Chapter 10
Building & Developing
an Entrepreneurial
Culture
Copyright (c) 2007 by Donald F. Kuratko All rights reserved.
Introduction
A simple way to think about culture
is that it captures the personality of
the company and what it stands for.
Entrepreneurship is not only
affected by the culture in a
company, it is also a core element
of the culture.
The Nature of Culture in Organizations
Culture can be defined as “an organization’s basic
beliefs and assumptions about what the
company is about, how its members should
behave, and how it defines itself in relation to
its external environment”
 A culture reflects the unique history of a group
of people interacting over time, but it also is
subject to continuous change as people come
and go, and is based on developments in the
external environment.
The Nature of Culture in Organizations
 Finally, cultures are fuzzy. They include
elements that may seem contradictory or
paradoxical.
 Cultures tend to differ along some key
dimensions:
 Positive vs. negative
 Strong or weak
 Homogeneous or heterogeneous
 Consistent or inconsistent
The Pieces and Parts of Culture
Six elements
 Values
 Rules of conduct
 Vocabulary
 Methodology
 Rituals
 Myths and stories
The Pieces and Parts of Culture
Cultures consist of substance and forms.
Substance refers to shared systems of
values, beliefs, and norms.
Forms are the concrete ways in which
the substance is manifested in the
organization.
• Artifacts
and
Creations
Artifacts and
Visible but often
-Technology
not decipherable
Creations
-Art
• -Visible
Values and audible behavior
patternsin the physical
-Testable
Greater level of
environment
Values
awareness
-Testable only by social
consensus
• Basic
Assumptions
-Relationship to environment
-Nature of reality, time, space
Taken for granted,
Basic
-Nature of human nature
invisible,
-Nature of human activity
Assumptions
preconscious
- Nature of human relationships
The Pieces and Parts of Culture
“Organizational cultures can enhance
and inspire us. They can remove us
from the boxes and traps in which we
exist, making our lives richer and
giving meaning to our daily tasks.
[This] is the goal of cultural
management.”
Core Ideology and the Envisioned Future
Core ideology includes core values, or what the
company stands for, as well as core purpose, or
the reason the company exists.
 Sony Corp.’s core values include being a
pioneer, doing the impossible, and
encouraging individual ability and creativity.
 At Disney, creativity, dreams, and imagination
form some of the core values.
Core Ideology and the Envisioned Future
Envisioned future – about setting
clear and compelling goals that the
company commits to achieve over
the next 10 or 20 years.
Goals motivate people and evoke
passion and conviction.
Generic Culture Types
Four prototypes:
 The Process Culture
 The Tough-Guy/Macho Culture
 The Work Hard/Play Hard
Culture
 The Bet-the-Company Culture
Organizational Culture Examples
Ouchi, 1981
 Types A, J, and Z
Deal and Kennedy, 2000
 Process
 Tough-guy/macho
 Work hard/play hard
 Bet the company
Organizational Culture Examples
Mitroff and Kilmann, 1975
 Sensation-thinking
 Intuition-feeling
 Intuition-thinking
 Sensation-feeling
Sethia and Von Glinow, 1985
 Apathetic
 Exacting
 Caring
 Integrative
Organizational Culture Examples
Kets DeVries and Miller, 1984
 Paranoid
 Avoidant
 Charismatic
 Bureaucratic
 Schizoid
Elements of an Entrepreneurial Culture
 People and empowerment focused
 Value creation through innovation and change
 Attention to the basics
 Hands-on management
 Doing the right thing
 Freedom to grow and to fail
 Commitment and personal responsibility
 Emphasis on the future and a sense of urgency
Elements of an Entrepreneurial Culture
Healthy discontent – describes
an emphasis on constant
improvement
Core Cultural Values
(fig. 10.2)PAGE 276
see following diagrams…
Multipurpose
Unipurpose
Comfort/
Satisfaction
Excellence
Unity of
Interest
Class interest
Personal
purpose
Organizational
purpose
Command
decision-making
Consensus
decision-making
Empirical
decision-making
Expediency
Performancebased rewards
Career
Disposable
labor
Qualitative
decision-making
Integrity
Power/tenurebased rewards
Jobs
Intimate
concerns
Entrepreneurial Leadership Through
Culture: An Example
Cintas Corporation is the world’s leading
provider of corporate identity uniforms,
with annual sales exceeding $1.9 billion
 The company has grown for 31 consecutive
years, with sales increasing at a compound
rate of 25% and profits at a rate of 33%
 An investment of $1,000 in Cintas stock when
it went public in 1983 would be worth over
$50,000 today.
Exploring a Key Value: Individualism
Individualism – a self-orientation, an
emphasis on self-sufficiency and
control, the pursuit of individual goals
that may or may not be consistent with
those of the employee’s colleagues.
Collective orientation – the
subordination of personal interests to
the goals of the larger work group.
Merits of Individualism vs. Collectivism
(Table 10.3)
Positive Aspects
Negative Aspects
Exploring a Key Value: Individualism
The ability to achieve sustained
entrepreneurship in a company is
dependent upon a balance between the
need for individual initiative and the
spirit of cooperation and group
ownership of innovation.
Entrepreneurial
Intensity
High
Low
Strong individual
orientation
Strong group or
collective org.
Ideal balance
A Different View of Failure
Managers struggle with the concept of failure
 There is a tendency within companies to
develop “zero error cultures” as companies
strive to meet ever-higher performance
standards in a hypercompetitive marketplace
 This results in innovation incompetence,
where bold initiatives are avoided and
initiatives are pursued only when there is an
apparent guarantee of outcomes
A Different View of Failure
The culture in the entrepreneurial firm
celebrates failure.
 Fear of failure is a certain recipe for
mediocrity.
 Failure is perceived – employees attach certain
costs to it
 Is it job loss, a smaller pay raise, a missed
promotion, a blemished record, loss of
autonomy, personal embarrassment, loss of
stature, or something else?
A Different View of Failure
Johnson & Johnson – “Failure is our most
important product”.
Different types of failure
 Moral failure
 Personal failure
 Uncontrollable failure
A Different View of Failure
Success
Failure
10
10
10
Failure
Success
Developing an Environment
to Support Entrepreneurship
“To be able to innovate, the
enterprise needs to put – every
three years or so – every single
product, process, technology,
market, distributive channel,
and internal staff activity on
trial for life.” - Peter F. Drucker