospectors*.

impact of the crisis.

**2. Literature review**

resources used [9, 24].

submitted to a sample of 300 Italian micro-enterprises, located in Marche Region.

These data clearly show that, at the aggregate level, Italian female businesses have shown a greater resistance and have been able to deal with the crisis better than male companies. In this context, it is important to understand how companies have dealt with the crisis and what strategies male and female businesses have taken to deal with the economic downturn.

In studies about business strategy, there is a range of strategies that companies can adopt when they face a crisis: innovation and development strategies; restructuring strategies; downsizing strategies and reorganization strategies [3–9]. These studies, however, do not consider the gender of the entrepreneur and do not take into account whether male and female businesses can opt for different solutions when they face with an economic downturn. In contrast, in other studies, especially in entrepreneurship studies, the existence of significant differences between men and women entrepreneurs is proven, for example, in terms of risk taking, propensity towards investments, innovation, development and growth [10–13].

These factors can significantly affect the choice of business strategies. For this reason, it is important to compare the behavior of male and female entrepreneurs, in order to understand if there are differences in the way they have dealt with the crisis. As stated, this is a so far neglected question in business strategy studies, as they dealt with strategies to face crisis situations and with factors affecting this choice, but they neglected the impact of gender. On the other hand, in entrepreneurship studies, some differences between men and women entrepreneurs have been identified, but their role in influencing how to deal with crisis has not been addressed. For this reason we propose the following research questions:


Economic downturns do not affect in the same manner and with the same intensity in all businesses. In fact there are different variables that can affect the impact of an economic downturn: size [14–18], industry [19–21], capital structure [22], business' age [5]. That is why, when analyzing strategies adopted to face the recent economic crisis, it is also important to answer the following research question:

**3.** Did variables, other than gender (industry, age of the business, performance and entrepreneurs' age), influenced strategies adopted to face the economic crisis?

In order to answer these questions, a survey research was carried out and a questionnaire was submitted to a sample of 300 Italian micro-enterprises, located in Marche Region.

Results from this research contribute to the debate on gender's influence in explaining behaviors of men and women entrepreneurs. This analysis in fact shows that, under the same external conditions, men adopted offensive strategies more often than women. Differences in the approach to face the crisis were also identified with respect to company's age, industry and impact of the crisis.

The paper is structured into four parts. In the first part, a literature review on strategic responses to economic crises and on factors influencing strategic choice is presented. Next, methodology employed in the empirical research is described. Finally, key results from the research are discussed and the main conclusions are drawn.

### **2. Literature review**

**1. Introduction**

394 Entrepreneurship - Development Tendencies and Empirical Approach

The recent economic and financial crisis has had a strong impact on the Italian economy, and has put Italian companies into great difficulty. The number of bankruptcies and non-bankruptcy insolvency procedures has continued growing relentlessly [1]. However, in Italy, statistical data show that female enterprises have fared better and have resisted the economic crisis more effectively than male ones. For instance, in the period 2011–2012 the stock of Italian enterprises decreased by 0.49% (29.911 enterprises), while the number of female businesses showed only a very slight reduction (−0.04%, 593 enterprises). In the period December 2012–December 2013, moreover, the number of female businesses increased by 0.75% (+10,713 units), a value higher than that reported in all Italian companies, equal to 0.56%. More recently, using data available as on March 31, 2014, female businesses increased by 6605 units over the past 12 months, thus achieving a growth rate of 0.51%, more than twice that in the total enterprises (0.2%) [2].

These data clearly show that, at the aggregate level, Italian female businesses have shown a greater resistance and have been able to deal with the crisis better than male companies. In this context, it is important to understand how companies have dealt with the crisis and what strategies male and female businesses have taken to deal with the economic downturn.

In studies about business strategy, there is a range of strategies that companies can adopt when they face a crisis: innovation and development strategies; restructuring strategies; downsizing strategies and reorganization strategies [3–9]. These studies, however, do not consider the gender of the entrepreneur and do not take into account whether male and female businesses can opt for different solutions when they face with an economic downturn. In contrast, in other studies, especially in entrepreneurship studies, the existence of significant differences between men and women entrepreneurs is proven, for example, in terms of risk taking, pro-

These factors can significantly affect the choice of business strategies. For this reason, it is important to compare the behavior of male and female entrepreneurs, in order to understand if there are differences in the way they have dealt with the crisis. As stated, this is a so far neglected question in business strategy studies, as they dealt with strategies to face crisis situations and with factors affecting this choice, but they neglected the impact of gender. On the other hand, in entrepreneurship studies, some differences between men and women entrepreneurs have been identified, but their role in influencing how to deal with crisis has not been

**1.** What strategies did men and women entrepreneurs adopted to face the economic crisis?

Economic downturns do not affect in the same manner and with the same intensity in all businesses. In fact there are different variables that can affect the impact of an economic downturn: size [14–18], industry [19–21], capital structure [22], business' age [5]. That is why, when analyzing strategies adopted to face the recent economic crisis, it is also important to answer

pensity towards investments, innovation, development and growth [10–13].

addressed. For this reason we propose the following research questions:

the following research question:

**2.** Did men and women entrepreneurs adopted similar or different strategies?

#### **2.1. Defensive or offensive strategies to face economic crises?**

It is generally accepted that companies can adopt two types of strategies when they face an economic downturn: the first is the adoption of measures aimed at maintaining efficiency through cost-cutting, selling of non-strategic assets and reducing personnel costs; the second is realized through new investments, organizational/technological innovations, introduction of new products and processes, research for new markets and new customers. The first is a defensive choice, intended to guarantee business survival in the short-term, whereas the second is an offensive choice, aimed at creating opportunities for long-term value creation. According to Miles and Snow [23], the first corresponds to the *defenders's* approach, while the second characterizes the behavior of firms labeled as *prospectors*.

From another perspective, firms may face an economic crisis by adopting externally or internally directed strategies. The former requires actions directed towards the market and aimed to change marketing strategies, pricing strategies, international orientation, etc. The latter involve actions directed towards the firm in order to change structures, processes, systems or resources used [9, 24].

In this wide range of possibilities, and combining both perspectives, four main strategies may be identified to explain how firms may respond to an economic crisis: restructuring strategies; resizing strategies; reorganization strategies and innovation strategies [5, 9, 25].

Restructuring strategies are internally directed actions that involve cutting costs in order to improve efficiency. Such strategies relate to traditional product/market combinations and do not involve significant dimensional variations. Firms try to improve efficiency by improving productivity and reducing expenses on a wide range of activities. Resizing strategies are external-directed actions oriented to refocusing the core business and disinvesting non-core assets. Disinvestment of products/product lines, withdrawing from markets, selling parts of the business, closure of plants or production sites are examples of resizing actions [5, 9].

look at the long-term and make new investments. The latter cause an immediate absorption of resources, but they can enhance companies' competitive position and allow long-term advantages. The two alternatives cause opposing risks: emphasis on short-term performance is likely to weaken companies' long-term competitiveness and their performances can deteriorate in the post-recession; on the contrary, focusing on long-term goals, companies should expend resources and thus cause a further deterioration of the immediate performance, further threatening their survival. Some studies show that too much emphasis on downsizing and cost cutting strategies can lead to negative effects in the long-term [17], while anti-cyclical actions can facilitate achieving high performance in the phase of economic recovery [38, 39]. Pearce and Michael [15], through the analysis of a sample of start-up manufacturing firms, showed that firms that had made marketing investments achieved higher earnings than com-

Does Gender Matter in Strategies Adopted to Face the Economic Crisis? A Comparison…

http://dx.doi.org/10.5772/intechopen.70292

397

A solution to this dilemma is the so-called ambidextrous strategies [6] that combine both effi-

According to Shama [20], strategic response to an economic recession depends on how entrepreneurs/managers perceive its impact on their business. As a consequence, they will "take different tactical and/or strategic measures to adjust or even to exploit changes in the economic environment" ([20], p. 62). This means that companies' response to an economic downturn may be conditioned by entrepreneurs' set of priorities, motivations, preferences, skills, knowledge and abilities. Actually companies' performances, rather than being the direct result of external factors, are affected by decisions and choices of the control group. These choices, in turn, also during economic downturn, are significantly affected by leader's cultural, psychological and cognitive characteristics, as well as by his/ her skills and experiences. This means that in every business, the decision-maker makes his/her own personal assessment of the seriousness of the crisis and its possible consequences in the short- and long-term. Based on these elements, he/she chooses what he/ she considers the most effective way to respond to the crisis [25, 41]. It follows that, facing the same economic scenario, different firms may adopt different behaviors, and this is particularly true during economic downturns. A crisis, in fact, is a complex phase and it is difficult to interpret, so that it is often impossible to foresee its evolution. In the absence of certainty, perceptions of managers and entrepreneurs are key to choose company's reac-

The influence of decision-maker's perceptions – in small businesses identified with the entrepreneur – in determining business' reactions to an economic crisis is widely accepted [6, 9, 20, 25, 42]. Analysis focused on factors affecting the choice of strategies to tackle the crisis, however, have neglected entrepreneur's gender. This is an important gap. In fact, there are many studies that show the existence of significant differences between male and female entrepreneurs – and more generally between men and women – in terms of risk taking, propensity towards investments, innovation, development and growth. These factors can signifi-

panies that had cut costs during the recession.

tion to the crisis [24, 41].

cantly affect the choice of business strategies.

ciency improvements and strategic investments [9, 27, 40].

**2.2. Gender differences in strategies adopted to face the economic crisis**

Both restructuring and resizing strategies are defensive in nature [26] and they are the most common approaches adopted by firms to deal with economic crisis [5, 27–29], especially in the short-term [6]. Even in Italy, a recent survey involving a sample of small firms confirmed that defensive strategies were most frequently used to deal with the crisis [30, 31]. Some authors [28] argue that firms that adopt this approach tend to cut above all costs and assets that can be more easily repurchased, such as low-skilled workers, not strategic raw materials, etc.

About the effectiveness of such strategies in times of economic crisis opposing assessments can be made [5]. Adopting a positive perspective, an economic crisis can be an incentive to improve and rationalize the company, through a critical review of its products portfolio and focusing on its core business. A crisis also leads firms to improve efficiency and reduce operating costs by optimizing asset utilization and divesting marginal and less profitable activities. However, there are negative aspects. Cutting costs and activities, in fact, is often a knee-jerk reaction to adverse market conditions, but it did not involve any strategic repositioning of the company. As a consequence, cost- and asset-cutting can weaken business's competitiveness and reduce its ability to successfully face the later stages of economic recovery.

Defensive strategies are very common for firms in times of crisis [17, 28, 32–34]. However, other studies suggest alternative strategies to cope with the crisis. They require countercyclical investments and technological/organizational innovations, aimed at strengthening the company and allow it to better tackle the economic crisis and become more competitive and better prepared for the post-recession phase. These strategic responses seem inspired by Penrose's idea that "depression is sometimes looked on as a good time to expand: costs are low, plant can be constructed and equipment bought cheaply" [35].

Reorganization strategies and innovation and development strategies belong to this second group. Reorganization strategies are internally directed actions focused on improving organizational aspects, for instance by redefining responsibilities, enhancing information system controls, investing in human resources and so on. Such strategies aim to requalify the firm and improve its organizational structure. Some authors assert that investments in human resources [25, 36] and employee benefits are useful to maintain commitment during an economic crisis [37].

Innovation strategies are externally directed actions concerned with businesses' competitive position. They adopt an offensive approach [26] and examples include investment into new markets, new product development, business diversification and increased marketing investments [6, 9, 25]. These strategies require firms' ability to perceive economic crisis as "opportunities to invest, innovate and expand into new market in order to achieve or extend a competitive advantage during the recession and beyond" [6]. However they are risky and not easy to implement, not only because they require firm's ability to look beyond and not to dwell on the difficulties of the moment, but also because they often require large amount of financial resources, managerial competences and technical expertise.

Indeed during an economic crisis, business owners and managers have to face a dilemma: to favor a short-term perspective and thus protect the current financial performance, or to look at the long-term and make new investments. The latter cause an immediate absorption of resources, but they can enhance companies' competitive position and allow long-term advantages. The two alternatives cause opposing risks: emphasis on short-term performance is likely to weaken companies' long-term competitiveness and their performances can deteriorate in the post-recession; on the contrary, focusing on long-term goals, companies should expend resources and thus cause a further deterioration of the immediate performance, further threatening their survival. Some studies show that too much emphasis on downsizing and cost cutting strategies can lead to negative effects in the long-term [17], while anti-cyclical actions can facilitate achieving high performance in the phase of economic recovery [38, 39]. Pearce and Michael [15], through the analysis of a sample of start-up manufacturing firms, showed that firms that had made marketing investments achieved higher earnings than companies that had cut costs during the recession.

A solution to this dilemma is the so-called ambidextrous strategies [6] that combine both efficiency improvements and strategic investments [9, 27, 40].

#### **2.2. Gender differences in strategies adopted to face the economic crisis**

assets. Disinvestment of products/product lines, withdrawing from markets, selling parts of the business, closure of plants or production sites are examples of resizing actions [5, 9].

396 Entrepreneurship - Development Tendencies and Empirical Approach

Both restructuring and resizing strategies are defensive in nature [26] and they are the most common approaches adopted by firms to deal with economic crisis [5, 27–29], especially in the short-term [6]. Even in Italy, a recent survey involving a sample of small firms confirmed that defensive strategies were most frequently used to deal with the crisis [30, 31]. Some authors [28] argue that firms that adopt this approach tend to cut above all costs and assets that can be

About the effectiveness of such strategies in times of economic crisis opposing assessments can be made [5]. Adopting a positive perspective, an economic crisis can be an incentive to improve and rationalize the company, through a critical review of its products portfolio and focusing on its core business. A crisis also leads firms to improve efficiency and reduce operating costs by optimizing asset utilization and divesting marginal and less profitable activities. However, there are negative aspects. Cutting costs and activities, in fact, is often a knee-jerk reaction to adverse market conditions, but it did not involve any strategic repositioning of the company. As a consequence, cost- and asset-cutting can weaken business's competitiveness

Defensive strategies are very common for firms in times of crisis [17, 28, 32–34]. However, other studies suggest alternative strategies to cope with the crisis. They require countercyclical investments and technological/organizational innovations, aimed at strengthening the company and allow it to better tackle the economic crisis and become more competitive and better prepared for the post-recession phase. These strategic responses seem inspired by Penrose's idea that "depression is sometimes looked on as a good time to expand: costs are

Reorganization strategies and innovation and development strategies belong to this second group. Reorganization strategies are internally directed actions focused on improving organizational aspects, for instance by redefining responsibilities, enhancing information system controls, investing in human resources and so on. Such strategies aim to requalify the firm and improve its organizational structure. Some authors assert that investments in human resources [25, 36] and employee benefits are useful to maintain commitment during an economic crisis [37].

Innovation strategies are externally directed actions concerned with businesses' competitive position. They adopt an offensive approach [26] and examples include investment into new markets, new product development, business diversification and increased marketing investments [6, 9, 25]. These strategies require firms' ability to perceive economic crisis as "opportunities to invest, innovate and expand into new market in order to achieve or extend a competitive advantage during the recession and beyond" [6]. However they are risky and not easy to implement, not only because they require firm's ability to look beyond and not to dwell on the difficulties of the moment, but also because they often require large amount of

Indeed during an economic crisis, business owners and managers have to face a dilemma: to favor a short-term perspective and thus protect the current financial performance, or to

more easily repurchased, such as low-skilled workers, not strategic raw materials, etc.

and reduce its ability to successfully face the later stages of economic recovery.

low, plant can be constructed and equipment bought cheaply" [35].

financial resources, managerial competences and technical expertise.

According to Shama [20], strategic response to an economic recession depends on how entrepreneurs/managers perceive its impact on their business. As a consequence, they will "take different tactical and/or strategic measures to adjust or even to exploit changes in the economic environment" ([20], p. 62). This means that companies' response to an economic downturn may be conditioned by entrepreneurs' set of priorities, motivations, preferences, skills, knowledge and abilities. Actually companies' performances, rather than being the direct result of external factors, are affected by decisions and choices of the control group. These choices, in turn, also during economic downturn, are significantly affected by leader's cultural, psychological and cognitive characteristics, as well as by his/ her skills and experiences. This means that in every business, the decision-maker makes his/her own personal assessment of the seriousness of the crisis and its possible consequences in the short- and long-term. Based on these elements, he/she chooses what he/ she considers the most effective way to respond to the crisis [25, 41]. It follows that, facing the same economic scenario, different firms may adopt different behaviors, and this is particularly true during economic downturns. A crisis, in fact, is a complex phase and it is difficult to interpret, so that it is often impossible to foresee its evolution. In the absence of certainty, perceptions of managers and entrepreneurs are key to choose company's reaction to the crisis [24, 41].

The influence of decision-maker's perceptions – in small businesses identified with the entrepreneur – in determining business' reactions to an economic crisis is widely accepted [6, 9, 20, 25, 42]. Analysis focused on factors affecting the choice of strategies to tackle the crisis, however, have neglected entrepreneur's gender. This is an important gap. In fact, there are many studies that show the existence of significant differences between male and female entrepreneurs – and more generally between men and women – in terms of risk taking, propensity towards investments, innovation, development and growth. These factors can significantly affect the choice of business strategies.

Several researches in sociology and psychology have shown that women are less risk-oriented than men [11, 12]. According to Arch [43], this difference is due to the fact that men tend to interpret risky situations as challenges that stimulate their desire for involvement and participation, while women tend to interpret them as threats and are so induced to avoid them. Lower women's propensity for risk is also confirmed by other research [44–47], that compare the behavior of men and women involved in financial decisions. According to other authors, women have lower self-confidence than men [48, 49], especially in some typically masculine areas, just as finance. Barber and Odean [50] verify that men have a greater self-confidence and therefore take riskier financial choices than women.

propensity to risk, investment, growth and innovation. These differences may have resulted in a different approach to deal with the recent economic crisis. As stated in the previous pages, in fact, numerous and very different from each other are strategies that a company can adopt to deal with an economic downturn. This choice is very influenced by entrepreneurs' perception and their individual characteristics. In turn, the latter are very different with respect to gender.

Does Gender Matter in Strategies Adopted to Face the Economic Crisis? A Comparison…

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399

*H1.Women entrepreneurs adopted offensive strategies less frequently than men to face the crisis.*

and are better able to quickly modify them to adapt to environmental changes [16, 18].

crisis, while larger and more mature firms preferred cost reduction strategies.

Based on results of such analysis, we put forth the following hypotheses:

*H3.Strategies adopted to face the economic crisis vary by business's industry.*

*H4.Strategies adopted to face the economic crisis vary by entrepreneur's age.*

*H5.Strategies adopted to face the economic crisis vary by its impact on businesses.*

*H2.Strategies adopted to face the economic crisis vary by business's age.*

Apart from business size, the impact of an economic crisis may depend on business industry [19–21]. In Marche region, data from Bank of Italy confirms the importance of industry in determining the crisis' impact. In this region, in fact, it was stronger for companies operating in certain sectors, such as construction and mechanics, while it was less strong for companies

Variables affecting crisis' impact and strategies adopted to face it also include business' age and experience. Latham [5], for instance, maintain that start-ups are more vulnerable, as they "typically lack the resource pools that may afford a "wait-it-out" approach during environmental duress" ([5], p. 181). His research about software industry suggests that start-up organizations were much more inclined to pursue revenue-generating strategies to face economic

In order to test these hypotheses, this paper results from an empirical analysis are presented.

An economic recession on the national level may affect firms differently, depending on their regional location, industry or other factors. Actually economic crises do not affect in the same way and with the same intensity in all businesses. In fact many variables can affect the impact of a crisis on firm's stability, as well as the ways in which each firm decide to deal with it. Some authors [14– 18] stress the importance of size and maintain that small firms are more vulnerable in situations of economic recession [5, 68]. The reason is their lack of resources and skills and, as a consequence, the more narrow range of answers they can develop to face the crisis [14, 15, 69]. Actually, data relating to recent Italian situation show that, other things being equal, small businesses have suffered with the effects of the crisis more than large firms [70]. Moreover, small businesses usually face the crisis with a more reactive than proactive approach, as they often lack necessary resources and skills to direct events in their favor. Small firms, however, possess more flexible organization and processes

For this reason, we hypothesize as follows:

in the service sector.

**2.3. Factors influencing strategies adopted to face the crisis**

Research on this topic, however, show that women's preferences with regard to financial investments are not the result of their psychological characteristics, but they are affected by their social status. Women's preference for investments with a lower financial risk, in fact, could be explained by their lower knowledge in financial matters (financial literacy) and their lower average incomes [51, 52]. Other research related to men and women entrepreneurs confirms the existence of gender-based differences in risk propensity, even if there are other studies that contradict these findings [53, 54]. According to Cliff [10], women are more concerned than male entrepreneurs about risks associated with rapid growth and this is why they deliberately prefer a slow and steady rate of expansion. According to Sexton and Bowman-Upton [55], women entrepreneurs are less willing than men to get involved in situations of high uncertainty, even when it comes to the opportunity to achieve financial and economic benefits. Moreover, they argue that women are not equipped with time, energy and resources necessary to manage a growth-oriented firm [56]. Other reasons that explain female businesses' lower propensity to growth are [57]: women's difficulties to balance work and family responsibilities; difficulties in accessing to financial resources [58, 59]; women mainly owned retail and service firms, that are less oriented to growth; women entrepreneurs are less concerned with achieving high financial performance while they are more interested in personal satisfaction and selffulfillment [60]; in female firms growth should be viewed in a qualitative perspective [60–67].

According to Pelger [13], women's priorities play a central role in explaining female companies' lower propensity to invest. The latter is not the result of financial problems or other limitations connected to the firm. It is rather the consequence of women's goals when they engage themselves in entrepreneurial activity. As Pelger [13] pointed out, women entrepreneurs are less inclined to invest and they are less likely than men to name sales increases, innovation, R&D and implementation of new products as their investment goals. For this reason, women entrepreneurs may have had a lower propensity towards innovation/development strategies, which would have required new investments and the willingness to accept risks associated with them.

Cliff [10] argues that women's goal size on average is lower than that pursued by men. For women, the ideal size is the one that allows to maintain company's control and to devote a proper amount of time and energy to business, in order to easily balance work and family. According to this author [10], "this more cautious approach toward business expansion may result in ventures that are able to out-survive those headed by entrepreneurs pursuing more risky, high-growth strategies".

In conclusion, existing investigations about women entrepreneurs' characteristics have revealed the existence of significant differences with men entrepreneurs, especially in terms of propensity to risk, investment, growth and innovation. These differences may have resulted in a different approach to deal with the recent economic crisis. As stated in the previous pages, in fact, numerous and very different from each other are strategies that a company can adopt to deal with an economic downturn. This choice is very influenced by entrepreneurs' perception and their individual characteristics. In turn, the latter are very different with respect to gender.

For this reason, we hypothesize as follows:

Several researches in sociology and psychology have shown that women are less risk-oriented than men [11, 12]. According to Arch [43], this difference is due to the fact that men tend to interpret risky situations as challenges that stimulate their desire for involvement and participation, while women tend to interpret them as threats and are so induced to avoid them. Lower women's propensity for risk is also confirmed by other research [44–47], that compare the behavior of men and women involved in financial decisions. According to other authors, women have lower self-confidence than men [48, 49], especially in some typically masculine areas, just as finance. Barber and Odean [50] verify that men have a greater self-confidence

Research on this topic, however, show that women's preferences with regard to financial investments are not the result of their psychological characteristics, but they are affected by their social status. Women's preference for investments with a lower financial risk, in fact, could be explained by their lower knowledge in financial matters (financial literacy) and their lower average incomes [51, 52]. Other research related to men and women entrepreneurs confirms the existence of gender-based differences in risk propensity, even if there are other studies that contradict these findings [53, 54]. According to Cliff [10], women are more concerned than male entrepreneurs about risks associated with rapid growth and this is why they deliberately prefer a slow and steady rate of expansion. According to Sexton and Bowman-Upton [55], women entrepreneurs are less willing than men to get involved in situations of high uncertainty, even when it comes to the opportunity to achieve financial and economic benefits. Moreover, they argue that women are not equipped with time, energy and resources necessary to manage a growth-oriented firm [56]. Other reasons that explain female businesses' lower propensity to growth are [57]: women's difficulties to balance work and family responsibilities; difficulties in accessing to financial resources [58, 59]; women mainly owned retail and service firms, that are less oriented to growth; women entrepreneurs are less concerned with achieving high financial performance while they are more interested in personal satisfaction and selffulfillment [60]; in female firms growth should be viewed in a qualitative perspective [60–67]. According to Pelger [13], women's priorities play a central role in explaining female companies' lower propensity to invest. The latter is not the result of financial problems or other limitations connected to the firm. It is rather the consequence of women's goals when they engage themselves in entrepreneurial activity. As Pelger [13] pointed out, women entrepreneurs are less inclined to invest and they are less likely than men to name sales increases, innovation, R&D and implementation of new products as their investment goals. For this reason, women entrepreneurs may have had a lower propensity towards innovation/development strategies, which would have required new investments and the willingness to accept risks associated with them. Cliff [10] argues that women's goal size on average is lower than that pursued by men. For women, the ideal size is the one that allows to maintain company's control and to devote a proper amount of time and energy to business, in order to easily balance work and family. According to this author [10], "this more cautious approach toward business expansion may result in ventures that are able to out-survive those headed by entrepreneurs pursuing more

In conclusion, existing investigations about women entrepreneurs' characteristics have revealed the existence of significant differences with men entrepreneurs, especially in terms of

and therefore take riskier financial choices than women.

398 Entrepreneurship - Development Tendencies and Empirical Approach

risky, high-growth strategies".

*H1.Women entrepreneurs adopted offensive strategies less frequently than men to face the crisis.*

#### **2.3. Factors influencing strategies adopted to face the crisis**

An economic recession on the national level may affect firms differently, depending on their regional location, industry or other factors. Actually economic crises do not affect in the same way and with the same intensity in all businesses. In fact many variables can affect the impact of a crisis on firm's stability, as well as the ways in which each firm decide to deal with it. Some authors [14– 18] stress the importance of size and maintain that small firms are more vulnerable in situations of economic recession [5, 68]. The reason is their lack of resources and skills and, as a consequence, the more narrow range of answers they can develop to face the crisis [14, 15, 69]. Actually, data relating to recent Italian situation show that, other things being equal, small businesses have suffered with the effects of the crisis more than large firms [70]. Moreover, small businesses usually face the crisis with a more reactive than proactive approach, as they often lack necessary resources and skills to direct events in their favor. Small firms, however, possess more flexible organization and processes and are better able to quickly modify them to adapt to environmental changes [16, 18].

Apart from business size, the impact of an economic crisis may depend on business industry [19–21]. In Marche region, data from Bank of Italy confirms the importance of industry in determining the crisis' impact. In this region, in fact, it was stronger for companies operating in certain sectors, such as construction and mechanics, while it was less strong for companies in the service sector.

Variables affecting crisis' impact and strategies adopted to face it also include business' age and experience. Latham [5], for instance, maintain that start-ups are more vulnerable, as they "typically lack the resource pools that may afford a "wait-it-out" approach during environmental duress" ([5], p. 181). His research about software industry suggests that start-up organizations were much more inclined to pursue revenue-generating strategies to face economic crisis, while larger and more mature firms preferred cost reduction strategies.

Based on results of such analysis, we put forth the following hypotheses:

*H2.Strategies adopted to face the economic crisis vary by business's age.*

*H3.Strategies adopted to face the economic crisis vary by business's industry.*

*H4.Strategies adopted to face the economic crisis vary by entrepreneur's age.*

*H5.Strategies adopted to face the economic crisis vary by its impact on businesses.*

In order to test these hypotheses, this paper results from an empirical analysis are presented.

### **3. Method, sample and data collection**

A survey research was carried out among a sample of Italian sole-proprietors, owners of micro-enterprises. Firms included in the sample are located in Marche region, in central Italy. Several reasons justify the choice of this region for the empirical research. Firstly, Marche has a particularly high concentration of micro and small enterprises; the average size of regional businesses is 3.6 employees, against the national average of 3.9 employees [31]. Secondly, the impact of the economic crisis has been particularly harsh in this region. In 2009, the regional GDP declined by 5.4% [31], the joint-stock companies' mortality rate has been the highest in Italy (7.5%) [1] and the number of craft enterprises decreased by 5.1% between 2008 and 2012. Moreover the regional feminization rate (24.3%) is slightly higher than at the national level (23.6%). Even in this region, female businesses have resisted the crisis more effectively than male ones [2]. In the period June 2012–June 2013, in fact, in the Marche region, the balance of firms was negative (less than 608 units), while the balance of female businesses was positive, albeit slightly (+8 units equal to 0.02%) [2]. For all these reasons, Marche region is ideally suited to such a study.

The decision to involve only sole-proprietors in this survey has several reasons: (1) it is easier to establish a relationship between entrepreneur's gender and strategies adopted to face the crisis (in companies with male and female members is not easy to determine if strategic decisions are actually taken, or influenced, by a man or a woman); (2) despite the presence of many female companies and partnerships, in Italy sole proprietorships represent a very high percentage of the total number of female businesses (61% in 2010); (3) it was easier to correctly identify female businesses, as information about the gender of shareholders, partners and directors are not always available.

A non-proportional stratified sample, with the same number of men and women, was selected using the list of members of one of the main regional business associations. First of all, businesses founded after 2008 were excluded. The purpose of the survey, in fact, was to understand how the onset of the crisis has changed male and female firms' strategies. Starting from a list of 1627 sole-proprietors (429 women and 1198 men) a sample of 300 sole-proprietors (150 men and 150 women) was randomly extracted.

**1.** identify strategies adopted to face the economic crisis;

**Table 1.** Strategic actions adopted to face the crisis (descriptive variables).

ferent strategies and

only includes micro-enterprises.

economic crisis.

**4. Main results**

**2.** understand if male and female entrepreneurs faced the recession through similar or dif-

Costs and waste reduction 4.32 0.973 0.947 Labor costs reduction 3.89 1.128 1.273 Deferment of investments 3.20 1.400 1.959 Production volumes reduction 2.26 1.305 1.703 Prices reduction 2.74 1.456 2.120 Improvement of production processes and products 1.46 0.854 0.729 Organisational or technological innovation 1.30 0.658 0.433 New products/services 1.49 0.932 0.869 Search for new clients 1.65 1.020 1.041 Communication and advertising 1.63 0.933 0.871 Interfirm collaboration 1.18 0.568 0.323 More qualified personnel 1.09 0.334 0.111 Staff training 1.21 0.606 0.367 Production volumes expansion 1.16 0.597 0.357 Prices increase 1.11 0.415 0.172 New collaborators or partners 1.10 0.358 0.128

**Mean Standard deviation Variance**

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Does Gender Matter in Strategies Adopted to Face the Economic Crisis? A Comparison…

**3.** understand if other variables, other than gender, influenced strategies adopted to face the

Based on results from literature analysis, factors considered to compare strategies adopted to face the crisis, apart from gender, have been: (1) business' age; (2) business industry; (3) entrepreneurs' age and (4) crisis' impact. We did not consider business size as our sample

**4.1. Men and women micro entrepreneurs in front of the crisis. Strategic responses**

The most frequently adopted strategic actions were identified on the basis of scores given to each action listed in the questionnaire (**Table 1**). Data show that entrepreneurs dealt with the

Entrepreneurs selected this way, took part in a telephone questionnaire between October and November 2013 and were asked questions regarding actions implemented to face the crisis. Questions refer to the previous 5 years. Sample entrepreneurs were given a list of 16 strategic actions devised from prevailing literature on this subject (**Table 1**) and were asked the following question: "In the last 5 years did you carry out any of the listed actions in order to deal with the crisis?" They were asked to score each action according to a 5-point Likert scale, in which 1 = Definitely not; 5 = Definitely. The survey enabled us to obtain 218 fully completed questionnaires. Women compiled 110 and men 108 questionnaires. The response rate was particularly high, standing at 73% and substantially similar for both genders (men: 72% and women: 73.3%).

Information gathered through the questionnaire has been used to:


**Table 1.** Strategic actions adopted to face the crisis (descriptive variables).


Based on results from literature analysis, factors considered to compare strategies adopted to face the crisis, apart from gender, have been: (1) business' age; (2) business industry; (3) entrepreneurs' age and (4) crisis' impact. We did not consider business size as our sample only includes micro-enterprises.

#### **4. Main results**

**3. Method, sample and data collection**

400 Entrepreneurship - Development Tendencies and Empirical Approach

suited to such a study.

women: 73.3%).

directors are not always available.

men and 150 women) was randomly extracted.

Information gathered through the questionnaire has been used to:

A survey research was carried out among a sample of Italian sole-proprietors, owners of micro-enterprises. Firms included in the sample are located in Marche region, in central Italy. Several reasons justify the choice of this region for the empirical research. Firstly, Marche has a particularly high concentration of micro and small enterprises; the average size of regional businesses is 3.6 employees, against the national average of 3.9 employees [31]. Secondly, the impact of the economic crisis has been particularly harsh in this region. In 2009, the regional GDP declined by 5.4% [31], the joint-stock companies' mortality rate has been the highest in Italy (7.5%) [1] and the number of craft enterprises decreased by 5.1% between 2008 and 2012. Moreover the regional feminization rate (24.3%) is slightly higher than at the national level (23.6%). Even in this region, female businesses have resisted the crisis more effectively than male ones [2]. In the period June 2012–June 2013, in fact, in the Marche region, the balance of firms was negative (less than 608 units), while the balance of female businesses was positive, albeit slightly (+8 units equal to 0.02%) [2]. For all these reasons, Marche region is ideally

The decision to involve only sole-proprietors in this survey has several reasons: (1) it is easier to establish a relationship between entrepreneur's gender and strategies adopted to face the crisis (in companies with male and female members is not easy to determine if strategic decisions are actually taken, or influenced, by a man or a woman); (2) despite the presence of many female companies and partnerships, in Italy sole proprietorships represent a very high percentage of the total number of female businesses (61% in 2010); (3) it was easier to correctly identify female businesses, as information about the gender of shareholders, partners and

A non-proportional stratified sample, with the same number of men and women, was selected using the list of members of one of the main regional business associations. First of all, businesses founded after 2008 were excluded. The purpose of the survey, in fact, was to understand how the onset of the crisis has changed male and female firms' strategies. Starting from a list of 1627 sole-proprietors (429 women and 1198 men) a sample of 300 sole-proprietors (150

Entrepreneurs selected this way, took part in a telephone questionnaire between October and November 2013 and were asked questions regarding actions implemented to face the crisis. Questions refer to the previous 5 years. Sample entrepreneurs were given a list of 16 strategic actions devised from prevailing literature on this subject (**Table 1**) and were asked the following question: "In the last 5 years did you carry out any of the listed actions in order to deal with the crisis?" They were asked to score each action according to a 5-point Likert scale, in which 1 = Definitely not; 5 = Definitely. The survey enabled us to obtain 218 fully completed questionnaires. Women compiled 110 and men 108 questionnaires. The response rate was particularly high, standing at 73% and substantially similar for both genders (men: 72% and

#### **4.1. Men and women micro entrepreneurs in front of the crisis. Strategic responses**

The most frequently adopted strategic actions were identified on the basis of scores given to each action listed in the questionnaire (**Table 1**). Data show that entrepreneurs dealt with the crisis through a primarily defensive approach. Most frequently adopted measures were in fact related to restructuring and resizing strategies. The most frequent actions were: reduction of waste and costs, labor costs reduction, deferment of investments and production volumes reduction. On the other hand, actions related to innovation, development or reorganization were less widely adopted. Only few entrepreneurs expanded their activity and production volumes, invested in training projects, introduced innovations, invested in communication and advertising, improved production processes and/or products/services, introduced new products/services and sought for new clients.

It is interesting to note that only few entrepreneurs have taken action based on collaboration with other companies to address the crisis. This result is in contrast with the findings from similar research recently carried out in Spain [25]. According to this research collaboration between firms emerged as one of the more effective ways to address and overcome the crisis.

#### **4.2. Factor analysis and strategic profiles**

In the following step of the analysis, 16 actions listed in the questionnaire were submitted to factor analysis. In this way, we tried to more effectively outline entrepreneurs' behavior during the crisis, by identifying a more limited number of factors describing typical strategic profiles [71]. The aim of the factor analysis was not to confirm the validity of the pre-existing model, but to identify the variety of strategic behaviors during the crisis. Consequently, a varimax orthogonal rotation analysis was carried out considering a non-correlation among factors. Factors were extracted considering a method of parallel analysis [72]. After having extracted four factors, the factor structure shown in **Table 2** was obtained. In this phase, one strategic action was eliminated (lowering of prices), as it had a factor coefficient lower than 0.5 [73].

Extracted factors correspond to four different strategic profiles. Each profile corresponds to actions, which have resulted as the most significant to identify the strategic behavior of each entrepreneur.

processes and products. A minority of entrepreneurs with this profile also started collaboration with other entrepreneurs to share costs and investments and realize joint projects.

**F1 F2 F3 F4**

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Does Gender Matter in Strategies Adopted to Face the Economic Crisis? A Comparison…

**Strategic actions Strategic profiles**

Improvement of production processes and products 0.807 Organisational or technological innovation 0.779 Expansion of the activity 0.685 Interfirms collaboration 0.519

Overall, the four factors explain 63.437% of the total percentage variance.

**Table 2.** Factor analysis results. Strategic profiles matrix.

Deferment of investments 0.807 Reduction of waste and costs 0.788 Reduction of labour costs 0.783 Reduction of production volumes 0.686

Communication and advertising 0.849 Search for new clients 0.754 New products/services 0.634 Percent Explained Variance 17.457 16.404 16.366 13.210

More qualified personnel 0.816 New collaborators or partners 0.807 Price increase 0.791 Training of staff 0.560

*Factor 3: Orientation to downsizing.* This profile corresponds to entrepreneurs who reacted to the crisis through a defensive approach. The initiatives adopted, in fact, include cost cutting, waste elimination, labor costs reduction, deferment and/or cancelation of investments and reduction of production volumes. Ultimately these entrepreneurs placed the priority on the survival of their businesses. Consistent with this purpose, they gave up making new investments, redefined their core business activities and tried to increase the efficiency of remaining

*Factor 4: Orientation to market.* Entrepreneurs with this profile tried countering the crisis with actions aimed at resisting the negative trend of demand. They redefined their supply and sought new opportunities for expanding demand. Measures were mainly geared to introducing new products and services, exploring new markets and looking for new clients. Such actions were accompanied by initiatives of communication and advertising, to increase busi-

activities.

Test Bartlett < 0.5 e KMO > 0.7.

ness' reputation and improving its image.

Each factor has been labeled, in order to point out the typical behavior corresponding to each strategic profile. The strategic profiles corresponding to each factor are as follows.

*Factor 1: Orientation to human resources qualification.* Entrepreneurs corresponding to this profile interpreted the crisis as an opportunity to enrich their intangible assets and invested in particular in human resources. They employed more qualified personnel, looked for new collaborators and partners and participated in training courses in order to improve business's qualification and skills. This strategic behavior may be based on the desire to differentiate themselves from competitors. Business requalification was followed by an increase in products/services' costs, as clients should be willing to pay a premium price for products and services.

*Factor 2: Orientation to development and growth.* Entrepreneurs with this profile tried to counter the crisis with measures aimed at turning around the negative trend of demand and sales. Such an objective materialized in actions and investments aimed at reorganizing the business and renewing its technology, in order to increase volume of production and sales and improve


Overall, the four factors explain 63.437% of the total percentage variance.

**Table 2.** Factor analysis results. Strategic profiles matrix.

crisis through a primarily defensive approach. Most frequently adopted measures were in fact related to restructuring and resizing strategies. The most frequent actions were: reduction of waste and costs, labor costs reduction, deferment of investments and production volumes reduction. On the other hand, actions related to innovation, development or reorganization were less widely adopted. Only few entrepreneurs expanded their activity and production volumes, invested in training projects, introduced innovations, invested in communication and advertising, improved production processes and/or products/services, introduced new

It is interesting to note that only few entrepreneurs have taken action based on collaboration with other companies to address the crisis. This result is in contrast with the findings from similar research recently carried out in Spain [25]. According to this research collaboration between firms emerged as one of the more effective ways to address and overcome the crisis.

In the following step of the analysis, 16 actions listed in the questionnaire were submitted to factor analysis. In this way, we tried to more effectively outline entrepreneurs' behavior during the crisis, by identifying a more limited number of factors describing typical strategic profiles [71]. The aim of the factor analysis was not to confirm the validity of the pre-existing model, but to identify the variety of strategic behaviors during the crisis. Consequently, a varimax orthogonal rotation analysis was carried out considering a non-correlation among factors. Factors were extracted considering a method of parallel analysis [72]. After having extracted four factors, the factor structure shown in **Table 2** was obtained. In this phase, one strategic action was eliminated (lowering of prices), as it had a factor coefficient lower

Extracted factors correspond to four different strategic profiles. Each profile corresponds to actions, which have resulted as the most significant to identify the strategic behavior of each

Each factor has been labeled, in order to point out the typical behavior corresponding to each

*Factor 1: Orientation to human resources qualification.* Entrepreneurs corresponding to this profile interpreted the crisis as an opportunity to enrich their intangible assets and invested in particular in human resources. They employed more qualified personnel, looked for new collaborators and partners and participated in training courses in order to improve business's qualification and skills. This strategic behavior may be based on the desire to differentiate themselves from competitors. Business requalification was followed by an increase in products/services' costs,

*Factor 2: Orientation to development and growth.* Entrepreneurs with this profile tried to counter the crisis with measures aimed at turning around the negative trend of demand and sales. Such an objective materialized in actions and investments aimed at reorganizing the business and renewing its technology, in order to increase volume of production and sales and improve

strategic profile. The strategic profiles corresponding to each factor are as follows.

as clients should be willing to pay a premium price for products and services.

products/services and sought for new clients.

402 Entrepreneurship - Development Tendencies and Empirical Approach

**4.2. Factor analysis and strategic profiles**

than 0.5 [73].

entrepreneur.

processes and products. A minority of entrepreneurs with this profile also started collaboration with other entrepreneurs to share costs and investments and realize joint projects.

*Factor 3: Orientation to downsizing.* This profile corresponds to entrepreneurs who reacted to the crisis through a defensive approach. The initiatives adopted, in fact, include cost cutting, waste elimination, labor costs reduction, deferment and/or cancelation of investments and reduction of production volumes. Ultimately these entrepreneurs placed the priority on the survival of their businesses. Consistent with this purpose, they gave up making new investments, redefined their core business activities and tried to increase the efficiency of remaining activities.

*Factor 4: Orientation to market.* Entrepreneurs with this profile tried countering the crisis with actions aimed at resisting the negative trend of demand. They redefined their supply and sought new opportunities for expanding demand. Measures were mainly geared to introducing new products and services, exploring new markets and looking for new clients. Such actions were accompanied by initiatives of communication and advertising, to increase business' reputation and improving its image.

#### **4.3. Gender and other variables influencing strategic response to economic crisis**

In order to answer our research questions, firms included in the sample have been divided into subgroups, identified according variables mentioned in research hypothesis. These variables are described in **Table 3**.

After having applied Levene's test to verify the hypothesis of variance equality among groups, a t-test robust has been applied to evaluate the existence of significant differences among factors' average scores, corresponding to strategic profiles described in **Table 2**. Results from t-test are described in **Table 4**.

Crisis' impact was measured using entrepreneurs response to the questionnaire. They were asked to evaluate crisis' impact on their business, using a 5-points Likert scale in which 1 = Extremely important and 5 = No impact.

The comparison between men and women entrepreneurs shows that a significant difference exists with respect to strategic profiles corresponding to Factor 1 – *Orientation to human resources qualification* – and Factor 2 – *Orientation to development and growth*. In both cases men entrepreneurs have obtained a higher factor score than women entrepreneurs. On the contrary no significant differences emerge with regard to strategic profiles corresponding to Factors 3 and 4. This suggests that, although the prevalence of a defensive approach is what men and women entrepreneurs had in common (see also **Table 1**), men adopted an offensive approach more frequently than women. So this result confirms hypothesis in H1, as *women entrepreneurs* dealt with the crisis with an offensive approach less frequently than men and preferred downsizing their activities and increasing efficiency. To this end they reduced costs, cut unprofitable and marginal activities and focused on core business. Although such an attitude is rather widespread even among men entrepreneurs, the latter dealt with the crisis in a more diversified way. As a matter of fact, the percentage of men adopting offensive strategies, to requalify human resources and obtain business growth and development, has been markedly higher.

By comparing young and mature firms, a significant difference can be observed with regard to Factor 1. In fact mature firms have scored higher on strategies oriented to *human resources qualification*. No differences exist with regard to other factors. So hypotheses in H2 can be considered partially confirmed. However it must be noted that very young firms – start-ups – are not included in our sample. In fact, only firms founded before the beginning of the crisis

**Variables Description N F1 t-Test F2 t-Test F3 t-Test F4 t-Test** *Gender* Women 110 *−0.179 \*\*\* −0.410 \*\*\** 0.057 *ns −*0.069 *ns*

*Business' age* Young 46 *−0.269 \*\*\** 0.080 *ns* 0.062 *ns* 0.015 *ns*

*Industry* Service and trade 135 *−*0.025 *ns −0.124 \*\*\* −0.135 \*\*\** 0.016 *ns*

*Crisis impact* Low 74 0.05 *ns −*0.07 *ns −0.55 \*\*\** 0.02 *ns* High 144 *−*0.03 0.04 *0.28 −*0.01

Men 108 *0.182 0.418 −*0.058 0.070

Mature 172 *0.072 −*0.021 *−*0.017 *−*0.004

Senior 128 0.044 0.081 *−*0.009 *−*0.030

83 0.040 *0.201 0.219 −*0.026

Does Gender Matter in Strategies Adopted to Face the Economic Crisis? A Comparison…

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405

Young 90 *−*0.063 *ns −*0.115 *ns* 0.012 *ns* 0.043 *ns*

As regards industry, significant differences have been found with regard to Factors 2 and 3. In fact manufacturing firms have scored higher in strategies oriented to growth and to downsizing. This data confirms H3. This result appears contradictory, since growth and downsizing strategies have completely contrasting purposes and content. This result, however, may be the consequence of the different impact of the crisis in the two industries. As stated, in Marche region, the crisis was particularly strong in manufacturing and construction. In this scenario, firms operating in these industries may have been forced to react to the crisis with harder and more focused measures, and to adopt growth or resizing strategies. These strategies, on the contrary, were less frequently adopted by trade and services firms, which aimed more at preserving the status quo: they did not implement growth strategies because the crisis did not allow it; on the other hand they did not adopt downsizing measures because they were not strictly necessary, as the impact of the crisis was lower than in manufacturing and construction. No significant differences have been found with regard to entrepreneurs' age. This means that young and senior entrepreneurs faced the crisis with similar strategies, regardless of age. So

Finally, some significant differences have also been found regarding crisis' impact on businesses, consistently with H5. In fact businesses that suffered the greatest impact of the crisis adopted downsizing strategies more often and with greater intensity than businesses where

(Autumn 2008) are included.

Manufacturing and construction

*Entrepreneur's* 

\*\*\* = p-Value < 0.05.

**Table 4.** t-Test results.

*age*

H4 has not been confirmed.

the impact of the crisis was weaker.


The comparison based on other variables described in **Table 4** has shown some differences in how companies dealt with the crisis.

**Table 3.** Variables.


**Table 4.** t-Test results.

**4.3. Gender and other variables influencing strategic response to economic crisis**

ables are described in **Table 3**.

t-test are described in **Table 4**.

been markedly higher.

**Table 3.** Variables.

how companies dealt with the crisis.

**Variables Description** Gender • Woman

Business' age • Young

Industry • Service and trade

Entrepreneur's age • Young: less than 35

1 = Extremely important and 5 = No impact.

404 Entrepreneurship - Development Tendencies and Empirical Approach

In order to answer our research questions, firms included in the sample have been divided into subgroups, identified according variables mentioned in research hypothesis. These vari-

After having applied Levene's test to verify the hypothesis of variance equality among groups, a t-test robust has been applied to evaluate the existence of significant differences among factors' average scores, corresponding to strategic profiles described in **Table 2**. Results from

Crisis' impact was measured using entrepreneurs response to the questionnaire. They were asked to evaluate crisis' impact on their business, using a 5-points Likert scale in which

The comparison between men and women entrepreneurs shows that a significant difference exists with respect to strategic profiles corresponding to Factor 1 – *Orientation to human resources qualification* – and Factor 2 – *Orientation to development and growth*. In both cases men entrepreneurs have obtained a higher factor score than women entrepreneurs. On the contrary no significant differences emerge with regard to strategic profiles corresponding to Factors 3 and 4. This suggests that, although the prevalence of a defensive approach is what men and women entrepreneurs had in common (see also **Table 1**), men adopted an offensive approach more frequently than women. So this result confirms hypothesis in H1, as *women entrepreneurs* dealt with the crisis with an offensive approach less frequently than men and preferred downsizing their activities and increasing efficiency. To this end they reduced costs, cut unprofitable and marginal activities and focused on core business. Although such an attitude is rather widespread even among men entrepreneurs, the latter dealt with the crisis in a more diversified way. As a matter of fact, the percentage of men adopting offensive strategies, to requalify human resources and obtain business growth and development, has

The comparison based on other variables described in **Table 4** has shown some differences in

• Manufacturing and construction

• High: values higher than the sample median

• Senior: more than 34

• Man

• Mature

Crisis impact • Low: values lower than the sample median

By comparing young and mature firms, a significant difference can be observed with regard to Factor 1. In fact mature firms have scored higher on strategies oriented to *human resources qualification*. No differences exist with regard to other factors. So hypotheses in H2 can be considered partially confirmed. However it must be noted that very young firms – start-ups – are not included in our sample. In fact, only firms founded before the beginning of the crisis (Autumn 2008) are included.

As regards industry, significant differences have been found with regard to Factors 2 and 3. In fact manufacturing firms have scored higher in strategies oriented to growth and to downsizing. This data confirms H3. This result appears contradictory, since growth and downsizing strategies have completely contrasting purposes and content. This result, however, may be the consequence of the different impact of the crisis in the two industries. As stated, in Marche region, the crisis was particularly strong in manufacturing and construction. In this scenario, firms operating in these industries may have been forced to react to the crisis with harder and more focused measures, and to adopt growth or resizing strategies. These strategies, on the contrary, were less frequently adopted by trade and services firms, which aimed more at preserving the status quo: they did not implement growth strategies because the crisis did not allow it; on the other hand they did not adopt downsizing measures because they were not strictly necessary, as the impact of the crisis was lower than in manufacturing and construction.

No significant differences have been found with regard to entrepreneurs' age. This means that young and senior entrepreneurs faced the crisis with similar strategies, regardless of age. So H4 has not been confirmed.

Finally, some significant differences have also been found regarding crisis' impact on businesses, consistently with H5. In fact businesses that suffered the greatest impact of the crisis adopted downsizing strategies more often and with greater intensity than businesses where the impact of the crisis was weaker.

### **5. Conclusions and implications**

This paper provides insight into strategies that Italian micro-entrepreneurs adopted to survive the recent economic crisis.

In front of these data, we can wonder about the real effectiveness of strategies women entrepreneurs adopted to tackle the economic crisis. Demographic data on birth and mortality rate of Italian firms show that female businesses showed better resistance towards the economic crisis. Therefore we could think that defensive strategies adopted by women have proven to be more effective in addressing the crisis and ensuring the survival of their enterprises. However, our analysis does not allow saying whether female businesses' lower mortality rates are the consequence of the strategies they adopted to face the crisis. Indeed, in the literature on strategies to deal with economic crisis different opinions have been expressed about the effectiveness of defensive strategies. In some cases, it is argued that a defensive strategic approach can be considered positive in the short-term, as it aims at guaranteeing business' survival. However, in the long-term, such an approach may undermine business ability to seize new opportunities and innovate, and consequently weaken business's competitiveness. For this reason, further analysis should be done to find out if there is a relationship between strategies adopted by male and female businesses and their financial and competitive perfor-

Does Gender Matter in Strategies Adopted to Face the Economic Crisis? A Comparison…

http://dx.doi.org/10.5772/intechopen.70292

407

Results from this research are also useful to understand which economic policy measures may be useful to help men and women entrepreneurs to address the crisis and ensure the survival of their businesses. Policy-makers who want to support female entrepreneurship should consider these aspects, in order to identify tools and policies that can help female firms to resist economic downturns more effectively and to seize new market opportunities in the recovery phase.

This study has important limitations related to the type of business analyzed (only sole proprietors) and to the limited geographical context (only Italian firms from a single region). Results from this investigation, however, may serve as an important basis for international comparisons, in order to understand whether, in different geographical and cultural contexts and with different economic, political and institutional situations, men and women entrepreneurs prove to have the same attitudes and the same behavior of their Italian colleagues. As regard the role of other variables (business age, industry and crisis' impact) in influencing strategic choices, further analysis should be carried out to understand how they interact with gender in affecting strategic responses to the crisis. In fact, our analysis does not allow us to establish which variable is the most significant in explaining differences in strategies adopted to face the crisis. In particular, further analysis should say if, other things being equal, gender continues to be significant in explaining the different strategies adopted by companies to face up to the crisis.

mance, in the short- and in the long-term.

**Author details**

Urbino, Italy

Andrea Buratti, Francesca Maria Cesaroni\* and Annalisa Sentuti

Department of Economics, Society and Politics (DESP), University of Urbino Carlo Bo,

\*Address all correspondence to: francesca.cesaroni@uniurb.it

Factor analysis allowed the identification of four strategic profiles: strategy oriented to human resource training (investment in intangible assets); market-oriented strategy (redefining supply and searching for new opportunities); development and growth strategy (focused on sales increasing and on product and process improving) and downsizing strategy (costs reduction, elimination of waste and redefining of core business). Findings suggest that entrepreneurs mainly adopted a defensive approach characterized by restructuring and resizing strategies aimed to improve efficiency and refocus the core business. An offensive approach – realized by innovation, development or reorganization strategies – was less common. The defensive approach characterized both men and women entrepreneurs, although the adoption of offensive strategies was less widespread among women. So we can say that, in front of the same external economic conditions, men and women entrepreneurs made different choice to face the crisis.

Differences in strategies adopted to address the crisis have also been identified with regard to other factors, especially industry and crisis' impact. In particular, some differences have been identified among companies that were differently affected by the crisis. In fact results show that where the impact of the crisis was stronger, businesses needed to "batten down the hatches" and defend themselves from the crisis, mostly through cost cutting measures, while they gave up making new investments, redefined their core business activities and tried to increase the efficiency of remaining activities.

Results from this research provide significant contributions, in the field of both scientific research and of real economy.

From a scientific perspective, data from this investigation contribute to the development of the debate on gender-based differences in behaviors, attitudes and preferences. Men and women entrepreneurs are compared considering a particular economic condition, characterized by recession. Until now, no analyses were carried out to compare the behavior of entrepreneurs of both genders in such situations and this is the first study to address this issue. Moreover, it must be observed that even if several research analyzed factors affecting the choice of strategies to face a crisis, they ignored gender issues.

Data from our analysis allow us to get important information about how men- and womenowned micro-enterprises reacted to economic downturns. Our analysis shows that, under the same external conditions, Italian men and women entrepreneurs adopted different strategies to respond to the economic crisis. In this perspective, results are consistent with those of previous analyses comparing male and female entreprenurs' behaviors. The defensive strategies mainly adopted by women entrepreneurs, in fact, are consistent with some of their distinguishing characteristics, compared to male entrepreneurs: lower risk orientation, lower preference for conditions of uncertainty, lower growth orientation and less willingness to invest.

In front of these data, we can wonder about the real effectiveness of strategies women entrepreneurs adopted to tackle the economic crisis. Demographic data on birth and mortality rate of Italian firms show that female businesses showed better resistance towards the economic crisis. Therefore we could think that defensive strategies adopted by women have proven to be more effective in addressing the crisis and ensuring the survival of their enterprises. However, our analysis does not allow saying whether female businesses' lower mortality rates are the consequence of the strategies they adopted to face the crisis. Indeed, in the literature on strategies to deal with economic crisis different opinions have been expressed about the effectiveness of defensive strategies. In some cases, it is argued that a defensive strategic approach can be considered positive in the short-term, as it aims at guaranteeing business' survival. However, in the long-term, such an approach may undermine business ability to seize new opportunities and innovate, and consequently weaken business's competitiveness.

For this reason, further analysis should be done to find out if there is a relationship between strategies adopted by male and female businesses and their financial and competitive performance, in the short- and in the long-term.

Results from this research are also useful to understand which economic policy measures may be useful to help men and women entrepreneurs to address the crisis and ensure the survival of their businesses. Policy-makers who want to support female entrepreneurship should consider these aspects, in order to identify tools and policies that can help female firms to resist economic downturns more effectively and to seize new market opportunities in the recovery phase.

This study has important limitations related to the type of business analyzed (only sole proprietors) and to the limited geographical context (only Italian firms from a single region). Results from this investigation, however, may serve as an important basis for international comparisons, in order to understand whether, in different geographical and cultural contexts and with different economic, political and institutional situations, men and women entrepreneurs prove to have the same attitudes and the same behavior of their Italian colleagues.

As regard the role of other variables (business age, industry and crisis' impact) in influencing strategic choices, further analysis should be carried out to understand how they interact with gender in affecting strategic responses to the crisis. In fact, our analysis does not allow us to establish which variable is the most significant in explaining differences in strategies adopted to face the crisis. In particular, further analysis should say if, other things being equal, gender continues to be significant in explaining the different strategies adopted by companies to face up to the crisis.

### **Author details**

**5. Conclusions and implications**

406 Entrepreneurship - Development Tendencies and Empirical Approach

increase the efficiency of remaining activities.

gies to face a crisis, they ignored gender issues.

research and of real economy.

ness to invest.

vive the recent economic crisis.

This paper provides insight into strategies that Italian micro-entrepreneurs adopted to sur-

Factor analysis allowed the identification of four strategic profiles: strategy oriented to human resource training (investment in intangible assets); market-oriented strategy (redefining supply and searching for new opportunities); development and growth strategy (focused on sales increasing and on product and process improving) and downsizing strategy (costs reduction, elimination of waste and redefining of core business). Findings suggest that entrepreneurs mainly adopted a defensive approach characterized by restructuring and resizing strategies aimed to improve efficiency and refocus the core business. An offensive approach – realized by innovation, development or reorganization strategies – was less common. The defensive approach characterized both men and women entrepreneurs, although the adoption of offensive strategies was less widespread among women. So we can say that, in front of the same external economic conditions, men and women entrepreneurs made different choice to face the crisis.

Differences in strategies adopted to address the crisis have also been identified with regard to other factors, especially industry and crisis' impact. In particular, some differences have been identified among companies that were differently affected by the crisis. In fact results show that where the impact of the crisis was stronger, businesses needed to "batten down the hatches" and defend themselves from the crisis, mostly through cost cutting measures, while they gave up making new investments, redefined their core business activities and tried to

Results from this research provide significant contributions, in the field of both scientific

From a scientific perspective, data from this investigation contribute to the development of the debate on gender-based differences in behaviors, attitudes and preferences. Men and women entrepreneurs are compared considering a particular economic condition, characterized by recession. Until now, no analyses were carried out to compare the behavior of entrepreneurs of both genders in such situations and this is the first study to address this issue. Moreover, it must be observed that even if several research analyzed factors affecting the choice of strate-

Data from our analysis allow us to get important information about how men- and womenowned micro-enterprises reacted to economic downturns. Our analysis shows that, under the same external conditions, Italian men and women entrepreneurs adopted different strategies to respond to the economic crisis. In this perspective, results are consistent with those of previous analyses comparing male and female entreprenurs' behaviors. The defensive strategies mainly adopted by women entrepreneurs, in fact, are consistent with some of their distinguishing characteristics, compared to male entrepreneurs: lower risk orientation, lower preference for conditions of uncertainty, lower growth orientation and less willing-

Andrea Buratti, Francesca Maria Cesaroni\* and Annalisa Sentuti

\*Address all correspondence to: francesca.cesaroni@uniurb.it

Department of Economics, Society and Politics (DESP), University of Urbino Carlo Bo, Urbino, Italy

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Does Gender Matter in Strategies Adopted to Face the Economic Crisis? A Comparison…

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2013. Available from: http://www.bancaditalia.it/pubblicazioni/econo/quest\_ecofin\_2/ qef177/QEF\_177.pdf [Accessed: March 9, 2014]

**Chapter 22**

Provisional chapter

**Testing Gender Productivity Difference with Informal**

DOI: 10.5772/intechopen.71696

Testing Gender Productivity Difference with Informal

In the literature, we have seen results stating that women are less efficient than men in entrepreneurship. In this chapter, we have used data of informal enterprises in Burkina Faso to test gender productivity difference. Our data support the assumption that men's enterprises employ and carry out more income than women's enterprises. Nevertheless, women's enterprises are technically more efficient and stable than men's enterprises. We have also found out that to succeed in entrepreneurship, it is profitable for women to be young. However, men need to get more experiences in order to become efficient in

In the past, economists focused themselves on identifying factors that have been determining women's participation to labor market [1, 2, 3]. Nowadays, robust responses have been provided to this question. It has been shown that women are less represented among owners of big formal enterprises [4, 5]. Most of them are owners of small and medium-sized enterprises (SME) especially in developing countries (PED) [6]. If presently, the debate on the determinants of women's participation to entrepreneurship seems to be ended, questions on their SMEs'

Theoretically, the question of efficiency of enterprises run by women should not be subjected to great debates. Etymologically, economy is defined as the art of managing well a home, that is

> © The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and eproduction in any medium, provided the original work is properly cited.

© 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Keywords: gender, informal enterprises, productivity, Burkina Faso

**Enterprises Data: A Case Study of Burkina Faso**

Enterprises Data: A Case Study of Burkina Faso

Akouwerabou Babikigalaga Dénis, Legala-Keud Genesquin Guibert and

Akouwerabou Babikigalaga Dénis, Legala-Keud Genesquin Guibert and

http://dx.doi.org/10.5772/intechopen.71696

informal entrepreneurship.

Additional information is available at the end of the chapter

Additional information is available at the end of the chapter

productivity, dynamism, and survival are still topical.

Bayala Balibié Auguste Serge

Bayala Balibié Auguste Serge

Abstract

1. Introduction


Provisional chapter

### **Testing Gender Productivity Difference with Informal Enterprises Data: A Case Study of Burkina Faso** Testing Gender Productivity Difference with Informal Enterprises Data: A Case Study of Burkina Faso

DOI: 10.5772/intechopen.71696

Akouwerabou Babikigalaga Dénis, Legala-Keud Genesquin Guibert and Bayala Balibié Auguste Serge Akouwerabou Babikigalaga Dénis, Legala-Keud Genesquin Guibert and

Additional information is available at the end of the chapter Bayala Balibié Auguste Serge

http://dx.doi.org/10.5772/intechopen.71696 Additional information is available at the end of the chapter

#### Abstract

2013. Available from: http://www.bancaditalia.it/pubblicazioni/econo/quest\_ecofin\_2/

[60] Weber PC, Geneste L. Exploring gender-related perceptions of SME success. International Journal of Gender and Entrepreneurship. 2014;**6**:15-27. DOI: 10.1108/IJGE-04-2013-0038

[61] Brush CG. Research on women business owners: Past trends, a new perspective and

[62] Rosa P, Carter S, Hamilton D. Gender as a determinant of small business performance: Insights from a British study. Small Business Economics. 1996;**8**:463-478. DOI: 10.1007/

[63] Buttner EH, Moore DP. Women's organizational exodus to entrepreneurship: Selfreported motivations and correlates with success. Journal of Small Business Management.

[64] Collins-Dodd C, Gordon IM, Smart C. Further evidence on the role of gender in financial performance. Journal of Small Business Management. 2004;**42**:395-417.

[65] Dalborg C, von Friedrichs Y, Wincent J. Beyond the numbers: Qualitative growth in women's businesses. International Journal of Gender and Entrepreneurship. 2012;**4**:289-315.

[66] Reichborn-Kjennerud K, Svare H. Entrepreneurial growth strategies: The female touch. International Journal of Gender and Entrepreneurship. 2014;**6**:181-199. DOI: 10.1108/

[67] Dalborg C. The life cycle in women-owned businesses: From a qualitative growth perspective. International Journal of Gender and Entrepreneurship. 2015;**7**:126-147.

[68] Beaver C, Ross C. Recessionary consequences on small business management and business development: The abandonment of strategy? Strategy Change. 1999;**8**:251-261

[70] Banca d'Italia (2009, 2010, 2011, 2012, 2013, 2014), Economie regionali. L'economia delle Marche. Aggiornamento congiunturale. Vol. 1986. Available from: https://www.banca-

[71] Hair JF, Anderson RE, Tatham RL, Black WC. Multivariate Data Analysis. New Jersey:

[72] Zwick WR, Velicer WF. Comparison of five rules for determining the number of components to retain. Psychological Bulletin. 1986;**99**:432-442. DOI: 10.1037/0033-2909.99.3.432

[73] McCain KW. Mapping authors in intellectual space: A technical overview. Journal of the

[69] Ghemawat P. Sustainable advantage. Harvard Business Review. 1986;**64**:53-58

ditalia.it/pubblicazioni/economie-regionali [Accessed: April 30, 2015]

American Society for Information Science. 1990;**41**:433-443

future directions. Entrepreneurship Theory & Practice. 1992;**16**:5-30

qef177/QEF\_177.pdf [Accessed: March 9, 2014]

412 Entrepreneurship - Development Tendencies and Empirical Approach

DOI: 10.1111/j.1540-627X.2004.00119.x

DOI: 10.1108/17566261211264163

DOI: 10.1108/IJGE-06-2014-0019

BF00390031

1997;**35**:34-46

IJGE-04-2013-0043

Prentice Hall; 1998

In the literature, we have seen results stating that women are less efficient than men in entrepreneurship. In this chapter, we have used data of informal enterprises in Burkina Faso to test gender productivity difference. Our data support the assumption that men's enterprises employ and carry out more income than women's enterprises. Nevertheless, women's enterprises are technically more efficient and stable than men's enterprises. We have also found out that to succeed in entrepreneurship, it is profitable for women to be young. However, men need to get more experiences in order to become efficient in informal entrepreneurship.

Keywords: gender, informal enterprises, productivity, Burkina Faso

### 1. Introduction

In the past, economists focused themselves on identifying factors that have been determining women's participation to labor market [1, 2, 3]. Nowadays, robust responses have been provided to this question. It has been shown that women are less represented among owners of big formal enterprises [4, 5]. Most of them are owners of small and medium-sized enterprises (SME) especially in developing countries (PED) [6]. If presently, the debate on the determinants of women's participation to entrepreneurship seems to be ended, questions on their SMEs' productivity, dynamism, and survival are still topical.

Theoretically, the question of efficiency of enterprises run by women should not be subjected to great debates. Etymologically, economy is defined as the art of managing well a home, that is

© The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and eproduction in any medium, provided the original work is properly cited.

to say more precisely the ability to have a more efficient internal organization. Now, it is known that a woman is the right person to manage a home. For example, in Burkina Faso, there is a common saying that goes as: " Paglayiri," meaning " there shall never be a home without a woman." This implies that if the economist's first objective is to avoid wastes, everyone who agrees with this economy's definition says likewise that, a woman would be more efficient than a man in managing economic affairs.

performances by the fact that women take less risk than men when they are enterprises managers. Broadly speaking, Amin [27] points out that labor productivity and the size of women's informal enterprises are by far inferior to those run by men. The output per capita of worker in women's enterprises represents only 76% to the one of men's enterprises. Concerning the size, the author thinks that men's enterprises are 61% bigger than women's enterprises. It even seems that these results can be generalized in the case of formal enterprises. Brush et al. [28] show that women's formal enterprises generate an average income representing only 26% of men's enterprises income. Through a study on 26 transition-state countries' data, Sabarwal and Terrell [29] reach the result stating that women's enterprises are less profitable than men's enterprises.

Testing Gender Productivity Difference with Informal Enterprises Data: A Case Study of Burkina Faso

http://dx.doi.org/10.5772/intechopen.71696

415

Even if everything leads to believe that men are more efficient than women in businesses, some reports invite us to relativize these results. First, a woman works less for example in an enterprise and more in housework. In certain parts of the world, institutional constraints hinder them from being more educated compared to men. Second, when we study women's enterprises' productivity compared to men's, it needs to be carried out by using data collected in the same field of activity. Chirwa [8] and Masters and Meier [30] assess that in developing countries, women practice less profitable and less risky economic activities. In any case, we must know that the above constraints will not and cannot justify by themselves the productivity differences observed between women and men in entrepreneurship. According to Amin [27], these factors do not explain more than 30% of the productivity difference observed

Other justifying elements of this productivity difference have also been highlighted. For example, men's enterprises are often family firms bequeathed by parents. As women rarely benefit from inheritance in certain regions of the world, this would explain why their enterprises are less experienced than men's enterprises. Other authors explain women's coming to business not to make profit but for other reasons which vary rapidly from a country to another. Women from poor households engage themselves in economic activities to support their husbands in family expenditure [31, 32]. The fact that some women reach a higher level of education motivates them into practicing entrepreneurship [33, 34]. The deplorable thing is the fact that these latter practice mostly in informal economic activities [35, 39]. For example, in developing countries, average 60% of working women hold an informal job. In Sub-Saharan Africa, 84% of women practicing

an economic activity work in a nonagricultural informal sector to 63% for men [40].

would not be any difference between them in terms of profitability.

According to Nelton [41], women do not seek to maximize profit, they are rather concerned with the quality of their enterprises' output. This helps us to understand why their enterprises grow a little slower than men's [43, 44]. This idea has been seen otherwise by Rosa, et al. [45]. These authors say that women do not seek to increase the size and/or the number of employees of their enterprises, they rather seek to perform their job well. Thus, one should not analyze women's enterprises only in terms of profitability, but one should also and especially consider their efficiency. Brush [25] thinks that women are also efficient as men except that they do not know how to cheat in business. This is especially true as Dollar et al. [46] have shown that countries having a lot of women in their management departments are less corrupt. Johnson and Storey [47] have also shown that women's enterprises are more stable than men's on the long run. Rietz and Henrekson [48] show that even if men's enterprises outsell women's, there

between them.

Women have not yet got the opportunity to show their economic know-how because they have long been discriminated on the labor market [2, 7]. Even if now, this discrimination is no more too obvious, there are still certain types of employments that they cannot afford to fill [8]. The importance of female entrepreneurship would then lie in its capacity to reduce discriminations against women on the labor market. Welter et al. [9] show that economic sectors whereby women are owners of private enterprises are sectors hiring more women. However, women's capacity to create and manage dynamic jobs supplying SMEs for their counterparts is often limited by cultural and religious factors [10]. This implies that it will be erroneous to draw conclusions of a woman's performances in entrepreneurship without considering institutional factors' influences. In developing countries, informal institutions prevent women to fully and freely take part in the private and individual process of wealth accumulation [11]. These informal regulations or laws contribute to highlight discrimination against women in wages rate setting and on labor market in general [12, 13]. According to Pressman [14], these same informal institutions keep households run by women in poverty.

Therefore, even if women are predisposed to be more efficient than men in the economic arena, formal or informal institutional norms that have kept women out of the labor market for a long time could in the end damage their economic efficiency. For example, obligation for women to always stay at home to care for children (in some developing countries) would contribute to reduce their motivations to commit themselves to female entrepreneurship [10, 15, 16]. Udry [17] notes that in households run by men, about 6% of the output of the plot of land farmed by women is lost due to a bad distribution of production inputs in their disfavor.

Setting up a business in developing countries has always been difficult. The difficulty in undertaking stems mainly from the market's failure. Access to credit seemed to be the biggest of these constraints. When we look particularly into this difficulty, we realize that women are the most constrained [18–20]. It would then be plausible to justify the weak performances experienced by enterprises run by women through their inability to acquire more physical capital due to credit access' constraints. Fafchamps et al. [21] show that even if credit access' constraints limit women's capacity to increase their investment in physical capital, this does not explain why they are less efficient than those run by men. Other case studies, having been carried out by De Mel et al. [22] in Sri Lanka, Banerjee and Sendhil [15] in India and Karlan and Zinman [23] in the Philippines have also proven that the difference in terms of equipment would not explain alone the difference of productivity observed between women's and men's enterprises.

Lonstreth et al. [24] as well as Brush [25] think that women's enterprises are less profitable than men's because the concern of maximizing profit does not appear in their objective function. They create small informal production units just to busy themselves or to have a little financial and economic freedom. As for Minguez-Vera and Martin [26], they justify women's enterprises' weak performances by the fact that women take less risk than men when they are enterprises managers. Broadly speaking, Amin [27] points out that labor productivity and the size of women's informal enterprises are by far inferior to those run by men. The output per capita of worker in women's enterprises represents only 76% to the one of men's enterprises. Concerning the size, the author thinks that men's enterprises are 61% bigger than women's enterprises. It even seems that these results can be generalized in the case of formal enterprises. Brush et al. [28] show that women's formal enterprises generate an average income representing only 26% of men's enterprises income. Through a study on 26 transition-state countries' data, Sabarwal and Terrell [29] reach the result stating that women's enterprises are less profitable than men's enterprises.

to say more precisely the ability to have a more efficient internal organization. Now, it is known that a woman is the right person to manage a home. For example, in Burkina Faso, there is a common saying that goes as: " Paglayiri," meaning " there shall never be a home without a woman." This implies that if the economist's first objective is to avoid wastes, everyone who agrees with this economy's definition says likewise that, a woman would be

Women have not yet got the opportunity to show their economic know-how because they have long been discriminated on the labor market [2, 7]. Even if now, this discrimination is no more too obvious, there are still certain types of employments that they cannot afford to fill [8]. The importance of female entrepreneurship would then lie in its capacity to reduce discriminations against women on the labor market. Welter et al. [9] show that economic sectors whereby women are owners of private enterprises are sectors hiring more women. However, women's capacity to create and manage dynamic jobs supplying SMEs for their counterparts is often limited by cultural and religious factors [10]. This implies that it will be erroneous to draw conclusions of a woman's performances in entrepreneurship without considering institutional factors' influences. In developing countries, informal institutions prevent women to fully and freely take part in the private and individual process of wealth accumulation [11]. These informal regulations or laws contribute to highlight discrimination against women in wages rate setting and on labor market in general [12, 13]. According to Pressman [14], these same

Therefore, even if women are predisposed to be more efficient than men in the economic arena, formal or informal institutional norms that have kept women out of the labor market for a long time could in the end damage their economic efficiency. For example, obligation for women to always stay at home to care for children (in some developing countries) would contribute to reduce their motivations to commit themselves to female entrepreneurship [10, 15, 16]. Udry [17] notes that in households run by men, about 6% of the output of the plot of land farmed by

Setting up a business in developing countries has always been difficult. The difficulty in undertaking stems mainly from the market's failure. Access to credit seemed to be the biggest of these constraints. When we look particularly into this difficulty, we realize that women are the most constrained [18–20]. It would then be plausible to justify the weak performances experienced by enterprises run by women through their inability to acquire more physical capital due to credit access' constraints. Fafchamps et al. [21] show that even if credit access' constraints limit women's capacity to increase their investment in physical capital, this does not explain why they are less efficient than those run by men. Other case studies, having been carried out by De Mel et al. [22] in Sri Lanka, Banerjee and Sendhil [15] in India and Karlan and Zinman [23] in the Philippines have also proven that the difference in terms of equipment would not explain alone the difference of productivity observed between women's and

Lonstreth et al. [24] as well as Brush [25] think that women's enterprises are less profitable than men's because the concern of maximizing profit does not appear in their objective function. They create small informal production units just to busy themselves or to have a little financial and economic freedom. As for Minguez-Vera and Martin [26], they justify women's enterprises' weak

more efficient than a man in managing economic affairs.

414 Entrepreneurship - Development Tendencies and Empirical Approach

informal institutions keep households run by women in poverty.

men's enterprises.

women is lost due to a bad distribution of production inputs in their disfavor.

Even if everything leads to believe that men are more efficient than women in businesses, some reports invite us to relativize these results. First, a woman works less for example in an enterprise and more in housework. In certain parts of the world, institutional constraints hinder them from being more educated compared to men. Second, when we study women's enterprises' productivity compared to men's, it needs to be carried out by using data collected in the same field of activity. Chirwa [8] and Masters and Meier [30] assess that in developing countries, women practice less profitable and less risky economic activities. In any case, we must know that the above constraints will not and cannot justify by themselves the productivity differences observed between women and men in entrepreneurship. According to Amin [27], these factors do not explain more than 30% of the productivity difference observed between them.

Other justifying elements of this productivity difference have also been highlighted. For example, men's enterprises are often family firms bequeathed by parents. As women rarely benefit from inheritance in certain regions of the world, this would explain why their enterprises are less experienced than men's enterprises. Other authors explain women's coming to business not to make profit but for other reasons which vary rapidly from a country to another. Women from poor households engage themselves in economic activities to support their husbands in family expenditure [31, 32]. The fact that some women reach a higher level of education motivates them into practicing entrepreneurship [33, 34]. The deplorable thing is the fact that these latter practice mostly in informal economic activities [35, 39]. For example, in developing countries, average 60% of working women hold an informal job. In Sub-Saharan Africa, 84% of women practicing an economic activity work in a nonagricultural informal sector to 63% for men [40].

According to Nelton [41], women do not seek to maximize profit, they are rather concerned with the quality of their enterprises' output. This helps us to understand why their enterprises grow a little slower than men's [43, 44]. This idea has been seen otherwise by Rosa, et al. [45]. These authors say that women do not seek to increase the size and/or the number of employees of their enterprises, they rather seek to perform their job well. Thus, one should not analyze women's enterprises only in terms of profitability, but one should also and especially consider their efficiency. Brush [25] thinks that women are also efficient as men except that they do not know how to cheat in business. This is especially true as Dollar et al. [46] have shown that countries having a lot of women in their management departments are less corrupt. Johnson and Storey [47] have also shown that women's enterprises are more stable than men's on the long run. Rietz and Henrekson [48] show that even if men's enterprises outsell women's, there would not be any difference between them in terms of profitability.

The test of productivity difference between women's enterprises and men's enterprises is still then topical. Most of the previous studies were mainly limited by using domestic data that have covered several fields of activities. The reproach to these types of data is to have left out the fact that fewer women are often represented in some sectors. Even if we make use of a small sample like Rosa et al. [45] and Holmquist and Sundin [35], we have the advantage of possessing data collected in sectors of activity whereby women and men are frequently seen as owners of enterprises.

and Leicht [43] show that determinants of survival and success of enterprises in Indiana (USA) were independent from the owner's sex. Other studies having been carried out in developed countries have also shown that women's enterprises produce less incomes and even employ fewer workers than men's enterprises [25, 49]. Even if it is accepted that there is a difference in women's and men's enterprises' output, Kalleberg and Leicht [43] estimate that this productivity difference is overestimated when one uses national data. To reduce this overestimation, these

Testing Gender Productivity Difference with Informal Enterprises Data: A Case Study of Burkina Faso

http://dx.doi.org/10.5772/intechopen.71696

417

Certain studies carried out on data collected in developed countries have often supported the assumption that in some cases, women perform better than men. Carter and Cannon [42] have shown that even if women's enterprises focus too much on qualitative aspects in a short term, quantitative performance indicators are also their concern on the long run. Rosa, et al. [45] have reached the results stating that when we consider small-sized enterprises (1–5 employees), we realize that women's enterprises grow faster while for medium enterprises

Education is the variable determining the survival of women's enterprises in Africa. Chirwa [8] has got to the result that education improves informal enterprises' profitability. Akouwerabou [50] has obtained an opposite result on a case study of Burkina Faso's informal enterprises. The author justifies the fact that education affects negatively enterprises' growth due to the fact that qualified owners are in the informal and looking for a job in the public service or in big enterprises. On data from Malawi, Chirwa finds out that women's enterprises grow faster than men's enterprises. This result is contrary to McPherson's findings [51] in the case of South Africa. Akouwerabou [50] from Burkina Faso's informal enterprises' data and Chirwa [8] have found a reversed U relation between the informal enterprise's profitability and its experience. This would signify that whether it belongs to a woman or a man, young enterprises grow less rapidly than

Even if this seems to vary very quickly from a country to another, in Africa, we notice that on the scale of informal enterprises, women have more access to credit than men have. This is justified by the fact that microfinance is little developed, and it grants more credits to women than men in towns as well as in rural areas. In Malawi, Chirwa [8] finds out that women have more access to credit than men, while in South Africa, Abor and Biekpe [52] have got to an

In the current analysis, we seek to test the hypothesis according to which men-owned enterprises perform more than women-owned ones. The purpose of the chapter is to show that the outcomes (dynamism and technical efficiency) of men-owned informal enterprises are better

We use data collected within the framework of education production in informal activities. These data were collected by Western and Center of African Network for Research in

authors recommend the use of data of the same sector of activity.

(more than 20 employees), men's enterprises grow faster.

the old ones.

opposite result.

than women ones.

3.1. Data

3. Methods and data

We use primary data collected in Ouagadougou to analyze informal enterprises' performances with particular attention to gender. Our data have been collected from very small production units in such a way that their owners are almost poor. Thus, we shall make gender correspond only to sex. The main question we shall try to answer is as follows: After controlling by socioeconomic variables of the owner and by the characteristics of the business environment as well, is it possible to justify SMEs' productivity difference and dynamism through gender?

In Ouagadougou, eight out of ten households get their income from an informal production unit [36]. When we consider the informal sector's actors, we realize that women are well represented. We think that if their activities were not profitable, their number would have decreased with time. According to INSD's statistics, in the informal sector in Ouagadougou, 47.3% of enterprises are set up and managed by women. However, on the level of employees, men were more paid than women. But, this is justified by the fact that men's working hours (60 hours per week) are longer than women's (51 hours per week). The objective of our analysis is consequently to test that women's enterprises are more dynamic and more efficient than men's enterprises. In order to succeed, we will analyze issues of enterprises' growths through Evan's model [37]. To derive these enterprises' technical efficiency scores, we will use the stochastic frontier model by Mayers and Liu [38].

At the end of our analyses, we realized that our data support the assumption stating that women's enterprises grow more rapidly than men's enterprises. In general, we have also noticed that women's enterprises are younger than men's enterprises. In average, women's enterprises technical efficiency is higher than men's enterprises. Nevertheless, men's enterprises employ more workers than women's enterprises.

The remaining of the chapter is segmented as follows. Section II briefly recalls a few empirical results on the determinants of productivity difference between women and men. Section III presents the models of the dynamism analysis and the technical efficiency and the data as well. Section IV analyzes and discusses the results. The last section sums up the analysis's results and makes a few recommendations to ensure the survival of women's enterprises.

### 2. Literature review on gender productivity difference

In literature, all the results seem to corroborate the fact that men's enterprises perform better than women's enterprises both in developing and developed countries. Johnson and Storey [47] show that from 289 enterprises'data in Great Britain, women's enterprises are smaller than men's enterprises. From 400 enterprises' data from three different industrial sectors, Kalleberg and Leicht [43] show that determinants of survival and success of enterprises in Indiana (USA) were independent from the owner's sex. Other studies having been carried out in developed countries have also shown that women's enterprises produce less incomes and even employ fewer workers than men's enterprises [25, 49]. Even if it is accepted that there is a difference in women's and men's enterprises' output, Kalleberg and Leicht [43] estimate that this productivity difference is overestimated when one uses national data. To reduce this overestimation, these authors recommend the use of data of the same sector of activity.

Certain studies carried out on data collected in developed countries have often supported the assumption that in some cases, women perform better than men. Carter and Cannon [42] have shown that even if women's enterprises focus too much on qualitative aspects in a short term, quantitative performance indicators are also their concern on the long run. Rosa, et al. [45] have reached the results stating that when we consider small-sized enterprises (1–5 employees), we realize that women's enterprises grow faster while for medium enterprises (more than 20 employees), men's enterprises grow faster.

Education is the variable determining the survival of women's enterprises in Africa. Chirwa [8] has got to the result that education improves informal enterprises' profitability. Akouwerabou [50] has obtained an opposite result on a case study of Burkina Faso's informal enterprises. The author justifies the fact that education affects negatively enterprises' growth due to the fact that qualified owners are in the informal and looking for a job in the public service or in big enterprises. On data from Malawi, Chirwa finds out that women's enterprises grow faster than men's enterprises. This result is contrary to McPherson's findings [51] in the case of South Africa. Akouwerabou [50] from Burkina Faso's informal enterprises' data and Chirwa [8] have found a reversed U relation between the informal enterprise's profitability and its experience. This would signify that whether it belongs to a woman or a man, young enterprises grow less rapidly than the old ones.

Even if this seems to vary very quickly from a country to another, in Africa, we notice that on the scale of informal enterprises, women have more access to credit than men have. This is justified by the fact that microfinance is little developed, and it grants more credits to women than men in towns as well as in rural areas. In Malawi, Chirwa [8] finds out that women have more access to credit than men, while in South Africa, Abor and Biekpe [52] have got to an opposite result.

### 3. Methods and data

In the current analysis, we seek to test the hypothesis according to which men-owned enterprises perform more than women-owned ones. The purpose of the chapter is to show that the outcomes (dynamism and technical efficiency) of men-owned informal enterprises are better than women ones.

#### 3.1. Data

The test of productivity difference between women's enterprises and men's enterprises is still then topical. Most of the previous studies were mainly limited by using domestic data that have covered several fields of activities. The reproach to these types of data is to have left out the fact that fewer women are often represented in some sectors. Even if we make use of a small sample like Rosa et al. [45] and Holmquist and Sundin [35], we have the advantage of possessing data collected in sectors of activity whereby women and men are frequently seen as

We use primary data collected in Ouagadougou to analyze informal enterprises' performances with particular attention to gender. Our data have been collected from very small production units in such a way that their owners are almost poor. Thus, we shall make gender correspond only to sex. The main question we shall try to answer is as follows: After controlling by socioeconomic variables of the owner and by the characteristics of the business environment as well, is it possible to justify SMEs' productivity difference and dyna-

In Ouagadougou, eight out of ten households get their income from an informal production unit [36]. When we consider the informal sector's actors, we realize that women are well represented. We think that if their activities were not profitable, their number would have decreased with time. According to INSD's statistics, in the informal sector in Ouagadougou, 47.3% of enterprises are set up and managed by women. However, on the level of employees, men were more paid than women. But, this is justified by the fact that men's working hours (60 hours per week) are longer than women's (51 hours per week). The objective of our analysis is consequently to test that women's enterprises are more dynamic and more efficient than men's enterprises. In order to succeed, we will analyze issues of enterprises' growths through Evan's model [37]. To derive these enterprises' technical efficiency scores, we will use the

At the end of our analyses, we realized that our data support the assumption stating that women's enterprises grow more rapidly than men's enterprises. In general, we have also noticed that women's enterprises are younger than men's enterprises. In average, women's enterprises technical efficiency is higher than men's enterprises. Nevertheless, men's enterprises employ

The remaining of the chapter is segmented as follows. Section II briefly recalls a few empirical results on the determinants of productivity difference between women and men. Section III presents the models of the dynamism analysis and the technical efficiency and the data as well. Section IV analyzes and discusses the results. The last section sums up the analysis's results

In literature, all the results seem to corroborate the fact that men's enterprises perform better than women's enterprises both in developing and developed countries. Johnson and Storey [47] show that from 289 enterprises'data in Great Britain, women's enterprises are smaller than men's enterprises. From 400 enterprises' data from three different industrial sectors, Kalleberg

and makes a few recommendations to ensure the survival of women's enterprises.

2. Literature review on gender productivity difference

owners of enterprises.

mism through gender?

stochastic frontier model by Mayers and Liu [38].

416 Entrepreneurship - Development Tendencies and Empirical Approach

more workers than women's enterprises.

We use data collected within the framework of education production in informal activities. These data were collected by Western and Center of African Network for Research in Education<sup>1</sup> and covered four activities branches in Ouagadougou. The informal sector activities covered by this survey are hairdressing salon, motor bike mechanics, sewing, and carpentry. In this study, we used only the data of hairdressing salon and sewing, which are the activities sectors where we meet men-owned and women-owned enterprises.

The survey was carried out in 2010 and related to 300 small production units in Ouagadougou. With the objective to prevent the production units to count in the same area, 60 informal production units were retained in each of the five districts of Ouagadougou. Informal production unit's number per sub-category of activity is retained according to the representativeness of each sub-category activity according to the data collected by INSD in 2001 in the whole of Ouagadougou town [53]. Collected information are related to the employees number (at the activity starting year and in 2010) and their socio demographic characteristics (age, education level, the type of leasing contract established with the landlord, number of lost working days by the unit members due to disease, etc.)

#### 3.2. Model

From theoretical view, one can imagine that the efficiency of a microenterprise influences its dynamism and vice versa. Efficiency influences dynamism through the process of self-financing. When the micro enterprise is efficient, this helps it to achieve more cash flow and then more resource that will supply its self-financing. The past results (dynamism) of the enterprise also influence its current capacities through the process of learning by doing. A microenterprise that carried out good performances from the past must be able to do the same now. These relations may be summed up through the following system:

$$\begin{cases} dy\_t = f\left(\text{eff}\_{t-s}, \mathbf{x}, z\right) \\ \text{eff}\_t = g\left(dy\_{t-1}, \mathbf{x}, z\right), \text{with } s \ge 2 \end{cases} \tag{1}$$

In the relation Eq. (2), St

unpredictable.

log St ð Þ�0 log ð Þ St

difference, ε the term of errorZ ¼ ½ � x⋮z .

function <sup>h</sup>ð Þ: is of the type h xð Þ¼ ; <sup>z</sup> <sup>e</sup><sup>Z</sup>βþ<sup>ε</sup>, we obtain:

entrepreneurs in their field of activities are among men.

are straightly linked to their relations network.

<sup>0</sup> represents the number of employees of the most recent year and St the

http://dx.doi.org/10.5772/intechopen.71696

Testing Gender Productivity Difference with Informal Enterprises Data: A Case Study of Burkina Faso

(3)

419

number of employees at the enterprise's year of creation. By considering the logarithm of G and by carrying out a limited development of order two of gð Þ: but by supposing that the

þα<sup>5</sup> log ð Þ� St log ð Þþ A Zβ þ ε

Where d is a normalization coefficient that helps to control the effect of enterprises' age

In the current study, we will suppose that Z contains variables such as education of the owner, the share of unknown customers in the enterprise's earnings, the number of the entrepreneurs' years of experience in its activity area, the number of inactive individuals dependent upon the

We suppose that the group of variables (entrepreneur's education, entrepreneur's experience in the domain and the number of employees who have a formal contract) have a positive influence on the dynamism of IPUs. As for the other two variables (share of unknown customers in the IPU's earnings and the number of unemployed supported by the IPU), we expect that they affect negatively the microenterprise's growth. When an entrepreneur of a microenterprise is supporting many inactive, the enterprise earnings are mostly used to satisfy family needs, which lower the capacity of self-financing. As the access to credit of microenterprises is very low, the use of enterprises' earnings to support social expenditure negatively affects enterprise growth. Likewise, when the enterprise has very few loyal customers, its earnings fluctuate more, given that the demand addressed to it is totally

Table 1 descriptive statistics show that the number of employees varies between 1 and 8, and enterprises hiring the most are men's enterprises. This implies that women's enterprises grow less rapidly than men's with regard to employment. In average, women's enterprises hire five employees per year to six employees for men's enterprises. At the starting of their activities, men's enterprises even start with more employees than women's. However, women's enterprises are mostly younger than men's enterprises. Considering the level of education, we realize that men have slightly gained this capital than women. Even the most experienced

Roughly speaking, we can say that we have a sample that is a bit like Chirwa's [8] in terms of human capital variables. In his study about Malawi, the author has got almost the same characteristics between women and men. Like Chirwa, we come to the conclusion that men outnumbered women in our sample. In fact, 66.1% of sewing and hairdressing enterprises managers having been surveyed are men. Women's enterprises' incomes depend more on their network of acquaintances. About 53% of customers of women's enterprises are people who know personally the manager, whereas 65.2% of customers of men's enterprises are unknown. We see here Okten and Osili's [54] findings stating that women's informal enterprises incomes

entrepreneur, and the number of employees having a formal contract in the enterprise.

<sup>d</sup> <sup>¼</sup> <sup>α</sup><sup>0</sup> <sup>þ</sup> <sup>α</sup><sup>1</sup> log ð Þþ St <sup>α</sup><sup>2</sup> log ð Þ St ½ �<sup>2</sup> <sup>þ</sup> <sup>α</sup><sup>3</sup> log ð Þþ <sup>A</sup> <sup>α</sup>4½ � log ð Þ <sup>A</sup> <sup>2</sup>

Where dy represents the dynamism or the enterprise growth, x the characteristics of enterprise, z the characteristics of environment where the enterprise is, effi measures the efficiency, and t the time.

The analysis of system Eq. (1) requires data of at least two periods. But, the data at our disposal are data of one passage. Consequently, we will replace effit�<sup>s</sup> by some proxies like most of loyal customers in the microenterprise's earnings. The system relations Eq. (1) form a system of sequential equations, and the equations can be estimated individually.

Evans [37] proposed to consider the enterprise growth as a function of its growth rate and its characteristics. The author estimates that the enterprise growth is mainly influenced by its initial size and age. Let G be the variable measuring the micro enterprise growth, we can write that:

$$\mathbf{G} = \frac{\mathbf{S}\_{\mathbf{f}}}{\mathbf{S}\_{\mathbf{f}}} = \mathbf{g}(\mathbf{S}\_{\mathbf{f}}, A)\hbar(\mathbf{x}, \mathbf{z})\tag{2}$$

<sup>1</sup> Akouwerabou et al., (2010) Microeconomic analysis of the impact of education on the job market in Urban district of Ouagadougou. http://www.rocare.org/grants/2010/grants2010bf1.pdf

In the relation Eq. (2), St <sup>0</sup> represents the number of employees of the most recent year and St the number of employees at the enterprise's year of creation. By considering the logarithm of G and by carrying out a limited development of order two of gð Þ: but by supposing that the function <sup>h</sup>ð Þ: is of the type h xð Þ¼ ; <sup>z</sup> <sup>e</sup><sup>Z</sup>βþ<sup>ε</sup>, we obtain:

Education<sup>1</sup> and covered four activities branches in Ouagadougou. The informal sector activities covered by this survey are hairdressing salon, motor bike mechanics, sewing, and carpentry. In this study, we used only the data of hairdressing salon and sewing, which are the

The survey was carried out in 2010 and related to 300 small production units in Ouagadougou. With the objective to prevent the production units to count in the same area, 60 informal production units were retained in each of the five districts of Ouagadougou. Informal production unit's number per sub-category of activity is retained according to the representativeness of each sub-category activity according to the data collected by INSD in 2001 in the whole of Ouagadougou town [53]. Collected information are related to the employees number (at the activity starting year and in 2010) and their socio demographic characteristics (age, education level, the type of leasing contract established with the landlord, number of lost working days

From theoretical view, one can imagine that the efficiency of a microenterprise influences its dynamism and vice versa. Efficiency influences dynamism through the process of self-financing. When the micro enterprise is efficient, this helps it to achieve more cash flow and then more resource that will supply its self-financing. The past results (dynamism) of the enterprise also influence its current capacities through the process of learning by doing. A microenterprise that carried out good performances from the past must be able to do the same now. These relations

dyt <sup>¼</sup> f effit�<sup>s</sup>; <sup>x</sup>; <sup>z</sup> � �

effit <sup>¼</sup> g dyt�<sup>1</sup>; <sup>x</sup>; <sup>z</sup> � � , with <sup>s</sup> <sup>≥</sup> <sup>2</sup>

Where dy represents the dynamism or the enterprise growth, x the characteristics of enterprise, z the characteristics of environment where the enterprise is, effi measures the efficiency, and t the time.

The analysis of system Eq. (1) requires data of at least two periods. But, the data at our disposal are data of one passage. Consequently, we will replace effit�<sup>s</sup> by some proxies like most of loyal customers in the microenterprise's earnings. The system relations Eq. (1) form a system of

Evans [37] proposed to consider the enterprise growth as a function of its growth rate and its characteristics. The author estimates that the enterprise growth is mainly influenced by its initial size and age. Let G be the variable measuring the micro enterprise growth, we can write that:

Akouwerabou et al., (2010) Microeconomic analysis of the impact of education on the job market in Urban district of

¼ g St ð Þ ; A h xð Þ ; z (2)

(1)

activities sectors where we meet men-owned and women-owned enterprises.

by the unit members due to disease, etc.)

418 Entrepreneurship - Development Tendencies and Empirical Approach

may be summed up through the following system:

(

sequential equations, and the equations can be estimated individually.

Ouagadougou. http://www.rocare.org/grants/2010/grants2010bf1.pdf

<sup>G</sup> <sup>¼</sup> St 0 St

3.2. Model

1

$$\begin{aligned} \frac{\log\left(\mathcal{S}\_{\ell}\right) - \log\left(\mathcal{S}\_{\ell}\right)}{d} &= a\_0 + a\_1 \log\left(\mathcal{S}\_{\ell}\right) + a\_2 \left[\log\left(\mathcal{S}\_{\ell}\right)\right]^2 + a\_3 \log\left(A\right) + a\_4 \left[\log\left(A\right)\right]^2 \\ &+ a\_5 \log\left(\mathcal{S}\_{\ell}\right) \cdot \log\left(A\right) + Z\beta + \varepsilon \end{aligned} \tag{3}$$

Where d is a normalization coefficient that helps to control the effect of enterprises' age difference, ε the term of errorZ ¼ ½ � x⋮z .

In the current study, we will suppose that Z contains variables such as education of the owner, the share of unknown customers in the enterprise's earnings, the number of the entrepreneurs' years of experience in its activity area, the number of inactive individuals dependent upon the entrepreneur, and the number of employees having a formal contract in the enterprise.

We suppose that the group of variables (entrepreneur's education, entrepreneur's experience in the domain and the number of employees who have a formal contract) have a positive influence on the dynamism of IPUs. As for the other two variables (share of unknown customers in the IPU's earnings and the number of unemployed supported by the IPU), we expect that they affect negatively the microenterprise's growth. When an entrepreneur of a microenterprise is supporting many inactive, the enterprise earnings are mostly used to satisfy family needs, which lower the capacity of self-financing. As the access to credit of microenterprises is very low, the use of enterprises' earnings to support social expenditure negatively affects enterprise growth. Likewise, when the enterprise has very few loyal customers, its earnings fluctuate more, given that the demand addressed to it is totally unpredictable.

Table 1 descriptive statistics show that the number of employees varies between 1 and 8, and enterprises hiring the most are men's enterprises. This implies that women's enterprises grow less rapidly than men's with regard to employment. In average, women's enterprises hire five employees per year to six employees for men's enterprises. At the starting of their activities, men's enterprises even start with more employees than women's. However, women's enterprises are mostly younger than men's enterprises. Considering the level of education, we realize that men have slightly gained this capital than women. Even the most experienced entrepreneurs in their field of activities are among men.

Roughly speaking, we can say that we have a sample that is a bit like Chirwa's [8] in terms of human capital variables. In his study about Malawi, the author has got almost the same characteristics between women and men. Like Chirwa, we come to the conclusion that men outnumbered women in our sample. In fact, 66.1% of sewing and hairdressing enterprises managers having been surveyed are men. Women's enterprises' incomes depend more on their network of acquaintances. About 53% of customers of women's enterprises are people who know personally the manager, whereas 65.2% of customers of men's enterprises are unknown. We see here Okten and Osili's [54] findings stating that women's informal enterprises incomes are straightly linked to their relations network.


Table 1. Descriptive statistics of variables used in the growth model.

For the estimation of the technical efficiency scores, we suppose that we have N firms ð Þ i ¼ 1; 2;…; N , each producing a certain quantity of output yi (in logarithm) starting from a

Testing Gender Productivity Difference with Informal Enterprises Data: A Case Study of Burkina Faso

ence on the inefficiency of the firm. Let us suppose that the unobserved border y<sup>∗</sup> is given by

parameters to be estimated. The effective output of each firm (y) is equal to the potential

i.e., the effective production is at most equal to the potential production. In relationship Eq. (5), ui and vi are independent and δ is the vector of parameters of the function of the inefficiency.

θ þ vi � ln μ þ z<sup>0</sup>

total variance of enterprise output. This variable helps us determine the share of variability of the dependent variable stemming from technical inefficiency. When Γ is null, this implies that

The explanatory variables in relationship Eq. (6) are the labor (l) and the capital (k) in the function of production and the number of qualified employees, the number of lost working days by the enterprise through members' ill-health, and the potential risk that the entrepreneur assumes in his field of activity (risk). This variable is a binary variable that assigns a value of 1 if the IPU entrepreneur thinks that his field of business is too risky. The binary variable ICT assigns a value of 1 if the IPU possesses and uses a mobile phone. The access to credit is represented by credit, which is a dummy variable indicating by the value 1 that the enterprise has access to credit. Binary variables representing activities of hairdressing, and sewing, and the predicted variable of dynamism has also been introduced in the

We assume that the efficiency of a microenterprise increases with its number of qualified workers. This prediction is established on the hypotheses that theories of endogenous growth have expressed on the capacity of human capital to increase technical efficiency. However, increased levels of worker disease lead to less efficient enterprises. This hypothesis stems from the fact that the more the workers contract diseases, the less they work, thus leading to a decrease of the enterprise's productivity. Finally, we assume that the more the entrepreneur of

<sup>y</sup><sup>∗</sup> <sup>¼</sup> <sup>x</sup><sup>0</sup> i <sup>i</sup> <sup>¼</sup> Zi<sup>⋮</sup> <sup>d</sup>byi

<sup>i</sup> and z<sup>0</sup> and where θ is the vector of the unknown

i, δÞ, where uiðzi, δÞ ≥ 0 (5)

δ � � (6)

<sup>u</sup> is the variance of u. By taking the natural logarithm, we

i

, we also suppose that ui is independent of xi. We then consider thereafter

δ. If we integrate this expression into Eq. (5), we then obtain the equation

i

, this report helps us analyze the contribution of the inefficiency to the

θ þ vi (4)

� � � � exerting an influ-

421

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. That allows us to write that:

<sup>i</sup> and the vector of the exogenous variables z<sup>0</sup>

<sup>2</sup> � � and independent of x<sup>0</sup>

yi ¼ x<sup>0</sup>

output (y<sup>∗</sup>) with an error (ui) whose distribution depends on z<sup>0</sup>

of the stochastic frontier of production that will be estimated:

inefficiency does not contribute to explain the output variability.

<sup>i</sup>θ þ vi � uðz<sup>0</sup>

yi ¼ x<sup>0</sup> i

vector of input x<sup>0</sup>

the relationship:

with vi ~ N 0; σvi

Conditioning by z<sup>0</sup>

By writing Γ ¼ <sup>γ</sup><sup>2</sup>

inefficiency equation.

that ui ~ N<sup>þ</sup> μ exp z<sup>0</sup>

obtain ln ui ¼ ln μ þ z<sup>0</sup>

i

<sup>u</sup>=γ<sup>2</sup> uþσ<sup>2</sup> v

i δ � �; γ<sup>2</sup> u � �, where γ<sup>2</sup>

i

For the estimation of the technical efficiency scores, we suppose that we have N firms ð Þ i ¼ 1; 2;…; N , each producing a certain quantity of output yi (in logarithm) starting from a vector of input x<sup>0</sup> <sup>i</sup> and the vector of the exogenous variables z<sup>0</sup> <sup>i</sup> <sup>¼</sup> Zi<sup>⋮</sup> <sup>d</sup>byi � � � � exerting an influence on the inefficiency of the firm. Let us suppose that the unobserved border y<sup>∗</sup> is given by the relationship:

$$y^\* = \mathbf{x}\_i^\prime \boldsymbol{\Theta} + \boldsymbol{v}\_i \tag{4}$$

with vi ~ N 0; σvi <sup>2</sup> � � and independent of x<sup>0</sup> <sup>i</sup> and z<sup>0</sup> and where θ is the vector of the unknown parameters to be estimated. The effective output of each firm (y) is equal to the potential output (y<sup>∗</sup>) with an error (ui) whose distribution depends on z<sup>0</sup> i . That allows us to write that:

$$y\_i = \mathbf{x}'\_i \boldsymbol{\theta} + \boldsymbol{v}\_i - \boldsymbol{u}(\boldsymbol{z}'\_i, \boldsymbol{\delta}), \quad \text{where} \quad \boldsymbol{u}\_i(\boldsymbol{z}\_i, \boldsymbol{\delta}) \ge 0 \tag{5}$$

i.e., the effective production is at most equal to the potential production. In relationship Eq. (5), ui and vi are independent and δ is the vector of parameters of the function of the inefficiency. Conditioning by z<sup>0</sup> i , we also suppose that ui is independent of xi. We then consider thereafter that ui ~ N<sup>þ</sup> μ exp z<sup>0</sup> i δ � �; γ<sup>2</sup> u � �, where γ<sup>2</sup> <sup>u</sup> is the variance of u. By taking the natural logarithm, we obtain ln ui ¼ ln μ þ z<sup>0</sup> i δ. If we integrate this expression into Eq. (5), we then obtain the equation of the stochastic frontier of production that will be estimated:

$$y\_i = \mathbf{x}\_i' \boldsymbol{\Theta} + \boldsymbol{\upsilon}\_i - \left(\ln \mu + z\_i' \boldsymbol{\delta}\right) \tag{6}$$

By writing Γ ¼ <sup>γ</sup><sup>2</sup> <sup>u</sup>=γ<sup>2</sup> uþσ<sup>2</sup> v , this report helps us analyze the contribution of the inefficiency to the total variance of enterprise output. This variable helps us determine the share of variability of the dependent variable stemming from technical inefficiency. When Γ is null, this implies that inefficiency does not contribute to explain the output variability.

The explanatory variables in relationship Eq. (6) are the labor (l) and the capital (k) in the function of production and the number of qualified employees, the number of lost working days by the enterprise through members' ill-health, and the potential risk that the entrepreneur assumes in his field of activity (risk). This variable is a binary variable that assigns a value of 1 if the IPU entrepreneur thinks that his field of business is too risky. The binary variable ICT assigns a value of 1 if the IPU possesses and uses a mobile phone. The access to credit is represented by credit, which is a dummy variable indicating by the value 1 that the enterprise has access to credit. Binary variables representing activities of hairdressing, and sewing, and the predicted variable of dynamism has also been introduced in the inefficiency equation.

We assume that the efficiency of a microenterprise increases with its number of qualified workers. This prediction is established on the hypotheses that theories of endogenous growth have expressed on the capacity of human capital to increase technical efficiency. However, increased levels of worker disease lead to less efficient enterprises. This hypothesis stems from the fact that the more the workers contract diseases, the less they work, thus leading to a decrease of the enterprise's productivity. Finally, we assume that the more the entrepreneur of

Variables growth (dy)

Log (number of employees

Log (enterprise Number of unknown customers

owner education Inactive individuals

Employees

 with a formal contract

Entrepreneur's

Source: build by the authors.

Table 1.

Descriptive

 statistics of variables used in the growth model.

 experience

 in the sector

 who depend on the owner 215

 age)

 at startup)

Sample Obs. Mean Std. Dev Min Max Obs. Mean Std. Dev Min Max Obs. Men Std. Dev Min Max

215

215

215

215 60.74 28.09

15 8.45

 4.47

> 3.76

> > 215

215 10.77

 6.28

 0 35 53

 8.51

 4.51

 .08

 .28

 0 1

 53

 .06

 .23

 0 1

 162

 .09

 .29

 6.59

 0 35

 0 1

 3.16

 0 0

 53

 3.08

 2.50

 0 10 162

 3.98 3.32

 0 20

 1 19 53

 8.2

 2.62

 3 19 162

 8.51 4.93

 1 19

420 Entrepreneurship - Development Tendencies and Empirical Approach

 .63

 .39

 0 3.30 53

 0 100 53

 47.08 28.88

 0 90 162 65.22 26.41

 .26

 .21

 0 .85 53

 .06

 .09

0.15 .60 53

 .05

 .25

 .58

 .32

 0 1.18 162

 .21

 0 .60 162

 .06

0.06 .24 162

 .06

 .26

 .65

 .42

 0 3.30

 0 100

 .21

 0 .85

 .09

0.15 .60

Women

Men


4.1. Growth of enterprises

4.2. Enterprises' technical efficiency

By lining up enterprise's growth and labor, we get a reversed u-relation between growth and women's age. Young women's enterprises grow more rapidly. In fact, the results show us that women aged less than 35 years are more dynamic than older women. As for men, starting an enterprise with a high number of employees negatively affects the enterprise's dynamism. However, unlike women, young men's enterprises grow less rapidly than older men. With regard to Table 3 significant coefficients, we can also say that men aged more than 25 years are capable of setting up and manage well a medium-sized informal enterprise. Men's enterprises

Testing Gender Productivity Difference with Informal Enterprises Data: A Case Study of Burkina Faso

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423

Table 2 has shown that women's enterprises have got more physical capital than men's enterprises. Based on Table 4 results, we can affirm that women's enterprises are overequipped. Women's enterprises' level of equipment is higher than the optimal threshold which they needed. Both for women and men, we shall keep in mind that labor contributes more to improving productivity compared to capital. Our assessments show that credit does not affect men's technical efficiency. Nevertheless, it harms women's enterprises' technical efficiency. This

Log (labor at starting) 0.234\*\*\* 0.073 0.0839 0.130 0.434\*\*\* 0.0869 Log (labor at starting) square 0.140 0.102 0.0774 0.243 0.0575 0.112 Log (age) 0.142\*\*\* 0.034 0.296\*\*\* 0.0887 0.270\*\*\* 0.0412 Log (age) square 0.024\*\* 0.012 0.296\*\*\* 0.0886 0.0590\*\*\* 0.0137 Log(Age)\* Log (labor at startin 0.200\*\*\* 0.061 0.00546 0.136 0.377\*\*\* 0.0690 Education\_head 0.001 0.004 0.00336 0.00378 Unknown\_customers 0.0002 0.0002 8.83e-05 0.000283 4.85e-05 0.000225 Age\*Educ\_head 0.0001 0.0001 0.000102 0.000117 Unemployed 0.003\* 0.002 0.00377 0.00324 0.00508\*\* 0.00220 Experience 0.0001 0.001 0.00343 0.00209 0.000270 0.00110 Number of formal employees 0.0513\*\*\* 0.018 0.0371 0.0326 0.0603\*\*\* 0.0199 Constant 0.142\*\*\* 0.021 0.0162 0.0268 0.223\*\*\* 0.0304

Coefficients std. error Coefficients std. error Coefficients std. error

giving formal contracts to their employees are also more dynamic.

Variables Sample Women Men

Observations 215 53 162 R-squared 0.354 0.462 0.472

Source: build by author; Notes: results of the estimation of growth rate. Legend: \*\*\*, \*\* and \* imply significance at 1%, 5%, and 10%, respectively.

Table 3. Determinants of the informal enterprises growth.

Table 2. Descriptive statistics of variables used in the stochastic frontier model.

the micro-enterprise believes that his business is risky, the more efficient his enterprise is. If the entrepreneur believes that his business is too risky, he will expend more effort to minimize this risk. The efforts of minimization of risk are later converted into profit productivity.

Table 2 shows us that men's enterprises generate more incomes than women's enterprises. Nevertheless, women's enterprises have got more physical capital than men's enterprises. Women's enterprises are mostly practicing in sewing and their employees contract diseases more than men's employees. A great proportion of women (45%) thinks that doing business in the informal is more risky to 37% of men. Broadly speaking, employees in women's enterprises are more skilled than men's enterprises.

Finally, the relationships that will be estimated are relationship Eq. (3) for the dynamism of the microenterprise and relationship Eq. (6) for the efficiency determinants. These estimations have been carried out with STATA 12.

#### 4. Econometric results

In this section, we present and discuss econometric results. In the first section, we discuss results concerning determinants of enterprises' growth. The second subsection presents and discusses determinants of enterprises' technical efficiency.

#### 4.1. Growth of enterprises

By lining up enterprise's growth and labor, we get a reversed u-relation between growth and women's age. Young women's enterprises grow more rapidly. In fact, the results show us that women aged less than 35 years are more dynamic than older women. As for men, starting an enterprise with a high number of employees negatively affects the enterprise's dynamism. However, unlike women, young men's enterprises grow less rapidly than older men. With regard to Table 3 significant coefficients, we can also say that men aged more than 25 years are capable of setting up and manage well a medium-sized informal enterprise. Men's enterprises giving formal contracts to their employees are also more dynamic.

#### 4.2. Enterprises' technical efficiency

the micro-enterprise believes that his business is risky, the more efficient his enterprise is. If the entrepreneur believes that his business is too risky, he will expend more effort to minimize this

Table 2 shows us that men's enterprises generate more incomes than women's enterprises. Nevertheless, women's enterprises have got more physical capital than men's enterprises. Women's enterprises are mostly practicing in sewing and their employees contract diseases more than men's employees. A great proportion of women (45%) thinks that doing business in the informal is more risky to 37% of men. Broadly speaking, employees in women's enterprises

Finally, the relationships that will be estimated are relationship Eq. (3) for the dynamism of the microenterprise and relationship Eq. (6) for the efficiency determinants. These estimations

In this section, we present and discuss econometric results. In the first section, we discuss results concerning determinants of enterprises' growth. The second subsection presents and

risk. The efforts of minimization of risk are later converted into profit productivity.

Table 2. Descriptive statistics of variables used in the stochastic frontier model.

Variables Sample Women Men

Min Max Obs. Mean Std.

Log (sales) 215 4.78 .58 0 5.69 53 4.68 .77 0 5.69 162 4.82 .51 0 5.57 Log (labor) 215 .48 .19 0 .90 53 .46 .19 0 .78 162 .48 .19 0 .90 Log (capital) 215 5.23 .56 3.69 6.39 53 5.29 .59 3.69 6.18 162 5.21 .54 3.69 6.39 Illness 215 25.28 20.43 0 100 53 31.30 22.19 0 100 162 23.31 19.49 0 90 Mobile phone 15 .94 .24 0 1 53 .91 .29 0 1 162 .95 .22 0 1 Credit 215 .06 .24 0 1 53 .11 .32 0 1 162 .04 .20 0 1 Hairdressing 215 .35 .48 0 1 53 .85 .36 0 1 162 .19 .39 0 1 Sewing 215 34 .47 0 1 53 .15 36 0 1 162 .39 .49 0 1 Risk 215 .39 .49 0 1 53 .45 .50 0 1 162 .37 .49 0 1

Dev

215 .08 .28 0 1 53 .06 .23 0 1 162 .09 .29 0 1

Min Max Obs. Men Std.

Dev

Min Max

Obs. Mean Std.

422 Entrepreneurship - Development Tendencies and Empirical Approach

Dev

are more skilled than men's enterprises.

have been carried out with STATA 12.

discusses determinants of enterprises' technical efficiency.

4. Econometric results

Number of qualified employees

Source: build by the authors.

Table 2 has shown that women's enterprises have got more physical capital than men's enterprises. Based on Table 4 results, we can affirm that women's enterprises are overequipped. Women's enterprises' level of equipment is higher than the optimal threshold which they needed. Both for women and men, we shall keep in mind that labor contributes more to improving productivity compared to capital. Our assessments show that credit does not affect men's technical efficiency. Nevertheless, it harms women's enterprises' technical efficiency. This


Source: build by author; Notes: results of the estimation of growth rate. Legend: \*\*\*, \*\* and \* imply significance at 1%, 5%, and 10%, respectively.

Table 3. Determinants of the informal enterprises growth.


in Burkina Faso, microfinance institutions grant more credit to women than men [56]. Our data actually corroborate Minguez-Vera and Martin [26] who said that women are less efficient compared to men in risky fields of activities. However, we have found out that labor is more

Testing Gender Productivity Difference with Informal Enterprises Data: A Case Study of Burkina Faso

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425

Women's access to credit does not help them to increase their enterprises' productivity. Instead of using the credit to facilitate their enterprises' activities, women often tend to use the credit for consumption items. They get into debt on behalf of their enterprises to insure their families' consumption expenses. Then, they use their enterprises' incomes to pay the credit back [57].

Graph 1 shows that in average, women's enterprises are as efficient as men's enterprises. The curve representing women's enterprises level of technical efficiency is even sometimes on top of men's own. This implies that women are as efficient as men in the informal sector [25]. Thus, by limiting oneself to sales analysis, one can say women are less efficient than men (Table 2). Authors like Cuba et al. [49] have drawn conclusions from this type of information that women are less efficient than men. But, in fact, even if women get fewer incomes in comparison to men, they are more efficient than men. Table 1 descriptive statistics have even shown that their enterprises are more stable than men's enterprises. This table's data show that the minimum growth of women's enterprises is .06, whereas men's enterprise is .15. This implies that enterprises having laid off more employees, since their creations are found among men's enterprises. This result has also been highlighted by Johnson and Storey [47]. From our view point, the fact of women becoming less skillful is deplorable in the enterprise manage-

productive in women's enterprises contrary to Chowdhury and Amin result (2011).

This explains why women who have access to credit are less productive.

ment as they become older.

0.00

1

9

17

25

33

41

49

57

65

73

81

Graph 1. Technical efficiency scores with regard to the gender of the promotor. Source: Build by the authors.

89

97

105

eff\_women eff\_men

113

121

129

137

145

153

161

169

177

185

193

201

209

0.20

0.40

0.60

efficiency scores

0.80

1.00

1.20

Legend: \*\*\*, \*\* and \* imply significance at 1%, 5% and 10%, respectively. Source: build by author.

Table 4. Determinants of enterprises productivity and inefficiency.

result is in contradiction with the result of Marlow and Patton [55] who have shown that access to credit improves women's informal enterprises' performances. The fact of managing an enterprise in a very risky field of activity lessens women's technical efficiency. However, doing business in a risky field of activity is profitable to men. When employees in the enterprise lose working hours due to sicknesses, it negatively affects enterprises' productivity irrespective of the owner's gender.

#### 4.3. Discussion

In our sample, women's enterprises are not less equipped than men's enterprises contrary to the data of De Mel et al. [22] and Banerjee and Sendhil [15]. Nevertheless, we find out that they are inefficient in choosing the level of production factors. Women overinvest in physical capital with regard to the size of the enterprise. Moreover, contrary to the findings of Wasihun and Paul [20] who estimate that women have less access to credit compared to men, we have found out that women's access rate to credit is higher than men's. During the last 10 years, microfinance has been developed rapidly in developing countries. But, it has been shown that in Burkina Faso, microfinance institutions grant more credit to women than men [56]. Our data actually corroborate Minguez-Vera and Martin [26] who said that women are less efficient compared to men in risky fields of activities. However, we have found out that labor is more productive in women's enterprises contrary to Chowdhury and Amin result (2011).

Women's access to credit does not help them to increase their enterprises' productivity. Instead of using the credit to facilitate their enterprises' activities, women often tend to use the credit for consumption items. They get into debt on behalf of their enterprises to insure their families' consumption expenses. Then, they use their enterprises' incomes to pay the credit back [57]. This explains why women who have access to credit are less productive.

Graph 1 shows that in average, women's enterprises are as efficient as men's enterprises. The curve representing women's enterprises level of technical efficiency is even sometimes on top of men's own. This implies that women are as efficient as men in the informal sector [25]. Thus, by limiting oneself to sales analysis, one can say women are less efficient than men (Table 2). Authors like Cuba et al. [49] have drawn conclusions from this type of information that women are less efficient than men. But, in fact, even if women get fewer incomes in comparison to men, they are more efficient than men. Table 1 descriptive statistics have even shown that their enterprises are more stable than men's enterprises. This table's data show that the minimum growth of women's enterprises is .06, whereas men's enterprise is .15. This implies that enterprises having laid off more employees, since their creations are found among men's enterprises. This result has also been highlighted by Johnson and Storey [47]. From our view point, the fact of women becoming less skillful is deplorable in the enterprise management as they become older.

result is in contradiction with the result of Marlow and Patton [55] who have shown that access to credit improves women's informal enterprises' performances. The fact of managing an enterprise in a very risky field of activity lessens women's technical efficiency. However, doing business in a risky field of activity is profitable to men. When employees in the enterprise lose working hours due to sicknesses, it negatively affects enterprises' productivity irrespective of the

Variables Sample Women Men

424 Entrepreneurship - Development Tendencies and Empirical Approach

log\_lab 0.295\*\* 0.135 1.357\*\*\* 2.23e-08 0.248\*\*\* 1.39e-08 log\_capital 0.119\*\* 0.0487 0.0503\*\*\* 5.45e-09 0.0436\*\*\* 6.24e-09 Constant 4.479\*\*\* 0.235 5.061\*\*\* 1.97e-08 5.146\*\*\* 3.87e-08

illnes 0.0122 0.00847 0.0308\*\* 0.0153 0.0164\*\*\* 0.00538 m\_phone 0.812\* 0.472 2.687\*\*\* 0.705 0.232 0.481 credit 0.176 0.462 0.935\* 0.542 0.0616 0.470 coif 0.716\* 0.414 0.241 0.360 0.123 0.224 age 0.0743\*\*\* 0.0270 0.118\*\*\* 0.0457 0.0251 0.0153 risk 0.691\*\* 0.308 1.007\*\* 0.508 0.851\*\*\* 0.177 contrat\_formel 1.489\* 0.781 3.041\*\*\* 0.850 0.253 0.352 dy 2.504 3.141 5.771 3.931 3.256 2.600 Constant 0.0122 0.00847 1.803 1.731 0.255 0.777

Γ 3.925\*\*\* 0.252 35.92\*\*\* 0.115 36.14\*\*\* 0.0686

Observation 215 53 162

Legend: \*\*\*, \*\* and \* imply significance at 1%, 5% and 10%, respectively.

Table 4. Determinants of enterprises productivity and inefficiency.

Coefficients std. error robust Coefficients std. Error robust Coefficients std. error robust

In our sample, women's enterprises are not less equipped than men's enterprises contrary to the data of De Mel et al. [22] and Banerjee and Sendhil [15]. Nevertheless, we find out that they are inefficient in choosing the level of production factors. Women overinvest in physical capital with regard to the size of the enterprise. Moreover, contrary to the findings of Wasihun and Paul [20] who estimate that women have less access to credit compared to men, we have found out that women's access rate to credit is higher than men's. During the last 10 years, microfinance has been developed rapidly in developing countries. But, it has been shown that

owner's gender.

Production function

Efficiency function

Function of variance

Source: build by author.

4.3. Discussion

Graph 1. Technical efficiency scores with regard to the gender of the promotor. Source: Build by the authors.

### 5. Conclusion

Women have long been hindered from setting up and managing their own businesses. After several dozens of political and economic years of efforts, some women have got freedom to do business. Today, the new concern of economists is to know if women are less efficient than men. The first analyses have actually got to the findings that men's enterprises are more profitable than women's enterprises [58, 59].

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Testing Gender Productivity Difference with Informal Enterprises Data: A Case Study of Burkina Faso

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In this chapter, we have used data from informal enterprises to contribute to this debate. Studies that have shown that women are less efficient than men have gone under a lot of criticisms regarding the quality of data they have used. These studies have mostly used data, whereby women and men do business in different fields of activities. The difference of the sector of activity then prevents to clearly see the impact of gender on performances. Others have also sometimes used data, whereby men run formal enterprises, while women are in the informal. We have used data, whereby women and men practice the same activities.

We have found out that it is more profitable for a woman to set up and manage an enterprise while she is young. However, young men succeed less in entrepreneurship. Unlike then to women, men need to get more experiences in their sector of activities before becoming efficient. This allows to justify why in our sample, women's enterprises are younger than men's enterprises (Table 1). Women's enterprises employ less workers than men's enterprises and get less income than men's enterprises.

Women's enterprises are however more efficient than men's enterprises. Women's enterprises technical efficiency scores are slightly superior to men's enterprises scores. Moreover, in terms of vulnerability, women's enterprises are more stable than men's enterprises. We have found out that the frequency of redundancy is higher in men's enterprises.

In order to succeed in entrepreneurship, we advise women to start when they are younger. Even if the development of microfinance in developing countries facilitates them the access to credit, it will be profitable that women index the request of credit to their enterprises' needs. In fact, they should not apply for credit given the easy access to credit, but they should rather do it when their enterprises really need it. Therefore, to better understand why the access to credit negatively affects women's enterprises' technical efficiency, it will be profitable to investigate on the determinants of the credit application by entrepreneur women in the informal sector.

### Author details

Akouwerabou Babikigalaga Dénis\*, Legala-Keud Genesquin Guibert and Bayala Balibié Auguste Serge

\*Address all correspondence to: denisj16@yahoo.fr

Economics Department, University Ouaga II, Ouagadougou, Burkina Faso

### References

5. Conclusion

profitable than women's enterprises [58, 59].

426 Entrepreneurship - Development Tendencies and Empirical Approach

less income than men's enterprises.

Author details

Bayala Balibié Auguste Serge

\*Address all correspondence to: denisj16@yahoo.fr

Women have long been hindered from setting up and managing their own businesses. After several dozens of political and economic years of efforts, some women have got freedom to do business. Today, the new concern of economists is to know if women are less efficient than men. The first analyses have actually got to the findings that men's enterprises are more

In this chapter, we have used data from informal enterprises to contribute to this debate. Studies that have shown that women are less efficient than men have gone under a lot of criticisms regarding the quality of data they have used. These studies have mostly used data, whereby women and men do business in different fields of activities. The difference of the sector of activity then prevents to clearly see the impact of gender on performances. Others have also sometimes used data, whereby men run formal enterprises, while women are in the

We have found out that it is more profitable for a woman to set up and manage an enterprise while she is young. However, young men succeed less in entrepreneurship. Unlike then to women, men need to get more experiences in their sector of activities before becoming efficient. This allows to justify why in our sample, women's enterprises are younger than men's enterprises (Table 1). Women's enterprises employ less workers than men's enterprises and get

Women's enterprises are however more efficient than men's enterprises. Women's enterprises technical efficiency scores are slightly superior to men's enterprises scores. Moreover, in terms of vulnerability, women's enterprises are more stable than men's enterprises. We have found

In order to succeed in entrepreneurship, we advise women to start when they are younger. Even if the development of microfinance in developing countries facilitates them the access to credit, it will be profitable that women index the request of credit to their enterprises' needs. In fact, they should not apply for credit given the easy access to credit, but they should rather do it when their enterprises really need it. Therefore, to better understand why the access to credit negatively affects women's enterprises' technical efficiency, it will be profitable to investigate on the determinants of the credit application by entrepreneur women in the informal sector.

out that the frequency of redundancy is higher in men's enterprises.

Akouwerabou Babikigalaga Dénis\*, Legala-Keud Genesquin Guibert and

Economics Department, University Ouaga II, Ouagadougou, Burkina Faso

informal. We have used data, whereby women and men practice the same activities.


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**Chapter 23**

**Provisional chapter**

**Deinstitutionalization through Business Model**

**Deinstitutionalization through Business Model** 

**and North Africa**

**and North Africa**

**Abstract**

Richard A. Hunt and Lauren L. Ortiz-Hunt

Richard A. Hunt and Lauren L. Ortiz-Hunt

http://dx.doi.org/10.5772/intechopen.70834

Additional information is available at the end of the chapter

Additional information is available at the end of the chapter

of entrepreneurial action taken by MENA women.

theory, innovation, Middle East and North Africa

**Evolution: Women Entrepreneurs in the Middle East**

**Evolution: Women Entrepreneurs in the Middle East** 

*"The first day I sold my perfumes was the best day of my life. Customers loved them. No one had ever bought such a good product at such a low price. I was overjoyed with the success, even though I worried about getting caught running my own business…In the early years, I couldn't even open my own* 

This chapter is among the first to examine the interplay between deinstitutionalization and the rollout of novel business models by women entrepreneurs in developing countries. Much of the existing literature has examined the ways in which policy directives by formal institutions are the key drivers of entrepreneurial activity among women. Implicitly, this orientation suggests that the fate of women entrepreneurs is tied to, and cascades from, macro-level deinstitutionalization efforts, arising through changes in policies, laws and regulations championed at the highest levels. While this top-down view may intuitively be attractive, there are empirical reasons to doubt that the "institutional cascading" model accurately captures the underlying mechanisms of entrepreneurial activity among women. Taking a radically different tack, we develop and test an alternative, market-based perspective in which novel business models developed by women drive deinstitutionalization in bottom-up fashion. The context for our study involves detailed case histories of 95 women who started new businesses in the Middle East and North Africa (MENA), 1960–2012. Using a question-driven research design, our findings indicate that deinstitutionalization is strongly associated with the timing and substance

*bank account! Everything was cash only."* Esraa, Female Entrepreneur from Oman

DOI: 10.5772/intechopen.70834

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution,

© 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

and reproduction in any medium, provided the original work is properly cited.

**Keywords:** women entrepreneurs, business models, deinstitutionalization, institutional


**Provisional chapter**

### **Deinstitutionalization through Business Model Evolution: Women Entrepreneurs in the Middle East and North Africa Deinstitutionalization through Business Model Evolution: Women Entrepreneurs in the Middle East**

DOI: 10.5772/intechopen.70834

Richard A. Hunt and Lauren L. Ortiz-Hunt

Additional information is available at the end of the chapter Richard A. Hunt and Lauren L. Ortiz-Hunt

http://dx.doi.org/10.5772/intechopen.70834 Additional information is available at the end of the chapter

**and North Africa**

*"The first day I sold my perfumes was the best day of my life. Customers loved them. No one had ever bought such a good product at such a low price. I was overjoyed with the success, even though I worried about getting caught running my own business…In the early years, I couldn't even open my own bank account! Everything was cash only."* Esraa, Female Entrepreneur from Oman

#### **Abstract**

[47] Johnson S, Storey D. Male and Feamle entrepreneurs and their business: A comparative study, conference on women entrepreneurs: University of Bradford. Revised version in. In: Allen S, Truman C, editors. Women Entrepreneurs. London: Routledge; 1989-1993.

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3. Burkina Faso: Ouagadougou; 2001

ductivity in Burkina Faso. IBME. 2013

Economics Perspectives. 2011;6(1):138-149

agement. 1986;24(4):18-29

neurship, Theory and Practice. 2005;29(6):717-735

Internationales de Micro-interm édiation. 2008;1-24

pp. 70-85

Economics. 2000;14(1):1-10

2006;7(2):105-112

1225-1246

This chapter is among the first to examine the interplay between deinstitutionalization and the rollout of novel business models by women entrepreneurs in developing countries. Much of the existing literature has examined the ways in which policy directives by formal institutions are the key drivers of entrepreneurial activity among women. Implicitly, this orientation suggests that the fate of women entrepreneurs is tied to, and cascades from, macro-level deinstitutionalization efforts, arising through changes in policies, laws and regulations championed at the highest levels. While this top-down view may intuitively be attractive, there are empirical reasons to doubt that the "institutional cascading" model accurately captures the underlying mechanisms of entrepreneurial activity among women. Taking a radically different tack, we develop and test an alternative, market-based perspective in which novel business models developed by women drive deinstitutionalization in bottom-up fashion. The context for our study involves detailed case histories of 95 women who started new businesses in the Middle East and North Africa (MENA), 1960–2012. Using a question-driven research design, our findings indicate that deinstitutionalization is strongly associated with the timing and substance of entrepreneurial action taken by MENA women.

**Keywords:** women entrepreneurs, business models, deinstitutionalization, institutional theory, innovation, Middle East and North Africa

and reproduction in any medium, provided the original work is properly cited.

© 2018 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution,

### **1. Introduction**

Success stories of female entrepreneurs in developing economies often elicit surprise, ranging from casual intrigue to brazen incredulity. The long-standing and often intractable impediments faced by women in business are well-documented [1]. However, comparatively little is understood regarding the mechanisms by which women engage in entrepreneurial activity despite business venturing prohibitions or other formal and informal limitations. To date, much of the focus has been on the ways in which women entrepreneurs are favorably or unfavorably affected by institutional policy changes [2] or how they may be enabled as the beneficiaries of grassroots programs, such as the micro-finance model [3]. Missing from these perspectives are the ways in which women entrepreneurs are themselves the instigators of purposeful change, not through political machinations and formalized programs, but through innovative business models that successfully deliver superior goods and services to competitive markets. The purposeful deinstitutionalization wrought from these entrepreneurial actions is the focus of this study.

ventures, particularly in developing economies where the subjugation of women is often deeply entrenched [23, 27]. A central cause of this veridicality gap may stem from efforts by entrepreneurship scholars to develop models of endogenous actors functioning as "institutional entrepreneurs," individuals who drive change through existing organizations. For example, Greenwood and Suddaby [28] make the strong case argument that institutional entrepreneurship by central organizations is far more important than change-oriented activi-

Deinstitutionalization through Business Model Evolution: Women Entrepreneurs in the Middle…

http://dx.doi.org/10.5772/intechopen.70834

433

There are a number of problems with the "institutional-actor-as-central-change-agent" perspective [29], including the trenchant reality that institutions often remain unflinchingly inertial for very long periods of time [30]. These problems are magnified in the context of female entrepreneurship [1]. First of all, women have comparatively little presence in governing organizations. Legislative agendas and constitutional initiatives aiming to improve the status of women are often subordinate to hegemonic forces that are more focused on preserving the status quo [31, 32]. This suggests that the impetus for change likely materializes exogenously, not endogenously. Second, the focus on institutional entrepreneurship posits a top-down approach to societal change, such that the forces of deinstitutionalization [33] are the consequence, not the cause, of improved financial prospects for women. This seems dubious since a framework dominated by the conception of institutional action relegates women to the role of simply waiting for maledominated institutions to confer economic privileges. In fact, studies on the growth in femaleowned businesses show that women are not waiting for institutional reform [34]. Finally, an institution-centric approach fails to account for the transformational potential of market-based activities that tie entrepreneurial innovations to eager customers through novel business models

that may empower and enable women well beyond the reach of legislative fiat [35].

Our investigation addresses these shortcomings by developing and testing a novel approach to female entrepreneurship that contributes multi-disciplinary insights to research streams in strategic management, entrepreneurship, political science, and development economics. The framework we propose inverts the explanatory model for female-driven business venturing by identifying market-based mechanisms that fuel deinstitutionalization from the bottomup, rather than the top-down. Existing scholarship on women entrepreneurs overwhelming tends to characterize them as targets of institutional initiatives rather than as co-instigators of deinstitutionalization [1]. While there may indeed be instances of the top-down dynamic, counter-examples abound [35], suggesting that fresh theoretical perspectives are needed. The

Leveraging insights drawn from the burgeoning domain of business model analysis [36–38] and then bridging this literature to seminal works on deinstitutionalization (e.g., [33, 39]), we investigate how customer-focused, market-based innovations by female entrepreneurs are a key driver of the institutional changes affecting the financial and legal status of women. The context for our study involves detailed case histories of women who started new businesses in the Middle East and North Africa (MENA), 1960–2012. Despite their central role in fostering the survival of families throughout the world, women entrepreneurs in developing countries are notoriously under-studied. The paucity of research is even more acute in the case of MENA women entrepreneurs due to socio-religious and cultural restrictions that often impede the collection of detailed narratives [40].

ties occurring on the periphery of formal institutions.

purpose of this paper is to answer this call.

Recent efforts to better understand the relationship between institutions and entrepreneurial activity have drawn scholars to scrutinize the influence from a variety of perspectives, including: institutional barriers to growth [4, 5], the use of intermediaries to precipitate institutional change [6], the use of "soft power" [7, 8] and use of nonmarket strategies [9–11] to influence firms, industries and institutions through the activation of political and social leverage [12–15]. To varying degrees, each of these perspectives reinforces Baumol's [16] notion that entrepreneurial activity will emerge to varying degrees and with varying characteristics and intents as a function of the prevailing economic, political, and legal institutions. Scholars focusing on the mechanisms of institutional change have generated a formidable body of empirical work supporting the argument that nonmarket dynamics are non-ignorable sources of influence [5, 17] and that, just as Baumol [16] had predicted, institutions play a pronounced role in emergence and expression of entrepreneurial activity [18–20].

At first glance, it would appear that the macro-institutional template is well suited to the description and analysis of entrepreneurship among women, including those seeking to gain a financial foothold at the base of the pyramid [21]. There are, however, reasons to doubt whether the distinctive, underlying mechanisms of entrepreneurial opportunity pursuit by women have been aptly captured by extant theories [22]. Similarly, it is far from clear that research connecting institutional change to entrepreneurial activity [4–6] accurately conveys the specific set of circumstances faced by female entrepreneurs, particularly those confronting institutional barriers in developing economies [23]. Scholars such as Ehlers and Main [3], Harper [24], and Elam [25] have convincingly asserted that the descriptive accuracy and predictive reliability of existing frameworks are suspect.

Through the effort to articulate an omnibus framework to explain the mechanisms of institutional influence on opportunity emergence [26], scholars may have inadvertently marginalized key mechanisms of action and important sources of variance in opportunity pursuit and venturing outcomes. If so, then explanatory frameworks may be considerably less robust to gender differences than scholars previously had thought and with far greater consequences concerning the entry and survival strategies of female-owned and operated ventures, particularly in developing economies where the subjugation of women is often deeply entrenched [23, 27]. A central cause of this veridicality gap may stem from efforts by entrepreneurship scholars to develop models of endogenous actors functioning as "institutional entrepreneurs," individuals who drive change through existing organizations. For example, Greenwood and Suddaby [28] make the strong case argument that institutional entrepreneurship by central organizations is far more important than change-oriented activities occurring on the periphery of formal institutions.

**1. Introduction**

432 Entrepreneurship - Development Tendencies and Empirical Approach

Success stories of female entrepreneurs in developing economies often elicit surprise, ranging from casual intrigue to brazen incredulity. The long-standing and often intractable impediments faced by women in business are well-documented [1]. However, comparatively little is understood regarding the mechanisms by which women engage in entrepreneurial activity despite business venturing prohibitions or other formal and informal limitations. To date, much of the focus has been on the ways in which women entrepreneurs are favorably or unfavorably affected by institutional policy changes [2] or how they may be enabled as the beneficiaries of grassroots programs, such as the micro-finance model [3]. Missing from these perspectives are the ways in which women entrepreneurs are themselves the instigators of purposeful change, not through political machinations and formalized programs, but through innovative business models that successfully deliver superior goods and services to competitive markets. The purposeful deinstitutionalization wrought from these entrepreneurial actions is the focus of this study.

Recent efforts to better understand the relationship between institutions and entrepreneurial activity have drawn scholars to scrutinize the influence from a variety of perspectives, including: institutional barriers to growth [4, 5], the use of intermediaries to precipitate institutional change [6], the use of "soft power" [7, 8] and use of nonmarket strategies [9–11] to influence firms, industries and institutions through the activation of political and social leverage [12–15]. To varying degrees, each of these perspectives reinforces Baumol's [16] notion that entrepreneurial activity will emerge to varying degrees and with varying characteristics and intents as a function of the prevailing economic, political, and legal institutions. Scholars focusing on the mechanisms of institutional change have generated a formidable body of empirical work supporting the argument that nonmarket dynamics are non-ignorable sources of influence [5, 17] and that, just as Baumol [16] had predicted, institutions play a pronounced

At first glance, it would appear that the macro-institutional template is well suited to the description and analysis of entrepreneurship among women, including those seeking to gain a financial foothold at the base of the pyramid [21]. There are, however, reasons to doubt whether the distinctive, underlying mechanisms of entrepreneurial opportunity pursuit by women have been aptly captured by extant theories [22]. Similarly, it is far from clear that research connecting institutional change to entrepreneurial activity [4–6] accurately conveys the specific set of circumstances faced by female entrepreneurs, particularly those confronting institutional barriers in developing economies [23]. Scholars such as Ehlers and Main [3], Harper [24], and Elam [25] have convincingly asserted that the descriptive accuracy and

Through the effort to articulate an omnibus framework to explain the mechanisms of institutional influence on opportunity emergence [26], scholars may have inadvertently marginalized key mechanisms of action and important sources of variance in opportunity pursuit and venturing outcomes. If so, then explanatory frameworks may be considerably less robust to gender differences than scholars previously had thought and with far greater consequences concerning the entry and survival strategies of female-owned and operated

role in emergence and expression of entrepreneurial activity [18–20].

predictive reliability of existing frameworks are suspect.

There are a number of problems with the "institutional-actor-as-central-change-agent" perspective [29], including the trenchant reality that institutions often remain unflinchingly inertial for very long periods of time [30]. These problems are magnified in the context of female entrepreneurship [1]. First of all, women have comparatively little presence in governing organizations. Legislative agendas and constitutional initiatives aiming to improve the status of women are often subordinate to hegemonic forces that are more focused on preserving the status quo [31, 32]. This suggests that the impetus for change likely materializes exogenously, not endogenously. Second, the focus on institutional entrepreneurship posits a top-down approach to societal change, such that the forces of deinstitutionalization [33] are the consequence, not the cause, of improved financial prospects for women. This seems dubious since a framework dominated by the conception of institutional action relegates women to the role of simply waiting for maledominated institutions to confer economic privileges. In fact, studies on the growth in femaleowned businesses show that women are not waiting for institutional reform [34]. Finally, an institution-centric approach fails to account for the transformational potential of market-based activities that tie entrepreneurial innovations to eager customers through novel business models that may empower and enable women well beyond the reach of legislative fiat [35].

Our investigation addresses these shortcomings by developing and testing a novel approach to female entrepreneurship that contributes multi-disciplinary insights to research streams in strategic management, entrepreneurship, political science, and development economics. The framework we propose inverts the explanatory model for female-driven business venturing by identifying market-based mechanisms that fuel deinstitutionalization from the bottomup, rather than the top-down. Existing scholarship on women entrepreneurs overwhelming tends to characterize them as targets of institutional initiatives rather than as co-instigators of deinstitutionalization [1]. While there may indeed be instances of the top-down dynamic, counter-examples abound [35], suggesting that fresh theoretical perspectives are needed. The purpose of this paper is to answer this call.

Leveraging insights drawn from the burgeoning domain of business model analysis [36–38] and then bridging this literature to seminal works on deinstitutionalization (e.g., [33, 39]), we investigate how customer-focused, market-based innovations by female entrepreneurs are a key driver of the institutional changes affecting the financial and legal status of women. The context for our study involves detailed case histories of women who started new businesses in the Middle East and North Africa (MENA), 1960–2012. Despite their central role in fostering the survival of families throughout the world, women entrepreneurs in developing countries are notoriously under-studied. The paucity of research is even more acute in the case of MENA women entrepreneurs due to socio-religious and cultural restrictions that often impede the collection of detailed narratives [40].

Our investigation of this under-examined population of entrepreneurs illustrates our key contribution concerning the governing mechanisms of deinstitutionalization through entrepreneurial action by women; namely, by bringing to market radicalizing business models for the sake of profiting from market success, women entrepreneurs unintentionally trigger reassessments of institutional structures and aims that often result in improvements to the economic and legal status of women.

**2.2. Women entrepreneurs in the Middle East and North Africa**

ness ownership is strictly a domain for men.

*neurial action precede institutional change?*

*culturally and economically restrictive conditions?*

**2.3. Mechanisms of entrepreneurial action**

Although women are challenged by institutional inertia worldwide, the MENA region offers an unusually good portal through which to assess progress toward deinstitutionalization. Prior literature has studied the role of Islam and the Shari'a on women's entrepreneurship [50], including efforts to identify the most fruitful policy initiatives to stimulate business ownership among women [40, 51]; however, extant research has failed to account for the ways in which women entrepreneurs may play a transformational role in driving deinstitutionaliza-

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435

**Question 1***: Has female entrepreneurship in MENA been a cause or an effect of deinstitutionalization?* While entrepreneurial activity by women has increased worldwide in the past 30 years, women in the MENA region have notably lagged as a consequence of formal and informal restrictions on their freedom to engage in commercial activity [40, 52]. Oppressive legal restrictions and unequal access to financial and non-financial resources have conspired to severely limit the quantity, quality and diversity of entrepreneurial activity among women throughout MENA. Fewer than 28 percent of the adult women in MENA are economically active, the lowest rate in the world [53]. O'Sullivan and colleagues [54] point to a number of key factors, such as cultural attitudes, gender laws, and weak support systems, including little if any family-level advocacy. Dana [55] similarly noted limitations based on lack of financing, exclusion from male-dominated informal networks and widespread social attitudes that busi-

**Question 2***: Do legal strictures forestall entrepreneurial action by women? If so, then what explains the presence of women entrepreneurs throughout the region? If not, then how and when does entrepre-*

Concomitant to documenting the paucity of entrepreneurial activity among MENA women is the parallel issue of how some women do in fact succeed in pursuing entrepreneurial opportunities despite the persistence of an unfavorable institutional overlay. Very little research exists of female Muslim entrepreneurs operating in an Islamic context [54]. That which does exist mainly focuses on how macro-level institutional forces create environments that are either favorable or unfavorable to new business foundings. Left unexamined are the factors that influence behaviors and outcomes in a market-based approach to business model development by women.

**Question 3***: What is the nature of business founded by MENA women? From where do the ideas and* 

**Question 4***: What is the effect of women entrepreneurs launching novel business models under socially,* 

A key claim from the outset of this paper involved the assertion that omnibus conceptions of entrepreneurial action and Baumol-inspired institutional influence may not be sufficient grounds for the identification and description of the underlying mechanisms for entrepreneurship among MENA women. In order to properly test this claim, we needed to pose framing

*innovations emerge? Are the enterprises copycat businesses or do they break new ground?*

questions regarding the micro-level mechanisms of entrepreneurial action.

tion and supporting market-based efforts to promulgate sustainable existence.

In the absence of a clear theoretical frame to examine the bottom-up deinstitutionalization through market-based business model innovations by female entrepreneurs, we proceed in the next section with the development of framing questions, which we use to derive a series stylized findings that hold rich implications for scholars and practitioners.

### **2. Framing questions**

Theoretically and empirically, existing literature has sought to draw meaningful connections concerning the relationship between institutional policy and entrepreneurial action. However, the dynamics involved in deinstitutionalization from a business model-driven, bottom-up perspective fundamentally diverge from extant scholarship. Since it is our contention that omnibus theories of entrepreneurial action were not crafted taking into account the distinctive context of female entrepreneurs from developing countries, there was reason to believe that our line of inquiry would benefit from the use of framing questions in order to explicate the phenomenon at a mechanism level. Through these we sought to ascertain a set of stylized facts that could then be compared and contrasted with frameworks, reasoning and evidence from existing theory. This approach, one that departs from traditional hypothesis testing, applies methodological tools and insights from recent studies by Moeen and Agarwal [41] and O'Neill and Rothbard [42].

#### **2.1. Women entrepreneurs—material progress, continuing challenges**

In recent years, despite the stymieing effects of long-standing socio-cultural and economic constraints, women have come to play an increasingly important role in generating economic growth though entrepreneurial activity [43]. In fact, women now account for more than 40% of all new ventures [44], versus one-fourth that number: a mere 10% of all business start-ups: only a quarter century ago. This dramatic increase in entrepreneurial activity includes a significant and rapidly growing presence in developing countries [27, 45] where some governments have sought to activate the levers of public policy in order to stimulate and support the growth and development of women-owned businesses [2]. This surge in women-led entrepreneurship validates early attempts by policy pioneers to advocate steps to promote the role of women in creating economic growth through business venturing [23]. It also confirms the insights of prescient scholars who sought to highlight the importance of studying women entrepreneurs as a unique and vital subset within the broader landscape of entrepreneurship research [46]. Progress in the realms of public policy and scholarly research has underscored the facets of opportunity identification and development that are unique to the conditions and outcomes of women entrepreneurs [2]. This, in turn, has laid the groundwork for continued growth in the quantity, diversity and impact of new business venturing by women [47–49].

#### **2.2. Women entrepreneurs in the Middle East and North Africa**

Our investigation of this under-examined population of entrepreneurs illustrates our key contribution concerning the governing mechanisms of deinstitutionalization through entrepreneurial action by women; namely, by bringing to market radicalizing business models for the sake of profiting from market success, women entrepreneurs unintentionally trigger reassessments of institutional structures and aims that often result in improvements to the

In the absence of a clear theoretical frame to examine the bottom-up deinstitutionalization through market-based business model innovations by female entrepreneurs, we proceed in the next section with the development of framing questions, which we use to derive a series

Theoretically and empirically, existing literature has sought to draw meaningful connections concerning the relationship between institutional policy and entrepreneurial action. However, the dynamics involved in deinstitutionalization from a business model-driven, bottom-up perspective fundamentally diverge from extant scholarship. Since it is our contention that omnibus theories of entrepreneurial action were not crafted taking into account the distinctive context of female entrepreneurs from developing countries, there was reason to believe that our line of inquiry would benefit from the use of framing questions in order to explicate the phenomenon at a mechanism level. Through these we sought to ascertain a set of stylized facts that could then be compared and contrasted with frameworks, reasoning and evidence from existing theory. This approach, one that departs from traditional hypothesis testing, applies methodological tools and insights from recent studies by Moeen and Agarwal [41] and O'Neill and Rothbard [42].

In recent years, despite the stymieing effects of long-standing socio-cultural and economic constraints, women have come to play an increasingly important role in generating economic growth though entrepreneurial activity [43]. In fact, women now account for more than 40% of all new ventures [44], versus one-fourth that number: a mere 10% of all business start-ups: only a quarter century ago. This dramatic increase in entrepreneurial activity includes a significant and rapidly growing presence in developing countries [27, 45] where some governments have sought to activate the levers of public policy in order to stimulate and support the growth and development of women-owned businesses [2]. This surge in women-led entrepreneurship validates early attempts by policy pioneers to advocate steps to promote the role of women in creating economic growth through business venturing [23]. It also confirms the insights of prescient scholars who sought to highlight the importance of studying women entrepreneurs as a unique and vital subset within the broader landscape of entrepreneurship research [46]. Progress in the realms of public policy and scholarly research has underscored the facets of opportunity identification and development that are unique to the conditions and outcomes of women entrepreneurs [2]. This, in turn, has laid the groundwork for continued growth in the quantity, diversity and impact of new business venturing by women [47–49].

stylized findings that hold rich implications for scholars and practitioners.

**2.1. Women entrepreneurs—material progress, continuing challenges**

economic and legal status of women.

434 Entrepreneurship - Development Tendencies and Empirical Approach

**2. Framing questions**

Although women are challenged by institutional inertia worldwide, the MENA region offers an unusually good portal through which to assess progress toward deinstitutionalization. Prior literature has studied the role of Islam and the Shari'a on women's entrepreneurship [50], including efforts to identify the most fruitful policy initiatives to stimulate business ownership among women [40, 51]; however, extant research has failed to account for the ways in which women entrepreneurs may play a transformational role in driving deinstitutionalization and supporting market-based efforts to promulgate sustainable existence.

#### **Question 1***: Has female entrepreneurship in MENA been a cause or an effect of deinstitutionalization?*

While entrepreneurial activity by women has increased worldwide in the past 30 years, women in the MENA region have notably lagged as a consequence of formal and informal restrictions on their freedom to engage in commercial activity [40, 52]. Oppressive legal restrictions and unequal access to financial and non-financial resources have conspired to severely limit the quantity, quality and diversity of entrepreneurial activity among women throughout MENA. Fewer than 28 percent of the adult women in MENA are economically active, the lowest rate in the world [53]. O'Sullivan and colleagues [54] point to a number of key factors, such as cultural attitudes, gender laws, and weak support systems, including little if any family-level advocacy. Dana [55] similarly noted limitations based on lack of financing, exclusion from male-dominated informal networks and widespread social attitudes that business ownership is strictly a domain for men.

**Question 2***: Do legal strictures forestall entrepreneurial action by women? If so, then what explains the presence of women entrepreneurs throughout the region? If not, then how and when does entrepreneurial action precede institutional change?*

Concomitant to documenting the paucity of entrepreneurial activity among MENA women is the parallel issue of how some women do in fact succeed in pursuing entrepreneurial opportunities despite the persistence of an unfavorable institutional overlay. Very little research exists of female Muslim entrepreneurs operating in an Islamic context [54]. That which does exist mainly focuses on how macro-level institutional forces create environments that are either favorable or unfavorable to new business foundings. Left unexamined are the factors that influence behaviors and outcomes in a market-based approach to business model development by women.

**Question 3***: What is the nature of business founded by MENA women? From where do the ideas and innovations emerge? Are the enterprises copycat businesses or do they break new ground?*

**Question 4***: What is the effect of women entrepreneurs launching novel business models under socially, culturally and economically restrictive conditions?*

#### **2.3. Mechanisms of entrepreneurial action**

A key claim from the outset of this paper involved the assertion that omnibus conceptions of entrepreneurial action and Baumol-inspired institutional influence may not be sufficient grounds for the identification and description of the underlying mechanisms for entrepreneurship among MENA women. In order to properly test this claim, we needed to pose framing questions regarding the micro-level mechanisms of entrepreneurial action.

Entrepreneurial action is a meso-level phenomenon [56, 57] in which an actor (e.g., individual, firm, trade association) ultimately seeks to influence the system(s) in which it is embedded, presumably to improve the actor's autonomy or power in relation to the system [56–58]. This meta-theoretical relationship has been depicted graphically by Coleman [58], explicated by Hedström and Swedberg [59], and recently applied specifically to entrepreneurship [60]. Kim and colleagues note, "Hedström and Swedberg's application of Coleman's bathtub model urges scholars to focus on three types of mechanisms: (1) situational mechanisms (represented by [B] in **Figure 1**) by which the macro environments in which actors are embedded: such as countries, regions, organizations, markets, fields, and networks: shape actors' opportunities, goals, and beliefs; (2) action-formation mechanisms (represented by [C]) that explain how these opportunities, goals, and beliefs influence and actor's behavior; and (3) transformation mechanisms (represented by [D]) that account for how the behavior of many actors jointly brings about both intended and unintended macro-level outcomes" (p. 277).

Upon arriving at the conclusion (intuitively, if not deliberately) that the environment may indeed offer a possible opportunity for someone [57], actors must take action. Here, individuals contemplate the external environment and ask, how does what's happening out there affect me [63, 64]? How should a situation be interpreted given the actor's knowledge, skills, abilities, motives, and intents? These questions involve meso-level phenomena occurring exclusively within the actor-level, such as when individual-level preferences are argued to

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**Question 6***: What forms of entrepreneurial action are undertaken by MENA women? What drives the* 

This brings us to the transition from micro-level back up to macro-level, wherein the actor seeks to influence the system, institutions, or structure in which she is at least partially embedded. Research interested in this link seeks to understand the mechanisms actors use to transform systems and focuses on "how" as opposed to the "when and where" of situational mechanisms or the "whether, why, and who" of action-formation mechanisms. Thus, actors do not necessarily engage in behavior with the intent of transforming the system, but nonetheless they still can and do [66]. Through this process, social norms can evolve to govern

**Question 7***: Are the micro-level entrepreneurial actions of MENA women transformative? If so, when* 

Extant scholarship has largely focused on the capacity and resolve of existing institutions to enhance or inhibit entrepreneurial activity among women [34, 35]. As Jennings and Brush [1] noted, the small amount of prior research on women's social and environmental entrepreneurship has tended to "portray women as the targets rather than as the initiators of enterprise initiatives," (p. 711) including the rapidly growing literature on micro-finance organizations. Grassroots studies examining the role of women entrepreneurs in fostering sustainable livelihood assets [68] have framed the obstacles and opportunities of women [34] in terms of the entrepreneurial actions women have taken within the context of existing institutional constraints and support systems [69, 70]. Implicit in this approach is an event sequencing logic that presumes institutional change is the key driver of entrepreneurial activity and sustainable organizational forms among women. This, in turn, suggests that the fate of women entrepreneurs is tied to, and emanates from, deinstitutionalization, which "refers to the erosion or discontinuity of an institutionalized organizational activity or practice." [33]. When policy actions instigated by formal institutions foster greater participation by women, then opportunities for women should increase in cascading fashion. The essence of this per-

behavior without individuals being consciously aware of their influence [67].

produce an entrepreneurial orientation at the firm-level [56, 65].

*decision to act? From where does the influence arise?*

**3. Extant theory: institutional cascading**

spective is captured in **Figure 2**.

**3.1. Women entrepreneurs and deinstitutionalization**

*and how?*

As **Figure 1** displays, the fundamental starting point for an entrepreneur who intends to bring to market novel technologies, organizations, or business models involves confronting the conditions that challenge one's ability to interact with the macro-environmental context. In more contemporary entrepreneurship theory, Shane and Venkataraman, [61] McMullen and Shepherd [57], and Sarason et al. [62] each present conceptualizations of entrepreneurial action that acknowledge the influence of both system and individual in the contemplation of opportunity for entrepreneurial action. McMullen and Shepherd [57], for example, note that actors must first become aware of the possibility that an opportunity for someone exists before they can evaluate whether it represents an opportunity for them to engage in entrepreneurial action.

**Question 5***: From where do MENA women entrepreneurs get their innovations and ideas?*

**Figure 1.** Coleman's boat.

Upon arriving at the conclusion (intuitively, if not deliberately) that the environment may indeed offer a possible opportunity for someone [57], actors must take action. Here, individuals contemplate the external environment and ask, how does what's happening out there affect me [63, 64]? How should a situation be interpreted given the actor's knowledge, skills, abilities, motives, and intents? These questions involve meso-level phenomena occurring exclusively within the actor-level, such as when individual-level preferences are argued to produce an entrepreneurial orientation at the firm-level [56, 65].

**Question 6***: What forms of entrepreneurial action are undertaken by MENA women? What drives the decision to act? From where does the influence arise?*

This brings us to the transition from micro-level back up to macro-level, wherein the actor seeks to influence the system, institutions, or structure in which she is at least partially embedded. Research interested in this link seeks to understand the mechanisms actors use to transform systems and focuses on "how" as opposed to the "when and where" of situational mechanisms or the "whether, why, and who" of action-formation mechanisms. Thus, actors do not necessarily engage in behavior with the intent of transforming the system, but nonetheless they still can and do [66]. Through this process, social norms can evolve to govern behavior without individuals being consciously aware of their influence [67].

**Question 7***: Are the micro-level entrepreneurial actions of MENA women transformative? If so, when and how?*

### **3. Extant theory: institutional cascading**

Entrepreneurial action is a meso-level phenomenon [56, 57] in which an actor (e.g., individual, firm, trade association) ultimately seeks to influence the system(s) in which it is embedded, presumably to improve the actor's autonomy or power in relation to the system [56–58]. This meta-theoretical relationship has been depicted graphically by Coleman [58], explicated by Hedström and Swedberg [59], and recently applied specifically to entrepreneurship [60]. Kim and colleagues note, "Hedström and Swedberg's application of Coleman's bathtub model urges scholars to focus on three types of mechanisms: (1) situational mechanisms (represented by [B] in **Figure 1**) by which the macro environments in which actors are embedded: such as countries, regions, organizations, markets, fields, and networks: shape actors' opportunities, goals, and beliefs; (2) action-formation mechanisms (represented by [C]) that explain how these opportunities, goals, and beliefs influence and actor's behavior; and (3) transformation mechanisms (represented by [D]) that account for how the behavior of many actors jointly

As **Figure 1** displays, the fundamental starting point for an entrepreneur who intends to bring to market novel technologies, organizations, or business models involves confronting the conditions that challenge one's ability to interact with the macro-environmental context. In more contemporary entrepreneurship theory, Shane and Venkataraman, [61] McMullen and Shepherd [57], and Sarason et al. [62] each present conceptualizations of entrepreneurial action that acknowledge the influence of both system and individual in the contemplation of opportunity for entrepreneurial action. McMullen and Shepherd [57], for example, note that actors must first become aware of the possibility that an opportunity for someone exists before they can evaluate whether it represents an opportunity for them to engage in entrepre-

**Question 5***: From where do MENA women entrepreneurs get their innovations and ideas?*

brings about both intended and unintended macro-level outcomes" (p. 277).

436 Entrepreneurship - Development Tendencies and Empirical Approach

neurial action.

**Figure 1.** Coleman's boat.

#### **3.1. Women entrepreneurs and deinstitutionalization**

Extant scholarship has largely focused on the capacity and resolve of existing institutions to enhance or inhibit entrepreneurial activity among women [34, 35]. As Jennings and Brush [1] noted, the small amount of prior research on women's social and environmental entrepreneurship has tended to "portray women as the targets rather than as the initiators of enterprise initiatives," (p. 711) including the rapidly growing literature on micro-finance organizations. Grassroots studies examining the role of women entrepreneurs in fostering sustainable livelihood assets [68] have framed the obstacles and opportunities of women [34] in terms of the entrepreneurial actions women have taken within the context of existing institutional constraints and support systems [69, 70]. Implicit in this approach is an event sequencing logic that presumes institutional change is the key driver of entrepreneurial activity and sustainable organizational forms among women. This, in turn, suggests that the fate of women entrepreneurs is tied to, and emanates from, deinstitutionalization, which "refers to the erosion or discontinuity of an institutionalized organizational activity or practice." [33]. When policy actions instigated by formal institutions foster greater participation by women, then opportunities for women should increase in cascading fashion. The essence of this perspective is captured in **Figure 2**.

industrialized democracies. When the Shah was deposed in 1979, the existing institutional structures were largely discarded through legislative change wrought from the Islamic Revolution, including broad policies aimed at limiting business and educational opportunities for women [73]. The deinstitutionalization and subsequent reinstitutionalization processes involved a top-down, "institutional cascading" of constitutional reforms that had a demonstrable impact on the dramatically reduced quantity and diversity of entrepreneurial

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While the institution-centric framework is intuitively enticing given various efforts to change the socio-economic status among women in a top-down fashion, the "institutional cascading" model [74] may actually be constructed upside down [12, 56] when applied to many circumstances involving women entrepreneurs in MENA. Importantly, Oliver's framework makes no governing assumptions regarding the origins of the mechanisms that drive deinstitutionalization. Rather, the top-down conceptualization appears to be an artifact of scholarship emanating from political science [71], sociology [72] and management [33] that have focused on legislative reforms and other macro-institutional policies as the principal sources of change that impact the legal and economic status of women entrepreneurs [1]. Unstudied to date is an alternative perspective in which novel business models developed by women entrepreneurs may instead lead to deinstitutionalization through the spread of new, market-based approaches, in a bottom-up fashion. As a source of influence impacting the long-term status of women and the fate of women-owned business, the differences between the top-down and bottom-up conceptions of deinstitutionalization could not be more stark. The ability and willingness of marginalized women exerting influence from outside the system constitutes a direct challenge to conceptions propounding institutional macro-mechanisms driving change

Existing literature on institutional change is deeply bifurcated on the role of agency and actors. On the one hand, some scholars have held that new ideas more often occur at the margins of a field, where individuals and groups are less beholden to formal and informal institutional norms and are more cognizant of institutional contradictions [75, 76]. On the other hand, emerging scholarship on endogenous actors and "institutional entrepreneurs" holds that centrally situated individuals are far more likely to possess the means and inclination to affect institutional change [28, 77–79]. Elam [25] makes the case that neither perspective is entirely useful to the study of women entrepreneurs because each view fails to account for the market-based forces that shape the decision-making logics of women who influence formal and informal institutions without intending to do so. Instead of presuming an institutional provocation as a call to action, a more reasonable starting point may be the creation of novel business models that are developed to address market

By its very nature, institutional cascading presumes a "wait and see" approach by prospective women entrepreneurs for propitious times that ensure a high degree of social validation, as

**4. "Bottom-up" alternative: business model innovation**

opportunities available to women.

through top-down cascading.

opportunities [80].

**Figure 2.** "Institutional cascading" approach to deinstitutionalization.

In many instances, the top-down model is a reasonable and effective basis for conceptualizing the deinstitutionalization process. As the double-headed arrows suggest, actors operating across a wide array of formal institutions take actions that promote or inhibit the process of deinstitutionalization. As momentum toward deinstitutionalization or away from deinstitutionalization occurs, institutions are themselves affected in a feedback loop. In time, this formalized process of deinstitutionalization will trickle down to women, including entrepreneurs, who will experience an increase or decrease in the quantity and diversity of opportunities, depending on the specific nature of the deinstitutionalization that is occurring.

For example, prior to the Islamic Revolution, women in Iran enjoyed access to educational and professional opportunities virtually on par with those experienced by women in western industrialized democracies. When the Shah was deposed in 1979, the existing institutional structures were largely discarded through legislative change wrought from the Islamic Revolution, including broad policies aimed at limiting business and educational opportunities for women [73]. The deinstitutionalization and subsequent reinstitutionalization processes involved a top-down, "institutional cascading" of constitutional reforms that had a demonstrable impact on the dramatically reduced quantity and diversity of entrepreneurial opportunities available to women.

While the institution-centric framework is intuitively enticing given various efforts to change the socio-economic status among women in a top-down fashion, the "institutional cascading" model [74] may actually be constructed upside down [12, 56] when applied to many circumstances involving women entrepreneurs in MENA. Importantly, Oliver's framework makes no governing assumptions regarding the origins of the mechanisms that drive deinstitutionalization. Rather, the top-down conceptualization appears to be an artifact of scholarship emanating from political science [71], sociology [72] and management [33] that have focused on legislative reforms and other macro-institutional policies as the principal sources of change that impact the legal and economic status of women entrepreneurs [1]. Unstudied to date is an alternative perspective in which novel business models developed by women entrepreneurs may instead lead to deinstitutionalization through the spread of new, market-based approaches, in a bottom-up fashion. As a source of influence impacting the long-term status of women and the fate of women-owned business, the differences between the top-down and bottom-up conceptions of deinstitutionalization could not be more stark. The ability and willingness of marginalized women exerting influence from outside the system constitutes a direct challenge to conceptions propounding institutional macro-mechanisms driving change through top-down cascading.

Existing literature on institutional change is deeply bifurcated on the role of agency and actors. On the one hand, some scholars have held that new ideas more often occur at the margins of a field, where individuals and groups are less beholden to formal and informal institutional norms and are more cognizant of institutional contradictions [75, 76]. On the other hand, emerging scholarship on endogenous actors and "institutional entrepreneurs" holds that centrally situated individuals are far more likely to possess the means and inclination to affect institutional change [28, 77–79]. Elam [25] makes the case that neither perspective is entirely useful to the study of women entrepreneurs because each view fails to account for the market-based forces that shape the decision-making logics of women who influence formal and informal institutions without intending to do so. Instead of presuming an institutional provocation as a call to action, a more reasonable starting point may be the creation of novel business models that are developed to address market opportunities [80].

### **4. "Bottom-up" alternative: business model innovation**

In many instances, the top-down model is a reasonable and effective basis for conceptualizing the deinstitutionalization process. As the double-headed arrows suggest, actors operating across a wide array of formal institutions take actions that promote or inhibit the process of deinstitutionalization. As momentum toward deinstitutionalization or away from deinstitutionalization occurs, institutions are themselves affected in a feedback loop. In time, this formalized process of deinstitutionalization will trickle down to women, including entrepreneurs, who will experience an increase or decrease in the quantity and diversity of opportunities, depending on the specific nature of the deinstitutionalization

**Figure 2.** "Institutional cascading" approach to deinstitutionalization.

438 Entrepreneurship - Development Tendencies and Empirical Approach

For example, prior to the Islamic Revolution, women in Iran enjoyed access to educational and professional opportunities virtually on par with those experienced by women in western

that is occurring.

By its very nature, institutional cascading presumes a "wait and see" approach by prospective women entrepreneurs for propitious times that ensure a high degree of social validation, as would be suggested by the macro-structural-dominant consideration represented by Point 4 in our earlier rendering of Coleman's Boat (**Figure 1**). While the importance of formal and informal institutional influence enjoys a strong scholarly heritage (e.g., Baumol [16]; North [18]) and selected sources of empirical support [4–6, 10, 14, 15], it lacks much needed veridicality in the context of women who persist in pursuing entrepreneurial activity even in the face of institutional impediments and outright prohibitions. Solely engaging a top-down conceptualization of deinstitutionalization appears untenable under these circumstances. Our alternative approach proposes a bottom-up conceptualization based on business model innovation [81].

#### **4.1. The deinstitutionalizing effects of novel business models**

Business models are the distinctive means by which a firm creates and captures economic value. Zott and Amit [82] refer to business models as the logic of the firm, "the content, structure, and governance of transactions designed so as to create value through the exploitation of business opportunities" (p. 511). It is, in the words of Porter [83] an "activity system," consisting of dynamic linkages that form a system of managerial decisions that, if successful, interlock in a complementary fashion with customer choices [82]. The focus on systemic linkages, value-enhancing activities and transactions [56] is a key facet to understanding novel business models developed by individuals through entrepreneurial activity. The customer-focused nature of business model frameworks [84, 85] is expressed through an explicit emphasis on developing and delivering the firm's value proposition [86–88]. In this sense, the customer is the "central anchor" for managerial decision-making [89, 90].

In the context of deinstitutionalization, the generation of novel business models to service evolving customer needs functions as a leading indicator of socio-cultural change [84]. While models of institutional entrepreneurship have suggested that "individualistic values are not superior to collective values as far as alertness and entrepreneurial discovery are concerned" [24] (p. 4), the sum total of market-based influences involves an amalgamation of individualistic values that can be a potent force in directing behaviors, decisions and business outcomes [89]. It is likely, then, that women who face an unfavorable constitutional regime or onerous policy environment still seek value-creating opportunities that long precede changes to institutional strictures and structures. As the proposed model depicted in **Figure 3** suggests, the starting point for this deinstitutionalization emanates from pragmatic, market-based decisions to offer better goods and services to customers.

In **Figure 3**, customer receptivity to new and better modes of delivering value results in market feedback that validates strategic and operational decisions. "Transactional support" refers to the development and implementation of specific business model support systems through market transactions with customers. Based on customer receptivity, transactional support is continuously modified to better deliver value [56]. The consequence of this is the emergence of new business models that are "interlocked" in complementary fashion with customer choices [82]. Our proposed bottom-up model theorizes that the validation of these complementary interlocks exerts deinstitutionalizing forces on a wide assortment of formal institutions (indicated by positively oriented "FI" reactions to deinstitutionalization in **Figure 3**). When deinstitutionalization occurs in this fashion, constitutional reform and other legislative changes affecting women are a consequence of grassroots mechanisms originating with market-based decisions by women who did not aspire to precipitate institutional change, but did so unintentionally through receptivity to the novel business models by the market. Thus, rather than

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441

**Figure 3.** Business model innovation approach to deinstitutionalization.

Regardless of whether a business is owned and operated by a man or a woman, the first consideration is the owner's ability to behave entrepreneurially when seeking to generate distinctive value for customers. As Wirtz et al. [91] noted: "A business model reflects the operational and output system of a company, and as such captures the way the firm functions and creates value" (p. 274). McGrath took a similar tack, emphasizing that business models consist of "process or operational advantages, which yield performance benefits when more adroit deployment of resources leads a firm to enjoy superior efficiency or effectiveness on the key variables that influence its profitability" [92] (p. 249). Thus, the decisive characteristic of a successful female entrepreneur is not that she is female, but that she is entrepreneurial [34] and has the willingness and ability to develop and implement novel resource combinations that deliver superior efficiency and/or effectiveness to her customers.

Deinstitutionalization through Business Model Evolution: Women Entrepreneurs in the Middle… http://dx.doi.org/10.5772/intechopen.70834 441

**Figure 3.** Business model innovation approach to deinstitutionalization.

would be suggested by the macro-structural-dominant consideration represented by Point 4 in our earlier rendering of Coleman's Boat (**Figure 1**). While the importance of formal and informal institutional influence enjoys a strong scholarly heritage (e.g., Baumol [16]; North [18]) and selected sources of empirical support [4–6, 10, 14, 15], it lacks much needed veridicality in the context of women who persist in pursuing entrepreneurial activity even in the face of institutional impediments and outright prohibitions. Solely engaging a top-down conceptualization of deinstitutionalization appears untenable under these circumstances. Our alternative approach proposes a bottom-up conceptualization based on business model innovation [81].

Business models are the distinctive means by which a firm creates and captures economic value. Zott and Amit [82] refer to business models as the logic of the firm, "the content, structure, and governance of transactions designed so as to create value through the exploitation of business opportunities" (p. 511). It is, in the words of Porter [83] an "activity system," consisting of dynamic linkages that form a system of managerial decisions that, if successful, interlock in a complementary fashion with customer choices [82]. The focus on systemic linkages, value-enhancing activities and transactions [56] is a key facet to understanding novel business models developed by individuals through entrepreneurial activity. The customer-focused nature of business model frameworks [84, 85] is expressed through an explicit emphasis on developing and delivering the firm's value proposition [86–88]. In this sense, the customer is

In the context of deinstitutionalization, the generation of novel business models to service evolving customer needs functions as a leading indicator of socio-cultural change [84]. While models of institutional entrepreneurship have suggested that "individualistic values are not superior to collective values as far as alertness and entrepreneurial discovery are concerned" [24] (p. 4), the sum total of market-based influences involves an amalgamation of individualistic values that can be a potent force in directing behaviors, decisions and business outcomes [89]. It is likely, then, that women who face an unfavorable constitutional regime or onerous policy environment still seek value-creating opportunities that long precede changes to institutional strictures and structures. As the proposed model depicted in **Figure 3** suggests, the starting point for this deinstitutionalization emanates from pragmatic, market-based deci-

Regardless of whether a business is owned and operated by a man or a woman, the first consideration is the owner's ability to behave entrepreneurially when seeking to generate distinctive value for customers. As Wirtz et al. [91] noted: "A business model reflects the operational and output system of a company, and as such captures the way the firm functions and creates value" (p. 274). McGrath took a similar tack, emphasizing that business models consist of "process or operational advantages, which yield performance benefits when more adroit deployment of resources leads a firm to enjoy superior efficiency or effectiveness on the key variables that influence its profitability" [92] (p. 249). Thus, the decisive characteristic of a successful female entrepreneur is not that she is female, but that she is entrepreneurial [34] and has the willingness and ability to develop and implement novel resource combinations that

**4.1. The deinstitutionalizing effects of novel business models**

440 Entrepreneurship - Development Tendencies and Empirical Approach

the "central anchor" for managerial decision-making [89, 90].

sions to offer better goods and services to customers.

deliver superior efficiency and/or effectiveness to her customers.

In **Figure 3**, customer receptivity to new and better modes of delivering value results in market feedback that validates strategic and operational decisions. "Transactional support" refers to the development and implementation of specific business model support systems through market transactions with customers. Based on customer receptivity, transactional support is continuously modified to better deliver value [56]. The consequence of this is the emergence of new business models that are "interlocked" in complementary fashion with customer choices [82].

Our proposed bottom-up model theorizes that the validation of these complementary interlocks exerts deinstitutionalizing forces on a wide assortment of formal institutions (indicated by positively oriented "FI" reactions to deinstitutionalization in **Figure 3**). When deinstitutionalization occurs in this fashion, constitutional reform and other legislative changes affecting women are a consequence of grassroots mechanisms originating with market-based decisions by women who did not aspire to precipitate institutional change, but did so unintentionally through receptivity to the novel business models by the market. Thus, rather than witnessing an institutional cascade through formal instructional reforms being the starting point for female entrepreneurs, we posit deinstitutionalization as a consequence of novel, customer-centric actions already taken in the marketplace.

were inherited from family members or spouses. Thirteen of the women had started multiple businesses. The average lifespan for the businesses was 11 years, with a range of 2–55 years.

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443

In addition to extensive discussions with the entrepreneurs, researchers also spoke with other individuals in each entrepreneurs' family and business network, with the permission of the entrepreneur. These "triangulating" interviews provided confirmation and significant elaboration of details offered by or omitted from the entrepreneurs' own accounts. No fewer than five triangulating interviews were held for each subject, with a small number exceeding 20 interviews. The entrepreneurship-related facets of the case histories focused on obtaining a detailed description of each entrepreneur's business model, using key elements and common threads drawn from the conceptual frameworks developed by Hamel [93], Linder and Cantrell [94], Applegate and Collura [95], Osterwalder and Pigneur [37], and Zott and Amit [82]. Through these case histories, we sought to examine the evolution of viable business models in three regards: (i) The evolution of firm-level business models from the time of market entry until the sale or closure of the business; (ii) The evolution of viable business models over time across the full population of case histories, consisting of firm foundings from 1960 to 2012; (iii)

Each case history sought to elucidate the experiences of actual individuals drawn from specific entrepreneurial action that had been undertaken, usually involving the formation of a company and necessarily involving the sale of goods and services, evidenced by actual transactions that had occurred. Consistent with theory-building methods that employ the analysis of heterogeneous case studies [96, 97], the real-life cases compromising this study intentionally sought to illustrate diverse individuals and contexts in order to synthesize findings that

Central to harvesting stylized findings from heterogeneous cases are two finely balanced aims: (i) diversity of the individual contexts, and (ii) representativeness of the overall collection of contexts [98, 99]. Single case studies are often used in management research to delve into extreme exemplars to address observational gaps that elude mainstream deductive research [100], such as Dutton and Dukerich's examination of New York's Port Authority [101] or Weick's classic exposition of the Mann Gulch Fire [102]. However, as Eisenhardt and Graebner [97] noted, while single-case studies may be an excellent tool for establishing the existence of a phenomenon, theory building is better serviced by the use of multiple cases. Analysis of diverse cases is also highly instrumental in addressing the "multiple meanings problem" [97, 103] that often bedevils qualitative research. Since multiple-case studies are characterized by intentional dissimilarity of an appropriately diverse set of cases [96, 104], the central analytical aims are triangulation and synthesis [105], not the extrapolation witnessed in single-case designs, or the refinement of extant theory by repetitive cases in a particular context. Multiple meanings are systematically culled out through the process of investigating a similar phenomenon across distinctive contexts [105, 106]. In the exposition that follows, our triangulation reveals common threads emerging from varying individuals and contexts.

Annual revenues ranged from U.S.\$3700 to \$45MM.

The evolution specifically of market entry business models over time.

were representative of common experiences, not fringe cases.

**5.3. Stylized findings**

### **5. Study design**

#### **5.1. Question-driven inquiry**

Our line of inquiry constitutes a significant departure from existing frameworks and empirical studies that have focused on the ways in which women entrepreneurs primarily exploit existing, institutionally endorsed business models Jennings and Brush [1]. Missing from existing perspectives are important ways in which women entrepreneurs experiment with novel business models that precede the endorsement of formal institutions. For this reason, we engaged in a question-driven empirical analysis. The efficacy of this approach is underscored through a Special Issue (SI) call by the *Strategic Management Journal* (*SMJ*) focusing on "Question-Driven and Phenomenon-Based Empirical Strategy Research," led by Graebner, Knott, Lieberman, and Mitchell. The intent of this emerging methodology, and *SMJ*'s SI, is to "focus on identifying and analyzing key questions about strategy and strategically relevant phenomena, as alternatives to developing specific hypotheses." Like many studies employing contexts that were neither well-contemplated nor fully appreciated at the time of theory development, the methodological design employed in this study was justified by the fact that an inverted, bottom-up approach to the institutional influence of MENA women entrepreneurship is not well-explained by the logics of existing theories.

#### **5.2. Case histories**

We tested our re-conceptualization of the interplay between entrepreneurship and institutions through detailed case studies of 95 women entrepreneurs in seven MENA countries, each collected over a period of 1–5 days, through interviews with the entrepreneurs and associates. The case histories were compiled as part of a joint cultural anthropology and economic geography study conducted by faculty members and doctoral students from two large, American research universities as well as USAID employees working in the region. All 21 investigators had professional training in recording detailed ethnographies. The co-authors of this paper worked with the ethnographers to obtain specific entrepreneurship-oriented narratives that were relevant to our research questions, including the refinement of the framing questions. This ensured linguistic accuracy and preserved meaning across dialects. One or more of the co-authors accompanied the ethnographers on 23 of the in-depth interviews, totaling more than 400 hours of contact with the subjects.

The sample was comprised of 25 women in Morocco, 15 each in Egypt and Jordan, and 10 each in Algeria, Tunisia, UAE and Oman. The set of cases for each country included former and current women entrepreneurs, ranging in age from under 20 to over 70. The average age across all the cases was 47 years old. The stipulation for participation required that each woman must have founded her own revenue-generating business. None of the businesses were inherited from family members or spouses. Thirteen of the women had started multiple businesses. The average lifespan for the businesses was 11 years, with a range of 2–55 years. Annual revenues ranged from U.S.\$3700 to \$45MM.

In addition to extensive discussions with the entrepreneurs, researchers also spoke with other individuals in each entrepreneurs' family and business network, with the permission of the entrepreneur. These "triangulating" interviews provided confirmation and significant elaboration of details offered by or omitted from the entrepreneurs' own accounts. No fewer than five triangulating interviews were held for each subject, with a small number exceeding 20 interviews.

The entrepreneurship-related facets of the case histories focused on obtaining a detailed description of each entrepreneur's business model, using key elements and common threads drawn from the conceptual frameworks developed by Hamel [93], Linder and Cantrell [94], Applegate and Collura [95], Osterwalder and Pigneur [37], and Zott and Amit [82]. Through these case histories, we sought to examine the evolution of viable business models in three regards: (i) The evolution of firm-level business models from the time of market entry until the sale or closure of the business; (ii) The evolution of viable business models over time across the full population of case histories, consisting of firm foundings from 1960 to 2012; (iii) The evolution specifically of market entry business models over time.

Each case history sought to elucidate the experiences of actual individuals drawn from specific entrepreneurial action that had been undertaken, usually involving the formation of a company and necessarily involving the sale of goods and services, evidenced by actual transactions that had occurred. Consistent with theory-building methods that employ the analysis of heterogeneous case studies [96, 97], the real-life cases compromising this study intentionally sought to illustrate diverse individuals and contexts in order to synthesize findings that were representative of common experiences, not fringe cases.

### **5.3. Stylized findings**

witnessing an institutional cascade through formal instructional reforms being the starting point for female entrepreneurs, we posit deinstitutionalization as a consequence of novel,

Our line of inquiry constitutes a significant departure from existing frameworks and empirical studies that have focused on the ways in which women entrepreneurs primarily exploit existing, institutionally endorsed business models Jennings and Brush [1]. Missing from existing perspectives are important ways in which women entrepreneurs experiment with novel business models that precede the endorsement of formal institutions. For this reason, we engaged in a question-driven empirical analysis. The efficacy of this approach is underscored through a Special Issue (SI) call by the *Strategic Management Journal* (*SMJ*) focusing on "Question-Driven and Phenomenon-Based Empirical Strategy Research," led by Graebner, Knott, Lieberman, and Mitchell. The intent of this emerging methodology, and *SMJ*'s SI, is to "focus on identifying and analyzing key questions about strategy and strategically relevant phenomena, as alternatives to developing specific hypotheses." Like many studies employing contexts that were neither well-contemplated nor fully appreciated at the time of theory development, the methodological design employed in this study was justified by the fact that an inverted, bottom-up approach to the institutional influence of MENA women entrepre-

We tested our re-conceptualization of the interplay between entrepreneurship and institutions through detailed case studies of 95 women entrepreneurs in seven MENA countries, each collected over a period of 1–5 days, through interviews with the entrepreneurs and associates. The case histories were compiled as part of a joint cultural anthropology and economic geography study conducted by faculty members and doctoral students from two large, American research universities as well as USAID employees working in the region. All 21 investigators had professional training in recording detailed ethnographies. The co-authors of this paper worked with the ethnographers to obtain specific entrepreneurship-oriented narratives that were relevant to our research questions, including the refinement of the framing questions. This ensured linguistic accuracy and preserved meaning across dialects. One or more of the co-authors accompanied the ethnographers on 23 of the in-depth interviews, totaling more

The sample was comprised of 25 women in Morocco, 15 each in Egypt and Jordan, and 10 each in Algeria, Tunisia, UAE and Oman. The set of cases for each country included former and current women entrepreneurs, ranging in age from under 20 to over 70. The average age across all the cases was 47 years old. The stipulation for participation required that each woman must have founded her own revenue-generating business. None of the businesses

customer-centric actions already taken in the marketplace.

442 Entrepreneurship - Development Tendencies and Empirical Approach

neurship is not well-explained by the logics of existing theories.

than 400 hours of contact with the subjects.

**5. Study design**

**5.2. Case histories**

**5.1. Question-driven inquiry**

Central to harvesting stylized findings from heterogeneous cases are two finely balanced aims: (i) diversity of the individual contexts, and (ii) representativeness of the overall collection of contexts [98, 99]. Single case studies are often used in management research to delve into extreme exemplars to address observational gaps that elude mainstream deductive research [100], such as Dutton and Dukerich's examination of New York's Port Authority [101] or Weick's classic exposition of the Mann Gulch Fire [102]. However, as Eisenhardt and Graebner [97] noted, while single-case studies may be an excellent tool for establishing the existence of a phenomenon, theory building is better serviced by the use of multiple cases. Analysis of diverse cases is also highly instrumental in addressing the "multiple meanings problem" [97, 103] that often bedevils qualitative research. Since multiple-case studies are characterized by intentional dissimilarity of an appropriately diverse set of cases [96, 104], the central analytical aims are triangulation and synthesis [105], not the extrapolation witnessed in single-case designs, or the refinement of extant theory by repetitive cases in a particular context. Multiple meanings are systematically culled out through the process of investigating a similar phenomenon across distinctive contexts [105, 106]. In the exposition that follows, our triangulation reveals common threads emerging from varying individuals and contexts.

### **6. Findings and synthesis**

As noted from the outset, the purpose of this study was to investigate the underlying mechanisms driving MENA women to pursue entrepreneurial action even when confronted by institutional impediments. Our testable conjecture was that profit-seeking women developed and implemented innovative alternatives to extant goods and services. Further, these disruptive business models had an indelible, though largely unintended, effect on deinstitutionalization, thereby improving the financial and legal status of women. In the absence of a clear framework through which to construct hypotheses regarding a bottom-up process of deinstitutionalization, we developed seven framing questions to guide the interview process as we built the case histories. Ten stylized findings emerged, each of which generate novel theoretical contributions germane strategy, entrepreneurship, sociology and development economics.

Of the 95 case histories included in our study, 82 involved women entrepreneurs using business models in a fashion that did not strictly subscribe to the prevailing legal, social, cultural or economic conventions at the time of the firm's founding, but nonetheless achieved profitability, acceptance and longevity as institutions morphed to accommodate consumer-driven, market-based outcomes. Our findings provide support for our central argument: Evolving business models developed and promulgated by women entrepreneurs in developing countries simultaneously create new sources of customer value and, in an unintended fashion, contribute to the deinstitutionalization of barriers to entrepreneurial activity by women.

These recurrent themes ran throughout the ethnographies, crystallizing in two key findings

**Illegal businesses launched by participants**

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**Illegal businesses that became legal through institutional** 

445

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**changes**

**Finding 1:** *MENA women can and do start businesses despite legal strictures and social conventions* 

**Finding 2:** *Women take market-based action before institutional policies formally allow them to do so.* As **Table 1** illustrates, the women in our study launched 175 total businesses that were based on business models that were forbidden by laws that existed at the time of founding. In time, 87% of these businesses (152 businesses in total) eventually became legal enterprises under the applicable laws of each country. This means that the study participants launched a multitude of illegal businesses across a span of 50 years, of which the overwhelming majority were eventually sanctioned. The frequency with which new foundings consisted of partially or wholly illegal enterprises is not atypical in countries characterized by large informal economic sectors, sometimes accounting for more than two-thirds of the overall economy [107, 108]; however, MENA women entrepreneurs historically have had few, if any, formal sector alternatives, driving them to engage in illegal, informal entrepreneurial action, or non-participation. Overwhelmingly then, market entry and survival were driven by business model innovations developed by the women, despite impediments, which ranged from prohibitions against holding a bank account to owning land, and from laws against driving to laws forbidding the consummation of transactions. In time, all but 23 of these businesses became legal, meaning that in the vast majority of instances, MENA women entrepreneurs acted prior to the activation of institutional policy. A sample of these innovations and the legal impediments at the time of

As the examples in **Table 2** reveal, MENA women entrepreneurs often operate illegal businesses for lengthy periods of time before they were institutionally sanctioned. This means that market entry and commercial operations preceded formal legitimacy to do so. The deinstitutionalization-reinstitutionalization processes involve a battle between non-conformity and institutional inertia [33]. Through societal reassessment of behavioral standards, Oliver posited

related to unsponsored grassroots action:

**Table 1.** Illegal business foundings and the institutional response.

*barring such actions.*

**Country Study** 

**participants**

**Participants who launched illegal businesses**

Morocco 25 21 47 40 Egypt 15 12 22 17 Jordan 15 11 36 36 Algeria 10 9 16 14 Tunisia 10 9 21 21 UAE 10 10 17 13 Oman 10 10 16 11 **Total 95 82 175 152**

founding are captured in **Table 2**.

As noted above, we structured our inquiry to ascertain if and how business models evolved over time in three respects: (i) The evolution of firm-level business models from the time of market entry until the sale or closure of the business; (ii) The evolution of viable business models over time across the full population of case histories, consisting of firm foundings from 1960 to 2012; (iii) The evolution specifically of market entry business models over time.

First, we needed to establish that women had in fact started businesses and, since we were interested in whether entrepreneurial activity pre-dates or post-dates deinstitutionalization, we needed to establish whether the businesses were legal or illegal at the time each woman commenced commercial activities. As **Table 1** indicates, being a MENA woman entrepreneur almost always involved launching businesses that were illegal in some form or fashion.

Firm formation and other market-based action ensued despite formal institutional impediments. Key insights on this point are dramatized by the following perspectives:

*"I started my business because I saw the opportunity to make money. I was not ignorant of the fact that I might get in trouble, but I wasn't going to let a good idea slip away either."* Sunny, from Oman

*"People used to say that I was brave to strike out on my own at a time when women simply did not operate businesses, but now it is very common. Some of the best business owners are women."* Farah, from Tunisia

In many cases, the impediments involved significant gender-related socio-cultural issues, as well:

*"You think it's easy for a woman to run a business in Egypt? Try telling a male employee that he has made a mistake. Try telling a company with a male owner that they owe you money."* Sara, from Egypt

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**Table 1.** Illegal business foundings and the institutional response.

**6. Findings and synthesis**

444 Entrepreneurship - Development Tendencies and Empirical Approach

from Tunisia

well:

As noted from the outset, the purpose of this study was to investigate the underlying mechanisms driving MENA women to pursue entrepreneurial action even when confronted by institutional impediments. Our testable conjecture was that profit-seeking women developed and implemented innovative alternatives to extant goods and services. Further, these disruptive business models had an indelible, though largely unintended, effect on deinstitutionalization, thereby improving the financial and legal status of women. In the absence of a clear framework through which to construct hypotheses regarding a bottom-up process of deinstitutionalization, we developed seven framing questions to guide the interview process as we built the case histories. Ten stylized findings emerged, each of which generate novel theoretical contributions germane strategy, entrepreneurship, sociology and development economics.

Of the 95 case histories included in our study, 82 involved women entrepreneurs using business models in a fashion that did not strictly subscribe to the prevailing legal, social, cultural or economic conventions at the time of the firm's founding, but nonetheless achieved profitability, acceptance and longevity as institutions morphed to accommodate consumer-driven, market-based outcomes. Our findings provide support for our central argument: Evolving business models developed and promulgated by women entrepreneurs in developing countries simultaneously create new sources of customer value and, in an unintended fashion, contribute to the deinstitutionalization of barriers to entrepreneurial activity by women.

As noted above, we structured our inquiry to ascertain if and how business models evolved over time in three respects: (i) The evolution of firm-level business models from the time of market entry until the sale or closure of the business; (ii) The evolution of viable business models over time across the full population of case histories, consisting of firm foundings from 1960 to 2012; (iii) The evolution specifically of market entry business models over time. First, we needed to establish that women had in fact started businesses and, since we were interested in whether entrepreneurial activity pre-dates or post-dates deinstitutionalization, we needed to establish whether the businesses were legal or illegal at the time each woman commenced commercial activities. As **Table 1** indicates, being a MENA woman entrepreneur almost always involved launching businesses that were illegal in some form or fashion.

Firm formation and other market-based action ensued despite formal institutional impedi-

*"I started my business because I saw the opportunity to make money. I was not ignorant of the fact that I might get in trouble, but I wasn't going to let a good idea slip away either."* Sunny, from Oman *"People used to say that I was brave to strike out on my own at a time when women simply did not operate businesses, but now it is very common. Some of the best business owners are women."* Farah,

In many cases, the impediments involved significant gender-related socio-cultural issues, as

*"You think it's easy for a woman to run a business in Egypt? Try telling a male employee that he has made a mistake. Try telling a company with a male owner that they owe you money."* Sara, from Egypt

ments. Key insights on this point are dramatized by the following perspectives:

These recurrent themes ran throughout the ethnographies, crystallizing in two key findings related to unsponsored grassroots action:

**Finding 1:** *MENA women can and do start businesses despite legal strictures and social conventions barring such actions.*

**Finding 2:** *Women take market-based action before institutional policies formally allow them to do so.*

As **Table 1** illustrates, the women in our study launched 175 total businesses that were based on business models that were forbidden by laws that existed at the time of founding. In time, 87% of these businesses (152 businesses in total) eventually became legal enterprises under the applicable laws of each country. This means that the study participants launched a multitude of illegal businesses across a span of 50 years, of which the overwhelming majority were eventually sanctioned. The frequency with which new foundings consisted of partially or wholly illegal enterprises is not atypical in countries characterized by large informal economic sectors, sometimes accounting for more than two-thirds of the overall economy [107, 108]; however, MENA women entrepreneurs historically have had few, if any, formal sector alternatives, driving them to engage in illegal, informal entrepreneurial action, or non-participation. Overwhelmingly then, market entry and survival were driven by business model innovations developed by the women, despite impediments, which ranged from prohibitions against holding a bank account to owning land, and from laws against driving to laws forbidding the consummation of transactions. In time, all but 23 of these businesses became legal, meaning that in the vast majority of instances, MENA women entrepreneurs acted prior to the activation of institutional policy. A sample of these innovations and the legal impediments at the time of founding are captured in **Table 2**.

As the examples in **Table 2** reveal, MENA women entrepreneurs often operate illegal businesses for lengthy periods of time before they were institutionally sanctioned. This means that market entry and commercial operations preceded formal legitimacy to do so. The deinstitutionalization-reinstitutionalization processes involve a battle between non-conformity and institutional inertia [33]. Through societal reassessment of behavioral standards, Oliver posited


A dedicated sense of connectedness to customers is a hallmark of business model research [92, 110]. In this context, it helps to explain how illegal businesses were able to survive and thrive despite laws prohibiting their existence. Ultimately, customers made decisions based

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**Finding 5:** *Customers of MENA women entrepreneurs are attracted to goods and services despite* 

Single-minded attentiveness to customer satisfaction provides a kind of "security blanket," insulating women entrepreneurs from legal strictures because loyal customers are their best protection to the extent that women entrepreneurs can deliver superior value. In a sense, the transformational nature of their effort was vastly subordinate their customer-focused aims, not because they were indifferent to the plight of women, but because the best way to pursue entrepreneurial passion and ensure that their respective business survived was to remain relentlessly customer-centric. Thus, the motives and actions of the 95 women in the study

*"Hard work. That is my only rule and my only motto: Hard work. Everything I've ever gained has come from hard work. No one works harder than I do and my profits prove it."* Nadia, from Morocco *"This is the third business I've started so far. As soon as I think I'm done starting new businesses I think of a new way of doing something better, something that customers will love even more!"* Aqila,

The ubiquitous theme of customer-focused, market-based decision-making logics leads to the

**Finding 6***: The goals of MENA women entrepreneurs are grounded in market-based, profit-driven logics —the delivery of exceptional quality of goods and services to satisfied customers—not social* 

**Finding 7:** *Successful MENA women entrepreneurs have taken an "act-and-see" rather than a "wait-*

As the foregoing demonstrates, MENA women entrepreneurs formed the legacy of their market-based influence by seeking to cater zealously to the needs, wants and demands of customers, which simultaneously provided commercial success and protective insulation from laws prohibiting the popular goods and services they proffered. But, how do we know that these success stories had any material relationship to the process of deinstitutionalization? How do we know that it was bottom-up influence through novel business models rather than topdown influence through the erosion of pre-existing institutional constraints? To answer these questions, we need to look at the entire population of 175 businesses over time (**Figure 4**).

As **Figure 4** reveals, there continues to be a material gap between the "founding date" and the "legitimacy date," meaning that the great preponderance of new business models launched by MENA women entrepreneurs are illegal at the time of inception. However, it is apparent that the average time elapsed between founding and legal legitimacy has dramatically shortened.

were unambiguously focused on being an outstanding businessperson.

**6.2. Innovative business model generation and deinstitutionalization**

on demonstrable value, not the legal system [111]:

*institutional policy, not because of it.*

from Jordan

following stylized findings:

*and-see" approach to market-based innovations.*

*transformation.*

**Table 2.** Sample business model innovations and deinstitutionalizing responses.

institutional "erosion" occurring over long periods of time, which eventually brings societies to a "tipping point" when deinstitutionalization can be observed. The timelines for the 152 illegal businesses suggest that the entrepreneurial activities drawn from the case histories occurred as part of the erosion leading to deinstitutionalization, not an ex post, reinstitutionalized beneficiaries of a top-down policy changes. The narrative is clearly one of "act-and-see," not "waitand-see" [109] From the half century of erosive activity we discover that:

**Finding 3:** *Female entrepreneurship in MENA is associated with deinstitutionalization*

**Finding 4:** *Institutional policy action follows after entrepreneurial actions by MENA women more often than it precedes it.*

#### **6.1. Customer focus**

Having established that MENA women entrepreneurs emerged despite an array of legal prohibitions and that their entrepreneurial activities are associated with the erosional phase of deinstitutionalization, it is necessary to ask how this occurs if we are interested in examining the micro-level, bottom-up mechanisms of this action. The following excerpts are typical of the comments drawn from the ethnographies. Above all else, early-stage innovating and goto-market decision-making hinged on the women's ability to identify and exploit customers' needs, wants and desires more efficiently and effectively than existing solutions available in the market.

*"Women make most of the purchases for their families, so who is in the best position to create new products that women like? It is easy to out-think and out-maneuver businesses run by men when it involves things that women purchase."* Raghda, from Jordan

*"I love selling to customers. Most of them have become loyal to me over the years because they trust me and know that I will do what I promise. A customer is the most valuable thing for a business and I treat my customers like they are part of my family."* Meriem, from Algeria

A dedicated sense of connectedness to customers is a hallmark of business model research [92, 110]. In this context, it helps to explain how illegal businesses were able to survive and thrive despite laws prohibiting their existence. Ultimately, customers made decisions based on demonstrable value, not the legal system [111]:

**Finding 5:** *Customers of MENA women entrepreneurs are attracted to goods and services despite institutional policy, not because of it.*

Single-minded attentiveness to customer satisfaction provides a kind of "security blanket," insulating women entrepreneurs from legal strictures because loyal customers are their best protection to the extent that women entrepreneurs can deliver superior value. In a sense, the transformational nature of their effort was vastly subordinate their customer-focused aims, not because they were indifferent to the plight of women, but because the best way to pursue entrepreneurial passion and ensure that their respective business survived was to remain relentlessly customer-centric. Thus, the motives and actions of the 95 women in the study were unambiguously focused on being an outstanding businessperson.

*"Hard work. That is my only rule and my only motto: Hard work. Everything I've ever gained has come from hard work. No one works harder than I do and my profits prove it."* Nadia, from Morocco

*"This is the third business I've started so far. As soon as I think I'm done starting new businesses I think of a new way of doing something better, something that customers will love even more!"* Aqila, from Jordan

The ubiquitous theme of customer-focused, market-based decision-making logics leads to the following stylized findings:

**Finding 6***: The goals of MENA women entrepreneurs are grounded in market-based, profit-driven logics —the delivery of exceptional quality of goods and services to satisfied customers—not social transformation.*

**Finding 7:** *Successful MENA women entrepreneurs have taken an "act-and-see" rather than a "waitand-see" approach to market-based innovations.*

#### **6.2. Innovative business model generation and deinstitutionalization**

institutional "erosion" occurring over long periods of time, which eventually brings societies to a "tipping point" when deinstitutionalization can be observed. The timelines for the 152 illegal businesses suggest that the entrepreneurial activities drawn from the case histories occurred as part of the erosion leading to deinstitutionalization, not an ex post, reinstitutionalized beneficiaries of a top-down policy changes. The narrative is clearly one of "act-and-see," not "wait-

**Business model innovation Legal status Institutional response**

commercial enterprise

goods or services

manage real estate

bank account

Provide consulting services to women 1999 Illegal own and operate a business. Law changed in 2003

transactions

Illegal at the time to be involved in

Illegal at the time to publicly transact for

Illegal at the time for women to own or

Illegal at the time for woman to hold a

Law changed in 1974

Law changed in 1985

Law changed in 1989

Law changed in 2007

Law changed in 2010

**Finding 4:** *Institutional policy action follows after entrepreneurial actions by MENA women more* 

Having established that MENA women entrepreneurs emerged despite an array of legal prohibitions and that their entrepreneurial activities are associated with the erosional phase of deinstitutionalization, it is necessary to ask how this occurs if we are interested in examining the micro-level, bottom-up mechanisms of this action. The following excerpts are typical of the comments drawn from the ethnographies. Above all else, early-stage innovating and goto-market decision-making hinged on the women's ability to identify and exploit customers' needs, wants and desires more efficiently and effectively than existing solutions available in

*"Women make most of the purchases for their families, so who is in the best position to create new products that women like? It is easy to out-think and out-maneuver businesses run by men when it involves* 

*"I love selling to customers. Most of them have become loyal to me over the years because they trust me and know that I will do what I promise. A customer is the most valuable thing for a business and I treat* 

and-see" [109] From the half century of erosive activity we discover that:

Design B2B website and monetize its content 2001 Illegal to solicit and process online

**Table 2.** Sample business model innovations and deinstitutionalizing responses.

*things that women purchase."* Raghda, from Jordan

*my customers like they are part of my family."* Meriem, from Algeria

*often than it precedes it.*

Prepare fresher food for vendors by cooking the

446 Entrepreneurship - Development Tendencies and Empirical Approach

Sell customized orders direct-to-consumer contact

Establish co-location of complementary businesses

Finance the business activity of other women as

morning of sale in 1960

in 1971

1984

franchises 1993

**6.1. Customer focus**

the market.

**Finding 3:** *Female entrepreneurship in MENA is associated with deinstitutionalization*

As the foregoing demonstrates, MENA women entrepreneurs formed the legacy of their market-based influence by seeking to cater zealously to the needs, wants and demands of customers, which simultaneously provided commercial success and protective insulation from laws prohibiting the popular goods and services they proffered. But, how do we know that these success stories had any material relationship to the process of deinstitutionalization? How do we know that it was bottom-up influence through novel business models rather than topdown influence through the erosion of pre-existing institutional constraints? To answer these questions, we need to look at the entire population of 175 businesses over time (**Figure 4**).

As **Figure 4** reveals, there continues to be a material gap between the "founding date" and the "legitimacy date," meaning that the great preponderance of new business models launched by MENA women entrepreneurs are illegal at the time of inception. However, it is apparent that the average time elapsed between founding and legal legitimacy has dramatically shortened.

A low-rated firm along these dimensions might be a nail salon or tea house that simply replicated the product and service offerings of existing businesses. A firm rated very high for innovation might be one that is the first to offer a category of products or services to the market, such as online dating services. Another example of high novelty was a business that bundled disparate products and services in a fashion that met multiple user needs and provided symbiotic pricing advantages. In this sense, we would expect that high value creation and high novelty locks in new customers in new ways that disrupt both the marketplace for goods and services and the institutional framework. Using the time gap to legal legitimacy, we examined the role of novel business models and predicted the relationships depicted in **Figure 5**.

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There is no reason to expect that deinstitutionalization would be homogeneously responsive to innovation, and a regression analysis bore this out. Although a quantitative assessment was not an aspect of our original design, we had a sufficient population of firms to entertain preliminary analysis of our stylized findings, based on the model that had emerged. Using time to legal legitimacy as a dependent variable, we found that our predictive model was highly significant (F7,168 = 43.17; Adj. R2 = .451) and that the coded values for both value creation for customers and business model innovation novelty are positively associated with deinstitutionalization (p-value < 0.01). Since we did not have full controls available for all of the subjects, we are at loath to draw extended conclusions from these analyses, but believe they are quite intriguing. With or without the preliminary regression results, two key stylized findings emerged from this inquiry **Finding 9:** *MENA women entrepreneurs both copy and create business models. They are neither patently followers nor leaders. Situational effects are more important than generalizable conditions and* 

**Finding 10:** *Greater business model innovation is associated with a faster rate of deinstitutionalization.*

*women who can capitalize on novel innovations, do so.*

**Figure 5.** Relationship between market-based innovation and deinstitutionalization.

**Figure 4.** Cumulative ventures and timetable to legal legitimacy.

The graph illustrates two points simultaneously. First, the solid line shows that more recent launches experienced far shorter waiting periods to achieve legitimacy. Second, the dashed line, illustrates the fact that more new businesses are being launched at an accelerating rate despite the fact that most of them are still illegal at the time of being launched. Thus, we noted:

#### **Finding 8:** *Deinstitutionalization accelerates. The acceptance of novel commercial practices paves the way for subsequent novelties.*

The acceleration in new start-ups and the shortening of the timespan until legitimacy both indicate monumental gains for existing and aspiring MENA women entrepreneurs; however, it is not obvious that innovative business models are associated with these phenomena. If the goal of this study is to determine the underling mechanisms of bottom-up deinstitutionalization, then there must be some association between specific actions and specific outcomes at the micro-level. Otherwise, the changing legal and financial status of women could simply be attributed to the classic top-down conception that changing institutional policies will create a rising tide that eventually lifts all boats, including women entrepreneurs.

In fact, some number of women indicated that their go-to-market strategy involved imitating existing market models and trends:

*"Early on, I figured out that the best way to make money is to simply copy whatever the best company does, but I'm careful to not draw too much attention."* Yasmin, from UAE

To address this concern, we looked at each of the 175 businesses and coded each one on a scale of 0–10, based on two critical dimensions. The first examines the degree to which the new goods or services created new value for customers. The second examines the degree of novelty evidenced in the business model used by the entrepreneur at the time of market entry. A low-rated firm along these dimensions might be a nail salon or tea house that simply replicated the product and service offerings of existing businesses. A firm rated very high for innovation might be one that is the first to offer a category of products or services to the market, such as online dating services. Another example of high novelty was a business that bundled disparate products and services in a fashion that met multiple user needs and provided symbiotic pricing advantages. In this sense, we would expect that high value creation and high novelty locks in new customers in new ways that disrupt both the marketplace for goods and services and the institutional framework. Using the time gap to legal legitimacy, we examined the role of novel business models and predicted the relationships depicted in **Figure 5**.

There is no reason to expect that deinstitutionalization would be homogeneously responsive to innovation, and a regression analysis bore this out. Although a quantitative assessment was not an aspect of our original design, we had a sufficient population of firms to entertain preliminary analysis of our stylized findings, based on the model that had emerged. Using time to legal legitimacy as a dependent variable, we found that our predictive model was highly significant (F7,168 = 43.17; Adj. R2 = .451) and that the coded values for both value creation for customers and business model innovation novelty are positively associated with deinstitutionalization (p-value < 0.01). Since we did not have full controls available for all of the subjects, we are at loath to draw extended conclusions from these analyses, but believe they are quite intriguing. With or without the preliminary regression results, two key stylized findings emerged from this inquiry

**Finding 9:** *MENA women entrepreneurs both copy and create business models. They are neither patently followers nor leaders. Situational effects are more important than generalizable conditions and women who can capitalize on novel innovations, do so.*

The graph illustrates two points simultaneously. First, the solid line shows that more recent launches experienced far shorter waiting periods to achieve legitimacy. Second, the dashed line, illustrates the fact that more new businesses are being launched at an accelerating rate despite the fact that most of them are still illegal at the time of being launched. Thus, we noted: **Finding 8:** *Deinstitutionalization accelerates. The acceptance of novel commercial practices paves the* 

The acceleration in new start-ups and the shortening of the timespan until legitimacy both indicate monumental gains for existing and aspiring MENA women entrepreneurs; however, it is not obvious that innovative business models are associated with these phenomena. If the goal of this study is to determine the underling mechanisms of bottom-up deinstitutionalization, then there must be some association between specific actions and specific outcomes at the micro-level. Otherwise, the changing legal and financial status of women could simply be attributed to the classic top-down conception that changing institutional policies will create a

In fact, some number of women indicated that their go-to-market strategy involved imitating

*"Early on, I figured out that the best way to make money is to simply copy whatever the best company* 

To address this concern, we looked at each of the 175 businesses and coded each one on a scale of 0–10, based on two critical dimensions. The first examines the degree to which the new goods or services created new value for customers. The second examines the degree of novelty evidenced in the business model used by the entrepreneur at the time of market entry.

rising tide that eventually lifts all boats, including women entrepreneurs.

*does, but I'm careful to not draw too much attention."* Yasmin, from UAE

*way for subsequent novelties.*

**Figure 4.** Cumulative ventures and timetable to legal legitimacy.

448 Entrepreneurship - Development Tendencies and Empirical Approach

existing market models and trends:

**Finding 10:** *Greater business model innovation is associated with a faster rate of deinstitutionalization.*

**Figure 5.** Relationship between market-based innovation and deinstitutionalization.

The rich, detailed information drawn from the ethnographies provide a revealing perspective on the landscape of entrepreneurial activity among women in the MENA region. Despite formal prohibitions, the vast majority of participants took business models to market that found customer acceptance and economic success. In many cases, the formulation and implementation of the business model significantly preceded institutional action to reassess the governing laws.

deserve greater scrutiny: (i) the use of a question-driven design, (ii) the use of ethnographic narratives, and (iii) the focus on the under-studied context of MENA women entrepreneurs. Regarding the use of a question-driven design, as noted earlier, the development of framing questions was strongly indicated by paucity of existing literature on deinstitutionalization and female entrepreneurship. Moreover, much of the theory that does exist has taken a patently top-down, institutional cascading perspective to the process of deinstitutionalization. Studies examining the role of grassroots social movement influence, such as that seen in the wind power industry [14, 15] take up coevolutionary dynamics with some attention to bottom-up sources of influence. Contexts such as wind power validate the theory-building emphasis on exogenous, grassroots-level change mechanisms; however, the emphasis of this research stream does not focus on several facets that are indispensable to our study: legal strictures, individual decision-making, and business model innovations [80]. The purpose of this study was to deconstruct the macro-micro convergence of entrepreneurial action of social structures occurring at Point 4 of Coleman's Model (**Figure 1**) with the aim of ascertaining the micro-level mechanisms of deinstitutionalization. Since existing scholarly sentiments either had not considered this avenue or were inclined in a different direction, a more open-ended,

Deinstitutionalization through Business Model Evolution: Women Entrepreneurs in the Middle…

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451

As for the use of ethnographic narratives, here too there are pros and cons. Utilizable data is rarely collected on marginalized groups, especially for women [1] and those residing in developing countries [23]. Often, the only data that is available is highly aggregated [44, 113] or consists difficult-to-generalize single-case studies. The liability of ethnographic narratives is the potential for corrupting biases emanating from the researcher and the self-presentation biases of the subjects. Concerning the former, all the ethnographers were well-trained, experienced researchers, who had extensive in-country tenures and language fluency. More importantly, all subject research was conducted while rigorously applying modern techniques that invite subjects to be "co-investigators" rather than maintaining the pretense of dispassionate observers [114]. Concerning the potential biases from self-presentation, by triangulating throughout the network of the study subjects, ethnographers could feel confident with a high degree of certainty that customers, suppliers, family members and friends provided confirmatory perspectives.

Finally, regarding the focus on MENA, the benefits of examining countries that have a persistent disconnect between the aspirations of women entrepreneurs and legally endowed constitutional freedoms provides an exceptional portal through which to observe the processes of institutionalization, deinstitutionalization and reinstitutionalization. However, several caveats are worth noting. First, MENA is far from monolithic. The ethnographies and data are aggregated here for the purpose of demonstrating "critical mass" in the focal phenomenon. By no means are the seven countries included in the study identical to one other's past, present or future. Although the countries were, by design, selected because each is overwhelmingly Muslim, the socio-cultural, linguistic and post-colonial heritages across these countries exhibit enormous differences. Second, global generalization from the MENA context is challenging. In the same sense that each MENA country is distinctive, so too are regions and countries outside MENA. Future studies can and should exploit access to other societal contexts to delve deeper and to establish meaningful boundary conditions while testing the stylized

question-driven design was ideal.

findings drawn from this study.

### **7. Discussion**

By pioneering novel organizational forms and customer-focused innovations despite institutional impediments, women entrepreneurs not only create consumer demand for valued goods and services, they also build a sustainable foundation to improve the lives of their children, their communities and themselves. Oftentimes, as the foregoing results reveal, these entrepreneurial actions create lasting pathways for institutional change. While extant theory envisions institutional change seeding an increasingly receptive environment for women entrepreneurs, our framework and supporting empirics suggest that in the case of MENA women entrepreneurs the exact opposite may be occurring; that is, entrepreneurial pursuits are well out in front of policy initiatives in driving deinstitutionalization through new activity systems [112] stemming from business models that seek novel sources of profits by more effectively addressing customer needs [84, 89], thereby resulting in fresh opportunities for new entrepreneurs who may be ready to test new business models. As Oliver [33] noted, it is common for deinstitutionalization to emanate from individuals who are neither aware nor concerned with facilitating institutional change.

Our study of MENA region women suggests that grassroots activities to better serve willing customers constitute an important instigator of institutional change. Our analysis of 95 women revealed that their novel approaches were often effective and, in some case highly subversive (see **Figure 5**), even though institutional change was neither the stated nor the implicit motive for engaging in entrepreneurial activity. The findings shift attention to market-based, bottomup approaches to commerce that address functioning markets. Concomitantly, institutions are fundamentally changed in the process, opening the door for future generations of women in a manner and with a speed that cannot be equaled through constitutional reforms.

The ability of these women to deliver meaningful, market-based value to their respective customers, we believed, would prove to be more compelling to customers than informal and formal strictures pertaining new venturing by women. Although social transformation was not a consideration to these entrepreneurs, their actions did in fact precede institutional change and, as suggested by the detailed case histories, contributed to that change.

#### **7.1. Limitations and opportunities**

All research designs involve compromises and tradeoffs, the efficacy of which ultimately rests upon the ability of the methodology to service the research aims of the investigation. Here too, then, there are limitations and opportunities stemming from three design decisions that deserve greater scrutiny: (i) the use of a question-driven design, (ii) the use of ethnographic narratives, and (iii) the focus on the under-studied context of MENA women entrepreneurs.

The rich, detailed information drawn from the ethnographies provide a revealing perspective on the landscape of entrepreneurial activity among women in the MENA region. Despite formal prohibitions, the vast majority of participants took business models to market that found customer acceptance and economic success. In many cases, the formulation and implementation of the business model significantly preceded institutional action to reassess the

By pioneering novel organizational forms and customer-focused innovations despite institutional impediments, women entrepreneurs not only create consumer demand for valued goods and services, they also build a sustainable foundation to improve the lives of their children, their communities and themselves. Oftentimes, as the foregoing results reveal, these entrepreneurial actions create lasting pathways for institutional change. While extant theory envisions institutional change seeding an increasingly receptive environment for women entrepreneurs, our framework and supporting empirics suggest that in the case of MENA women entrepreneurs the exact opposite may be occurring; that is, entrepreneurial pursuits are well out in front of policy initiatives in driving deinstitutionalization through new activity systems [112] stemming from business models that seek novel sources of profits by more effectively addressing customer needs [84, 89], thereby resulting in fresh opportunities for new entrepreneurs who may be ready to test new business models. As Oliver [33] noted, it is common for deinstitutionalization to emanate from individuals who are neither aware nor

Our study of MENA region women suggests that grassroots activities to better serve willing customers constitute an important instigator of institutional change. Our analysis of 95 women revealed that their novel approaches were often effective and, in some case highly subversive (see **Figure 5**), even though institutional change was neither the stated nor the implicit motive for engaging in entrepreneurial activity. The findings shift attention to market-based, bottomup approaches to commerce that address functioning markets. Concomitantly, institutions are fundamentally changed in the process, opening the door for future generations of women

in a manner and with a speed that cannot be equaled through constitutional reforms.

and, as suggested by the detailed case histories, contributed to that change.

The ability of these women to deliver meaningful, market-based value to their respective customers, we believed, would prove to be more compelling to customers than informal and formal strictures pertaining new venturing by women. Although social transformation was not a consideration to these entrepreneurs, their actions did in fact precede institutional change

All research designs involve compromises and tradeoffs, the efficacy of which ultimately rests upon the ability of the methodology to service the research aims of the investigation. Here too, then, there are limitations and opportunities stemming from three design decisions that

governing laws.

**7. Discussion**

concerned with facilitating institutional change.

450 Entrepreneurship - Development Tendencies and Empirical Approach

**7.1. Limitations and opportunities**

Regarding the use of a question-driven design, as noted earlier, the development of framing questions was strongly indicated by paucity of existing literature on deinstitutionalization and female entrepreneurship. Moreover, much of the theory that does exist has taken a patently top-down, institutional cascading perspective to the process of deinstitutionalization. Studies examining the role of grassroots social movement influence, such as that seen in the wind power industry [14, 15] take up coevolutionary dynamics with some attention to bottom-up sources of influence. Contexts such as wind power validate the theory-building emphasis on exogenous, grassroots-level change mechanisms; however, the emphasis of this research stream does not focus on several facets that are indispensable to our study: legal strictures, individual decision-making, and business model innovations [80]. The purpose of this study was to deconstruct the macro-micro convergence of entrepreneurial action of social structures occurring at Point 4 of Coleman's Model (**Figure 1**) with the aim of ascertaining the micro-level mechanisms of deinstitutionalization. Since existing scholarly sentiments either had not considered this avenue or were inclined in a different direction, a more open-ended, question-driven design was ideal.

As for the use of ethnographic narratives, here too there are pros and cons. Utilizable data is rarely collected on marginalized groups, especially for women [1] and those residing in developing countries [23]. Often, the only data that is available is highly aggregated [44, 113] or consists difficult-to-generalize single-case studies. The liability of ethnographic narratives is the potential for corrupting biases emanating from the researcher and the self-presentation biases of the subjects. Concerning the former, all the ethnographers were well-trained, experienced researchers, who had extensive in-country tenures and language fluency. More importantly, all subject research was conducted while rigorously applying modern techniques that invite subjects to be "co-investigators" rather than maintaining the pretense of dispassionate observers [114]. Concerning the potential biases from self-presentation, by triangulating throughout the network of the study subjects, ethnographers could feel confident with a high degree of certainty that customers, suppliers, family members and friends provided confirmatory perspectives.

Finally, regarding the focus on MENA, the benefits of examining countries that have a persistent disconnect between the aspirations of women entrepreneurs and legally endowed constitutional freedoms provides an exceptional portal through which to observe the processes of institutionalization, deinstitutionalization and reinstitutionalization. However, several caveats are worth noting. First, MENA is far from monolithic. The ethnographies and data are aggregated here for the purpose of demonstrating "critical mass" in the focal phenomenon. By no means are the seven countries included in the study identical to one other's past, present or future. Although the countries were, by design, selected because each is overwhelmingly Muslim, the socio-cultural, linguistic and post-colonial heritages across these countries exhibit enormous differences. Second, global generalization from the MENA context is challenging. In the same sense that each MENA country is distinctive, so too are regions and countries outside MENA. Future studies can and should exploit access to other societal contexts to delve deeper and to establish meaningful boundary conditions while testing the stylized findings drawn from this study.

An additional challenge of this study stems from the emergence of potential alternative explanations. As a theory-building research design, question-driven methodologies are more prone to exposure to challenges from alternative explanations than studies applying quantitative tools regarding well-trodden research questions. In some sense, however, it is the ability to ignite purposeful debate that makes question-driven methods valuable to the field of strategic management. One prominent alternative explanation emerging from this study pertains to the issue of enforcement. The essence of this argument is that prohibitions against MENA women in various facets of commercial activity are the equivalent of "blue laws" in the U.S.; that is, they are arcane prohibitions that are never actually enforced, such as archaic state-level provisions forbidding activities like walking one's dog on Sunday. The claim could be that throughout MENA, informal institutions: such as norms, preferences and customs: have fundamentally changed, but that there is a "constitutional lag" as the formal institutional changes move more slowly. Thus, a society may have no interest in legal enforcement even while the laws still exist. Moreover, both women entrepreneurs and their customers know this. Like so many facets of deinstitutionalization, there is almost certainly some interaction between formal and informal institutions during the process of institutional erosion [33]. However, the logic of this argument actually supports the concern that top-down institutional cascading is not the sole driver of deinstitutionalization. There are, as our study reveals, a whole host of individual actions that soften institutional inertia from the bottom-up. As the results suggest, those actions aimed at consumer-focused, market-based improvements by innovating entrepreneurs are likely to be particularly impactful.

than the steady delegitimization of accepted practices through the power of the pocketbook. Fatima, a serial entrepreneur now specializing in Moroccan Argan oil, captures the notion in

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*"My suppliers love me because I pay on time and I'm able to move huge quantities. My customers love me because they get an authentic product, not the imitations. And as for me, I have ten more ideas for new businesses…I've done this myself. No family money. No husband money. It was hard. I won't tell* 

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[2] Greene P, Hart M, Gatewood E, Brush C, Carter N. Women entrepreneurs: Moving front and center: An overview of research and theory. Coleman White Paper Series. 2003;**3**:1-47 [3] Ehlers T, Main K. Women and the false promise of microenterprise. Gender and Society.

[4] Eberhart R, Eesley C, Eisenhardt K. Failure is an option: Institutional barriers to failure, bankruptcy, and new firm performance in Japan. Organization Science. 2017;**28**(1):93-112

[5] Eesley C. Institutional barriers to growth: Entrepreneurship, human capital and institu-

[6] Armanios D, Eesley C, Eisenhardt K, Li J. How entrepreneurs leverage institutional intermediaries in emerging economies to acquire public resources. Strategic Management

[7] Baron D. Competing for the public through the news media. Journal of Economics and

[8] Nye J. Soft Power: The Means to Success in World Politics New York City, NY. Public

[9] Baron D, Diermeier D. Strategic activism and nonmarket strategy. Journal of Economics

tional change. Organization Science. 2016;**27**(5):1290-1306

*you how hard. But, I was born to be in business and that's what I've done."*

1 Strategy & Entrepreneurship, Colorado School of Mines, Golden, CO, USA 2 Dyson School of Applied Economics, Cornell University, Ithaca, NY, USA

\* and Lauren L. Ortiz-Hunt2

\*Address all correspondence to: rahunt@mines.edu

this fashion:

**Author details**

Richard A. Hunt<sup>1</sup>

**References**

663-715

1998;**12**(4):424-440

Affairs; 2004

Journal. 2017;**38**(7):1373-1390

Management Strategy. 2005;**14**(2):339-376

and Management Strategy. 2007;**16**(3):599-634

#### **7.2. Conclusion**

The evidence that MENA women entrepreneurs display an "act-and-see" rather "wait-andsee" approach is itself transformative tot eh study of women entrepreneurship. Scholars examining institutions, entrepreneurial action and economic development can benefit from the potential micro-level mechanisms highlighted in this study. Extant theory has provided extensive support for an important truism: institutions matter. Institutional influence theories from Baumol [16], North [18] and others appear to be secure in their assertion that the structure and content of institutions exerts noteworthy influence on the quantity, diversity and purpose of entrepreneurial action. However, a focus solely on macro-structural drivers of the macro-micro nexus at Point 4 of Coleman's Model (**Figure 1**) misses entirely the role of microlevel mechanisms, emanating from individual decisions about the commercial prospects of business model innovations.

It is beyond the scope of this study to prove causal connections between the novelty of business model innovations by women entrepreneurs and the deinstitutionalization of legal strictures that limit the access to commercial opportunities for women. Future studies will need to leverage and stress-test our findings in search of increasingly well-refined data and research designs that allow for the use of strong-theory models and robust instruments that will together provide directional certainty regarding causation. However, our findings indicate that institutional entropy [33] is strongly associated with the timing and substance of entrepreneurial action taken by MENA women. In the end, the mechanisms of deinstitutionalization appear to be less a frontal assault enacted from hegemonic seats of political power than the steady delegitimization of accepted practices through the power of the pocketbook. Fatima, a serial entrepreneur now specializing in Moroccan Argan oil, captures the notion in this fashion:

*"My suppliers love me because I pay on time and I'm able to move huge quantities. My customers love me because they get an authentic product, not the imitations. And as for me, I have ten more ideas for new businesses…I've done this myself. No family money. No husband money. It was hard. I won't tell you how hard. But, I was born to be in business and that's what I've done."*

### **Author details**

An additional challenge of this study stems from the emergence of potential alternative explanations. As a theory-building research design, question-driven methodologies are more prone to exposure to challenges from alternative explanations than studies applying quantitative tools regarding well-trodden research questions. In some sense, however, it is the ability to ignite purposeful debate that makes question-driven methods valuable to the field of strategic management. One prominent alternative explanation emerging from this study pertains to the issue of enforcement. The essence of this argument is that prohibitions against MENA women in various facets of commercial activity are the equivalent of "blue laws" in the U.S.; that is, they are arcane prohibitions that are never actually enforced, such as archaic state-level provisions forbidding activities like walking one's dog on Sunday. The claim could be that throughout MENA, informal institutions: such as norms, preferences and customs: have fundamentally changed, but that there is a "constitutional lag" as the formal institutional changes move more slowly. Thus, a society may have no interest in legal enforcement even while the laws still exist. Moreover, both women entrepreneurs and their customers know this. Like so many facets of deinstitutionalization, there is almost certainly some interaction between formal and informal institutions during the process of institutional erosion [33]. However, the logic of this argument actually supports the concern that top-down institutional cascading is not the sole driver of deinstitutionalization. There are, as our study reveals, a whole host of individual actions that soften institutional inertia from the bottom-up. As the results suggest, those actions aimed at consumer-focused, market-based improvements by

The evidence that MENA women entrepreneurs display an "act-and-see" rather "wait-andsee" approach is itself transformative tot eh study of women entrepreneurship. Scholars examining institutions, entrepreneurial action and economic development can benefit from the potential micro-level mechanisms highlighted in this study. Extant theory has provided extensive support for an important truism: institutions matter. Institutional influence theories from Baumol [16], North [18] and others appear to be secure in their assertion that the structure and content of institutions exerts noteworthy influence on the quantity, diversity and purpose of entrepreneurial action. However, a focus solely on macro-structural drivers of the macro-micro nexus at Point 4 of Coleman's Model (**Figure 1**) misses entirely the role of microlevel mechanisms, emanating from individual decisions about the commercial prospects of

It is beyond the scope of this study to prove causal connections between the novelty of business model innovations by women entrepreneurs and the deinstitutionalization of legal strictures that limit the access to commercial opportunities for women. Future studies will need to leverage and stress-test our findings in search of increasingly well-refined data and research designs that allow for the use of strong-theory models and robust instruments that will together provide directional certainty regarding causation. However, our findings indicate that institutional entropy [33] is strongly associated with the timing and substance of entrepreneurial action taken by MENA women. In the end, the mechanisms of deinstitutionalization appear to be less a frontal assault enacted from hegemonic seats of political power

innovating entrepreneurs are likely to be particularly impactful.

452 Entrepreneurship - Development Tendencies and Empirical Approach

**7.2. Conclusion**

business model innovations.

Richard A. Hunt<sup>1</sup> \* and Lauren L. Ortiz-Hunt2

\*Address all correspondence to: rahunt@mines.edu

1 Strategy & Entrepreneurship, Colorado School of Mines, Golden, CO, USA

2 Dyson School of Applied Economics, Cornell University, Ithaca, NY, USA

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## *Edited by Ladislav Mura*

In context of entrepreneurship, this book was motivated by a desire of a team of wellknown authors. The book consists of 23 closely related thematic contributions, which fall into 4 separate sections: Interactions between Economy and Entrepreneurship; Innovation in Entrepreneurship and Economic Growth; Current Trends in Family Business, Social Entrepreneurship and Responsibility; and The Role of Human Resource Management, Education and Gender in Entrepreneurship. Authorscontributors have submitted the results of their recent research and presented essential findings about the decision-making process of entrepreneurs in order to maintain their businesses competitive. The reader can get an insight into the selection of the best scientific contributions that have been reviewed and ready for debate. Our piece of work, Entrepreneurship: Development Tendencies and Empirical Approach, has interdisciplinary features. This work by authors from different countries - Finland, Germany, Czech Republic, Slovakia, Italy, Spain, Turkey and Malaysia - is dedicated to readers providing up-to-date research data and background for further research as well as implementation techniques in business practice.

Entrepreneurship - Development Tendencies and Empirical Approach

Entrepreneurship

Development Tendencies

and Empirical Approach

*Edited by Ladislav Mura*

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