The Impact of the Entrepreneur's Personality on the Strategy-Formation and Planning Process in SMEs

By McCarthy, Breda | Irish Journal of Management, January 1, 2003 | Go to article overview

The Impact of the Entrepreneur's Personality on the Strategy-Formation and Planning Process in SMEs


McCarthy, Breda, Irish Journal of Management


ABSTRACT

The objective of this study was to explore the impact of the entrepreneur's character on the development of strategy in small- to medium-sized firms. While researchers have looked at entrepreneurial traits in order to explain business start-up and growth, little attention has been paid to the possible interactions between entrepreneurial types and the strategic choices they make. This study identified two main types of entrepreneurs, the pragmatist and the charismatic entrepreneur, which resulted in different patterns of strategic behaviour. The research suggested that different types of entrepreneurs faced different problems, and that their responses to crises varied. The study suggests that the charismatic entrepreneurs were forced to review their propensity to take risk, share power and involve more people in the decision-making process and this resulted in a more rational, planned approach to the strategy-making process. Financial planning became a priority for both types of entrepreneur.

THE CONCEPT OF STRATEGY

Numerous perspectives on strategy and numerous definitions of the term 'strategy' exist (Mair, 1999). The term 'strategy' refers to the direction and scope of an organisation over the long term and strategic decisions are generally broad, encompassing details about product range, market scope and competitive approach (Wickham, 1998). According to Porter (1996) the essence of strategy is choosing to perform activities differently from rivals, which requires creativity and insight. In the planning school of thought (Chandler, 1902; Ansoff, 1965), the term 'strategy' is usually defined as a formal plan, and planners perform a detailed analysis of the company, its product-market and its environment (Lambkin, 1997). In the process school of thought, writers (Mintzberg and Waters, 1985; Pettigrew, 1992) focus on the processes by which actions are decided and implemented. Writers in the process (or emergent) school of thought have highlighted the emergent nature of strategic actions due to cognitive limitations, learning (Quinn, 1980), cultural biases (Peters and Waterman, 1982) and organisational politics (Pfeffier, 1981).These writers have outlined the difficulties involved in planning a strategy and then trying to implement it as planned. Researchers (Mintzberg and Waters, 1985; Hayashi, 2001) have proposed that the strategy formation process was not simply an exercise in rationality but reflected experimentation, exploration, intuition, instinct and learning. Hamel (1996) highlighted that strategic plans were often inflexible and led planners to overcommit themselves to specific future predictions. Today, researchers are attempting to transcend this dichotomy between the planning and process views of strategy. While the first approach overstates the value of deliberate thinking and rational planning, the second approach underemphasises the value of rational planning within most companies (Ginsberg, 1994).

RESEARCH OBJECTIVES AND RATIONALE FOR STUDY

The main objective of this study was to explore the impact of the entrepreneur's character on the development of strategy in small- to medium-sized firms. The small business literature on strategy falls into two main categories: the first focuses on the traits of effective entrepreneurs and the second relates to planning. Entrepreneurial discourse (as set out by Gasse, 1977; Kets de Vries, 1977; Brockhaus, 1982; Mintzberg and Waters, 1985; Timmons, 1999) has emphasised the critical role played by the entrepreneur in the management of the enterprise. Researchers have focused on the traits associated with effective entrepreneurs (Carland et al., 1996) and a related stream of research seeks to develop a typology of business leaders. For instance, Kets de Vries and Miller (1984) suggest that the neurotic character type finds it difficult to cede control of the venture. The entrepreneur tends to have a strong desire for autonomy and control (Timmons, 1999) and these characteristics, if unchecked, can hamper growth of the venture. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

The Impact of the Entrepreneur's Personality on the Strategy-Formation and Planning Process in SMEs
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.