Academic journal article Entrepreneurship: Theory and Practice

Entrepreneurship in Established Organizations: The Case of the Public Sector

Academic journal article Entrepreneurship: Theory and Practice

Entrepreneurship in Established Organizations: The Case of the Public Sector

Article excerpt

The potential role of entrepreneurship in public sector organizations is explored. Entrepreneurship is conceptualized as a manageable process with underlying dimensions of innovativeness, risk-taking, and proactiveness. Unique characteristics of the public sector environment are examined, and a number of core principles and concepts from entrepreneurship are applied. Arguments against the application of these concepts are addressed. Results are reported of a survey of 152 public sector managers in South Africa. The findings suggest that these managers find entrepreneurship to be a salient concept for their organizations, and that the key obstacles to its implementation are very similar to those reported by corporate managers. Implications are drawn for theory and practice, and a number of suggestions are made for further research.

Public sector organizations are often conceptualized as monopolistic entities facing captive demand, enjoying guaranteed sources and levels of financing, and being relatively immune from the influences of voters, stakeholders, and political institutions such as legislatures and courts (Etzioni-Halevey, 1983; Litan & Nordhaus, 1983; Stein, 1995; Weidenbaum, 1992). Not only are most of the components of this stereotype inaccurate, but the contemporary public sector organization faces unprecedented demands from a society that grows more complex and interdependent by the day (Lewis, 1980; Mitchell & Scott, 1987; Skoldberg, 1994).

The external environment of public sector organizations can be characterized as highly turbulent, which implies an increasingly dynamic, hostile, and complex set of environmental conditions (Nutt & Backoff, 1993; Miller & Friesen, 1983; Osborne & Gaebler, 1992). One has only to consider the typical public medical facility. There are more beds than patients, competition is arising from entirely new sources, technological change is continuous, medical liability pressures are intense, costs are rising faster than the general rate of inflation, those who cannot pay must be served, and skilled labor is in short supply.

Organizational theory has long held that external change leads to internal adjustments in structure, strategy, and operational methods (Emery & Trist, 1965; Thompson, 1965; Lawrence & Lorsch, 1967). Thus, contingency theorists posit that the relatively stable and predictable business environments of the 1950s and 1960s led to the development in the private sector of many large, mechanistic organizations. Alternatively, they suggest that smaller, more organic structures appear to be more appropriate when faced with high levels of environmental change (Ansoff, 1979; Burgelman, 1983; Burns & Stalker, 1961; Miller, 1983).

A related stream of research suggests that entrepreneurship represents an effective strategic response to environmental turbulence (Covin & Slevin, 1989; Miller & Friesen, 1983; Morris & Sexton, 1996). Discontinuities in the environment threaten existing modes of operation, while also creating numerous opportunities for innovative behavior. When conceptualized at the organizational level, there is a growing body of evidence to suggest that, under conditions of turbulence, a company's entrepreneurial orientation is positively associated with numerous measures of corporate performance (Davis, Morris, & Allen, 1991; Morris & Sexton, 1996; Zahra, 1986).

More recently, considerable attention has been devoted to the need for alternative frameworks to guide the management of public sector organizations. Various observers have emphasized a need to "reinvent" and "streamline" government, and to introduce to the public sector such market-related mechanisms as competition, market segmentation, user fees, and a customer focus (Moody's, 1994; Osborne & Gaebler, 1992; Peters, 1987). Others have argued for the development of creative, risk-taking cultures inside of public organizations, and, in this context, the term public sector entrepreneurship has been introduced (Bellone & Goerl, 1992; Doig & Hargrove, 1987; Lewis, 1980; Ramamurti, 1986). …

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