J Ö N K Ö P I N G I N T E R N A T I O N A L B U S I N E S S S C H O O L JÖNKÖPING UNIVERSITY

How to keep the entrepreneu-rial spir it within growing

companies?

Master Thesis within Business Administration

Author: Henko Leffers

Suzanne Elhorr

Tutor: Cinzia Dalzotto

Jönköping June 2008

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Acknowledgements

We would like to express our gratitude to the persons who provided us with the knowl-edge, guidance and encouragement to develop our final thesis.

Mikael Petterson, Unimerco

Kenneth Johansson, Safetool

Krister Svantesson, Jönköping Posten

Niclas Adler, Jönköping International Business School (JIBS)

Sheridan Tatsuno Jönköping International Business School (JIBS)

PhD student, X Jönköping International Business School (JIBS)

PhD student, Y Jönköping International Business School (JIBS)

Further we are thankful to our fellow student who gave us support, feedback and good ad-vice.

Kamil Sawicki

Jönköping, June 2008

Suzanne Elhorr & Henko Leffers

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Master Thesis in Business Administration

Title: How to keep the entrepreneurial spirit within growing companies

Author: Suzanne Elhorr

Henko Leffers

Tutor: Dalzotto Cinzia

Date: Jönköping, 2008 June

Subject terms:

Abstract

Problem: Once a business is running, simultaneously the treat of loosing the entrepreneu-rial spirit is occurring. The team is not as passionate and people do not seem as enthusias-tic, and what was once a mission is now seemingly nothing more than a job for you and for them. Many factors cause the damage; however, the structure and the human resource management are two particularly factors involved in that damage.

Purpose: The purpose of this thesis is to investigate how the structure and the human re-source management serve as rescuers to force and keep the entrepreneurial spirit. The au-thors findings will help them give suggestions on how these two basic fields help in stabi-lizing the entrepreneurship.

Method: The data collection is based on theories related to findings from the real life busi-ness world. To assemble qualitative and reliable research, the authors conducted seven oral interviews with professionals working in different positions. In addition, the interviewees were selected from four different companies and different industries.

Conclusion

The structure in growing firms needs regular adjustment to hold a clear communication and clear definition of responsibilities which are crucial for the survival of the firm. Firms relying on innovativeness need to find the balance between openness of communication, flexibility and the degree of bureaucratization. In addition, firms based on innovation should be aware of tolerance of failure. Trust between management and employees also tend to influence the overall performance of the firm.

As the business develops, HRM practices also follow a certain change and update. An es-tablished firm needs to have clear competences of what is needed in the organization. Be-sides that, the firms need to emphasize training and development. In addition to keep peo-ple motivated and sustain the entrepreneurial spirit, firms need to be aware of rewarding.

Eventually the authors also discovered a need to include internationalization in their thesis and how it is related to sustain the entrepreneurial spirit in growing firms.

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Table of Contents

1 Introduction............................................................................... 1

1.1 Background.....................................................................................1 1.2 Problem ...........................................................................................2 1.3 Purpose ...........................................................................................3 1.4 Research Sub-questions ...............................................................3

2 Theoretical Framework............................................................. 4

2.1 Entrepreneurship............................................................................4 2.2 Growing Companies.......................................................................5 2.3 Structure .........................................................................................6 2.3.1 Structure....................................................................................6

2.3.2 Structural arrangements............................................................8

2.3.3 Smallness................................................................................10

2.3.4 De-Layering.............................................................................11

2.3.5 Communication in terms of Innovation ...................................12

2.4 Human resource management ....................................................14 2.4.1 Need for formal HRM ..............................................................14

2.4.2 HRM and organizational culture of trust ..................................14

2.4.3 Human resource practices.......................................................15 2.4.3.1 Staffing.....................................................................................................15 2.4.3.2 Planning...................................................................................................17 2.4.3.3 Appraising Performance ..........................................................................18 2.4.3.4 Intrinsic Rewards .....................................................................................19 2.4.3.5 Extrinsic Rewards ....................................................................................20 2.4.3.6 Training and development .......................................................................22 2.5 Internationalization.......................................................................22 2.6 Reflections on Theories...............................................................23

3 Methodology ........................................................................... 25

3.1 Conducted research.....................................................................25 3.2 Case Design..................................................................................25 3.3 Collection of Empirical Information ............................................26 3.3.1 Firms included in findings ........................................................27

3.3.2 Firms excluded in findings .......................................................28

3.4 Methodical research approach....................................................28 3.5 Critical treatment of gathered data .............................................29 3.6 Delimitations.................................................................................30

4 Empirical collection ................................................................ 30

4.1 Unimerco.......................................................................................30 4.1.1 Unimerco’s Presentation .........................................................31

4.2 Jönköping International Business School (JIBS)......................35 4.2.1 Jönköping International Business School History....................36

5 Analysis................................................................................... 52

5.1 Entrepreneurial Growing Companies .........................................52 5.2 Structure .......................................................................................52 5.3 HRM practices...............................................................................54 5.3.1 Formal HRM practice ..............................................................54

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5.3.2 Culture.....................................................................................54 5.3.3 Staffing and Planning ..............................................................55 5.3.4 Rewarding ...............................................................................56 5.3.4.1 Intrinsic ....................................................................................................56 5.3.4.2 Extrinsic ...................................................................................................57

5.3.5 Training and Development ......................................................57

5.4 Internationalization.......................................................................58

6 Conclusion and discussion ................................................... 59

6.1 Organizational structure ..............................................................59 6.2 HRM practices...............................................................................60

7 Recommendations.................................................................. 61

8 References .............................................................................. 62

List of figures

Figure 1 Entrepreneurship as A Vector (Kuratko & Morris, 2002)………………………..4

Figure 2 Business Life Cycle (Kuratko & Morris, 2002)…………………………………...5

Figure 3 Entrepreneurial Mindset Kuratko & Welsh, 2004………………………………..6

Figure 4 SAAB team…………………………………………………..…………………10

Figure 5 Elements reflected in organizational forms………………………………….….12

Figure 6 Inverted Triangle…………………………………………..…………………....20

Figure 7 Trapezoid (Davidsson, 2001) [Modified] ………………………………………29

Figure 8 Jonkoping University Structure (Jonkoping University, 2008) …………………38

List of exhibits

Exhibit 1 Structural practice to foster entrepreneurship (Schuler, 1986)…………………..9

Exhibit 2 Structural Practice…………………………………………………………..…10

List of tables

Table 1 The 5-15 Report……………………………………………………………..…..13

Table 2 Employee Characteristics………………………………………………….…….17

Table 3 HRM practices………………………………………………………...…...……18

List of boxes

Box 1 Effective Entrepreneurial Organization………………………………………...…21

Appendices

Table 4 Assesing Flexibility (Levey, 2002) ……………………………………………... 64

Questionnaire……………………………………………………………………………64

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Table 5 Flexibility Measurement (Levey, 2002)………………………………………….67

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1 Introduction

This chapter will introduce the reader to why the question “How to keep the entrepre-

neurial spirit within growing companies” was chosen as a topic for this Master’s thesis.

Firstly, the background is explained to why this subject is relevant and interesting for

investigation. Secondly the area of investigation is narrowed down to the problem.

Third, the specific purpose of the thesis is clarified and finally the sub-questions are

also identified.

1.1 Background

It’s a fact that for some entrepreneurs managing an established company becomes more difficult and more challenging than managing a new created one. They begin to realize that to maintain growing and successful companies, they need to reenergize the team and them-selves as well otherwise they will reach a “Glass ceiling”. According to David Rae (1999), the “Glass ceiling” is where business can not grow further or can grow but other measur-able issues, such as entrepreneurial level can shrink. To overcome this glass, there is a need to learn how to manage the business differently according to the circumstances in a way to grow while sustaining the entrepreneurial spirit. Why entrepreneurial spirit in particular?

Over the years, it has become obvious that entrepreneurship contributes to economic and business development. Transforming ideas into business opportunities is at the heart of en-trepreneurship. Studies show that progress has been significantly advanced by bold people who are entrepreneurial and innovative, able to exploit opportunities and willing to take risks. As any business grows, there are increasing requirements for change: improvement in the competitive situation, development of new opportunities and additional resources, all require a deep change in management (HRM) and structure within the business (McKeran, 2000). The main issue is that changes must be driven and managed in order to move for-ward. There should be a clear awareness of the key issues surrounding the growth and the development of the business.

As the business grows, a number of potential conflicts arise such as structure. Flexibility is a major point in growing entrepreneurial growth. For this reason, there is a need to develop or sustain a flexible structure. Kuratko and Morris (2002) point out that the degree of en-trepreneurship (level of innovativeness, risk-taking, and proactive ness) versus the fre-quency of entrepreneurship (number of events) is affected by the organizational structure.

Any organization wishing to become flexible and continually improving must develop peo-ple who are flexible, responsive and open to growth. This is achieved when individuals take responsibility for actions. HRM, in entrepreneurial firms, should make sure to select and develop such qualified people. The job should be doubled in companies at a growth phase. Balkin and Logan (1988) argues that poorly designed compensation and performance ap-praisal systems may threaten entrepreneurial behavior. In addition, studies show that in growing companies, such systems should be more formal and more advanced. Similarly, a number of observers have suggested that organization’s level entrepreneurship can be in-fluenced by HRM-related policies (Schuler, 1986). HRM varies in practices: hiring qualified employees, managerial behaviors on employee motivation, strategic role of compensation in motivating employees, etc…These practices have been facilitators of entrepreneurship and main supporters for growth. Employees become a source of sustainable competitive advantage.

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1.2 Problem

In simple words, the entrepreneurial spirit is an act focused on curiosity to discover, find, and try something new in order to build a business out of it. In professional words, there are certainly key characteristics which encapsulate the entrepreneurial spirit. It is hard to limit the number of these characteristics; however innovations, risk-taking, proactive ness, are the most common ones. This encapsulation makes many companies adopt the entre-preneurial spirit and makes it as its main core value; however, as the business grows, a number of potential conflicts arise in the areas of management, structure, strategy, and cul-ture which must be managed.

Oftentimes, the founding entrepreneur departs as the company grows (Kuratko and Welsh, 2004). More professional managers are hired and they bring in more organization and func-tional structure. Later, as the company grows, those become impediments for opportunity to develop. As they get bigger, they lose the entrepreneurial spirit. Moreover, they bring in financial measures, like return on investment, thus delimiting the level of risk taking; these things interfere with entrepreneurship concept. As the company continues to develop, one loses people and put processes in place that inhibit the entrepreneurial spirit and entrepre-neurial thinking.

The one thing that kills entrepreneurship is so many checks and controls because it creates a certain level of bureaucracy. They start out helping the organization to function, but they end up hurting it by creating too many rules and regulations.

Growing, in terms of the growing numbers of people and the shift in the scale of the busi-ness, affect entrepreneurs in some way: People are not kept informed, and they are not given regular feedback. In addition, little time is spent on developing people. These in turn affect people who were used to be children for these entrepreneurs. Now people feel unse-cured.

Entrepreneurial firms are generally characterized by employees who are expected to per-form a wide variety of tasks. The reason behind that is the lack of routinization, which makes it difficult to develop stable role definitions. Unfortunately, most of the growing companies fail in sustaining the original entrepreneurial structure, and end up with a bu-reaucratic structure killing the entrepreneurial spirit. Growing leads to an increase in the subdivision of the functions which is interpreted as a process of bureaucratization (Bendix, 1956). Bureaucratization, one form of routinization, means that bureaucratic organizations are more involved with established activities and less willing to pursue risky projects and this delimits the entrepreneurial spirit characterized by risk-taking.

People must be regarded as critical system elements. They must be managed properly. For innovative organizations to operate effectively, human resource professionals should re-cruit, develop, motivate, and retain its most valuable resource-innovative employee; How-ever, as the business grows, the ideal characteristics in employees are not well checked and examined by the HRM practices. Organizations are not stimulating and reinforcing these primary characteristics. As studies showed the HRM practices needed to foster entrepre-neurship are not well emphasized.

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1.3 Purpose

The purpose of this thesis is to investigate how the structure and the human resource man-agement serve as rescuers to keep the entrepreneurial spirit.

1.4 Research Sub-questions

These are the sub questions developed to support the purpose of the thesis and to answer the initial question:

• What is entrepreneurship?

• Why growing companies are selected?

• How organizational structure should be adjusted in a way that supports entrepre-neurship?

• How communication should be handled in entrepreneurial companies?

• To what extent culture of trust is necessary for HRM practices?

• How HRM practices should be adjusted in a way that supports entrepreneurship?

The first question is formulated to introduce the concept of entrepreneurship to the reader. The second question clarifies why entrepreneurship in growing companies is suffering. The remaining four questions will solve the problem, and suggest several ways that keep and maintain the entrepreneurial desire and spirit.

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2 Theoretical Framework

2.1 Entrepreneurship

Kuratko and Morris (2002) point out that; “Entrepreneurial thinking and acting are in the mindset of a global entrepreneurial revolution”. This fact is changing the way business is carried out at every time and every country. But “What is really entrepreneurship?”

Block (1985) defines entrepreneurship as a process of creating or innovating new products within new or existing businesses. Furthermore, Kanter (1985) defines it as a creation of new combination. Actually, entrepreneurship is the practice or activity of creating and in-novating. The process of innovation is central to entrepreneurship, or as Drucker (1985) states “Innovation is the tool of the entrepreneur.”

What distinguishes entrepreneurial from non-entrepreneurial firms is the rate of innovation (Schuler, 1996). This is to say the greater the rate of innovation, the more entrepreneurial the firm (Kanter & Drucker, 1985). Furthermore, the greater the rate of innovation, the greater the level of success and effectiveness. Kuratko and Morris (2202) underlie two fur-ther dimensions of entrepreneurship in addition to the innovation: risk-taking, and proac-tive ness.

Anything new involves risk. Risk-taking involves, according to Kuratko and Morris (2002), a “willingness to pursue opportunities that have a reasonable likelihood of producing losses or significant performance discrepancies” (p.41).

Taking any act results in new thing. This is called Pro-activeness. Pro-activeness is con-cerned with taking responsibility and doing any necessary step to activate the entrepreneur-ship concept (Kuratko & Morris, 2002).

Kuratko and Morris (2002) depict entrepreneurship as a vector in three-dimensional space (see figure 1). The more the events are innovative, risky, and proactive, the higher the de-gree of entrepreneurship. The first (E1) represents a firm that is highly innovative or proac-tive but highly risk averse. The second situation (E2) represents a firm that is highly inno-vative and risk-taking but lacking proactive ness. Any vector drawn determines to what ex-tent a firms, or individuals in firms are innovative, proactive, and risk-taker.

Figure 1 Entrepreneurship as a Vector (Kuratko & Morris, 2002)

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Another question is also addressed “Why approaching entrepreneurship?” In addition to the importance of entrepreneurship mentioned above, there are more reasons for organiza-tions tending to become entrepreneurial.

According to Cornwall and Perlman (1990), the first reason is that entrepreneurship has its biggest impact on long-term organizational performance especially the survival. It is critical to maintain an entrepreneurial process in the organization at the strategic level. Such entre-preneurial approach allows the organization to react more to changes and thus adapt and survive over time.

Cornwall and Perlman (1990) figure out a second reason for such entrepreneurial orienta-tion: The outcomes of an entrepreneurial organization are the main motivators behind such entrepreneurial orientation. Outputs vary from development of existing products and ser-vices, innovations in products and services, and the creation of new business.

2.2 Growing Companies

Organizations face the natural patterns of life cycle stages. According to Kuratko and Mor-ris (2002), the stages of development are as follow: New venture-development, start-up ac-tivities, growth stage, stabilization stage, and choice of innovation or decline (see figure 2).

Figure 2 Business Life Cycle (Kuratko & Morris, 2002)

Any stage might necessitate major changes in entrepreneurial strategy to compete in the market. Sometimes, as Kuratko (2002) said:”even the highly creative entrepreneurs are un-able to meet the administrative challenge that accompanies the stage of growth” (p.9). Four critical factors affect the extent to which a company maintains its entrepreneurial spirit (Kuratko & Morris, 2002):

-Responsibility: As the business evolves, it becomes crucial to define and determine responsi-bilities to set up flexibility and innovation. Kuratko and Morris (2002) figure out that sus-tainable entrepreneurship requires innovative activity and shared responsibility of everyone in the organization.

-Tolerance for Failure: Maintaining a tolerance for failure is necessary during the whole busi-ness life. Kuratko and Morris (2002) points out that the failure of people in start-up entre-preneurial companies is tolerated. This level of failure should stay the same in later stages, growing stage.

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-Change and flexibility: As the organization grows, there is a continuous change in different fields. Change has many implications for the firm in terms of people (HRM), and structure. For this reason, it is important that flexibility regarding change be preserved.

-Control: Growth and size might bring problems in rules and controls.

Figure 3 illustrates the danger suffocating innovation. In some cases, success will affect an entrepreneur’s willingness to change and innovate. According to Welsh and Kuratko (2004):”This is particularly true when enterprise has developed a sense of complacency and the entrepreneur likes this environment” (p. 40). In other words, entrepreneurs do not want to change anymore and they will create a bureaucratic environment where orders are issued from the top down. As a result, no one is willing or encouraged to become innova-tive or entrepreneurial because such activities are stifled.

Figure 3 Entrepreneurial Mindset (Kuratko & Welsh, 2004)

Actually, Welsh and Kuratko (2004) in their book “Strategic entrepreneurial growth”, show that the entrepreneur directly affects the firm’s growth orientation. Entrepreneurs must es-tablish a business that remains flexible beyond the start-up period if he wants to have an innovative atmosphere. Welsh and Kuratko (2004) say: “An adaptive firm increases opportu-nity for its employees; initiates change, and instill the desire to be innovative in employees” (p.40). The rest of this research discusses the ways to build such adaptive firms

2.3 Structure

2.3.1 Structure

Definition

Structure is the design of an organization. Kuratko and Morris (2002) define the structure of an organization as “the formal pattern of how people and jobs are grouped and how the activities of different people or functions are connected” (p.191). Structures are created to bring order and logic to company operations. It is the structure that determines the way di-visions, departments, functions, and people link together and interact. Organization struc-ture determines operational responsibilities horizontally and vertically.

The structure of an organization plays a significant role in the success of the organization. An efficient structure facilitates coordination and interconnecting of employees and com-

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munication systems. The structure also defines what the responsibilities of every one in the firm are. An organizational structure determines the role of everyone in order to achieve the overall objectives of the organization. According to Perlman (1990), organization struc-ture is “inextricably linked to the people who perform the tasks” (p.108). However, the structure is not static, it is continuously changed.

Structure in Growing companies

One can make decisions quickly or there could be many things slowing down the process. The organizational structure might be profitable; however, according to Jackson and Roper (1991): “as the company grows, it becomes difficult to maintain the needed volume of work while controlling systems, processes, and procedures to maintain operations”. To hold the organizational objectives, the organizational structure should be adjusted to allow adequate maintenance of operations.

Any organizational structure should go along with the strategy. Before shaping the organ-izational structure, managers should mold the organization’s strategy and vision, and then adjust the structure of the organization in a way that fits that strategy. The goal of structure is to support execution of the entrepreneurial organization’s chosen strategy based on in-novation. Every time strategy and vision are modified, structure should be also modified to support that execution.

In order to serve the external customers, effective communication and support systems should be spread among internal customers. As Jackson and Roper (1991) mentioned: “Within every organization, information should flow in “every direction” — from custom-ers to the company, throughout all levels within the company, and back to customers in the form of execution”. In other words, lack of such information flow will damage the infor-mation gaps whether with internal or external customers and damage the performance as well (Jackson & Roper, 1991).

Malfunction of Bureaucratic Structure

Traditional organizations depend on bureaucracy (Weber, 1952) to ensure that work is ac-complished efficiently. Bureaucratic structure is a rigid structure where there is a standardi-zation of work in order to achieve tasks. The need to follow plans and programs is stressed (Morris, 2002). In a bureaucratic structure, power, knowledge, and data stay at the top of organization (McKeran & Flanningen, 1996). Centralized decision making, and highly spe-cialized tasks are dominant in such a structure.

Entrepreneurship suffers for different reasons. First of all and according to Cornwall and Perlman (1990): “many organizations have rules that demand that ideas for new products and other opportunities be submitted in writing” (p.109). Cornwall and Perlman (1990) point out that these proposals require employee to follow a set of format, and these pro-posals may be handled only at establishes times. The problem with bureaucratic structure is that it formalizes the process for communicating ideas for new products or processes. It is hard to write down innovative ideas in a well formatted paper.

Secondly, employees might be aware of the final goal but may be confused on how to reach it. According to Cornwall (1990) “a bureaucratic structure may impede reaching a goal be-cause it limits the alternative paths to the goal that can be taken” (p.111)

Third, bureaucratic structure does not welcome change and variety in its specific processes and procedures, and sometimes this change is needed to carry out the tasks of a project.

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Benveniste argued that the bureaucratic structures prohibit the fluid environment needed sometimes to carry out a project (as cited in Cornwall & Perlman, 1990, p.111).

Ideal Entrepreneurial structure

In small companies, structure begins as little. They operate in a flexible and lose manner. However, as they grow in age and size, firms implement a bureaucratic structure (Kuratko & Morris, 2002). Consequently, “While growing, structure becomes more bureaucratic and entrepreneurship suffers” (Kuratko & Morris, 2002).

Obviously, bureaucratic structures are undesirable in entrepreneurial organization. Clifford and Cavanagh talk about bureaucracy as: “… smothering innovation, substituting rules for common sense, stultifying decision-making, and straight jacketing initiative ” (as cited in Perlman and Cornwall, 1990, p.109).

Consequently, growing companies have to adjust structure in a way that it accommodates innovative behavior. Innovation necessitates a level of flexibility in terms of resource utili-zation and time scopes. Quick decisions are often required during the innovative process and there should not be boundaries slowing down communication because, according to Kuratko and Morris (2002): “Innovation is also a communication intensive activity, includ-ing both lateral and vertical communication much of which is informal and unplanned” (p.194)

In simple words, structure in growing entrepreneurial company necessitates special struc-tural arrangements to keep its entrepreneurial growing identity.

2.3.2 Structural arrangements

Freedom and Autonomy

No ideal structure is listed; however, structural arrangements should be applied in a way to encourage and foster entrepreneurial behavior. Schuler (1986) mentioned: “At the heart of structural arrangements to keep and promote entrepreneurship is granting some degrees of freedom and autonomy to an individual and group” (p.3). High levels of autonomy and freedom increase job performance.

Employee autonomy dissolved barriers between managers and employees. Therefore, autonomy fosters relationships and trust between management and employees.

Randall S. Schuler (1986) suggested many structural practices in structural arrangements (see Exhibit 1). The more complete the structural arrangement (and granting of autonomy); the more the innovation is enhanced. Innovation may occur under less structural arrange-ments, but it occurs less frequently.

According to Schuler (1996), as the structural arrangements go from modest to more sig-nificant and complete, innovation and entrepreneurial activity show higher levels.

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Exhibit 1 Structural practice to foster entrepreneurship (Schuler, 1986)

Flexibility

Flexibility is not about saying yes to all requests. Flexibility at work allows employees to think about their work and personal needs. Flexibility at work allows employees to propose new solutions that enable them to get the job done. It keeps an open dialogue about how to work most effectively (“Levey”, 2002). It is about work-process planning and answering questions like: How will the work get done? What happens during overtime? How will communication and coordination be managed? Here are some tips to improve flexibility.

Reducing Segmentalism- To increase flexibility and foster entrepreneurship, reducing segmen-tation should be covered (Schuler, 1986). Reducing segmentation and increasing integration across groups, teams, departments, and divisions facilitate idea and information exchange. This occurs as a matter of culture reflecting teamwork and cooperation which are crucial to team success. Team members must coordinate to achieve group goals. They must work to-gether and make efforts to support and cooperate with each other. Team members share information and suggestions freely.

Financial processes- Financial processes need to become more flexible if innovation is to be fostered and maintained. According to Schuler (1996): “many organizations, like Eastman Kodak, are setting up special “innovation banks” to fund new ventures or innovations out-side of operating budgets” (p.7). This allows employees to develop small activities which would otherwise find no place in a managers’ budget who are just seeking immediate prof-itability. Another form of increased financial flexibility is top management sponsoring as many small and diverse entrepreneurial projects as possible rather than just a few big ones (Schuler, 1996).

Reducing Bureaucracy- Bureaucracy describes the preciseness and rigidity of department ar-rangements, and reporting practices and rules. Schuler (1996) says that “systematic innova-tion is strengthened to the extent that the bureaucracy is minimized” (p.6). In other words there should be a cutting of the bureaucratic actions in order to maintain entrepreneurship.

Exhibit 2 reflects the policies and procedures to enhance flexibility.

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Exhibit 2 Structural Practice (Schuler, 1986)

2.3.3 Smallness

In order to apply the structural arrangements mentioned above, several practical structures could be proposed. One of them is the possibility to breakdown of organization into inde-pendent units, or what Cornwall and Perlman (1990) called “Smallness”. SAAB team-based structure illustrates this arrangement where the aim was to make teams operates as individ-ual companies with high level of operational freedom and responsibility (see figure 4). Hence, due to that smallness in units, employee will get immediate feedback on work per-formance, and on new ideas without delay and with the help of a quick and easy communi-cation. Moreover, they can obtain resources, information, and assistance quickly and easily. As a result, quick response to employees enhances innovation and risk-taking.

Such a SMALLNESS theory encourages entrepreneurial activities and forbid bureaucratic drawbacks. According to Schuler (1996), the higher the innovation-level, the less the bu-reaucracy and vice versa. Free departmental boundaries facilitate the flow of information and ideas which is crucial to form new combinations. Schuler (1996) points out: “Less ne-cessity to adhere to the chain of command also facilitates interaction and knowledge ex-change, and less reliance on rules and procedures recognizes the dynamics of knowledge-intense activities so characteristic of innovation” (p.11).

Figure 4 SAAB team (Kuratko & Morris, 2002)

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2.3.4 De-Layering

Fewer structural layers, is another practice which could be applied. According to Peters (1987):“Good intention and brilliant proposals will be dead-ended, delayed, sabotaged, massaged to death, or revised beyond recognition or usefulness by the over-lay structures at most large and growing firms” (p.356). Many large businesses decided to delayer their organizations. Delayering is the process of removing one or more levels in the hierarchy in order to flatten out the organizational structure. As a result, numbers of layers are reduced and the span of control becomes wider.

De-layering is necessary to keep the autonomy, creativity, to provide better service to the customer, and to increase the speed of communication and decision making. The commu-nication flows faster by having flatter hierarchical structures and encourages delegation since wider spans of control should provide opportunities for employees to take on more responsibilities. The flatter the organization, the less the number of layers and the wider the spans of control. Here are the main advantages of delayering and wider spans of control (flatter structures) introduced by Mintzberg and Peters (1987):

• Delegation puts more burdens on subordinates. Hence, there are opportunities for sub-ordinates to take on extra responsibilities, and to initiate to some level their own innovative small projects.

• The problem of most growing companies is about difficulty in the communication proc-ess and difficulty in connecting people to each other and traversing all layers. However, shaping fewer layers in the hierarchy improves the communication and hence the growing problem is dissolved (whether on horizontal level or vertical level).

• According to Mintzberg: ”There is a smaller psychological distance between those at the top and those at the bottom of the organization”. This can help to eliminate a ‘them and us’ culture where workers feel alienated from senior management (Mintzberg& Peters, 1987).

According to Cornwall and Perlman (1990), something similar happens at Siemens. To al-low the firm to be more entrepreneurial, barriers have to be broken down and decision making should be decentralized. For this reason, a restructuring process took place and the number of management layers fall from seven to three.

De-layering follows the concept of decentralization (see figure 5) where decision-making and responsibility is passed onto others in the organization. Planning and execution be-come faster and more efficient since there is delegation of authority and responsibility and day-to-day decision-making is faster. By that way, staff is empowered and hence is more motivated. Workers feel more valued since they are involved in the decision-making. Peters and Mintzberg (1987) go further and point out: ”The autonomy also means that they can use their initiative and feel a sense of ownership for their work”. Figure 2 captures the structural changes such as de-layering, decentralization that are ac-companied by the ways horizontal units communicate and interact, the information tech-nology capabilities, and the new types of human resources management practices. HRM practices are somehow interrelated with decentralization and delayering because these ne-cessitate greater responsibility from employees and hence employees in turn necessitate greater training and development and other HRM practices.

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Figure 5 Elements reflected in organizational forms (Kuratko & Morris, 2002)

2.3.5 Communication in terms of Innovation

Structure and communication systems hold organizations together, transmit information, and control how new ideas are implemented. According to Cornwall and Perlman (1990), in the entrepreneurial organization, structure and communication accomplish such output by being designed to enhance innovation and opportunity. This is done by supplying enough information so that employees at all levels in the organization can pursue new ideas with a good chance in success (Cornwall & Perlman, 1990).

Innovation is also a communication activity. Communication is the transfer of information and understanding from one person to another. In growing entrepreneurial companies, all employees must know that they are heard, and that they have something to say.

“Elevator mentality”, defined by Kanter (1983) as “a pattern of following the chain of com-mand and protocol in communication, prohibits the transfer of innovative ideas”, is spread in growing companies. In an organization with elevator mentality, communication is in the form of job instructions, procedures, and practices, and feedback (Cornwall & Perlman, 1990). This elevator prohibits the productive communication and the flow of communica-tion from the bottom up. Cornwall and Perlman (1990) mentioned that it is true that in such organization superiors communicate to subordinates, useful information do not travel up the organization easily.

To avoid such an elevator mentality, “Intertwined bowl of spaghetti” should be introduced in growing companies. This will keep and deserve their names as Entrepreneurial Companies. This Intertwined bowl of spaghetti, called so by Cornwall and Perlman (1990), represent the patterns of communication. This means that communication largely occurs on a “need-to-know” basis. It is not based on formal bureaucratic structure. Row of vertical lines branching out at new level in the organization chart will characterize the communication pattern in the traditional organization (Cornwall, 1990). In simple words, anyone, in entre-preneurial companies, can initiate communication. The feedback should be rapid and es-sential. The communication can be personal and face to face.

Managers, instead of focusing on rules on where messages to go, and how long they are, should try to achieve the productive communication. This type of communication is the only way people can get the information they need. The productive communication allows interchange of data and ideas between people (Cornwall & Perlman, 1990).

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However, to reach that productivity in communication, three factors come into considera-tion (Perlman & Cornwall, 1990):

Sharing Information - In growing environment, sharing information should be much more emphasized to speed the problem solving, to inhibit people form higher positions from controlling and interfering inappropriately, to flatten organizational structure, and accord-ing to Perlman and Cornwall(1990) “to contribute to intrinsic satisfaction, since being in-formed can be rewarding in and of itself” (p.116).

A practical tip is the 5-15 Report suggested by Cornwall & Perlman (1990) where every employee, once a week, has to report to a manager a report which takes no more than 15 minutes to write and no more than 5 minutes to read. Managers, in turn, provide feedback to their employees (see Table1).

Box 7-1 ,The 5-15 Report

Once a week, everyone who reports to a manager, submits a report that takes no more than 15 minutes to write and no more than 5 minutes to read. In it, people can communicate what they did during the week, their problems, their successes, and their ideas. In growing companies, everyone is so busy it is difficult to keep in touch.

To be a productive form of communication within an entrepreneurial growing organiza-tion, the 5-15 report necessitates that managers provide feedback to their employees. This is not done by written comments on each report submitted but on what the manager does in response to what he or she reads. In some cases, managers may want to talk at greater length with someone. In other cases, obtaining or shifting resources to someone will be a response. In still other cases, some type of recognition award or ceremony will be in order. If managers are to act, they must act quickly, often within one week’s time. The 5-15 report allows meaningful, direct, and efficient communication.

Source: P.Hawken, “The employee as Customer,” Inc.no.9 (1987), pp.21-22.

Table 1 The 5-15 Report

Communications by Doing- Actions are stronger than words (Cornwall and Perlman, 2002). In other words, managers should not only talk about letting people innovate and get involved, rather they should show some actions. Rewarding people for taking risks which is decided by HRM professionals, empowering people, letting people innovate, and other actions should enhance the productive communication.

Clear Communication- In growing companies, there is an amount of time lost in order to de-liver and to clearly understand the messages. For this reason, clarity in communication is necessary where simple messages are used, feedback is quick, and communication is tied to the vision, mission and goals (Cornwall and Perlman, 2002). The vision can be lost in grow-ing business, so there should always be refreshment in mind of the employees about the vi-sion and the goals so that they know where they are going.

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2.4 Human resource management

2.4.1 Need for formal HRM

HRM policies and practices, for example, recruitment and selection, training and develop-ment and reward systems with business strategies allow firms to gain competitive advantage (Schuler, 1986).

Researchers found that the majority of the small firms rely on word of mouth and other in-formal recruitment processes for ease of use and convenience (Schuler, 1986).

However, in growing firms, formal HRM policies and practices have to be applied if growth is to be sustained. On the first hand, and as Arthur figures out that growing means more complexity because of the greater numbers of employees and for this reason these formal policies are necessary to cope with such increase in complexity (as cited in Cornwall and Perlman, 1990, p. 127). On the other hand, managers who used to rely on informal ways in recruiting, like family members and walk-ins in small firms, have to develop more formal methods to recruit employees in growing stage.

Hornsby and Kuratko (2003) argue that if a firm fails, this is because of managerial incom-petence in handling HRM issues. According to Barringer, “The ability to overcome the “managerial capacity problem” depends in part on manager’s recognition of the importance of HRM to the firm’s performance (as cited in Schuler, 1986, 12).

Growing firms, where growth is defined as employing new staff because of expansion, ex-hibit greater formalization in their HRM practices than non-growing firms if they are to gain or maintain a competitive advantage.

2.4.2 HRM and organizational culture of trust

For the Human Resources Management to work in practice, Cornwall and Perlman (1990) suggest “there must be an organization culture of high trust” (p.93). So before introducing any HRM practices, there should be a well established culture full of trust and an environ-ment in which people can contribute. Jack Welch, a professor in the Wright state univer-sity, says that people will not do their best without trust (“Building and repairing”, 2004). Every business faces change and ambiguity, the best way to cope with that is to boost the level of trust which encourages creativity, empowerment, and teamwork. Encouraging a culture of trust necessitates certain procedures and policies which enhance the level of trust among employees like open communication and investing in employees

Individuals who trust the people they work with and they are trusted by them are comfort-able with change and growth, and able to take risks. Trust is empowering people. Trust fa-cilitates information sharing and collaboration. Most of the time, where there is no reward-ing for efforts and trusts in the rewarding system, people don’t like to discuss or share their new ideas with each other. As a result, one way to encourage them to discuss their ideas is to establish a trusty rewarding system which guarantees for them a certain level of confi-dentiality of their own ideas. Such an environment encourages developing innovative ideas and resolve growth’s problems. According to Welsh (2004), managers who trust their sub-ordinates tend to delegate more tasks to them, and subordinates who trust their managers will welcome the idea of additional responsibility even when there is some risk of failure. These subordinates know that they are allowed to fail and any mistake will not threat their careers.

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However, trust is not born within the firm. It is a learned process where organizations can use procedures and actions to encourage trust among employees. This is the HRM respon-sibility and that is why HRM can not be discussed without relating to culture of trust. One of the policies is investing in employees and thus showing concern for employees whether by providing training and development experiences for employees or by providing benefits packages. In addition, as Jack Welch (2004) figures out: ”promoting open communication: Practicing an "open door" policy that permits all employees to share their concerns with management” (”Building and Repairing”, 2004).

2.4.3 Human resource practices

2.4.3.1 Staffing

Randall Schuler (1986) first emphasized many staffing practices (see table 2). These prac-tices stimulate employee innovation, cooperation, and long term focus in the organization (Schuler, 1986). In addition, the nature of entrepreneurial company is related to ambiguity and flexibility. This means that employees, in entrepreneurial growing companies, should feel comfortable with change, and thus growth. Consequently, Randall Schuler (1986) sug-gests that organizations should recruit individuals most likely to tolerate ambiguity.

According to Kuratko and Morris (2002), selecting a qualified employee to a specific entre-preneurial task should not be mainly based on employee’s past performance and em-ployee‘s basic knowledge and skills the job requires. Rather, it should be based on more “self-selection” into entrepreneurial positions. By that way, HRM managers can guarantee to a certain extent, that the individual’s needs match the entrepreneurial requirements of the organization (Kuratko and Morris, 2002).

Wayne Outlaw (1998) describes in his book “Smart staffing, how to hire, reward, and keep top employees for your growing company” the relation between employees and the quality of the business. He mentions essential reasons which are badly influencing the business.

The first reason is hiring the wrong employees cost money. If organizations want to sustain their competitiveness, the management should be aware of the value of human resources. HRM practices which enhance the organizational performance. Employees which are not appropriate for the job dismiss good customers, and management is much easier with hir-ing good employees. Every worker is a valuable and a critical benefit for the company and contributes to the entrepreneurial activities from the entire organization. The time and ef-fort are also crucial and hence are spent on the hiring process. This will protect the organi-zation (Outlaw, 1998).

Outlaw (1998) suggested that “to ensure that you have an ample supply of quality candi-dates, make hiring a systematic and logical procedure” (p. 8). The first phase is “Thinking before you hire”. During this phase, one need to evaluate the organization, the company’s characteristics, and innovativeness, by doing this, one determines what is needed in the or-ganization. What is a proper job definition? According to Outlaw (1998), a specific job de-scription includes the following elements:

1. Job responsibilities and task (p.3)

2. Necessary behavior on the job

3. The required level of performance

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4. The potential development

5. Payment

Another issue concerning the first step is that one must hire people by following regula-tions and rules. The rules related to hiring people, are also providing an effective frame-work to gather information about candidates (Outlaw, 1998)

The second step is to locate the right qualified candidates. Outlaw (1998) suggested a re-cruitment plan which starts with a proper job description with a specific target timeline i.e. ninety days.

The third step is to interview applicants and pick a new member for the staff. The process starts by screening the candidates and then selects the most excellent candidate. The impor-tance of the interview relies on the need to be aware of the attributes and characteristics of candidates. It is important to create questions that provide the information one really wants.

Step four involves strategies to retain good employees, “Reward and keep good staff mem-bers”. For welcoming the new recruit, one should create a plan concerning issues such as training, mentoring, orientation, and a program which builds up an employee’s confidence and opens the connection between management and employee. The program should also include issues concerning job enrichment, financial incentives, and career guidance (Out-law, 1998).

Step five is “learn from your losses” learn from the loss of a valuable staff member. Make use of cautious planned techniques to reveal the cause of the resignation (Outlaw, 1998).

Here is a point to be stressed: Rewards are used to attract qualified people to join an entre-preneurial organization. Cornwall and Perlman (1990) says that traditional organizations may use a high level of salary, a signing bonus, and a solid fringe benefit package; however, in entrepreneurial organization, may offer “a way of life’ that some employees find rewarding in and of itself.

In growing companies, there is a tendency to use formal selection practices: a list of skills and qualifications desired and a job description (see Table 2).

Employee Characteristics

1. Highly Repetitive------------------------------------------Highly Creative Innovative behavior

2. Very Short Term Focus----------------------------------------------Very Long Term Focus

3.Cooperative Interdependent behavior------------------Independent Autonomous Behavior

4.Very Low Concern For Quality-------------------------------Very High Concern For Quality

6. Very Low Risk Taking------------------------------------------------------Very High risk taking

7. Very high Concern for process-------------------------------- Very high Concern for Results

8. High preference to Avoid Responsibility------ High preference to Assume Responsibility

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9. Very Inflexible To Change-------------------------------------------- Very Flexible To Change

10.Very Comfortable with Stability----------Very Tolerant of Ambiguity and Unpredictability

11.Very Low Task Orientation-------------------------------------- Very High Task Orientation

Table 2 Employee Characteristics (Schuler, 1986)

2.4.3.2 Planning

Fostering entrepreneurship is facilitated by planning practices (Schuler, 1986). The planning practices should be formal, and should encourage employee participation and innovation. In simple words, Kuratko and Morris (2002) put the planning practice into the box:

“What are employees asked to do?”

The planning practices should stimulate innovation and get employees to assume responsi-bility (Schuler, 1986). Job-related tasks need to be easily defined, with more decision-making prudence given to employees. Additionally, as Schuler (1986) points out: “ the use of written job description, including the result criteria, should also be introduced which fo-cused more on results than process” (p.11). Results criteria force employees to work to-ward implementing ideas and systems.

Managers need to understand that, as it is the case for all HRM practices, career planning contributes to individual performance. As a manager, he/she should help the individual meet career expectations and organization’s goals by profiting from the opportunities avail-able in the organization.

Managers should be aware of how to treat employees. Bad management will influence peo-ple’s performance. Managers have to accept responsibility for the performance of their staff. Managers have to define their goals, have a clear vision, and develop a flow of precise information about their operations (Merchant, 1989).

Good Career Planning Practices could be as follow:

- By providing courses and workshops which help individuals to assess and understand their strengths and weaknesses.

- by letting managers take an active and genuine interest in the career planning needs of every single member of staff and working with each one to realize those needs.

Table 3 reflects the HRM practices in an ideal entrepreneurial growing companies devel-oped by Randall S.Schuler (1986).

Planning choices

Informal………………………..Formal

Loose………………………..Tight

Short term………………………..Long term

Explicit term………………………..Implicit Analysis

Low employee involvement……………………….High employee involvement

Staffing choices

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Internal sources………………………..External sources

Narrow paths………………………..Broad paths

Explicit criteria………………………..Implicit criteria

Limited socialization………………………..Extensive socialization

Closed procedures………………………..Open procedures

Appraising choices

Loose, incomplete integration………………………..Tight, complete integration

Behavioral criteria………………………..Results criteria

Low employee participation………………………..High employee participation

Individual criteria………………………..Group criteria

Internal equity………………………..External equity

Low participation………………………..High participation

No incentives………………………..Many incentives

Short term incentives………………………..Long term incentives

No employment security………………………..High employment security

Training and development

Short term………………………..Long term

Individual orientation………………………..Group orientation

Low participation………………………..High participation

Extensive Organizational Structure………………………..Minimal organizational structure

Table3 HRM practices (Schuler, 1986)

2.4.3.3 Appraising Performance

Rewarding and Appraising practices encourage employee participation; recognize the ac-complishments of groups of individuals. These practices stimulate risk taking which is at the core value of entrepreneurial organizations (Caroll and Schneir, 1982). According to Kerr and Slocum (1987): “The reward system defines the relationship between the organi-zation and the individual member by specifying the terms of exchange: It specifies the con-tributions expected for members and expresses values and norms to which those in the or-ganization must conform, as well as the response individuals can expect to receive as a re-sult of their performance.” (p. 58).

The reward system should be consistent with the goals and the strategies of an entrepre-neurial firm and with what is needed for employees. Entrepreneurial organizations remove constraints on employees so they will take risks and innovate. Thus, a proper reward sys-tem in these organizations is one way to ensure encouragement for innovation. It is neces-sary to mention what Cornwall and Perlman (1990) point out that reward systems can not work properly without a proper structure and culture that enhance entrepreneurial organi-zation. In other words, there is an interrelation between structure, culture, and HRM which has been shown before in this research.

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Two fundamental types of rewards are used in the reward system of an entrepreneurial or-ganization: Intrinsic and extrinsic.

2.4.3.4 Intrinsic Rewards

Intrinsic rewards provide what people need psychologically. These include a sense of com-petency in what they did, a sense of self-esteem, a sense of freedom and autonomy, and a sense of achievement (Cornwall, 2002).

“Organizations do not distribute intrinsic rewards, but structure their processes, cultures, and design of em-ployees’ jobs such that opportunities to engage in task that are intrinsically satisfying are available”(p. 136).

Acceptance of failure- Acceptance of failure in entrepreneurial growing companies should be a must because of the initial definition of entrepreneurship where innovation and risk taking are welcomed. It is one form of intrinsic reward. Frank de Chambeau and E.Micheal Shays (1984) believe that people in new situations make mistakes and mistakes are not necessarily reason to cancel a project or dismiss them. The main valuable issue is to make sure that they learn from these mistakes.

When the company is growing, it seems that the time spent on something new which is not guaranteed to be successful, would be much more precious if this time is spent on finishing the required tasks. So obviously, this will threaten the concept of failure and innovation. This in turn diminishes the level of entrepreneurship at the company. Even if failure, at growing phase will cost in terms of time, however this on the long term will be a deep strength.

Empowerment- Employees come to work to achieve reward in any form. Some seek financial rewards (compensating, see figure 3); others seek empowerment and power (intrinsic re-ward). The four elements of empowerment contribute to intrinsic satisfaction (Bennis & Nanues, 1985):

. Engaging in serious, significant acts and activities

. Feeling competent and learning on the job

. Feeling a part of something, whether it is family, an organization, or the community.

. Having fun

Empowerment is quite needed. An organization can only react quickly to changing de-mands if empowerment occurs. Entrepreneurial organizations rely on their people all the time, not only in time of crisis. Managers give employees as much information, resources, and support as they can to increase their productivity (Cornwall & Perlman, 1990).

As a result of empowerment, communication improves and becomes more open. Relation-ships cut across formal hierarchical lines and communication channels. People have as much power as possible. Empowerment enhances employee involvement, allowing anyone to come up with a good idea, exercise skills, and use power. So whatever is the level of growth at a company, people are always given information from data, technical knowledge, to expertise and resources from funds, materials, to time, so that they are always kept em-powered and hence pushed for new ideas and involvement.

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The problem of communication barriers and slow decision-making in growing companies is dissolved with empowerment.

Inverted Triangle- Flanningan and Mckeran (1996) introduced the concept of inverted tri-angle believing that the ability to empower employees and to make employees as they key interface with customers achieve company objectives. By inverting the triangle, the man-ager’s role is to support employees, ensuring they have the necessary resources to achieve their objectives (see Figure 6).

Figure 6 Inverted Triangle (Flanningan & Mckeran, 1996)

2.4.3.5 Extrinsic Rewards

Intrinsic rewards are not sufficient to lead to desired levels of commitment, risk taking, and innovation within growing entrepreneurial organization (Perlman & Cornwall, 1990). There is a need to extrinsic rewards such as salary, bonuses, promotions, and other forms.

Cornwall uses the extrinsic rewards in two ways: Pay-Offs and Investments.

1. Pay-offs- These are distributed after people have demonstrated productivity. There are two types of pay-offs.

.Bonuses: These are direct and indirect benefits of organizational entrepreneurship (see Box

1). The figure depicts the four dimensions on which to evaluate the success of entrepreneu-rial organization.

Assessing the Effectiveness of Entrepreneurial Organization

Four Major criteria to Consider in judging Entrepreneurial organization success.

Direct Benefits

1. Financial results of entrepreneurial initiatives => These include volume, profit, return on investment, and other standard measures of financial performance for the entrepreneurial initiatives undertaken.

2. Non Financial results of entrepreneurial initiatives => These include both tangible gains, such as those resulting from better utilization of productive capacity, technological im-provements, or market synergy, as well as intangible gains, such as those resulting from an enhanced industry reputation or an improved image in the marketplace.

Indirect Benefits

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3. Off school entrepreneurial initiatives => Even if an entrepreneurial initiative was less than successful in terms of the direct benefits (financial and non financial results), it could still be judged as worthwhile if the learning from this experience allowed the organization to launch as successful “second generation” or offshoot initiative which evolved as a result of the “failed” first attempt.

Box 1 Effective Entrepreneurial Organization (Cornwall & Perlman , 1990)

.Recognition: The acknowledgment of a job affects employees. The important point, as

Cornwall and Perlman (1990) figure out, is that those receiving recognition must be per-ceived as clear “achievers” and “entrepreneurs”. This recognition should be kind of multi-plied in growing companies because people will be in need for it more since they see the growth of the company as the output of their efforts. Lack of such recognition will demo-tivate them:

“Whether I made efforts or not, no body appreciates my efforts”.

2. Investment Centered Rewards- These are investment for the future (Cornwall & Perlman, 1990). They are also divided into two parts:

. Promotion As it is common; promotion is beneficial because it leads to more power, more

status, more resources, salary…

. Venture-Capital It involves placing funds in a budget for an individual’s or team’s use

within the entrepreneurial organization without permission being needed (Cornwall & Perlman, 1990). People can use this amount for new innovative projects without permis-sion from the managers, this will save time in the growing phase where managers are in-volved in other task. Pinchot (1985) defines venture capital as “freedom credits” (as cited in Corlman, 1985, p.139). Schuler called it also “bank of money”. The reward is not really the money itself:

“The reward is the autonomy gained”.

The freedom funds allow people to choose their own projects, to make mistakes and fail-ures, and to use their own expertise without constraints.

3. Ownership

. Stock Ownership: Entrepreneurship is fostered and facilitated to the extent that compensat-

ing practices encourage employee participation. Accordingly, they should stimulate and re-inforce risk taking, or willingness to assume responsibility and a longer term orientation (Schuler, 1986). To further foster and facilitate a sense of responsibility, Schulre (1986) points out that organizations need to establish long-term financial arrangements to com-pensate entrepreneurial employees. Employee stock ownership plans and profit sharing plans ensure that employees will be compensated in accordance with the performance of the product or service over its life (Schuler, 1986).

. Employee Ownership: There has always been an interest in employee ownership, but the de-

velopment that employees owned a significant part of the company, is coming from tax in-centives constructed to support the so called ESOP plan (Employee Stock Ownership Plan). S. Estrin and D.C. Jones (1992) describe in their research that the key problem for

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Employee-owned firms is the accumulation of collectively owned assets and the under-utilization of external debts as the company grows. This resulted in the difficulty that em-ployee-owned firms as a sector are failing to grow as quickly as their capitalist counterparts. Effective use of collectively owned assets and utilizations of external debts is the key, for survival and competitiveness on the long term for employee owned firms. ESOPs are most commonly used to motivate and reward employees (”A Comprehensive Overview”, 2005).

2.4.3.6 Training and development

Training and development practices can promote entrepreneurial behavior to the extent that training programs encourage high employee participation (Kuratko and Morris, 2002). Changes can occur at any time in the firm, and such a change necessitates a change in the job demands. Consequently, there is a need for continuous training. In addition, Kuratko and Morris (2002) points out that there is also need for training activities which focus on “individualized knowledge requirements”. These trainings will make the employees feel comfortable with ambiguity which characterized any change as mentioned before. More-over, these trainings serve first as facilitators for employees to take risks, assume responsi-bility, and keep them empowered.

One of the suggestions about training practice is the so called “Orientation program”. Orien-tation introduces a new recruit to his job, to his colleagues and to the company’s culture. The majority of organizations offer an oriental training program organized by the HRM department (Blackwell, 1997). On the short run, successful programs make employees un-derstand the business and get familiar with the business. On the long term, a successful ori-entation program increases job satisfaction (Gates and Hellweg, 1989).

An employee orientation plan’s main concern is to make a newcomer comfortable and con-fident. It is related to the company history, working times, employee, and customer rela-tionship. The process of training should ensure that the candidate will achieve a certain level expertise (Blackwell, 1997).

On the job training (OJT) is a useful method to make a new recruited employee comfort-able and confident with his job. The training session should start with an instruction, and include issues concerning job enrichment, financial incentives, and career guidance.

Mesut Akdere and Steven W. Schmidt (2007) examined the effectiveness of employee ori-entation trainings. They concluded that employee orientation training is crucial for both employee and for the firm. The two authors’ result of their study shows important differen-tiation in understanding of employees before and after orientation programs. There is a need to continue to train and develop staff members; learning does not end after an orien-tation program. Both human resource and top management have to combine efforts to en-sure quality and survival of the organization. Thus, what is said in this section about orien-tation for new employees should also be applied for old employees, specifically who have been following the stages of the company’s growth because these persons should always be trained. The continuous training for employees is a necessity because with time, new abili-ties and competencies should be learned to keep innovativeness and growth

2.5 Internationalization

According to David Rae (1999), in order to prevent the phase of not growing (Glass ceil-ing); it is essential to change or to find new markets, hence the importance of internation-alization. According to the network perspective developed by Johanson and Mattsson

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(1988), the internationalization of a firm means that it develops business relationships in foreign networks. This can achieved through the establishment of relationships in country networks through international extension. Development of relationships in existing net-works by penetration; and connection of existing networks in different countries (Jones & Coviello, 2005).

Internationalization allows firms to acquire new knowledge, and possible access to new re-sources and markets. Internationalization entails entry into new country markets which is a process of innovation.

Anssi Poutanen (2005) describes a main advantage of internationalization: the firm’s chances of learning will increase and the chance of capacity improvements increases. With this potential increase of learning, the firm can improve existing business procedures and recognize opportunities to expand the business to different industries and at the same time increasing the competencies at the company. Innovation necessitates a level of flexibility in terms of resource utilization. Thus by acquiring more resources, the level of innovation is enhanced.

Entrepreneurship and internationalization are seen as interdependent processes. Interna-tionalization is an entrepreneurial process of behavior. As Jones and Coviello (2005) figure out that internationalization events occur when ”they are exploited in an innovative form and thus in creative thinking” (p.11). McDougall and Oviatt (2000) defined international entrepreneurship as ‘combination of innovative, proactive and risk-seeking behavior that crosses national borders and is intended to create value in organizations” (p.15). Interna-tional firms develop competitive advantage through entrepreneurial behavior, and entre-preneurial firms can operate internationally.

2.6 Reflections on Theories

Departing from the definition of entrepreneurship, many companies adopt the entrepre-neurial spirit and make it as the main core value; however, as the business grows, a number of potential conflicts of focus and allocation arise in the areas of structure, culture, com-munication, and HRM. These conflicts give rise to a series of tensions which must be man-aged. The main danger is the danger evolving into bureaucrats who stifle innovation.

To cope with these problems, several things should be adjusted. First of all the structure is mentioned. Developing any ideal structure far from bureaucratic atmosphere necessitates a certain level of autonomy and flexibility which are grants for innovation. Once these are guaranteed, it is up to the entrepreneurial growing companies to develop the proper struc-ture whether a SMALLNESS structure (SAAB) characterized by independent units or DE-LAYERING structure characterized by a break down of barriers.

Structure and communication are interrelated and designed in a way to enhance innovation and opportunity. Thus communication is the second factor to delimit the problem arising in growing companies. Employees must feel that their voices are heard, their votes count, and their opinions matter. Any harmful factor for entrepreneurship such as the “Elevator mentality” should be cancelled and instead productive communication should be introduced. This necessitates a clear sharing of information, managing people and letting them inno-vate, and a clear vision definition.

The entrepreneurial process involves individuals. It starts with individuals. Thus HRM is a main factor in maintaining the entrepreneurial spirit. HRM should be formally imple-

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mented otherwise managerial incompetence in handling HRM issues will be a major source of firm failure. HRM varies in its practices. However, for the Human Resources Manage-ment to work in practice there must be an organization culture of high trust. Hence organi-zations should use policies and actions to promote trust among employees.

Once this is achieved, HRM practices can be developed. The nature of entrepreneurial company is related to ambiguity and flexibility, for this reason, the recruiting process should select the employees able to cope with ambiguity and change. The second HRM practice is the planning practice. It is about clarifying what is needed from employees. With growing phase, vision and job requirements might become confusing, for this reason, a clear vision and job description is developed which focus more on results than process. A good career planning is needed. Changes can occur at any time in the firm, and such a change necessitates a change in the job demands, and this in turn necessitates a well devel-oped training program enhancing the employees’ skills. The forth HRM practice is the re-warding system, whether intrinsic or extrinsic rewarding system, encourage employee par-ticipation, and recognize the accomplishments of groups of individuals.

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3 Methodology

The methodology outlines the authors approach to conduct qualitative research. The chapter illustrates the empirical study and techniques which are used.

3.1 Conducted research

To support the authors answer to the question, “How to keep the entrepreneurial spirit within growing companies”? The authors tried to include in this report all matters that are affecting the entrepreneurial spirit within an organization. With this approach, the authors made an effort to create qualitative research.

In accordance with the purpose of this thesis the authors started with the definition of en-trepreneurship and the growth of companies. Secondly, the authors included issues in rela-tion to the company’s structure and how this can affect the entrepreneurial spirit of the company. Additionally, this paper attempts to define the relation between communication within the firm and its structure. Furthermore the document continues with human re-source management practices and how these practices are affecting the entrepreneurial spirit of the firm. During the interviews, the authors discovered that internationalization has the ability to boost the entrepreneurial spirit by means of features such as entering new markets and acquiring new knowledge.

3.2 Case Design

Experiments, case studies and surveys are ways to conduct qualitative research. In deciding on which way to conduct research, one needs to take into consideration different require-ments, such as what questions need to be answered. The authors approach to conduct the chapter “empirical findings,” is based on interviews with firms operating in different indus-tries. The authors sought for clarification of theories in the real life business world.

The authors used in their questionnaires mostly open question which are defined as ques-tion which you can answer as in a conversation. With the usage of open questions, inter-viewees don’t feel forced to answer or reveal too much. Closed question are on the other hand question which an interviewee mostly can answer with yes or no.

To conduct a proper interview, there are three stages to consider: First the task of data col-lection, second the distribution of the questionnaire and lastly conducting interviews (Yin, 1994). The author also acknowledged the differentiation between a single and multiple case designs. A multiple case design is time consuming; however it is more robust and reliable (Yin, 1994).

Steinar (1996) acknowledged that qualitative interviews attempt to include both factual and meaningful issues. A qualitative interview should relate the theme of the research with the real world.

Interviews are useful to get the story behind participants and to let the interviewer go in-depth and get life world information in relation to the topic (McNamara, 1999).

Dapzury Valenzuela and Pallavi Shrivastava (2002) represent the following facts of qualita-tive interviews:

• In comparison with questionnaires, interviews are more personal.

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• In general interviews are easier for a respondent, in means of opinions and impres-sions. In addition, the interviewer has the chance to ask follow up questions.

• Interviews are generally easier for respondent, especially if what is sought are opin-ions or impressions.

• It is a good exercise, for the reason that the interviewer has to be well trained in how to respond to any unforeseen event.

• If the interviewee did not get some questions, directly the interviewer can help him in figuring out the meaning.

Once the authors decided upon a qualitative or quantitative approach, they decided as well upon on how to handle collected data whether inductively or deductively.

Starting with a particular case and move to a generalization necessitates an inductive ap-proach. Hence, this means that the data is collected first and then the theoretical part is formulated.

On the other hand, moving from a universal principle to a particular case necessitates the deductive approach. Thus, this means that the theoretical part is formulated first and then the data is collected based on that theoretical view.

Actually, the thesis research starts with theoretical overview which leads the empirical col-lection. Hence, the approach was a deductive approach.

However, after the data is collected, new necessary theories were formulated to support the purpose of the research. This was like a loop starting with theories, proceeding to data, and then come back to theories if necessary.

For this reason, one can say that both deductive and inductive processes have been applied. This combination of deductive and inductive approach is described as abductive by Brett-Davies (2007).

3.3 Collection of Empirical Information

The chapter; “Empirical Findings” is based on multiple interviews with companies which were transferring from the start up phase into a more established phase. In their question-naire the authors focused on the organizational structure including communication and on human resource management practices.

One of their objectives was to gain information in relation to the frame of reference from different perspectives. For instance the authors examined firms’ operating in diversified in-dustries and communicated to staff members from different positions. In addition, some of the empirical findings were not related to the theory of references so the authors edit that and add what is missing.

In total the authors approached twelve companies; four of the firms were interested and supported the authors thesis. As they conducted the interviews, two of the firms were in-consistent with the topic. Which is clearly defined as how to keep the entrepreneurial spirit in growing companies and how the organizational structure and human resource manage-ment practices influences the entrepreneurial spirit of a firm. As soon as the authors con-ducted the interviews in the two firms, they concluded that the firms were differentiating

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too much from their topic and hence they were excluded form findings. Lack of time, trouble finding participating firms and resource constraints prevented the authors to con-duct additional interviews.

3.3.1 Firms included in findings

The first firm examined, Unimerco AB, is a subsidiary from a worldwide organization with it’s headquarter located in Denmark. The findings are limited by the fact that the authors didn’t question employees from different perspectives. The firm adopted a flat structure. The subsidiary in Jönköping was a sales office, and other practices such as R & D, Human resource management, production, took place in their headquarters. Therefore, the infor-mation gathered in this firm was from the perspective of a salesman.

After they conducted the first interview, the authors discovered that internationalization also seems to boost the entrepreneurial spirit of a growing firm. The firm started to expand to other countries in 1991 and the subsidiary in Jönköping was the first location abroad. Nowadays the company is a worldwide organization and has subsidiaries in different coun-tries located in Europe, Asia and the United States. It is evident that the firm’s growth was a result of internationalization.

In case of internationalization, firms acquire new knowledge and possible access to new re-sources and markets. These advantages possibly will contribute to the entrepreneurial spirit of the company. Another advantage of internationalization is the ability to concentrate ac-tivities to favorable locations.

Additionally the authors noticed that the firm they examined was owned by its employees, as the majority of the shares were owned by its employees. Hence they expanded the chap-ter concerning human resource management with two paragraphs stock ownership and employee ownership.

The second organization the authors examined, the Jönköping International Business School (JIBS), was rather different in comparison to the first company. The firms operated in completely different industries. Where the first firm was a specialist in cutting tools, the second firm was an educational institution. However, the findings of this firm contributed to the quality of the paper. The authors did not have any limitations to gather information from different perspectives. On Thursday the first of May, they interviewed Sheridan Ta-tsuno who is hired as a business consultant. Then, the authors interviewed the managing director Niclas Adler on Wednesday the 7th of May. Furthermore, they interviewed one PhD student on the 9th of May and another recent PhD graduate on Monday the 19th of May. In this manner the authors interviewed from top position and bottom positions. Be-sides that, the staff members come from different levels of the organization. The authors questioned a managing director, a business consultant and two PhD students, thus from top position and bottom positions. Furthermore, the staff members came from different workplaces and backgrounds and they differed in the length of their employment periods. This resulted in different answers to the same questions.

Once more, the authors discovered during their examination of the educational institution a need to include internationalization in their frame of reference for the reason that the firms strategy, to boost the entrepreneurial spirit was based on internationalization.

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3.3.2 Firms excluded from findings

The third firm which the authors excluded from their thesis was typically in starting up phase. The company is called “Safetool” and was founded in 2004. The authors conducted the interview on Thursday the 24th of April with Kenneth Johansson, the CEO of the firm called Safetool. It is characterized by pro-activeness to adapt to their target market. The original business concept changed already on feedback provided by customers. In relation to human resource management practices, the firm’s recruitment of employees was de-pending on the demanding market.

To boost entrepreneurship, there should some kind of acceptance of failure in the com-pany. During the interview, the CEO makes it clear and ensures that the culture and struc-ture affect entrepreneurship to a certain extent. However, though it is quite innovative, it is in a starting-up phase so it is already and by nature entrepreneurial and is not facing any problem with that.

Actually, though not included, what the authors noticed before about the features of any entrepreneurial firm in starting up phase were assured in this company. For example, the need for formal HRM is not present at Safetool which is in start-up phase. This in turn re-flects and clarifies the need to implement formal HRM practices at later stages at any en-trepreneurial company especially in growing phase. On the other hand, this makes more clear the problem with entrepreneurship facing the growing companies.

The authors last examined firm, the Jönköping Posten was family owned. They interviewed Krister Svantesson, on the 12th of May, who is the CEO at the firm. Their approach was focusing on firms which were transferring from a starting up phase to a more established phase. Though it is the case with Jönköping posten, the author’s reason for excluding this firm out of their thesis was that the manager says in his own words that they are not that innovative and their main concern is not about entrepreneurship though it is the nature of such a business. In addition, every time the manager was answering the authors’ questions, he was relating the answers to the fact that the company is a family-owned business and this affects everything whether HRM practices, flexibility, freedom, etc. As a result, if the authors included this firm in their empirical investigations, they should expand their re-search with a focus on family owned businesses and how this affects the entrepreneurial spirit. However, even though, this also helps the authors in determining some HRM factors affecting entrepreneurships. For instance labor turnover was quite low, and some staff members were employed for more than 35 years. Therefore it could be interesting to find out what kind of practices offered by human resource management to keep employees mo-tivated.

3.4 Methodical research approach

The following figure (figure7) shows the methodical approach of the author’s research. The figure represents the trapezoid (Davidsson, 2001) method they used to conduct their thesis.

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Figure 7 Trapezoid (Davidsson, 2001) [Modified]

The trapezoid begins with the background, with the background as a basis for the thesis. The authors present to the person who reads the thesis an insight in support of why the writers came up with the topic “How to keep the entrepreneurial spirit within growing companies”. After the background, the trapezoid continues with the problem where the au-thors draw up boundaries which kill the entrepreneurial spirit in growing firms. By defining the problem, they stated the purpose of their thesis. The purpose of their research is to in-vestigate how the organizational structure and human resource management practices in-fluences the entrepreneurial spirit of a firm. The conducted theories are then supported by empirical findings which are based on the real live business world. After these two matters, the trapezoid goes on with an analysis of the relation between the theories and empirical findings. The trapezoid ends with a conclusion and recommendations providing sugges-tions how the organizational structure and human resource management practices help in sustaining entrepreneurship in growing firms and hence to answer the original questions.

3.5 Critical treatment of gathered data

To provide the reader with reliability and credibility, the authors tried to relate their theo-ries which support the sustainability of the entrepreneurial spirit to the real live business

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world. In addition, their research has gone through significance inspection and scrutiny. Shenton (2004) agrees that scrutiny improves the credibility of research.

Additionally, the fact that the thesis is based on multiple perspectives contributed to the trustworthiness. For instance the authors examined firms operating in different industries, and strived to question staff members in different position. Furthermore the authors in-tended to question people in different position the same questions. Once more, Shenton (2004) suggest that iterative questioning supports the reliability of the thesis.

3.6 Delimitation

The chapter empirical finding is based on interviews with growing companies. The authors’ first interview was with a sales man at Unimerco. This delimits their findings because it is limited to one perspective. The authors didn’t interview employees at higher or lower posi-tions. This is because the subsidiary in Jönköping is a sales subsidiary characterized by a flat structure where R & D practices, management, HRM decisions and production run in the company headquarter locating outside Sweden, in Denmark.

The author’s second interview was along with the Jönköping International Business School (JIBS). They gathered information from different perspectives, i.e. the managing director, a business consultant, and two PhD students.

The authors intension was no to criticize the firms overall performance. Rather, their aim was to gather information from firms within different industries. Thus, creating a discus-sion concerning issues affecting the entrepreneurial spirit in growing firms.

The time horizon given for the authors to work on the thesis put some restrains on the re-search. Though some companies wanted the authors to contact them after summer, but given a specific time horizon, the authors were unable to wait though companies were en-trepreneurial and growing. Given a particular time horizon, the authors have limited the re-search to companies in Jönköping and Husqvarna since contacting companies far away from Jönköping necessitates more time.

4 Empirical collection

In this chapter the authors presented their empirical material collected based on questionnaires conducted within different companies. They tried to gather information from different perspectives. In the questionnaire the authors focused on which strategy was used to keep people motivated and how the company remained en-trepreneurial and competitive.

4.1 Unimerco

Unimerco was founded in 1964 by Hans Foxby in the town of Lind south of Herning, Denmark. After a few years Unimerco started to distribute cutting tools from a manufac-turer of cutting tools for the wood industry. Customers expected from Unimerco to re-grind the tools, so Unimerco also started to regrind cutting tools (“UM History”, n.d).

Unimerco was mainly specialized in cutting tools for the wood industry. During the years, they started to expand their service in cutting tools into different industries, i.e. the aero-

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space industry, automotive industry and building and construction etc. In 1975, the com-pany already started with profit sharing to encourage employees and in 1977 they intro-duced already a new ownership structure. All employees had the opportunity to acquire shares, back then the shares were owned by management and two foundations 'UNIMER-COs Fond' and 'Hans Foxbys Fond'. In 1995, Unimerco became completely owned by the management and staff members. Nowadays, 95 % of all employees own shares in the firm. In 1991, the first subsidiary was founded in Jönköping Sweden and the process of interna-tionalization continued. Today, the Unimerco group has 18 subsidiaries in 12 countries. (“UM Concept”, n.d).

4.1.1 Unimerco’s Presentation

The authors interviewed Mikael Petterson who is an engineer specialized in cutting tools and who is working as a salesman at Unimerco Sweden. The authors tried to get as much info as possible about structure and HRM practices. They referred to the company’s web-site as a tool to support the info.

The idea of sharing profit and employee ownerships model came from the CEO Kenneth Iversen’s own childhood. He grew up in a fishing environment in Thyborøn in Denmark. When the fishing industry had to survive a difficult period, one of the surviving companies made the entire staff member’s owners of the boat and they shared profit equally. By shar-ing the profit, they applied a model whereby half of the ship’s catch went to the crew. However, the rest went towards maintenance, fuel supply, insurance, interest and deprecia-tion etc. In case of a lack in performance, if fishermen did not participate in fishing, he went home without a payment. The model encouraged crew members to go out fishing and make a good catch (“The fishing Vessel Model, n.d).

The ownership model of the fishing boat was secured in the following way: When the cap-tain turned into 55-60 years of age, the model was like that that he would sell 40-50 % of the boat to his first mate and the remaining part in time when he turned into 65 (“Insight into a workplace”, n.d)

Unimerco is a quite entrepreneurial in terms of innovation. Unimerco’s products might not be unique; however, they produce things in their own way: “We follow their convictions. And we are proud to be different. However, we are not just different for the sake of being different, but because we wish to be an attractive alternative – both as a workplace and as a supplier” (“UM Concept”, n.d). The degree of entrepreneurship is quite high. Unimerco’s events are highly innovative and Unimerco’s entering into new markets make it a risky firm.

Motivation

“How to motivate people and allow them to innovate at any time and during such a growing phase”?

Mikeal Petterson mentioned: “The motivation is determined by how much a person perceives a direct relationship between the effort he or she puts forth and successful performance on the firm’s employee ap-praisal” (personal communication, March 20, 2008). According to Mikeal, the motivation is also determined by how much the person perceives a direct relationship between a good performance appraisal and rewards.

There has always been an interest in employee ownership. This means that the majority of the shares were owned by the employees “after an introduction period of six months the employee could acquire shares” (personal communication, March 20, 2008). One of the features from

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employee owned companies is that employees have more commitment to the organization. Mikeal Petterson insists that if the company is successful, and it is making profit, 2 % of the economy outcome is shared by everyone so this is by itself a basic motivator for the employees.

“The model of employee ownership applied at Unimerco comes from a fishing boat. But what are the for-tunes which are accumulated?”

The past overall performance resulted into the fact that a tooling engineer or technician when he retires after 30 years of employment at Unimerco gained a capital of £87,000 addi-tional on his salary. This divided by thirty; the technician had an additional income of £2,400 each year over last 30 years, monthly this would be £200 additional on his salary.

“In addition to the EOPS, we have what is so called Case-Story” (personal communication, March 20, 2008). According to Mikeal and concerning strategy, Unimerco was mainly depending on innovation. Basically they supply all kinds of cutting instruments, for the wood and metal industry. Customers approach them many times with problems which needed to be solved. It could be that a progress should be improved more efficient. However, when the company solved a problem and the customer get great benefits from the solution, they real-ized a case story. In this case story, they explained the existing product, how it was used by the customer, they defined the problem and the solution, and how this was beneficial for the customer. Their ambition for creating the case stories was to attract more customers and to keep motivating people.

Open structure

“The atmosphere at any firm is reflected somehow in the structure, how would you describe the structure at Unimerco?”

“In order for the Employee-owned Unimerco concept I mentioned before to work, an appropriate organiza-tional structure and internal rules have to be developed so that it works out well”. The structure of Un-imerco is an open structure. Office is designed in a way that employees can reach and see each other easily. M.Pettersson says: “All employees are bosses” (personal communication, March 20, 2008). Visitors can see directly the whole department and where every body is working. The employees consider themselves equal, so there is no hierarchy, only paper wise: “And concerning openness, every employee receives on 8.00 o’clock in the morning an overview from the performance of all the different branches of the organizations”. According to Mikeal, in that way, the staff in Sweden can also evaluate their own performance and compare it with other subsidiaries worldwide.

The design of the office was contributing to the flat organizational structure because em-ployees could reach and see each other easily. Moreover, Unimerco’s flat organizational structure is also characterized by the lack of middle managers.

So the process of decision making involves employees, and every opinion needs to be con-sidered: “This is an advantage for Unimerco because this allows the firm to respond faster to changing cir-cumstances and preferences of customers”.

Trust

“What is the level of trust at Unimerco?”

Mikeal answered: ”Trust? In which level we rely on our staff....As you know we work in a very open structured culture which is based on trust and reliability between all who are employed at Unimerco world-

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wide” (personal communication, March 20, 2008). Unimerco does not want to use any re-sources to supervise workplace. It is very important that everyone rely and trust each other. Unimerco vision and business are founded on trust and this is one of the criteria Unimerco is focusing on during new employment situations.

“There are no internal rules”. According to Mikeal, this lack of rules is related to the culture at Unimerco. A culture and environment of trust in which everybody can contribute: “Actu-ally, without trust, employees might not do their best and will not work as a team”.

Once upon a time, Unimerco fall into stress where there has been overload in work; how-ever, the teamwork tried to make its effort to overcome that and they succeed: “This was ba-sically affected by the culture at Unimerco. In addition, all people at Unimerco take the decision at the right time”.

Communication

“How structure affects the communication? Is there a direct communication? If any employee comes up with a new idea, does it take time to be evaluated or implemented”?

“As mentioned before, Unimerco is characterized by an organizational structure promoting good communi-cation, quick and qualified decisions and a team spirit embodied in the running of the company”. In addi-tion, Mikeal mentioned several advantages on communication in this structure (personal communication, March 20, 2008):

• effective and free communication

• a friendly and informal way of communicating

• mutual respect, and trust

• employees get to know each other

”Since Unimerco is innovative and entrepreneurial, some authors suggest that there could be a bank of money for employees so that if employees want to start new small projects they can get access to this bank without waiting a reply from the top managers and thus without wasting time and they can directly work on innovative projects, is this applicable at Unimerco? Or something similar? If not, what do you think about this bank of money?”

If, anyone in Unimerco has ideas concerning products developments, he takes contact with staff in the Project and Development department (specified people in different sales areas) and “plant” their ideas. Unimerco encourages staff to wherever an idea comes up; Uni-merco takes contact with P&D and together evaluates the idea. If the idea is relevant and sensible the department makes a development project with specified staff, time of project, release and budget:

”P&D department operates the project. The origin informant is released from the project but will be in-formed about progress and asked in certain matters”.

Flexibility

“Still I relate flexibility to the level of trust”. According to Mikeal, Flexibility is also seen as part of the culture at Unimerco (personal communication, March 20, 2008). He relates flexibility to trust and respect.

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The authors asked several questions and after that, they assess the questions either into flexibility challenged or flexibility champion (see table 5 in the appendices.)

Unimerco embraces flexibility: “All divisions and groups at Unimerco are in direction of company”. They are all allowed to commit failures on the basis that they will learn from these failures: “This is part of flexibility”.

Allowance for failure, ability to take decisions by every person, are terms of flexibility ac-cording to Mikeal: “In Unimerco, there is enough trust between managers in Denmark and employees that the flexibility will be used to make people happy at work, and not to make them work more” (per-sonal communication, March 20, 2008). Mikeal states that most of the employees missed some vacations because of the overload in work; however, flexibility has never been an abuse at Unimerco. Employees take their own responsibilities to finish the job and fight against stress because they wanted the best results.

Employees in a flexible environment are more engaged in their jobs and committed to help the companies succeed: “This is really reflected in the distribution of the 2 % of the profit among em-ployees whenever a success is reached. This also makes them more satisfied with their jobs” (personal communication, March 20, 2008).

Mikeal went further and explained that flexibility is about employees proposing new solu-tions that enable them to get the job done. It is about keeping a dialogue about how to work most effectively.

Intrinsic Reward: Employee-Customers relationships

Employees at Unimerco are the key interface with customers. Mikeal states the social net-work evolved between customers and employees. Mikeal stressed: “The customers satisfaction and employees’ satisfaction are intimately related” (personal communication, March 20, 2008). Delegating and keeping the employees in contact with customers is a source of empower-ment for employees and motivation

“Unimerco is a customer-focused culture”. Unimerco evaluates the customers' needs and then de-velop products.

Extrinsic Rewards

”UNIMERCO believes that a good working environment leads to good quality of life and high perform-ance and responsibility” (”Employee Benefits”, n.d.). In addition to the ESOP mentioned be-fore as a main motivator for employees, a profit is shared among employees whenever there is an increase in performance. Furthermore, a flexible pension is guaranteed for ever employee.

Taking into consideration the culture and structure at Unimerco, other benefits come to fit this structure and culture:

.Satisfying work environment

.Social events

.Family gatherings

Training and development

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“Can you tell us more about Training and development at Unimerco? How you train people in order to be able to face the changes from face to face?”

According to Mikeal, he sees internationalization as a basis for training. Internationalization is beneficial for a firm in means of being entrepreneurial and innovative. Advantages for Unimerco are as follows: “They gain new knowledge when they expand to other countries, and these new skills or knowledge are contributing to capability improvements and more competencies” (personal communication, March 20, 2008).

Unimerco is a worldwide organization and one way to train and develop people is to offer opportunities to go for exchange to one of the subsidiaries: “For instance, I went for seven months to England to share knowledge and learn from their strategies. The attitude of employees in Eng-land was different that the Swedish staff members” (personal communication, March 20, 2008).

They also gain operational efficiencies through concentrating their activities to a limited number of favorable locations.

Unimerco mostly offers its staff regular internal training which Mikeal called ”Technical train-ing”. Unimerco also encourage their staff to think about training as a personal development in their daily, ordinary work.

”In which way it would be personal?”

Mikeal continues: ”If my work tends to involve more languages (ex. Italian) and I personally and pri-vate sees an opportunity in learning Italian to “grow” as a person and at the same time our company have a benefit in staff with Italian language skills. In such cases, our company encourages their staff to participate in an Italian-language-course” (personal communication, March 20, 2008). By that way employ-ees are trained on a personal basis and at the same time they take their own responsibilities in developing and enhancing skills.

Recruiting

When Unimerco sees an opportunity to grow in a certain business area, they recruit per-sonal that fit into the future organization. They often try to have a little bit higher demands than other companies, in job application criteria’s than average, and this is, according to Mikeal ”to secure for future growth and market changes” (personal communication, March 20, 2008).

During the interviews, Unimerco informs candidates about Unimerco strategy and tell them about Unimerco’s structure and visions. Unimerco tries to hire people fitting its strategies and visions.

”How do you support a new hired employee?”

When Unimerco decides who gets the job, a group in Unimerco ” we form a new, special group of people, each time” plans all the introduction of the new employed. The first 2-3 weeks of training and education includes job description and more detailed visions of Unimerco.

4.2 Jönköping International Business School (JIBS)

The authors conducted interviews with four persons from JIBS. Some questions are the same and some are different depending on the field within which every person is working.

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4.2.1 Jönköping International Business School History

The Jönköping International Business School (JIBS) was founded in 1989. In 1994, JIBS started as a research and educational business school, with a focus on business renewal, internationalization and entrepreneurship. Today, JIBS offers all kinds of educational programs: undergraduate, graduate, doctoral program, executive education. JIBS conduct research as well.

JIBS together with the school of engineering, the school of education and communication, and the school of health services forming four schools represent the Jönköping University (“Organization”, 2007). In addition to these four schools, the university has a separate organization responsible for school services such as admissions, information, IT, library, housing and maintenance. All five organizations are limited companies and follow the regu-lations of private Limited companies. The Jönköping University is lead by the Foundation Board. According to the Swedish law, the Chairman of this Board is assigned by the Swed-ish government (“Organization”, 2007.

Since the foundation, JIBS becomes a leading business school in Sweden. One of the reasons that JIBS could develop so quickly is that it is not owned by the state. The Jönköping International Business School, JIBS, is a non-for profit company, owned by the Jönköping University Foundation (“Organization”, 2007). Other universities in Sweden are owned by the state and more bounded by rules and regulations.

In Sweden there are only three institutions of higher education that have been founded by Foundations. The institutions are the Chalmers University of Technology, Stockholm School of Economics and the Jönköping University. The main goal for such institutions was to change the system in Sweden so that it becomes more individual and less social. They wanted to see the sights of a free-market approach. This new structure of foundation gives the organizations more independence. The Universities have more rights, greater ac-cess to resources, more flexibility and more liberty to compete with other universities in Europe.

JIBS objective

In Sweden, JIBS succeed in becoming one of the leading business schools. JIBS’ objective is to turn into the European leading research and educational centre in entrepreneurship and business renewal. JIBS aim to be recognized as the most entrepreneurial, pioneering and bold business school in 2011.

Interview with Sheridan Tatsuno, 01-05-2008,

Sheridan Presentation

Sheridan Tatsuno is a business strategist and screenwriter from Silicon Valley. Silicon Val-ley is located in Northern California in the United States and is one of the leading high-tech centers because of its large number of engineers and investors. Sheridan Tatsuno started in the 1970s. He was trained in urban planning and started to work with energy impact re-ports (EIS), solar rights policies, housing plans, and international project financing. In the last 25 years, he helped companies, mainly in Silicon Valley to develop breakthrough strate-gies and gave advice in semi conductors, consumer devices, internet, and digital media (”Sheridan”, 2007).

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Sheridan Tatsuno is hired as an associate dean of business creation. Sheridan’s task is to help the Jönköping international business school (JIBS) to generate new revenues, give lec-tures on entrepreneurship, and give advice to students how to startup a new firm (”Sheri-dan”, 2007). In addition, Sheridan Tatsuno is responsible to invite investors to Jönköping and establish connections between Sweden and Silicon Valley. Sheridan Tatsuno is one of the members of the Business Creation team.

‘How you classify JIBS as an entrepreneurial organization?”

To keep the entrepreneurial spirit, JIBS established a business creation team. According to Sheridan: ”The team’s objective is to create new profitable businesses at the school” (personal commu-nication, May 01, 2008). Currently the business creation team is working on projects in Europe, the Middle East, India, China, Africa and the U.S: ”Hence pursuing new opportunities”.

The team is working on the following issues (”Business creation”, 2006):

• Developing a new business process to realize an entrepreneurial state of mind and environment at the business school

• Developing marketing strategy’s with both, nonprofits and profitable firms and governmental agency’s

• Introducing new venture businesses

• Creating more research and education through workshops, consulting conferences, and management training

• Advising regions around the world how to establish an entrepreneurial environ-ment.

For Sheridan Tatsuno, one way to keep a firm entrepreneurial is to look at the Macro-environment. There is a need to look at the macro-environment from JIBS such as com-petitive, technological, political, social, and economy factors: ”Basically one evaluates all the ex-ternal factors that affect the organizational decision making. For instance, government regulations in a new market are out of the control of the university, and this might make it difficult for university to achieve ob-jectives” (personal communication, May 01, 2008).

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Freedom

The greater amount of freedom is remarkable at JIBS basically because JIBS is owned by the Jönköping University Foundation. Sheridan gave an example in order to clarify this point where the high rate of freedom is affected somehow by private ownership: “The Steinbeis University in Germany, this university is also non state owned. It is owned by the Steinbeis Foundation and founded in March 1990” (personal communication, May 01, 2008).

Structure

”How you classify the structure at JIBS?”

According to Sheridan Tatsuno’s previous experience, the current business model is not applicable for several reasons. The current structure at the university is about a head of five separate companies (see figure 8). The Jönköping University Foundation currently guides the separate departments in a way making every school focusing on its core abilities and core competitive advantages. In this case, JIBS focuses on entrepreneurial innovative think-ing and empowering people to gain easier access to knowledge and become more self-conscious of their needs: ”Within this structure, the different companies are competing with each other and refuse to collaborate. The structure is suffering and many problems evolve” (personal communica-tion, May 01, 2008).

Consequently, Sheridan proposes the Silicon business model as an alternative solution and describes how this model would be beneficial for the Jönköping University. In this model the business school (JIBS) would be the centre and the other school around it. Sheridan Tatsuno pointed out that if Jönköping University wants to reach its objective, JIBS should be in the centre, so that its core abilities are applied on each individual school: ”However, the fact that all the separate schools are financially in a better condition than JIBS makes it difficult and chal-lenging to make JIBS in the centre” (personal communication, May 01, 2008).

Figure 8 Jönköping University Structure (Jönköping University, 2006)

Internationalization

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”How you relate internationalization to Entrepreneurship?”

Sheridan Tatsuno insists: “You have to go where the money is”. He describes all kinds of busi-ness opportunities for JIBS. By evaluating the Macro-environment, one recognizes Jönköping as” an entrepreneurial town”. His vision for Jönköping is the new Silicon Valley which is transferred into a leading high-tech center because of its potential. He describes Silicon Valley as unrecognizable in comparison with the current situation.

One strategy of the business creation team is to attract foreign investors. Sheridan Tatsuno recognizes new markets in Asia, Russia and the Middle East ”By being international, JIBS al-ready managed to build up such an extensive network, and it is undeniable that this is one of the strength of the business school. Actually, JIBS next focus is to attract foreign investors” (personal communication, May 01, 2008).

“The majority of international students return to their homeland, for the reason that it is just the easiest way of starting their career”. Their ambitions to study abroad are to improve their language skills and to enhance their variety of degrees. Some students study international because their home country doesn’t offer suitable education. Additionally, a foreign degree com-pared with a local degree is honored more, in particular from certain countries.

Sheridan Tatsuno mentioned that it would be relevant to examine students who returned to their home countries. He believes that the international environment at JIBS is not only developing JIBS as an international business school, it contributes as well to the develop-ment of the students studying at JIBS. They have a wider perspective, and in addition dur-ing their study they start to know people so students expand their network globally. With the information gained from previous international JIBS students. JIBS could make up case stories. Explaining how their experience contributed to their live. With these case stories, JIBS has the opportunity to attract more local and international students.

Recruiting

“Why you are emphasizing on hiring international people?”

Sheridan lists three different reasons for hiring international people. First of all, because of the experience and knowledge earned, it is necessary to make such an international step. This goes in parallel with Sheridan’s new vision for JIBS which focuses on internationaliza-tion. Second, there is a need for a third party which represents a fresh perspective. Third international people come, which connect JIBS to the world and provide the basic business network.

Sheridan clarified the strategy applied at JIBS to hire retired professors, who are still willing to work part-time:” Recently there is a retired former JIBS professor working on establishing networks in Pakistan”. According to Sheridan, the hiring process is changing. Before, the majority was Swedish. Nowadays, people are hired from different cultures and not only limited to Swedish people. People should master the English language: “It is really a problem for some Swedish people here because they still have a problem in English, but now things have to change and we are making sure that the criteria for good English are met to a certain level” (personal communication, May 01, 2008).

Sheridan informed us about a job agency providing JIBS with the 10 best professors. Actu-ally, part of the recruitment is taken by this job agency which facilitates the recruitment process at JIBS. People are recruited in a way to form a mixture between female, male, 40 years and older or younger: “This mixture guarantees a mixture of knowledge and abilities. The team

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at JIBS is formed of 3 to 5 people, it depends on the market. This team is somehow mixed” (personal communication, May 01, 2008).

New technology opportunities

According to Sheridan Tatsuno to continue competitiveness you should recognize new technological opportunities. Technological developments influence the society as a whole, but also the way of education. New opportunities to educate students are for example online teaching people are not bounded any more at locations. Education could be PC based or even Mobile phone based.

Interview with Niclas Adler, 07-05-2008.

Niclas Adler is an associate professor, hired at JIBS as a managing director and Dean since March 1, 2007. From his previous experience, he managed and co-founded research cen-ters, i.e. the Stockholm School of Entrepreneurship and FENIX Centre for Innovations in Management, Chalmers University of Technology, Institute for Management of Innovation and Technology and Ecole des Mines de Paris. In addition, he managed and established re-search programs. Until now, Professor Adler, co-founded fourteen firms, advised many in-ternational companies and is still a board member in seven companies (“Associate profes-sor”, 2008)

The university had an enormous growth since its foundation but the last years the univer-sity is stagnating. Since the University has the objective to be recognized by 2011 as the most entrepreneurial, pioneering and bold business school, they can not effort to stagnate. For this reason they hired Professor Adler, his expertise and the international environment at JIBS is hopefully the right mixture to achieve towards growing.

Recruiting

“Recruiting process at university is very crucial because professors will lead the students, how do you make sure that you recruit the right people?”

The traditional answer is “Try to find the right people…” However, Niclas Adler goes beyond that and insists that people by themselves will evaluate if they fit the job at JIBS or not. Candidates usually have to select between different business schools, and between different profiles. Hence, if JIBS vision and business concept is clear then people will decide whether they fit or not. There comes the need for corporate language where conversation and job clarification and description are well identified.

Visions and strategies should be in practice and that is achieved only via JIBS’ employees: “It is important to look at the counterpart, when hiring new people they should fit into the company’s strategy, in this case JIBS profile: profile in business renewal entrepreneurship and internationalization” (personal communication, May 05, 2008).

“To what extent you see recruiting retired people efficient?”

Niclas clarifies: “After 50 years of work, a lot of energies are left”. For this reason, retired people are a good source from which JIBS can profit in terms of knowledge. They are enough knowledgeable and able to work toward JIBS vision. They about the markets and can rec-ognize new markets.

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Freedom of action: Intrinsic Reward

“What about the rewards are there any extrinsic like money or intrinsic?”

According to Niclas Adler, JIBS rewards staff members in means of freedom of action. Professor Adler believes that people grow with freedom of actions. The responsibility for JIBS is to empower people to have this freedom of action. According to Adler “Create the same vision, as a managing director, it is essential to focus on a joint vision” (personal communication, May 05, 2008). People should get involved. Currently JIBS has 203 staff members and they have to be convinced about the vision and the right strategy in order to empower them, make them take initiatives, and to gain trust. According to Niclas “Bring new business, get per-centage of the total” is the main bonus.

There are several extrinsic motivators. Nadler mentions engaging people in international activities, salary negotiation and prices for JIBS entrepreneurs. However, these are not emphasized as much as the empowerment and freedom of action are emphasized. This is because the nature of JIBS is entrepreneurial in nature and is aware that to keep and pro-mote entrepreneurship it should grant some degrees of freedom and autonomy to JIBS’ employees. This will foster relationships with a greater degree of trust between manage-ment and employees.

Training

“What is the best way to train people and let them perform in an excellent way?”

Niclas points out that putting people in new context is a challenging process and by that way they are provided with a training process indirectly. The main point is “Training by do-ing”. This is the best training process for new hired people in addition to the project-team which provides people with more experience and exposes everybody to others’ knowledge and abilities.

Trust

“To what level Trust is important at JIBS?”

Niclas described how trust is important in case of JIBS. Basically, he talked about trust not internally but worldwide. In other words, he insists that trust is highly requested in order to gain new markets’ help and support. He gave us the Libyan case as an example: “We have to gain Libyan government’s trust in order to give us money and support our business concept in Libya and in order to provide us with the most talented people. If we failed, then we will not succeed in establishing mar-ket in Libya” (personal communication, May 05, 2008).

Structure

“How structure is changing from phase to phase?”

For Niclas, structure is clear but complicated portfolio. JIBS is made up in the following departments: Entrepreneurship, Accounting and Finance, Marketing and Management (EMM), Economics (with statistics and economics geography), Languages, Law, Informat-ics and Political Science (“Organization”, 2007). JIBS structure is explicit and implicit at the same time. When things are done, flow is changing. An example of this change is the Berk-ingham’s project-based task. By that, Sheridan wants to point out that the structure can not be hold the same all the time because many issues are taking place and change is unavoid-able.

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Internationalization

“What are the international acts JIBS is taking?”

According to Niclas Adler, JIBS is focusing now on internationalization, and with this ambition they accomplished already cooperation between the King Saud University and JIBS. The Jönköping International Business School is helping at the King Saud University an International Entrepreneurship Academy, INTENTAC. In addition, JIBS signed contracts with the Birmingham College to establish JIBS MBA programs at Birmingham College (UK). The contract also includes future partnership to offer the same JIBS MBA programs in China and India (“JIBS and Birmingham”, 2006).

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Anonymous 09-05-2008. This time the authors interviewed a PhD Candidate in Business Administration to balance the management perspective with a doctoral perspective of JIBS. The interviewee wished to stay anonymous so the authors did not mention any work ex-perience or background information, as was did with Sheridan and Niclas, this person is re-ferred to as X.

“Why did you join this school?”

The main reason for X to apply at JIBS was the entrepreneurial and international profile and secondly the forward thinking attitude with close interaction with the corporate world in e.g. the Host Company Projects. After one year X suggested an improvement of the Host Company project, this resulted in Project Based Module PBM. PBM module is based on collaboration with the business world. A group of students of JIBS guided by a project manager assigns to solve a possible solution for a real identified problem by a company, they worked as consultants. X believes this to be an opportunity for students to gain valu-able experience, preparing the students for their future career.

“How was the entrepreneurial atmosphere during your studies?”

X studied many entrepreneurial courses. In one, X and other students forming a team start their own company; this was the most rewarding experience. Team-work was a main moti-vator for entrepreneurial behavior and at the same time it was a challenge to balance be-tween running the company and fulfilling the university requirements in gaining a degree: “We were a team, we had to fulfill many different tasks, marketing, financing, logistic, pricing, sourcing and conflicts, we divided the work, and had about 150 customers “(personal communication, May 09, 2008). However, going abroad during the third year, the company was shut down: “The op-portunity to go abroad was valued higher than becoming entrepreneurs by the team.”(personal communi-cation, May 09, 2008).

JIBS as entrepreneurial

“JIBS have been entrepreneurial in the internationalization strategy, especially the exchange program for undergraduate, but also on the faculty staff level.” X sees JIBS as entrepreneurial organization mainly because of internationalization. As a result, the international environment is attract-ing numerous students both exchange students but also international students, since there is no tuition for the education: “I see a danger in placing a tuition for the education of JIBS, since the main reason for the international students to study at JIBS is that it is FREE, introducing a tuition, JIBS will start to compete with education given in English speaking countries such as UK, Australia and US. After only 14 years, I am not sure that JIBS have the strength to compete with these schools.” X sees a danger that tuition could undermine the current advantage of the international profile of JIBS.

JIBS is constrained in its mission to offer high quality education due to the low level of founds by the state: X pointed out “A comparison can be made to cost of educating an upper secon-dary student on a technical program, during one year of 200 000 SEK and the estimation of the state of 50 000 SEK for a Business Administration student on the university level. The reoccurring argument is that there is a higher cost in facilities and technological materials. Educating creative, international, and en-trepreneurial students, there is a need with facilities, were the students can work as in a office environment, doing trade with other students at other universities, simultaneous as teachers have a every day contact chal-lenging the students in developing their argumentative and critical abilities. (personal communication, May 09, 2008).” X sees that more resources in the Business Administration program could increase the quality of the education significantly, reorienting the learning process to stu-

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dent driving the learning process instead of the current “requirements for the degree orien-tation”.

X also mentioned that if there would be more funding from the state then there could be smaller classes and a closer interaction between the students and teachers. Further, having teacher teams that follows a batch would increase the quality in the education. For X, this communication is crucial, because teachers have to stimulate students to become real en-trepreneurs and if people are not all aware of that there will not be a so called entrepreneurial output. X points out that the importance of having a structure, were teachers can be role models and facilitate for the students to become leaders who are different, not only deliver-ing and following up already set plans, instead create a product from an idea or lead a change process in a company.

X insisted that whatever are the negative and malfunctioning issues at JIBS, the nature of the PhD program as researcher at JIBS is entrepreneurial. As a researcher, in applying for research funds, previous experience, ideas and the ability to fulfill research project, are used as arguments in competing with other applicants. For X, the main motivator in the PhD lies in the entrepreneurial nature of doing research: “Despite JIBS having problem in communica-tion and structure as it is growing, the nature of research is entrepreneurial in itself”. In the role as a PhD X experience freedom of action and interests are inline with the entrepreneurial envi-ronment at JIBS. However, in the structure of the PhD program it is clear how much re-sources are connected to each PhD at JIBS and to what activities that these resources can be used. It is also unclear what costs that are covered by the Centers and what cost that are covered by the departments. An suggestion could be that each PhD have a budget and it is guidelines for how these money should be used, e.g. going to conferences, conducting re-search, literature, attending presentations of interesting research findings in Sweden etc.

Communication

“In most of the organizations who are facing growing phase, communication becomes difficult for many rea-sons, how would you classify JIBS?”

According to X, during the change process, JIBS communication is lacking at times. There is written communication in e-mails send out, however there is not sufficient oral commu-nication during the current change process. Information is spread more informally between colleagues, leading to misinterpretations.

Structure and Freedom

X defines the structure as Adhocracy. The feature for this kind of organization structure is that they are antonymous to bureaucracy and encouraging a team structure. X proceeds “Personally I believe that the current structure is unclear, there is an organizational chart, but there is also an informal structure.” Depending on what arena JIBS is working in the business model is dif-ferent. Towards the students JIBS can be classified as service organization, delivering edu-cation. However delivering research, there are many different target groups and a certain business model can not be identified. From a business creation perspective; it is difficult also to define a certain model.

“JIBS is growing and structure is becoming complicated as Niclas mentioned, how you see that?”

“I guess the structure is changing JIBS, it use to be a start- up in the 90’ies, mature in, beginning of the 2000 and now going into another phase, what is unclear…” (personal communication, May 09, 2008). JIBS’s have grown from being a small organization into a large, and are challenge in

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maintaining an informal structure simultaneous as it is growing into a larger organization: “JIBS needs a more structured organization in a way to keep innovativeness”. The main need, accord-ing to X, is to find resources, and right people. JIBS has lack of resources and this delimits the entrepreneurial activities on an individual level. There are no funds to for staff to work on ideas or projects, instead this is centralized to the business creation team, and the staff is not empowered to innovate. There are no clear arenas for involving in the decision process or contributing with ideas on how to create external revenues.

In relation to the role as a PhD, there are many different managerial roles or position that a PhD is accountable to. There is the Dean, the Associate Deans, the Department Head, and the Head of the Research Center, a Human Resource Manager, and also the Main Tutor in the PhD process. “It is sometimes just not clear where to go for certain issues. Sometimes X has the feel-ing that they are even confusion in the different roles” (personal communication, May 09, 2008).

In the role as a PhD, at times it is confusing to grasp the value of the program for the business world. What is the value of what I am doing?” It is also difficult to know what is ex-pected of the PhD, since it is an individual learning and development process. Each person has their own experience and learning process.

“What could be an alternative solution?”

In line with the PBM module, X would like to see students having the opportunity to do internships in companies. In view of the fact that JIBS has the objective to be entrepreneu-rial and bold, they should offer students the opportunity to combine exchange programs with internships. There are students who recognized opportunities when they where abroad to do internships in firms and sometimes students prefer to take this opportunity and not finalizing the degree at JIBS: “If I find a good job contract outside Sweden, then I prefer to stay there and get money and an experience than to come back”. A solution could be to increase the number of students reaching the degree, could be to offer the opportunity to do the bache-lor/master degree abroad in collaboration with a company. Currently JIBS is not support-ing students in writing the thesis or doing an internship abroad. As an organization, JIBS should recognize this international opportunity for the student to establish networks and spread the word of JIBS in the world.

Recruiting

“Did the recruiting process change from time to time?”

X experienced the recruitment process as slightly informal, were person from JIBS in-formed and encourages X to apply for the position. There is no internal marketing of the PhD program target to current students. To increase the attractiveness of the PhD more information should be spread to the student explaining what a PhD position implies, this would increase the match between the applicants and position. X thought through the po-sition before applying: “I took me a while before I had convinced myself that I was an appropriate per-son”.

Applying the process was more formal. The process consisted of filling in an application, proceeding to two more interviews as well as handing in the master thesis. However, X en-sured: “But there was no assessment on writing abilities, which is a central part of the program.”. X pointed out that prior experience in different areas and her previous relation to JIBS, gave a priority to be recruited at JIBS.

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X insists that the recruiting process is informal and that important skills in the PhD pro-gram could be assessed, to find the right person for the position. X is reflective to the au-thors’ question: “What is the old and new JIBS vision?” X was somehow confused and was not able to give a direct answer. For X, there is a demotivator at JIBS which also delimits the innovative spirit: “Due to the change process and also the different roles in the PhD pro-gram I still experience confusion in my role in the organization of JIBS”.

Nevertheless, the contacts concerning human resource matters have been positive.

Rewarding

“Does JIBS rewarding system motivate you and your colleges to innovate and take risks?”

X informed us that there are opportunities to get prices for research papers and research proposals. For instance, if somebody has a good research proposal, it will be rewarded. The academic career is based on number of papers published in leading journals. If the PhD student strives for a career in the business worlds, the incentives are not clear in the current structure of the program.

However, JIBS has more or less eighty PhD candidates, beside the fact that they are en-gaged in an individual learning process they teach 25% of their time. With an outstanding performance in teaching, PhD candidates have the potential to be awarded with a peda-gogical price, by the students. There are two prices annually, one price by JSA and also one price by the Studentkåren in Jönköping.

“What motivate you to innovate and work entrepreneurially?”

According to X, emotional support from supervisor is a main motivator: “I have a very good relation with my main supervisor, this is a main motivator for me”. The roles of the main supervisor are to guide, support and motivate X in the PhD process. Individual achievements and in-spiring people (students) are also motivators. In particular, being a role model and inspiring students to be entrepreneurial and successful leaders in future mainly motivates X: “My main goal in life is to inspire people to be the best they can” (personal communication, May 09, 2008).

“Do you feel stimulated to be entrepreneurial?”

The simple answer was “No, I don’t feel the stimulation to be entrepreneurial”. For the reason that it is difficult to give proposals, with the current structure it is just not clear for X where to go, which idea has the potential to be further developed. X still considers the nature of the research work to be entrepreneurial, but it needs to be fostered at JIBS. X has freedom in deciding what to do research on and also freedom in courses and methods used.

Training

During the interview, it becomes clear that X consider training at JIBS to be informal and a central element of the PhD program. Her doctoral program is divided into 25 % as teach-ing, 68% is research, 5% is administration (participating in organizational activates), 2% is pedagogical development. There is a mentor program for the teaching role of 25%. For the research there is doctoral courses and coaching from the supervisor. In the doctoral proc-ess, there is continuous learning in different ways. For the teaching there are only 2% on pedagogic development and the mentoring is not funded by JIBS, it is more done on an in-formal basis.

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“Are you measured on performance and on your entrepreneurial activities?”

For X, the teaching part performance is evaluated and measured by students’ evaluation and feedbacks: “If I did a poor work in teaching, course responsible and my supervisor will have a talk to me and see if my performance can be improved and the reasons, for my poor performance”.

However, X insisted that there is freedom. For instance, there is culture of being suspicious if somebody leaves early, the culture is based on trust to take responsibility of delivering teaching and assignments in courses in time. In addition, when asked about research part, the performance is evaluated on the quality of writing papers, research proposal and finally the quality of the dissertation will be low if “I have not ask questions, attend lectures, and partici-pate actively in the doctoral program, the responsibility of creating a dissertation with high quality is my own”. However, to measure individual mental development and ability to be creative in the PhD program is difficult.

Anonymous 09-05-2008

This time the authors interviewed a recent PhD graduate in Business Administration. The reason for that was to take a look at JIBS from a different perspective than a management perspective. The authors interviewee wanted to stay anonymous so they did not mention any work experience or background information. Some questions, not all of them, are the same ones used when the authors conducted interview with X.

JIBS as entrepreneurial

“I see JIBS as entrepreneurial organization for many reasons”. Y interprets JIBS as entrepreneurial organization because it focuses on research in non-traditional way and focuses also on teaching in non-traditional way.

On the first hand, the research process includes new staff, new challenge, new research on entrepreneurship, new topics about entrepreneurship from different perspectives and dif-ferent assumptions in the academia.

On the second hand, the teaching process distinguishes JIBS from other Swedish schools whether in the way of teaching or in the way JIBS develops strong links with companies.

In addition, the new “Business Creation” is a bold act and not many business schools are characterized by such a creation. In addition, it is an innovative source for revenue.

Internationalization

“Can we say that the entrepreneurship and internationalization are interrelated?”

For Y, the entrepreneurial JIBS takes advantages of new opportunities and enter new mar-kets. By that way, “Sweden is selling education outside”.

JIBS is different than other Swedish schools. Traditional schools offer courses focusing on Swedish people as the main target; however, at JIBS, 80% of the master students are inter-national. Y ensured that very few Swedish schools, unlike JIBS, tend to invest a lot of money abroad: “Such investigations attempt to generate revenues, take for example the launch of MBA program abroad which increase JIBS revenues” (personal communication, May 19, 2008)

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Y went further and related the growth of JIBS to the internationalization process. The growth is limited sometimes: “Any non-international school after certain time got all students in the current area and hence the growth options are limited and hence innovation and resources are limited.” This is to say that the fact of being international offers growth options. JIBS tends to initiate many projects in different new markets such as Pakistan, Libya, and other new markets: “Even if JIBS fails, at least JIBS is trying new things” (personal communication, May 19, 2008).

Structure

“Entrepreneurial Growing Organization necessitates a special kind of structure, how can you describe the structure at JIBS?”

The structure is flat and bureaucratic at the same time. Bureaucracy at JIBS necessitates more rules and procedures. “But doesn’t such a bureaucracy threaten the entrepreneurial natures of JIBS?”

“Maybe; however, it is up to the rules applied”. In other words, Y clarified that it is true than bu-reaucracy might not match the entrepreneurial nature of the organization; however, the way rules are formulated are the main criteria determining such a fact. She added that, due to the high rate of growth, the structure now is different than before and a recent layer man-ager is added.

Y went further and clarified that the structure though bureaucratic, is classified as a matrix structure: “For me, I call it more Matrix Structure”. This means that JIBS is organized in de-partments. For example, there is a center for family business and other center for another field. Y ensured us that this is an ideal entrepreneurial structure: “Though having many bosses, one for teaching and one for research, it is more creative and more flexible and more entrepreneurial because it is about centers with different people and hence different backgrounds and different knowledge and skills” (personal communication, May 19, 2008)

“How you define your freedom at JIBS?”

“I can do whatever I want as long as I am doing what I am supposed to do”. Y insisted that once she fulfilled her duties (teaching and doing a good thesis), she is free to do anything she wants to do within her field. For example, she can prepare some papers and go to conferences. She defined the boundaries as very broad boundaries.

Communication

“To what level the communication at JIBS affects the level of entrepreneurship especially in the growing phase?”

According to Y, the communication was a bit confusing when she started her PHD pro-gram at JIBS; however, now after 5 years, communication becomes informal: “I don’t need to think twice before I send message to my boss. Moreover, the relationship with Niclas is informal” (per-sonal communication, May 19, 2008).

In addition, Y got all the necessary information and resources needed to work and fulfill her duties: “Things are clear and my job duties are also clear”.

Recruiting

“How can you classify the recruiting process in an entrepreneurial organization?”

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“It is really tough”. According to Y, although she has an assistant at JIBS, this did not facili-tate her way towards PHD program: “I was student here but I was uncertain about this”. She had to submit formal application and wait for a reply. The main reason is that, because of in-ternational students, there had been a lot of competition and this was not easy: “For exam-ple, many candidates had previous experience in teaching”.

In addition, the selection procedure was also tough because the characteristics were very precise and a mixture of skills was required: “Special skills in communication, analytical skills, teaching skills, and any others which make me uncertain about the result”.

According to Y, the selection starts with one interview, and then a screening process took place. In addition, a letter of interest and documentations played a role in selection.

“Once you are recruited, you get a job description, etc..?”

According to Y, the planning process starts when a candidate scans the website to apply for a position: “Every thing is deeply explained on the website”. After candidates are selected, there is a 2 days introduction by HRM management where clear instructions and job description are given.

Rewarding

“Are you rewarded for your entrepreneurial actions?”

According to Y, the rewarding process was not really present at JIBS: “For example, if I worked extra, I was not really rewarded for that”. She mentioned the bonuses as a reward system. However, this is also limited: “If you fulfill your duties like teaching and research, and you take extra assignments then you might be rewarded”.

Y went further more and related the rewarding system to the Swedish culture. The equality in Sweden demotivates a little bit: “For example, if I published an article, I will not be rewarded for being a special person, I am like others” (personal communication, May 19, 2008).

“What about emotional reward or Emotional support?”

According to Y, this is also not really applicable and it is not that important as money: “There are no money pockets”.

Training

“Growing necessitates some changes like new skills and more knowledge, are you trained on a continuous basis?”

According to Y, the training is quite good. The research training is offering good PHD courses: “These courses are helpful for the thesis”. The teaching training is not that good: “The teaching courses are good; However, there should be kind of mentoring courses even before students start teaching” (personal communication, May 19, 2008).

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Summary of Empirical Findings

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5 Analysis

The following section will provide an analysis drawn from the Empirical Findings with respect to, and in comparison to the Theoretical Framework. The analysis is based upon the research questions with a focus on how do companies cope with the problem of entrepreneurial spirit in growing phase?

5.1 Entrepreneurial Growing Companies

All the five interviewees were capable of defining the companies in which they work as en-trepreneurial in terms of innovativeness. However, X, Y, and Mikeal did not refer to the second and third dimension of entrepreneurship: “risk-taking” and “proactive ness”. They were limiting entrepreneurship to innovation. However, when asked about these dimensions, they reemphasize these dimensions and make sure that the company covers all of the dimensions; however, every interviewee de-termines on his own which dimension has the highest rate among others. All the interviewees at JIBS were able to guarantee that the higher the level of innovation at the company, the higher the level of success because of the nature of the work. When asked about the life cycle of the business in which they are involved, they were aware that the growing phase at the company necessitates certain changes whether in vision, structure, or HRM in order to avoid problems resulting from such growth.

Interviewee at Unimerco, ensured that whatever is the change, flexibility should be sus-tained because it characterized the original company.

What was noticeable is though interviewees at JIBS worked within entrepreneurial field, none of them mentioned the allowance of failure at work. Contradictory to that, the inter-viewee from Unimerco emphasized this tolerance of failure where people are welcomed to fail under the condition that they learn from their mistakes.

5.2 Structure

All the interviewees agreed upon the importance of the structure in defining the responsi-bilities and roles of everyone in the company in order to work towards same goals. They all agreed that the structure is not static; it is continuously changed in parallel with the change in vision. However, they do not all agree about the best suitable structure fostering the en-trepreneurial atmosphere at work.

Niclas and Sheridan classified the structure in growing company as complex and compli-cated rather than a clear one. The reason for that is that the structure needs adjustment from time to time in order to fit new strategies and new plans in the growing phase. They did not clarify the relation between shaping current structure and sustaining entrepreneurial spirit. Though change might delimit the simplicity of the structure, entrepreneurial atmos-phere is kept at a high rate.

X and Y classified JIBS structure as a flat one and that it fits the entrepreneurial nature of JIBS. They were aware that the structure affects entrepreneurial spirit to certain extent. They know that structure had changed in order to keep the original entrepreneurial identity of the firms.

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However, one interviewee figures out that structure could be adjusted in a better way to keep the employees as entrepreneurial as possible. Sustaining smallness at JIBS is necessary but did not succeed. Any structure can be helpful as long as it provides people with re-sources to innovate and as long as people are free to act. Though X is not aware about the meaning of the “Innovative banks”, she pointed out that it is the best idea to provide peo-ple with resources in order to innovate.

Y sees the current JIBS structure as an entrepreneurial flat organization. It can be kept en-trepreneurial as long as the “matrix” concept is dominant. The varieties in departments of-fer a different mixture in backgrounds and skills.

However, as a contradiction remark, Y also classified the organization as a bureaucratic or-ganization. Though bureaucratic is known by its rigidity and mechanistic structure, Y measures bureaucracy from different perspective. Bureaucracy is a good structure for grow-ing companies depending on the nature of rules applied. Though flexibility is enhanced by reduction in bureaucracy, Y still classified JIBS as flexible too.

Delayering leads to flatter structure. However, according to Y, the structure is flat and at the same time they add one more layer manager recently. This contradicts the concept of delayering with the concept of flat structure. Flattening facilitates communication flow and process. However, according to X, though the structure is flat, communication faces some problems because of the lack of clearness of what should be communicated and what should not be communicated. This lack of clarity is also due to the fact that vision is not made clear for everyone. During the years the university went through changes so did their objective or vision. There exists some unclearness concerning vision.

Mikeal relates the flat structure at Unimerco to the innovative atmosphere at the company followed by an open communication. It facilitates communication and the flow of new ideas. Bureaucratic structure is not welcomed at all at this company. Obviously, Mikeal is aware of the traditional drawbacks of bureaucratic structure. The fact that anybody can come up with any new idea and discuss it does not fit the bureaucratic structure where formal formatted proposals should be hand in. In this company, communication can be initiated at any point and communication is face-to-face.

Sheridan, X, and Mikeal all agree upon the level of flexibility at the companies enhanced by the integration across teams and the reduction in segmentalism. The structure in both companies is also classified as team-based. For these interviewees, this structure facilitates the exchange of ideas and information between employees. By doing that, knowledge is also shared and new skills are acquired, hence entrepreneurship is fostered.

While the speed in feedback depends on the layers and paths through which a process has to pass, X and Y relate the speed of feedback to the nature of the boss, whether he is quick in response or not. They are directly related to two or three bosses. Not the structure but the nature of the boss and manager affects the speed in feedback and in decision-making as well.

This, though X mentioned that JIBS tried to hold the smallness in its structure, might en-sure that the structure is hold small in some way. A department operates as individual companies with high level of operational freedom and responsibility. In that way, employee will get immediate feedback on work performance from his/her manager. In such a struc-ture, it is easy to communicate. However, according to X’s experience, there is a lack in “communication by doing” at JIBS. Managers allow people to innovate but, at the same time, didn’t not provide them with resources and tools to innovate. The main reason is be-

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cause JIBS’s budget is too limited and hence the focus is on increasing the profit rather than reemphasizing the entrepreneurship at the company.

5.3 HRM practices

5.3.1 Formal HRM practice

According to interviewees, HRM was formal to a certain level depending on a particular HRM practice. In other words, some of the HRM practices were applied formally and some were applied informally.

However, all of them agreed upon the need to have a formal HRM in all form of practices because of the growing phase of the business and the complex process evolving with growth. They all agreed that the managers should be aware about the importance of HRM to the firm’s performance.

For X, the recruiting process was somehow formal and informal, it starts informally and continued formally. Contradicting to X, Y pictures the recruiting process as a real formal process. For Mikeal, the recruiting is more or less informal based on social network and words of mouth.

5.3.2 Culture of Trust

All interviewees agreed upon the culture of trust at the companies. In such environment, they were all able to contribute. However, every one understands trust and its importance from different perspective.

X and Y relate trust to some boundaries. The more they are trusted, the broader the boundaries. They are trusted by their bosses, and they are free to act as long as they are ful-filling their duties. Trust had empowered them.

For Mikeal, the trust is by default a characteristic of the current structure at Unimerco. He relates the trust to the flat structure and the very open communication. Without trust, such a structure will not function properly.

All of the interviewees ensured that the trust was helpful during the whole life cycle of the business where there had been several changes. The trust was a source of empowerment, teamwork, and conflict management. For X, the trust is present not only between her and the bosses but even between her colleagues where she had sometimes to work within a team.

For Mikeal, the trust had also been a main source solving the stress problem at Unimerco. Some of the employees had to work overtime because their managers trust them and they trust their managers. Based on that, they welcomed the idea of taking extra responsibilities without complaining and without getting paid.

For Sheridan and Mikeal, JIBS is passing through economic and financial pressure. Trust-ing the abilities of the others, a recovery plan is taking place nowadays. Gaining the trust of the others facilitate the introduction of new models and limits the resistance of change by some of the people.

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However, just X and Y, and Mikeal relate the HRM intrinsic reward system to trust. The intrinsic rewards are related to the fact that the managers trust them. The trust by itself is an intrinsic reward because it is a source of empowerment and motivation. Trusting people and their abilities and competencies satisfy people.

5.3.3 Staffing and Planning

X, Y, Sheridan, and Niclas ensured that HRM managers, while recruiting new people, should make sure that these people are aware of the vision and the nature of the work. New recruits should have the best competences which match the vision and should share a clear path.

Sheridan and Niclas insisted on the concept of self-selection into entrepreneurial positions. Applicants should evaluate whether the entrepreneurial requirements match their individual needs or not. X and Y also insisted that some candidates can not tolerate the entrepreneu-rial environment which necessitates special efforts and special orientation. The nature of JIBS as entrepreneurial company is subject to ambiguity and flexibility. Hence, candidates should be should feel comfortable with change, and growth.

For X, the first step of recruiting was informal, asking her informally about the possibility to apply. For Y, the first step was posting job vacancies on internet with a proper job de-scription and a clear definition of what is expected from an ideal candidate. Then both of them had to pass the interview test where the entrepreneurial vision of JIBS is made clear for them. The next step was a 2 days introduction and orientation session.

X and Y mentioned some of the planning practices like providing courses and workshops which help them in developing skills. In addition, more than one manager was responsible for every one of them who were involved in the career planning needs of everyone and working with everyone to realize those needs.

For Sheridan, he added one more step in recruiting: Selecting the candidates who can fulfill what was missing in previous candidates like the best candidates in English. Recruiting process was also based on learning from previous candidates’ failures.

For Mikeal, staffing practice was more or less informal and the reason behind that is the nature of employee ownership. Though new recruits should fit the future organization and they should secure for future growth, there is no formal selection practices like a list of skills and qualifications desired and a job description.

From all interviewees’ perspective, HRM managers help the individual form realistic career expectations and plans taking into consideration the opportunities available in the entre-preneurial organization and motivating them in achieving the organization’s goals. X, Y, and Mikeal emphasize how the goals of the organization were clearly defined for them and how the information about their operations flows. All of them ensured that managers have a clear vision and were able to clarify it to them.

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5.3.4 Rewarding

5.3.4.1 Intrinsic

X, Y, and Mikeal ensured that the sense of achievement and the emotional support from managers were the main intrinsic motivation. The words of motivation played a crucial role.

However, both X and Y showed some contradiction. Although her manager values her work, X’s impression was that whatever she is doing, this is not very valued by others. This lack of valuing the job of others demotivates and delimits the possibility to work within en-trepreneurial spirit especially within the research field.

The same with Y, publishing new article will not make her special among her colleagues. This fact becomes a demotivating factor to a certain extent. The lack of recognition where Y and others must be perceived as clear “achievers” and “entrepreneurs” is lacking.

Since the reward system should be consistent with the goals and the strategies of an entre-preneurial firm and with what is needed for employees, whether in the research field or teaching field, more intrinsic rewards should be applied.

It was clear that all interviewees are welcomed to innovate and risk because the entrepre-neurial organizations remove any constraints on them. Mikeal, insisted on the acceptance of failure at Unimerco where people can make mistakes without losing their jobs as long as they learn from these mistakes. Failure is accepted at any stage even in the growing phase.

However, the other interviewees at JIBS except for Sheridan, though involved in entrepre-neurial atmosphere, did not have tendency to reflect such a concept. For Sheridan, failure is an opportunity to learn new things. Being aware that failure is not threatening his job, he was able to represent new business ideas and new business models knowing that these might not work properly.

A second form of intrinsic motivation dominates in both companies was empowerment. All interviewees were engaged in different activities at different levels and they feel compe-tent on their jobs. Mikeal, Sheridan, and Niclas, feels as part of the organization and not as second class employees (Glassop & Waddell, 2005). In other words, though they are not owners, they behave as if they own the companies and they are trying to do their best. Be-cause of this empowerment, they react quickly to changes. For Mikeal, during the real growing phase where there has been a real increase in workload, he was able to manage and adapt to the change. Unimerco relied on him and his colleagues all the time, not only in time of crisis.

For Sheridan, managers give him as much information, resources, and support as they can to solve a specific problem while enjoying his job. However for X, this was a bit different. Though she was empowered to a certain level, she did not feel as a part of the organization. She was not adhered to JIBS and its growth. Though managers encourage her to innovate, they did not provide her with information and resources so that she is always kept empow-ered and hence pushed for new ideas and involvement. Communication by doing was lack-ing in case of X.

For Mikeal, the main empowerment source was the direct contact with customers. Uni-merco were really customer focused and have direct contacts with customers. From cus-tomers’ needs, he get inspired and come up with new ideas. The fact that the managers let-ting him directly contact customers empowered him in a way that he feels that he is part of

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the organization and he has main responsibilities towards the organization. By that way of customer-centric, Mikeal becomes more loyal to customers and hence retaining the social network with customers. Mikeal and others are kept close to the customers. In that strate-gic way, Mikeal had grown, developed new skills, and was able to respond to change in cus-tomer requirements.

5.3.4.2 Extrinsic

For Mikeal, the main reward after he has demonstrated productivity is the ESOP concept. In addition, unlike what X and Y figured out, employees at Unimerco are offered profit sharing related to performance, and good payment for working overtime. At Unimerco, ex-trinsic rewarding system is formal. According to Mikeal, bonuses are offered if any entre-preneurial initiative, even if less than successful in terms of the direct benefits (financial and non-financial results), is judged as worthwhile if the learning from this experience allowed the organization to launch a total new idea or product. In addition to indirect benefits, di-rect benefits also lead to bonuses like utilization of productive capacity and technological improvements like the “vacuum cleaner”. ESOPs are most commonly used at Unimerco to motivate and reward employees.

According to Mikeal and not to the others, Venture-Capital at Unimerco places a budget for the team’s use within the entrepreneurial organization. People can use this amount for new innovative projects without permission of the managers especially when these projects are serving the customers’ needs. Because their headquarters is in Denmark and hence the managers are located there, this will save time in the growing phase where managers are in-volved in other tasks.

However, all interviewees at JIBS ensured that the extrinsic rewarding system at JIBS is in-formal. People were getting bonuses based on indirect benefits like attracting money in re-search grants. Other than bonuses, nothing was applied at JIBS. However, Sheridan pointed out that there is a discussion about more extrinsic rewards like the ESOP but still not applicable. The reason for that discussion is that Sheridan and the other members of the business creation realize the need for rewards in the organization especially during this growing phase.

5.3.5 Training and Development

The interviewees agree that because of the entrepreneurial nature of the business, changes can occur at any time and thus a change in the job demands can also occur. For this reason, there is a need for continuous training. For Mikeal, the advance in technology involves sales persons in the process of learning of new sales techniques. Just Mikeal between the interviewees mentioned a regular internal training.

For X and Y, the change in the vision of JIBS necessitates new training skills such as more focus on researches to work on achieving the new vision of “bold and entrepreneurial”.

For Sheridan and Niclas, the training activities should be focused on individualized knowl-edge requirements because according to them, the employees at JIBS are the ones develop-ing the next generation and their knowledge should be enhanced and improved. The em-ployees must feel comfortable with ambiguity and change. Moreover, once trained, they will feel more empowered and hence more able to take risks and responsibilities. The same with Niclas, where employees are trained on a personal basis and at the same time they take their own responsibilities in developing and enhancing skills.

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X, Y, and Mikeal mentioned the orientation program where all new candidates get used to the familiarity of the business. Though they did not call it as continuous orientation pro-gram, they ensured that the training and development of staff members last even at later stages and especially during growing phase. Sheridan emphasized need for continuous training for employees because with time, new abilities and competencies should be learned to enhance innovativeness and growth.

5.4 Internationalization

Each one of the interviewees relates the entrepreneurial growth of the company to the in-ternationalization from his own perspective. According to Mikeal, though he is not aware of the relation between internationalization and sustaining the entrepreneurship, the inter-nationalization is the best training practice. The advantages of exchanging employees be-tween subsidiaries are illustrated by gaining new knowledge and new skills which in turn in-crease the organization’s competencies. The entry into new country markets is a process of innovation by itself at Unimerco.

For Sheridan, internationalization is within the entrepreneurial nature of JIBS. It is by de-fault a characteristic of JIBS. Profiting from the international business opportunities and recognizing the new markets at JIBS is an entrepreneurial process by itself.

For X, internationalization is an outcome of entrepreneurship. JIBS is entrepreneurial be-cause of internationalization which provides some kind of resources to innovate and create.

For Y, JIBS is entrepreneurial because of the internationalization which is combination of innovative, proactive and risk-seeking behavior. Internationalization is necessary for the growth phase of JIBS. Because of the internationalization, growth is not limited and it of-fers a lot of growth operations which enhance the entrepreneurship by entering new mar-kets, providing different ways of teaching, and bringing up new challenges.

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6 Conclusion and discussion

This paragraph attempts to answer the research question and purpose of this thesis. The research question and purpose is clearly defined as how the organizational structure and human resource management prac-tices influences the entrepreneurial spirit of a firm. The aothors frame of references consists of theories which they tried to relate to findings which are based on the real live business world. Before reading the authors conclusion it is important to know that their findings are based upon firms operating in different industries

6.1 Organizational structure

The structure in growing firms needs adjustment from time to time in order to fit new strategies and new plans in the growing phase. The structure might become complex and complicated and people even get confused about how to communicate and how to define the roles of everybody. Obviously, this is what causes problems in growing companies where there is a difficulty in handling and managing a huge volume of work. For this rea-son, the authors theoretical framework makes clear how to manage these problems by re-structuring the organization efficiently. Through the stage of growing, firms tend to adapt to a structure based on bureaucracy. However, innovative firms need to find the right balance between openness of communi-cation, flexibility and the degree of bureaucratization. An ideal structure is a structure free of boundaries, strict rules and routinatization. A flat and de-layered structure, as one suggestion, followed by open communication facili-tates the flow of new ideas which are connected to the innovative atmosphere of the firm. Another option could be dividing the organization into independent units where every unit has a full responsibility and freedom. Trust also tends to be an influential component of the organizational structure. It is a source of empowerment, teamwork, and conflict management as well as it reduces prob-lems and stress. A high level of trust between management and employees will affect the overall performance of the firm. Any implemented structure should provide staff members with resources to innovate. In addition, the structure should enhance the communication in the organization. To boost innovativeness, the organizational vision has to be clearly defined and shared by all the staff members. In the author’s frame of reference, they mention firms based on innovation should be aware of tolerance of failure. None of the interviewees of their examined educational insti-tution which was innovative and entrepreneurial, mention the allowance of failure. How-ever, the other interviewee emphasizes the importance of learning from mistakes. Failure is the best opportunity to learn from.

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6.2 HRM practices

As a firm goes from a start-up phase to a growth phase, a certain adjustment in its HRM practices is needed in order to be able to pursue its objectives. HRM practices can not function without a proper culture of trust which promotes creativity and conflict manage-ment.

Whenever an organization wants to recruit a new candidate, there should be a clear evalua-tion of the candidate’s competences and skills. However, on the long run, this is not suc-cessful because candidate himself should evaluate the organization’s goals and vision and analyze whether the organization’s requirements match his individual needs or not.

The recruiting process is also applied as a learning process where recruiters should learn from previous candidates’ failures what is not desirable in future candidates. Once organ-izational objectives are well clarified for employees, human resource managers have to sup-port employees to form realistic career expectations and plans.

New recruits are in need of an orientation program during which they get used to the fa-miliarity of the business. In addition they need to know that the training and development of staff members last even at later stages and especially during growing phase.

Any growth is followed by change. Consequently, the firms need to emphasize on continu-ous training in order to let employees gain new abilities and competencies to adapt for such a change. The employees must feel comfortable with ambiguity and change. Moreover, once trained, they will feel more empowered and more able to take risks and responsibili-ties.

Intrinsic rewarding tends to make people feel competent on their jobs. Furthermore, hand-ing out responsibilities to employees empower people in a way that they feel part of the or-ganization and make them feel fully responsible for the organization’s success. On the other hand, though intrinsic reward is necessary, it can not work without a certain level of extrinsic rewarding. Extrinsic rewarding, varying from employee ownership to stock ownership and other forms also encourage people and motivate them.

In addition, a freedom of action contributes to people performance. Many options can provide employees with freedom. For instance, employees could use a fixed budget for new innovative risky projects without even getting permission from people at higher posi-tions.

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7 Recommendations

With regards to what has been excluded from the author’s findings, the family owned com-pany could have good reasons for not fostering entrepreneurship. Thus, a similar investiga-tion focusing on family-owned-business could provide information about the extent to which entrepreneurship is applied and fostered and the reason behind that.

Another interesting approach would be to focus on how the level of entrepreneurship dif-fers in international companies than non-international companies, i.e. comparison between international and non-international companies. Such a study would help to find differences in the degree of entrepreneurship between various kinds of companies and to further un-derstand the importance of internationalization in fostering entrepreneurship.

Also culture at entrepreneurial organization would be interesting to dig deeper into, rather than just limiting it to trust, in order to find out which ideal culture including values and norms fits an innovative atmosphere. This would give implications on how culture affects the entrepreneurial behavior of employees and to what extent entrepreneurs need a special culture where innovation is enhanced rather than suffocated.

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Appendices

I- Assessing Unimerco Flexibility

Table 4 Assessing Flexibility (Levey, 2002)

The flexibility-challenged will answer yes to these questions

The flexibility champion will answer yes to these questions

Do you expect employees to follow the specifics of your way of working or to adhere to a single, uniform code?....

Sometimes we need to specify work instructions but mostly give space to reach targets. No uniform code, but well dressed.

Do you encourage employees to develop their own work schedules based on their needs and productivity?

Yes.

Does flexibility equal poor communication, resulting in work spinning out of control and missed priorities?

Yes, it could be a risk but also a opportunity.

Will employees be more likely to stay on and complete tasks if they have more freedom in how they work?

Yes.

Do you think some of your employees would take advan-tage of flexibility and not work as hard?

No, not likely. It’s a matter of trust.

Are your employees professional and competent enough to do their jobs without much direct supervision?

Yes, definitely.

Does flexibility have the potential to compromise quick action if face-to-face meetings on little notice are impos-sible?

Yes, maybe, but I do not quite understand this question.

Are you and your staff able to leverage technology (con-ference calls, e-mail, instant messaging, etc.) to commu-nicate effectively and quickly?.

Yes.

Do you sometimes or often note the early arrival or late departure of employees?

Yes sometimes. More often when we have a lot of incom-ing work.

Can you resist the urge to use long hours in performance evaluations and focus solely on results?

Yes sometimes, but the fact that we have report of sales every day makes us focus more on results. Sometimes we need to use more time on performance evaluations to create a foundation in long time relation with certain cus-tomers.

II- Questionaire

Entrepreneurial Organization

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a. In what way it is entrepreneurial? (In terms of innovativeness, proactive ness, risk-takers….)

b. To what extent is X entrepreneurial? (Entrepreneurial means innovative, risk taker, pro-active…)

Growing Organization

a. Under which stage is X classified?

b. If Growing, then how you define a company as growing company?

c. How you determine that it is a growing company?

Problem

a. The problem is when the company is growing the original entrepreneurial spirit is threat-ened, so how you understand this phenomenon?

Structure

a. What is the current structure at X? Bureaucratic, Organic, …?

b. Does it fit the entrepreneurial nature?

c. What are the necessary characteristics of the structure in growing entrepreneurial com-pany?

d. What about Autonomy and freedom? How are these applied at X?

e. To what extent are these characteristics important for entrepreneurial company?

f. To what extent are these characteristics necessary in growing company?

g. To what extent do these characteristics guarantee entrepreneurial spirit in growing com-panies?

h. What is the ideal solution (in terms of structure) to cope with the problem mentioned before?

i. How you define the level of Integration at X?

Communication

a. How can you define the communication in X?

b. Anyone can open a communication? Feedback? Bottom up?

c. Factors: .Sharing information: can u tell us more about how info is shared?

. Clear communication: Is communication Clear? Is it related to Vision? Is

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vision changing form time to time?

HRM Practices

a.To what extent HRM is formal at X?

b.Why do you think HRM is necessary in growing entrepreneurial companies?

c.How, in your opinion, does HRM solve the problem?

d. Are the managers aware of the importance of HRM?

e. What do you think the necessary characteristics of employee at X?

Culture

a.How can you define the culture at X?

b. What about Trust? What is the importance of trust?

Staffing

a. What about X’s staffing? How to recruit people?

b. When company grows, employees face ambiguity and change, how staffing is important to guarantee employees who can face these?

c. To what level you see that it is important to match between entrepreneurial task at X and individual’s needs? Between entrepreneurial tasks and X’s vision?

Planning

a. How you define planning at X In terms of formal and written job descriptions, are they clear?

b. To what extent are they formal and clear?

Intrinsic reward

a. Are employees allowed to make failure?

b. To what extent people are empowered at X? Why they are empowered?

Training and Development

. Is there any Orientation Program?

. Is there any continuous training?

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. Growing necessitates new skills, how X’s HRM does manage that?

III- Flexibility Test

Table 5 Flexibility Measurement (Levey, 2002)

The flexibility-challenged will answer yes to these questions The flexibility champion will answer yes to these questions

Do you expect employees to follow the specifics of your way of working or to adhere to a single, uniform code?

………………………………

Do you encourage employees to develop their own work sched-ules based on their needs and productivity?

……………………………

Does flexibility equal poor communication, resulting in work spin-ning out of control and missed priorities?

………………………..

Will employees be more likely to stay on and complete tasks if they have more freedom in how they work?

…………………………………..

Do you think some of your employees would take advantage of flexibility and not work as hard?

…………………………….

Are your employees professional and competent enough to do their jobs without much direct supervision?

……………………………….

Does flexibility have the potential to compromise quick action if face-to-face meetings on little notice are impossible?

………………………….

Are you and your staff able to leverage technology (conference calls, e-mail, instant messaging, etc.) to communicate effectively and quickly?

……………………

Do you sometimes or often note the early arrival or late departure of employees?

Can you resist the urge to use long hours in performance evalua-tions and focus solely on results?