INTERNATIONAL ENTREPRENEURSHIP
A report to identify the body of theoretical knowledge and recent developments in research, which support the acquisition of the competences necessary to an international entrepreneur.
September 2008
Colophon
INTERNATIONAL ENTREPRENEURSHIP
A report to identify the body of theoretical knowledge and recent developments in research, which support the acquisition of the competences necessary to an international entrepreneur.
The theoretical research is carried out by:
Fiona Bibby, consultant in intercultural competence development, and Franck Brulhart, professor at Aix-en –Provence university, for the AGEFA PME, within the framework of the INTENT project
The theoretical research is part of the desk research described as“workpackage 2” within the European Project "INTENT" supported under the Leonardo da Vinci "Transfer of Innovation" programme 2007 - 2013 of the European Commission.
While every precaution has been taken in the preparation of this document, the publisher and the author assume no responsibility for errors or omissions, or for damages resulting from the use of information contained in this document or from the use of programs and source code that may accompany it. In no event shall the publisher and the author be liable for any loss of profit or any other commercial damage caused or alleged to have been caused directly or indirectly by this document.
September 2008, Brussels
Special thanks to:
All the experts and project partners who contributed to the theoretical research.
All the strategic partners of the INTENT project for their support and commitment.
Table of Contents
Colophon
Introduction
1Understanding the concept of International Entrepreneurship
1.1Definition and the characterisation of the entrepreneurial process
1.1.1Entrepreneurship: Setting up a business or exploiting opportunities?
1.1.2Entrepreneurship, innovation and creating value
1.2Definition and characterization: the entrepreneur
1.2.1Some received ideas about entrepreneurs
1.2.2The principal representations of entrepreneurs
1.3«Focus» on the International Entrepreneur
1.3.1Entrepreneurship and international development
1.3.2What is the profile of an international entrepreneur?
1.4Bibliography
2Characteristics of the concept of culture
2.1The origins of the concept of culture and the anthropological approach
2.1.1An anthropological approach to culture: Universalism
2.1.2An anthropological approach to culture: Particularism
2.1.3An anthropological approach to culture: Culture and personality
2.1.4An anthropological approach to culture: Structural analysis
2.2Culture and sociology: the introduction of the individual and the group into the process of reflection
2.2.1Cultures and sub cultures
2.2.2Culture and the transmission of culture
2.2.3Culture and the individual
2.3The various approaches to culture in Management Sciences
2.3.1The different levels of analysis of culture
2.3.2The different ways of studying culture
2.3.3Towards a pragmatic approach to culture
2.4Bibliography
3 Understanding the diversity of national cultures
3.1Globalisation does not equal a homogenisation of cultures
3.1.1The phenomenon of globalisation: shrinking cultural differences
3.1.2The persistence of cultural diversity and perceivable creolisation
3.1.3The awareness and flexibility that cultural diversity demands
3.2Analysis of cultural diversity and the characterisation of national cultural differences
3.2.1 The founding contribution of Hofstede
3.2.2 Hall and the importance of communication
3.2.3Trompenaars or pragmatic synthesis
3.3Practical interpretation of the characterisation of national cultures: «working with the X»
3.4Bibliography
Introduction
This study was carried out by AGEFA-PME as part of work package 2 of the Intent project.
A theoretical research report was carried out by Fiona Bibby, consultant in intercultural competence development, and Franck Brulhart, professor at Aix-en –Provence university, for the AGEFA PME, within the framework of the INTENT project.
This report aims to identify the body of theoretical knowledge and recent developments in research, which support the acquisition of the competences necessary to an international entrepreneur.
It was decided to keep the framework of the study within the objective of creating a training programme and module for initial vocational education and training. Partners decided at the kick off meeting the limits of the research to be carried out in each country. From this debate,
a structure for the research was approved by the project partners.
The objectives of the theoretical research:
- To identify the sources and body of knowledge supporting the competences and skills (soft) required in training and developing young people to adopt an entrepreneurial mindset in order to improve performance when working internationally;
- To serve as a work base to identify, check and improve on the sources chosen by an analysis in each partner country of the state of the art in this area;
To identify the knowledge, skills and competences found in the literature to be used alongside those found in the company research questionnaires and study of existing training, which will provide a starting point for the development of a vocational profile for the training unit.
1Understanding the concept of International Entrepreneurship
1.1Definition and the characterisation of the entrepreneurial process
Entrepreneurship is a complex phenomenon that has, since it was first studied at the beginning of the 80’s, been broadly and variously interpreted. This makes the task of proposing a simple, homogenous definition a difficult one (Saporta and Verstraete, 2000). To what economic reality does the concept of entrepreneurship relate? What is the profile of the average entrepreneur? What problems are encountered in the practice of entrepreneurship? What are the characteristics specific to international entrepreneurs? Defining the notions of entrepreneurship and entrepreneur is fundamental before we can proceed to focus on the international dimension of entrepreneurship.
1.1.1Entrepreneurship: Setting up a business or exploiting opportunities?
Specialist literature on entrepreneurship is a relatively recent phenomenon. It would appear, however, that over the past fifteen years, two major schools of thought have emerged that provide a framework for this area of research (Fayolle, 2004; Julien and Marchesnay, 1996).
The first school of thought sees entrepreneurship as the process of setting up a company or starting a new organisation. This view of entrepreneurship is rooted in the economic difficulties of the 1975. Indeed, between 1925 and 1975, economic growth depended on the growth of large companies that benefited from various advantages associated with their size of (economies of scale, economies of scope, economies of size, etc.). During this period, the priority was to strengthen these big groups (Julien and Marchesnay, 1996). With the economic crisis, the focus shifted towards the setting up of new businesses, which created new opportunities for those who had lost their jobs and met the needs generated by a mass consumer society. From this perspective, entrepreneurship concerns the study of how these new entities come into being and the activities that enable an individual to start a new business (Fayolle, 2004). The focus here, in entrepreneurship, is on «organisational emergence», in other words, on the process that leads up to the creation of a new organisation (Gartner, 1990; Bouchiki, 1993, Fayolle, 2004).
The second school of thought is rooted in the notion of entrepreneurial opportunity (Fayolle, 2004). Here, entrepreneurship is defined as the study of the process that leads to the discovery, evaluation and exploitation of new opportunities. This school of thought also concerns the study of the individuals and the circumstances involved at the start of the entrepreneurial process and the study of the impact of the exploitation of this opportunity (Venkatraman, 1997). Here, entrepreneurship is seen as the identification and exploitation of opportunities. The focus is no longer on «organisational emergence » but rather, more generally, on the emergence of a new activity, which does not necessarily have to be associated with the creation of a new entity or new company (Fayolle, 2004). This notion coincides with the notion of entrepreneurship as an «entrepreneurial spirit » or «entrepreneurial initiative». Entrepreneurial spirit may be defined as the aptitude of an individual or social group to take risks investing in an «enterprise» as an «adventure» (Julien and Marchesnay, 1996). This «adventure» is the grasping of an opportunity that concerns something new, creative, value-adding, using and combining various resources.
1.1.2Entrepreneurship, innovation and creating value
With this latter definition of entrepreneurship, which seems to us to be the one most suited to the purpose of our study, grasping an opportunity leads to a process of the creation of value through the starting of a new activities or, more generally, through the implementation of a new project. For Schumpeter (1935) this opportunity may take the form of the launch of a new product, as a new market opens up… The creation of value and innovation (in the generally accepted meaning of the term) are therefore at the centre of the phenomenon of entrepreneurship. In 1935, Schumpeter linked the phenomenon of innovation to the social actor that is the entrepreneur, while at the same time specifying that this definition should not be restricted to the entrepreneur as a founder of a company. Innovation, according to Le petit Robert, consists in introducing something new, as yet unknown, in a certain format. Innovation, then, concerns all types of novelty and so accordingly may be applied to any area of economic or social life. Castagnos (1994) spoke of innovation in a more economic context, linking it to the notion of the creation of value. For him, the term innovation denotes any intentional change achieved by an economic agent, with this change being acknowledged from the moment it generates an increase in income or a reduction in costs, i.e. a creation of value. From this perspective, innovation is taking the initiative, it is a change, a project, the creation or seizing of an opportunity, showing an entrepreneurial dynamic and aimed at creating wealth.
In this regard, the notions of uncertainty and risk would appear to have strong ties with entrepreneurship. An entrepreneur does, in fact, face uncertainty, where uncertainty is defined as all the events that could potentially happen, the probability of which cannot be quantified. (Julien and Marchesnay, 1996). The paradox lies in the fact that entrepreneurs suffer this uncertainty when they innovate, but they themselves also generate uncertainty. Indeed when an entrepreneur innovates, he exposes himself to market sanction and so faces significant uncertainty and considerable risk, but that entrepreneur also creates uncertainty, by contributing to destabilising that market, in the launch of his project.
1.2Definition and characterization: the entrepreneur
The entrepreneurial process is driven by an entrepreneur who is defined as an individual possessing entrepreneurial spirit. There are many received ideas about the profile of the «entrepreneur», and although the many studies performed on this subject have failed to identify the characterising traits of entrepreneurs, several schools of thought have tried to establish a «standard profile» (Fayolle, 2004) or, by default, propose «types» of entrepreneur.
1.2.1Some received ideas about entrepreneurs
The first received idea about entrepreneurs concerns their «innate» intuition. The entrepreneur would be someone gifted from birth with particular instinctive abilities that make him skilled at seizing opportunities and who possesses the appropriate «vision» that makes their success likely. This view of the born-entrepreneur actually has more to do with myth than with reality (Fayolle, 2004). Indeed, an individual’s personal qualities would count for little without the knowledge and skills acquired and accumulated over the course of years, either through schooling or experience. Another of the traditional depictions used to identify entrepreneurs concerns their taste for gambling and risk-taking: entrepreneurs are seen as players. Of course, as we have already emphasized, uncertainty and risk are factors inherent to the environment and activities of the entrepreneur. Indeed, evaluating risks so as to better manage or control them is the business of the entrepreneur. Aside from the myth of the born-entrepreneur and the myth of the gambler, entrepreneurs are also often perceived as being motivated by a desire for power and money. Contrary to this received idea, and whichever country you look at, their motivations appear more profound, with the lure of money taking rather a secondary place (Fayolle, 2004). Among the basic motivations, we could cite the need to achieve, the need for recognition, the desire to rise to challenges, the need for self-esteem, etc.… Finally, one of the most widespread ideas about entrepreneurs is that they are young, energetic people. Although dynamism and energy are indisputably important assets when it comes to running ambitious projects, age does not present an insurmountable barrier (Fayolle, 2004).
1.2.2The principal representations of entrepreneurs
Several schools of thought have put forward their vision of the entrepreneur. For some, the most significant characteristic of the entrepreneur is his specific psychological profile. Among the characteristics mentioned in the numerous studies carried out on this subject (McLelland, 1961; Brockhaus, 1980), we could cite flexibility, determination, tolerance of ambiguity and uncertainty, self-confidence, long-term commitment, moderated risk-taking and optimism. For others, the principal characteristics of entrepreneurs concern their creativity and their capacity to innovate (Schumpeter, 1935; Drucker, 1985). It should be noted that although this school of thought sets innovation at the centre of the entrepreneurial process, it uses this term in a very broad sense and is not referring purely to groundbreaking innovations. Stevenson and Jarillo (1990) who broadly support this school of thought, supplement this description by proposing five behaviours specific to the entrepreneur: a very short reaction time to opportunities, the progressive and sequential investment of resources, a desire to seize new business opportunities, recourse to informal network structures and the flexible use of resources.
Besides these approaches, aimed at compiling a portrait of a «typical» entrepreneur, other contributions have been made that specifically emphasize the diversity of possible profiles of the entrepreneur, proposing typologies (Fayolle, 2004). Probably the oldest is by Schumpeter (1935) who distinguishes four «structural» types of entrepreneurs (including the company founder): the manufacturer-trader, the captain of industry, the salaried director and the company founder. More recently, the typology of Lorrain and Dussault (1988) put forward two profiles: the artisan entrepreneur and the opportunistic entrepreneur. The artisan entrepreneur has limited formal education but strong technical skills; work is his principle focus of interest, and he tends to take a paternalistic attitude; he wants to control everything and refuses to share power. The profile of the opportunistic entrepreneur is almost the complete opposite: he has a higher level of education and plenty of business experience; he is management-orientated and his attitude is not paternalistic; he is ready to cede part of his control and independence to ensure the growth of his business. Lastly, Julien and Marchesnay (1988) distinguish two profiles of entrepreneur: PIG (Perpetuity, Independence of Capital, Growth) and the GAP (Growth, Autonomy, Perpetuity). Here we can identify the artisan and opportunistic entrepreneurs, since the «PIG» prioritise control and independence, at the expense of growth if need be, while the «GAP» prioritise seizing opportunities, risk-taking and growth, even if this sometimes requires some sacrifice of autonomy.
1.3«Focus» on the International Entrepreneur
Having characterised the notions of entrepreneurship and entrepreneur, we must now shift the focus to the analysis on the concept of international entrepreneurship in order to demonstrate firstly, the indisputable entrepreneurial dimension of international development and, secondly, to deal with the specific attributes of the international entrepreneur.
1.3.1Entrepreneurship and international development
The international development of a company may take a wide variety of forms. This notion may be used to describe the introduction of a strategy for research into market shares and the potential areas for the expansion of an existing activity at local level (strategy for the specialisation and development of international business) or the launch of a new business on foreign territory (international diversification strategy). Likewise, the structures and modalities used to implement this international development may vary widely from one case to the next: using a front company, an agent, setting up a subsidiary, taking over a foreign company and making it a subsidiary, etc. These various methods (Lemaire, 1997) may also be linked to stages in the development of the international expansion strategy (stage 1: predominantly national activities in the first phase of the international expansion, with recourse to national or regional structures; stage 2: multi-local activities with recourse to international structures; stage 3: trans-national activities with recourse to multinational structures). Lastly, there are two ways of looking at how the product of service is marketed internationally: adaptation at local-level and a multinational strategy or the standardisation of the offer on a worldwide scale and a global strategy.
However, regardless of the chosen policy, marketing strategy, type of entity set up and the specific form the international expansion takes, it is possible to view this international development as an entrepreneurial activity (Hinkelman, 1999). Indeed, these international development activities are characterised by a high degree of risk and uncertainty and involve change and innovation within the organisation, albeit not systematically «radical» or «groundbreaking». These operations are rooted, moreover, in a desire to seize a business opportunity with the aim of creating value. In this regard, whether the entity concerned is a «first mover» expanding for the first time into a new zone, or a company that has decided to expand its international structure using first an agent and then a wholly owned subsidiary, we are certainly looking at an entrepreneurial process.
1.3.2What is the profile of an international entrepreneur?
The next issue we must deal with concerns the characteristics that are specific to international entrepreneurship, defined as the identification and exploitation of opportunities for the development of business at international level. Must an international entrepreneur have any particular profile, specific qualities on top of the skills accorded to entrepreneurs in general? For Hinkelman (1999), the answer is yes. In addition to the qualities that generally define entrepreneurs (self-confidence, determination, the ability to make decisions, to learn, man-management talent, communication skills, the ability to innovate, subtlety, perspicacity, perfectionism, etc.) the entrepreneur must have three special characteristics: the capacity for empathy, patience and above all cultural tolerance. Hinkelman (1999) specifically insists on this third dimension that is central in view of the cultural diversity existing on a worldwide scale. The capacity for empathy will allow the entrepreneur to gain an awareness of the cultural differences of the people he deals with, and the cultural tolerance will allow him to adapt his behaviour and attitude so as to avoid upsetting the people with whom he comes into contact and ensure that he does not infringe their conscious or subconscious cultural norms, thereby preventing inappropriate or misguided behaviours.